MARK4020 - Review Quiz

Which combination best describes why retailers are “forced into existence” in many supply chains?

• Producers dislike dealing with wholesalers and therefore must use retailers as an extra layer for bargaining power.

• Specialized producers and dispersed consumers both need an intermediary that can break bulk, create assortments, and provide services neither side performs efficiently.

• Governments mandate that all products must be sold through retailers so that VAT can be collected more easily.

• Consumers do not care about convenience or assortment, but producers demand it to smooth production.

A manufacturer claims that if all producers sold directly online to consumers, society would no longer need functions like breaking bulk and assortment creation. What is the strongest critique of this claim?

• Online channels cannot securely process payments at scale, so physical retailers are still required.

• Only wholesalers would perform these functions, making retailers redundant but leaving the total number of intermediaries the same.

• Consumers would stop buying because they do not trust manufacturers, so the issue is not about functions.

• The underlying functions are still required; removing retailers does not remove the need to adapt products, quantities, and choices to household purchasing patterns and preferences.

True or False: Retailing includes selling services such as haircuts and streaming subscriptions, as long as they are for personal or household use rather than for business use.

• True

• False

True or False: If all retail intermediaries disappeared, producers and consumers would face exactly the same coordination and transaction costs as before, because digital platforms automatically replace every retail function at zero cost.

• True

• False

A convenience store under a student dorm sells small packs at higher unit prices than a distant hypermarket. Students still buy there regularly. Which statement best explains this behaviour in terms of retail functions?

• Students are unaware of the hypermarket’s existence and therefore have no meaningful choice set.

• The hypermarket does not perform breaking bulk, so it can only sell full pallets that students cannot store.

• Students trade higher prices for convenience in time and space, including extended hours and proximity for top-up and emergency purchases.

• The convenience store has many more categories and SKUs than the hypermarket, so students get a strictly superior assortment.

True or False: Wet markets and street vendors can remain competitive in emerging markets because they combine low fixed costs, local convenience, and trust-based relationships, even when modern formats enter, rather than because they always offer lower prices or larger assortments than hypermarkets.

• True

• False

A discount retailer starts out with bare-bones stores and very low prices. Over time, it upgrades stores, adds services, and raises prices. This evolution best illustrates:

• The wheel of retailing, where retailers move from low-status, low-margin formats to more upscale positions as they add services and costs.

• The retail accordion, where assortment breadth expands and contracts around a stable price image.

• Category migration, where consumers shift their purchases to different product categories as their incomes change.

• A closed-loop supply chain, where products flow back from consumers to producers for recycling.

A retailer defines its mission as “making healthy, sustainable living accessible to Vietnamese families” and chooses not to compete on the lowest possible price. Which statement best captures its strategic positioning?

• It pursues a pure low-cost strategy, since “accessible” always implies being the absolute cheapest in the market.

• It is following a diversification strategy, since any mission involving sustainability automatically means entering new industries.

• It is a wholesaler, not a retailer, because it is focusing on values rather than everyday low prices.

• It adopts a focused differentiation strategy built around health and sustainability for a clearly defined target segment, accepting that some customers may pay a modest premium.

True or False: A clear target market definition and a coherent value proposition are both central to a well-designed retail strategy, because without them operational decisions on assortment, pricing, and format easily drift in different directions.

• True

• False

A retailer attempts to serve “everyone” with all categories, all price levels, and all formats simultaneously, with no clear trade-offs. Which risk is it most likely to face?

• High brand clarity and strong competitive advantage, because a “one size fits all” positioning is always easiest for customers to understand.

• Strategic drift and a “stuck in the middle” position, where the retailer fails to offer either sharp value or distinctive experience for any particular group.

• Perfect alignment with every customer’s needs, as broader choice always guarantees higher satisfaction for all segments.

• Guaranteed cost leadership, since serving many segments automatically spreads fixed costs efficiently.