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Unformatted text preview: . Factory outlets are owned and
operated by manufacturers and carry only their own line of merchandise. Outlets are used to sell
surplus goods, factory seconds, return merchandise, and closeouts. Most manufacturers place
these outlets in locations that do not conflict with their normal retailer. Manufacturers with
factory outlets include Liz Claiborne, J. Crew, Calvin Klein, West Point Pepperel, Oneida, and
KEY: CB&E Model Distribution OBJ: 15-3 TOP: AACSB MSC: BLOOMS Synthesis 7. Retailing opportunities can take place without customers shopping at a store. Name and briefly
discuss four forms of nonstore retailing.
AUTOMATIC VENDING. Vending machines for items such as soft drinks, snacks, and coffee
are an important form of nonstore retailing. Vending is the most pervasive retail business in the
United States, with about 11.5 million vending machines selling billions of dollars worth of goods
annually. Consumers are willing to pay higher prices for products from a vending machine than
for the same products in a traditional retail setting.
DIRECT RETAILING. This form of nonstore retailing is characterized by sales transactions in a
home setting. This includes door-to-door selling and party plan selling. Direct retailers are also
using the Internet as a channel to reach more customers and increase sales.
DIRECT MARKETING. In this case, consumers buy from their homes. Direct marketing
(sometimes called direct response marketing) refers to a variety of techniques such as
telemarketing, direct mail, and catalogs and mail order.
ELECTRONIC RETAILING. This form of nonstore retailing includes the 24-hour, shop-at-home
television networks and online retailing, which is also called e-tailing. The best-known television
networks are HSN and QVC.
KEY: CB&E Model Distribution OBJ: 15-4 TOP: AACSB MSC: BLOOMS Synthesis 8. Define franchising and discuss its two basic forms. Give an example of each form.
A franchise is a continuing relationship in which a franchisor grants operating rights to a
franchisee. The franchisor originates the trade name, product, and methods of operation, and
grants franchisees the right to operate and sell the product or service in return for revenue. Two
basic forms of franchising are product and trade name franchising and business format
In product and trade name franchising, a dealer agrees to sell certain products provided by a
manufacturer or wholesaler. A Michelin tire dealership and a Coca-Cola bottler are examples. In
business format franchising, the franchisor “sells” a franchisee the right to use the franchisor’s
approach to doing business. Fast-food restaurants such as McDonald’s and Wendy’s are examples
of this type of franchising. PTS: 1
KEY: CB&E Model Distribution OBJ: 15-5 TOP: AACSB MSC: BLOOMS Synthesis 9. What is the first task of developing a retail strategy? What is involve...
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- Fall '13