Increasing intertype competition has made it harder for retailers to identify their

journal article

Journal of Marketing

Vol. 14, No. 3 (Oct., 1949)

, pp. 441-447 (7 pages)

Published By: Sage Publications, Inc.

https://doi.org/10.2307/1248197

https://www.jstor.org/stable/1248197

Journal Information

The Journal of Marketing (JM) develops and disseminates knowledge about real-world marketing questions relevant to scholars, educators, managers, consumers, policy makers and other societal stakeholders. It is the premier outlet for substantive research in marketing. Since its founding in 1936, JM has played a significant role in shaping the content and boundaries of the marketing discipline?

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Chapter 01
Introduction to the World of Retailing

Multiple Choice Questions
1. (p. 6) What is retailing?
A. It is the merchandising component of the retail mix.
B. It is the set of business activities that adds value to the products and services sold to
consumers for their personal use.
C. It is the strategy retailers and vendors use to get products into the stores.
D. It is the process of offering products in smaller quantities for consumer consumption
patterns.
E. It is the ability to offer enough variety in a store to encourage one-stop shopping.

Difficulty: Easy
Type: Definition

2. (p. 6) Which of the following businesses would be considered a retailer?
A. a hot dog cart at the Highland Games
B. Delta Airlines
C. University bookstore
D. Priceline.com
E. all of the above
Retailers are businesses that sell goods and/or services.

Difficulty: Medium
Type: Application

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3. (p. 6) Why is it imperative that manufacturers like Apple Computer and Proctor and Gamble
understand how retailers operate?
A. Manufacturers will be able to sell directly on-line.
B. Manufacturers will understand how to get their products on the shelves and sold to the
customer.
C. Manufacturers can better sell merchandise without retailers.
D. Retailers can expect fewer buyouts to occur.
E. Manufacturers can limit multi-channel integration

Difficulty: Medium
Type: Comprehension

4. (p. 6) A ______________ is a business that sells products and/or services to consumers for
their personal or family use.
A. manufacturer
B. wholesaler
C. retailer
D. Distributor

Difficulty: Easy
Type: Definition

5. (p. 6) The decisions that retail manger make include:
A. Selecting their target markets
B. Selecting retail locations
C. Negotiating with suppliers
D. Training and motivating sales associates
E. All of the above

Difficulty: Easy
Type: Comprehension

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6. (p. 7) A(n) ______________ is a set of firms that make and deliver a given set of goods and
services to the ultimate consumer.
A. supply chain
B. buying network
C. trade association
D. integrated wholesale network

Difficulty: Easy
Type: Definition

7. (p. 7) A retailer's role in a supply chain is to:
A. act as the liaison between manufacturers and wholesalers
B. buy merchandise exclusively from the manufacturers
C. negotiate with manufacturers to eliminate a wholesaler
D. satisfy the needs of the consumers
E. sell to wholesalers

Difficulty: Easy
Type: Definition

8. (p. 7) ______________ is when a firm performs more than one set of activities in a channel.
A. Channel diversification
B. Horizontal development

C. Horizontal integration
D. Vertical development
E. Vertical integration

Difficulty: Easy
Type: Definition

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9. (p. 7) If a chain of florist shops opened a plant nursery to provide gift plants and cut flowers
to all of its outlets within a 300-mile radius, the chain would be practicing
A. vertical integration.
B. channel expansion.
C. horizontal expansion.
D. opportunity incrementing.
E. service marketing.
The florist is performing more than one channel function.

Difficulty: Medium
Type: Application

10. (p. 7) Victoria's Secret, a popular retail chain in women's lingerie and perfume, design the
merchandise they sell, and then contract with manufacturers to produce it exclusively for
them. Victoria's Secret is practicing:
A. globalization
B. product-related marketing
C. vertical integration
D. horizontal integration

E. product diversification
Because the retail chain designs and contracts its manufacturing firm, it is an example of
vertical integration.

Difficulty: Medium
Type: Application

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11. (p. 7) Why is it advantageous for retailers to be vertically integrated?
A. It is advantageous because retailers can develop unique merchandise sold only in their
stores.
B. Retailers can expand their services easily to the Internet because they can direct orders to
the manufacturer
C. Retailers have realized that to stay competitive, they must become vertically integrated
D. Customers prefer retailers who are vertically integrated.
E. There is no advantage to being vertically integrated.

Difficulty: Hard
Type: Comprehension

12. (p. 7) A retailer that is vertically integrated:
A. concentrates on selling to businesses only
B. does not have frequent communication between buyers and managers
C. has an excellent vertical relationship between corporate and stores
D. performs more than one function in the chain from manufacturing to sales to end user
E. performs only one function to end user

Difficulty: Medium
Type: Definition

13. (p. 7) __________________ arises when a retailer performs some distribution and
manufacturing activities, such as operating warehouses or designing private-label
merchandise.
A. Globalization
B. Product-related marketing
C. Backward integration
D. Horizontal integration
E. Forward integration

Difficulty: Easy
Type: Definition

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14. (p. 7) _______________ occurs when a manufacturer undertakes retailing activities.
A. Private label business
B. Product-related marketing
C. Backward integration
D. Horizontal integration
E. Forward integration

Difficulty: Easy
Type: Definition

15. (p. 7) Retailers provide important functions that increase the value of the products and

services they sell to consumers. Which of the following does not include value function
created by a retailer?
A. Providing an assortment of products and services
B. Reducing production costs with innovative design
C. Breaking bulk
D. Holding inventory
E. Providing services

Difficulty: Easy
Type: Definition

16. (p. 8) Which of the following statements about retailers holding inventory is FALSE?
A. By having inventory held in the store, consumers can hold less merchandise at home.
B. By holding inventory, retailers can decrease the visual merchandising expenditure.
C. Holding inventory in a store helps serve the customer's needs.
D. Retailers keep inventory so products are available when consumers want them.
E. Holding inventory reduces consumer's cost of storing products.

Difficulty: Medium
Type: Comprehension

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17. (p. 8) Grocers purchase pineapples from several different tropical countries. When
pineapples arrive in the distribution centers across the United States, containers are reduced to
amounts that are appropriate for store delivery. Once delivered to the stores, associates open
the cartons and arrange the pineapples for the consumer to select. Grocers are performing
what function?

A. adaptive selling
B. breaking bulk
C. acclimating
D. distribution
E. transferring

Difficulty: Medium
Type: Comprehension

18. (p. 8) Providing assortments is an advantageous business activity because:
A. it enables the company to create a more informational and entertaining environment that
would promote more sales
B. it enables the company to reinvest for the future of the business.
C. it enables the customer to choose from a wide selection of brands, designs, sizes and prices
all in one store
D. it enables the customer to try more products
E. It enables the customer to stock up on the assortments because of bulk availability.

Difficulty: Medium
Type: Application

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19. (p. 8) One of the functions retailers undertake to increase the customer's perception of value
is providing services. Which of the following would be an example of that activity?
A. clean restrooms
B. displaying merchandise
C. having trained salespeople available to answer questions

D. well-lit parking
E. all of the above
All of these functions are provided by the retailer to make it easier for a customer to buy and
use products.

Difficulty: Easy
Type: Comprehension

20. (p. 8) A credit union holds and maintains detailed records of the banking activities of its
members. Each quarter, the credit union provides its members a printout of banking activities,
information about low rate loans and pre-owned automobiles. By contacting its members on a
regular basis, the credit union is engaging in the business function of:
A. breaking bulk
B. holding inventory
C. providing assortments
D. financing
E. providing services
Maintaining records and informing members are services.

Difficulty: Easy
Type: Application

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21. (p. 9) Retailing is one of the nation's largest industries in terms of:
A. community involvement
B. employment
C. competition

D. promotions
E. variety

Difficulty: Easy
Type: Fact

22. (p. 11) When considering the largest retailers worldwide, ___________ retailers continue to
dominate among them.
A. food
B. apparel
C. drug
D. home-improvement
E. Internet

Difficulty: Medium
Type: Comprehension

23. (p. 11) Which of the following statements about the U.S. distribution system is true?
A. Many people think the United States is understored.
B. Many U.S. retailers are large enough to have their own warehouses and have eliminated
their need for wholesalers.
C. When compared to retail density in Europe, the United States is very low.
D. The small specialty store is the fastest growing type of U.S. retailer.
E. All of the above statements about the U.S. distribution system are false.
The U.S. is probably overstored. The U.S. has the greatest retail density in the world. The
large store with over 20,000 square feet is the fastest growing type of U.S. retailer.

Difficulty: Medium
Type: Fact

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24. (p. 11) The Chinese distribution system:
A. has more people employed in distribution than the U.S.
B. is characterized by small stores with a large wholesale industry
C. is more efficient than the distribution system in the U.S.
D. is more similar to U.S. distribution systems than Europe's systems
E. none of the above

Difficulty: Medium
Type: Fact

25. (p. 11) The fastest growing retailers in the United States sell through:
A. kiosks in malls and department stores
B. large stores with over 20,000 square feet
C. outlet stores
D. small specialty stores
E. the Internet

Difficulty: Medium
Type: Fact

26. (p. 12) What factors have created differences in the distribution systems in the major
markets?
A. geography
B. market size
C. the high population density in Europe, China, and India
D. different social and political objectives

E. all of the above

Difficulty: Easy
Type: Fact

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27. (p. 12) Which of the following is NOT TRUE when explaining what created differences
within the distribution system of the major international markets?
A. China and India have many large businesses to reduce unemployment.
B. E.U. has many large retailers to achieve economy of scales.
C. E.U. countries protect small retailers.
D. China has many large retailers because it has an abundance of low-cost real estate
available for building large stores.

Difficulty: Hard
Type: Fact

28. (p. 12) Which of the following is NOT TRUE in describing distribution systems within
major international markets?
A. The U.S. distribution system has the greatest retail density and the greatest concentration
of large retail firms.
B. The Indian distribution systems are characterized by small stores operated by small firms
and a large independent wholesale industry.
C. In the Chinese distribution system, the merchandise often passes through several levels of
distribution to make the daily deliveries to the small retailers efficient.
D. Northern European retailing is similar to efficient distribution system in the U.S.
E. Southern European retailing is fragmented across all sectors.

F. All of the above is true.
G. None of the above is true.

Difficulty: Medium
Type: Comprehension

29. (p. 16) The competition between the same types of retailers is called:
A. intertype competition
B. indirect competition
C. intratype competition
D. scrambled merchandising
E. vertical integration

Difficulty: Easy
Type: Definition

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30. (p. 16) CVS, Walgreens and Rite Aid are _________ competitors.
A. indirect
B. intratype
C. intertype
D. vertical
E. horizontal
All three category killers utilize the same format

Difficulty: Medium
Type: Application

31. (p. 16) Macy's, Belk, JCPenney and Nordstrom are ___________ competitors.
A. channel
B. vertical
C. intertype
D. intratype
E. none of the above
All three department stores use the same format

Difficulty: Medium
Type: Application

32. (p. 16) Which of the following would be an intratype competitor for a Home Depot
supermarket?
A. Target
B. Lowe's
C. Kroger
D. Macy's
E. All of the above
Lowes is a home-improvement center

Difficulty: Easy
Type: Application

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33. (p. 16) What is variety?
A. Variety is the number of different items in a category.

B. Variety is the number of different SKU's within a merchandise category.
C. Variety is the number of different merchandise categories within a store.
D. Variety is another term for scrambled merchandising.
E. Variety is the number of different facets of the business plan.

Difficulty: Medium
Type: Definition

34. (p. 16) When Taco Bell opened its first restaurant, a hungry patron could order a taco, a
burrito and a Coke. In those early years, Taco Bell did not offer much:
A. assortment
B. product depth
C. quantity
D. value
E. variety

Difficulty: Medium
Type: Application

35. (p. 16) Dillards sells Godiva chocolates and coffees in their stores. By selling such products,
Dillards is:
A. offering a good merchandise mix
B. offering what the market demands
C. offering deep product assortments
D. practicing scrambled merchandising
E. practicing intratype competition

Difficulty: Medium
Type: Application

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36. (p. 16) The offering of merchandise not typically associated with the store type is called:
A. scrambled merchandising
B. intratype competition
C. product diversification
D. channel conflict
E. vertical differentiation

Difficulty: Easy
Type: Definition

37. (p. 16) While vacationing at the beach, Delia was delighted to see that the local Walgreens
carried milk, bread, apples and bananas. Her delight indicates she has never seen:
A. a deep product assortment
B. an acceptable merchandising mix
C. a retail mix
D. scrambled merchandising
E. this type of intratype competition

Difficulty: Medium
Type: Application

38. (p. 16) Scrambled merchandising increases:
A. vertical integration
B. intertype competition
C. concentric diversification
D. horizontal integration

E. intratype competition

Difficulty: Medium
Type: Comprehension

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39. (p. 16) Which of the following would be an example of intertype competition?
A. a supermarket and a fresh flower stand
B. a specialty store and a fast food restaurant
C. a supercenter and a pharmacy
D. a convenience store and a department store
E. all of the above

Difficulty: Easy
Type: Application

40. (p. 16) The Lands' End Web site, the JCPenney catalog, and the Sears area all in
____________ competition.
A. channel
B. horizontal
C. indirect
D. intertype
E. intratype
They all sell similar products, but use different formats to do so.

Difficulty: Hard
Type: Comprehension

41. (p. 16) Increasing intertype competition has made it harder for retailers to identify their:
A. competition
B. target market
C. merchandise mix
D. retail mix
E. none of the above

Difficulty: Medium
Type: Comprehension

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42. (p. 16) The intensity of competition is greatest among retailers when:
A. price dominates the retail mix
B. they are located near each other and offer similar retail offerings
C. they are located near each other and target the same customer
D. they are located far from each other and offer similar retail offerings
E. they are located far from each other and target the same customer

Difficulty: Hard
Type: Comprehension

43. (p. 16) Since convenience of location is important in store choice, a store's proximity to
competitors is a critical factor in identifying:
A. competition
B. ethical standards
C. real estate negotiations

D. the target market
E. which merchandise to scramble

Difficulty: Medium
Type: Comprehension

44. (p. 18) Once a retailer understands its environment, it needs to develop and implement a:
A. viable customer base
B. advertising plan
C. retail strategy
D. competitive strategy
E. functional strategy
The retail strategy is developed after information is gathered in a situation analysis. Although
similar in theory to a business plan, it is specific to the retailing industry.

Difficulty: Easy
Type: Application

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45. (p. 18) The retail strategy helps a retailer to identify the following EXCEPT:
A. The target market toward which the retailer will direct its efforts.
B. The nature of the merchandise and services the retailer will offer to satisfy the needs of the
target market.
C. How the retailer will build a long-term advantage over its competitors.
D. Break-even point for making profits
E. All of the above

Difficulty: Easy
Type: Application

46. (p. 18) When developing the _________________ for his new barber shop, Theo decided to
obtain a long-term competitive advantage over other salons by offering longer hours, better
prices, a well trained staff and half-price perm day every Wednesday to attract customers.
A. selling concept
B. business cycle
C. retail strategy
D. focal point orientation
E. marketing concept
A retail strategy statement identifies the target market, the merchandise and services, and how
the retailer will build a long-term advantage over its competitors. All three of these elements
are present in the question.

Difficulty: Medium
Type: Application

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47. (p. 18) As the owner of a store specializing in men's suits, Isabella can use a retail strategy
statement to identify all of the following EXCEPT:
A. the advertising campaign developed to sell last season's merchandise
B. the shop's target market
C. how the store will build a competitive advantage over Men's Warehouse
D. what services the shop will offer its customers
E. what types of suits the store will stock
A retail strategy has to do with planning for the future and not focusing on a short-term

problem.

Difficulty: Hard
Type: Application

48. (p. 20) Which of the following strategies has JCPenney changed to compete effectively with
the competition in the past?
A. JCPenney centralized merchandise management.
B. JCPenney is building new stores off the mall.
C. JCPenney is designing stores with centralized checkout.
D. JCPenney now ships merchandise through distribution centers.
E. JCPenney is upgrading its merchandise offering by adding France's cosmetics Sephora.
F. All of the above

Difficulty: Medium
Type: Comprehension

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49. (p. 21) To implement a retail strategy, a retailer must develop a _____ that satisfies the needs
of its target market better than its competitors.
A. production orientation
B. horizontal integration
C. sales orientation.
D. retail mix.
E. situation analysis
The retail mix is the combination of factors that satisfies customers' needs. The others are not
used for this purpose.

Difficulty: Easy
Type: Comprehension

50. (p. 21) Once a well-articulated retail strategy has been developed, the next step is to:
A. override the control mechanism
B. evaluate the results of the strategy
C. forecast future environmental trends
D. confirm that environmental conditions have not changed
E. implement the strategy
Once the strategy is developed, the next logical step is implementation. Nothing would get
accomplished if a retailer repeatedly went back to step 1 as in Alternatives C and D. The final
stage in the process is the evaluation of the strategy. Overriding the control mechanism would
not be a good idea in any case.

Difficulty: Hard
Type: Comprehension

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51. (p. 21) The combination of factors retailers use to satisfy customer needs and influence their
purchase decisions is called the firm's:
A. retailing conglomerate
B. retail mix
C. marketing strategy
D. target group
E. none of the above

Difficulty: Easy
Type: Definition

52. (p. 21) Which of the following is part of a retailer's retail mix?
A. advertising
B. displays
C. trained salespeople
D. services offered
E. all of the above
All of the choices are elements within the retail mix.

Difficulty: Easy
Type: Definition

53. (p. 21) Which of the following is NOT an element in the retail mix?
A. competitive response
B. merchandise assortments
C. location
D. customer service
E. advertising and promotion
The elements of the retail mix include customer service, store design and display, advertising
and promotion, location, assortments and pricing.

Difficulty: Easy
Type: Definition

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54. (p. 21) Which of the following parts of the retail mix can be utilized by a small hardware
store?
A. bright lighting in the store, which makes it easier to read the messages
B. a new ad campaign that uses both radio and newspaper media
C. store location next door to a hospital
D. attractive point-of-purchase displays at the ends of the store's aisles
E. all of the above
Store design, location, and advertising programs are all part of the retail mix.

Difficulty: Medium
Type: Application

55. (p. 23) What are the principles governing the behavior of the individual and the company?
A. ethics
B. retail strategy
C. training guidelines
D. company culture
E. Civil Rights Act of 1964

Difficulty: Easy
Type: Definition

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56. (p. 23) Belinda is a swimwear buyer for a major department store. She will allow vendors to
purchase her lunch at the local coffee shop when they visit. One October, she dined with a
new vendor to discuss a progressive line of men's swimwear that is popular in resorts
throughout the Caribbean. Belinda's goal was to assess the assortments for her company in

order to see if the product was a good fit for the company brand. During lunch, the vendor
invited Belinda for an all-expense paid weekend trip to Jamaica to see the popularity of the
merchandise. His goal was to enable her to make a more educated decision when buying.
Belinda hesitated to accept because of:
A. personal and professional ethics
B. the scheduling of the buy for the spring season
C. the price of the exclusive merchandise would not match the income level of her target
market
D. the manufacturer would be unable to develop the line in time for spring
E. her inability as a buyer to alter the visual merchandising for the store

Difficulty: Medium
Type: Application

Essay Questions
57. (p. 7) What is the retailer's role in a supply chain?
The retailer's role in the distribution channel is to link manufacturers with consumers by
directing their efforts to satisfying the needs of the ultimate consumers.

Difficulty: Medium

58. (p. 8) List the four functions performed by retailers.
The four functions performed by retailers are (1) providing an assortment of products and
services, (2) breaking bulk, (3) holding inventory, and (4) providing services.

Difficulty: Easy

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59. (p. 8) With manufacturers legally able to sell direct from the factories, why should retailers
exist?
In the retailing distribution channel, there are occasions when manufacturers sell directly to
the ultimate consumer. While occasionally doing so, manufacturers mainly exist to
manufacture products to satisfy the needs of a wholesaler or retailer. Retailers exist because
they direct their efforts and specialize in satisfying only the customer's needs. Retailers exist
because they increase the value consumers receive.

Difficulty: Medium

60. (p. 16) Distinguish between intratype competition and intertype competition. Give an
example of each.
Intratype competition refers to the competition between retailers with the same format. An
example would be the competition between Publix and BiLo for sale of fresh salmon.
Intertype competition refers to retailers that sell similar merchandise using different formats.
An example would be the sale of Revlon Color-Stay Lipstick between CVS and Target.

Difficulty: Easy

61. (p. 16) Why would a Walgreens add novelty gifts, fresh bread, pre-wrapped sandwiches and
milk to its product mix?
Walgreens is engaging in scrambled merchandising. They have added these products; and
therefore, appeal more to a broader group of customers, while providing one-stop shopping
for our time-starved society.

Difficulty: Medium

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62. (p. 16) A chef wants to open an Italian restaurant in the suburbs of a large city. How should
she identify the competition?
This question can have a variety of responses, but she could first look at the obvious and
identify other Italian restaurants near her location. Is her location the best? She should
consider frozen Italian entrees at nearby grocery stores. She should also consider the prices of
the entrees she offers and compare them to the prices of other types of restaurants.

Difficulty: Medium

63. (p. 17) Why do retailers consider customers important when developing a retail strategy?
Retailers need to understand customers and how they are changing so that they can better
satisfy their needs. Retailers need to know and understand why customers shop, how they
select stores and how they select from that store's merchandise.

Difficulty: Medium

64. (p. 18) What are the three things identified by a retail strategy statement?
(1) The target market toward which the retailer will direct its efforts, (2) the nature of the
merchandise and services the retailer will offer to satisfy the needs of the target market, and
(3) how the retailer will build a long-term advantage over its competitors.

Difficulty: Medium

65. (p. 18) Why is location strategy important for both consumers and for competitive reasons?
(1) Location is typically the most important characteristic consumers consider when selecting
a store. (2) A good location creates a long-term advantage over the competition.

Difficulty: Medium

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66. (p. 19) The success of discount stores poses a growing threat for JCPenney. To compete
effectively with these retailers, the company instituted some radical changes. Discuss four
changes the company made and how JCPenney expects the changes to better satisfy its target
market.
(1) JCPenney is reducing its distribution costs by shipping merchandise through its
distribution centers rather than using direct delivery from vendors to stores. (2) JCPenney
centralized merchandise management. Rather than having sore managers make merchandise
decisions, merchandise decisions are made by JCPenney buyers in the corporate headquarters
to save costs and respond quicker. (3) To increase customer convenience, JCPenney is
building new stores off the mall. (4) To increase convenience, the company is also installing
centralized checkout counters in each area of the store.

Difficulty: Medium

Fill in the Blank Questions
67. (p. 7) Renting a tuxedo, the purchase of a DVD on Amazon.com, buying a Ronco Veg-OMatic after watching an infomercial, and getting a facial are all examples of ________
activities--the sale of goods and services to the ultimate consumer.
retailing

Difficulty: Easy

68. (p. 7) A _____ is a business that sells products and services to ultimate consumers.
retailer

Difficulty: Easy

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What is a retailer's role in the supply chain quizlet?

Why is providing assortments an advantageous business activity?

Why is it advantageous for retailers to be vertically integrated quizlet?

How can supermarkets differentiate themselves from other food retailing formats?