Short Answer Type Questions
Q. 1. ‘Retailer is an important link in the channel of distribution.’ Explain the services he provides to the consumer.
Ans. Services provided by the retailer to the customers are as follows:
(i) Regular availability of the goods: Retailers maintain regular availability of variety of product from different manufacturers. This helps the customers to buy the products of their choice as and when they require.
(ii) Information about the goods: By effectively displaying the goods and through personal selling efforts; retailers provide important information about the arrival of the new goods, their special features etc. thus helps them in making their purchase decision.
(iii) Convenience in buying: Firstly, retailers are situated very nearer to the residential areas and remain open for long hours. Secondly, retailers sell the goods of desired variety in small quantity according to customers requirement therefore, providing convenience to customers.
(iv) Wider choice: Retailers generally keep stock of wide variety of goods, produced by different manufacturers. This enables the customers to make their choice out of the wide variety available to select the best good.
Q. 2. Describe any four functions of retailers.
Ans. The functions of retailers are as follows:
(i) Financing: Retailers provide goods to the consumers on credit basis. This increases the level of consumption and hence the standard of living.
(ii) Supplying market information: Since the retailer is in direct contact with the consumers, he provides information regarding their tastes, preferences and attitudes, etc. to the wholesaler. This information helps them in taking important marketing decisions
(iii) Convenience in buying: Retailers provide goods to the consumers according to their requirements. Usually, they are situated near the residential areas and remain open for long hours.
(iv) Risk bearing: A retailer has to bear the risk if the change in style and fashion occurs when the goods are stored in large quantities in the warehouses.
Q. 3. Mention any three services provided by the retailer to the consumer.
Ans. The services provided by the retailer to the consumer are as follows:
(i) Convenience in buying: Retailers provide goods to the consumers according to their requirements. Normally, they are situated near the residential areas and remain open for long hours.
(ii) Wide selection: Generally, the retailers keep large varieties of products of different manufacturers. So, they offer wide selection to the consumers.
(iii) New product information: The retailers through their personal skills, efforts and effective display of products, provide information about the arrival, special features, etc. of new products to the customers. This helps the consumers in deciding the purchase of those goods.
Q. 4. If retail shops are eliminated, what difficulties do you think consumers will face?
Ans. If there is no retail shop, a consumer will face a number of difficulties which are stated below:
(i) Without a retail shop, a consumer cannot get continuous supply of commodities.
(ii) It will be difficult to have a wide choice to purchase variety of goods manufactured by various manufacturers.
(iii) A consumer will miss the personalised services and credit facilities provided by retailers.
(iv) A consumer will miss the after-sale services provided by the retail shops.
Q. 5. What are the objectives of GST?
Ans. Objectives of GST are:
(i) To eliminate the cascading impact of taxes on production and distribution cost of goods and services.
(ii) Streamlining indirect tax regime.
(iii) Growth of revenue in States and Union.
(iv) Reduction in transaction costs and unnecessary wastages.
(v) Elimination of the multiplicity of taxation.
Q. 6. Name few State and Central taxes which are included in GST.
Ans. (i) State Taxes
(a) VAT/Sales tax
(b) Entertainment Tax (unless it is levied by local bodies)
(c) Luxury Tax
(d) Taxes on lottery, betting and gambling.
(e) State cesses and surcharges in so far as they relate to supply of goods and services.
(f) Entry tax not in lieu of octroi.
(ii) Central Taxes
(a) Central Excise Duty.
(b) Additional Excise Duty.
(c) The Excise Duty levied under the medical and Toiletries Preparation Act
(d) Services Tax.
(e) Surcharges
(f) Cesses
Q. 7. Write a short note on fixed shop retailers.
Ans. (i) The retailers who have permanent establishments for carrying out business activities are known as fixed shop retailers.
(ii) They are the most common type of retailers found in market place.
(iii) They deal in consumer durable as well as non durable products.
(iv) They operate on a large scale and have greater resources.
(v) They offer various services to the customers like home delivery, repairs, credit facilities, etc.
(vi) Fixed shop retailers are generally of two types: Small retailers, Large retailers.
Q. 8. If retail shops are eliminated, what difficulties do you think consumers will face?
Ans. If there is no retail shop, a consumer will face a number of difficulties which are stated below:
(i) Without a retail shop, a consumer cannot get continuous supply of commodities.
(ii) It will be difficult to have a wide choice to purchase variety of goods manufactured by various manufacturers.
(iii) A consumer will miss the personalised services and credit facilities provided by retailers.
(iv) A consumer will miss the after-sale services provided by the retail shops.
Q. 9. “Spencers”, “Big Apple” and “Big Bazar” are examples of which type of fixed shop (large store)? Give any two merits of these types of stores.
Ans. “Spencers”, “Big Apple” and “Big Bazar” are examples of departmental stores. A departmental store is a large retail outlet offering a wide variety of products, classified into well-defined departments under one roof. The main aim of this store is to satisfy all the needs of the customers.
Merits: (i) Convenience in buying: Departmental stores, provide great convenience to customers by offering a large variety of products of their requirements at one place.
(ii) Attract large number of customers: Being centrally located, these stores are able to attract a large number of customers.
Q. 10. State the limitations of departmental stores.
Ans. The limitations of departmental stores are as follows:
(i) Lack of personal attention: Large size of the store makes it difficult to provide adequate personal attention to the customers.
(ii) High possibility of loss: Due to large-scale operations, the possibility of losses are high in these stores.
For example, in case of change in fashion, the store has to sell the out-of-fashion goods in clearance sale at heavy discounts.
(iii) High operating cost: Because of the various services offered by the store to its customers, the operating cost is high. High operating cost increases the price of the goods and hence these stores are not attractive for lower income groups.
(iv) Inconvenient location: Since these stores are centrally located, it is not convenient for the purchase of goods required immediately.
Q. 11. What are the limitations of multiple shops?
Ans. The limitations of multiple shops are as follows:
(i) Limited selection of goods: These stores sell range of goods produced in their organisations only. Thus, they offer limited choice of goods.
(ii) Lack of personal touch: Sometimes, indifferences and lack of personal touch arise in the employees due to lack of incentives.
(iii) Problems of change in demand: The management has to bear heavy losses when the demand for their goods changes rapidly. This is because a large amount of stock remains unsold at the central office.
(iv) Lack of initiative: The branch managers are required to follow the instructions received from the head office. Thus, they become habitual of seeking the guidance of head office in all matters. This kills their initiative to make use of their creative skills.
Q. 12. Enlist any four main features of chain stores.
Ans. Some of the important features of chain stores are given below:
(i) Location: These shops are located in fairly populous locality to serve the customers at a point which is nearest to their residence.
(ii) Centralised manufacturing: The manufacturing/ procurement of merchandise for all the retail units is centralised at the head office.
(iii) Supervision by Branch Manager: Each retail unit works under the supervision of branch manager who sends daily reports to the head office in relation to cash deposits, requirement of stock, etc.
(iv) Pricing policy: The prices of goods in such shops are fixed and uniform for all the units and sales are made on cash basis.
Q. 13. Departmental stores make shopping convenient, Comment.
Ans. Yes, departmental stores make shopping convenient due to following advantages:
(i) These stores are located at central places.
(ii) These stores offer a large variety of goods under one roof.
(iii) These stores provide attractive services of restrooms, etc.
Q. 14. (i) Identify the type of retail selling in which goods are supplied to the customers without the help of middlemen and without customers undertaking journey to the retailer.
(ii) Enlist any three merits of such retail business.
Ans. (i) This is mail order retailing, also known as shopping by post.
(ii) Mail order business offers following benefits:
(a) Elimination of middlemen which results in lots of savings for both buyers and sellers.
(b) It does not require heavy expenditure on building and other infrastructure. Therefore, it can be started with limited capital.
(c) Since the mail order business does not extend credit facilities to the customers, there is no risk of bad debts to them.
Q. 15. What is meant by Internal Trade?
Ans. (i) Buying and selling of goods and services within the boundaries of a nation is referred to as internal trade.
(ii) No custom duties or import duties are levied on such trade as goods are part of domestic production and are meant for domestic consumption.
(iii) Internal trade can be categorised into two broad categories:
(a) Wholesale trade
(b) Retail trade
Q. 16. Specify the characteristics of Fixed shop retailers.
Ans. Characteristics of fixed shop retailers are:
(i) They have greater resources as compared it itinerant traders.
(ii) These retailers may be dealing in different products.
(iii) They have greater credibility in the minds of customers.
Q. 17. What purpose is served by the wholesaler by providing warehousing facilities?
Ans. Wholesalers keep the goods assembled by them in their warehouses to supply them to retailers whenever they require. This service is provided by the wholesaler by providing ware-house facilities.
Q. 18. How does market information provided by the wholesalers benefit the manufacturers.
Ans. A wholesaler provides information regarding the preferences and expectations of the customers to the manufacturer. He also collects information regarding the products of the competitor price of his product, etc. Wholesalers make suggestions about the type and quality of goods required by the consumers. Such information helps the producer to regulate production according to the changing requirements of the consumers.
Q. 19. How does the wholesaler help the manufacturer in availing the economies of scale?
Ans. Economies of scale refer to benefits of operating on a large scale. Wholesalers help the manufacturers to avail the benefits of large-scale operations as wholesalers buy goods in large quantity. They buy in bulk which enables manufacturers also to produce in bulk and avail benefits of large-scale production.
Q. 20. Distinguish between single line stores and specialty stores. Can you identify such stores in your locality?
Ans. Single line stores are those stores which deal in one line of product only; for example, sweet shop, chemist shop, garment shop, Stationary shop etc. Specialty stores are those stores which deal in particular product of one line of product.
For example, sweet shops dealing in Bengali sweets only, garment shop selling jeans only. Yes, we can identify such stores in our locality.
Q. 21. How would you differentiate between street traders and street shops?
Ans. Street shops are those shops which are situated in street crossings or on the main road or on corners of colonies. Street traders are those retailers who display their articles on busy street corners, pavements, bus stands, etc.
Q. 22. What are the services offered by retailers to wholesalers and consumers?
Ans. Services of retailers :
(i) To wholesalers
(a) Help in distribution of goods
(b) Personal selling
(c) Enabling large – scale operations
(d) Collecting market information
(e) Help in promotion
(ii) To consumers
(a) Regular availability of products
(b) New products information
(c) Convenience in buying
(d) Wide – selection
(e) After – sales services
(f) Provide credit facilities.
Long Answer Type Questions
Q. 1. What are the services offered by retailers to wholesalers and consumers ? (KVS 2013)
Ans. Retailers provide important services to consumers and wholesalers as they act as middle-men between them. Services to consumers:
(i) Ready or quick supply: The most important service of a retailer to consumers is to maintain regular availability of various products so that the buyers can buy the products whenever they need.
(ii) Wide variety: Retailers generally keep stock of a variety of products and different manufacturers. This enables the consumers to make their choice out of a wide selection of goods.
(iii) Guiding customers: By arranging the effective display of products and through their personal selling efforts retailers should provide the information of products to the customers.
(iv) Demonstration and after sale services: It can be done in the form of home delivery, supply of spare parts and attending to customers.
(v) Home delivery: It is an important part of after sale services and for a buyers decision for repeat purchase of the products.
(vi) Convenient location: They are situated very near to the residential areas and remain open for long hours which makes great convenience to the customers.
Services to wholesalers and manufacturers:
(i) Ready market: Retailers deal with individuals so the manufacturers and wholesalers will not make individual sales.
(ii) Providing information: By undertaking personal selling efforts retailers relieve the producers of this activity of individual selling.
(iii) Risk bearing: Retailers participate in the promotional activities of the product so that the product becomes popular and then it is less risk for the manufacturers.
(iv) Distribution of goods to distant places: Retailers help in distribution of goods to the final consumers and thus provide place utility.
Q. 2. What are the services of the wholesalers to its retailers?
Ans. The services of wholesalers to retailers are as follows:
(i) Availability of goods: The wholesaler provides a variety of same goods to the retailer and hence relieves him from the burden of collecting the goods from several manufacturers.
(ii) Risk sharing: A retailer does not have to bother about risk of storage, reduction in price, fluctuation in demand, etc. All these risks are borne by the wholesaler.
(iii) Grant of credit: The wholesaler grants credit facility to the retailer, thus enabling him to manage his business with a small amount of working capital.
(iv) Marketing support: The wholesalers undertake advertisements and other sales promotional activities in order to induce the consumers to purchase the goods. Thus, they provide marketing support to the retailers.
(v) Specialised knowledge: The wholesalers provide useful information to the retailers about the new products, their benefits, quality, etc. They also advise the retailers regarding the decoration of their shops, allocation of shelf space and demonstration of certain products.
Q. 3. What are the functions of wholesalers?
OR
Explain the services provided by wholesalers. (NCT 2010)
Ans. Services provided by wholesalers are as follows:
(i) Buying and assembling: The wholesaler buys the product from the manufacturer and collects the same at one place and supplies goods to the retailers according to their requirement.
(ii) Storage function: The wholesaler also performs the storage function. The goods are purchased by the wholesalers from the manufacturers and stored at warehouses in order to meet the demand of retailers. The wholesalers act as bridge between the production and consumption of goods.
(iii) Breaking the bulk: The wholesaler purchases goods from manufacturers in bulk and avails discounts. He sells goods in small quantities to the retailers which saves the retailers from maintaining large stocks.
(iv) Advertisement: A wholesaler undertakes advertising and sales promotion of the product which automatically results in the increase in sales.
(v) Market information: Wholesalers inform the retailers about the introduction of new products in the market. He also gets feedback from the retailers about the needs and preferences of customers. He passes the information to the producer to make necessary changes in the products.
(vi) Risk bearing: The wholesalers have to maintain optimum levels of stock in their go downs to meet the demands of the retailer. The retailer’s risk of maintaining go downs, price fluctuations, etc., are reduced to a great level.
Q. 4. Explain the features of Goods and Services Tax (GST)
Ans. Features of the GST model are:
(i) There are two components: one levied by the Central (referred to as Central GST), and the other levied by the States (referred to as State GST), Rates for Central GST and State GST approved appropriately.
(ii) The Central GST and the State GST are applicable to all transactions of goods and services.
(iii) The Central GST and State GST are to be paid to the accounts of the Centre and the States individually.
(iv) Since the Central GST and the State GST are treated individually, taxes paid against the Central GST are allowed to be taken as input tax credit (ITC) for the Central GST and can be utilized only against the payment of Central GST.
(v) Cross utilization of ITC between the Central GST and the State GST is not permitted except in the case of inter-State supply of goods and services.
(vi) The taxpayer needs to submit periodical returns, in common format, to both the Central GST authority and to the concerned State GST authorities.
Q. 5. Explain the benefits of Goods and Services Tax (GST)
Ans. Benefits of GST are:
(i) GST provides comprehensive and wider coverage of input credit set-off, you can use service tax credit for the payment of tax on sale of goods etc.
(ii) Many indirect taxes in state and central level have been included in GST. You need to pay a single GST instead of all.
(iii) Uniformity of tax rates across the states.
(iv) Ensure better compliance as aggregate tax rate reduces.
(v) By reducing the tax burden, the competitiveness of Indian products in international market has increased and thereby development of the nation.
(vi) Prices of goods are expected to reduce in the long run as the benefits of less tax burden would be passed on to the consumer.
