MKT 394 Exam 2 (Chapter5-7) JSU

For terms of purchase or lease, retailers should review:

Length of lease, exclusivity clause, guaranteed traffic rate, and anchor clause

Groups of stores closely located and share similar characteristics

Retail clusters

2 similar retail businesses located next to each other

Store compatibility

Good neighboring businesses:

Are compatible with the retailers line of trad, help generate additional businesses for each other, and store compatibility

What law? Inherent power of the government to seize private property without the owners consent in to benefit the community

Eminent domain law

Extent to which retailers are concentrated in different areas of the market in question

Supply density

Retailers need to identify the major variables influencing their potential demand, which can be examined by:

The types of customers who already shop in the retailers present stores

Extent to which the potential demand for the retailers goods and services is concentrated in certain areas

Demand density

Factors pertaining to size of trading areas:

Stores that sell products that consumers want in the most inconvenient way will have smaller areas, as consumer mobility increases the trading area increases, and as the size of the store increases it's trading area increases because of stock

An evaluation of the density of demand and supply within each market with the. goal of identifying the best retail sites

Site analysis

Strength of retail competition will be greater when the community has:

Recently experienced rapid growth in numbers of stores

Indicates whether the community tends to have large or small scale retailing

Square feet per store

Major components of market demand potential are:

Population characteristics, buyer behavior characteristics, household income, and household age profile

Ratio of demand for product divided by available supply

Index of retail saturation (IRS)

IRS= (H x RE) / RF

H= # of households in area

RE= annual retail expediters for particular line of trade

RF= square footage

Where the number of stores in relation to household is so large that to engage in retailing is usually unprofitable or marginally profitable

Overstored

The number of stores in relation to households is relatively low so that engaging in retailing is an attractive economic endeavor

Understored

There are just enough store facilities for a given type of store to efficiently and satisfactorily serve the population and yield a fair profit to the owners

Retail store saturation

Examines how the demand for goods and services of a potential trading area is being served by current retail establishments in comparison with other potential markets

Saturation Theory

Algebraic expression of the new formulation of Reily's law

Dab= d over 1 + square root of Pb over Pa

The breaking point between 2 cities where customers are indifferent to shopping in either city

Point of indifference

What theory? Based on newtonian gravitational principles, explains how large urbanized areas attract customers from smaller rural communities

Reily's law of retail gravitation

What theory? There are underlying consistencies in shopping behavior that yield to mathematical analysis and prediction based on the notion or concept of gravity

Retail gravity theory

Geographic area from which a retailer, or group of retailers, or community draws its customers

Trading area

Uses of geographic information systems

Market selection, site analysis, trade area definition, new store cannibalization, and advertising managment

Uses visual techniques to display cultural characteristics of the physical space

Thematic maps

Buffer that people have created between themselves and the raw physical environment

Culture

Computerized system that combines physical geographic with cultural geography

Geographic information system (GIS)

What act prohibits unfair and deceptive acts and practices regardless of whether competition is injured?

Wheeler-Lea Amendment to the FTC (1938)

What act establishes the Federal Trade Commission, a body of specialists with broad powers to investigate and to issue cease-and-desist orders to enforce section 5, which declares that "unfair methods of competition in commerce are unlawful"?

Federal Trade Commission, 1914

What act adds to the Sherman act by prohibiting specific practices whereas the effect may be substantially lessen competition or tend to create a monopoly in any line of commerce?

Clayton Act, 1914

What act makes it a federal crime to defraud consumers through use of the mail ?

Mail fraud act, 1872

What act requires large companies to notify the government of their intent to merge?

Hart-Scott-Rodino Act, 1976

What act amends section 7 of the Clayton Act by broadening the power to prevent corporate acquisitions where the acquisition may have a substantially adverse effect on competition?

Celler-Kefauver Antimerger Act, 1950

Which act requires lenders to state the true cost of credit transaction and established a National Commission on Consumer Finance?

Truth in Lending Act, 1968

Which act prevents the marketing and selling of harmful toys and dangerous products?

Child Safety Act, 1966

Which act regulates packaging and labeling and establishes uniform sizes?

Fair Packaging and Labeling Act, 1966

Which act requires auto manufactures to past suggested retail prices on new cars?

Automobile Information Disclosure Act, 1958

Which act prohibits interstate shipments of flammable apparel or material?

Flammable Fabrics Act, 1953

Which act regulates interstate commerce in misbranded and adulterated foods, drinks, and drugs?

Pure Food and drug Act, 1906

______ locates along major traffic arteries and does not have any adjacent retailers to share traffic.

Freestanding retailer

Disadvantages of shopping centers:

Inflexible store hours

High rents

Restrictions as to what merchandise or services the retailer may sell

Inflexible operations and required membership in the centers merchant organization

Advantages of shopping centers:

Heavy traffic resulting from the wide range of product offerings

Cooperative planning and sharing of common cost

Access to highways and available parking

Lower crime rate

Stores in a shopping center that are the most dominant and are expected to draw customers to the shopping center are _____.

Anchor stores

______ is a centrally owned/managed shopping district that is planned, has balanced tenancy, and is surrounded by parking facilities.

Shopping center/mall

_____ is a shopping area that evolves to satisfy the convenience-oriented shopping needs of a neighborhood; generally contains several small stores and is located on a major artery of a residential area.

Neighborhood business district (NBD)

_____ is a shopping area that is smaller than CBD and that revolves around at least on department or variety store at a major street intersection.

Secondary Business District (SBD)

______ is an unplanned shopping area around the geographic point where all public transportation systems coverage; it is usually in the center of the city and often where the city originated historically.

Central Business District (CBD)

Criteria to successfully reach a target market:

Seek a measurable market segment

Accessibility

Segment should be substantial or large enough to be profitable for the retailer

Groups of consumers that the retailer is seeking to serve is _____.

Target market

Consumers ability to easily and quickly find a retailers website is _____.

Ease of access

Collection of all the pages of info on the retailers internet site is ______.

Virtual store

Introductory material on a retailers internet site; equivalent to a retailers storefront in the physical is _______.

Home page

Target market can be reached by _________ and _________.

Store based location in which the consumer travels to the store

Non-store retailing format in which products and services are offered at a more accessible location

When Retailers charge suppliers when merchandise does not sell at what the vendor intended, it is _____.

Markdown money

____ is offering an inducement to the retailer for purchasing vendor's products.

Bribery

_____ is fee's paid by a vendor for space or a slot on a retailers shelves and having its UPC number given a slot in the retailers computer system.

Slotting fees (slotting allowances)

Requiring suppliers to engage in sustainable business practices is _____.

Sustainability

_____ is when retailers inspect suppliers to make sure they are not buying illegal merchandise from unsavory characters.

Sourcing

____ is testing products to check if they adhere to stricter ethical and environmental standards that go beyond existing government regulations.

Product quality

Retail decisions that involve ethical considerations:

Buying merchandise

Selling merchandise

Retailer-employee relationships

_____ is unwritten but well understood standards of moral responsibility.

Implicit code of ethics

____ is a written policy that states what is ethical and unethical behavior

Explicit code of ethics

____ is a set of rules for human and moral behavior.

Ethics

Federal laws retailers must be aware of:

Trade agreements regulating import and export

Laws that deal with minimum wages and hiring practices

A seller with a strong product or service requires a buyer to purchase. weak product or service as a condition for buying the strong product/service; not viewed as a violation; viewed as illegal if a substantial share of commerce is affected is _____-

Trying agreement

When a supplier offers the retailer exclusive distribution of a merchandise line/product in a particular trade area; retailer agrees to return the manufactures favor is _____.

Two-way exclusive dealing agreement

When a retailer has exclusive right to merchandise that supplies product in a particular trade area it is _____.

One-way exclusive dealing arrangement

When a manufacturer sells to an independent retailers and also through its own retail outlets; adversely affects the manufacture retailer relationships _____.

Dual distribution

____ limits the geographic area in which a retailer may resell its merchandise; lessens the competition between retailers; violation of Sherman Antitrust Act

Territorial Restrictions

____ implies that the merchandise is fit for a particular purpose and arises when the customer relies on the retailer to assist or make the selection of goods to serve a particular purpose.

Implied warranty of fitness

Made by every retailer when the retailer sells goods and implies that the merchandise sold is fit for the ordinary purpose for which such goods are typically used.

Implied warranty of merchantability

_____ is written or verbalized agreements about the performance of a product and that can cover all attributes of the merchandise or only 1 attribute.

Expressed warranties

____ is when a seller must attempt to foresee how a product may be misused and warn the consumer against the same.

Foreseeability doctrine

____ deals with the sellers responsibility to market safe products.

Product liability laws

What are the illegal practices for deceptive sales?

Failing to be honest or omitting key facts in either an ad or a sales presentation

Using deceptive credit contracts

Forbidden practices in deceptive advertising include:

Refusing to show, demonstrate, or sell the product offered

Disparaging, by word or deed, the advertised product

Failing to have sufficient quantities of the advertised product at all outlets listed in the ad

____ is advertising or promoting a product at unrealistically low price to serve as "bait" and then trying to "switch" the customer to a higher priced product.

Bait and switch advertising

Requirements to challenge ant claim contained in advertising include:

The FTC must prove that the challenged claim is contained in the ad

The claim must be deceptive

The deceptive claim must be material

Promotion decisions are constrained by the:

Federal Trade Commission Act and Wheeler-Lea Amendment of the FTC Act

What are some justifications for some types of price discrimination?

Cost justification defense, changing market conditions defense, and meeting competition in good faith defense

_____ is when a retail chain charges different prices in different geographical areas to eliminate competition in selected geographical areas

Predatory pricing

_____ is a misleading price that is used to lure customers into the store and then hidden charges are added or the item advertised may be unavailable.

Deceptive pricing

_____ is when two retailers buy an identical amount of "like grade and quality" merchandise from the same supplier but pay different prices.

Price discrimination

____ is when a retailer collaborates with the manufacturer or wholesaler to resell an item at an agreed on price.

Vertical price fixing (resell price maintenance/fair trade)

A group of competing retailers who establish a fixed price at which to sell certain brands of products is _____.

Horizontal price fixing

What act prohibits arbitrary rate increases and use of misleading credit terms and establishes more protection to consumers use of gift cards?

Credit Card Act, 2009

What act simnifically enhances the ability of the Consumer Product Safety Commission to monitor, track, and recall unsafe products with special attention to products such as toys for children?

Consumer product Safety Improvement Act, 2008

What act prohibits discrimination in credit transactions because of gender, marital status, race, national origin, religion, age, or receipt of public assistance?

Equal Credit Opportunity Act, 1975

What act empowers the FTC to determine rules concerning consumers warranties and provides for consumer access to mens of redress, such as "class action", and expands FTC regulatory powers over unfair or deceptive acts or practices?

Magnuson-Moss Warranty/ FTC Improvement Act, 1975

What act created the Consumer Product Safety Commission?

Consumer Product Safety Act, 1972

What act regulates the reporting and use of credit information and limits consumer liability for stolen credit card to $50?

Fair Credit Report Act, 1970

What act amends the Clayton Act, adds the phrase "to injure, destroy, or prevent competition". Defines price discrimination as unlawful and provides FTC with the rights to establish limits on quantity discounts, to forbid brokerage allowances except to independent brokers, and to ban promotional allowances or the furnishings of services/facilities except when made available to all "on proportionally equal terms"?

Robinson-Patman Act, 1936

What act establishes protection for trademarks?

Lanham Act, 1946

What law bans monopolies or attempts to monopolize and contracts, combinations, or conspiracies in restraint of trade in interstate and foreign commerce?

Sherman Act, 1890

___ is a set of institutions that move goods from the point of production to that of consumption.

Supply chain/ channel

Broadened view incorporates:

Materials that go into manufacturing the good and the process use to dispose

The supply chain is affected by 5 external forces:

Consumer behavior, competitor behavior, socioeconomic environment, technological environment, and legal ethical environment

The supply chain must perform 8 marketing functions:

Buying, selling, storing, transporting, sorting, financing, information gathering, and risk taking

___ is breaking down heterogeneous products into homogeneous.

Sorting

The entities that are involved in moving physical inventory from the source to the retail store is _____.

Logistics network