Chapter 9
1) The least flexible element of a retailer's strategy mix is ________.
A) merchandise assortment
B) human resources
C) pricing
D) location
Answer: D
Diff: 1 Page Ref: 250
Skill: Terminology/Concept
2) The first step in choosing a store location is to ________.
A) determine whether to locate as an isolated store, in an unplanned business district, or in a planned shopping center
B) evaluate alternate geographic (trading areas) in terms of the characteristics of residents and existing retailers
C) select the general isolated business district or planned shopping-center location
D) analyze alternate sites contained in the specified retail location type
Answer: B
Diff: 1 Page Ref: 251
Skill: Terminology/Concept
3) A trading area can best be defined as ________.
A) those competitive stores that interchange customers
B) stores that are located in the same shopping center or district
C) a geographic area containing customers of a particular firm or group of firms for specific goods and services
D) a designation of a retail area by the U.S. Census Bureau
Answer: C
Diff: 1 Page Ref: 252
Skill: Terminology/Concept
4) A major benefit of a trading-area analysis is that it allows a retailer to determine ________.
A) the demographic and socioeconomic characteristics of consumers
B) a store's image
C) the psychographics of shoppers versus nonshoppers
D) the response of shoppers to promotional pricing
Answer: A
Diff: 2 Page Ref: 252
Skill: Terminology/Concept
5) A major benefit of a thorough trading-area analysis is that it allows a retailer to ________.
A) increase sales at branch stores with high trading-area overlap
B) better match its target market profile with a medium's circulation
C) increase the degree of trading overlap among branch units
D) better understanding of an area's lifestyles
Answer: B
Diff: 2 Page Ref: 252
Skill: Terminology/Concept
6) The determination of trading-area overlap is most important for ________.
A) regional shopping centers
B) shopping districts
C) chain retailers
D) independent retailers
Answer: C
Diff: 2 Page Ref: 253
Skill: Terminology/Concept
7) A proposed location for a supermarket chain is within three miles of a current store. What is the major factor that management should study relative to both locations?
A) the trading area of the current location
B) the trading area of the proposed location
C) the trading-area overlap of both locations
D) the demographics of the trading area of each location
Answer: C
Diff: 2 Page Ref: 253
Skill: Terminology/Concept
8) Which technique graphically depicts a trading area's characteristics?
A) geographic mapping
B) geographic information analysis
C) trading-area overlap analysis
D) semantic differential
Answer: B
Diff: 1 Page Ref: 253
Skill: Terminology/Concept
9) Digitized mapping with key locational data are combined with
A) trading area analysis.
B) trading area overlap analysis.
C) geographic information systems.
D) TIGER maps.
Answer: C
Diff: 1 Page Ref: 253
Skill: Terminology/Concept
10) Which statement concerning the U.S. Census Bureau's national digital map, TIGER, is not correct?
A) TIGER incorporates all streets and highways in the United States.
B) TIGER files are available free-of-charge.
C) TIGER maps include retail facilities and population characteristics.
D) Enhancements to TIGER are available from independent software firms.
Answer: C
Diff: 2 Page Ref: 253
Skill: Terminology/Concept
11) Between 50 and 80 percent of a store's customers come from its ________ trading area.
A) secondary
B) primary
C) fringe
D) tertiary
Answer: B
Diff: 1 Page Ref: 257
Skill: Terminology/Concept
12) The area that has the highest density of store customers to population is the ________ trading area.
A) secondary
B) primary
C) fringe
D) tertiary
Answer: B
Diff: 1 Page Ref: 257
Skill: Terminology/Concept
13) The trading area with the highest average purchase by a customer is the ________.
A) primary trading area
B) parasite trading area
C) fringe trading area
D) secondary trading area
Answer: A
Diff: 1 Page Ref: 257
Skill: Terminology/Concept
14) A retailer should concentrate the bulk of its promotional activity in its ________.
A) fringe trading area
B) secondary trading area
C) primary trading area
D) satellite trading area
Answer: C
Diff: 2 Page Ref: 257
Skill: Terminology/Concept
15) A retailer's outshoppers come from its ________.
A) fringe trading area
B) secondary trading area
C) primary trading area
D) satellite trading area
Answer: A
Diff: 2 Page Ref: 257
Skill: Terminology/Concept
16) Which trading area covers the greatest distance?
A) fringe trading area
B) secondary trading area
C) primary trading area
D) satellite trading area
Answer: A
Diff: 2 Page Ref: 257
Skill: Terminology/Concept
17) The most widely dispersed group of customers can be found in which trading area segment?
A) trading area overlap
B) primary trading area
C) secondary trading area
D) fringe trading area
Answer: D
Diff: 1 Page Ref: 257
Skill: Terminology/Concept
18) Primary, secondary, and fringe trading areas can be described on the basis of ________.
A) outshopping by consumers
B) the frequency with which people from various geographic localities shop at a particular store
C) customer store loyalty
D) the probability of large orders based upon customer residence
Answer: B
Diff: 2 Page Ref: 257
Skill: Terminology/Concept
19) A store with a wide assortment of merchandise and a strong image in a particular merchandise category is a ________ store.
A) variety
B) department
C) destination
D) parasite
Answer: C
Diff: 1 Page Ref: 257
Skill: Terminology/Concept
20) A store which does not have a real trading area of its own is a ________ store.
A) fringe
B) parasite
C) destination
D) convenience
Answer: B
Diff: 2 Page Ref: 258
Skill: Terminology/Concept
21) A newspaper stand in a hotel lobby can best be described as a ________ store.
A) fringe
B) parasite
C) destination
D) convenience
Answer: B
Diff: 2 Page Ref: 258
Skill: Terminology/Concept
22) In a regional shopping center, the store with the largest trading area is the ________ store.
A) department
B) variety
C) supermarket
D) gift
Answer: A
Diff: 1 Page Ref: 259
Skill: Terminology/Concept
23) Which computer-based system classifies and describes communities by ZIP code, as well as census tracts?
A) American Community Survey
B) Editor & Publisher Market Guide
C) Nielsen Researcher
D) Claritas Corporation's PRIZM NE
Answer: D
Diff: 1 Page Ref: 260
Skill: Terminology/Concept
24) The simplest and most popular form of computerized site selection model is ________.
A) corner influence
B) gravity
C) regression
D) analog
Answer: D
Diff: 1 Page Ref: 261
Skill: Terminology/Concept
25) The regression computer site selection model ________.
A) utilizes a series of mathematical equations
B) evaluates store distance and image
C) analyzes competition, market share, and market size
D) studies population and driving distance
Answer: A
Diff: 1 Page Ref: 261
Skill: Terminology/Concept
26) In Reilly's law of retail gravitation, the point of indifference is the ________.
A) customer's perceived similarity between two competing retailers
B) geographic breaking point area at which shoppers are indifferent to shopping at either of two cities
C) limit of a city's trading area in estimated driving time
D) limit of a city's primary trading area in driving distance
Answer: B
Diff: 1 Page Ref: 261-262
Skill: Terminology/Concept
27) The major assumptions of Reilly's law are that two competing areas are equally accessible from a major road and that ________.
A) each city has an equal population
B) each city is equally distant from shoppers at the point of indifference
C) merchants in the two cities are equally effective
D) consumers are willing to travel for lower prices
Answer: C
Diff: 1 Page Ref: 261-262
Skill: Terminology/Concept
28) Huff improved Reilly's law by adding which variable to the estimation of trading areas?
A) economic barriers
B) the effect of travel time on different kinds of shopping trips
C) median disposable income in each city
D) the existence of primary, secondary, and fringe trading areas
Answer: B
Diff: 2 Page Ref: 262
Skill: Terminology/Concept
29) A major advantage of the Census of Population for use by retailers in trading-area analysis is ________.
A) its currency
B) its five-year projections of key economic data
C) the availability of retail sales data by merchandise classification
D) the availability of information on small geographic units
Answer: D
Diff: 2 Page Ref: 266
Skill: Terminology/Concept
30) An important advantage to the use of American Community Survey data in trading-area analysis is its ________.
A) availability on the Web
B) annually updated data
C) computation of economic base characteristics
D) small size of census blocks and tracks
Answer: B
Diff: 2 Page Ref: 269
Skill: Terminology/Concept
31) An area's commercial and industrial structure is referred to as its ________.
A) lambda coefficient
B) economic base
C) trading area
D) industrial diversification base
Answer: B
Diff: 1 Page Ref: 271
Skill: Terminology/Concept
32) What type of economic base is preferred by most retailers?
A) upper-income economic base
B) service-oriented economic base
C) single-industry economic base
D) diversified economic base
Answer: D
Diff: 2 Page Ref: 271
Skill: Terminology/Concept
33) Data on an area's economic base are available from ________.
A) American Community Survey
B) Editor & Publisher Market Guide
C) Census of Population
D) Census of Retail Trade
Answer: B
Diff: 1 Page Ref: 234
Skill: Terminology/Concept
34) A retailer with a higher than average profitability is most likely to have which level of saturation?
A) overstored
B) understored
C) oversaturated
D) saturated
Answer: B
Diff: 2 Page Ref: 271
Skill: Terminology/Concept
35) An area which has the proper amount of stores to satisfy the needs of its population for a specific good or service is a(n) ________ trading area.
A) saturated
B) supersaturated
C) overstored
D) understored
Answer: A
Diff: 1 Page Ref: 271
Skill: Terminology/Concept
36) A retailer's location strategy can be made more flexible through ________.
A) sale and leaseback arrangements with financial institutions
B) ownership versus long-term leasing
C) the use of short-term leases with multiple renewal options versus a long-term lease
D) the use of a maintenance-increase-recoupment provision
Answer: C
Diff: 2 Page Ref: 251
Skill: Applied/Comprehensive/Integrative
37) Which type of customers are generally not studied in a trading-area analysis?
A) direct-selling customers
B) fringe trading area customers
C) branch customers of retail chains
D) outshoppers
Answer: A
Diff: 2 Page Ref: 252
Skill: Applied/Comprehensive/Integrative
38) A retailer with three retail stores located within a 10-mile radius wishes to advertise in a county-based daily newspaper which covers a very large geographic area. The retailer should ________.
A) use small ads to minimize waste
B) use horizontal cooperative advertising to reduce waste
C) use a regional edition to minimize waste
D) seek to reduce the trading-area overlap to minimize waste with this medium
Answer: C
Diff: 2 Page Ref: 253
Skill: Applied/Comprehensive/Integrative
39) High trading-area overlap is preferable for a retailer that seeks to ________.
A) receive high incremental sales from new store units
B) saturate a geographic area and keep out potential new retailers
C) appeal to niche markets
D) become a destination store
Answer: B
Diff: 2 Page Ref: 252, 253
Skill: Applied/Comprehensive/Integrative
40) Under what condition would it be rational for the trading areas of two branch locations to completely overlap?
A) when each store has the same target market
B) when the retailer desires cost economics in promotion
C) when a retailer pursues a mass marketing strategy
D) when the retailer decides to switch store locations due to loss of a lease on the first store location
Answer: D
Diff: 2 Page Ref: 252, 253
Skill: Applied/Comprehensive/Integrative
41) Which software products enable retailers to graphically evaluate the characteristics of alternate locations?
A) data warehousing
B) data mining
C) geographic information systems
D) geographic mapping
Answer: C
Diff: 1 Page Ref: 253
Skill: Applied/Comprehensive/Integrative
42) The most important trading area to a retailer is the ________.
A) primary trading area
B) secondary trading area
C) fringe trading area
D) parasite area overlap
Answer: A
Diff: 2 Page Ref: 257
Skill: Applied/Comprehensive/Integrative
43) A retailer's core shoppers come from which trading area?
A) secondary trading area
B) primary trading area
C) parasite trading area
D) fringe trading area
Answer: A
Diff: 2 Page Ref: 257
Skill: Applied/Comprehensive/Integrative
44) Loyal customers who shop at a store despite very long travel requirements constitute the store's ________.
A) trading-area overlap
B) primary trading area
C) secondary trading area
D) fringe trading area
Answer: D
Diff: 2 Page Ref: 257
Skill: Applied/Comprehensive/Integrative
45) A store has a disproportionately large primary, secondary, and fringe trading area. This situation can be caused by ________.
A) a high level of prices
B) its being a destination store
C) physical barriers
D) high competition in each trading area
Answer: B
Diff: 2 Page Ref: 257
Skill: Applied/Comprehensive/Integrative
46) What type of retailer has a very large primary trading area?
A) impulse retailer
B) convenience retailer
C) destination retailer
D) parasite store
Answer: C
Diff: 2 Page Ref: 257
Skill: Applied/Comprehensive/Integrative
47) Which of the following retailers is most likely to be a parasite in a major shopping center?
A) coffee shop
B) electronic repair facility
C) department store
D) clothing specialty retailer
Answer: A
Diff: 2 Page Ref: 258
Skill: Applied/Comprehensive/Integrative
48) Which statement about the trading area of a parasite store in a regional shopping center is correct?
A) A parasite store has its own unique trading area.
B) The trading area of the parasite store approximates that of the shopping center.
C) The parasite store has a larger trading area than the center's department store.
D) The parasite store is a destination store.
Answer: B
Diff: 2 Page Ref: 258
Skill: Applied/Comprehensive/Integrative
49) "A grouping of stores may actually increase the trading area for each store." This statement especially applies to ________.
A) convenience products
B) emergency products
C) impulse products
D) shopping products
Answer: D
Diff: 2 Page Ref: 259
Skill: Applied/Comprehensive/Integrative
50) A supermarket has developed a model to aid in its site selection process. The model contains variables such as trading area population in the primary trading area and expected market share. This illustrates a(n) ________ model.
A) regression
B) historical analogy
C) gravity
D) analog
Answer: D
Diff: 2 Page Ref: 261
Skill: Applied/Comprehensive/Integrative