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business
retailing management
Retailing 7th Edition Patrick M. Dunne, Robert F. Lusch , James R. Carver - Solutions
5. Some discounters not only have a ‘‘no layaway’’ policy but also will only accept cash. They don’t accept checks or credit and debit cards. Will this hinder these stores in the marketplace? Because of the slowing economy and the high fees banks charge on the cards, as well as bad
4. A major discounter was recently quoted as saying that he ‘‘no longer worries about dwell time. After all, low price is the only factor that drives sales.’’ Do you agree or disagree with this statement? What is your reasoning?
3. Should online customers expect the same type of service that bricks-andmortar customers get from retailers selling similar merchandise? Explain the reasoning behind your answer.
2. Should the level of service offered by a retailer be directly proportional to the gross margin obtained from the sale of the merchandise? In other words, the more profitable the item, the greater the service level that should be extended. Explain the reasoning behind your answer.
1. Your store manager just told you that since profits have been falling over the past year, he has recommended to the owners that they could increase profits by cutting back further on customer services. After all, customers don’t really expect service anymore. Agree or disagree with this
6. Understand the importance of a customer service audit.
5. Describe the retail selling process.
4. Describe the various management problems involved in retail selling, salesperson selection, and training and evaluation.
3. Explain how a retailer should determine which services to offer.
2. Describe the various customer services that a retailer can offer.
1. Explain why customer service is so important in retailing.
3. Since the press was copied on Ms. Stiles’ letter, should the mall copy them on its reply?
2. Does a retailer’s imposition of hard and fast rules cause bad PR? (After all, a breast cancer victim wearing a bandanna could hardly be mistaken for a gang member. The lack of hair, missing eyelashes, and a general pale complexion should have been a clue.)
1. If you were the marketing director for a retailer and received such a letter, would you have replied the same way as Ms. Barnes?
13. What can retail managers do to prevent bad publicity about their stores from circulating on the Internet?
12. What is publicity? Isn’t this always free to the retailer? How does publicity fit into a retailer’s promotional efforts?
11. What is sales promotion? How is it different from advertising?
10. How should a small-town retailer use the Internet?
9. From the creative standpoint, it is said that a retail ad should accomplish three goals. What are these goals, and is one of these more important than the others?
8. An old proverb claims, ‘‘Doing advertising without planning is like running a giant manure spreader; your advertising department throws words out the back faster than you can shovel money in the front.’’ Do you agree or disagree with this statement? Explain your reasoning.
7. Some retailers decline a vendor’s offer of cooperative advertising; is this smart? After all, aren’t they passing up ‘‘free’’ money?
6. Describe the three methods available to the retailer for determining the amount to spend on advertising. Which one is the best one to use? Which one is most commonly used by small retailers?
5. Why don’t retailers list ‘‘increasing sales’’ as their number-one advertising objective?
4. What do you think is the most important short-term objective for a retailer: increase patronage from existing customers or attracting new customers? Explain the reasoning behind your answer.
3. Explain how a long-term promotional objective can affect the firm over the short run.
2. Why are the desired promotional outcomes for other members of a retailer’s supply chain different from the retailer’s promotional goals? Isn’t the marketing supply chain supposed to be a partnership?
1. What features should a retailer promote in its ads for national branded products? Are these the same features that should be promoted by the retailer for its private-label products?
4. Explain how retailers manage their sales promotion and publicity.
3. List the six steps involved in developing a retailer’s advertising campaign.
2. Describe the differences between a retailer’s long-term and shortterm promotional objectives.
1. Name the four basic components of the retailer’s promotional mix and discuss their relationship with other decisions.
4. What is the real issue here?
3. If a customer can go to a supermarket and purchase a combination bag of apples and oranges at a lower price than the oranges alone, throw away all the apples, and not be penalized, how can an airline explain this pricing policy?
2. Should the airlines do anything to passengers who ‘‘jump ship?’’
1. Is the current airline pricing an example of variable or flexible pricing? Why did you choose your answer?
22. A buyer submits the following plans to his general merchandise manager:planned sales ¼ $135,000; planned initial markup ¼ 40 percent; planned reductions ¼ $41,000. Based on these projections, what is the planned maintained markup percentage?
21. The buyer for men’s shirts has a price point of $45 and requires a markup of 45 percent. What would be the highest price he should pay for a shirt to sell at this price point?
20. The buyer for the women’s sweater department has purchased wool sweaters for $35.69. She uses an odd pricing policy and wants to sell them at a 49-percent markup on selling price. At what price should each sweater be sold?
19. Which markdown policy would be best for sporting goods? Explain your reasoning. Would your answer be the same for a specialty apparel store?
18. Somebody once said, ‘‘Buyers only need to take a markdown when they make mistakes. Therefore, good buyers should never have to take markdowns.’’ Do you agree with that statement? Explain your answer.
17. Why should a retailer plan on taking markdowns during a merchandising season?
16. Intimate Apparel wants to produce a 9-percent operating profit this year on sales of $1,200,000. Based on past experiences, the owner made the following estimates:Net alteration expenses $1,100 Employee discount $5,400 Markdowns 61,000 Operating expenses 275,000 Stock shortages 12,200 Cash
15. Can an initial markup ever be equal to the maintained markup? Explain.
14. Which is more important to a retailer—initial or maintained markup?
13. If the markup on cost is 76 percent, what is the markup on selling price?
12. A buyer tells you that she realized a markup of $50 on an interview suit for a college senior. You know that her markup is 25 percent of retail. What did the suit cost her?
11. Complete the following:Dress Shirt Sport Shirt Belt Selling price ($) 40.00 49.99 15.00 Cost ($) 23.00 25.35 6.50 Markup in dollars ($)Markup percentage on cost (%)Markup percentage on selling price (%)
10. Compute the markup on selling price for an item that retails for $49.95 and costs $31.20.
9. In the United States, a loss leader is generally accepted as legal. Yet in other countries such a policy is illegal. What should it be?
8. What type of retailer is most likely to use leader pricing?
7. Would you prefer to buy a car from a dealer using a flexible or a one-price policy? Why?
6. Despite the lack of supportive research, odd-numbered pricing is still used in retailing today. Shouldn’t gas stations drop those 0.9 cents from their posted prices and round them to the nearest penny?
5. What is the difference between variable and flexible pricing? Does the demand for the item being sold affect either of these strategies?
4. If a retailer wants to use an above-market pricing policy, how should that retailer’s retailing mix be different from the competition?
3. When should a retailer use the penetration pricing objective?
2. Is pricing really an interactive decision? Provide an example of how pricing should interact with the services offered by the retailer.
1. How does a store’s location affect the price it can charge?
4. Discuss why markdown management is so important in retailing and describe some of the errors that cause markdowns.
3. Describe how retailers calculate the various markups.
2. Describe the differences between the various pricing strategies available to the retailer.
1. Discuss the factors a retailer should consider when establishing pricing objectives and policies.
4. One solution to RFID-assisted hijacking could be to shield trucks and cargo containers so the tags do not transmit signals. Do you believe the cost of shielding every single truck and container in the world is worth the threat? If not, which ones should be shielded, if any? Or is there a better
3. How could retailers stop competitors or others from using RFID readers to know the sales volume of every item in the store?
2. Would displaying privacy statements about RFID on the walls of retail stores decrease or increase how much customers perceived risk?
1. What do you think would happen if retailers simply removed the RFID tags at checkout to try to decrease consumer privacy concerns? (Hint: Think about customer returns to the retailer that have to be sent back to the manufacturer or the retailer’s return processing warehouse as one of several
26. Where should retailers draw the line when it comes to prosecuting shoplifting? Should customers who eat grapes ‘‘to test them’’ be prosecuted?
25. Should a retailer’s right to security take precedent over an employee’s and a customer’s right to privacy when the retailer sets up an electronic monitoring system in its stores to curb losses from theft?
24. What is the worst type of shrinkage—employee theft or customer theft?What is your reasoning?
23. How can manufacturers stop retailers from diverting their brand-name goods to discounters?
22. How can cumulative-quantity discounts be considered to be anticompetitive?
21. A retailer purchases goods that have a list price of $7,500. The manufacturer allows a trade discount of 40-25-10 and a cash discount of 2/10, net 30. If the retailer takes both discounts, how much is paid to the vendor?
20. If a vendor ships you $1,000 worth of merchandise on April 27 with terms of 3/20, net 30 EOM, how much should you pay the vendor on June 8?
19. Why should a new buyer look over the previous buyer’s confidential vendor analysis before going to market?
18. What do you think is the most important criterion in selecting a vendor?Why?
17. How long does a merchandise-line review normally take?
16. What happens to items that are not going to be discontinued?
15. Who is involved a merchandise-line review?
14. If a shirt came in five sizes, four colors, and three styles, what possible considerations must be given prior to determining how many item numbers should be created?
13. What does item cross-reference mean?
12. Manufacturers of so-called third-tier brands argue that they are being squeezed out of many stores by the major brands. Do you agree with that statement? Why?
11. To the extent that the merchandise mix can actually shape customers’ wants and impact whether and what customers purchase, what level of ethical responsibility does the retailer have toward the customer?
10. How can merchandise lines have too much breadth yet not enough depth?
9. What are the major constraints in designing the optimal merchandise mix?
8. A buyer is going to market and needs to compute the open-to-buy. The relevant data are as follows: planned stock at end of March, $319,999 (at retail prices); planned March sales, $149,999; current stock on hand (March 1), $274,000; merchandise on order for delivery, $17,000; planned reductions,
7. What does the term open-to-buy mean? How can it be used to control merchandise investments?
6. What problems can occur to buyers open-to-buy if they misjudge planned sales?
5. The Corner Hardware Store is attempting to develop a merchandise budget for the next 12 months. To assist in this process, the following data have been developed. The target inventory turnover is 4.8, and forecast sales are Month Forecast Sales 1 $27,000 2 26,000 3 20,000 4 34,000 5 41,000 6
4. If your annual inventory-turnover rate is four times, which inventory stock level method would you use and why?
3. How do replenishment orders affect the merchandise dollar planner and open-to-buy calculation?
2. What must happen after a buyer agrees to purchase a product yet before a purchase order can be created?
1. How often do most retailers renegotiate vendor contracts?
8. Does this product complement the rest of my inventory?
7. What is my expected turnover rate with this product?
6. Can this product stand on its own or is it merely a ‘‘me-too’’ item?
5. Will I be able to obtain reliable, speedy stock replacement?
4. What is my anticipated gross margin for this product?
3. What is the estimated demand for this product in my target market?
2. Will I have an exclusive with this product, or will I be in competition with nearby retailers?
1. Where does this product fit into the strategic position that I have staked out for my department?
7. Discuss the various methods of handling the merchandise once it is received in the store so as to control shrinkage, including vendor collusion, and theft.
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