Merchandising Management
Midterm Exam
Course Introduction
Merchandising Management focuses on the principles and practices involved in the planning, buying, presenting, and selling of products to consumers in retail environments. The course covers key topics such as merchandise assortment planning, inventory control, supplier relations, pricing strategies, and visual merchandising techniques. Students learn to analyze market trends, consumer behavior, and sales data to make informed sourcing and purchasing decisions. Emphasis is placed on the integration of digital technologies and omnichannel approaches to optimize profitability and customer satisfaction. Through case studies and practical assignments, students gain insight into strategic management processes essential for successful merchandising within todays dynamic retail landscape.
Recommended Textbook
Retailing Management 9th Edition by Michael Levy
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Chapter 1: Introduction to the World of Retailing
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Sample Questions
Q1) How does scrambled merchandising impact retail competition?
Answer: Scrambled merchandising increases intertype competition,or competition among retailers that sell similar merchandise using different types of retail outlets,such as drug and department stores.Increasing intertype competition makes it harder for retailers to identify and monitor their competition.In one sense,all retailers compete against one another for the dollars that consumers spend on goods and services.But the intensity of competition is greatest among retailers whose offerings are viewed as very similar.
Q2) The offering of merchandise not typically associated with the store type is called:
A) scrambled merchandising.
B) intratype competition.
C) product diversification.
D) channel diversification.
E) vertical differentiation.
Answer: A
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Chapter 2: Types of Retailers
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Q1) Explain what drugstores do to remain competitive in the marketplace.
Answer: Drugstores face competition from pharmacies in discount stores and from pressure to reduce health care costs.In response,the major drugstore chains are offering a wider assortment of merchandise,including more frequently purchased food items,as well as new services,such as the convenience of drive-through windows for picking up prescriptions,in-store medical clinics,and even makeovers and spa treatments.
Q2) Services are difficult to be evaluated before customers buy or even after they buy and consume them.Which of the following characteristics of service causes this challenge for service retailers?
A) Intangibility
B) Perishability
C) Inconsistency
D) Consumability
E) Compatibility
Answer: A
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4
Chapter 3: Multichannel Retailing
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Sample Questions
Q1) Shoppers often have only a general sense of what they want.
A)True
B)False
Answer: True
Q2) 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.
Answer: B
Q3) 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.
Answer: E
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5
Chapter 4: Customer Buying Behavior
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Sample Questions
Q1) Eve's is a retail store selling skincare products.It recently introduced fair trade products such as handmade soaps,herbal skin creams,and shampoos made by rural workers.Eve's also claimed that a part of the sales proceeds of these products would be utilized for the workers' welfare.The store aims to attract customers who are interested in social causes.Therefore,including fair trade merchandise involves:
A) decreasing an importance weight.
B) increasing a performance belief.
C) decreasing the performance belief for competitive retailer.
D) adding a new benefit.
E) focusing on a single attribute.
Q2) How do reference groups influence the buying decisions of a person?
Q3) Catherine's is a chain of retail stores having merchandise assortments for women over size 14.Women who meet this criterion form a:
A) consideration set.
B) retail market segment.
C) demographic set.
D) reference group.
E) subculture.
Q4) How does the brand loyalty of customers impact retailers?
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Chapter 5: Retail Market Strategy
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Sample Questions
Q1) _____ are developed so that the distance between two retailers' positions on the map indicates how similar the stores appear to consumers.
A) Perceptual maps
B) Geographical maps
C) Brand perceptions
D) Product perceptions
E) Demographic maps
Q2) Krueger Burgers LLC,a chain of restaurants,intends to change its pricing policy and promotional mix to cater to a new market segment.Which of the following growth strategies will best suit Kruger Burgers?
A) Market penetration growth opportunity
B) Market expansion growth opportunity
C) Retail format growth opportunity
D) Diversification growth opportunity
E) Wholesale format growth opportunity
Q3) List the key opportunities for success in global retailing.
Q4) Describe franchising.
Q5) Why would a retailer desire to have private-label or store brands?
Q6) Define positioning.
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Chapter 6: Financial Strategy
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Sample Questions
Q1) Which of the following would be the best example of an output measure?
A) Square feet of shelf space allocated to a particular item
B) The expense of running a magazine advertisement
C) The purchase of new inventory
D) The cost of paying overtime to a clerk who worked late
E) Monthly net profits for the entire store
Q2) Which of the following statements does not describe gross margin?
A) It can be expressed as a percentage of net sales.
B) It is the profit on the goods sold excluding the operating expenses.
C) It is also referred to as gross profit.
D) It is a performance measurement.
E) It is a measure of return on assets.
Q3) The formula for calculating operating expenses percentage is:
A) total sales/operating expenses.
B) gross sales/operating expenses.
C) operating expenses/net sales.
D) average sales/gross sales.
E) total sales/average sales.
Q4) Define debt-to-equity ratio.
Q5) What is same-store sales growth and how retailers use it?
Page 8
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Chapter 7: Retail Locations
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Q1) Mention three advantages that shopping malls have over alternative locations.
Q2) The retailers that attract a significant number of consumers and consequently make the center more appealing for other retailers are _____ stores.
A) parasite
B) anchor
C) location rival
D) leader
E) alpha
Q3) Where would you most likely find a lifestyle center?
A) At interstate interchanges
B) In higher-income neighborhoods
C) In low-income neighborhoods
D) In small towns
E) Near discount store malls
Q4) What is a store-within-a-store?
Q5) Retail developers need to take into consideration legal aspects when they are evaluating different locations.Describe the main legal considerations.
Q6) What are the advantages and disadvantages of choosing a freestanding site for your retail store?
Page 9
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Chapter 8: Retail Site Location
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Sample Questions
Q1) A metropolitan statistical area (MSA)is a core urban area containing a population of more than 50,000 inhabitants.
A)True
B)False
Q2) According to the Huff Gravity Model,the two factors which attract consumers to a store location are:
A) travel time for customer to get to location and the number of customers in a trade area.
B) the attractiveness of the store's location and the time it takes to travel to the store.
C) the size of the store and the number of customers in a trade area.
D) travel time for customer to get to location and the distance between a customer's location and store location.
E) the distance between customer location and store location and the number of customers in a trade area.
Q3) Conducting a competitive analysis is typically the first step in the selection of a site.
A)True
B)False
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Chapter 9: Human Resource Management
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Sample Questions
Q1) Employment discrimination on which of the following basis is legal in the United States?
A) Gender
B) Age
C) Educational qualification
D) Religious beliefs
E) Sexual orientation
Q2) Val is concerned that the commissioned salespeople in her fur shop are not keeping the store clean and merchandise properly displayed.What should she do?
A) Increase the sales commissions for her salespeople.
B) Change the incentives from commissions to bonuses.
C) Stock less merchandise.
D) Fire the salespeople and hire new ones.
E) Change the compensation to strictly an hourly wage.
Q3) Distinguish between centralization and decentralization.
Q4) List the five HR management activities that build employee engagement.
Q5) How do human resource professionals,store managers,and employees play a part in human resource management?
Q6) Define organization structure.
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Chapter 10: Information Systems and Supply Chain Management
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Q1) An inventory planner notes that the inventory she is responsible for would be best managed by relying on consumer demand.She recommends to her management to implement a(n)_____ that would support being in a better stock position of her managed product by store location.
A) cross check logistic strategy
B) pull supply chain strategy
C) cost efficient logistic strategy
D) push supply chain strategy
E) influential logistic strategy
Q2) Which of the following terms describe the process of moving returned goods to the retailer from the consumer to the DC and then to the vendor for the purpose of capturing value or proper disposal?
A) Ticketing
B) Reverse logistics
C) Marking
D) Cross-docking
E) Exception management logistics
Q3) What are the benefits of RFID technology over traditional bar codes?
Q4) Identify and describe the vendor-managed inventory approach.
Q5) What is the purpose of the data warehouse and how do retailers use it?
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Chapter 11: Customer Relationship Management
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Sample Questions
Q1) The Bird of Paradise is one of the world's most attractive tropical flowers.When Josiah,who owns Joe's Flower Shop,knows he's receiving flowers from Hawaii,he emails all his customers whom he knows will like the flower and informs them of the expected shipment.Josiah's program is an example of:
A) a frequent shopper program.
B) a loyalty program.
C) gaining competitive advantage.
D) add-on selling.
E) 1-to-1 retailing.
Q2) Describe practices which retailers use to convert good customers into their best customers.
Q3) When consumers explicitly agree to share personal information,the agreement is referred to as _____.
A) participatory knowledge
B) opt in
C) the 80-20 rule
D) a disclosure agreement
E) opt out
Q4) Describe approaches that retailers use in dealing with unprofitable customers.
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Chapter 12: Managing the Merchandise Planning Process
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Sample Questions
Q1) Seasonal merchandise consists of items whose sales fluctuate dramatically depending on the time of the year.
A)True
B)False
Q2) The highest classification level in a buying organization is the _____.
A) order point
B) buying group
C) stock-keeping unit
D) merchandise group
E) department
Q3) What are the decisions influencing the allocation of merchandise to stores?
Q4) The second highest level in the merchandise classification structure is the _____.
A) stock-keeping unit
B) category
C) department
D) merchandise group
E) classification
Q5) Explain briefly the ABC analysis method for analyzing merchandise management performance.
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Chapter 13: Buying Merchandise
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Q1) Which of the following is true of collaborative supply chain management?
A) It is difficult to implement these strategies when sourcing globally.
B) These systems are based on large inventories.
C) Collaborative systems are based on child labor laws and regulations.
D) Lead times are long when using these systems.
E) Interactions between the vendor and retailer are minimal.
Q2) The only retailer that offers Fresh Sun organic food products is Daily Needs.Therefore,Fresh Sun is an example of a(n):
A) generic brand.
B) private-label brand.
C) exclusive brand.
D) premium private label.
E) copycat brand.
Q3) Describe the four phases in the development of strategic partnering relationships that are characterized by increasing levels of involvement.
Q4) What are some of the costs associated with sourcing merchandise globally?
Q5) If there are so many advantages to carrying private brands,why do retailers even bother to sell national brands?
Q6) What are some of the drawbacks of using a store brands?
Page 15
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Chapter 14: Retail Pricing
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Sample Questions
Q1) _____ is the practice of offering two or more different products or services for sale at one price.
A) Price bundling
B) Psychological pricing
C) Price grouping
D) Conjoint bundling
E) Price lining
Q2) The retail price of a sweater is $75,and the initial markup is 51 percent.Calculate the cost of the product.
A) $33.75
B) $25.71
C) $28.50
D) $36.75
E) $42.85
Q3) Which type of retailer is MOST likely to use first-degree price discrimination?
A) A sub shop
B) A candy store
C) A newspaper stand
D) An antique shop
E) A pet store
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Chapter 15: Retail Communication Mix
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Sample Questions
Q1) A freestanding insert (FSI)is also called a(n)_____.
A) preprint
B) cogprint
C) reprint
D) postprint
E) eprint
Q2) The _____ determines the budget required to undertake specific tasks to accomplish communication objectives.
A) competitive parity method
B) percentage-of-sales method
C) affordable budgeting method
D) rule-of-thumb method
E) objective-and-task method
Q3) The objective-and-task method uses past sales and communication activities to determine the present communication budget.
A)True
B)False
Q4) List the four steps involved in developing a retail communication program.
Q5) How can having strong brands benefit a retailer?
Q6) How can brands benefit the consumer?
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Chapter 16: Managing the Store
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Sample Questions
Q1) Which among the following accounts for more inventory loss?
A) Shoplifting
B) Employee theft
C) Inaccurate records
D) Vendor fraud
E) Logistical gaps
Q2) Lee just signed a lease for her lunch delivery business and is now ready to become involved in the employee management process of her business plan.What should Lee do first?
A) Train employees.
B) Motivate employees.
C) Recruit employees.
D) Evaluate employees.
E) Socialize employees.
Q3) The job description identifies essential activities to be undertaken and is used to determine the qualifications of potential employees.
A)True
B)False
Q4) Discuss establishing security policies and control systems to control employee theft.
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Chapter 17: Store Layout, Design, and Visual Merchandising
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Sample Questions
Q1) The Americans with Disabilities Act:
A) states that stores built before 1990 must be fully accessible for the disabled.
B) states that it is illegal to discriminate in hiring and termination decisions concerning people between the ages of 40 and 70.
C) prohibits unequal pay for men and women who perform equal work or work of comparable worth.
D) protects people with disabilities from discrimination in employment,transportation,public accommodations,telecommunications,and the activities of government.
Q2) Which of the following locations in a store is the most appropriate to place high margin products?
A) The store entrance
B) Center aisles
C) End caps
D) Right-hand side
E) Left-hand side
Q3) Explain the concept of vertical merchandising.
Q4) How does smell impact customers' mood and emotions?
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Chapter 18: Customer Service
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Q1) Six weeks after Samuel purchased six portable computers for his realty business,he was called by the retailer who sold him the computers and asked if he was satisfied with the purchase and if there was anything that he would change about the way the store does business.In this scenario,the retailer is trying to reduce its _____.
A) delivery gap
B) standards gap
C) production gap
D) knowledge gap
E) communication gap
Q2) Glamour Looks is a beauty salon.It offers various skin and hair treatment packages based on customer requests.Which of the following types of services is Glamour Looks offering?
A) Standardized service
B) Wardrobing
C) Micromanagement
D) Perceived service
E) Personalized service
Q3) Why is it important to empower employees for quick resolution of customer problems?
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