Retailing Management 9th Edition by Michael Levy - Test Bank

Chapter 03 Multichannel Retailing True / False Questions 1. The direct-response TV (DRTV) channel is a retail channel in which customers watch a TV advertisement that demonstrates merchandise and then place orders for that merchandise. True False 2. Direct selling is a retail channel where salespeople interact with customers face-to-face. True False 3. Automated retailing is a retail channel in which merchandise or services are stored in a machine and dispensed to customers. True False 4. Shoppers often have only a general sense of what they want. True False 5. Stores offer immediate gratification to customers. True False 6. The consequences of security breaches are worse for the retailer than the consumer if a credit card number was stolen from their place of business. True False 7. Multichannel retailers can leverage their stores to lower the cost of fulfilling orders and processing returned merchandise. True False 8. Retailers need to provide a consistent brand image of themselves and their private-label merchandise across all channels. True False 9. Automated retailing occurs when a consumer goes into a store to learn about different brands and products and then searches the Internet for the same product sold at a lower price. True False 10. RFID is a technology which will be a part of the future technology to be used in retailing. True False Multiple Choice Questions 11. A multichannel retailer is one that: A. is a combination of single channel retailers. B. channels all assortments through stores. C. works with other retailers who are in the channel. D. sells merchandise or services through more than one channel. E. buys merchandise from multiple channels to sell in the stores. 12. Mason's is an apparel store which also offers online shopping apart from its stores. Therefore, Mason's is a(n) _____. A. computerized retailer B. direct seller C. electronic retailer D. single-channel retailer E. multichannel retailer 13. Current retailers are using catalog channels for: A. developing multilevel systems for direct marketing. B. collecting information to customize offers for customers. C. building a brand image and driving traffic to stores. D. channel integration. E. none of these. 14. A(n) _____ is a form of DRTV advertisement that is typically 30 to 60 minutes long and mixes entertainment with product demonstrations. A. sponsored film B. documentary C. podcast D. widget E. infomercial 15. Infomercials: A. are 60-second commercials. B. usually solicit orders placed by telephone. C. are software applications for customers. D. are not shown on broadcast television. 16. Ben saw a 30 minute TV show. During the show, the presenter was showing how to prepare a variety of dishes so that they would be totally fat-free. Each item was prepared using a special cooker. During the show, the audience was given several opportunities to buy the cooker. Which of the following terms describes the 30 minute show? A. Infomercial B. Widget C. Showrooming D. Catalog channel E. Podcast 17. Which of the following statements is true of TV home shopping? A. Goods are automatically dispensed to customers on cash payment. B. There are two types of advertising: party plan and multilevel. C. The impact of advertisements on people cannot be determined accurately. D. Salespeople interact directly with customers. E. Customers can see the merchandise demonstrations before buying. 18. Direct selling is characterized by all of these EXCEPT that it is not _____. A. a highly interactive form of retailing B. taking place in the home C. mainly performed by independent agents D. a low cost method of retailing E. used for selling personal care products 19. A party plan system: A. is a form of direct-response advertising. B. is a form of direct selling involving salespeople. C. forms a part of automated retailing. D. uses a master distributor as lead salesperson. E. is a recruiting tool for multilevel networks. 20. When a multilevel direct selling becomes a pyramid scheme, _____. A. annual sales of products often double B. the salespeople are no longer independent agents C. the use of the party plan becomes more commonplace D. the selling format is usually franchised E. relatively little merchandise is sold to end users 21. Automated retailing: A. is most effective in high-traffic areas. B. is based on the idea that social relationships influence buying habits. C. uses a master distributor as lead salesperson. D. is a recruiting tool for multilevel networks. E. promotes products through infomercials. 22. Redbox, a DVD rental service, utilizes machines to dispense DVDs to customers. Which form of retailing is Redbox using? A. Internet retailing B. Store Channel C. Direct Selling D. Automated retailing E. Catalog retailing 23. Which of the following is NOT a direct selling approach? A. A party plan system B. A multilevel network C. An infomercial D. Pyramid scheme E. None of these 24. Which of the following forms of direct selling has independent businesspeople serving as master distributors and recruiting other people to become distributors in their network? A. Multilevel system B. Party plan system C. Showrooming D. Automated retailing E. Catalog marketing 25. A(n) _____ develops in direct marketing when a firm and its program are designed to sell merchandise and services to other distributors, rather than to end-users. A. shell game B. e-tailing program C. pyramid scheme D. party plan system E. phishing scheme 26. Judy regularly buys cosmetics from a salesperson. She invites her friends over to her home for an evening of socializing along with everyone getting makeovers. Afterwards, the salesperson showed the product that was used for their makeovers, and they were given the opportunity to purchase the product and browse through a catalog for additional products to purchase. This is an example of a(n): A. party plan system. B. multilevel network. C. infomercial. D. pyramid scheme. E. omniretailing program. 27. Which of the following is NOT a benefit of a store channel shopping experience? A. Browsing B. Immediate gratification C. Risk reduction D. Personal service E. None of these 28. Which of the following is a benefit of ONLY store channel shopping? A. Convenience B. Extensive information C. Personalization D. Immediate gratification E. Broad and deep assortments 29. Margaret went to the mall to meet her sister, Val. While at the mall, they witnessed a back-to-school fashion show in a store. They took a walk and watched the children play in the center arena. Which benefit of store shopping did Margaret and Val enjoy? A. Immediate Gratification B. Entertainment and social interaction C. Convenience D. Personal service E. Touch and feel products 30. Compared to other retail formats, the greatest benefit that store shopping offers is: A. the ability to touch and feel the products. B. personal safety. C. easy availability of information for product comparison. D. broader and deeper assortments. E. availability of detailed information for evaluating a product. 31. Which retail channel has the least perceived risk when purchasing products? A. Internet B. Stores C. Catalog D. Showrooming E. Mobile retailing 32. Ryan needs a painkiller. He goes to the nearby drugstore, buys it, and uses it. Which of the following benefits offered by stores can be seen in the given example? A. Risk reduction B. Immediate gratification C. Personal service D. Entertainment and Social experience E. Browsing 33. Which of the following benefits is offered by the Internet channel? A. Deeper assortments B. Immediate gratification C. Social interaction D. Personal service E. Less perceived risk 34. Which of the following statements about Internet retailing is TRUE? A. Internet retailing gives customers an opportunity to use all five senses. B. Customers can have more personalized information on products. C. Customers do not receive sufficient information to evaluate products. D. The electronic channel offers a less satisfying shopping experience than catalogs. E. Online stores offer limited assortments compared to store channels. 35. Which retail channel has the ability to economically provide the most product information for the consumer purchasing products? A. Internet B. Stores C. Direct Selling D. Automated E. All of these 36. Which of the following is true of the benefits offered by Internet shopping? A. The Internet offers a limited assortment of products. B. Customers can get information that is useful across channels. C. The perceived risk is lower when compared to store channels. D. The Internet is not economically viable for retailers looking to expand their markets. E. It has limited effectiveness in making personalized recommendations. 37. By obtaining information about customer preferences, and past purchase behavior, retailers operating an electronic channel are able to: A. design more secure sites for credit card users. B. develop faster download times. C. promote showrooming. D. respond immediately to consumer inquiries. E. tailor merchandise and recommendations. 38. Internet retailers offer _____, where customers can click a button at any time and have an instant messaging e-mail or voice conversation with a customer service representative. A. live chats B. cookies C. showrooming D. contact scraping E. intranet portals 39. _____ enable online retailers to collect customer information as they navigate through the retailers' websites. A. Blogs B. Widgets C. Apps D. Cookies E. Podcasts 40. _____ are software applications designed to improve the consumers' shopping experiences when using smartphones and tablets. A. Infomercials B. Widgets C. Blogs D. Wikis E. Apps 41. Shades N Hues is a large cosmetics retailer. It recently developed a software application which enables customers with smartphones to look at the latest products. Hence, the store is using _____ to improve customers' shopping experience. A. blogs B. apps C. wikis D. cookies E. widgets 42. Retailers can use multiple channels synergistically by: A. using one channel to promote the others. B. providing similar assortments across channels. C. providing a limited amount of information to customers. D. concentrating only on catalogs for product promotions. E. reducing prices for products in all channels. 43. Which of the following strategies can a retailer utilize to attract shoppers to its website? A. Persuade investors with positive sales forecasts. B. Encourage vendors to deliver the assortments. C. Focus on bankruptcy proceedings to create a trustworthy image. D. Print the website address on signage, bags and in advertising. E. Prime its sales associates to use its website. 44. Multichannel retailers struggle to provide an integrated shopping experience because: A. various channels demand skills and unique resources. B. they do not have intermediaries for supplying products. C. they generally offer limited assortments in their channels. D. multichannel retailing often results in a pyramid scheme. E. merchandise is offered at the same price across channels. 45. _____ involves selling the same products at the same prices through the same distribution system for all channels. A. Channel migration B. Showrooming C. Automated retailing D. Complete integration E. Personalization 46. Which of the following statements is true of the operations of multichannel retailers? A. Integrating various channel operations does not pose a major problem. B. They need to maintain a consistent image across channels. C. Most retailers have a common organization to manage all channels. D. Competition does not have a significant impact on pricing. E. Similar assortments are often suitable for various channels. 47. _____ occurs when a consumer goes into a store to learn about different brands and products and then searches the Internet for the same product sold at a lower price. A. Returning B. Direct selling C. Automated retailing D. Showrooming E. Sweethearting 48. _____ occurs when customers gather information from a retailer's channel and buy products from a competitor's channel. A. Channel expansion B. Channel integration C. Channel migration D. Omniretailing E. Automated retailing 49. Matt often goes to a retail store to look at electronic goods. He learns about the brands and products and searches the Internet for lower prices. This act by Matt is an example of _____. A. sweethearting B. automated retailing C. omniretailing D. showrooming E. channel integration 50. Retailers can reduce showrooming by: A. designing programs to sell merchandise to other distributors rather than end-users. B. using a single channel to promote products. C. offering limited assortments on their websites. D. promoting private-label merchandise that can be purchased only from the retailer. E. recruiting people to become distributors in their network. 51. Which of the following terms represents a form of channel migration? A. Showrooming B. Phishing C. Multilevel system D. Omniretailing E. Pyramid scheme 52. Which of the following strategies aids in reducing channel migration? A. Offer uniquely relevant information to customers. B. Persuade suppliers to increase their sales forecasts. C. Encourage vendors to deliver complete assortments. D. Increase efficiencies of supply chain management. E. None of these. 53. Catherine wanted to purchase a digital camera. Hence, she visited an online retailer's website to learn more about the different features and capabilities of the device. Catherine went to a supermarket to make other purchases. She sees the camera there and purchases it. Which of the following terms describes Catherine's actions? A. Channel migration B. Channel expansion C. E-tailing D. Phishing E. Automated retailing 54. Linda wants to buy a diamond pendant. She wants information on the best deals available online. Which of the following technologies would best suit her requirement? A. Self-checkout terminals B. Widgets C. Cookies D. Personal shopper programs E. All of these Essay Questions 55. What is m-commerce and how is it different from e-commerce? 56. Describe the working of a catalog channel. 57. Describe the direct selling channel along with the two different types of direct selling. 58. How have traditional store-based retailers benefitted by adding Internet channels to their operations? 59. How does the Internet help customers evaluate merchandise when making buying decisions? 60. Explain the perceived risks involved in Internet shopping. 61. Explain how pricing presents a challenge to multichannel retailers. 62. How can multichannel retailers reduce showrooming? 63. Explain how channel migration poses a challenge to multichannel retailers. 64. List some technologies that will be a part of a future retail store. Chapter 03 Multichannel Retailing Answer Key True / False Questions 1. (p. 70) The direct-response TV (DRTV) channel is a retail channel in which customers watch a TV advertisement that demonstrates merchandise and then place orders for that merchandise. TRUE The direct-response TV (DRTV) channel is a retail channel in which customers watch a TV advertisement that demonstrates merchandise and then place orders for that merchandise. The orders are placed by either telephoning a phone bank of operators or accessing the Internet to use the company's website. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 2 Medium Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 2. (p. 70) Direct selling is a retail channel where salespeople interact with customers face-to-face. TRUE Direct selling is a retail channel in which salespeople interact with customers face-to-face in a convenient location, either at the customer's home or at work. Direct salespeople demonstrate merchandise benefits and/or explain a service, take an order, and deliver the merchandise. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 2 Medium Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 3. (p. 72) Automated retailing is a retail channel in which merchandise or services are stored in a machine and dispensed to customers. TRUE Automated retailing is a retail channel in which merchandise or services are stored in a machine and dispensed to customers when they deposit cash or use a credit card. Automated retailing machines, also known as vending machines, are typically placed at convenient, high-traffic locations. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 4. (p. 73) Shoppers often have only a general sense of what they want. TRUE Shoppers often have only a general sense of what they want (e.g., a sweater, something for dinner, a gift) but don't know the specific item they want, so they go to a store to see what is available before they decide what to buy. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-02 Compare the benefits offered by the four major retail channels: stores; Internet; mobile; and catalogs. Topic: Relative Benefits of Retail Channels 5. (p. 73) Stores offer immediate gratification to customers. TRUE Customers can use merchandise immediately after they buy it in stores. Thus, when customers have a fever or need a last-minute gift, for example, they do not have to wait a day or two for the delivery of a prescription from D or of a gift from A. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 2 Medium Learning Objective: 03-02 Compare the benefits offered by the four major retail channels: stores; Internet; mobile; and catalogs. Topic: Relative Benefits of Retail Channels 6. (p. 79) The consequences of security breaches are worse for the retailer than the consumer if a credit card number was stolen from their place of business. TRUE The consequences of security breaches can be far worse for the retailer from which the card number was stolen. Security breaches can ruin a retailer's reputation and possibly expose it to legal liability. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-02 Compare the benefits offered by the four major retail channels: stores; Internet; mobile; and catalogs. Topic: Relative Benefits of Retail Channels 7. (p. 81) Multichannel retailers can leverage their stores to lower the cost of fulfilling orders and processing returned merchandise. TRUE Multichannel retailers can use their stores as "warehouses" for gathering merchandise for delivery to customers. Customers also can be offered the opportunity to pick up and return merchandise at the retailer's stores rather than pay shipping charges. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 2 Medium Learning Objective: 03-03 Analyze the challenges facing multichannel retailers. Topic: Challenges Facing Multichannel Retailers 8. (p. 82) Retailers need to provide a consistent brand image of themselves and their private-label merchandise across all channels. TRUE Retailers need to provide a consistent brand image of themselves and their private-label merchandise across all channels. For example, Patagonia reinforces its image of selling high-quality, environmentally friendly sports equipment in its stores, catalogs, and website. Each of these channels emphasizes function, not fashion, in the descriptions of Patagonia's products. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-03 Analyze the challenges facing multichannel retailers. Topic: Challenges Facing Multichannel Retailers 9. (p. 84) Automated retailing occurs when a consumer goes into a store to learn about different brands and products and then searches the Internet for the same product sold at a lower price. FALSE A particularly concerning form of channel migration is called showrooming. Showrooming occurs when a consumer goes into a store to learn about different brands and products and then searches the Internet for the same product sold at a lower price. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-03 Analyze the challenges facing multichannel retailers. Topic: Challenges Facing Multichannel Retailers 10. (p. 85) RFID is a technology which will be a part of the future technology to be used in retailing. TRUE RFID, self-checkout, and personalized virtual reality displays are some of the technologies that will exist in future retails stores. AACSB: Technology Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 2 Medium Learning Objective: 03-04 Consider the multichannel shopping experience in the future. Topic: Multichannel Shopping in the Future Multiple Choice Questions 11. (p. 67) A multichannel retailer is one that: A. is a combination of single channel retailers. B. channels all assortments through stores. C. works with other retailers who are in the channel. D. sells merchandise or services through more than one channel. E. buys merchandise from multiple channels to sell in the stores. Multichannel retailing involves using more than one channel to sell and deliver merchandise and services to consumers. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 12. (p. 67) Mason's is an apparel store which also offers online shopping apart from its stores. Therefore, Mason's is a(n) _____. A. computerized retailer B. direct seller C. electronic retailer D. single-channel retailer E. multichannel retailer Multichannel retailing involves using more than one channel to sell and deliver merchandise and services to consumers. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 1 Easy Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 13. (p. 70) Current retailers are using catalog channels for: A. developing multilevel systems for direct marketing. B. collecting information to customize offers for customers. C. building a brand image and driving traffic to stores. D. channel integration. E. none of these. Catalogs' share of sales is declining relative to the Internet. But catalogs are not going away. Their role is shifting from primarily generating sales to building a brand image and driving traffic to the Internet and physical stores. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 14. (p. 70) A(n) _____ is a form of DRTV advertisement that is typically 30 to 60 minutes long and mixes entertainment with product demonstrations. A. sponsored film B. documentary C. podcast D. widget E. infomercial There are two types of DRTV advertisements: a long form, referred to as an infomercial and typically 30 to 60 minutes long, that mixes entertainment with product demonstrations, and a short form consisting of one- to two-minute advertisements on television. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 2 Medium Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 15. (p. 70) Infomercials: A. are 60-second commercials. B. usually solicit orders placed by telephone. C. are software applications for customers. D. are not shown on broadcast television. Infomercials are a form of TV home shopping with 30-60 minute programs that mix entertainment with product demonstrations and then solicit orders placed by telephone. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 16. (p. 70) Ben saw a 30 minute TV show. During the show, the presenter was showing how to prepare a variety of dishes so that they would be totally fat-free. Each item was prepared using a special cooker. During the show, the audience was given several opportunities to buy the cooker. Which of the following terms describes the 30 minute show? A. Infomercial B. Widget C. Showrooming D. Catalog channel E. Podcast Infomercials are 30-60 minute TV programs that mix product demonstrations with order solicitations. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 17. (p. 70) Which of the following statements is true of TV home shopping? A. Goods are automatically dispensed to customers on cash payment. B. There are two types of advertising: party plan and multilevel. C. The impact of advertisements on people cannot be determined accurately. D. Salespeople interact directly with customers. E. Customers can see the merchandise demonstrations before buying. The major advantage of TV home shopping is that customers can see the merchandise demonstrated either on their television screens or through streaming videos on the Internet. In response to the increase in cooking, decorating, do-it-yourself, and other lifestyle programming, home shopping retailers have incorporated more demonstrations into their programming in an attempt to educate their potential customers. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 18. (p. 71) Direct selling is characterized by all of these EXCEPT that it is not _____. A. a highly interactive form of retailing B. taking place in the home C. mainly performed by independent agents D. a low cost method of retailing E. used for selling personal care products Direct selling is a highly interactive retail channel in which considerable information is conveyed to customers through face-to-face discussions and demonstrations. However, providing this high level of personalized information, including extensive demonstrations, is costly. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 2 Medium Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 19. (p. 72) A party plan system: A. is a form of direct-response advertising. B. is a form of direct selling involving salespeople. C. forms a part of automated retailing. D. uses a master distributor as lead salesperson. E. is a recruiting tool for multilevel networks. About one-quarter of all direct sales are made using a party plan system. Salespeople encourage customers to act as hosts and invite friends or coworkers to a "party." The host or hostess receives a gift or commission for arranging the party. At the party, the merchandise is demonstrated and attendees place orders. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 2 Medium Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 20. (p. 72) When a multilevel direct selling becomes a pyramid scheme, _____. A. annual sales of products often double B. the salespeople are no longer independent agents C. the use of the party plan becomes more commonplace D. the selling format is usually franchised E. relatively little merchandise is sold to end users When little merchandise is actually sold to the end users, it is just the founders and the initial distributors that profit from the inventory bought by later participants. AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 21. (p. 72) Automated retailing: A. is most effective in high-traffic areas. B. is based on the idea that social relationships influence buying habits. C. uses a master distributor as lead salesperson. D. is a recruiting tool for multilevel networks. E. promotes products through infomercials. Automated retailing is a retail channel in which merchandise or services are stored in a machine and dispensed to customers when they deposit cash or use a credit card. Automated retailing machines, also known as vending machines, are typically placed at convenient, high-traffic locations. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 22. (p. 72) Redbox, a DVD rental service, utilizes machines to dispense DVDs to customers. Which form of retailing is Redbox using? A. Internet retailing B. Store Channel C. Direct Selling D. Automated retailing E. Catalog retailing Redbox uses automated retailing machines, also known as vending machines, to rent out DVDs. Automated retailing is a retail channel in which merchandise or services are stored in a machine and dispensed to customers when they deposit cash or use a credit card. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 23. (p. 72) Which of the following is NOT a direct selling approach? A. A party plan system B. A multilevel network C. An infomercial D. Pyramid scheme E. None of these All of these are a direct selling approach except infomercial which is a form of television home shopping. An infomercial is a type of direct-response TV advertisement and is typically 30 to 60 minutes long, that mixes entertainment with product demonstrations, and a short form consisting of one- to two-minute advertisements on television. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 2 Medium Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 24. (p. 72) Which of the following forms of direct selling has independent businesspeople serving as master distributors and recruiting other people to become distributors in their network? A. Multilevel system B. Party plan system C. Showrooming D. Automated retailing E. Catalog marketing In a multilevel system, independent businesspeople serve as master distributors, recruiting other people to become distributors in their network. The master distributors either buy merchandise from the firm and resell it to their distributors or receive a commission on all merchandise purchased by the distributors in their network. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 2 Medium Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 25. (p. 72) A(n) _____ develops in direct marketing when a firm and its program are designed to sell merchandise and services to other distributors, rather than to end-users. A. shell game B. e-tailing program C. pyramid scheme D. party plan system E. phishing scheme A pyramid scheme develops when the firm and its program are designed to sell merchandise and services to other distributors, rather than to end-users. The founders and initial distributors in pyramid schemes profit from the inventory bought by later participants, but little merchandise is sold to consumers who use it. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 26. (p. 72) Judy regularly buys cosmetics from a salesperson. She invites her friends over to her home for an evening of socializing along with everyone getting makeovers. Afterwards, the salesperson showed the product that was used for their makeovers, and they were given the opportunity to purchase the product and browse through a catalog for additional products to purchase. This is an example of a(n): A. party plan system. B. multilevel network. C. infomercial. D. pyramid scheme. E. omniretailing program. Two special types of direct selling are the party plan and multilevel systems. About one-quarter of all direct sales are made using a party plan system. Salespeople encourage customers to act as hosts and invite friends or coworkers to a "party." The host or hostess receives a gift or commission for arranging the party. At the party, the merchandise is demonstrated and attendees place orders. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 27. (p. 73) Which of the following is NOT a benefit of a store channel shopping experience? A. Browsing B. Immediate gratification C. Risk reduction D. Personal service E. None of these Shopping in a store offers benefits such as immediate gratification, personal service, browsing, touching and feeling merchandise, risk reduction, and cash payment. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-02 Compare the benefits offered by the four major retail channels: stores; Internet; mobile; and catalogs. Topic: Relative Benefits of Retail Channels 28. (p. 73) Which of the following is a benefit of ONLY store channel shopping? A. Convenience B. Extensive information C. Personalization D. Immediate gratification E. Broad and deep assortments Immediate gratification is a benefit of store channel shopping; all of the other choices are benefits of other channels. Customers can use merchandise immediately after they buy it in stores. Thus, when customers have a fever or need a last-minute gift, for example, they do not have to wait a day or two for the delivery of a prescription from D or of a gift from A. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-02 Compare the benefits offered by the four major retail channels: stores; Internet; mobile; and catalogs. Topic: Relative Benefits of Retail Channels 29. (p. 73) Margaret went to the mall to meet her sister, Val. While at the mall, they witnessed a back-to-school fashion show in a store. They took a walk and watched the children play in the center arena. Which benefit of store shopping did Margaret and Val enjoy? A. Immediate Gratification B. Entertainment and social interaction C. Convenience D. Personal service E. Touch and feel products In-store shopping can be a stimulating experience for some people, providing a break in their daily routine and enabling them to interact with friends. AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 1 Easy Learning Objective: 03-02 Compare the benefits offered by the four major retail channels: stores; Internet; mobile; and catalogs. Topic: Relative Benefits of Retail Channels 30. (p. 73) Compared to other retail formats, the greatest benefit that store shopping offers is: A. the ability to touch and feel the products. B. personal safety. C. easy availability of information for product comparison. D. broader and deeper assortments. E. availability of detailed information for evaluating a product. Perhaps the greatest benefit offered by stores is the opportunity for customers to use all five senses—touching, smelling, tasting, seeing, and hearing—when examining and evaluating products. Although new technologies such as three-dimensional and 360-degree projections can enhance representations of products on a computer or mobile phone screen, these visual improvements do not provide the same level of information customers get when they actually try on a swimsuit or smell the fragrance of a candle. AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-02 Compare the benefits offered by the four major retail channels: stores; Internet; mobile; and catalogs. Topic: Relative Benefits of Retail Channels 31. (p. 73) Which retail channel has the least perceived risk when purchasing products? A. Internet B. Stores C. Catalog D. Showrooming E. Mobile retailing The physical presence of the store reduces perceived risk and increases customers' confidence that any problems with a purchase will be corrected. Customers can easily access people in the store to resolve issues concerning defective or unsuitable merchandise or get additional information on how to use a product. AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-02 Compare the benefits offered by the four major retail channels: stores; Internet; mobile; and catalogs. Topic: Relative Benefits of Retail Channels 32. (p. 73) Ryan needs a painkiller. He goes to the nearby drugstore, buys it, and uses it. Which of the following benefits offered by stores can be seen in the given example? A. Risk reduction B. Immediate gratification C. Personal service D. Entertainment and Social experience E. Browsing Customers can use merchandise immediately after they buy it in stores. Thus, when customers have a fever or need a last-minute gift, for example, they do not have to wait a day or two for the delivery of a prescription from D or of a gift from A. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 03-02 Compare the benefits offered by the four major retail channels: stores; Internet; mobile; and catalogs. Topic: Relative Benefits of Retail Channels 33. (p. 75) Which of the following benefits is offered by the Internet channel? A. Deeper assortments B. Immediate gratification C. Social interaction D. Personal service E. Less perceived risk Individual retailers' websites typically offer deeper assortments of merchandise (more colors, brands, and sizes) than are available in stores or catalogs. This expanded offering enables them to satisfy consumer demand for less popular styles, colors, or sizes. Many retailers also offer a broader assortment (more categories) on their websites. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-02 Compare the benefits offered by the four major retail channels: stores; Internet; mobile; and catalogs. Topic: Relative Benefits of Retail Channels 34. (p. 75) Which of the following statements about Internet retailing is TRUE? A. Internet retailing gives customers an opportunity to use all five senses. B. Customers can have more personalized information on products. C. Customers do not receive sufficient information to evaluate products. D. The electronic channel offers a less satisfying shopping experience than catalogs. E. Online stores offer limited assortments compared to store channels. The addition of the Internet channels has the potential to offer a greater selection of products. They allow retailers to provide more information. They enable retailers to provide customers with more personalized information about products and services. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-02 Compare the benefits offered by the four major retail channels: stores; Internet; mobile; and catalogs. Topic: Relative Benefits of Retail Channels 35. (p. 75) Which retail channel has the ability to economically provide the most product information for the consumer purchasing products? A. Internet B. Stores C. Direct Selling D. Automated E. All of these Retail channels differ in terms of how much information customers can access. The amount of information available through the store channel is limited by the number and training of sales associates and the space allocated to informative signage. Similarly, the information available through a catalog channel is limited by the number of pages in the catalog. In contrast, the information provided through the Internet channels is unlimited. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-02 Compare the benefits offered by the four major retail channels: stores; Internet; mobile; and catalogs. Topic: Relative Benefits of Retail Channels 36. (p. 75) Which of the following is true of the benefits offered by Internet shopping? A. The Internet offers a limited assortment of products. B. Customers can get information that is useful across channels. C. The perceived risk is lower when compared to store channels. D. The Internet is not economically viable for retailers looking to expand their markets. E. It has limited effectiveness in making personalized recommendations. Internet channels enable retailers to provide customers with more personalized information about products and services. They offer sellers the unique opportunity to collect information about consumer shopping. Internet channels provide an opportunity for retailers to enter new markets economically. They provide information that they can use to improve the shopping experience across all channels. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-02 Compare the benefits offered by the four major retail channels: stores; Internet; mobile; and catalogs. Topic: Relative Benefits of Retail Channels 37. (p. 77) By obtaining information about customer preferences, and past purchase behavior, retailers operating an electronic channel are able to: A. design more secure sites for credit card users. B. develop faster download times. C. promote showrooming. D. respond immediately to consumer inquiries. E. tailor merchandise and recommendations. The interactive nature of the Internet provides an opportunity for retailers to personalize their offerings for each of their customers. For example, A serves customers a personalized landing page with information about books and other products of interest based on the customer's past purchases and search behavior on the website. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-02 Compare the benefits offered by the four major retail channels: stores; Internet; mobile; and catalogs. Topic: Relative Benefits of Retail Channels 38. (p. 77) Internet retailers offer _____, where customers can click a button at any time and have an instant messaging e-mail or voice conversation with a customer service representative. A. live chats B. cookies C. showrooming D. contact scraping E. intranet portals The retailer can play a more proactive role in personalizing merchandise and information through the Internet channels. For example, many retailers offer live chats: Customers can click a button at any time and have an instant messaging e-mail or voice conversation with a customer service representative. This technology also enables retailers to send a proactive chat invitation automatically to customers on the site. AACSB: Technology Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 2 Medium Learning Objective: 03-03 Analyze the challenges facing multichannel retailers. Topic: Relative Benefits of Retail Channels 39. (p. 78) _____ enable online retailers to collect customer information as they navigate through the retailers' websites. A. Blogs B. Widgets C. Apps D. Cookies E. Podcasts Collecting data on how customers navigate through a website is quite easy. By placing a cookie (a small computer program that collects information about computer usage) on a customer's hard drive, the retailer can monitor each mouse click. The click-stream data provides insights into what characteristics of products customers considered and what products customers looked at but did not buy. AACSB: Technology Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 2 Medium Learning Objective: 03-02 Compare the benefits offered by the four major retail channels: stores; Internet; mobile; and catalogs. Topic: Relative Benefits of Retail Channels 40. (p. 79) _____ are software applications designed to improve the consumers' shopping experiences when using smartphones and tablets. A. Infomercials B. Widgets C. Blogs D. Wikis E. Apps Apps are software applications designed to improve the consumers' shopping experiences when using smartphones and tablets. Apps developed by retailers are typically used to easily perform some specific functions available on the retailer's website but do not provide access to all of the functions available on the website. AACSB: Technology Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 2 Medium Learning Objective: 03-02 Compare the benefits offered by the four major retail channels: stores; Internet; mobile; and catalogs. Topic: Relative Benefits of Retail Channels 41. (p. 79) Shades N Hues is a large cosmetics retailer. It recently developed a software application which enables customers with smartphones to look at the latest products. Hence, the store is using _____ to improve customers' shopping experience. A. blogs B. apps C. wikis D. cookies E. widgets Apps are software applications designed to improve the consumers' shopping experiences when using smartphones and tablets. Apps developed by retailers are typically used to easily perform some specific functions available on the retailer's website but do not provide access to all of the functions available on the website. AACSB: Technology Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 03-02 Compare the benefits offered by the four major retail channels: stores; Internet; mobile; and catalogs. Topic: Relative Benefits of Retail Channels 42. (p. 80) Retailers can use multiple channels synergistically by: A. using one channel to promote the others. B. providing similar assortments across channels. C. providing a limited amount of information to customers. D. concentrating only on catalogs for product promotions. E. reducing prices for products in all channels. Retailers also benefit by using multiple channels synergistically. Multichannel retailers can use one channel to promote the services offered by other channels. For example, the URL of a store's website can be advertised on in-store signs, shopping bags, credit card billing statements, point-of-sale (POS) receipts, and the print or broadcast advertising used to promote the store. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-03 Analyze the challenges facing multichannel retailers. Topic: Challenges Facing Multichannel Retailers 43. (p. 81) Which of the following strategies can a retailer utilize to attract shoppers to its website? A. Persuade investors with positive sales forecasts. B. Encourage vendors to deliver the assortments. C. Focus on bankruptcy proceedings to create a trustworthy image. D. Print the website address on signage, bags and in advertising. E. Prime its sales associates to use its website. Retailers benefit by using multiple channels synergistically. Multichannel retailers can use one channel to promote the services offered by other channels. For example, the URL of a store's website can be advertised on in-store signs, shopping bags, credit card billing statements, point-of-sale (POS) receipts, and the print or broadcast advertising used to promote the store. The physical stores and catalogs are also advertisements for a retailer's other channels. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 03-03 Analyze the challenges facing multichannel retailers. Topic: Challenges Facing Multichannel Retailers 44. (p. 81) Multichannel retailers struggle to provide an integrated shopping experience because: A. various channels demand skills and unique resources. B. they do not have intermediaries for supplying products. C. they generally offer limited assortments in their channels. D. multichannel retailing often results in a pyramid scheme. E. merchandise is offered at the same price across channels. Multichannel retailers still struggle to provide an integrated shopping experience because the various channels demand various skills, as well as unique resources. Handling individual items, rather than cartons, and shipping them to individual consumers, instead of retailers, requires unique packaging, different transportation systems, and new intermediaries. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-03 Analyze the challenges facing multichannel retailers. Topic: Challenges Facing Multichannel Retailers 45. (p. 82) _____ involves selling the same products at the same prices through the same distribution system for all channels. A. Channel migration B. Showrooming C. Automated retailing D. Complete integration E. Personalization A critical decision facing multichannel retailers is the degree to which they should integrate the operations of the channels or have different organizations for each channel. At one extreme of this continuum is complete integration—selling the same products at the same prices through the same distribution system for all channels. At the other extreme is having a different organization manage each channel so that the channels are tailored to different target markets. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-03 Analyze the challenges facing multichannel retailers. Topic: Challenges Facing Multichannel Retailers 46. (p. 82) Which of the following statements is true of the operations of multichannel retailers? A. Integrating various channel operations does not pose a major problem. B. They need to maintain a consistent image across channels. C. Most retailers have a common organization to manage all channels. D. Competition does not have a significant impact on pricing. E. Similar assortments are often suitable for various channels. Retailers need to provide a consistent brand image of themselves and their private-label merchandise across all channels. For example, Patagonia reinforces its image of selling high-quality, environmentally friendly sports equipment in its stores, catalogs, and website. Each of these channels emphasizes function, not fashion, in the descriptions of Patagonia's products. AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-03 Analyze the challenges facing multichannel retailers. Topic: Challenges Facing Multichannel Retailers 47. (p. 84) _____ occurs when a consumer goes into a store to learn about different brands and products and then searches the Internet for the same product sold at a lower price. A. Returning B. Direct selling C. Automated retailing D. Showrooming E. Sweethearting A particularly concerning form of channel migration is called showrooming. Showrooming occurs when a consumer goes into a store to learn about different brands and products and then searches the Internet for the same product sold at a lower price. Three approaches that multichannel retailers can use to reduce showrooming are (1) providing better customer service, (2) offering uniquely relevant information based on proprietary data the retailer has collected about the customers, and (3) promoting private-label merchandise that can be purchased only from the retailer. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-03 Analyze the challenges facing multichannel retailers. Topic: Challenges Facing Multichannel Retailers 48. (p. 84) _____ occurs when customers gather information from a retailer's channel and buy products from a competitor's channel. A. Channel expansion B. Channel integration C. Channel migration D. Omniretailing E. Automated retailing As long as the store and the Internet channel represent the same retailer, the firm is happy. But if customers gather information from one of its channels, then buy from a channel hosted by a competitor, the retailer suffers from the frustrating problem of channel migration. Modern technologies, including those that allow customers to gather information and buy online or through their mobile devices, also make channel migration really easy. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 2 Medium Learning Objective: 03-03 Analyze the challenges facing multichannel retailers. Topic: Challenges Facing Multichannel Retailers 49. (p. 84) Matt often goes to a retail store to look at electronic goods. He learns about the brands and products and searches the Internet for lower prices. This act by Matt is an example of _____. A. sweethearting B. automated retailing C. omniretailing D. showrooming E. channel integration Showrooming occurs when a consumer goes into a store to learn about different brands and products and then searches the Internet for the same product sold at a lower price. Three approaches that multichannel retailers can use to reduce showrooming are (1) providing better customer service, (2) offering uniquely relevant information based on proprietary data the retailer has collected about the customers, and (3) promoting private-label merchandise that can be purchased only from the retailer. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 03-03 Analyze the challenges facing multichannel retailers. Topic: Challenges Facing Multichannel Retailers 50. (p. 84) Retailers can reduce showrooming by: A. designing programs to sell merchandise to other distributors rather than end-users. B. using a single channel to promote products. C. offering limited assortments on their websites. D. promoting private-label merchandise that can be purchased only from the retailer. E. recruiting people to become distributors in their network. Showrooming occurs when a consumer goes into a store to learn about different brands and products and then searches the Internet for the same product sold at a lower price. Three approaches that multichannel retailers can use to reduce showrooming are (1) providing better customer service, (2) offering uniquely relevant information based on proprietary data the retailer has collected about the customers, and (3) promoting private-label merchandise that can be purchased only from the retailer. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-03 Analyze the challenges facing multichannel retailers. Topic: Challenges Facing Multichannel Retailers 51. (p. 84) Which of the following terms represents a form of channel migration? A. Showrooming B. Phishing C. Multilevel system D. Omniretailing E. Pyramid scheme A particularly concerning form of channel migration is called showrooming. Showrooming occurs when a consumer goes into a store to learn about different brands and products and then searches the Internet for the same product sold at a lower price. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-03 Analyze the challenges facing multichannel retailers. Topic: Challenges Facing Multichannel Retailers 52. (p. 84) Which of the following strategies aids in reducing channel migration? A. Offer uniquely relevant information to customers. B. Persuade suppliers to increase their sales forecasts. C. Encourage vendors to deliver complete assortments. D. Increase efficiencies of supply chain management. E. None of these. Three approaches that multichannel retailers can use to reduce channel migration are (1) providing better customer service, (2) offering uniquely relevant information based on proprietary data the retailer has collected about the customers, and (3) promoting private-label merchandise that can be purchased only from the retailer. AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-03 Analyze the challenges facing multichannel retailers. Topic: Challenges Facing Multichannel Retailers 53. (p. 84) Catherine wanted to purchase a digital camera. Hence, she visited an online retailer's website to learn more about the different features and capabilities of the device. Catherine went to a supermarket to make other purchases. She sees the camera there and purchases it. Which of the following terms describes Catherine's actions? A. Channel migration B. Channel expansion C. E-tailing D. Phishing E. Automated retailing As long as the store and the Internet channel represent the same retailer, the firm is happy. But if customers gather information from one of its channels, then buy from a channel hosted by a competitor, the retailer suffers from the frustrating problem of channel migration. AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 03-03 Analyze the challenges facing multichannel retailers. Topic: Challenges Facing Multichannel Retailers 54. (p. 84) Linda wants to buy a diamond pendant. She wants information on the best deals available online. Which of the following technologies would best suit her requirement? A. Self-checkout terminals B. Widgets C. Cookies D. Personal shopper programs E. All of these A personal shopper program goes out and literally shops the world electronically, visiting the servers for companies selling diamond pendants. AACSB: Technology Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 03-04 Consider the multichannel shopping experience in the future. Topic: Multichannel Shopping in the Future Essay Questions 55. (p. 68-69) What is m-commerce and how is it different from e-commerce? The mobile channel (also called mobile retailing, mobile commerce, or m-commerce), involves accessing the Internet using a smartphone, and Internet retailing involves retailers interacting with consumers via the Internet, whether they use a traditional computer or a laptop, a variety of sizes of tablets or a smartphone. The channel that involves accessing the Internet through a traditional computer as the electronic channel (also called e-commerce). AACSB: Analytic AACSB: Communication Blooms: Understand Difficulty: 1 Easy Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 56. (p. 69-70) Describe the working of a catalog channel. The catalog channel is a nonstore retail channel in which the retail offering is communicated to customers through a catalog mailed to customers. About half of U.S. consumers shop through catalogs each year. The merchandise categories with the greatest catalog sales are drugs, beauty aids, computers, software, clothing, accessories, furniture, and housewares. The use of catalogs has come under attack from consumer groups that believe that catalogs are an unnecessary waste of natural resources. In the United States, catalogs account for 3 percent of the roughly 80 million tons of paper products used annually. That is more than either magazines or books. Further, catalogs' share of sales is declining relative to the Internet. But catalogs are not going away. Their role is shifting from primarily generating sales to building a brand image and driving traffic to the Internet and physical stores. AACSB: Analytic AACSB: Communication Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 57. (p. 70-71) Describe the direct selling channel along with the two different types of direct selling. Direct selling is a retail channel in which salespeople interact with customers face-to-face in a convenient location, either at the customer's home or at work. Direct salespeople demonstrate merchandise benefits and/or explain a service, take an order, and deliver the merchandise. Direct selling is a highly interactive retail channel in which considerable information is conveyed to customers through face-to-face discussions and demonstrations. AACSB: Analytic AACSB: Communication Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-01 Understand the nonstore channels offered by retailers. Topic: Nonstore Retail Channels 58. (p. 75) How have traditional store-based retailers benefitted by adding Internet channels to their operations? The addition of Internet channels to traditional store-based retailers and catalogers has improved their ability to serve their customers and build a competitive advantage in several ways: 1. The addition of the Internet channels has the potential to offer a greater selection of products. 2. They allow retailers to provide more information. 3. They enable retailers to provide customers with more personalized information