BUSI 330 quiz 4 solutions complete answers

BUSI 330 quiz 4 solutions complete answers 

 

The goals to be achieved by a firm's marketing strategy determine whether its supply chain needs to be more ________ in meeting customer requirements.

 

For logistics, the customer service concept suggests that firms should

 

Which of the following is an example of communication between buyer and supplier?

 

Allowances, like discounts, are

 

Using a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors is referred to as

 

Marketers using a dynamic price policy should take care to avoid

 

The three main benefits packaging provides to manufacturers, retailers, and consumers include which of the following?

 

A ________ at Justin’s is responsible for a category such as nut butters or butter cups. He or she develops all elements of that brand, from the promotional strategy, to everyday pricing, to working with the sales team.

 

A retailer is

 

All of the following are demand factors except which?

 

Price fixing is

 

All of the following statements about price are true except which?

 

All of the following are true about a skimming pricing strategy when used during the introduction stage of the product life cycle except which?

 

Three pricing objectives relate to a firm's profit. In one known as ________, a company gives up immediate profit in exchange for achieving a higher market share in the hopes of penetrating competitive markets.

 

Price discrimination is

 

All of the following are true about product line extensions except which?

 

Vertical marketing systems are

 

To handle products in the decline stage of the product life cycle, companies often use either a ________ strategy or a ________ strategy.

 

Question 1 Which of the following products would have a low­learning product life cycle curve?

Question 2 Many nonprofit organizations use PSAs in their media planning. What does the acronym "PSA" stand for?

Question 3 Brand personality refers to __________.

Question 4 During the __________ stage of the product life cycle, product proliferation occurs to help differentiate a company's brand from competitors.

Question 5 Seiko makes watches. It markets its higher quality watches under the Seiko or LaSalle brand name, and its lower­priced watches are sold under the Pulsar brand. Seiko uses a __________ strategy.

Question 6 Commuters in New York often have often installed radio frequency identification (RFID) devices on their cars that can be read automatically as they approach a toll booth. This saves time, improves traffic flow, and means drivers don't need to keep exact change in their cars. It also offers New York authorities the opportunity to manage traffic flow by charging different toll amounts for different times of day, such as charging a higher toll for "rush hour" periods during the morning and afternoon commutes. Commuters in New York are experiencing

Question 7 Since Gatorade Thirst Quencher was concocted in 1965, its marketers have introduced Gatorade Frost in 1997, Gatorade Fierce in 1999, the Gatorade Performance Series in 2001, Gatorade Rain in 2006, and the Gatorade G Series in 2011, to name a few. These introductions are examples of __________.

Question 8 Bayer Aspirin is sold in the original strength, in a safety­coated version, in an extra­strength version, and in a version designed especially for women. Bayer is using __________.

Question 9 Consider the PLC photos above. Which stage of the product life cycle (PLC) is the Apple iPad tablet device?

Question 10 In the seven Ps of services marketing, the term "process" involves not only "what" gets created but also

Question 11 A box of Cascade dishwasher detergent shrink­wrapped with a bottle of Jet Dry for 10 cents more than the regular price of the dishwasher detergent is an example of __________ pricing.

Question 12 SHAPE magazine is targeted at young women seeking healthier lifestyles. At a price of $3.00 per copy, 1.25 million copies are sold. If the price per issue is increased to $3.25, only 1 million copies would be sold. Fixed costs are $1 million and unit variable costs are $0.50 per magazine. From the information provided here, what is SHAPE magazine's total revenue obtained at the lower $3.00 price?

Question 13 The manufacturer of a new kind of fat­free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product. Which of the following conditions would argue AGAINST using a penetration pricing strategy for the tasty dessert treat?

Question 14 Figure 11­3B Which of the following statements most likely would account for the shift in the demand curve from D1 to D2shown in Figure 11­3B above?

Question 15 A manufacturing company that introduces a product must know or anticipate what specific price its __________ currently charge or may charge in the future.

Question 16 A firm's profit equation demonstrates that profit equals __________.

Question 17 Price Premium Marketing Dashboard As the brand manager for Red Bull, what would you conclude from the information provided in the Price Premium Marketing Dashboard above?

Question 18 All of the following statements about standard markup pricing are true EXCEPT:

Question 19 An ad campaign by Suave shampoo asked television viewers to identify the heads of hair of women who used Suave shampoo and conditioner and those that used the much more expensive salon hair­care products. The idea of the ad was that no one could tell which woman used the much cheaper Suave brand. By making price its selling point, Suave is most likely using __________.

Question 20 Setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors is referred to as __________.

Question 21 In the automobile industry, many companies use a __________, whereby a manufacturer licenses dealers to sell its cars subject to various sales and service conditions.

Question 22 A __________ can be compared to a pipeline through which water flows—making possible the flow of products from a producer, through intermediaries, to a buyer.

Question 23 Marketing channels help create value for consumers through four utilities. These utilities are

Question 24 In an episode of the Glee television series, members of the glee club sold home­baked cupcakes at school to raise money. The students selling their cupcakes without any intermediary would be an example of a(n)

Question 25 For which of the following products would their respective manufacturers be most likely to use exclusive distribution?

Question 26 Cross­docking is most closely related to __________.

Question 27 A large company produces paint and other home decorating products. Its goal is to choose the best marketing channel arrangement that would give it the most control over supply sources. Which marketing channel system should this company choose?

Question 28 The three major types of vertical marketing systems are administered, corporate, and __________.

Question 29 The importance of time, dependability, communication, and convenience are all important concepts of __________, within the context of the supply chain.

Question 30 Which of the following best describes the goal for a firm's inventory and transportation costs?

 

Question 1

Reducing the package content without changing package size while maintaining or increasing the package price is referred to as __________.

Question 2

A brand name that cannot be spoken is referred to as a __________.

Question 3

Product modification refers to a marketing strategy that __________.

Question 4

Mott's applesauce promotes itself as a low‑fat alternative to cooking oil for baked goods. Mott's is __________.

Question 5

Promotional expenditures at the introduction stage of the product life cycle are best spent on __________.

Question 6

The four steps in the sequential process of building the brand equity pyramid include: (1) developing positive brand awareness; (2) establishing a brand's meaning in the minds of consumers; (3) __________; and (4) creating a consumer‑brand connection.

Question 7

Gatorade is MOST LIKELY in which stage of its product life cycle?

Question 8

Tylenol successfully used __________ with the introduction of Tylenol Arthritis, Tylenol Sinus and Allergy, Tylenol Cold and Flu, and Tylenol Pain and Sleeplessness.

Question 9

A manufacturer can successfully use mixed branding because __________.

Question 10

Which of the following is an example of a product in the maturity stage of the product life cycle?

Question 11

Rather than emphasize demand, cost, or profit factors, a price setter can stress what __________ is (are) doing.

Question 12

Which of the following is a profit‑oriented approach to pricing?

Question 13

Setting an annual target of a specific dollar volume of profit is referred to as __________.

Question 14

 

Price Premium Marketing Dashboard

The Price Premium Marketing Dashboard above shows the dollar and unit market shares for selected energy drinks. What is the price premium for Monster in 2009?

Question 15

Demand factors refer to

Question 16

All of the following are demand factors EXCEPT:

Question 17

A target return profit objective implies that a company chooses to

Question 18

The four types of discounts are

Question 19

The owner of a take‑out fried chicken and biscuits restaurant pays each month $2,500 in rent, $500 in utilities, $750 loan interest, $200 insurance premium, and $250 on local bus advertising. A bucket of chicken is priced at $9.50. Variable costs for the bucket are $5.50. How many buckets of chicken does the restaurant need to sell to break‑even each month?

Question 20

Allowances, like discounts, refer to

Question 21

Schwan's Sales Enterprises of Marshall, Minnesota, markets a full line of frozen foods in 49 states and parts of Canada using door‑to‑door salespeople who sell from its refrigerated trucks. This particular method of distribution is referred to as a(n)

Question 22

Amazon uses supply chain and logistics management to

Question 23

While Maytag appliances have the leading brand name, its sales are third in the industry. One of the things the company has done to spur sales is to create a website where potential customers can find the answers to the questions they ask during the appliance purchase process. Although Maytag considered using a __________ strategy by directing customers to Maytag appliance stores it owns, the firm decided against it and simply provides the names and addresses of all the retailers (Sears, Home Depot, etc.) that carry Maytag appliances.

Question 24

Rather than compete with large greeting card companies for shelf space in supermarkets, several smaller card companies place their cards in pack‑and‑ship stores where the customer can mail a card on the spur of the moment, and in carwashes where customers are waiting and appreciate having something amusing to read. This would be an example of which type of marketing channel strategy?

Question 25

Which of the following statements regarding supply chains is most accurate?

Question 26

Which statement regarding responsive supply chains is most accurate?

Question 27

Bombardier is the leading marketer of corporate jets. Its brand name is well known and respected in the corporate jet market. The aircraft company relies on outside suppliers for design support and to share development costs and market risks, but Bombardier is considered the leader in determining design and marketing of its planes. For its newest plane, Bombardier has about 30 prime suppliers—about 10 of those have been involved since the initial design phase. Bombardier is an example of a __________.

Question 28

A commonly used indirect channel moves product from producer to retailer to consumer. This channel is used when 

Question 29

Most Apple retail stores have a Genius Bar staffed with highly trained personnel that can help customers with their purchases of iPads, iPhones, and other Apple products and services. Which buying requirement is Apple satisfying with its Genius Bar?

Question 30

The word flow as it relates to the definition of logistics management refers to decisions needed to move

 

Which of the following statements about Gatorade is true? 

            a.    Michael Jordan has been a Gatorade spokesperson. 

            b.    International opportunities were vigorously pursued. 

            c.    Distribution of Gatorade expanded first to include convenience stores and supermarkets. 

            d.    The original Gatorade was a liquid with a lemon-lime flavor. 

            e.    All of the above statements about Gatorade are true. 

 Which of the following statements about Gatorade is true? 

            a.    Gatorade began as a rehydration beverage for a football team. 

            b.    Gatorade has plans to expand to the Latin American market before the end of this decade. 

            c.    Gatorade was first only available through catalogs or mail order. 

            d.    The Federal Trade Commission protects the Gatorade brand name from becoming generic. 

            e.    All of the above statements about Gatorade are true. 

 A concept that describes the stages a new product goes through in the marketplace—introduction, growth, maturity, and decline— is called:  

            a.    the retail life cycle. 

            b.    the product life cycle. 

            c.    the marketing mix. 

            d.    the product growth cycle. 

            e.    product commercialization. 

 The stage of the product life cycle when a product is first introduced to its intended target market is called the __________ stage. 

            a.    growth 

            b.    commercialization 

            c.    launch 

            d.    introduction 

            e.    awareness-trial 

 Lack of profit in the introductory stage of the product life cycle is very often the result of:  

            a.    insufficient allocation of resources to the marketing mix. 

            b.    poor selection of distribution channels. 

            c.    high taxes. 

            d.    large investment costs in product development. 

            e.    ineffective execution of the marketing program. 

 The marketing objective for a product in the __________ stage of the product life cycle is to promote consumer awareness and gain trial. 

            a.    introduction 

            b.    growth 

            c.    maturity 

            d.    decline 

            e.    product repositioning 

 A few years ago Who Wants to Be a Millionaire premiered as the first nighttime game show in a couple of decades.  The marketing for the show was intent on making television viewers aware of its existence and excited enough about the show that we would watch the first episode.  Which of the following statements about televised game shows is true? 

            a.    Who Wants to Be a Millionaire was in the introduction stage of the product life cycle of televised nighttime game shows when it premiered. 

            b.    Because television has been around for many years, all programs fall naturally into the maturity stage. 

            c.    Televised programs are either in the introduction stage or the growth stage and are discontinued when they move into the maturity stage. 

            d.    All televised programming uses a three-stage product life cycle--growth, maturity, and decline. 

            e.    The product life cycle is totally inapplicable to any television genre. 

 A product in the introduction stage of the product life cycle should have which of the following marketing objectives? 

            a.    to gain awareness and stimulate trial 

            b.    to stress differentiation 

            c.    to maintain brand loyalty 

            d.    to gain as much distribution as possible 

            e.    to reveal a marketing niche 

 One of the newest types of television shows is the category called reality shows.  According to the product life cycle, what was the objective of the marketers of these reality shows when they were in the introduction stage of the product life cycle? 

            a.    to gain awareness and stimulate trial 

            b.    to stress differentiation 

            c.    to maintain brand loyalty 

            d.    to gain as much distribution as possible 

            e.    to reveal a marketing niche 

 Gillette spent $35 million in advertising to introduce the Sensor razor to consumers. Such expenditures are often made to stimulate __________, or desire for the product class, rather than for a specific brand, when there are no competitors with the same product. 

            a.    additional marketing research 

            b.    innovative sampling 

            c.    primary demand 

            d.    initial data gathering 

            e.    repeat purchase 

 Scientists have discovered a new medical treatment but before they can market it, physicians and patients must be aware of its existence.  In other words, its manufacturer must create __________ demand. 

            a.    selective 

            b.    primary 

            c.    derived 

            d.    generic 

            e.    secondary 

 During the introduction stage of the product life cycle, promotional expenditures are made to stimulate consumer desire for an entire product class rather than for a specific brand.  The consumer desire that is stimulated is referred to as __________ demand. 

            a.    selective 

            b.    primary 

            c.    derived 

            d.    generic 

            e.    secondary 

 The popular "Got Milk" advertising campaign was sponsored by the National Milk Board to encourage more people to drink milk.  This ad campaign stimulated __________ demand. 

            a.    selective 

            b.    primary 

            c.    derived 

            d.    generic 

            e.    secondary 

 Promotional expenditures at the introduction stage of the product life cycle are spent on:  

            a.    contests and sweepstakes. 

            b.    creating selective demand. 

            c.    creating primary demand. 

            d.    personal endorsements. 

            e.    maintaining brand loyalty. 

 During the growth stage of the product life cycle, promotional expenditures are made to stimulate consumer desire for a specific brand due to increased competition.  The consumer desire that is stimulated is referred to as __________ demand. 

            a.    selective 

            b.    primary 

            c.    derived 

            d.    generic 

            e.    secondary 

 As competitors introduce their own products, and the product progresses along its life cycle, company attention is focused on creating __________ demand, or demand for a specific brand. 

            a.    selective 

            b.    primary 

            c.    derived 

            d.    generic 

            e.    secondary 

 For years when most consumers thought of cranberries, they thought of the Ocean Spray brand.  Then Northland cranberry juice came on the market claiming that it was superior to the Ocean Spray brand.  Northland was creating __________ demand for its cranberry products. 

            a.    selective 

            b.    primary 

            c.    derived 

            d.    generic 

            e.    secondary 

 During the introduction stage of the product life cycle, the place element of the marketing mix is highly involved with:  

            a.    reducing inventory costs. 

            b.    gaining distribution outlets. 

            c.    guaranteeing there is adequate demand if a skimming pricing strategy is used. 

            d.    building storage warehouses and distribution centers. 

            e.    using an intermodal logistics system. 

 The music industry has changed dramatically over the years.  In the 1970s, consumers purchased 8-track tapes.  In the 1980s, cassette tapes caused the decline of 8-track tapes.  In fact, today consumers would experience difficulty in purchasing a new artist on 8-track tape.  Now in the 2000s, compact discs have become very popular and are being purchased by music lovers of every age and background.  As sales of compact discs continue to grow at an increasing rate, sales of cassette tapes are weakening, the profits are declining, and the product may face a fate similar to that of 8-track tapes.  Based upon this information, you can correctly conclude cassette tapes are in the __________stage, and compact discs are in the __________ stage of the product life cycle:  

            a.    decline; growth 

            b.    decline; introduction 

            c.    maturity; growth 

            d.    decline; maturity 

            e.    maturity; introduction 

 During the introduction stage of the product life cycle, __________ may be used used.  This pricing strategy charges a high price to recoup the costs of product development. 

            a.    penetration pricing 

            b.    cost-plus pricing 

            c.    ROI pricing. 

            d.    market-oriented pricing 

            e.    skimming pricing 

 INGenius ATG introduced the microware oven-sized battery recycler in 1999.  It was intended for the business market.  Companies could buy the recycler and use it to restore alkaline batteries that are not normally recharged.  The recycling does not let a battery live forever; but it does give it a charge of about 80 percent of the energy it originally had.  Depending on the size of the battery, the recycler can hold up to 96 batteries.  It takes 13 hours to recharge any battery.  The recycler was introduced at $3,000.  When you consider that the R & D to develop this product was quite high, you should suspect that INGenius ATG was using a __________ strategy. 

            a.    penetration pricing 

            b.    cost-plus pricing 

            c.    ROI pricing. 

            d.    market-oriented pricing 

            e.    skimming pricing 

 A company follows a skimming strategy as part of introducing a new product to:  

            a.    help recover costs of development and to capitalize on the price insensitivity of early buyers. 

            b.    capitalize on the price sensitivity of early buyers and to postpone breakeven. 

            c.    discourage competitors and build unit volume. 

            d.    move the product into the maturity stage once primary demand has been created. 

            e.    do all of the above. 

 When Texas Instruments (TI) introduced its pocket calculator in the early 1970s, it was a tremendous product innovation, and TI set the mail order price at $495.  What is the name of the pricing strategy Texas Instruments used? 

            a.    rip off 

            b.    chiseling 

            c.    opportunistic 

            d.    skimming 

            e.    caveat emptor 

 During the introduction stage of the product life cycle, the strategy that discourages competitive entry by charging a low price is referred to as:  

            a.    penetration pricing. 

            b.    cost-plus pricing. 

            c.    ROI pricing. 

            d.    market-oriented pricing. 

            e.    skimming pricing. 

 Consumers who are frequently on the Internet more than likely use either Netscape Explorer or Netscape as their Web browser.  There is another option called Opera, which is faster and highly customizable, a feature that neither Internet Explorer nor Netscape have.  For example, it can be set to suppress all pop-up ads and there are several mouse-controlled shortcuts available.  Opera was initially offered on the market for $29 and this included tech support.  It was hoped that this low price would build the volume of Opera users quickly.  Opera used a __________ strategy. 

            a.    penetration pricing 

            b.    cost-plus pricing 

            c.    ROI pricing 

            d.    market-oriented pricing 

            e.    skimming pricing 

 To discourage competitive entry, a company can price its new product low, using penetration pricing.  This pricing strategy also helps to:  

            a.    reduce costs. 

            b.    increase profits. 

            c.    build customer loyalty. 

            d.    improve product quality. 

            e.    build unit volume. 

 Which of the following statements about the introduction stage of the product life cycle is true? 

            a.    During the introduction stage, efforts are made to increase primary demand. 

            b.    During the introduction stage, firms may choose a skimming pricing strategy. 

            c.    During the introduction stage, firms may choose a penetration pricing strategy. 

            d.    Generally the promotional message is to inform and educate the consumer. 

            e.    All of the above statements about the introduction stage of the product life cycle are true. 

 Opera.com introduced a new Web browser that can be easily customized to do what you want it to do—such as suppress all pop-up ads and retrieve previously visited websites quickly.  Opera is spending a lot of money to make potential consumers aware of the existence of a Web browser that can be customized.  Sales have been slow to rise over the past year, and profit has yet to be achieved.  In what stage of the product life cycle is this product category? 

            a.    growth stage 

            b.    decline stage 

            c.    commercialization stage 

            d.    maturity stage 

            e.    introduction stage 

 Technology that allows consumers to access information on the Internet from a cell phone is in the introductory stage of its product life cycle.  The industry is composed of several small firms with state-of-the-art products that are neither standardized nor compatible with one another.  Moreover, these small firms have limited marketing expertise and little money to spend on marketing; their common strength is engineering.  This industry has welcomed the entry of a giant in the mobile phone industry like Nokia because:  

            a.    the small companies could leapfrog beyond Nokia's products. 

            b.    Nokia's entry would help segment the market, establishing targets for the smaller firms. 

            c.    Nokia set standards and is generating primary demand. 

            d.    Nokia could solve the remaining technological problems. 

            e.    Nokia could acquire the small, struggling firms. 

 Imagine that Eveready has developed solar rechargeable batteries that cost only slightly more to produce than regular batteries (less than the rechargeable batteries currently available) and can be recharged by sunlight up to 5 times, after which they are meant to be discarded. Unfortunately, the production process cannot be patented, and competitors could arrive within a few months.  Eveready's marketing efforts should include all the following EXCEPT:  

            a.    skimming pricing. 

            b.    widespread distribution. 

            c.    high production capacity. 

            d.    advertising aimed at brand name awareness. 

            e.    introductory promotions to encourage trial. 

 A few years ago Who Wants to Be a Millionaire premiered as the first nighttime game show in a couple of decades.  Once the show became a hit and televised several nights a week, other networks quickly created their own version of what they hoped to be a successful game show format.  Greed and Twenty-One are the names of but two of the new shows that were created to compete with Who Wants to Be a Millionaire.  At this point in time the nighttime televised game show entered which stage of its product life cycle? 

            a.    growth stage 

            b.    decline stage 

            c.    commercialization stage 

            d.    maturity stage 

            e.    introduction stage 

 Which stage in the product life cycle is characterized by a rapid increase in sales and the appearance of competitors? 

            a.    introduction 

            b.    growth 

            c.    maturity 

            d.    decline 

            e.    profit 

 At which stage in the product life cycle do industry profits usually peak? 

            a.    introduction 

            b.    growth 

            c.    maturity 

            d.    decline 

            e.    commercialization 

 Which of the following is a characteristic of the growth stage of the product life cycle? 

            a.    advertising emphasis switches to primary demand 

            b.    growing proportion of initial purchasers to repeat purchasers 

            c.    slow, steady sales 

            d.    competitors appear 

            e.    pricing is more aggressive 

 A technology company has just begun to make a profit on its DVD-R discs (DVD discs in a recordable format).  Its promotional expenditures are aimed at trying to persuade potential customers of the merits of its DVD-R discs.  Even more money is being spent to develop the firm's distribution system for its DVD-R discs.  Since Apple's iMac now comes with a DVD recorder as a standard part, several other companies have started producing DVD-R discs for the market.  What stage of the product life cycle is the DVD-R in? 

            a.    commercialization stage 

            b.    maturity stage 

            c.    growth stage 

            d.    decline stage 

            e.    introduction stage 

 Which stage in the product life cycle is characterized by a slowing of industry sales? 

            a.    introduction 

            b.    growth 

            c.    maturity 

            d.    decline 

            e.    comparability 

 During the maturity stage of the product life cycle, profit declines because:  

            a.    there are fewer and fewer competitors in the market. 

            b.    better products are only in the growth stage. 

            c.    production costs increase the more a firm has to manufacture the same product. 

            d.    there is fierce price competition among sellers. 

            e.    all of the above. 

 The marketing objective of a firm whose product is in the maturity stage of the product life cycle is to:  

            a.    actively search out new first time users. 

            b.    maintain existing buyers since new ones are hard to find. 

            c.    actively reinforce competitors' marketing efforts. 

            d.    maintain existing distributors and actively seek out new ones. 

            e.    shift to a skimming price strategy. 

 Promotional expenses at the maturity stage of the product life cycle are often directed towards:  

            a.    creating demand for the product class. 

            b.    reminding the consumer to use the product. 

            c.    creating primary demand. 

            d.    gaining new distributors. 

            e.    eliminating distribution channels. 

 Which of the following statements is a characteristic of the maturity stage of the product life cycle? 

            a.    Often this stage is entered because of environmental or technological factors. 

            b.    During this stage companies attempt to eliminate distribution channels. 

            c.    Industry sales revenue peaks, which is one stage after industry profit peaks. 

            d.    Industry profits peak because production and distribution costs are declining. 

            e.    Industry profit peaks, which is one stage after industry sales revenue peaks. 

 The videocassette recorder (VCR) was introduced to the market in the late 1970s.  Ninety-one percent of American homes own at least one VCR.  To maintain market share in the VCR market and to get customers to purchase additional VCRs, its manufacturers have continually provided for higher-quality recording capabilities and made the machines easier to watch and with different features that allowed for quicker location of recorded programs.  Because the goal of VCR manufacturers is to maintain brand loyalty and market share, the product category is in the __________ stage of its product life cycle. 

            a.    introduction 

            b.    growth 

            c.    maturity 

            d.    decline 

            e.    harvesting 

 Hershey's chocolate bars have been marketed in the United States for more than 100 years, and are still a tremendous success, with a loyal following of consumers.  The company began advertising several years ago to hold its market share, and it has introduced several distinctive new products.  What stage of the product life cycle are Hershey's chocolate bars competing in? 

            a.    development 

            b.    introduction 

            c.    growth 

            d.    maturity 

            e.    decline 

 Sales and profits both exhibit a steady downward trend throughout which stage of the product life cycle? 

            a.    introduction 

            b.    growth 

            c.    maturity 

            d.    decay 

            e.    decline 

 All products are assumed to have a complete product life cycle.  Which of the following is NOT a reason why products ultimately decline? 

            a.    poor marketing 

            b.    emergence of superior competitive products 

            c.    all consumers' wants and needs inevitably change 

            d.    non-marketing failures of firms 

            e.    all the above are reasons for decline 

 All of the following occur during the decline stage of the product life cycle EXCEPT:  

            a.    sales decrease substantially. 

            b.    the firm chooses the wrong marketing strategy, which results in an inappropriate marketing program for the target market. 

            c.    the uncontrollable environment changes. 

            d.    promotional support for the product becomes minimal. 

            e.    the number of competitors is reduced. 

 In the 1960s, television westerns were extremely popular.  The shows were adventure shows with settings and costumes that were very unlike what really existed.  There was Bonanza, Wagon Train, The Virginian, Laramie, etc.  When viewers gradually stopped watching this category of programs, production companies found the networks no longer wanted to televise such shows.  The television western as a product category entered the __________ stage. 

            a.    decay 

            b.    decommercialization 

            c.    decline 

            d.    maturity 

            e.    harvested 

 To handle products in the decline stage of the product life cycle, companies often use either:  

            a.    diversification or harvesting. 

            b.    harvesting or contracting. 

            c.    deletion or harvesting. 

            d.    diversification or harvesting. 

            e.    building or contracting. 

 Three years ago Pokémon was the hottest name in toys, but as other more high-tech toys appeared on the market, the popularity of Pokémon waned as did its sales.  Some toy experts predict Pokémon will soon be only a memory for toy retailers.  Pokémon is in the __________ stage of its product life cycle. 

            a.    decay 

            b.    decommercialization 

            c.    decline 

            d.    maturity 

            e.    harvested 

 Your product has been suffering from steadily eroding sales and profits.  You have tried a number of options to revitalize the product's sales and profits, but after seven changes in your strategy, you have yet to find success.  Which of the following actions would be the LEAST appropriate next step? 

            a.    Delete the product from the line. 

            b.    Retain the product, but reduce its support costs. 

            c.    Stimulate primary demand. 

            d.    Contract the production of the product. 

            e.    Contract the marketing of the product. 

 During the 1990s, there was a backlash against artificial colors in food and other consumer products.  As a result, a lot of companies issued products that were clear.  One example was Crystal Pepsi.  The product never really found a market and was __________, or dropped from the Pepsi product line soon after its introduction. 

            a.    diversified 

            b.    aggregated 

            c.    segmented 

            d.    deleted 

            e.    harvested 

 In the 1960s, television westerns were extremely popular.  The shows were adventure shows with settings and costumes that were very unlike what really existed.  There was Bonanza, Wagon Train, The Virginian, Laramie, etc.  When viewers gradually stopped watching this category of programs, production companies found the networks no longer wanted to televise such shows.  The production companies used a __________ strategy and stopped production on all television westerns when the networks stopped showing them. 

            a.    diversifying 

            b.    aggregation 

            c.    segmentation 

            d.    deletion 

            e.    harvesting 

 A strategy of dropping a product from the product line, usually in the decline stage of the product life cycle, is called:  

            a.    diversifying. 

            b.    aggregation. 

            c.    segmentation. 

            d.    deletion. 

            e.    harvesting. 

 __________ occurs when a company retains a product but reduces marketing support costs. 

            a.    Skimming 

            b.    Harvesting 

            c.    Profiting 

            d.    Deletion 

            e.    Divesting 

 When a product reaches the decline stage of the product life cycle, a firm has two choices.  One choice involves product deletion, where a product is dropped from a firm's product line.  Another less drastic choice is to retain the product in the product line, but to reduce marketing costs.  When this option called __________ is selected, advertising expenditures for the product are reduced and salespeople do not devote their efforts to selling the product. 

            a.    decline maintenance 

            b.    customer need maintenance 

            c.    divestment 

            d.    maturity re-development 

            e.    harvesting 

 A strategy of harvesting may be employed in the decline stage of a product’s life to:  

            a.    maintain primary demand for a product category. 

            b.    get as many new customers as possible. 

            c.    maintain the ability to meet customers' requests. 

            d.    eliminate production and distribution costs. 

            e.    reposition the product. 

 The growth of e-mail has:  

            a.    led to a significant increase in the amount of faxing because communication is easier. 

            b.    led to a significant decrease in the amount of faxing. 

            c.    not affected faxing. 

            d.    led to a significant increase in the amount of faxing because people don't trust just e-mail and want a hard copy fax. 

            e.    discouraged all forms of written communication. 

 Generally, the average length of time it takes for a product category to move from the introduction stage of its product life cycle to the decline stage is:  

            a.    18 months. 

            b.    5-10 years. 

            c.    20 years. 

            d.    30 years. 

            e.    unpredictable. 

 There is no exact time that a product takes to move through its life cycle.  As a rule:  

            a.    fad products have the longest lifecycle. 

            b.    consumer products have shorter life cycles than business products. 

            c.    packaged goods have a shorter life cycle than fads. 

            d.    installations have a shorter life cycle than consumer products. 

            e.    intangibility shortens the product life cycle. 

 Which of the following is a NOT a type of product life cycle? 

            a.    revolutionary

            b.    low learning 

            c.    fashion 

            d.    high learning 

            e.    fad 

 An extended introduction stage of the product life cycle occurs for which type of product? 

            a.    high learning 

            b.    low learning 

            c.    fashion 

            d.    fad 

            e.    revolutionary 

 Interactive television with video on-demand capabilities will change how people watch television and how consumers access the Internet.  What type of a product life cycle would be associated with this product? 

            a.    revolutionary

            b.    high learning 

            c.    low learning 

            d.    fashion 

            e.    fad 

 An alternative product life cycle that results from products that are easily imitated by competitors, consumers who readily understand their benefits, and for which the appropriate marketing strategy is to gain strong distributor outlets is characteristic of __________ products. 

            a.    high learning 

            b.    low learning 

            c.    fashion 

            d.    fad 

            e.    substitute 

 Imagine Eveready has developed solar rechargeable batteries that cost only slightly more to produce than regular batteries (less than the rechargeable batteries currently available) and can be recharged by sunlight up to 5 times, after which they are meant to be discarded.  Unfortunately, the production process cannot be patented, and competitors could arrive within a few months.  Which of the following is the best description of the product life cycle of this product? 

            a.    rapid growth followed by rapid decline 

            b.    long, level beginning, and rapid ascent 

            c.    moderately slow introduction, followed by modest growth, gradually leveling off 

            d.    high introductory sales, with rapid decline 

            e.    high initial sales followed by slow decline 

 Products that are introduced, decline, and then seem to return are characteristic of the __________ type of product life cycle. 

            a.    high learning 

            b.    low learning 

            c.    fashion 

            d.    fad 

            e.    revolutionary

 Which of the following products is the best example of a product that might experience an introduction, a decline, and a reintroduction as part of its normal product life cycle? 

            a.    cat food 

            b.    veterinarian services 

            c.    cake mixes 

            d.    fishnet hose 

            e.    paperclips 

 Which type of product has experiences rapid sales on introduction and then an equally rapid decline of the product life cycle? 

            a.    high learning products 

            b.    low learning products 

            c.    fashion products 

            d.    fad products 

            e.    abnormal products 

 Some singers sing a great song that shoots to the top of the chart.  The singers go on tour and have sold-out concerts everywhere they appear.  Just as quickly (particularly if they are unable to follow their first hit song with a second one), they are singing to half-filled concerts and then to smaller clubs, and eventually no one wants to hear them perform.  Such one-hit singers are most likely categorized as __________ products. 

            a.    high learning 

            b.    low learning 

            c.    fashion 

            d.    fad 

            e.    revolutionary

 With diffusion of innovation,  

            a.    once a product enters the market, very similar products will enter within a very short period of time. 

            b.    one new product will produce ancillary product invention (e.g., video cassettes created a market for cassette holders). 

            c.    not all consumers accept a new product at the same time because adoption of a product spreads slowly throughout the population. 

            d.    product changes by one competitor lead to similar product changes by another competitor. 

            e.    unique efforts are made to create primary demand. 

 The life cycle of a product depends on sales to customers.  The shapes of life-cycle curves indicate that most sales occur after the product has been on the market for some time.  The concept that some people are attracted to a product early while others buy it only after they see their friends with the product is called the:  

            a.    dissociation of sensibility. 

            b.    timed profiling. 

            c.    categories of adopters. 

            d.    diffusion of innovation. 

            e.    derivation of markets. 

 All of the following are categories of consumers based on when they purchase a new product, the information sources they use, and their risk-taking orientation EXCEPT:  

            a.    initiators. 

            b.    early adopters. 

            c.    early majority. 

            d.    late majority. 

            e.    laggards. 

 The largest numbers of product adopters with respect to the diffusion of innovation are found among:  

            a.    early adopters and laggards. 

            b.    early majority and late majority. 

            c.    late majority laggards. 

            d.    innovators and early majority. 

            e.    innovators and early adopters. 

 As product adopters, innovators typically:  

            a.    fear debt and use neighbors and friends as information sources. 

            b.    are skeptical and have below average social status. 

            c.    act with deliberation and use many informal social contacts. 

            d.    are leaders in social standing and have slightly above average education when compared to the other adopter classes. 

            e.    are venturesome, better educated than other product adopters, and use multiple information sources. 

 As product adopters, early adopters typically:  

            a.    fear debt and use neighbors and friends as information sources. 

            b.    are skeptical and have below average social status. 

            c.    act with deliberation and use many informal social contacts. 

            d.    are leaders in social standing and have slightly above average education when compared to the other adopter classes. 

            e.    are venturesome, better educated than other product adopters, and use multiple information.

 As product adopters, members of the early majority typically:  

            a.    fear debt and use neighbors and friends as information sources. 

            b.    are skeptical and have below average social status. 

            c.    act with deliberation and use many informal social contacts. 

            d.    are leaders in social standing and have slightly above average education when compared to the other adopter classes. 

            e.    are venturesome, better educated than other product adopters, and use multiple information. 

 As product adopters, members of the late majority typically:  

            a.    fear debt and use neighbors and friends as information sources. 

            b.    are skeptical and have below average social status. 

            c.    act with deliberation and use many informal social contacts. 

            d.    are leaders in social standing and have slightly above average education when compared to the other adopter classes. 

            e.    are venturesome, better educated than other product adopters, and use multiple information.

 As product adopters, laggards typically:  

            a.    fear debt and use neighbors and friends as information sources. 

            b.    are skeptical and have below average social status. 

            c.    act with deliberation and use many informal social contacts. 

            d.    are leaders in social standing and have slightly above average education when compared to the other adopter classes. 

            e.    are venturesome, better educated than other product adopters, and use multiple information.

 When the personal computer was first introduced, industry analysts predicted that very few would be sold.  However, a short time after the product was made available, consumers who were young, highly educated, adventuresome, and who were well informed began buying personal computers.  While those buyers were relatively few in number, the marketers of computers were encouraged because other, less adventuresome consumers would likely adopt personal computers later.  According to the product adoption classification, those first buyers of personal computers were:  

            a.    early adopters. 

            b.    early majority. 

            c.    innovators. 

            d.    product leaders. 

            e.    diffusion leaders. 

 Imagine Post Cereal introduces a cereal bar just like the ones Kellogg's and Quaker already have on the market.  Post has decided to promote the bars using ads without coupons and to price the bars at about the same price as the other brands.  Post Cereal bars will also be distributed to the same stores as the Kellogg's and Quaker products.  Which of the following barriers to new product adoption will most likely prevent the Post Cereal bars from being a successful product? 

            a.    value barrier 

            b.    psychological barrier 

            c.    economic barrier 

            d.    usage barrier 

            e.    social barrier 

 A new exercise video contends that with one day of fasting and one one-hour period of intense cardiovascular exercise, the average individual can lose five pounds a week and be in peak health within six months of starting the program.  __________ barriers will doom the new product to failure because the product's claims are not consistent with what consumers do and how they think. 

            a.    Psychological 

            b.    Physical

            c.    Risk 

            d.    Value 

            e.    Usage 

 When McDonald’s began doing business in India, it had to change the meat in some of its meals from beef, considered sacred by many in India, to lamb and other meats.  __________ barriers would have doomed McDonald’s in India had they not changed their recipes because many Indian consumers would have refused to eat sandwiches made from an animal they consider to be sacred.

            a.    Psychological 

            b.    Physical

            c.    Risk 

            d.    Value 

            e.    Usage 

 Even an experienced and well trained hiker would not think of crossing Death Valley, where temperatures easily top 120 degrees, without plenty of water as part of their supplies.  __________ barriers would doom any hiking trip across that area without the assurance that plenty of water would be available for the hiker.

            a.    Psychological 

            b.    Physical

            c.    Risk 

            d.    Value 

            e.    Usage 

 Why would the manufacturer of a new all-natural-ingredient shampoo and conditioner put free samples of the product in Sunday newspapers? 

            a.    to simulate laggard usage of the product 

            b.    to encourage product adoption 

            c.    to control innovation diffusion 

            d.    to avoid any possibility of litigation 

            e.    to circumvent the typical adoption cycle 

 __________ is a strategy that involves altering a product's characteristic such as its quality, performance, or appearance to try to increase and extend the product’s sales. 

            a.    Market modification 

            b.    Product modification 

            c.    Product repositioning 

            d.    Market-product strategy 

            e.    Diversification 

 Twenty years ago, the Mississippi Gulf Coast was a nice place to vacation with a white sandy beach, golfing opportunities, resort hotels, and good seafood restaurants.  With the addition of casinos, the Gulf Coast improved its odds of being a tourist destination for more travelers.  This is an example of:  

            a.    a market-product strategy. 

            b.    diversification. 

            c.    market modification. 

            d.    product modification. 

            e.    harvesting. 

 Alka-Seltzer was made originally as a hangover remedy that cured the headache and settled the stomach.  Today, you can purchase Original Alka-Seltzer, Extra Strength Alka-Seltzer, Alka-Seltzer Morning Relief (for morning headaches and fatigue), and Alka-Seltzer Heartburn Relief.  To extend the product's sales to new markets, the makers of Alka-Seltzer have used:  

            a.    a market-product strategy. 

            b.    diversification. 

            c.    market modification. 

            d.    product modification. 

            e.    harvesting. 

 DiGiorno rising crust pizza has been available in the freezer sections of supermarkets for quite awhile.  The product's recent introduction of a DiGiorno cheese stuffed crust is an example of __________ and should attract new buyers. 

            a.    a market-product strategy. 

            b.    diversification. 

            c.    market modification. 

            d.    product modification. 

            e.    harvesting. 

 ___________ is a strategy used when a company tries to find new customers, increase a product’s use among existing customers, or create new use situations.

            a.    Market modification 

            b.    Product modification 

            c.    Product repositioning 

            d.    Market-product strategy 

            e.    Diversification 

 When Coca-Cola promoted Coke as a morning beverage when you didn't want coffee, it was using:  

            a.    product modification. 

            b.    repositioning the product. 

            c.    market modification. 

            d.    market-product extension. 

            e.    diversification. 

 Tums, which has long been used for reducing heartburn, is now being promoted as a source of calcium for the prevention of osteoporosis.  Its manufacturer is using which of the following market modification strategies? 

            a.    finding new users 

            b.    creating new use situations 

            c.    increasing use by existing customers 

            d.    modifying the product characteristics 

            e.    doing none of the above 

 Finding new uses for an existing product has been a major strategy in extending the life of Arm & Hammer Baking Soda.  The product (unchanged from its original formula) is now being promoted as a dentifrice; a deodorizer for cat litter, carpeting, and refrigerators; and a fire extinguisher. Arm & Hammer is:  

            a.    finding new users through a product modification strategy. 

            b.    creating new use situations through a market modification strategy. 

            c.    increasing use by existing customers through a product modification strategy. 

            d.    modifying the product characteristics. 

            e.    demarketing the product. 

 Major American car manufacturers are offering buying incentives to newly graduated college students who traditionally have little or no credit.  Car manufacturers are using which of the following market modification strategies? 

            a.    finding new users 

            b.    creating new use situations 

            c.    increasing use by existing customers 

            d.    modifying the product 

            e.    reacting to competitors' position 

 The Upjohn Company first targeted men for its Rogaine topical solution, a drug to restore hair growth, but later marketed this product to women.  The Upjohn Company is using which of the following market modification strategies? 

            a.    finding new users 

            b.    creating new use situations 

            c.    increasing use by existing customers 

            d.    modifying the product 

            e.    reacting to competitors' position 

 Consumer advocates believe the practice of downsizing by consumer products firms has resulted in: 

            a.    lower product prices for consumers because of lower labor, raw material and packaging costs due to the recession and lower inflation in the United States. 

            b.    a greener environment due to the reduction in the amount of packaging used for promotional purposes (e.g. eliminating of the glossy cardboard that promoted the musical artist and contained the CD and its plastic protective box), thereby reducing the amount of waste disposed in landfills. 

            c.    fewer products and less product variability offered due to the corporate restructuring taking place worldwide. 

            d.    keeping prices from rising beyond the psychological barriers consumers have developed for products. 

            e.    a subtle, yet deceptive practice of taking advantage of consumers' buying habits by offering less product content in the same or larger package while maintaining or increasing the price. 

 Changing the place a product occupies in a consumer's mind relative to competitive products is called:  

            a.    market modification. 

            b.    product modification. 

            c.    product repositioning. 

            d.    product development. 

            e.    differentiation. 

 All of the following are factors that trigger product repositioning as a marketing action EXCEPT:  

            a.    changing the value offered to consumers relative to competitive products by adding or deleting features. 

            b.    catching a rising trend due to changes in consumer preferences relative to competitive products. 

            c.    reaching a new market due to sluggish sales in the currently targeted market. 

            d.    reacting to a competitor's entrenched product position that is adversely affecting the firm's sales and market share. 

            e.    copying competitors' sales promotion strategies to increase the trial and repeat purchase behavior of consumers relative to the firm's product. 

 Sealy, the largest manufacturer of mattresses in the U.S., recently set out to redefine its place in the bedrooms of America.  No longer was it going to be associated as a mattress company.  Henceforth, the name Sealy was going to be known as the world's leading "sleep wellness provider."  This is an example of:  

            a.    reverse marketing. 

            b.    demarketing. 

            c.    repositioning. 

            d.    resegmenting. 

            e.    reverse targeting. 

 New Coke was repositioned as a slightly sweeter, less filling soft drink because the Coca-Cola Company discovered that its 1984 market share in supermarkets was 2 percent behind Pepsi.  This product repositioning strategy was:  

            a.    a reaction to a competitor's position. 

            b.    to reach a new market. 

            c.    to catch a rising trend. 

            d.    to change the value offered. 

            e.    to change its target audience. 

 Harry & David is a catalog retailer.  At its inception, the company sold fruit baskets and popularized the “Fruit of the Month” concept.  Since then the company has abandoned this restrictive definition of itself, expanded its product mix, and used its promotion to explain that it is the source of the perfect gift for every occasion.  Harry & David used a __________ strategy. 

            a.    reinvention 

            b.    restoration 

            c.    reconfiguration 

            d.    realignment 

            e.    repositioning 

 Snickers candy bar was repositioned from a candy bar to a snack food through commercials that showed busy people satisfying their hunger with a Snickers bar.  Mars, Inc. used this strategy with its Snickers bar to:  

            a.    react to a competitor's position. 

            b.    reach a new market. 

            c.    catch a rising trend. 

            d.    change the value offered. 

            e.    do none of the above. 

 For many years, Kellogg's Frosted Flakes, a ready-to-eat breakfast cereal, was perceived as a cereal for children.  Tony the Tiger, a cartoon character, extolled Frosted Flakes, and advertisements depicted children enjoying the product in competitive situations.  Recently, in response to declining sales of the Frosted Flakes, the cereal-maker has adopted a new series of advertisements that show adults admitting they enjoy Frosted Flakes, too.  Kellogg's is attempting to:  

            a.    develop alternative product selection factors. 

            b.    reposition its product. 

            c.    complete the product life cycle of Frosted Flakes. 

            d.    introduce new uncontrollable elements into the marketing mix. 

            e.    introduce a new product. 

 Pretzels were first introduced as a salty snack.  Later the product was repositioned as a low-fat snack to:  

            a.    respond to a competitor's head-on positioning strategy. 

            b.    reach a new market. 

            c.    catch a rising trend. 

            d.    change the value offered. 

            e.    change its target audience. 

 An aging baby boomer population has led to increased interest in developing and marketing products to satisfy the need of this potentially large market.  As a result, moisturizing creams like Oil of Olay are now positioned as “age-defying” creams.  This is an example of which of the four factors that may trigger a repositioning action? 

            a.    reacting to a competitor's position 

            b.    reaching a new market 

            c.    catching a rising trend 

            d.    changing the value offered 

            e.    product modification 

 Which of the following product repositioning strategies requires a change in the physical product? 

            a.    increasing use 

            b.    creating new use situations 

            c.    finding new users 

            d.    reacting to a competitor’s position 

            e.    changing the value offered 

 Trading up involves adding value to a product (or line) through:  

            a.    adding product features but reducing the price. 

            b.    adding product features and using higher quality product materials. 

            c.    reducing product features and using lower quality product materials. 

            d.    decreasing the number of features and quality and lowering the price of a product. 

            e.    downsizing. 

 Kmart stores hoped to add perceived value to the store's merchandise by adding the Martha Stewart product line, which is perceived as being of a higher quality.  This product line addition was an example of:  

            a.    top-down marketing. 

            b.    trading up. 

            c.    bottom-up marketing. 

            d.    trading down. 

            e.    game-playing. 

 The strategy of trading down involves:  

            a.    adding product features and using lower quality product materials. 

            b.    adding product features and using higher quality product materials. 

            c.    reducing product features and using lower quality product materials. 

            d.    reducing the number of features, quality, or price of a product. 

            e.    seeking a less price sensitive target market. 

 __________ refers to reducing the content of packages without changing package size and maintaining or increasing the package price. 

            a.    Top-down marketing 

            b.    Trading up 

            c.    Bottom-up marketing 

            d.    Game-playing 

            e.    Downsizing 

 Downsizing is reducing the:  

            a.    quality of materials used in a product line. 

            b.    product's price for a smaller package. 

            c.    content of a package without changing its size while maintaining or increasing the package price. 

            d.    number of product features offered to consumers. 

            e.    number of brands offered and the total number of products manufactured. 

 Since the creation of the Hershey candy bar over 100 years ago, the price of chocolate has fluctuated, but the price of the candy bar has slowly risen.  In fact, when the price of chocolate had dramatic price fluctuations over a three-year period, the price of a Hershey's candy bar remained the same.  When the price of chocolate was very high, Hershey's was able to maintain its profits by making the bars smaller.  Hershey's engaged in:  

            a.    top-down marketing. 

            b.    trading up. 

            c.    bottom-up marketing. 

            d.    game-playing. 

            e.    downsizing. 

 The decision an organization makes to use a name, phrase, design, symbol, or combination of these to identify its products and distinguish them from those of competitors is called:  

            a.    product identification. 

            b.    branding. 

            c.    trademarking. 

            d.    copyrighting. 

            e.    licensing. 

 A ___________ is any word, device (design, sound, shape, or color), or combination of these used to distinguish a seller's goods or services. 

            a.    copyright 

            b.    trade name 

            c.    brand mark 

            d.    brand name 

            e.    generic brand 

 A brand name is:  

            a.    any word, device (design, sound, shape or color), or combination of these used to distinguish a seller's goods or services. 

            b.    the part of a brand name that can be spoken. 

            c.    the part of a brand that is a symbol or design and cannot be spoken. 

            d.    the commercial, legal name under which a company does business. 

            e.    legal identification of a company's exclusive rights to use a brand name, brand mark, or trade name. 

 The stylized blue and white waves in an oval shape that appear on every package of Ocean Spray brand products is an example of a:  

            a.    copyright. 

            b.    trade name. 

            c.    service market. 

            d.    brand name. 

            e.    generic brand. 

 __________ is a set of human characteristics associated with a brand name. 

            a.    Brand personality 

            b.    A brand mannerism 

            c.    A symbolic brand 

            d.    Brand personification 

            e.    Product personification 

 When consumers think of Harley-Davidson, the image of a masculine, non-conformist is the likely associated with that brand name.  With the Vespa motorscooters, the image is more likely to be a brainy environmentalist that wears polyester and socks that don't match.  Both Vespa and Harley-Davidson:  

            a.    have brand personalities. 

            b.    have created brand mannerisms. 

            c.    are symbolic brands. 

            d.    use brand personification. 

            e.    use product personification. 

 The primary benefit of branding for consumers is branding makes:  

            a.    products higher in quality. 

            b.    products lower in price. 

            c.    consumers more efficient shoppers. 

            d.    products higher in value. 

            e.    advertising unnecessary. 

 Brand equity is:  

            a.    the resources invested to create a name, phrase, design, symbol, or combination of these to identify a firm's products and distinguish them from those of its competitors. 

            b.    adding customer value to the product brand through additional features or higher-quality materials, or reducing its price. 

            c.    increasing the content contained within the brand's package without changing its size or increasing its price. 

            d.    the net present value of the royalties the firm receives as a result of licensing its brand to other firms to manufacture and/or market. 

            e.    the added value a given brand name gives to a product beyond the functional benefits provided. 

 Which of the following is true about the process of creating brand equity?

            a.    Marketers have to develop positive brand awareness and an association of the brand in consumers’ minds with a product class or need to give the brand an identity.

            b.    A marketer must establish a brand’s meaning in the minds of consumers.

            c.    A marketer must get consumers to develop proper responses to a brand’s identity and meaning.

            d.    A deep psychological bond characterizes consumer—brand connection and the personal identification consumers have with the brand.

            e.    All of the above are true about the process of creating brand equity.

 Which of the following is true about the process of creating brand equity?

            a.    Marketers have to develop positive brand awareness and an association of the brand in consumers’ minds with a product class or need to give the brand an identity.

            b.    A marketer must establish a brand’s colors in the minds of consumers.

            c.    A marketer must get consumers to develop proper responses to a brand’s distribution strategy.

            d.    A deep physical bond characterizes consumer—brand connection.

            e.    All of the above are true about the process of creating brand equity.

 Which of the following is true about the process of creating brand equity?

            a.    Marketers have to develop positive brand awareness and an association of the brand in consumers’ minds with a product color.

            b.    A marketer must establish a brand’s meaning in the minds of consumers.

            c.    A marketer must get consumers to develop proper responses to a brand’s distribution strategy.

            d.    A deep physical bond characterizes consumer—brand.

            e.    All of the above are true about the process of creating brand equity.

 Which of the following is true about the process of creating brand equity?

            a.    Marketers have to develop positive brand awareness and an association of the brand in consumers’ minds with a product color.

            b.    A marketer must establish a brand’s meaning in the minds of competitors.

            c.    A marketer must get consumers to develop proper responses to a brand’s identity and meaning.

            d.    A deep physical bond characterizes consumer—brand connection.

            e.    All of the above are true about the process of creating brand equity.

 Which of the following is true about the process of creating brand equity?

            a.    Marketers have to develop positive brand awareness and an association of the brand in consumers’ minds with a product color.

            b.    A marketer must establish a brand’s meaning in the minds of competitors.

            c.    A marketer must get consumers to develop proper responses to a brand’s distribution strategy.

            d.    A deep psychological bond characterizes consumer—brand connection and the personal identification consumers have with the brand.

            e.    All of the above are true about the process of creating brand equity.

 Which of the following is true about the value of brand equity?

            a.    Brand equity is an intangible asset.

            b.    Brand equity has an economic value to the manufacturer.

            c.    Brand equity can increase in value when effectively managed.

            d.    Brand equity can lose value when ineffectively managed.

            e.    All of the above are true about the value of brand equity.

 Which of the following is true about the value of brand equity?

            a.    Brand equity is an intangible asset.

            b.    Brand equity does not have an economic value to the manufacturer.

            c.    Brand equity will not increase in value when effectively managed.

            d.    Brand equity will not decrease in value when ineffectively managed.

            e.    All of the above are true about the value of brand equity.

 Which of the following is true about the value of brand equity?

            a.    Brand equity is a tangible asset.

            b.    Brand equity has an economic value to the manufacturer.

            c.    Brand equity will not increase in value when effectively managed.

            d.    Brand equity will not lose value when ineffectively managed.

            e.    All of the above are true about the value of brand equity.

 Which of the following is true about the value of brand equity?

            a.    Brand equity is a tangible asset.

            b.    Brand equity has no economic value to the manufacturer.

            c.    Brand equity can increase in value when effectively managed.

            d.    Brand equity cannot lose value when ineffectively managed.

            e.    All of the above are true about the value of brand equity.

 Which of the following is true about the value of brand equity?

            a.    Brand equity is a tangible asset.

            b.    Brand equity has no economic value to the manufacturer.

            c.    Brand equity cannot increase in value when effectively managed.

            d.    Brand equity can lose value when ineffectively managed.

            e.    All of the above are true about the value of brand equity.

 All of the following are criteria for selecting a good brand name EXCEPT:  

            a.    suggests product features. 

            b.    suggests product benefits. 

            c.    fits the company or product image. 

            d.    is memorable, distinctive, and positive. 

            e.    is simple. 

 Which of the following are criteria for selecting a good brand name?

            a.    should have no legal or regulatory restrictions 

            b.    suggests product benefits 

            c.    fits the company or product image 

            d.    is memorable, distinctive, and positive 

            e.    All of the above are criteria for selecting a good brand name.

 Which of the following are criteria for selecting a good brand name?

            a.    should have no legal or regulatory restrictions 

            b.    suggests product features

            c.    fits the consumer’s image 

            d.    blends with the culture 

            e.    All of the above are criteria for selecting a good brand name.

 Which of the following are criteria for selecting a good brand name?

            a.    should be complex so it stands out 

            b.    suggests product benefits 

            c.    fits the consumer’s image 

            d.    blends with the culture 

            e.    All of the above are criteria for selecting a good brand name.

 Which of the following are criteria for selecting a good brand name?

            a.    should be complex so it stands out 

            b.    suggests product features 

            c.    fits the company or product image 

            d.    blends with the culture 

            e.    All of the above are criteria for selecting a good brand name.

 Which of the following are criteria for selecting a good brand name?

            a.    should be complex so it stands out 

            b.    suggests product features 

            c.    fits the consumer’s image 

            d.    is memorable, distinctive, and positive 

            e.    All of the above are criteria for selecting a good brand name.

 Imagine the President of Black Stoves, Inc. is thinking about developing a new brand name for the company's line of wood stoves with catalytic converters.  The stove because of its design also conserves wood because it burns slowly.  The brand name he is considering is The Fast One.  Why is this brand name choice NOT the best one? 

            a.    The name should be distinctive and memorable. 

            b.    The name should fit the company image. 

            c.    The name should have no legal restrictions. 

            d.    The name should be simple. 

            e.    The name should suggest the product benefits. 

 Use the five criteria for selecting a good brand name to determine which of the following is the best choice. 

            a.    Spam canned meat 

            b.    Ken's salad dressing 

            c.    Formula 409 cleaner 

            d.    Match Light charcoal 

            e.    Bayer aspirin 

 With __________, the producer dictates the brand name using either a multiproduct or multibrand approach. 

            a.    retailer branding 

            b.    intermediary 

            c.    licensing 

            d.    manufacturer branding 

            e.    co-branding 

 Manufacturer branding is:  

            a.    a statement indicating the liability of the manufacturer for product deficiencies. 

            b.    a branding strategy in which the producer dictates the brand name, using either a multiproduct or multibrand approach. 

            c.    a branding strategy in which a company uses one name for all of its products. It is often referred to as a blanket or family branding strategy. 

            d.    a branding strategy in which manufacturers produce products but sell them under the brand name of a wholesaler or retailer, also called private labeling or reseller branding. 

            e.    a contractual agreement whereby a company allows someone else to use its brand name and usually requires the product be made to its specifications. 

 With manufacturer branding the producer dictates the brand name using either a:  

            a.    regional or national approach. 

            b.    domestic or international strategy. 

            c.    multiproduct or multibrand approach. 

            d.    competitor-focused or consumer-oriented approach. 

            e.    tactical or strategic objective. 

 Multiproduct branding is:  

            a.    a statement indicating the liability of the manufacturer for product deficiencies. 

            b.    a strategy where products are given no identifying names other than a description of their contents. 

            c.    a branding strategy in which a company uses one name for all of its products. 

            d.    a branding strategy in which manufacturers produce products but sell them under the brand name of a wholesaler or retailer, also called private labeling or reseller branding. 

            e.    a contractual agreement whereby a company allows someone else to use its brand name and usually requires that the product be made to its specifications. 

 A branding strategy in which a company uses one name for all of its products (often referred to as a blanket or family branding strategy) is called:  

            a.    co-branding. 

            b.    generic branding. 

            c.    reseller branding. 

            d.    mixed branding. 

            e.    multiproduct branding. 

 All products sold by the Tabasco Company are sold using the Tabasco brand.  This is an example of:  

            a.    multiproduct licensing. 

            b.    multibranding. 

            c.    co-branding. 

            d.    generic branding. 

            e.    multiproduct branding. 

 Every product manufactured by the SlimFast Company carries the Slim-Fast brand name.  The SlimFast Company uses:  

            a.    multibranding. 

            b.    single branding. 

            c.    co-branding. 

            d.    blanket branding. 

            e.    agent licensing. 

 Every product manufactured by the Gap carries the Gap brand name.  The Gap uses:  

            a.    multibranding. 

            b.    single branding. 

            c.    co-branding. 

            d.    blanket branding. 

            e.    agent licensing. 

 Every product manufactured by Ben & Jerry’s carries the Ben & Jerry’s brand name.  Ben & Jerry’s uses:  

            a.    multibranding. 

            b.    single branding. 

            c.    co-branding. 

            d.    family branding. 

            e.    agent licensing. 

 When a company uses line extension it is:  

            a.    manufacturing a product under a new brand name that consumers will view as an entirely new product line. 

            b.    using a current brand name to enter a new market segment in its product class. 

            c.    speeding up the movement of a product category through its PLC. 

            d.    contracting with another firm to manufacture modified versions of the original products. 

            e.    applying the current brand name to enter a completely different product class. 

 Bayer aspirin is sold in the original strength, in a safety-coated version, in an extra-strength version, and in a version designed especially for women.  The manufacturer of Bayer aspirin is using:  

            a.    channel extension 

            b.    subbranding 

            c.    line extension 

            d.    co-branding 

            e.    multibranding 

 Which of the following statements about line extensions is true? 

            a.    A line extension strategy typically leads to increased advertising costs. 

            b.    There are no risks associated with a line extension strategy. 

            c.    When the Clorox Company joins with Kroger supermarkets to advertise Clorox products, it is an example of a line extension. 

            d.    A line extension is used with multiproduct branding. 

            e.    A line extension is used with multibranding. 

 Which of the following statements about line extensions is true? 

            a.    A line extension strategy typically leads to decreased advertising costs. 

            b.    There are no risks associated with a line extension strategy. 

            c.    When the Clorox Company joins with Kroger supermarkets to advertise Clorox products, it is an example of a line extension. 

            d.    A line extension is used with reseller branding. 

            e.    A line extension is used with multibranding. 

 Which of the following statements about line extensions is true? 

            a.    A line extension strategy typically leads to increased advertising costs. 

            b.    There are risks associated with a line extension strategy. 

            c.    When the Clorox Company joins with Kroger supermarkets to advertise Clorox products, it is an example of a line extension. 

            d.    A line extension is used with reseller branding. 

            e.    A line extension is used with multibranding. 

 Combining a family brand with a new brand is called:  

            a.    subbranding. 

            b.    multiproduct branding. 

            c.    mixed branding. 

            d.    generic branding. 

            e.    family branding. 

 Brand extensions require:  

            a.    manufacturing a product under a new name that consumers will view as an entirely new product line. 

            b.    manufacturing a new product with the same brand name for a new market segment in the same product class so consumers will view it as a logical addition to the original product line. 

            c.    manufacturing accessory products such as Barbie clothes for Barbie Dolls. 

            d.    licensing another firm to manufacture modified versions of the original products. 

            e.    applying the current brand name to enter a completely different product class. 

 Gerber had tremendous brand equity with its baby food.  The use of a __________ strategy to use the Gerber name on a bibs, plastic baby bottles, and pacifiers seemed logical. 

            a.    brand extension 

            b.    family branding 

            c.    co-branding 

            d.    blanket branding 

            e.    mixed branding 

 Multibranding is:  

            a.    a branding strategy that involves giving each product a distinct name. 

            b.    a branding strategy that uses different brand names for the same product across multiple countries. 

            c.    a branding strategy in which a company uses one name for multiple products. 

            d.    a branding strategy in which manufacturers produce products but sell them under the brand name of a wholesaler or retailer. 

            e.    a contractual agreement whereby a company allows someone else to use its brand name and usually requires that the product be made to its specifications. 

 Mars, Inc. sells Snickers, Milky Way, Twix, Skittles, Dove, Starburst, M&Ms, and Three Musketeer candy.  This variety of names is typical of a __________ strategy 

            a.    co-branding 

            b.    multibranding 

            c.    multiproduct 

            d.    mixed brand 

            e.    private branding 

 A manufacturer's branding strategy in which a distinct name is given to each of its products is called:  

            a.    multibranding. 

            b.    generic branding. 

            c.    cobranding. 

            d.    mixed branding. 

            e.    multiproduct branding. 

 Seiko makes watches.  It markets its higher quality watches under the Sieko or Lasalle name, and its lower-priced watches are sold under the Pulsar brand.  Seiko uses a __________ strategy. 

            a.    multibranding 

            b.    generic branding 

            c.    multiproduct branding 

            d.    trademarked branding 

            e.    private branding 

 A company uses __________ when it manufactures products but sells them under the brand name of a wholesaler or retailer. 

            a.    manufacturer branding 

            b.    private branding 

            c.    generic branding 

            d.    proprietary rights 

            e.    riparian rights 

 Private branding is:  

            a.    a branding strategy that involves giving each product a distinct name. 

            b.    a strategy where products are given no identifying names other than a description of its contents. 

            c.    a branding strategy in which a company uses one name for all of its products. 

            d.    a branding strategy in which manufacturers produce products that are sold under the brand name of a wholesaler or retailer. 

            e.    a contractual agreement whereby a company allows someone else to use its brand name and usually requires that the product be made to its specifications. 

 Thirty-six percent of sales at supermarkets in the United Kingdom carry the stores' own brand names.  Eighteen percent of all supermarket sales in France and Germany carry the stores' own brand names; and in the US, 14 percent do.  These supermarkets are using a __________ strategy to sell consumer food. 

            a.    private branding 

            b.    generic branding 

            c.    multibranding 

            d.    co-branding 

            e.    multiproduct branding 

 Which of the following statements about Pez is true? 

            a.    Pez comes from the German word for peppermint, pfefferminz. 

            b.    Pez was successfully sold in Europe as an adult breath mint. 

            c.    Pez was originally packaged in a headless dispenser. 

            d.    Pez first appeared in the United States in 1953. 

            e.    All of the above statements about Pez are true. 

 Mixed branding is a branding strategy:  

            a.    that involves giving each product a distinct name. 

            b.    that uses different brand names for the same product across multiple countries. 

            c.    in which a company uses one name for all of its products. 

            d.    in which a company markets products under their own name and that of a reseller. 

            e.    in which a company follows both manufacturer and generic branding approaches for products in its mix. 

 A branding strategy in which a company markets products under its own name and that of a reseller is called:  

            a.    multibranding. 

            b.    generic branding. 

            c.    private branding. 

            d.    mixed branding. 

            e.    multiproduct branding. 

 Packaging is:  

            a.    any box, bottle, jar, can, carton or bag that can be used for transporting durable or nondurable goods. 

            b.    any container in which a product is offered for sale and on which information is communicated. 

            c.    that part of a product that is not consumed. 

            d.    any container used for storage of consumer or industrial goods. 

            e.    accurately described by none of the above. 

 A label:  

            a.    is an integral part of the package. 

            b.    typically identifies the product or brand. 

            c.    is typically an expensive part of the marketing strategy for a product. 

            d.    provides important benefits for manufacturers, retailers, and consumers. 

            e.    is accurately described by all of the above. 

 Which of the following can be conveyed through packaging? 

            a.    communication benefits 

            b.    storage benefits 

            c.    perceptual benefits 

            d.    protection benefits 

            e.    all of the above 

 Which of the following statements about packaging is true? 

            a.    Packaging can have brand equity benefits for the company. 

            b.    Consumer protection is an important function of packaging.

            c.    Packaging can give the idea of status, economy, and product quality. 

            d.    Packaging can be used to extend shelf life. 

            e.    All of the above statements about packaging are true. 

 Which of the following statements does NOT describe a benefit associated with packaging? 

            a.    Packaging provides consumers with valuable and necessary information about directions regarding product usage and its composition. 

            b.    Packaging extends a product's shelf life. 

            c.    Packaging is an inexpensive product strategy to implement. 

            d.    Packaging potentially increases product sales. 

            e.    Packaging connotes product benefits or enhances psychographic attributes of the product. 

 Packages create customer value by providing:  

            a.    legal disclaimers. 

            b.    psychographic attributes about the product. 

            c.    communication, functional, and perceptual benefits. 

            d.    environmental impact statements. 

            e.    all of the above. 

 Directions on how to use a product and the composition of a product that appear on packaging are what kind of benefits? 

            a.    communication benefits 

            b.    storage benefits 

            c.    perceptual benefits 

            d.    protection benefits 

            e.    all of the above 

 Packaging that provides convenience, protection, or storage offers what kind of benefits? 

            a.    communication benefits 

            b.    functional benefits 

            c.    perceptual benefits 

            d.    physiological benefits 

            e.    all of the above types of benefits 

 The ideas of status, economy, and product quality that packaging creates in the consumer's mind relates to what kind of benefits? 

            a.    communication benefits 

            b.    functional benefits 

            c.    perceptual benefits 

            d.    physical benefits 

            e.    all of the above types of benefit 

 A package can connote:  

            a.    status, economy, and product quality. 

            b.    economy, barter price, and distribution strategy. 

            c.    all of the elements of the marketing mix. 

            d.    product quality, company size, and industry growth rate. 

            e.    consumerism, environmentalism, and industry ethical standards. 

 How does General Mills Gold Medal flour brand provide functional benefits through its packaging?

a.   By including company contact information on the bag

b.   By including the Betty Crocker seal of approval on the bag

c.   By using a fancier, gold-embellished label than the one currently used

d.   By using a resealable plastic bag instead of a paper bag

e.   All of the above would provide functional benefits through packaging.

 How does General Mills Gold Medal flour brand provide perceptual benefits through its packaging?

a.   By including company contact information on the bag

b.   By including the Betty Crocker seal of approval on the bag

c.   By using a fancier, gold-embellished label than the one currently used

d.   By using a resealable plastic bag instead of a paper bag

e.   All of the above would provide functional benefits through packaging.

 How does General Mills Gold Medal flour brand provide communication benefits through its packaging?

a.   By including company contact information on the bag

b.   By including the Betty Crocker seal of approval on the bag

c.   By using a fancier, gold-embellished label than the one currently used

d.   By using a resealable plastic bag instead of a paper bag

e.   All of the above would provide functional benefits through packaging.

 The concepts of the product part of the marketing mix usually apply well to service with three exceptions. They are:

a.   exclusivity, branding, and capacity management

b.   exclusivity, pricing, and branding

c.   branding, capacity management, and promotion

d.   capacity management, pricing, and promotion

e.   pricing, promotion, and place

 When designing the product element of the marketing mix for services marketing managers should give special attention to: 

            a.    exclusivity, advertising, and capacity management. 

            b.    exclusivity, branding, and capacity management. 

            c.    advertising, packaging, and exclusivity. 

            d.    capacity management, packaging and advertising. 

            e.    brand name, packaging, and exclusivity. 

 A patent gives a manufacturer of goods exclusive rights for 17 years.  A major difference between goods and services is that: 

 The use of brand names is especially important for services because of which unique characteristic of services? 

            a.    inventory costs 

            b.    inseparability 

            c.    inconsistency 

            d.    invisibility 

            e.    intangibility 

 Cracker Barrel is a leader in the market of family restaurants located alongside major highways.  Its marketing mix includes a down-home atmosphere, a shop through which customers pass on the way to and from the restaurant, a menu of American home cooking, and a friendly staff.  Which aspect of the product component of the marketing mix will be particularly helpful to travelers looking for a place to eat lunch? 

            a.    capacity management 

            b.    pricing strategy 

            c.    brand name and identifying logo 

            d.    exclusivity 

            e.    all of the above 

 Andrea Arena is the owner of 2 Places at 1 Time, a concierge company.  She and her staff of 60 perform everyday services such as walking the dog, picking up cleaning, waiting for the repairman, and going to the post office for people who are too busy to perform these simple acts themselves.  This is a strong service brand name because it suggests: 

            a.    the company has international experience. 

            b.    the benefits provided by the service. 

            c.    the company is employee-owned. 

            d.    the company is a nonprofit organization. 

            e.    the service concept is patented. 

 Integrating the service component of the marketing mix with efforts to influence consumer demand is called: 

            a.    off-peak pricing. 

            b.    idle production capacity. 

            c.    gap analysis. 

            d.    capacity management. 

            e.    inventory management. 

 An airport limousine service will meet people at their homes and deliver them to or bring them home from their local airport.  Because demand is much higher before 9 a.m. and after 5 p.m. during weekdays, it must be concerned with: 

            a.    exclusivity. 

            b.    image management. 

            c.    branding. 

            d.    inconsistency. 

            e.    capacity management. 

 A patient must be in a hospital to "buy" an appendectomy, and a guest must be in a hotel to "buy" an accommodation.  To make the product/service component of the marketing mix available to the consumer, the service component of the mix must be integrated with efforts to influence consumer demand.  What is this called? 

            a.    allocation of resources 

            b.    timing 

            c.    capacity management 

            d.    customized service 

            e.    facilities analysis 

 Pricing plays two essential roles in the managing of services.  They are: 

            a.    profit and capacity management. 

            b.    profit and indicator of customer value. 

            c.    influencing consumer perceptions and profit management. 

            d.    influencing consumer perceptions and capacity management. 

            e.    capacity management and cost recovery. 

 Which unique characteristic of service has the most influence on pricing? 

            a.    inventory costs 

            b.    inseparability 

            c.    inconsistency 

            d.    invisibility 

            e.    intangibility 

 Many service businesses use off-peak pricing, which consists of charging different prices during different times of the day or days of the week to reflect: 

            a.    variations in costs of delivering service. 

            b.    variations in demand for the service. 

            c.    deviations from standard profit policies. 

            d.    holidays and other special promotional events. 

            e.    government regulations that may apply. 

 Setting prices during different times of the day or days of the week to reflect variations in demand for the service is called: 

            a.    off-peak pricing. 

            b.    idle production capacity pricing. 

            c.    customer contact audit pricing. 

            d.    differential value pricing. 

            e.    capacity inventory pricing. 

 The headline in a newspaper advertisement for American Airlines proclaimed, "Florida: $199 Round Trip!"  A closer examination of the advertisement revealed the special low price airfare applied only to specific travel dates.  That is, the $199 price applied to tickets to Florida during the months of July and August.  If a consumer wished to travel to Florida during the peak travel times of October through May, the price of the ticket was $499.  The airline was engaging in __________ by offering lower prices for tickets during less desirable travel times. 

            a.    price gouging 

            b.    price differentiation 

            c.    off-peak pricing 

            d.    bait-and-switch pricing 

            e.    package pricing 

 Commuters in New York often have often installed devices on their cars that can be read automatically as they approach a tollbooth.  This saves time, improves traffic flow, and means drivers don't need to keep suitable change in the car.  It also offers New York authorities the opportunity to manage traffic flow by charging different toll amounts for different times of day.  Commuters in New York are experiencing: 

            a.    price gouging. 

            b.    competitive pricing. 

            c.    off-peak pricing. 

            d.    internal marketing. 

            e.    external marketing. 

 Place or distribution is extremely important to the managing services because of which unique characteristic of services? 

            a.    inventory costs 

            b.    inconsistency 

            c.    inseparability 

            d.    intangibility 

            e.    invisibility 

 Historically in services marketing, little attention has been paid to: 

            a.    product. 

            b.    price. 

            c.    place (distribution). 

            d.    positioning. 

            e.    promotion. 

 Which of the 4 P's is a variable that health care providers could employ to reach their market segments? 

            a.    promotion 

            b.    distribution 

            c.    pricing 

            d.    product 

            e.    all of the above 

 Which of the following should be communicated to consumers when promoting services? 

            a.    courteous service 

            b.    availability 

            c.    location 

            d.    quality 

            e.    all of the above 

 Which component of the promotional mix is particularly important for nonprofit services? 

            a.    advertising 

            b.    sales promotion 

            c.    personal selling 

            d.    publicity 

            e.    packaging 

 A publicity tool frequently used by nonprofit services, which uses free space or time donated by the media is called a(n): 

            a.    promotion. 

            b.    advertisement. 

            c.    public service announcement. 

            d.    free standing insert. 

            e.    publicity stunt. 

 Many nonprofit organizations have used what are called PSAs in their media planning.  What does the abbreviation PSA stand for? 

            a.    public service announcement 

            b.    publicity savings allocation 

            c.    publicly served audience 

            d.    pluralistic society allotment 

            e.    promotional service allocation 

 Nonprofit services cannot control who sees a public service announcement or when the message is given because: 

            a.    PSAs tie up too large a percentage of the service's advertising budget. 

            b.    PSAs are traditionally boring and not well designed. 

            c.    timing and location of the PSA are under the control of the medium, not the organization. 

            d.    PSAs have a very limited reach or scope. 

            e.    PSAs are a form of two-way communication. 

 BMW's strategy is to keep its products in the:  

            a.    introduction and growth stages. 

            b.    growth and maturity stages. 

            c.    introduction stage. 

            d.    growth stage. 

            e.    growth and maturity stages. 

 Which of the following statements about BMW is true? 

            a.    BMW cars typically have a product life cycle of seven years. 

            b.    BMW has a trademark naming system for its cars. 

            c.    Pierce Bronson drove a BMW in the James Bond film, Goldeneye. 

            d.    BMW's website is an integrated part of the overall marketing strategy for BMW. 

            e.    All of the above statements about BMW are true. 

 

1. James Gilmore and Joseph Pine explain, "The more contrived the world seems, the more we all demand what is real." In terms of marketing, this simply means

A. consumers cannot really tell the difference between illusion and reality.

B. reality aside, give customers what they think they want.

C. good marketing can make even the impossible—possible.

D. what we want and what we can have are two totally different things.

E. consumers want engaging, personal, memorable, and authentic offerings.

2. The focuses on performing services that provide a unique experience.

A. intangibility economy

B. experience economy

C. virtual economy

D. magic of marketing

E. authentic economy

3. Consumers are no longer content with affordable, high quality purchases; they want .

A. offerings that reflect their self-image

B. consistent quality

C. to be treated as special one-of-a-kind buyers

D. total customer satisfaction

E. to feel as if they are in control of the entire purchasing process

4. There are several ways of providing consumers authentic offerings: (1) ; (2) provide personal interaction rather than automation; (3) create a social process that allows consumers to share their interests; and (4) manage any dimension of their reputation that might influence perceptions of authenticity.

A. allow for adaptability at every customer contact point

B. back up claims with scientific research, market research, or governmental documentation

C. facilitate customer customization

D. do thorough research at each stage of the new-service development process

E. obtain personal endorsements from celebrity spokespeople and other opinion leaders

5. There are several ways of providing consumers authentic offerings: (1) facilitate customization; (2) ; (3) create a social process that allows consumers to share their interests; and (4) manage any dimension of their reputation that might influence perceptions of authenticity.

A. allow for adaptability at every customer contact point

B. back up claims with scientific research, market research, or governmental documentation

C. do thorough research at each stage of the new-service development process

D. provide personal interaction rather than automation

E. obtain personal endorsements from celebrity spokespeople and other opinion leaders

6. There are several ways of providing consumers authentic offerings: (1) facilitate customization; (2) provide personal interaction rather than automation; (3) ; and (4) manage any dimension of their reputation that might influence perceptions of authenticity.

A. allow for adaptability at every customer contact point

B. back up claims with scientific research, market research, or governmental documentation

C. do thorough research at each stage of the new-service development process

D. obtain personal endorsements from celebrity spokespeople and other opinion leaders

E. create a social process that allows consumers to share their interests

7. There are several ways of providing consumers authentic offerings: (1) facilitate customization; (2) provide personal interaction rather than automation; (3) create a social process that allows consumers to share their interests; and (4) .

A. allow for adaptability at every customer contact point

B. back up claims with scientific research, market research, or governmental documentation

C. manage any dimension of a firm's reputation that might influence perceptions of authenticity

D. do thorough research at each stage of the new-service development process

E. obtain personal endorsements from celebrity spokespeople and other opinion leaders

8. One way to provide consumers authentic offerings is to provide personal interaction. Which of the following actions provides the best example of this approach?

A. Geico advertises that its insurance specialists are available 24/7 (24 hours per day, 7 days per week).

B. iPods allow customers to create personalized playlists.

C. YouTube, Twitter, and Facebook create a forum for expressing personal experiences.

D. Cirque du Soleil combines the original elements of street performance, the circus, and live theater.

E. Bloomingdales provides dressing rooms with huge electronic mirrors.

9. Services refer to 

A. ideas that consist of a bundle of tangible and intangible attributes that satisfies consumers' needs and is received in exchange for money or something else of value.

B. intangible activities or benefits that an organization provides to satisfy consumers' needs in exchange for money or something else of value.

C. philanthropic activities performed in without expectations of monetary remuneration.

D. any intangible activity that provides a benefit to a consumer that he or she could not have obtained or performed on his or her own.

E. any tangible activity that provides a benefit to a consumer that he or she could not have obtained or performed on his or her own.

10. Intangible activities or benefits that an organization provides to satisfy consumers' need in exchange for money or something else of value are referred to as .

A. virtual experiences

B. intangible benefits

C. intangible goods

D. product concepts

E. services

11. Intangible items such as airline trips, financial advice, or telephone calls that an organization provides to consumers are referred to as

A. production goods.

B. support products.

C. services.

D. goods.

E. benefits.

12. Which of the following statements about services is MOST accurate?

A. Although a major contributor to the GDP nationally, services play only a minor role in GDP on a global scale.

B Whether tangible or not, the marketing of services is exactly the same as the marketing of products or ideas since they both satisfy customer needs.

C. Almost 35% of all jobs created in the United States are in the services sector.

D. In the U.S., more than 47% of the GDP comes from services.

E There is much more in common with the marketing of services and business products than there is between the marketing of services and consumer products.

13. Which of the following statements about services is MOST accurate?

A Whether tangible or not, the marketing of services is exactly the same as the marketing of products or ideas since they both satisfy customer needs.

B. Although a major contributor to the GDP nationally, services play only a minor role in GDP on a global scale.

C. Services represent a large export business; it is one of the few areas where the United States has a trade surplus.

D. Very few jobs in the United States are in the services sector.

E There is much more in common with the marketing of services and business products than there is

14. between the marketing of services and consumer products.

As shown in Figure 12-1 above, which of the following statements is MOST accurate?

A. Services are a smaller part of the gross domestic product than are goods.

B. In 2010, goods represent a larger part of the gross domestic product than services.

C. In 1995, services were worth almost $1 billion.

D. Until 1980, goods and services contributed almost equally to the gross domestic product (GDP).

E. In 2010, goods were 50 percent of the GDP.

15. There are four unique elements to services—intangibility, inconsistency, inseparability, and inventory— which are referred to as the .

A. service mix

B. four I's of services

C. service matrix

D. span of services

E. service continuum

16. The four I's of services consist of

A. intangibility, inconsistency, inseparability, and innovation.

B. intangibility, inconsistency, inseparability, and impression.

C. intangibility, inconsistency, inseparability, and inventory.

D. intangibility, inventory, innovation, and impression.

E. intangibility, inconsistency, innovation, and impression.

17. The four I's of services consist of

A. inflexibility, intangibility, inconsistency, and inseparability.

B. intangibility, inconsistency, inseparability, and inventory.

C. incompatibility, inconsistency, inseparability, and inventory.

D. invisibility, inconsistency, inseparability, and intangibility.

E. inflexibility, incongruity, inconsistency, and inventory.

18. The intangibility element of a service refers to the fact that it

A. has value that can only be determined by using subjective criteria.

B. can't be held, seen, or touched before the purchase decision.

C. cannot be described, only experienced.

D. can maintain or accumulate inventory.

E. can be objectively evaluated.

19. Because services tend to be a(n) rather than an object, they are much more difficult for consumers to evaluate.

A. opportunity

B. performance

C. adventure

D. risk

E. decision

20. To help consumers assess and compare services, marketers try to make them or show the benefits of using the service.

A. tangible

B. intangible

C. consistent

D. timely

E. measurable

21. To help consumers assess and compare services, marketers try to make them tangible or .

A. temporal

B. consistent

C. adaptable

D. measurable

E. show the benefits of using the service

22. The Singapore Airlines ad in the textbook shows a traveler in the airline's new seats and also emphasizes food and other amenities to overcome the of its service.

A. incongruity

B. inconsistency

C. inventory costs

D. inseparability

E. intangibility

23. Sarah has a backache due to overexertion. She believes a massage would loosen her back muscles and make her feel better. She is concerned because a massage, unlike a pair of shoes, cannot be held, touched, or seen before she buys it. Which characteristic of services is she concerned about?

A. incongruity

B. inconsistency

C. inventory costs

D. inseparability

E. intangibility

24. Before moving out of their apartment, Brad and Kim Westgate decided to have their carpets cleaned by ServiceMaster, a company specializing in professional carpet cleaning. The carpet cleaners arrived at Brad and Kim's apartment, unpacked their equipment, cleaned the carpets, packed up their tools, and drove away in their bright yellow van. The service provided by ServiceMaster could not be held, touched, or seen before the purchase decision. This scenario illustrates the of services.

A. inconsistency

B. inseparability

C. inventory costs

D. intangibility

E. interdependence

25. Consumers have more difficulty evaluating services than they do products; the difficulty results from the

A. intangibility of services.

B. incongruity of services.

C. inseparability of services.

D. inflexibility of services.

E. interdependence of services.

26. To help consumers assess and compare its airline service, Frontier Airlines uses personable animal characters in its advertising to announce and describe benefits, such as leather seats and "stretch" seating, to help deal with the

A. intangibility of the service.

B. incongruity of the service.

C. inseparability of the service.

D. inflexibility of the service.

E. interdependence of the service.

27. The brochure for Spa Sydell has photographs of people enjoying the various spa amenities. By seeing the pictures of what is available at the spa, a customer has a better idea of what she is buying. Spa Sydell uses a brochure to help customers deal with the that is associated with using the service.

A. incongruity

B. inconsistency

C. inventory costs

D. inseparability

E. intangibility

28. Services depend on the people who provide them. As a result, their quality varies with each person's capabilities and day-to-day job performance. This element of services is referred to as .

A. variation

B. differentiation

C. evaluation

D. inconsistency

E. intangibility

29. Developing, pricing, promoting, and delivering services is challenging because the quality of a service is often

A. inseparable.

B. inconsistent.

C. inventoried.

D. tied to a product.

E. independent of the quality delivered.

30. Developing, pricing, promoting, and delivering services are challenging because the quality of the service is often inconsistent. Organizations attempt to reduce this inconsistency by

A. paying higher incentives to employees to encourage satisfactory performance.

B. reducing incentives available to employees because of poor performance.

C. reducing the customer contact points in the service delivery process.

D. providing standardization and training.

E. exercising better hiring practices.

31. Inconsistency of services refers to the fact that

A. there is no regulation of service industries in terms of basic standards of quality.

B. the quality of service provided by a firm is often inconsistent with its image.

C. the performance of one employee may vary from the performance of another employee even though the same firm employs both.

D. training and standardization of service delivery procedures cannot be accomplished.

E. services have a varying degree of durability.

32. Organizations attempt to reduce the inconsistency of service delivery through

A. higher incentives to employees for satisfactory performance.

B. pay reductions for poor employee performance.

C. the reduction of customer contact points in the service delivery process.

D. standardization and training.

E. employing technology.

33. Students from Berry College attended a performance at nearby Shorter College and were extremely impressed with the dance troupe that was the opening act. As soon as the students returned to Berry, they made arrangements for the entertainers to appear on their campus. On the day of the concert, the venue was packed with students, but the quality of the performance was much poorer than they had seen at the Shorter campus. The Berry students' disappointment was the direct result of which characteristic of services?

A. inconsistency

B. impressionability

C. intangibility

D. invisibility

E. uniqueness of the service

34. Andrea Arenas is the owner of 2 Places at 1 Time, a concierge company. She and her staff of 60 perform everyday services, such as walking the dog, picking up cleaning, waiting for the repairman, and going to the post office, for people who are too busy to perform these simple acts. One way she tries to ensure of services for her regular customers is to make sure that the same well-trained person is always assigned to work for them.

A. tangibility

B. consistency

C. congruity

D. flexibility

E. compatibility

35. Betty Smith operates a wedding preparation service that aids brides-to-be in the planning of their weddings. To maintain a quality image and a standardized offering, Betty provides extensive training for each of her employees. What unique aspect of services is Betty trying to address?

A. impressionability

B. intangibility

C. inconsistency

D. inseparability

E. uniqueness of the service

36. Don graduated high school and takes his mom to dinner after the ceremony. At the restaurant, the server fills their water glasses, checks on their table, and takes care of their requests. Don notes that the last time he was at this same restaurant, the experience was much worse. This scenario illustrates the of services.

A. impressionability

B. intangibility

C. inseparability

D. uniqueness of the service

E. inconsistency

37. Inseparability in services means consumers

A. see little variation from one service provider in an industry to another.

B. are unable to differentiate price from quality.

C. cannot evaluate a service until it is being used.

D. cannot separate the service from the deliverer of the service.

E. cannot separate themselves from the deliverer of the service.

38. Andrea Arenas is the owner of 2 Places at 1 Time, a concierge company. She and her staff of 60 perform everyday services, such as walking the dog, picking up cleaning, waiting for the repairman, and going to the post office, for people who are too busy to perform these simple acts. She is such a caring person and so well liked that her customers recommend her instead of her business to people who are looking for someone to perform similar services. Their inability to see the distinction between Arenas and her 2

Places at 1 Time concierge service is an example of which unique characteristic of services?

A. intangibility

B. impressionability

C. incongruity

D. inseparability

E. inflexibility

39. When Thelma got her drive-thru order at the fast-food restaurant, she thought Louise, the employee who took her money and gave her order, was cold and unfriendly. The food tasted good but was overshadowed by Louise's demeanor. Every time she has the opportunity, Thelma says something derogatory about the restaurant because she does not distinguish the service deliverer (Louise, the employee who prepared her food and gave it to her) from the service (the fast-food restaurant). Thelma is having a problem with which unique characteristic of services?

A. intangibility

B. impressionability

C. incongruity

D. inseparability

E. inflexibility

40. When banks are closed, they can offer value to their customers through automatic teller machines (ATMs). This self-service technology also comes with a down side since the ATMs are perceived as being less .

A. convenient

B. reliable

C. personal

D. safe

E. accurate

41. Although many people love the self-service technology that allows Redbox to provide DVDs 24 hours a day, many people missed the personal interaction and recommendations from their local clerks from Blockbuster or an independent video store. Redbox confronted this issue by creating a "Redblog" where customers could share their opinions, feelings, and experiences. This is an example of confronting the

A. inventory aspects of services.

B. inseparability aspects of services.

C. inconsistency aspects of services.

D. intangibility aspects of services.

E. impressionability aspects of services.

42. Why are inventory of services different from that of goods?

A. time is less important to customers of services than customers of goods

B. many times, the service provider is unavailable when there is a demand for the service

C. there are costs associated with the handling of service inventory

D. service inventory can be reduced through a straight salary compensation system

E. with goods, many items are perishable

43. A situation that occurs when a service provider is available but there is no demand is referred to as

A. off-peak pricing.

B. idle production capacity.

C. static demand.

D. capacity management.

E. excess inventory.

44. Idle production capacity refers to

A. the minimum number of customers that a service provider can serve and still remain profitable.

B. the maximum number of customers that a service provider must serve in order to remain profitable.

C the ability of a service provider to redirect its efforts so even when there is no primary demand, employees are still able to meet selective demand.

D. a situation that occurs when a service provider is available but there is no demand for the service.

E a situation that occurs when the primary demand for a service exceeds that number of service deliverers available to meet that demand.

45. Idle production capacity refers to

A.a situation where the demand for exceeds the availability of service providers and as a result, no services can be offered.

B. when the supply of service providers exceeds the primary demand for the service.

C. a situation where a service provider is available but there is no demand for the service.

D. integrating the service component of the marketing mix with efforts to influence consumer demand.

E. the potential profits of one service provider serving multiple clients at the same time.

46. The emergency room staff in Houston's largest hospital is surprised and pleased when a four-day Fourth of July weekend brings in few accident victims for treatment. They know from experience that such public holidays usually have high rates of accidents. For the hospital's business office, the lower demand for the emergency room services means

A. a break in the service continuum.

B. its services are no longer tangible.

C. its services can be separated from the staff.

D. the hospital has idle production capacity.

E. an opportunity for gap analysis.

47. Andrea Arenas is the owner of 2 Places at 1 Time, a concierge company. She and her staff of 60 perform everyday services such as walking the dog, picking up cleaning, waiting for the repairman, and going to the post office for people who are too busy to perform these simple acts. She has often been hired by major corporations to perform services for their harried executives, and now many of her major clients are providing perks like her service to their employees. Her staff is overworked and she is hiring more employees to fill demand. Arenas is not experiencing ; in fact, all of her employees are providing the maximum level of services to customers.

A. off-peak pricing

B. idle production capacity

C. static demand

D. capacity marketing

E. capacity inventory

48. Western Airlines operates five flights daily between Chicago and Phoenix during the winter. One flight leaves Phoenix at 12:10 PM. The plane, a Boeing 737, has a capacity of 120 passengers. During the past month, the flight has averaged only 24 passengers, a load factor of 20 percent. Once the plane takes off, the other 96 seats generate no sales and profits to the airline for that flight. What unique aspect of services does this situation describe?

A. incongruity

B. intangibility

C. inconsistency

D. inseparability

E. idle production capacity

49. Many retailers hire additional sales help during the holiday season. This is an example of how service companies deal with .

A. shrinkage

B. seasonal absenteeism

C. economic recessions

D. derived demand

E. inventory carrying costs

50. The cost of a service is the cost of paying the person used to provide the service along with any needed equipment.

A. intangibility

B. inconsistency

C. inseparability

D. inventory

E. hidden

51. Inventory carrying costs can be reduced by

A. using a straight salary compensation plan.

B. hiring additional full-time personnel.

C. allowing personnel to work overtime.

D. increasing the hours worked per week.

E. using a commission compensation system.

52. The inventory costs of services include

A. equipment and training costs.

B. management and material costs.

C. service delivery and spoilage costs.

D. salary of service provider and equipment costs.

E. salary of service provider and training costs.

53. Which of the organizations listed below has the lowest inventory carrying cost?

A. restaurant

B. automobile repair

C. amusement parks

D. employment agencies

E. animal hospital

54. Which of the organizations listed below has the lowest inventory carrying cost?

A. railroad

B. hotel

C. long-term care facility

D. amusement park

E. insurance companies

55. The inventory carrying costs of airlines is high because they

A. use a straight salary compensation plan for the large numbers of flight attendants.

B. high-salaried pilots and very expensive equipment.

C. allow baggage personnel to work overtime.

D. decrease the number of workdays per week, but increase the hours per day.

E. use a commission compensation system for their reservationists.

56. The inventory carrying costs of real estate agencies are low because they

A. use a straight salary compensation plan.

B. have employees who work on commission need little inexpensive equipment.

C. allow personnel to work any hours a day and any number of days per week.

D. decrease the number of workdays per week, but increase the hours per day.

E. are responsible for their own training, transportation, and supplies.

57. The highest inventory carrying costs would most likely be for which of the following services?

A. real estate agencies

B. dry cleaners

C. auto repair centers

D. amusement parks

E. hospitals

58. The range of offerings from the tangible to the intangible or product-dominant to service-dominant is referred to as the

A. service continuum.

B. product continuum.

C. tangibility line.

D. inseparability span.

E. customer contact audit.

59. The range of offerings from the tangible to the intangible or product-dominant to service-dominant is referred to as the

A. product continuum.

B. service continuum.

C. tangibility line.

D. inseparability span.

E. customer contact audit.

60. According to the service continuum shown in Figure 12-3 above, which of the following offerings has the highest level of intangibility?

A. tailored suit

B. advertising agency

C. tutoring service

D. fast-food restaurant

E. salt

61. According to the service continuum shown in Figure 12-3 above, which of the offerings has an almost perfect balance of tangible and intangible attributes?

A. tailored suit

B. tutoring service

C. dog food

D. fast-food restaurant

E. movie theater

62. Services can be classified by

A. their method of delivery.

B. their use of idle capacity time.

C. the nature of their ownership.

D. their location on perceptual maps.

E. organizational reach.

63. Services can be classified according to whether they are , they are profit or nonprofit organizations, or they are government sponsored.

A. national or global

B. use independent contractors

C. privately owned or publicly owned

D. delivered by people or equipment

E. owned by individuals or corporations

64. Services can be classified according to whether they are delivered by people or equipment, they are , or they are government sponsored.

A. national or global

B. use independent contractors

C. privately owned or publicly owned

D. owned by individuals or corporations

E. for profit or nonprofit organizations

65. Services can be classified according to whether they are delivered by people or equipment, whether they are for profit or nonprofit organizations, and whether they are .

A. government sponsored

B. a national organization or a global organization

C. privately owned or publicly owned

D. performed by independent contractors

E. owned by individuals or corporations

66. The categories for people-based services include .

A. volunteers, skilled operators, and professionals

B. unskilled labor, skilled labor, and professionals

C. those operated by skilled operators, unskilled labor and skilled labor

D. those operated by relatively unskilled operators, those operated by skilled operators, and unskilled labor

E. automated, those operated by skilled operators, and professionals

67. Which of the following is the best example of a people-based service?

A. movie theaters

B. airlines

C. advertising agency

D. vending machines

E. taxis

68. Which of the following is the best example of a people-based service?

A. a lawyer

B. movie theaters

C. airlines

D. vending machines

E. taxis

69. What do a security guard, a plumber, and a management consultant share in common?

A. They are all tangible services.

B. They are all people-based services.

C. They do not have problems with idle production capacity.

D. They are all equipment-based services.

E. They never use off-peak pricing.

70. The categories for equipment-based services include .

A. unskilled labor, skilled labor, and professionals

B. volunteers, unskilled and skilled operators, and professionals

C. those operated by relatively unskilled operators, those operated by skilled operators, and unskilled labor

D. those operated by skilled operators, unskilled labor, and professionals

E. automated, those operated by relatively unskilled operators, and those operated by skilled operators

71. The categories for equipment-based services include

A. unskilled labor, those operated by relatively unskilled operators, and automated (self-serve).

B. professionals, those operated by relatively unskilled operators, and automated (self-serve).

C. automated (self-serve), those operated by relatively unskilled operators, and those operated by skilled operators.

D. unskilled labor, skilled labor, and professionals.

E. those operated by skilled operators, unskilled labor, and professionals.

72. Equipment-based services do not have the marketing concerns of

A. intangibility.

B. inseparability.

C. inventory.

D. inconsistency.

E. immeasurability.

73. Equipment-based services do not have the marketing concerns of inconsistency because have been removed from the provision of the service.

A. product liability

B. people

C. learning requirements

D. automation

E. accessories

74. Which of the following is the best example of an equipment-based service?

A. lawn care

B. doctors

C. taxis

D. lawyers

E. janitorial services

75. What do an automated carwash, a limousine service, and an airline have in common?

A. They are all tangible services.

B. They are all people-based services.

C. None of them has problems with idle production capacity.

D. They are all equipment-based services.

E. They never use off-peak pricing.

76. What do a dry cleaning service, an automated carwash, and a taxi service have in common?

A. They are all tangible services.

B. They are all people-based services.

C. None of them has problems with idle production capacity.

D. They never use off-peak pricing.

E. They are all equipment-based services.

77. Equipment-based services like ATMs, online brokerage firms, and automated car washes, do not have the marketing concerns of

A. inconsistency.

B. intangibility.

C. inseparability.

D. inventory.

E. deliverability.

78. For nonprofit organizations, excesses in revenue over expenses are

A. taxed at one-half the rate for profit organizations.

B. distributed equally to all of the organization's shareholders.

C. returned to the organization's treasury for continuation of the service.

D. taxed at a reduced rate if the revenue is to be used in keeping with the organization's core mission.

E. not taxed at all unless it is a religious organization.

79. A nonprofit organization may pay taxes if

A. excess revenues exceed 18 percent of the budget.

B. the organization is not considered to be religious institution.

C. revenue is received from overseas subsidiaries.

D. revenue-generating holdings are not directly related to the organization's core mission.

E. money is spent on research and development, then it is taxed at a significantly lower rate.

80. Recently, many nonprofit organizations such as the American Red Cross

A. were eager to use marketing practices.

B. thought that marketing would limit the profitability of the nonprofit organization.

C. could not afford marketing activities.

D. thought that marketing activities would create excess demand.

E. have increased their use of marketing practices.

81. The American Red Cross uses marketing to help achieve its goals. As a service, it can be classified as

A. a nonprofit organization.

B. people-based.

C. equipment-based.

D. a business firm.

E. a governmental agency.

82. Sterile Feral, Inc. is a nonprofit organization that catches wild or stray cats, and then neuters, vaccinates, and releases them back into the wild. In recent years, nonprofit organizations such as Sterile Feral have turned to marketing to help

A. receive additional government funding.

B. expand its business to stray dogs.

C. maintain its nonprofit status.

D. achieve organizational goals.

E. compete with other similar organizations.

83. The Susan G. Komen for the Cure has used , in addition to its familiar walks and races, to raise more than $1.5 billion for breast cancer research.

A. social marketing

B. private donations

C. sales promotion campaigns

D. green marketing programs

E. sharing of resources

84. The American Red Cross uses social marketing tools such as Facebook, Twitter, and e-mail to increase donations. The campaign raised more than $32 million in response to the Haiti earthquake.

A. All for one and 1% for All

B. Text-to-Donate

C. In for a Penny

D. It All Makes Cents

E. Time for Change

85. The first step a nonprofit organization should take to engage people with social media is to.

A. set specific measurable goals

B. understand what motivates people to take up causes

C. create a simple and realistic operating budget

D. create a well-defined organizational hierarchy

E. develop a unique selling proposition

86. What do the United States Post Service, the U.S. Park Service, and a local fire department have in common?

A. They are all privately owned companies.

B. They do not fit on the service continuum.

C. They are all government-sponsored service providers.

D. They never experience idle production capacity.

E. Capacity management is not an issue for these organizations.

87. What do the United States Post Service, a state health department, and a local fire department have in common?

A. They are all government-sponsored service providers.

B. They never experience idle production capacity.

C. They do not fit on the goods-services continuum.

D. They do not have service encounters.

E. They do not have capacity management problems.

88. According to Figure 12-5 above, purchases labeled "A" would most likely be evaluated on properties.

A. value

B. search

C. credence

D. experience

E. quality

89. According to Figure 12-5 above, purchases labeled "B" would most likely be evaluated on properties.

A. value

B. search

C. credence

D. experience

E. expenditure

90. According to Figure 12-5 above, purchases labeled "C" would most likely be evaluated on properties.

A. value

B. search

C. credence

D. experience

E. expenditure

91. According to Figure 12-5 above, which statement is MOST accurate?

A. Legal services are high in search credence properties, but medical services are high in experience properties.

B. Haircuts are high in experience properties, but barbershops are high is search properties.

C. Jewelry is high in search properties, although diamonds are high in credence properties.

D. Television repair is more difficult to evaluate than restaurant meals.

E. Child care is equally high in search, experience, and credence properties because the decision is so important.

92. Characteristics of tangible goods, such as color, size, and style are considered properties.

A. search

B. form

C. experience

D. credence

E. brand

93. Which of the following is high in search properties?

A. clothing

B. TV repair

C. legal services

D. auto repair

E. medical diagnosis

94. One of the primary differences between tangible goods and services involves a consumer's ability to make prepurchase evaluations. For example, consumers can easily evaluate shoes, jewelry, and skis before making a purchase. On the other hand, consumers can evaluate services such as restaurants, ski instructors, and tanning salons only during or after their purchase. Indeed, tangible products have properties, whereas services have properties.

A. consistent; inconsistent

B. search; experience

C. inconsistent; consistent

D. experience; search

E. gap; encounter

95. Which of the following is high in experience properties?

A. clothing

B. a vacation

C. legal services

D. auto repair

E. a medical diagnosis

96. Services such as restaurants and child care are evaluated on properties.

A. search

B. form

C. experience

D. credence

E. performance

97. Andrea Arenas is the owner of 2 Places at 1 Time, a concierge company. She and her staff of 60 perform everyday services such as walking the dog, picking up cleaning, waiting for the repairman, and going to the post office for people who are too busy to perform these simple acts. She is often hired by major corporations to perform services for their harried executives and their spouses. Her clients can evaluate the services that 2 Places at 1 Time provide

A. only before they are purchased or consumed.

B. only after they are purchased or consumed.

C. only at the same time as they are purchased or consumed.

D. before, during, and/or after they are purchased or consumed.

E. only during consumption or after they are purchased.

98. Sarah has a backache due to overexertion. She believes a massage would loosen her back muscles and make her feel better. She is concerned because a massage, unlike a pair of shoes, cannot be felt before she buys it. Sarah realizes massages have properties.

A. search

B. form

C. experience

D. credence

E. performance

99. When Theresa Martinez relocated from the East to the Midwest, she needed to find a bank with offices in her new state. Several banks offered banking products (checking and savings accounts, loans, certificates of deposit) and other financial products (mutual funds, insurance) that were available from her former bank. After selecting U.S. Bank, Theresa later needed some help with her accounts and went to visit her personal banker. She was very impressed with the banker's attitude and willingness to explain certain items to her in terms she could understand. The service Theresa received from the U.S. Bank banker exhibited properties.

A. credence

B. expertise

C. experience

D. search

E. customer relationship 

100. Services provided by specialized professionals such as medical diagnoses and legal services have certain properties or characteristics that the consumer may find impossible to evaluate even after purchase and consumption. What are these properties called?

A. customer contact properties

B. credence properties

C. capacity properties

D. contract properties

E. relationship properties

101. Which of the following are high in credence properties?

A. clothing

B. vacation

C. jewelry

D. houses

E. medical diagnoses

102. Services performed by surgeons or lawyers are primarily evaluated on properties.

A. search

B. form

C. indirect

D. credence

E. experience

103. To reduce the uncertainty created by properties, service consumers turn to personal sources of information such as opinion leaders, early adopters, and reference group members during the purchase decision process.

A. search

B. credence

C. experience

D. expertise

E. quality

104. Sarah has a toothache. She believes it may be due to her not having regular dental checkups in the past. She now wants to find a dentist, but does not have one that she has used in the past. Because dentistry has properties, Sarah plans to ask her friends for a recommendation for a dentist they like to be sure that she finds a good one.

A. search

B. form

C. experience

D. credence

E. performance

105. Fred White has just accepted a sales position with the ABC Health Maintenance Organization, a major provider of health care services. He had been selling medical supplies for some time and found that he understood how customers bought medical supplies. Which of the following is likely to be a characteristic of the health care services that Fred offers?

A. Customers are engaged in a low involvement purchase process.

B. The quality of services can be predetermined in a similar manner to tangible products.

C. The buyer does not participate in the delivery of the service.

D.A consumer may not have the ability to judge the quality of medical care service even after the service has been provided.

E The service provider should concentrate on the problem recognition stage of the purchase decision process in the marketing of health care services.

106. The type of analysis that compares the differences between consumers' expectations about a service and their experience with it based on dimensions of service quality is referred to as

A. customer relationship management.

B. service encounter differential.

C. gap analysis.

D. a customer contact audit.

E. a service audit.

107.The two basic components of a customer's evaluation of a service are

A. expectations and customer contact.

B. expectations and experience.

C. intangibility and inconsistency.

D. experience and credence.

E. inconsistency and inseparability.

108.How a person establishes expectations for a service not yet experienced is influenced by , personal needs, past experiences, and promotional activities.

A. the economy

B. consumer income

C. word-of-mouth communications

D. competitive trends

E. how the organization delivers its service

109.How a person establishes expectations for a service not yet experienced is influenced by word of mouth communications, , past experiences, and promotional activities.

A. personal needs

B. the economy

C. consumer income

D. competitive trends

E. how the organization delivers its service

110.How a person establishes expectations for a service not yet experienced is influenced by word of mouth communications, personal needs, , and promotional activities.

A. how the organization delivers its service

B. past experiences

C. competitive trends

D. the economy

E. consumer income

111.How a person establishes expectations for a service not yet experienced is influenced by word of mouth communications, personal needs, past experiences, and .

A. the economy

B. consumer income

C. competitive trends

D. promotional activities

E. how the organization delivers its service

112.A son can establish expectations for a service he or she has not yet experienced through word-of- mouth communications, personal needs, past experiences, and promotional activities. However, the actual experience(s) are determined by

A. the way the organization actually delivers its service.

B. the positive reinforcement from friends, family, and peers after the service was provided.

C. repeat encounters with the same service provider.

D. psychological feelings of well-being.

E. a formal post-purchase evaluation or questionnaire.

113.Many restaurants now ask consumers to evaluate their experience on a short questionnaire when they pay their bill. This assessment of consumer expectations and the actual experience they had is called a .

A. gap analysis

B. service encounter survey

C. customer profile analysis

D. customer contact audit

E. service audit

114.There are five key dimensions of service quality:

A. reliability, responsiveness, competence, courtesy, and empathy.

B. knowledge, responsiveness, respect, diligence, and honesty.

C. honesty, respect, empathy, reliability, and diligence.

D. reliability, competence, alacrity, fairness, and product knowledge.

E. reliability, tangibility, responsiveness, assurance, and empathy.

115.As a dimension of service quality, the ability to perform the promised service dependably and accurately is referred to as .

A. reliability

B. responsiveness

C. competence

D. courtesy

E. empathy

116.As a dimension of service quality, the appearance of physical facilities, equipment, personnel, and communication materials as a dimension of service quality is referred to as .

A. communication

B. responsiveness

C. competence

D. tangibility (tangibles)

E. empathy

117.As a dimension of service quality, the willingness to help customers and provide prompt service is referred to as .

A. reliability

B. responsiveness

C. competence

D. assurance

E. empathy

118.As a dimension of service quality, the knowledge and courtesy of employees, and their ability to convey trust and confidence is referred to as .

A. reliability

B. responsiveness

C. competence

D. assurance

E. empathy

119.As a dimension of service quality, the caring, individualized attention provided to customers as a dimension of service quality is referred to as .

A. reliability

B. responsiveness

C. competence

D. assurance

E. empathy

120.The dimension of service quality called is the ability to perform the promised service dependably and accurately.

A. reliability

B. assurance

C. accuracy

D. responsiveness

E. empathy

121.The dimension of service quality called is the appearance of physical facilities, equipment, personnel, and communication materials.

A. assurance

B. reliability

C. responsiveness

D. empathy

E. tangibility (tangibles)

122.The dimension of service quality called is willingness to help customers and provide prompt service.

A. assurance

B. reliability

C. responsiveness

D. empathy

E. sympathy

123.The dimension of service quality called is knowledge and courtesy of employees and their ability to convey trust and confidence.

A. assurance

B. sympathy

C. empathy

D. responsiveness

E. reliability

124.The dimension of service quality called is caring, and individualized attention provided to customers.

A. assurance

B. reliability

C. responsiveness

D. empathy

E. sympathy

125.Sandy needs to have her car repaired. She is a member of the American Automobile Association (AAA) and knows that they evaluate car repair shops. Furthermore, the shop she is considering displays the AAA seal of approval. It also is clean and organized. She believes this is a good way to predict the quality of the service she will receive. Sandy bases her opinion of car repair shops on the basis of which service quality dimension?

A. assurance

B. tangibility (tangibles)

C. reliability

D. responsiveness

E. empathy

126.Sterile Feral, Inc. is a nonprofit organization that catches wild or stray cats, and then neuters, vaccinates, and releases them back into the wild. Veterinarians are particularly impressed with how dependably the organization is able to perform its promised service. With which service quality dimension are veterinarians most impressed?

A. assurance

B. tangibility

C. reliability

D. credibility

E. empathy

127.Arnett is looking for a new Web portal to use to access information that interests him on the Internet. The one he currently uses is too slow when loading web pages because each page is cluttered with ads and videos. In terms of the service quality dimensions, Arnett is unhappy with which dimension of this service?

A. assurance

B. tangibility

C. reliability

D. responsiveness

E. empathy

128.Sterile Feral, Inc. is a nonprofit organization that catches wild or stray cats, and then neuters, vaccinates, and releases them back into the wild. The personnel of the nonprofit organization are caring people who love animals and try to do what they can to meet the needs of each cat they care for. The caring nature of the personnel relates to which service quality dimension?

A. assurance

B. tangibility

C. reliability

D. credibility

E. empathy

129. According to Figure 12-6 above, "A" represents which dimension of service quality?

A. reliability

B. tangibility (tangibles)

C. responsiveness

D. assurance

E. empathy

130. According to Figure 12-6 above, "B" represents which dimension of service quality?

A. reliability

B. assurance

C. empathy

D. tangibility (tangibles)

E. responsiveness

131. According to Figure 12-6 above, "C" represents which dimension of service quality?

A. reliability

B. empathy

C. tangibility (tangibles)

D. assurance

E. responsiveness

132. According to Figure 12-6 above, "D" represents which dimension of service quality?

A. reliability

B. empathy

C. assurance

D. tangibility (tangibles)

E. responsiveness

133. According to Figure 12-6 above, "E" represents which dimension of service quality?

A. reliability

B. empathy

C. tangibility (tangibles)

D. assurance

E. responsiveness

134.Another name for the steps in the service delivery process is .

A. service interactions

B. access points

C. path-analysis

D. service encounters

E. wheel of services

135.A tomer contact audit refers to

A. the initial contact between a service provider and the ultimate consumer.

B. a flowchart of the points of interaction between a consumer and a service provider.

C. a method of consumer evaluation of service quality and consistency.

D. an estimation of demand based on service forecasting techniques.

E. is a systematic assessment of a service provider's objectives, strategies, and performance in terms of social responsibility.

136.A wchart of the points of interaction between a customer and a service provider is referred to as

A. a service continuum.

B. gap analysis.

C. a customer contact audit.

D. a customer contact continuum.

E. a service audit.

137.Recent research suggests that and sincerity of the interactions affect the success of the relationships.

A. reliability

B. authenticity

C. responsiveness

D. tangibles

E. friendliness

138.Ron had a craving for sushi so he searched yellowpages.com for the name of a restaurant in his vicinity that serves this type of food. When he arrived at his destination, he was impressed with the menu posted outside the door and decided to go in. He was greeted with a smile by a hostess and then immediately seated at a well-appointed table where he was given a warm cloth for his hands. The food was beautifully presented, the rice was the perfect texture and temperature, and the fish was fresh and delicious. Halfway thought the meal, he excused himself to go to the restroom. It was clean, but unfortunately was out of paper towels. He returned to his table, finished his meal, and paid his check. The hostess said goodbye and asked him to return. The first point in his customer contact audit was .

A. searching yellowpages.com

B. reading the menu on the door

C. being greeted by the hostess

D. being seated at his table

E. receiving his meal

139.Ron had a craving for sushi so he searched yellowpages.com for the name of a restaurant in his vicinity that serves this type of food. When he arrived at his destination, he was impressed with the menu posted outside the door and decided to go in. He was greeted with a smile by a hostess and then immediately seated at a well-appointed table where he was given a warm cloth for his hands. A waiter beautifully presented the food, the rice was the perfect texture and temperature, and the fish was fresh and delicious. Halfway thought the meal, he excused himself to go to the restroom. It was clean, but unfortunately was out of paper towels. He returned to his table, finished his meal, and paid his check. The hostess said goodbye and asked him to return. Which of the following statements about this scenario is MOST accurate?

A Reading the menu posted outside the door was Ron's first point of interaction in the customer contact audit because if he hadn't liked the selections, he wouldn't have gone into the restaurant.

B Being greeted by the hostess was the first point of interaction in the customer contact audit because it was the first encounter with the actual service provider—the restaurant.

C The first point of interaction in the customer contact audit wasn't written, it was implied. The real first point in the customer contact audit should have been between Ron and the waiter, not Ron and the hostess.

D The lack of paper towels in the restroom was the first point of interaction in the customer contact audit because it was the first time his expectations weren't met.

E The yellowpages.com ad, the menu on the door, the hostess's greeting, the waiter, the quality and presentation of food, and even the restroom were all important points of a contact.

140.Which of the following is a point in the customer contact audit for a health club?

A. participating in the health club's exercise class

B. the customer's diet

C. too much traffic on the way to the club

D. a willingness to exercise

E. meeting an attractive gym member

141.Which of the following statements about service failures is MOST accurate?

A. Only 5-10% of dissatisfied customers choose to complain to the company.

B. Once customers complain, they expect all of their demands to be met.

C. Only 20% of consumers will give a company a second chance if they are not fully satisfied during the first encounter.

D. People are twice as likely to share good service experiences as bad experiences.

E Monitoring social media websites such as YouTube, Twitter, and Facebook are a waste of time since the complaints presented are usually isolated instances and are not indicative of the actual service delivered.

142.Most public relations experts agree that it is best for a company to comments about it on the Internet.

A. ignore

B. argue with

C. respond to

D. blog about

E. consider

143.Which of the following statements about relationship marketing is most accurate?

A. The number of encounters in a service experience should always be the same.

B. The service encounter represents an opportunity to develop social bonds with customers.

C. An after-holiday sale is a good incentive to create a loyal customer relationship.

D. The purpose of relationship marketing is to benefit the customer, not the organization.

E. A major customer benefit of relationship marketing is a reduction in the price that is paid for services rendered.

144.Relationship marketing provides several benefits for service customers, including: (1) ; (2) customized service delivery; (3) reduced stress due to a repetitive purchase process; and (4) an absence of switching costs.

A. the continuity of a single provider

B. no need for comparison shopping

C. discounted switching costs

D. implied warranties

E. strict government quality performance guidelines

145.Relationship marketing provides several benefits for service customers, including: (1) the continuity of a single provider; (2) customized service delivery; (3) ; and (4) an absence of switching costs.

A. no need for comparison shopping

B. reduced stress due to a repetitive purchase process

C. discounted switching costs

D. implied warranties

E. strict government quality performance guidelines

146.Relationship marketing provides several benefits for service customers, including: (1) the continuity of a single provider; (2) customized service delivery; (3) reduced stress due to a repetitive purchase process; and (4) .

A. no need for comparison shopping

B. implied warranties

C. discounted switching costs

D. an absence of switching costs

E. strict government quality performance guidelines

147.Recent surveys of consumers have indicated that while customers of many services are interested in being "relationship customers," they require that the relationship be balanced in terms of

A. honesty, a lack of prejudice, and empathy.

B. loyalty, benefits, and respect for privacy.

C. loyalty, honesty, and integrity.

D. financial benefits, product benefits, and preferential treatment.

E. financial benefits, product benefits, and personal benefits.

148.An expanded marketing mix for services that includes the four Ps (product, price, promotion, and place or distribution) as well as people, physical environment, and process, is referred to as the .

A. seven Ps of services

B. service matrix

C. service continuum

D. service encounters

E. the service mix

149.While there are 4 Ps of marketing, there are Ps of services.

A. 3

B. 5

C. 6

D. 7

E. 8

150.All of the following comprise the seven (7) Ps of services marketing EXCEPT:

A. product.

B. process.

C. profitability.

D. people.

E. physical environment.

151.The use of brand names is especially important for services because of which unique characteristic of services?

A. inventory costs

B. inseparability

C. inconsistency

D. invisibility

E. intangibility

152.Which of the following statements regarding service branding is MOST accurate?

A. Because services are intangible and more difficult to describe, brand names and logos are of critical importance.

B. Because the classification of services is so complex, it is far more difficult to find a brand name that hasn't already been taken.

C Services must include the word "service" in all their brand names to assure that customers understand they are not purchasing a product.

D Service firms with a well-established brand reputation and service firms without a brand reputation both find it easy to introduce new services.

E. Service logos and brands must designated by the "®" symbol while consumer products are designated by the "SM" symbol.

153.Which of the following statements regarding service branding is MOST accurate?

A.Because the classification of services is so complex, it is far more difficult to find a brand name that hasn't already been taken.

B Services must include the word "service" in all their brand names to assure that customers understand they are not purchasing a product.

C Service firms with a well-established brand reputation will also find it easier to introduce new services than firms without a brand reputation.

D. Many consumers are suspicious of companies that offer too many services under the same brand name.

E Many service organizations, such as banks, hotels, and restaurants do not rely heavily on branding because of the extent to which they are people-dominated services.

154.The FedEx brand suggests the possibility that it is government sanctioned and fast. This perception is important because of which unique characteristic of services?

A. inventory costs

B. inseparability

C. inconsistency

D. invisibility

E. intangibility

155.Which of the following is the most important aspect conveyed by the FedEx brand?

A. its international experience

B. differentiation and an image of quality

C. the ownership of the company

D. the nonprofit aspect of the company

E. the patent for its service

156.Tuition, charges, fares, and rates are all

A. names given to the tangible portion of the price of a service.

B. names that are interchangeable when identifying the price of a service.

C. names given to the intangible portion of the price of a service.

D. names given to the price of services.

E. terms used in services to imply a higher quality product than the terms "cost" or "price."

157.Tuition, charges, fares, and rates are all

A. euphemisms for the name "price" to the price factor in services.

B. names given to the price of services.

C. names given to the intangible portion of the price of a service.

D. names that are interchangeable when identifying the price of a service.

E. terms used in services to imply a higher quality product than the terms "cost" or "price."

158.Because of the intangible nature of services, consumers often perceive price as a possible indicator of of the service.

A. the profit or ROI

B. the customer value

C. the quality

D. the target market

E. the cost

159.When customers buy services, they also consider nonmonetary costs, such as the and efforts required to consume the service.

A. emotional; physical

B. mental; physical

C. psychological; intellectual

D. physical; moral

E. physical; ethical

160.One tool available for services when trying to balance demand is .

A. off-peak pricing

B. product lay-away

C. credit incentives

D. container sales

E. product rationing

161.Service providers use tools such as , which consists of charging different prices for different times of the day or during different days of the week to reflect the variations in demand for their services.

A. scale pricing

B. capacity pricing

C. down-time pricing

D. off-peak pricing

E. fraction pricing

162.Many service businesses use off-peak pricing to reflect variations in

A. costs of delivering service.

B. demand for the service.

C. profitability based on time of day or week.

D. promotional events.

E. government regulations.

163.Charging different prices during different times of the day or during different days of the week to reflect variations in demand for a service is referred to as

A. capacity pricing.

B. idle production pricing.

C. customer contact pricing.

D. derived demand pricing.

E. off-peak pricing.

164.The less-expensive matinee movie pricing offered on shows prior to 4:00 PM is an example of

A. price lining.

B. price differentiation.

C. off-peak pricing.

D. bait-and-switch pricing.

E. idle production pricing.

165.Commuters in New York often have often installed radio frequency identification (RFID) devices on their cars that can be read automatically as they approach a tollbooth. This saves time, improves traffic flow, and means drivers don't need to keep exact change in their cars. It also offers New York authorities the opportunity to manage traffic flow by charging different toll amounts for different times of day. Commuters in New York are experiencing

A. price gouging.

B. off-peak pricing.

C. flow management pricing.

D. price differentiation.

E. idle production pricing.

166.A or factor in developing a service marketing strategy is because of the inseparability of services from the producer.

A. product

B. price

C. promotion

D. place

E. process

167.Which of the following statements regarding the place element of services is MOST accurate?

A.Place has little impact on the marketing of services because there are so many intermediaries from which a consumer may choose.

B. The distribution site and the service provider are the intangible components of the service.

C. Place is especially important factor because of the inconstancy between the service and the service provider.

D. Until recently, customers generally had to go to the service provider's physical location to purchase the service.

E Technology is an effective way to bring services to the customer, but only if the consumer is a new user; otherwise, the disadvantages outweigh the benefits.

168.A licity tool frequently used by nonprofit services, which uses free space or time donated by the media is referred to as a(n)

A. promotion.

B. advertisement.

C. public service announcement.

D. press release.

E. cooperative advertisement.

169.Many nonprofit organizations have used PSAs in their media planning. What does the acronym "PSA" stand for?

A. public stakeholder announcement

B. public sustainability announcement

C. public service announcement

D. public service annunciation

E. promotional service announcement

170.The notion that a service organization must focus on its employees before successful programs can be directed at customers is referred to as

A. internal analysis.

B. internal marketing.

C. external marketing.

D. stakeholder marketing.

E. employee marketing.

171.The concept of internal marketing is based on the notion that a service organization must focus on its before successful programs can be directed at customers.

A. competitors

B. prospects

C. shareholders

D. employees

E. suppliers

172.Edinberry's, a restaurant located in south Texas, offers a variety of foods and entertainment opportunities to its customers. The restaurant is famous for its fine steaks, spicy chili, and outstanding customer service. In order to maintain the restaurant's reputation for putting its customers first, the marketing manager at Edinberry's has developed marketing activities that are directed at the waiters and waitresses. These marketing activities are an example of and are designed to help the restaurant employees to maintain an exceptional customer experience.

A. internal marketing

B. external marketing

C. service marketing

D. stakeholder marketing

E. employee marketing

173.The process of managing the entire customer experience with the company is referred to as

A. services marketing.

B. internal marketing.

C. customer experience management.

D. relationship marketing.

E. gap analysis.

174.The customer experience management (CEM) process should

A. allow for spontaneity and not be too rigid or planned.

B. be unique to each individual customer's experience.

C. stress the similarities in style, function, and form of their service relative to the top competitors in the industry.

D. differentiate a service from other service offerings.

E. be performed by someone outside the firm to guarantee objectivity.

175.The appearance of the environment in which the service is delivered and where the firm and customer interact can influence the customer's of the service.

A. repeat usage

B. evaluation

C. exploitation

D. utilization

E. perception

176.The buildings, landscaping, vehicles, furnishings, signage, brochures, and equipment comprise which of the seven Ps of services marketing?

A. process

B. place

C. physical environment

D. productivity

E. product

177.Service companies can manage their physical environment to influence customers' perceptions is through

A. service delivery management.

B. relationship management.

C. customer experience management.

D. exposure management.

E. impression management.

178.The actual procedures, mechanisms, and flow of activities by which a service is created and delivered is referred to as .

A. a process

B. a procedure

C. productivity

D. a protocol

E. a plan

179.In the seven Ps of services, the term "process" refers to

A. the patented steps of service encounters that distinguish one service provider from another.

B. licensed procedures that have met ISO 9000 guidelines for safety.

C. the procedures, mechanisms, and flow of activities by which the service is created and delivered.

D. a protocol for behaviors and activities for people-based rather than technology-based services.

E. the decisions consumers' make during the purchase of services.

180.In the seven Ps of services marketing, the term "process" involves not only "what" gets created but also

A. "if" it gets created at all.

B. "how" it gets created.

C. "when" it gets created.

D. for "whom" it gets created.

E. "why" it gets created.

181.A is very important to the process aspect of services because it helps identify steps that will ultimately lead to better service creation and delivery processes.

A. customer contact audit

B. internal marketing review

C. tangibility gap analysis

D. service continuum

E. consumer experience audit

182.Integrating the service component of the marketing mix with efforts to influence consumer demand is referred to as .

A. customer management

B. internal marketing

C. product management

D. capacity management

E. eight Ps of services marketing

183.Capacity management refers to

A. integrating the service component of the marketing mix with efforts to influence consumer demand.

B. when the service provider is available but there is no demand.

C charging different prices during different times of the day or during different days of the week to reflect variations in demand for the service.

D. the practice of changing prices for services in real time in response to supply and demand conditions.

E.the operating cost per hour per employee or technology subtracted from the revenue generated by each full-time employee equivalent.

184.Airlines feature load factor as a(n) measure on their marketing dashboards.

A. productivity

B. price differentiation

C. tangibility

D. capacity management

E. profitability

185.Airlines feature load factor as a capacity management measure on their marketing dashboards, along with two other measures; namely the operating expense per available seat flown one mile and , which is the revenue generated by each seat flown one mile.

A. profit per passenger

B. average price per passenger

C. internal ROI

D. unit variable sales

E. yield

186.Airline load factor refers to

A. the percentage of paying customer seats flown one mile plus frequent flyer redemption seats flown one mile.

B. the percentage of empty seats on a plane compared to its total capacity.

C. the percentage of available seats flown one mile occupied by a paying customer.

D. the percentage of seats that are overbooked on any given flight to prevent profit shortfalls for "no shows."

E the total of all paid seats plus all luggage overcharges and all purchased beverages, meals, and other amenities or additional services, per flight.

187. The percentage of available seats flown one mile occupied by a paying customer is shown in the capacity management marketing dashboard above as .

A. 9.83%

B. 82.1%

C. 8.28%

D. 18.11%

E. 1.55%

188. The revenue generated by each seat flown one mile is shown in the capacity management marketing dashboard above as

A. 9.83 cents.

B. 82.1 cents.

C. 8.28 cents.

D. 18.11 cents.

E. 7.99 cents.

189. The marketing dashboard for JetBlue Airways shown in the capacity management marketing dashboard above indicates that JetBlue posted a(n) profit/loss per available seat flown one mile.

A. 9.83 cent profit

B. 1.55 cent profit

C. 1.27 cent profit

D. 0.21 cent loss

E. 8.28 cent loss

190. Assuming the information shown in the JetBlue capacity management marketing dashboard above will not change in the near future, what actions would recommend that JetBlue take?

A. Proceed as in the past; JetBlue is clearly profitable.

B. Use advertising to let consumers know how JetBlue currently meets their needs.

C. Change the flight schedules to accommodate travelers' needs and advertise these changes.

D. Keep the flight schedule as it is and reduce the price per flight.

E. There is not enough information in the marketing dashboard to suggest an action to take.

191.Changes in the services industry in the future will primarily be driven by two factors. They are technological development and

A. reverse marketing.

B. sustainable development.

C. global development.

D. global service branding.

E. the elimination of ethnocentricity.

192.The key elements of future services include , convergence, and personalization.

A. automation

B. transglobalization

C. mobility

D. divergence

E. convenience

193.The key elements of future services include , mobility, and personalization.

A. automation

B. transglobalization

C. convenience

D. divergence

E. convergence

194.The key elements of future services include , mobility, and convergence.

A. automation

B. transglobalization

C. cooperation

D. personalization

E. convenience

195.Mobility as a future aspect of services refers to

A. the ability of networking technology to be incorporated into portable digital devices.

B. the ability to transport goods almost anywhere in the world within 24 hours.

C. the ability to transfer entire operations including a firm's technology from one location to the next within a matter of days.

D. the ability of consumers to purchase any service from any service provider anywhere in the world.

E. the ability of service providers to move their operations to any location in the world.

196.The trend toward sustainability and "green" business practices has expanded to include many services as they strive to

A. comply with FDA rules.

B. increase their energy use.

C. reduce their capacity.

D. create a competitive advantage.

E. minimize consumer involvement.

197.The Philadelphia Phillies are marketing what "product?"

A. a baseball game

B. popular players

C. a fun experience

D. a winning team

E. competitive spirit

198.The Philadelphia Phillies best type of advertising is/are

A. TV ads.

B. personal selling.

C. coupons.

D. word of mouth.

E. contests.

199.The Phillies segment their fans primarily upon what basis?

A. location

B. interests

C. promotion

D. age

E. income

200.Which of the following statements regarding the Phillies special promotions nights is most accurate?

A. Although they foster good will in the community, there is little change in attendance.

B Regular and diehard fans tend to stay away because they are too distracted by children who are only there for the "free gifts" (bats, balls, bobble head dolls, etc.).

C Attendance remains steady but people tend to spend more money during special event days because there is a greater sense of fun and excitement.

D. Game attendance can increase by 30 to 35 percent during special event days.

E. Game attendance increases by 25 percent with the bump in attendance usually lasting throughout the entire month.

201.An additional benefit of a Phillies special promotions night is that it not only does boosts overall attendance, it

A. generates first-time visits from fans who have never attended a Major League Baseball game.

B. generates premiums (wristbands, caps, bats, etc.) from new companies interested in offering a promotion to gain positive exposure.

C. helps regulate local traffic since people arrive early to be sure they get the free gift.

D helps keep children quiet during the game since they're playing with their free gift and not bothering their parents or other game attendees.

E. creates a heightened sense of excitement and anticipation for the game.

202.The Phillies "special promotions days" fall into three distinct categories:

A. theme nights, event days, and premium gift days.

B. team-oriented, fan-oriented, and family-oriented.

C. revenue generating, market share building, and goodwill generating.

D. ticket discounts, trip giveaways, and contests.

E. televised games, community outreach, and loyal fan promotions.

203.The Philadelphia Phillies offer different promotions to meet the needs of specific segments. Offering discounts on dinners would most likely be targeted towards .

A. diehard baseball fans

B. ball team members, their families, and friends

C. married families with children

D. 20- and 30-somethings

E. seniors 60 years and older

204.The Philadelphia Phillies uses the Phanatic to help the fans evaluate their experience, since a ball game experience is

A. intangible.

B. tangible.

C. inventory.

D. inconsistent.

E. imperfect.

205.The Phillie Phanatic had his own book signing at Barnes and Noble in Exton, PA, for the children's book series The Phillie Phanatic's Happiest Memories, The Phillie Phanatic's Moving Day, The Phillie Phanatic's Phantastic Journey, and Happy Birthday Phillie Phanatic. If the baseball team were trying to get people to the game, why would they host an activity away from the stadium?

A. They are trying to build future attendees but they don't want younger children bothering people during the games.

B. They need to generate revenue during the months when the stadium is closed.

C. It generates team spirit, adds to non-ticket revenues, and cultivates fans for the future.

D. Phillie Phanatic is used to reduce hostility towards the team when they have a losing season.

E. The new stadium was built significantly smaller and cannot hold as many activities on the premises.

 

James Gilmore and Joseph Pine explain, “The more contrived the world seems, the more we all demand what is real.”  In terms of marketing, this simply means

a.   consumers cannot really tell the difference between illusion and reality.

b.   reality aside, give customers what they think they want.

c.   good marketing can make even the impossible—possible.

d.   what we want and what we can have are two totally different things.

e.   consumers want engaging, personal, memorable, and authentic offerings.

The __________ focuses on performing services that provide a unique experience.

a.   intangibility economy

b.   experience economy

c.   virtual economy

d.   magic of marketing

e.   authentic economy

Consumers are no longer content with affordable, high quality purchases; they want __________.

a.   offerings that reflect their self-image

b.   consistent quality

c.   to be treated as special one-of-a-kind buyers

d.   total customer satisfaction

e.   to feel as if they are in control of the entire purchasing process

There are several ways of providing consumers authentic offerings: (1) __________; (2) provide personal interaction rather than automation; (3) create a social process that allows consumers to share their interests; and (4) manage any dimension of their reputation that might influence perceptions of authenticity.

a.   allow for adaptability at every customer contact point

b.   back up claims with scientific research, market research, or governmental documentation

c.   facilitate customer customization

d.   do thorough research at each stage of the new-service development process

e.   obtain personal endorsements from celebrity spokespeople and other opinion leaders

There are several ways of providing consumers authentic offerings: (1) facilitate customization; (2) __________; (3) create a social process that allows consumers to share their interests; and (4) manage any dimension of their reputation that might influence perceptions of authenticity.

a.   allow for adaptability at every customer contact point

b.   back up claims with scientific research, market research, or governmental documentation

c.   do thorough research at each stage of the new-service development process

d.   provide personal interaction rather than automation

e.   obtain personal endorsements from celebrity spokespeople and other opinion leaders

There are several ways of providing consumers authentic offerings: (1) facilitate customization; (2) provide personal interaction rather than automation; (3) __________; and (4) manage any dimension of their reputation that might influence perceptions of authenticity.

a.   allow for adaptability at every customer contact point

b.   back up claims with scientific research, market research, or governmental documentation

c.   do thorough research at each stage of the new-service development process

d.   obtain personal endorsements from celebrity spokespeople and other opinion leaders

e.   create a social process that allows consumers to share their interests

There are several ways of providing consumers authentic offerings: (1) facilitate customization; (2) provide personal interaction rather than automation; (3) create a social process that allows consumers to share their interests; and (4) __________.

a.   allow for adaptability at every customer contact point

b.   back up claims with scientific research, market research, or governmental documentation

c.   manage any dimension of a firm’s reputation that might influence perceptions of authenticity

d.   do thorough research at each stage of the new-service development process

e.   obtain personal endorsements from celebrity spokespeople and other opinion leaders

One way to provide consumers authentic offerings is to provide personal interaction.  Which of the following actions provides the best example of this approach?

a.   Geico advertises that its insurance specialists are available 24/7 (24 hours per day, 7 days per week).

b.   iPods allow customers to create personalized playlists.

c.   YouTube, Twitter, and Facebook create a forum for expressing personal experiences.

d.   Cirque du Soleil combines the original elements of street performance, the circus, and live theater.

e.   Bloomingdales provides dressing rooms with huge electronic mirrors.

Services refer to

a.   ideas that consist of a bundle of tangible and intangible attributes that satisfies consumers’ needs and is received in exchange for money or something else of value.

b.   intangible activities or benefits that an organization provides to satisfy consumers’ needs in exchange for money or something else of value.

c.   philanthropic activities performed in without expectations of monetary remuneration.

d.   any intangible activity that provides a benefit to a consumer that he or she could not have obtained or performed on his or her own.

e.   any tangible activity that provides a benefit to a consumer that he or she could not have obtained or performed on his or her own.

Intangible activities or benefits that an organization provides to satisfy consumers’ need in exchange for money or something else of value are referred to as __________.

a.   virtual experiences

b.   intangible benefits

c.   intangible goods

d.   product concepts

e.   services

Intangible items such as airline trips, financial advice, or telephone calls that an organization provides to consumers are referred to as

a.   production goods.

b.   support products.

c.   services.

d.   goods.

e.   benefits.

Which of the following statements about services is MOST accurate?

a.   Although a major contributor to the GDP nationally, services play only a minor role in GDP on a global scale.

b.   Whether tangible or not, the marketing of services is exactly the same as the marketing of products or ideas since they both satisfy customer needs.

c.   Almost 35% of all jobs created in the United States are in the services sector.

d.   In the U.S., more than 47% of the GDP comes from services.

e.   There is much more in common with the marketing of services and business products than there is between the marketing of services and consumer products.

Which of the following statements about services is MOST accurate?

a.   Whether tangible or not, the marketing of services is exactly the same as the marketing of products or ideas since they both satisfy customer needs.

b.   Although a major contributor to the GDP nationally, services play only a minor role in GDP on a global scale.

c.   Services represent a large export business; it is one of the few areas where the United States has a trade surplus.

d.   Very few jobs in the United States are in the services sector.

e.   There is much more in common with the marketing of services and business products than there is between the marketing of services and consumer products.

 

As shown in Figure 12-1 above, which of the following statements is MOST accurate?

a.   Services are a smaller part of the gross domestic product than are goods.

b.   In 2010, goods represent a larger part of the gross domestic product than services.

c.   In 1995, services were worth almost $1 billion.

d.   Until 1980, goods and services contributed almost equally to the gross domestic product (GDP).

e.   In 2010, goods were 50 percent of the GDP.

There are four unique elements to services—intangibility, inconsistency, inseparability, and inventory—which are referred to as the __________.

a.   service mix

b.   four I’s of services

c.   service matrix

d.   span of services

e.   service continuum

The four I’s of services consist of

a.   intangibility, inconsistency, inseparability, and innovation.

b.   intangibility, inconsistency, inseparability, and impression.

c.   intangibility, inconsistency, inseparability, and inventory.

d.   intangibility, inventory, innovation, and impression.

e.   intangibility, inconsistency, innovation, and impression.

The four I’s of services consist of

a.   inflexibility, intangibility, inconsistency, and inseparability.

b.   intangibility, inconsistency, inseparability, and inventory.

c.   incompatibility, inconsistency, inseparability, and inventory.

d.   invisibility, inconsistency, inseparability, and intangibility.

e.   inflexibility, incongruity, inconsistency, and inventory.

The intangibility element of a service refers to the fact that it

a.   has value that can only be determined by using subjective criteria.

b.   can’t be held, seen, or touched before the purchase decision.

c.   cannot be described, only experienced.

d.   can maintain or accumulate inventory.

e.   can be objectively evaluated.

Because services tend to be a(n) __________ rather than an object, they are much more difficult for consumers to evaluate.

a.   opportunity

b.   performance

c.   adventure

d.   risk

e.   decision

To help consumers assess and compare services, marketers try to make them __________ or show the benefits of using the service.

a.   tangible

b.   intangible

c.   consistent

d.   timely

e.   measurable

To help consumers assess and compare services, marketers try to make them tangible or __________.

a.   temporal

b.   consistent

c.   adaptable

d.   measurable

e.   show the benefits of using the service

The Singapore Airlines ad in the textbook shows a traveler in the airline’s new seats and also emphasizes food and other amenities to overcome the __________ of its service.

a.   incongruity

b.   inconsistency

c.   inventory costs

d.   inseparability

e.   intangibility

Sarah has a backache due to overexertion.  She believes a massage would loosen her back muscles and make her feel better.  She is concerned because a massage, unlike a pair of shoes, cannot be held, touched, or seen before she buys it.  Which characteristic of services is she concerned about?

a.   incongruity

b.   inconsistency

c.   inventory costs

d.   inseparability

e.   intangibility

Before moving out of their apartment, Brad and Kim Westgate decided to have their carpets cleaned by ServiceMaster, a company specializing in professional carpet cleaning.  The carpet cleaners arrived at Brad and Kim’s apartment, unpacked their equipment, cleaned the carpets, packed up their tools, and drove away in their bright yellow van.  The service provided by ServiceMaster could not be held, touched, or seen before the purchase decision.  This scenario illustrates the __________ of services.

a.   inconsistency

b.   inseparability

c.   inventory costs

d.   intangibility

e.   interdependence

Consumers have more difficulty evaluating services than they do products; the difficulty results from the

a.   intangibility of services.

b.   incongruity of services.

c.   inseparability of services.

d.   inflexibility of services.

e.   interdependence of services.

To help consumers assess and compare its airline service, Frontier Airlines uses personable animal characters in its advertising to announce and describe benefits, such as leather seats and “stretch” seating, to help deal with the

a.   intangibility of the service.

b.   incongruity of the service.

c.   inseparability of the service.

d.   inflexibility of the service.

e.   interdependence of the service.

The brochure for Spa Sydell has photographs of people enjoying the various spa amenities.  By seeing the pictures of what is available at the spa, a customer has a better idea of what she is buying.  Spa Sydell uses a brochure to help customers deal with the __________ that is associated with using the service.

a.   incongruity

b.   inconsistency

c.   inventory costs

d.   inseparability

e.   intangibility

Services depend on the people who provide them.  As a result, their quality varies with each person’s capabilities and day-to-day job performance.  This element of services is referred to as __________.

a.   variation

b.   differentiation

c.   evaluation

d.   inconsistency

e.   intangibility

Developing, pricing, promoting, and delivering services is challenging because the quality of a service is often

a.   inseparable.

b.   inconsistent.

c.   inventoried.

d.   tied to a product.

e.   independent of the quality delivered.

Developing, pricing, promoting, and delivering services are challenging because the quality of the service is often inconsistent.  Organizations attempt to reduce this inconsistency by

a.   paying higher incentives to employees to encourage satisfactory performance.

b.   reducing incentives available to employees because of poor performance.

c.   reducing the customer contact points in the service delivery process.

d.   providing standardization and training.

e.   exercising better hiring practices.

Inconsistency of services refers to the fact that

a.   there is no regulation of service industries in terms of basic standards of quality.

b.   the quality of service provided by a firm is often inconsistent with its image.

c.   the performance of one employee may vary from the performance of another employee even though the same firm employs both.

d.   training and standardization of service delivery procedures cannot be accomplished.

e.   services have a varying degree of durability.

Organizations attempt to reduce the inconsistency of service delivery through

a.   higher incentives to employees for satisfactory performance.

b.   pay reductions for poor employee performance.

c.   the reduction of customer contact points in the service delivery process.

d.   standardization and training.

e.   employing technology.

Students from Berry College attended a performance at nearby Shorter College and were extremely impressed with the dance troupe that was the opening act.  As soon as the students returned to Berry, they made arrangements for the entertainers to appear on their campus.  On the day of the concert, the venue was packed with students, but the quality of the performance was much poorer than they had seen at the Shorter campus.  The Berry students’ disappointment was the direct result of which characteristic of services?

a.   inconsistency

b.   impressionability

c.   intangibility

d.   invisibility

e.   uniqueness of the service

Andrea Arenas is the owner of 2 Places at 1 Time, a concierge company.  She and her staff of 60 perform everyday services, such as walking the dog, picking up cleaning, waiting for the repairman, and going to the post office, for people who are too busy to perform these simple acts.  One way she tries to ensure ___________ of services for her regular customers is to make sure that the same well-trained person is always assigned to work for them.

a.   tangibility

b.   consistency

c.   congruity

d.   flexibility

e.   tangibility

Betty Smith operates a wedding preparation service that aids brides-to-be in the planning of their weddings.  To maintain a quality image and a standardized offering, Betty provides extensive training for each of her employees.  What unique aspect of services is Betty trying to address?

a.   impressionability

b.   intangibility

c.   inconsistency

d.   inseparability

e.   uniqueness of the service

Don graduated high school and takes his mom to dinner after the ceremony.  At the restaurant, the server fills their water glasses, checks on their table, and takes care of their requests.  Don notes that the last time he was at this same restaurant, the experience was much worse.  This scenario illustrates the ___________ of services.

a.   impressionability

b.   intangibility

c.   inseparability

d.   uniqueness of the service

e.   inconsistency

Inseparability in services means consumers

a.   see little variation from one service provider in an industry to another.

b.   are unable to differentiate price from quality.

c.   cannot evaluate a service until it is being used.

d.   cannot separate the service from the deliverer of the service.

e.   cannot separate themselves from the deliverer of the service.

Andrea Arenas is the owner of 2 Places at 1 Time, a concierge company.  She and her staff of 60 perform everyday services, such as walking the dog, picking up cleaning, waiting for the repairman, and going to the post office, for people who are too busy to perform these simple acts.  She is such a caring person and so well liked that her customers recommend her instead of her business to people who are looking for someone to perform similar services.  Their inability to see the distinction between Arenas and her 2 Places at 1 Time concierge service is an example of which unique characteristic of services?

a.   intangibility

b.   impressionability

c.   incongruity

d.   inseparability

e.   inflexibility

When Thelma got her drive-thru order at the fast-food restaurant, she thought Louise, the employee who took her money and gave her order, was cold and unfriendly.  The food tasted good but was overshadowed by Louise’s demeanor.  Every time she has the opportunity, Thelma says something derogatory about the restaurant because she does not distinguish the service deliverer (Louise, the employee who prepared her food and gave it to her) from the service (the fast-food restaurant).  Thelma is having a problem with which unique characteristic of services?

a.   intangibility

b.   impressionability

c.   incongruity

d.   inseparability

e.   inflexibility

When banks are closed, they can offer value to their customers through automatic teller machines (ATMs).  This self-service technology also comes with a down side since the ATMs are perceived as being less __________.

a.   convenient

b.   reliable

c.   personal

d.   safe

e.   accurate

Although many people love the self-service technology that allows Redbox to provide DVDs 24 hours a day, many people missed the personal interaction and recommendations from their local clerks from Blockbuster or an independent video store.  Redbox confronted this issue by creating a “Redblog” where customers could share their opinions, feelings, and experiences.  This is an example of confronting the

a.   inventory aspects of services.

b.   inseparability aspects of services.

c.   inconsistency aspects of services.

d.   intangibility aspects of services.

e.   impressionability aspects of services.

Why are inventory of services different from that of goods?

a.   time is less important to customers of services than customers of goods

b.   many times, the service provider is unavailable when there is a demand for the service

c.   there are costs associated with the handling of service inventory

d.   service inventory can be reduced through a straight salary compensation system

e.   with goods, many items are perishable

A situation that occurs when a service provider is available but there is no demand is referred to as

a.   off-peak pricing.

b.   idle production capacity.

c.   static demand.

d.   capacity management.

e.   excess inventory.

Idle production capacity refers to

a.   the minimum number of customers that a service provider can serve and still remain profitable.

b.   the maximum number of customers that a service provider must serve in order to remain profitable.

c.   the ability of a service provider to redirect its efforts so even when there is no primary demand, employees are still able to meet selective demand.

d.   a situation that occurs when a service provider is available but there is no demand for the service.

e.   a situation that occurs when the primary demand for a service exceeds that number of service deliverers available to meet that demand.

Idle production capacity refers to

a.   a situation where the demand for exceeds the availability of service providers and as a result, no services can be offered.

b.   when the supply of service providers exceeds the primary demand for the service.

c.   a situation where a service provider is available but there is no demand for the service.

d.   integrating the service component of the marketing mix with efforts to influence consumer demand.

e.   the potential profits of one service provider serving multiple clients at the same time.

The emergency room staff in Houston’s largest hospital is surprised and pleased when a four-day Fourth of July weekend brings in few accident victims for treatment.  They know from experience that such public holidays usually have high rates of accidents.  For the hospital’s business office, the lower demand for the emergency room services means

a.   a break in the service continuum.

b.   its services are no longer tangible.

c.   its services can be separated from the staff.

d.   the hospital has idle production capacity.

e.   an opportunity for gap analysis.

Andrea Arenas is the owner of 2 Places at 1 Time, a concierge company.  She and her staff of 60 perform everyday services such as walking the dog, picking up cleaning, waiting for the repairman, and going to the post office for people who are too busy to perform these simple acts.  She has often been hired by major corporations to perform services for their harried executives, and now many of her major clients are providing perks like her service to their employees.  Her staff is overworked and she is hiring more employees to fill demand.  Arenas is not experiencing __________; in fact, all of her employees are providing the maximum level of services to customers.

a.   off-peak pricing

b.   idle production capacity

c.   static demand

d.   capacity marketing

e.   capacity inventory

Western Airlines operates five flights daily between Chicago and Phoenix during the winter.  One flight leaves Phoenix at 12:10 PM.  The plane, a Boeing 737, has a capacity of 120 passengers.  During the past month, the flight has averaged only 24 passengers, a load factor of 20 percent.  Once the plane takes off, the other 96 seats generate no sales and profits to the airline for that flight.  What unique aspect of services does this situation describe?

a.   incongruity

b.   intangibility

c.   inconsistency

d.   inseparability

e.   idle production capacity

Many retailers hire additional sales help during the holiday season.  This is an example of how service companies deal with __________.

a.   shrinkage

b.   seasonal absenteeism

c.   economic recessions

d.   derived demand

e.   inventory carrying costs

The __________ cost of a service is the cost of paying the person used to provide the service along with any needed equipment.

a.   intangibility

b.   inconsistency

c.   inseparability

d.   inventory

e.   hidden

Inventory carrying costs can be reduced by

a.   using a straight salary compensation plan.

b.   hiring additional full-time personnel.

c.   allowing personnel to work overtime.

d.   increasing the hours worked per week.

e.   using a commission compensation system.

The inventory costs of services include

a.   equipment and training costs.

b.   management and material costs.

c.   service delivery and spoilage costs.

d.   salary of service provider and equipment costs.

e.   salary of service provider and training costs.

Which of the organizations listed below has the lowest inventory carrying cost?

a.   restaurant

b.   automobile repair

c.   amusement parks

d.   employment agencies

e.   animal hospital

Which of the organizations listed below has the lowest inventory carrying cost?

a.   railroad

b.   hotel

c.   long-term care facility

d.   amusement park

e.   insurance companies

The inventory carrying costs of airlines is high because they

a.   use a straight salary compensation plan for the large numbers of flight attendants.

b.   high-salaried pilots and very expensive equipment.

c.   allow baggage personnel to work overtime.

d.   decrease the number of workdays per week, but increase the hours per day.

e.   use a commission compensation system for their reservationists.

The inventory carrying costs of real estate agencies are low because they

a.   use a straight salary compensation plan.

b.   have employees who work on commission need little inexpensive equipment.

c.   allow personnel to work any hours a day and any number of days per week.

d.   decrease the number of workdays per week, but increase the hours per day.

e.   are responsible for their own training, transportation, and supplies.

The highest inventory carrying costs would most likely be for which of the following services?

a.   real estate agencies

b.   dry cleaners

c.   auto repair centers

d.   amusement parks

e.   hospitals

The range of offerings from the tangible to the intangible or product-dominant to service-dominant is referred to as the

a.   service continuum.

b.   product continuum.

c.   tangibility line.

d.   inseparability span.

e.   customer contact audit.

The range of offerings from the tangible to the intangible or product-dominant to service-dominant is referred to as the

a.   product continuum.

b.   service continuum.

c.   tangibility line.

d.   inseparability span.

e.   customer contact audit.

 

According to the service continuum shown in Figure 12-3 above, which of the following offerings has the highest level of intangibility?

a.   tailored suit

b.   advertising agency

c.   tutoring service

d.   fast-food restaurant

e.   salt

According to the service continuum shown in Figure 12-3 above, which of the offerings has an almost perfect balance of tangible and intangible attributes?

a.   tailored suit

b.   tutoring service

c.   dog food

d.   fast-food restaurant

e.   movie theater

Services can be classified by

a.   their method of delivery.

b.   their use of idle capacity time.

c.   the nature of their ownership.

d.   their location on perceptual maps.

e.   organizational reach.

Services can be classified according to whether they are __________, they are profit or nonprofit organizations, or they are government sponsored.

a.   national or global

b.   use independent contractors

c.   privately owned or publicly owned

d.   delivered by people or equipment

e.   owned by individuals or corporations

Services can be classified according to whether they are delivered by people or equipment, they are __________, or they are government sponsored.

a.   national or global

b.   use independent contractors

c.   privately owned or publicly owned

d.   owned by individuals or corporations

e.   for profit or nonprofit organizations

Services can be classified according to whether they are delivered by people or equipment, whether they are for profit or nonprofit organizations, and whether they are __________.

a.   government sponsored

b.   a national organization or a global organization

c.   privately owned or publicly owned

d.   performed by independent contractors

e.   owned by individuals or corporations

The categories for people-based services include __________.

a.   volunteers, skilled operators, and professionals

b.   unskilled labor, skilled labor, and professionals

c.   those operated by skilled operators, unskilled labor and skilled labor

d.   those operated by relatively unskilled operators, those operated by skilled operators, and unskilled labor

e.   automated, those operated by skilled operators, and professionals

Which of the following is the best example of a people-based service?

a.   movie theaters

b.   airlines

c.   advertising agency

d.   vending machines

e.   taxis

Which of the following is the best example of a people-based service?

a.   a lawyer

b.   movie theaters

c.   airlines

d.   vending machines

e.   taxis

What do a security guard, a plumber, and a management consultant share in common?

a.   They are all tangible services.

b.   They are all people-based services.

c.   They do not have problems with idle production capacity.

d.   They are all equipment-based services.

e.   They never use off-peak pricing.

The categories for equipment-based services include __________.

a.   unskilled labor, skilled labor, and professionals

b.   volunteers, unskilled and skilled operators, and professionals

c.   those operated by relatively unskilled operators, those operated by skilled operators, and unskilled labor

d.   those operated by skilled operators, unskilled labor, and professionals

e.   automated, those operated by relatively unskilled operators, and those operated by skilled operators

The categories for equipment-based services include

a.   unskilled labor, those operated by relatively unskilled operators, and automated (self-serve).

b.   professionals, those operated by relatively unskilled operators, and automated (self-serve).

c.   automated (self-serve), those operated by relatively unskilled operators, and those operated by skilled operators.

d.   unskilled labor, skilled labor, and professionals.

e.   those operated by skilled operators, unskilled labor, and professionals.

Equipment-based services do not have the marketing concerns of

a.   intangibility.

b.   inseparability.

c.   inventory.

d.   inconsistency.

e.   immeasurability.

Equipment-based services do not have the marketing concerns of inconsistency because __________ have been removed from the provision of the service.

a.   product liability

b.   people

c.   learning requirements

d.   automation

e.   accessories

Which of the following is the best example of an equipment-based service?

a.   lawn care

b.   doctors

c.   taxis

d.   lawyers

e.   janitorial services

What do an automated carwash, a limousine service, and an airline have in common?

a.   They are all tangible services.

b.   They are all people-based services.

c.   None of them has problems with idle production capacity.

d.   They are all equipment-based services.

e.   They never use off-peak pricing.

What do a dry cleaning service, an automated carwash, and a taxi service have in common?

a.   They are all tangible services.

b.   They are all people-based services.

c.   None of them has problems with idle production capacity.

d.   They never use off-peak pricing.

e.   They are all equipment-based services.

Equipment-based services like ATMs, online brokerage firms, and automated car washes, do not have the marketing concerns of

a.   inconsistency.

b.   intangibility.

c.   inseparability

d.   inventory.

e.   deliverability.

For nonprofit organizations, excesses in revenue over expenses are

a.   taxed at one-half the rate for profit organizations.

b.   distributed equally to all of the organization’s shareholders.

c.   returned to the organization’s treasury for continuation of the service.

d.   taxed at a reduced rate if the revenue is to be used in keeping with the organization’s core mission.

e.   not taxed at all unless it is a religious organization.

A nonprofit organization may pay taxes if

a.   excess revenues exceed 18 percent of the budget.

b.   the organization is not considered to be religious institution.

c.   revenue is received from overseas subsidiaries.

d.   revenue-generating holdings are not directly related to the organization’s core mission.

e.   money is spent on research and development, then it is taxed at a significantly lower rate.

Recently, many nonprofit organizations such as the American Red Cross

a.   were eager to use marketing practices.

b.   thought that marketing would limit the profitability of the nonprofit organization.

c.   could not afford marketing activities.

d.   thought that marketing activities would create excess demand.

e.   have increased their use of marketing practices.

The American Red Cross uses marketing to help achieve its goals.  As a service, it can be classified as

a.   a nonprofit organization.

b.   people-based.

c.   equipment-based.

d.   a business firm.

e.   a governmental agency.

Sterile Feral, Inc. is a nonprofit organization that catches wild or stray cats, and then neuters, vaccinates, and releases them back into the wild.  In recent years, nonprofit organizations such as Sterile Feral have turned to marketing to help

a.   receive additional government funding.

b.   expand its business to stray dogs.

c.   maintain its nonprofit status.

d.   achieve organizational goals.

e.   compete with other similar organizations.

The Susan G. Komen for the Cure has used __________, in addition to its familiar walks and races, to raise more than $1.5 billion for breast cancer research.

a.   social marketing

b.   private donations

c.   sales promotion campaigns

d.   green marketing programs

e.   sharing of resources

The American Red Cross uses social marketing tools such as Facebook, Twitter, and e-mail to increase donations.  The __________ campaign raised more than $32 million in response to the Haiti earthquake.

a.   All for one and 1% for All

b.   Text-to-Donate

c.   In for a Penny

d.   It All Makes Cents

e.   Time for Change

The first step a nonprofit organization should take to engage people with social media is to __________.

a.   set specific measurable goals

b.   understand what motivates people to take up causes

c.   create a simple and realistic operating budget

d.   create a well-defined organizational hierarchy

e.   develop a unique selling proposition

What do the United States Post Service, the U.S. Park Service, and a local fire department have in common?

a.   They are all privately owned companies.

b.   They do not fit on the service continuum.

c.   They are all government-sponsored service providers.

d.   They never experience idle production capacity.

e.   Capacity management is not an issue for these organizations.

What do the United States Post Service, a state health department, and a local fire department have in common?

a.   They are all government-sponsored service providers.

b.   They never experience idle production capacity.

c.   They do not fit on the goods-services continuum.

d.   They do not have service encounters.

e.   They do not have capacity management problems.

 

According to Figure 12-5 above, purchases labeled “A” would most likely be evaluated on __________ properties.

a.   value

b.   search

c.   credence

d.   experience

e.   quality

According to Figure 12-5 above, purchases labeled “B” would most likely be evaluated on __________ properties.

a.   value

b.   search

c.   credence

d.   experience

e.   expenditure

According to Figure 12-5 above, purchases labeled “C” would most likely be evaluated on __________ properties.

a.   value

b.   search

c.   credence

d.   experience

e.   expenditure

According to Figure 12-5 above, which statement is MOST accurate?

a.   Legal services are high in search credence properties, but medical services are high in experience properties.

b.   Haircuts are high in experience properties, but barbershops are high is search properties.

c.   Jewelry is high in search properties, although diamonds are high in credence properties.

d.   Television repair is more difficult to evaluate than restaurant meals.

e.   Child care is equally high in search, experience, and credence properties because the decision is so important.

Characteristics of tangible goods, such as color, size, and style are considered __________ properties.

a.   search

b.   form

c.   experience

d.   credence

e.   brand

Which of the following is high in search properties?

a.   clothing

b.   TV repair

c.   legal services

d.   auto repair

e.   medical diagnosis

One of the primary differences between tangible goods and services involves a consumer’s ability to make prepurchase evaluations.  For example, consumers can easily evaluate shoes, jewelry, and skis before making a purchase.  On the other hand, consumers can evaluate services such as restaurants, ski instructors, and tanning salons only during or after their purchase.  Indeed, tangible products have __________ properties, whereas services have __________ properties.

a.   consistent; inconsistent

b.   search; experience

c.   inconsistent; consistent

d.   experience; search

e.   gap; encounter

Which of the following is high in experience properties?

a.   clothing

b.   a vacation

c.   legal services

d.   auto repair

e.   a medical diagnosis

Services such as restaurants and child care are evaluated on __________ properties.

a.   search

b.   form

c.   experience

d.   credence

e.   performance

Andrea Arenas is the owner of 2 Places at 1 Time, a concierge company.  She and her staff of 60 perform everyday services such as walking the dog, picking up cleaning, waiting for the repairman, and going to the post office for people who are too busy to perform these simple acts.  She is often hired by major corporations to perform services for their harried executives and their spouses.  Her clients can evaluate the services that 2 Places at 1 Time provide

a.   only before they are purchased or consumed.

b.   only after they are purchased or consumed.

c.   only at the same time as they are purchased or consumed.

d.   before, during, and/or after they are purchased or consumed.

e.   only during consumption or after they are purchased.

Sarah has a backache due to overexertion.  She believes a massage would loosen her back muscles and make her feel better.  She is concerned because a massage, unlike a pair of shoes, cannot be felt before she buys it.  Sarah realizes massages have __________ properties.

a.   search

b.   form

c.   experience

d.   credence

e.   performance

When Theresa Martinez relocated from the East to the Midwest, she needed to find a bank with offices in her new state.  Several banks offered banking products (checking and savings accounts, loans, certificates of deposit) and other financial products (mutual funds, insurance) that were available from her former bank.  After selecting U.S. Bank, Theresa later needed some help with her accounts and went to visit her personal banker.  She was very impressed with the banker’s attitude and willingness to explain certain items to her in terms she could understand.  The service Theresa received from the U.S. Bank banker exhibited __________ properties.

a.   credence

b.   expertise

c.   experience

d.   search

e.   customer relationship

Services provided by specialized professionals such as medical diagnoses and legal services have certain properties or characteristics that the consumer may find impossible to evaluate even after purchase and consumption.  What are these properties called?

a.   customer contact properties

b.   credence properties

c.   capacity properties

d.   contract properties

e.   relationship properties

Which of the following are high in credence properties?

a.   clothing

b.   vacation

c.   jewelry

d.   houses

e.   medical diagnoses

Services performed by surgeons or lawyers are primarily evaluated on __________ properties.

a.   search

b.   form

c.   indirect

d.   credence

e.   experience

To reduce the uncertainty created by __________ properties, service consumers turn to personal sources of information such as opinion leaders, early adopters, and reference group members during the purchase decision process.

a.   search

b.   credence

c.   experience

d.   expertise

e.   quality

Sarah has a toothache.  She believes it may be due to her not having regular dental checkups in the past.  She now wants to find a dentist, but does not have one that she has used in the past.  Because dentistry has __________ properties, Sarah plans to ask her friends for a recommendation for a dentist they like to be sure that she finds a good one.

a.   search

b.   form

c.   experience

d.   credence

e.   performance

Fred White has just accepted a sales position with the ABC Health Maintenance Organization, a major provider of health care services.  He had been selling medical supplies for some time and found that he understood how customers bought medical supplies.  Which of the following is likely to be a characteristic of the health care services that Fred offers?

a.   Customers are engaged in a low involvement purchase process.

b.   The quality of services can be predetermined in a similar manner to tangible products.

c.   The buyer does not participate in the delivery of the service.

d.   A consumer may not have the ability to judge the quality of medical care service even after the service has been provided.

e.   The service provider should concentrate on the problem recognition stage of the purchase decision process in the marketing of health care services.

The type of analysis that compares the differences between consumers’ expectations about a service and their experience with it based on dimensions of service quality is referred to as

a.   customer relationship management.

b.   service encounter differential.

c.   gap analysis.

d.   a customer contact audit.

e.   a service audit.

The two basic components of a customer’s evaluation of a service are

a.   expectations and customer contact.

b.   expectations and experience.

c.   intangibility and inconsistency.

d.   experience and credence.

e.   inconsistency and inseparability.

How a person establishes expectations for a service not yet experienced is influenced by __________, personal needs, past experiences, and promotional activities.

a.   the economy

b.   consumer income

c.   word-of-mouth communications

d.   competitive trends

e.   how the organization delivers its service

How a person establishes expectations for a service not yet experienced is influenced by word of mouth communications, __________, past experiences, and promotional activities.

a.   personal needs

b.   the economy

c.   consumer income

d.   competitive trends

e.   how the organization delivers its service

How a person establishes expectations for a service not yet experienced is influenced by word of mouth communications, personal needs, __________, and promotional activities.

a.   how the organization delivers its service

b.   past experiences

c.   competitive trends

d.   the economy

e.   consumer income

How a person establishes expectations for a service not yet experienced is influenced by word of mouth communications, personal needs, past experiences, and __________.

a.   the economy

b.   consumer income

c.   competitive trends

d.   promotional activities

e.   how the organization delivers its service

A person can establish expectations for a service he or she has not yet experienced through word-of-mouth communications, personal needs, past experiences, and promotional activities.  However, the actual experience(s) are determined by

a.   the way the organization actually delivers its service.

b.   the positive reinforcement from friends, family, and peers after the service was provided.

c.   repeat encounters with the same service provider.

d.   psychological feelings of well-being.

e.   a formal post-purchase evaluation or questionnaire.

Many restaurants now ask consumers to evaluate their experience on a short questionnaire when they pay their bill.  This assessment of consumer expectations and the actual experience they had is called a __________.

a.   gap analysis

b.   service encounter survey

c.   customer profile analysis

d.   customer contact audit

e.   service audit

There are five key dimensions of service quality:

a.   reliability, responsiveness, competence, courtesy, and empathy.

b.   knowledge, responsiveness, respect, diligence, and honesty.

c.   honesty, respect, empathy, reliability, and diligence.

d.   reliability, competence, alacrity, fairness, and product knowledge.

e.   reliability, tangibility, responsiveness, assurance, and empathy.

As a dimension of service quality, the ability to perform the promised service dependably and accurately is referred to as __________.

a.   reliability

b.   responsiveness

c.   competence

d.   courtesy

e.   empathy

As a dimension of service quality, the appearance of physical facilities, equipment, personnel, and communication materials as a dimension of service quality is referred to as __________.

a.   communication

b.   responsiveness

c.   competence

d.   tangibility (tangibles)

e.   empathy

As a dimension of service quality, the willingness to help customers and provide prompt service is referred to as __________.

a.   reliability

b.   responsiveness

c.   competence

d.   assurance

e.   empathy

As a dimension of service quality, the knowledge and courtesy of employees, and their ability to convey trust and confidence is referred to as __________.

a.   reliability

b.   responsiveness

c.   competence

d.   assurance

e.   empathy

As a dimension of service quality, the caring, individualized attention provided to customers as a dimension of service quality is referred to as __________.

a.   reliability

b.   responsiveness

c.   competence

d.   assurance

e.   empathy

The dimension of service quality called __________ is the ability to perform the promised service dependably and accurately.

a.   reliability

b.   assurance

c.   accuracy

d.   responsiveness

e.   empathy

The dimension of service quality called __________ is the appearance of physical facilities, equipment, personnel, and communication materials.

a.   assurance

b.   reliability

c.   responsiveness

d.   empathy

e.   tangibility (tangibles)

The dimension of service quality called __________ is willingness to help customers and provide prompt service.

a.   assurance

b.   reliability

c.   responsiveness

d.   empathy

e.   sympathy

The dimension of service quality called __________ is knowledge and courtesy of employees and their ability to convey trust and confidence.

a.   assurance

b.   sympathy

c.   empathy

d.   responsiveness

e.   reliability

The dimension of service quality called __________ is caring, and individualized attention provided to customers.

a.   assurance

b.   reliability

c.   responsiveness

d.   empathy

e.   sympathy

Sandy needs to have her car repaired.  She is a member of the American Automobile Association (AAA) and knows that they evaluate car repair shops.  Furthermore, the shop she is considering displays the AAA seal of approval.  It also is clean and organized.  She believes this is a good way to predict the quality of the service she will receive.  Sandy bases her opinion of car repair shops on the basis of which service quality dimension?

a.   assurance

b.   tangibility (tangibles)

c.   reliability

d.   responsiveness

e.   empathy

Sterile Feral, Inc. is a nonprofit organization that catches wild or stray cats, and then neuters, vaccinates, and releases them back into the wild.  Veterinarians are particularly impressed with how dependably the organization is able to perform its promised service.  With which service quality dimension are veterinarians most impressed?

a.   assurance

b.   tangibility

c.   reliability

d.   credibility

e.   empathy

Arnett is looking for a new Web portal to use to access information that interests him on the Internet.  The one he currently uses is too slow when loading web pages because each page is cluttered with ads and videos.  In terms of the service quality dimensions, Arnett is unhappy with which dimension of this service?

a.   assurance

b.   tangibility

c.   reliability

d.   responsiveness

e.   empathy

Sterile Feral, Inc. is a nonprofit organization that catches wild or stray cats, and then neuters, vaccinates, and releases them back into the wild.  The personnel of the nonprofit organization are caring people who love animals and try to do what they can to meet the needs of each cat they care for.  The caring nature of the personnel relates to which service quality dimension?

a.   assurance

b.   tangibility

c.   reliability

d.   credibility

e.   empathy

 

According to Figure 12-6 above, “A” represents which dimension of service quality?

a.   reliability

b.   tangibility (tangibles)

c.   responsiveness

d.   assurance

e.   empathy

According to Figure 12-6 above, “B” represents which dimension of service quality?

a.   reliability

b.   assurance

c.   empathy

d.   tangibility (tangibles)

e.   responsiveness

According to Figure 12-6 above, “C” represents which dimension of service quality?

a.   reliability

b.   empathy

c.   tangibility (tangibles)

d.   assurance

e.   responsiveness

According to Figure 12-6 above, “D” represents which dimension of service quality?

a.   reliability

b.   empathy

c.   assurance

d.   tangibility (tangibles)

e.   responsiveness

According to Figure 12-6 above, “E” represents which dimension of service quality?

a.   reliability

b.   empathy

c.   tangibility (tangibles)

d.   assurance

e.   responsiveness

Another name for the steps in the service delivery process is __________.

a.   service interactions

b.   access points

c.   path-analysis

d.   service encounters

e.   wheel of services

A customer contact audit refers to

a.   the initial contact between a service provider and the ultimate consumer.

b.   a flowchart of the points of interaction between a consumer and a service provider.

c.   a method of consumer evaluation of service quality and consistency.

d.   an estimation of demand based on service forecasting techniques.

e.   is a systematic assessment of a service provider’s objectives, strategies, and performance in terms of social responsibility.

A flowchart of the points of interaction between a customer and a service provider is referred to as

a.   a service continuum.

b.   gap analysis.

c.   a customer contact audit.

d.   a customer contact continuum.

e.   a service audit.

Recent research suggests that __________ and sincerity of the interactions affect the success of the relationships.

a.   reliability

b.   authenticity

c.   responsiveness

d.   tangibles

e.   friendliness

Ron had a craving for sushi so he searched yellowpages.com for the name of a restaurant in his vicinity that serves this type of food.  When he arrived at his destination, he was impressed with the menu posted outside the door and decided to go in.  He was greeted with a smile by a hostess and then immediately seated at a well-appointed table where he was given a warm cloth for his hands.  The food was beautifully presented, the rice was the perfect texture and temperature, and the fish was fresh and delicious.  Halfway thought the meal, he excused himself to go to the restroom.  It was clean, but unfortunately was out of paper towels.  He returned to his table, finished his meal, and paid his check.  The hostess said goodbye and asked him to return.  The first point in his customer contact audit was __________.

a.   searching yellowpages.com

b.   reading the menu on the door

c.   being greeted by the hostess

d.   being seated at his table

e.   receiving his meal

       

Ron had a craving for sushi so he searched yellowpages.com for the name of a restaurant in his vicinity that serves this type of food.  When he arrived at his destination, he was impressed with the menu posted outside the door and decided to go in.  He was greeted with a smile by a hostess and then immediately seated at a well-appointed table where he was given a warm cloth for his hands.  A waiter beautifully presented the food, the rice was the perfect texture and temperature, and the fish was fresh and delicious.  Halfway thought the meal, he excused himself to go to the restroom.  It was clean, but unfortunately was out of paper towels.  He returned to his table, finished his meal, and paid his check.  The hostess said goodbye and asked him to return.  Which of the following statements about this scenario is MOST accurate?

a.   Reading the menu posted outside the door was Ron’s first point of interaction in the customer contact audit because if he hadn’t liked the selections, he wouldn’t have gone into the restaurant.

b.   Being greeted by the hostess was the first point of interaction in the customer contact audit because it was the first encounter with the actual service provider—the restaurant.

c.   The first point of interaction in the customer contact audit wasn’t written, it was implied.  The real first point in the customer contact audit should have been between Ron and the waiter, not Ron and the hostess.

d.   The lack of paper towels in the restroom was the first point of interaction in the customer contact audit because it was the first time his expectations weren’t met.

e.   The yellowpages.com ad, the menu on the door, the hostess’s greeting, the waiter, the quality and presentation of food, and even the restroom were all important points of a contact.

Which of the following is a point in the customer contact audit for a health club?

a.   participating in the health club’s exercise class

b.   the customer’s diet

c.   too much traffic on the way to the club

d.   a willingness to exercise

e.   meeting an attractive gym member

Which of the following statements about service failures is MOST accurate?

a.   Only 5-10% of dissatisfied customers choose to complain to the company.

b.   Once customers complain, they expect all of their demands to be met.

c.   Only 20% of consumers will give a company a second chance if they are not fully satisfied during the first encounter.

d.   People are twice as likely to share good service experiences as bad experiences.

e.   Monitoring social media websites such as YouTube, Twitter, and Facebook are a waste of time since the complaints presented are usually isolated instances and are not indicative of the actual service delivered.

Most public relations experts agree that it is best for a company to ___________ comments about it on the Internet.

a.   ignore

b.   argue with

c.   respond to

d.   blog about

e.   consider

Which of the following statements about relationship marketing is most accurate?

a.   The number of encounters in a service experience should always be the same.

b.   The service encounter represents an opportunity to develop social bonds with customers.

c.   An after-holiday sale is a good incentive to create a loyal customer relationship.

d.   The purpose of relationship marketing is to benefit the customer, not the organization.

e.   A major customer benefit of relationship marketing is a reduction in the price that is paid for services rendered.

Relationship marketing provides several benefits for service customers, including: (1) __________; (2) customized service delivery; (3) reduced stress due to a repetitive purchase process; and (4) an absence of switching costs.

a.   the continuity of a single provider

b.   no need for comparison shopping

c.   discounted switching costs

d.   implied warranties

e.   strict government quality performance guidelines

Relationship marketing provides several benefits for service customers, including: (1) the continuity of a single provider; (2) customized service delivery; (3) __________; and (4) an absence of switching costs.

a.   no need for comparison shopping

b.   reduced stress due to a repetitive purchase process

c.   discounted switching costs

d.   implied warranties

e.   strict government quality performance guidelines

Relationship marketing provides several benefits for service customers, including: (1) the continuity of a single provider; (2) customized service delivery; (3) reduced stress due to a repetitive purchase process; and (4) __________.

a.   no need for comparison shopping

b.   implied warranties

c.   discounted switching costs

d.   an absence of switching costs

e.   strict government quality performance guidelines

Recent surveys of consumers have indicated that while customers of many services are interested in being “relationship customers,” they require that the relationship be balanced in terms of

a.   honesty, a lack of prejudice, and empathy.

b.   loyalty, benefits, and respect for privacy.

c.   loyalty, honesty, and integrity.

d.   financial benefits, product benefits, and preferential treatment.

e.   financial benefits, product benefits, and personal benefits.

An expanded marketing mix for services that includes the four Ps (product, price, promotion, and place or distribution) as well as people, physical environment, and process, is referred to as the __________.

a.   seven Ps of services

b.   service matrix

c.   service continuum

d.   service encounters

e.   the service mix

While there are 4 Ps of marketing, there are __________ Ps of services.

a.   3

b.   5

c.   6

d.   7

e.   8

All of the following comprise the seven (7) Ps of services marketing EXCEPT:

a.   product.

b.   process.

c.   profitability.

d.   people.

e.   physical environment.

The use of brand names is especially important for services because of which unique characteristic of services?

a.   inventory costs

b.   inseparability

c.   inconsistency

d.   invisibility

e.   intangibility

Which of the following statements regarding service branding is MOST accurate?

a.   Because services are intangible and more difficult to describe, brand names and logos are of critical importance.

b.   Because the classification of services is so complex, it is far more difficult to find a brand name that hasn’t already been taken.

c.   Services must include the word “service” in all their brand names to assure that customers understand they are not purchasing a product.

d.   Service firms with a well-established brand reputation and service firms without a brand reputation both find it easy to introduce new services.

e.   Service logos and brands must designated by the “®” symbol while consumer products are designated by the “SM” symbol.

Which of the following statements regarding service branding is MOST accurate?

a.   Because the classification of services is so complex, it is far more difficult to find a brand name that hasn’t already been taken.

b.   Services must include the word “service” in all their brand names to assure that customers understand they are not purchasing a product.

c.   Service firms with a well-established brand reputation will also find it easier to introduce new services than firms without a brand reputation.

d.   Many consumers are suspicious of companies that offer too many services under the same brand name.

e.   Many service organizations, such as banks, hotels, and restaurants do not rely heavily on branding because of the extent to which they are people-dominated services.

The FedEx brand suggests the possibility that it is government sanctioned and fast.  This perception is important because of which unique characteristic of services?

a.   inventory costs

b.   inseparability

c.   inconsistency

d.   invisibility

e.   intangibility

Which of the following is the most important aspect conveyed by the FedEx brand?

a.   its international experience

b.   differentiation and an image of quality

c.   the ownership of the company

d.   the nonprofit aspect of the company

e.   the patent for its service

Tuition, charges, fares, and rates are all

a.   names given to the tangible portion of the price of a service.

b.   names that are interchangeable when identifying the price of a service.

c.   names given to the intangible portion of the price of a service.

d.   names given to the price of services.

e.   terms used in services to imply a higher quality product than the terms “cost” or “price.”

Tuition, charges, fares, and rates are all

a.   euphemisms for the name “price” to the price factor in services.

b.   names given to the price of services.

c.   names given to the intangible portion of the price of a service.

d.   names that are interchangeable when identifying the price of a service.

e.   terms used in services to imply a higher quality product than the terms “cost” or “price.”

Because of the intangible nature of services, consumers often perceive price as a possible indicator of __________ of the service.

a.   the profit or ROI

b.   the customer value

c.   the quality

d.   the target market

e.   the cost

When customers buy services, they also consider nonmonetary costs, such as the __________ and __________ efforts required to consume the service.

a.   emotional; physical

b.   mental; physical

c.   psychological; intellectual

d.   physical; moral

e.   physical;  ethical

One tool available for services when trying to balance demand is __________.

a.   off-peak pricing

b.   product lay-away

c.   credit incentives

d.   container sales

e.   product rationing

Service providers use tools such as __________, which consists of charging different prices for different times of the day or during different days of the week to reflect the variations in demand for their services.

a.   scale pricing

b.   capacity pricing

c.   down-time pricing

d.   off-peak pricing

e.   fraction pricing

Many service businesses use off-peak pricing to reflect variations in

a.   costs of delivering service.

b.   demand for the service.

c.   profitability based on time of day or week.

d.   promotional events.

e.   government regulations.

Charging different prices during different times of the day or during different days of the week to reflect variations in demand for a service is referred to as

a.   capacity pricing.

b.   idle production pricing.

c.   customer contact pricing.

d.   derived demand pricing.

e.   off-peak pricing.

The less-expensive matinee movie pricing offered on shows prior to 4:00 PM is an example of

a.   price lining.

b.   price differentiation.

c.   off-peak pricing.

d.   bait-and-switch pricing.

e.   idle production pricing.

Commuters in New York often have often installed radio frequency identification (RFID) devices on their cars that can be read automatically as they approach a tollbooth.  This saves time, improves traffic flow, and means drivers don’t need to keep exact change in their cars.  It also offers New York authorities the opportunity to manage traffic flow by charging different toll amounts for different times of day.  Commuters in New York are experiencing

a.   price gouging.

b.   off-peak pricing.

c.   flow management pricing.

d.   price differentiation.

e.   idle production pricing.

A major factor in developing a service marketing strategy is __________because of the inseparability of services from the producer.

a.   product

b.   price

c.   promotion

d.   place

e.   process

Which of the following statements regarding the place element of services is MOST accurate?

a.   Place has little impact on the marketing of services because there are so many intermediaries from which a consumer may choose.

b.   The distribution site and the service provider are the intangible components of the service.

c.   Place is especially important factor because of the inconstancy between the service and the service provider.

d.   Until recently, customers generally had to go to the service provider’s physical location to purchase the service.

e.   Technology is an effective way to bring services to the customer, but only if the consumer is a new user; otherwise, the disadvantages outweigh the benefits.

A publicity tool frequently used by nonprofit services, which uses free space or time donated by the media is referred to as a(n)

a.   promotion.

b.   advertisement.

c.   public service announcement.

d.   press release.

e.   cooperative advertisement.

Many nonprofit organizations have used PSAs in their media planning.  What does the acronym “PSA” stand for?

a.   public stakeholder announcement

b.   public sustainability announcement

c.   public service announcement

d.   public service annunciation

e.   promotional service announcement

The notion that a service organization must focus on its employees before successful programs can be directed at customers is referred to as

a.   internal analysis.

b.   internal marketing.

c.   external marketing.

d.   stakeholder marketing.

e.   employee marketing.

The concept of internal marketing is based on the notion that a service organization must focus on its __________ before successful programs can be directed at customers.

a.   competitors

b.   prospects

c.   shareholders

d.   employees

e.   suppliers

Edinberry’s, a restaurant located in south Texas, offers a variety of foods and entertainment opportunities to its customers.  The restaurant is famous for its fine steaks, spicy chili, and outstanding customer service.  In order to maintain the restaurant’s reputation for putting its customers first, the marketing manager at Edinberry’s has developed marketing activities that are directed at the waiters and waitresses.  These marketing activities are an example of __________ and are designed to help the restaurant employees to maintain an exceptional customer experience.

a.   internal marketing

b.   external marketing

c.   service marketing

d.   stakeholder marketing

e.   employee marketing

The process of managing the entire customer experience with the company is referred to as

a.   services marketing.

b.   internal marketing.

c.   customer experience management.

d.   relationship marketing.

e.   gap analysis.

The customer experience management (CEM) process should

a.   allow for spontaneity and not be too rigid or planned.

b.   be unique to each individual customer’s experience.

c.   stress the similarities in style, function, and form of their service relative to the top competitors in the industry.

d.   differentiate a service from other service offerings.

e.   be performed by someone outside the firm to guarantee objectivity.

The appearance of the environment in which the service is delivered and where the firm and customer interact can influence the customer’s __________ of the service.

a.   repeat usage

b.   evaluation

c.   exploitation

d.   utilization

e.   perception

The buildings, landscaping, vehicles, furnishings, signage, brochures, and equipment comprise which of the seven Ps of services marketing?

a.   process

b.   place

c.   physical environment

d.   productivity

e.   product

Service companies can manage their physical environment to influence customers’ perceptions is through

a.   service delivery management.

b.   relationship management.

c.   customer experience management.

d.   exposure management.

e.   impression management.

The actual procedures, mechanisms, and flow of activities by which a service is created and delivered is referred to as __________.

a.   a process

b.   a procedure

c.   productivity

d.   a protocol

e.   a plan

In the seven Ps of services, the term “process” refers to

a.   the patented steps of service encounters that distinguish one service provider from another.

b.   licensed procedures that have met ISO 9000 guidelines for safety.

c.   the procedures, mechanisms, and flow of activities by which the service is created and delivered.

d.   a protocol for behaviors and activities for people-based rather than technology-based services.

e.   the decisions consumers’ make during the purchase of services.

In the seven Ps of services marketing, the term “process” involves not only “what” gets created but also

a.   “if” it gets created at all.

b.   “how” it gets created.

c.   “when” it gets created.

d.   for “whom” it gets created.

e.   “why” it gets created.

A __________ is very important to the process aspect of services because it helps identify steps that will ultimately lead to better service creation and delivery processes.

a.   customer contact audit

b.   internal marketing review

c.   tangibility gap analysis

d.   service continuum

e.   consumer experience audit

Integrating the service component of the marketing mix with efforts to influence consumer demand is referred to as __________.

a.   customer management

b.   internal marketing

c.   product management

d.   capacity management

e.   eight Ps of services marketing

Capacity management refers to

a.   integrating the service component of the marketing mix with efforts to influence consumer demand.

b.   when the service provider is available but there is no demand.

c.   charging different prices during different times of the day or during different days of the week to reflect variations in demand for the service.

d.   the practice of changing prices for services in real time in response to supply and demand conditions.

e.   the operating cost per hour per employee or technology subtracted from the revenue generated by each full-time employee equivalent.

Airlines feature load factor as a(n) __________ measure on their marketing dashboards.

a.   productivity

b.   price differentiation

c.   tangibility

d.   capacity management

e.   profitability

Airlines feature load factor as a capacity management measure on their marketing dashboards, along with two other measures; namely the operating expense per available seat flown one mile and __________, which is the revenue generated by each seat flown one mile.

a.   profit per passenger

b.   average price per passenger

c.   internal ROI

d.   unit variable sales

e.   yield

Airline load factor refers to

a.   the percentage of paying customer seats flown one mile plus frequent flyer redemption seats flown one mile.

b.   the percentage of empty seats on a plane compared to its total capacity.

c.   the percentage of available seats flown one mile occupied by a paying customer.

d.   the percentage of seats that are overbooked on any given flight to prevent profit shortfalls for “no shows.”

e.   the total of all paid seats plus all luggage overcharges and all purchased beverages, meals, and other amenities or additional services, per flight.

 

The percentage of available seats flown one mile occupied by a paying customer is shown in the capacity management marketing dashboard above as __________.

a.   9.83%

b.   82.1%

c.   8.28%

d.   18.11%

e.   1.55%

The revenue generated by each seat flown one mile is shown in the capacity management marketing dashboard above as

a.   9.83 cents.

b.   82.1 cents.

c.   8.28 cents.

d.   18.11 cents.

e.   7.99 cents.

The marketing dashboard for JetBlue Airways shown in the capacity management marketing dashboard above indicates that JetBlue posted a(n) __________ profit/loss per available seat flown one mile.

a.   9.83 cent profit

b.   1.55 cent profit

c.   1.27 cent profit

d.   0.21 cent loss

e.   8.28 cent loss

Assuming the information shown in the JetBlue capacity management marketing dashboard above will not change in the near future, what actions would recommend that JetBlue take?

a.   Proceed as in the past; JetBlue is clearly profitable.

b.   Use advertising to let consumers know how JetBlue currently meets their needs.

c.   Change the flight schedules to accommodate travelers’ needs and advertise these changes.

d.   Keep the flight schedule as it is and reduce the price per flight.

e.   There is not enough information in the marketing dashboard to suggest an action to take.

Changes in the services industry in the future will primarily be driven by two factors.  They are technological development and

a.   reverse marketing.

b.   sustainable development.

c.   global development.

d.   global service branding.

e.   the elimination of ethnocentricity.

The key elements of future services include __________, convergence, and personalization.

a.   automation

b.   transglobalization

c.   mobility

d.   divergence

e.   convenience

The key elements of future services include __________, mobility, and personalization.

a.   automation

b.   transglobalization

c.   convenience

d.   divergence

e.   convergence

The key elements of future services include __________, mobility, and convergence.

a.   automation

b.   transglobalization

c.   cooperation

d.   personalization

e.   convenience

Mobility as a future aspect of services refers to

a.   the ability of networking technology to be incorporated into portable digital devices.

b.   the ability to transport goods almost anywhere in the world within 24 hours.

c.   the ability to transfer entire operations including a firm’s technology from one location to the next within a matter of days.

d.   the ability of consumers to purchase any service from any service provider anywhere in the world.

e.   the ability of service providers to move their operations to any location in the world.

The trend toward sustainability and “green” business practices has expanded to include many services as they strive to

a.   comply with FDA rules.

b.   increase their energy use.

c.   reduce their capacity.

d.   create a competitive advantage.

e.   minimize consumer involvement.

The Philadelphia Phillies are marketing what “product?”

a.   a baseball game

b.   popular players

c.   a fun experience

d.   a winning team

e.   competitive spirit

The Philadelphia Phillies best type of advertising is/are

a.   TV ads.

b.   personal selling.

c.   coupons.

d.   word of mouth.

e.   contests.

The Phillies segment their fans primarily upon what basis?

a.   location

b.   interests

c.   promotion

d.   age

e.   income

Which of the following statements regarding the Phillies special promotions nights is most accurate?

a.   Although they foster good will in the community, there is little change in attendance.

b.   Regular and diehard fans tend to stay away because they are too distracted by children who are only there for the “free gifts” (bats, balls, bobble head dolls, etc.).

c.   Attendance remains steady but people tend to spend more money during special event days because there is a greater sense of fun and excitement.

d.   Game attendance can increase by 30 to 35 percent during special event days.

e.   Game attendance increases by 25 percent with the bump in attendance usually lasting throughout the entire month.

An additional benefit of a Phillies special promotions night is that it not only does boosts overall attendance, it

a.   generates first-time visits from fans who have never attended a Major League Baseball game.

b.   generates premiums (wristbands, caps, bats, etc.) from new companies interested in offering a promotion to gain positive exposure.

c.   helps regulate local traffic since people arrive early to be sure they get the free gift.

d.   helps keep children quiet during the game since they're playing with their free gift and not bothering their parents or other game attendees.

e.   creates a heightened sense of excitement and anticipation for the game.

The Phillies “special promotions days” fall into three distinct categories:

a.   theme nights, event days, and premium gift days.

b.   team-oriented, fan-oriented, and family-oriented.

c.   revenue generating, market share building, and goodwill generating.

d.   ticket discounts, trip giveaways, and contests.

e.   televised games, community outreach, and loyal fan promotions.

The Philadelphia Phillies offer different promotions to meet the needs of specific segments.  Offering discounts on dinners would most likely be targeted towards __________.

a.   diehard baseball fans

b.   ball team members, their families, and friends

c.   married families with children

d.   20- and 30-somethings

e.   seniors 60 years and older

The Philadelphia Phillies uses the Phanatic to help the fans evaluate their experience, since a ball game experience is

a.   intangible.

b.   tangible.

c.   inventory.

d.   inconsistent.

e.   imperfect.

The Phillie Phanatic had his own book signing at Barnes and Noble in Exton, PA, for the children’s book series The Phillie Phanatic’s Happiest Memories, The Phillie Phanatic’s Moving Day, The Phillie Phanatic’s Phantastic Journey, and Happy Birthday Phillie Phanatic.  If the baseball team were trying to get people to the game, why would they host an activity away from the stadium?

a.   They are trying to build future attendees but they don’t want younger children bothering people during the games.

b.   They need to generate revenue during the months when the stadium is closed.

c.   It generates team spirit, adds to non-ticket revenues, and cultivates fans for the future.

d.   Phillie Phanatic is used to reduce hostility towards the team when they have a losing season.

e.   The new stadium was built significantly smaller and cannot hold as many activities on the premises.

 

1. Which of the following statements about StubHub is most accurate?

A. Amazon.com recently purchased StubHub for $213 million dollars.

B. StubHub makes money from both the buyer and the seller of the tickets sold on its Web site.

C. StubHub had plans to enter the European market, but EU regulations made the plan unfeasible.

D.

StubHub and Ticket Master have a non-binding agreement to cater to separate market segments (sports vs. concert) to avoid undo competition.

E. StubHub has difficulty selling tickets in some states because ticket scalping is illegal.

2. With over half of tickets to major events sold online, StubHub's Web site can help generate extra ticket sales for the original sponsors. This is why

A. The NFL recently purchased StubHub for $213 million dollars.

B. StubHub now has formal relationships not only with professional sports leagues, but also with many sports programs of major universities.

C. StubHub has to pay licensing fees to all major sports teams whose tickets are sold on their site.

D. StubHub has expanded their mission from being "a sports ticket marketplace" to the "hub of all entertainment experiences."

E. StubHub pays a surtax on any ticket it sells if the games are not already sold out at the stadium(s).

3. The money or other considerations (including other products and services) exchanged for the ownership or use of a product or service is referred to as _________.

A. fee

B. value

C. remuneration

D. price

E. exchange rate

4. Price refers to

A. the value assigned to the exchange of products and services for other products and services.

B. the value judgment made by both the buyer and seller regarding an item's worth.

C. the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service.

D. the value assessed for the benefits of using a product or service.

E. the highest monetary value a customer is willing to pay for a product or service.

5. From a marketing viewpoint, __________ is money or other considerations (including other products and services) exchanged for the ownership or use of a product or service.

A. value

B. price

C. barter

D. currency

E. a tariff

6. Attorneys' fees, entrance fees, train fares, and organization dues are all examples of

A. premiums.

B. barter.

C. mediums of exchange.

D. price.

E. outlays.

7. Which of the following is a particular type of price?

A. operating costs

B. liquidity

C. value

D. college tuition

E. stockholders' equity

8. The practice of exchanging products and services for other products and services rather than for money is referred to as _________.

A. barter

B. reciprocal pricing

C. virtual pricing

D. balance of payments

E. value-pricing

9. Barter refers to

A. a reciprocity agreement stipulating that if company "A" purchase services from company "B," then company "B" must purchase similar services from company "A."

B. a tying agreement stipulating that if company "A" purchases a product from company "B," it must also purchase its services.

C. the practice of exchanging products and services for other products and services rather than for money.

D. the practice of exchanging services for products of equal or greater value.

E. the practice of exchanging products and services for other services rather than for money.

10. Barter is the practice of exchanging products and services for other products and services rather than for

__________.

A. value

B. ideas

C. money

D. promises

E. tariffs

11. The use of "special fees" and "surcharges" is driven by consumers' zeal for __________ and the ease of making price comparisons on the Internet.

A. high prices

B. low prices

C. quality

D. value

E. warranties

12. The use of "special fees" and "surcharges" is driven by consumers' zeal for low prices and

_________.

A. value, the idea of getting "more" for their money

B. the ease of making price comparisons on the Internet

C. the need for extra accessories

D. avoiding state sales taxes from Internet purchases

E. a dislike of price haggling or negotiating

13. The price equation formula is final price equals list price minus incentives and allowances plus

A. profits.

B. commissions.

C. trade-ins.

D. extra fees.

E. taxes.

14. The price equation formula is final price equals __________ minus incentives and allowances plus extra fees.

A. salaries

B. profits

C. trade-ins

D. list price

E. taxes

15. The price equation formula is final price equals list price minus __________ plus extra fees.

A. profits

B. commissions

C. trade-ins

D. incentives and allowances

E. taxes

16. A company that manages apartments decides to buy 15 new dishwashers at a list price of $550 each as replacements for old dishwashers in a small apartment complex it owns. Because the company is buying more than 10 dishwashers, it is eligible for a $150 per unit quantity discount. Financing charges total $20 per unit. The company gets $10 per dishwasher for the 15 dishwashers traded in. What is the final price the company will pay for each dishwasher?

A. $390

B. $400

C. $410

D. $530

E. $560

17. Tara is enrolled for spring semester at college. The tuition is $6,000 but she has a scholarship for $1,000 as well as a work-study grant of $1,500. The health fees and student activity fees are $150 for the semester. What is the final price that Tara will pay for the spring semester?

A. $2,500

B. $2,650

C. $3,650

D. $5,150

E. $6,150

18. The final price a buyer pays can take different names, depending on what is purchased, and can change depending on _________.

A. the price equation

B. the equity factor

C. the barter formula

D. price enhancements

E. demand factors

19. The ratio of perceived benefits to price is referred to as

A. the price-quality relationship.

B. prestige pricing.

C. value-added pricing.

D. value.

E. value analysis.

20. The ratio of _________ to price is referred to as value.

A. perceived benefits

B. prestige value

C. costs

D. perceived quality

E. profits

21. The ratio of perceived benefits to __________ is referred to as value.

A. price

B. prestige

C. perceived quality

D. profits

E. perceived costs

22. To increase value, marketers have the option of

A. decreasing benefits.

B. decreasing benefits and increasing price.

C. decreasing price and increasing benefits.

D. decreasing price and decreasing benefits.

E. do nothing and let the perceived value of the item increase as it matures in its life cycle.

23. To increase value, marketers may _________.

A. decrease benefits

B. increase price

C. increase advertising

D. decrease price and increase benefits

E. do nothing and let the perceived value of the item increase as it matures in its life cycle

24. To increase value marketers may _________, decrease price, or do both.

A. decrease benefits

B. increase benefits

C. increase price

D. increase advertising

E. do nothing and let the perceived value of the item increase as it matures in the life cycle.

25. Value-pricing refers to

A. the ratio of perceived benefits to price.

B. the practice of simultaneously increasing product and service benefits and maintaining or decreasing price.

C. is the money or other considerations exchanged for the ownership or use of a product or service.

D. the ratio of price to perceived benefits.

E. list price minus incentives and allowances plus extra fees.

26. The practice of simultaneously increasing product and service benefits and maintaining or decreasing price is referred to as _________.

A. value-pricing

B. customer-value pricing

C. competitive pricing

D. cost pricing

E. demand pricing

27. Creative marketers engage in _________, which is the practice of simultaneously increasing product and service benefits and maintaining or decreasing price.

A. revenue sharing

B. customer-value pricing

C. demand pricing

D. value-pricing

E. cost pricing

28. Creative marketers engage in value-pricing, which is the practice of simultaneously _________ and maintaining or decreasing price.

A. decreasing product and service benefits

B. decreasing profit

C. analyzing benefits

D. decreasing cost

E. increasing product and service benefits

29. Creative marketers engage in value-pricing, which is the practice of simultaneously increasing product and service benefits and _________.

A. increasing costs

B. increasing price

C. advertising more

D. decreasing costs

E. maintaining or decreasing price

30. A major grocery chain pays its baggers a regular hourly wage. The baggers not only pack the groceries, they will take customers' groceries to their car, regardless of the weather. The baggers are not permitted to accept tips, even if they are offered. This would be an example of

A. pricing enhancement

B. societal pricing

C. revenue sharing

D. value-pricing

E. cost-pricing

31. Many convenience stores now have mail slots where customers can pay their utility bills. The utility companies handle all the processing while the customers get the benefit of not having to use postage. The convenience store owner gets the advantage of the extra foot traffic. This is an example of

A. societal pricing

B. revenue sharing

C. barter

D. value-pricing

E. cost-pricing

32. Many cosmetology schools allow their advanced students to style hair for "real world" clients for a reduced fee. The students benefit from the experience, the clients get a less expensive haircut, and the school is able to provide students with additional training without costing it anything; in fact, they even profit from it. This is an example of

A. societal pricing

B. revenue sharing

C. barter

D. value-pricing

E. cost-assist pricing

33. Most consumers realize that the quality of diamonds varies, and most believe the higher the price of the diamond, the higher its quality. This is an example of price influencing the perception of overall quality, and __________ to consumers.

A. acceptable cost

B. perceptual investment

C. barter potential

D. return on investment

E. value

34. Which of the following statements is most accurate?

A. For some products, price influences the perception of overall quality, and ultimately value, to consumers.

B. A consumer's view of a product's value is always tied to quality.

C. A consumer's view of value is a function of their education and upbringing.

D. Price plays only a small part in a consumer's value of a product or service.

E. Price plays a large role in assessing value but play a very minor role in assessing quality.

35. When Pizza Hut announced it was going to add 25 percent more toppings to its Meat Lover's line of pizzas without increasing their prices, what consumer motivation was it appealing to?

A. cost

B. appearance

C. tangibles

D. value

E. quality

Figure 13-1

36. As shown in Figure 13-1 above, McDonald's is most likely using which type of pricing strategy?

A. predatory pricing

B. value pricing

C. loss-leader pricing

D. odd-even pricing

E. barter

37. A "reference value" involves the judgment by a consumer of the worth and desirability of a product or service _________.

A. relative to the amount of time and energy a consumer puts into the purchase process.

B. based upon the value assigned to similar items used by the consumer's peers.

C. that results from performing a careful break-even analysis.

D. relative to substitutes that satisfy the same need.

E. based upon the differential between customers' "needs" and their "wants."

38. A buying situation can involve comparing the costs and benefits of substitute items—such as real sugar to the sugar substitute Splenda which, although more expensive than sugar, is purchased by many consumers because it contains no calories. This situation involves the consumer considering

A. a marginal analysis.

B. a profit equation.

C. a break-even analysis.

D. price elasticity of demand.

E. a reference value.

39. Reference value involves comparing the costs and benefits of _________.

A. substitute items

B. items of equal or greater value

C. products with which a consumer is familiar and items the consumer has not seen or used before

D. items from one particular distributor

E. intangible items

40. The __________ calculation = (Unit price × Quantity sold) - Total cost.

A. total revenue

B. profit

C. variable cost

D. net present value

E. break-even point

41. A firm's profit equation demonstrates that profit equals _________.

A. Total cost + Total revenue

B. Total revenue - Total cost

C. Marginal revenue - Marginal cost

D. Price × Quantity

E. Total revenue + Total cost

42. The formula, Total revenue - Total cost, or [(Unit price × Quantity sold) - (Fixed cost + Variable cost)] represents _________.

A. the profit equation

B. the value equation

C. the sales ratio

D. average revenue

E. the break-even point

Figure 13-2

43. Figure 13-2 above represents the six steps in the price-setting process. "A" represents the step at which a firm would

A. raise initial capital.

B. identify pricing objectives and constraints.

C. scan competitors for prices of similar products or services.

D. select the appropriate pricing formula.

E. establish the price range.

44. Figure 13-2 above represents the six steps in setting price. "B" represents the step at which a firm would

A. estimate demand and revenue.

B. identify pricing objectives and constraints.

C. scan competitors for prices of similar products or services.

D. select the appropriate pricing formula.

E. determine cost, volume, and profit relationships.

45. Figure 13-2 above represents the six steps in setting price. "C" represents the step at which a firm would

A. estimate demand and revenue.

B. identify pricing objectives and constraints.

C. scan competitors for prices of similar products or services.

D. determine cost, volume, and profit relationships.

E. establish the price range.

46. Figure 13-2 above represents the six steps in setting price. "D" represents the step at which a firm would

A. estimate demand and revenue.

B. select an approximate price level.

C. scan competitors for prices of similar products or services.

D. determine cost, volume, and profit relationships.

E. establish the price range.

47. Figure 13-2 above represents the six steps in setting price. "E" represents the step at which a firm would

A. set list or quoted price.

B. select an approximate price level.

C. scan competitors for prices of similar products or services.

D. determine cost, volume, and profit relationships.

E. establish the price range.

48. Figure 13-2 above represents the six steps in setting price. "F" represents the step at which a firm would

A. set list or quoted price.

B. select an approximate price level.

C. scan competitors for prices of similar products or services.

D. make special adjustments to list or quoted price.

E. establish the price range.

49. Figure 13-2 above represents the six steps in setting price. Which letter represents the step where a firm would estimate price elasticity?

A. "A"

B. "B"

C. "C"

D. "D"

E. "E"

50. Figure 13-2 above represents the six steps in setting price. Which letter represents the step where a firm would conduct a break-even analysis?

A. "A"

B. "B"

C. "C"

D. "D"

E. "E"

51. Figure 13-2 above represents the six steps in setting price. Which letter represents the step where a firm would estimate dollar and unit sales revenues?

A. "A"

B. "B"

C. "C"

D. "D"

E. "E"

52. Figure 13-2 above represents the six steps in setting price. Which letter represents the step where a firm would assess the constraints on the demand for the product class and brand?

A. "A"

B. "B"

C. "C"

D. "D"

E. "E"

53. Figure 13-2 above represents the six steps in setting price. Which letter represents the step where a firm would identify pricing objectives such as profit, market share, and survival?

A. "A"

B. "B"

C. "C"

D. "D"

E. "E"

54. Figure 13-2 above represents the six steps in setting price. Which letter represents the step where a firm would estimate demand?

A. "A"

B. "B"

C. "C"

D. "D"

E. "E"

55. Figure 13-2 above represents the six steps in setting price. Which letter represents the step where a firm would estimate costs and perform a marginal analysis to assess profitability?

A. "A"

B. "B"

C. "C"

D. "D"

E. "E"

56. According to Nandan Nilekani, CEO of Infosys, there are a number of fundamental changes in world business, which includes outsourcing, broadband connectivity, lower priced computers, and

A. the natural evolution of a more computer literate society.

B. multi-lingual search engines.

C. virtual time translation of multi-lingual transmissions.

D. the explosion of software and search engines.

E. the absence of governmental authority or regulation of Internet commerce.

57. With over 300 million customers, __________ is the world's cell phone market and is adding 5 million new customers a year.

A. China

B. India

C. Russia

D. the European Union

E. the United States

58. Which of the following are examples of elements involved in Step 1 of the price-setting process: identify pricing objectives?

A. profit, market share, and survival

B. estimation of demand, sales revenue, and price elasticity

C. cost estimation, marginal analysis, and break-even analysis

D. demand for the product class and brand, newness of the product, and competition

E. market segmentation targeting, and positioning

59. Which of the following would be an example of an objective in Step 1 of the price-setting process?

A. "We need to set an initial price of $259 dollars per unit."

B. "We need to obtain a ten percent market share."

C. "We need to find the least expensive distributor."

D. "We need to make allowances for large quantity orders."

E. "We need to increase the price during the holiday shopping season."

60. Which of the following would be an example of an objective in Step 1 of the price-setting process?

A. "We need to set an initial price of $259 dollars per unit."

B. "We need to find the least expensive distributor."

C. "We need to set profits at $1.2 million."

D. "We need to make allowances for large quantity orders."

E. "We need to increase the price during the holiday shopping season."

61. Which of the following would be an example of an objective in Step 1 of the price-setting process?

A. "We need to forget profits right now; just make sure we break even."

B. "We need to find the least expensive distributor."

C. "We need to make allowances for large quantity orders."

D. "We need to increase the price during the holiday shopping season."

E. "We need to hire a professional accountant."

62. Which of the following would be an example of a constraint in Step 1 of the price-setting process?

A. "Remember, no one even knows what this new product can do."

B. "We can rely on our reputation for our other products in the line."

C. "Experts are predicting a surge in global demand."

D. "We need to make allowances for large quantity orders."

E. "We should increase the price during the holiday shopping season."

63. Which of the following would be an example of a constraint in Step 1 of the price-setting process?

A. "We can rely on our reputation for our other products in the line."

B. "Experts are predicting a surge in global demand."

C. "We need to make allowances for large quantity orders."

D. "We should increase the price during the holiday shopping season."

E. "We're going to face some stiff competition."

64. Which of the following represent elements of Step 2 of the price-setting process?

A. profit, market share, and survival

B. estimation of demand, sales revenue, and price elasticity

C. cost estimation, marginal analysis, and break-even analysis

D. demand for the product class and brand, newness of the product, and competition

E. market segmentation targeting, and positioning

65. Objectives like profit, market share, and survival as well as constraints such demand for product class and brand, newness, costs, and competition are issues that would be addressed during __________ of the price-setting process.

A. Step 1

B. Step 2

C. Step 3

D. Step 4

E. Step 5

66. Estimating demand, sales revenue, and price elasticity are issues that would be addressed during __________ of the price-setting process.

A. Step 1

B. Step 2

C. Step 3

D. Step 4

E. Step 5

67. Estimating cost, conducting a marginal analysis, and performing a break-even analysis are issues that would be addressed during __________ of the price-setting process.

A. Step 1

B. Step 2

C. Step 3

D. Step 4

E. Step 5

68. Selecting an approximate price level would occur during __________ of the price-setting process.

A. Step 2

B. Step 3

C. Step 4

D. Step 5

E. Step 6

69. Setting list or quoted prices would occur during __________ of the price-setting process.

A. Step 2

B. Step 3

C. Step 4

D. Step 5

E. Step 6

70. Making special adjustments to the list or quoted price would occur during __________ of the pricesetting process.

A. Step 2

B. Step 3

C. Step 4

D. Step 5

E. Step 6

71. Which of the following statements would most likely be spoken during Step 2 of the price-setting process?

A. "It's important to offer discounts to seniors."

B. "We have to try to achieve an 8% profit share."

C. "The starting price should be $4.99 and we can raise the price again in six months."

D. "But, if we increase the price even by one dollar, how many customers will we lose?"

E. "We should probably price the extra large version somewhere between $600 and $650."

72. Which of the following are examples of elements of Step 3 in the price-setting process?

A. profit, market share, and survival

B. estimation of demand, sales revenue, and price elasticity

C. cost estimation, marginal analysis, and break-even analysis

D. demand for the product class and brand, newness of the product, and competition

E. market segmentation targeting, and positioning

73. Which of the following statements would most likely be spoken during Step 3 in the price-setting process?

A. "In order to break-even, we will need to sell at least 500,000 units."

B. "We have to try to achieve an 8% profit share."

C. "The starting price should be $4.99 and we can raise the price again in six months."

D. "But, if we increase the price even by one dollar, how many customers will we lose?"

E. "We should probably price the extra large version somewhere between $600 and $650."

74. Specifying the role of price in an organization's marketing and strategic plans is referred to as

A. a pricing plan.

B. profit mission.

C. pricing constraints.

D. pricing objectives.

E. the list or quoted price.

75. Pricing objectives refer to

A. reconciling the prices charged by an organization to the values set forth in its business mission.

B. taking specific steps to capitalize on an organization's internal strengths as they apply to price.

C. taking specific steps to compensate for an organization's weaknesses as they apply to price.

D. specifying the role of price in an organization's marketing and strategic plans.

E. subjectively setting intrinsic values to all products and services offered by an organization.

76. Which of the following statements regarding pricing objectives is most accurate?

A. Pricing objectives should never change.

B. Pricing objectives may change depending upon the relative market share of competitors.

C. Pricing objectives are established exclusively by the marketing department.

D. Pricing objectives may change depending on the financial position of the company.

E. Pricing objectives are extremely sensitive to even the slightest change in the local economy.

77. Three different objectives relate to a firm's profit, which have different implications for pricing strategy. The three profit-oriented objectives include managing for long-run profits, maximizing current profit objectives, and _________.

A. achieving a target return

B. accumulating profits

C. reinvesting profits

D. redistributing profits

E. maximizing gross margin

78. Three different objectives relate to a firm's profit, which have different implications for pricing strategy. The three profit-oriented objectives include _________, maximizing current profits, and target return.

A. accumulating profits

B. reinvesting profits

C. redistributing profits

D. maximizing gross margin

E. managing for long-run profits

79. Three different objectives relate to a firm's profit, which have different implications for pricing strategy. The three profit-oriented objectives include _________, managing for long-run profits, and target return.

A. accumulating profits

B. reinvesting profits

C. redistributing profits

D. maximizing gross margin

E. maximizing current profits

80. Managing for long-run profits implies that a company

A. will give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.

B. will maintain a given price range to ensure there is no loss of customers over time, even if the profit margin declines.

C. all profits will be invested in bonds or other certificates of deposit in order to counteract any drastic economic changes in the future.

D. all profits will be reinvested into market research or product research rather than returned to shareholders.

E. all products, product lines, or divisions that cannot maintain their pricing goals will be dropped.

81. A maximizing current profit objective implies that a company chooses

A. to set targets whose performance can be measured quickly.

B. to give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.

C. to set a profit goal that is often determined by its board of directors.

D. to reduce investment in any further market or product research.

E. to set prices based on return on sales.

82. A target return profit objective implies that a company chooses

A. to set targets that whose performance can be measured quickly.

B. to give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.

C. to set a profit goal that is often determined by its board of directors.

D. to reduce investment in any further market or product research.

E. to set prices based on return on sales.

83. A firm's profit objective is often measured in terms of ROI. The acronym ROI stands for _________.

A. risk opportunity investment

B. regulated organizational incentives

C. return on investment

D. regulated organizational investments

E. replenishment of organizational inventories

84. A firm's profit objective is often measured in terms of ROA. The acronym ROA stands for _________.

A. risk opportunity assessment

B. regulated organizational acquisitions

C. return on assets

D. regulated organizational activities

E. risk opportunity analysis

85. While pricing objectives frequently reflect corporate goals, pricing constraints often relate to

A. stockholder demands.

B. political ideology.

C. conditions existing in the marketplace.

D. an organization's code of ethics.

E. the financial realities within the organization itself.

86. Given that a firm's profit is high enough for it to remain in business, an objective may be to _________, which will in turn lead to increases in market share and profit.

A. increase the commitment to social responsibility

B. decrease unit volume while maintaining price

C. increase dollar sales revenue

D. increase research and development funding for new product line extensions

E. continue with previous policies that seem to be working

87. Which of the following statements regarding sales goals is most accurate?

A. For marketing managers, sales revenue or unit sales are more easily addressed than profit goals.

B. Cutting prices for a single product in a product line to raise unit sales often results in an increase in sales for related products in the line as well.

C. Very often cutting prices results in a decrease in market share.

D. Setting unit volume sales as a pricing objective results in price wars with competitors, so the practice is limited to industries with as few competitors as possible.

E. An advantage of increasing unit volume sales is that it always results in an increase in profits.

88. The ratio of the firm's sales revenues or unit sales to those of the industry (competitors plus the firm itself) is referred to as

A. target return on sales.

B. industry profit.

C. unit volume.

D. market share.

E. profit.

89. Market share is the ratio of the _________ to those of the industry.

A. target return on sales

B. marginal profit of the firm

C. marketing expenses of the firm

D. firm's sales revenues or unit sales

E. profits of the firm

90. Netflix used to charge $14.99 per month for its movie rental service. However, when Blockbuster introduced the same service at $13.99, Netflix then dropped its price to $13.99. Netflix most likely made this price reduction in an attempt to

A. maintain market share.

B. decrease revenue but increase profit.

C. increase profit by decreasing revenue.

D. decrease market share.

E. increase efficiency.

91. If the CEO of the Clorox Company were to say, "We want to control 60 percent of the bleach market within the next five years," he would have set a __________ pricing objective.

A. profit

B. sales

C. unit volume

D. market share

E. social responsibility

92. Companies often pursue a market share objective when _________.

A. industry sales are flat or declining

B. profits are increasing

C. industry sales are beginning to rise

D. there is a sudden increase in production costs

E. stockholders are seeking higher dividends

93. Which of the following statements regarding a market share pricing objective is most accurate?

A. A market share objective is often difficult for product managers since stockholders are looking for immediate dividends (return of profits) and obtaining market share usually takes time.

B. Although increased market share is a primary goal of some firms, others see it as a means to other ends such as increased sales or profits.

C. Selecting market share as a pricing objective is particularly effective if industry sales are rising.

D. An advantage of market share as a pricing objective is that it is particularly insensitive to competitors' actions.

E. Ironically, a market share objective is realized by raising prices in order to increase consumer confidence during the decline stage of a product's life cycle.

94. Unit volume as a pricing objective refers to

A. the quantity or products to be produced or sold.

B. the ratio of price per unit to unit variable cost.

C. the ratio of production costs to the minimum sales price that would still generate profit.

D. the total quantity of product sold by a firm relative to the total quantity of product sold by all firms in the industry.

E. the number of units that need to be sold in order to avoid inventory carrying costs.

95. A negative aspect of selecting unit volume as a pricing objective is that

A. production can often not keep up with demand.

B. there are increased carrying costs with extensive inventories.

C. if price reductions are used to achieve volume objectives, it can sometimes come at the expense of profits.

D. it can create competition between divisions within the organization itself causing conflicts over the allocation of resources.

E. it always positively correlates with a sales revenue objective.

96. Some specialty-toy retailers pursue a __________ pricing objective to generate cash to ward off bankruptcy.

A. market share

B. survival

C. sales revenue

D. single product line

E. profit

97. For years a local "greasy spoon" diner had customers lining up around the building for breakfast. When the city announced that it was building an off ramp from the highway that would conceivably double his customer traffic, he was delighted. Having saved enough in previous years, he was certain it could hold him over through the three month construction. Unfortunately, construction delays continued for an additional six months and the work is still going in progress. The best pricing objective at this point would most likely be _________.

A. profit

B. market share

C. unit volume

D. survival

E. social responsibility

98. Factors that limit the range of prices a firm may set are referred to as _________.

A. pricing restraints

B. pricing constraints

C. demand factors

D. pricing barriers

E. pricing restrictions

99. Pricing constraints refer to

A. barriers that must be overcome in order to set pricing objectives.

B. competitive pricing advantages one firm has over another.

C. different pricing strategies for each of the firm's products.

D. factors that limit the range of prices a firm may set.

E. barriers to entry a firm faces when launching a new product.

100.Which term describes factors that limit the range of prices a firm may set?

A. price fixings

B. pricing constraints

C. price elasticities

D. pricing demands

E. pricing margins

101.Factors that limit the range of prices a firm may set are referred to as

A. pricing objectives.

B. pricing restraints.

C. pricing constraints.

D. pricing elasticity.

E. the pricing environment.

102.Which of the following statements about consumer demand as a pricing constraint is most accurate?

A. The number of potential buyers for the product class has little effect on the price a seller can charge.

B. The number of potential buyers for the product affects the price a seller can charge but only if the product is a luxury item.

C. The number of potential buyers for the product affects the price a seller can charge but only if the product is a necessity item.

D. The number of potential buyers for the brand affects the price a seller can charge in the growth stage of a product life cycle, but not in the introductory stage.

E. Whether the item is a luxury or a necessity affects the price a seller can charge.

103.Which of the following statements about the product life cycle as a pricing constraint is most accurate?

A. The newer a product is, the higher the price that can usually be charged.

B. The later in the product life cycle the product is, the higher the price that can usually be charged.

C. Once a product is considered nostalgic, the price will continue to rise indefinitely.

D. Fads will generally have only two price points - high and low- but the value of those price points will remain basically the same.

E. Prices should not be changed until a product reaches the maturity stage.

104.Which of the following statements regarding pricing objectives is most accurate?

A. Generally, the greater the demand for a product, the higher the price that can be set.

B. At the corporate level, when setting pricing objectives and constraints, a firm must disregard current conditions in the marketplace because they are too temporal for long-term planning.

C. Pricing objectives must always be set, but they are rarely achieved; they provide a framework rather than actual expectations.

D. It is possible to create pricing objectives with the greatest range possible in order to anticipate any and all changes in the marketing environment.

E. Even if a firm is trying to satisfy its obligations to its customers and society in general is it should never forego making a profit.

105.The newer a product and the earlier it is in its life cycle,

A. the lower the price the firm must charge.

B. the more competition it has.

C. the higher is the price that can usually be charged.

D. the lower the production costs are.

E. the lower the unit variable cost is.

106.Occasionally, prices may rise later in the product's life cycle. This is often due to

A. new competitors entering the market.

B. nostalgia and fad factors.

C. production economies of scale.

D. a decrease in the price of raw materials.

E. the type of competitive market shifts from pure monopoly to pure competition.

107.At one point, people were willing to pay hundreds of dollars on eBay for a Beanie Baby toy that originally cost a fraction of that amount. Today, those same Beanie Babies can be found at garage sales all over the country for a less than a dollar apiece. This is most likely due to

A. a product becoming a fad and then losing its fad appeal.

B. faulty craftsmanship in later production batches.

C. a sharp downturn in the economy.

D. the new, more nostalgic fad of bobble-head dolls.

E. too many counterfeit Beanie Babies entering the country.

108.Which of the following statements regarding pricing objectives is most accurate?

A. When a product is in the introductory stage of the product life cycle, there is very little latitude in setting the initial price since consumers still don't know what the product can really do.

B. A company has more latitude in setting an initial price if the product is in the introductory stage of its life cycle and is the only product in the line.

C. The greater the number of products in a company's product line, the less the product features of similar products can affect price.

D. The newest addition to a company's product line should always have the highest price in order to maintain the value of existing brands.

E. To avoid cannibalization, the newest product addition to a company's product line should never have a price lower than the other offerings in the line.

109.An analysis of a prospective product shows that it is expected to grow by at least 10 percent each year over the next 5 years, and then enter the maturity phase of its product life cycle. This type of analysis would provide useful information in which step of the price-setting process?

A. identifying pricing objectives and constraints

B. determining cost, volume, and profit relationships

C. estimating demand and revenue

D. selecting an appropriate (approximate) price lining strategy

E. making special adjustments to list or quoted price

110.George and Alice Renfro decided to start a family business in 1990. Its product: chowchow, a southern regional food. To determine how they would price the chowchow, the Renfros had to: (1) examine the demand for the product (e.g., would people rather eat home-made or store-bought?); (2) the costs of the jars for and bottling of the chowchow; and (3) and how much it would cost to distribute the product to area grocery stores. For the Renfros, Step 1 of their price-setting process consists of

A. identifying pricing constraints.

B. estimating break-even points and revenue points.

C. setting the list price.

D. selecting an approximate price level.

E. determining cost, volume, and profit relationships.

111.Pricing constraints refer to

A. the controllable elements in a firm's marketing mix that allow it to charge the highest price possible.

B. formulas used in establishing break-even points, price elasticity of demand, and marginal analysis of revenues and costs.

C. factors that limit the range of prices a firm may set.

D. factors that expand the range of prices a firm may set.

E. virtual boundaries used when setting the initial price on a new product.

112.Which of the following statements is most accurate?

A. Nonprofit organizations are exempt from having to cover the costs of producing and/or marketing their products.

B. Socially responsible corporations should have the pricing objective of covering all costs of producing and marketing their products, but they should not price their products to earn a profit.

C. Regardless of a company's objectives, a firm must cover all the costs of producing and marketing product or the firm will fail.

D. Price elasticity of demand makes it virtually impossible for companies to cover all their marketing and production costs at all times.

E. Marketing and production costs are the most difficult and expensive aspect of pricing because they draw so much capital away from other departments in the organization.

113.A study of four supermarket chains found the average annual cost of these price changes was $105,887, which represents 0.70 percent of revenues and an astounding __________ percent of net margins.

A. 10.0

B. 23.6

C. 35.2

D. 38.9

E. 43.0

114.Which of the following statements regarding price changes is most accurate?

A. Product prices should change monthly, whereas services prices should change quarterly.

B. Changing a product's price too frequently creates antagonism among consumers, yet changing prices too infrequently makes them feel the company is not improving its product or service sufficiently.

C. Supermarkets should change their prices every week since customers are expecting new prices in the weekly flyers they receive in the mail.

D. Companies selling products over the Internet can instantly change their prices whenever the need arises.

E. Internet price changes are regulated by the Internet Fair Practices Act to protect consumers against price gouging.

115.Which of the following statements regarding the seller's price is most accurate?

A. Internet price changes are regulated by the Internet Fair Practices Act to protect consumers against price gouging.

B. The seller's price is constrained by the type of market within which it competes.

C. Price changes cannot be regulated in a monopoly.

D. The type of market has little or no impact on a firm in monopolistic competitive environment.

E. Competitive environments should affect a firm's pricing objectives, but not its actual product prices.

116.Which pricing constraint does the following statement demonstrate: "Most public utilities must petition regulatory commissions in order to obtain a rate increase."

A. demand for the product, class, or brand

B. newness of product in the life cycle

C. costs of production

D. type of competitive market

E. single product versus a product line

117.Economists have identified four types of competitive markets:

A. capitalistic, monopolistic, socialist, and communist

B. pure monopoly, monopolistic competition, oligopoly, and pure competition

C. free market, restrained market, government-regulated, and command economy

D. market economy, command economy, traditional economy, and controlled economy

E. open market, consumer-dominated market, service market, and product market

118.Economists have identified four types of competitive markets: pure monopoly, monopolistic competition, oligopoly, and _________.

A. government-dominated

B. pure competition

C. capitalist

D. socialist

E. communist

119.Economists have identified four types of competitive markets: pure monopoly, pure competition, oligopoly, and _________.

A. capitalism

B. monopolistic competition

C. socialism

D. consumer-dominated

E. government-dominated

120.Economists have identified four types of competitive markets: pure monopoly, monopolistic competition, pure competition, and _________.

A. capitalism

B. socialism

C. consumer-dominated

D. oligopoly

E. government-dominated

121.Economists have identified four types of competitive markets: oligopoly, monopolistic competition, pure competition, and _________.

A. capitalism

B. socialism

C. consumer-dominated

D. government-dominated

E. pure monopoly

122.List the following competitive markets from most competitive to least competitive.

A. monopolistic competition, pure monopoly, pure competition, and oligopoly

B. pure competition, monopolistic competition, oligopoly, and pure monopoly

C. pure competition, monopolistic competition, pure monopoly, and oligopoly

D. pure monopoly, monopolistic competition, pure competition, and oligopoly

E. pure monopoly, oligopoly, monopolistic competition, and pure competition

123.List the following competitive markets from least competitive to most competitive.

A. monopolistic competition, pure monopoly, pure competition, and oligopoly.

B. pure competition, monopolistic competition, oligopoly, and pure monopoly.

C. pure competition, monopolistic competition, pure monopoly, and oligopoly.

D. pure monopoly, monopolistic competition, pure competition, and oligopoly.

E. pure monopoly, oligopoly, monopolistic competition, and pure competition.

124.The type of competition dramatically influences the range of price competition and, in turn,

A. the nature of product differentiation and extent of on-hand inventory.

B. the nature of product differentiation and extent of advertising.

C. the degree of involvement with each of the organization's stakeholders.

D. the degree of involvement with both retailers and wholesalers.

E. the relationship between product lines and product classes.

125.The competitive market situation in which many sellers follow the market price for identical, commodity products is referred to as

A. pure monopoly.

B. oligopoly.

C. monopolistic competition.

D. pure competition.

E. oligopolistic competition.

126.Pure competition is the competitive situation where

A. many sellers follow market price for identical, commodity products.

B. one seller sets the price for a unique product.

C. few sellers are sensitive to one another's prices.

D. many sellers compete on non-price factors.

E. one or few sellers compete solely on nonprice factors.

127.If competitive market circumstances are such that there is almost no price competition, no product differentiation, and the only advertising informs prospects that the product is available, then _________ competitive market must exist in this industry.

A. a pure monopoly

B. an oligopoly

C. monopolistic competition

D. pure competition

E. monopolistic oligopoly

128.The marketplace sets the price for wheat, so farmers who are trying to sell their wheat crops don't have to create a pricing strategy. The wheat is sold in a(n) __________ type of competitive market.

A. oligopoly

B. pure monopoly

C. pure competition

D. monopolistic competition

E. monopolistic oligopoly

Figure 13-3

129.In Figure 13-3 above, column "A" represents which type of competitive market?

A. pure monopoly

B. oligopoly

C. monopolistic competition

D. pure competition

E. monopolistic oligopoly

130.In Figure 13-3 above, column "B" represents which type of competitive market?

A. pure monopoly

B. oligopoly

C. monopolistic competition

D. pure competition

E. monopolistic oligopoly

131.In Figure 13-3 above, column "C" represents which type of competitive market?

A. pure monopoly

B. oligopoly

C. monopolistic competition

D. pure competition

E. monopolistic oligopoly

132.In Figure 13-3 above, column "D" represents which type of competitive market?

A. pure monopoly

B. oligopoly

C. monopolistic competition

D. pure competition

E. monopolistic oligopoly

133.Using Figure 13-3 above, how much price competition is likely for bushels of wheat?

A. There is a range of prices at which to sell.

B. The market sets the price so there is no price competition.

C. There is a price leader in the farming industry that sets the price.

D. Since there is only one seller, that firm sets the price.

E. Price is regulated by the government.

134.Using Figure 13-3 above, how much price competition is likely for small coffee shops?

A. There is almost none; the market sets the price.

B. There is some competition within a range of prices.

C. There is generally a price leader that sets the price.

D. Starbucks sets the price and all other coffee shops follow its lead.

E. Price is set by the seller, but regulated by the government.

135.Microsoft, Sony, and Nintendo are the three principal firms in the video game market. Using Figure 13-3 above, how much price competition is most likely for video game makers?

A. There is almost none; the market sets the price.

B. There is some competition within a range of prices.

C. There is generally a price leader that sets the price.

D. Each firm is aware of each other's prices and may adjust them based on the prices of the other two firms.

E. Price is set by the seller but regulated by the government.

136.The competitive market situation in which one seller sets the price for a unique product is referred to as

A. pure monopoly.

B. oligopoly.

C. monopolistic competition.

D. pure competition.

E. monopolistic oligopoly.

137.Pure monopoly is the competitive market situation where

A. many sellers follow market price for identical, commodity products.

B. one seller sets the price for a unique product.

C. few sellers are sensitive to one another's prices.

D. many sellers compete on non-price factors.

E. one or few sellers compete solely on nonprice factors.

138.If competitive market circumstances are such that there is no price competition, no product differentiation, and the purpose of advertising is to increase demand for the product class, then __________ must exist in the industry.

A. a pure monopoly

B. an oligopoly

C. monopolistic competition

D. pure competition

E. oligopolistic competition

139.Florida Power & Light, an electric power company, is the only source of electricity for consumers in most parts of the Florida panhandle. As a(n) _________, the company receives approval from the state utility commission for the rates it can charge.

A. free enterprise firm

B. pure monopoly

C. oligopoly

D. monopolistic competitor

E. competitor in a pure competition

140.The marketing director for a(n) __________ is most likely to believe the following statement, "The purpose of advertising is to increase demand for the product class."

A. pure monopoly

B. oligopoly

C. monopolistic competitor

D. pure competitor

E. competitive oligopoly

141.The competitive market situation in which the few sellers are sensitive to one another's prices is referred to as

A. pure monopoly.

B. oligopoly.

C. monopolistic competition.

D. pure competition.

E. oligopolistic competition.

142.An oligopoly is a competitive market situation where

A. many sellers follow market price for identical, commodity products.

B. one seller sets the price for a unique product.

C. few sellers are sensitive to one another's prices.

D. many sellers compete on non-price factors.

E. one or few sellers compete solely on nonprice factors.

143.Go to any Kroger supermarket and walk to the cereal aisle. You will notice four major brands— Kellogg's, Quaker, General Mills, and Post—seem to occupy most of the shelf space. These cereals are all priced about the same. There is a good deal of product differentiation as the result of licensing agreements with movie studios (Disney, DreamWorks, etc.) and through the use of different health claims. The cereal industry is an example of what type of competitive market?

A. a pure monopoly.

B. an oligopoly.

C. monopolistic competition.

D. pure competition.

E. monopolistic oligopoly.

144.If competitive market circumstances are such that there are few sellers who are sensitive to each other's prices, and the purpose of advertising is to inform but avoid price competition, then __________ must exist in the industry.

A. a pure monopoly

B. an oligopoly

C. monopolistic competition

D. pure competition

E. oligopolistic competition

145.The competitive market situation in which many sellers compete on non-price factors is referred to as

A. a pure monopoly.

B. an oligopoly.

C. monopolistic competition.

D. pure competition.

E. monopolistic oligopoly.

146.In which type of industry would a marketing director be most likely to say, "We have to let the customer know that our product is the only one that comes with its own tracking device."

A. pure monopoly

B. oligopoly

C. monopolistic competition

D. pure competition

E. monopolistic oligopoly

147.There are over 100 companies that manufacture natural and artificial flavorings used to enhance the taste of food before it is sold to consumers. Many of these manufacturers are regional operations. Many differentiate themselves in their advertising from the competition by specializing in one or two types of foods for which they provide flavorings. Some use their distribution strategies as a means of differentiating themselves from their competition. This industry is most likely an example of

A. pure monopoly.

B. oligopoly.

C. monopolistic competition.

D. bilateral monopoly.

E. monopolistic oligopoly.

148.Small regional producers selling grocery products have a special problem because they need to set prices at which both they and their channel members can profit while

A. still maintaining local customer loyalty.

B. trying to go head-to-head or steal market share from nationally recognized brands.

C. competing with other brands to gain valuable space on supermarket shelves.

D. keeping other regional businesses from entering the market.

E. avoiding cannibalization if they sell their product both in stores and online.

149.A manufacturing company that introduces a product must know or anticipate what specific price its __________ currently charge or may charge in the future.

A. banks

B. suppliers

C. unions

D. present and potential competitors

E. regulators

150.Basic to setting a product's price is the extent of _________. This information is used in estimating the revenues the firm expects to receive.

A. management's commitment to the product relative to other products in the line

B. curiosity or interest potential consumers expressed during market testing

C. customer demand for it

D. the firm's promotional budget

E. distribution requirements

151.Marketing executives must translate estimates of customer demand into estimates of

A. personnel requirements.

B. advertising expenditures.

C. ancillary product support.

D. revenues the firm expects to receive.

E. minimum distribution requirements.

152.Demand curve refers to a graph that relates

A. the quantity sold and price, which shows the maximum number of units that will be sold at a given price.

B. the quantity sold and price, which shows the minimum number of units that must be sold to break even.

C. the quantity sold and price, which shows the minimum number of units that must be sold in order to make a profit.

D. total production costs to various price points in order to determine how many units must be sold in order to realize a predetermined profit.

E. total product costs to advertising expenditures in order to determine how to spend the least amount of money while creating the greatest customer demand.

153.The horizontal axis of a demand curve graph represents _________.

A. market growth rate

B. relative market share

C. price per unit

D. potential profit in dollars

E. quantity demanded

154.A demand curve graph typically appears as

A. a parabola with the apex representing the highest price that can be charged without losing customers.

B. an inverted parabola with the lowest point representing the lowest price that can be charged and still meet the company's profit objectives.

C. a diagonal line going from top left to bottom right demonstrating that as price goes down, demand goes up.

D. a diagonal line going from lower left to upper right demonstrating that as prices go up, demand goes up proportionately.

E. two intersecting lines that identify the point at which supply and demand are exactly the same.

155.The maximum quantity of products consumers will buy at given price is shown by

A. a demand curve.

B. a price constraint.

C. a break-even point.

D. price lining.

E. a marginal revenue curve.

156.Which of the following statements about the factors that influence demand is true?

A. As the availability of close substitutes increases, the demand for a product increases.

B. As real consumer income increases, demand for a product increases.

C. As the price of close substitutes increases, demand for a product declines.

D. Changing consumer tastes have little impact on demand for a product.

E. As real consumer income decreases, demand for a product increases.

157.Factors that determine consumers' willingness and ability to pay for products and services are referred to as

A. the "misery index."

B. demand factors.

C. gross national product.

D. elasticity factors.

E. macro environmental factors.

158.All of the following are demand factors EXCEPT:

A. the price of similar products.

B. consumer tastes.

C. the number of distribution outlets carrying the product.

D. consumer income.

E. the availability of similar products.

159.When estimating demand, price is not the only factor to be considered. Three other elements include consumer tastes, price and availability of similar products, and

A. consumer income.

B. consumer psychographics.

C. current economic stressors.

D. current political agendas.

E. green substitutes.

160.While consumer tastes and price and availability of similar products determine what consumers want to buy, consumer income determines

A. where they buy.

B. the degree of brand loyalty.

C. the degree of repeat buys.

D. what they can buy.

E. their desire to buy.

161.Campbell Soup spent seven years and $55 million on a super secret project to produce a line of Intelligent Quisine (IQ) food products "scientifically proven to lower high levels of cholesterol, blood sugar, and blood pressure." They were responding to the needs and desires expressed by consumers. However, after 15 months in an Ohio test market, Campbell Soup yanked the entire IQ line because

A. Progresso Soups got to the stores first with a similar product and dominated the shelf space.

B. the product's claims were exaggerated and not backed up with scientific data.

C. the price was too low, leaving the consumer believing that Campbell's sacrificed taste for nutrition.

D. the product was priced too high and there was too little product variety.

E. a downturn in the economy shifted people's desire from a healthy lifestyle to a desire for home and comfort. The new soups were too different from the product they remembered as children.

162. There are a lot of skateboards on the market, but the BMW Streetcarver is the only one with stabilizers and wheel design based on BMW's automobiles. This technology gives the BMW Streetcarver better control at high speeds and around sharp turns than any other brand. The skateboard is priced at $495, which leaves many consumers (especially young males) who might want to buy the Streetcarver unable to afford it. This inability to pay for the high-priced BMW-made skateboard shows the effect of __________ on sales.

A. demand factors

B. macroeconomic environmental factors

C. barter factors

D. supply factors

E. exchange parameters

163.Mrs. Renfro's, Inc., is a company that sells 25 different relishes in 45 different states. Mrs. Renfro's chipotle corn salsa is so popular that the company cannot make enough to keep its resellers stocked. Its price of $4.50 for a jar seems just right to consumers who savor its hot and spicy taste. The popularity of hot and spicy food is an example of a(n) __________ that Mrs. Renfro's has taken advantage of to make its product a success.

A. barter factor

B. demand factor

C. supply factor

D. consumer index

E. macroeconomic environmental factor

Figure 13-4

164.Figure 13-4 above shows that when the price moves from $2.00 to $1.50 per unit along the demand curve D1, the quantity demanded

A. increases from 3.0 to 4.5 million units per year.

B. decreases from 4.5 to 3.0 million units per year.

C. stays the same.

D. increases from 3.0 to 7.5 million units per year.

E. decreases from 7.5 to 3.0 million units per year.

165.Figure 13-4 above shows that when the quantity demanded moves from 3.0 to 4.5 million units along the demand curve D1, the profit

A. increases from $1.50 to $2.00 per unit.

B. decreases from $2.00 to $1.50 per unit.

C. stays the same per unit.

D. increases from $0.50 to $1.50 per unit.

E. Figure 13-4 does not indicate what happens to profit when the quantity demanded changes.

Figure 13-5

166.Figure 13-5 above shows that when the quantity demanded moves from 3.0 to 6 million units along the demand curve D1, the profit

A. increases from $1.50 to $2.00 per unit.

B. decreases from $2.00 to $1.50 per unit.

C. stays the same per unit.

D. increases from $0.50 to $1.50 per unit.

E. Figure 13-5 does not indicate what happens to profit when the quantity demanded moves.

167.In Figure 13-5 above, the demand curve shifts from D1 to D2, which most likely represents

A. an increase in demand that did not require a decrease in price.

B. an increase in demand that required an increase in price.

C. no change in price and no change in demand.

D. no change in demand or price but a greater profit due to economies of scale.

E. increases from $0.50 to $1.50 per unit.

168.Which of the following statements most likely would account for the shift in the demand curve from D1 to D2 shown in Figure 13-5 above?

A. The firm increased its prices and consumers perceived the value of the product to be greater.

B. There were more product substitutes available in the marketplace.

C. Competitors in the market lowered their prices.

D. A downward economic shift caused a proportionate change in consumer income.

E. The firm's price remained the same but changes occurred in consumer tastes.

169.A shift of the demand curve from D1 to D2 in Figure 13-5 above indicates

A. more units are demanded at a given price.

B. fewer units are demanded at a given price.

C. the price has decreased.

D. the price has increased.

E. There is not enough information given to indicate what happened.

170.Which of the following illustrates movement along the demand curve?

A. Prices remain the same, but there is a significant increase in demand.

B. Prices remain the same, but there is a significant decrease in demand.

C. As the price is raised, the quantity demanded increases, assuming all else stays the same.

D. As the price is lowered, the quantity demanded increases, assuming all else stays the same.

E. Movement along the curve rather than a shift of the curve indicates that some significant event has taken place outside the organization that has affected demand.

171.Which of the following illustrates a shift in the demand curve?

A. When prices remain the same, there is an increase or decrease in demand.

B. When prices remain the same, there is a significant decrease in demand.

C. As the price is raised, the quantity demanded increases, assuming all else stays the same.

D. As the price is lowered, the quantity demanded decreases, assuming all else stays the same.

E. Movement along the curve indicates that some significant event has taken place outside the organization that has affected demand.

172.The total money received from the sale of a product is referred to as _________.

A. profit

B. total revenue

C. average revenue

D. marginal revenue

E. derived demand

173.Total revenue refers to

A. the profit made from selling a product or service.

B. the net gain in revenue if the unit price is lowered but sales increase.

C. the least number of units sold to cover product, distribution, and promotional costs.

D. the amount by which marginal costs exceed fixed costs.

E. the total money received from the sale of a product.

174.At a price of $3.00 each, SHAPE magazine sells 1.25 million copies of its magazine targeted to young women seeking a healthier lifestyle. If the price per issue is increased to $3.25, only 1 million copies would be sold. Fixed costs are $1 million and unit variable costs are $0.50 per magazine. From the information provided here, what is SHAPE magazine's total revenue obtained at the lower price?

A. $3,750,000

B. $3,250,000

C. $3,000,000

D. $2,125,000

E. $1,750,000

175.Forever Quilting is a small company that makes quilting kits priced at $120 each. There is no quantity discount. The costs of the materials that go into each kit are $45. It costs $5 in labor to assemble a kit. The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $4,500 for the monthly salary of its owner. Last month the company sold 150 kits. Forever Quilting's total revenue for the month was

A. $4,300.

B. $6,200.

C. $7,500.

D. $10,500.

E. $18,000.

176.The average amount of money received for selling one unit of a product, or simply the price of that unit, is referred to as _________.

A. profit

B. total revenue

C. unit variable revenue

D. marginal revenue

E. average revenue

177.Average revenue is

A. the typical or average sales generated for all items within an industry.

B. the average amount of revenue necessary for a business to remain profitable.

C. total revenue divided by the quantity sold.

D. the difference between the highest and lowest price charged for a given item within a specific firm.

E. the difference between the highest and lowest price charged for a given item within a specific industry.

178.Ampro-Mag is a small company that makes materials for safely controlling hazardous spills of all kinds.

It sells these items as a neutralizing kit that priced at $100 each. The costs of the materials that go into each kit are $25. It costs $5 in labor to assemble a kit. The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $300 for advertising in trade journals, and $3,000 for the monthly salary of its owner. Ampro-Mag's average revenue per unit is

A. $30.

B. $70.

C. $100.

D. $130.

E. $4,500.

179.At a price of $4.00 each, SHAPE magazine sells 1.25 million copies of its magazine targeted to young women seeking a healthier lifestyle. If the price per issue is increased to $4.50 each, only 1 million copies will be sold. Fixed costs are $1 million and unit variable costs are $0.50 per magazine. Calculate the average revenue for SHAPE magazine at the higher price.

A. $0.50

B. $1.25

C. $4.00

D. $4.50

E. $8.50

180.The change in total revenue that results from producing and marketing one additional unit of a product is referred to as _________.

A. break-even revenue

B. marginal cost

C. elasticity of demand

D. unit variable cost

E. marginal revenue

181.Marginal revenue refers to

A. the additional money required to produce one additional unit.

B. the least number of units sold to cover product, distribution, and promotional costs.

C. the amount by which marginal costs exceed variable costs.

D. the change in total revenue that results from producing and marketing one additional unit of the product.

E. the net gain in revenue if unit prices are lowered but sales increase.

182.For any downward-sloping, straight-line demand curve, the marginal revenue curve always

A. is the additional money required to make one additional unit.

B. falls at a rate half as fast as the demand curve.

C. falls at a rate twice as fast as the demand curve.

D. remains the same since there is a one-to-one relationship.

E. reacts as the direct inverse of the original line.

183.Forever Quilting is a company that designs and distributes quilting kits. The kits are priced at $120 each. The costs of the materials that go into each kit are $45. It costs $5 in labor to assemble a kit. The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising in quilting magazines, and $3,500 for the monthly salary of its owner. Forever Quilting's marginal revenue is

A. $50.

B. $70.

C. $120.

D. $3,500.

E. $5,200.

184.The change in total revenue obtained by selling one additional unit is referred to as

A. demand revenue.

B. median revenue.

C. average revenue.

D. marginal revenue.

E. marginal cost.

Figure 13-6

185.Figure 13-6 above shows that to maximize revenue, Newsweek should price its magazine at

A. $2.50

B. $2.00

C. $1.50

D. $1.00

E. $0.50

186.Figure 13-6 above shows that the average revenue at point C is

A. $3.00

B. $2.50

C. $2.00

D. $1.50

E. $1.00

187.According to Figure 13-6 above, what is the price of Newsweek when marginal revenue is $0?

A. $0

B. $0.50

C. $1.00

D. $1.50

E. $2.00

188.According to Figure 13-6 above, when the price of Newsweek is $1.00 per issue, how many magazines will it sell?

A. 1,500,000

B. 3,000,000

C. 4,500,000

D. 6,000,000

E. 7,500,000

189.According to Figure 13-6 above, if Newsweek raises its price from $2.00 per issue to $2.50 per issue, what happens to total revenue?

A. total revenue goes up

B. total revenue goes down

C. total revenue stays the same

D. total revenue is not related to the price

E. it is impossible to tell from the information given in the figure

190.All things being equal, if a firm finds the demand for one of its products is inelastic, it can increase its total revenues by

A. raising its price.

B. lowering its price.

C. increasing fixed costs only.

D. increasing variable costs only.

E. increasing both fixed and variable costs.

191.The percentage change in quantity demanded relative to the percentage change in price is referred to as

A. price elasticity of supply.

B. price elasticity of demand.

C. average demand.

D. marginal revenue.

E. derived demand.

192.Which of the following statements about price elasticity of demand is most accurate?

A. Price elasticity with unitary demand is less than 1.

B. The more substitutes a product has, the less likely it is to be price elastic.

C. Unitary demand represents the relationship between the cash outlay necessary to purchase a product relative to a person's disposable income.

D. With inelastic demand, reducing price will result in a decrease of total revenue.

E. With inelastic demand, reducing price will result in an increase in total revenue, although not necessarily an increase in profit.

193.Which of the following statements about price elasticity of demand is most accurate?

A. Price elasticity with inelastic demand is less than 1.

B. The more substitutes a product has, the less likely it is to be price elastic.

C. Unitary demand represents the relationship between the cash outlay necessary to purchase a product relative to a person's disposable income.

D. With inelastic demand, reducing price will result in an increase of total revenue.

E. With inelastic demand, reducing price will result in an increase in total revenue, although not necessarily an increase in profit.

194.Which of the following statements about price elasticity of demand most accurate?

A. Price elasticity with inelastic demand must always be greater than 1.

B. The more substitutes a product has, the more likely it is to be price elastic.

C. Unitary demand represents the relationship between the cash outlay necessary to purchase a product, relative to a person's disposable income.

D. With inelastic demand, reducing price will result in an increase of total revenue.

E. With inelastic demand, reducing price will result in an increase in total revenue, although not necessarily an increase in profit.

195.In a snack vending machine, consumers can choose one of up to of 20 choices. These snacks are

A. more likely to be price elastic.

B. an ideal example of unitary demand.

C. likely to have a price elasticity equal to 1.

D. likely to have a price elasticity less than 1.

E. more likely to be price inelastic.

196.At a price of $2.00 each, SHAPE magazine sells 1 million copies of its magazine targeted to young women seeking a healthier lifestyle. If the price per issue is increased to $2.50, only 800,000 copies would be sold. From the information provided here, the price elasticity of demand for SHAPE magazine in this price range can be described as

A. inelastic demand.

B. elastic demand.

C. unitary demand.

D. null elasticity.

E. subsidized elasticity.

197.Recently, much of the western U.S. experienced a drought condition and water usage was restricted in Denver. Yet even though most people used less water, the price of water did not drop. When the drought was declared over, the water company raised water prices. However, the residents of Denver did not use less water. Here, water is

A. price inelastic.

B. price elastic.

C. price sensitive.

D. price insensitive.

E. unitary elastic.

198.Demand for a product is likely to be more price elastic if

A. it is considered a necessity.

B. it has many substitutes.

C. it has few substitutes.

D. it requires a small cash outlay.

E. none of the above is true.

199.Several companies produce latex gloves that are used in a variety of different industries. If one of the glove manufacturers decreases its price by just a few percentage points, it will result in a significant increase in quantity demanded. The demand for latex gloves is

A. synergistic.

B. elastic.

C. inelastic.

D. unitary.

E. entropic.

200.Elastic demand exists when

A. a small percentage decrease in price produces a smaller percentage increase in quantity demanded and total revenue falls.

B. a small percentage decrease in price produces a larger percentage increase in quantity demanded and total revenue increases.

C. an increase in price causes a larger increase in quantity demanded and total revenue falls to zero.

D. the quantity demanded remains the same regardless of level of price and total revenue is unchanged.

E. a small percentage decrease in price produces a smaller percentage decrease in quantity demanded and total revenue increases.

201.Inelastic demand exists when

A. a small percentage decrease in price produces a smaller percentage increase in quantity demanded and total revenue falls.

B. a small percentage increase in price produces a smaller percentage increase in quantity demanded and total revenue falls.

C. an increase in price causes a larger increase in quantity demanded and total revenue falls to zero.

D. the quantity demanded remains the same regardless of level of price and total revenue is unchanged.

E. a small percentage decrease in price produces a smaller percentage decrease in quantity demanded and total revenue increases.

202.A book on how to invest in collectibles spends several weeks on The New York Times bestseller list. The paperback book was originally released for $9.99. A reduction of the price to $9.79 had no effect on total revenue, which remained the same. This is due to the book having

A. inelastic demand.

B. elastic demand.

C. unitary demand.

D. null elasticity.

E. subsidized elasticity.

203.Which of the following statements about unitary demand is most accurate?

A. Products for which there are a lot of substitutes traditionally have unitary demand.

B. Products such as life-saving drugs tend to have unitary demand.

C. Products with unitary demand will have price elasticity equal to 1.

D. Products with unitary demand have a price elasticity that is greater than one.

E. High-end consumer products like jets, yachts, and summer homes usually have unitary demand.

204.Market analysts for a large cereal company estimated that the price elasticity of demand for presweetened cereal is 1.97, but that the entire market for ready-to-eat cereals exhibits a price elasticity of demand of 0.36. Marketers collect this type of information in which step of the price-setting process?

A. identifying pricing objectives and constraints

B. estimating the break-even point

C. estimating demand and revenue

D. selecting an approximate price level

E. making special adjustments to list or quoted price

205.Price elasticity of demand is determined by a number of factors, such as the availability of substitutes, the necessity of the product or service, the cash outlay of purchase relative to a person's disposable income, and

A. whether the item is a luxury product or service.

B. the stage of the product or service in its product life cycle.

C. the degree of carrying costs for the manufacturer or distributor.

D. the financial resources of the organization itself.

E. the ability of the organization to meet sudden increases in demand.

206.Price elasticity of demand is determined by a number of factors, such as whether the item is a luxury product or service, the necessity of the product or service, the cash outlay of purchase relative to a person's disposable income, and

A. the stage of the product or service in its product life cycle.

B. the degree of carrying costs for the manufacturer or distributor.

C. the availability of substitutes.

D. the financial resources of the organization itself.

E. the ability of the organization to meet sudden increases in demand.

207.Price elasticity of demand is determined by a number of factors such as whether the item is a luxury product or service, the availability of substitutes, the cash outlay of purchase relative to a person's disposable income, and

A. the stage of the product or service in its product life cycle.

B. the degree of carrying costs for the manufacturer or distributor.

C. the necessity of the product or service.

D. the financial resources of the organization itself.

E. the ability of the organization to meet sudden increases in demand.

208.Price elasticity of demand is determined by a number of factors such as whether the item is a luxury product or service, the availability of substitutes, the necessity of the product or service, and

A. the stage of the product or service in its product life cycle.

B. the degree of carrying costs for the manufacturer or distributor.

C. the financial resources of the organization itself.

D. the cash outlay of purchase relative to a person's disposable income.

E. the ability of the organization to meet sudden increases in demand.

209.Ace Shoe Co. has fixed costs of $6 million and unit variable costs of $5 per pair. Suppose a consultant tells Ace it can sell 700,000 pairs of shoes, thus earning a profit of $2.5 million. What potential error is the consultant making?

A. assuming that fixed costs are independent of price

B. assuming that units sold is independent of price

C. assuming that some fixed costs are variable

D. assuming that some variable costs are fixed

E. assuming that variable costs are independent of price

210.The total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost, is referred to as

A. overhead cost.

B. total cost.

C. unit cost.

D. average cost.

E. marginal cost.

211.Total cost refers to

A. the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold.

B. the total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost.

C. the change in expenses that results from producing and marketing one additional unit of a product.

D. the average amount of money received for selling one unit of a product or simply the price of that unit.

E. the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.

212.Fixed cost refers to

A. the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.

B. the total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost.

C. the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold.

D. the average amount of money received for selling one unit of a product or simply the price of that unit.

E. the total expenses of the firm that vary indirectly with the quantity of a product that is produced and sold.

213.The sum of the expenses of a firm that is stable and does not change with the quantity of the product that is produced and sold is referred to as

A. total cost.

B. fixed cost.

C. variable cost.

D. marginal cost.

E. overhead cost.

214.Rents, executive salaries, and insurance are typical examples of

A. variable costs.

B. fixed costs.

C. unit costs.

D. marginal costs.

E. total costs.

215.Which of the following would be an example of a fixed cost for a company that makes carbon monoxide monitoring systems for employees to wear that work in hazardous areas?

A. the lithium batteries that are used in each monitor

B. the chest harness which the employee must use to wear the monitor

C. the rent for the company's offices

D. the free training videos that are sent to each new customer

E. the stainless steel, water-resistant cases in which the monitors sit

216.Which of the following is a typical example of a fixed cost?

A. taxes

B. building rental expense

C. raw materials

D. sales commissions

E. hourly wages

217.Variable cost refers to the

A. sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold.

B. sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.

C. total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost.

D. average amount of money received for selling one unit of a product or simply the price of that unit.

E. change in total cost that results from producing and marketing one additional unit of a product.

218.The sum of the expenses of the firm that vary directly with the quantity of the product that is produced and sold is referred to as

A. fixed cost.

B. total cost.

C. marginal cost.

D. unit cost.

E. variable cost.

219.Unit variable cost refers to variable cost expressed

A. as the sum of all units sold.

B. as a percentage of total sales.

C. on a per unit basis for a product.

D. as a percentage of fixed costs.

E. as a percentage of total costs.

220.Forever Quilting is a small company that makes quilting kits priced at $120. The costs of the materials that go into each kit are $45. It costs $5 in labor to assemble a kit. The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $4,500 for the monthly salary of its owner. Forever Quilting's unit variable cost for its kits is

A. $5.

B. $45.

C. $50.

D. $120.

E. $170.

221.Marginal cost refers to

A. the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold.

B. the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.

C. the total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost.

D. the average amount of money received for selling one unit of a product or simply the price of that unit.

E. the change in total cost that results from producing and marketing one additional unit of product.

222.The change in total cost that results from producing and marketing one additional unit of product is referred to as

A. fixed cost.

B. total cost.

C. marginal cost.

D. variable cost.

E. unit cost.

223.Marginal cost is the change in total cost that results from

A. reducing the total number of units produced.

B. increasing the number of units produced by one percent.

C. increasing the number of products in a product line.

D. producing and marketing one additional unit of a product.

E. the percentage change that results from changing a product feature or service benefit to reduce costs.

224.Despite having a good idea and good products, one reason Webvan failed was due to

A. setting prices too high, especially for a dot.com business where people seek out bargains.

B. setting prices too low to cover the costs of inventory, warehouses, and fulfillment on low-margin goods.

C. not spending enough on promotion to generate consumer awareness of its services.

D. a sudden downturn in consumer income.

E. miscommunication between management, suppliers, and distributors.

225.Despite having a good idea and good products, one reason Pets.com failed was due to

A. setting prices too high, especially for a dot.com business where people seek out bargains.

B. setting prices too low to cover the costs of inventory, warehouses, and fulfillment, on low-margin goods.

C. executing an advertising campaign that was too far removed from the company's mission.

D. spending too much on promotion on Super Bowl TV ads.

E. a sudden downturn in consumer income.

226.Despite having a good idea and good products, one reason Pets.com failed was due to

A. setting prices too high, especially for a dot.com business where people seek out bargains.

B. setting prices too low to cover the costs of inventory, warehouses, and fulfillment, on low-margin goods.

C. executing an advertising campaign that was too far removed from the company's mission.

D. believing that people would forego shopping at traditional pet stores like PetSmart and Petco.

E. a sudden downturn in consumer income.

227.An ironic "upside" to Pets.com's failure was

A. its entire inventory was purchased by PetSmart, their primary competitor.

B. its sock puppet became the "spokespuppet" for BarNone, a financial services firm.

C. its Web site and brand name were purchased by Petco for over a million dollars.

D. it sold its assets on eBay and was able to reimburse shareholders for their losses.

E. it sold the rights to its "failure" story to a textbook publisher to help other young entrepreneurs from making the same mistakes.

228.While hundreds of dot-coms failed, many travel dot-coms still seem to be thriving. One reason for their success may be attributed to

A. finding customer segments (students, senior citizens) whose last-minute flexibility enables them to reserve hotel rooms or airline seats that would otherwise go unsold.

B. the fact that during good economic times, people travel for fun and during bad economic times, they travel to escape reality even if they can't afford it.

C. overcoming consumer skepticism almost a decade ago when timeshares became more reliable, thus reducing consumer inhibitions about purchasing travel products online.

D. the limited number of clever travel domain names, so it was "first come first serve." With fewer competitors, travel dot-coms have been able to survive and thrive.

E. the ability to access airline and hotel customer databases before Internet privacy laws were enacted.

229.While hundreds of dot-coms failed, many travel dot-coms still seem to be thriving. One reason for their success may be attributed to

A. the fact that during good economic times, people travel for fun and during bad economic times, they travel to escape reality even if they can't afford it.

B. overcoming consumer skepticism almost a decade ago when timeshares became more reliable, thus reducing consumer inhibitions about purchasing travel products online.

C. the limited number of clever travel domain names, so it was "first come first serve." With fewer competitors, travel dot-coms have been able to survive and thrive.

D. the ability to access airline and hotel customer databases before Internet privacy laws were enacted.

E. reaching key customer segments that would actually pay higher prices for hotel rooms or airline tickets.

230.While hundreds of dot-coms failed, many travel dot-coms still seem to be thriving. One reason for their success may be attributed to

A. the fact that during good economic times, people travel for fun and during bad economic times, they travel to escape reality even if they can't afford it.

B. overcoming consumer skepticism almost a decade ago when timeshares became more reliable, thus reducing consumer inhibitions about purchasing travel products online.

C. the limited number of clever travel domain names, so it was "first come first serve." With fewer competitors, travel dot-coms have been able to survive and thrive.

D. the ability to access airline and hotel customer databases before Internet privacy laws were enacted.

E. being able to conduct almost all operations electronically without the warehousing and order fulfillment problems of their brick-and-mortar dot-com cousins.

231.While hundreds of dot-coms failed, many travel dot-coms still seem to be thriving. One reason for their success may be attributed to

A. the fact that during good economic times, people travel for fun and during bad economic times, they travel to escape reality even if they can't afford it.

B. overcoming consumer skepticism almost a decade ago when timeshares became more reliable, thus reducing consumer inhibitions about purchasing travel products online.

C. being able to conduct almost all operations electronically without the warehousing and order fulfillment problems of their brick-and-mortar dot-com cousins.

D. the limited number of clever travel domain names, so it was "first come first serve." With fewer competitors, travel dot-coms have been able to survive and thrive.

E. the ability to access airline and hotel customer databases before Internet privacy laws were enacted.

232.What idea is described as a continuing, concise trade-off of incremental costs against incremental revenues?

A. break-even analysis

B. marginal analysis

C. demand analysis

D. cost-benefit analysis

E. situation analysis

233.A continuing, concise trade-off of incremental costs against incremental revenues is referred to as

A. break-even analysis

B. demand analysis

C. marginal analysis

D. cost-benefit analysis

E. situation analysis

234.The break-even point for a large grain farming operation was calculated to be 2 million bushels of corn. Break-even analysis would take place during which step of the price-setting process?

A. identify pricing objectives and constraints

B. determine cost, volume, and profit relationships

C. estimate demand and revenue

D. select an approximate price level

E. make special adjustments to list or quoted price

235.The quantity at which total revenue and total cost are equal is referred to as

A. break-even point.

B. tipping point.

C. profitability point.

D. incremental return on investment.

E. sustainability.

236.Break-even analysis refers to

A. a process that investigates the difference between marginal revenue and marginal cost.

B. a method of determining just how much a consumer is willing to pay for a product or service.

C. a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.

D. the process of determining the quantity of product consumers will buy relative to the quantity produced by the firm.

E. the graph that shows the maximum number of products consumers will buy at a given price.

237.A technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output is referred to as _________.

A. break-even analysis

B. marginal analysis

C. sensitivity analysis

D. market analysis

E. tipping point analysis

238.The owner of a small restaurant that sells take-out fried chicken and biscuits pays $2,500 in rent each month, $500 in utilities, $750 interest on his loan, insurance premium of $200, and advertising on local buses $250 a month. A bucket of take-out chicken is priced at $9.50. Unit variable costs for the bucket of chicken are $5.50. How many small buckets of chicken does the restaurant need to sell to break-even each month?

A. 442 buckets

B. 764 buckets

C. 1,050 buckets

D. 3,150 buckets

E. 4,200 buckets

239.Each month, the owner of a carwash pays $2,500 in rent, $500 in utilities, $750 interest on the business loan, an insurance premium of $200, and advertising on local bus routes of $250 a month. A full-service car wash is priced at $10.50. Unit variable costs for the carwash are $7.50. At what level of revenue will the carwash break-even?

A. $4,200.00

B. $10,500.00

C. $14,700.00

D. $30,000.00

E. $39,900.00

240.You have been asked to calculate the break-even point for a new line of souvenir T-shirts. The selling price will be $25 per shirt. The labor costs is $5 per shirt. The administrative costs of operating the company are estimated to be $60,000 annually and the sales and marketing expenses are $20,000 a year. Additionally, the cost of materials will be $10 per shirt. What is the break-even quantity?

A. 2,000 shirts

B. 3,200 shirts

C. 5,334 shirts

D. 8,000 shirts

E. 16,000 shirts

241.Tim Marlow, the owner of The Clock Works, wanted to know how many clocks he must sell in order to cover his fixed cost at a given price. Tim knew that he had a fixed cost of $20,000 for equipment, taxes, and a bank loan. He also had a unit variable cost of $20 per clock for labor, and materials. If the price Tim charges for each of his clocks is $40, what is his break-even point quantity?

A. 100 clocks

B. 334 clocks

C. 500 clocks

D. 1,000 clocks

E. 10,000 clocks

242.A recently graduated business student decided to open a small Internet café serving a variety of unusual non-alcoholic beverages from around the world. He carefully used all the pricing formulas he learned in school and set a goal to break even the first six months and make a moderate profit for the next six months at which time he would review his pricing strategies. Within a week after opening, every seat was filled and he had to replenish his beverage orders several times. At his six month review, he was devastated to find that despite huge sales, he had actually lost money. He realized it wasn't his "math" that was wrong; he forgot to include monthly expenses such as toilet paper, paper towels, hand soap, and trash removal fees in his calculations. These costs should have appeared as __________ in his break-even analysis.

A. fixed costs

B. marginal costs

C. variable costs

D. overhead costs

E. sunk costs

243.Ampro-Mag is a small company that makes materials for safely controlling hazardous spills of all kinds. It sells these items as a neutralizing kit priced at $100. The costs of the materials that go into each kit are $45. It costs $5 in labor to assemble a kit. The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising in trade journals, and $3,500 for the monthly salary of its owner. What is Ampro-Mag's monthly break-even point in terms of number of neutralizing kits sold?

A. 40 kits

B. 52 kits

C. 104 kits

D. 116 kits

E. 520 kits

244.Jane Westerlund owns a picture-framing shop, The Caplow Co. The average price she receives for a picture she frames for a customer is $120. This price must cover her costs for a typical framed picture, which consists of $5 for glass, $2 for matting, $13 for the frame, and $30 for the labor involved. She must also cover monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $3,500 for her salary. Westerlund is considering buying an automatic matte-cutting machine in order to reduce the number of hours of direct labor required to produce a framed picture. In considering this purchase, she should recognize this purchase will _____ Caplow's variable cost and _____ Caplow's fixed cost.

A. decrease; increase

B. decrease; decrease

C. increase; decrease

D. increase; increase

E. have no effect on; have no effect on

245.Ace Shoe Company sells heel replacement kits for men's shoes. It has fixed costs of $9 million and unit variable costs of $5 per pair. Ace is considering a switch from manual labor to an automated process. New equipment would cost an additional $4 million per year while lowering variable costs by $3 per shoe repair kit. How many kits would Ace have to sell at $17 per pair to make $2 million in profits in the next year with the automated process?

A. 117,648 kits

B. 428,572 kits

C. 705,883 kits

D. 916,667 kits

E. 1,000,000 kits

246.A graphic presentation of the break-even analysis that shows when total revenue and total cost intersect to identify profit or loss for a given quantity sold is referred to as a(n) _________.

A. Gantt chart

B. demand curve

C. ROI analysis

D. cross-tabulation

E. break-even chart

247.A break-even chart refers to a graphic presentation

A. that shows the maximum number of units that will be sold at a certain price.

B. of a break-even analysis that shows when total revenue and total cost intersect to identify profit or loss for a given quantity sold.

C. that relates variable costs in terms of product or service substitutes in order to determine which items or services would least affect total revenues.

D. that relates profits and revenues versus total costs in order to determine the time frame in which a company could achieve profitability.

E. in the form of a scatter graph used to identify specific activities or items that are creating the greatest return on investment.

Figure 13-7

248.Figure 13-7 above shows that by selling 200 pictures, the firm will

A. break even.

B. incur a loss.

C. earn a profit.

D. have no fixed costs.

E. have no variable costs.

249.According to Figure 13-7 above, how much profit will the firm make if it sells 400 pictures?

A. $48,000

B. $35,000

C. $20,000

D. $32,000

E. $0

250.Figure 13-7 above shows that by selling 800 pictures, the firm will

A. break even.

B. incur a loss.

C. earn a profit.

D. have no fixed costs.

E. have no variable costs.

251.Figure 13-7 above is drawn to show that variable costs are smaller than fixed costs when the firm sells

A. 400 pictures

B. 900 pictures.

C. 1,000 pictures.

D. 1,200 pictures.

E. There is not enough information to determine this.

252.You are president of a manufacturer of small electronic appliances. You want to reduce your break-even quantity. All things being equal, you can do this by

A. increasing the quantity sold, while keeping price unchanged.

B. reducing marginal revenue.

C. reducing unit variable cost.

D. increasing fixed cost.

E. increasing total cost.

253.Jane Westerlund owns a picture-framing shop, The Caplow Co. The average price she receives for a picture she frames for a customer is $120. This price must cover her costs for a typical framed picture, which consists of $5 for glass, $2 for matting, $13 for the frame, and $30 for the labor involved. She must also cover monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $3,500 for her salary. Assuming there is no change in price nor the quantity demanded, if Westerlund wants to increase her advertising expenses to a total of $1,000 (a $500 increase), this would cause the total cost line to __________ and the break-even quantity to _________.

A. decrease; stay the same

B. decrease; increase

C. increase; increase

D. stay the same; increase

E. stay the same; decrease

254.Jane Westerlund owns a picture-framing shop, The Caplow Co. The average price she receives for a picture she frames for a customer is $120. This price must cover her costs for a typical framed picture, which consists of $5 for glass, $2 for matting, $13 for the frame, and $30 for the labor involved. She must also cover monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $3,500 for her salary. Assuming there is no change in the quantity demanded, if Jane Westerlund slightly increased the average price charged for a framed picture, this would cause the total revenue line to __________ and the break-even quantity to ___________ in a break-even chart.

A. increase; increase

B. increase; decrease

C. decrease; decrease

D. decrease; increase

E. stay the same; increase

255.Ace Shoe Company sells heel replacement kits for men's shoes. It has fixed costs of $6 million and unit variable costs of $5 per pair. Ace would like to earn a profit of $2 million; how many pairs must they sell at a price of $15?

A. 100,000 kits

B. 400,000 kits

C. 600,000 kits

D. 800,000 kits

E. 1,400,000 kits

256.Ace Shoe Company sells heel replacement kits for men's shoes. It has fixed costs of $6 million and unit variable costs of $5 per pair. Suppose a consultant tells Ace it can sell 750,000 heel repair kits, what price must it charge to achieve a profit of $2.5 million?

A. $5.00

B. $8.33

C. $11.33

D. $16.33

E. $20.00

257.A primary reason for Washburn's success is

A. underselling competitors by mass producing fine quality guitars.

B. developing product lines at different price points for different market segments.

C. offering significant price breaks to well-known performers in exchange for product endorsements.

D. selling traditional American "rock n' roll" guitars in global markets.

E. setting up free music programs and donating low price-point guitars to students in schools that have lost their music programs due to budget constraints.

258.Washburn Guitars markets its guitars to four distinct market segments. The firm's one-of-kind custom instruments are targeted at

A. first-time buyers.

B. professional musicians.

C. stars and famous musicians.

D. large institutional buys such as high school and collegiate band programs.

E. intermediate skill players who may become professional musicians.

259.Washburn Guitars markets its guitars to four distinct market segments. The firm's batch-custom products instruments are targeted at

A. first-time buyers.

B. professional musicians.

C. stars and famous musicians.

D. large institutional buys such as band programs.

E. intermediate skill players who may become professional musicians.

260.Washburn Guitars markets its guitars to four distinct market segments. The firm's mass customization instruments are targeted at

A. first-time buyers.

B. professional musicians.

C. stars and famous musicians.

D. large institutional buys such as band programs.

E. intermediate skill players who may become professional musicians.

261.Washburn Guitars markets its guitars to four distinct market segments. The firm's mass-produced instruments are targeted at

A. first-time buyers.

B. professional musicians.

C. stars and famous musicians.

D. guitar collectors and music aficionados.

E. intermediate skill players who may become professional musicians.

262.The executive vice president of Washburn Guitars has set a sales target of 2,000 units for a new line of guitars. This type of objective is most closely related to a(n) ________ pricing objective.

A. profit

B. target return

C. unit volume

D. market share

E. survival

263.The average price Washburn charges for a guitar is $349. This price must cover its variable costs of $25 for direct materials and $120 in direct labor. It must also cover fixed expenses of $38,000. Assuming everything else stays the same, the company's planned move to Nashville, Tennessee, will reduce its fixed costs by $4,800. This would cause total costs to __________ and the break-even quantity to _________.

A. decrease; stay the same

B. decrease; increase

C. increase; increase

D. stay the same; increase

E. decrease; decrease

264.To reduce the price sensitivity for some of its products, Washburn

A. uses multiple suppliers for its raw materials.

B. offers three months of free music lessons with the purchase of each guitar.

C. uses endorsements by internationally known musicians who play Washburn signature guitars.

D. offers a lifetime, unconditional warranty on all its instruments regardless of the price of its guitars.

E. sponsors free music programs and special Washburn guitar camps for children.

 

StubHub’s pricing formula is to

a.   charge an escalating commission percentage based on the value of the ticket sold.

b.   deduct a flat fee of $25 for every ticket sold regardless of its value.

c.   charge a commission to both buyers and sellers of the tickets sold on its website.

d.   include special surcharges for enabling prospective buyers to view, in 3D 360° streaming video on its YouTube channel, the seats at stadiums, concert halls, and other venues for the events they are interested in.

e.   deduct the sales tax from the purchase of tickets based on the states where such taxes must be collected and forwarded.

With over half of tickets to major events sold online, StubHub’s website can help generate extra ticket sales for the original sponsors.  This is why

a.   Ticketmaster recently purchased StubHub for $213 million dollars.

b.   StubHub has to pay licensing fees to all major sports teams whose tickets are sold on their website.

c.   StubHub now has formal relationships not only with professional sports leagues, but also with many sports programs at major universities.

d.   Stub Hub has expanded their mission from being “a sports ticket marketplace” to the “hub of all entertainment experiences.”

e.   StubHub pays a surtax on any ticket it sells if the games are not already sold out at local stadiums.

Which of the following statements about StubHub is most accurate?

a.   StubHub recently purchased Amazon.com for $253 million dollars.

b.   StubHub has established relationships with deal-making social networking firms LivingSocial and Groupon.

c.   StubHub had plans to enter the European market, but EU regulations made the plan unfeasible.

d.   StubHub and Ticketmaster have a nonbinding agreement to cater to separate market segments (sports vs. concert) to avoid undue competition.

e.   StubHub has had difficulty selling tickets in some states because they view the brokering of tickets as ticket scalping, which is illegal.

       

The money or other considerations (including other products and services) exchanged for the ownership or use of a product or service is referred to as __________.

a.   fee

b.   value

c.   remuneration

d.   price

e.   exchange rate

Price refers to

a.   the value assigned to the exchange of products and services for other products and services.

b.   the value judgment made by both the buyer and seller regarding an item’s worth.

c.   the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service.

d.   the value assessed for the benefits of using a product or service.

e.   the highest monetary value a customer is willing to pay for a product or service.

From a marketing viewpoint, __________ is money or other considerations (including other products and services) exchanged for the ownership or use of a product or service.

a.   the value

b.   price

c.   barter

d.   currency

e.   a tariff

All of the following are examples of a price EXCEPT:

a.   a premium.

b.   barter.

c.   tuition.

d.   a commission.

e.   profit.

Attorneys’ fees, entrance fees, train fares, and organization dues are all examples of

a.   premiums.

b.   barter.

c.   mediums of exchange.

d.   price.

e.   outlays.

Which of the following is a special type of price?

a.   college tuition

b.   operating costs

c.   liquidity

d.   value

e.   stockholders’ equity

All of the following statements about price are true EXCEPT:

a.   Research on 1,000 large U.S. companies shows that a 1 percent price increase translates to a 12 percent increase in profitability, other factors remaining the same.

b.   The price for a product or service must earn a profit for the company.

c.   For most products and services, their prices are always the same.

d.   The price must be “right”—in the sense that customers must be willing to pay it.

e.   The price must generate enough sales dollars to pay for the cost of developing, producing, and marketing the product.

Susan O’Rourke hired an attorney to represent her in a court case involving an auto accident.  The attorney charged O’Rourke a fee for his services.  Terry Thomas needed a haircut—the local stylist charged him $12 for her services.  Aaron Mathison mowed his neighbor’s lawn; in exchange, the neighbor roto-tilled Mathison’s garden.  The attorney fees paid by O’Rourke, the $12 charged by the hair stylist, and the exchange of lawn mowing for garden tilling are all examples of

a.   premiums.

b.   barter.

c.   the profit motive.

d.   price.

e.   outlays.

The practice of exchanging products and services for other products and services rather than for money is referred to as __________.

a.   barter

b.   reciprocal pricing

c.   virtual pricing

d.   balance of payments

e.   value-pricing

Barter refers to

a.   a reciprocity agreement stipulating that if company “A” purchases services from company “B,” then company “B” must purchase similar services from company “A.”

b.   a tying agreement stipulating that if company “A” purchases a product from company “B,” it must also purchase its services.

c.   the practice of exchanging products and services for other products and services rather than for money.

d.   the practice of exchanging services for products of equal or greater value.

e.   the practice of exchanging products and services for money.

Barter is the practice of exchanging products and services for other products and services rather than for ___________.

a.   value

b.   ideas

c.   promises

d.   tariffs

e.   money

The use of “special fees” and “surcharges” is driven by consumers’ zeal for __________ and the ease of making price comparisons on the Internet.

a.   high prices

b.   low prices

c.   quality

d.   value

e.   warranties

The use of “special fees” and “surcharges” is driven by consumers’ zeal for low prices and __________.

a.   the ease of making price comparisons on the Internet

b.   value, the idea of getting “more” for their money

c.   the need for extra accessories

d.   avoiding state sales taxes from Internet purchases

e.   a dislike of price haggling or negotiating

According to the price equation, a product’s or service’s final price equals its list price minus incentives and allowances plus

a.   profits.

b.   commissions.

c.   trade-ins.

d.   extra fees.

e.   taxes.

According to the price equation, final price equals __________ minus incentives and allowances plus extra fees.

a.   salaries

b.   list price

c.   profits

d.   trade-ins

e.   taxes

According to the price equation, final price equals list price minus __________ plus extra fees.

a.   profits

b.   commissions

c.   trade-ins

d.   taxes

e.   incentives and allowances

A company that manages apartments decides to buy 15 new dishwashers at a list price of $550 each as replacements for old dishwashers in a small apartment complex it owns.  Because the company is buying more than 10 dishwashers, it is eligible for a $150-per-unit quantity discount.  Financing charges total $20 per unit.  The company gets $10 per dishwasher for the 15 dishwashers traded in.  What is the final price the company will pay for each dishwasher?

a.   $390

b.   $400

c.   $410

d.   $530

e.   $560

Tara is enrolled for spring semester at college.  The tuition is $6,000, but she has a scholarship for $1,000 as well as a work-study grant of $1,500.  The health fees and student activity fees are $150 for the semester.  What is the final price that Tara will pay for the spring semester?

a.   $2,500

b.   $2,650

c.   $3,150

d.   $3,650

e.   $6,150

 

Suppose you want to get “plugged in” and buy a 2011 Tesla Roadster Sport (see the photo above), the world’s leading all-electric, zero-emission car that has a 245-mile range and can be recharged in three hours.  The Tesla Roadster Sport has a list price of $110,000, but you want several options (leather interior, carbon fiber hard top, electronics upgrade, metallic paint, performance wheels, and others) that will cost $20,000.  An extended warranty will add an additional $5,000.  However, if you put $50,000 down now and finance the balance over the next year, you will receive a dealer rebate of $3,500 off the list price.  The dealer will give you a $4,000 trade-in allowance for your 2005 Honda Civic DX four-door sedan.  In addition, you will have to pay a state sales tax of $10,000, an auto registration fee of $500 to the state, and a $500 destination charge to ship the car.  But because the Tesla Roadster Sport is an alternative energy vehicle, you qualify for a $2,500 state rebate and a $7,500 federal tax credit!  Finally, your total finance charge is $2,500.  Applying the price equation, what is your final price for the Tesla Roadster Sport?

a.   $54,000

b.   $89,000

c.   $110,000

d.   $131,000

e.   $166,000

According to Nandan Nilekani, CEO of Infosys Technologies, Ltd., the “__________.”

a.   playing field is being leveled

b.   world is flattening

c.   practice of caveat emptor is rising

d.   Indian economy relies too much on outsourcing

e.   Chinese capitalism is a huge threat to global economic stability

According to Nandan Nilekani, CEO of Infosys Technologies, Ltd., there are a number of fundamental changes in world business, which include outsourcing, broadband connectivity, lower priced computers, and

a.   the natural evolution of a more computer literate society.

b.   the explosion of software and search engines.

c.   multilingual search engines.

d.   virtual time translation of multilingual transmissions.

e.   the absence of governmental authority or regulation of Internet commerce.

With over 300 million customers, __________ is the world’s largest mobile phone market and is adding 5 million new customers a month.

a.   India

b.   Russia

c.   China

d.   the European Union

e.   the United States

The ratio of perceived benefits to price is referred to as

a.   the price-quality relationship.

b.   customer value pricing.

c.   value-added pricing.

d.   value analysis.

e.   value.

The ratio of perceived benefits to __________ is referred to as value.

a.   price

b.   prestige

c.   perceived quality

d.   profits

e.   perceived costs

The ratio of __________to price is referred to as value.

a.   prestige value

b.   perceived benefits

c.   costs

d.   perceived quality

e.   profits

To increase value, marketers have the option of

a.   decreasing benefits.

b.   decreasing benefits and increasing price.

c.   decreasing price and increasing benefits.

d.   decreasing price and decreasing benefits.

e.   do nothing and let the perceived value of the item increase as it matures in its life cycle.

To increase value, marketers may __________, decrease price, or do both.

a.   decrease benefits

b.   increase benefits

c.   increase price

d.   increase advertising

e.   do nothing and let the perceived value of the item increase as it matures in the life cycle

Value-pricing refers to

a.   the ratio of perceived benefits to price.

b.   is the money or other considerations exchanged for the ownership or use of a product or service.

c.   the practice of simultaneously increasing product and service benefits and maintaining or decreasing price.

d.   the ratio of price to perceived benefits.

e.   list price minus incentives and allowances plus extra fees.

The practice of simultaneously increasing product and service benefits and maintaining or decreasing price is referred to as __________.

a.   value-pricing

b.   customer-value pricing

c.   competitive pricing

d.   cost pricing

e.   demand pricing

Creative marketers engage in value-pricing, which is the practice of simultaneously __________and maintaining or decreasing price.

a.   decreasing product and service benefits

b.   increasing product and service benefits

c.   decreasing profit

d.   analyzing benefits

e.   decreasing cost

Creative marketers engage in value-pricing, which is the practice of simultaneously increasing product and service benefits and __________.

a.   increasing costs

b.   increasing price

c.   increasing advertising

d.   decreasing costs

e.   maintaining or decreasing price

A major grocery chain pays its baggers a regular hourly wage.  The baggers not only pack the groceries, they will take customers’ groceries to their car, regardless of the weather.  The baggers are not permitted to accept tips, even if they are offered.  This carryout service is an example of

a.   pricing enhancement.

b.   societal pricing.

c.   revenue sharing.

d.   value-pricing.

e.   cost-pricing.

Many convenience stores now have mail slots where customers can pay their utility bills.  The utility companies handle all the processing, while the customers get the benefit of not having to use postage.  The convenience store owner gets the advantage of the extra foot traffic.  The mail slots are an example of

a.   societal pricing.

b.   revenue sharing.

c.   value-pricing.

d.   barter.

e.   cost-pricing.

Many cosmetology schools allow their advanced students to style hair for “real world” clients for a reduced fee.  The students benefit from the experience, the clients get a less expensive haircut, and the school is able to provide students with additional training without costing it anything; in fact, they even profit from it.  This is an example of

a.   value-pricing.

b.   societal pricing.

c.   revenue sharing.

d.   barter.

e.   cost-assist pricing.

Most consumers realize that the quality of diamonds varies, and most believe the higher the price of a diamond, the higher its quality.  This is an example of price influencing the perception of overall quality, and therefore __________, to consumers.

a.   acceptable cost

b.   perceptual investment

c.   barter potential

d.   return on investment

e.   value

Which of the following statements is most accurate?

a.   For some products, price influences the perception of overall quality, and ultimately value, to consumers.

b.   A consumer’s view of a product’s value is always tied to quality.

c.   A consumer’s view of value is a function of his or her education and income.

d.   Price plays only a small part in a consumer’s perceived value of a product or service.

e.   Price plays a large role in assessing value but a very minor role in assessing quality.

When Pizza Hut announced it was going to add 25 percent more toppings to its Meat Lover’s line of pizzas without increasing prices, what consumer motivation was it appealing to?

a.   cost

b.   appearance

c.   value

d.   price

e.   quality

 

As shown in the McDonald’s menu board photo above, McDonald’s is most likely using which type of pricing strategy?

a.   predatory pricing

b.   value-pricing

c.   loss-leader pricing

d.   odd-even pricing

e.   barter

A reference value involves comparing the costs and benefits of __________.

a.   substitute items

b.   items of equal or greater value

c.   products with which a consumer is familiar and items the consumer has not seen or used before

d.   items from one particular distributor

e.   intangible items

A reference value __________.

a.   is relative to the amount of time and energy a consumer puts into the purchase process

b.   is based upon the value assigned to similar items used by the consumer’s peers

c.   results from performing a careful break-even analysis

d.   involves comparing the costs and benefits of substitute items

e.   is based upon the differential between customers’ “needs” and their “wants”

A buying situation can involve comparing the costs and benefits of substitute items—such as real sugar to the sugar substitute Splenda, which, although more expensive than sugar, is purchased by many consumers because it contains no calories.  This situation involves the consumer considering

a.   a marginal analysis.

b.   a profit equation.

c.   a break-even analysis.

d.   price elasticity of demand.

e.   a reference value.

If you wanted to buy a McDonald’s Big Mac, small fries, and a small drink separately, it you cost you $6.19.  However, if you purchased these three items together as part of the firm’s Extra Value Meal package, you would pay only $4.39, savings 80¢.  This “Extra Value Meal” price serves as __________ to you and other consumers, who compare the costs and benefits of substitute items to a bundle containing those items.

a.   a marginal analysis

b.   a profit equation

c.   a reference value

d.   a break-even analysis

e.   price elasticity of demand

A BOGO offer is retail slang that means

a.   big orders, greater overhead

b.   buy one, get one

c.   build only good offerings

d.   bad once, good overall

e.   buy over grand objectives

 

The Gap in-store signage photo above shows that customers can save 60 percent off a second item if they purchase one at the full price.  This is an example of a __________ deal to entice shoppers to buy additional items.

a.   Big Clearance

b.   Extra Value

c.   BOGO

d.   Inventory Reduction

e.   Barter

 

The American Eagle Outfitters in-store signage photo above shows that customers can buy an American Eagle Outfitters hoodie for $24.95 and then purchase another one for 50 percent off (BOGO Deal “A”).  Another BOGO deal (not shown above) offers consumers a markdown of 10 percent if they buy two hoodies (BOGO Deal “B”).  In a third BOGO deal (not shown above), a retailer has marked down the price of hoodies from $24.95 to $22.95 per hoodie, so you’ll consider buying two at that price (BOGO Deal “C”).  BOGO deal #4 (not shown above) offers consumers the following terms: 5 percent off the first item and then 10 percent off the reduced price for the second item (BOGO Deal “D”).  Finally, a fifth BOGO deal offers consumers the following terms: $10 off of all purchases of $40 or more (BOGO Deal “E”).  Which BOGO deal offers the best value (least cost) to consumers for the purchase of American Eagle Outfitters hoodies?

a.   BOGO Deal “A”

b.   BOGO Deal “B”

c.   BOGO Deal “C”

d.   BOGO Deal “D”

e.   BOGO Deal “E”

The __________ equation = (Unit price × Quantity sold) − Total cost.

a.   total revenue

b.   variable cost

c.   net present value

d.   profit

e.   break-even point

A firm’s profit equation demonstrates that profit equals __________.

a.   Total cost + Total revenue

b.   Total revenue − Total cost

c.   Marginal revenue − Marginal cost

d.   Price × Quantity

e.   Total revenue + Total cost

The formula, Total revenue − Total cost, or  [(Unit price × Quantity sold) − (Fixed cost + Variable cost)] represents __________.

a.   the value equation

b.   the sales ratio

c.   average revenue

d.   the break-even point

e.   the profit equation

A firm’s profit equation equals

a.   Total cost + Total revenue or [(Unit price × Quantity sold) − (Fixed cost + Variable cost)].

b.   Total revenue − Total cost or [(Unit price × Quantity sold) − (Fixed cost + Variable cost)].

c.   Total cost − Marginal cost or [(Fixed cost + Variable cost) ÷ (Unit price × Quantity sold)].

d.   Total cost − Variable cost or [(Fixed cost + Variable cost) + (Unit price × Quantity sold)].

e.   Total revenue + Total cost or [(Unit price × Quantity sold) − (Fixed cost + Variable cost)].

Calculate a firm’s total revenue (TR) using the following information: the unit price (P) for a product is $40; the quantity sold (Q) is 2,000; the fixed cost (FC) is $50,000; and the variable cost (VC) is $20,000.

a.   $10,000

b.   $50,000

c.   $110,000

d.   $150,000

e.   cannot be determined with the information provided

 

Figure 13-2 above represents the six steps in the price-setting process.  “A” represents the step at which a firm would

a.   raise initial capital.

b.   identify pricing objectives and constraints.

c.   scan competitors for prices of similar products or services.

d.   select the appropriate pricing formula.

e.   establish the price range.

Figure 13-2 above represents the six steps in setting price.  “B” represents the step at which a firm would

a.   estimate demand and revenue.

b.   identify pricing objectives and constraints.

c.   scan competitors for prices of similar products or services.

d.   select the appropriate pricing formula.

e.   determine cost, volume, and profit relationships.

Figure 13-2 above represents the six steps in setting price.  “C” represents the step at which a firm would

a.   estimate demand and revenue.

b.   identify pricing objectives and constraints.

c.   scan competitors for prices of similar products or services.

d.   determine cost, volume, and profit relationships.

e.   establish the price range.

Figure 13-2 above represents the six steps in setting price.  “D” represents the step at which a firm would

a.   estimate demand and revenue.

b.   scan competitors for prices of similar products or services.

c.   select an approximate price level.

d.   determine cost, volume, and profit relationships.

e.   establish the price range.

Figure 13-2 above represents the six steps in setting price.  “E” represents the step at which a firm would

a.   set list or quoted price.

b.   select an approximate price level.

c.   scan competitors for prices of similar products or services.

d.   determine cost, volume, and profit relationships.

e.   establish the price range.

Figure 13-2 above represents the six steps in setting price.  “F” represents the step at which a firm would

a.   set list or quoted price.

b.   select an approximate price level.

c.   scan competitors for prices of similar products or services

d.   make special adjustments to list or quoted price.

e.   establish the price range.

 

Figure 13-2 above represents the six steps in setting price.  Which letter represents the step where a firm would estimate price elasticity?

a.   “A”

b.   “B”

c.   “C”

d.   “D”

e.   “E”

Figure 13-2 above represents the six steps in setting price.  Which letter represents the step where a firm would conduct a break-even analysis?

a.   “A”

b.   “B”

c.   “C”

d.   “D”

e.   “E”

Figure 13-2 above represents the six steps in setting price.  Which letter represents the step where a firm would estimate dollar and unit sales revenues?

a.   “A”

b.   “B”

c.   “C”

d.   “D”

e.   “E”

Figure 13-2 above represents the six steps in setting price.  Which letter represents the step where a firm would assess the constraints on the demand for the product class and brand?

a.   “A”

b.   “B”

c.   “C”

d.   “D”

e.   “E”

Figure 13-2 above represents the six steps in setting price.  Which letter represents the step where a firm would identify pricing objectives such as profit, market share, and survival?

a.   “A”

b.   “B”

c.   “C”

d.   “D”

e.   “E”

Figure 13-2 above represents the six steps in setting price.  Which letter represents the step where a firm would estimate demand?

a.   “A”

b.   “B”

c.   “C”

d.   “D”

e.   “E”

Figure 13-2 above represents the six steps in setting price.  Which letter represents the step where a firm would estimate costs and perform a marginal analysis to assess profitability?

a.   “A”

b.   “B”

c.   “C”

d.   “D”

e.   “E”

Which of the following are examples of elements involved in Step 1 of the price-setting process: identify pricing objectives?

a.   profit, market share, and survival

b.   estimation of demand, sales revenue, and price elasticity

c.   cost estimation, marginal analysis, and break-even analysis

d.   demand for the product class and brand, newness of the product, and competition

e.   market segmentation targeting, and positioning

Which of the following would be an example of an objective in Step 1 of the price-setting process?

a.   “We need to set an initial price of $259 dollars per unit.”

b.   “We need to obtain a 10 percent market share.”

c.   “We need to find the least expensive distributor.”

d.   “We need to make allowances for large quantity orders.”

e.   “We need to increase the price during the holiday shopping season.”

Which of the following would be an example of an objective in Step 1 of the price-setting process?

a.   “We need to set an initial price of $259 dollars per unit.”

b.   “We need to find the least expensive distributor.”

c.   “We need to make a profit of at least $1.2 million.”

d.   “We need to make allowances for large quantity orders.”

e.   “We need to increase the price during the holiday shopping season.”

Which of the following would be an example of an objective in Step 1 of the price-setting process?

a.   “We need to find the least expensive distributor.”

b.   “We need to make allowances for large quantity orders.”

c.   “We need to increase the price during the holiday shopping season.”

d.   “We need to forget profits right now; just make sure we break even.”

e.   “We need to hire a professional accountant.”

Which of the following would be an example of a constraint in Step 1 of the price-setting process?

a.   “We can rely on our reputation for our other products in the line.”

b.   “Experts are predicting a surge in global demand.”

c.   “We need to make allowances for large quantity orders.”

d.   “We should increase the price during the holiday shopping season.”

e.   “Remember, we don’t know what the selective demand for this new product will be.”

Which of the following would be an example of a constraint in Step 1 of the price-setting process?

a.   “We can rely on our reputation for our other products in the line.”

b.   “Experts are predicting a surge in global demand.”

c.   “We need to make allowances for large quantity orders.”

d.   “We should increase the price during the holiday shopping season.”

e.   “We're going to face some stiff competition.”

An analysis of a prospective product shows that it is expected to grow by at least 10 percent each year over the next 5 years, and then enter the maturity phase of its product life cycle.  This type of analysis would provide useful information in which step of the price-setting process?

a.   identifying pricing objectives and constraints

b.   determining cost, volume, and profit relationships

c.   estimating demand and revenue

d.   selecting an appropriate (approximate) price lining strategy

e.   making special adjustments to list or quoted price

Which of the following represent elements of Step 2 of the price-setting process?

a.   profit, market share, and survival

b.   estimation of demand, sales revenue, and price elasticity

c.   cost estimation, marginal analysis, and break-even analysis

d.   demand for the product class and brand, newness of the product, and competition

e.   market segmentation targeting, and positioning

Objectives like profit, market share, and survival as well as constraints such demand for product class and brand, newness, costs, and competition are issues that would be addressed during __________ of the price-setting process.

a.   Step 1

b.   Step 2

c.   Step 3

d.   Step 4

e.   Step 5

Estimating demand, sales revenue, and price elasticity are issues that would be addressed during __________ of the price-setting process.

a.   Step 1

b.   Step 2

c.   Step 3

d.   Step 4

e.   Step 5

George and Alice Renfro decided to start a family business in 1990.  Its product: chowchow, a southern regional food.  To determine how they would price the chowchow, the Renfros had to: (1) examine the demand for the product (e.g., would people rather eat homemade or store-bought?); (2) the costs of the jars for and bottling of the chowchow; and (3) and how much it would cost to distribute the product to area grocery stores.  For the Renfros, Step 1 of their price-setting process consists of

a.   identifying pricing constraints.

b.   estimating break-even points and revenue points.

c.   setting the list price.

d.   selecting an approximate price level.

e.   determining cost, volume, and profit relationships.

Which of the following statements would most likely be spoken during Step 2 of the price-setting process?

a.   “It’s important to offer discounts to seniors.”

b.   “We have to try to achieve an 8 percent profit share.”

c.   “The starting price should be $4.99 and we can raise the price again in six months.”

d.   “But, if we increase the price even by one dollar, how many customers will we lose?”

e.   “We should probably price the extra large version somewhere between $600 and $650.”

Estimating cost, conducting a marginal analysis, and performing a break-even analysis are issues that would be addressed during __________ of the price-setting process.

a.   Step 1

b.   Step 2

c.   Step 3

d.   Step 4

e.   Step 5

Which of the following are examples of elements of Step 3 in the price-setting process?

a.   profit, market share, and survival

b.   estimation of demand, sales revenue, and price elasticity

c.   cost estimation, marginal analysis, and break-even analysis

d.   demand for the product class and brand, newness of the product, and competition

e.   market segmentation, targeting, and positioning

Which of the following statements would most likely be spoken during Step 3 in the price-setting process?

a.   “In order to break even, we will need to sell at least 500,000 units.”

b.   “We have to try to achieve an 8 percent profit share.”

c.   “The starting price should be $4.99 and we can raise the price again in six months.”

d.   “But, if we increase the price even by one dollar, how many customers will we lose?”

e.   “We should probably price the extra large version somewhere between $600 and $650.”

Selecting an approximate price level would occur during __________ of the price-setting process.

a.   Step 1

b.   Step 2

c.   Step 3

d.   Step 4

e.   Step 5

Setting list or quoted prices would occur during __________ of the price-setting process.

a.   Step 1

b.   Step 2

c.   Step 3

d.   Step 4

e.   Step 5

Making special adjustments to the list or quoted price would occur during __________ of the price-setting process.

a.   Step 2

b.   Step 3

c.   Step 4

d.   Step 5

e.   Step 6

Specifying the role of price in an organization’s marketing and strategic plans is referred to as

a.   choosing a pricing plan.

b.   defining a profit mission.

c.   developing pricing constraints.

d.   setting pricing objectives.

e.   determining the list or quoted price.

Pricing objectives refer to

a.   reconciling the prices charged by an organization to the values set forth in its business mission.

b.   taking specific steps to capitalize on an organization’s internal strengths as they apply to price.

c.   specifying the role of price in an organization’s marketing and strategic plans.

d.   taking specific steps to compensate for an organization’s weaknesses as they apply to price.

e.   subjectively setting intrinsic values to all products and services offered by an organization.

Which of the following statements regarding pricing objectives is most accurate?

a.   Pricing objectives should never change.

b.   Pricing objectives may change depending on the financial position of the company.

c.   Pricing objectives may change depending upon the relative market share of competitors.

d.   Pricing objectives are established exclusively by the marketing department.

e.   Pricing objectives are extremely sensitive to even the slightest change in the local economy.

All of the following are examples of pricing objectives EXCEPT:

a.   market share.

b.   survival.

c.   unit sales.

d.   social responsibility.

e.   competitors’ prices.

A firm’s profit objective is often measured in terms of ROI.  The acronym ROI stands for __________.

a.   risk opportunity investment

b.   revised organizational incentives

c.   return on investment

d.   regulated organizational investments

e.   replenishment of organizational inventories

A firm’s profit objective is often measured in terms of ROA.  The acronym ROA stands for __________.

a.   return on assets

b.   risk opportunity assessment

c.   return of allowances

d.   return on average equity

e.   risk opportunity analysis

Three different objectives relate to a firm’s profit, which is often measured in terms of return on investment.  One objective, known as _________, is when a company gives up immediate profit in exchange for achieving a higher market share in the hopes of penetrating competitive markets.

a.   maximizing current profit

b.   target return

c.   break-even strategy

d.   minimizing risk

e.   managing for long-run profits

Three different objectives relate to a firm’s profit, which have different implications for pricing strategy.  The three profit-oriented objectives include __________, maximizing current profit, and achieving a target return.

a.   accumulating profits

b.   managing for long-run profits

c.   reinvesting profits

d.   redistributing profits

e.   maximizing gross margin

Managing for long-run profits implies that a company

a.   will give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.

b.   will maintain a given price range to ensure there is no loss of customers over time, even if the profit margin declines.

c.   all profits will be invested in bonds or other certificates of deposit in order to counteract any drastic economic changes in the future.

d.   all profits will be reinvested into market research or product research rather than returned to shareholders.

e.   all products, product lines, or divisions that cannot maintain their pricing goals will be dropped.

Three different objectives relate to a firm’s profit, which is often measured in terms of return on investment.  One objective, known as _________, is common in many firms because the targets can be set and performance measured quickly.

a.   managing for long-run profits

b.   target return

c.   break-even strategy

d.   maximizing current profit

e.   minimizing risk

A maximizing current profit objective implies that a company chooses to

a.   set targets whose performance can be measured quickly.

b.   give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.

c.   set a profit goal that is often determined by its board of directors.

d.   reduce investment in any further market or product research.

e.   set prices based on return on sales.

Three different objectives relate to a firm’s profit, which is often measured in terms of return on investment.  One objective, known as _________, occurs when a firm sets a profit goal, usually determined by its board of directors.

a.   maximizing current profit

b.   managing for long-run profits

c.   target return

d.   break-even strategy

e.   minimizing risk

Three different objectives relate to a firm’s profit, which have different implications for pricing strategy.  The three profit-oriented objectives include managing for long-run profits, maximizing current profit objectives, and __________.

a.   accumulating profits

b.   reinvesting profits

c.   redistributing profits

d.   maximizing gross margin

e.   achieving a target return

A target return profit objective implies that a company chooses to

a.   set targets whose performance can be measured quickly.

b.   give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.

c.   set a profit goal that is often determined by its board of directors.

d.   reduce investment in any further market or product research.

e.   set prices based on return on sales.

Given that a firm’s profit is high enough for it to remain in business, an objective may be to __________, which will in turn lead to increases in market share and profit.

a.   increase the commitment to social responsibility

b.   increase dollar sales revenue

c.   decrease unit volume while maintaining price

d.   increase research and development funding for new product line extensions

e.   continue with previous policies that seem to be working

Which of the following statements regarding sales goals is most accurate?

a.   For marketing managers, sales revenue or unit sales are more easily addressed than profit goals.

b.   Cutting prices for a single product in a product line to raise unit sales often results in an increase in sales for related products in the line as well.

c.   Very often, cutting prices results in a decrease in market share.

d.   Setting unit volume sales as a pricing objective results in price wars with competitors, so the practice is limited to industries with as few competitors as possible.

e.   An advantage of increasing unit volume sales is that it always results in an increase in profits.

The ratio of the firm’s sales revenues or unit sales to those of the industry (competitors plus the firm itself) is referred to as

a.   target return on sales.

b.   industry profit.

c.   unit volume.

d.   market share.

e.   profit.

Market share is the ratio of the __________to those of the industry, including the firm itself.

a.   target return on sales

b.   marginal profit of the firm

c.   firm’s sales revenues or unit sales

d.   marketing expenses of the firm

e.   profits of the firm

Companies often pursue a market share objective when __________.

a.   industry sales are flat or declining

b.   profits are increasing

c.   industry sales are beginning to rise

d.   there is a sudden increase in production costs

e.   stockholders are seeking higher dividends

Which of the following statements regarding a market share pricing objective is most accurate?

a.   A market share objective is often difficult for product managers since stockholders are looking for immediate dividends (return of profits) and obtaining market share usually takes time.

b.   Although increased market share is a primary goal of some firms, others see it as a means to other ends, such as increased sales or profits.

c.   Selecting market share as a pricing objective is particularly effective if industry sales are rising.

d.   An advantage of market share as a pricing objective is that it is particularly insensitive to competitors’ actions.

e.   Ironically, a market share objective is realized by raising prices in order to increase consumer confidence during the decline stage of a product’s life cycle.

Netflix used to charge $14.99 per month for its movie rental service.  However, when Blockbuster introduced the same service at $13.99, Netflix then dropped its price to $13.99.  Netflix most likely made this price reduction in an attempt to

a.   decrease revenue but increase profit.

b.   increase profit by decreasing revenue.

c.   maintain market share.

d.   decrease market share.

e.   increase efficiency.

If the CEO of the Clorox Company were to say, “We want to control 60 percent of the bleach market within the next five years,” he would have set a __________ pricing objective.

a.   profit

b.   sales

c.   unit volume

d.   market share

e.   social responsibility

Unit volume as a pricing objective refers to

a.   the quantity of products to be produced or sold.

b.   the ratio of price per unit to unit variable cost.

c.   the ratio of production costs to the minimum sales price that would still generate profit.

d.   the total quantity of product sold by a firm relative to the total quantity of product sold by all firms in the industry.

e.   the number of units that need to be sold in order to avoid inventory carrying costs.

A negative aspect of selecting unit volume as a pricing objective is that

a.   production often cannot keep up with demand.

b.   there are increased carrying costs with extensive inventories.

c.   if price reductions are used to achieve volume objectives, it can sometimes come at the expense of profits.

d.   it can create competition between divisions within the organization itself causing conflicts over the allocation of resources.

e.   it always positively correlates with a sales revenue objective.

Some specialty-toy retailers pursue a __________ pricing objective to generate cash to ward off bankruptcy.

a.   market share

b.   survival

c.   sales revenue

d.   single product line

e.   profit

For years, a local “greasy spoon” diner had customers lining up around the building for breakfast.  When the city announced that it was building an off ramp from the highway that would conceivably double his customer traffic, the proprietor was delighted.  Having saved enough in previous years, he was certain it could hold him over through the three-month construction.  Unfortunately, construction delays continued for an additional six months and the work is still in progress.  The best pricing objective at this point for the diner’s owner would most likely be __________.

a.   profit

b.   market share

c.   unit volume

d.   survival

e.   social responsibility

A firm may forgo higher profit on sales and follow which of the following pricing objectives because it wants to recognize its stakeholder obligations?

a.   profit

b.   market share

c.   unit volume

d.   survival

e.   social responsibility

Factors that limit the range of prices a firm may set are referred to as __________.

a.   pricing restraints

b.   pricing constraints

c.   demand factors

d.   pricing barriers

e.   pricing restrictions

Pricing constraints are

a.   the controllable elements in a firm’s marketing mix that allow it to charge the highest price possible.

b.   formulas used in establishing break-even points, price elasticity of demand, and marginal analysis of revenues and costs.

c.   factors that limit the range of prices a firm may set.

d.   factors that expand the range of prices a firm may set.

e.   virtual boundaries used when setting the initial price on a new product.

Pricing constraints refer to

a.   barriers that must be overcome in order to set pricing objectives.

b.   competitive pricing advantages one firm has over another.

c.   different pricing strategies for each of the firm’s products.

d.   factors that limit the range of prices a firm may set.

e.   barriers to entry a firm faces when launching a new product.

Which term describes factors that limit the range of prices a firm may set?

a.   price fixings

b.   pricing constraints

c.   price elasticities

d.   pricing demands

e.   pricing margins

While pricing objectives frequently reflect corporate goals, pricing constraints often relate to

a.   stockholder demands.

b.   political ideology.

c.   conditions existing in the marketplace.

d.   an organization’s code of ethics.

e.   the financial realities within the organization itself.

All of the following are examples of pricing constraints EXCEPT:

a.   cost of producing the product.

b.   competitors’ prices.

c.   newness of the product (stage in its life cycle).

d.   social responsibility.

e.   demand for the product class, product, or brand.

Which of the following statements about consumer demand as a pricing constraint is most accurate?

a.   The number of potential buyers for the product class has little effect on the price a seller can charge.

b.   The number of potential buyers for the product affects the price a seller can charge, but only if the product is a luxury item.

c.   The number of potential buyers for the product affects the price a seller can charge, but only if the product is a necessity item.

d.   The number of potential buyers for the brand affects the price a seller can charge in the growth stage of a product life cycle, but not in the introductory stage.

e.   Whether the item is a luxury or a necessity affects the price a seller can charge.

Which of the following statements regarding pricing constraints is most accurate?

a.   Generally, the greater the demand for a product, the higher the price that can be set.

b.   At the corporate level, when setting pricing constraints, a firm must disregard current conditions in the marketplace because they are too temporal for long-term planning.

c.   Pricing constraints must always be set, but they are rarely enforced.

d.   It is possible to create pricing constraints with the greatest range possible in order to anticipate any and all changes in the marketing environment.

e.   Even if a firm is trying to satisfy its obligations to its customers and society in general, it should ignore setting pricing constraints.

Which of the following statements is most accurate?

a.   Nonprofit organizations are exempt from having to cover the costs of producing and/or marketing their products.

b.   Socially responsible corporations should have the pricing constraint of covering all costs of producing and marketing their products, but they should not price their products to earn a profit.

c.   Regardless of a company’s constraints, a firm must cover all the costs of producing and marketing a product, or the firm will fail.

d.   Price elasticity of demand makes it virtually impossible for companies to cover all their marketing and production costs at all times.

e.   Marketing and production costs are the most difficult and expensive aspect of pricing because they draw so much capital away from other departments in the organization.

Los Angeles Lakers tickets cost so much because

a.   the Lakers subsidize the Los Angeles Clippers, which also play in Staples Center.

b.   the Lakers must cover all of their operating costs while earning a profit.

c.   their stadium is the most expensive to maintain.

d.   their luxury payroll tax and marketing costs are the highest in the NBA.

e.   the team must cover ticket broker fees paid as a result of unsold seats at home games.

The price of tickets to a Los Angeles Lakers game can be attributed to

a.   the scalping of tickets on StubHub.

b.   sales taxes charged by online ticket sellers like Ticketmaster.

c.   the popularity of players like Candace Parker of the Los Angeles Sparks.

d.   the rise of online pricing in resold tickets and the supply–demand interaction for high-interest sporting events.

e.   losses due to declines in sales of television rights.

Which of the following statements about the product life cycle as a pricing constraint is most accurate?

a.   The newer a product is, the higher the price that can usually be charged.

b.   The later in the product life cycle a product is, the higher the price that can usually be charged.

c.   Once a product is considered nostalgic, the price will continue to rise indefinitely.

d.   Fads will generally have only two price points—high and low—but the values of those price points will remain basically the same.

e.   Prices should not be changed until a product reaches the maturity stage.

Which of the following statements regarding pricing constraints is most accurate?

a.   When a product is in the introductory stage of the product life cycle, there is very little latitude in setting the initial price since consumers still don’t know what the product can really do.

b.   A company has more latitude in setting an initial price if the product is in the introductory stage of its life cycle and is the only product in the line.

c.   The greater the number of products in a company’s product line, the less the product features of similar products can affect price.

d.   The newest addition to a company’s product line should always have the highest price in order to maintain the value of existing brands.

e.   To avoid cannibalization, the newest product addition to a company’s product line should never have a price lower than the other offerings in the line.

Occasionally, prices may rise later in the product’s life cycle.  This is often due to

a.   new competitors entering the market.

b.   production economies of scale.

c.   a decrease in the price of raw materials.

d.   nostalgia and fad factors.

e.   the type of competitive market shifts from pure monopoly to pure competition.

The newer a product and the earlier it is in its life cycle,

a.   the lower the price the firm must charge.

b.   the more competition it has.

c.   the higher the price that can usually be charged.

d.   the lower its production costs are.

e.   the lower its unit variable cost is.

At one point, people were willing to pay hundreds of dollars on eBay for a Beanie Baby toy that originally cost a fraction of that amount.  Today, those same Beanie Babies can be found at garage sales all over the country for a less than a dollar apiece.  This is most likely due to

a.   faulty craftsmanship in later production batches.

b.   a sharp downturn in the economy.

c.   the new, more nostalgic fad of bobble-head dolls.

d.   too many counterfeit Beanie Babies entering the country.

e.   a product becoming a fad and then losing its fad appeal.

Which of the following statements regarding price changes is most accurate?

a.   Product prices should change monthly, whereas services prices should change quarterly.

b.   Changing a product’s price too frequently creates antagonism among consumers, yet changing prices too infrequently makes them feel the company is not improving its product or service sufficiently.

c.   Supermarkets should change their prices every week since customers are expecting new prices in the weekly flyers they receive in the mail.

d.   Companies selling products over the Internet can instantly change their prices whenever the need arises.

e.   Internet price changes are regulated by the Internet Fair Practices Act to protect consumers against price gouging.

A study of four supermarket chains found the average annual cost of changing prices was $105,887, which represents 0.70 percent of revenues and an astounding __________ percent of net margins.

a.   10.0

b.   23.6

c.   35.2

d.   38.9

e.   43.0

Which of the following statements regarding the seller’s price is most accurate?

a.   Internet price changes are regulated by the Internet Fair Practices Act to protect consumers against price gouging.

b.   The seller’s price is constrained by the type of market within which it competes.

c.   Price changes cannot be regulated in a monopoly.

d.   The type of market has little or no impact on a firm in a monopolistic competitive environment.

e.   Competitive environments should affect a firm’s pricing objectives, but not its actual product prices.

Which pricing constraint does the following statement demonstrate? “Most public utilities must petition regulatory commissions in order to obtain a rate increase.”

a.   demand for the product, class, or brand

b.   newness of product in the life cycle

c.   costs of production

d.   type of competitive market

e.   single product versus a product line

Economists have identified four types of competitive markets, which are

a.   capitalistic, monopolistic, socialist, and communist.

b.   pure monopoly, monopolistic competition, oligopoly, and pure competition.

c.   free market, restrained market, government-regulated, and command economy.

d.   market economy, command economy, traditional economy, and controlled economy.

e.   open market, consumer-dominated market, service market, and product market.

Economists have identified four types of competitive markets: pure monopoly, monopolistic competition, oligopoly, and __________.

a.   pure competition

b.   government-dominated

c.   capitalist

d.   socialist

e.   communist

Economists have identified four types of competitive markets: pure monopoly, pure competition, oligopoly, and __________.

a.   capitalism

b.   socialism

c.   monopolistic competition

d.   consumer-dominated

e.   government-dominated

Economists have identified four types of competitive markets: pure monopoly, monopolistic competition, pure competition, and __________.

a.   capitalism

b.   socialism

c.   consumer-dominated

d.   oligopoly

e.   government-dominated

Economists have identified four types of competitive markets: oligopoly, monopolistic competition, pure competition, and __________.

a.   capitalism

b.   socialism

c.   consumer-dominated

d.   government-dominated

e.   pure monopoly

List the following competitive markets from MOST competitive to least competitive.

a.   monopolistic competition, pure monopoly, pure competition, and oligopoly

b.   pure competition, monopolistic competition, oligopoly, and pure monopoly

c.   pure competition, monopolistic competition, pure monopoly, and oligopoly

d.   monopolistic competition, pure monopoly, pure competition, and oligopoly

e.   pure monopoly, oligopoly, monopolistic competition, and pure competition

List the following competitive markets from LEAST competitive to most competitive.

a.   monopolistic competition, pure monopoly, pure competition, and oligopoly

b.   pure competition, monopolistic competition, oligopoly, and pure monopoly

c.   pure competition, monopolistic competition, pure monopoly, and oligopoly

d.   monopolistic competition, pure monopoly, pure competition, and oligopoly

e.   pure monopoly, oligopoly, monopolistic competition, and pure competition

The particular type of competition dramatically influences the range of price competition and, in turn,

a.   the nature of product differentiation and extent of advertising.

b.   the nature of product differentiation and extent of on-hand inventory.

c.   the degree of involvement with each of the organization’s stakeholders.

d.   the degree of involvement with both retailers and wholesalers.

e.   the relationship between product lines and product classes.

 

In Figure 13-4 above, column “A” represents which type of competitive market?

a.   pure monopoly

b.   oligopoly

c.   monopolistic competition

d.   pure competition

e.   monopolistic oligopoly

In Figure 13-4 above, column “B” represents which type of competitive market?

a.   pure monopoly

b.   oligopoly

c.   monopolistic competition

d.   pure competition

e.   monopolistic oligopoly

In Figure 13-4 above, column “C” represents which type of competitive market?

a.   pure monopoly

b.   oligopoly

c.   monopolistic competition

d.   pure competition

e.   monopolistic oligopoly

In Figure 13-4 above, column “D” represents which type of competitive market?

a.   pure monopoly

b.   oligopoly

c.   monopolistic competition

d.   pure competition

e.   monopolistic oligopoly

Using Figure 13-4 above, how much price competition is likely for bushels of wheat?

a.   There is a range of prices at which to sell.

b.   The market sets the price so there is no price competition.

c.   There is a price leader in the farming industry that sets the price.

d.   Since there is only one seller, that firm sets the price.

e.   Price is regulated by the government.

Using Figure 13-4 above, how much price competition is likely for small coffee shops?

a.   There is almost none; the market sets the price.

b.   There are many sellers competing within a range of prices.

c.   There is generally a price leader that sets the price.

d.   Starbucks sets the price and all other coffee shops follow its lead.

e.   Price is set by the seller but regulated by the government.

The competitive market situation in which many sellers follow the market price for identical, commodity products is referred to as

a.   a pure monopoly.

b.   an oligopoly.

c.   monopolistic competition.

d.   pure competition.

e.   oligopolistic competition.

Pure competition is the competitive situation where

a.   many sellers follow market price for identical, commodity products.

b.   one seller sets the price for a unique product.

c.   few sellers are sensitive to one another’s prices.

d.   many sellers compete on nonprice factors.

e.   one or few sellers compete solely on nonprice factors.

If competitive market circumstances are such that there is almost no price competition, no product differentiation, and the only advertising informs prospects that the product is available, then the competitive market in this industry must be __________.

a.   a pure monopoly

b.   pure competition

c.   an oligopoly

d.   monopolistic competition

e.   monopolistic oligopoly

The marketplace sets the price for wheat, so farmers who are trying to sell their wheat crops don’t have to create a pricing strategy.  The wheat is sold in a(n) __________ type of competitive market.

a.   oligopoly

b.   pure monopoly

c.   pure competition

d.   monopolistic competition

e.   monopolistic oligopoly

The competitive market situation in which many sellers compete on nonprice factors is referred to as

a.   a pure monopoly.

b.   an oligopoly.

c.   pure competition.

d.   monopolistic competition.

e.   monopolistic oligopoly.

In which type of industry would a marketing director be most likely to say, “We have to let the customer know that our product is the only one that comes with its own tracking device”?

a.   pure monopoly

b.   oligopoly

c.   pure competition

d.   monopolistic oligopoly

e.   monopolistic competition

There are more than 100 companies that manufacture natural and artificial flavorings used to enhance the taste of food before it is sold to consumers.  Many of these manufacturers are regional operations.  Many differentiate themselves from the competition in their advertising by specializing in one or two types of foods for which they provide flavorings.  Some use their distribution strategies as a means of differentiating themselves from their competition.  This industry is most likely an example of

a.   pure monopoly.

b.   oligopoly.

c.   monopolistic competition.

d.   bilateral monopoly.

e.   monopolistic oligopoly.

Small regional producers selling grocery products have a special problem because they need to set prices at which both they and their channel members can profit while

a.   competing with other brands to gain valuable space on supermarket shelves.

b.   still maintaining local customer loyalty.

c.   trying to go head-to-head or steal market share from nationally recognized brands.

d.   keeping other regional businesses from entering the market.

e.   avoiding cannibalization if they sell their product both in stores and online.

The competitive market situation in which the few sellers are sensitive to each other’s prices is referred to as

a.   pure monopoly.

b.   oligopoly.

c.   monopolistic competition.

d.   pure competition.

e.   oligopolistic competition.

An oligopoly is a competitive market situation where

a.   many sellers follow market price for identical, commodity products.

b.   one seller sets the price for a unique product.

c.   few sellers are sensitive to one another’s prices.

d.   many sellers compete on nonprice factors.

e.   one or few sellers compete solely on nonprice factors.

If competitive market circumstances are such that there are few sellers who are sensitive to each other’s prices, and the purpose of advertising is to inform but avoid price competition, then __________ must exist in the industry.

a.   a pure monopoly

b.   monopolistic competition

c.   pure competition

d.   an oligopoly

e.   oligopolistic competition

Go to any Kroger supermarket and walk to the cereal aisle.  You will notice that four major brands—Kellogg’s, Quaker, General Mills, and Post—seem to occupy most of the shelf space.  These cereals are all priced about the same.  There is a good deal of product differentiation as the result of licensing agreements with movie studios (Disney, DreamWorks, etc.) and through the use of different health claims.  The cereal industry is an example of what type of competitive market?

a.   a pure monopoly

b.   monopolistic competition

c.   pure competition

d.   monopolistic oligopoly

e.   an oligopoly

Microsoft, Sony, and Nintendo are the three principal firms in the video game console market.  Using Figure 13-4, how much price competition is most likely for video game makers?

a.   There is almost none; the market sets the price.

b.   There is some competition within a range of prices.

c.   There is generally a price leader that sets the price.

d.   Each firm is aware of each other’s prices and may adjust them based on the prices of the other two firms.

e.   Price is set by the seller but regulated by the government.

The competitive market situation in which one seller sets the price for a unique product is referred to as

a.   a pure monopoly.

b.   an oligopoly.

c.   monopolistic competition.

d.   pure competition.

e.   monopolistic oligopoly.

Pure monopoly is the competitive market situation where

a.   many sellers follow market price for identical, commodity products.

b.   one seller sets the price for a unique product.

c.   few sellers are sensitive to one another’s prices.

d.   many sellers compete on nonprice factors.

e.   one or few sellers compete solely on nonprice factors.

If competitive market circumstances are such that there is no price competition, no product differentiation, and the purpose of advertising is to increase demand for the product class, then __________ must exist in the industry.

a.   an oligopoly

b.   monopolistic competition

c.   a pure monopoly

d.   pure competition

e.   oligopolistic competition

The marketing director for a(n) __________ is most likely to believe the following statement, “The purpose of advertising is to increase demand for the product class.”

a.   oligopolist competitor

b.   monopolistic competitor

c.   pure competition competitor

d.   pure monopolist competitor

e.   competitive oligopolist competitor

Florida Power & Light, an electric power company, is the only source of electricity for consumers in most parts of the Florida panhandle.  As a(n) __________, the company receives approval from the state utility commission for the rates it can charge.

a.   free enterprise firm

b.   oligopoly

c.   monopolistic competitor

d.   competitor in a pure competition

e.   pure monopoly

Walmart lies on the border between __________.

a.   oligopoly and pure monopoly

b.   monopolistic competition and pure monopoly

c.   pure competition and monopolistic competition

d.   monopolistic competition and oligopoly

e.   pure competition and pure monopoly

Walmart uses which pricing strategy that affects both customers and competitors?

a.   penetration pricing

b.   every day fair pricing

c.   every day low pricing

d.   supply-side pricing

e.   value-pricing

A manufacturing company that introduces a product must know or anticipate what specific price its __________ currently charge or may charge in the future.

a.   present and potential competitors

b.   financial institutions

c.   suppliers

d.   unions

e.   regulators

To increase profits on digital music downloads, Amazon has

a.   raised its prices to appear more exclusive than Apple iTunes.

b.   lowered its prices to try to lure customers from Apple iTunes.

c.   added a download fee to the price of each song.

d.   made its prices the same as those of Apple iTunes.

e.   kept its prices the same but increased the number of available songs.

Apple iTunes has an advantage over Amazon as an online music supplier because

a.   it has a larger market share and has tied its iTunes software to products like iPods.

b.   people aren’t aware that Amazon sells music.

c.   most digital songs play only on iTunes-compatible devices like iPods.

d.   it reached the market first.

e.   it has a slicker user interface.

Basic to setting a product’s price is the extent of __________.  This information is used in estimating the revenues the firm expects to receive.

a.   management’s commitment to the product relative to other products in the line

b.   curiosity or interest potential consumers expressed during market testing

c.   customer demand for it

d.   the firm’s promotional budget

e.   distribution requirements

Marketing executives must translate estimates of customer demand into estimates of

a.   personnel.

b.   advertising expenditures.

c.   ancillary product support.

d.   revenues the firm expects to receive.

e.   supply.

A demand curve refers to a graph that relates

a.   the quantity sold and price, which shows the maximum number of units that will be sold at a given price.

b.   the quantity sold and price, which shows the minimum number of units that must be sold to break even.

c.   the quantity sold and price, which shows the minimum number of units that must be sold in order to make a profit.

d.   total production costs to various price points in order to determine how many units must be sold in order to realize a predetermined profit.

e.   primary demand to selective demand.

The horizontal axis of a demand curve graph represents __________.

a.   market growth rate

b.   relative market share

c.   price per unit

d.   potential profit in dollars

e.   quantity demanded

The vertical axis of a demand curve graph represents __________.

a.   market growth rate

b.   relative market share

c.   price per unit

d.   potential profit in dollars

e.   quantity demanded

A demand curve graph typically appears as

a.   a parabola with the apex representing the highest price that can be charged without losing customers.

b.   a diagonal line going from upper left to lower right demonstrating that as price goes down, demand goes up.

c.   an inverted parabola with the lowest point representing the lowest price that can be charged and still meet the company’s profit objectives.

d.   a diagonal line going from lower left to upper right demonstrating that as prices go up, demand goes up proportionately.

e.   two intersecting lines that identify the point at which supply and demand are exactly the same.

The maximum quantity of products consumers will buy at given price is shown by

a.   a demand curve.

b.   a price constraint.

c.   a break-even point.

d.   a supply curve.

e.   a marginal revenue curve.

Factors that determine consumers’ willingness and ability to pay for products and services are referred to as

a.   supply factors.

b.   demand factors.

c.   affordability factors.

d.   elasticity factors.

e.   macro environmental factors.

Demand factors refer to

a.   the number of consumers who can afford to purchase a product or service.

b.   the price that should be charged for a given product.

c.   consumers’ willingness and ability to pay for goods and services.

d.   the number of consumers who want to purchase a product.

e.   the number of consumers who can purchase a product.

All of the following are demand factors EXCEPT:

a.   the price of similar products.

b.   consumer tastes.

c.   consumer income.

d.   the availability of similar products.

e.   the number of distribution outlets carrying the product.

When estimating demand, price is not the only factor to be considered.  Three other elements include consumer tastes, price and availability of similar products, and

a.   consumer income.

b.   consumer psychographics.

c.   current economic stressors.

d.   current political agendas.

e.   green substitutes.

While consumer tastes and price and availability of similar products determine what consumers want to buy, consumer income determines

a.   where they buy.

b.   the degree of brand loyalty.

c.   the degree of repeat buys.

d.   what they can buy.

e.   their desire to buy.

Which of the following statements about the factors that influence demand is true?

a.   As the availability of close substitutes increases, the demand for a product increases.

b.   As real consumer income increases, the demand for a product increases.

c.   As the price of close substitutes increases, the demand for a product declines.

d.   Changing consumer tastes have little impact on the demand for a product.

e.   As real consumer income decreases, the demand for a product increases.

Campbell Soup spent seven years and $55 million on a super secret project to produce a line of Intelligent Quisine (IQ) food products “scientifically proven to lower high levels of cholesterol, blood sugar, and blood pressure.”  They were responding to the needs and desires expressed by consumers.  However, after 15 months in an Ohio test market, Campbell Soup yanked the entire IQ line because

a.   Progresso Soups got to the stores first with a similar product and dominated the shelf space.

b.   the product’s claims were exaggerated and not backed up with scientific data.

c.   the product was priced too high and there was too little product variety.

d.   the price was too low, leaving the consumer believing that Campbell’s sacrificed taste for nutrition.

e.   a downturn in the economy shifted people’s desire from a healthy lifestyle to a desire for home and comfort.  The new soups were too different from the product they remembered as children.

There are a lot of skateboards on the market, but the BMW Streetcarver is the only one with stabilizers and wheel design based on BMW’s automobiles.  This technology gives the BMW Streetcarver better control at high speeds and around sharp turns than any other brand.  The skateboard is priced at $495, which leaves many consumers (especially young males) who might want to buy the Streetcarver unable to afford it.  This inability to pay for the high-priced BMW-made skateboard shows the affect of __________ on sales.

a.   demand factors

b.   macroeconomic environmental factors

c.   barter factors

d.   supply factors

e.   exchange parameters

Mrs. Renfro’s, Inc., is a company that sells 25 different relishes in 45 different states.  Mrs. Renfro’s chipotle corn salsa is so popular that the company cannot make enough to keep its resellers stocked.  Its price of $4.50 for a jar seems just right to consumers who savor its hot and spicy taste.  The popularity of hot and spicy food is an example of a __________ that Mrs. Renfro’s has taken advantage of to make its product a success.

a.   barter factor

b.   demand factor

c.   supply factor

d.   consumer index

e.   macroeconomic environmental factor

 

Figure 13-5A above shows that when the price moves from $2.00 to $1.50 per unit along the demand curve D1, the quantity demanded

a.   increases from 3.0 to 4.5 million units per year.

b.   decreases from 4.5 to 3.0 million units per year.

c.   stays the same.

d.   increases from 3.0 to 7.5 million units per year.

e.   decreases from 7.5 to 3.0 million units per year.

Figure 13-5A above shows that when the quantity demanded moves from 3.0 to 4.5 million units along the demand curve D1, the profit

a.   increases from $1.50 to $2.00 per unit.

b.   decreases from $2.00 to $1.50 per unit.

c.   stays the same per unit.

d.   increases from $0.50 to $1.50 per unit.

e.   Figure 13-5A does not indicate what happens to profit when the quantity demanded changes.

Which of the following illustrates movement along the demand curve?

a.   Prices remain the same, but there is a significant increase in demand.

b.   Prices remain the same, but there is a significant decrease in demand.

c.   As the price is raised, the quantity demanded increases, assuming all else stays the same.

d.   As the price is lowered, the quantity demanded increases, assuming all else stays the same.

e.   Movement along the curve rather than a shift of the curve indicates that some significant event has taken place outside the organization that has affected demand.

 

Figure 13-5B above shows that when the quantity demanded moves from 3.0 to 6.0 million units along the demand curve D1, the profit

a.   increases from $1.50 to $2.00 per unit.

b.   decreases from $2.00 to $1.50 per unit.

c.   stays the same per unit.

d.   increases from $0.50 to $1.50 per unit.

e.   Figure 13-5B does not indicate what happens to profit when the quantity demanded moves.

In Figure 13-5B above, the demand curve shifts from D1 to D2.  This most likely represents

a.   an increase in demand that did not require a decrease in price.

b.   an increase in demand that required an increase in price.

c.   no change in price and no change in demand.

d.   no change in demand or price but a greater profit due to economies of scale.

e.   an increase in price from $0.50 to $1.50 per unit.

Which of the following statements most likely would account for the shift in the demand curve from D1 to D2 shown in Figure 13-5B above?

a.   The firm increased its prices and consumers perceived the value of the product to be greater.

b.   There were more product substitutes available in the marketplace.

c.   Competitors in the market lowered their prices.

d.   A downward economic shift caused a proportionate change in consumer income.

e.   The firm’s price remained the same but changes occurred in consumer tastes.

A shift of the demand curve from D1 to D2 in Figure 13-5B above indicates

a.   fewer units are demanded at a given price.

b.   more units are demanded at a given price.

c.   the price has decreased.

d.   the price has increased.

e.   there is not enough information given to indicate what happened.

Which of the following illustrates a shift in the demand curve?

a.   When prices remain the same, there is a significant decrease in demand.

b.   As the price is raised, the quantity demanded increases, assuming all else stays the same.

c.   When prices remain the same, there is an increase or decrease in demand.

d.   As the price is lowered, the quantity demanded decreases, assuming all else stays the same.

e.   Movement along the curve indicates that some significant event has taken place outside the organization that has affected demand.

The total money received from the sale of a product is referred to as __________.

a.   profit

b.   total revenue

c.   average revenue

d.   marginal revenue

e.   derived demand

Total revenue refers to

a.   the profit made from selling a product or service.

b.   the net gain in sales revenue if the unit price is lowered.

c.   the least number of units sold needed to cover product, distribution, and promotional costs.

d.   the amount by which marginal costs exceed fixed costs.

e.   the total money received from the sale of a product.

At a price of $3.00 each, SHAPE magazine sells 1.25 million copies of its magazine targeted to young women seeking a healthier lifestyle.  If the price per issue is increased to $3.25, only 1 million copies would be sold.  Fixed costs are $1 million and unit variable costs are $0.50 per magazine.  From the information provided here, what is SHAPE magazine’s total revenue obtained at the lower price?

a.   $3,750,000

b.   $3,250,000

c.   $3,000,000

d.   $2,125,000

e.   $1,750,000

Forever Quilting is a small company that makes quilting kits priced at $120 each.  There is no quantity discount.  The costs of the materials that go into each kit are $45.  It costs $5 in labor to assemble a kit.  The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $4,500 for the monthly salary of its owner.  Last month the company sold 150 kits.  Forever Quilting’s total revenue for the month was

a.   $4,300.

b.   $6,200.

c.   $7,500.

d.   $10,500.

e.   $18,000.

The average amount of money received for selling one unit of a product, or simply the price of that unit, is referred to as __________.

a.   profit

b.   total revenue

c.   unit variable revenue

d.   average revenue

e.   marginal revenue

Average revenue is

a.   the typical or average sales generated for all items within an industry.

b.   the average amount of revenue necessary for a business to remain profitable.

c.   total revenue divided by the quantity sold.

d.   the difference between the highest and lowest price charged for a given item within a specific firm.

e.   the difference between the highest and lowest price charged for a given item within a specific industry.

Ampro-Mag is a small company that makes materials for safely controlling hazardous spills of all kinds.  It sells these items as a neutralizing kit priced at $100 each.  The costs of the materials that go into each kit are $25.  It costs $5 in labor to assemble a kit.  The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $300 for advertising in trade journals, and $3,000 for the monthly salary of its owner.  Ampro-Mag’s average revenue per unit is

a.   $30.

b.   $70.

c.   $100.

d.   $130.

e.   $4,500.

At a price of $4.00 each, SHAPE magazine sells 1.25 million copies of its magazine targeted to young women seeking a healthier lifestyle.  If the price per issue is increased to $4.50 each, only 1 million copies will be sold.  Fixed costs are $1 million and unit variable costs are $0.50 per magazine.  Calculate the average revenue for SHAPE magazine at the higher price.

a.   $0.50

b.   $1.25

c.   $4.00

d.   $4.50

e.   $8.50

The change in total revenue that results from producing and marketing one additional unit of a product is referred to as __________.

a.   break-even revenue

b.   marginal cost

c.   elasticity of demand

d.   unit variable cost

e.   marginal revenue

Marginal revenue refers to

a.   the additional money required to produce one additional unit.

b.   the least number of units sold to cover product, distribution, and promotional costs.

c.   the amount by which marginal costs exceed variable costs.

d.   the change in total revenue that results from producing and marketing one additional unit of the product.

e.   the net gain in revenue if unit prices are lowered.

Forever Quilting is a company that designs and distributes quilting kits.  The kits are priced at $120 each.  The costs of the materials that go into each kit are $45.  It costs $5 in labor to assemble a kit.  The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising in quilting magazines, and $3,500 for the monthly salary of its owner.  Forever Quilting’s marginal revenue is

a.   $50.

b.   $70.

c.   $120.

d.   $3,500.

e.   $5,200.

For any downward-sloping, straight-line demand curve, the marginal revenue curve always

a.   is the additional money required to make one additional unit.

b.   falls at a rate twice as fast as the demand curve.

c.   falls at a rate half as fast as the demand curve.

d.   remains the same since there is a one-to-one relationship.

e.   reacts as the direct inverse of the original line.

 

Figure 13-7 above shows that to maximize revenue, Newsweek should price its magazine at

a.   $2.50.

b.   $2.00.

c.   $1.50.

d.   $1.00.

e.   $0.50.

Figure 13-7 above shows that the average revenue at point “C” is

a.   $3.00.

b.   $2.50.

c.   $2.00.

d.   $1.50.

e.   $1.00.

According to Figure 13-7 above, what is the price of Newsweek when marginal revenue is $0?

a.   $0

b.   $0.50

c.   $1.00

d.   $1.50

e.   $2.00

According to Figure 13-7 above, when the price of Newsweek is $1.00 per issue, how many magazines will it sell?

a.   1,500,000

b.   3,000,000

c.   4,500,000

d.   6,000,000

e.   7,500,000

According to Figure 13-7 above, if Newsweek raises its price from $2.00 per issue to $2.50 per issue, what happens to total revenue?

a.   total revenue goes up

b.   total revenue goes down

c.   total revenue stays the same

d.   total revenue is not related to the price

e.   it is impossible to tell from the information given in the figure

The percentage change in quantity demanded relative to the percentage change in price is referred to as

a.   price elasticity of demand.

b.   price elasticity of supply.

c.   average demand.

d.   marginal revenue.

e.   derived demand.

Price elasticity of demand (E) is expressed as

a.   E = Percentage change in price (%∆ in P) ÷ Percentage change in quantity demanded (%∆ in Q).

b.   E = Price (P) ÷ Quantity demanded (Q).

c.   E = Percentage change in quantity demanded (%∆ in Q) ÷ Percentage change in price (%∆ in P).

d.   E = Quantity demanded (Q) ÷ Price (P).

e.   E = Quantity demanded (Q) × Price (P).

Elastic demand exists when

a.   a small percentage decrease in price produces a smaller percentage increase in quantity demanded and total revenue falls.

b.   a small percentage decrease in price produces a larger percentage increase in quantity demanded and total revenue increases.

c.   an increase in price causes a larger increase in quantity demanded and total revenue falls to zero.

d.   the quantity demanded remains the same regardless of level of price and total revenue is unchanged.

e.   a small percentage decrease in price produces a smaller percentage decrease in quantity demanded and total revenue increases.

Which of the following statements about price elasticity of demand most accurate?

a.   The more substitutes a product has, the more likely it is to be price elastic.

b.   Price elasticity with inelastic demand must always be greater than 1.

c.   Unitary demand represents the relationship between the cash outlay necessary to purchase a product relative to a person's disposable income.

d.   With inelastic demand, reducing price will result in an increase of total revenue.

e.   With inelastic demand, reducing price will result in an increase in total revenue, although not necessarily an increase in profit.

Demand for a product is likely to be more price elastic if

a.   it is considered a necessity.

b.   it has many substitutes.

c.   it has few substitutes.

d.   it requires a small cash outlay.

e.   none of the above is true.

In a snack vending machine, consumers can choose one of up to of 20 choices.  These snacks are

a.   an ideal example of unitary demand.

b.   likely to have a price elasticity equal to 1.

c.   more likely to be price elastic.

d.   likely to have a price elasticity less than 1.

e.   more likely to be price inelastic.

Several companies produce latex gloves that are used in a variety of different industries.  If one of the glove manufacturers decreases its price by just a few percentage points, it will result in a significant increase in quantity demanded.  The demand for latex gloves is

a.   synergistic.

b.   inelastic.

c.   unitary.

d.   elastic.

e.   entropic.

Inelastic demand exists when

a.   a small percentage decrease in price produces a smaller percentage increase in quantity demanded and total revenue falls.

b.   a small percentage increase in price produces a smaller percentage increase in quantity demanded and total revenue falls.

c.   an increase in price causes a larger increase in quantity demanded and total revenue falls to zero.

d.   the quantity demanded remains the same regardless of level of price and total revenue is unchanged.

e.   a small percentage decrease in price produces a smaller percentage decrease in quantity demanded and total revenue increases.

All things being equal, if a firm finds the demand for one of its products is inelastic, it can increase its total revenues by

a.   lowering its price.

b.   increasing fixed costs only.

c.   increasing variable costs only.

d.   increasing both fixed and variable costs.

e.   raising its price.

Which of the following statements about price elasticity of demand is most accurate?

a.   Price elasticity with unitary demand is less than 1.

b.   The more substitutes a product has, the less likely it is to be price elastic.

c.   Unitary demand represents the relationship between the cash outlay necessary to purchase a product relative to a person’s disposable income.

d.   With inelastic demand, reducing price will result in a decrease of total revenue.

e.   With inelastic demand, reducing price will result in an increase in total revenue, although not necessarily an increase in profit.

Which of the following statements about price elasticity of demand is most accurate?

a.   Price elasticity with inelastic demand is less than 1.

b.   The more substitutes a product has, the less likely it is to be price elastic.

c.   Unitary demand represents the relationship between the cash outlay necessary to purchase a product relative to a person's disposable income.

d.   With inelastic demand, reducing price will result in an increase of total revenue.

e.   With inelastic demand, reducing price will result in an increase in total revenue, although not necessarily an increase in profit.

At a price of $2.00 each, SHAPE magazine sells 1 million copies of its magazine targeted to young women seeking a healthier lifestyle.  If the price per issue is increased to $2.50, only 800,000 copies would be sold.  From the information provided here, the price elasticity of demand for SHAPE magazine in this price range can be described as

a.   inelastic demand.

b.   elastic demand.

c.   unitary demand.

d.   null elasticity.

e.   subsidized elasticity.

Recently, much of the western U.S. experienced a drought condition and water usage was restricted in Denver.  Yet even though most people used less water, the price of water did not drop.  When the drought was declared over, the water company raised water prices.  However, the residents of Denver did not use less water.  Here, water is

a.   price elastic.

b.   price sensitive.

c.   price inelastic.

d.   price insensitive.

e.   unitary elastic.

The manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product.  Which of the following conditions would argue against using a penetration pricing strategy for the tasty fat-free ice cream?

a.   The ice cream market is highly elastic.

b.   A large portion of the market has inelastic demand for ice cream—over a fairly broad range of prices.

c.   Economies of scale in production would be substantial.

d.   Retailers are not willing to pay for new brands of premium ice cream in the already overcrowded category.

e.   Once the initial price is set, it is nearly impossible to lower the price without alienating early buyers.

Products such as disposable diapers usually have

a.   elastic demand.

b.   null elasticity.

c.   unitary demand.

d.   inelastic supply.

e.   inelastic demand.

Which of the following statements about unitary demand is most accurate?

a.   Products for which there are a lot of substitutes traditionally have unitary demand.

b.   Products such as life-saving drugs tend to have unitary demand.

c.   Products with unitary demand will have price elasticity equal to 1.

d.   Products with unitary demand have a price elasticity that is greater than one.

e.   High-end consumer products like jets, yachts, and summer homes usually have unitary demand.

A book on how to invest in collectibles spends several weeks on The New York Times bestseller list.  The paperback book was originally released for $9.99.  A reduction of the price to $9.79 had no effect on total revenue, which remained the same.  This is due to the book having

a.   inelastic demand.

b.   elastic demand.

c.   null elasticity.

d.   unitary demand.

e.   subsidized elasticity.

Market analysts for a large cereal company estimated that the price elasticity of demand for presweetened cereal is 1.97, but that the entire market for ready-to-eat cereals exhibits a price elasticity of demand of 0.36.  Marketers collect this type of information in which step of the price-setting process?

a.   identifying pricing objectives and constraints

b.   estimating demand and revenue

c.   estimating the break-even point

d.   selecting an approximate price level

e.   making special adjustments to list or quoted price

Price elasticity of demand is determined by a number of factors, such as the availability of substitutes, the necessity of the product or service, the cash outlay of purchase relative to a person’s disposable income, and

a.   whether the item is a luxury product or service.

b.   the stage of the product or service in its product life cycle.

c.   the degree of carrying costs for the manufacturer or distributor.

d.   the financial resources of the organization itself.

e.   the ability of the organization to meet sudden increases in demand.

Price elasticity of demand is determined by a number of factors, such as whether the item is a luxury product or service, the necessity of the product or service, the cash outlay of purchase relative to a person’s disposable income, and

a.   the stage of the product or service in its product life cycle.

b.   the degree of carrying costs for the manufacturer or distributor.

c.   the availability of substitutes.

d.   the financial resources of the organization itself.

e.   the ability of the organization to meet sudden increases in demand.

Price elasticity of demand is determined by a number of factors such as whether the item is a luxury product or service, the availability of substitutes, the cash outlay of purchase relative to a person’s disposable income, and

a.   the stage of the product or service in its product life cycle.

b.   the degree of carrying costs for the manufacturer or distributor.

c.   the financial resources of the organization itself.

d.   the ability of the organization to meet sudden increases in demand.

e.   the necessity of the product or service.

Price elasticity of demand is determined by a number of factors such as whether the item is a luxury product or service, the availability of substitutes, the necessity of the product or service, and

a.   the stage of the product or service in its product life cycle.

b.   the degree of carrying costs for the manufacturer or distributor.

c.   the financial resources of the organization itself.

d.   the cash outlay of purchase relative to a person’s disposable income.

e.   the ability of the organization to meet sudden increases in demand.

Ace Shoe Co. has fixed costs of $6 million and unit variable costs of $5 per pair.  Suppose a consultant tells Ace it can sell 700,000 pairs of shoes, thus earning a profit of $2.5 million.  What potential error is the consultant making?

a.   assuming that fixed costs are independent of price

b.   assuming that units sold is independent of price

c.   assuming that some fixed costs are variable

d.   assuming that some variable costs are fixed

e.   assuming that variable costs are independent of price

Five cost concepts are important in pricing decisions: total cost, fixed cost, variable cost, marginal cost, and __________.

a.   dividend cost

b.   liquidity cost

c.   discretionary cost

d.   unit variable cost

e.   elastic cost

The total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost, is referred to as

a.   overhead cost.

b.   total cost.

c.   unit cost.

d.   average cost.

e.   marginal cost.

Total cost refers to

a.   the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold.

b.   the change in expenses that results from producing and marketing one additional unit of a product.

c.   the average amount of money received for selling one unit of a product or simply the price of that unit.

d.   the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.

e.   the total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost.

Fixed cost refers to

a.   the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.

b.   the total expense incurred by a firm in producing and marketing a product, which equals the sum of overhead cost and variable cost.

c.   the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold.

d.   the average amount of money received for selling one unit of a product or simply the price of that unit.

e.   the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.

The sum of the expenses of a firm that is stable and does not change with the quantity of the product that is produced and sold is referred to as

a.   fixed cost.

b.   total cost.

c.   variable cost.

d.   marginal cost.

e.   overhead cost.

Rents, executive salaries, and insurance are typical examples of

a.   variable costs.

b.   fixed costs.

c.   unit costs.

d.   marginal costs.

e.   total costs.

Which of the following is a typical example of a fixed cost?

a.   taxes

b.   raw materials

c.   sales commissions

d.   building rental expense

e.   hourly wages

Which of the following would be an example of a fixed cost for a company that makes carbon monoxide monitoring systems for employees to wear that work in hazardous areas?

a.   the lithium batteries that are used in each monitor

b.   the chest harness the employee must use to wear the monitor

c.   the rent for the company’s offices

d.   the free training videos that are sent to each new customer

e.   the stainless steel, water-resistant cases in which the monitors sit

Variable cost refers to

a.   the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold.

b.   the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.

c.   the total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and marginal cost.

d.   the average amount of money received for selling one unit of a product or simply the price of that unit.

e.   the change in total cost that results from producing and marketing one additional unit of a product.

The sum of the expenses of the firm that vary directly with the quantity of the product that is produced and sold is referred to as

a.   fixed cost.

b.   total cost.

c.   marginal cost.

d.   unit cost.

e.   variable cost.

Which of the following is a typical example of a variable cost?

a.   cost of maintaining inventory

b.   rent on a building

c.   executive salaries

d.   insurance premiums

e.   lease on delivery trucks

Unit variable cost refers to variable cost expressed

a.   as the sum of all units sold.

b.   on a per unit basis for a product.

c.   as a percentage of total sales.

d.   as a percentage of fixed costs.

e.   as a percentage of total costs.

The unit variable cost (UVC) equals variable cost (VC) divided by __________.

a.   quantity (Q)

b.   fixed costs (FC)

c.   total cost (TC)

d.   total revenue (TR)

e.   price per unit of the product (P)

Forever Quilting is a small company that makes quilting kits priced at $120.  The costs of the materials that go into each kit are $45.  It costs $5 in labor to assemble a kit.  The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $4,500 for the monthly salary of its owner.  Forever Quilting’s unit variable cost for its kits is

a.   $5.

b.   $45.

c.   $50.

d.   $120.

e.   $170.

General Motors, Ford, and Chrysler have all recently experienced financial distress because

a.   the Asian markets such as China, India, and Japan entered the North American market and captured an even larger share.

b.   the value pricing strategy used by the “big three” was flawed and North Americans’ perceptions of value had changed.

c.   they were continually using deceptive pricing when establishing the manufacturer’s suggested retail price on their vehicles.

d.   their costs got out of control, causing their total costs to exceed their total revenues.

e.   their product line was not changing with the times in order to meet changing environmental standards regarding emissions.

Marginal cost refers to

a.   the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold.

b.   the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.

c.   the total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost.

d.   the average amount of money received for selling one unit of a product or simply the price of that unit.

e.   the change in total cost that results from producing and marketing one additional unit of product.

The change in total cost that results from producing and marketing one additional unit of product is referred to as

a.   fixed cost.

b.   total cost.

c.   marginal cost.

d.   variable cost.

e.   unit cost.

Marginal cost is the change in total cost that results from

a.   reducing the total number of units produced.

b.   increasing the number of units produced by 1 percent.

c.   increasing the number of products in a product line.

d.   producing and marketing one additional unit of a product.

e.   the percentage change that results from changing a product feature or service benefit to reduce costs.

What idea is described as a continuing, concise trade-off of incremental costs against incremental revenues?

a.   break-even analysis

b.   marginal analysis

c.   demand analysis

d.   cost-benefit analysis

e.   situation analysis

A continuing, concise trade-off of incremental costs against incremental revenues is referred to as

a.   break-even analysis.

b.   demand analysis.

c.   marginal analysis.

e.   situation analysis.

d.   cost-benefit analysis.

Break-even analysis refers to

a.   a process that investigates the difference between marginal revenue and marginal cost.

b.   a method of determining just how much a consumer is willing to pay for a product or service.

c.   a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.

d.   the process of determining the quantity of product consumers will buy relative to the quantity produced by the firm.

e.   the graph that shows the maximum number of products consumers will buy at a given price.

A technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output is referred to as __________.

a.   break-even analysis

b.   marginal analysis

c.   sensitivity analysis

d.   market analysis

e.   tipping point analysis

The break-even point for a large grain farming operation was calculated to be 2 million bushels of corn.  Break-even analysis would take place during which step of the price-setting process?

a.   identify pricing objectives and constraints

b.   determine cost, volume, and profit relationships

c.   estimate demand and revenue

d.   select an approximate price level

e.   make special adjustments to list or quoted price

A recently graduated business student decided to open a small Internet café serving a variety of unusual nonalcoholic beverages from around the world.  He carefully used all the pricing formulas he learned in school and set a goal to break even the first six months and make a moderate profit for the next six months, at which time he would review his pricing strategies.  Within a week after opening, every seat was filled and he had to replenish his beverage orders several times.  At his six-month review, he was devastated to find that despite huge sales, he had actually lost money.  He realized it wasn’t his “math” that was wrong; he forgot to include monthly expenses such as toilet paper, paper towels, hand soap, and trash removal fees in his calculations.  These costs should have appeared as __________ in his break-even analysis.

a.   fixed costs

b.   marginal costs

c.   variable costs

d.   overhead costs

e.   sunk costs

The quantity at which total revenue and total cost are equal is referred to as

a.   break-even point.

b.   tipping point.

c.   profitability point.

d.   incremental return on investment.

e.   sustainability.

The break-even point (BEP) = [Fixed cost ÷ (Unit price − __________)].

a.   Total cost

b.   Total expense

c.   Marginal revenue

d.   Unit variable cost

e.   Total number of units produced or quantity

The break-even point (BEP) = [__________ ÷ (Unit price − Unit variable cost)].

a.   Total cost

b.   Total expense

c.   Fixed cost

d.   Unit variable cost

e.   Total number of units produced or quantity

The break-even point (BEP) = [Fixed cost ÷ (__________ − Unit variable cost)].

a.   Total cost

b.   Total expense

c.   Fixed cost

d.   Unit variable cost

e.   Unit price

The owner of a small restaurant that sells take-out fried chicken and biscuits pays each month $2,500 in rent, $500 in utilities, $750 interest on his loan, insurance premium of $200, and $250 on advertising on local buses.  A bucket of take-out chicken is priced at $9.50.  Unit variable costs for the bucket of chicken are $5.50.  How many small buckets of chicken does the restaurant need to sell to break-even each month?

a.   442 buckets

b.   764 buckets

c.   1,050 buckets

d.   3,150 buckets

e.   4,200 buckets

Each month, the owner of a carwash pays $2,500 in rent, $500 in utilities, $750 interest on the business loan, an insurance premium of $200, and $250 on advertising on local bus routes.  A full-service carwash is priced at $10.50.  Unit variable costs for the carwash are $7.50.  At what level of revenue will the carwash break even?

a.   $4,200

b.   $10,500

c.   $14,700

d.   $30,000

e.   $39,900

You have been asked to calculate the break-even point for a new line of souvenir T-shirts.  The selling price will be $25 per shirt.  The labor cost is $5 per shirt.  The administrative costs of operating the company are estimated to be $60,000 annually and the sales and marketing expenses are $20,000 a year.  Additionally, the cost of materials will be $10 per shirt.  What is the break-even quantity?

a.   2,000 shirts

b.   3,200 shirts

c.   5,334 shirts

d.   8,000 shirts

e.   16,000 shirts

Tim Marlow, the owner of The Clock Works, wanted to know how many clocks he must sell in order to cover his fixed cost at a given price.  Tim knew that he had a fixed cost of $20,000 for equipment, taxes, and a bank loan.  He also had a unit variable cost of $20 per clock for labor and materials.  If the price Tim charges for each of his clocks is $40, what is his break-even point quantity?

a.   100 clocks

b.   334 clocks

c.   500 clocks

d.   1,000 clocks

e.   10,000 clocks

Ampro-Mag is a small company that makes materials for safely controlling hazardous spills of all kinds.  It sells these items as a neutralizing kit priced at $100.  The costs of the materials that go into each kit are $45.  It costs $5 in labor to assemble a kit.  The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising in trade journals, and $3,500 for the monthly salary of its owner.  What is Ampro-Mag's monthly break-even point in terms of number of neutralizing kits sold?

a.   40 kits

b.   52 kits

c.   104 kits

d.   116 kits

e.   520 kits

 

In Figure 13-10A above, “X” represents

a.   fixed cost

b.   marginal cost

c.   variable cost

d.   marginal revenue

e.   MR = MC

In Figure 13-10A above, “Y” represents

a.   fixed cost

b.   marginal cost

c.   variable cost

d.   marginal revenue

e.   MR = MC

In Figure 13-10A above, “Z” represents

a.   MR = MC

b.   fixed cost

c.   marginal cost

d.   variable cost

e.   marginal revenue

A graphic presentation of the break-even analysis that shows when total revenue and total cost intersect to identify profit or loss for a given quantity sold is referred to as a __________.

a.   Gantt chart

b.   demand curve

c.   ROI analysis

d.   cross-tabulation

e.   break-even chart

A break-even chart refers to a graphic presentation

a.   that shows the maximum number of units that will be sold at a certain price.

b.   of a break-even analysis that shows when total revenue and total cost intersect to identify profit or loss for a given quantity sold.

c.   that relates variable costs in terms of product or service substitutes in order to determine which items or services would least affect total revenues.

d.   that relates profits and revenues versus total costs in order to determine the time frame in which a company could achieve profitability.

e.   in the form of a scatter graph used to identify specific activities or items that are creating the greatest return on investment.

 

In Figure 13-12 above, “A” identifies a

a.   cost point.

b.   price point.

c.   value point.

d.   sensitivity point.

e.   break-even point.

In Figure 13-12 above, “B” identifies

a.   fixed costs.

b.   a break-even point.

c.   variable costs.

d.   a profit.

e.   total revenue.

Figure 13-12 above shows that by selling 200 pictures, the firm will

a.   break even.

b.   earn a profit.

c.   incur a loss.

d.   have no fixed costs.

e.   have no variable costs.

According to Figure 13-12 above, how much profit will the firm make if it sells 400 pictures?

a.   $48,000

b.   $35,000

c.   $20,000

d.   $32,000

e.   $0

Figure 13-12 above shows that by selling 800 pictures, the firm will

a.   break even.

b.   earn a profit.

c.   incur a loss.

d.   have no fixed costs.

e.   have no variable costs.

Figure 13-12 above is drawn to show that variable costs are smaller than fixed costs when the firm sells

a.   400 pictures.

b.   900 pictures.

c.   1,000 pictures.

d.   1,200 pictures.

e.   There is not enough information to determine this.

You are president of a manufacturer of small electric appliances.  You want to reduce your break-even quantity.  All things being equal, you can do this by

a.   increasing the quantity sold, while keeping price unchanged.

b.   reducing marginal revenue.

c.   reducing unit variable cost.

d.   increasing fixed cost.

e.   increasing total cost.

Ace Shoe Company sells heel replacement kits for men’s shoes.  It has fixed costs of $9 million and unit variable costs of $5 per pair.  Ace is considering a switch from manual labor to an automated process.  New equipment would cost an additional $4 million per year while lowering variable costs by $3 per shoe repair kit.  How many kits would Ace have to sell at $17 per pair to make $2 million in profits in the next year with the automated process?

a.   117,648 kits

b.   428,572 kits

c.   705,883 kits

d.   916,667 kits

e.   1,000,000 kits

Jane Westerlund owns a picture-framing shop, The Caplow Co.  The average price she receives for a picture she frames for a customer is $120.  This price must cover her costs for a typical framed picture, which consists of $5 for glass, $2 for matting, $13 for the frame, and $30 for the labor involved.  She must also cover monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $3,500 for her salary.  Westerlund is considering buying an automatic matte-cutting machine in order to reduce the number of hours of direct labor required to produce a framed picture.  In considering this purchase, she should recognize this purchase will __________ Caplow’s variable cost and __________ Caplow’s fixed cost.

a.   decrease; increase

b.   decrease; decrease

c.   increase; decrease

d.   increase; increase

e.   have no effect on; have no effect on

Jane Westerlund owns a picture-framing shop, The Caplow Co.  The average price she receives for a picture she frames for a customer is $120.  This price must cover her costs for a typical framed picture, which consists of $5 for glass, $2 for matting, $13 for the frame, and $30 for the labor involved.  She must also cover monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $3,500 for her salary.  Assuming there is no change in price or the quantity demanded, if Westerlund wants to increase her advertising expenses to a total of $1,000 (a $500 increase), this would cause total costs to __________ and the break-even quantity to __________.

a.   decrease; stay the same

b.   increase; increase

c.   decrease; increase

d.   stay the same; increase

e.   stay the same; decrease

Ace Shoe Company sells heel replacement kits for men’s shoes.  It has fixed costs of $6 million and unit variable costs of $5 per pair.  Ace would like to earn a profit of $2 million; how many pairs must they sell at a price of $15?

a.   100,000 kits

b.   400,000 kits

c.   600,000 kits

d.   800,000 kits

e.   1,400,000 kits

Ace Shoe Company sells heel replacement kits for men’s shoes.  It has fixed costs of $6 million and unit variable costs of $5 per pair.  Suppose a consultant tells Ace it can sell 750,000 heel repair kits, what price must it charge to achieve a profit of $2.5 million?

a.   $5.00

b.   $8.33

c.   $11.33

d.   $16.33

e.   $20.00

A primary reason for Washburn’s success is

a.   underselling competitors by mass-producing fine-quality guitars.

b.   developing product lines at different price points for different market segments.

c.   offering significant price breaks to well-known performers in exchange for product endorsements.

d.   selling traditional American “rock ’n roll” guitars in global markets.

e.   setting up free music programs and donating low-price-point guitars to students in schools that have lost their music programs due to budget constraints.

Washburn Guitars markets its guitars to four distinct market segments.  The firm’s one-of-kind custom instruments are targeted at

a.   first-time buyers.

b.   professional musicians.

c.   stars and famous musicians.

d.   large institutional buyers such as high school and collegiate band programs.

e.   intermediate-skill players who may become professional musicians.

Washburn Guitars markets its guitars to four distinct market segments.  The firm’s batch-custom products instruments are targeted at

a.   first-time buyers.

b.   professional musicians.

c.   stars and famous musicians.

d.   large institutional buyers such as band programs.

e.   intermediate-skill players who may become professional musicians.

Washburn Guitars markets its guitars to four distinct market segments.  The firm’s mass customization instruments are targeted at

a.   first-time buyers.

b.   professional musicians.

c.   stars and famous musicians.

d.   large institutional buyers such as band programs.

e.   intermediate-skill players who may become professional musicians.

Washburn Guitars markets its guitars to four distinct market segments.  The firm’s mass-produced instruments are targeted at

a.   first-time buyers.

b.   professional musicians.

c.   stars and famous musicians.

d.   guitar collectors and music aficionados.

e.   intermediate-skill players who may become professional musicians.

The executive vice president of Washburn Guitars has set a sales target of 2,000 units for a new line of guitars.  This type of objective is most closely related to a(n) ________ pricing objective.

a.   profit

b.   target return

c.   unit volume

d.   market share

e.   survival

The average price Washburn Guitars charges for a guitar is $349.99.  This pricing level is most reflective of a(n) __________ approach.

a.   skimming price

b.   penetration price

c.   prestige price

d.   odd-even pricing

e.   target price

Washburn sells their guitars through a number of channels such as chains and online dealers, but they feel it is their independent dealers who sell the guitar for them.  In recognition of their hard work, Washburn takes a smaller profit margin from them because they have to do more work.  In essence, this special adjustment to the list price or quoted price is an example of a(n)

a.   quantity discount.

b.   seasonal discount.

c.   trade discount.

d.   cash discount.

e.   promotional allowance.

To reduce the price sensitivity for some of its products, Washburn

a.   uses multiple suppliers for its raw materials.

b.   offers three months of free music lessons with the purchase of each guitar.

c.   uses endorsements by internationally known musicians who play Washburn signature guitars.

d.   offers a lifetime, unconditional warranty on all its instruments regardless of the price of its guitars.

e.   sponsors free music programs and special Washburn guitar camps for children.

The average price Washburn charges for a guitar is $349.  This price must cover its variable costs of $25 for direct materials and $120 in direct labor.  It must also cover fixed expenses of $38,000.  Assuming everything else stays the same, the company’s planned move to Nashville, Tennessee, will reduce its fixed costs by $4,800.  This would cause total costs to __________ and the break-even quantity to __________.

a.   decrease; stay the same

b.   decrease; increase

c.   increase; increase

d.   stay the same; increase

e.   decrease; decrease

Washburn recently purchased Parker Guitar, another guitar manufacturer that designed products for professionals and collectors, and will combine the two production facilities into a new location.  Washburn expects the acquisition to reduce its rent and tax expenses by 40 percent, and the new skilled employees will reduce the hours of work needed for each unit by 15 percent.  This would cause the slope of the total cost curve to _________ and the break-even quantity to _________.

a.   decrease; stay the same

b.   decrease; increase

c.   increase; increase

d.   stay the same; increase

e.   decrease; decrease

 

North America’s fastest-growing HDTV and consumer electronics company is

a.   Samsung.

b.   Philips.

c.   LG.

d.   Sony.

e.   Vizio.

Vizio, Inc. is an up-and-coming contender in the __________ market.

a.   designer eyewear

b.   virtual media

c.   HDTV

d.   3D video game

e.   exotic travel

Vizio’s long-term goal for the next 20 to 30 years is to

a.   have at least one of its HDTV products in every single home in the United States.

b.   have its HDTVs exported from the U.S. to China.

c.   be the next Sony.

d.   be the next Apple.

e.   create the first completely wireless HDTV entertainments system.

In order to deliver a product that the average consumer can afford, Vizio

a.   handles product design and marketing in the United States and relies on contract manufacturers in Taiwan to build the product.

b.   uses mass customization in Taiwan and then ships the HDTVs to the United States.

c.   purchased a small company in China to distribute its products under the Vizio name.

d.   purchased a small company in Japan to distribute its products under the Vizio name.

e.   relies solely on recycled materials to build high quality, no-frills products.

According to Vizio, “The whole goal is to ensure that we have the right product, at the right time and the right price and __________.”

a.   forever rid the world of plugs and wires

b.   create customer value that is unmatched in the industry

c.   deliver it to the right people

d.   at the right place

e.   drive a seamless end-to-end value chain

 

According to Figure 14-1 above, “A” represents which step in the price-setting process?

a.   raise initial capital

b.   identify pricing objectives and constraints

c.   scan competitors for prices of similar products or services

d.   select the appropriate pricing formula

e.   establish the price range

According to Figure 14-1 above, “B” represents which step in the price-setting process?

a.   estimate demand and revenue

b.   identify pricing objectives and constraints

c.   scan competitors for prices of similar products or services

d.   select the appropriate pricing formula

e.   determine cost, volume, and profit relationships

According to Figure 14-1 above, “C” represents which step in the price-setting process?

a.   estimate demand and revenue

b.   identify pricing objectives and constraints

c.   scan competitors for prices of similar products or services

d.   determine cost, volume, and profit relationships

e.   establish the price range

According to Figure 14-1 above, “D” represents which step in the price-setting process?

a.   estimate demand and revenue

b.   select an approximate price level

c.   scan competitors for prices of similar products or services.

d.   determine cost, volume, and profit relationships

e.   identify pricing objectives and constraints

According to Figure 14-1 above, “E” represents which step in the price-setting process?

a.   set list or quoted price

b.   select an approximate price level

c.   scan competitors for prices of similar products or services

d.   determine cost, volume, and profit relationships

e.   identify pricing objectives and constraints

According to Figure 14-1 above, “F” represents which step in the price-setting process?

a.   set list or quoted price

b.   select an approximate price level

c.   scan competitors for prices of similar products or services

d.   make special adjustments to list or quoted price

e.   identify pricing objectives and constraints

 

Figure 14-1 above represents the six steps in the price-setting process.  Which letter represents the step where a firm would use a demand-oriented approach to setting price?

a.   “A”

b.   “B”

c.   “C”

d.   “D”

e.   “E”

Figure 14-1 above represents the six steps in the price-setting process.  Which letter represents the step where a firm would use a cost-oriented approach to setting price?

a.   “B”

b.   “C”

c.   “D”

d.   “E”

e.   “F”

Figure 14-1 above represents the six steps in the price-setting process.  Which letter represents the step where a firm would use a competition-oriented approach to setting price?

a.   “A”

b.   “F”

c.   “C”

d.   “E”

e.   “D”

Figure 14-1 above represents the six steps in the price-setting process.  Which letter represents the step where a firm would establish a one price or flexible price policy?

a.   “A”

b.   “F”

c.   “C”

d.   “E”

e.   “D”

Figure 14-1 above represents the six steps in the price-setting process.  Which letter represents the step where a firm would assess company, customer, and competitive effects on price?

a.   “B”

b.   “D”

c.   “F”

d.   “C”

e.   “E”

Figure 14-1 above represents the six steps in the price-setting process.  Which letter represents the step where a firm would balance incremental costs and revenues?

a.   “E”

b.   “F”

c.   “D”

d.   “C”

e.   “A”

Figure 14-1 above represents the six steps in the price-setting process.  Which letter represents the step where a firm would offer discounts?

a.   “E”

b.   “D”

c.   “F”

d.   “C”

e.   “B”

Figure 14-1 above represents the six steps in the price-setting process.  Which letter represents the step where a firm would offer allowances?

a.   “F”

b.   “E”

c.   “D”

d.   “C”

e.   “B”

Figure 14-1 above represents the six steps in the price-setting process.  Which letter represents the step where a firm would make geographical adjustments?

a.   “D”

b.   “B”

c.   “E”

d.   “F”

e.   “C”

 

Figure 14-1 above represents the six steps in the price-setting process.  Which letter represents the step where a firm would consider a demand-, cost-, profit-, or competition-oriented approach?

a.   “B”

b.   “C”

c.   “D”

d.   “E”

e.   “F”

Figure 14-1 above represents the six steps in the price-setting process.  Which letter represents the step where a firm would consider a one price or flexible price strategy; company, customer and competitive effects; and incremental costs and revenues?

a.   “B”

b.   “C”

c.   “D”

d.   “E”

e.   “F”

Figure 14-1 above represents the six steps in the price-setting process.  Which letter represents the step where a firm would consider discounts, allowances, and geographical adjustments to arrive at the final price?

a.   “B”

b.   “C”

c.   “D”

d.   “E”

e.   “F”

The key to setting a final price for a product is finding an approximate price level to use as a reasonable starting point.  Four common approaches to selecting an approximate price level are: (1) demand-oriented; (2) __________; (3) profit-oriented; and (4) competition-oriented approaches.

a.   cost-oriented

b.   cause-oriented

c.   revenue-oriented

d.   stakeholder-oriented

e.   distribution-oriented

The key to setting a final price for a product is finding an approximate price level to use as a reasonable starting point.  Four common approaches to selecting an approximate price level are: (1) demand-oriented; (2) cost-oriented; (3) __________; and (4) competition-oriented approaches.

a.   stakeholder-oriented

b.   revenue-oriented

c.   profit-oriented

d.   distribution-oriented

e.   cause-oriented

The key to setting a final price for a product is finding an approximate price level to use as a reasonable starting point.  Four common approaches to selecting an approximate price level are: (1) demand-oriented; (2) cost-oriented; (3) profit-oriented; and (4) __________ approaches.

a.   revenue-oriented

b.   distribution-oriented

c.   stakeholder-oriented

d.   competition-oriented

e.   cause-oriented

 

Figure 14-2 above represents the four approaches to selecting an appropriate price level.  “A” represents which approach?

a.   cost-oriented approach

b.   profit-oriented approach

c.   competition-oriented approach

d.   demand-oriented approach

e.   results-oriented approach

Figure 14-2 above represents the four approaches to selecting an appropriate price level.  “B” represents which approach?

a.   demand-oriented approach

b.   profit-oriented approach

c.   competition-oriented approach

d.   results-oriented approach

e.   cost-oriented approach

Figure 14-2 above represents the four approaches to selecting an appropriate price level.  “C” represents which approach?

a.   demand-oriented approach

b.   cost-oriented approach

c.   profit-oriented approach

d.   competition-oriented approach

e.   results-oriented approach

Figure 14-2 above represents the four approaches to selecting an appropriate price level.  “D” represents which approach?

a.   competition-oriented approach

b.   demand-oriented approach

c.   cost-oriented approach

d.   profit-oriented approach

e.   results-oriented approach

Which of the following statements about the price-setting process is most accurate?

a.   When selecting a strategy for setting an initial price, it doesn’t matter which one you use as long as you stick with it.

b.   Sometimes pricing strategies overlap, and a seasoned marketer will consider several strategies when choosing an approximate price level.

c.   Demand-oriented pricing approaches rely heavily on competitors’ prices.

d.   Skimming pricing is a competition-oriented pricing strategy.

e.   Penetration pricing is the best pricing strategy for companies trying to meet the goals of a profit-oriented pricing approach.

Demand-oriented approaches weigh factors that underlie expected __________ more heavily than such factors as cost, profit, and competition when selecting a price level.

a.   total revenue

b.   stakeholder concerns

c.   prevailing prices

d.   product substitutes

e.   customer tastes

All of the following are demand-oriented approaches to selecting an approximate price level EXCEPT:

a.   odd-even.

b.   yield management.

c.   customary.

d.   bundle.

e.   prestige.

Skimming pricing is considered to be a __________ approach to pricing.

a.   demand-oriented

b.   cost-oriented

c.   profit-oriented

d.   competition-oriented

e.   service-oriented

Setting the highest initial price that customers really desiring the product are willing to pay when introducing a new or innovative product is referred to as a

a.   skimming strategy.

b.   penetration strategy.

c.   price-lining strategy.

d.   experience-curve pricing strategy.

e.   prestige pricing strategy.

Skimming pricing refers to

a.   setting the lowest initial price possible when introducing a new or innovative product in order to “skim” sales from competitors.

b.   setting the highest initial price that customers really desiring the product are willing to pay when introducing a new or innovative product.

c.   setting a low initial price on a new product to appeal immediately to the mass market.

d.   the practice of replacing promotional allowances with higher manufacturer list prices.

e.   setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it.

Skimming pricing is a strategy that introduces a new or innovative product by

a.   following a price elastic strategy.

b.   creating multiple price points.

c.   setting a high initial price.

d.   setting a low initial price.

e.   setting the price at the average of competitors’ prices.

A skimming pricing policy is likely to be most effective when

a.   consumers perceive one product to be similar to other products on the market.

b.   a lower price will significantly lower fixed costs.

c.   competitors will be attracted to the market due to the potential for high sales revenues.

d.   consumers tend to be price sensitive.

e.   the high initial price will not attract competitors.

A skimming pricing policy is likely to be most effective when

a.   consumers perceive your product to be similar to other products on the market.

b.   a lower price will significantly lower fixed costs.

c.   customers interpret high price as signifying high quality.

d.   consumers tend to be price sensitive.

e.   it will be easier to set measurable sales unit goals.

A skimming pricing policy is likely to be most effective when

a.   consumers tend to be price sensitive.

b.   it will be easier to set measurable sales unit goals.

c.   a lower price will significantly lower fixed costs.

d.   consumers perceive your product to be similar to other products on the market.

e.   lowering the price has only a minor effect on increasing sales volume and reducing unit costs.

A skimming pricing policy is likely to be most effective when

a.   consumers tend to be price sensitive.

b.   it will be easier to set measurable sales unit goals.

c.   a lower price will significantly lower fixed costs.

d.   customers are willing to buy immediately at the high initial price.

e.   consumers perceive your product to be similar to other products on the market.

A skimming pricing policy is likely to be most effective when: (1) lowering the price has only a minor effect on increasing sales volume and reducing unit costs; (2) when the high initial price does not attract competitors; (3) customers interpret high price as signifying high quality; and (4) __________.

a.   enough customers are willing to buy immediately at the high initial price

b.   consumers tend to be price sensitive

c.   it will be easier to set measurable sales unit goals

d.   a lower price will significantly reduce unit costs

e.   consumers perceive your product to be similar to other products on the market

A skimming pricing policy is likely to be most effective when: (1) enough customers are willing to buy immediately at the high initial price; (2) lowering the price has only a minor effect on increasing sales volume and reducing unit costs; (3) customers interpret high price as signifying high quality; and (4) __________.

a.   consumers perceive your product to be similar to other products on the market

b.   a lower price will significantly reduce unit costs

c.   consumers tend to be price sensitive

d.   it will be easier to set measurable sales unit goals

e.   when the high initial price does not attract competitors

A skimming pricing policy is likely to be most effective when: (1) enough customers are willing to buy immediately at the high initial price; (2) when the high initial price does not attract competitors; (3) customers interpret high price as signifying high quality; and (4) __________.

a.   consumers tend to be price sensitive

b.   lowering the price has only a minor effect on increasing sales volume and reducing unit costs

c.   a lower price will significantly reduce unit costs

d.   it will be easier to set measurable sales unit goals

e.   consumers perceive the product to be similar to other products on the market

A skimming pricing policy is likely to be most effective when: (1) enough customers are willing to buy immediately at the high initial price; (2) lowering the price has only a minor effect on increasing sales volume and reducing unit costs; (3) when the initial high prices do not attract competitors; and (4) __________.

a.   consumers perceive your product to be similar to other products on the market

b.   a lower price will significantly reduce unit costs

c.   when customers interpret the high price as signifying high quality

d.   consumers tend to be price sensitive

e.   it will be easier to set measurable sales unit goals

A manufacturer of a digital video recorder (DVR) is thinking of using a skimming pricing strategy for its new product.  Which of the following conditions would argue AGAINST using a skimming pricing strategy for the DVR?

a.   large potential market, even at a high price

b.   technological problems still exist for competitors

c.   increasing volume reduces production costs substantially

d.   consumers perceive a price-quality relationship

e.   consumers are innovators

Hallmark was the official supplier of flowers at the last Winter Olympics.  Hallmark presented each Olympic winner with a special bouquet of roses designed to resemble the Olympic torch.  Consumers were able to buy a smaller version of this same bouquet at the Hallmark website for $74.95.  The Olympic bouquet that consumers could buy contained two dozen yellow roses, yet you could buy the same two dozen yellow roses for less than $35 at most supermarkets.  If Hallmark is treating the Olympic bouquet as an innovative product, then it is using which demand-oriented pricing approach?

a.   bundle pricing

b.   yield management pricing

c.   skimming pricing

d.   target return-on-sales pricing

e.   penetration pricing

The Apple iPhone was introduced at an initial price of $600.  People waited in line overnight so they could be one of the first to own this unique smartphone.  Which pricing strategy did Apple use to help recoup its research and development costs for the smartphone?

a.   penetration pricing

b.   experience curve pricing

c.   customary pricing

d.   skimming pricing

e.   target pricing

When microwave ovens were in the introduction stage of their product life cycle, some consumers were willing to pay exorbitant prices for these innovative ovens.  Taking advantage of this strong consumer desire, marketers set the price for microwave ovens at the highest initial price possible.  Marketers of microwave ovens used a __________ pricing strategy.

a.   skimming

b.   penetration

c.   prestige

d.   price lining

e.   bundle

The first Apple iPad was introduced in 2010 at an initial price of $650 for the 16 GB version.  People waited in line overnight so they could be one of the first to own this unique tablet device.  Which pricing strategy did Apple use to help recoup its research and development costs for the iPad?

a.   price lining

b.   penetration pricing

c.   customary pricing

d.   skimming pricing

e.   target pricing

Penetration pricing is considered to be a __________ approach to pricing.

a.   demand-oriented

b.   cost-oriented

c.   profit-oriented

d.   competition-oriented

e.   service-oriented

Penetration pricing refers to

a.   charging different prices to different buyers for goods of like grade and quality.

b.   setting the highest initial price that customers really desiring the product are willing to pay.

c.   setting a low initial price on a new product to appeal immediately to the mass market.

d.   setting a market price for a product or product class based on a subjective feel for the competitors’ prices or market price.

e.   setting prices a few dollars or cents under an even number.

The pricing strategy that is almost the exact opposite of skimming pricing is

a.   target pricing.

b.   penetration pricing.

c.   price lining.

d.   odd-even pricing.

e.   prestige pricing.

Penetration pricing is intended to appeal to which market?

a.   highly selective, quality-seeking consumers

b.   price-insensitive markets

c.   specialty product markets

d.   the same markets as those targeted with a skimming pricing strategy

e.   the mass market

Which of the following statements about penetration pricing is most accurate?

a.   Penetration pricing is a profit-oriented approach to pricing.

b.   Penetration pricing is a cost-oriented pricing method.

c.   Penetration pricing encourages competitors to enter a market.

d.   Penetration pricing is more effective in a marketplace with price-sensitive consumers.

e.   Penetration pricing usually precedes a skimming pricing.

A penetration pricing policy is MOST LIKELY to be effective when

a.   lowering the price has only a minor effect on increasing sales volume and reducing unit costs.

b.   many segments of the market are price sensitive.

c.   the high initial prices do not attract competitors.

d.   customers interpret high price as signifying high quality.

e.   customers are willing to buy immediately at the high initial price.

A penetration pricing policy is MOST LIKELY to be effective when

a.   lowering the price has only a minor effect on increasing sales volume and reducing unit costs.

b.   the high initial prices do not attract competitors.

c.   a low initial price discourages competitors from entering the market.

d.   customers interpret high price as signifying high quality.

e.   customers are willing to buy immediately at the high initial price.

A penetration pricing policy is MOST LIKELY to be effective when

a.   unit production and marketing costs fall dramatically as production volumes increase.

b.   customers are willing to buy immediately at the high initial price.

c.   lowering the price has only a minor effect on increasing sales volume and reducing unit costs.

d.   the high initial prices do not attract competitors.

e.   customers interpret high price as signifying high quality.

A penetration pricing policy is MOST LIKELY to be effective when: (1) __________; (2) unit production and marketing costs fall dramatically as production volume increases; and (3) many segments of the market are price sensitive.

a.   lowering the price has only a minor effect on increasing sales volume and reducing unit costs

b.   the high initial prices do not attract competitors

c.   customers interpret high prices as signifying high quality

d.   customers are willing to buy immediately at the high initial price

e.   a low initial price discourages competitors from entering the market

A penetration pricing policy is MOST LIKELY to be effective when: (1) a low initial price discourages competitors from entering the market; (2) unit production and marketing costs fall dramatically as production volume increases; and (3) __________.

a.   lowering the price has only a minor effect on increasing sales volume and reducing unit costs

b.   when the high initial prices do not attract competitors

c.   when customers interpret high prices as signifying high quality

d.   many segments of the market are price sensitive

e.   customers are willing to buy immediately at the high initial price

A penetration pricing policy is MOST LIKELY to be effective when: (1) many segments of the market are price sensitive; (2) a low initial price discourages competitors from entering the market; and (3) _________.

a.   unit production and marketing costs fall dramatically as production volumes increase

b.   customers are willing to buy immediately at the high initial price

c.   lowering the price has only a minor effect on increasing sales volume and reducing unit costs

d.   when the high initial prices do not attract competitors

e.   when customers interpret high prices as signifying high quality

In some cases, penetration pricing may follow skimming pricing.  The skimming pricing would help __________ and the penetration pricing would help__________.

a.   increase market share; attract price-insensitive customers

b.   attract price sensitive customers; increase market share

c.   recoup initial research and development costs; increase market share

d.   recoup initial research and development costs; maintain market share

e.   increase market share; attract price insensitive customers

Wrigley recently introduced a new flavor of Orbit brand sugar free chewing gum—mint mojito.  The introductory price was low so that it quickly created loyal customers for the flavor.  In this example, Wrigley used

a.   skimming pricing.

b.   penetration pricing.

c.   price lining.

d.   odd-even pricing.

e.   loss-leader pricing.

When Hallmark cards introduced a line of 99-cent cards (about half the price of the previously least expensive cards it sold), the greeting card company was trying to appeal to a mass market that was price sensitive.  Hallmark was using a __________ pricing strategy.

a.   prestige

b.   skimming

c.   target ROI

d.   penetration

e.   experience-curve

The manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product.  Which of the following conditions would argue AGAINST using a penetration pricing strategy for the tasty fat-free ice cream?

a.   The ice cream market is highly conservative.

b.   Economies of scale in production would be substantial.

c.   Retailers are not willing to carry new brands of ice cream in the already overcrowded category.

d.   Once the initial price is set, it is nearly impossible to lower the price without alienating early buyers.

e.   The ice cream market exhibits inelastic demand over a fairly broad range of prices.

Prestige pricing refers to

a.   charging different prices to different buyers for goods of like grade and quality.

b.   setting a low initial price on a new product to appeal immediately to the mass market odd-even pricing.

c.   setting a market price for a product or product class based on a subjective feel for the competitors’ price or market price.

d.   setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it.

e.   setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors.

Setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it is referred to as

a.   skimming pricing.

b.   status pricing.

c.   price lining.

d.   value pricing.

e.   prestige pricing.

Prestige pricing is considered to be a __________ approach to pricing.

a.   demand-oriented

b.   cost-oriented

c.   profit-oriented

d.   competition-oriented

e.   service-oriented

A manufacturer using _________ is setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it.

a.   skimming pricing

b.   penetration pricing

c.   price lining

d.   odd-even pricing

e.   prestige pricing

Talbot’s sells women’s clothes.  A T-shirt with the Talbot’s label costs $25.  By comparison,  you can buy a T-shirt for $5 at a Family Dollar Store, but it won’t have the Talbot’s label or quality.  What kind of demand-oriented approach to pricing does Talbot’s use?

a.   experience curve pricing

b.   skimming pricing

c.   demand-backward pricing

d.   prestige pricing

e.   flexible pricing

You can buy a General Electric dishwasher for $399 or you can buy a similar Bosch brand dishwasher for $989.  Since Bosch uses its pricing strategy to project a high-quality product image, it is most likely using __________ pricing.

a.   bundle

b.   standard markup

c.   prestige

d.   penetration

e.   cost plus fixed-fee

Mercedes-Benz cars and a Patek Philippe Platinum World Time wristwatch have a common characteristic—they have an element of _________.

a.   penetration pricing

b.   target pricing

c.   bundle pricing

d.   yield-management pricing

e.   prestige pricing

 

Figure 14-3A above shows a demand curve that slopes downward and to the right, then turns back to the left.  Which pricing approach does Figure 14-3A depict?

a.   prestige pricing

b.   skimming pricing

c.   penetration pricing

d.   price lining

e.   reflexive pricing

Figure 14-3A above is a graph that shows which pricing strategy?

a.   skimming

b.   penetration

c.   cost-plus

d.   price lining

e.   prestige

The movement from point A to point B in Figure 14-3A above shows

a.   skimming demand.

b.   penetration demand.

c.   that buyers see the product as a bargain and buy more.

d.   that buyers become dubious about the quality and prestige and buy less.

e.   a downturn in the economy.

The movement from point B to point C in Figure 14-3A above shows

a.   an increased demand for the product at a lower price.

b.   derived demand.

c.   that buyers see the product as a bargain and buy more.

d.   that buyers become dubious about the quality and prestige and buy less.

e.   a downturn in the economy.

Figure 14-3B above illustrates which type of pricing approach?

a.   skimming

b.   penetration

c.   cost-plus

d.   price lining

e.   prestige

In response to Duracell’s introduction of the Duracell Ultra battery, Energizer introduced an Advanced Formula battery.  But unlike Duracell, Energizer priced its batteries at a low initial price to attract the mass market.  Energizer used

a.   penetration pricing.

b.   prestige pricing.

c.   skimming pricing.

d.   price lining.

e.   cost-plus fixed-fee pricing.

In response to Duracell’s introduction of the Duracell Ultra battery, Energizer introduced an Advanced Formula battery.  But unlike Duracell, Energizer priced its batteries at a low initial price to attract the mass market.  Was Energizer’s pricing strategy to take market share from Duracell a success?

a.   No, because consumers are price-insensitive when it comes to batteries.

b.   Yes, because of the positive association with the “Energizer Bunny” marketing campaign.

c.   No, because consumers equate quality of batteries with higher prices.

d.   Yes, because consumers typically respond positively to cost-plus pricing.

e.   Yes, because the demand for batteries has unitary elasticity.

Setting the price of a line of products at a number of different specific price points is referred to as __________.

a.   odd-even pricing

b.   bundle pricing

c.   cost-plus pricing

d.   price lining

e.   prestige pricing

Price lining refers to

a.   charging different prices to different buyers for goods of like grade and quality.

b.   setting a low initial price on a new product to appeal immediately to the mass market.

c.   setting a market price for product or product class based on a subjective feel for the competitors’ price or market price.

d.   setting prices a few dollars or cents under an even number.

e.   setting the price of a line of products at a number of different specific price points.

Price lining is considered to be a __________ approach to pricing.

a.   cost-oriented

b.   demand-oriented

c.   profit-oriented

d.   competition-oriented

e.   service-oriented

When using a price lining strategy, a marketer will

a.   set the price of a line of products at a number of different specific pricing points.

b.   set the price slightly higher than necessary to protect against losses from environmental factors.

c.   adjust the price of a product so it is “in line” with the price of its largest competitor.

d.   set a low initial price on a new product to appeal immediately to the mass market.

e.   set a market price for product or product class based on a subjective feel for the competitors’ price or market price.

The assumption that demand is elastic at a number of price points but is inelastic between these price points leads to which pricing approach?

a.   product line pricing

b.   skimming pricing

c.   penetration pricing

d.   price lining

e.   odd-even pricing

Which of the following statements regarding price lining is most accurate?

a.   In order for price lining to be effective, there should be at least 10 specified price points.

b.   Price lining assumes that demand is inelastic at each price point but elastic between price points.

c.   Price lining assumes that demand is elastic at each price point but inelastic between price points.

d.   Price lining is the preferred pricing strategy for governmental contracts.

e.   Price lining is the same as above-, at-, or below-market pricing.

In some cases, manufacturers design products for different price points and retailers apply __________ to achieve the three or four different price points offered to consumers.

a.   progressively higher markup percentages

b.   different markup percentages depending how long the item remains on their shelves

c.   above-, at-, or below-market pricing

d.   approximately the same markup percentages

e.   elasticity of demand pricing calculations

A retailer purchased a gross of silk shells each costing exactly $17 apiece.  Although the only difference between the shells was color, when they were put on the floor, the primary colors were marked $25, the pastel colors were marked $28, and the black-and-white shells were marked $30.  These prices were set most likely because

a.   retailers using a price lining strategy will occasionally mark up items based on color, style, and expected consumer demand.

b.   fewer people buy black-and-white shells, so the retailer has to charge a higher price to break even.

c.   the retailer is using prestige pricing; black-and-white shells are more elegant.

d.   the primary colors were priced using a penetration strategy, the pastels were priced using a skimming strategy, and the black-and-white shells were priced using prestige pricing.

e.   price lining is essentially the same as above-, at-, or below market pricing.

Odd-even pricing refers to

a.   setting prices one way for product lines and another way for individual brands.

b.   setting prices of luxury items at even price points and setting the price of necessities at odd price points.

c.   setting prices a few dollars or cents under an odd number.

d.   adding a fixed percentage to the cost of all items in a specific product class.

e.   setting prices a few dollars or cents under an even number.

Setting prices a few dollars or cents under an even number is referred to as __________.

a.   odd-even pricing

b.   prestige pricing

c.   price lining

d.   above-, at-, or below-market pricing

e.   every day fair pricing

Odd-even pricing is considered to be a __________ approach to pricing.

a.   cost-oriented

b.   profit-oriented

c.   demand-oriented

d.   competition-oriented

e.   service-oriented

Odd-even pricing is based on

a.   retailers’ perceptions of price.

b.   customers’ perceptions of price.

c.   wholesalers’ markups.

d.   manufacturers’ perceptions of price.

e.   government regulators’ perceptions of price.

Odd-even pricing is most closely related to

a.   retailers’ perceptions of price.

b.   wholesalers’ markups.

c.   a manufacturer’s costs.

d.   competitors’ perceptions of price.

e.   customers’ perceptions of price.

Which of the following statements regarding odd-even pricing is most accurate?

a.   Odd-even pricing is designed to give the consumer a better set of pricing alternatives.

b.   Odd-even pricing can be used in conjunction with a skimming strategy, but should not be used with a penetration strategy.

c.   Odd-even pricing does not work if the product is healthcare-related.

d.   Overuse of odd-ending prices tends to mute its effect on demand.

e.   Odd-ending prices are best used with large ticket items; it loses its effectiveness with moderate- to low-ticket items.

The prices for all furniture sold at American Furniture Warehouse end in $9, such as $599.99, $899.99, etc.  American Furniture Warehouse uses

a.   odd-even pricing.

b.   dynamic pricing.

c.   price lining.

d.   bundle pricing.

e.   product line pricing.

Target pricing refers to

a.   a method of selecting specific prices wholesalers and retailers are willing to pay based upon the elasticity of each given item.

b.   a method of charging different prices to maximize revenue for a set amount of capacity at any given time.

c.   the practice of simultaneously increasing product and service benefits while maintaining or decreasing price.

d.   a method of estimating the price that ultimate consumers would be willing to pay for a product, then working backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers..

e.   a method of estimating the price that ultimate consumers would be willing to pay for a product, then determining how much wholesalers wish to charge its customers, deliberately adjusting the composition and features of the product to achieve the target price to consumers.

The pricing approach that: (1) estimates the price that ultimate consumers would be willing to pay for a product; (2) works backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers; and (3) results in the manufacturer deliberately adjusting the composition and features of the product to achieve the target price to consumers is referred to as __________.

a.   cost-benefit pricing

b.   cost-plus percentage-of-cost pricing

c.   target pricing

d.   cost-plus fixed-fee pricing

e.   product feature pricing

Which of the following pricing techniques is most sensitive to customers’ responses to price?

a.   cost-plus percentage-of-cost pricing

b.   target pricing

c.   experience curve pricing

d.   cost-plus fixed-fee pricing

e.   standard markup pricing

Which of the following pricing techniques results in the manufacturers deliberately adjusting the composition and features of a product to achieve the target price to consumers?

a.   cost-plus percentage-of-cost pricing

b.   standard markup pricing

c.   cost-plus fixed-fee pricing

d.   experience curve pricing

e.   target pricing

The Swedish manufacturer of Asko dishwashers concluded that consumers would be willing to pay approximately $989 for a dishwasher that was quieter than any other machine on the market.  Based on this price, Asko determined the margins that would have to be given to wholesalers and retailers to arrive at the $989 retail price.  Asko used

a.   prestige pricing.

b.   price lining.

c.   cost-plus pricing.

d.   target pricing.

e.   customary pricing.

Marketing two or more products in a single package price is referred to as

a.   package pricing.

b.   loss-leader pricing.

c.   bundle pricing.

d.   tie-in pricing.

e.   multi-product pricing.

Bundle pricing refers to

a.   an extra amount of “free goods” awarded sellers in the channel of distribution for promoting a product.

b.   marketing two or more products in a single package price.

c.   deliberately selling a product below its customary price, not to increase sales, but to attract customers’ attention in hopes that they will buy other products as well.

d.   setting the price of a line of products at two specific pricing points.

e.   the practice of charging two or more prices depending upon the outlet carrying the product.

Which of the following is a demand-oriented approach to pricing?

a.   customary pricing

b.   target profit pricing

c.   standard markup pricing

d.   bundle pricing

e.   service-oriented pricing

Bundle pricing is considered to be a __________ pricing practice.

a.   demand-oriented

b.   cost-oriented

c.   profit-oriented

d.   competition-oriented

e.   product line-oriented

Which one of the following statements regarding bundle pricing is most accurate?

a.   Bundle pricing is intended to benefit the consumer, not the seller.

b.   Bundle pricing is really “bundle packaging” since the price charged is for two or more products that are shrink-wrapped together.

c.   Bundle pricing is often associated with a skimming strategy.

d.   Bundle pricing often provides a lower total cost to buyers and lower marketing costs to sellers.

e.   Bundle pricing is based on the idea that consumers value the individual items more than they value the group contained in the package.

If you were to buy one peach tree and one apple tree from the Stark Bros. fruit trees and landscaping catalog in two separate orders, you would pay a total of $108.99.  However, if you order the peach and apple tree together in the same order, you pay only $89.99.  When purchasing the two trees together, what pricing strategy does Stark Bros. employ?

a.   product line pricing

b.   prestige pricing

c.   price lining

d.   discount pricing

e.   bundle pricing

When Dell sells various laptops, it also pre-installs Microsoft Office and other software customers order at a discount before a laptop is shipped.  This is an example of

a.   price lining.

b.   product line pricing.

c.   bundle pricing.

d.   customary pricing.

e.   prestige pricing.

A box of Cascade dishwasher detergent shrink-wrapped with a bottle of Jet Dry for 10 cents more than the regular price of the dishwasher detergent is an example of __________ pricing.

a.   penetration

b.   prestige

c.   bundle

d.   odd-even

e.   standard mark-up

Individuals can choose to purchase Microsoft stand-alone software packages, such as the Home and Student versions of Word, Excel, and PowerPoint, for $119.99 each.  However, they may choose to purchase the Office Home and Student 2010 suite, which has all of these applications in the same package, for a price of $149.99.  Microsoft is using a __________ pricing strategy.

a.   penetration

b.   prestige

c.   bundle

d.   odd-even

e.   standard mark-up

Yield management pricing refers to

a.   controlling the production of products based upon seasonal demand.

b.   deliberately selling a product below its customary price, not to increase sales, but to attract customers’ attention in hopes that they will buy other products as well.

c.   charging different prices during different times of the day or days of the week to reflect variations in demand for the service.

d.   offering significant price discounts to wholesalers who agree to purchase products in advance for a period of a year or more at a time.

e.   charging different prices to maximize revenue for a set amount of capacity at any given time.

Charging different prices to maximize revenue for a set amount of capacity at any given time is referred to as

a.   demand backward pricing.

b.   target pricing.

c.   skimming pricing.

d.   yield management pricing.

e.   penetration pricing.

Yield management is considered to be a __________ approach to pricing.

a.   demand-oriented

b.   cost-oriented

c.   profit-oriented

d.   competition-oriented

e.   service-oriented

Yield management pricing is most consistent with services trying to deal with

a.   perceived risk.

b.   capacity management.

c.   cognitive dissonance.

d.   inelasticity of demand.

e.   new product strategy development.

While __________ often changes price based upon color or style, __________ often changes prices based on time, day, week, or season.

a.   prestige pricing; skimming pricing

b.   yield management pricing; bundle pricing

c.   price lining; yield management pricing

d.   target pricing; target return on investment pricing

e.   bundle pricing; standard markup pricing

One problem in the interstate trucking industry is the number of trucks that return empty after making a delivery.  There is a website where independent interstate truckers can look for loads to carry on their return trips.  Because the trucks would normally return empty, truckers who use this website to generate business they would not have had otherwise, receive a reduced shipping rate.  This reduced rate is an example of

a.   penetration pricing.

b.   target pricing.

c.   cost-plus pricing.

d.   odd-even pricing.

e.   yield management pricing.

Airlines, hotels, and car rental firms engage in _________ by varying prices based on time, day, week, or season to match supply and demand.

a.   skimming pricing

b.   yield management pricing

c.   bundle pricing

d.   target pricing

e.   prestige pricing

Which of the following is a cost-oriented pricing method?

a.   loss leader pricing

b.   standard markup pricing

c.   at-, above-, or below-market pricing

d.   price lining

e.   penetration pricing

Which of the following is a cost-oriented approach to pricing?

a.   cost-plus pricing

b.   skimming pricing

c.   prestige pricing

d.   loss-leader pricing

e.   bundle pricing

Which of the following is a cost-oriented approach to pricing?

a.   skimming pricing

b.   prestige pricing

c.   loss-leader pricing

d.   experience curve pricing

e.   bundle pricing

All of the following are cost-oriented approaches to select an approximate price level EXCEPT:

a.   cost-plus fixed-fee pricing.

b.   standard markup pricing.

c.   yield management.

d.   experience curve pricing.

e.   cost-plus percentage-of-cost pricing.

With a __________ pricing strategy, a price setter stresses the __________ side of the pricing problem.

a.   demand-oriented; cost

b.   supply-oriented; target ROI

c.   competition-oriented; marketing channel

d.   cost-oriented; cost

e.   profit-oriented; revenue

With cost-oriented approaches, a price setter stresses the cost side of the pricing problem, not the __________ side.

a.   shareholder equity

b.   income

c.   service

d.   supply

e.   demand

With cost-oriented approaches to pricing, a price setter stresses the __________ side of the pricing problem, not the __________ side.

a.   cost; revenue

b.   cost; demand

c.   cost; profit

d.   cost; supply

e.   cost; service

With a cost-oriented pricing strategy, a price setter stress the __________ side of the pricing problem and the price is set by looking at _________.

a.   demand; revenue

b.   production and marketing; profit

c.   demand; target sales

d.   cost; production and marketing costs

e.   cost; consumer demand

Which of the following statements regarding cost-oriented approaches is most accurate?

a.   These methods focus on the demand side of the pricing problem.

b.   These methods focus on production and marketing expenses.

c.   Target return on investment is an example of a cost-oriented method.

d.   Experience curve pricing is simple to use because costs predictably decrease by 25 percent with each doubling of production.

e.   Cost-oriented approaches are subcategories of competition-oriented methods.

Standard markup pricing is considered to be a __________ approach to pricing.

a.   demand-oriented

b.   profit-oriented

c.   cost-oriented

d.   competition-oriented

e.   service-oriented

Standard markup pricing refers to

a.   adjusting the price of a product so it is “in line” with that of its largest competitor.

b.   setting the price of a line of products at a number of different price points.

c.   setting prices to achieve a profit that is a specified percentage of the sales volume.

d.   increasing the price slightly to protect against undue profit losses from unforeseen environmental forces.

e.   adding a fixed percentage to the cost of all items in a specific product class.

Adding a fixed percentage to the cost of all items in a specific product class is referred to as

a.   target profit pricing.

b.   standard markup pricing.

c.   target return-on-investment pricing.

d.   customary pricing.

e.   everyday low pricing.

Creative Quilts Studio sells hundreds of colors and types of fabric and thread.  To price its inventory, the owners add 50 percent to the cost of each bolt of fabric and every spool of thread.  What is this pricing approach called?

a.   target return-on-sales pricing

b.   flexible pricing

c.   cost-plus pricing

d.   standard markup pricing

e.   customary pricing

Assume it costs Lady Marion Seafood, Inc. $30 to catch, process, freeze, package, and ship 5-pound packages of Alaskan salmon.  The firm adds 60 percent to the cost of its salmon products and charges customers $48 for a postage-paid vacuum-sealed package.  What type of pricing does Lady Marion Seafood use to arrive at its final price?

a.   target return-on-sales pricing

b.   standard markdown pricing

c.   standard markup pricing

d.   target profit pricing

e.   customary pricing

Supermarket managers use standard markup pricing because it is particularly suited to situations when

a.   there is a large number of products and estimating the demand for each would be difficult and time consuming.

b.   there is a large number of product lines, all with basically the same product attributes.

c.   there is a specific profit goal that needs to be achieved.

d.   there is a policy of selling every item in a product line at the same price regardless of the product class.

e.   the products are perishable or seasonal.

Summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price is referred to as __________.

a.   standard markup pricing

b.   experience curve pricing

c.   cost-plus pricing

d.   product-line pricing

e.   target return-on-investment pricing

Cost-plus pricing refers to

a.   summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at the price.

b.   setting the price of a line of products at a number of different price points.

c.   adding a fixed percentage to the cost of all items in a specific product class.

d.   setting prices to achieve a profit that is a specified percentage of the sales volume.

e.   increasing the price slightly to protect against undue profit losses from unforeseen environmental factors.

The two forms of cost-plus pricing are

a.   cost-plus fixed-fee pricing and cost-plus variable-fee pricing.

b.   cost-plus ROI pricing and cost-minus markdown pricing.

c.   target return on sales pricing and target return on investment pricing.

d.   cost-plus percentage-of-cost pricing and cost-plus fixed-fee pricing.

e.   dynamic pricing and flexible pricing.

The most commonly used pricing method for business products is __________.

a.   target return on investment

b.   customary

c.   standard markup

d.   target profit

e.   cost-plus pricing

While the most commonly used pricing method for business products is cost-plus pricing, this method is becoming more and more popular among __________ in the service sector.

a.   e-businesses

b.   business-to-consumer firms

c.   business-to-government sellers

d.   nonprofit organizations

e.   business-to-business marketers

Architectural firms that specialize in designing and constructing one-of-a-kind custom homes often use which price policy to set prices?

a.   cost-plus pricing

b.   experience curve pricing

c.   standard markup pricing

d.   yield management pricing

e.   price lining

Rather than billing clients by the hour, some lawyers and their clients agree on a fixed fee based on expected costs plus an agreed upon level of profit for the law firm.  Which pricing approach are they using?

a.   target pricing

b.   cost-plus pricing

c.   customary pricing

d.   experience curve pricing

e.   bundle pricing

Setting the price of a product or service by adding a fixed percentage to the total unit cost is referred to as

a.   cost-plus fixed-fee pricing.

b.   demand backward pricing.

c.   cost-plus percentage-of-cost pricing.

d.   experience curve pricing.

e.   target return on investment pricing.

Cost-plus percentage-of-cost pricing refers to

a.   summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at the price.

b.   adding a fixed percentage to the cost of all items in a specific product class.

c.   setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors.

d.   setting the price of a product or service by adding a fixed percentage to the total unit cost.

e.   charging different prices to different buyers for goods of like grade and quality.

Which of the following type of business is most likely to use cost-plus percentage-of-cost pricing?

a.   real estate agency

b.   insurance company

c.   power company

d.   space shuttle contractor

e.   architect

A pricing method where a supplier is reimbursed for all costs, regardless of what they may be, and is allowed a fixed fee as profit that is independent of the final cost of the project is referred to as

a.   target return on investment pricing.

b.   cost-plus percentage-of-cost pricing.

c.   target return on sales pricing.

d.   experience curve pricing.

e.   cost-plus fixed-fee pricing.

The Brazilian government wants to build a global positioning satellite (GPS) system.  The satellite manufacturer will receive a mutually agreed upon profit over and above all costs associated with the project.  The pricing approach the satellite manufacturer uses is called

a.   standard markup pricing.

b.   experience curve pricing.

c.   cost-plus percentage-of-cost pricing.

d.   cost-plus fixed-fee pricing.

e.   bundle pricing.

Experience curve pricing is considered to be a __________ approach to pricing.

a.   demand-oriented

b.   cost-oriented

c.   profit-oriented

d.   competition-oriented

e.   service-oriented

Experience curve pricing refers to

a.   the method of pricing where the price of a product often rises following the expansion of costs associated with the firm’s producing and selling an increased volume of the product.

b.   the point at which profits double then double again as more consumers buy the product.

c.   a predictive pricing plan based upon the knowledge that the prices will fluctuate in a predictable pattern within a given industry.

d.   a method of pricing based on the learning effect, which holds that the unit cost of many products and services declines by 10 percent to 30 percent each time a firm’s experience at producing and selling them doubles.

e.   a pricing strategy that uses price estimates based upon the consensus of the salesforce and the firm’s top management team.

Which cost-oriented pricing method holds that a product’s unit costs predictably decline by 10 to 30 percent each time its production volume doubles?

a.   experience curve pricing

b.   cost-plus percentage-of-cost pricing

c.   cost-plus fixed-fee pricing

d.   standard markup pricing

e.   derived demand pricing

Which pricing approach complements the demand-oriented pricing strategy of skimming followed by penetration pricing?

a.   cost-plus percentage-of-cost pricing

b.   cost-plus fixed-fee pricing

c.   standard markup pricing

d.   derived demand pricing

e.   experience curve pricing

The retail price of a mobile phone (unsubsidized) has decreased from $4,000 in 1983 when Motorola commercialized the device to less than $99 today as the volume increased from zero to millions of units sold.  This is due in large part to which type of pricing approach?

a.   skimming pricing

b.   prestige pricing

c.   experience curve pricing

d.   odd-even pricing

e.   customary pricing

The retail price of a fax machine has decreased from more than $10,000 in the early 1970s to less than $100 today.  This is due in large part to

a.   skimming pricing.

b.   prestige pricing.

c.   odd-even pricing.

d.   experience curve pricing.

e.   customary pricing.

The retail price of DVD players has decreased from $900 in the mid-1990s to less than $100 today.  This is due in large part to

a.   skimming pricing.

b.   prestige pricing.

c.   odd-even pricing.

d.   customary pricing.

e.   experience curve pricing.

Which of the following is a profit-oriented approach to pricing?

a.   skimming pricing

b.   target pricing

c.   loss-leader pricing

d.   target return-on-sales pricing

e.   standard markup pricing

All of the following are profit-oriented approaches to selecting an approximate price level EXCEPT:

a.   target ROI pricing.

b.   target return-on-investment pricing.

c.   target return-on-sales pricing.

d.   target profit pricing.

e.   cost-plus percentage-of-cost pricing.

Which of the following is a profit-oriented pricing method?

a.   target return-on-sales pricing

b.   loss leader pricing

c.   above-, at-, or below-market pricing

d.   price lining

e.   penetration pricing

With profit-oriented approaches to pricing, a price setter may choose to balance both _________ and _________ to set price.

a.   cost; profit

b.   cost; service

c.   cost; revenue

d.   cost; supply

e.   cost; demand

Target profit pricing refers to

a.   adjusting the price of a product so it is “in line” with that of its largest competitor.

b.   setting an annual target of a specific dollar volume of profit.

c.   setting the price of a line of products at a number of different price points.

d.   adding a fixed percentage to the cost of all items in a specific product class.

e.   setting prices to achieve a profit that is a specified percentage of production costs.

Setting an annual target of a specific dollar volume of profit is referred to as __________.

a.   target profit pricing

b.   target return-on-investment pricing

c.   loss leader pricing

d.   at-, above-, or below-market pricing

e.   yield management pricing

A critical assumption when using target profit pricing is that

a.   a higher average price will not cause the demand for a product to fall.

b.   a higher average price will cause the demand for a product to rise.

c.   a higher average price will always cause the demand for a product to fall.

d.   this form of pricing is extremely risky because profit is tied to the current value of the dollar.

e.   being first is essential if you increase your average price since all of your competitors will do the same.

What is the critical assumption when using target profit pricing?

a.   a higher average price will usually cause the demand to fall

b.   a higher average price will always cause the demand to fall

c.   profit is relative to the current value of the dollar so this form of pricing is extremely risky

d.   a higher average price will not cause the demand to fall

e.   if the average price is increased, all of a firm’s competitors will do the same

A custom tailor wishes to use target profit pricing to establish a price for a custom-designed business suit.  Assume variable cost is $200 per suit, fixed cost is $44,000, and the target profit is $50,000 based on a volume of 50 suits.  What price should be charged for a typical custom suit?

a.   $520

b.   $1,040

c.   $1,880

d.   $2,080

e.   $10,000

Lady Marion Seafood, Inc. sells 5-pound packages of Alaskan salmon.  Assume its unit variable cost per package is $30 and its fixed cost is $250,000.  It wants a target profit of $38,000 on a volume of 16,000 packages.  What should the firm charge for a five-pound package of salmon?

a.   $25.00

b.   $33.94

c.   $40.00

d.   $48.00

e.   $61.25

The manager of a small gasoline station observes that while gasoline sales have been steady, the service side of the business has fallen off, and mechanics are often idle.  He decides to offer a promotion—a $20 off coupon for an oil change that is to be mailed to 800 households within a two-mile radius from the gas station.  The cost of printing and mailing is $1,000.  The normal cost of an oil change is $40.  Materials and labor per oil change costs $15.  If 200 customers use the coupon, what will be the total profit of the promotion based on the profit equation?

a.   ($4,000)

b.   ($1,000)

c.   $0

d.   $1,000

e.   $4,000

Target return-on-sales pricing refers to

a.   adjusting the price of a product so it is “in line” with that of its largest competitor.

b.   setting the price of a line of products at a number of different price points.

c.   adding a fixed percentage to the cost of all items in a specific product class.

d.   setting prices to achieve a profit that is a specified percentage of the sales revenue.

e.   setting a price based on a specific annual dollar target profit volume.

Setting a price to achieve a profit that is a specified percentage of the sales volume is referred to as __________.

a.   target return-on-investment pricing

b.   target return-on-sales pricing

c.   loss-leader pricing

d.   target pricing

e.   standard markup pricing

What pricing method is often used because of the difficulty in establishing a benchmark of sales or investment to show how much of a firm’s effort is needed to achieve the target?

a.   target return-on-investment pricing

b.   target return-on-sales pricing

c.   standard markup pricing

d.   target pricing

e.   loss-leader pricing

A custom kitchen cabinet storeowner wishes to use a target return-on-sales pricing approach to establish a price for a typical section of cabinets.  Assume that variable costs total $200 per unit, fixed cost is $44,000, and the storeowner desires a target profit of 20 percent return on sales at an annual volume of 400 cabinets.  What price should be charged for a typical cabinet section?

a.   $263.50

b.   $311.00

c.   $387.50

d.   $445.50

e.   $775.00

Target return-on-investment pricing refers to

a.   setting a price to achieve an annual target ROA.

b.   adding a fixed percentage to the cost of all items in a specific product class.

c.   setting prices to achieve a profit that is a specified percentage of the sales volume.

d.   setting a price to achieve an annual target ROI.

e.   setting a price based on an annual specific dollar target volume of profit.

Setting a price to achieve an annual target return-on-investment (ROI) is referred to as

a.   target return-on-investment pricing.

b.   target return-on-profit pricing.

c.   target return-on-sales pricing.

d.   target profit pricing.

e.   customary pricing.

Which of the following companies would be most likely to use target return-on-investment pricing?

a.   a farmer

b.   a florist shop

c.   a book publisher

d.   a veterinarian

e.   an automobile manufacturer

Target return-on-investment (ROI) is frequently used by

a.   contractors.

b.   public utilities.

c.   business-to-business markets.

d.   supermarkets.

e.   small privately owned firms.

Which of the following is a competition-oriented approach to pricing?

a.   skimming pricing

b.   target pricing

c.   loss-leader pricing

d.   target return-on-sales pricing

e.   standard markup pricing

All of the following are competition-oriented approaches to selecting an approximate price level EXCEPT:

a.   below-market pricing.

b.   customary pricing.

c.   above-market pricing.

d.   price lining.

e.   at-market pricing.

Rather than emphasize demand, cost, or profit factors, a price setter can stress what __________ is (are) doing.

a.   the service sector

b.   “the market” or competitors

c.   the global economy

d.   suppliers

e.   the financial markets

Customary pricing refers to

a.   a pricing method where the price the seller quotes includes all transportation costs.

b.   setting the same price for similar customers who buy the same product and quantities under the same conditions.

c.   deliberately selling a product below its list price to attract attention to it.

d.   setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors.

e.   pricing based on what the market will bear.

Setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors is referred to as __________.

a.   cost-plus pricing

b.   customary pricing

c.   standard markup pricing

d.   experience curve pricing

e.   target profit pricing

Southern gardeners normally pay $5 for a 2-cubit-foot bag of pine bark mulch that they buy at their local gardening-supply and home-improvement stores to keep the weeds down in their gardens.  If the price being charged by a retailer is not within a narrow range that gardeners feel is appropriate, they will use substitutions—newspaper, grass clippings, or some other kind of ground covering.  When pricing pine bark mulch, a garden-supply or home-improvement retailer should use

a.   customary pricing.

b.   at-market pricing.

c.   loss-leader pricing.

d.   penetration pricing.

e.   bundle pricing.

Consumers buy water and soda from vending machines.  Traditionally, the price of each of these products is about $1.25.  If a marketer charges a significantly higher price for such products dispensed by vending machines, sales are likely to decline.  In order to avoid declines in sales, marketers tend to be very consistent in the prices they charge for vending machine products.  This is an example of marketers employing a __________ strategy.

a.   below-market pricing

b.   skimming pricing

c.   penetration pricing

d.   loss-leader pricing

e.   customary pricing

Setting a market price for a product or product class based on a subjective feel for the competitors’ price or market price as the benchmark is referred to as

a.   customary pricing.

b.   above-, at-, or below-market pricing.

c.   standard markup pricing.

d.   competitive margin pricing.

e.   experience curve pricing.

The __________ of a product is what customers are generally willing to pay.

a.   customary price

b.   asking price

c.   target price

d.   discount price

e.   market price

For most products, it is difficult to identify a specific market price for a product or product class.  Still, marketing managers often have a subjective feel for the competitors’ price or market price.  Using this benchmark, they then may deliberately choose a strategy of

a.   above-, at-, or below-market pricing.

b.   loss-leader pricing.

c.   penetration pricing.

d.   standard markup pricing.

e.   experience curve pricing.

Companies use a “__________” to assess whether its products and brands are above, at, or below the market.

a.   customary price

b.   prestige price

c.   price premium

d.   price lining

e.   benchmark

Swedish company Asko, which prides itself on manufacturing and marketing some of the best-built and most expensive appliances in the world, would probably use which competition-oriented pricing approach?

a.   customary pricing

b.   above-market pricing

c.   loss-leader pricing

d.   at-market pricing

e.   below-market pricing

Large department store chains, such as Sears, generally use _________ pricing.

a.   above-market

b.   at-market

c.   below-market

d.   prestige pricing

e.   everyday low pricing

Manufacturers of generic brands use which method of competition-oriented pricing?

a.   penetration pricing

b.   below-market pricing

c.   loss-leader pricing

d.   prestige pricing

e.   skimming pricing

An ad campaign by Suave shampoo asked television viewers to identify the heads of hair of women who used Suave shampoo and conditioner and those that used the much more expensive salon hair-care products.  The idea of the ad was that no one could tell which woman used the much cheaper Suave brand.  By making price its selling point, Suave is most likely using __________.

a.   above-market pricing

b.   loss-leader pricing

c.   prestige pricing

d.   skimming pricing

e.   below-market pricing

Companies use a “price premium” to assess whether their products and brands are priced above, at, or below the market.  More specifically, a price premium is the percentage by which the actual price charged for a specific brand exceeds or falls short of a benchmark established for a similar product or basket of products.  This price premium equals:

a.   unit volume market share for a brand divided by dollar sales market share for a brand, minus 1.

b.   dollar sales market share for a brand divided by unit volume market share for a brand, plus 1.

c.   dollar sales market share for a brand divided by unit volume market share for a brand, minus 1.

d.   dollar sales market share for a brand, divided by unit volume market share for a brand, plus 1.

e.   dollar sales market share for a brand, divided by unit volume market share for a brand, minus the number of competitors against which a brand is being measured.

 

The Price Premium Marketing Dashboard above shows the dollar and unit market shares for selected energy drinks.  What is the price premium for Red Bull in 2010?

a.   -12.5%

b.   -7.5%

c.   -5.3%

d.   0%

e.   15.2%

The Price Premium Marketing Dashboard above shows the dollar and unit market shares for selected energy drinks.  What is the price premium for Red Bull in 2009?

a.   12.1%

b.   0%

c.   -5.0%

d.   -5.6%

e.   -11.1%

The Price Premium Marketing Dashboard above shows the dollar and unit market shares for selected energy drinks.  What is the price premium for Monster in 2010?

a.   -12.5%

b.   -7.5%

c.   -5.3%

d.   0%

e.   15.2%

The Price Premium Marketing Dashboard above shows the dollar and unit market shares for selected energy drinks.  What is the price premium for Monster in 2009?

a.   12.1%

b.   0%

c.   -5.0%

d.   -5.6%

e.   -11.1%

As the brand manager for Red Bull, what information does the Price Premium Marketing Dashboard above give you?

a.   Red Bull has a price premium relative to Monster.

b.   Rockstar has a price premium relative to Monster.

c.   Red Bull engaged in price discounting relative to both Monster and Rockstar from 2009 to 2010.

d.   Rockstar sold more product than Monster in 2010.

e.   In terms of dollar market share, Red Bull has a lower share than the “Other Brands” category.

 

Frito-Lay is considering whether to buy the Cracker Jack brand of caramel popcorn from Borden, Inc.  Frito-Lay research shows that Cracker Jack has a strong brand equity.  But Cracker Jack’s dollar sales market share and pound (a surrogate for unit) volume market share have declined recently and trailed the Crunch ‘n Munch brand as shown in the Figure 14-A marketing dashboard above.  Borden’s management used an above-market, premium pricing strategy for Cracker Jack.  As a Frito-Lay marketer studying Cracker Jack, calculate Cracker Jack’s price premium.  What position in Figure 14-A above represents the price premium of Cracker Jack?

a.   “A”

b.   “B”

c.   “C”

d.   “D”

e.   “E”

Loss-leader pricing refers to

a.   a pricing method where the price the seller charges is below the actual cost to make the product.

b.   setting a low initial price and gradually but consistently increasing that price so as not to antagonize the consumer.

c.   deliberately selling a product below its customary price, not to increase sales, but to attract customers’ attention in hopes that they will buy other products as well.

d.   a method of pricing based on a product’s tradition, standardized channel of distribution, or other competitive factors.

e.   pricing a product between 8 and 10 percent lower than nationally branded competitive products.

Deliberately selling a product below its customary price, not to increase sales, but to attract customers’ attention in hopes that they will buy other products as well, is referred to as

a.   loss-leader pricing.

b.   bundle pricing.

c.   magnet pricing.

d.   predatory pricing.

e.   below-market pricing.

Using __________, many retailers deliberately sell products below their normal prices (and sometimes below cost) to attract attention and additional store traffic.

a.   customary pricing

b.   below-market pricing

c.   prestige pricing

d.   penetration pricing

e.   loss-leader pricing

When Kroger, a national supermarket chain, uses a special promotion to price a six-pack of soda at $2.09 (which is below its customary price level), it is attempting to

a.   drive its competition out of business.

b.   attract customers in hopes they will buy other products as well.

c.   fill its parking lot so its store will look successful.

d.   work with the local bottler to move products that are close to their expiration dates.

e.   help stimulate the local economy and generate good will with its customers.

Setting one price for all buyers of a product or service is referred to as __________.

a.   customary pricing

b.   one-price policy

c.   flexible-price policy

d.   standard markup pricing

e.   uniform pricing

A one-price policy refers to

a.   setting different prices for products and services depending on individual buyers and purchase situations.

b.   setting the price of a line of products at a number of different specific pricing points.

c.   setting prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item.

d.   adding a fixed percentage to the cost of all items in a specific product class.

e.   setting one price for all buyers of a product or service.

Another name for a one-price policy is

a.   customary pricing.

b.   fixed pricing.

c.   flexible pricing.

d.   standard markup pricing.

e.   uniform pricing.

When you buy a used car from a CarMax dealership, you are offered the car at a “no haggle” price.  You can buy it or not, but there is no negotiating the published price because of the seller’s

a.   customary pricing strategy.

b.   one-price policy.

c.   uniform pricing policy.

d.   flexible-price policy.

e.   dynamic pricing strategy.

 

Consider the photo above.  Family Dollar Stores, like 99¢ Stores, use what type of pricing policy?

a.   target

b.   customary

c.   flexible

d.   one

e.   below-market

Tendollars.com offers thousands of gifts, all priced at $10.  This is an example of two pricing methods working in tandem.  The firm is MOST LIKELY using a(n) __________ and a(n) __________.

a.   customary pricing approach; skimming pricing approach

b.   odd-even pricing approach; loss-leader pricing approach

c.   below-market pricing approach; one-price policy

d.   penetration pricing approach; loss-leader pricing approach

e.   everyday low pricing approach; flexible-price policy

Setting different prices for products and services depending on individual buyers and purchase situations is referred to as

a.   price lining.

b.   a flexible-price policy.

c.   customary pricing.

d.   price fixing.

e.   discretionary pricing.

A flexible-price policy refers to

a.   setting the price of a line of products at a number of different specific pricing points.

b.   setting the prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item.

c.   deliberately selling a product below its customary price, not to increase sales, but to attract customers’ attention in hopes that they will buy other products as well.

d.   setting different prices for products and services depending on individual buyers and purchase situations.

e.   Adding a fixed percentage to the cost of all items in a specific product class.

 Another name for flexible-price policy is __________.

a.   target pricing

b.   fluid pricing

c.   price lining

d.   market-based pricing

e.   dynamic pricing

A flexible-price policy gives marketers __________ in setting the final price in light of demand, cost, and competitive factors.

a.   no leeway

b.   total freedom

c.   little discretion

d.   considerable discretion

e.   limited competitive authority

Which of the following is a form of flexible pricing?

a.   odd-even pricing

b.   yield management pricing

c.   above-, at-, or below-market pricing

d.   target pricing

e.   cost-plus pricing

Yield management pricing is a form of

a.   target pricing.

b.   loss-leader pricing.

c.   dynamic pricing.

d.   customary pricing.

e.   price lining.

 The way that a person navigates through an online marketer’s website is called

a.   surf-shopping behavior.

b.   cross-channel shopping.

c.   the clickstream.

d.   1-click shopping.

e.   the shopper pathway.

Which of the following statements about a flexible-price policy is most accurate?

a.   A flexible-price policy is especially suited to low cost items where profit margins are slim.

b.   A flexible-price policy should not be used with large ticket items such as cars or real estate.

c.   When using a flexible-price policy, the seller may risk violating the Robinson-Patman Act.

d.   Flexible pricing is not a form of yield management pricing.

e.   Flexible pricing is rarely used for online purchases because of the high cost to develop information technology and data warehouses.

What do 60 percent of prospective buyers dread about looking for a new car?

a.   selecting the preferred brand

b.   negotiating the price

c.   taking a test drive

d.   experiencing postpurchase dissonance

e.   searching for cars on the Internet

When buying a car, __________ may result in discriminatory practices.

a.   fixed pricing

b.   a one-price policy

c.   a flexible-price policy

d.   target return-on-sales pricing

e.   “no haggle” pricing

 

Consider the flexible pricing chart above, which shows the results of a National Bureau of Economic Research study of 750,000 car purchases.   The data indicate that some groups of car buyers, on average, paid roughly $105, $423, and $483 more, respectively, for a new car in the $21,000 range than the typical purchaser.  Who are the car buyers in “A?”

a.   women

b.   the elderly

c.   Hispanics

d.   AfricanAmericans

e.   Asian Anericans

Consider the flexible pricing chart above, which shows the results of a National Bureau of Economic Research study of 750,000 car purchases.   The data indicate that some groups of car buyers, on average, paid roughly $105, $423, and $483 more, respectively, for a new car in the $21,000 range than the typical purchaser.  Who are the car buyers in “B?”

a.   women

b.   the elderly

c.   Hispanics

d.   African Americans

e.   Asian Anericans

Consider the flexible pricing chart above, which shows the results of a National Bureau of Economic Research study of 750,000 car purchases.   The data indicate that some groups of car buyers, on average, paid roughly $105, $423, and $483 more, respectively, for a new car in the $21,000 range than the typical purchaser.  Who are the car buyers in “C?”

a.   women

b.   the elderly

c.   Hispanics

d.   African Americans

e.   Asian Anericans

Which of the following statements regarding new car purchases in the U.S. is most accurate?

a.   While men of all races pay basically the same price, women, regardless of race, pay considerably less.

b.   Seventy-nine percent of all men purchasing cars cite haggling over price as the most exciting aspect of the purchase.

c.   A one-price policy is now the standard in the automobile industry due to violations of the Robinson-Patman Act.

d.   Female automobile salespeople rarely, if ever, offer flexible pricing to female customers.

e.   African Americans, women, and Hispanics pay higher than the average price for a new car.

The setting of prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item, is referred to as

a.   line item pricing.

b.   product-line pricing.

c.   price lining.

d.   customary pricing.

e.   discretionary pricing.

Product-line pricing refers to

a.   setting the price of a line of products at a number of different specific pricing points.

b.   deliberately selling a product below its customary price, not to increase sales, but to attract customers’ attention in hopes that they will buy other products as well.

c.   adding a fixed percentage to the cost of all items in a specific product class.

d.   setting of prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item.

e.   the marketing of two or more products in a single package.

Product-line pricing involves determining: (1) the lowest-priced product and price; (2) __________; and (3) the price differentials for all other products in the line.

a.   the single most popular item in the line

b.   the least vulnerable product in the line

c.   the highest-priced product and price

d.   the most frequently sold product in the line

e.   the most price insensitive product in the line

Product-line pricing involves determining: (1) the lowest-priced product and price; (2) the highest-priced product and price; and (3) __________.

a.   the single most popular item in the line

b.   the least vulnerable product in the line

c.   the most frequently sold product in the line

d.   the most price insensitive product in the line

e.   the price differentials for all other products in the line

When establishing product line pricing, the highest priced item is typically positioned as

a.   the oldest product item in the line.

b.   the best-selling product item in the line.

c.   the premium item in terms of quality and features.

d.   the loss leader item for the rest of the product line.

e.   the most price insensitive product item in the line.

When establishing product line pricing, the lowest-priced item is typically positioned as

a.   the youngest product item in the line.

b.   the smallest-selling product item in the line.

c.   the lost-cost item in the line in terms of quality and features.

d.   the profit leader for the rest of the product line.

e.   the traffic builder designed to capture the attention of hesitant or first-time buyers.

When establishing product-line pricing, the price differentials between items in the line should make sense to customers and reflect differences in terms of the

a.   perceived value of the products offered.

b.   actual costs in terms of the features offered.

c.   perceived risk.

d.   quantity discounts and price allowances offered.

e.   market segments targeted.

Different brands within a company’s product line generally have different profit margins; for example, items with higher price lines have higher profit margins.  Nike Variety tennis shoes have variable costs of $6 and sell for $24, whereas Nike Wimbledon tennis shoes have variable costs of $38 and sell for $48, but when fixed overhead is added, the shoe is unprofitable by $2 per pair.  Which statement is most accurate regarding Nike’s pricing approach with these two product lines?

a.   Demand for each shoe line is unrelated to price.

b.   Nike is using a cost-plus percentage-of-cost pricing strategy.

c.   Nike is using a product-line pricing strategy.

d.   Demand for each shoe line is unrelated to product quality.

e.   Consumers do not use price as an indication of quality.

The price for Nintendo’s Wii video game console was likely insufficient to cover its fixed and variable costs.  However, the price of its video games was set high enough to cover the video game console loss and deliver a handsome profit for the entire Nintendo product line.  This example illustrates Nintendo’s use of

a.   bundle pricing.

b.   product-line pricing.

c.   price lining.

d.   customary pricing.

e.   loss-leader pricing.

 

Consider the Tostitos products photo above.  Frito-Lay recognizes that its tortilla chip products are partial substitutes for one another.  The company’s bean and cheese dips and salsa sauces complement its tortilla chips. Frito-Lay uses this knowledge to set prices for each item, which is known as

a.   bundle pricing.

b.   price lining.

c.   customary pricing.

d.   product-line pricing.

e.   loss-leader pricing.

Toro decided to augment its traditional hardware retail distribution channel by also selling through mass merchandisers, such as Walmart and Target, and set prices for its products substantially below those for its traditional hardware outlets.  As a result, many hardware stores abandoned Toro products in favor of other manufacturers.  This is an example of a firm failing to consider __________ effects when setting its final list or quoted price.

a.   company

b.   social responsibility

c.   regulatory

d.   competitive

e.   customer

The Hummer was an attention-getting SUV that sold for $80,000 in a limited number of dealerships.  Then, General Motors developed a smaller version for $50,000 that could be sold in many more outlets.  To cover costs and reach the market faster, the Hummer H2 shared some parts with other GM cars.  To which customer effects did Hummer marketing managers need to pay particular attention?

a.   The price of Hummer H2 should make sense to customers and reflect differences in the perceived value of the H2 relative to the original Hummer.

b.   Elements such as gas mileage, color, and interior fabrics will be important for H2 customers.

c.   The most important element of the H2 is its versatility as a family vehicle.

d.   Comfort and fuel efficiency will be more important than price for H2 customers.

e.   GM used a penetration pricing strategy for the original Hummer; the H2 continues this pricing strategy to maximize profit.

The successive price cutting by competitors to increase or maintain their unit sales or market share is referred to as

a.   everyday low pricing.

b.   a price war.

c.   fair trade pricing.

d.   a market war.

e.   a price reduction.

A price war refers to

a.   competition between sellers and resellers to maintain or attain the largest market share of potential customers.

b.   conflicts between manufacturers and distributors regarding acceptable percentages they each may charge relative to one another.

c.   when one channel member believes another channel member is engaged in pricing behavior that prevents it from achieving its profitability goals.

d.   the successive price cutting by competitors to increase or maintain their unit sales or market share.

e.   the practice of replacing promotional allowances with lower manufacturer list prices.

Which of the following statements regarding price cutting is most accurate?

a.   Marketers should only consider price cutting if primary demand for a product class will remain stable.

b.   Marketers should only consider price cutting if the price cut can be made across all items in a product line and all product lines in a product mix.

c.   Marketers should only consider price cutting if the price cut is confined to customers within specific target market segments.

d.   Marketers should only consider price cutting if the firm also increases advertising.

e.   Marketers should never consider price cutting unless a product is in the introductory stage of its product life cycle.

Marginal analysis refers to

a.   a continuing, concise trade-off of incremental costs against incremental revenues.

b.   the change in total cost that results from producing and marketing one additional unit of a product.

c.   a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.

d.   a continuing concise trade-off of incremental ROI and incremental ROA.

e.   a technique that analyzes the relationship between revenues, profit, and market share relative to changes in market growth rates.

Marginal analysis might take the form of such questions as, “Should we extend our hours to include Sundays?” or “What if we put more apples in the pie?”  The basic principle is that

a.   as long as a marketing action breaks even, the action is worth taking.

b.   expected incremental revenues from pricing and other marketing actions must more than offset incremental costs.

c.   you “don’t rock the boat” if your program is making a profit; instead, you “leave well enough alone.”

d.   if you are not willing to take risks, even if the numbers tell you otherwise, your business will ultimately fail.

e.   marketing and finance are two different animals: “If it feels right in your gut … go for it.”

It is relatively easy to measure the incremental cost of a new advertising campaign; what is not as easy is

a.   measuring the extra fixed cost involved.

b.   measuring the extra variable cost involved.

c.   measuring the incremental revenue generated by the new advertising campaign.

d.   determining whether customers who stop buying the product are reacting negatively to the advertisement or to some other aspect of the product itself.

e.   determining what percentage of the ad-generated revenue should be reinvested into additional advertisements of the same form.

The manager of a small gasoline station observes that while gasoline sales have been steady, the service side of the business has fallen off, and mechanics are often idle.  He decides to offer a promotion—a $20 off coupon for an oil change that is to be mailed to 800 households within a two-mile radius from the gas station.  The cost of printing and mailing is $1,000.  The normal cost of an oil change is $40.  Materials and labor per oil change cost $15.  How many additional maintenance service jobs must result for the promotion to break even?

a.   25 jobs

b.   40 jobs

c.   50 jobs

d.   67 jobs

e.   200 jobs

The three major types of special adjustments to list or quoted price are

a.   demand-oriented, cost-oriented, and  profit-oriented adjustments.

b.   one price, flexible price, and discounts.

c.   discounts, allowances, and marginal adjustments.

d.   discounts, allowances, and geographical adjustments.

e.   discounts, incremental costs and revenues, and geographical adjustments.

 

Figure 14-6 above shows the three types of special adjustments to list or quoted price.  “A” represents

a.   demand-oriented price adjustments.

b.   allowances.

c.   geographical adjustments.

d.   discounts.

e.   customary pricing adjustments.

Figure 14-6 above shows the three types of special adjustments to list or quoted price.  “B” represents

a.   demand-oriented price adjustments.

b.   geographical adjustments.

c.   allowances.

d.   discounts.

e.   customary pricing adjustments.

Figure 14-6 above shows the three types of special adjustments to list or quoted price.  “C” represents

a.   demand-oriented price adjustments.

b.   allowances.

c.   discounts.

d.   customary pricing adjustments.

e.   geographical adjustments.

A reduction from the list price that a seller gives a buyer as a reward for some activity of the buyer that is favorable to the seller is called

a.   the pretax price.

b.   the list price.

c.   the manufacturer’s suggested retail price (MSRP).

d.   a discount.

e.   a trade-in allowance.

Discounts refer to reductions from the __________ that a seller gives a buyer as a reward for some activity of the buyer that is favorable to the seller.

a.   final price

b.   list price

c.   manufacturer’s suggested retail price

d.   manufacturer’s cost

e.   retailer’s cost

The four types of discounts are

a.   quantity, trade-in, promotional, and cash.

b.   quantity, seasonal, trade (functional), and cash.

c.   quantity, seasonal, promotional, and FOB.

d.   cash, trade-in, seasonal, and promotional.

e.   trade-in, promotional, geographic, and functional.

Reductions in unit costs for a larger order are referred to as

a.   promotional allowances.

b.   quantity discounts.

c.   economic order discounts.

d.   penetration pricing.

e.   case allowances.

Quantity discounts refer to

a.   price reductions in unit costs for placing a larger order.

b.   price reductions for placing long-term pre-scheduled orders.

c.   price reductions to encourage retailers to stock inventory earlier than their normal demand would require.

d.   reductions in unit costs for purchasing items that are nearing their expiration dates.

e.   reductions in unit costs for taking merchandise that will soon be replaced by new and improved versions of the original product.

Your local instant photocopying service charges 10 cents a copy up to 25 copies, 9 cents a copy for 26 to 99 copies, and 8 cents a copy for 100 copies or more.  What kind of adjustment to these list or quoted prices is the photocopying service using?

a.   experience curve pricing

b.   loss-leader pricing

c.   a quantity discount

d.   a promotional discount

e.   everyday low pricing

Mike Morgan, a sales representative for a major food service distributor of General Mill Warm Delights, wanted to encourage repeat purchases by his grocery customers.  In order to accomplish this objective, Morgan offered the following discounts to his customers: a 10 percent discount for buying 1-49 cases of Warm Delights within a calendar month; the discount increases to 12 percent if 50-99 cases of Warm Delights are purchased within the same calendar month; and the discount increases to 15 percent if 100 or more cases of Warm Delights are purchased within the same calendar month.  What type of discount was Morgan offering his grocery customers?

a.   a seasonal discount

b.   a quantity discount

c.   a cash discount

d.   a trade discount

e.   a case allowance discount

A discount that is based on the size of an individual purchase order rather than a series of repeat orders is referred to as a(n)

a.   cumulative quantity discount.

b.   bundle pricing.

c.   economic order discount.

d.   noncumulative quantity discount.

e.   promotional allowance.

Noncumulative quantity discounts refer to

a.   discounts that are based on a series of orders rather than on the size of an individual order.

b.   one-time discounts per customer or household.

c.   one-time discounts that must be used within a certain time frame or they become null and void.

d.   discounts used to place new products on supermarket shelves.

e.   discounts that are based on the size of an individual purchase order, rather than a series of orders.

Which of the following statements regarding quantity discounts is most accurate?

a.   Noncumulative quantity discounts encourage large individual purchase orders, not a series of orders.

b.   Noncumulative quantity discounts encourage repeat buying by a single customer to a far greater degree than do cumulative quantity discounts.

c.   Quantity discounts are primarily used to undercut competitors’ prices.

d.   Noncumulative quantity discounts encourage smaller long-term repeat purchases rather than less-frequent, larger short-term purchases.

e.   Quantity discounts can basically be used only once with each reseller or the price will increase.

Discounts that apply to the accumulation of purchases of a product over a given time period, such as a year, are referred to as

a.   promotional allowances.

b.   cumulative quantity discounts.

c.   cash discounts.

d.   functional discounts.

e.   noncumulative quantity discounts.

Cumulative quantity discounts refer to

a.   reductions in unit costs for a larger order.

b.   cash payments or extra amounts of “free goods” awarded sellers in the channel of distribution for undertaking certain advertising or selling activities to promote a product.

c.   discounts offered to sellers for first-time purchases of a new product as incentives for providing shelf space.

d.   a series of discounts for every additional rebuy in which the discount becomes incrementally higher.

e.   discounts that apply to the accumulation of purchases of a product over a given time period, typically a year.

Which of the following statements regarding quantity discounts is most accurate?

a.   Cumulative quantity discounts encourage repeat buying by a single customer to a far greater degree than do noncumulative quantity discounts.

b.   Noncumulative quantity discounts encourage repeat buying by a single customer to a far greater degree than do cumulative quantity discounts.

c.   Quantity discounts are primarily used to undercut competitors’ prices.

d.   Noncumulative quantity discounts encourage smaller, long-term repeat purchases rather than less-frequent, large-quantity purchases.

e.   Quantity discounts can basically be used only once with each reseller or the price will become too customary.

Manufacturers use seasonal discounts to

a.   get rid of expired merchandise.

b.   prevent retailers from purchasing competitors’ products.

c.   extend the peak seasonal selling season.

d.   encourage buyers to stock inventory earlier than their normal demand would require.

e.   temporarily spur primary demand during periods of soft sales, such as the beginning of a month, after which prices will return to normal when selective demand picks up.

To encourage buyers to stock inventory earlier than their normal demand would require, manufacturers often use

a.   noncumulative discounts.

b.   cumulative discounts.

c.   seasonal discounts.

d.   trade discounts.

e.   functional discounts.

       

To reward wholesalers and retailers for the risk they accept in assuming increased inventory carrying costs, manufacturers offer

a.   noncumulative discounts.

b.   cumulative discounts.

c.   trade discounts.

d.   seasonal discounts.

e.   functional discounts.

To reward wholesalers and retailers for having supplies in stock at the time customers want, manufacturers offer

a.   noncumulative discounts.

b.   seasonal discounts.

c.   trade discounts.

d.   cumulative discounts.

e.   functional discounts.

Manufacturers use seasonal discounts to

a.   get rid of dated merchandise.

b.   prevent retailers from purchasing competitors’ products.

c.   prolong the peak seasonal selling season.

d.   establish an immediate feeling of goodwill between the buyer and seller that hopefully will continue when prices return to normal.

e.   entice dealers to purchase seasonal merchandise earlier in the selling season.

 

Consider the Toro ad above.  What type of discount does Toro offer its channel members to carry and sell its riding lawn mowers during the winter months?

a.   noncumulative discounts

b.   cumulative discounts

c.   functional discounts

d.   seasonal discounts

e.   trade discounts

What is it called when a manufacturer offers discounts to resellers in the marketing channel on the basis of where they are in the channel?

a.   seasonal discounts

b.   trade discounts

c.   cash discounts

d.   promotional allowances

e.   trade-in allowances

To reward wholesalers and retailers for marketing functions they will perform in the future, a manufacturer often gives __________ discounts.

a.   seasonal

b.   cash

c.   trade

d.   quantity

e.   cumulative

Functional discounts are offered to resellers in the marketing channel on the basis of where they are in the channel and

a.   the size of the order.

b.   the frequency of the order.

c.   when orders are placed during the year.

d.   the length of the relationship with the manufacturer.

e.   the marketing activities they are expected to perform in the future.

Trade discounts are offered to resellers in the marketing channel on the basis of where they are in the channel and

a.   the marketing activities they are expected to perform in the future.

b.   the frequency of the order.

c.   when orders are placed during the year.

d.   the length of the relationship with the manufacturer.

e.   the size of the order.

Trade discounts are offered to resellers in the marketing channel on the basis of the marketing activities they are expected to perform in the future and

a.   the frequency of the order.

b.   where they are in the channel.

c.   when orders are placed during the year.

d.   the length of the relationship with the manufacturer.

e.   the size of the order.

Suppose a manufacturer quotes price in the following form: List price—$100 less 30/10/5.  When calculating this trade discount, the first number “30” in the percentage sequence always refers to the

a.   discount to the ultimate consumer.

b.   manufacturer’s cost.

c.   retail end of the channel.

d.   channel intermediary closest to the manufacturer.

e.   original unit cost.

If the terms of the trade discount are listed as “20/10/5,” the number “20” represents

a.   20 percent of the suggested retail price that is available to the retailer to cover costs and provide a profit.

b.   20 percent of the suggested wholesale price that is available to the wholesaler to cover costs and provide a profit.

c.   20 percent of the suggested retail price that is available to the jobber to cover costs and provide a profit.

d.   20 percent of the manufacturer’s suggested retail price that is available to the ultimate consumer.

e.   20 percent of the suggested retail price is the profit that is available to the manufacturer.

If the terms of the trade discount are listed 20/10/5, the number “5” represents

a.   5 percent of the suggested wholesale price that is available to the retailer to cover costs and provide a profit.

b.   5 percent of the suggested retail price that is available to the jobber to cover costs and provide a profit.

c.   5 percent of the wholesale price that is available to the jobber to cover costs and provide a profit.

d.   5 percent of the suggested retail price that is available to the ultimate consumer.

e.   5 percent of the suggested retail price is the profit that is available to the manufacturer.

 

Consider Figure 14-7 above.  Suppose a manufacturer quotes price in the following form: List price—$100 less 30/10/5.  What does “A” represent?

a.   the wholesaler’s trade discount

b.   the retailer’s trade discount

c.   the jobber’s trade discount

d.   the manufacturer’s trade discount

e.   the manufacturer’s markup

Consider Figure 14-7 above.  Suppose a manufacturer quotes price in the following form: List price—$100 less 30/10/5.  What does “B” represent?

a.   the wholesaler’s trade discount

b.   the retailer’s trade discount

c.   the jobber’s trade discount

d.   the manufacturer’s trade discount

e.   the manufacturer’s markup

Consider Figure 14-7 above.  Suppose a manufacturer quotes price in the following form: List price—$100 less 30/10/5.  What does “C” represent?

a.   the wholesaler’s trade discount

b.   the retailer’s trade discount

c.   the jobber’s trade discount

d.   the manufacturer’s trade discount

e.   the manufacturer’s markup

Consider Figure 14-7 above.  Suppose a manufacturer quotes price in the following form: List price—$100 less 30/10/5.  What does $7.00 represent?

a.   the wholesaler’s trade discount

b.   the retailer’s trade discount

c.   the jobber’s trade discount

d.   the manufacturer’s trade discount

e.   the manufacturer’s markup

According to Figure 14-7 above, how much is the retailer trade discount?

a.   $3.15

b.   $7.00

c.   $30.00

d.   $63.00

e.   $70.00

According to Figure 14-7 above, how much is the jobber trade discount?

a.   $3.15

b.   $7.00

c.   $30.00

d.   $63.00

e.   $70.00

A manufacturer does marketing research and estimates that consumers will accept a manufacturer’s suggested retail price of $50 for a jacket.  The manufacturer expects to offer trade discount terms of 40/10/5 to retailers, wholesalers, and agents in the marketing channel.  What price will the manufacturer receive for the jacket?

a.   $47.50

b.   $45.00

c.   $30.00

d.   $27.50

e.   $25.65

A manufacturer estimates that consumers will accept a price of $275 for a snowboard.  If the manufacturer expects to offer trade discounts of 35/15/5 to retailers, wholesalers, and jobbers, respectively, what price will the manufacturer receive for the snowboard?

a.   $275.00

b.   $178.75

c.   $151.94

d.   $144.34

e.   $100.00

A manufacturer offers a suggested list price for a cashmere sweater of $250.  The trade discount is 40/20/10.  What amount does the manufacturer expect to receive for the sweater?

a.   $175.00

b.   $225.00

c.   $108.00

d.   $125.00

e.   $100.00

Within the channel of distribution for certain types of imported furniture, the typical trade terms are 40/15/10.  If a dining room table has a list price of $1,000, how much would the manufacturer sell the table to a jobber for?

a.   $1,000

b.   $600

c.   $510

d.   $459

e.   $400

A glass blowing studio makes fine pieces of art glass.  It has decided on a retail list price of $2,000 for one of its vases.  They sell only to wholesalers and retailers who receive 50/10 terms.  How much will the studio receive from selling this vase?

a.   $2,000

b.   $1,000

c.   $900

d.   $800

e.   $100

To encourage retailers to pay their bills quickly, manufacturers offer them

a.   quantity discounts.

b.   cash discounts.

c.   flexible pricing policies.

d.   promotional allowances.

e.   manufacturer’s inducements.

The purpose of a cash discount is to

a.   reward retailers for making large quantity purchases.

b.   encourage purchasing items during periods of low demand.

c.   prevent competitors from obtaining shelf space.

d.   counteract the introduction of a new product by a competitor.

e.   encourage retailers to pay their bills promptly.

If the cash discount terms for a $500 purchase are 4/10 net 30, the number $500 refers to

a.   the original price owed on the merchandise.

b.   the total amount owed if paid within 10 days.

c.   the total discount in dollars if the bill is paid on time in 30 days.

d.   the manufacturer’s suggested wholesale price.

e.   the total penalty in dollars if the bill is paid after 10 days.

If the cash discount terms for a $500 purchase are 4/10 net 30, the number 4 refers to

a.   the percentage markup on the product.

b.   the percentage discount if the bill is paid within 10 days.

c.   the percentage increase in price if the bill is not paid within 10 days.

d.   the discount in dollars per unit if the order is paid on time in 30 days.

e.   the penalty in dollars if the bill is not paid within 10 days.

If the cash discount terms for a $500 purchase are 4/10 net 30, the number 10 refers to

a.   the percentage discounted if the bill is paid within 30 days.

b.   the percentage increase in price if the bill is not paid within 10 days.

c.   the number of days for which the discount is valid.

d.   the discount in dollars per unit if the order is paid on time in 30 days.

e.   the penalty in dollars if the bill is not paid within 10 days.

Larry’s Lawn Care allows customers to use a credit card for purchases.  Larry pays 4 percent of the sale to the credit card company.  To promote more business, Larry decides to offer a lower price to customers paying cash—that price being 3 percent less than the standard list price.  Larry is giving his customers a(n)

a.   functional discount.

b.   trade-in allowance.

c.   promotional allowance.

d.   discount-for-cash.

e.   everyday low price.

When Sherman bought gas, he noticed the convenience store offered him a 2 percent reduction in price if he paid cash rather than if he used his credit card to pay for his purchase.  The convenience store was offering him a

a.   trade discount.

b.   cash discount.

c.   promotional allowance.

d.   rebate.

e.   functional discount.

Allowances, like discounts, refer to

a.   rewards given to retailers to encourage early payment.

b.   payment extensions given to cash-strapped consumers during the current recession.

c.   list price deductions based on  surges in consumer demand.

d.   list price deductions based on sudden drops in consumer demand.

e.   reductions from list or quoted prices to buyers for performing some activity.

Like discounts, reductions from list or quoted prices to buyers for performing some activity are referred to as

a.   allowances.

b.   subsidies.

c.   remittances.

d.   noncumulative deductions.

e.   list price deductions.

A price reduction given when a used product is part of the payment on a new product is referred to as a __________.

a.   cash discount

b.   seasonal discount

c.   trade-in allowance

d.   promotional allowance

e.   subsidy discount

A trade-in allowance refers to

a.   a noncash exchange of one product for another of equal or greater value.

b.   a cash-back payment when a more expensive item is replaced with a less expensive item.

c.   a price reduction given when a used product is part of the payment on a new product.

d.   the return of money based on proof of purchase.

e.   a cash payment to a retailer for extra in-store support or special featuring of the brand.

 Which of the following statements regarding a trade-in allowance is most accurate?

a.   A trade-in allowance is a noncash exchange of one product for another of equal or greater value.

b.   A trade-in allowance is an effective way to lower the price a buyer has to pay without formally reducing the list price.

c.   A trade-in allowance is a cash-back payment when a more expensive item is replaced with a less expensive item.

d.   A trade-in allowance is the return of money based on proof of purchase.

e.   A trade-in allowance is a cash payment to a retailer for extra in-store support or special featuring of the brand.

A new car dealer can reduce the list price of a new Ford F-150 pickup truck by offering you a __________ of $1,000 for your 1998 Nissan Altima.

a.   cash discount

b.   functional discount

c.   seasonal discount

d.   trade-in allowance

e.   promotional allowance

Cash payments or an extra amount of “free goods” awarded sellers in the channel for undertaking certain advertising or selling activities to promote the product is referred to as a

a.   promotional allowance.

b.   quantity discount.

c.   seasonal discount.

d.   purchase inducement.

e.   flexible-pricing policy.

A promotional allowance refers to

a.   a one-time discount that must be used within a certain time frame or it expires.

b.   the cash payments or an extra amount of “free goods” awarded sellers in the marketing channel for undertaking certain advertising or selling activities to promote the product.

c.   the return of money based on proof of purchase.

d.   short-term price reductions when consumer demand takes a significant and unexpected dip.

e.   incentives, such as trips, cruises, jewelry, etc., presented to brand-loyal customers.

The practice of replacing promotional allowances with lower manufacturer list prices is referred to as

a.   everyday low pricing.

b.   everyday fair pricing.

c.   trade-in allowances.

d.   markdown pricing.

e.   everyday value pricing.

Everyday low pricing refers to

a.   the pricing strategy of “extreme value” stores  to maintain high price-quality images for the products they sell.

b.   the pricing strategy of starting a product at standard list price and then lowering the price by a certain percentage until it is sold.

c.   short-term price reductions when consumer demand takes a significant and  unexpected dip.

d.   the practice of replacing promotional allowances with lower manufacturer list prices.

e.   a form of predatory pricing used solely for the purpose of undercutting competitors’ prices.

The acronym “EDLP” stands for __________.

a.   everyday lo-hi pricing.

b.   extended discounts for loss-leader products.

c.   everyday low pricing.

d.   either free delivery or lower prices.

e.   expired discounts in lieu of lower pricing.

Instead of everyday low prices (EDLP), supermarkets prefer a __________ approach, which is based on frequent specials where prices are temporarily lowered for a brief period of time and then raised again.

a.   odd-even pricing

b.   a one-price policy

c.   hi-lo pricing

d.   bundle-pricing

e.   flexible-pricing

After offering a promotional allowance, the price of a product returns to its regular price level.  When this happens, the retail store’s gross margin on that product __________ on those items that were bought with the allowance but not sold during the special price promotion.

a.   decreases substantially

b.   increases substantially

c.   remains the same

d.   fluctuates wildly

e.   vanishes

Which of the following statements about everyday low pricing (EDLP) is most accurate?

a.   EDLP encourages manufacturer allowances.

b.   Supermarkets have hailed EDLP as the most effective form of value pricing.

c.   Some argue that EDLP without price specials is boring for many grocery shoppers.

d.   EDLP allows supermarkets to use deeply discounted price specials.

e.   EDLP can increase average retail prices by as much as 10 percent.

Which of the following statements about everyday low pricing (EDLP) is most accurate?

a.   For supermarkets, EDLP means “everyday low profits!”

b.   Supermarkets have hailed EDLP as value pricing at its most effective.

c.   EDLP allows supermarkets to use deeply discounted price specials.

d.   EDLP can increase average retail prices by as much as 10 percent.

e.   If retailers pass on their allowances to customers, they cannot make a profit.

Geographical adjustments are made by manufacturers or wholesalers to reflect

a.   production costs.

b.   administrative costs.

c.   selling costs.

d.   promotional costs.

e.   transportation costs.

Manufacturers or and even wholesalers make geographical adjustments to list or quoted prices to reflect

a.   warehouse inventory carrying and loading costs.

b.   the cost of transportation of the products from seller to buyer.

c.   changes in price due to tariffs the Federal Trade Commission imposes on the transport of goods from the U.S.

d.   changes in price due to fuel excise taxes on inefficient diesel trucks.

e.   the need some firms have of recouping the costs of developing different versions of their products for different global markets.

Geographical adjustments are made by manufacturers or even wholesalers to list or quoted prices to reflect

a.   loyalty to the local economy whether it be city, state, or nationally designated.

b.   changes in price due to tariffs or excise taxes.

c.   the cost of transportation of the products from seller to buyer.

d.   the differentiated aspect of the particular product or service.

e.   simplicity in pricing structures.

The two general methods for quoting prices related to transportation costs are FOB origin pricing and __________.

a.   uniform delivered pricing

b.   mode of transportation pricing

c.   regional pricing

d.   flexible pricing

e.   FOB destination pricing

The two general methods for quoting prices related to transportation costs are uniformed delivered pricing and  __________.

a.   regional pricing

b.   flexible pricing

c.   mode of transportation pricing

d.   FOB origin pricing

e.   FOB destination pricing

Which of the following statements about geographical adjustments to price is most accurate?

a.   In FOB origin pricing, the seller selects the mode of transportation.

b.   In FOB with freight-allowed pricing, the buyer deducts the transportation costs from the list price.

c.   Multiple-zone pricing is sometimes referred to as “spider web” pricing.

d.   Basing point pricing seems to have been used in industries where freight expenses are only a minor part of the total cost to the buyer.

e.   Geographical adjustments can be subject to government regulation if the firm cannot supply objective data (lists of mountains, rivers, weather conditions, etc.) explaining why those adjustments need to be made.

Which of the following statements about geographical adjustments to price is most accurate?

a.   In FOB origin pricing, the seller selects the mode of transportation.

b.   In FOB with freight-allowed pricing, the seller passes on all transportation costs to the buyer.

c.   Multiple-zone pricing is sometimes referred to as “spider web” pricing.

d.   Basing point pricing has been used in industries where freight expenses are a significant part of the total cost to the buyer and products are largely undifferentiated.

e.   Geographical adjustments can be subject to government regulation if the firm cannot supply objective data (lists of mountains, rivers, weather conditions, etc.) explaining why those adjustments need to be made.

The acronym “FOB” stands for __________.

a.   freight on board

b.   free on board

c.   freight of buyer

d.   forward onto buyer

e.   freight owner bonus

The word “Free” in relation to the acronym “FOB” signals the point or location where the seller is

a.   free of responsibility for customer invoicing.

b.   free of product liability.

c.   free to choose method of transportation.

d.   free to choose  the point of loading.

e.   free to choose the method of payment.

FOB origin pricing refers to

a.   a method of  “free on board” pricing where the price the seller sets includes all transportation costs.

b.   a method of pricing where taxes and tariffs are adjusted based upon the city, state, or country of origin of a product and not its destination.

c.   a method of pricing where the price the seller quotes includes only the cost of loading the       product onto the vehicle and specifies the name of the location where the loading is to occur (the seller’s warehouse or factory, for example) is referred to as

d.   a method of pricing where taxes and tariffs are adjusted based upon the city, state, or country destination of a product and not its place of origin.

e.   the buyer’s naming the location of this loading as the seller’s factory or warehouse.

A method of pricing where the price the seller quotes includes only the cost of loading the product onto the vehicle and specifies the name of the location where the loading is to occur is referred to as

a.   FOB origin pricing.

b.   FOB destination pricing.

c.   geographical allowance.

d.   uniform delivered pricing.

e.   mode of transportation pricing.

Central Ice Machine Company is located in Omaha, Nebraska and sells Frick, Sullair, York, and Fes Fuller ammonia refrigeration parts.  The company ships these parts using FOB origin pricing.  Which of the following statements about the shipment of a Frick reciprocating compressor is true?

a.   Central Ice Machine will pay all shipping costs.

b.   Central Ice Machine splits the shipping costs with its customers no matter where the compressor is shipped.

c.   It will cost Central Ice Machine more to ship to Charlotte, North Carolina than to Topeka, Kansas.

d.  A buyer in Albany, New York, will pay significantly more shipping charges than a buyer in Lincoln, Nebraska.

e.   All buyers will pay the same shipping costs, regardless of the destination.

The fashion buyer for Neiman Marcus is in Italy to view the new collections and to order for the coming season.  In Milan, she negotiates a good price for a quantity of shoes in a range of sizes and styles, FOB factory.  This means that

a.   the factory selects the mode of transportation, pays the freight charges, and is responsible for any damage because the seller retains title to the goods until they are delivered to Neiman Marcus.

b.   the factory selects the mode of transportation but Neiman Marcus pays freight charges and is responsible for any damage while the shoes are in transit because title passes to the firm at the point of loading.

c.   Neiman Marcus and the factory split the freight costs.

d.   the factory pays the freight cost to a designated port (airport or seaport) in the U.S. while Neiman Marcus pays the freight from that port to its final destination within the U.S.

e.   the factory passes the title when the goods are loaded but will pay all shipping costs.

Uniform delivered pricing refers to

a.   the price the seller quotes that includes all transportation costs.

b.   the price the seller quotes excluding all transportation costs.

c.   the price the seller quotes including a fixed allowance whereby the buyer pays any additional costs.

d.   the price the seller quotes includes a fixed percentage of transportation costs for which they will be responsible.

e.   the guarantee that a retailer will be charged the same transportation fee for all of their outlets regardless of where they are located.

With uniform delivered pricing, the price the seller quotes

a.   includes all transportation costs.

b.   excludes all transportation costs.

c.   includes a fixed allowance whereby the buyer pays any costs above that allowance.

d.   includes a fixed percentage of transportation costs for which the seller will be responsible.

e.   will guarantee that a retailer will be charged the same transportation fee for all of their outlets regardless of where they are located.

The price the seller quotes that includes all transportation costs is referred to as __________.

a.   mode of transportation

b.   geographical allowance

c.   uniform delivered pricing

d.   FOB origin pricing

e.   FOB destination pricing

A method of pricing where the price the seller quotes includes all transportations costs and the seller retains title to the goods until delivered to the buyer, thereby assuming responsibility for any damage that may occur, is referred to as

a.   FOB destination pricing.

b.   FOB origin pricing.

c.   geographical allowance.

d.   uniform delivered pricing.

e.   transportation allowance.

Many cruise lines pay the customer’s airfare to the point of cruise departure.  What type of price adjustment are the cruise lines using?

a.   skimming pricing

b.   promotional pricing

c.   loss-leader pricing

d.   prestige pricing

e.   uniform delivered pricing

A pricing method where all buyers pay the same delivered price for the products, regardless of their distance from the seller, is referred to as __________.

a.   single-zone pricing

b.   multiple-zone pricing

c.   freight-absorption pricing

d.   FOB origin pricing

e.   basing-point pricing

A company placing an order from the Lab Safety Supply catalog is instructed to add $25.00 to the total cost of the order to pay for shipping.  Which method of shipping does this catalog supplier use?

a.   FOB origin pricing

b.   multiple-zone pricing

c.   freight absorption pricing

d.   single-zone pricing

e.   basing-point pricing

 

According to the Geographical Pricing Map A above, if the plant in Denver charges $20 to ship its products to all of the identified cities, it is most likely using which type of pricing?

a.   FOB origin pricing

b.   multiple-zone pricing

c.   single-zone pricing

d.   freight absorption pricing

e.   basing-point pricing

When a firm divides its selling territory into geographic areas, it is referred to as

a.   single-zone pricing.

b.   multiple-zone pricing.

c.   geographic pricing.

d.   FOB origin pricing.

e.   basing-point pricing.

Multiple-zone pricing refers to

a.   establishing a distribution center in each major geographical region or zone in which a firm’s product is sold.

b.   establishing retail outlets in the same vicinity as all of the firm’s manufacturing plants.

c.   a firm’s decision to charge the same price regardless of geographic regions or zones where it operates.

d.   a firm’s division of  its selling territory into geographic areas or zones.

e.   a firm’s decision to divide its business between multiple carriers to provide flexibility should transportation prices rise with one and fall with another.

After extensive analysis, a mail order company has decided to embark on a policy of multiple-zone pricing.  In which step of the price-setting process would the mail order firm have made this decision?

a.   make special adjustments to the list or quoted price

b.   select an approximate price level

c.   estimate demand and revenue

d.   identify price constraints and objectives

e.   set list or quoted price

 

According to the Geographical Pricing Map B above, if the plant in Denver ships its products to all of the identified cities at different prices based on distance as indicated by the color-coded regions, it is most likely using which type of pricing?

a.   FOB origin pricing

b.   multiple-zone pricing

c.   single-zone pricing

d.   FOB destination pricing

e.   basing-point pricing

According to the Geographical Pricing Map B above, if products are shipped from Denver, which of the following statements would be most accurate?

a.   A firm shipping products from Denver would charge customers in Miami and New York a lower price than customers who live in Dallas or Seattle.

b.   Customers in Minneapolis and Nashville would be charged $60.

c.   Customers in Dallas and Phoenix pay the same price.

d.   Customers in Nashville pay less shipping than customers in Minneapolis.

e.   All customers receiving products from Denver will pay the same shipping fee.

A company in Virginia that manufactures and sells peanut brittle to retailers charges higher shipping costs for orders sent to customers living west of the Mississippi River.  This Virginia company is using

a.   single-zone pricing.

b.   FOB origin pricing.

c.   freight absorption pricing.

d.   multiple-zone pricing.

e.   basing-point pricing.

A pricing strategy where the buyer is allowed to deduct freight expenses from the list price of the goods so the seller pays the transportation costs is referred to as

a.   FOB factory pricing.

b.   FOB absorption pricing.

c.   FOB origin pricing.

d.   basing-point pricing.

e.   FOB with freight-allowed pricing.

Another name for freight absorption pricing is

a.   FOB factory pricing.

b.   FOB absorption pricing.

c.   FOB with freight-allowed pricing.

d.   FOB basing-point pricing.

e.   FOB origin pricing.

Selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the buyer is referred to as __________.

a.   FOB origin pricing

b.   basing-point pricing

c.   single-zone pricing

d.   multiple-zone pricing

e.   freight absorption pricing

Basing-point pricing refers to

a.   selecting a single geographical location from which the list price for products plus freight expenses are charged to the seller.

b.   selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the seller.

c.   having all buyers pay the same delivered price for the products, regardless of their distance from the seller.

d.   a firm dividing a selling territory into geographic areas or zones and charging the same delivered price to all buyers within the same zone, but charging different prices in different zones depending on distance from the factory or warehouse.

e.   selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the buyer.

For which of the following products is a manufacturer most likely to use basing-point pricing?

a.   pet food

b.   furniture

c.   crystal glass bowls

d.   coal

e.   cut flowers

 

Suppose a firm selects its plant in St. Louis as the location from where it will ship its products to all of the identified cities shown in Geographical Pricing Map C above.  The MSRP of the product is $100 but the firm adds a freight surcharge to cover transportation/freight.  This surcharge will vary according to the distance between the origin of the shipment—in this case St. Louis—and the destination or customer’s location.  What is the most likely pricing method this firm is using?

a.   FOB origin pricing

b.   multiple-zone pricing

c.   single-zone pricing

d.   basing-point pricing

e.   FOB destination pricing

Suppose a firm selects its plant in St. Louis as the location from where it will ship its products to all of the identified cities shown in Geographical Pricing Map C above.  The MSRP of the product is $100 but the firm adds a freight surcharge to cover transportation/freight.  This surcharge will vary according to the distance between the origin of the shipment—in this case St. Louis—and the destination or customer’s location.  In this pricing method, what is St. Louis called?

a.   basing point

b.   FOB origin point

c.   multiple-zone location

d.   FOB freight location

e.   FOB destination point

Five pricing practices are closely scrutinized because of  potential unethical or illegal actions.  They include: (1) price fixing; (2) price discrimination; (3) deceptive pricing; (4) geographical pricing; and (5) __________.

a.   predatory pricing

b.   price discounting

c.   lateral price fixing

d.   regional rollbacks

e.   delayed payment penalties

Five pricing practices are closely scrutinized because of  potential unethical or illegal actions.  They include: (1) price fixing; (2) price discrimination; (3) predatory pricing; (4) geographical pricing; and (5) __________.

a.   price discounting

b.   deceptive pricing

c.   lateral price fixing

d.   regional rollbacks

e.   delayed payment penalties

Five pricing practices are closely scrutinized because of  potential unethical or illegal actions.  They include: (1) price fixing; (2) predatory pricing; (3) deceptive pricing; (4) geographical pricing; and (5) __________.

a.   price discounting

b.   lateral price fixing

c.   regional rollbacks

d.   delayed payment penalties

e.   price discrimination

Five pricing practices are closely scrutinized because of  potential unethical or illegal actions.  They include: (1) predatory pricing; (2) price discrimination; (3) deceptive pricing; (4) geographical pricing; and (5) __________.

a.   price discounting

b.   lateral price fixing

c.   price fixing

d.   delayed payment penalties

e.   price discrimination

Five pricing practices are closely scrutinized because of potential unethical or illegal actions.  They include: (1) price fixing; (2) price discrimination; (3) deceptive pricing; (4) predatory pricing; and (5) __________.

a.   geographical pricing

b.   price discounting

c.   lateral price fixing

d.   delayed payment penalties

e.   price discrimination

Which of the following statements about the legal and regulatory aspect of pricing is most accurate?

a.   The Robinson-Patman Act deals with predatory pricing.

b.   The Consumer Goods Pricing Act is the only federal legislation that deals directly with pricing issues.

c.   The Sherman Act deals only with vertical price fixing.

d.   The Federal Trade Commission Act deals with predatory pricing, deceptive pricing, and geographical pricing issues.

e.   The Consumer Goods Pricing Act and the Robinson-Patman Act deal with price discrimination.

 

Consider Figure 14-8 above.  “A” represents which of the following legislative acts?

a.   The Robinson-Patman Act

b.   The Clayton Act

c.   The Sherman Act

d.   The Federal Trade Commission Act

e.   The Consumer Goods Pricing Act

Consider Figure 14-8 above.  “B” represents which of the following legislative acts?

a.   The Robinson-Patman Act

b.   The Clayton Act

c.   The Sherman Act

d.   The Federal Trade Commission Act

e.   The Consumer Goods Pricing Act

Consider Figure 14-8 above.  “C” represents which of the following legislative acts?

a.   The Robinson-Patman Act

b.   The Clayton Act

c.   The Sherman Act

d.   The Federal Trade Commission Act

e.   The Consumer Goods Pricing Act   

Consider Figure 14-8 above.  “D” represents which of the following legislative acts?

a.   The Robinson-Patman Act

b.   The Clayton Act

c.   The Sherman Act

d.   The Federal Trade Commission Act

e.   The Consumer Goods Pricing Act

All of the following statements regarding the legal and regulatory aspects of pricing are true EXCEPT:

a.   there has been a movement towards a “rule of reason” in both horizontal and vertical price fixing cases.

b.   the Robinson-Patman Act allows for price differentials to different customers under the “cost justification defense.”

c.   a manufacturer’s MSRP has been declared illegal per se by a recent U.S. Supreme Court decision.

d.   The “rule of reason” perspective is the direct opposite of the per se rule.

e.   wholesalers can fix the maximum retail price for their products provided the price agreement does not create an “unreasonable restraint of trade.”

A conspiracy among firms to set prices for a product is referred to as

a.   price discrimination.

b.   price fixing.

c.   predatory pricing.

d.   tying arrangements.

e.   exclusive dealing.

Price fixing refers to

a.   an arrangement a manufacturer makes with a reseller to handle only its products and not those of a competitor.

b.   the practice of charging a very low price for a product with the intent of driving competitors out of business.

c.   the practice of charging different prices to different buyers for goods of like grade and quality.

d.   a conspiracy among firms to set prices for a product.

e.   a seller’s requirement that the purchaser of one product also buy another product in the line.

Price fixing is illegal per se under the Sherman Act.  What does “per se” mean?

a.   “according to”

b.   “in lieu of”

c.   “in regard to”

d.   “in and of itself”

e.   “without exception”

Price fixing is illegal per se under the

a.   Sherman Act.

b.   Consumer Goods Pricing Act.

c.   Robinson-Patman Act.

d.   Federal Trade Commission Act.

e.   Clayton Act.

Two or more competitors explicitly or implicitly setting prices is referred to as __________.

a.   competitive collusion

b.   vertical price fixing

c.   horizontal price fixing

d.   lateral price fixing

e.   price cooperation

Controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price is called

a.   competitive collusion.

b.   price cooperation.

c.   horizontal price fixing.

d.   lateral price fixing.

e.   vertical price fixing.

Vertical price fixing refers to

a.   two or more competitors explicitly or implicitly setting  prices.

b.   the practice of charging different prices to different buyers for goods of like grade and quality.

c.   controlling agreements between independent buyers and sellers whereby sellers are required not to sell products below a minimum retail price.

d.   a conspiracy among firms to set prices for a product or service.

e.   a seller’s requirement that the purchaser of one product also buy another product in the line.

Vertical price fixing involves controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price.  This practice is also called __________.

a.   price discrimination

b.   predatory pricing

c.   a tying arrangement

d.   resale price maintenance

e.   exclusive dealing

Resale price maintenance was declared illegal in 1975 under the

a.   Sherman Act.

b.   Consumer Goods Pricing Act.

c.   Robinson-Patman Act.

d.   Federal Trade Commission Act.

e.   Clayton Act.

Mark Johnson, the manager of a discount consumer electronics store, was approached by the manufacturer’s representative on behalf of a marketer of a popular and profitable line of DVD storage racks.  The manufacturer’s representative implied that if Johnson doesn’t raise the retail prices for the storage racks to those paid by the marketer’s non-discount customers, Johnson’s supply of racks may be severely curtailed.  The manufacturer’s representative is guilty of attempting

a.   horizontal price-fixing.

b.   resale price maintenance.

c.   price discrimination.

d.   predatory pricing.

e.   bait and switch pricing.

Price discrimination refers to

a.   the practice of charging different prices to different buyers for goods of like grade and quality.

b.   an arrangement a manufacturer makes with a reseller to handle only its products and not those of a competitor.

c.   the practice of charging a very low price for a product with the intent of driving competitors out of business.

d.   a conspiracy among firms to set prices for a product or service.

e.   a seller’s requirement that the purchaser of one product also buy another product in the line.

The practice of charging different prices to different buyers for goods of like grade and quality is referred to as

a.   horizontal price-fixing.

b.   resale price maintenance.

c.   price discrimination.

d.   predatory pricing.

e.   bait and switch pricing.

Price discrimination is illegal under the

a.   Sherman Act.

b.   Consumer Goods Pricing Act.

c.   Robinson-Patman Act.

d.   Federal Trade Commission Act.

e.   Anti-Competitive Act.

In one of its least favorite actions, Amazon.com was caught fiddling with its price tags.  Avid DVD buyers, buying in quantity for resale, found that the online retailer was offering different customers different prices for the same DVD, and complained vociferously.  Amazon was caught red-handed. Company officials admitted that the company was trying to see how much it could charge for an item before buyers balked.  No matter what the reasoning behind it, Amazon.com was using

a.   horizontal price-fixing.

b.   price discrimination.

c.   resale price maintenance.

d.   predatory pricing.

e.   bait and switch pricing.

A unique feature of the Robinson-Patman Act is that it allows for price differentials to different customers under several conditions.  Which of the following practices would be permitted?

a.   Using price differentials when price differences charged to different customers do not exceed the differences in the cost of manufacture, sale, or delivery resulting from different methods or quantities in which such goods are sold or delivered to buyers.

b.   Using price differentials when price differences are given on the basis of other family businesses.

c.   Using price differentials when charging different prices to different buyers for goods of like grade or quality.

d.   Using price differentials when charging different prices on the basis of religious affiliation.

e.   Using price differentials when charging the original price for refurbished goods that have been damaged or used and returned but repaired according to company specifications.

A unique feature of the Robinson-Patman Act is that it allows for price differentials to different customers under several conditions.  Which of the following practices would be permitted?

a.   Using price differentials when price differences are given on the basis of other family businesses.

b.   Using price differentials when charging different prices to different buyers for goods of like grade or quality.

c.   Using price differentials when charging different prices on the basis of religious affiliation.

d.   Using price differentials when charging the original price for refurbished goods that have been damaged or used and returned but repaired according to company specifications.

e.   When price differences result from changing market conditions, avoiding obsolescence of seasonal merchandise, including perishables, or closing out sales.

A unique feature of the Robinson-Patman Act is that it allows for price differentials to different customers under several conditions.  Which of the following practices would be permitted?

a.   Using price differentials when price differences are given on the basis of other family businesses.

b.   Using price differentials when charging different prices to different buyers for goods of like grade or quality.

c.   When price differences are quoted to selected buyers in good faith to meet competitors’ prices and are not intended to injure competition.

d.   Using price differentials when charging different prices on the basis of religious affiliation.

e.   Using price differentials when charging the original price for refurbished goods that have been damaged or used and returned but repaired according to company specifications.

The Robinson-Patman Act covers promotional allowances as well as discounts.  To legally offer promotional allowances to buyers, the seller must do so on a(n) __________ to all buyers businesses distributing the seller’s products.

a.   proportionally equal basis

b.   limited basis

c.   disproportionally equal basis

d.   geographical basis

e.   across the board

Price deals that mislead consumers fall into the category of

a.   predatory pricing.

b.   deceptive pricing.

c.   price discrimination.

d.   caveat emptor.

e.   resale price maintenance.

Advertising such as “Retail Value $100, Our Price $85” is deceptive if

a.   a verified and substantial number of stores in the market area did not price the item at $100.

b.   even one store in that retail chain did not price the item at $100.

c.   a competitor is selling the same item for $75 on sale and their normal price is only $85.

d.   there is not enough product on hand at that price to satisfy the needs of the store’s regular customer traffic.

e.   the markup on the original price is more than 200 percent.

A claim that a price is below a manufacturer’s suggested or list price may be deceptive if

a.   the items for sale had been purchased from another retailer.

b.   the items for sale were part of a manufacturer’s promotional allowance.

c.   the items were part of a bulk order.

d.   few or no sales occur at that price in a retailer’s market area.

e.   the items were purchased from the manufacturer at a higher price and the sale was part of a loss-leader promotion.

When a seller represents a price as reduced, the item must have been offered in good faith at a higher price for a substantial previous period.  Former price comparisons are deceptive if

a.   the high price tags were from a previous owner or retailer and were purchased that way from the reseller, even though that price didn’t originate at the store.

b.   the items for sale were part of a manufacturer’s promotional allowance.

c.   a high price was set for the purpose of establishing a reference for a price reduction.

d.   the items for sale were available at the higher price for less than 30 days.

e.   the items were purchased from the manufacturer at a higher price and the sale was part of a loss-leader promotion.

Deceptive pricing practices are outlawed by legislation and enforced by which federal agency?

a.   Consumer Protection Agency.

b.   U.S. Department of Justice.

c.   Federal Communications Commission.

d.   U.S. Department of Commerce.

e.   Federal Trade Commission.

When a firm offers a very low price on a product to attract customers to a store, and once in the store, the customer is persuaded to purchase a higher-priced item, the practice is referred to as

a.   predatory pricing.

b.   deceptive pricing.

c.   price discrimination.

d.   caveat emptor.

e.   bait and switch.

Five common forms of pricing include: bait and switch, bargains conditional on other purchases, comparable value comparisons, comparisons with suggested prices, and former price comparisons.  What do all these practices have in common?  They are all

a.   most effective in the growth stage of the product life cycle.

b.   popular techniques preferred by online businesses.

c.   illegal and often difficult to prosecute.

d.   most effective in business-to-business marketing.

e.   effective pricing practices that professional marketers use.

A hardware store advertises a ⅜” Black and Decker Power Drill for $29.95.  You enter the store intending to purchase the drill.  The salesperson informs you that they are all sold out.  She tells you that the “sale” drills were factory seconds and that if you are going to be doing any kind of serious woodworking, you should buy the Model 3309, which sells for $49.99.  This scenario has elements of which type of deceptive pricing?

a.   comparable value comparisons

b.   former price comparisons

c.   comparisons with suggested prices

d.   bait and switch

e.   conditional bargains

To promote their business, some psychics advertise free tarot-card readings and other insights into their customers’ futures on television.  Unfortunately, this “free reading” has cost some unsuspecting callers as much as $700 in phone charges.  This sort of deceptive pricing practice would be primarily monitored by the

a.   Consumer Protection Agency.

b.   U.S. Department of Justice.

c.   Federal Trade Commission.

d.   Federal Communications Commission.

e.   Consumer Product Safety Commission.

Which of the following statements about geographical pricing is most accurate?

a.   Geographical pricing is generally legal and not normally a concern in the U.S. legal system.

b.   Geographical pricing has come under more government scrutiny than any other pricing policy.

c.   FOB freight-allowed pricing practices are illegal.

d.   FOB origin pricing is legal.

e.   Basing-point pricing is the only form of geographical pricing that is not under some type of legal restriction.

The practice of charging a very low price for a product with the intent of driving competitors out of business is referred to as

a.   price fixing.

b.   predatory pricing.

c.   price discrimination.

d.   deceptive pricing.

e.   geographical pricing.

Predatory pricing refers to

a.   the practice of charging a very low price for a product with the intent of driving competitors out of business.

b.   a conspiracy among firms to set prices for a product.

c.   using price differentials when charging different prices on the basis of race, religion, or ethnic affiliation.

d.   using price differentials when charging the original price for refurbished goods that have been damaged or used and returned but repaired according to company specifications.

e.   controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price.

Predatory pricing is

a.   an arrangement a manufacturer makes with a reseller to handle only its products and not those of a competitor.

b.   the practice of charging different prices to different buyers for goods of like grade and quality.

c.   the practice of charging a very low price for a product with the intent of driving competitors out of business.

d.   a conspiracy among firms to set prices for a product or service.

e.   a seller’s requirement that the purchaser of one product must also buy another product in the line.

In the early 1980s, typical round-trip coach airfares from the East Coast to London were more than $500.  Then Freddie Laker introduced the People’s Express, a competing service into Newark at $350.  Major airlines matched his price—and continued to do so until they drove People’s Express out of business.  Then prices shot back up to over $500.  A lawsuit filed under the Sherman Act resulted in the judgment that the major airlines had explicitly tried to destroy a competitor.  The experience of People’s Express is an example of __________ on the part of the major airlines

a.   price fixing.

b.   price discrimination.

c.   deceptive pricing.

d.   predatory pricing.

e.   pricing constraints.

Bob Biltmore owns dozens of very successful print shops throughout the Midwest.  Biltmore’s shops specialize in low-cost black-and-white copies and feature user-friendly machines consumers can easily operate.  In recent months, Biltmore has noticed many more competitors in the areas where his stores are located.  In an attempt to eliminate the competition, Biltmore has decided to charge a very low price for his black-and-white copies, a price so low his competitors will be forced out of business.  After the competition has been driven out, Biltmore plans to raise the price of his copies.  Biltmore is planning to engage in the illegal and unethical practice of

a.   price fixing.

b.   price inflation.

c.   deceptive pricing.

d.   competitive pricing.

e.   predatory pricing.

The practice of offering a bargain that is conditional on the purchase of other products may exist when a buyer is offered the “1-Cent Sale,” the “Buy 1, Get 1 Free,” or the “Get 2 for the Price of 1” deal.  Such pricing is legal only if

a.   the seller is using bundle pricing.

b.   there is a reasonable amount of inventory to satisfy the needs of the retailers normal traffic flow.

c.   the first items are sold at the regular price, not a price inflated for the offer.

d.   the product is not outdated.

e.   the quantity available to the customer is not limited.

As explained in “Going Online” box, the Federal Trade Commission (FTC) is especially concerned about the

a.   overuse of FOB origin pricing.

b.   misuse of quantity discounting.

c.   elimination of seasonal discounts.

d.   children under 18 making online purchases.

e.   misuse of the word “free” in promotions.

When 3M launched its premium Greptile Grip golf glove consisting of the highest quality Cabretta sheep leather, it suggested a retail price range of $16.95 to $19.95.  Golf glove marketer Bionic had introduced its Classic at $24.95 and its Pro at $39.95, while FootJoy launched its Pure Touch Limited at $28.00 and its SciFlex at $18.00.  Other competitors focused on price/value at three price points: $6.00-$9.99, $10.00-$16.99, and $17.00 and up.  These statements suggest that 3M has been pursuing a __________ method of selecting an approximate price level.

a.   competition-based

b.   profit-oriented

c.   cost-oriented

d.   demand-oriented

e.   experience-oriented

If 3M decided the retail price for the Greptile Grip golf glove would be $16.95 and then worked backward through markups taken by retailers and wholesalers to determine what price it can charge wholesalers for the product, the firm would most likely be practicing a __________ strategy.

a.   price lining

b.   penetration pricing

c.   predatory pricing

d.   target pricing

e.   cost plus percentage-of-cost pricing

 

1. Vizio's long-term goal for the next 20 to 30 years is to

A. have at least one of its HDTVs products in every single home in the United States.

B. have its HDTVs exported from the U.S. to China.

C. be the next Sony.

D. be the next Apple.

E. create the first completely wireless HDTV entertainments system.

2. According to Vizio, "The whole goal is to ensure that we have the right product, at the right time and the right price and _________."

A. forever rid the world of plugs and wires

B. create customer value that is unmatched in the industry

C. deliver it to the right people

D. at the right place

E. drive a seamless end-to-end value chain

3. In order to deliver a product that the average consumer could afford, Vizio

A. has the design specifications and marketing done in the United States and having contract

manufacturers in Taiwan, build the product.

B. uses mass customization in Taiwan and then ships the HDTVs to the United States.

C. purchased a small company in China to distribute its products under the Vizio name.

D. purchased a small company in Japan to distribute its products under the Vizio name.

E. relies solely on recycled materials to build high quality, no frills products.

4. The key to setting a final price for a product is finding an approximate price level to use as a reasonable starting point. Four common approaches to select an approximate price level are: (1) demand-oriented; (2) ___________; (3) profit-oriented; and (4) competition-oriented approaches.

A. cost-oriented

B. cause-oriented

C. revenue-oriented

D. stakeholder-oriented

E. distribution-oriented

5. The key to setting a final price for a product is finding an approximate price level to use as a reasonable starting point. Four common approaches to select an approximate price level are: (1) demand-oriented; (2) cost-oriented; (3) ___________; and (4) competition-oriented approaches.

A. stakeholder-oriented

B. revenue-oriented

C. profit-oriented

D. distribution-oriented

E. cause-oriented

6. The key to setting a final price for a product is finding an approximate price level to use as a reasonable starting point. Four common approaches to select an approximate price level are: (1) demand-oriented; (2) cost-oriented; (3) profit-oriented; and (4) __________ approaches.

A. revenue-oriented

B. distribution-oriented

C. stakeholder-oriented

D. competition-oriented

E. cause-oriented

7. Figure 14-1 above represents the six steps in setting price. Which letter represents the step where a firm would consider a demand-, cost-, profit-, or competition-oriented approach?

A. "B"

B. "C"

C. "D"

D. "E"

E. "F"

8. Figure 14-1 above represents the six steps in setting price. Which letter represents the step where a firm would consider a one price or flexible price strategy, company and competitive effects, and incremental costs and revenues?

A. "B"

B. "C"

C. "D"

D. "E"

E. "F"

9. Figure 14-1 above represents the six steps in setting price. Which letter represents the step where a firm would consider discounts, allowances, and geographical adjustments?

A. "B"

B. "C"

C. "D"

D. "E"

E. "F"

10. Which of the following statements is most accurate?

A. When selecting a strategy for setting an initial price, it doesn't matter which one you use as long as you stick with it.

B. Sometimes pricing strategies overlap and it would be wise for a novice marketer to consider several strategies in choosing an approximate price level.

C. Demand-oriented pricing approaches rely heavily on competitors' prices.

D. Skimming pricing is a competition-oriented pricing strategy.

E. Penetration pricing is the best pricing strategy for companies trying to meet the goals of a profitoriented pricing approach.

11. Demand-oriented approaches weigh factors that underlie expected __________ more heavily than factors such as cost, profit, and competition when selecting a price level.

A. total revenue

B. stakeholder concerns

C. prevailing prices

D. product substitutes

E. customer tastes

12. Skimming pricing is considered to be a __________ approach to pricing.

A. demand-oriented

B. cost-oriented

C. profit-oriented

D. competition-oriented

E. service-oriented

13. Skimming pricing is a strategy that introduces a new or innovative product by

A. following a price elastic strategy.

B. creating multiple price points.

C. setting a high initial price.

D. setting a low initial price.

E. setting the price at the average of competitors' prices.

14. Setting the highest initial price that customers really desiring the product are willing to pay when introducing a new or innovative product is referred to as a

A. skimming strategy.

B. penetration strategy.

C. price-lining strategy.

D. experience-curve pricing strategy.

E. prestige pricing strategy.

15. Skimming pricing refers to

A. setting the lowest initial price possible when introducing a new or innovative product in order to "skim" sales from competitors.

B. setting the highest initial price that customers really desiring the product are willing to pay when introducing a new or innovative product.

C. setting the lowest initial price possible, skimming right above the point of profitability in order to secure a larger market share.

D. purposely setting the highest price possible to repel the mass market and attract upper class buyers even though the actual value of the item is extremely small.

E. selling off the lowest producing products from a company's product line and turning them over to resellers to skim off any remaining profit potential.

16. A skimming pricing policy is likely to be most effective when

A. consumers perceive your product to be similar to other products on the market.

B. a lower price will significantly lower fixed costs.

C. competitors will be attracted to the market due to the potential for high sales revenues.

D. consumers tend to be price sensitive.

E. the high initial price will not attract competitors.

17. A skimming pricing policy is likely to be most effective when

A. consumers perceive your product to be similar to other products on the market.

B. a lower price will significantly lower fixed costs.

C. customers interpret high price as signifying high quality.

D. consumers tend to be price sensitive.

E. it will be easier to set measurable sales unit goals.

18. A skimming pricing policy is likely to be most effective when

A. consumers perceive your product to be similar to other products on the market.

B. a lower price will significantly lower fixed costs.

C. consumers tend to be price sensitive.

D. it will be easier to set measurable sales unit goals.

E. the high initial prices do not attract competitors.

19. A skimming pricing policy is likely to be most effective when

A. consumers tend to be price sensitive.

B. it will be easier to set measurable sales unit goals.

C. a lower price will significantly lower fixed costs.

D. consumers perceive your product to be similar to other products on the market.

E. lowering the price has only a minor effect on increasing sales volume and reducing unit costs.

20. A skimming pricing policy is likely to be most effective when

A. customers are willing to buy immediately at the high initial price.

B. consumers tend to be price sensitive.

C. it will be easier to set measurable sales unit goals.

D. a lower price will significantly lower fixed costs.

E. consumers perceive your product to be similar to other products on the market.

21. Hallmark was the official supplier of flowers at the last Winter Olympics. Hallmark presented each Olympic winner with a special bouquet of roses designed to resemble the Olympic torch. Consumers were able to buy a smaller version of this same bouquet at the Hallmark Web site for $74.95. The Olympic bouquet that consumers could buy contains two dozen yellow roses, yet you can buy two dozen yellow roses for less than $35 at most supermarkets. If Hallmark is treating the Olympic bouquet as an innovative product, then it is using which demand-oriented pricing approach?

A. bundle pricing

B. yield management pricing

C. skimming pricing

D. target return-on-sales pricing

E. penetration pricing

22. The Apple iPhone was recently introduced at an initial price of $600. People waited in line overnight so they could be one of the first to own these unique phones. Which pricing strategy did Apple use to help recoup its research and development costs for the mobile phone?

A. penetration pricing

B. experience curve pricing

C. customary pricing

D. skimming pricing

E. target pricing

23. When microwave ovens were in the introduction stage of its product life cycle, some consumers were willing to pay exorbitant prices for these innovative ovens. Taking advantage of this strong consumer desire, marketers set the price for microwave ovens at the highest initial price customers with a very strong desire for the product were willing to pay. Marketers of microwave ovens used a __________ pricing strategy.

A. skimming

B. penetration

C. prestige

D. price lining

E. bundle

24. Penetration pricing is considered to be a __________ approach to pricing.

A. demand-oriented

B. cost-oriented

C. profit-oriented

D. competition-oriented

E. service-oriented

25. Penetration pricing refers to

A. charging different prices to different buyers for goods of like grade and quality.

B. setting the highest initial price that customers really desiring the product are willing to pay.

C. setting a low initial price on a new product to appeal immediately to the mass market.

D. setting a market price for product or product class based on a subjective feel for the competitors' prices or market price as the benchmark.

E. setting prices a few dollars or cents under an even number.

26. The pricing strategy that is almost the exact opposite of skimming pricing is

A. target pricing.

B. penetration pricing.

C. price lining.

D. odd-even pricing.

E. prestige pricing.

27. Wrigley recently introduced a new flavor of Orbit brand sugar free chewing gum—mint mojito. The introductory price was low so that it would quickly create loyal customers for the flavor. In this example, Wrigley used

A. skimming pricing.

B. penetration pricing.

C. price lining.

D. odd-even pricing.

E. loss-leader pricing.

28. Penetration pricing is intended to appeal to which market?

A. highly selective, quality-seeking consumers

B. price-insensitive markets

C. the mass market

D. specialty product markets

E. the same markets as those targeted with a skimming pricing strategy

29. Which of the following statements about penetration pricing is most accurate?

A. Penetration pricing is a profit-oriented approach to pricing.

B. Penetration pricing is a cost-oriented pricing method.

C. Penetration pricing encourages competitors to enter a market.

D. Penetration pricing is more effective in a marketplace with price-sensitive consumers.

E. Penetration pricing usually precedes a skimming pricing.

30. A penetration pricing policy is likely to be most effective when

A. unit production and marketing costs fall dramatically as production volumes increase.

B. customers are willing to buy immediately at the high initial price.

C. lowering the price has only a minor effect on increasing sales volume and reducing unit costs.

D. the high initial prices do not attract competitors.

E. customers interpret high price as signifying high quality.

31. A penetration pricing policy is likely to be most effective when

A. lowering the price has only a minor effect on increasing sales volume and reducing unit costs.

B. when the high initial prices do not attract competitors.

C. many segments of the market are price sensitive.

D. customers interpret high price as signifying high quality.

E. customers are willing to buy immediately at the high initial price.

32. A penetration pricing policy is likely to be most effective when

A. lowering the price has only a minor effect on increasing sales volume and reducing unit costs.

B. the high initial prices do not attract competitors.

C. a low initial price discourages competitors from entering the market.

D. customers interpret high price as signifying high quality.

E. customers are willing to buy immediately at the high initial price.

33. In some cases, penetration pricing may follow skimming pricing. The skimming pricing would help __________ and the penetration pricing would help __________.

A. increase market share; attract price-insensitive customers

B. attract price sensitive customers; increase market share

C. recoup initial research and development costs; increase market share

D. recoup initial research and development costs; maintain market share

E. increase market share; attract price insensitive customers

34. When Hallmark cards introduced a line of $0.99 cards (about half the price of the previously least expensive cards it sold), the greeting card company was trying to appeal to a mass market that was price sensitive. Hallmark was using a __________ pricing strategy.

A. prestige

B. skimming

C. penetration

D. target ROI

E. experience-curve

35. The manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product. Which of the following conditions would argue against using a penetration pricing strategy for the tasty fat-free ice cream?

A. The ice cream market is highly conservative.

B. The ice cream market exhibits inelastic demand over a fairly broad range of prices.

C. Economies of scale in production would be substantial.

D. Retailers are not willing to carry new brands of ice cream in the already overcrowded category.

E. Once the initial price is set, it is nearly impossible to lower price without alienating early buyers.

36. Prestige pricing is considered to be a __________ approach to pricing.

A. demand-oriented

B. cost-oriented

C. profit-oriented

D. competition-oriented

E. service-oriented

37. Setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy

it is referred to as

A. skimming pricing.

B. status pricing.

C. price lining.

D. value pricing.

E. prestige pricing.

38. A manufacturer using _________ is setting a high price so that quality- or status-conscious consumers

will be attracted to the product and buy it.

A. skimming pricing

B. penetration pricing

C. price lining

D. odd-even pricing

E. prestige pricing

39. Talbot's sells women's clothes. A T-shirt with the Talbot's label costs $25. If you want to buy just ant Tshirt, you can buy one for $5 at a Family Dollar Store, but it won't have the Talbot's label or quality. What kind of demand-oriented approach to pricing does Talbot's use?

A. experience curve pricing

B. skimming pricing

C. demand-backward pricing

D. prestige pricing

E. flexible pricing

40. You can buy a General Electric dishwasher for $399 or you can buy a similar under-the-counter Bosch brand dishwasher for $989. Since Bosch uses its pricing strategy to project a high-quality product image, it is most likely using __________ pricing.

A. bundle

B. standard markup

C. prestige

D. penetration

E. cost plus fixed-fee

41. Figure 14-2A above shows a demand curve that slopes downward and to the right, then turns back to the left. Which pricing approach does Figure 14-2A depict?

A. prestige pricing

B. skimming pricing

C. penetration pricing

D. price lining

E. reflexive pricing

42. Figure 14-2A above is a graph that shows which pricing strategy?

A. skimming

B. penetration

C. cost-plus

D. price lining

E. prestige

43. The movement from point A to point B in Figure 14-2A above shows

A. skimming demand.

B. penetration demand.

C. that buyers see the product as a bargain and buy more.

D. that buyers become dubious about the quality and prestige and buy less.

E. a downturn in the economy.

44. The movement from point B to point C in Figure 14-2A above shows

A. an increased demand for the product at a lower price.

B. derived demand.

C. that buyers see the product as a bargain and buy more.

D. that buyers become dubious about the quality and prestige and buy less.

E. a downturn in the economy.

45. Figure 14-2B above illustrates which type of pricing approach?

A. skimming

B. penetration

C. cost-plus

D. price lining

E. prestige

46. Price-lining is considered to be a __________ approach to pricing.

A. cost-oriented

B. demand-oriented

C. profit-oriented

D. competition-oriented

E. service-oriented

47. Setting the price of a line of products at a number of different specific price points is referred to as _________.

A. odd-even pricing

B. bundle pricing

C. cost-plus pricing

D. price lining

E. prestige pricing

48. Price lining refers to

A. charging different prices to different buyers for goods of like grade and quality.

B. setting a low initial price on a new product to appeal immediately to the mass market.

C. setting a market price for product or product class based on a subjective feel for the competitors' price or market price as the benchmark.

D. setting the price of a line of products at a number of different specific price points.

E. adjusting the price of a product so it is "in line" with the price of its largest competitor.

49. When using a price lining strategy, a marketer will

A. set price slightly higher than necessary to protect against losses from environmental factors.

B. adjust the price of a product so it is "in line" with the price of its largest competitor.

C. set the price of a line of products at a number of different specific pricing points.

D. setting a low initial price on a new product to appeal immediately to the mass market.

E. setting a market price for product or product class based on a subjective feel for the competitors' price or market price as the benchmark.

50. The assumption that demand is elastic at a number of price points but is inelastic between these price points leads to which pricing approach?

A. product line pricing

B. skimming pricing

C. penetration pricing

D. price lining

E. odd-even pricing

51. Which of the following statements regarding price lining is most accurate?

A. In order for price lining to be effective, there should be at least ten specified price points.

B. Price lining method assumes that demand is inelastic at each price point but elastic between price points.

C. Price lining assumes that demand is elastic at each price point but inelastic between price points.

D. Price lining is the preferred pricing strategy for governmental contracts.

E. Price lining is the same as above-, at-, or below-market pricing.

52. In some cases, manufacturers design products for different price points and retailers apply __________ to achieve the three or four different price points offered to consumers.

A. approximately the same markup percentages

B. progressively higher markup percentages

C. different markup percentages depending how long the item remains on their shelves

D. above-, at-, or below-market pricing

E. elasticity of demand pricing calculations

53. A retailer purchased a gross of silk shells each costing exactly $17 apiece. Although the only difference between the shells was color, when they were put on the floor, the pastel primary colors were marked $25, the pastel colors were marked $28 dollars, and the black and white shells were marked $30. These prices were set most likely because

A. retailers using a price lining strategy will occasionally mark up items based on color, style, and expected consumer demand.

B. fewer people buy black and white shells, so the retailer has to charge a higher price to break even.

C. the retailer is using prestige pricing; black and white are more elegant.

D. the primary colors are priced using a penetration strategy, the pastels are priced using a skimming strategy, and the black and white shells are priced using prestige pricing.

E. price lining is essentially the same as above-, at-, or below market pricing.

54. In response to Duracell's introduction of the Duracell Ultra battery, Energizer introduced an Advanced Formula battery. But unlike Duracell, Energizer priced its batteries at a low initial price to attract the mass market. Energizer used

A. penetration pricing.

B. prestige pricing.

C. skimming pricing.

D. price lining.

E. cost-plus fixed-fee pricing.

55. In response to Duracell's introduction of the Duracell Ultra battery, Energizer introduced an Advanced Formula battery. But unlike Duracell, Energizer priced its batteries at a low initial price to attract the mass market. Was Energizer's pricing strategy to take market share from Duracell a success?

A. No, because consumers equate quality of batteries with higher prices.

B. No, because consumers are price-insensitive when it comes to batteries.

C. Yes, because the positive association with the "Energizer Bunny" kept on going and going.

D. Yes, because consumers typically respond positively to cost-plus pricing.

E. Yes, because the demand for batteries has unitary elasticity.

56. Odd-even pricing is considered to be a __________ approach to pricing.

A. cost-oriented

B. profit-oriented

C. demand-oriented

D. competition-oriented

E. service-oriented

57. Odd-even pricing refers to

A. setting prices one way for product lines and another way for individual brands.

B. setting prices of luxury items at even price points and setting the price of necessities at odd price points.

C. setting prices a few dollars or cents under an even number.

D. adding a fixed percentage to the cost of all items in a specific product class.

E. offering retailers "baker's dozens," thirteen items for the price of twelve to encourage larger purchase orders.

58. Setting prices a few dollars or cents under an even number is referred to as _________.

A. odd-even pricing

B. prestige pricing

C. price lining

D. above-, at-, or below-market pricing

E. every day fair pricing

59. Odd-even pricing is based on

A. retailers' perceptions of price.

B. customers' perceptions of price.

C. wholesalers' markups.

D. manufacturers' perceptions of price.

E. government regulators' perceptions of price.

60. The prices for all furniture sold at American Furniture Warehouse end in $9, such as $599.99, $899.99, etc. American Furniture Warehouse uses

A. odd-even pricing.

B. dynamic pricing.

C. price lining.

D. bundle pricing.

E. product line pricing.

61. Which of the following statements regarding odd-even pricing is most accurate?

A. Odd-even pricing is designed to give the consumer a better set of pricing alternatives.

B. Odd-even pricing can be used in conjunction with a skimming strategy, but should not be used with a penetration strategy.

C. Odd-even pricing does not work if the product is healthcare-related.

D. Overuse of odd-ending prices tends to mute its effect on demand.

E. Odd-ending prices are best used with large ticket items; it loses its effectiveness with moderate- to lowticket items.

62. The pricing approach that: (1) estimates the price that ultimate consumers would be willing to pay for a product; (2) works backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers; and then (3) deliberately adjusts the composition and features of the product to achieve the target price to consumers is referred to as _________.

A. cost-benefit pricing

B. cost-plus percentage-of-cost pricing

C. target pricing

D. cost-plus fixed-fee pricing

E. product feature pricing

63. The Swedish manufacturer of Asko dishwashers concluded that consumers would be willing to pay approximately $989 for a dishwasher that was quieter than any other machine on the market. Based on this price, Asko determined the margins that would have to be given to wholesalers and retailers to arrive at the $989 retail price. Asko used

A. prestige pricing.

B. price lining.

C. cost-plus pricing.

D. target pricing.

E. customary pricing.

64. Which of the following pricing techniques is most sensitive to customers' responses to price?

A. cost-plus percentage-of-cost pricing

B. experience curve pricing

C. cost-plus fixed-fee pricing

D. target pricing

E. standard markup pricing

65. Which of the following is a demand-oriented approach to pricing?

A. customary pricing

B. target profit pricing

C. standard markup pricing

D. bundle pricing

E. service-oriented pricing

66. Bundle pricing is considered to be a __________ pricing practice.

A. demand-oriented

B. cost-oriented

C. profit-oriented

D. competition-oriented

E. product line-oriented

67. Marketing two or more products in a single package price is referred to as

A. package pricing.

B. loss-leader pricing.

C. bundle pricing.

D. tie-in pricing.

E. multi-product pricing.

68. Bundle pricing refers to

A. an extra amount of "free goods" awarded sellers in the channel of distribution for promoting a product.

B. marketing two or more products in a single package price.

C. deliberately selling a product below its customary price, not to increase sales, but to attract customers' attention in hopes that they will buy other products as well.

D. offering significant price discounts to wholesalers who agree to purchase products well in advance of their reorder period.

E. the practice of charging two or more prices depending upon the outlet carrying the product.

69. If you were to buy one peach tree and one apple tree from the Stark Bros. fruit trees and landscaping catalog in two separate orders, you will pay a total of $108.99. However, if you order the peach and apple tree together in the same order, you pay only $89.99. When purchasing the two trees together, what pricing strategy does Stark Bros. employ?

A. product line pricing

B. bundle pricing

C. prestige pricing

D. price lining

E. discount pricing

70. When Dell sells various laptops, it also pre-installs Microsoft Office and other software customers order at a discount before a laptop is shipped. This is an example of

A. price lining.

B. product line pricing.

C. customary pricing.

D. prestige pricing.

E. bundle pricing.

71. Which one of the following statements regarding bundle pricing is most accurate?

A. Bundle pricing is intended to benefit the consumer, not the seller.

B. Bundle pricing is really "bundle packaging" since the price charged is for two or more products that are shrink-wrapped together.

C. Bundle pricing is often associated with a skimming strategy.

D. Bundle pricing often provides a lower total cost to buyers and lower marketing costs to sellers.

E. Bundle pricing is based on the idea that consumers value the individual items more than they value the group contained in the package.

72. A box of dishwasher detergent shrink-wrapped with a bottle of Jet Dry for 10 cents more than the regular price of the dishwasher detergent is an example of __________ pricing.

A. penetration

B. prestige

C. bundle

D. odd-even

E. standard mark-up

73. Yield management is considered to be a __________ approach to pricing.

A. demand-oriented

B. cost-oriented

C. profit-oriented

D. competition-oriented

E. service-oriented

74. Yield management pricing refers to

A. controlling the production of products based upon seasonal demand.

B. deliberately selling a product below its customary price, not to increase sales, but to attract customers' attention in hopes that they will buy other products as well.

C. charging different prices during different times of the day or days of the week to reflect variations in demand for the service.

D. offering significant price discounts to wholesalers who agree to purchase products in advance for a period of a year or more at a time.

E. charging different prices to maximize revenue for a set amount of capacity at any given time.

75. While __________ often changes price based upon color or style, __________ often changes prices based on time, day, week, or season.

A. prestige; skimming

B. yield management pricing; bundle pricing

C. price-lining; yield management pricing

D. target pricing; target return on investment pricing

E. promotional allowances; standard markup pricing

76. Yield management pricing is most consistent with services trying to deal with

A. capacity management.

B. perceived risk.

C. cognitive dissonance.

D. inelasticity of demand.

E. new product strategy development.

77. One problem in the interstate trucking industry is the number of trucks that return after making a delivery with an empty truck. There is a Web site where independent interstate truckers can look for loads that they can carry with them on their return trip. Because the trucks would be returning empty, truckers, who use this Web site to get business that they would not have had without it, receive a reduced shipping rate.

This reduced rate is an example of

A. yield management pricing.

B. penetration pricing.

C. target pricing.

D. cost-plus pricing.

E. odd-even pricing.

78. Which of the following is a cost-oriented approach to pricing?

A. experience curve pricing

B. skimming pricing

C. prestige pricing

D. loss-leader pricing

E. bundle pricing

79. With cost-oriented approaches, a price setter stresses the cost side of the pricing problem, not the __________ side.

A. shareholder equity

B. income

C. service

D. supply

E. demand

80. With a __________ pricing strategy, a price setter stresses the __________ side of the pricing problem.

A. demand-oriented; cost

B. supply-oriented; target ROI

C. competition-oriented; marketing channel

D. cost-oriented; cost

E. profit-oriented; revenue

81. Which of the following is a cost-oriented approach to pricing?

A. cost-plus pricing

B. skimming pricing

C. prestige pricing

D. loss-leader pricing

E. bundle pricing

82. Which of the following statements regarding cost-oriented approaches is most accurate?

A. These methods focus on the demand side of the pricing problem.

B. These methods focus on production and marketing expenses.

C. Target return on investment is an example of a cost-oriented method.

D. Experience curve pricing is simple to use because costs predictably decrease by 25 percent with each doubling of production.

E. Cost-oriented approaches are subcategories of competition-oriented methods.

83. Which of the following is a cost-oriented pricing method?

A. standard markup pricing

B. loss leader pricing

C. at-, above-, or below-market pricing

D. price lining

E. penetration pricing

84. Standard markup pricing is considered to be a __________ approach to pricing.

A. demand-oriented

B. cost-oriented

C. profit-oriented

D. competition-oriented

E. service-oriented

85. Standard markup pricing refers to

A. adjusting the price of a product so it is "in line" with that of its largest competitor.

B. setting the price of a line of products at a number of different price points.

C. adding a fixed percentage to the cost of all items in a specific product class.

D. setting prices to achieve a profit that is a specified percentage of the sales volume.

E. increasing the price slightly to protect against undue profit losses from unforeseen environmental forces.

86. Adding a fixed percentage to the cost of all items in a specific product class is referred to as

A. target profit pricing.

B. target return-on-investment pricing.

C. standard markup pricing.

D. customary pricing.

E. everyday low pricing.

87. Creative Quilts Studio sells hundreds of colors and types of fabric and thread. To price its inventory, the owners add 50 percent to the cost of each bolt of fabric and every spool of thread. What is this pricing approach called?

A. target return-on-sales pricing

B. flexible pricing

C. cost-plus pricing

D. standard markup pricing

E. customary pricing

88. Assume it costs Lady Marion Seafood, Inc. $30 to catch, process, freeze, package, and ship, 5-pound packages of Alaskan salmon. It uses a 60 percent markup on its salmon products and charges customers $48 for a postage-paid vacuum-sealed package. What type of pricing does Lady Marion Seafood use?

A. target return-on-sales pricing

B. cost-plus pricing

C. standard markup pricing

D. target profit pricing

E. customary pricing

89. Supermarkets managers use standard markup pricing because it is particularly suited to situations when

A. there is a large number of product lines, all with basically the same product attributes.

B. there is a large number of products and estimating the demand for each would be difficult and time consuming.

C. there is a specific profit goal that needs to be achieved.

D. there is a policy of selling every item in a product line at the same price regardless of the product class.

E. the products are perishable or seasonal.

90. Summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at the price is referred to as _________.

A. standard markup pricing

B. experience curve pricing

C. cost-plus pricing

D. product-line pricing

E. target return-on-investment pricing

91. Cost-plus pricing refers to

A. setting the price of a line of products at a number of different price points.

B. adding a fixed percentage to the cost of all items in a specific product class.

C. summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at the price.

D. setting prices to achieve a profit that is a specified percentage of the sales volume.

E. increasing the price slightly to protect against undue profit losses from unforeseen environmental factors.

92. The two forms of cost-plus pricing are

A. cost-plus fixed-fee pricing and cost-plus variable-fee pricing.

B. cost-plus ROI pricing and cost-minus markdown pricing.

C. target return on sales pricing and target return on investment pricing.

D. cost-plus percentage-of-cost pricing and cost-plus fixed-fee pricing.

E. dynamic pricing and flexible pricing.

93. Rather than billing clients by the hour, some lawyers and their clients agree on a fixed fee based on expected costs plus an agreed upon level of profit for the law firm. Which pricing approach are they using?

A. target pricing

B. cost-plus pricing

C. customary pricing

D. experience curve pricing

E. bundle pricing

94. The most commonly used pricing method for business products is _________.

A. target return on investment

B. customary

C. standard markup

D. target profit

E. cost-plus pricing

95. While the most commonly used pricing method for business products is cost-plus pricing, this method is becoming more and more popular among __________ in the service sector.

A. e-businesses

B. business-to-consumer firms

C. business-to-government sellers

D. nonprofit organizations

E. business-to-business marketers

96. Setting the price of a product or service by adding a fixed percentage of the construction costs is referred to as

A. cost-plus fixed-fee pricing.

B. cost-plus percentage-of-cost pricing.

C. demand backward pricing.

D. experience curve pricing.

E. target return on investment pricing.

97. Cost-plus percentage-of-cost pricing refers to

A. summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at the price.

B. setting the price of a product or service by adding a fixed percentage of the production or construction costs.

C. adding a fixed percentage to the cost of all items in a specific product class.

D. setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors.

E. charging different prices to different buyers for goods of like grade and quality.

98. Which of the following type of business is most likely to use cost-plus percentage-of-cost pricing?

A. real estate agency

B. architect

C. insurance company

D. power company

E. space shuttle contractor

99. A pricing method where a supplier is reimbursed for all costs, regardless of what they may be, and also receives an agreed upon dollar amount of profit that is independent of the final cost of the project is referred to as

A. target return on investment pricing.

B. cost-plus percentage-of-cost pricing.

C. target return on sales pricing.

D. experience curve pricing.

E. cost-plus fixed-fee pricing.

100.The Brazilian government wants to build a global positioning satellite (GPS) system. The satellite manufacturer will receive a mutually agreed upon profit. The pricing approach the satellite manufacturer uses is called

A. standard markup pricing.

B. experience curve pricing.

C. cost-plus percentage-of-cost pricing.

D. cost-plus fixed-fee pricing.

E. bundle pricing.

101.Experience curve pricing is considered to be a __________ approach to pricing.

A. demand-oriented

B. cost-oriented

C. profit-oriented

D. competition-oriented

E. service-oriented

102.Experience curve pricing refers to

A. the method of pricing where the price of a product often rises following the expansion of costs associated with the firm's producing and selling an increased volume of the product.

B. a method of pricing based on the learning effect, which holds that the unit cost of many products and services declines by 10 percent to 30 percent each time a firm's experience at producing and selling them doubles.

C. the point at which profits double then double again as more consumers buy the product.

D. a predictive pricing plan based upon the knowledge the prices will fluctuate in a predictable pattern within a given industry.

E. a pricing strategy that uses price estimates based upon the consensus of the salesforce and the firm's top management team.

103.Which cost-oriented pricing method holds that a product's unit costs predictably decline by 10 to 30 percent each time its production volume doubles?

A. experience curve pricing

B. cost-plus percentage-of-cost pricing

C. cost-plus fixed-fee pricing

D. standard markup pricing

E. derived demand pricing

104.The retail price of cell phones (unsubsidized) has decreased from $4,000 in 1983 when Motorola commercialized the device to less than $99 today. This is due in large part to which type of pricing approach?

A. skimming pricing

B. prestige pricing

C. odd-even pricing

D. experience curve pricing

E. customary pricing

105.The retail price of fax machines has decreased from over $1,000 in the early 1970s to less than $100 today. This is due in large part to

A. skimming pricing.

B. prestige pricing.

C. odd-even pricing.

D. experience curve pricing.

E. customary pricing.

106.The retail price of DVD players has decreased from $900 in the mid-1990s to less than $100 today. This

is due in large part to

A. skimming pricing.

B. prestige pricing.

C. odd-even pricing.

D. experience curve pricing.

E. customary pricing.

107.Which of the following is a profit-oriented pricing method?

A. target return on sales pricing

B. loss leader pricing

C. above-, at-, or below-market pricing

D. price lining

E. penetration pricing

108.Target profit pricing refers to

A. adjusting the price of a product so it is "in line" with that of its largest competitor.

B. setting the price of a line of products at a number of different price points.

C. adding a fixed percentage to the cost of all items in a specific product class.

D. setting prices to achieve a profit that is a specified percentage of production costs.

E. setting an annual target of a specific dollar volume of profit.

109.Setting an annual target of a specific dollar volume of profit is referred to as _________.

A. target profit pricing

B. target return on investment pricing

C. loss leader pricing

D. at, above, or below market pricing

E. yield management pricing

110.A critical assumption when using target profit pricing is that

A. a higher average price will not cause the demand for a product to fall.

B. a higher average price will cause the demand for a product to rise.

C. a higher average price will always cause the demand for a product to fall.

D. this form of pricing is extremely risky because profit is tied to the current value of the dollar.

E. being first is essential if you increase your average price since all of your competitors will do the same.

111.A custom tailor wishes to use target profit pricing to establish a price for a custom designed business suit. Assume variable cost is $200 per suit, fixed cost is $44,000, and a target profit of $50,000 based on a volume of 50 suits. What price should be charged for a typical custom suit?

A. $520

B. $1,040

C. $1,880

D. $2,080

E. $10,000

112.Lady Marion Seafood, Inc. sells 5-pound packages of Alaska salmon. Assume its unit variable cost per package is $30 and its fixed cost is $250,000. It wants a target profit of $38,000 on a volume of 16,000 packages. What should it charge for a five-pound package of salmon?

A. $25.00

B. $33.94

C. $40.00

D. $48.00

E. $61.25

113.The manager of a small gasoline station observes that while gasoline sales have been steady, the service side of the business has fallen off, and mechanics are often idle. He decides to offer a promotion—a $20 off coupon for an oil change that is to be mailed to 800 households within a 2-mile radius from the gas station. The cost of printing and mailing is $1,000. The normal cost of an oil change is $40. Materials and labor per oil change cost is $15. If two hundred customers use the coupon, what will be the total profit of the promotion based on the profit equation?

A. ($4,000)

B. ($1,000)

C. $0

D. $1,000

E. $4,000

114.Target return-on-sales pricing refers to

A. adjusting the price of a product so it is "in line" with that of its largest competitor.

B. setting the price of a line of products at a number of different price points.

C. adding a fixed percentage to the cost of all items in a specific product class.

D. setting prices to achieve a profit that is a specified percentage of the sales revenue.

E. setting a price based on a specific annual dollar target profit volume.

115.Setting a price to achieve a profit that is a specified percentage of the sales volume is referred to as _________.

A. target return-on-investment pricing

B. target return-on-sales pricing

C. loss-leader pricing

D. penetration pricing

E. standard markup pricing

116.A custom kitchen cabinet storeowner wishes to use target return-on-sales pricing approach to establish a price for a typical section of cabinets. Assume that variable costs total $200 per unit, fixed cost is $44,000, and the storeowner desires a target profit of 20 percent return on sales at an annual volume of 400 cabinets. What price should be charged for a typical cabinet section?

A. $263.50

B. $311.00

C. $387.50

D. $445.50

E. $775.00

117.Target return-on-investment pricing refers to

A. setting a price to achieve an annual target ROA.

B. adding a fixed percentage to the cost of all items in a specific product class.

C. setting prices to achieve a profit that is a specified percentage of the sales volume.

D. setting a price to achieve an annual target ROI.

E. setting a price based on an annual specific dollar target volume of profit.

118.Setting a price to achieve an annual target return-on-investment (ROI) is referred to as

A. target return-on-investment pricing.

B. target return-on-profit pricing.

C. target return-on-sales pricing.

D. target profit pricing.

E. customary pricing.

119.Which of the following companies would be most likely to use target return-on-investment pricing?

A. a farmer

B. a florist shop

C. a book publisher

D. a veterinarian

E. an automobile manufacturer

120.Target return-on-investment (ROI) is frequently used by

A. contractors.

B. public utilities.

C. business-to-business markets.

D. supermarkets.

E. small privately owned firms.

121.Rather than emphasize demand, cost, or profit factors, a price setter can stress what __________ is (are) doing.

A. the service sector

B. the global economy

C. suppliers

D. "the market" or competitors

E. the financial markets

122.Customary pricing refers to

A. a pricing method where the price the seller quotes includes all transportation costs.

B. setting the same price for similar customers who buy the same product and quantities under the same conditions.

C. deliberately selling a product below its list price to attract attention to it.

D. setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors.

E. pricing based on what the market will bear.

123.Setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors is referred to a(n) _________.

A. cost-plus pricing

B. customary pricing

C. standard markup pricing

D. experience curve pricing

E. target profit pricing

124.Southern gardeners normally pay $5 for 2 cubit foot bag of pine bark mulch that they buy at their local gardening supply and home improvement stores to keep the weeds down in their gardens. If the price being charged by a retailer is not within a narrow range that gardeners feel is appropriate, they will use substitutions—newspaper, grass clippings or some other kind of ground covering. When pricing pine bark mulch, a garden supply or home improvement retailer should use

A. customary pricing.

B. at-market pricing.

C. loss-leader pricing.

D. penetration pricing.

E. bundle pricing.

125.Setting a market price for a product or product class based on a subjective feel for the competitors' price or market price as the benchmark is referred to as

A. customary pricing.

B. above-, at-, or below-market pricing.

C. standard markup pricing.

D. competitive margin pricing.

E. experience curve pricing.

126.For most products, it is difficult to identify a specific market price for a product or product class. Still, marketing managers often have a subjective feel for the competitors' price or market price. Using this benchmark, they then may deliberately choose a strategy of

A. above-, at-, or below-market pricing.

B. loss-leader pricing.

C. penetration pricing.

D. standard markup pricing.

E. experience curve pricing.

127.Swedish company Asko, which prides itself on manufacturing and marketing some of the best-built and most expensive appliances in the world, probably would use which competition-oriented pricing approach?

A. customary pricing

B. above-market pricing

C. prestige pricing

D. at-market pricing

E. below-market pricing

128.An ad campaign by Suave shampoo asked television viewers to identify the heads of hair of women who used Suave shampoo and conditioner and those that used the much more expensive salon hair-care products. The idea of the ad was that no one could tell which woman used the much cheaper Suave brand. By making price its selling point, Suave is most likely using _________.

A. above-market pricing

B. below-market pricing

C. loss-leader pricing

D. prestige pricing

E. skimming pricing

129.Manufacturers of generic brands use which method of competition-oriented pricing?

A. penetration pricing

B. below-market pricing

C. loss-leader pricing

D. prestige pricing

E. skimming pricing

130.Loss-leader pricing refers to

A. a pricing method where the price the seller charges is below the actual cost to make the product.

B. setting a low initial price and gradually but consistently increasing that price so as not to antagonize the consumer.

C. deliberately selling a product below its customary price, not to increase sales, but to attract customers' attention in hopes that they will buy other products as well.

D. a method of pricing based on a product's tradition, standardized channel of distribution, or other competitive factors.

E. pricing a product between 8 and 10 percent lower than nationally branded competitive products.

131.Deliberately selling a product below its customary price, not to increase sales, but to attract customers' attention in hopes that they will buy other products as well, is referred to as

A. bundle pricing.

B. magnet pricing.

C. loss-leader pricing.

D. predatory pricing.

E. below-market pricing.

132.Using _________, many retailers deliberately sell products below their normal prices (and sometimes below cost) to attract attention and induce additional store traffic.

A. customary pricing

B. below-market pricing

C. loss-leader pricing

D. prestige pricing

E. penetration pricing

133.When Kroger's, a national supermarket chain, uses a special promotion to price a six-pack of soda at $2.09 (which is below its customary price level), it is attempting to

A. drive its competition out of business. 

B. attract customers in hopes they will buy other products as well.

C. fill its parking lot so its store will look successful.

D. work with the local bottler to move products that are close to their expiration dates.

E. help stimulate the local economy and generate good will with its customers.

134.Companies use a "price premium" to assess whether its products and brands are priced above, at, or below the market. More specifically, a price premium is the percentage by which the actual price charged for a specific brand exceeds or falls short of a benchmark established for a similar product or basket of products. This price premium equals:

A. dollar sales market share for a brand divided by unit volume market share for a brand, minus 1.

B. unit volume market share for a brand divided by dollar sales market share for a brand, minus 1.

C. dollar sales market share for a brand divided by unit volume market share for a brand, plus 1.

D. dollar sales market share for a brand, divided by unit volume market share for a brand, plus 1.

E. dollar sales market share for a brand, divided by unit volume market share for a brand, minus the number of competitors against which a brand is being measured.

Figure 14-3

135.Position "A" in Figure 14-3 above represents the price premium of which of the following?

A. Crunch ‘n Munch

B. Cracker Jack

C. Fiddle Faddle

D. Private Brands

E. Seasonal, specialty, and regional brands

136.Position "B" in Figure 14-3 above represents the price premium of which of the following?

A. Crunch ‘n Munch

B. Cracker Jack

C. Fiddle Faddle

D. Private Brands

E. Seasonal, specialty, and regional brands

137.Position "C" in Figure 14-3 above represents the price premium of which of the following?

A. Crunch ‘n Munch

B. Cracker Jack

C. Fiddle Faddle

D. Private Brands

E. Seasonal, specialty, and regional brands

138.Position "D" in Figure 14-3 above represents the price premium of which of the following?

A. Crunch ‘n Munch

B. Cracker Jack

C. Fiddle Faddle

D. Private Brands

E. Seasonal, specialty, and regional brands

139.Position "E" in Figure 14-3 above represents the price premium of which of the following?

A. Crunch ‘n Munch

B. Cracker Jack

C. Fiddle Faddle

D. Private Brands

E. Seasonal, specialty, and regional brands

140.As the brand manager for Cracker Jack, what information does Figure 14-3 above give you?

A. You have a price premium relative to Crunch ‘n Munch.

B. Crunch ‘n Munch has a price premium relative to Cracker Jack.

C. Fiddle Faddle is priced higher than Crunch ‘n Munch.

D. Private Brands sell more product than Cracker Jack.

E. Seasonal, specialty, and regional brands have the lowest market share.

141.Setting one price for all buyers of a product or service is referred to as _________.

A. customary pricing

B. one-price policy

C. flexible-price policy

D. standard markup pricing

E. uniform pricing

142.A one-price policy refers to

A. setting different prices for products and services depending on individual buyers and purchase situations.

B. setting the price of a line of products at a number of different specific pricing points.

C. setting of prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item.

D. adding a fixed percentage to the cost of all items in a specific product class.

E. setting one price for all buyers of a product or service.

143.Another name for a one-price policy is

A. customary pricing.

B. fixed pricing.

C. flexible-pricing.

D. standard markup pricing.

E. uniform pricing.

144.When you buy a used car from a CarMax dealership, you are offered the car at a "no haggle" price. You can buy it or not, but there is no negotiating the published price because of the seller's

A. customary pricing strategy.

B. uniform pricing policy.

C. flexible-price policy.

D. dynamic pricing strategy.

E. one-price policy.

145.Tendollars.com offers thousands of gifts, all priced at $10. This is an example of two pricing methods working in tandem. Most likely, the firm uses a __________ and a _________.

A. customary pricing approach; skimming pricing approach

B. odd-even pricing approach; loss-leader pricing approach

C. below-market pricing approach; one-price policy

D. penetration pricing approach; loss-leader pricing approach

E. everyday low pricing approach; flexible-price policy

146.Setting different prices for products and services depending on individual buyers and purchase situations is referred to as

A. price lining.

B. customary pricing.

C. a flexible-price policy.

D. price fixing.

E. discretionary pricing.

147.A flexible-price policy refers to

A. setting the price of a line of products at a number of different specific pricing points.

B. setting of prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item.

C. setting different prices for products and services depending on individual buyers and purchase situations.

D. deliberately selling a product below its customary price, not to increase sales, but to attract customers' attention in hopes that they will buy other products as well.

E. Adding a fixed percentage to the cost of all items in a specific product class.

148.Another name for flexible price policy is _________.

A. target pricing

B. fluid pricing

C. dynamic pricing

D. price lining

E. market-based pricing

149.Which of the following statements about a flexible-price policy is most accurate?

A. A flexible-price policy is especially suited to low cost items where profit margins are slim.

B. A flexible-price policy should be avoided with large ticket items such as cars or real estate.

C. When using a flexible-price policy, the seller may risk violating the Robinson-Patman Act.

D. Flexible pricing is not a form of yield management pricing.

E. Flexible pricing is rarely used for online purchases because of the high cost to develop information technology and data warehouses.

150.A flexible-price policy gives marketers __________ in setting the final price in light of demand, cost, and competitive factors.

A. no leeway

B. total freedom

C. little discretion

D. considerable discretion

E. limited competitive authority

151.The way that person navigates through an online marketer's Web site is called

A. surf-shopping behavior

B. a cross-channel shopper

C. the clickstream

D. 1-click shopping

E. the shopper pathway

152.Yield management pricing is a form of

A. target pricing.

B. loss-leader pricing.

C. dynamic pricing.

D. customary pricing.

E. price lining.

153.Which of the following statements regarding new car purchases in the United States is most accurate?

A. While men of all races pay basically the same price, women, regardless of race, pay considerably less.

B. Seventy-nine percent of all men purchasing cars cite haggling over price as the most exciting aspects of the purchase.

C. African-Americans, women, and Hispanics pay higher prices than the average price paid for a new car.

D. A one-price policy is now the standard in the automobile industry due to violations of the Robinson-Patman Act.

E. Female automobile salespeople rarely, if ever, offer flexible pricing to women customers.

154.The setting of prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item is referred to as

A. line item pricing.

B. product-line pricing.

C. price lining.

D. customary pricing.

E. discretionary pricing.

155.Product-line pricing refers to

A. setting the price of a line of products at a number of different specific pricing points.

B. setting of prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item.

C. deliberately selling a product below its customary price, not to increase sales, but to attract customers' attention in hopes that they will buy other products as well.

D. adding a fixed percentage to the cost of all items in a specific product class.

E. the marketing of two or more products in a single package.

156.Product-line pricing involves determining: (1) the lowest-priced product and price; (2) ___________; and (3) the price differentials for all other products in the line.

A. the single most popular item in the line

B. the least vulnerable product in the line

C. the highest-priced product and price

D. the most frequently sold product in the line

E. the most price insensitive product in the line

157.Product-line pricing involves determining: (1) the lowest-priced product and price; (2) the highest-priced product and price; and (3) _________.

A. the single most popular item in the line

B. the least vulnerable product in the line

C. the most frequently sold product in the line

D. the most price insensitive product in the line

E. the price differentials for all other products in the line

158.When establishing product line pricing, the highest priced item is typically positioned as

A. the oldest product item in the line.

B. the largest selling product item in the line.

C. the premium item in the line in terms of quality and features.

D. the loss leader item for the rest of the product line.

E. the most price insensitive product item in the line.

159.When establishing product line pricing, the lowest-priced item is typically positioned as

A. the youngest product item in the line.

B. the smallest selling product item in the line.

C. the lost-cost item in the line in terms of quality and features.

D. the profit leader for the rest of the product line.

E. the traffic builder designed to capture the attention of first-time buyers.

160.When establishing product line pricing, the price differentials between items in the line should make sense to customers and reflect differences in terms of the

A. perceived value of the products offered.

B. actual costs in terms of the features offered.

C. perceived risk.

D. quantity discounts and price allowances offered.

E. market segments targeted.

161.Different brands within a company's product line generally have different profit margins; for example, items with higher price lines have higher profit margins. Nike Variety tennis shoes have variable costs of $6 and sell for $24, whereas Nike Wimbledon tennis shoes have variable costs of $38 and sell for $48, but when fixed overhead is added, the shoe is unprofitable by $2 per pair. Which statement is most accurate regarding Nike's pricing approach with these two product lines:

A. Demand for each shoe line is unrelated to price.

B. Nike is using a cost-plus percentage-of-cost pricing strategy.

C. Nike is using a product-line pricing strategy.

D. Demand for each shoe line is unrelated to product quality.

E. Consumers do not use price as an indication of quality.

162.The price for Nintendo's Wii video game console was likely insufficient to cover its fixed and variable costs. However, the price of its video games was set high enough to cover the video game console loss and deliver a handsome profit for the entire Nintendo product line. This example illustrates Nintendo's use of

A. bundle pricing.

B. product-line pricing.

C. price lining.

D. customary pricing.

E. loss-leader pricing.

163.The Hummer was an attention-getting SUV that sold for $80,000 in a limited number of dealerships. Then, General Motors developed a smaller version for $50,000 that could be sold in many more outlets. To cover costs and reach the market faster, the Hummer H2 shared some parts with other GM cars. To which customer effects did Hummer marketing managers need to pay particular attention?

A. The original Hummer was prestige priced. Therefore, the price of Hummer 2 should make sense to customers and reflect differences in the perceived value of each product.

B. Elements such as gas mileage, color, and interior fabrics will be important for H2 customers.

C. The most important elements of the H2 is its versatility as a family vehicle.

D. Comfort and fuel efficiency will be more important than price for H2 customers.

E. The original Hummer was penetration priced so that the H2 continues this pricing strategy to maximize expected profit.

164.Toro decided to augment its traditional hardware retail distribution channel by also selling through mass merchandisers such as Walmart and Target and set prices its products substantially below those for its traditional hardware outlets. Many unhappy hardware stores subsequently abandoned Toro products in favor of other manufacturers. This is an example of a firm failing to consider __________ effects when setting its final list or quoted price.

A. company

B. social responsibility

C. regulatory

D. competitive

E. customer

165.The successive price cutting by competitors to increase or maintain their unit sales or market share is referred to as

A. everyday even lower pricing.

B. price war.

C. pricing combat.

D. competitive cost war.

E. price reduction.

166.Price war refers to

A. competition between sellers and resellers to maintain or attain the largest market share of potential customers.

B. conflicts between manufacturers and distributors regarding acceptable percentages they each may charge relative to one another.

C. the competitive advantage of consumers who bring coupons or offers from one seller to another in order to negotiate a better price.

D. the successive price cutting by competitors to increase or maintain their unit sales or market share.

E. the practice of replacing promotional allowances with lower manufacturer list prices.

167.Which of the following statements regarding price cutting is most accurate?

A. Marketers should only consider price cutting if primary demand for a product class will remain stable.

B. Marketers should only consider price cutting if the price cut can be made across all item in a product line and all product lines in a product mix.

C. Marketers should only consider price cutting if the price cut is confined to customers within specific target market segments.

D. Marketers should only consider price cutting if the firm has a technological advantage over its competitors.

E. Marketers should never consider price cutting unless a product is in the introductory stage of its product life cycle.

168.Marginal analysis refers to

A. a continuing, concise trade-off of incremental costs against incremental revenues.

B. the change in total cost that results from producing and marketing one additional unit of a product.

C. a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.

D. a continuing concise trade-off of incremental ROI and incremental ROA.

E. a technique that analyzes the relationship between revenues, profit, and market share relative to changes in market growth rates.

169.Marginal analysis might take the form of such questions as, "Should we extend our hours to include Sundays?" or "What if we put more apples in the pie?" The basic principle is that

A. as long as a marketing action breaks even, the action is worth taking.

B. expected incremental revenues from pricing and other marketing actions must more than offset incremental costs.

C. don't rock the boat if your program is making a profit; leave well enough alone.

D. if you are not willing to take risks, even if the numbers tell you otherwise, your business will ultimately fail.

E. marketing and finance are two different animals: "If it feels right in your gut…go for it."

170.It is relatively easy to measure the incremental cost of a new advertising campaign; what is not as easy is

A. measuring the extra fixed cost involved.

B. measuring the extra variable cost involved.

C. measuring the incremental revenue generated by the new advertising campaign.

D. determining whether customers who stop buying the product are reacting negatively to the

advertisement or to some other aspect of the product itself.

E. determining what percentage of the ad-generated revenue should be reinvested into additional advertisements of the same form.

171.The manager of a small gasoline station observes that while gasoline sales have been steady, the service side of the business has fallen off, and mechanics are often idle. He decides to offer a promotion—a $20 off coupon for an oil change that is to be mailed to 800 households within a 2-mile radius from the gas station. The cost of printing and mailing is $1,000. The normal cost of an oil change is $40. Materials and labor per oil change cost is $15. How many additional maintenance service jobs must result for the promotion to break even?

A. 25 jobs

B. 40 jobs

C. 50 jobs

D. 67 jobs

E. 200 jobs

172.The three major types of special adjustments to list or quoted price are

A. discounts, allowances, and geographical adjustments.

B. demand-oriented, cost-oriented, and profit-oriented adjustments.

C. one price, flexible price, and discounts.

D. discounts, allowances, and marginal adjustments.

E. discounts, incremental costs and revenues, and geographical adjustments.

173.Discounts refer to reductions from the __________ that a seller gives a buyer as a reward for some activity of the buyer that is favorable to the seller.

A. final price

B. list price

C. manufacturer's suggested retail price

D. manufacturer's cost

E. retailer's cost

174.The four major types of price discounts are

A. quantity, trade-in, promotional, and cash.

B. quantity, seasonal, trade (functional), and cash.

C. quantity, seasonal, promotional, and FOB.

D. cash, trade-in, seasonal, and promotional.

E. trade-in, promotional, geographic, and functional.

175.Reductions in unit costs for a larger order are referred to as

A. promotional allowances.

B. quantity discounts.

C. economic order discounts.

D. penetration pricing.

E. case allowances.

176.Quantity discounts refer to

A. price reductions in unit costs for placing a larger order.

B. price reductions for placing long-term pre-scheduled orders.

C. price reductions to encourage retailers to stock inventory earlier than their normal demand would require.

D. reductions in unit costs for purchasing items that are nearing their expiration dates.

E. reductions in unit costs for taking merchandise that will soon be replaced by new and improved versions of the original product.

177.Your local instant photocopying service charges 10 cents a copy for copies up to a quantity of 25, 9 cents a copy for 26 to 99 copies, and 8 cents a copy for 100 copies or more. What kind of adjustment to list or quoted prices is the photocopying service using?

A. experience curve pricing

B. quantity discounts

C. loss-leader pricing

D. promotional discounts

E. everyday low pricing

178.Mike Morgan, a sales representative for a major distributor of Kodak film, wanted to encourage repeat purchases by his customers. In order to accomplish this objective, Morgan offered the following discounts to his customers: a 10 percent discount for buying 10-49 cases of film within the calendar year; the discount increases to 12 percent if 50-99 cases of film are purchased within the same calendar year; and the discount increases to 15 percent if 100 or more cases of film are purchased within the same calendar year. What type of discount was Morgan offering his customers?

A. a seasonal discount

B. a cumulative quantity discount

C. a noncumulative quantity discount

D. a trade discount

E. a case allowance discount

179.A discount that is based on the size of an individual purchase order rather than a series of repeat orders is referred to as a(n)

A. cumulative quantity discount.

B. bundle pricing.

C. economic order discount.

D. noncumulative quantity discount.

E. promotional allowance.

180.Non-cumulative quantity discounts refer to

A. discounts that are based on a series of orders rather than on the size of an individual order.

B. discounts that are based on the size of an individual purchase order rather than a series of orders.

C. one-time discounts per customer or household.

D. one-time discounts that must be used within a certain time frame or they become null and void.

E. discounts used to place new products on supermarket shelves.

181. Which of the following statements regarding quantity discounts is most accurate?

A. Noncumulative quantity discounts encourage repeat buying by a single customer to a far greater degree than do cumulative quantity discounts.

B. Quantity discounts are primarily used to undercut competitors' prices.

C. Noncumulative quantity discounts encourage smaller long-term repeat purchases rather than less frequent larger short-term purchases.

D. Noncumulative quantity discounts encourage large individual purchase orders, not a series of orders.

E. Quantity discounts can basically be used only once with each reseller or the price will increase.

182.Discounts that apply to the accumulation of purchases of a product over a given time period, such as a year, are referred to as

A. promotional allowances.

B. cumulative quantity discounts.

C. cash discounts.

D. functional discounts.

E. noncumulative quantity discounts.

183.Cumulative quantity discounts refer to

A. reductions in unit costs for a larger order.

B. cash payments or extra amounts of "free goods" awarded sellers in the channel of distribution for undertaking certain advertising or selling activities to promote a product.

C. discounts offered to sellers for first time purchases of a new product as incentives for providing shelf space.

D. a series of discounts for every additional rebuy in which the discount becomes incrementally higher.

E. discounts that apply to the accumulation of purchases of a product over a given time period, typically a year.

184.Which of the following statements regarding quantity discounts is most accurate?

A. Cumulative quantity discounts encourage repeat buying by a single customer to a far greater degree than do noncumulative quantity discounts.

B. Noncumulative quantity discounts encourage repeat buying by a single customer to a far greater degree than do cumulative quantity discounts.

C. Quantity discounts are primarily used to undercut competitors' prices.

D. Noncumulative quantity discounts encourage smaller long term repeat purchases rather than less frequent large quantity purchases.

E. Quantity discounts can basically be used only once with each reseller or the price will become too customary.

185.Manufacturers use seasonal discounts to

A. get rid of expired merchandise.

B. prevent retailers from purchasing competitors' products.

C. extend the peak seasonal selling season.

D. establish an immediate feeling of goodwill between the buyer and seller that hopefully will continue when prices return to normal.

E. encourage the buyer to stock inventory earlier than normal demand would require.

186.To encourage buyers to stock inventory earlier than their normal demand would require, manufacturers often use

A. noncumulative discounts.

B. cumulative discounts.

C. seasonal discounts.

D. trade discounts.

E. functional discounts.

187.To reward wholesalers and retailers for the risk they accept in assuming increased inventory carrying

costs, manufacturers offer

A. noncumulative discounts.

B. cumulative discounts.

C. seasonal discounts.

D. trade discounts.

E. functional discounts.

188.To reward wholesalers and retailers for having supplies in stock at the time they are wanted by customers, manufacturers offer

A. noncumulative discounts.

B. cumulative discounts.

C. seasonal discounts.

D. trade discounts.

E. functional discounts.

189.To reward wholesalers and retailers for marketing functions they will perform in the future, a manufacturer often gives __________ or, as often called, __________ discounts.

A. quantity; seasonal

B. trade; functional

C. manufacturer's; quantity

D. cash; seasonal

E. quantity; cash

190.Functional discounts are offered to resellers in the marketing channel on the basis of where they are in the channel and

A. the size of the order.

B. the frequency of the order.

C. when orders are placed during the year.

D. the length of the relationship with the manufacturer.

E. the marketing activities they are expected to perform in the future.

191.Trade discounts are offered to resellers in the marketing channel on the basis of where they are in the channel and

A. the size of the order.

B. the frequency of the order.

C. when orders are placed during the year.

D. the length of the relationship with the manufacturer.

E. the marketing activities they are expected to perform in the future.

192.Trade discounts are offered to resellers in the marketing channel on the basis of the marketing activities they are expected to perform in the future and

A. the size of the order.

B. the frequency of the order.

C. when orders are placed during the year.

D. the length of the relationship with the manufacturer.

E. where they are in the channel.

193.Suppose a manufacturer quotes price in the following form: List price—$100 less 30/10/5. When calculating this trade discount, the first number "30" in the sequence always refers to the

A. discount to the ultimate consumer.

B. manufacturer's percentage cost.

C. retail end of the channel.

D. channel intermediary closest to the manufacturer.

E. original unit cost.

194.If the terms of the trade discount are listed as "20/10/5," the number 20 represents

A. 20 percent of the suggested retail price is available to the retailer to cover costs and provide a profit.

B. 20 percent of the suggested retail price is available to the wholesaler to cover costs and provide a profit.

C. 20 percent of the suggested retail price is available to the jobber to cover costs and provide a profit.

D. 20 percent of the suggested retail price is available to the ultimate consumer.

E. 20 percent of the suggested retail price is the profit available to the manufacturer.

195.If the terms of the trade discount are listed 20/10/5, the number 5 represents

A. 5 percent of the suggested retail price is available to the retailer to cover costs and provide a profit.

B. 5 percent of the suggested retail price is available to the wholesaler to cover costs and provide a profit.

C. 5 percent of the suggested retail price is available to the jobber to cover costs and provide a profit.

D. 5 percent of the suggested retail price is available to the ultimate consumer.

E. 5 percent of the suggested retail price is the profit available to the manufacturer.

196.A manufacturer does marketing research and estimates that consumers will accept a manufacturer's suggested retail price of $50 for a jacket. The manufacturer expects to offer trade discount terms of 40/10/ 5 to retailers, wholesalers, and agents in the marketing channel. What price will the manufacturer receive for the jacket?

A. $47.50

B. $45.00

C. $30.00

D. $27.50

E. $25.65

197.A manufacturer estimates that consumers will accept a price of $275 for a snowboard. If the manufacturer expects to offer trade discounts of 35/15/5 to retailers, wholesalers, and agents, respectively, what price will the manufacturer receive for the snowboard?

A. $275.00

B. $178.75

C. $151.94

D. $144.34

E. $100.00

198.A manufacturer offers a suggested list price for a cashmere sweater of $250. The trade discount is 40/20/10. What amount does the manufacturer expect to receive for the sweater?

A. $175.00

B. $225.00

C. $108.00

D. $125.00

E. $100.00

199.Within the channel of distribution for certain types of imported furniture, the typical trade terms are 40/15/10. If a dining room table has a list price of $1,000, how much would the manufacturer sell the table to a jobber for?

A. $1,000

B. $600

C. $510

D. $459

E. $400

200.A glass blowing studio makes fine pieces of art glass. It has decided on a retail list price of $2,000 for one of its vases. They sell only using wholesalers and retailers who receive 50/10 terms. How much will the studio receive from selling this vase?

A. $2,000

B. $1,000

C. $900

D. $800

E. $100

201.Which of the following terms does Figure 14-4 above reflect?

A. 30/7/3.15

B. 30/10/5

C. 5/10/30

D. 10/30/5

E. 30/5/10

202.In Figure 14-4 above what does $7.00 represent?

A. the wholesaler's trade discount

B. the retailer's trade discount

C. the jobber's trade discount

D. the manufacturer's trade discount

E. the manufacturer's markup

203.According to Figure 14-4 above, how much is the retailer trade discount?

A. $30.00

B. $7.00

C. $3.15

D. $63.00

E. $70.00

204.According to Figure 14-4 above, how much is the jobber trade discount?

A. $30.00

B. $7.00

C. $3.15

D. $63.00

E. $70.00

205.To encourage retailers to pay their bills quickly, manufacturers offer them

A. quantity discounts.

B. flexible pricing policies.

C. promotional allowances.

D. cash discounts.

E. manufacturer's inducements.

206.The purpose of a cash discount is to

A. reward retailers for making large quantity purchases.

B. encourage purchasing items during periods of low demand.

C. prevent competitors from obtaining shelf space.

D. counteract the introduction of a new product by a competitor.

E. encourage retailers to pay their bills promptly.

207.If the cash discount terms for a $500 purchase are 4/10 net 30, the number $500 refers to

A. the original price owed on the merchandise.

B. the total amount owed if paid within 10 days.

C. the total discount in dollars if the bill is paid on time.

D. the manufacturer's suggested retail price.

E. the total penalty in dollars if the bill is paid after 10 days.

208.If the cash discount terms for a $500 purchase are 4/10 net 30, the number 4 refers to

A. the percentage markup on the product.

B. the percentage discount if the bill is paid within 10 days.

C. the percentage increase in price if the bill is not paid within 10 days.

D. the discount in dollars per unit awarded if the order is paid on time.

E. the penalty in dollars in dollars if the bill is not paid within 10 days.

209.If the cash discount terms for a $500 purchase are 4/10 net 30, the number 10 refers to

A. the percentage discounted if the bill is paid within 30 days.

B. the percentage increase in price if the bill is not paid within 10 days.

C. the number of days for which the discount is valid.

D. the discount in dollars per unit awarded if the order is paid on time.

E. the penalty in dollars in dollars if the bill is not paid within 10 days.

210.If a firm receives an invoice for $45,000 with the cash discount terms of 2/10 net 30, what is maximum effective annual interest rate the firm should borrow to take advantage of the cash discount if it didn't have the funds on hand?

A. 6 percent

B. 12 percent

C. 18 percent

D. 24 percent

E. 36 percent

211.Larry's Lawn Care allows customers to use a credit card for purchases. Larry pays 3 percent of the sale to the credit card company. To promote more business, Larry decides to offer a lower price to customers paying cash—that price being 3 percent less than the standard list price. Larry is giving his customers a(n):

A. functional discount.

B. trade-in allowance.

C. promotional allowance.

D. discount-for-cash.

E. everyday low price.

212.When Sherman bought gas, he noticed the convenience store offered him a 3 percent reduction in price if he paid cash rather than used his credit card. The convenience store was offering him a

A. trade discount.

B. cash discount.

C. promotional allowance.

D. rebate.

E. functional discount.

213.Allowances, like discounts, refer to

A. rewards given to retailers to encourage early payment.

B. payment extensions given to cash-strapped consumers during the current recession.

C. list price deductions based on surges in consumer demand.

D. list price deductions based on sudden drops in consumer demand.

E. reductions from list or quoted prices to buyers for performing some activity.

214.Like discounts, reductions from list or quoted prices to buyers for performing some activity are referred to as

A. subsidies.

B. remittances.

C. noncumulative deductions.

D. list price deductions.

E. allowances.

215.A price reduction given when a used product is part of the payment on a new product is referred to as a _________.

A. cash discount

B. subsidy discount

C. seasonal discount

D. trade-in allowance

E. promotional allowance

216.A trade-in allowance refers to a

A. noncash exchange of one product for another of equal or greater value.

B. cash back payment when a more expensive item is replaced with a less expensive item.

C. price reduction given when a used product is part of the payment on a new product.

D. the return of money based on proof of purchase.

E. cash payment to a retailer for extra in-store support or special featuring of the brand.

217.Which of the following statements regarding a trade-in allowance is most accurate?

A. A trade-in allowance is a noncash exchange of one product for another of equal or greater value.

B. A trade-in allowance is an effective way to lower the price a buyer has to pay without formally reducing the list price.

C. A trade-in allowance is a cash back payment when a more expensive item is replaced with a less expensive item.

D. A trade-in allowance is the return of money based on proof of purchase.

E. A trade-in allowance is a cash payment to a retailer for extra in-store support or special featuring of the brand.

218.A new car dealer can reduce the list price of a new Ford pickup truck by offering you a __________ of $1,000 for your 1988 Camaro.

A. cash discount

B. functional discount

C. seasonal discount

D. trade-in allowance

E. promotional allowance

219.Cash payments or an extra amount of "free goods" awarded sellers in the channel for undertaking certain advertising or selling activities to promote the product is referred to as a

A. quantity discount.

B. flexible pricing policy.

C. promotional allowance.

D. purchase inducement.

E. subsidy.

220.A promotional allowance refers to

A. a one-time discount that must be used within a certain time frame or they expire.

B. the cash payments or an extra amount of "free goods" awarded sellers in the channel of distribution for undertaking certain advertising or selling activities to promote the product.

C. the return of money based on proof of purchase.

D. short-term price reductions when consumer demand takes a significant and unexpected dip.

E. incentives such as trips, cruises, jewelry, etc. presented to brand loyal customers.

221.The practice of replacing promotional allowances with lower manufacturer list prices is referred to as

A. everyday low pricing.

B. everyday fair pricing.

C. trade-in allowances.

D. markdown pricing.

E. everyday value pricing.

222.Everyday low pricing refers to

A. the pricing strategy of "extreme value" stores to maintain high price-quality images for the products they sell.

B. the pricing strategy of starting a product at standard list price and then lowering the price by a certain percentage until it is sold.

C. short-term price reductions when consumer demand takes a significant and unexpected dip.

D. the practice of replacing promotional allowances with lower manufacturer list prices.

E. a form of predatory pricing used solely for the purpose of undercutting competitors' prices.

223.The acronym "EDLP" stands for _________.

A. everyday lo-hi pricing

B. extended discounts for loss-leader products

C. expired discounts in lieu of lower pricing

D. everyday low pricing

E. either free delivery or lower prices

224.Which of the following statements about everyday low pricing (EDLP) is most accurate?

A. EDLP encourages manufacturer allowances.

B. Supermarkets have hailed EDLP as value pricing at its most effective.

C. Some argue that EDLP without price specials is boring for many grocery shoppers.

D. EDLP allows supermarkets to use deeply discounted price specials.

E. EDLP can increase average retail prices by as much as 10 percent.

225.Which of the following statements about everyday low pricing (EDLP) is most accurate?

A. For supermarkets, EDLP means "everyday low profits!"

B. Supermarkets have hailed EDLP as value pricing at its most effective.

C. EDLP allows supermarkets to use deeply discounted price specials.

D. EDLP can increase average retail prices by as much as 10 percent.

E. If retailers pass on their allowances to customers, they cannot make a profit.

226.After offering a promotional allowance, the price of a product returns to its regular price level. When this happens, the retail store's gross margin on that product __________ on those items that were bought with the allowance but not sold during the price special promotion.

A. decreases substantially

B. increases substantially

C. remains the same

D. fluctuates wildly

E. vanishes

227.Instead of everyday low prices (EDLP), supermarkets prefer a __________ approach, which is based on frequent specials where prices are temporarily lowered for a brief period of time and then raised again.

A. odd-even pricing

B. a one-price policy

C. hi-lo pricing

D. bundle-pricing

E. rigid-pricing

228. Geographic adjustments are made by manufacturers or wholesalers to cover

A. production costs.

B. administrative costs.

C. promotional costs.

D. variable costs.

E. transportation costs.

229.Manufacturers or even wholesalers make geographical adjustments to list or quoted prices to reflect

A. warehouse inventory carrying and loading costs.

B. the cost of transportation of the products from seller to buyer.

C. changes in price due to tariffs the Federal Trade Commission imposes on the transport of goods to and from the U.S.

D. changes in price due to fuel excise taxes on inefficient diesel trucks.

E. the need some firms have of recouping the costs of developing different versions of their products for different global markets.

230.The two general methods for quoting prices related to transportation costs are FOB origin pricing and _________.

A. uniform delivered pricing

B. mode of transportation pricing

C. regional pricing

D. flexible pricing

E. FOB destination pricing

231.The two general methods for quoting prices related to transportation costs are uniformed delivered pricing and _________.

A. regional pricing

B. flexible pricing

C. mode of transportation pricing

D. FOB origin pricing

E. FOB destination pricing

232.Which of the following statements about geographical adjustments to price is most accurate?

A. In FOB origin pricing, the seller selects the mode of transportation.

B. In FOB with freight-allowed pricing, the buyer subtracts the transportation costs from the list price.

C. Multiple-zone pricing is sometimes referred to as "spider web" pricing.

D. Basing point pricing seems to have been used in industries where freight expenses are only a minor part of the total cost to the buyer.

E. Geographical adjustments can be subject to government regulation if the firm cannot supply objective data (lists of mountains, rivers, weather conditions, etc.) explaining why those adjustments need to be made.

233.Which of the following statements about geographical adjustments to price is most accurate?

A. In FOB origin pricing, the seller selects the mode of transportation.

B. In FOB with freight-allowed pricing, the seller must pay for all transportation costs.

C. Multiple-zone pricing is sometimes referred to as "spider web" pricing.

D. Basing point pricing seems to have been used in industries where freight expenses are a significant part of the total cost to the buyer.

E. Geographical adjustments can be subject to government regulation if the firm cannot supply objective data (lists of mountains, rivers, weather conditions, etc.) explaining why those adjustments need to be made.

234.The acronym "FOB" stands for _________.

A. freight on board

B. free on board

C. freight of buyer

D. forward onto buyer

E. freight owner bonus

235.The word "Free" in relation to the acronym "FOB" signals the point or location where the seller is

A. free of responsibility for customer invoicing.

B. free of product liability.

C. free to choose method of transportation.

D. free to choose the point of loading.

E. free to choose the method of payment.

236.FOB origin pricing refers to

A. a method of "free on board" pricing where the price the seller sets includes all transportation costs.

B. a method of pricing where taxes and tariffs are adjusted based upon the city, state, or country of origin of a product and not its destination.

C. a method of pricing where taxes and tariffs are adjusted based upon the city, state, or country destination of a product and not its place of origin.

D. the "free on board" (FOB) price the seller quotes that includes only the cost of loading the product onto or into a vehicle and specifies the name of the location where the loading is to occur (seller's factory or warehouse).

E. the seller's naming the location of this loading as the seller's factory or warehouse.

237.A method of pricing where the price the seller quotes includes only the cost of loading the product onto the vehicle and specifies the name of the location where the loading is to occur is referred to as

A. FOB destination pricing.

B. FOB origin pricing.

C. geographical allowance.

D. uniform delivered pricing.

E. mode of transportation pricing.

238.Central Ice Machine Company is located in Omaha, Nebraska and sells Frick, Sullair, York, and Fes Fuller ammonia refrigeration parts. The company ships these parts using FOB origin pricing. Which of the following statements about the shipment of a Frick reciprocating compressor is true?

A. Central Ice Machine will pay all shipping costs.

B. Central Ice Machine splits the shipping costs with its customers no matter where the compressor is shipped.

C. It will cost Central Ice Machine more to ship to Charlotte, North Carolina than to Topeka, Kansas.

D. A buyer in Albany, New York, will pay significantly more shipping charges than a buyer in Lincoln, Nebraska.

E. All buyers will pay the same shipping costs, regardless of the destination.

239.The fashion buyer for Neiman Marcus is in Italy to view the new collections and to order for the coming season. In Milan, she negotiates a good price for a quantity of shoes in a range of sizes and styles, FOB factory. This means that

A. the factory selects the mode of transportation, pays the freight charges, and is responsible for any damage because the seller retains title to the goods until they are delivered to Neiman Marcus.

B. Neiman Marcus selects the mode of transportation, pays freight charges, and is responsible for any damage while the shoes are in transit because title passed to the firm at the point of loading.

C. Neiman Marcus and the factory split the freight costs.

D. the factory pays the freight cost to a designated port (airport or seaport) in the U.S. while Neiman Marcus pays the freight from that port to its final destination within the U.S.

E. the factory passes the title when the goods are loaded but will pay all shipping costs.

240.With uniform delivered pricing, the price the seller quotes

A. includes all transportation costs.

B. excludes all transportation costs.

C. includes a fixed allowance whereby the buyer pays any additional costs.

D. includes a fixed percentage of transportation costs for which it will be responsible.

E. will guarantee that a retailer will be charged the same transportation fee for all of their outlets regardless of where they are located.

241.The price the seller quotes that includes all transportation costs is referred to as _________.

A. mode of transportation

B. geographical allowance

C. uniform delivered pricing

D. FOB origin pricing

E. FOB destination pricing

242.Many cruise lines pay the customer's airfare to the point of cruise departure. What type of price adjustment are the cruise lines using?

A. skimming pricing

B. promotional pricing

C. loss-leader pricing

D. uniform delivered pricing

E. prestige pricing

243.A company placing an order from the Lab Safety Supply catalog is instructed to add $25.00 to the total cost of the order to pay for shipping. Which method of shipping does this catalog supplier use?

A. single-zone pricing

B. multiple-zone pricing

C. FOB origin pricing

D. FOB destination pricing

E. basing-point pricing

244.A pricing method where all buyers pay the same delivered price for the products, regardless of their distance from the seller is referred to as _________.

A. single-zone pricing

B. multiple-zone pricing

C. freight absorption pricing

D. FOB origin pricing

E. basing-point pricing

245.According to Figure 14-5 above, if the plant in Denver charges $20 to ship its products to all of the identified cities, it is most likely using which type of pricing?

A. FOB origin pricing

B. basing-point pricing

C. single-zone pricing

D. multiple-zone pricing

E. freight absorption pricing

246.When a firm divides its selling territory into geographic areas, it is referred to as

A. single-zone pricing.

B. multiple-zone pricing.

C. geographic pricing.

D. FOB origin pricing.

E. basing-point pricing.

247.Multiple-zone pricing refers to

A. establishing a distribution center in each major geographical region or zone in which a firm's product is sold.

B. establishing retail outlets in the same vicinity as all the firm's manufacturing plants.

C. a firm's decision to charge the same price regardless of geographic regions or zones where it operates.

D. a firm's division of its selling territory into geographic areas or zones.

E. a firm's decision to divide its business between multiple carriers to provide flexibility should transportation prices rise with one and fall with another.

248.After extensive analysis, a mail order company has decided to embark on a policy of multiple-zone pricing. In which step of the price-setting process would the mail order firm have made this decision?

A. Make special adjustments to the list or quoted price.

B. Select an approximate price level.

C. Estimate demand and revenue.

D. Identify price constraints and objectives.

E. Set list or quoted price.

249.According to Figure 14-6 above, if the plant in Denver ships its products to all the identified cities at different prices based on distance as indicated by the color-coded regions, it is most likely using which type of pricing?

A. FOB origin pricing

B. basing-point pricing

C. single-zone pricing

D. multiple-zone pricing

E. FOB destination pricing

250.According to Figure 14-6 above, if products are shipped from Denver, which of the following statements would be most accurate?

A. Products shipped from Denver would charge customers in Miami and New York a lower price than customers who live in Dallas or Seattle.

B. Customers in Minneapolis and Nashville would be charged $60.

C. Customers in Dallas and Phoenix pay the same price.

D. Customers in Nashville pay less shipping than customers in Minneapolis.

E. All customers receiving products from Denver will pay the same shipping fees.

251.A company in Virginia that manufactures and sells peanut brittle to retailers, charges higher shipping costs for orders sent to customers living west of the Mississippi River. This Virginia company is using

A. single-zone pricing.

B. multiple-zone pricing.

C. FOB origin pricing.

D. freight absorption pricing.

E. basing-point pricing.

252.Another name for freight-absorption pricing is

A. FOB factory.

B. FOB absorption pricing.

C. FOB with freight-allowed pricing.

D. basing-point pricing.

E. FOB origin pricing.

253.A pricing strategy where the buyer is allowed to deduct freight expenses from the list price of the goods so the seller pays the transportation costs is referred to as

A. FOB factory.

B. basing-point pricing.

C. FOB origin pricing.

D. single zone pricing.

E. freight-allowed pricing.

254.Selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the buyer is referred to as _________.

A. FOB origin pricing

B. single-zone pricing

C. basing-point pricing

D. multiple-zone pricing

E. freight absorption pricing

255.Basing-point pricing refers to

A. selecting a single geographical location from which the list price for products plus freight expenses are charged to the seller.

B. selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the seller.

C. having all buyers pay the same delivered price for the products, regardless of their distance from the seller.

D. a firm dividing a selling territory into geographic areas or zones and charging the same delivered price to all buyers within the same zone, but charging different prices in for different zones depending on distance from the factory or warehouse.

E. selecting one or more geographical locations (basing points) from which the list price for products plus freight expenses are charged to the buyer.

256.For which of the following products is its manufacturer most likely to use basing-point pricing?

A. pet food

B. furniture

C. crystal glass bowls

D. cut flowers

E. coal

257.Five pricing practices are closely scrutinized because of potential unethical or illegal actions. They include: (1) price fixing; (2) price discrimination; (3) deceptive pricing; (4) geographical pricing; and (5) _________.

A. predatory pricing

B. price discounting

C. lateral price fixing

D. regional rollbacks

E. delayed payment penalties

258.Five pricing practices are closely scrutinized because of potential unethical or illegal actions. They include: (1) price fixing; (2) price discrimination; (3) predatory pricing; (4) geographical pricing; and (5) _________.

A. price discounting

B. deceptive pricing

C. lateral price fixing

D. regional rollbacks

E. delayed payment penalties

259.Five pricing practices are closely scrutinized because of potential unethical or illegal actions. They include: (1) price fixing; (2) predatory pricing; (3) deceptive pricing; (4) geographical pricing; and (5) _________.

A. price discounting

B. lateral price fixing

C. regional rollbacks

D. delayed payment penalties

E. price discrimination

260.Five pricing practices are closely scrutinized because of potential unethical or illegal actions. They include: (1) predatory pricing; (2) price discrimination; (3) deceptive pricing; (4) geographical pricing; and (5) _________.

A. price discounting

B. lateral price fixing

C. regional rollbacks

D. delayed payment penalties

E. price fixing

261.Which of the following statements about the legal and regulatory aspect of pricing is most accurate?

A. The Robinson-Patman Act deals with predatory pricing.

B. The Consumer Goods Pricing Act is the only federal legislation that deals directly with pricing issues.

C. The Sherman Act deals only with vertical price fixing.

D. The Federal Trade Commission Act deals with predatory pricing, deceptive pricing, and geographical pricing issues.

E. The Consumer Goods Pricing Act and the Robinson-Patman Act deal with price discrimination.

262.A conspiracy among firms to set prices for a product is referred to as

A. price discrimination.

B. price fixing.

C. predatory pricing.

D. tying arrangements.

E. exclusive dealing.

263.Price fixing refers to

A. an arrangement a manufacturer makes with a reseller to handle only its products and not those of a competitor.

B. the practice of charging a very low price for a product with the intent of driving competitors out of business.

C. the practice of charging different prices to different buyers for goods of like grade and quality.

D. a conspiracy among firms to set prices for a product.

E. a seller's requirement that the purchaser of one product also buy another product in the line.

264.Price fixing is illegal per se under the Sherman Act. "Per se" means

A. "according to"

B. "in lieu of"

C. "in regard to"

D. "in and of itself"

E. "without exception"

265.Two or more competitors explicitly or implicitly setting prices is referred to as _________.

A. competitive collusion

B. vertical price fixing

C. horizontal price fixing

D. lateral price fixing

E. price cooperation

266.Mark Johnson, the manager of a discount consumer electronics store, was approached by the manufacturer's representative on behalf of a marketer of a popular and profitable line of DVD storage racks. The manufacturer's representative implied that if Johnson doesn't raise the retail prices for the storage racks to those paid by the marketer's non-discount customers, Johnson's supply of racks may be severely curtailed. The manufacturer's representative is guilty of attempting

A. horizontal price-fixing.

B. resale price maintenance.

C. price discrimination.

D. predatory pricing.

E. bait and switch pricing.

267.Controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price are referred to as

A. horizontal price fixing.

B. vertical price fixing.

C. competitive price fixing.

D. lateral price fixing.

E. explicit price fixing.

268.Vertical price fixing refers to

A. two or more competitors explicitly or implicitly setting prices.

B. the practice of charging different prices to different buyers for goods of like grade and quality.

C. controlling agreements between independent buyers and sellers whereby sellers are required not to sell products below a minimum retail price horizontal price fixing.

D. a conspiracy among firms to set prices for a product or service.

E. a seller's requirement that the purchaser of one product also buy another product in the line. 

269.Price discrimination refers to

A. an arrangement a manufacturer makes with a reseller to handle only its products and not those of a competitor.

B. the practice of charging a very low price for a product with the intent of driving competitors out of business.

C. the practice of charging different prices to different buyers for goods of like grade and quality.

D. a conspiracy among firms to set prices for a product or service.

E. a seller's requirement that the purchaser of one product also buy another product in the line.

270.The practice of charging different prices to different buyers for goods of like grade and quality is referred to as

A. horizontal price-fixing.

B. resale price maintenance.

C. price discrimination.

D. predatory pricing.

E. bait-and-switch pricing.

271.In one of its least favorite actions, Amazon.com was caught fiddling with its price tags. Avid videodisc buyers, buying in quantity for resale, found that the online retailer was offering different customers different prices for the same DVD, and complained vociferously. Amazon was caught red-handed. It was, company officials admitted, trying to see how much it could charge for an item before buyers balked. No matter what the reasoning behind it, Amazon.com was using

A. horizontal price-fixing.

B. resale price maintenance.

C. price discrimination.

D. predatory pricing.

E. bait-and-switch pricing.

272.A unique feature of the Robinson-Patman Act is that it allows for price differentials to different customers under several conditions. Which of the following practices would be permitted?

A. Using price differentials when price differences charged to different customers do not exceed the differences in the cost of manufacture, sale, or delivery resulting from different methods or quantities in which such goods are sold or delivered to buyers.

B. Using price differentials when price differences are given on the basis of other family businesses.

C. Using price differentials when charging different prices to different buyers for goods of like grade or quality.

D. Using price differentials when charging different prices on the basis of religious affiliation.

E. Using price differentials when charging the original price for refurbished goods that have been damaged or used and returned but repaired according to company specifications.

273.A unique feature of the Robinson-Patman Act is that it allows for price differentials to different customers under several conditions. Which of the following practices would be permitted?

A. Using price differentials when price differences are given on the basis of other family businesses.

B. Using price differentials when charging different prices to different buyers for goods of like grade or quality.

C. Using price differentials when charging different prices on the basis of religious affiliation.

D. Using price differentials when charging the original price for refurbished goods that have been damaged or used and returned but repaired according to company specifications.

E. When price differences result from changing market conditions, avoiding obsolescence of seasonal merchandise, including perishables, or closing out sales.

274.A unique feature of the Robinson-Patman Act is that it allows for price differentials to different customers under several conditions. Which of the following practices would be permitted?

A. Using price differentials when price differences are given on the basis of other family businesses.

B. Using price differentials when charging different prices to different buyers for goods of like grade or quality.

C. When price differences are quoted to selected buyers in good faith to meet competitors' prices and are not intended to injure competition.

D. Using price differentials when charging different prices on the basis of religious affiliation.

E. When price differences result from changing market conditions, avoiding obsolescence of seasonal merchandise, including perishables, or closing out sales.

275.The Robinson-Patman Act covers promotional allowances as well as discounts. To legally offer promotional allowances to buyers, the seller must do so on a(n) __________ to all buyers businesses distributing the seller's products.

A. proportionally equal basis

B. limited basis

C. disproportionally equal basis

D. geographical basis

E. across the board

276.Five common forms of pricing include: bait and switch, bargains conditional on other purchases, comparable value comparisons, comparisons with suggested prices, and former price comparisons. What do all these practices have in common? They are all

A. most effective in the growth stage of the product life cycle.

B. popular techniques preferred by online businesses.

C. illegal and often difficult to prosecute.

D. most effective in business-to-business marketing.

E. effective pricing practices that professional marketers use.

277.A hardware store advertises a 3/8" Black and Decker Power Drill for $29.95. You enter the store intending to purchase the drill. The salesperson informs you that they are all sold out. She tells you that the "sale" drills were factory seconds and that if you are going to be doing any kind of serious woodworking, you should buy the Model 3309, which sells for $49.99. This scenario has elements of which type of deceptive pricing?

A. comparable value comparisons

B. former price comparisons

C. comparisons with suggested prices

D. conditional bargains

E. bait and switch

278.To promote their business, some psychics advertise free tarot-card readings and other insights into their customers' futures on television. Unfortunately, this "free reading" has cost some unsuspecting callers as much as $700 in phone charges. This sort of deceptive pricing practice would be primarily monitored by the

A. Consumer Protection Agency.

B. U.S. Department of Justice.

C. Federal Trade Commission.

D. Federal Communications Commission.

E. Consumer Product Safety Commission.

279.Which of the following statements about geographical pricing is most accurate?

A. Geographical pricing is generally legal and not normally a concern the U.S. legal system.

B. Geographical pricing has come under more government scrutiny than any other pricing policy.

C. FOB origin pricing is legal.

D. FOB freight-allowed pricing practices are illegal.

E. Basing-point pricing is the only form of geographical pricing that is not under some type of legal restriction.

280.The practice of changing a very low price for a product with the intent of driving competitors out of business is referred to as

A. price fixing.

B. price discrimination.

C. predatory pricing.

D. deceptive pricing.

E. geographical pricing.

281.Predatory pricing refers to

A. a conspiracy among firms to set prices for a product.

B. using price differentials when charging different prices on the basis of race, religion, or ethnic affiliation.

C. the practice of changing a very low price for a product with the intent of driving competitors out of business.

D. using price differentials when charging the original price for refurbished goods that have been damaged or used and returned but repaired according to company specifications.

E. controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price.

282.Predatory pricing is

A. an arrangement a manufacturer makes with a reseller to handle only its products and not those of a competitor.

B. the practice of charging a very low price for a product with the intent of driving competitors out of business.

C. the practice of charging different prices to different buyers for goods of like grade and quality.

D. a conspiracy among firms to set prices for a product or service.

E. a seller's requirement that the purchaser of one product must also buy another product in the line.

283.In the early 1980s, typical round-trip coach air fares from the East Coast to London were over $500. Then Freddie Laker introduced the People's Express, a competing service into Newark at $350. Major airlines matched his price—and continued to do so until they drove People's Express out of business. Then prices shot back up to over $500. A lawsuit filed under the Sherman Act resulted in the judgment that the major airlines had explicitly tried to destroy a competitor. The experience of People's Express is an example of __________ on the part of the major airlines.

A. price fixing

B. price discrimination

C. predatory pricing

D. deceptive pricing

E. pricing constraints

284.Bob Biltmore owns dozens of very successful print shops throughout the Midwest. Biltmore's shops specialize in low cost black and white copies and feature user-friendly machines consumers can easily operate. In recent months, Biltmore has noticed many more competitors in the areas where his stores are located. In an attempt to eliminate the competition, Biltmore has decided to charge a very low price for his black and white copies, a price so low his competitors will be forced out of business. After the competition has been driven out, Biltmore plans to raise the price of his copies. Biltmore is planning to engage in the illegal and unethical practice of

A. price fixing.

B. price inflation.

C. predatory pricing.

D. competitive pricing.

E. a price war.

285.The practice of offering a bargain that is conditional on the purchase of other products may exist when a buyer is offered the "1-Cent Sales," the "Buy 1, Get 1 Free," or the "Get 2 for the Price of 1" deal. Such pricing is legal only if

A. the seller is using bundle pricing.

B. there is a reasonable amount of inventory to satisfy the needs of the retailers normal traffic flow.

C. the first items are sold at the regular price, not a price inflated for the offer.

D. the product is not outdated.

E. the quantity available to the customer is not limited.

286.Advertising such as "Retail Value $100, Our Price $85" is deceptive if

A. a verified and substantial number of stores in the market area did not price the item at $100.00.

B. even one store in that retail chain did not price the item at $100.

C. a competitor is selling the same item for $75.00 on sale and their normal price is only $85.

D. there is not enough product on hand at that price to satisfy the needs of the store's regular customer traffic.

E. the markup on the original price is more than 200 percent.

287.A claim that a price is below a manufacturer's suggested or list price may be deceptive if

A. few or no sales occur at that price in a retailer's market area.

B. the items for sale had been purchased from another retailer.

C. the items for sale were part of a manufacturer's promotional allowance.

D. the items were part of a bulk order.

E. the items were purchased from the manufacturer at a higher price and the sale was part of a loss-leader promotion.

288.When a seller represents a price as reduced, the item must have been offered in good faith at a higher price for a substantial previous period. Former price comparisons are deceptive if

A. the high price tags were from a previous owner or retailer and were purchased that way from the reseller, even though that price didn't originate at the store.

B. a high price was set for the purpose of establishing a reference for a price reduction.

C. the items for sale were part of a manufacturer's promotional allowance.

D. the items for sale were available at the higher price for less than 30 days.

E. the items were purchased from the manufacturer at a higher price and the sale was part of a loss-leader promotion.

289.As explained in "Going Online" box, the Federal Trade Commission (FTC) is especially concerned about the

A. overuse of FOB origin pricing.

B. misuse of quantity discounting.

C. elimination of seasonal discounts.

D. children under 18 making online purchases.

E. misuse of the word "free" in promotions.

290.When 3M launched its premium Greptile Grip golf glove consisting of the highest quality Cabretta leather, it suggested a retail price range of $16.95 to $19.95. Golf glove marketer Bionic had introduced its Classic at $24.95 and its Pro at $39.95, while FootJoy launched its Pure Touch Limited at $28.00 and its SciFlex at $18.00. Other competitors focused on price/value at three price points: $6.00-$9.99, $10.00- $16.99, and $17.00 and up. These statements suggest that 3M has been pursuing a(n) __________ method of selecting an approximate price level.

A. competition-based

B. profit-oriented

C. cost-oriented

D. demand-oriented

E. experience-oriented

291.If 3M decided the retail price for the Greptile Grip golf glove would be $16.95 and then worked backward through markups taken by retailers and wholesalers to determine what price it can charge wholesalers for the product, the firm would most likely be practicing a __________ strategy.

A. price lining

B. penetration pricing

C. predatory pricing

D. cost plus percentage-of-cost pricing

E. target pricing

 

When Callaway opened its “online” store, it wanted to be very careful not to ruin the good relationship it had with its loyal trade partners.  To make sure this did not happen, Callaway

a.   offered its retail partners greater trade allowances.

b.   offered its retail partners Callaway stock options.

c.   had one of its retail stores get the credit for an online sale.

d.   offered incentives for retailers if they encouraged their store customers to shop online.

e.   discounted merchandise in retail outlets but not online.

Callaway markets its products through on- and off-course golf retailers and sporting goods retailers, and also has its own online store, which makes it a full-fledged

a.   cross channel marketer.

b.   multichannel marketer.

c.   industrial marketer.

d.   direct marketer.

e.   merchant marketer.

Individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users are referred to as a

a.   marketing channel.

b.   distribution matrix.

c.   retailer.

d.   wholesaler.

e.   distributor.

You probably own several pairs of shoes.  Further, it is highly likely you purchased those shoes at retail stores located in a shopping mall and not directly from the manufacturer.  In fact, most products are brought to you via a __________, which consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users.

a.   marketing intermediary

b.   distribution hierarchy

c.   marketing chain of command

d.   distribution matrix

e.   marketing channel

A __________ can be compared to a pipeline through which water flows—making possible the flow of goods from a producer, through intermediaries, to a buyer.

a.   chain of command

b.   marketing hierarchy

c.   marketing agent

d.   marketing channel

e.   marketing middleman

Jay stops at the shopping mall to purchase a new pair of jeans from the Diesel store.  He is the ultimate consumer in a pipeline from the producer through intermediaries, including the clothing store.  This pipeline is actually a

a.   marketing tunnel.

b.   consumer market.

c.   marketing channel.

d.   transactional conduit.

e.   distribution matrix.

A middleman refers to

a.   a person or firm whose sole responsibility is bringing a buyer to the last link in the distribution chain.

b.   a person or firm whose sole responsibility is to find distributors for a manufacturer’s products.

c.   any intermediary between a manufacturer and end-user markets.

d.   a person or firm that takes possession of a product and in some way alters it before passing it on to ultimate consumers.

e.   an intermediary who sells to ultimate consumers.

Any intermediary between a manufacturer and end-user markets is referred to as a

a.   retailer.

b.   middleman.

c.   wholesaler.

d.   broker.

e.   distributor.

A(n) __________ is any intermediary between a manufacturer and end-user markets.

a.   agent

b.   wholesaler

c.   retailer

d.   middleman

e.   broker

Jaffar (Jeff) Tabrizi is the owner and president of Tabrizi Oriental Rugs located in Toronto, Canada.  He personally shops the world over, handpicks and orders authentic and beautiful handmade rugs, which he has shipped to Canada, where he sells them through his brick-and-mortar stores and at his www.tabrizi.com website.  In terms of the marketing channel, Jeff is acting as a(n) _________.

a.   consumer

b.   retailer

c.   wholesaler

d.   brokerage firm

e.   middleman

Any intermediary with legal authority to act on behalf of the manufacturer is referred to as a __________.

a.   dealer

b.   agent

c.   retailer

d.   wholesaler

e.   distributor

An agent refers to

a.   any intermediary with legal authority to act on behalf of the manufacturer.

b.   independent firms or individuals whose principal function is to transport goods.

c.   any intermediary who takes ownership of a manufacturer’s goods or services and then finds multiple buyers for them.

d.   a manufacturer’s paid representative and acting voice in initial sales transactions.

e.   a manufacturing “matchmaker” who actively seeks out potential consumers and brings them to retailers.

A wholesaler refers to

a.   independent firms or individuals whose principal function is to bring buyers and sellers together.

b.   any intermediary who takes ownership of a manufacturer’s products or services and then finds multiple buyers for those products or services.

c.   an intermediary who sells to other intermediaries, usually to retailers in consumer markets.

d.   an intermediary who sells to consumers.

e.   a manufacturing “matchmaker” who actively seeks out potential consumers and brings them to retailers.

An intermediary who sells to other intermediaries, usually to retailers in consumer markets, is referred to as a(n) __________.

a.   broker

b.   agent

c.   retailer

d.   distributor

e.   wholesaler

A(n) __________ is an intermediary who sells to other intermediaries.

a.   agent

b.   wholesaler

c.   retailer

d.   manufacturer

e.   broker

Establishments primarily engaged in selling livestock, grain, and other farm products would be classified as

a.   retailers.

b.   brokers.

c.   ultimate consumers.

d.   wholesalers.

e.   middlemen.

An intermediary who sells to consumers is referred to as a(n) __________.

a.   agent

b.   broker

c.   retailer

d.   wholesaler

e.   distributor

A retailer refers to

a.   an intermediary who sells only to other intermediaries.

b.   any intermediary between a manufacturer and industrial markets.

c.   an intermediary who sells to other distributors.

d.   an intermediary who takes possession of a product, alters it in some way, and then sells it to the ultimate consumer.

e.   an intermediary who sells to consumers.

A(n) __________ is an intermediary who sells to consumers.

a.   agent

b.   retailer

c.   wholesaler

d.   distributor

e.   broker

Several artists in Charleston, South Carolina, have created an arrangement to sell their paintings.  They have set up an art gallery in downtown Charleston so tourists and art lovers can look at their paintings and buy the ones they like.  Each artist takes a turn acting as the sales clerk at the gallery.  In terms of the marketing channel, the artist who is on duty in the gallery is acting as a(n) __________.

a.   ultimate consumer

b.   manufacturer

c.   wholesaler

d.   retailer

e.   distributor

A distributor refers to

a.   intermediaries who perform a variety of distribution functions, including selling, maintaining inventories, extending credit, and so on.

b.   an intermediary who sells only to manufacturers.

c.   an intermediary who takes possession of a product, alters it in some way, and then sells it to the ultimate consumer.

d.   an intermediary who sells to other intermediaries, usually to retailers.

e.   an intermediary who sells only to other intermediaries.

Intermediaries who perform a variety of functions, including selling, maintaining inventories, extending credit, and so on are referred to as __________.

a.   dealers

b.   brokers

c.   retailers

d.   wholesalers

e.   distributors

Automakers such as Chrysler, Ford, and General Motors utilize a __________ network.

a.   dealer

b.   broker

c.   retailer

d.   distributor

e.   wholesaler

 

A variety of terms are used for marketing intermediaries.  According to Figure 15-1 above, “A” represents a(n) __________.

a.   retailer

b.   middleman

c.   wholesaler

d.   distributor

e.   agent or broker

A variety of terms are used for marketing intermediaries.  According to Figure 15-1 above, “B” represents a(n) __________.

a.   retailer

b.   middleman

c.   wholesaler

d.   distributor

e.   agent or broker

A variety of terms are used for marketing intermediaries.  According to Figure 15-1 above, “C” represents a(n) __________.

a.   retailer

b.   dealer

c.   wholesaler

d.   distributor

e.   agent or broker

A variety of terms are used for marketing intermediaries.  According to Figure 15-1 above, “D” represents a(n) __________.

a.   retailer

b.   wholesaler

c.   distributor

d.   agent or broker

e.   middleman

A variety of terms are used for marketing intermediaries.  According to Figure 15-1 above, “E” represents a(n) __________.

a.   retailer

b.   middleman

c.   wholesaler

d.   distributor

e.   agent or broker

A variety of terms are used for marketing intermediaries.  According to Figure 15-1 above, “F” represents a(n) __________.

a.   dealer

b.   retailer

c.   middleman

d.   wholesaler

e.   agent or broker

Two students, Nick and Lee, were studying for an upcoming exam in their introduction to marketing course.  While studying the chapter on marketing channels and wholesalers, Nick made the following statement: “If it weren’t for wholesalers and other intermediaries in the channel of distribution, the products we buy would cost a lot less!”  After contemplating Nick’s statement, Lee said, “Wait a minute.  We learned in class that channel intermediaries actually make marketing more efficient by minimizing the number of transactions necessary to sell products.”  Lee’s statement refers to

a.   channel intermediary development.

b.   the relationships between channel intermediaries themselves.

c.   the value created by channel intermediaries.

d.   channel intermediary promotional efforts.

e.   an inaccurate statement by Lee; Nick was correct.

The three basic functions intermediaries perform are

a.   accommodating functions, logistical functions, and transactional functions.

b.   implementation functions, accommodating functions, and contractual functions.

c.   contractual functions, facilitating functions, and logistical functions.

d.   transactional functions, logistical functions, and facilitating functions.

e.   facilitating functions, accommodating functions, and implementation functions.

 

Intermediaries perform three basic functions.  According to Figure 15-2 above, “A” represents a(n) __________.

a.   middleman function

b.   logistical function

c.   facilitating function

d.   operational function

e.   transactional function

Intermediaries perform three basic functions.  According to Figure 15-2 above, “B” represents a(n) __________.

a.   logistical function

b.   transactional function

c.   middleman function

d.   facilitating function

e.   operational function

Intermediaries perform three basic functions.  According to Figure 15-2 above, “C” represents a(n) __________.

a.   transactional function

b.   facilitating function

c.   middleman function

d.   logistical function

e.   operational function

Intermediaries performing a transactional function in distribution are engaged in buying, selling, and __________.

a.   storing

b.   financing

c.   transporting

d.   risk taking

e.   merchandising

The “risk” in a transactional function refers to

a.   unpredictable costs of transportation because of fuel prices.

b.   product liability from poorly produced products that become defective.

c.   the need to stock merchandise in anticipation of sales, which may become obsolete.

d.   trying new promotional campaigns.

e.   investments in new product development.

In terms of distribution, when marketing channel members are engaged in buying, selling, and risk taking, they are performing __________ functions.

a.   logistical

b.   merchandising

c.   facilitating

d.   implementation

e.   transactional

A marketing channel intermediary that purchases merchandise for resale at retail outlets would be an example of a(n) __________ function.

a.   transactional

b.   logistical

c.   facilitating

d.   risk taking

e.   assorting

Purchasing products for resale or as an agent for supply of a product would be an example of a __________ function.

a.   logistical

b.   facilitating

c.   risk taking

d.   transactional

e.   assorting

Logistical function activities include

a.   buying and selling.

b.   gathering, sorting, and dispersing products.

c.   financing and grading.

d.   risk taking.

e.   marketing information and research.

When marketing channel members are engaged in gathering, sorting, and dispersing products, they are performing __________ functions.

a.   logistical

b.   merchandising

c.   facilitating

d.   implementation

e.   transactional

When Hunter went to the hardware store looking for gloves to wear while refinishing a table, he bought one pair because that was all he needed.  But when the hardware store purchased the gloves, it purchased a case containing 100 pairs of identical gloves.  Which logistical function did the hardware store perform for Hunter and its other customers?

a.   marketing

b.   buying

c.   sorting

d.   assorting

e.   risk taking

Creating product assortments from several sources to serve customers would be an example of a __________ function.

a.   transactional

b.   facilitating

c.   selling

d.   logistical

e.   risk taking

Assembling and protecting products at a convenient location to offer better customer service would be an example of a __________ function.

a.   transactional

b.   facilitating

c.   grading

d.   risk taking

e.   logistical

Purchasing products in large quantities and breaking them into smaller amounts desired by customers would be an example of a __________ function.

a.   logistical

b.   transactional

c.   facilitating

d.   transporting

e.   risk taking

Physically moving a product to customers would be an example of a __________ function.

a.   transactional

b.   logistical

c.   facilitating

d.   selling

e.   risk taking

Facilitating function activities include

a.   buying and selling.

b.   assorting, sorting, and storing.

c.   financing, grading, and marketing information and research.

d.   risk taking.

e.   transportation.

In terms of distribution, when marketing channel members are engaged in financing, grading, and marketing information and research, they are performing the __________ function.

a.   logistical

b.   transformational

c.   implementing

d.   facilitating

e.   transactional

Intermediaries perform facilitating function activities, which assist producers in making goods and services more attractive to buyers.  These activities include

a.   producing, assembling, and distributing.

b.   transportation and distribution.

c.   buying, selling, and risk taking.

d.   assorting, sorting, and storing.

e.   financing, grading, and marketing information and research.

Extending credit to customers would be an example of a __________ function.

a.   transactional

b.   logistical

c.   facilitating

d.   buying

e.   risk taking

Inspecting, testing, or judging products and assigning them quality grades would be an example of a __________ function.

a.   transactional

b.   logistical

c.   storing

d.   facilitating

e.   risk taking

Before consumers see a movie, it is assigned a rating such as G or PG based on its language and content.  This rating system is most closely related to which facilitating function activity performed by marketing intermediaries?

a.   grading

b.   sorting

c.   risk taking

d.   marketing

e.   assorting

Marketing channels help create value for consumers through four utilities.  These utilities are

a.   product, price, promotion, and place.

b.   form, function, risk taking, and selling.

c.   time, place, form, and possession.

d.   transactional, logistical, facilitating, and marketing.

e.   buying, selling, storing, and transporting.

A snack vending machine located in a university building that students use between classes when hungry creates both __________ utility.

a.   time and place

b.   place and form

c.   form and creation

d.   possession and form

e.   application and place

Having a product or service where consumers want it is __________ utility.

a.   form

b.   place

c.   time

d.   possession

e.   transactional

Enhancing a product or service to make it more appealing to buyers is __________ utility.

a.   time

b.   place

c.   possession

d.   form

e.   transactional

A textile artist can buy fabric, thread, and batting, create an heirloom quilt, and then sell the finished work to customers in a kiosk decorated with some of the quilts produced to entice customers who shop at the local strip mall.  By designing the quilts and kiosk with aesthetic value, the artist creates __________ utility.

a.   application

b.   possession

c.   time

d.   place

e.   form

An example of __________ utility involves intermediaries shipping goods to buyers of a product.

a.   time

b.   form

c.   place

d.   possession

e.   transactional

As the number of intermediaries between a producer and buyer increases, the channel is viewed as increasing in __________.

a.   variety

b.   scope

c.   depth

d.   scale

e.   length

A(n) __________ exists when producers and ultimate consumers deal one-on-one with each other.

a.   strategic channel alliance

b.   direct channel

c.   marketing channel

d.   indirect channel

e.   dual distribution channel

When producers and ultimate consumers deal with each other one-on-one, it is referred to as a(n)

a.   strategic channel alliance.

b.   marketing channel.

c.   direct channel.

d.   indirect channel.

e.   dual distribution channel.

A direct channel is when

a.   producers and end-users deal with each other on a one-on-one basis.

b.   the producer and consumer and perform numerous channel functions.

c.   a firm reaches different buyers by employing two or more different types of channels for the same basic product.

d.   an intermediary sells to other intermediaries, usually to retailers in consumer markets.

e.   an agent or broker brings ultimate consumers to manufacturers.

In a direct channel, all channel functions are performed by __________.

a.   retailers

b.   wholesalers

c.   producers

d.   brokers and agents

e.   middlemen

When Dell Computer sells made-to-order PCs to customers online via its website, it is an example of which type of marketing channel?

a.   indirect channel

b.   strategic channel alliances

c.   marketing channel

d.   dual distributive channel

e.   direct channel

Schwan’s Sales Enterprises of Marshall, Minnesota, markets a full line of frozen foods in 49 states and parts of Canada using door-to-door salespeople who sell from its refrigerated trucks.  This particular method of distribution is referred to as a(n)

a.   indirect channel.

b.   direct channel.

c.   facilitated channel.

d.   customer-service channel.

e.   truck-jobber channel.

In an episode of the Glee television series, members of the glee club sold home-baked cupcakes at school to raise money.  The students selling their cupcakes without any intermediary would be an example of a(n)

a.   personalized distribution.

b.   non-permanent distribution.

c.   informal channel of distribution.

d.   direct channel of distribution.

e.   indirect channel of distribution.

A channel that includes intermediaries that are between the producer and consumer and perform numerous channel functions is referred to as a(n)

a.   indirect channel.

b.   direct channel.

c.   multilevel channel.

d.   full-service channel.

e.   limited-service channel

Indirect channels for consumer products

a.   occur when one firm’s marketing channels are used to sell another firm’s products.

b.   include producers and end-users dealing directly with each other.

c.   include intermediaries that are between the producer and consumer and perform numerous channel functions.

d.   are arrangements whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product.

e.   occurs when a retailer sells its product in a store and on the Internet.

A commonly used indirect channel moves product from producer to retailer to consumer.  This channel is used when

a.   the retail outlets are regionally located.

b.   the cost of maintaining inventory is low.

c.   there is little if any seasonal demand.

d.   the risk lies solely with the manufacturer.

e.   the retailer is large and can buy in large quantities from a producer.

A commonly used indirect channel moves product from producer to retailer to consumer.  This channel is used when

a.   the cost of maintaining inventory is low.

b.   the cost of inventory makes it too expensive to use a wholesaler.

c.   there is little if any seasonal demand.

d.   the risk lies solely with the manufacturer.

e.   the retail outlets are regionally located.

The most indirect channel for consumer products incorporates agents, wholesalers, and retailers and is most commonly used when there

a.   are only a few large manufacturers but many small retailers.

b.   are low-cost, low unit volume goods.

c.   is too large an inventory to be carried by wholesalers.

d.   are many small manufacturers and many small retailers.

e.   are many manufacturers with a limited inventory competing for a small group of retailers.

 

Figure 15-3 above depicts the four most common marketing channels for consumer products and services.  “W” represents

a.   consumers.

b.   industrial users.

c.   wholesalers.

d.   agents or brokers.

e.   retailers.

Figure 15-3 above depicts the four most common marketing channels for consumer products and services.  “X” represents

a.   consumers.

b.   industrial users.

c.   wholesalers.

d.   agents or brokers.

e.   retailers.

Figure 15-3 above depicts the four most common marketing channels for consumer products and services.  “Y” represents

a.   consumers.

b.   industrial users.

c.   wholesalers.

d.   agents or brokers.

e.   retailers.

Figure 15-3 above depicts the four most common marketing channels for consumer products and services.  “Z” represents

a.   consumers.

b.   industrial users.

c.   wholesalers.

d.   agents or brokers.

e.   retailers.

Figure 15-3 above depicts four common marketing channels for consumer products and services that differ by the kind and number of intermediaries.  Channel “A” would be an appropriate marketing channel for which of the following?

a.   automobiles

b.   jewelry

c.   construction machinery

d.   candy

e.   insurance products

Figure 15-3 above depicts four common marketing channels for consumer products and services that differ by the kind and number of intermediaries.  Channel “B” would be an appropriate marketing channel for which of the following?

a.   insurance products

b.   direct-to-home food products

c.   automobiles

d.   construction machinery

e.   candy

Figure 15-3 above depicts four common marketing channels for consumer products and services that differ by the kind and number of intermediaries.  Channel “C” would be an appropriate marketing channel for __________.

a.   candy bars

b.   automobiles

c.   car insurance

d.   dental services

e.   tickets to a rock concert

The most indirect marketing channel is employed where many small manufacturers and many small retailers and other intermediaries are used to help coordinate a large supply of the product.  This channel is represented in Channel “D” in Figure 15-3 above.  Which of the following products would most likely be marketed using this kind of channel?

a.   dental services

b.   automobiles

c.   pool supplies

d.   rugs made in India

e.   candy bars

A small electronics company manufactures a line of low- to moderate-quality stereo components that are distributed through wholesalers to mass-market retailers such as Walmart.  The electronics company has begun production of a small line of high-quality, professional studio-model components.  How should the small electronics company best distribute its new products?

a.   use its established indirect marketing channel

b.   distribute directly to mass market consumers

c.   distribute through agents who sell to specialty electronics stores that will feature the new line

d.   sell directly to specialty electronics stores that will feature the new line

e.   establish its own chain of electronics retail stores

In marketing channels for business products, an intermediary that performs a variety of marketing channel functions including selling, stocking, delivering a full product assortment, and financing is referred to as a(n) ___________.

a.   agent

b.   industrial distributor

c.   wholesaler

d.   retailer

e.   channel captain

An industrial distributor refers to

a.   an intermediary that performs a variety of marketing channel functions involving selling, stocking, delivering a full product assortment, and financing.

b.   an intermediary that maintains its own salesforce and performs all channel functions.

c.   an intermediary that deals exclusively with the selling, stocking, and delivery of raw materials used by manufacturers in the production of its products.

d.   an intermediary that deals with a single product line within a single industry.

e.   an intermediary that performs functions involving selling, stocking, and delivery of industrial goods but is unable to provide financing due to the normally large expenditures.

Industrial distributors perform functions that are most like which intermediary in the consumer goods marketing channel?

a.   manufacturers

b.   retailers

c.   agents

d.   wholesalers

e.   brokers

International Products, a Burlington, New Jersey, firm that sells industrial cleansers and lubricants wanted to sell its product to factories, hospitals, and labs in China, but it did not have the necessary expertise.  As a result, International Products hired Asia Marketing & Management to sell, stock, and deliver a full assortment of products to the Chinese market.  Asia Marketing & Management is an example of a(n) __________.

a.   agent

b.   wholesaler

c.   global agent

d.   retailer

e.   industrial distributor

 

Figure 15-4 above depicts the four most common marketing channels for business products and services.  “X” represents

a.   consumers.

b.   industrial users.

c.   dual distributors.

d.   agents or brokers.

e.   industrial distributors.

Figure 15-4 above depicts the four most common marketing channels for business products and services.  “Y” represents

a.   consumers.

b.   industrial users.

c.   dual distributors.

d.   agents or brokers.

e.   industrial distributors.

Figure 15-4 above depicts the four most common marketing channels for business products and services.  “Z” represents

a.   consumers.

b.   industrial users.

c.   dual distributors.

d.   agents or brokers.

e.   industrial distributors.

Figure 15-4 above depicts the four most common marketing channels for business products and services.  Channel “A” would be an appropriate marketing channel for __________.

a.   Boeing aircraft

b.   Caterpillar lift trucks

c.   John Deer tractors

d.   fencing systems

e.   electrical products

Figure 15-4 above, depicts the four most common marketing channels for business products and services.  Channel “B” would be an appropriate marketing channel for __________.

a.   Cray supercomputers

b.   magnetic resonance imaging (MRI) machines

c.   John Deere excavators

d.   industrial fasteners

e.   electrical products

Figure 15-4 above depicts the four most common marketing channels for business products and services.  Channel “C” would be an appropriate marketing channel for __________.

a.   IBM mainframe computers

b.   Caterpillar excavators

c.   electrical motors

d.   industrial fasteners

e.   Bombardier aircraft

Figure 15-4 above depicts the four most common marketing channels for business products and services.  Channel “D” would be an appropriate marketing channel for __________.

a.   supercomputers

b.   electrical products

c.   Boeing aircraft

d.   Caterpillar tractors

e.   industrial fasteners

Electronic marketing channels refer to

a.   the employment of the Internet to make products and services available for consumption or use by consumers or industrial buyers.

b.   a firm’s computer driven inventory management through an entirely mechanized warehousing system.

c.   intranet systems linking all aspects of production within a single firm.

d.   manufacturers that specialize in the creation and production of microprocessors used in industrial markets.

e.   the name given to all Internet addresses that end in “.com” to indicate the website is a commercial entity that distributes goods and services.

Employing the Internet to make products and services available for consumption or use by consumers or industrial buyers is referred to as __________.

a.   Internet distribution channels

b.   virtual marketing channels

c.   World Wide Web channels

d.   electronic marketing channels

e.   extranet marketing channels

Which of the following products or services must be provided by traditional and NOT by electronic marketing channels?

a.   car rental reservations

b.   software

c.   healthcare

d.   music

e.   education

MachineTools.com sells grinders, boring mills, and engine lathes.  Its website lists products from over 700 machinery manufacturers, 2,500 distributors of new equipment, and 650 dealers of used inventory for sale.  MachineTools.com relies on a well-established channel of manufacturers, distributors, and machinery dealers to provide the merchandise that is sold through this

a.   Internet government channel.

b.   virtual marketing channel.

c.   World Wide Web channel.

d.   extranet channel.

e.   electronic marketing channel.

Allowing consumers to buy products by interacting with various advertising media without a face-to-face meeting with a salesperson is the definition of a(n) __________.

a.   indirect marketing channel

b.   direct marketing channel

c.   multimarketing channel

d.   channel bypass marketing

e.   personal selling

Direct marketing channels refer to

a.   the distribution of goods and services directly from the manufacturer’s production site to end-users.

b.   the traditional chain of distribution from manufacturer to retailer to consumer.

c.   the use of agents who represent a single producer and are responsible for the entire marketing function of that producer.

d.   a method of distribution that allows consumers to buy products by interacting with various advertising media without a face-to-face meeting with a salesperson.

e.   a method of distribution that allows consumers to buy products through direct personal interaction with the manufacturer’s representatives in order to provide more personalized service.

Mail order selling, catalog sales, and telemarketing are all examples of

a.   direct marketing channels.

b.   indirect marketing channels.

c.   multimarketing channels.

d.   virtual marketing channels.

e.   personal selling.

When you order a sweater from an L. L. Bean mail-order catalog, what type of marketing channel are you and the company using?

a.   cash and carry marketing channel

b.   intensive distribution channel

c.   selective distribution channel

d.   indirect marketing channel

e.   direct marketing channel

The blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online, is referred to as __________.

a.   direct marketing

b.   indirect marketing

c.   intensive marketing

d.   multichannel marketing

e.   electronic marketing

Multichannel marketing is the blending of different __________ that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online.

a.   pricing channels

b.   distribution channels

c.   communication and delivery channels

d.   direct and indirect channels

e.   communication channels

Multichannel marketing seeks to integrate a firm’s electronic and delivery channels.  Catalogs can serve as shopping tools for online purchasing, and websites can help consumers do their homework before visiting a store.  By blending different communication and delivery channels,

a.   multichannel marketing can leverage the value-adding capabilities of different channels.

b.   multichannel marketing creates greater elasticity of demand for a firm’s products.

c.   multichannel marketing creates greater inelasticity of demand for a firm’s products.

d.   multichannel marketing allows a firm to legally circumvent paying taxes on revenue generated by online sales.

e.   multichannel marketing allows customers to avoid shipping and handling charges.

Multichannel marketing

a.   creates greater elasticity of demand for its products.

b.   can leverage the value-adding capabilities of different channels.

c.   creates greater inelasticity of demand for its product.

d.   allows firms to legally circumvent paying taxes on revenue generated by online sales.

e.   allow customers to avoid shipping and handling charges.

An arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product is referred to as __________.

a.   a strategic channel alliance

b.   multiple level selling

c.   parallel distribution

d.   dual distribution

e.   multilayered distribution

Dual distribution refers to

a.   a level of distribution density whereby a firm selects a few retailers in a specific geographical area to carry its products.

b.   an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product.

c.   the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online.

d.   professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact.

e.   a practice whereby one firm's marketing channel is used to sell another firm’s products.

In some instances, firms pair multiple channels with a multibrand strategy.  The purpose of this strategy would be to __________ of the firm’s family brand and differentiate its marketing channels.

a.   create greater perceived value

b.   maximize channel profits

c.   minimize cannibalization

d.   generate awareness

e.   create a “backup” channel

Pharmaceutical companies sell some of their products to hospitals and clinics directly.  They also market other products to large retail chains like Walgreens that distribute them to their stores across the nation.  In addition, they sell products to drug wholesalers that sell to the remaining independent drugstores in the U.S.  What method of distribution best describes the method used by pharmaceutical companies in this example?

a.   dual distribution

b.   vertical distribution

c.   horizontal distribution

d.   direct distribution

e.   exclusive distribution

Rather than compete with large greeting card companies for shelf space in supermarkets, several smaller card companies place their cards in pack-and-ship stores where the customer can mail a card on the spur of the moment, or in carwashes where customers are waiting and appreciate having something amusing to read.  This would be an example of which type of marketing channel strategy?

a.   a strategic channel alliance

b.   multichannel distribution

c.   parallel distribution

d.   dual distribution

e.   direct distribution

A practice whereby one firm’s marketing channel is used to sell another firm’s products is referred to as __________.

a.   dual distribution

b.   cooperative distribution

c.   an integrated channel alliance

d.   a multichannel venture

e.   a strategic channel alliance

Strategic channel alliances refer to

a.   an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product.

b.   a practice whereby one firm’s marketing channel is used to sell another firm’s products.

c.   the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online.

d.   an arrangement whereby companies reduce distribution costs by sharing facilities,  equipment, and transportation.

e.   a practice whereby consumers can interact with various advertising media to buy products without a face-to-face meeting with a salesperson.

Which type of marketing channel arrangement is especially good for a firm to use in global marketing where the creation of marketing channel relationships is expensive and time consuming?

a.   dual distribution

b.   cooperative distribution

c.   strategic channel alliance

d.   global distribution alliance

e.   multichannel distribution

Kraft Foods distributes Starbucks coffee in U.S. supermarkets and internationally using __________.

a.   multichannel distribution

b.   a direct marketing channel

c.   a cooperative distribution channel

d.   a strategic channel alliance

e.   a dual distribution agreement

An example of a(n) __________ is when Kraft Foods uses the distribution system of Ajinomoto, a major Japanese food company, to market its Maxwell House coffee in Japan.

a.   direct marketing channel

b.   industrial distribution system

c.   dual distribution system

d.   franchising operation

e.   strategic channel alliance

CPW (Cereals Partners Worldwide) is a __________ designed from the start to be a global business.  It joined the cereal manufacturing and marketing capability of General Mills with the distribution clout of Nestlé.

a.   dual distribution partnership

b.   multichannel distribution system

c.   cooperative distribution channel

d.   strategic channel alliance

e.   bilateral trade cooperative

The General Mills–Nestlé strategic channel alliance

a.   increased the ready-to-eat cereal worldwide market share of these companies.

b.   decreased the ready-to-eat cereal worldwide market share of these companies.

c.   increased the ready-to-eat cereal market abroad and decreased General Mills’ ready-to-eat cereal market in the U.S.

d.   served as a model for Post Cereal and Weetabix, a British firm.

e.   resulted in a lawsuit from Kellogg’s, the global leader in the ready-to-eat cereal market for unfair trade practices.

Professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact are referred to as __________.

a.   integrated marketing systems

b.   horizontal marketing systems

c.   vertical marketing systems

d.   functional marketing systems

e.   cooperative marketing systems

Vertical marketing systems refers to

a.   professionally managed geographically dispersed marketing channels designed to achieve channel economies and maximize marketing impact.

b.   professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact.

c.   retailer-sponsored cooperatives where small, independent retailers form an organization that operates a wholesale facility cooperatively.

d.   professionally managed geographically dispersed marketing channels that are controlled through strategic channel alliances.

e.   channel partnerships that share responsibility for ordering and physically distributing each other’s products.

The three major types of vertical marketing systems are administered, corporate, and __________.

a.   integrated

b.   cooperative

c.   delegated

d.   manufacturer-dominated

e.   contractual

The three major types of vertical marketing systems are corporate, contractual, and __________.

a.   administered

b.   integrated

c.   cooperative

d.   delegated

e.   manufacturer-dominated

A corporate vertical marketing system refers to

a.   small, independent retailers that form an organization that operates a wholesale facility cooperatively.

b.   professionally managed geographically dispersed marketing channels that are controlled through strategic channel alliances.

c.   the combination of successive stages of production and distribution under a single ownership.

d.   professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact.

e.   a contractual arrangement between a parent company and an individual or firm that allows the individual or firm to operate a certain type of business under an established name and according to specific rules.

The combination of successive stages of production and distribution under a single ownership is referred to as a(n) __________.

a.   contractual vertical marketing system

b.   corporate vertical marketing system

c.   integrated marketing system

d.   corporate horizontal marketing system

e.   contractual horizontal marketing system

Which of the following statements regarding corporate vertical marketing systems is most accurate?

a.   Corporate vertical marketing systems can use either forward integration or backward integration but not both.

b.   Corporate vertical marketing systems increase distribution costs.

c.   Corporate vertical marketing systems increase investment but decrease fixed costs.

d.   Corporate vertical marketing systems are only effective with low-end consumer products.

e.   Corporate vertical marketing systems combine successive stages of production and distribution under a single ownership.

Which of the following statements regarding corporate vertical marketing systems is most accurate?

a.   Corporate vertical marketing systems combine successive stages of production and distribution under shared ownership with all links in the marketing chain sharing title to the goods.

b.   Corporate vertical marketing systems can incorporate both forward and backward integration.

c.   Corporate vertical marketing systems increase distribution costs.

d.   Corporate vertical marketing systems increase investment increases but decrease fixed costs.

e.   Corporate vertical marketing systems are only effective with low-end consumer products.

Which of the following statements regarding corporate vertical marketing systems is most accurate?

a.   Corporate vertical marketing systems combine successive stages of production and distribution under shared ownership with all links in the marketing chain sharing title to the goods.

b.   Corporate vertical marketing systems can use forward integration or backward integration but not both.

c.   Corporate vertical marketing systems increase distribution costs.

d.   Corporate vertical marketing systems result in increased capital investments and fixed costs.

e.   Corporate vertical marketing systems are only effective with low-end consumer products.

Cessna is considered the volume leader in the executive-jet market.  It has been described as “almost totally vertically integrated.”  This quote means that Cessna

a.   does not fall under the jurisdiction of any federal regulatory agency.

b.   has eliminated economies of scale.

c.   combines successive stages of  production and distribution under a single ownership.

d.   has achieved a high level of social responsibility.

e.   uses outsourcing for all component parts and materials.

The Fox Entertainment Group counts among its assets a thriving TV production unit, a Hollywood movie studio, many TV stations, a half-dozen national cable networks, and almost two dozen regional sports networks.  Since most of the shows produced at its TV production unit and many of the movies made at its studio are only televised on its cable TV networks, Fox Entertainment Group is an example of a(n)

a.   corporate vertical marketing system.

b.   integrated marketing system.

c.   contractual vertical marketing system.

d.   corporate horizontal marketing system.

e.   contractual horizontal marketing system.

When a producer owns an intermediary at the next level down in the marketing channel, it is referred to as __________.

a.   backward integration

b.   forward integration

c.   vertical integration

d.   lateral integration

e.   horizontal integration

Forward integration means

a.   a retailer owns a manufacturing operation.

b.   a wholesaler owns a manufacturing operation.

c.   retailers form a strategic channel alliance with manufacturers to purchase products at better prices since they are able to place much larger orders.

d.   a producer owns an intermediary at the next level down in the marketing channel.

e.   all links in the distribution chain own stock in the manufacturer’s company.

Hart Schaffner & Marx is a producer of fine men’s suits and sports coats that operates 100 menswear stores.  Hart Schaffner & Marx uses __________.

a.   dual distribution

b.   backward integration

c.   forward integration

d.   horizontal integration

e.   strategic channel alliances

When a retailer owns a manufacturing operation, it is referred to as

a.   forward integration.

b.   lateral integration.

c.   a joint venture.

d.   horizontal integration.

e.   backward integration.

Tiffany & Co. manufactures about half of the fine jewelry items for sale through its stores and boutiques worldwide.  Tiffany & Co. practices

a.   backward integration.

b.   forward integration.

c.   vertical integration.

d.   joint venturing.

e.   horizontal integration.

A contractual vertical marketing system refers to an arrangement whereby

a.   privately owned distributors and retailers integrate their efforts, on a contractual basis, to obtain greater functional economies and marketing impact than they could achieve alone.

b.   independent production and distribution firms integrate their efforts, on a contractual basis, to obtain greater functional economies and marketing impact than they could achieve alone.

c.   a manufacturer offers a limited number of franchise licenses to restrict the number of franchisees within a given geographical region.

d.   a firm reaches different buyers by employing two or more different types of channels for the same basic product.

e.   a firm formally designates by contract one channel member—whether producer, wholesaler, or retailer—to coordinate, direct, and support all other channel members.

There are three variations of contractual systems: wholesaler-sponsored voluntary chains, retailer-sponsored cooperatives, and __________.

a.   franchising

b.   service-oriented voluntary chains

c.   channel-dominated voluntary chains

d.   distributorship cooperatives

e.   reseller franchising

There are three variations of contractual systems: wholesaler-sponsored voluntary chains, franchising, and __________.

a.   service-oriented voluntary chains

b.   channel-dominated voluntary chains

c.   distributorship cooperatives

d.   retailer-sponsored cooperatives

e.   reseller franchising

There are three variations of contractual systems: retailer-sponsored cooperatives, franchising, and __________.

a.   service-oriented voluntary chains

b.   channel-dominated voluntary chains

c.   wholesaler-sponsored voluntary chains

d.   distributorship cooperatives

e.   reseller franchising

A vertical marketing system that involves a contractual relationship between a wholesaler and small independent retailers to standardize and coordinate buying practices, merchandising programs, and inventory management efforts is referred to as a __________.

a.   service-sponsored retail franchise system

b.   retailer-sponsored cooperative

c.   administered vertical marketing system

d.   manufacturer-sponsored retail franchise system

e.   wholesaler-sponsored voluntary chain

IGA and Ben Franklin variety and craft stores represent a(n)

a.   service-sponsored retail system

b.   wholesaler-sponsored voluntary chain

c.   retailer-sponsored cooperative

d.   administered cooperative system

e.   manufacturer-sponsored cooperative

Which type of contractual vertical marketing system involves small independent retailers forming an organization that operates a wholesale facility cooperatively?

a.   retailer-sponsored cooperative

b.   service-sponsored retail system

c.   administered cooperative system

d.   manufacturer-sponsored cooperative

e.   wholesaler-sponsored voluntary chain

The arrangement in which small, independent retailers form an organization that operates a wholesale facility cooperatively is referred to as a(n) __________.

a.   service-sponsored retail system

b.   administered cooperative system

c.   manufacturer-sponsored cooperative

d.   retailer-sponsored cooperative

e.   wholesaler-sponsored voluntary chain

A retailer-sponsored cooperative refers to

a.   small, independent retailers forming an organization that operates a wholesale facility  cooperatively.

b.   a vertical marketing system that involves a contractual relationship between a wholesaler and small independent retailers to standardize and coordinate buying practices, merchandising programs, and inventory management.

c.   an agreement among small, privately owned manufacturers to pool their resources by sharing installations, heavy equipment, and warehousing that they would be unable to afford on their own.

d.   an agreement among retailers to pool their resources by purchasing services such as signage, snow removal, and trash removal that affects the physical space (mall, strip mall, main street, etc.) they all share.

e.   small, independent retailers that pool their resources to purchase cooperative advertising.

Ace Hardware is a national ___________ that allows its members, retailers of paint and hardware products, to concentrate their buying power through wholesalers and more importantly plan collaborative promotional and pricing activities.

a.   service-sponsored retail system

b.   administered cooperative system

c.   retailer-sponsored cooperative

d.   manufacturer-sponsored cooperative

e.   wholesaler-sponsored voluntary chain

A contractual arrangement between a parent company and an individual or firm that allows the latter to operate a certain type of business under an established name and according to specific rules is referred to as __________.

a.   a corporate vertical marketing system

b.   a wholesaler sponsored voluntary chain

c.   a retailer-sponsored cooperative

d.   franchising

e.   an administered vertical marketing system

Franchising refers to

a.   a contractual agreement between multiple retailers sharing the same business mission to operate with a consistent business model to not only achieve enhanced buying power but also increase customer loyalty.

b.   a contractual arrangement between a parent company and an individual or firm that allows the latter to operate a certain type of business under an established name and according to specific rules.

c.   purchasing the name, branding, and raw materials from one organization and transferring it to another.

d.   a practice whereby one firm’s marketing channel is used to sell another firm’s product.

e.   selling an idea to a larger company and letting it do all the manufacturing, distribution, and marketing.

Franchising is one form of a(n) __________.

a.   corporate vertical marketing system

b.   horizontal marketing system

c.   administered vertical marketing system

d.   wholesaler-sponsored voluntary system

e.   contractual vertical marketing system

There are four popular types of franchising: (1) __________; (2) manufacturer-sponsored wholesale franchise systems; (3) service-sponsored retail franchise systems; and (4) service-sponsored franchise systems.

a.   contractual-sponsored franchise systems

b.   wholesaler-sponsored franchise systems

c.   manufacturer-sponsored retail franchise systems

d.   horizontal-marketing franchise systems

e.   customer-oriented franchise systems

There are four popular types of franchising: (1) manufacturer-sponsored retail franchise systems, (2) __________; (3) service-sponsored retail franchise systems; and (4) service-sponsored franchise systems.

a.   service-sponsored retail franchise systems

b.   manufacturer-sponsored wholesale franchise systems

c.   horizontal-marketing franchise systems

d.   contractual-sponsored franchise systems

e.   customer-oriented franchise systems

There are four popular types of franchising: (1) manufacturer-sponsored retail franchise systems; (2) manufacturer-sponsored wholesale franchise systems; (3) service-sponsored franchise systems; and (4) _________.

a.   service-sponsored retail franchise systems

b.   wholesaler-sponsored franchise systems

c.   horizontal-marketing franchise systems

d.   contractual-sponsored franchise systems

e.   customer-generated franchise systems

The four most popular types of franchise arrangements are

a.   service-sponsored franchise systems, service-sponsored retail franchise systems, manufacturer-sponsored wholesale franchise systems, and manufacturer-sponsored retail franchise systems.

b.   service-sponsored retail franchise systems, corporate vertical marketing systems, wholesaler-sponsored voluntary chains, and service-sponsored franchise systems.

c.   manufacturer-sponsored wholesale franchise systems, service-sponsored retail franchise systems, corporate vertical marketing systems, and wholesaler-sponsored voluntary chains.

d.   manufacturer-sponsored retail franchise systems, service-sponsored retail franchise systems, corporate vertical marketing systems, and wholesaler-sponsored voluntary chains.

e.   administered vertical marketing systems, service-sponsored retail franchise systems, corporate vertical marketing systems, and wholesaler-sponsored voluntary chains.

General Motors uses a(n) _________, whereby the company license dealers in North America to sell GM automobiles subject to various sales and service conditions.

a.   service-sponsored producer franchise system

b.   service-sponsored retail franchise system

c.   manufacturer-sponsored wholesale franchise system

d.   manufacturer-sponsored retail franchise system

e.   administered vertical marketing system

Jacob has developed a lawn care service that will revolutionize the lawn care industry.  However, Jacob has limited operating capital and yet he still wants a wide distribution of his new product.  Which of the following options would be the best choice for Jacob?

a.   He should develop an administered vertical marketing system.

b.   He should establish a corporate vertical marketing system.

c.   He should open up branch offices around the country to provide the exposure he needs.

d.   He should establish a wholesaler-sponsored voluntary chain.

e.   He should establish a service-sponsored retail franchise system.

In the automobile industry, many companies use a __________, whereby a manufacturer licenses dealers to sell its cars subject to various sales and service conditions.

a.   service-sponsored producer franchise system

b.   service-sponsored retail franchise system

c.   manufacturer-sponsored wholesale franchise system

d.   manufacturer-sponsored retail franchise system

e.   administered vertical marketing system

A __________ is common in the soft drink industry where the manufacturer sells its concentrate to wholesalers, who carbonate it, and market the finished product to retailers.

a.   service-sponsored franchise system

b.   service-sponsored retail franchise system

c.   manufacturer-sponsored wholesale franchise system

d.   manufacturer-sponsored retail franchise system

e.   administered vertical marketing system

Firms that have designed a unique approach for performing a service and wish to profit by selling the franchise to others employ a __________.

a.   customer-generated franchising system

b.   service-sponsored retail franchise system

c.   manufacturer-sponsored wholesale franchise system

d.   manufacturer-sponsored retail franchise system

e.   administered vertical marketing systems

A _________ exists when a franchisor licenses individuals or firms to dispense a service under a trade name and specific guidelines.

a.   service-sponsored retail franchise system

b.   manufacturer-sponsored wholesale franchise system

c.   manufacturer-sponsored retail franchise system

d.   administered vertical marketing system

e.   service-sponsored franchise system

A __________ is common in the employment services and tax services industries where franchisors license individuals or firms to dispense a service under a trade name and specific guidelines.

a.   service-sponsored franchise system

b.   service-sponsored retail franchise system

c.   manufacturer-sponsored wholesale franchise system

d.   manufacturer-sponsored retail franchise system

e.   administered vertical marketing system

The type of vertical marketing system that achieves coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership is referred to as a(n) __________.

a.   corporate vertical marketing system

b.   integrated vertical marketing system

c.   contractual vertical marketing system

d.   administered vertical marketing system

e.   interactive vertical marketing system

An administered vertical marketing system refers to a marketing system

a.   that achieves coordination at successive stages of production and distribution by contractual agreements between channel members.

b.   that achieves coordination at successive stages of production and distribution by cooperation and consensus among all members of the marketing chain.

c.   that achieves coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership.

d.   where a channel member (producer, wholesaler, or retailer) is elected to coordinate, direct, and support all other channel members.

e.   that is run and coordinated completely outside the traditional chain of distribution by a firm that specializes in that industry’s specific logistics needs.

Which of the following statements describes the difference between a corporate vertical marketing system and an administered vertical marketing system?

a.   Administered vertical marketing systems gain power through ownership while corporate vertical marketing systems gain power through contractual agreement.

b.   Administered vertical marketing systems gain power through the size and influence of one channel member and through ownership.

c.   Administered vertical marketing systems gain power through contractual agreements and ownership.

d.   Administered vertical marketing systems are usually larger and more profitable than corporate vertical marketing systems.

e.   Administered vertical marketing systems achieve coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership.

Procter & Gamble can obtain cooperation from supermarkets in terms of displaying, promoting, and pricing its products, given its broad assortment of brand-name products.  Which type of vertical marketing system does Procter & Gamble represent?

a.   corporate vertical marketing system

b.   integrated vertical marketing system

c.   contractual vertical marketing system

d.   administered vertical marketing system

e.   forward integration vertical marketing system

Walmart can obtain cooperation from manufacturers in terms of product specifications, price levels, and promotional support, given its position as the world’s largest retailer.  Walmart is an example of a(n)

a.   service-sponsored retail system.

b.   administered vertical marketing system.

c.   retailer-sponsored cooperative.

d.   administered cooperative system.

e.   manufacturer-sponsored cooperative.

A new company produces paint and other home decorating products.  Its goal is to choose the best marketing channel arrangement that would give it the most control.  Which marketing channel system should this company choose?

a.   a contractual vertical marketing system

b.   an administered vertical marketing system

c.   a corporate vertical marketing system

d.   an integrated marketing system

e.   a corporate horizontal marketing system

When choosing a marketing channel or intermediary, it is important to ask three key questions: (1) Which channel and intermediaries will provide the best coverage of the target market?  (2) Which channel and intermediaries will best satisfy the buying requirements of the target market?  and (3)

a.   How many of the firm’s competitors will be using the same channels?

b.   Which channels have strategic channel alliances with other resellers?

c.   How long have the channel members and intermediaries been in business?

d.   Who is responsible for negotiating the channel or intermediary contracts?

e.   Which channel and intermediaries will be the most profitable?

In terms of target market coverage, density refers to the number of __________ in a geographical area.

a.   target market customers

b.   competitors

c.   wholesalers

d.   retail stores

e.   stakeholders

In marketing, the term __________ is used to describe the number of stores in a geographical area—and type of intermediaries to be used at the retail level of distribution.

a.   density

b.   breadth

c.   depth

d.   mass

e.   concentration

The three degrees of distribution density are

a.   intensive, extensive, and selective.

b.   extensive, concentrated, and selective.

c.   intensive, exclusive, and selective.

d.   extensive, pervasive, and concentrated.

e.   concentrated, exclusive, and intensive.

The density of distribution whereby a firm tries to place its products or services in as many outlets as possible is referred to as __________.

a.   intensive distribution

b.   extensive distribution

c.   selective distribution

d.   exclusive distribution

e.   concentrated distribution

Intensive distribution refers to

a.   the distribution of products or services in markets where there are currently no other competitors.

b.   the distribution of products or services where the producer owns the entire channel of distribution.

c.   the density of distribution whereby a firm tries to place its products or services with only one retail outlet in a specified geographical area.

d.   the density of distribution whereby a firm tries to place its products or services in as many outlets as possible.

e.   the density of distribution whereby a firm tries to place its products or services in a few retail outlets in a specific area.

Candy bars should most likely be sold using which type of target market coverage?

a.   exclusive distribution

b.   direct distribution

c.   intensive distribution

d.   dual distribution

e.   selective distribution

Breath mints, bottled water, and nail clippers would most likely use which type of distribution density?

a.   extensive distribution

b.   intensive distribution

c.   selective distribution

d.   exclusive distribution

e.   concentrated distribution

A level of distribution density whereby only one retailer in a geographical area carries the firm’s products is referred to as __________.

a.   intensive distribution

b.   extensive distribution

c.   selective distribution

d.   concentrated distribution

e.   exclusive distribution

Exclusive distribution refers to

a.   the distribution of products or services in markets where there are currently no other competitors.

b.   the distribution of products or services where the producer owns the entire channel of distribution.

c.   the density of distribution whereby a firm tries to place its products or services with only one retail outlet in a specified geographical area.

d.   the density of distribution whereby a firm tries to place its products or services in as many outlets as possible.

e.   the density of distribution whereby a firm tries to place its products or services in a few retail outlets in a specific area.

There are three degrees of distribution—one of these being intensive distribution.  What is the extreme opposite of this degree of density?

a.   exhaustive distribution

b.   thorough distribution

c.   exclusive distribution

d.   selective distribution

e.   concentrated distribution

John Deere manufactures and distributes industrial and farm equipment.  These types of equipment are considered to be specialty products.  Which type of market coverage does John Deere likely use?

a.   intensive distribution

b.   extensive distribution

c.   selective distribution

d.   exclusive distribution

e.   private label distribution

Which type of distribution density does Rolls Royce use when the car manufacturer maintains only one dealership in any large metropolitan area?

a.   exclusive distribution

b.   intensive distribution

c.   extensive distribution

d.   selective distribution

e.   private label distribution

For which of the following products would the manufacturer be most likely to use exclusive distribution?

a.   Timex watches, Hanes underwear, and Nike shoes

b.   Chanel perfume, Steinway pianos, and Baccarat crystal

c.   Oreos, Teddy Grahams, and NillaWafers

d.   paper clips, light bulbs, and file folders

e.   Lean Cuisine meals, Breyer’s Ice Cream, and Coca-Cola

A level of distribution density whereby a firm tries to place its products in a few retail outlets in a specific geographical area is referred to as __________.

a.   intensive distribution

b.   extensive distribution

c.   selective distribution

d.   exclusive distribution

e.   concentrated distribution

Selective distribution refers to

a.   the density of distribution whereby a firm tries to place its products or services in as many outlets as possible.

b.   the distribution of products or services in markets where there are currently no other competitors.

c.   the distribution of products or services where the producer owns the entire channel of distribution.

d.   the density of distribution whereby a firm tries to place its products or services with only one retail outlet in a specified geographical area.

e.   the density of distribution whereby a firm tries to place its products or services in a few retail outlets in a specific area.

The distribution intensity associated with shopping products such as electronics, clothing, and costume jewelry is referred to as __________.

a.   intensive distribution

b.   selective distribution

c.   extensive distribution

d.   exclusive distribution

e.   concentrated distribution

Which type of distribution lies between the two distribution extremes and means that a firm selects a few retail outlets in a specific geographical area to carry its products?

a.   intensive distribution

b.   extensive distribution

c.   exclusive distribution

d.   selective distribution

e.   concentrated distribution

Which is the most common form of distribution intensity used today?

a.   selective distribution

b.   intensive distribution

c.   extensive distribution

d.   exclusive distribution

e.   concentrated distribution

In choosing the appropriate marketing channel, a firm should consider the interests that buyers might want fulfilled.  These interests fall into four broad categories: (1) __________; (2) convenience; (3) variety; and (4) pre- or postsale services.

a.   profitability

b.   information

c.   quality

d.   brand name recognition

e.   availability

In choosing the appropriate marketing channel, a firm should consider the interests that buyers might want fulfilled.  These interests fall into four broad categories: (1) information; (2) convenience; (3) __________; and (4) pre- or postsale services.

a.   availability

b.   quality

c.   variety

d.   brand name recognition

e.   adaptability

 In choosing the appropriate marketing channel, a firm should consider the interests that buyers might want fulfilled.  These interests fall into four broad categories: (1) information; (2) convenience; (3) variety; and (4) __________.

a.   availability

b.   quality

c.   brand name recognition

d.   price

e.   pre- or postsale services

All of the following are buyer requirements for choosing a marketing channel EXCEPT:

a.   pre- or postsale services.

b.   convenience.

c.   variety.

d.   profitability.

e.   information.

The most important consideration in choosing a marketing channel when buyers have limited knowledge or desire specific data about a product or service is to provide __________.

a.   postsale services

b.   seller adaptability

c.   information

d.   convenience

e.   presale services

Which buyer requirement would be most important in choosing a channel for a financial service for a consumer who is interested in setting up a retirement account?

a.   information

b.   context

c.   variety

d.   pre- and postsale services

e.   adaptation

Most Apple retail stores have a Genius Bar staffed with highly trained personnel that can help customers with their purchases of iPads, iPhones, and other Apple products and services.  Which buying requirement is Apple satisfying with its Genius Bar?

a.   context

b.   information

c.   variety

d.   pre- and postsale services

e.   adaptation

Customer convenience is an important consideration when choosing a marketing channel.  A commonly held view among website developers is the “__________” where consumers will abandon their efforts to enter or navigate a website if download time exceeds this amount of time.

a.   five second rule

b.   six second rule

c.   seven second rule

d.   eight second rule

e.   ten second rule

Channels are typically designed to satisfy one or more of four consumer buying requirements.  When a membership book club allows its members to use the Internet to notify the company whether they want to receive the next month’s issue, the book club is appealing to which buyer requirement?

a.   information

b.   convenience

c.   variety

d.   pre- or postsale services

e.   adaptability

Driving time, proximity, hours of operation, and the usability of a website are all examples of which buyer requirement?

a.   information

b.   variety

c.   pre- or postsale services

d.   adaptability

e.   convenience

Tylenol and Advil are two manufacturers of over-the-counter products for ailments such as colds, headaches, sore throats, arthritis aches, and general pain and fever.  Both manufacturers seek distribution of their products through pharmacies such as Walgreens.  These companies seek out channels and intermediaries that will satisfy a buyer’s desire for

a.   variety.

b.   information.

c.   pre-or postsale service.

d.   convenience.

e.   adaptability.

Buyers are interested in having numerous competing and complementary items from which to choose.  The buyer requirement for __________ is satisfied through the breadth and depth of products and brands that intermediaries carry.

a.   information

b.   convenience

c.   variety

d.   pre- or postsale services

e.   adaptability

Items such as large household appliances that require installation and delivery demonstrate the buyer requirements of __________.

a.   information

b.   convenience

c.   variety

d.   pre- or postsale services

e.   adaptability

The third consideration in choosing a marketing channel is profitability, which is determined by the margins earned for each channel member and for the channel as a whole.  Based on this information, which of the following statements would be most accurate?

a.   The more responsibilities a channel member takes in terms of distribution, advertising, and selling expenses, the greater the potential for manufacturer profitability.

b.   The more responsibilities the manufacturer assumes relative to its channel members, the greater the potential for profitability.

c.   The extent to which channel members share costs determines the margins received by each member and by the channel as a whole.

d.   While channel members can increase profitability by taking on distribution and selling expenses, advertising expenses should always remain with the manufacturer if a firm is looking for the greatest profitability.

e.   Profitability is not related to the length or nature of the distribution chain but determined by the manufacturer.

 

Which of the channels shown in the Channel Sales and Profit Marketing Dashboard above represents the most sales for a particular furniture manufacturer?

a.   independent furniture stores

b.   furniture store chains

c.   department store chains

d.   mass merchandisers

e.   none of the above

Which of the channels shown in the Channel Sales and Profit Marketing Dashboard above represents the least profit to the manufacturer?

a.   furniture store chains

b.   independent furniture stores

c.   department store chains

d.   mass merchandisers

e.   none of the above

Based on the information presented in the Channel Sales and Profit Marketing Dashboard above, which channel of distribution would the furniture manufacturer most likely consider dropping?

a.   department store chains

b.   furniture store chains

c.   independent furniture stores

d.   none of the above

e.   Not enough information is given in the dashboard to make this determination.

When one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals, it is referred to as __________.

a.   distributor dissension

b.   marketing channel discord

c.   partnership divergence

d.   channel conflict

e.   channel dissonance

Channel conflict refers to

a.   disagreements over the trade discounts allotted to each level of the distribution chain by the Federal Trade Commission.

b.   regulatory restrictions limiting the number of distributors that can sell a producer’s products.

c.   when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals.

d.   when one distributor carries two competing brands.

e.   when the producer doesn’t allow other channel members to have input regarding product specifications or benefits.

The two types of channel conflict are

a.   wholesaler and retailer.

b.   horizontal and vertical.

c.   transactional and promotional.

d.   external and internal.

e.   producer and consumer.

Which of the following types of vertical marketing systems is likely to experience the least channel conflict?

a.   corporate vertical marketing system

b.   wholesaler-sponsored voluntary chain

c.   retailer-sponsored cooperative

d.   franchise system

e.   administered vertical marketing system

Conflict that occurs between two different levels in a marketing channel is referred to as

a.   lateral conflict.

b.   horizontal conflict.

c.   vertical conflict.

d.   distributor conflict.

e.   contractual conflict.

Vertical conflict refers to conflict that occurs between

a.   two members in the same level of a marketing channel.

b.   two different levels in a marketing channel.

c.   members of upper management who make the marketing channel decisions and lower management who must implement these decisions.

d.   a firm’s and its customers’ goals.

e.   two producers of the same product vying for the same distribution channel members.

Which of the following would be a source of vertical conflict?

a.   Foot Locker decides to open a retail outlet next to a Nike store in a shopping mall.

b.   A restaurant serves both Coke and Pepsi to its patrons.

c.   Ansible Technologies Ltd. sells its portable planetariums to both colleges and high schools.

d.   Microsoft provides HP laptops more prominent point-of-purchase locations in its retail stores than comparable laptops from Sony.

e.   Long John Silver’s decides to serve grilled burgers in addition to seafood.

Channel conflict that arises when one member bypasses another member and sells or buys product directly is referred to as __________.

a.   horizontal conflict

b.   channel circumvention

c.   lateral conflict

d.   disintermediation

e.   dual distribution

Disintermediation refers to channel conflict that arises when

a.   a channel member severs relationships with other channel members to work for or with a competing manufacturer.

b.   channel conflicts are resolved by a third party.

c.   a channel member bypasses another member and sells or buys product directly.

d.   channel conflicts are resolved through a binding arbitration from a panel of representatives from all channel members involved.

e.   the entire distribution chain is eliminated, such as when a company sets up its own wholesaler and retailer network.

While Maytag appliances have the leading brand name, its sales are third in the industry.  One of the things the company has done to spur sales is to create a website where potential customers can find the answers to the questions they ask during the appliance purchase process.  Although Maytag considered using a __________ strategy, which directs customers to Maytag appliance stores it owns, the firm decided against it and simply provides the names and addresses of all the retailers (Sears, Home Depot, etc.) that carry Maytag appliances.

a.   horizontal channel strategy

b.   strategic channel alliance

c.   dual distribution

d.   cross-docking

e.   disintermediation

Conflict occurring between intermediaries at the same level in a marketing channel, such as between two or more retailers, is referred to as __________.

a.   horizontal conflict

b.   corporate conflict

c.   vertical conflict

d.   lateral conflict

e.   contractual conflict

Horizontal conflict refers to conflict that occurs between

a.   two different levels in a marketing channel.

b.   members of upper management who make the marketing channel decisions and lower management who must implement these decisions.

c.   two producers of the same product vying for the same distribution channel members.

d.   two members in the same level of a marketing channel.

e.   a firm’s and its customers’ goals.

Goodyear Tire dealers became irate when Goodyear Tire Company decided to sell its brands through Sears, Walmart, and Sam’s Clubs.  Many switched to competing tire makers.  This is an example of __________.

a.   corporate conflict

b.   vertical conflict

c.   horizontal conflict

d.   administered conflict

e.   contractual conflict

All the following sources produce channel conflict EXCEPT:

a.   when a manufacturer increases its distribution coverage in a geographical area.

b.   a channel member bypasses another member and sells or buys products directly.

c.   disagreements over how profit margins are distributed among channel members.

d.   manufacturers believe wholesalers or retailers are not giving their products adequate attention.

e.   a channel member that coordinates, directs, and supports other channel members.

A channel member (producer, wholesaler, or retailer) who coordinates, directs, and supports other channel members is referred to as a __________.

a.   channel champion

b.   channel general

c.   channel captain

d.   channel director

e.   channel coordinator

A channel captain refers to

a.   a member of a distribution channel that takes control through hegemony (power is not assigned, but assumed).

b.   a channel member (producer, wholesaler, or retailer) who coordinates, directs, and supports other channel members.

c.   a channel team member known for his or her expertise in cutting through red tape.

d.   a person responsible for implementing a firm’s a mission statement linking all members of the marketing channel through a common goal.

e.   the person with greatest authority who represents his or her channel in the distribution chain.

A firm becomes a channel captain because it is the channel member with the ability to influence the behavior of other members.  Influence can take four forms, one of which is

a.   economic influence.

b.   stakeholder position.

c.   familial ties to other channel members.

d.   longevity in the industry.

e.   geographic proximity to the manufacturing plant.

A firm becomes a channel captain because it is the channel member with the ability to influence the behavior of other members.  Influence can take four forms, one of which is

a.   stakeholder position.

b.   familial ties to other channel members.

c.   expertise.

d.   longevity in the industry.

e.   geographic proximity to the manufacturing plant.

A firm becomes a channel captain because it is the channel member with the ability to influence the behavior of other members.  Influence can take four forms, one of which is

a.   stakeholder position.

b.   familial ties to other channel members.

c.   longevity in the industry.

d.   identification with a particular channel member.

e.   geographic proximity to the manufacturing plant.

Walmart is a channel captain because of its strong image, number of outlets, and purchasing volume.  The source of Walmart’s power is its

a.   economic influence.

b.   expertise.

c.   identification with a particular channel member.

d.   legitimate rights through contracts.

e.   political connections.

American Hospital Supply helps its customers (hospitals) manage inventory and streamline order processing for hundreds of medical supplies.  The source of American Hospital Supply’s power is its

a.   economic influence.

b.   expertise.

c.   identification with a particular channel member.

d.   legitimate rights through contracts.

e.   governmental contracts.

Neiman-Marcus is a retailer that many small manufacturers would like to be associated with.  A product placement in Neiman-Marcus will increase the prestige of a smaller brand.  The source of Neiman-Marcus’s power is its

a.   economic influence.

b.   expertise.

c.   sought-after identification for a particular channel member.

d.   legitimate rights through contracts.

e.   longevity as an upscale retailer.

Bombardier is the leading marketer of corporate jets.  Its brand name is well known and respected in the corporate jet market.  The aircraft company relies on outside suppliers for design support and to share development costs and market risks, but Bombardier is considered the leader in determining design and marketing of its planes.  For its newest plane, Bombardier has about 30 prime suppliers—about 10 of those have been involved since the initial design phase.  Bombardier is an example of a __________.

a.   product champion

b.   channel general

c.   channel director

d.   channel coordinator

e.   channel captain

Sports Port, a motorcycle and fishing boat retailer located in a small northern Minnesota town, was the world’s largest dealer for Crestliner fishing boats.  In order to meet the demand of his many customers, the owner of Sports Port worked with a wide variety of channel members, ranging from the manufacturer of the boats to trucking firms, other retailers, and even detailers.  Such a diverse channel of distribution often resulted in channel conflict.  However, due to his strong consumer following, the owner of Sports Port had the power to resolve disputes between channel members.  The owner of Sports Port served as the __________ in the channel of distribution.

a.   wholesaler

b.   producer

c.   channel spokesperson

d.   channel captain

e.   channel arbitrator

The __________ and the Justice Department monitor channel practices that restrain competition, create monopolies, or otherwise represent unfair methods of competition under the provisions of the Clayton Act or the Sherman Act.

a.   Consumer Product Safety Commission

b.   Better Business Bureau

c.   Federal Trade Commission

d.   American Marketing Association

e.   Department of Commerce

The Federal Trade Commission and the Justice Department monitor channel practices that __________, create monopolies, or otherwise represent unfair methods of competition under the Sherman Act (1890) and the Clayton Act (1914).

a.   suggest patent infringement

b.   restrain competition

c.   connect channel members

d.   use coercive or suggestive advertising

e.   manipulate public opinion

When developing a distribution strategy, marketers should avoid the anticompetitive attempts of eliminating wholesalers or retailers if they want to avoid the possibility of violating the __________ provisions of the Clayton Act or the Sherman Act.

a.   resale restrictions

b.   tying arrangements

c.   exclusive dealing

d.   refusal to deal

e.   dual distribution

The __________ specifically prohibits exclusive dealing and tying arrangements when they lessen competition or create monopolies.

a.   Sherman Act

b.   Robinson-Patman Act

c.   Federal Trade Commission Act

d.   Clayton Act

e.   Consumer Goods Pricing Act

The __________ has been used to prosecute resale restrictions, which are a supplier’s attempt to stipulate to whom distributors may resell the supplier’s products and in what specific geographical areas or territories they may be sold.

a.   Sherman Act

b.   Robinson-Patman Act

c.   Federal Trade Commission Act

d.   Clayton Act

e.   Consumer Goods Pricing Act

The Clayton Act prohibits, restricts, or influences all of the following channel strategies and practices EXCEPT:

a.   exclusive dealing

b.   refusal to deal

c.   resale restrictions

d.   vertical integration

e.   full-line forcing

Dual distribution is considered illegal if

a.   both channels are corporately owned.

b.   one channel is a direct channel and the other is not.

c.   channels are operated from two different states.

d.   there is an attempt by a manufacturer to lessen competition by eliminating wholesalers or retailers.

e.   the prices charged consumers differ as a result of the channel in which they were making their purchases.

Dual distribution can violate the Sherman Act and the Clayton Act if the

a.   prices charged for items sold through one channel are different from the prices charged for the same items in another channel.

b.   manufacturer’s behavior is viewed as lessening competition by eliminating wholesalers or retailers.

c.   manufacturer has a corporate vertical marketing system with one channel and an administered vertical system with the other.

d.   manufacturer uses both a direct and indirect marketing channel.

e.   product is not available through more than one marketing channel.

Vertical integration can lead to legal prosecution if

a.   there is potential to lessen competition or create a monopoly.

b.   mergers create too much competition.

c.   a corporate vertical system attempts to become a contractual vertical marketing system.

d.   an administered vertical system attempts to become a corporate vertical marketing system.

e.   one member of the channel attempts to take the position of channel captain away from another.

Some manufacturers have tried to use the brand loyalty of their consumers to force retailers to carry manufacturers’ products and none from their competitors.  These manufacturers were trying to force retailers to participate in a practice known as a(n)

a.   resale restriction.

b.   vertical integration.

c.   exclusive dealing.

d.   refusal to deal.

e.   tying arrangement.

A tying arrangement refers to when a supplier 

a.   requires a distributor purchasing some products to buy others from the supplier.

b.   requires channel members to sell only its products or restricts distributors from selling directly competitive products.

c.   stipulates to whom distributors may resell the supplier’s products and in what specific geographical areas or territories they may sell.

d.   requires a channel member to sell only its products.

e.   requires a channel member to finance all loans through the seller’s bank.

A fast-food franchisee is required by its franchisor to buy unmarked plastic eating utensils from the franchisor if the franchisee wants to use the cups, napkins, and other paper products with the franchise logo.  The franchisee can buy the identical utensils from a local supplier for half the price.  This requirement would be an example of a(n)

a.   dual distribution network.

b.   refusal to deal.

c.   exclusive dealing.

d.   tying arrangement.

e.   resale restriction.

Questions of legality regarding tying arrangements and exclusive dealing would most likely occur in

a.   corporate vertical marketing systems.

b.   administered vertical marketing systems.

c.   franchises.

d.   horizontal marketing systems.

e.   retail-sponsored cooperatives.

Under the Clayton Act, __________ with existing channel members may be illegal.

a.   refusal to cooperate

b.   refusal to deal

c.   sharing proprietary information

d.   horizontal integration

e.   disintermediation

A(n) __________ is a supplier’s attempt to stipulate to whom distributors may resell the supplier’s products and in what specific geographical areas or territories they may sell.

a.   oligopolistic practice

b.   monopolistic practice

c.   refusal to deal

d.   tying arrangement

e.   resale restriction

A supplier’s attempt to stipulate to whom distributors may resell the supplier’s products and in what specific geographical areas or territories they may sell is referred to as __________.

a.   full-line forcing

b.   exclusive dealing

c.   a refusal to deal

d.   a resale restriction

e.   a tying arrangement

Resale restrictions refer to when a supplier

a.   requires a channel member to sell only its products.

b.   requires a channel member to finance all loans through the seller's bank.

c.   stipulates to whom distributors may resell the supplier’s products and in what specific geographical areas or territories they may sell.

d.   attempts to sell used or pre-owned products as new.

e.   attempts to sell used products that have expired or will soon become obsolete without informing the buyer.

Those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost are referred to as

a.   strategic distribution.

b.   distribution management.

c.   tactical marketing planning.

d.   value chain optimization.

e.   logistics.

Activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost is referred to as __________.

a.   sensitivity

b.   distribution

c.   logistics

d.   direct selling

e.   warehousing

Logistics refers to

a.   an inventory management system where the supplier determines the product amount and assortment a retailer needs and automatically delivers the appropriate items.

b.   mathematical formulas and calculations used in determining product volume and demand in order to generate the greatest revenue at the lowest cost.

c.   the sequence of firms that performs activities required to create and deliver a product or service to ultimate consumers or industrial users.

d.   activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost.

e.   a specialized intermediary in the distribution chain responsible for the coordination of all production schedules.

A marketing channel relies on __________ to make products available to consumers and industrial users.

a.   logistics

b.   strategic distribution

c.   strategic marketing planning

d.   supply chains

e.   value chain optimization

Logistics is most closely related to which element of the marketing mix?

a.   product

b.   place (distribution)

c.   production

d.   promotion

e.   price

Johnson Controls can receive an order for automobile seats from Ford and deliver the order four hours later, beginning with raw materials and ending with delivery of the finished seats to Ford.  As used by Johnson Controls, logistics

a.   creates utilities for Ford.

b.   increases Ford’s inventory.

c.   increases the number of steps in the value proposition.

d.   includes the role of Johnson controls as a drop shipper.

e.   does not influence Ford’s supply chain.

Reductions in delivery times both in the marketplace and the supply chain have earned firms such as Toyota and Xerox a reputation as “time-based competitors.”  For Toyota and Xerox, logistics

a.   increases their customers’ inventory.

b.   increases the number of steps in the manufacturing process.

c.   includes the role of Toyota and Xerox as a drop shipper.

d.   creates time and place utility for their customers.

e.   does not influence their suppliers’ supply chain.

A few years ago, Benetton delivered new styles to its worldwide stores once a month.  Today, it replenishes its racks once a week.  Getting the fashions to its stores more quickly means that effectively using logistics has increased Benetton’s market share by providing

a.   larger lots of available inventory for the retailer.

b.   time and place utility for its customers.

c.   increased steps in the value proposition.

d.   technological advances leading to greater customer information.

e.   increased customer traffic.

The practice of organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements is referred to as __________.

a.   marketing channel oversight

b.   logistics management

c.   production management

d.   manufacturer distribution logistics

e.   supply-chain management

Logistics management refers to

a.   the practice of organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements.

b.   the integration and organization of information and logistics activities across firms in a supply chain for the purpose of creating and delivering products and services that provide value to ultimate consumers.

c.   the integration and organization of information and logistical activities that actively brings consumers together with sellers through the express use of agents and brokers.

d.   systems that are designed to reduce a retailer’s lead time for receiving merchandise, which then lowers a retailer’s inventory investment, improves customer service levels, and reduces logistics expense.

e.   proprietary computer and telecommunication technologies to exchange electronic invoices, payments, and information among suppliers, manufacturers, and retailers.

The word flow as it relates to the definition of logistics management refers to decisions needed to move

a.   raw materials to the producer.

b.   semi-finished materials to a merchant wholesaler.

c.   finished products to the distributor.

d.   finished products directly from the producer to the retailer.

e.   a product from the source of raw materials to consumption.

The word cost-effective as it relates to the definition of logistics management implies

a.   while it is important to drive down logistics costs, all channel members must equally benefit financially or the chain will not function effectively.

b.   speed of delivery must be measured against increased savings.

c.   while it is important to drive down logistics costs, customer buying requirements must be a part of the equation.

d.   the need for multiple carriers always results in lower profit margins and therefore should be avoided.

e.   the choice of intermediaries should be made on their ability to perform their tasks efficiently even if additional costs must be passed on to the consumer.

A firm needs to drive down logistics costs as long as it can deliver expected __________.

a.   balance sheet results

b.   customer service

c.   low levels of expenses

d.   product-market synergies

e.   target market goals

The sequence of firms that performs activities required to create and deliver a product or service to ultimate consumers or industrial users is referred to as

a.   strategic distribution.

b.   distribution management.

c.   a supply chain.

d.   value chain optimization.

e.   logistics.

A supply chain refers to

a.   the sequence of firms that performs activities required to create and deliver a product or service to ultimate consumers or industrial users.

b.   an inventory management system where the supplier determines the product amount and assortment a retailer needs and automatically delivers the appropriate items.

c.   mathematical formulas and calculations used in determining product volume and demand in order to generate the greatest revenue at the lowest cost.

d.   activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost.

e.   a specialized intermediary in the distribution chain responsible for the coordination of all production schedules.

Which of the following statements best describes how a supply chain differs from a marketing channel?

a.   Communication is more important in the marketing channel than in the supply chain.

b.   The marketing channel places more emphasis on cost-effectiveness than the supply chain.

c.   A marketing channel includes suppliers that provide raw material inputs to a manufacturer.

d.   A supply network moves materials from producer to consumer while a marketing channel moves materials from the supplier to the producer.

e.   A supply chain includes suppliers; marketing channels do not.

A __________ is essentially a sequence of linked suppliers and customers in which every customer is, in turn, a supplier to another customer until a finished product reaches the final consumer.

a.   logistical flow

b.   demand chain

c.   supplier-customer alliance

d.   supply chain

e.   distributive cooperative

Customers currently link to Cisco’s website to configure, price, and order its networking equipment.  Cisco then sends orders back out across the Internet to producers and assemblers including Celestica, Flextronics, Jabil, and Solectron.  Products are built and tested to Cisco’s standards, sometimes with procedures run remotely by Cisco.  Most items are then drop-shipped to buyers, untouched by Cisco’s employees.  This is a description of Cisco’s

a.   just-in-time inventory system.

b.   supply chain.

c.   electronic data interchange.

d.   strategic information alliance.

e.   product-specific delivery system.

Supply chain management refers to

a.   the integration and organization of information and logistic activities across firms in a supply chain for the purpose of creating and delivering goods and services that provide value to ultimate consumers.

b.   organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point-of-origin to point-of-consumption to satisfy customer requirements.

c.   the integration and organization of information and logistical activities that actively bring consumers together with sellers through the express use of agents and brokers.

d.   an inventory management system that is designed to reduce the retailer’s lead time for receiving merchandise, which then lowers a retailer’s inventory investment, improves customer service levels, and reduces logistic expenses.

e.   a highly organized system that facilitates minute-to-minute communication between all members of a supply chain and ensures the producer is aware of any changes in delivery or demand for a product or service.

An important feature of customer-driven supply chain management is its application of __________ that allows companies to share and operate systems for order processing, transportation scheduling, and inventory and facility management.

a.   wholesaler cooperatives

b.   mathematical and statistical models

c.   sophisticated information technology

d.   continuous inventory management

e.   standardized distribution protocols

In the automobile industry, the __________ manager is responsible for translating customer requirements into actual orders and arranging for delivery dates.

a.   marketing

b.   information technology

c.   intermodal

d.   supply chain

e.   financial

In the automobile industry, the supply chain manager is responsible for translating __________ into actual orders and arranging for delivery dates.

a.   marketing goals

b.   customer requirements

c.   marketing information

d.   production requirements

e.   company goals

Supply chain and logistics managers play a large part in the manufacture of automobiles.  It is estimated that logistics costs account for __________ percent of the retail price of a typical new car.

a.   25 to 30

b.   40 to 45

c.   50 to 60

d.   60 to 70

e.   over 70

IBM is one of the world’s great business success stories because of its ability to reinvent itself to satisfy shifting customer needs in a(n) __________ global marketplace.

a.   stagnant

b.   dynamic

c.   inert

d.   lethargic

e.   apathetic

IBM has adopted a(n) __________ supply chain strategy to better serve its customers.

a.   efficient

b.   responsive

c.   harmonized

d.   integrated

e.   multi-tiered

IBM has set about to build a single __________ that would handle raw material procurement, manufacturing, logistics, customer support, order entry, and customer fulfillment across all of IBM—something that had never been done before.

a.   integrated supply chain

b.   extranet computer system

c.   customer service department

d.   intranet supply network system

e.   global procurement network

The choice of a supply chain follows from a clearly defined marketing strategy and involves three steps: (1) _________; (2) understand the supply chain; and (3) harmonize the supply chain with the marketing strategy.

a.   understand the environment

b.   consider the legal consequences of partnering

c.   understand the marketing strategy

d.   understand the customer

e.   understand the company’s goals

The choice of a supply chain involves three steps: (1) understand the customer; (2) __________; and (3) harmonize the supply chain with the marketing strategy.

a.   understand the environment

b.   consider the legal consequences

c.   understand the supply chain

d.   understand the marketing strategy

e.   understand the company’s goals

The three steps used in choosing a supply chain include: (1) understand the customer; (2) understand the supply chain; and (3) __________.

a.   understand the environment

b.   harmonize the supply chain with the marketing strategy

c.   understand the marketing strategy

d.   understand the logistics

e.   understand the company’s goals

What is the first step in choosing the right supply chain?

a.   understand the supply chain

b.   develop a list of qualified channel members

c.   enumerate logistics specifications

d.   compare multiple-channel alternatives

e.   understand the customer

Often companies must choose between a responsive supply chain and an efficient supply chain.  This decision is based on __________.

a.   the specific needs of customer segments

b.   monetary considerations

c.   supplier alternatives

d.   the business mission

e.   a lack of an appropriate channel captain

The goals achieved by a firm’s marketing strategy determine whether its supply chain needs to be more __________ in meeting customer requirements.

a.   cost effective

b.   broadly expanded

c.   responsive or efficient

d.   centrally located

e.   geographically distributed  

Dell has adopted a(n) __________ supply chain strategy to better serve its customers.

a.   responsive

b.   reactionary

c.   efficient

d.   proficient

e.   economical

Dell made a conscious decision to use a(n) __________ supply chain to best meet the requirements of its consumers.

a.   integrated

b.   efficient

c.   harmonized

d.   responsive

e.   multi-tiered

Which statement regarding responsive supply chains is most accurate?

a.   Responsive supply chains use slower modes of transportation but faster order processing.

b.   Responsive supply chains always use the least expensive mode of transportation possible.

c.   Responsive supply chains rely on large inventory warehouses.

d.   Responsive supply chains achieve economies of scale by having all inventory stored and sorted at a central location.

e.   Responsive supply chains rely heavily on information technology.

Which statement regarding responsive supply chains is most accurate?

a.   Responsive supply chains use slower modes of transportation but faster order processing.

b.   Responsive supply chains often rely on more expensive express transportation.

c.   Responsive supply chains always use the least expensive mode of transportation possible.

d.   Responsive supply chains rely on large inventory warehouses.

e.   Responsive supply chains achieve economies of scale by having all inventory stored and sorted at a central location.

Walmart made a conscious decision to use a(n) __________ supply chain in order to best meet the needs of its consumers.

a.   integrated

b.   responsive

c.   harmonized

d.   efficient

e.   multi-tiered

Walmart’s marketing strategy is to be a reliable, lower-price retailer for a wide variety of mass consumption consumer goods.  This strategy favors a(n) __________ designed to deliver products to consumers at the lowest possible cost.

a.   integrated supply chain

b.   global supply chain

c.   efficient supply chain

d.   responsive supply chain

e.   customer service supply chain

Which statement regarding efficient supply chains is most accurate?

a.   Efficient supply chains traditionally use inexpensive but slower modes of transportation.

b.   Efficient supply chains use common platforms and common components across several products.

c.   Efficient supply chains rely on maintaining large geographically dispersed inventory warehouses.

d.   Efficient supply chains traditionally use expensive, but faster, modes of transportation.

e.   Efficient supply chains emphasize economies of scale by increasing the variety of system configurations offered.

Which statement regarding efficient supply chains is most accurate?

a.   Efficient supply chains use common platforms and common components across several products.

b.   Efficient supply chains rely on large geographically dispersed inventory warehouses.

c.   Efficient supply chains traditionally use expensive, but faster, modes of transportation.

d.   Efficient supply chains may limit their assembly and inventory storage facilities to a single location.

e.   Efficient supply chains emphasize economies of scale by increasing the variety of system configurations offered.

The practice that involves unloading products from suppliers, sorting products for individual stores, and quickly reloading products on trucks that will deliver the products to specific stores is referred to as __________.

a.   just-in-time (JIT) delivery

b.   intermodal distribution

c.   immediate response system (ERS)

d.   piggy-backing

e.   cross-docking

Cross-docking refers to

a.   the practice of organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements.

b.   the practice of storing finished goods in the same trucks from which they will be dispensed and sold to consumers.

c.   using large cargo containers that will be loaded to trucks and then to barges or ships that sail from port to port and then unloaded back to trucks for final transport and delivery.

d.   a practice that involves unloading products from suppliers, sorting products for individual stores, and quickly reloading products onto trucks for a particular store.

e.   the practice of transporting retail goods from a centralized warehouse to the loading docks of regionally located satellite warehouses.

Cross-docking is most closely related to __________.

a.   efficient supply chains

b.   intermodal transportation

c.   responsive supply chains

d.   reverse logistics

e.   logistics management

Which of the following statements regarding supply chains is most accurate?

a.   The most common form of supply chain is the collaborative-response efficiency strategy.

b.   In order for a supply chain to work effectively, key decisions should be made by a third-party logistics provider.

c.   There is no one best supply chain for every company.

d.   The longer the supply chain, the greater the economies of scale and the better the profit margins.

e.   Supply chains should consider the needs of suppliers, provided those needs are consistent with marketing strategies.

Which of the following statements regarding supply chains is most accurate?

a.   The best supply chain is the one that is consistent with the needs of the customer segment being served and complements a company’s marketing strategy.

b.   The most common form of supply chain is the collaborative-response efficiency strategy.

c.   In order for a supply chain to work effectively, key decisions should be made by a third-party logistics provider.

d.   The longer the supply chain, the greater the economies of scale and the better the profit margin.

e.   Supply chains should consider the needs of suppliers, provided those needs are consistent with marketing strategies.

Which of the following statements regarding supply chains is most accurate?

a.   The most common form of supply chain is the collaborative-response efficiency strategy.

b.   In order for a supply chain to work effectively, key decisions should be made by a third-party logistics provider.

c.   The longer the supply chain, the greater the economies of scale and the better the profit margin.

d.   Supply chains should consider the needs of suppliers, provided those needs are consistent with marketing strategies.

e.   Supply chain managers often need to make trade-offs between efficiency and responsiveness.

The objective of information and logistics management in a customer-driven supply chain is to minimize logistics costs while

a.   satisfying suppliers.

b.   maximizing profits.

c.   maximizing supply chain membership.

d.   delivering maximum customer service.

e.   maximizing supply chain inefficiency.

The objective of information and logistics management in a supply chain is to deliver maximum customer service and to

a.   minimize logistics costs.

b.   maximize distribution outlets.

c.   maximize profits.

d.   maximize supply chain membership.

e.   maximize supply chain inefficiency.

Expenses associated with transportation, materials handling and warehousing, inventory, stockouts (being out of inventory), order processing, and return products handling are referred to as __________.

a.   supplier service cost

b.   manufacturing cost

c.   total logistics cost

d.   social responsibility cost

e.   total supply chain cost

Total logistics costs refer to

a.   the design, installation, and maintenance of in-store displays, cabinets, and free standing promotional materials for retail outlets.

b.   expenses associated with activities performed by brokers and agents to bring buyers and sellers together.

c.   expenditures associated with the clerical or bookkeeping side of the procurement process, which include purchase, design, and maintenance of the EDI system.

d.   expenses associated with product adaptations that are made by the manufacturer in response to the needs of a channel member closest to the consumer.

e.   expenses associated with transportation, materials handling and warehousing, inventory, stockouts, order processing, and return products handling.

 

Figure 15-10 above indicates that supply chain managers must balance total logistics cost factors against customer service factors. The four customer service factors (“A,” “B,” “C,” and “D”) include all of the following EXCEPT:

a.   communication.

b.   dependability.

c.   convenience.

d.   place.

e.   time.

Which of the following is an element of total logistics cost?

a.   new product development

b.   inventories

c.   advertising

d.   personal selling

e.   market research

Which of the following best describes the goal of a firm’s combination of inventory and transportation costs?

a.   minimize required inventory costs

b.   minimize required transportation costs

c.   minimize the sum of inventory and transportation costs

d.   maximize the difference between required inventory and transportation costs

e.   set a level of transportation costs and minimize the required inventory costs

The customer service concept suggests that firms should

a.   automate customer service.

b.   maximize customer service levels.

c.   minimize customer service levels.

d.   minimize total logistics costs and let customer service follow.

e.   provide superior customer service while controlling logistics costs.

Customer service refers to

a.   adhering to the belief that the customer is always right.

b.   satisfying the customers’ needs no matter what the price.

c.   accepting full liability if a product fails to meet a customer’s expectations.

d.   the ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience.

e.   the ability of logistics management to satisfy users in terms of product, price, promotion, and place.

Within the context of a supply chain, __________ is the ability of a logistics system to satisfy users in terms of time, dependability, communication, and convenience.

a.   quick response

b.   customer service

c.   distribution management

d.   efficient consumer response

e.   lead time

The importance of time, dependability, communication, and convenience are all important concepts of  __________.

a.   consumer service

b.   supplier service

c.   wholesaler service

d.   retailer service

e.   stakeholder service

Supply chain managers balance total logistics cost factors against customer service factors.  Customer service factors include

a.   reliability, flexibility, consistency, and dependability.

b.   time, dependability, communication, and convenience.

c.   consistency, responsiveness, durability, and communication.

d.   time, assurance, responsiveness, and dependability.

e.   convenience, flexibility, time, and value.

The output of a supply chain is the

a.   units of products delivered.

b.   total generated revenue.

c.   service delivered to customers.

d.   total number of customers served.

e.   total profits realized.

Which of the following statements regarding supply chain customer service is most accurate?

a.   The output of a supply chain is measured in total units sold.

b.   Customer service is seen not just as an expense but also as a means to increase customer satisfaction and sales.

c.   The output of a supply chain is measured either in total units sold or total number of customers served.

d.   A firm’s goal should be to provide superior customer service regardless of logistics costs.

e.   Customer service is the responsibility of marketing channel members and not the supplier network.

The lag from ordering an item until it is received and ready for use or sale is referred to as

a.   order cycle time.

b.   order handling time.

c.   order-to-ship duration.

d.   purchase cycle.

e.   logistics cycle.

Order cycle time refers to

a.   the time between when an order is placed and when payment is received.

b.   the time between the sale of the first production batch to the sale of the next production batch.

c.   the cycle between one full warehouse shipment to the next full warehouse shipment.

d.   the lag from ordering an item until it is received and ready for use or sale.

e.   the average time between reorders by a given wholesaler or retailer in the marketing channel.

Another name for order cycle time is

a.   physical distribution sequence.

b.   total logistics cycle.

c.   replenishment time.

d.   logistical support time.

e.   billing cycle.

In a supply chain setting, replenishment time refers to lead time for an item, which means the lag from ordering an item until it is

a.   billed to the customer.

b.   acknowledged by the customer.

c.   billed and paid for by the customer.

d.   promised for delivery.

e.   received and ready for use or sale.

Replenishment time refers to

a.   the time lag from the inception of an idea until its initial commercialization.

b.   the time lag from ordering an item until it is received and ready for use or sale.

c.   the time between the commercialization of a product and general acceptance of the product as no longer “new.”

d.   the time lag between a new product entering the market and the market entry of the product’s first competitor.

e.   the time between when a new product is first promoted to its target market and when the product actually comes to the marketplace.

The typical order cycle include all of the following elements EXCEPT:

a.   order processing.

b.   transportation.

c.   stockout reports.

d.   documentation.

e.   order transmittal.

The Limited employs a quick response system to order fast-moving fashion items.  The Limited’s point-of-sale scanner records each sale.  When stock falls below a minimum level, the system automatically sends an electronic order to the manufacturer, which processes the order immediately.  This system has effectively reduced

a.   dependability.

b.   product flow.

c.   replenishment time.

d.   supply lag.

e.   logistical lag.

Inventory management systems that are designed to reduce the retailer’s lead time for receiving merchandise, which then lower a retailer’s inventory investment, improve customer service levels, and reduce logistics expense are referred to as

a.   order replenishment systems.

b.   quick response systems.

c.   customer logistics factors.

d.   minimum-inventory systems.

e.   web-based response systems.

An efficient consumer response system refers to

a.   an order replenishment system that maintains a 10 percent inventory rate at all times in order to guarantee there will never be stockouts. 

b.   an online virtual inventory storage program that allows firms to enter in minute-by-minute information in order to avoid stockouts due to unforeseen environmental forces.

c.   a computer program that allows even the smallest manufacturer to manage its inventory system.

d.   an inventory management system that is designed to reduce the retailer’s lead time for receiving merchandise, which then lowers its inventory investment, improves customer service levels, and reduces logistics expense.

e.   an exclusive contractual agreement between delivery services such as FedEx or UPS to deliver expedited orders at a special low rate, regardless of the day and time.

Inventory management systems that are designed to reduce the retailer’s lead time for receiving merchandise, which then lowers its inventory investment, improves customer service levels, and reduces logistic expenses is referred to as __________.

a.   efficient consumer response systems

b.   order replenishment systems

c.   customer logistics factors

d.   minimum-inventory systems

e.   web-based response systems

Another name for quick response systems is __________.

a.   order replenishment systems

b.   customer logistics factors

c.   minimum-inventory systems

d.   web-based response systems

e.   efficient consumer response systems

Another name for efficient consumer response systems is __________.

a.   customer logistics factors

b.   order replenishment systems

c.   minimum-inventory systems

d.   quick response systems

e.   web-based response systems

Dependability is the consistency of replenishment.  This is important to all firms in a supply chain and to consumers.  It can be broken into three elements: safe delivery, complete delivery, and __________.

a.   honest and accurate pricing

b.   quality products

c.   consistent lead time

d.   a well-informed delivery staff

e.   product warranties

Dependability is the consistency of replenishment.  This is important to all firms in a supply chain and to consumers.  It can be broken into three elements: consistent lead time, complete delivery, and __________.

a.   honest and accurate pricing

b.   quality products

c.   a well-informed delivery staff

d.   product warranties

e.   safe delivery

Dependability is the consistency of replenishment.  This is important to all firms in a supply chain and to consumers.  It can be broken into three elements: consistent lead time, safe delivery, and __________.

a.   complete delivery

b.   honest and accurate pricing

c.   quality products

d.   product warranties

e.   a well-informed delivery staff

A two-way link between buyer and seller that helps in monitoring service and anticipating future needs is referred to as

a.   honesty.

b.   reliability.

c.   communication.

d.   being well-informed.

e.   accountability.

Which of the following statements regarding communication is most accurate?

a.   Communication as a function of customer service refers to oral rather than written exchange of information.

b.   Communication as a function of customer service refers to written rather than oral exchange of information.

c.   Communication as a function of customer service refers exclusively to exchanges between the retailer and the ultimate consumer.

d.   There should be little if any communication between an ultimate consumer and the manufacturer.

e.   Improvement in transportation carrier information has improved the ability to trace information and schedule shipments.

Convenience refers to the concept that

a.   there should be a minimum of effort on the part of the buyer in doing business with the seller.

b.   all products or services should be available 24 hours a day, 7 days a week, and 365 days a year.

c.   all tasks required to make an exchange are the sole responsibility of the seller.

d.   an exchange requires equal effort by both the buyer and seller.

e.   all logistical services are provided by a supplier network.

An inventory-management system whereby the supplier determines the product amount and assortment a retailer needs and automatically delivers the appropriate items is referred to as __________.

a.   supplier-managed inventory

b.   supply chain inventory

c.   logistics-managed inventory

d.   just-in-time inventory management

e.   vendor-managed inventory

A vendor-managed inventory system refers to an

a.   inventory supply system that operates with very low inventories and requires fast on-time delivery.

b.   inventory management system whereby the supplier determines the product amount and assortment a retailer needs and automatically delivers the appropriate items.

c.   inventory management system that is designed to reduce the retailer’s lead time for receiving merchandise, which then lowers a retailer’s inventory investment, improves customer service levels, and reduces logistic expenses.

d.   inventory supply system that relies on the “judgment” of individual warehouse managers based on daily reports from its retailer customers.

e.   inventory system that guarantees delivery within 48 hours, and grants price reductions of 1 percent per hour if a shipment is delayed.

At the end of a recent year, Solectron, a big Milpitas, California, electronics contractor, made half of its purchases under vendor-managed inventory programs.  Solectron

a.   had its suppliers perform all materials handing activities.

b.   authorized its suppliers to eliminate as many wholesaling functions as possible from the supply chain.

c.   used a system in which its suppliers determined the product amount and assortment that should be in stock.

d.   authorized the use of distribution centers to provide quicker customer response times.

e.   balanced its total logistics cost by eliminating the convenience service factor.

The process of reclaiming recyclable and reusable materials, returns, and reworks from the point-of-consumption or use for repair, remanufacturing, redistribution, or disposal is referred to as

a.   salvage marketing.

b.   materials transformation.

c.   reverse materials handling.

d.   reverse logistics.

e.   cause-related marketing.

Reverse logistics refers to

a.   the collection of used goods donated from to nonprofit organizations by ultimate consumers to be restored, cleaned, repaired, and resold back to ultimate consumers.

b.   deconstructing products that failed to pass quality inspection standards on the production line and reusing workable parts instead of throwing out the entire unit.

c.   the process of reclaiming recyclable and reusable materials, returns, and reworks from the point-of-consumption or use for repair, remanufacturing, redistribution, or disposal.

d.   organizing a cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements.

e.   the donation of old or broken automobiles to nonprofit organizations that can be recycled or turned into scrap with the profits applied to the organization’s operating expenses.

Butler-McDonald, an Indianapolis firm, recycles outdated computers to reclaim reusable materials such as plastics, copper, zinc, silver, and gold.  Butler-McDonald is implementing

a.   salvage marketing.

b.   materials transformation.

c.   reverse materials handling.

d.   reverse logistics.

e.   cause-related marketing.

Hewlett-Packard is taking a proactive role in reducing the amount of electronic merchandise dumped in landfills by using __________ to reclaim recyclable and reusable materials.

a.   reverse materials handling

b.   reverse logistics

c.   cause-related marketing

d.   vendor-managed inventory

e.   materials transformation

One of the sales growth strategies Amazon considered early on is __________.

a.   sales of books

b.   sales of consulting services

c.   sales of original paintings and wall art

d.   selling Amazon’s distribution centers

e.   sales of greeting cards and invitations

Amazon uses supply chain and logistics management to

a.   make sure that it maintains the authority that comes with being the channel captain.

b.   avoid having to use quick response replenishment.

c.   lessen the amount of communication that is necessary between it and its suppliers.

d.   manage the flow of products from its suppliers to its distribution centers.

e.   implement its market divestment strategies.

Amazon uses supply chain and logistics management to

a.   make sure that it maintains the authority that comes with being the channel captain.

b.   avoid having to use quick response replenishment.

c.   manage the flow of customer orders from the distribution centers to individual’s homes.

d.   lessen the amount of communication that is necessary between it and its suppliers.

e.   implement its market divestment strategies.

 

1. When Callaway opened its "online" store, it wanted to be very careful not to ruin the good relationship it had with its loyal trade partners. To make sure this did not happen, Callaway

A. offered their retail partners greater trade allowances.

B. offered their retail partners Callaway stock options.

C. had one of its retail stores get the credit for an online sale.

D. offered incentives for retailers if they encouraged their store customers to shop online.

E. discounted merchandise in retail outlets but not online.

2. Individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users are referred to as a

A. distribution matrix.

B. marketing channel.

C. retailer.

D. wholesaler.

E. distributor.

3. Jay stops at the shopping mall to purchase a new pair of jeans from the Diesel store. He is the ultimate consumer in a pipeline from the producer through intermediaries, including the clothing store. This pipeline is actually a

A. consumer market.

B. marketing intermediary.

C. marketing channel.

D. transactional conduit.

E. distribution matrix.

4. You probably own several pairs of shoes. Further, it is highly likely you purchased those shoes at retail stores located in a shopping mall and not directly from the manufacturer. In fact, most goods are brought to you via a _________, which consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users.

A. marketing intermediary

B. distribution hierarchy

C. marketing chain of command

D. distribution matrix

E. marketing channel

5. A middleman refers to

A. a person or firm whose sole responsibility is bringing a buyer to the last link in the distribution chain. 

B. a person or firm whose sole responsibility is to find distributors for a manufacturer's products.

C. any intermediary between a manufacturer and end-user markets.

D. a person or firm that takes possession of a product and in some way alters it before passing it on to ultimate consumers.

E. an intermediary who sells to ultimate consumers.

6. Any intermediary between manufacturer and end-user markets is referred to as a

A. middleman.

B. retailer.

C. wholesaler.

D. broker.

E. distributor.

7. A(n) __________ is any intermediary between manufacturer and end-user markets.

A. agent

B. wholesaler

C. retailer

D. middleman

E. broker

8. Any intermediary with legal authority to act on behalf of the manufacturer is referred to as a(n) _________.

A. dealer

B. agent

C. retailer

D. wholesaler

E. distributor

9. An agent refers to

A. any intermediary with legal authority to act on behalf of the manufacturer.

B. independent firms or individuals whose principal function is to transport goods.

C. any intermediary who takes ownership of a manufacturer's goods or services and then finds multiple buyers for them.

D. a manufacturer's paid representative and acting voice in initial sales transactions.

E. a manufacturing "match-maker" who actively seeks out potential consumers and brings them to retailers.

10. A wholesaler refers to

A. independent firms or individuals whose principal function is to bring buyers and sellers together.

B. an intermediary who sells to other intermediaries, usually to retailers in consumer markets.

C. any intermediary who takes ownership of a manufacturer's products or services and then finds multiple buyers for those products or services.

D. an intermediary who sells to consumers.

E. a manufacturing "match-maker" who actively seeks out potential consumers and brings them to retailers.

11. An intermediary who sells to other intermediaries, usually to retailers in consumer markets is referred to as a(n) ___________.

A. broker

B. agent

C. retailer

D. distributor

E. wholesaler

12. A(n) __________ is an intermediary who sells to other intermediaries.

A. agent

B. wholesaler

C. retailer

D. manufacturer

E. broker

13. An intermediary who sells to consumers is referred to as a(n) _________.

A. agent

B. broker

C. retailer

D. wholesaler

E. distributor

14. A retailer refers to

A. an intermediary who sells only to other intermediaries.

B. any intermediary between a manufacturer and industrial markets.

C. an intermediary who sells to other distributors.

D. an intermediary who takes possession of a product, alters it in some way, and then sells it to the ultimate consumer.

E. an intermediary who sells to consumers.

15. A(n) __________ is an intermediary who sells to consumers.

A. agent

B. wholesaler

C. retailer

D. distributor

E. broker

16. Several artists in Charleston, South Carolina, have created an arrangement to sell their paintings. They have set up an art gallery in downtown Charleston so tourists and art lovers can look at their paintings and buy the ones they like. Each artist takes a turn acting as the sales clerk at the gallery. In terms of the marketing channel, the artist who is on duty in the gallery is acting as a(n) _________.

A. ultimate consumer

B. manufacturer

C. wholesaler

D. broker

E. distributor

17. A distributor refers to

A. an intermediary who sells only to manufacturers.

B. intermediaries who perform a variety of distribution functions, including selling, maintaining inventories, extending credit, and so on.

C. an intermediary who takes possession of a product, alters it in some way, and then sells it to the ultimate consumer.

D. an intermediary who sells to other intermediaries, usually to retailers.

E. an intermediary who sells only to other intermediaries.

18. Intermediaries who perform a variety of distribution functions, including selling, maintaining inventories, extending credit, and so on are referred to as ________.

A. dealers

B. brokers

C. retailers

D. wholesalers

E. distributors

19. A variety of terms are used for marketing intermediaries. According to Figure 15-1 above, the term that would be used to describe the intermediary in Term "A" would be _________.

A. retailer

B. middleman

C. wholesaler

D. distributor

E. agent or broker

20. A variety of terms are used for marketing intermediaries. According to Figure 15-1 above, the term that would be used to describe the intermediary in Term "B" would be _________.

A. retailer

B. middleman

C. wholesaler

D. distributor

E. agent or broker

21. A variety of terms are used for marketing intermediaries. According to Figure 15-1 above, the term that would be used to describe the intermediary in Term "C" would be _________.

A. retailer

B. middleman

C. wholesaler

D. distributor

E. agent or broker

22. A variety of terms are used for marketing intermediaries. According to Figure 15-1 above, the term that would be used to describe the intermediary in Term "D" would be _________.

A. retailer

B. middleman

C. wholesaler

D. distributor

E. agent or broker

23. A variety of terms are used for marketing intermediaries. According to Figure 15-1 above, the term that would be used to describe the intermediary in Term "E" would be _________.

A. retailer

B. middleman

C. wholesaler

D. distributor

E. agent or broker

24. Intermediaries make the selling of goods more efficient by

A. eliminating inventory costs.

B. identifying target markets.

C. reducing manufacturing costs.

D. minimizing the number of sales contacts between producer and consumer.

E. maximizing the number of contacts necessary between producer and consumer.

25. Two students, Nick and Lee, were studying for an upcoming exam in their introduction to marketing course. While studying the chapter on marketing channels and wholesalers, Nick made the following statement: "If it weren't for wholesalers and other intermediaries in the channel of distribution, the products we buy would cost a lot less!" After contemplating Nick's statement, Lee said, "Wait a minute. We learned in class that channel intermediaries actually make marketing more efficient by minimizing the number of transactions necessary to sell products." Lee's statement refers to

A. the value created by channel intermediaries.

B. channel intermediary development.

C. the relationships between channel intermediaries themselves.

D. channel intermediary promotional efforts.

E. an inaccurate statement by Lee; Nick was correct.

26. The three basic functions intermediaries perform are

A. accommodating functions, logistical functions, and transactional functions.

B. implementation functions, accommodating functions, and contractual functions.

C. contractual functions, facilitating functions, and logistical functions.

D. facilitating functions, accommodating functions, and implementation functions.

E. transactional functions, logistical functions, and facilitating functions.

27. Intermediaries performing a transactional function in distribution are engaged in buying, selling, and _________.

A. storing

B. financing

C. transporting

D. risk taking

E. merchandising

28. The "risk" in a transitional function refers to

A. unpredictable costs of transportation because of fuel prices.

B. product liability from poorly produced products that become defective.

C. the need to stock merchandise in anticipation of sales, which may become obsolete.

D. trying new promotional campaigns.

E. investments in new product development.

29. In terms of distribution, when marketing channel members are engaged in buying, selling, and risk taking, they are performing __________ functions.

A. logistical

B. merchandising

C. facilitating

D. implementation

E. transactional

30. A marketing channel intermediary that purchases merchandise for resale at retail outlets would be an example of a(n) __________ function.

A. transactional

B. logistical

C. facilitating

D. risk taking

E. assorting

31. Assuming business risks in the ownership of inventory that can become obsolete or deteriorate would be an example of a __________ function.

A. transactional

B. logistical

C. facilitating

D. grading

E. storing

32. Logistical function activities include

A. buying and selling.

B. sorting, storing, and moving products.

C. financing and grading.

D. risk taking.

E. marketing information and research.

33. When marketing channel members are engaged in assorting, storing, sorting, and transporting goods, they are performing __________ functions.

A. logistical

B. merchandising

C. facilitating

D. implementation

E. transactional

34. When Hunter went to the hardware store looking for gloves to wear while refinishing a table, he bought one pair because that was all he needed. But when the hardware store purchased the gloves, it purchased a case containing 100 pairs of identical gloves. Which logistical function did the hardware store perform for Hunter and its other customers?

A. marketing

B. buying

C. sorting

D. assorting

E. risk taking

35. Creating product assortments from several sources to serve customers would be an example of a __________ function.

A. transactional

B. logistical

C. facilitating

D. selling

E. risk taking

36. Assembling and protecting products at a convenient location to offer better customer service would be an example of a __________ function.

A. transactional

B. logistical

C. facilitating

D. grading

E. risk taking

37. Purchasing in large quantities and breaking into smaller amounts desired by customers would be an example of a __________ function.

A. transactional

B. logistical

C. facilitating

D. transporting

E. risk taking

38. Physically moving a product to customers would be an example of a __________ function.

A. transactional

B. logistical

C. facilitating

D. selling

E. risk taking

39. Facilitating function activities include

A. buying and selling.

B. assorting, sorting, and storing.

C. financing, grading, and marketing information and research.

D. risk taking.

E. transportation.

40. In terms of distribution, when marketing channel members are engaged in financing, grading, marketing information and research, they are performing the __________ function.

A. logistical

B. transformational

C. facilitating

D. implementing

E. transactional

41. Intermediaries perform facilitating function activities, which assist producers in making goods and services more attractive to buyers. These activities include

A. producing, assembling, and distributing.

B. transportation and distribution.

C. buying, selling, and risk taking.

D. assorting, sorting, and storing.

E. financing, grading, and marketing information and research.

42. Before consumers see a movie, it is assigned a rating such as G or PG based on its language and content. This rating system is most closely related to which facilitating function activity performed by marketing intermediaries?

A. grading

B. sorting

C. risk taking

D. marketing

E. assorting

43. Extending credit to customers would be an example of a __________ function.

A. transactional

B. logistical

C. facilitating

D. buying

E. risk taking

44. Inspecting, testing, or judging products, and assigning them quality grades would be an example of a __________ function.

A. transactional

B. logistical

C. facilitating

D. storing

E. risk taking

45. Marketing channels help create value for consumers through four utilities. The utilities are

A. product, price, promotion, and place.

B. form, function, risk taking, and selling.

C. time, place, form, and possession.

D. transactional, logistical, facilitating, and marketing.

E. buying, selling, storing, and transporting.

46. Having a product or service where you want it is function of __________ utility.

A. form

B. time

C. place

D. possession

E. transactional

47. Enhancing a product or service to make it more appealing to buyers is a function of __________ utility.

A. form

B. time

C. place

D. possession

E. transactional

48. A textile artist can buy fabric, thread, and batting, create an heirloom quilt, and then sell the finished work to customers in a kiosk decorated with some of the quilts produced to entice customers who shop at the local strip mall. By designing the quilts and kiosk with aesthetic value, the artist creates __________ utility.

A. form

B. application

C. possession

D. time

E. place

49. An example of __________ utility involves intermediaries shipping goods to buyers of a product or service.

A. time

B. form

C. place

D. possession

E. transactional

50. A snack vending machine located in a university building that students use between classes when hungry creates both __________ utility.

A. time and place

B. place and form

C. form and creation

D. possession and form

E. application and place

51. A(n) __________ exists when producers and ultimate consumers deal one-on-one with each other.

A. strategic channel alliance

B. direct channel

C. marketing channel

D. indirect channel

E. dual distribution channel

52. When producers and ultimate consumers deal with each other one-on-one, it is referred to as a(n)

A. strategic channel alliance

B. direct channel

C. marketing channel

D. indirect channel

E. dual distribution channel

53. A direct channel is when

A. producers and end-users deal with each other on a one-on-one basis.

B. the producer and consumer perform numerous channel functions.

C. a firm reaches different buyers by employing two or more different types of channels for the same basic product.

D. an intermediary sells to other intermediaries, usually to retailers in consumer markets.

E. an agent or broker brings ultimate consumers manufacturers.

54. In a direct channel, all channel functions are performed by _________.

A. retailers

B. wholesalers

C. producers

D. brokers and agents

E. middlemen

55. When Dell Computer sells made-to-order PCs to customers online via its Web site, it is an example of which type of marketing channel?

A. direct channel

B. indirect channel

C. strategic channel alliances

D. marketing channel

E. dual distributive channel

56. Schwan's Sales Enterprises of Marshall, Minnesota, markets a full line of frozen foods in 49 states and parts of Canada using door-to-door salespeople who sell from refrigerated trucks. This particular method of distribution is referred to as a(n)

A. direct channel.

B. indirect channel.

C. facilitated channel.

D. customer-service channel.

E. truck-jobber channel.

57. In an episode of the Glee television series, members of the glee club sold home-baked cupcakes at school to raise money. The students selling their cupcakes without any intermediary would be an example of a(n)

A. personalized distribution.

B. non-permanent distribution.

C. informal channel of distribution.

D. direct channel of distribution.

E. indirect channel of distribution.

58. A channel that includes intermediaries that are between the producer and consumer and perform numerous channel functions is referred to as a(n)

A. indirect channel.

B. direct channel.

C. multi-level channel.

D. full-service channel.

E. limited-service channel

59. Indirect channels for consumer goods

A. occur when one firm's marketing channels are used to sell another firm's products.

B. include producers and end-users dealing directly with each other.

C. include intermediaries that are between the producer and consumer and perform numerous channel functions.

D. are arrangements whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product.

E. occurs when a retailer sells its product in a store and on the Internet.

60. A commonly used indirect channel moves product from producer to retailer to consumer. This channel is used when the retailer is large and can buy in large quantities from a producer or when

A. the cost of maintaining inventory is low.

B. the cost of inventory makes it too expensive to use a wholesaler.

C. there is little if any seasonal demand.

D. the risk lies solely with the manufacturer.

E. the retail outlets are regionally located.

61. A commonly used indirect channel moves product from producer to retailer to consumer. This channel is used when the cost of inventory makes it too expensive to use a wholesaler or when

A. the retail outlets are regionally located.

B. the cost of maintaining inventory is low.

C. there is little if any seasonal demand.

D. the risk lies solely with the manufacturer.

E. the retailer is large and can buy in large quantities from a producer.

62. The most indirect channel for consumer goods incorporates agents, wholesalers, and retailers and is most commonly used when there

A. are only a few large manufacturers but many small retailers.

B. are low-cost, low unit volume goods.

C. are many small manufacturers and many small retailers.

D. is too large an inventory to be carried by wholesalers.

E. are many manufacturers with a limited inventory competing for a small group of retailers.

63. A small electronics company manufactures a line of low to moderate quality stereo components that are distributed through wholesalers to mass-market retailers such as Walmart. The electronics company has begun production of a small line of high quality, professional studio-model components. How should the small electronics company best distribute its new products?

A. use its established indirect marketing channel.

B. distribute directly to mass market consumers.

C. distribute through agents who sell to specialty electronics stores that will feature the new line.

D. sell directly to specialty electronics stores that will feature the new line.

E. establish its own chain of electronics retail stores.

64. In marketing channels for business products, an intermediary that performs a variety of marketing channel functions involving selling, stocking, and delivering a full product assortment and financing is referred to as a(n) __________.

A. agent

B. wholesaler

C. retailer

D. channel captain

E. industrial distributor

65. Industrial distributor refers to

A. an intermediary that maintains its own salesforce and performs all channel functions.

B. an intermediary that deals exclusively with the selling, stocking, and delivery of raw materials used by manufacturers in the production of its products.

C. an intermediary that deals with a single product line within a single industry.

D. an intermediary that performs a variety of marketing channel functions involving selling, stocking, and delivering a full product assortment, and financing.

E. an intermediary that performs functions involving selling, stocking, and delivery of industrial goods but is unable to provide financing due to the normally large expenditures.

66. International Products, a Burlington, New Jersey, firm that sells industrial cleansers and lubricants wanted to sell its product to factories, hospitals and labs in China, but it did not have the necessary expertise. As a result, International Products hired Asia Marketing & Management to sell, stock, and deliver a full assortment of products to the Chinese market. Asia Marketing & Management is an example of a(n) _________.

A. agent

B. wholesaler

C. global agent

D. retailer

E. industrial distributor

67. Industrial distributors perform functions that are most like which intermediary in the consumer goods marketing channel?

A. manufacturers

B. retailers

C. agents

D. wholesalers

E. brokers

68. Employing the Internet to make products and services available for consumption or use by consumers or business buyers is referred to as _________.

A. Internet distribution channels

B. electronic marketing channels

C. virtual marketing channels

D. World Wide Web channels

E. extranet marketing channels

69. Electronic marketing channels refer to

A. the employment of the Internet to make goods and services available for consumption or use by consumers or business buyers.

B. a firm's computer driven inventory management through an entirely mechanized warehousing system.

C. intranet systems linking all aspects of production within a single firm.

D. manufacturers that specialize in the creation and production of microprocessors used in industrial markets.

E. the name given to all Internet addresses that end in ".com" to indicate the Web site is a commercial entity that distributes goods and services.

70. Which of the following products or services must be provided by traditional and not electronic marketing channels?

A. car rental reservations

B. software

C. healthcare

D. music

E. education

71. MachineTools.com sells grinders, boring mills, and engine lathes. Its Web site lists goods from over 700 machinery manufacturers, 2,500 distributors of new equipment, and 650 dealers of used inventory for sale. MachineTools.com relies on a well-established channel of manufacturers, distributors, and machinery dealers to provide the merchandise that is sold through this

A. Internet distribution channel.

B. electronic marketing channel.

C. virtual marketing channel.

D. World Wide Web channel.

E. extranet channel.

72. Allowing consumers to buy products by interacting with various advertising media without a face-to-face meeting with a salesperson is referred to as a _________.

A. indirect marketing channel

B. direct marketing channel

C. multi-marketing channel

D. channel bypass marketing

E. personal selling

73. Direct marketing channels refer to

A. the distribution of goods and services directly from the manufacturer's production site to end-users.

B. the traditional chain of distribution from manufacturer to retailer to consumer.

C. the use of agents who represent a single producer and are responsible for the entire marketing function of that producer.

D. a method of distribution that allows consumers to buy products by interacting with various advertising media without a face-to-face meeting with a salesperson.

E. a method of distribution that allows consumers to buy products through direct personal interaction with the manufacturer's representatives in order to provide more personalized service.

74. Mail order selling, catalog sales, and telemarketing, are all examples of

A. indirect channels.

B. direct marketing channels.

C. multi-marketing channels.

D. personal selling.

E. direct channels.

75. When you order a sweater from a L.L. Bean mail-order catalog, what type of marketing channel are you and the company using?

A. cash and carry marketing channel

B. intensive distribution channel

C. selective distribution channel

D. indirect marketing channel

E. direct marketing channel

76. The blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online, is referred to as _________.

A. direct marketing

B. indirect marketing

C. intensive marketing

D. multichannel marketing

E. electronic marketing

77. Multichannel marketing is the blending of different __________ that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online.

A. pricing channels

B. distribution channels

C. communication and delivery channels

D. direct and indirect channels

E. communication channels

78. Multichannel marketing

A. can leverage the value-adding capabilities of different channels.

B. creates greater elasticity of demand for its products.

C. creates greater inelasticity of demand for its product.

D. allows firms to legally circumvent paying taxes on revenue generated by online sales.

E. customers are not required to pay any shipping and handling charges.

79. An arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product is referred to as _________.

A. a strategic channel alliance

B. multiple level selling

C. parallel distribution

D. dual distribution

E. multi-layered distribution

80. Dual distribution refers to

A. a level of distribution density whereby a firm selects a few retailers in a specific geographical area to carry its products.

B. an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product.

C. the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online.

D.professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact.

E. a practice whereby one firm's marketing channel is used to sell another firm's products.

81. Pharmaceutical companies sell some of their products to hospitals and clinics directly. They also market other products to large retail chains like Walgreens that distribute them to their stores across the nation. They also sell to drug wholesalers that sell to the remaining independent drugstores in the U.S. What method of distribution best describes that used by pharmaceutical companies in this example?

A. dual distribution

B. vertical distribution

C. horizontal distribution

D. direct distribution

E. exclusive distribution

82. In some instances, firms pair multiple channels with a multibrand strategy. The purpose of this strategy would be to __________ of the firm's family brand and differentiate its marketing channels.

A. minimize cannibalization

B. create greater perceived value

C. maximize channel profits

D. generate awareness

E. create a "backup" channel

83. Rather than compete with large greeting card companies for shelf space in supermarkets, several smaller card companies place their cards in pack-and-ship stores where the customer can mail a card on the spur of the moment or in carwashes where customers are waiting and can have something amusing to read. This would be an example of which type of marketing channel strategy?

A. a strategic channel alliance

B. multichannel distribution

C. parallel distribution

D. dual distribution

E. direct distribution

84. A practice whereby one firm's marketing channel is used to sell another firm's products, is referred to as _________.

A. dual distribution

B. a strategic channel alliance

C. cooperative distribution

D. an integrated channel alliance

E. a multi-channel venture

85. Strategic channel alliances refer to

A. an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product.

B. a practice whereby one firm's marketing channel is used to sell another firm's products.

C. the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online.

D. an arrangement whereby companies reduce distribution costs by sharing facilities, equipment, and transportation.

E. a practice whereby consumers can interact with various advertising media to buy products without a face-to-face meeting with a salesperson.

86. Which type of marketing channel arrangement is especially good for a firm to use in global marketing where the creation of marketing channel relationships is expensive and time consuming?

A. dual distribution

B. strategic channel alliance

C. cooperative distribution

D. global distribution alliance

E. multi-channel distribution

87. Kraft Foods distributes Starbucks coffee in U.S. supermarkets and internationally using _________.

A. multi-channel distribution

B. a direct marketing channel

C. a cooperative distribution channel

D. a strategic channel alliance

E. a dual distribution agreement

88. An example of a(n) __________ occurs when Kraft Foods uses the distribution system of Ajinomoto, a major Japanese food company, to market its Maxwell House coffee in Japan.

A. direct marketing channel

B. industrial distributor

C. dual distribution system

D. strategic channel alliance

E. franchising operation

89. CPW (Cereals Produced Worldwide) is a __________ designed from the start to be a global business. It joined the cereal manufacturing and marketing capability of General Mills with the distribution clout of Nestlé.

A. dual distribution partnership

B. multi-channel distribution

C. cooperative distribution channel

D. strategic channel alliance

E. bilateral trade cooperative

90. The General Mills-Nestlé strategic channel alliance

A. increased the ready-to-eat cereal worldwide market share of these companies.

B. decreased the ready-to-eat cereal worldwide market share of these companies.

C. increased the ready-to-eat cereal market abroad and decreased General Mills' ready-to-eat cereal market in the U.S.

D. served as a model for Post Cereal and Weetabix, a British firm.

E. resulted in a lawsuit from Kellogg's, the global leader in the ready-to-eat cereal market for unfair trade practices.

91. Independently owned firms that take title to the merchandise they handle are referred to as

A. brokers.

B. agencies.

C. virtual retailers.

D. merchant wholesalers.

E. merchant retailers.

92. Merchant wholesalers are independently owned firms that __________ the merchandise they handle.

A. take title to

B. broker

C. act as agents for

D. break bulk and repackage

E. do not deliver

93. Which type of wholesaler carries a broad assortment of merchandise and performs all channel functions?

A. drop shipper

B. limited-line wholesaler

C. specialty merchandise wholesaler

D. rack jobber

E. general merchandise wholesaler

94. A general merchandise wholesaler refers to wholesalers that

A. carry a broad assortment of merchandise and perform all channel functions.

B. own the merchandise they sell but do not physically handle, stock, or deliver it.

C. have a small warehouse from which they stock their trucks for distribution to retailers.

D. work for several producers, carry noncompetitive, complementary merchandise in an exclusive territory, and use over-the-road transportation for all product deliveries.

E. deal exclusively with small low-cost consumer goods that are distributed to a select number of large retail chains.

95. Wholesalers that carry a broad assortment of merchandise and perform all channel functions are referred to as a _________.

A. limited-line wholesaler

B. drop shipper

C. rack jobber

D. specialty merchandise wholesaler

E. general merchandise wholesaler

96. A wholesaler that carries a narrow range of products and performs all channel functions is referred to as a _________.

A. general merchandise wholesaler

B. truck jobber

C. specialty merchandise wholesaler

D. rack jobber

E. drop shipper

97. A specialty merchandise wholesaler refers to wholesalers that

A. carry a broad assortment of merchandise and perform all channel functions.

B. own the merchandise they sell but do not physically handle, stock, or deliver it.

C. offer a relatively narrow range of products but has an extensive assortment within the product lines carried.

D. work for several producers, carry noncompetitive, complementary merchandise in an exclusive territory, and use over-the-road transportation for all product deliveries.

E. deal exclusively with small low-cost consumer goods that are distributed to a select number of large retail chains.

98. Which type of wholesaler offers a relatively narrow range of products but has an extensive assortment within the product lines carried?

A. general merchandise wholesaler

B. limited-service wholesaler

C. specialty merchandise wholesaler

D. cash and carry wholesaler

E. drop shipper

99. Which of the following is a type of full service merchant wholesaler?

A. cash and carry wholesaler

B. rack jobbers

C. truck jobbers

D. specialty merchandise wholesaler

E. drop shippers

100.The four major types of limited-service merchant wholesalers are cash and carry wholesalers, drop shippers, truck jobbers, and _________.

A. rack jobbers

B. display vendors

C. point of purchase wholesalers

D. transport vendors

E. container transport vendors

101.Rack jobbers refer to wholesalers who

A. furnish the shelves that display merchandise in retail stores, perform all channel functions, and sell on consignment to retailers.

B. own the merchandise they sell and have retailers store it in their warehouses.

C. own the merchandise they sell but do not physically handle, stock, or deliver it.

D. have a small warehouse from which they stock their trucks for distribution to retailers.

E. work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory.

102.A limited-service wholesaler that furnishes shelves that display merchandise in stores, performs all channel functions, and sells on consignment to retailers is referred to as a _________.

A. stack loader

B. rack jobber

C. drop shipper

D. desk jobber

E. truck jobber

103.Which type of wholesaler traditionally sells hosiery, toys, and health and beauty items?

A. cash and carry wholesalers

B. rack jobbers

C. truck jobbers

D. general merchandise wholesalers

E. drop shippers

104.The four major types of limited-service merchant wholesalers are drop shippers, rack jobbers, truck jobbers, and _________.

A. machine vendors

B. credit line wholesalers

C. transport vendors

D. cash and carry wholesalers

E. container transport vendors

105.Cash and carry wholesalers refers to wholesalers who

A. furnish the racks or shelves that display merchandise in retail stores, perform all channel functions, and sell on consignment to retailers.

B. take title to merchandise but sell only to buyers who call on them, pay cash for merchandise, and furnish their own transportation for merchandise.

C. own the merchandise they sell but do not physically handle, stock, or deliver it.

D. have a small warehouse from which they stock their trucks for distribution to retailers.

E. work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory.

106.Wholesalers who take title to merchandise but sell only to buyers who call on them, pay cash for merchandise, and furnish their own transportation for merchandise are referred to as _________.

A. rack jobbers

B. truck jobbers

C. transport vendors

D. cash and carry wholesalers

E. drop shippers

107.Cash and carry wholesalers

A. handle bulky items like lumber, bricks, and telephone poles.

B. handle office supplies, electrical supplies, hardware products, and groceries.

C. handle perishable items like flowers, baked goods, and deli meats.

D. are a kind of full-service wholesaler.

E. lease vending machines to merchants and refill them as needed on a cash only basis.

108.The four major types of limited-service merchant wholesalers are rack jobbers, truck jobbers, cash and carry wholesalers, and _________.

A. machine vendors

B. drop shippers

C. credit line wholesalers

D. transport vendors

E. container transport vendors

109.Drop shippers

A. furnish the racks or shelves that display merchandise in retail stores, perform all channel functions, and sell on consignment to retailers.

B. take title to merchandise but sell only to buyers who call on them, pay cash for merchandise, and furnish their own transportation for merchandise.

C. own the merchandise they sell but do not physically handle, stock, or deliver it.

D. have a small warehouse from which they stock their trucks for distribution to retailers.

E. work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory.

110.Wholesalers who own the merchandise they sell but do not physically handle, stock, or deliver it are referred to as _________.

A. cash and carry wholesalers

B. rack jobbers

C. drop shippers

D. truck jobbers

E. manufacturer's representatives

111.Another name for a drop shipper is _________.

A. desk jobber

B. drop runner

C. transport vendor

D. container transport vendor

E. stock jobber

112.The four major types of limited-service merchant wholesalers are drop shippers, rack jobbers, cash and carry wholesalers, and _________.

A. machine vendors

B. credit line wholesalers

C. truck jobbers

D. transport vendors

E. container transport vendors

113.The term truck jobbers refers to wholesalers who

A. furnish the racks or shelves that display merchandise in retail stores, perform all channel functions, and sell on consignment to retailers.

B. store all the merchandise they sell in their trucks.

C. own the merchandise they sell but do not physically handle, stock, or deliver it.

D. have a small warehouse from which they stock their trucks for distribution to retailers.

E. work for several producers, carry noncompetitive, complementary merchandise in an exclusive territory, and use over-the-road transportation for all product deliveries.

114.Wholesalers who have a small warehouse from which they stock their trucks for distribution to retailers are referred to as _________.

A. cash and carry wholesalers

B. rack jobbers

C. drop shippers

D. truck jobbers

E. manufacturer's representatives

115.A __________ would be most likely to use truck jobbers to distribute its products.

A. clothing manufacturer

B. manufacturer of electric generators

C. leather goods importer

D. pharmaceutical company

E. meat processing plant

116.Which limited-service wholesalers perform no facilitating functions?

A. selling agents and drop shippers

B. manufacturer's agents and selling agents

C. specialty merchandise wholesalers and rack jobbers

D. brokers and general merchandise wholesalers

E. cash and carry wholesalers and truck jobbers

117.Which type of the following firms has made the wisest wholesaler choice for its product?

A. Sam's Coal Country uses a drop shipper for its coal.

B. Amy's Amazing Appetizers uses a rack jobber for its frozen apricot aperitifs.

C. Hannah's Hardware uses a rack jobber for its hinges.

D. Shayna's Superior Supplies uses a desk jobber for its staplers.

E. Nova's Novelties uses a truck jobber for its never-needs-a-battery night lights.

118.Which type of the following firms has made the wisest wholesaler choice for its product?

A. Sam's Coal Country uses a cash and carry wholesaler for its coal.

B. Amy's Amazing Appetizers uses a rack jobber for its frozen apricot aperitifs.

C. Raisha's Retros uses a rack jobber for its replica racecar radios.

D. Shayna's Superior Supplies uses a desk jobber for its staplers.

E. Nova's Novelties uses a truck jobber for its never-needs-a-battery night lights.

119.Which type of the following firms has made the wisest wholesaler choice for its product?

A. Fiona's Floral uses a truck jobber for its cut roses.

B. Hannah's Hardware uses a rack jobber for its hammers.

C. Sam's Coal Country uses a truck jobber for its subway cars.

D. Shayna's Superior Supplies uses a desk jobber for its staplers.

E. Josh's Jackhammers uses a rack jobber for its hard hats.

120.Which of the following statements describes the key difference between merchant wholesalers and agents and brokers?

A. Merchant wholesalers don't perform all channel functions and agents and brokers do.

B. Agents and brokers only deal with consumer channels.

C. Agents and brokers make their profits based on the sales of merchandise they own, while merchant wholesalers make profits based on fees paid for their services.

D. Merchant wholesalers take title to merchandise and agents and brokers do not.

E. Agents and brokers take title to merchandise and merchant wholesalers do not.

121.Manufacturer's agents refers to agents who

A. furnish the racks or shelves that display merchandise in retail stores, perform all channel functions, and sell on consignment to retailers.

B. take title to merchandise but sell only to buyers who call on them, pay cash for merchandise, and furnish their own transportation for merchandise.

C. own the merchandise they sell but do not physically handle, stock, or deliver it.

D. have a small warehouse from which they stock their trucks for distribution to retailers.

E. work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory.

122.Intermediaries that work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory are referred to as __________.

A. selling agents

B. line brokers

C. distribution brokers

D. manufacturer's agents

E. brokers

123.Manufacturer's agents refer to agents who

A. represent a single producer and carry all products in the producer's lines.

B. work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory.

C. take title to merchandise but sell only to buyers who call on them, pay cash for merchandise, and furnish their own transportation for merchandise.

D. own the merchandise they sell but do not physically handle, stock, or deliver it.

E. furnish the racks or shelves that display merchandise in retail stores, perform all channel functions, and sell on consignment to retailers.

124.A regional bakery makes organic breads and muffins. It feels the choice of distribution channel is critical to the product's success, especially since it wants to have the product distributed nationally. However, it will take some time before sales take off, and the bakery wants to make sure the marketing program is consistent everywhere. It should use

A. its own salesforce to sell directly to retailers.

B. the services of a selling agent to sell to general merchandise wholesalers who will sell to retailers.

C. a dual distribution system composed of both direct and indirect wholesalers.

D. a rack jobber who will sell to a merchant wholesaler and who will in turn sell to retailers.

E. a manufacturer's agent to sell to truck jobbers who in turn will deal with retailers.

125.Selling agents refer to agents who

A. furnish the racks or shelves that display merchandise in retail stores, perform all channel functions, and sell on consignment to retailers.

B. represent a single producer and are responsible for the entire marketing function of that producer.

C. work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory.

D. take title to merchandise but sell only to buyers who call on them, pay cash for merchandise, and furnish their own transportation for the merchandise.

E. sell primarily large bulky products.

126.Intermediaries that represent a single producer and are responsible for the entire marketing function of that producer are referred to as _________.

A. brokers

B. line brokers

C. selling agents

D. distribution brokers

E. manufacturer's agents

127.Carla's Cards uses a __________ to sell and market the entire line of greeting cards. They design promotional plans, set prices, determine distribution policies, and make recommendations to Carla on product strategy.

A. manufacturer's agent

B. broker

C. selling agent

D. manufacturer's branch office

E. manufacturer's sales office

128.Brokers are independent firms or individuals whose principal function is to

A. represent a single producer and are responsible for the entire marketing function of that producer.

B. work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory.

C. take title to merchandise but sell only to buyers who call on them, pay cash for merchandise, and furnish their own transportation for the merchandise.

D. own the merchandise they sell but not physically handle, stock, or deliver it.

E. bring buyers and sellers together to make sales.

129.Independent firms or individuals whose principal function is to bring buyers and sellers together to make sales are referred to as _________.

A. manufacturer's agents

B. brokers

C. selling agents

D. manufacturer's branches

E. manufacturer's sales offices

130.Freightfinder.com is an Internet companies that is called a "go-between." If a trucker needs to find a load for a particular trade lane, he or she can visit this site, list the price and available truck space, and find a company that needs a shipment moved. Since the purpose of this Web site is to put buyer and sellers together so that a sale can be made, this Web site can be categorized as a __________.

A. broker

B. selling agent

C. manufacturer's representative

D. manufacturer's agent

E. administrator

131.Recently, office vacancy rates from Kansas City to San Jose hovered at or near a 10-year low. Like skilled labor at the time, choice office space was a scarce commodity. A business in Kansas City, Missouri, looking to rent office space should use a __________ to help it locate the most suitable space at the best possible rate.

A. selling agent

B. broker

C. manufacturer's representative

D. manufacturer's agent

E. administrator

132.Originally, filters for Mr. Coffee electric-drip coffee makers were sold through appliance and mass merchandise stores. If the company decided to sell the filters in grocery stores where customers purchased their coffee, what type of intermediaries would the company most likely hire?

A. a full-line wholesaler

B. drop shippers

C. truck jobbers

D. manufacturer's representatives

E. food brokers

133.A unique broker that acts in many ways like a manufacturer's agent is a food broker, representing buyers and sellers in the grocery industry. Food brokers differ from conventional brokers because they act on behalf of producers on a permanent basis and

A. receive a commission for their services.

B. are paid a flat fee for each time the shelves are stocked.

C. are paid by both the buyer and seller separately depending upon the size of the order.

D. are paid a commission by the buyer and a bonus by the seller.

E. are paid a flat fee by both the buyer and seller, but receive a bonus based upon the percentage of increased sales by quarter.

134.Wholly-owned extensions of the producer that perform wholesaling activities are referred to as

A. general merchandise wholesalers.

B. cash and carry wholesalers.

C. agents and brokers.

D. manufacturer's branches and sales offices.

E. merchant wholesalers.

135.Unlike merchant wholesalers, agents, and brokers, manufacturers' branches and sales offices are _________ that perform wholesaling activities.

A. independent distribution managers

B. independent intermediary channels

C. wholly-owned extensions of the producer

D. wholly-owned extensions of the distributor

E. wholly-owned extensions of the retailer

136.A manufacturer's branch office

A. performs a sales function as an option to agents and brokers.

B. works for several producers and carries noncompetitive, complementary merchandise in an exclusive territory.

C. takes title to merchandise but sells only to buyers who call on them, pays cash for merchandise, and furnishes their own transportation for the merchandise.

D. carries a producer's inventory and performs the functions of a full-service wholesaler.

E. brings buyers and sellers together to make sales.

137.A manufacturer's sales office

A. works for several producers and carries noncompetitive, complementary merchandise in an exclusive territory.

B. takes title to merchandise but sells only to buyers who call on them, pays cash for merchandise, and furnishes their own transportation for the merchandise.

C. carries a producer's inventory, performs the functions of a full-service wholesaler and is an alternative to a merchant wholesaler.

D. does not carry inventory, typically performs a sales function, and is an alternative to agents and brokers.

E. brings buyers and sellers together to make sales.

138.A channel intermediary that does not carry inventory, typically performs sales function, and is an alternative to agents and brokers is referred to as a _________.

A. brokering agent

B. cash and carry wholesalers

C. manufacturer's sales office

D. manufacturer's branch office

E. merchant wholesalers

139.Professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact are referred to as _________.

A. integrated marketing systems

B. horizontal marketing systems

C. vertical marketing systems

D. functional marketing systems

E. cooperative marketing systems

140.The term vertical marketing systems refers to

A. professionally managed geographically dispersed marketing channels designed to achieve channel economies and maximize marketing impact.

B. professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact.

C. retailer-sponsored cooperatives where small, independent retailers form an organization that operates a wholesale facility cooperatively.

D. professionally managed geographically dispersed marketing channels that are controlled through strategic channel alliances.

E. channel partnerships that share responsibility for ordering and physically distributing each other's goods.

141.Cessna is considered the volume leader for the executive-jet market. It has been described as "almost totally vertically integrated." This quote means that Cessna

A. does not fall under the jurisdiction of any federal regulatory agency.

B. has eliminated economies of scale.

C. has achieved a high level of social responsibility.

D. achieves, through ownership, greater control through coordination of production and distribution.

E. uses outsourcing for all component parts and materials.

142.The combination of successive stages of production and distribution under a single ownership is referred to as a(n) _________.

A. contractual vertical marketing system

B. corporate vertical marketing system

C. integrated marketing system

D. corporate horizontal marketing system

E. contractual horizontal marketing system

143.A corporate vertical marketing system refers to

A. small, independent retailers that form an organization that operates a wholesale facility cooperatively.

B. professionally managed geographically dispersed marketing channels that are controlled through strategic channel alliances.

C. the combination of successive stages of production and distribution under a single ownership.

D. professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact.

E. a contractual arrangement between a parent company and an individual or firm that allows the individual or firm to operate a certain type of business under an established name and according to specific rules.

144.The three major types of corporate vertical marketing systems are corporate, contractual, and _________.

A. integrated

B. administered

C. cooperative

D. delegated

E. manufacturer-dominated

145.The three major types of corporate vertical marketing systems are administered, corporate, and ____________.

A. integrated

B. cooperative

C. contractual

D. delegated

E. manufacturer-dominated

146.The Fox Entertainment Group counts among its assets a thriving TV production unit, a Hollywood movie studio, 33 TV stations, a half-dozen national cable networks, and 21 regional sports networks. Since most of the shows produced at its TV production unit and many of the movies made at its studio are only televised on its cable TV networks, Fox Entertainment Group is an example of a(n)

A. corporate vertical marketing system.

B. integrated marketing system.

C. contractual vertical marketing system.

D. corporate horizontal marketing system.

E. contractual horizontal marketing system.

147.When a producer owns an intermediary at the next level down in the marketing channel, it is referred to as _________.

A. forward integration

B. backward integration

C. vertical integration

D. lateral integration

E. horizontal integration

148.Forward integration refers to when

A. a producer owns an intermediary at the next level down in the marketing channel.

B. a retailer owns a manufacturing operation.

C. a wholesaler owns a manufacturing operation.

D. retailers form a strategic channel alliance with manufacturers to purchase goods at a better price since they are able to place much larger orders.

E. all links in the distribution chain own stock in the manufacturer's company.

149.Hart Schaffner & Marx is a producer of fine men's suits and sports coats that operates 100 menswear stores. Hart Schaffner & Marx uses _________.

A. dual distribution

B. forward integration

C. backward integration

D. horizontal integration

E. strategic channel alliances

150.When a retailer owns a manufacturing operation, it is referred to as

A. forward integration.

B. backward integration.

C. vertical integration.

D. a joint venture.

E. horizontal integration.

151.Which of the following statements regarding corporate vertical marketing systems is most accurate?

A. Successive stages of production and distribution are under a single ownership.

B. Corporate vertical marketing systems can use forward integration or backward integration but not both.

C. Corporate vertical marketing systems increase distribution costs.

D. Capital investment increases but fixed costs decrease.

E. Corporate vertical marketing systems are only effective with low-end consumer goods.

152.Which of the following statements regarding corporate vertical marketing systems is most accurate?

A. Successive stages of production and distribution are under shared ownership with all links in the marketing chain sharing title to the goods.

B. Corporate vertical marketing systems can incorporate both forward and backward integration.

C. Corporate vertical marketing systems increase distribution costs.

D. Capital investment increases but fixed costs decrease.

E. Corporate vertical marketing systems are only effective with low-end consumer goods.

153.Which of the following statements regarding corporate vertical marketing systems is most accurate?

A. Successive stages of production and distribution are under shared ownership with all links in the marketing chain sharing title to the goods.

B. Corporate vertical marketing systems can use forward integration or backward integration but not both.

C. Corporate vertical marketing systems reduce distribution costs.

D. Capital investment increases but fixed costs decrease.

E. Corporate vertical marketing systems are only effective with low-end consumer goods.

154.Which of the following statements regarding corporate vertical marketing systems is most accurate?

A. Successive stages of production and distribution are under shared ownership with all links in the marketing chain sharing title to the goods.

B. Corporate vertical marketing systems can use forward integration or backward integration but not both.

C. Corporate vertical marketing systems increase distribution costs.

D. Vertical marketing systems result in increased capital investments and fixed costs.

E. Corporate vertical marketing systems are only effective with low-end consumer goods.

155.A contractual vertical marketing system refers to

A. when privately owned distributors and retailers integrate their efforts, on a contractual basis, to obtain greater functional economies and marketing impact than they could achieve alone.

B. the integration of independent production and distribution firms, on a contractual basis, so their efforts to obtain greater functional economies and marketing impact are greater than they could achieve alone.

C. when a manufacturer offers a limited number of franchise licenses to restrict the number of franchisees within a given geographical region.

D. an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product.

E. the formal contractual designation of one channel member whether producer, wholesaler, or retailer, to coordinate, direct, and support all other members.

156.There are three variations of contractual systems: wholesaler-sponsored voluntary chains, retailersponsored voluntary chains, and _________.

A. franchising

B. service-oriented voluntary chains

C. channel-dominated voluntary chains

D. distributorship cooperatives

E. reseller franchising

157.There are three variations of contractual systems: wholesaler-sponsored voluntary chains, franchising, and _________.

A. service-oriented voluntary chains

B. channel-dominated voluntary chains

C. distributorship cooperatives

D. retailer-sponsored cooperatives

E. reseller franchising

158.There are three variations of contractual systems: retailer-sponsored voluntary chains, franchising, and _________.

A. service-oriented voluntary chains

B. channel-dominated voluntary chains

C. distributorship cooperatives

D. wholesaler-sponsored voluntary chains

E. reseller franchising

159.A vertical marketing system involves a contractual relationship between a wholesaler and small independent retailers to standardize and coordinate buying practices, merchandising programs, and inventory management efforts is referred to as a _________.

A. service-sponsored retail franchise system

B. retailer-sponsored cooperative

C. administered vertical marketing system

D. manufacturer-sponsored retail franchise system

E. wholesaler-sponsored voluntary chain

160.Ace Hardware is a national ___________ that allows its members, retailers of paint and hardware products, to concentrate their buying power through wholesalers and more importantly plan collaborative promotional and pricing activities.

A. service-sponsored retail system

B. retailer-sponsored cooperative

C. administered cooperative system

D. manufacturer-sponsored cooperative

E. wholesaler-sponsored voluntary chain

161.Which type of contractual vertical marketing system involves small independent retailers forming an organization that operates a wholesale facility cooperatively?

A. service-sponsored retail system

B. retailer-sponsored cooperative

C. administered cooperative system

D. manufacturer-sponsored cooperative

E. wholesaler-sponsored voluntary chain

162.Small independent retailers forming an organization that operates a wholesale facility cooperatively are referred to as a _________.

A. service-sponsored retail system

B. administered cooperative system

C. manufacturer-sponsored cooperative

D. retailer-sponsored cooperative

E. wholesaler-sponsored voluntary chain

163.A retailer-sponsored cooperative refers to

A. a vertical marketing system that involves a contractual relationship between a wholesaler and small independent retailers to standardize and coordinate buying practices, merchandising programs, and inventory management.

B. an agreement among small privately owned manufacturers to pool their resources by sharing installations, heavy equipment, and warehousing that they would be unable to afford on their own.

C. an agreement among retailers to pool their resources by purchasing services such as signage, snow removal, and trash removal that affects the physical space (mall, strip mall, main street, etc.) they all share.

D. small independent retailers forming an organization that operates a wholesale facility cooperatively. 

E. small independent retailers that pool their resources to purchase cooperative advertising.

164.Franchising refers to

A. a contractual agreement between multiple retailers sharing the same business mission to operate with a consistent business model to not only achieve enhanced buying power but also increase customer loyalty.

B. a contractual arrangement between a parent company (a franchisor) and an individual or firm (a franchisee) that allows the franchisee to operate a certain type of business under an established name and according to specific rules.

C. purchasing the name, branding, and raw materials from one organization and transferring it to another.

D. a practice whereby one firm's marketing channel is used to sell another firm's product.

E. selling an idea to a larger company and letting them do all the manufacturing, distribution, and marketing.

165.A contractual arrangement between a parent company and an individual or firm that allows the latter to operate a certain type of business under an established name and according to specific rules, is referred to as _________.

A. a corporate vertical marketing system

B. a wholesaler sponsored voluntary chain

C. a retailer sponsored cooperative

D. franchising

E. an administered vertical marketing system

166.Franchising is a form of _________.

A. corporate vertical marketing system

B. horizontal marketing system

C. contractual vertical marketing system

D. administered vertical marketing system

E. wholesaler-sponsored voluntary system

167.There are four popular types of franchising: (1) ___________; (2) manufacturer-sponsored wholesale systems; (3) service-sponsored retail franchise systems; and (4) service-sponsored franchise systems.

A. contractual-sponsored franchise systems

B. wholesaler-sponsored franchise systems

C. horizontal-marketing franchise systems

D. manufacturer-sponsored retail franchise systems

E. customer-oriented franchise systems

168.There are four popular types of franchising: (1) manufacturer-sponsored retail franchise systems, (2) manufacturer-sponsored wholesale systems; (3) service-sponsored franchise systems; and (4) _________.

A. service-sponsored retail franchise systems

B. wholesaler-sponsored franchise systems

C. horizontal-marketing franchise systems

D. contractual-sponsored franchise systems

E. customer-oriented franchise systems

169.The four types of franchise arrangements that are most popular are

A. service-sponsored franchise systems, service-sponsored retail franchise systems, manufacturersponsored wholesale systems, and manufacturer-sponsored retail franchise systems.

B. service-sponsored retail franchise systems, corporate vertical marketing systems, wholesaler-sponsored voluntary chains, and service-sponsored franchise systems.

C. manufacturer-sponsored wholesale systems, service-sponsored retail franchise systems, corporate vertical marketing systems, and wholesaler-sponsored voluntary chains.

D. manufacturer-sponsored retail franchise systems, service-sponsored retail franchise systems, corporate vertical marketing systems, and wholesaler-sponsored voluntary chains.

E. administered vertical marketing systems, service-sponsored retail franchise systems, corporate vertical marketing systems, and wholesaler-sponsored voluntary chains.

170.There are four popular types of franchising (1) manufacturer-sponsored franchise systems, (2) servicesponsored retail franchise systems, (3) service-sponsored franchise systems, and (4) _________.

A. wholesaler-sponsored franchise systems

B. horizontal-marketing franchise systems

C. contractual-sponsored franchise systems

D. customer-oriented franchise systems

E. manufacturer-sponsored retail systems

171.Jacob has developed a lawn care service that will revolutionize the lawn care industry. Jacob, however, has limited operating capital and yet, still wants a wide distribution of his new product. Which of the following options would be the best choice for Jacob?

A. He should develop an administered vertical marketing system.

B. He should establish a corporate vertical marketing system.

C. He should open up branch offices around the country to provide the exposure he needs.

D. He should establish a wholesaler-sponsored voluntary chain.

E. He should establish a service-sponsored retail franchise system.

172.In the automobile industry, many companies use a __________ where a manufacturer licenses dealers to sell its cars subject to various sales and service conditions.

A. service-sponsored producer franchise system

B. service-sponsored retail franchise system

C. manufacturer-sponsored wholesale system

D. manufacturer-sponsored retail franchise system

E. administered vertical marketing system

173.The __________ is common in the soft drink industry where the manufacturer sells its concentrate to wholesalers, who carbonate it, and market the finished product to retailers.

A. service-sponsored franchise system

B. service-sponsored retail franchise system

C. manufacturer-sponsored wholesale system

D. manufacturer-sponsored retail franchise system

E. administered vertical marketing system

174.The type of vertical marketing system that achieves coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership is referred to as a _________.

A. corporate vertical marketing system

B. integrated vertical marketing system

C. contractual vertical marketing system

D. administered vertical marketing system

E. interactive vertical marketing system

175.An administered vertical marketing system refers to a marketing system

A. that achieves coordination at successive stages of production and distribution by contractual agreements between channel members.

B. that achieves coordination at successive stages of production and distribution cooperation and consensus among all members of the marketing chain.

C. that achieves coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership.

D. whereby a channel member (producer, wholesaler, or retailer) is elected to coordinate, direct, and support all other channel members.

E. that is run and coordinated completely outside the traditional chain of distribution by a firm that specializes in that industry's specific logistics needs.

176.Which of the following statements describes the difference between a corporate vertical marketing system and an administered vertical marketing system?

A. Administered vertical marketing systems gain power through ownership while vertical marketing systems gain power through contractual agreement.

B. Administered vertical marketing systems gain power through size and influence of one channel member and through ownership.

C. Administered vertical marketing systems achieve coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership.

D. Administered vertical marketing systems gain power through contractual agreements and ownership.

E. Administered vertical marketing systems are usually larger and more profitable than corporate vertical marketing systems.

177.Procter & Gamble can obtain cooperation from supermarkets in terms of displaying, promoting, and pricing its products, given its broad assortment of brand-name products. Which type of vertical marketing system does Procter & Gamble represent?

A. corporate vertical marketing system

B. integrated vertical marketing system

C. contractual vertical marketing system

D. administered vertical marketing system

E. forward integration vertical marketing system

178.A new company produces paint and other home decorating products. Its goal is to choose the best marketing channel arrangement system that would give it the most control. Which marketing channel arrangement system should this company choose?

A. a contractual vertical marketing system

B. an administered vertical marketing system

C. a corporate vertical marketing system

D. an integrated marketing system

E. a corporate horizontal marketing system

179.What type of distribution system consists of agreements and procedures among channel members for ordering and physically distributing a producer's products through the channel to the ultimate consumer?

A. distribution pipeline

B. channel partnership

C. selling agency

D. strategic channel alliance

E. allocation channel

180.Agreements and procedures among channel members for ordering and physically distributing a producer's products through the channel to the ultimate consumer are referred to as a _________.

A. distribution pipeline

B. channel partnership

C. selling agency

D. strategic channel alliance

E. allocation channel

181.A channel partnerships refers to

A. an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product.

B. a contractual arrangement between a privately-owned and a publicly-owned firm to provide the best service or product for consumers.

C. a distribution system that consists of agreements and procedures among channel members for ordering and physically distributing a producer's products through the channel to the ultimate consumer channel partnership.

D. the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online.

E. a multi-faceted channel arrangement that allows one channel member to take over the responsibilities of another when consumer demand either exceeds or falls below forecasts.

182.Four main factors affect channel choice: environmental, consumer, product, and company. Which of the following would represent a consumer factor?

A. Tupperware started selling its products through not only home parties, but also online Web sites and mall kiosks in response to more women in the workforce.

B. Fila, a higher-end activewear apparel manufacturer that sold its product line through specialty athletic stores and pro shops, realized that it needed to broaden its market coverage. It signed a distribution agreement with Kohl's department stores for a line of moderately-priced activewear bearing the Fila brand.

C. While it would seem that the fax machine would be entering the decline stage of its product life cycle,

this is not the case since there are still benefits that fax machines provide that e-mail does not.

D. Nike withdrew its Starter line of athletic shoes and apparel from Walmart after the company decided it was "a business that did not play to Nike's strengths."

E. CookieMonster Cookie Company created an entire line of gourmet vegan cupcakes to capture another segment of the vegetarian market.

183.Four main factors affect channel choice: environmental, consumer, product, and company. Which of the following would represent a product factor?

A. Tupperware started selling its products through not only home parties, but also online Web sites and mall kiosks in response to more women in the workforce.

B. Fila, a higher-end activewear apparel manufacturer that sold its product line through specialty athletic stores and pro shops, realized that it needed to broaden its market coverage. It signed a distribution agreement with Kohl's department stores for a line of moderately-priced activewear bearing the Fila brand.

C. While it would seem that the fax machine would be entering the decline stage of its product life cycle, this is not the case since there are still benefits that fax machines provide that e-mail does not.

D. Nike withdrew its Starter line of athletic shoes and apparel from Walmart after the company decided it was "a business that did not play to Nike's strengths."

E. CookieMonster Cookie Company created an entire line of gourmet vegan cupcakes to capture another segment of the vegetarian market.

184.Four main factors affect channel choice: environmental, consumer, product, and company. Which of the following would represent a company factor?

A. Tupperware started selling its products through not only home parties, but also online Web sites and mall kiosks in response to more women in the workforce.

B. Fila, a higher-end activewear apparel manufacturer that sold its product line through specialty athletic stores and pro shops, realized that it needed to broaden its market coverage. It signed a distribution agreement with Kohl's department stores for a line of moderately-priced activewear bearing the Fila brand.

C. While it would seem that the fax machine would be entering the decline stage of its product life cycle, this is not the case since there are still benefits that fax machines provide that e-mail does not.

D. Nike withdrew its Starter line of athletic shoes and apparel from Walmart after the company decided it was "a business that did not play to Nike's strengths."

E. CookieMonster Cookie Company created an entire line of gourmet vegan cupcakes to capture another segment of the vegetarian market.

185.What was Avon's response in 1998 when China banned all forms of direct selling?

A.Avon withdrew from the Chinese market and redirected its efforts to India, Thailand, Japan, and South Korea.

B. Avon dropped out of the Asian market entirely and redirected its efforts to Eastern Europe.

C. Avon created an extensive on-line network to sell its products completely through its Web site.

D. Avon established a retail distribution network throughout China.

E.Avon actively petitioned the government and after seven years, it won the right to use direct selling once again.

186.When choosing a marketing channel or intermediary, it is important to ask three key questions: (1) Which channel and intermediaries will provide the best coverage of the target market? (2) Which channel and intermediaries will best satisfy the buying requirements of the target market? and (3)

A. How many of the firm's competitors will be using the same channels?

B. Which channels have strategic channel alliances with other resellers?

C. Which channel and intermediaries will be the most profitable?

D. How long have the channel members and intermediaries been in business?

E. Who is responsible for negotiating the channel or intermediary contracts?

187.In terms of target market coverage, density refers to the number of __________ in a geographical area.

A. target market customers

B. competitors

C. wholesalers

D. retail stores

E. the number of stakeholders

188.The three degrees of distribution density are

A. intensive, extensive, and selective.

B. extensive, concentrated, and selective.

C. intensive, exclusive, and selective.

D. extensive, pervasive, and concentrated.

E. concentrated, exclusive, and intensive.

189.The density of distribution whereby a firm tries to place its products or services in as many outlets as possible is referred to as_________.

A. intensive distribution

B. extensive distribution

C. selective distribution

D. exclusive distribution

E. concentrated distribution

190.Intensive distribution refers to

A. the distribution of products or services in markets where there are currently no other competitors.

B. the distribution of products or services where the producer owns the entire channel of distribution.

C. the density of distribution whereby a firm tries to place its products or services with only one retail outlet in a specified geographical area.

D. the density of distribution whereby a firm tries to place its products or services in as many outlets as possible.

E. the density of distribution whereby a firm tries to place its products or services in a few retail outlets in a specific area.

191.Candy bars should most likely be sold using which type of target market coverage?

A. exclusive distribution

B. direct distribution

C. intensive distribution

D. dual distribution

E. selective distribution

192.Breath mints, bottled water, and nail clippers would most likely use which type of distribution density?

A. intensive distribution

B. extensive distribution

C. selective distribution

D. exclusive distribution

E. concentrated distribution

193.A level of distribution density whereby only one retailer in a geographical area carries the firm's products is referred to as _________.

A. intensive distribution

B. extensive distribution

C. selective distribution

D. exclusive distribution

E. concentrated distribution

194.The density of distribution whereby a firm tries to place its products or services with only one retail outlet in a specified geographical area is referred to as __________ distribution.

A. intensive

B. extensive

C. selective

D. exclusive

E. concentrated

195.Exclusive distribution refers to

A. the distribution of products or services in markets where there are currently no other competitors.

B. the distribution of products or services where the producer owns the entire channel of distribution.

C. the density of distribution whereby a firm tries to place its products or services in as many outlets as possible.

D. the density of distribution whereby a firm tries to place its products or services with only one retail outlet in a specified geographical area.

E. the density of distribution whereby a firm tries to place its products or services in a few retail outlets in a specific area.

196.John Deere manufactures and distributes industrial and farm equipment. These types of equipment are considered to be specialty products. Which type of market coverage does John Deere likely use?

A. intensive distribution

B. extensive distribution

C. selective distribution

D. exclusive distribution

E. concentrated distribution

197.Which type of distribution density does Rolls Royce use when the car manufacturer maintains only one dealership in any large metropolitan area?

A. intensive distribution

B. extensive distribution

C. selective distribution

D. exclusive distribution

E. private label distribution

198.For which of the following products would the manufacturer be most likely to use exclusive distribution?

A. Timex watches, Hanes underwear, and Nike shoes

B. Chanel perfume, Steinway pianos, and Baccarat crystal

C. Oreos, Teddy Grahams, and NillaWafers

D. Paper clips, light bulbs, and file folders

E. Lean Cuisine meals, Breyer's Ice Cream, and Coca-Cola

199.A level of distribution density whereby a firm tries to place its products in a few retail outlets in a specific geographical area is referred to as _________.

A. intensive distribution

B. extensive distribution

C. selective distribution

D. exclusive distribution

E. concentrated distribution

200.The density of distribution whereby a firm tries to place its products in a few retail outlets in a specific geographical area is referred to as __________ distribution.

A. intensive

B. extensive

C. selective

D. exclusive

E. concentrated

201.Selective distribution refers to

A. the density of distribution whereby a firm tries to place its products or services in as many outlets as possible.

B. the distribution of products or services in markets where there are currently no other competitors.

C. the distribution of products or services where the producer owns the entire channel of distribution.

D. the density of distribution whereby a firm tries to place its products or services with only one retail outlet in a specified geographical area.

E. the density of distribution whereby a firm tries to place its products or services in a few retail outlets in a specific area. 

202.The target market coverage and distribution intensity associated with shopping products such as electronics, clothing, and costume jewelry is referred to as _________.

A. intensive distribution

B. exclusive distribution

C. selective distribution

D. extensive distribution

E. concentrated distribution

203.Which type of market coverage is usually associated with shopping products?

A. intensive distribution

B. extensive distribution

C. selective distribution

D. exclusive distribution

E. concentrated distribution

204.Which type of distribution lies between the two distribution extremes and means that a firm selects a few retail outlets in a specific geographical area to carry its products?

A. intensive distribution

B. extensive distribution

C. selective distribution

D. exclusive distribution

E. concentrated distribution

205.Which is the most common intensity of distribution used today?

A. intensive distribution

B. extensive distribution

C. selective distribution

D. exclusive distribution

E. concentrated distribution

206.The four major considerations for satisfying buyer requirements when designing distribution channels include: (1) information; (2) convenience; (3) variety; and (4) ____________.

A. availability

B. quality

C. pre- or post-sale services

D. brand name recognition

E. price

207.The four major considerations for satisfying buyer requirements when designing distribution channels include: (1) information; (2) convenience; (3) pre- or post-sale services; and (4)

A. availability.

B. quality.

C. variety.

D. brand name recognition.

E. adaptability.

208.The four major considerations for satisfying buyer requirements when designing distribution channels include: (1) convenience; (2) variety; (3) pre- or post-sale services; and (4) __________.

A. profitability

B. information

C. quality

D. brand name recognition

E. availability

209.Channels are typically designed to satisfy one or more of four consumer buying requirements. When a membership book club allows its members to use the Internet to notify the company whether they want to receive the next month's issue, the book club is appealing to which buyer requirement?

A. information

B. convenience

C. variety

D. pre- or post-sale services

E. adaptability

210.The most important requirement when buyers have limited knowledge or desire specific data about a product or service is _________.

A. post-sale services

B. seller adaptability

C. information

D. convenience

E. pre-sale services

211.Driving time, proximity, hours of operation, and the usability of a Web site are all examples of which buyer requirement?

A. information

B. convenience

C. variety

D. pre- or post-sale services

E. adaptability

212.Buyers are interested in having numerous competing and complementary items from which to choose. The buyer requirement for __________ is satisfied through the breadth and depth of products and brands that intermediaries carry.

A. information

B. convenience

C. variety

D. pre- or post-sale services

E. adaptability

213.Items such as large household appliances that require installation and delivery demonstrate the buyer requirements of _________.

A. information

B. convenience

C. variety

D. pre- or post-sale services

E. adaptability

214.Which buyer requirement would be most important in choosing a channel for a financial service for a consumer who is interested in setting up a retirement account?

A. information

B. context

C. variety

D. pre- and post-sale services

E. adaptation

215.The third consideration in choosing a channel is profitability, which is determined by the margins earned for each channel member and for the channel as a whole. Based on this information, which of the following statements would be most accurate?

A. The more responsibilities a channel member takes in terms of distribution, advertising, and selling expenses, the greater the potential for manufacturer profitability.

B. The more responsibilities the manufacturer assumes relative to its channel members, the greater the potential for profitability.

C. The extent to which channel members share costs determines the margins received by each member and by the channel as a whole.

D. While channel members can increase profitability by taking on distribution and selling expenses, advertising expenses should always remain with the manufacturer if a firm is looking for the greatest profitability.

E. Profitability is not related to the length or nature of the distribution chain by determined by the manufacturer.

216.All of the following are buyer requirements for choosing a marketing channel EXCEPT:

A. pre- or post-sale services.

B. convenience.

C. variety.

D. profitability.

E. information.

217.Which of the channels shown in Figure 15-2 above represents the most sales for a particular furniture manufacturer?

A. furniture store chains

B. independent furniture stores

C. department store chains

D. mass merchandisers

E. none of the above

218.Which of the channels shown for a particular furniture manufacturer in Figure 15-2 above represents the least profit to the manufacturer?

A. furniture store chains

B. independent furniture stores

C. department store chains

D. mass merchandisers

E. none of the above

219.Based on the information presented in Figure 15-2 above, which channel of distribution would the furniture manufacturer most likely consider dropping?

A. furniture store chains

B. independent furniture stores

C. department store chains

D. none of the above

E. Not enough information is given in the dashboard to make this determination.

220.Keiretsu refers to

A. a full-line wholesaler in South Korea.

B. a direct producer-customer channel in Japan.

C. selling agents and brokers in Japan.

D. vertical integration as well as a social and economic bond between producers and intermediaries in Japan.

E. vertical integration and a social and economic bond between producers and intermediaries in Taiwan.

221.The dominant member of a keiretsu is typically the _________.

A. customer

B. retailer

C. wholesaler

D. government regulator

E. producer

222.When one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals, it is referred to as _________.

A. distributor dissension

B. marketing channel discord

C. partnership divergence

D. channel conflict

E. channel dissonance

223.Channel conflict refers to

A. disagreements over the trade discounts allotted to each level of the distribution chain by the Federal Trade Commission.

B. regulatory restrictions limiting the number of distributors that can sell a producer's products.

C. when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals.

D. when one distributor carries two competing brands.

E. when the producer doesn't allow other channel members to have input regarding product specifications or benefits.

224.The two types of channel conflict are

A. wholesaler and retailer.

B. horizontal and vertical.

C. transactional and promotional.

D. external and internal.

E. producer and consumer.

225.Conflict that occurs between two different levels in a marketing channel is referred to as

A. lateral conflict.

B. horizontal conflict.

C. vertical conflict.

D. distributor conflict.

E. contractual conflict.

226.Vertical conflict refers to conflict that occurs between

A. two members in the same level of a marketing channel.

B. two different levels in a marketing channel.

C. members of upper management who make the marketing channel decisions and lower management who must implement these decisions.

D. a firm's and its customers' goals.

E. two producers of the same product vying for the same distribution channel members.

227.Which of the following would be a source of vertical conflict?

A. Foot Locker decides to open a retail outlet next to a Nike store in a shopping mall.

B. A restaurant serves both Coke and Pepsi to its patrons.

C. Ansible Technologies Ltd. sells its portable planetariums to both colleges and high schools.

D. Microsoft provides HP Windows-based PCs more prominent point-of-purchase locations in its retail stores than comparable PCs from Dell.

E. Long John Silver's decides to serve grilled burgers in addition to seafood.

228.Channel conflict that arises when member bypasses another member and sells or buys product direct, it is referred to as _________.

A. horizontal conflict

B. channel circumvention

C. lateral conflict

D. disintermediation

E. dual distribution

229.Disintermediation refers to channel conflict that arises when

A. a channel member severs relationships with other channel members to work for or with a competing manufacturer.

B. channel conflicts are resolved by a third party.

C. a channel member bypasses another member and sells or buys product direct.

D. channel conflicts that are resolved through a binding arbitration from a panel of representatives from all channel members involved.

E. a situation where the entire distribution chain is eliminated such as when a company sets up its own wholesaler and retailer network.

230.While Maytag appliances have the leading brand name, its sales are third in the industry. One of the things the company has done to spur sales is to create a Web site where potential customers can find the answers to the questions they ask during the appliance purchase process. While Maytag considered using a ___________ strategy, which directs customers to Maytag appliance stores it owed, the firm decided against it and simply provides the names and addresses of all the retailers (Sears, Home Depot, etc.) that carry Maytag appliances.

A. horizontal channel strategy

B. strategic channel alliance

C. dual distribution

D. cross-docking

E. disintermediation

231.Conflict occurring between intermediaries at the same level in a marketing channel, such as between two or more retailers, is referred to as ____________.

A. corporate conflict

B. vertical conflict

C. horizontal conflict

D. lateral conflict

E. contractual conflict

232.Horizontal conflict refers to conflict that occurs between

A. two different levels in a marketing channel.

B. members of upper management who make the marketing channel decisions and lower management who must implement these decisions.

C. two producers of the same product vying for the same distribution channel members.

D. two members in the same level of a marketing channel.

E. a firm's and its customers' goals.

233.All the following sources produce channel conflict EXCEPT:

A. dual distribution

B. horizontal

C. disintermediation

D. vertical

E. channel captain

234.A channel member (producer, wholesaler, or retailer) who coordinates, directs, and supports other channel members is referred to as a _________.

A. product champion

B. channel general

C. channel captain

D. channel director

E. channel coordinator

235.A channel captain refers to

A. a member of a distribution channel that takes control through hegemony (power is not assigned, but assumed).

B. a channel member (producer, wholesaler, or retailer) who coordinates, directs, and supports other channel members.

C. a channel team member known for his or her expertise in cutting through red tape.

D. a person responsible for implementing a firm's mission statement linking all members of the marketing channel through a common goal.

E. the person with greatest authority who represents his or her channel in the distribution chain.

236.Bombardier is the leading marketer of corporate jets. Its brand name is well known and respected in the corporate jet market. The aircraft company relies on outside suppliers for design support and to share development costs and market risks but Bombardier is considered the leader in determining design and marketing of its planes. For its newest plane, Bombardier has about 30 prime suppliers—about ten of those have been involved since the initial design phase. Bombardier is an example of a _________.

A. product champion

B. channel general

C. channel captain

D. channel director

E. channel coordinator

237.A firm can become a channel captain because it is typically the channel member with the ability to influence the behavior of other members. Influence can take four forms, one of which is:

A. stakeholder position.

B. familial ties to other channel members.

C. longevity in the industry.

D. identification with a particular channel member.

E. geographic proximity to the manufacturing plant.

238.A firm can become a channel captain because it is typically the channel member with the ability to influence the behavior of other members. Influence can take four forms, one of which is:

A. stakeholder position.

B. familial ties to other channel members.

C. expertise.

D. longevity in the industry.

E. geographic proximity to the manufacturing plant.

239.A firm can become a channel captain because it is typically the channel member with the ability to influence the behavior of other members. Influence can take four forms, one of which is:

A. stakeholder position.

B. economic influence.

C. familial ties to other channel members.

D. longevity in the industry.

E. geographic proximity to the manufacturing plant.

240.Sports Port, a motorcycle and fishing boat retailer located in a small northern Minnesota town, was the world's largest dealer for Crestliner fishing boats. In order to meet the demand of his many customers, the owner of Sports Port worked with a wide variety of channel members, ranging from the manufacturer of the boats to trucking firms, other retailers, and even detailers. Such a diverse channel of distribution often resulted in channel conflict. However, due to his strong consumer following, the owner of Sports Port had the power to resolve disputes between channel members. The owner of Sports Port served as the __________ in the channel of distribution.

A. wholesaler

B. producer

C. channel captain

D. channel spokesperson

E. channel arbitrator

241.Walmart is a channel captain because of their strong image, number of outlets, and purchasing volume. The source of Walmart's power is its

A. economic influence.

B. expertise.

C. identification with a particular channel member.

D. legitimate rights through contracts.

E. political connections.

242.American Hospital Supply helps its customers (hospitals) manage inventory and streamline order processing for hundreds of medical supplies. The source of American Hospital Supply's power is its

A. economic influence.

B. expertise.

C. identification with a particular channel member.

D. legitimate rights through contracts.

E. governmental contracts.

243.Neiman-Marcus is a retailer that many small manufacturers would like to be associated with. A product placement in Neiman-Marcus will increase the prestige of a smaller brand. The source of Neiman- Marcus' power is its

A. economic influence.

B. expertise.

C. sought-after identification for a particular channel member.

D. legitimate rights through contracts.

E. longevity as an upscale retailer.

244.The payments supermarkets receive in the form of money or free goods in exchange for shelf space to display and stock products of producers are referred to as _________.

A. bribes

B. exclusive dealing fees

C. tying arrangements

D. slotting allowances

E. extortion

245.The __________ and the Justice Department monitor channel practices that restrain competition, create monopolies, or otherwise represent unfair methods of competition under the provisions of the Clayton Act or the Sherman Act.

A. Consumer Product Safety Commission

B. Better Business Bureau

C. Federal Trade Commission

D. American Marketing Association

E. Department of Commerce

246.The Federal Trade Commission and the Justice Department monitor channel practices that _________, create monopolies, or otherwise represent unfair methods of competition under the Sherman Act (1890) and the Clayton Act (1914).

A. suggest patent infringement

B. restrain competition

C. connect channel members

D. use coercive or suggestive advertising

E. manipulate public opinion

247.When developing a distribution strategy, marketers should avoid the anticompetitive attempts of eliminating wholesalers or retailers if they want to avoid the possibility of violating the __________ provisions of the Clayton Act or the Sherman Act.

A. resale restrictions

B. dual distribution

C. tying arrangements

D. exclusive dealing

E. refusal to deal

248.The __________ specifically prohibits exclusive dealing and tying arrangements when they lessen competition or create monopolies.

A. Sherman Act

B. Robinson-Patman Act

C. Federal Trade Commission Act

D. Clayton Act

E. Consumer Goods Pricing Act

249.The __________ has been used to prosecute resale restrictions, which are a supplier's attempt to stipulate to whom distributors may resell the supplier's products and in what specific geographical areas or territories they may be sold.

A. Sherman Act

B. Robinson-Patman Act

C. Federal Trade Commission Act

D. Clayton Act

E. Consumer Goods Pricing Act

250.The Clayton Act prohibits, restricts, or influences all of the following channel strategies and practices EXCEPT:

A. exclusive dealing

B. refusal to deal

C. resale restrictions

D. vertical integration

E. full-line forcing

251.Producers can find it difficult to use dual distribution because

A. it is the most expensive marketing channel.

B. it provides limited market coverage.

C. it can cause conflict between channel members.

D. the channels are usually corporate owned.

E. tying arrangements are illegal.

252.Dual distribution is considered illegal if

A. both channels are corporately owned.

B. one channel is a direct channel and the other is not.

C. there is an attempt to lessen competition by eliminating wholesalers or retailers.

D. channels are operated from two different states.

E. the prices charged consumers differ as a result of the channel in which they were making their purchases.

253.Dual distribution can violate the Sherman Act and the Clayton Act if the

A. prices charged for items sold through one channel are different from the prices charged for the same items in another channel.

B. manufacturer has a corporate vertical marketing system with one channel and an administered vertical system with the other.

C. manufacturer's behavior is viewed as lessening competition by eliminating wholesalers or retailers.

D. manufacturer uses both a direct and indirect marketing channel.

E. product is not available through more than one marketing channel.

254.Vertical integration can lead to legal prosecution if

A. mergers create too much competition.

B. a corporate vertical system attempts to become a contractual vertical marketing system.

C. an administered vertical system attempts to become a corporate vertical marketing system.

D. there is potential to lessen competition or create a monopoly.

E. one member of the channel attempts to take the position of channel captain away from another.

255.Questions of legality regarding tying arrangements and exclusive dealing would most likely occur in

A. corporate vertical marketing systems.

B. administered vertical marketing systems.

C. franchises.

D. horizontal marketing systems.

E. retail-sponsored cooperatives.

256.Under the Clayton Act, __________ with existing channel members may be illegal.

A. refusal to cooperate

B. refusal to deal

C. sharing proprietary information

D. horizontal integration

E. disintermediation

257.Some manufacturers have tried to use the brand loyalty of their consumers to force retailers to carry manufacturers' products and none from their competitors. These manufacturers were trying to force retailers to participate in a practice known as a(n)

A. resale restriction.

B. vertical integration.

C. exclusive dealing.

D. refusal to deal.

E. tying arrangement.

258.A tying arrangement refers to when a supplier requires

A. a distributor purchasing some products to buy others from the supplier.

B. channel members to sell only its products or restricts distributors from selling directly competitive products.

C. to whom distributors may resell the supplier's products and in what specific geographical areas or territories they may sell.

D. a channel member to sell only its products.

E. a channel member to finance all loans through the seller's bank.

259.A fast-food franchisee is required by its franchisor to buy unmarked plastic eating utensils from the franchisor if the franchisee wants to use the cups, napkins, and other paper products with the franchise logo. The franchisee can buy the identical utensils from a local supplier for half the price. This requirement would be an example of a(n)

A. dual distribution network.

B. refusal to deal.

C. exclusive dealing.

D. tying arrangement.

E. resale restriction.

260.A(n) __________ is a supplier's attempt to stipulate to whom distributors may resell the supplier's products and in what specific geographical areas or territories they may sell.

A. resale restriction

B. oligopolistic practice

C. monopolistic practice

D. refusal to deal

E. tying arrangement

261.A supplier's attempt to stipulate to whom distributors may resell the supplier's products and in what specific geographical areas or territories they may sell is referred to as _________.

A. full-line forcing

B. exclusive dealing

C. refusal to deal

D. resale restriction

E. tying arrangement

262.Resale restrictions refer to when a supplier

A. requires a channel member to sell only its products.

B. requires a channel member to finance all loans through the seller's bank.

C. requires to whom distributors may resell the supplier's products and in what specific geographical areas or territories they may sell.

D. attempts to sell used or pre-owned products as new.

E. attempts to sell used products that have expired or will soon become obsolete without informing the buyer.

263.Golden Valley Microwave Foods uses __________ to get their products to consumers.

A. corporate vertical marketing systems

B. franchising

C. exclusive distribution

D. dual distribution

E. transporting, storing, and financing

264.Originally, ACT II was a privately owned company. In order to expand its business, it entered a licensing agreement to share its __________ with one of the largest food manufacturers in the industry.

A. trade name

B. technology

C. channel connections

D. secret recipe

E. warehouses

265.Originally, ACT II was a privately owned company. In order to expand its business it entered a licensing agreement with one of the largest food manufacturers in the industry. The licensing partner would sell the popcorn under its own brand name in grocery stores and supermarkets. In turn, ACT II agreed it would not

A. sell its popcorn to any other supermarkets.

B. sell its popcorn to any other channel outlets.

C. use the ACT II name for ten years.

D. distribute its ACT II brand in global markets for 10 years.

E. distribute its ACT II brand in U.S. grocery stores or supermarkets for 10 years.

266.ACT II successfully distributed its products, for ten years, through non-supermarket channels such as Blockbuster, Walgreen's, Circle K, Costco, etc. However, its greatest success came from marketing through _________.

A. mass merchandisers

B. movie theaters

C. video rental stores

D. global distributors

E. vending machines

267.For most consumers, popcorn is considered a convenience product. Therefore, Golden Valley should use __________ distribution for its ACT II popcorn.

A. intensive

B. extensive

C. selective

D. exclusive

E. concentrated

 

1. It makes no sense to have brilliant marketing programs to sell world-class products if the products aren't available at the right time, at the right place, and in the right form and condition that customers want them. Apple excelled at this by having

A. enough money to buy Microsoft.

B. a finely tuned global supply chain.

C. copy cat, "me too" technology.

D. fickle consumers.

E. customers in developing countries only.

2. Those activities that focus on getting the right amount of the right product to the right place at the right time at the lowest possible cost are referred to as

A. strategic distribution.

B. distribution management.

C. tactical marketing planning.

D. value chain optimization.

E. logistics.

3. Logistics refers to

A. an inventory management system where the supplier determines the product amount and assortment a retailer needs and automatically delivers the appropriate items.

B. mathematical formulas and calculations used in determining product volume and demand in order to generate the greatest revenue at the lowest cost.

C. the sequence of firms that perform activities required to create and deliver a product or service to ultimate consumers or industrial users.

D. activities that focus on getting the right amount of the right product to the right place at the right time at the lowest possible cost distribution management.

E. a specialized intermediary in the distribution chain responsible for the coordination of all production schedules.

4. A marketing channel relies on __________ to make products available to consumers and industrial users.

A. strategic distribution

B. strategic marketing planning

C. logistics

D. supply chains

E. value chain optimization

5. Logistics is most closely related to which element of the marketing mix?

A. product

B. production

C. place (distribution)

D. promotion

E. price

6. Johnson Controls can receive an order for automobile seats from Ford and deliver the order four hours later, beginning with raw materials and ending with delivery of the finished seats to Ford. As used by Johnson Controls, logistics

A. creates utilities for Ford.

B. increases Ford's inventory.

C. increases the number of steps in the value proposition.

D. includes the role of Johnson controls as a drop shipper.

E. does not influence Ford's supply chain.

7. Reductions in delivery times both in the marketplace and the supply chain have earned firms such as Toyota and Xerox a reputation as "time-based competitors." For Toyota and Xerox, logistics, logistics

A. increases their customers' inventory.

B. increases the number of steps in the manufacturing process.

C. includes the role of Toyota and Xerox as a drop shipper.

D. creates time and place utility for their customers.

E. does not influence their suppliers' supply chain.

8. Five years ago, Benetton delivered new styles to its worldwide stores once a month. Today, it replenishes its racks once a week. Getting the fashions to its stores more quickly means that effectively using logistics has increased Benetton's market share by providing

A. time and place utility for its customers.

B. larger lots of available inventory for the retailer.

C. increased steps in the value proposition.

D. technological advances leading to greater customer information.

E. increased customer traffic.

9. The practice of organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements is referred to as _________.

A. marketing channel oversight

B. logistics management

C. production management

D. manufacturer distribution logistics

E. supply-chain management

10. Logistics management refers to

A. the practice of organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements.

B. the integration and organization of information and logistics activities across firms in a supply chain for the purpose of creating and delivering products and services that provide value to ultimate consumers.

C. the integration and organization of information and logistical activities that actively brings consumers together with sellers through the express use of agents and brokers.

D. systems that are designed to reduce a retailer's lead time for receiving merchandise, which then lowers a retailer's inventory investment, improves customer service levels, and reduces logistics expense.

E. proprietary computer and telecommunication technologies to exchange electronic invoices, payments, and information among suppliers, manufacturers, and retailers.

11. The word flow as it relates to the definition of logistics management refers to decisions needed to move

A. raw materials to the producer.

B. semi-finished materials to a merchant wholesaler.

C. finished products to the distributor.

D. finished products directly from the producer to the retailer.

E. a product from the source of raw materials to consumption.

12. The word cost-effective as it relates to the definition of logistics management implies

A. while it is important to drive down logistics costs, customer requirements must be a part of the equation. 

B. while it is important to drive down logistics costs, all channel members must equally benefit financially or the chain will not function effectively.

C. speed of delivery must be measured against increased savings.

D. the need for multiple carriers always results in lower profit margins and therefore should be avoided.

E. the choice of intermediaries should be made on their ability to perform their tasks efficiently even if additional costs must be passed on to the consumer.

13. A firm needs to drive down logistics costs as long as it can deliver expected _________.

A. balance sheet results

B. customer service

C. low levels of expenses

D. product-market synergies

E. target market goals

14. The sequence of firms that perform activities required to create and deliver a product or service to ultimate consumers or industrial users is referred to as

A. strategic distribution.

B. distribution management.

C. a supply chain.

D. value chain optimization.

E. logistics.

15. A supply chain refers to

A. an inventory management system where the supplier determines the product amount and assortment a retailer needs and automatically delivers the appropriate items.

B. mathematical formulas and calculations used in determining product volume and demand in order to generate the greatest revenue at the lowest cost.

C. the sequence of firms that perform activities required to create and deliver a product or service to ultimate consumers or industrial users.

D. activities that focus on getting the right amount of the right product to the right place at the right time at the lowest possible cost distribution management.

E. a specialized intermediary in the distribution chain responsible for the coordination of all production schedules.

16. Which of the following statements best describes how a supply chain differs from a marketing channel?

A. Communication is more important in the marketing channel than in the supply chain.

B. The marketing channel places more emphasis on cost-effectiveness than the supply chain.

C. A marketing channel includes suppliers that provide raw material inputs to a manufacturer.

D. A supply chain includes suppliers; marketing channels do not.

E. A supply network moves materials from producer to consumer while a marketing channel moves materials from the supplier to the producer.

17. Customers currently link to Cisco's Web site to configure, price, and order its networking equipment. Cisco then sends orders back out across the Internet to producers and assemblers including Celestica, Flextronics, Jabil, and Solectron. Products are built and tested to Cisco's standards, sometimes with procedures run remotely by Cisco. Most items are then drop-shipped to buyers, untouched by Cisco's employees. This is a description of Cisco's

A. just-in-time inventory system.

B. electronic data interchange.

C. strategic information alliance.

D. supply chain.

E. product-specific delivery system.

18. Supply chain management refers to

A. organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point-of-origin to point-of consumption to satisfy customer requirements physical distribution management.

B. the integration and organization of information and logistic activities across firms in a supply chain for the purpose of creating and delivering goods and services that provide value to ultimate consumers.

C. the integration and organization of information and logistical activities that actively brings consumers together with sellers through the express use of agents and brokers.

D. an inventory management system that is designed to reduce the retailer's lead time for receiving merchandise, which then lowers a retailer's inventory investment, improves customer service levels, and reduces logistic expenses.

E. a highly organized system that facilitates minute to minute communication between all members of a supply chain that ensures the producer is aware of any changes in delivery or demand for a product or service.

19. An important feature of customer-driven supply chain management is its application of __________ that allows companies to share and operate systems for order processing, transportation scheduling, and inventory and facility management.

A. wholesaler cooperatives

B. mathematical and statistical models

C. sophisticated information technology

D. continuous inventory management

E. standardized distribution protocols

20. Few companies today rely solely on domestic supply chains. In fact, more than __________ of the active pharmaceutical ingredients in prescription and over-the-counter drugs sold in the United States are produced overseas.

A. 15%

B. 25%

C. 40%

D. 65%

E. 80%

21. In the automobile industry, the __________ manager is responsible for translating customer requirements into actual orders and arranging for delivery dates.

A. marketing

B. information technology

C. intermodal

D. supply chain

E. financial

22. Supply chain and logistics managers play a large part in the manufacture of automobiles. In fact, logistics costs account for __________ percent of the retail price of a typical new car.

A. 25 to 30

B. 40 to 45

C. 50 to 60

D. 60 to 70

E. over 70

23. In the automobile industry, the supply chain manager is responsible for translating __________ into actual orders and arranging for delivery dates.

A. customer requirements

B. marketing goals

C. marketing information

D. production requirements

E. company goals

24. At the Volkswagen Web site, you can assemble your own car based on your preferences and price point by choosing from thousands of versions, including the retailer-installed accessories you may want. This task represents a challenge for VW's _________, who is responsible for translating customer requirements into actual orders, arranging for delivery dates, and making financial arrangements for car dealers.

A. marketing manager

B. chief financial officer

C. supply chain manager

D. production manager

E. purchasing manager

25. What is the first step in choosing the right supply chain?

A. understand the supply chain

B. develop a list of qualified channel members

C. enumerate logistics specifications

D. compare multiple-channel alternatives

E. understand the customer

26. There are three steps used in choosing a supply chain: (1) understand the customer; (2) ___________; and (3) harmonize the supply chain with the marketing strategy.

A. understand the environment

B. consider the legal consequences

C. understand the marketing strategy

D. understand the supply chain

E. understand the company's goals

27. The three steps used in choosing a supply chain include: (1) understand the customer; (2) understand the supply chain; and (3) _________.

A. understand the environment

B. harmonize the supply chain with the marketing strategy

C. understand the marketing strategy

D. understand the logistics

E. understand the company's goals

28. Often companies must choose between a responsive supply chain and an efficient supply chain. This decision is based on _________.

A. monetary considerations

B. supplier alternatives

C. the business mission

D. a lack of an appropriate channel captain

E. the specific needs of customer segments

29. The goals achieved by a firm's marketing strategy determine whether its supply chain needs to be more __________ in meeting customer requirements.

A. cost effective

B. broadly expanded

C. responsive or efficient

D. adaptable

E. geographically distributed

30. Beginning in 2001, IBM set about to build a single __________ that would handle raw material procurement, manufacturing, logistics, customer support, order entry, and customer fulfillment across all of IBM—something that had never been done before.

A. integrated supply chain

B. extranet computer system

C. customer service department

D. intranet supply network system

E. global procurement network

31. Dell made a conscious decision to use a(n) __________ supply chain to best meet the requirements of its consumers.

A. integrated

B. efficient

C. responsive

D. harmonized

E. multi-tiered

32. Which statement regarding responsive supply chains is most accurate?

A. Responsive supply chains rely heavily on information technology.

B. Responsive supply chains use slower modes of transportation but faster order processing.

C. Responsive supply chains always use the least expensive mode of transportation possible.

D. Responsive supply chains rely on maintaining large inventory warehouses.

E. Responsive supply chains achieve economies of scale by having all inventory stored and sorted at a central location.

33. Which statement regarding efficient supply chains is most accurate?

A. Efficient supply chains traditionally use inexpensive but slower modes of transportation.

B. Efficient supply chains use common platforms and common components across several products.

C. Efficient supply chains rely on maintaining large geographically dispersed inventory warehouses.

D. Efficient supply chains traditionally use expensive, but faster, modes of transportation.

E. Efficient supply chains emphasize economies of scale by increasing the variety of system

configurations offered.

34. Which statement regarding efficient supply chains is most accurate?

A. Efficient supply chains use common platforms and common components across several products.

B. Efficient supply chains rely on maintaining large geographically dispersed inventory warehouses.

C. Efficient supply chains traditionally use expensive, but faster, modes of transportation.

D. Efficient supply chains may limit its assembly and inventory storage facilities to a single location.

E. Efficient supply chains emphasize economies of scale by increasing the variety of system

configurations offered.

35. The practice that involves unloading products from suppliers, sorting products for individual stores, and quickly reloading products on trucks, which will deliver the products to specific stores is referred to as _________.

A. just-in-time (JIT)

B. intermodal distribution

C. immediate response system (ERS)

D. piggy-backing

E. cross-docking

36. Cross-docking refers to

A. the practice of organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirement.

B. the practice of storing finished goods in the same trucks from which they will be dispensed and sold to consumers.

C. using large cargo containers that will be loaded to trucks and then to barges or ships that sail from port to port and then unloaded back to trucks for final transport and delivery.

D. a practice that involves unloading products from suppliers, sorting products for individual stores, and quickly reloading products onto its trucks for a particular store.

E. the practice of transporting retail goods from a centralized warehouse to the loading docks of regionally located satellite warehouses.

37. Cross-docking is most closely related to _________.

A. efficient supply chains

B. intermodal transportation

C. responsive supply chains

D. reverse logistics

E. logistics management

38. Which of the following statements regarding supply chains is most accurate?

A. The most common form of supply chain is the collaborative-response efficiency strategy.

B. In order for a supply chain to work effectively, key decisions should be made by a third-party logistics provider.

C. The longer the supply chain, the greater the economies of scale and the better the profit margin. 

D. Supply chains should consider the needs of suppliers provided those needs are consistent with marketing strategies.

E. Supply chain managers often need to make trade-offs between efficiency and responsiveness.

39. Which of the following statements regarding supply chains is most accurate?

A. The most common form of supply chain is the collaborative-response efficiency strategy.

B. In order for a supply chain to work effectively, key decisions should be made by a third-party logistics provider.

C. The best supply chain is the one that is consistent with the needs of the customer segment being served and complements a company's marketing strategy.

D. The longer the supply chain, the greater the economies of scale and the better the profit margin.

E. Supply chains should consider the needs of suppliers provided those needs are consistent with marketing strategies.

40. Which of the following statements regarding supply chains is most accurate?

A. The most common form of supply chain is the collaborative-response efficiency strategy.

B. In order for a supply chain to work effectively, key decisions should be made by a third-party logistics provider.

C. Contrary to what one might wish, there is no one best supply chain for every company.

D. The longer the supply chain the greater the economies of scale and the better the profit margins.

E. Supply chains should consider the needs of suppliers provided those needs are consistent with marketing strategies.

41. The objective of information and logistics management in a customer-driven supply chain is to minimize logistics costs while

A. satisfying suppliers.

B. maximizing profits.

C. maximizing supply chain membership.

D. delivering maximum customer service.

E. maximizing supply chain inefficiency.

42. The objective of information and logistics management in a supply chain is to deliver maximum customer service and to

A. minimize logistics costs.

B. maximize distribution outlets.

C. maximize profits.

D. maximize supply chain membership.

E. maximize supply chain inefficiency.

43. Combining proprietary computer and telecommunication technologies to exchange electronic invoices, payments, and information among suppliers, manufacturers, and retailers is referred to as _________.

A. strategic information database

B. integrated information system

C. an extranet

D. electronic data interchange

E. integrated sales management system

44. The acronym EDI stands for

A. e-commerce data interchange.

B. electronic data interface.

C. expanded data inquiries.

D. electronic data interchange.

E. exclusive data information.

45. Many consumer firms rely on computer-to-computer or __________ technology to exchange invoices, payments, and other information.

A. e-commerce data interchange

B. electronic data interface

C. expanded data inquiries

D. electronic data interchange

E. exclusive data information

46. EDI is commonly used in retail, apparel, transportation, pharmaceutical, grocery, health care, and insurance industries, as well as by _________.

A. independent local contractors

B. beauty salons and barbershops

C. art and dance studios

D. local, state, and federal government agencies

E. landscaping services

47. Of the companies listed in the Fortune 1000, about _________ of them use EDI.

A. 15%

B. 20%

C. 35%

D. 75%

E. 95%

48. Prudential HealthCare uses an Internet-based __________ that permits secure business-to-business communication between a manufacturer and its suppliers, distributors, and sometimes other partners like its advertising agency.

A. extranet

B. intranet

C. electronic data interchange

D. enterprise resource database management system

E. customized Internet Web site

49. Winemaker Robert Mondavi Corp. buys satellite images from NASA to spot problems in its vineyards and aims to push those images out over a(n) __________ to its independent growers. Mondavi helps its growers avoid vineyard problems—and improves the grapes it buys from them for use in its wines.

A. intranet

B. electronic data interchange

C. extranet

D. enterprise resource database management system

E. customized Internet Web site

50. In a business-to-business initiative, a(n) __________ has provided a way for the Whitney Museum of American Art to work cost-effectively with curators from around the world to plan exhibitions, using threaded discussion and online gathering of images and documentation from museums and collectors all over the world.

A. extranet

B. enterprise resource database management system

C. electronic data interchange

D. customized Internet Web site

E. intranet

51. WhirlpoolWebWorld.com allows Whirlpool to fulfill retailer orders quickly and inexpensively and better match appliance demand and supply using a(n)

A. enterprise resource database management system.

B. extranet.

C. customized Internet Web site.

D. electronic data interchange.

E. intranet.

52. Expenses associated with transportation, materials handling and warehousing, inventory, stockouts, and order processing, and return goods handling are referred to as _________.

A. supplier service costs

B. manufacturing costs

C. total logistics costs

D. social responsibility costs

E. total supply chain costs

53. Total logistics costs refer to

A. the design, installation, and maintenance of in-store displays, cabinets, and free standing promotional materials for retail outlets.

B. expenses associated with activities performed by brokers and agents to bring buyers and sellers together.

C. expenses associated with transportation, materials handling and warehousing, inventory, stockouts, order processing, and return goods handling.

D. expenditures associated with the clerical or bookkeeping side of the procurement process, which include purchase, design, and maintenance of the EDI system.

E. expenses associated with product adaptations that are made by the manufacturer in response to the needs of a channel member closest to the consumer.

54. Which of the following is an element of total logistics cost?

A. new product development

B. advertising

C. inventories

D. personal selling

E. market research

55. Which of the following best describes the goal of a firm's combination of inventory and transportation costs?

A. minimize required inventory costs.

B. minimize required transportation costs.

C. minimize the sum of inventory and transportation costs.

D. maximize the difference between required inventory and transportation costs.

E. set a level of transportation costs and minimize the required inventory costs.

56. Dramatic total logistics cost savings are possible when efficient transportation and warehousing can reduce __________ costs.

A. advertising

B. personal selling

C. publicity

D. inventory

E. billing

57. The customer service concept implies firms should

A. automate customer service.

B. maximize customer service levels.

C. minimize customer service levels.

D. minimize total logistics costs and let customer service follow.

E. provide superior customer service while controlling logistics costs.

58. Customer service refers to

A. adhering to the belief that the customer is always right.

B. satisfying the customers' needs no matter what the price.

C. accepting full liability if a product fails to meet a customer's expectations.

D. the ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience.

E. the ability of logistics management to satisfy users in terms of product, price, promotion, and place.

59. Within the context of a supply chain, __________ is the ability of a logistics system to satisfy users in terms of time, dependability, communications, and convenience.

A. quick response

B. distribution management

C. efficient consumer response

D. customer service

E. lead time

60. Supply chain managers balance total logistics cost factors against customer service factors. Customer service factors include

A. reliability, flexibility, consistency, and dependability.

B. time, dependability, communication, and convenience.

C. consistency, responsiveness, durability, and communication.

D. time, assurance, responsiveness, and dependability.

E. convenience, flexibility, time, and value.

61. The importance of time, dependability, communication, and convenience are all important concepts of _________.

A. consumer service

B. supplier service

C. wholesaler service

D. retailer service

E. stakeholder service

62. The output of a supply chain is the

A. service delivered to customers.

B. units of products delivered.

C. total generated revenue.

D. total number of customers served.

E. total profits realized.

63. Which of the following statements regarding supply chain customer service is most accurate?

A. The output of a supply chain is measured in total units sold.

B. Customer service is seen not just as an expense but also as a means to increase customer satisfaction and sales.

C. The output of a supply chain is measured either in total units sold or total number of customers served.

D. A firm's goal should be to provide superior customer service regardless of logistics costs.

E. Customer service is the responsibility of marketing channel members and not the supplier network.

64. The lag from ordering an item until it is received and ready for use or sale is referred to as

A. order cycle time.

B. order handling time.

C. order-to-ship duration

D. purchase cycle.

E. logistics cycle.

65. Order cycle time refers to

A. the time between when an order is placed and when payment is received.

B. the time between the sale of the first production batch to the sale of the next production batch.

C. the cycle between one full warehouse shipment to the next full warehouse shipment.

D. the lag from ordering an item until it is received and ready for use or sale.

E. the average time between reorders by a given wholesaler or retailer in the marketing channel.

66. Another name for order cycle time is

A. physical distribution sequence.

B. total logistics cycle.

C. logistical support time.

D. replenishment time.

E. billing cycle.

67. In a supply chain setting, replenishment time refers to lead time for an item, which means the lag from ordering an item until it is

A. billed to the customer.

B. acknowledged by the customer.

C. billed and paid for by the customer.

D. promised for delivery.

E. received and ready for use or sale.

68. Lead time refers to

A. the time lag from the inception of an idea until its initial commercialization.

B. the time lag from ordering an item until it is received and ready for use or sale.

C. the time between the commercialization of a product and general acceptance of the product as no longer "new."

D. the time lag between a new product entering the market and the market entry of the product's first competitor.

E. the time between when a new product is first promoted to its target market and when the product actually comes adopted within the marketplace.

69. The Limited employs a quick response system to order fast-moving fashion items. The Limited's pointof-sale scanner records each sale. When stock falls below a minimum level, the system automatically sends an electronic order to the manufacturer, which processes the order immediately. This system has effectively reduced

A. customer response cycle.

B. product flow.

C. lead time.

D. supply lag.

E. logistical lag.

70. Inventory management systems that are designed to reduce the retailer's lead time for receiving merchandise, which then lowers a retailer's inventory investment, improves customer service levels, and reduces logistics expense is referred to as

A. order replenishment systems.

B. quick response systems.

C. customer logistics factors.

D. minimum-inventory systems.

E. Web-based response systems.

71. Efficient consumer response systems refer to

A. an order replenishment system that maintains a ten percent inventory rate at all times in order to guarantee there will never be stockouts.

B. an online virtual inventory storage program that allows firms to enter in minute-by-minute information in order to avoid stockouts due to unforeseen environmental forces.

C. a computer program that allows even the smallest manufacturer to manage its inventory system.

D. inventory management systems that are designed to reduce the retailer's lead time for receiving merchandise, which then lowers its inventory investment, improves customer service levels, and reduces logistics expense.

E. exclusive contractual agreements between delivery services such as Federal Express or UPS to deliver expedited orders at a special low rate, regardless of the day and time.

72. Inventory management systems that are designed to reduce the retailer's lead time for receiving merchandise, which then lowers its inventory investment, improves customer service levels, and reduces logistic expenses is referred to as _________.

A. efficient consumer response systems

B. order replenishment systems

C. customer logistics factors

D. minimum-inventory systems

E. Web-based response systems

73. Another name for quick response systems is _________.

A. order replenishment systems

B. customer logistics factors

C. minimum-inventory systems

D. efficient consumer response systems

E. Web-based response systems

74. Another name for efficient consumer response is _________.

A. customer logistics factors

B. order replenishment systems

C. minimum-inventory systems

D. quick response

E. Web-based response systems

75. Quick response or efficient consumer response delivery systems are most closely related to

A. intermodal transportation.

B. piggybacking.

C. freight forwarding.

D. just-in-time inventory strategies.

E. reverse logistics.

76. Dependability is the consistency of replenishment. This is important to all firms in a supply chain and to consumers. It can be broken into three elements: consistent lead time, complete delivery, and _________.

A. honest and accurate pricing

B. quality products

C. a well-informed delivery staff

D. product warranties

E. safe delivery

77. Dependability is the consistency of replenishment. This is important to all firms in a supply chain and to consumers. It can be broken into three elements: consistent lead time, safe delivery, and _________.

A. complete delivery.

B. honest and accurate pricing.

C. quality products.

D. product warranties.

E. a well-informed delivery staff.

78. Dependability is the consistency of replenishment. This is important to all firms in a supply chain and to consumers. It can be broken into three elements: safe delivery, complete delivery, and _________.

A. honest and accurate pricing.

B. quality products.

C. consistent lead time.

D. a well-informed delivery staff.

E. product warranties.

79. Which of the following statements regarding communication is most accurate?

A. Communication as a function of customer service refers to oral rather than written exchange of information.

B. Communication as a function of customer service refers to written rather than oral exchange of information.

C. Improvement in transportation carrier information has improved the ability to trace information and schedule shipments.

D. Communication as a function of customer service refers exclusively to exchanges between the retailer and the ultimate consumer.

E. There should be little if any communication between an ultimate consumer and the manufacturer.

80. Saks Fifth Avenue has employed a quick response delivery system. When stock falls below a minimum level, the system automatically

A. alerts the manufacturer that more of the materials of that item (cotton, silk, nylon, etc.) needs to be grown, spun, or manufactured.

B. places advertising in media (TV, radio, newspapers, etc.) to promote the merchandise as part of its pull strategy.

C. suggests possible re-order quantities.

D. generates a replenishment order.

E. raises the price of the remaining stock.

81. Saks Fifth Avenue has a point-of-sale scanner system to record each sale. When stock of fashion merchandise, such as a Donna Karan jacket, falls below a minimum level, the system automatically generates a replenishment order. When Donna Karan receives the order, it is processed within 48 hours. This is an example of a(n)

A. efficient manufacturing program.

B. customer service policy.

C. customer loyalty program.

D. manufacturing and distribution alliance.

E. efficient consumer response delivery system.

82. Food marketers use the term efficient consumer response to describe their

A. customer service policies.

B. stock replenishment systems.

C. customer complaint systems.

D. customer loyalty programs.

E. policies toward their internal customers, their employees.

83. Convenience refers to the concept that

A. there should be a minimum of effort on the part of the buyer in doing business with the seller.

B. all products or services should be available 24 hours a day, 7 days a week, and 365 days a year.

C. all tasks required to make an exchange are the sole responsibility of the seller.

D. an exchange requires equal effort by both the buyer and seller.

E. all logistical services are provided by supplier network.

84. Firms that operate effective supply chains usually develop a set of written customer service standards.

These serve as objectives and provide

A. criteria for forecasting future product demand.

B. guidelines for handling late shipments or incomplete orders.

C. guidelines for selecting and hiring intermediaries.

D. guidelines for handling specific consumer complaints.

E. benchmarks against which results can be measured for control purposes.

85. The marketing dashboard shown in Figure 16-1 above suggests

A. there is an inverse relationship between the percentage of out-of-stocks and the percentage of on-time delivery.

B. that as the percentage of out-of-stocks goes up, so does the percentage of on-time delivery.

C. the percentages of on-time delivery are improving.

D. the percentages of out-of-stocks are trending downward.

E. the standard for on-time delivery has been set too high.

86. The marketing dashboard shown in Figure 16-1 above shows that the standard established for out-ofstocks is

A. 3 percent.

B. 4 percent.

C. 6 percent.

D. 8 percent.

E. 98 percent.

87. The marketing dashboard shown in Figure 16-1 above shows that the standard established for on-time delivery is

A. 92 percent.

B. 94 percent.

C. 96 percent.

D. 98 percent.

E. 3 percent.

88. The four key logistic functions in a supply chain include transportation, warehousing and materials handling, order processing, and _________.

A. communication between buyer and seller

B. inventory management

C. order cycle time

D. effective handling of problems

E. on-time delivery of products

89. The four key logistic functions in a supply chain include transportation, warehousing and materials handling, inventory management and _________.

A. order processing

B. communication between buyer and seller

C. order cycle time

D. effective handling of problems

E. on-time delivery of products

90. Firms that perform most or all of the logistics functions that manufacturers, suppliers, and distributors would normally perform themselves, are referred to as _________.

A. logistic management teams

B. channel captains

C. dual distribution

D. third-party logistics providers

E. supply channel ombudsmen

91. Third-party logistics providers refers to

A. firms that perform most or all of the logistics functions that manufacturers, suppliers, and distributors would normally perform themselves.

B. firms hired for the express purpose of scheduling deliveries and pick-ups.

C. off-shore call centers that take orders and place orders for domestic firms.

D. global manufacturers that receive design information, raw materials, and product orders but do not own the product.

E. firms hired to handle all product development and promotion activities so manufacturers can concentrate solely on distribution activities.

92. ProLogis is a leading provider of distribution facilities and services with 237.2 million square feet in 1,759 distribution facilities in 68 markets in North America, Europe, and Asia. It manages warehousing and materials handling for many different types of manufacturers. ProLogis is a

A. freight jobber.

B. freight forwarder.

C. rack jobber.

D. third-party logistics provider.

E. wholesaler.

93. All transportation modes can be evaluated using on six basic service criteria: cost, time, capability, dependability, accessibility, and _________.

A. adaptability

B. frequency

C. geographic range

D. weather vulnerability

E. fuel vulnerability

94. All transportation modes can be evaluated using on six basic service criteria: cost, time, capability, dependability, frequency, and _________.

A. adaptability

B. geographic range

C. weather vulnerability

D. fuel vulnerability

E. accessibility

95. All transportation modes can be evaluated using on six basic service criteria: cost, time, capability, accessibility, frequency, and _________.

A. adaptability

B. dependability

C. geographic range

D. weather vulnerability

E. fuel vulnerability

96. All transportation modes can be evaluated using on six basic service criteria: cost, time, dependability, accessibility, frequency, and _________.

A. adaptability

B. capability

C. geographic range

D. weather vulnerability

E. fuel vulnerability

97. All transportation modes can be evaluated using on six basic service criteria: time, capability, dependability, accessibility, frequency, and _________.

A. adaptability

B. cost

C. geographic range

D. weather vulnerability

E. fuel vulnerability

98. Which of the following statements regarding railroads is most accurate?

A. Railroads carry smaller shipments than trucks but they travel more quickly.

B. Railroads carry bulky items over fairly long distances at a relatively low cost.

C. Railroad routes are more extensive than truck routes.

D. Railroads are a significantly more expensive mode of transportation than trucks.

E. The need for railroads is almost obsolete.

99. Which of the following statements regarding railroads is most accurate?

A. Railroads can carry smaller shipments than trucks but they travel more quickly.

B. Railroads don't always provide complete pickup and delivery.

C. Railroad routes are more extensive than truck routes.

D. Railroads are a significantly more expensive mode of transportation than trucks.

E. The need for railroads is almost obsolete.

100.Coal from the Powder River basin in Wyoming burns cleaner than coal found in other areas of the U.S. As a result, there is greater demand for this coal nationwide. To move the coal to the rest of the country, the best means of transportation is to employ ________.

A. air carriers

B. motor carriers

C. water carriers

D. railroads

E. pipelines

101.A train that is dedicated to one commodity using permanently coupled cars that run a continuous loop from a single origin to a single destination and back is referred to as a(n)

A. mini-train.

B. unit train.

C. deadhead train.

D. intermodal train.

E. a recursive train.

102.A unit train refers to

A. the name given to an individual car in a train designed to carry industrial goods rather than passengers.

B. flat cars on a train that can carry large, bulky, or oddly shaped goods (such as bulldozers) that transport such items as "units."

C. a train car that can easily be attached and reattached at different locations.

D. box cars on a train that are designated by the "units" of products they are able to carry at a single time.

E. a train that is dedicated to one commodity using permanently coupled cars that run a continuous loop from a single origin to a single destination and back.

103.A unit train would be used most likely for transporting _________.

A. clothing

B. household furnishings

C. flowers

D. iron ore

E. livestock

104.Which of the following statements about pipelines is most accurate?

A. Pipelines have continuous flow and therefore can cause storage and inventory problems for buyers.

B. Pipelines have almost unlimited capability since they are located underground.

C. Pipelines are extremely expensive in the short-term but extremely in-expensive in the long run.

D. Although pipelines have huge capacities, the costs are very high.

E. Pipelines have frequent departures and the costs are very low.

105.Which of the following statements about water carriers is most accurate?

A. Water carriers are restricted to ocean transport.

B. Water carriers are limited by river flow and therefore are only cost effective when transporting in one direction.

C. Relatively speaking, water carriers have huge capacities but at a very high price.

D. Water carriers are relatively sensitive to weather conditions.

E. Water carriers have extensive routes and frequent departures.

106.Combining different transportation modes in order to get the best features of each is referred to as

A. freight forwarding.

B. dual distribution.

C. intermodal transportation.

D. bimodal logistics.

E. intramodal transport.

107.Intermodal transportation refers to

A. assembly lines, small "golf club" carts, and in some cases even small trucks, used to transport goods or personnel from one part of a large production plant to another.

B. equipment such as cranes or helicopters used to load products rather than transport them from one form of carrier to another.

C. the combination of different transportation modes in order to get the best features of each.

D. tug boats that push barges that carry goods from one side of a river to the other.

E. two forms of transportation that are interdependent upon each another, such as passenger ocean liners that are used to ferry trucks and their trailers in cargo holds to a foreign port.

108.All intermodal transportation approaches have one thing in common, which is

A. they are all less expensive than single mode transportation.

B. they attract low-value freight.

C. they are more costly than single mode transportation.

D. they combine different transportation modes to get the best features of each.

E. they use some form of container moved by railroad and water carrier for part of the distance.

109.Karl Zimmerman imports furniture from Germany—some antiques but mostly new pieces made and painted in the Black Forest. To keep cost down, he has arranged to ship the furniture only when there is enough to fill a 40-foot container. The container moves through Germany by truck, river barge, and train before being loaded on a container ship. When the ship docks in a port on the eastern U.S., the container is loaded onto a train and then a truck for delivery to Zimmerman's store. Zimmerman's method of bringing goods to the U.S. is referred to as a(n) _________.

A. international conveyance

B. strategic channel alliance

C. logistical conveyance

D. intermodal transportation

E. intramodal transportation

110.Trailer on flatcar is a form of _________.

A. dual distribution

B. intermodal transportation

C. mini-train

D. unit train

E. logistical conveyance

111.The acronym TOFC stands for _________.

A. transport on flat car

B. transfer of foreign commodities

C. transfer of fuel carriers

D. trailer on flat car

E. take on full cargo

112.The most popular intermodal combination is _________.

A. air-ground freight forwarders

B. air-truck freight carriers

C. containers on air carriers

D. trailer on flatcars

E. trailer on water carriers

113.Piggyback is another name for _________.

A. intermodal transportation

B. dual distribution

C. cross-docking

D. trailer on flatcar

E. air-truck carriers

114.Which of the following statements about motor carriers is most accurate?

A. The motor carrier industry is composed primarily of two major carriers, which are U.S. Truck and Swift Transportation.

B. Truck rates are substantially lower than rail rates since they have more local competitors.

C. The greatest trucking advantage is the ability to get through in almost all weather.

D. An advantage of motor carriers is that in many cases they can offer complete pickup and delivery.

E. An advantage of motor carriers is that piggyback trucks can carry loads of almost any size or weight.

115.There are several modes of transportation available to assist marketers in facilitating the transfer of goods from producer to the ultimate consumer. For example, logistics managers can use railroads, trucks/motor carriers, airplanes, pipelines, or ships to transport products. Each mode of transportation has inherent advantages and disadvantages. For instance, __________ offer the advantages of door-to-door service for pick-up and delivery, relatively fast delivery, and extensive routes. The disadvantages of this mode of transportation include size and weight restrictions, higher rates, and some sensitivity to weather.

A. railroads

B. trucks/motor carriers

C. airplanes

D. pipelines

E. ships

116.When Amazon.com provides a 3-5 day shipping option, it is offering __________ transport because this mode provides complete, door-to-door service and timely delivery schedules.

A. railroad

B. truck/motor carrier

C. airplane

D. pipeline

E. ship

117.Which of the following statements about air carriers is most accurate?

A. The large number of regional airports allows for door-to-door delivery.

B. Because of their speed, air carriers may create increased costs in higher inventory.

C. This method of transportation is especially effective for piggybacking.

D. Air carriers are commonly used for perishable flowers, clothing, and electronics parts.

E. Although air carriers can offer incredible speed incentives, there is also a high percentage of loss or damage that can occur during loading and unloading.

118.Which of the following statements about air carriers is most accurate?

A. The large number of regional airports allows almost door-to-door delivery.

B. Because of their speed, air carriers may create increased costs in higher inventory.

C. This method of transportation is especially effective for piggybacking.

D. Although air carriers have great speed, they also have limited capabilities.

E. Although air carriers can offer incredible speed incentives, there is also a high percentage of loss or damage that can occur during loading and unloading.

119.Firms that accumulate small shipments into larger lots and then hire a carrier to move them, usually at reduced rates, are referred to as _________.

A. global express companies

B. freight forwarders

C. freight jobbers

D. chartered logistics providers

E. surplus cargo logistics providers

120.Which of the following statements about freight forwarders is most accurate?

A. Freight forwarders often convert shipments that are less-than-truckload (LTL) onto trains for crosscountry shipping.

B. Freight forwarders avoid areas of specialization such as air freight or surface freight since their strength lies in full-cover transport.

C. Freight forwarders represent the most expensive of all transport alternatives.

D. Freight forwarders charge higher rates to consolidate shipments into smaller individual shipments since more work is required for loading and unloading.

E. Freight forwarders charge lower rates to consolidate shipments than if the same shipments were charged individually.

121.For 20 years, Regardo, Inc. has produced small specially-ordered machine parts. It sends out numerous small-sized orders throughout the week. This has been a very expensive way of doing business, and its logistics manager wants to save money on outbound transportation costs. What should she do?

A. Charter a plane once a week to carry all necessary orders.

B. Use an intermodal transportation method to deliver the orders.

C. Use a rail company to ensure that orders arrive on time.

D. Work with her suppliers to design a JIT system.

E. Employ the services of a freight forwarder.

122.Com-Oddities, Inc. is a freight forwarder specializing in arranging transportation for low value products (screws, bolts, etc.) for three customers in Chicago. The shipments are transported to Denver and Los Angeles for just-in-time manufacturers there. The Midwest is in the midst of extensive flooding due to severe weather. The transportation modes that were relied upon are now severely disrupted. Barge traffic on the Mississippi River has halted. Railroad and motor vehicle bridges across the river are closed along the Illinois border with Iowa and Missouri due to high water or washed out accesses. Consequently, rail traffic has been re-routed either north through Montana or south through Texas. Although interstate highways remain open, many secondary roads are closed and detours arranged to re-route traffic. Your customers require the timely delivery of the goods for which you arrange transportation. Any delays are cause for either substantial penalty payments or termination of contracts. Until the situation returns to normal, which mode of transportation should you select that will meet your contractual obligations, yet be cost-effective?

A. intermodal (truck to St. Louis, rail to Denver and Los Angeles; one-day delay)

B. railroad only (both north and south routes; both result in two-day delays)

C. truck only (delay of one to three days)

D. air cargo (e.g. United Airlines, which flies to both Denver and Los Angeles; no delay)

E. air express (e.g. Federal Express; no delay)

123.The two types of warehouses are

A. storage warehouses and assembly warehouses.

B. full-service warehouses and limited-service warehouses.

C. cooperative warehouses and independent warehouses.

D. distribution centers and storage warehouses.

E. multi-use warehouses and specialized warehouses.

124.Which of the following statements regarding warehousing is most accurate?

A. Distribution centers specialize in long-term storage of perishable goods.

B. Distribution centers specialize in long-term storage of non-perishable bulky items.

C. Storage warehouses are used not only for storage but for assembly and customization as well.

D. Warehousing represents the second most significant cost in a supply chain after transportation.

E. An advantage of storage warehouses is they are jointly-owned by non-competing firms and therefore help increase profit margins.

125.A warehouse that emphasizes the timely movement of goods is referred to as _________.

A. a storage warehouse

B. a freight forwarder

C. a distribution center

D. an assembly warehouse

E. an automated warehouse

126.Which of the following statements describes a major benefit of distribution centers?

A. Distribution centers hold goods economically for extended periods of time.

B. Distribution centers achieve lower costs by locating in remote sites, far removed from major transportation hubs and access.

C. Distribution centers emphasize speed and moving stored goods out as expeditiously as possible.

D. Distribution centers are typically used to increase lead time.

E. Distribution centers are massive centralized warehouses that serve as inventory hubs for smaller regional storage warehouses.

127.Paint companies such as Sherwin-Williams and Benjamin Moore blend different paints and label them in their _________.

A. distribution centers

B. storage warehouses

C. cross-docking facilities

D. automated warehouses

E. regional mini-warehouses

128.Moving goods over short distances into, within, and out of warehouses and manufacturing plants is referred to as _________.

A. intermodal transportation

B. production flow control

C. materials handling

D. inventory expediting

E. just-in-time inventory management system

129.One of the problems associated with materials handling is

A. finding the right transportation modes.

B. meeting government regulations.

C. a high rate of loss and damage.

D. locating the facility in which to perform the activity.

E. convincing buyers that it is an important activity.

130.One of the problems associated with materials handling is

A. finding the right transportation modes.

B. meeting government regulations.

C. high labor costs.

D. locating the facility in which to perform the activity.

E. convincing buyers that it is an important activity.

131.Forklifts, cranes, and conveyors are all examples of _________.

A. JIT tools

B. expediting equipment

C. purveyor equipment

D. inventory control equipment

E. materials handling equipment

132.There are several stages in the processing of an order, and a failure at any one of them can cause a problem with the customer. The process starts with

A. seeking out the right customer for the right product or service.

B. transmitting the order (Internet, extranet, EDI, etc.).

C. entering identification information about the customer.

D. checking if the desired product is even available.

E. qualifying the buyer in terms of his or her ability to pay.

133.Kiwi Brands, the Pennsylvania marketer of Kiwi shoe polish, Endust, and Behold, receives 75% of its retailers' purchase orders via EDI. Once the order has been received, the order is __________ and sent to those needing it. After checking inventory, and a credit check, all documentation for the order must be prepared, transportation arranged, and an order confirmation sent.

A. transmitted from the customer to the supplier

B. checked for available inventory

C. entered into the appropriate databases

D. evaluated in terms of speed and accuracy

E. printed out

134.Kiwi Brands, the Pennsylvania marketer of Kiwi shoe polish, Endust, and Behold receives 75% of its retailers' purchase orders via EDI. If Kiwi is out of a particular item, a new quantity is ordered from the production line or reordered from a vendor. For Kiwi's customers, this out-of-stock will generate a _________.

A. purchase order

B. inventory check

C. backorder

D. reevaluation of Kiwi as a supplier

E. benchmarking opportunity

135.If the item is currently out of stock, a(n) __________ is created, and the whole process of keeping track of a small part of the original order must be managed.

A. purchase order

B. inventory check

C. backorder

D. reevaluation of Kiwi as a supplier

E. benchmarking opportunity

136.Inventory control requires great balance. Too little inventory may result in ___________; too much leads to higher costs because of the money tied up in inventory and the chance that it may become obsolete.

A. higher prices, increases in warehousing costs, and higher marketing expenses

B. a loss of consumer interest in the product and an increase in company switching costs.

C. poor service, stockouts, brand switching, and loss of market share

D. the need to purchase similar but lesser quality products to fill in inventory gaps

E. the loss of tax exemptions for warehoused merchandise

137.Inventory control requires great balance. Too little inventory may result in poor service, stockouts, brand switching, and loss of market share; too much leads to higher costs because of the money tied up in inventory and

A. higher prices, higher employee wages, and higher marketing expenses.

B. the chance that it may become obsolete.

C. a loss of consumer interest in the product and an increase in company switching costs.

D. contentious competition between marketing channel members as they attempt to get rid of stockouts.

E. the loss of tax exemptions for warehoused merchandise.

138.Which of the following is a problem resulting from too little inventory?

A. A lack of product creates even greater demand that cannot be satisfied.

B. Reduced inventory may result in brand switching by consumers.

C. Contentious competition between marketing channel members as they attempt to get rid of overstocks.

D. If additional employees are hired to fill demand, they may need to be laid off once the demand is met.

E. The manufacturer may lose warehousing space to a competitor.

139.Which of the following is a problem resulting from too little inventory?

A. A lack of product creates even greater demand that cannot be satisfied.

B. Contentious competition between marketing channel members as they attempt to get rid of overstocks.

C. If additional employees are hired to fill demand, they may need to be laid off once the demand is met.

D. Too little inventory may result in poor service, stockouts, and/or brand switching.

E. The manufacturer may lose warehousing space to a competitor.

140.Which of the following is a problem resulting from too little inventory?

A. A lack of product creates even greater demand that cannot be satisfied.

B. Contentious competition between marketing channel members as they attempt to get rid of overstocks.

C. If additional employees are hired to fill demand, they may need to be laid off once the demand is met.

D. Too little inventory may result in a loss of market share.

E. The manufacturer may lose warehousing space to someone else.

141.Traditionally, carrying inventory has been justified on several grounds, one of which is to

A. anticipate increased demand from unanticipated social trends.

B. protect the firm from contingencies such as strikes and shortages.

C. help stimulate the local economy.

D. have sufficient inventory in the event of a natural disaster.

E. prevent a competitor from introducing a competing product.

142.Traditionally, carrying inventory has been justified on several grounds, one of which is to

A. anticipate increased demand from unanticipated social trends.

B. promote production efficiencies.

C. help stimulate the local economy.

D. have sufficient inventory in the event of a natural disaster.

E. prevent a competitor from introducing a competing product.

143.Traditionally, carrying inventory has been justified on several grounds, one of which is to

A. help stimulate the local economy.

B. anticipate increased demand from an unanticipated social trends.

C. prevent a competitor from introducing a competing product.

D. provide better service for those customers who wish to be served on demand.

E. have sufficient inventory in the event of a natural disaster.

144.Traditionally, carrying inventory has been justified on several grounds, one of which is to

A. help stimulate the local economy.

B. anticipate increased demand from unanticipated social trends.

C. prevent a competitor from introducing a competing product.

D. offer a buffer against variations in supply and demand.

E. have sufficient inventory in the event of a natural disaster.

145.Companies today view inventory as something to be _________.

A. centralized and computerized

B. sold in global markets

C. moved, not stored

D. dispersed in as many geographical regions possible

E. stored until sold

146.A classification of inventory costs includes the following:

A. capital costs, inventory service costs, storage costs, and risk costs.

B. investment costs, production costs, transportation costs, and storage costs.

C. installation costs, insurance costs, security costs, and utility costs.

D. capital costs, insurance costs, storage costs, and transportation costs.

E. inventory service costs, utility costs, risk costs, and storage costs.

147.Which of the following is an example of an inventory service cost?

A. warehousing space and materials handling costs

B. costs due to possible loss, damage, pilferage, or obsolescence

C. opportunity costs resulting from tying up funds in inventory instead of using them in other, more profitable investments

D. costs such as insurance and taxes that are present in many states

E. the need for an increased workforce and associated salaries

148.Which of the following is an example of an inventory storage cost?

A. costs due to possible loss, damage, pilferage, or obsolescence

B. opportunity costs resulting from tying up funds in inventory instead of using them in other, more profitable investments

C. costs such as insurance and taxes that are present in many states

D. warehousing space and materials handling costs

E. the need for an increased workforce and associated salaries

149.Which of the following is an example of an inventory risk cost?

A. the need for an increased workforce and associated salaries

B. costs due to possible loss, damage, pilferage, or obsolescence

C. costs such as insurance and taxes that are present in many states

D. warehousing space and materials handling costs

E. opportunity costs resulting from tying up funds in inventory instead of using them in other, more profitable investments

150.An inventory supply system that operates with very low inventories and requires fast on-time delivery is referred to as _________.

A. the just-in-case concept

B. the just-in-time concept

C. the time to market concept

D. expedited inventory management system

E. customer response system

151.Just in time refers to

A. an inventory supply system that operates with very low inventories and requires fast on-time delivery.

B. an inventory management system whereby the supplier determines the product amount and assortment a retailer needs and automatically delivers the appropriate items.

C. an inventory management system that is designed to reduce a retailer's lead time for receiving merchandise, which then lowers a retailer's inventory investment, improves customer service levels, and reduces logistic expenses.

D. an inventory supply system that relies on the "judgment" of individual warehouse managers based on daily reports from its retailer customers.

E. an inventory system that guarantees delivery within 48 hours and grants price reductions of 1% per hour if a shipment is delayed.

152.A diametrically opposed philosophy to just in time is the __________ philosophy.

A. just in case

B. judgment of experts

C. better late than never

D. do it, try it, fix it

E. more is better

153.When a firm protects itself against uncertainty by maintaining a reserve inventory at each of its production and stocking points, it is using _________.

A. a just-in-case system

B. a just-in-time system

C. a delivery-on-demand concept

D. an expedited inventory management system

E. a distribution center

154.Toyota was a pioneer of the __________ when it began operation with very low inventories and depended on fast, on-time deliveries.

A. just-in-case system

B. just-in-time system

C. delivery-on-demand concept

D. keiretsu inventory management system

E. distribution center system

155.The just-in-time concept requires very low inventories but fast, on-time delivery. When must parts needed for production arrive from suppliers?

A. neither before nor after they are needed

B. at least the day before they are needed

C. three to four days before they are needed

D. one week before they are needed

E. as far in advance as possible

156.Scott Baldwin, the owner of The Computer Company located in Stillwater, Oklahoma, specializes in creating customized personal computers for home use. Baldwin buys basic computer components from mail order companies and then upgrades the computers to fit the specific needs of each customer. In years past, Baldwin carried a large inventory of hard drives, CD-ROMS, motherboards, memory upgrades, and other computer components. More recently, Baldwin has decided he can't afford to maintain a large inventory of components. Instead, The Computer Company maintains a very low inventory and relies on mail-order suppliers to provide fast, on-time delivery of components as they are needed. The Computer Company is using

A. inventory service suppliers.

B. an inventory/transaction reduction strategy.

C. a just-in-time inventory supply system.

D. a just-in-case inventory supply system.

E. a keiretsu inventory management system.

157.An inventory-management system whereby the supplier determines the product amount and assortment a like a retailer needs and automatically delivers the appropriate items is referred to as _________.

A. supplier-managed inventory

B. supply chain inventory

C. logistics-managed inventory

D. just-in-time inventory management

E. vendor-managed inventory

158.A vendor-managed inventory system refers to an

A. inventory supply system that operates with very low inventories and requires fast on-time delivery.

B. inventory management system whereby the supplier determines the product amount and assortment a retailer needs and automatically delivers the appropriate items.

C. inventory management system that is designed to reduce the retailer's lead time for receiving merchandise, which then lowers a retailer's inventory investment, improves customer service levels, and reduces logistic expenses.

D. inventory supply system that relies on the "judgment" of individual warehouse managers based on daily reports from its retailer customers.

E. inventory system that guarantees delivery within 48 hours, and grants price reductions of 1% per hour if a shipment is delayed.

159.The constant pressure for faster response times in replenishing inventory and EDI technology have contributed to the use of _________.

A. supplier-managed inventory

B. supply chain inventory

C. logistics-managed inventory

D. a just-in-time system

E. vendor-managed inventory

160.At the end of a recent year, Solectron, a big Milpitas, California, electronics contractor, made half of its purchases under vendor-managed inventory programs. Solectron

A. used a system in which its suppliers determined the product amount and assortment that should be in stock.

B. had its suppliers perform all materials handing activities.

C. authorized its suppliers to eliminate as many wholesaling functions as possible from the supply chain.

D. authorized the use of distribution centers to provide quicker customer response times.

E. balanced its total logistics cost by eliminating the convenience service factor.

161.Hewlett-Packard is taking a proactive role in reducing the amount of electronic merchandise dumped in landfills by using __________ to reclaim recyclable and reusable materials.

A. reverse materials handling

B. reverse logistics

C. cause-related marketing

D. vendor-managed inventory

E. materials transformation

162.The process of reclaiming recyclable and reusable materials, returns, and reworks from the point-ofconsumption or use for repair, remanufacturing, redistribution, or disposal is referred to as

A. salvage marketing.

B. materials transformation.

C. reverse materials handling.

D. reverse logistics.

E. cause-related marketing.

163.Reverse logistics refers to

A. the collection of used goods donated from to nonprofit organizations by ultimate consumers to be restored, cleaned, repaired, and resold back to ultimate consumers.

B. deconstructing products that failed to pass quality inspection standards on the production line and reusing workable parts instead of throwing out the entire unit.

C. the process of reclaiming recyclable and reusable materials, returns and reworks from the point-ofconsumption or use for repair, remanufacturing, redistribution, or disposal.

D. organizing a cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements.

E. the donation of old or broken automobiles to nonprofit organizations that can be recycled or turned into scrap with the profits applied to the organization's operating expenses.

164.Butler-McDonald, an Indianapolis firm, recycles outdated computers to reclaim reusable materials such as plastics, copper, zinc, silver, and gold. Butler-McDonald is implementing

A. salvage marketing.

B. materials transformation.

C. reverse materials handling.

D. reverse logistics.

E. cause-related marketing.

165.Amazon uses supply chain and logistics management to

A. make sure that it maintains the authority that comes with being the channel captain.

B. avoid having to use quick response replenishment.

C. lessen the amount of communication that is necessary between it and its suppliers.

D. manage the flow of products from its suppliers to its distribution centers and the flow of customer orders from the distribution centers to individual's homes.

E. implement its market divestment strategies.

166.One of the sales growth strategies Amazon is considering for the future is _________.

A. sales of consulting services

B. sales of original paintings and wall art

C. selling Amazon's distribution centers

D. sales of books, CDs, and videos

E. sales of greeting cards and invitations

167.One of the sales growth strategies Amazon is considering for the future is _________.

A. sales of consulting services

B. sales of original paintings and wall art

C. selling Amazon's distribution centers

D. provide access to its existing operations to other retailers.

E. sales of greeting cards and invitations

 

 

 

2.
The actual procedures, mechanisms, and flow of activities by which a service is created and delivered is referred to as __________.
 
 
3.
The added value a brand name gives to a product beyond the functional benefits provided is referred to as __________.
 
 
4.
Adding value to the product (or line) through additional features or higher-quality materials is referred to as __________.
 
 
5.
All electric-powered automobiles such as the Chevy Spark shown in the photo above are in which stage of their product life cycle?
 
 
6.
All of the following are benefits to be stressed during the promotion of services EXCEPT:
 
 
7.
All of the following are market modification strategies EXCEPT:
 
 
8.
All of the following are product modification strategies EXCEPT:
 
 
9.
All of the following are responsibilities of a product or brand manager EXCEPT:
 
 
10.
All of the following are true about a skimming pricing strategy when used during the introduction stage of the product life cycle EXCEPT:
 
 
11.
All of the following are true about product line extensions EXCEPT:
 
 
12.
All of the following are true about the length of product life cycles EXCEPT
 
 
13.
All of the following are types of barriers to the adoption of new products EXCEPT:
 
 
14.
All of the following comprise the seven Ps of services marketing EXCEPT:
 
 
15.
All of the following marketing actions can be used by a firm to counteract barriers to product adoption EXCEPT:
 
 
16.
Among teenagers, Pez has a __________ percent awareness level.
 
 
17.
Another name for multiproduct branding is __________.
 
 
18.
Another name for multiproduct branding is __________.
 
 
19.
Any container in which a product is offered for sale and on which information is communicated is referred to as __________.
 
 
20.
Any word, device (design, sound, shape, or color), or combination of these used to distinguish a seller's products or services is referred to as a __________.
 
 
21.
The appearance of the environment in which the service is delivered and where the firm and customer interact can influence the customer's __________ of the service.
 
 
22.
Apple introduced the iPhone and iPad with multitouch screens, as well as the Magic Trackpad, also a multitouch device. These devices require consumers to use gestures (touch, swipe, tap, etc.) to perform various functions. This could make the mouse, a device Apple invented in 1977 for its Apple II, obsolete. With the emergence of multitouch technologies, the mouse most likely is now in the __________ stage of its product life cycle.
 
 
23.
Apple launched its iPhone in 2007, the first smartphone that used a multi-touch user interface. iPhone unit sales then skyrocketed for several years. Recently, growth in smartphone sales have slowed and profits have declined due to fierce competition from Samsung, Motorola, Nokia and others. In which stage of the product life cycle are smartphones like the iPhone?
 
 
24.
As more competitors launch their own products and the product progresses along its life cycle, company attention is focused on creating __________ demand, or the preference for a specific brand.
 
 
25.
As product adopters, innovators
 
 
26.
As product adopters, laggards
 
 
27.
As product adopters, members of the early majority
 
 
28.
As product adopters, members of the late majority
 
 
29.
Because of the intangible nature of services, consumers often perceive price as a possible indicator of the __________ of the service.
 
 
30.
The belief that products originating from one country would be of better or worse quality than the products from another country illustrates the __________ benefits that packaging information can provide.
 
 
31.
Brand equity building steps are: (1) __________ and an association with a product class or need in consumers' minds to create an identity; (2) establishing a brand's meaning in the minds of consumers; (3) eliciting the proper consumer responses to a brand's identity and meaning; and (4) creating an intense, active, and loyal consumer-brand connection.
 
 
 

32.
Brand equity is the added value a brand name gives to a product beyond the functional benefits provided. This value has two distinct advantages: it creates a competitive advantage and __________.
 
 
33.
Brand equity provides a financial advantage for a brand's owner because successful, established brand names have an economic value in the sense that they are __________.
 
 
34.
Brand equity refers to __________.
 
 
35.
Brand extensions is the practice of
 
 
36.
A branding strategy that involves giving each product a distinct name when each brand is intended for a different market segment is referred to as __________.
 
 
37.
Brand licensing refers to __________.
 
 
38.
A brand name refers to __________.
 
 
39.
A brand name that cannot be spoken is referred to as a __________.
 
 
40.
Brand personality refers to __________.
 
 
41.
Capacity management refers to
 
 
42.
Changing the place a product occupies in a consumer's mind relative to competitive products is referred to as __________.
 
 
43.
The classifications of innovators, early adopters, early majority, late majority, and laggards are all based upon __________.
 
 
44.
Combining a corporate or family brand with a new brand to distinguish a part of its product line from others is referred to as __________.
 
 
45.
Companies can employ four general branding strategies, which include: (1) __________; (2) multibranding; (3) private branding; or (4) and mixed branding.
 
 
46.
Companies can employ several different branding strategies. In Figure 10-6 above, Box A represents a __________ strategy.
 
 
47.
Companies can employ several different branding strategies. In Figure 10-6 above, B represents a __________ strategy.
 
 
48.
Companies can employ several different branding strategies. In Figure 10-6 above, C represents a __________ strategy.
 
 
49.
A company may choose a skimming strategy during the introduction stage of its product to help recover costs of development and to __________.
 
 
50.
A company uses __________ when it manufactures products but sells them under the brand name of a wholesaler or retailer.
 
 
51.
A concept that describes the stages a product goes through in the marketplace - introduction, growth, maturity, and decline - is referred to as the
 
 
52.
Consumer advocates believe the practice of downsizing by consumer products firms has resulted in __________.
 
 
53.
Consumer packaged goods firms like General Mills and PepsiCo and as well as industrial firms such as Intel and Hewlett-Packard employ a product manager to manage __________.
 
 
 

54.
A contractual agreement whereby one company (licensor) allows its brand name or trademark to be used with products or services offered by another company (licensee) for a royalty or fee is referred to as __________.
 
 
55.
The customer experience management (CEM) process should
 
 
56.
Customer value can assume numerous forms. For Pez Candy, Inc., customer value manifests itself in the form of __________.
 
 
57.
The desire for a product class rather than for a specific brand is called __________ demand.
 
 
58.
DiGiorno rising crust pizza has been available in the freezer sections of supermarkets for quite a while. The product's recent introduction of a DiGiorno cheese-stuffed crust to its line of pizzas is an example of __________.
 
 
59.
Directions on how and when to use a product and information about the source and composition of a product that appear on packaging labels provide what kind of benefits?
 
 
60.
Downsizing reduces the __________.
 
 
61.
During the introduction stage of the product life cycle, a(n) __________ pricing strategy may be used. This pricing strategy charges a high initial price to recoup the costs of product development.
 
 
62.
During the introduction stage of the product life cycle, promotional expenditures are made to stimulate consumer desire for an entire product class rather than for a specific brand. The consumer demand that is stimulated is referred to as __________ demand.
 
 
63.
During the introduction stage of the product life cycle, the place (distribution) element of the marketing mix is highly involved with
 
 
64.
During the introduction stage of the product life cycle, the strategy that discourages competitive entry by charging a low price for a new product is referred to as __________ pricing.
 
 
65.
During the maturity stage of the product life cycle, profit declines primarily because
 
 
66.
The environmental challenges of packaging and labeling are often global in nature. These include all of the following EXCEPT:
 
 
67.
An expanded marketing mix for services that includes the four Ps (product, price, promotion, and place or distribution) as well as people, physical environment, and process, is referred to as the __________.
 
 
68.
Experts suggest that the customer experience management (CEM) process should be all of the following EXCEPT:
 
 
69.
Florida Orange Growers Association advocates drinking orange juice throughout the day rather than for breakfast only, in a market modification strategy known as
 
 
70.
For any product to be successful, it must be purchased by __________.
 
 
71.
For consumers, the primary benefit of branding is that __________.
 
 
72.
The formula to calculate a CDI = __________.
 
 
73.
The fourth and last step in the sequential process of building brand equity is to __________.
 
 
 

74.
Free samples are one of the most popular means to gain consumer trial. In fact, most consumers consider a sample to __________.
 
 
75.
Gatorade is classified as a(n) __________ brand.
 
 
76.
Gatorade is most likely in which stage of its product life cycle?
 
 
77.
Generally, the average length of time it takes for a product category to move from the introduction stage to the decline stage of its product life cycle is __________.
 
 
78.
Gillette spent $200 million in advertising to introduce the Fusion razor to male shavers. Such expenditures are often made to stimulate __________, the desire for the product class, rather than for a specific brand, when there are few competitors with the same product.
 
 
79.
A good brand name should suggest the product benefits; be memorable, distinctive and positive; fit the company or product image; be simple and emotional; __________; and have favorable phonetic and semantic associations in other languages.
 
 
80.
hile there are the 4 Ps of marketing, there are the __________ Ps of services.
 
 
81.
If a customer is reluctant to try a new product because he would have to change his normal every day behaviors, the company is most likely facing a __________ barrier.
 
 
82.
If a customer is reluctant to try a new product because she is afraid it might make her ill, the company is most likely facing a(n) __________ barrier.
 
 
83.
If a firm's marketing dashboard displays a BDI over 100 for a consumer packaged good, such as General Mills' Warm Delights Minis, this indicates which of the following?
 
 
84.
If a firm's marketing dashboard displays a CDI over 100 for a consumer packaged good, such as General Mills' Warm Delights Minis, this indicates which of the following?
 
 
85.
If you were a marketing manager and were presented with the information in the CDI/BDI Marketing Dashboard above, you would determine that the __________ segment has the most opportunity for increasing Hawaiian Punch sales.
 
 
86.
IKEA sells a portable workbench called the FAHRTFULL. The product has many positive features, and in German or Swedish markets, the name describes the product's features well (fahrt meaning travel). This brand name in the United States, however, may not be as effective due to __________.
 
 
87.
Imagine that Eveready has developed solar rechargeable batteries that cost only slightly more to produce than the rechargeable batteries currently available. These solar batteries can be recharged by sunlight up to 5 times, after which they are to be discarded. Unfortunately, the production process cannot be patented, so competitors could enter the market within a year. Which of the following is the best description of the product life cycle of this product?
 
 
88.
Imagine that Eveready has developed solar rechargeable batteries that cost only slightly more to produce than the rechargeable batteries currently available. These solar batteries can be recharged by sunlight up to 5 times, after which they must be discarded. Unfortunately, the production process cannot be patented, so competitors could enter the market within a year. Which of the following would be the LEAST sound marketing program decision?
 
 
89.
In 1984, IBM launched the PCjr, its first low-priced, educational/home personal computer. Sales were poor because IBM most likely violated which criterion of picking a good brand name?
 
 
90.
Industry analysts estimate that the number of e-mail mailboxes worldwide will grow to __________ by 2016.
 
 
91.
The initial purchase of a product by a consumer is referred to as a(n
 
 
92.
Integrating the service component of the marketing mix with efforts to influence consumer demand is referred to as __________.
 
 
93.
Interactive television with video-on-demand capabilities changes how people watch television and how consumers access the Internet. This technology requires that customers become informed and adapt behaviorally. What type of product life cycle would this product have?
 
 
 

94.
In terms of its effect on faxing, e-mail has __________.
 
 
95.
In terms of new product purchases, early adopters
 
 
96.
In terms of the diffusion of innovation, early adopters account for __________ of product adopters.
 
 
97.
In terms of the diffusion of innovation, early majority accounts for __________ of product adopters.
 
 
98.
In terms of the diffusion of innovation, innovators account for __________ of product adopters.
 
 
99.
In the CDI/BDI Marketing Dashboard above, which segment consumes the LEAST amount of Hawaiian Punch?
 
 
100.
In the CDI/BDI Marketing Dashboard above, which segment consumes the MOST fruit drinks?
 
 
101.
In the seven Ps of services, the term "process" refers to
 
 
102.
A __________ is a brand strategy designed to counteract or confront competitors' brands.
 
 
103.
Johnson & Johnson effectively repositioned St. Joseph Aspirin as a product for infants to an adult low-strength aspirin to reduce the risk of heart attacks or strokes. This is an example of a product repositioning by __________.
 
 
104.
Kellogg's changed the name of its Heartwise cereal to Fiberwise most likely to __________.
 
 
105.
The key idea behind diffusion of innovation is that __________.
 
 
106.
Known for its popular line of construction toys for boys, LEGOS introduced a product line for young girls called LEGO Friends. This is an example of which market modification strategy?
 
 
107.
The lack of profit in the introductory stage of the product life cycle is very often the result of
 
 
108.
The largest numbers of product adopters with respect to the diffusion of innovation are found among __________.
 
 
109.
The life cycle of a product depends on sales to __________.
 
 
110.
A major factor in developing a service marketing strategy is __________ because of the inseparability of services from the producer.
 
 
111.
The Make a Wish Foundation brand name is especially effective because it __________.
 
 
112.
Managers often use two special indexes to help identify strong and weak market segments in order to provide direction for marketing efforts. One of these indexes is the CDI or __________.
 
 
113.
Managers often use two special indexes to help identify strong and weak market segments in order to provide direction for marketing efforts. The two indexes, CDI and BDI, stand for __________.
 
 
114.
Managers often use two special indexes to help identify strong and weak market segments in order to provide direction for marketing efforts. The two indexes focus on __________.
 
 
115.
A manufacturer of a new all-natural-ingredient shampoo and conditioner puts free samples of the product in Sunday newspapers to __________.
 
 
 

116.
Many service businesses use off-peak pricing to reflect variations in
 
 
117.
Many services depend on __________ for the creation and delivery of the customer service experience.
 
 
118.
Marketing for a product in the introduction stage of its product life cycle should focus primarily on gaining awareness and which other marketing objective?
 
 
119.
A marketing strategy that alters a product's characteristic, such as its quality, performance, or appearance, to increase its value and sales to customers is referred to as __________.
 
 
120.
Market modification refers to a marketing strategy that __________.
 
 
121.
Mattel has a contractual agreement to let Colgate use the Barbie name and image on kids' toothpaste and toothbrushes. Colgate pays Mattel a fee for the use of the Barbie name and image. This is an example of __________.
 
 
122.
Mixed branding refers to a branding strategy in which a firm __________.
 
 
123.
Multiproduct branding refers to a branding strategy __________.
 
 
124.
New product brands introduced as defensive moves to counteract and confront a firm's competition are referred to as __________.
 
 
125.
One of the most popular means to gain consumer trial is through
 
 
126.
One of the primary benefits of branding for consumers is that branding __________.
 
 
127.
One tool available when trying to even out the variations in demand for services is __________.
 
 
128.
One type of product that is new to the market is the smart watch, capable of tracking physiological functions and communicating with other devices. According to the product life cycle framework, what marketing objective(s) should producers of smart watches primarily focus on currently?
 
 
129.
An organization's use of a name, phrase, design, symbol, or combination of these to identify its products and distinguish them from those of competitors is referred to as __________.
 
 
130.
Packaging is defined as __________.
 
 
131.
Packaging that provides convenience, product quality assurance, protection, or easy storage offers what kind of benefits?
 
 
132.
People who tried a product, were satisfied, and bought it again are called __________ purchasers.
 
 
133.
Place or distribution is a major factor in developing a service marketing strategy because of the __________ of services.
 
 
134.
The preference for a specific brand is called __________ demand
 
 
135.
Pretzels were first introduced as a salty snack. Later, the product was repositioned as a low-fat snack in order to __________.
 
 
136.
Private branding is also referred to as private labeling or __________.
 
 
137.
Private branding refers to a branding strategy in which a firm __________.
 
 
138.
The process of a product spreading through the population is called the __________.
 
 
139.
A __________ product is a style of the times.
 
 
 

140.
A ________ product is one for which significant customer education is required and there is an extended introductory period.
 
 
141.
The product life cycle refers to
 
 
142.
A product life cycle that results from products that are easily imitated by competitors, whose benefits are readily understood by consumers, and for which the appropriate marketing strategy is to broaden distribution quickly is typical for __________ products.
 
 
143.
A product manager is sometimes called a __________.
 
 
144.
Product modification refers to a marketing strategy that __________.
 
 
145.
A __________ product requires little learning by the consumer, and the benefits of the purchase are readily understood.
 
 
146.
Products tend to consume a disproportionate share of management and financial resources relative to their future worth throughout which stage of the product life cycle?
 
 
147.
Products that are introduced, decline, and seem to return are characteristic of the __________ type of product life cycle.
 
 
148.
Products that experience rapid sales on introduction and then an equally rapid decline are called __________ products.
 
 
149.
Promotional expenditures at the introduction stage of the product life cycle are best spent on __________.
 
 
150.
Promotional expenses at the maturity stage of the product life cycle are often designed to
 
 
151.
A publicity tool frequently used by nonprofit services, which uses free space or time donated by the media, is referred to as a(n)
 
 
152.
Reducing the number of features, qualities, or price when repositioning a product is referred to as __________.
 
 
153.
Reducing the package content without changing package size while maintaining or increasing the package price is referred to as __________.
 
 
154.
The Reynolds's Aluminum foil box has two side tabs that say "Press Here to Lock Roll" to keep the roll of foil in place during use. This demonstrates which elements of good packaging?
 
 
155.
The sale of two or more separate products in one package is referred to as
 
 
156.
Sales exhibit a steady downward trend throughout which stage of the product life cycle?
 
 
157.
The second step in the sequential process of building brand equity is to __________.
 
 
158.
Secret maintains its leadership position as one of many products in what is typically considered a __________ product category.
 
 
159.
Seiko makes watches. It markets its higher quality watches under the Seiko or LaSalle brand name and its lower-priced watches are sold under the Pulsar brand. Seiko uses a __________ strategy.
 
 
160.
Service organizations must manage the availability of the offering so that __________ and the organization's assets are used in ways that will maximize the return on investment (ROI).
 
 
161.
Service providers use tools such as __________, which consists of charging different prices for different times of the day or during different days of the week to reflect the variations in demand for their services.
 
 
162.
A set of human characteristics associated with a brand name is referred to as __________.
 
 
163.
Seventy-one percent of consumers consider __________ to be the best way to evaluate a new product.
 
 
 

164.
The shapes of the product life cycle for high-learning, low-learning, fashion, and fad products vary as does __________.
 
 
165.
The __________ stage of the product life cycle is characterized by rapid increases in sales
 
 
166.
The __________ stage of the product life cycle is characterized by the slowing of total industry sales or product class revenue, causing marginal competitors to begin leaving the market.
 
 
167.
The __________ stage of the product life cycle occurs when a product is launched to its intended target market.
 
 
168.
A strategy for managing a product's life cycle that attempts to find new customers, increase a product's use among existing customers, or create new use situations is referred to as __________.
 
 
169.
A strategy of dropping a product from the product line during the decline stage of the product life cycle is referred to as __________.
 
 
170.
A strategy of harvesting may be employed in the decline stage of a product life to __________.
 
 
171.
The strategy of trading down involves __________.
 
 
172.
Subbranding involves __________.
 
 
173.
The tangibles that make up the service, such as buildings, landscaping, vehicles, furnishings, signage, brochures, and equipment, comprise which element of the seven Ps of services marketing?
 
 
174.
The term branding refers to __________.
 
 
175.
There are several factors why a consumer would be reluctant to adopt a new product. For example, a consumer might be reluctant to adopt a new product because of a value barrier, which occurs when __________.
 
 
176.
There are several reasons why a consumer might be reluctant to adopt a new product. For example, a consumer might be reluctant to adopt a new product because of a usage barrier, which occurs when __________.
 
 
177.
There are several reasons why a consumer would be reluctant to adopt a new product, including a psychological barrier, which occurs when __________.
 
 
178.
There are several reasons why a consumer would be reluctant to adopt a new product, including a risk barrier, which occurs when __________.
 
 
179.
There is no set time that a product takes to move through its life cycle. But, as a rule,
 
 
180.
The third step in the sequential process of building brand equity is to __________.
 
 
181.
Three important aspects of product life cycles are their length, the shape of their sales curves, and the rate at which __________.
 
 
182.
The three main benefits packaging provides to manufacturers, retailers, and consumers are communication benefits, perceptual benefits, and __________ benefits.
 
 
183.
The time a product can be stored before it spoils is referred to as its __________.
 
 
184.
To handle products in the decline stage of the product life cycle, companies often use either a __________ strategy or a __________ strategy.
 
 
185.
Trading down refers to __________ when repositioning a product.
 
 
 

186.
Trading up refers to __________.
 
 
187.
Tuition, charges, fares, fees, and rates are all terms
 
 
188.
Twitter uses a stylized blue or white bird with no text as its __________.
 
 
189.
The two most common pricing alternatives for products in the introduction stage of the product life cycle are __________ and __________.
 
 
190.
Under the concept of the diffusion of innovation, consumers who are deliberate adopters with many informal social contacts are called __________ product adopters.
 
 
191.
Under the concept of the diffusion of innovation, consumers who are leaders in social setting, and have slightly above average education are called __________ product adopters.
 
 
192.
Under the concept of the diffusion of innovation, consumers who are venturesome, highly educated, and use multiple information sources are called what kind of product adopters?
 
 
193.
Under the concept of the diffusion of innovation, consumers who have a fear of debt and depend on neighbors and friends as their information sources are called __________ product adopters.
 
 
194.
Warranties, money-back guarantees, extensive usage instructions, demonstrations, and free samples are all ways in which companies __________.
 
 
195.
What is the marketing objective for the decline stage of the product life cycle?
 
 
196.
What is the marketing objective for the growth stage of the product life cycle?
 
 
197.
What is the marketing objective for the introduction stage of the product life cycle?
 
 
198.
What is the marketing objective for the maturity stage of the product life cycle?
 
 
199.
When a company retains a product but reduces marketing costs, it is referred to as
 
 
200.
When a company uses a product line extension, it
 
 
201.
When a product reaches the decline stage of the product life cycle, a firm has two choices. One choice involves product deletion, dropping it from a firm's product line. The other is called __________, which retains the product in the product line but reduces marketing costs.
 
 
202.
When consumers think of Harley-Davidson, the image is of a masculine non-conformist. With Vespa motor scooters, they think of a brainy environmentalist. Both Vespa and Harley-Davidson __________.
 
 
203.
Which of the following barriers does downsizing try to combat when consumers will adopt a new product or repurchase an existing one?
 
 
204.
Which of the following is a characteristic of the growth stage of the product life cycle?
 
 
205.
Which of the following is a characteristic of the growth stage of the product life cycle?
 
 
206.
Which of the following is a characteristic of the growth stage of the product life cycle?
 
 
207.
Which of the following is an example of a product in the growth stage of the product life cycle?
 
 
208.
Which of the following is an example of a product in the maturity stage of the product life cycle?
 
 
209.
Which of the following is an important aspect of product life cycles?
 
 
210.
Which of the following is a product modification strategy?
 
 
 

211.
Which of the following occurs during the decline stage of the product life cycle?
 
 
212.
Which of the following products would have a fad product life cycle curve?
 
 
213.
Which of the following products would have a fad product life cycle curve?
 
 
214.
Which of the following products would have a fashion product life cycle curve?
 
 
215.
Which of the following products would have a high-learning product life cycle curve?
 
 
216.
Which of the following products would have a low-learning product life cycle curve?
 
 
217.
Which of the following quotes from a new product adopter would signal the need for a firm to counteract a risk barrier?
 
 
218.
Which of the following quotes from a new product adopter would signal the need for a firm to counteract a usage barrier?
 
 
219.
Which of the following statements about are perceptual benefits conveyed by a product's packaging and labeling is NOT true?
 
 
220.
Which of the following statements about product line extensions is most accurate?
 
 
221.
Which of the following statements about the decline stage of the product life cycle is most accurate?
 
 
222.
Which of the following statements about the introduction stage of the product life cycle is most accurate?
 
 
223.
Which of the following statements is most accurate?
 
 
224.
Which of the following statements regarding Gatorade's branding is most accurate?
 
 
225.
Which of the following statements regarding labels is most accurate?
 
 
226.
Which of the following statements regarding service branding is most accurate?
 
 
227.
Which of the following statements regarding the maturity stage of the product life cycle is most accurate?
 
 
228.
Which of the following statements regarding the maturity stage of the product life cycle is most accurate?
 
 
229.
Which of the following statements regarding the place element of services is most accurate?
 
 
230.
Which stage in the product life cycle is characterized by a rapid increase in sales and the appearance of competitors?
 
 
231.
Which type of product has equally rapid introduction and decline stages of the product life cycle?
 
 
 

232.
Xunrui Communications is an upstart maker of inexpensive smartphones for the Chinese market. Xunrui purchases components and uses small assembly factories in Shenzhen, in southern China. These smartphones retail for about $65 in U.S. dollars, much less than the $250 to $600 for smartphones marketed by Apple or Samsung, the top two marketers of these items. Here, Xunrui Communications most likely is using which pricing strategy
 
 
233.
Your product has been suffering from steadily eroding sales. You have tried to revitalize the product's sales and profits, but after seven strategy changes, you have yet to find success. Which of the following actions would be the LEAST appropriate next step?
 
 
 

1.
3D HDTVs are in which stage of the product life cycle?
 
 
2.
3M is a master of the __________ pricing strategy. According to a 3M manager, "We hit fast, price high, and get the heck out when the me-too products pour in."
 
 
3.
According to the text, the Kodak Playsport pocket video camera is most likely in what stage of its product life cycle?
 
 
4.
An all electric-powered automobile is in which stage of its product life cycle?
 
 
5.
All of the following are market modification strategies EXCEPT __________.
 
 
6.
All of the following are responsibilities of a product or brand manager EXCEPT: __________.
 
 
7.
Apple introduced the iPhone and iPad that use a multitouch screen to control and interact with what's on its screen, as well as the Magic Trackpad, which is also is a multitouch device. These devices require consumers to use gestures (touch, swipe, tap, etc.) to perform various functions. This could "exterminate" the "mouse," a device Apple invented in 1977 for its Apple II computer that enabled users to perform various functions by moving the mouse and clicking its buttons. Based on the emergence of these two multitouch technologies, the mouse is now most likely is in the __________ stage of its product life cycle.
 
 
8.
As product adopters, members of the late majority __________.
 
 
9.
As shown in the CDI/BDI marketing dashboard above, a BDI of 30 is determined by __________.
 
 
10.
At which stage in the product life cycle do industry profits usually peak?
 
 
11.
At which stage of the product life cycle is a company likely to have its most complete product line?
 
 
12.
Bayer aspirin is sold in the original strength, in a safety-coated version, in an extra-strength version, and in a version designed especially for women. The manufacturer of Bayer aspirin is using __________.
 
 
13.
A brand name refers to __________.
 
 
14.
The central element of the marketing strategy for Pez Candy, Inc., is the __________.
 
 
15.
Changing the place a product occupies in a consumer's mind relative to competitive products is referred to as __________.
 
 
16.
A company may choose a skimming strategy during the introduction stage of its product to help recover costs of development and/or to __________.
 
 
17.
Consider the PLC product photos above. Which stage of the product life cycle (PLC) is the Apple MacPro desktop computer?
 
 
18.
The consumers represented by "A" in Figure 11-5 above are called __________.
 
 
19.
The consumers represented by "B" in Figure 11-5 above are called __________.
 
 
20.
The consumers represented by "C" in Figure 11-5 above are called __________.
 
 
21.
Counterfeit products steal sales from the original manufacturer or harm the company's reputation. U.S. companies lose up to __________ each year to counterfeit products.
 
 
22.
During the introduction stage of the product life cycle, promotional expenditures are made to stimulate consumer desire for an entire product class rather than for a specific brand. The consumer demand that is stimulated is referred to as __________ demand.
 
 
23.
Even though Liquid Paper correction fluid is in the __________ stage of its product life cycle, Sanford, its manufacturer, has not deleted it from its line because there is still a residual core of consumers who use the product.
 
 
24.
A few years ago, Who Wants to Be a Millionaire premiered as the first nighttime TV game show in several decades. The marketing goals for the show included making television viewers aware of its existence and generating enough excitement about the show so that millions of viewers would watch the first episode. Based on this description, the TV show was in what stage of its product life cycle?
 
 
25.
Figure 11-1 above represents the stages of the product life cycle. What does the curve labeled "X" represent?
 
 
26.
Figure 11-1 above represents the stages of the product life cycle. What does the curve labeled "Y" represent?
 
 
27.
Figure 11-1 above represents the stages of the product life cycle. What does the portion of the curve labeled "C" represent?
 
 
28.
Figure 11-1 above represents the stages of the product life cycle. What does the portion of the curve labeled "D" represent?
 
 
29.
For years when most consumers thought of cranberries, they thought of the Ocean Spray brand. Then Northland cranberry juice came on the market, claiming that it was superior to the Ocean Spray brand. Northland was creating __________ demand for its cranberry products.
 
 
 

30.
Gillette spent $200 million in advertising to introduce the Fusion razor to male shavers. Such expenditures are often made to stimulate primary demand, or desire for the product __________, rather than for a specific brand, when there are few competitors with the same product.
 
 
31.
Greeting cards are an example of a __________, and Valentine cards are an example of a __________.
 
 
32.
If a customer is reluctant to try a new product because she's afraid it might make her ill, the company is most likely facing a __________ barrier.
 
 
33.
If a firm's marketing dashboard displays a BDI under 100 for a consumer packaged good, such as General Mills' Warm Delights Minis, this indicates which of the following?
 
 
34.
Industry analysts estimate that the number of e-mail mailboxes worldwide will grow to __________ by 2014.
 
 
35.
The initial purchase of a product by a consumer is referred to as a(n) _________.
 
 
36.
In its recent "You're not you when you're hungry—Snickers satisfies" TV ad, Mars, the maker of the Snickers candy bar, repositioned Snickers from a candy bar dessert-like food to a snack food that can satisfy hunger. Mars used this repositioning strategy with its Snickers brand to __________.
 
 
37.
In terms of its effect on faxing, e-mail has __________.
 
 
38.
In terms of new product purchases, early adopters __________.
 
 
39.
In terms of the diffusion of innovation, innovators account for __________ of product adopters.
 
 
40.
In terms of the diffusion of innovation, late majority accounts for __________ of product adopters.
 
 
41.
In the late 1950s and 1960s, television westerns were extremely popular. The shows were adventure shows with settings and costumes that were very unlike what really existed. There was Gunsmoke, Bonanza, Wagon Train, The Big Valley etc. When ratings declined as viewers gradually stopped watching this TV genre, production companies found the networks no longer wanted to buy and televise such shows. The production companies used a __________ strategy and stopped production on all television westerns when the networks stopped showing them.
 
 
42.
In which stage of the product life cycle do marginal competitors begin to leave the market?
 
 
43.
The largest numbers of product adopters with respect to the diffusion of innovation are found among __________.
 
 
44.
The life cycle of a product depends on sales to __________.
 
 
45.
Major American car manufacturers are offering buying incentives to newly graduated college students who traditionally have little or no credit. Car manufacturers are using which of the following market modification strategies?
 
 
46.
A manufacturer of a new all-natural-ingredient shampoo and conditioner puts free samples of the product in Sunday newspapers to __________.
 
 
47.
Mattel has a contractual agreement to let Colgate use the Barbie name and image on kids' toothpaste and toothbrushes. Colgate pays Mattel a fee for the use of the Barbie name and image. This is an example of __________.
 
 
48.
A new exercise video contends that with one day of fasting and a one-hour period of intense cardiovascular exercise, the average individual can lose five pounds a week and be in peak health within six months of starting the program. __________ barriers will doom the new product to failure because the product's claims are not consistent with how consumers think and behave.
 
 
49.
Pez was originally sold in Europe as an adult __________.
 
 
50.
Product changes characteristically take place in the __________ stage of the product life cycle.
 
 
 

51.
Product form refers to __________.
 
 
52.
A __________ product is one for which significant customer education is required and there is an extended introductory period.
 
 
53.
The product life cycle refers to __________.
 
 
54.
A __________ product requires little learning by the consumer, and the benefits of the purchase are readily understood.
 
 
55.
Profits tend to consume a disproportionate share of management and financial resources relative to their worth throughout which stage of the product life cycle?
 
 
56.
Promotional expenditures at the introduction stage of the product life cycle are best spent on __________.
 
 
57.
Promotional expenses at the maturity stage of the product life cycle are often designed to __________.
 
 
58.
Ralston Purina advertises with the following slogan: "Your Pet, Our Passion—Premium Pet Food by Purina." They offer high quality, super-premium cat and dog food based on formulations that promote "life stage nutrition." This is an example of __________.
 
 
59.
Reducing the number of features, qualities, or price when repositioning a product is referred to as __________.
 
 
60.
Reducing the package content without changing package size while maintaining or increasing the package price is referred to as __________.
 
 
61.
The sale of two or more separate products in one package is referred to as __________.
 
 
62.
Sealy, the self-proclaimed largest manufacturer of mattresses in the U.S., recently set out to redefine its place in the bedrooms of America. No longer was it going to be known as simply a mattress company. Now the name Sealy was going to be known as the world's leading "sleep wellness provider." This is an example of __________.
 
 
63.
The shapes of the product life cycle for high-learning, low-learning, fashion, and fad products vary as does __________.
 
 
64.
The __________ stage of the product life cycle is characterized by the slowing of total industry sales or product class revenue, causing marginal competitors to begin leaving the market.
 
 
65.
The __________ stage of the product life cycle occurs when a product is launched to its intended target market.
 
 
66.
A strategy for managing a product's life cycle that attempts to increase a product's use among existing customers, create new use situations, or find new customers is referred to as __________.
 
 
67.
A strategy of dropping a product from the product line during the decline stage of the product life cycle is referred to as __________.
 
 
68.
A strategy of harvesting may be employed in the decline stage of a product life to __________.
 
 
69.
The term product class refers to __________.
 
 
70.
There are several factors why a consumer would be reluctant to adopt a new product. For example, a consumer might be reluctant to adopt a new product because of a value barrier, which occurs when __________.
 
 
71.
There are several reasons why a consumer would be reluctant to purchase a new product. For example, a consumer might be reluctant to adopt a new product because of e a psychological barrier, which occurs when __________.
 
 
 

72.
To better connect with its customers, the Campbell Soup Company __________.
 
 
73.
To counteract product counterfeiting, the U.S. government passed the __________ in 2006.
 
 
74.
To help differentiate a company's brand from competitors, an improved version is created, or new features are added to the original design, and product proliferation occurs in the __________ stage of the product life cycle.
 
 
75.
Trading down refers to __________ when repositioning a product.
 
 
76.
Trading up refers to __________.
 
 
77.
Vinyl records, cassette tapes, CDs, and music downloads (mp3 files) are all members of the same __________.
 
 
78.
Warranties, money-back guarantees, extensive usage instructions, demonstrations, and free samples are all ways in which companies __________.
 
 
79.
What is the marketing objective for the decline stage of the product life cycle?
 
 
80.
What is the marketing objective for the introduction stage of the product life cycle?
 
 
81.
When a product that spreads through the population, it is called the __________.
 
 
82.
When most consumers who would buy a product are either repeat purchasers of the item or have tried and abandoned it, what stage of the product life cycle is the product in?
 
 
83.
When the Egg Farmers of Canada advertise "Get Cracking" they are trying to stimulate __________ demand.
 
 
84.
Which of the following is a characteristic of the growth stage of the product life cycle?
 
 
85.
Which of the following is a characteristic of the growth stage of the product life cycle?
 
 
86.
Which of the following is an example of a product in the decline stage of the product life cycle?
 
 
87.
Which of the following is an example of a product in the maturity stage of the product life cycle?
 
 
88.
Which of the following occurs during the decline stage of the product life cycle?
 
 
89.
Which of the following products would have a fad product life cycle curve?
 
 
90.
Which of the following products would have a high-learning product life cycle curve?
 
 
91.
Which of the following products would have a low-learning product life cycle curve?
 
 
92.
Which of the following quotes from a new product adopter would signal the need for a firm to counteract a value barrier?
 
 
93.
Which stage in the product life cycle is characterized by a slowing of total industry sales or product class revenue?
 
 
94.
Which type of product has equally rapid introduction and decline stages of the product life cycle?
 
 
95.
Your product has been suffering from steadily eroding sales. You have tried a number of options to revitalize the product's sales and profits, but after seven changes in your strategy, you have yet to find success. Which of the following actions would be the LEAST appropriate next step?
 
 
 

 
 
 
In terms of the diffusion of innovation, innovators account for____ of product adopters
 
 
 
In terms of the diffusion of innovation, early adopters account for ____ of product adopters
 
 
 
In terms of the diffusion of innovation, laggards account for___ of product adopters
 
 
 
The added value a brand name gives to a product beyond the functional benefits provided is referred to as
 
 
 
Equity in the Huggies family brand name has allowed Kimberley- Clark to successfully use ____ to leverage the strong Huggies brand equity among mothers when it introduced a full line of baby and toddler toiletries.
 
 
 
An organization's use of a name, phrase, design, symbol, or combination of these to identify its products and distinguish them from those of competitors is referred to as
 
 
 
A tractual agreement whereby one company (licensor) allows its brand name or trademark to be used with products or services offered by another company (licensee) for a royalty or fee is referred to as
 
 
 
Any word, device (design, sound, shape, or color), or combination of these used to distinguish a seller's
goods or services is referred to as a
 
 
 
A set of human characteristics associated with a brand name is referred to as
 
 
 
The pairing of two brand names of two manufacturers on a single product is referred to as
 
 
 
the life cycle of a product depends on sales to
 
 
 
Sales exhibit a steady downward trend throughout which stage of the product life cycle?
 
 
 
A strategy of dropping a product from the product line during the decline stage of the product life cycle is referred to as
 
 
 
To handle products in the decline stage of the product life cycle, companies often use either a ___or a ____ strategy.
 
 
 
what is the marketing objective for the growth stage of the product life cycle
 
 
 
When a product that spreads through the population, it is called the
 
 
 
Reducing the package content without changing package size while maintaining or increasing the package price is referred to as
 
 
 
for any product to be successful, it must be purchased by
 
 
 
Consumers who are leaders in social settings and have slightly above average educations are called
 
 
 
Consumers who are deliberate adopters with many informal social contacts are called
 
 
 
The largest numbers of product adopters with respect to the diffusion of innovation are found among
 
 
 
Products that experience rapid sales on introduction and then an equally rapid decline are called ___ products.
 
 
 
Another name for multiproduct branding is
 
 
 
Products that are introduced, decline, and seem to return are characteristic of the ___ type of product life cycle.
 
 
 
A ____ product is a style of the times.
 
 
 
New product brands introduced as defensive moves to counteract and confront a firm's competition are referred to as
 
 
 
What is the marketing objective for the introduction stage of the product life cycle?
 
 
 
Which stage in the product life cycle is characterized by a rapid increase in sales and the appearance of competitors?
 
 
 
Product changes characteristically take place in the ___stage of the product life cycle.
 
 
 
When a company retains a product but reduces marketing costs, it is referred to as
 
 
 
What is the marketing objective for the decline stage of the product life cycle?
 
 
 
A ___ product is one for which significant customer education is required and there is an extended introductory period.
 
 
 
Consumers who are venturesome, highly educated, and use multiple information sources are called
 
 
 
Warranties, money-back guarantees, extensive usage instructions, demonstrations, and free samples are all ways in which companies attempt to overcome barriers to product adoption during the ____
stage of a product's life cycle.
 
 
 
The market ____ stage of the product life cycle occurs when a product is launched to its intended target
 
 
 
Consumers who have a fear of debt and depend on neighbors and friends as their information sources are called
 
 
 
Consumers who are skeptical and have below average social status are called
 
 
 
A ___ product requires little learning by the consumer, and the benefits of the purchase are readily understood.
 
 
 
What is the marketing objective for the maturity stage of the product life cycle?
 
 
 
A strategy for managing a product's life cycle that attempts to increase a product's use among existing customers, create new use situations, or find new customers is referred to as
 
 
 
The___ stage of the product life cycle is characterized by the slowing of total industry sales or product class revenue, causing marginal competitors to begin leaving the market.
 
 
 
At which stage of the product life cycle is a company likely to have its most complete product line?
 
 
 
A branding strategy in which a company uses one name for all its products in a product class is referred to as
 
 
 
During the introduction stage of the product life cycle, the strategy that discourages competitive entry by charging a low price for a new product is referred to as ___ pricing.
 
 
 
The desire for a product class rather than for a specific brand is called a selective____
demand.
 
 
 
When the National Cattlemen's Beef Association developed the "Beef, It's What's for Dinner" advertising campaign, it was trying to stimulate
 
 
 
the sale of two or more separate products in one package is referred to as
 
 
 
The entire product category or industry is referred to as
 
 
 
High definition televisions (HDTVs) are an example of a __ , flat screen HDTVs are an example of a ___ ; and a Sony Bravia HDTV is an example of a ___.
 
 
 
 
 
 
 
 
 

 
 
 
The marketing of low-cost copies of popular brands not manufactured by the original producer is referred to as
 
 
 
Variations of a product within a product class are referred to as a/the
 
 
 
A concept that describes the stages a product goes through in the marketplace—introduction, growth,
maturity, and decline—is referred to as the
 
 
 
When a company manufactures a new product with the current brand name to enter a new market segment in its product class, it is using
 
 
 
refers to a marketing strategy that alters a product's characteristic such as its quality, performance, or appearance to increase its value to . customers and to increase sales
 
 
 
Changing the place a product occupies in a consumer's mind relative to competitive products is referred to as
 
 
 
People who tried a product, were satisfied, and bought it again are called
 
 
 
If a customer is reluctant to try a new product because she's afraid it might make her ill, the company is most likely facing a ___ barrier.
 
 
 
The preference for a specific brand is called___ demand
 
 
 
As more competitors launch their own products and the product progresses along its life cycle, company attention is focused on creating____demand, or the preference for a specific brand.
 
 
 
During the introduction stage of the product life cycle, a(n) ____ pricing strategy may be used. This pricing strategy charges a high initial price to recoup the costs of product development.
 
 
 
Combining a corporate or family brand with a new brand to distinguish a part of its product line from others is referred to as
 
 
 
The identification that a firm has legally registered its brand name or trade name so the firm has its exclusive use, thereby preventing others from using it, is referred to as a
 
 
 
The commercial, legal name under which a company does business is referred to as a
 
 
 
Reducing the number of features, qualities, or price when repositioning a product is referred to as
 
 
 
Adding value to the product (or line) through additional features or higher-quality materials is referred to as
 
 
 
The initial purchase of a product by a consumer is referred to as a
 
 
 
A exercise video contends that with one day of fasting and a one-hour period of intense cardiovascular exercise, the average individual can lose five pounds a week and be in peak health within six months of starting the program ____ barriers will doom the new product to failure because the product's claims are not consistent with how consumers think and behave.
 
 
 
If a customer is reluctant to try a new product because he'd have to change his normal every day behaviors, the company is most likely facing a ___ barrier.
 
 
 
Imagine that Post Cereal introduces a cereal bar—Trail Mix Crunch—just like the ones Kellogg's and General Mills already have on the market. Post has decided to promote the bars using ads without coupons and to price the bars at about the same price as these other brands. Post Cereal Trail Mix Crunch cereal bars will also be distributed to the same stores as the products from Kellogg's and General Mills' bars. Which of the following barriers to new product adoption will most likely prevent the Post Cereal Trail Mix Crunch cereal bars from being a successful product?
 
 
 
 
 
 
 

1.
7-Eleven rebranded 11 of its American stores and one Canadian store as "Kwik-E-Marts," selling some real-life versions of products seen in episodes of The Simpsons, such as Buzz Cola and Krusty-O's cereal. This form of promotion is referred to as __________.
 
 
2.
ABB is a Swiss-based manufacturer of industrial equipment with annual sales of $30 billion. At one time, ABB had a salesforce that sold only generators, one that only sold boilers, another that only sold transformers, and so forth. Each of its salespeople was an expert on the items he or she sold. Its salesforce was organized by __________.
 
 
3.
About 60 percent of U.S. companies now include __________ as a behavioral measure of salesperson performance.
 
 
4.
According to class, distribution's main role within the marketing mix is to:
 
 
5.
According to Figure 12-6 above, "C" represents which dimension of service quality?
 
 
6.
According to Figure 14-1 above, "A" represents which step in the price-setting process?
 
 
7.
According to Figure 14-1 above, "E" represents which step in the price-setting process?
 
 
8.
According to lecture, for every customer who bothers to complain to the marketer about a problem, how many other customers remain silent about their problem experience?
 
 
9.
According to lecture, _____________ goals include to Communicate customer value, Build a brand/company image, explain how the product works, and suggest new uses for a product.
 
 
10.
According to lecture, how much more does it cost to attract a new customer than to keep an existing one?
 
 
11.
According to lecture, retail operating costs are higher than wholesaler operating costs. Why is that true?
 
 
12.
According to lecture, SCM requires us to put information systems and metrics in place that focus on performance across the entire supply chain. Why is this important?
 
 
13.
According to the lecture, 1-800-flowers.com is a good example of:
 
 
14.
According to the lecture, about how much does the service sector contribute to the U.S. economy?
 
 
15.
According to the lecture, GEICO started its "caveman" ads because,
 
 
16.
According to the lecture, __________ goals include maintaining customers relationships and keeping the brand in the consumer's mind during the off-season
 
 
17.
According to the lecture, ____________ is the process of conveying a message to others.
 
 
18.
According to the lecture, the PETA TV ad which used singing cows was a good example of a:
 
 
19.
According to the lecture, which of the following is NOT a good example of a value provided to customers by improved services?
 
 
20.
According to the lecture, which one of the following is a "new" role for the promotion mix?:
 
 
21.
According to the lecture, which one of the following is a "new" role for the promotion mix?
 
 
22.
According to the service continuum shown in Figure 12-3 above, which of the following offerings has the HIGHEST level of intangibility?
 
 
23.
According to the textbook, one of the MOST crucial tasks of sales management is
 
 
24.
Activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost are referred to as __________.
 
 
25.
The actual procedures, mechanisms, and flow of activities by which a service is created and delivered is referred to as __________.
 
 
26.
The added value a brand name gives to a product beyond the functional benefits provided is referred to as __________.
 
 
27.
An ad for an international consulting firm was intended to communicate the company's philosophy—that you can be big and nimble at the same time—rather than sell any one particular service the company provides. The ad is an example of __________ institutional advertising.
 
 
28.
An ad for Conesco Insurance asks the question, "How long will you wait to start planning for long-term care?" The ad shows an elderly women being assisted by a nurse as she tries to win money on a game show. The idea that she will not have the care she needs because she failed to plan her finances for the future when she was younger is an example of a __________.
 
 
29.
The advantage of a product sales organization is that
 
 
30.
Albertson's Supermarket accepts debit and credit cards as well as cash and checks for purchases. Its acceptance of various forms of payment provides its customers with __________ utility.
 
 
31.
Alice Faulkner is a professional salesperson. She earns her living by selling advertising for The New York Times newspaper. In addition to selling advertising to her regular accounts, Alice is responsible for generating new advertising accounts for the newspaper. In order to fulfill her responsibilities, Faulkner works hard to make sure the potential customers she sells to are qualified prospects. How can Faulkner know if the prospects she is selling to are in fact qualified prospects?
 
 
32.
Allegra is an antihistamine. To create brand awareness, the company is offering people who request information about the product a seat cushion to use at their favorite sporting event. Its television ad shows a woman half-heartedly watching a sporting event. The voiceover asks if she is bored or congested. In the next scene, the person is having a great time and is decongested after taking Allegra. This use of the same promotional theme throughout a company's marketing campaign is an example of how marketers use __________.
 
 
33.
All of the following actions occur during the business analysis stage of the new-product process EXCEPT:
 
 
34.
All of the following are sales presentation formats EXCEPT:
 
 
35.
All of the following are social media performance measures EXCEPT:
 
 
36.
All of the following are true about the length of product life cycles EXCEPT:
 
 
37.
All the following statements about user generated content (UGC) are true EXCEPT:
 
 
38.
Amazon uses supply chain and logistics management to
 
 
 
 
 
 
 
 
 

39.
The American Red Cross uses social marketing tools such as __________ to help the victims of Hurricane Sandy.
 
 
40.
An analysis of a prospective product shows that sales for it are expected to grow by at least 10 percent each year over the next 5 years before it enters the maturity phase of its product life cycle. This type of analysis would provide useful information in which step of the price-setting process?
 
 
41.
Andrea Arenas is the owner of 2 Places at 1 Time, a concierge company. She and her staff of 60 perform everyday services such as walking the dog, picking up cleaning, waiting for the repairman, and going to the post office for people who are too busy to perform these simple acts. She is often hired by major corporations to perform services for their harried executives and their spouses. Her clients can evaluate the services that 2 Places at 1 Time provide
 
 
42.
Another name for an extreme value retailer is a(n) __________.
 
 
43.
Another name for cold calling is
 
 
44.
The arrangement in which small, independent retailers form an organization that operates a wholesale facility cooperatively is referred to as a(n) __________.
 
 
45.
As a dimension of service quality, knowledge and courtesy of employees and their ability to convey trust and confidence is referred to as __________.
 
 
46.
As noted in class, GEICO originally used a(n) ______________ channel of marketing.
 
 
47.
As product adopters, innovators
 
 
48.
As product adopters, members of the early majority
 
 
49.
Assuming the information in UMD12: Capacity Management for JetBlue Airways shown above will not change in the near future, what actions would recommend that JetBlue take?
 
 
50.
As we discussed in class, services differ from products (goods) in along a variety of dimensions. Which characteristic of services means that marketers must find ways to relate services to situations that will be familiar to the customer? The characteristic of:
 
 
51.
At the time of its introduction, which of the following products was the BEST example of a continuous innovation?
 
 
52.
At which stage in the personal selling process would a salesperson ask the customer whether he or she is satisfied with the product?
 
 
53.
Based on lecture, a supermarket that offers to carry your packages to your car for you is providing you with:
 
 
54.
Based on lecture, which of the following would be a good example of an ancillary service seen in B2B marketing?
 
 
55.
Based on lecture, which property of services can consumers evaluate DURING (or after) the service purchase?
 
 
56.
Based on the social media identified in Figure 19-1 above, Second Life has a __________ degree of self-disclosure than World of Warcraft.
 
 
57.
The battle for market share is usually fought directly before the __________ stage, and some competitors drop out of the market.
 
 
58.
Bernina, a sewing machine manufacturer, has an ongoing ad campaign in which it encourages sewers to stop in to their local Bernina dealer to register to win a new sewing machine. No purchase is necessary. Bernina is using a __________ sales promotion tool.
 
 
59.
Brand equity is the added value a brand name gives to a product beyond the functional benefits provided. This value has two distinct advantages: (1) it creates a competitive advantage and (2) __________.
 
 
60.
A break-even chart for comparing independent agents and a company salesforce includes a(n) __________ and __________.
 
 
61.
The brochure for Spa Sydell has photographs of people enjoying the various spa amenities. By seeing the pictures of available treatments at the spa, a customer has a better idea of what she is buying. Spa Sydell uses a brochure to help customers deal with the __________ that is associated with using the service.
 
 
62.
Carrying out the promotion program can be expensive and time consuming. One researcher estimates that "an organization with sales between $200 million and $500 million will need __________ years" to successfully implement an IMC program.
 
 
63.
The car salesman was overheard having the following conversation with a prospective customer: "What type of driving do you do?"; "How many people will you usually have riding in your car?"; and "Maybe you should look at vans instead of sedans." From this information, the car salesman was using a
 
 
64.
Channels are typically designed to satisfy one or more of four consumer buying requirements. When a membership book club allows its members to use the Internet to notify the company whether they want to receive the next month's issue, the book club is appealing to which buyer requirement?
 
 
65.
The closing stage in the selling process involves obtaining a purchase commitment from the prospect. This stage is the most important and the most difficult because the salesperson must determine when the prospect is ready to buy. Telltale signals indicating a readiness to buy include
 
 
66.
Commercialization is the stage in the new-product process
 
 
67.
A common publicity tool is the __________, where representatives of the media are all invited to an informational meeting and advance materials regarding the content are sent out in advance.
 
 
68.
The communication aspect of packaging on a can of Campbell's soup would MOST LIKELY be of the greatest benefit to __________.
 
 
69.
Companies can employ four general branding strategies, which include: (1) multiproduct branding; (2) __________; (3) private branding; and (4) mixed branding.
 
 
70.
A company uses __________ when it manufactures products but sells them under the brand name of a wholesaler or retailer.
 
 
71.
The concept of the diffusion of innovation shows how a product "diffuses" or spreads through the population over time. The consumer population is divided into five categories of product adopters based on when they adopt (i.e., first buy) a new product. Each product adopter category has a unique profile. Consumers who are skeptical and with below average social status are called __________ product adopters.
 
 
72.
Consider Figure 14-8 above. Suppose a manufacturer quotes price in the following form: List price—$100 less 30/10/5. What does "C" represent?
 
 
73.
Consider Figure 20-6A above. If a company chooses to employ its own salesforce, there are three basic organizational salesforce structures from which to choose. "A" represents which type of salesforce organization structure?
 
 
74.
Consider the Huggies photo above. Kimberley-Clark has successfully leveraged the strong Huggies brand image among mothers in its use of __________ when it introduced a full line of baby and toddler toiletries.
 
 
75.
Consumer advocates believe the practice of downsizing by consumer products firms has resulted in __________.
 
 
 

76.
Consumer packaged goods firms like General Mills and PepsiCo and as well as industrial firms such as Intel and Hewlett-Packard employ a product manager to manage __________.
 
 
77.
CoolMax is a fabric made by DuPont. It is used in the manufacture of exercise clothes because it keeps the user "cool and dry." The ads for the fabric in health and fitness magazines convinced Kumar to buy a pair of Thorlo CoolMax walking crew socks made of the material. Since he had never before owned anything made with CoolMax, Kumar was in which stage of the hierarchy of effects?
 
 
78.
The __________ cost of a service is the cost of paying the person used to provide the service along with any needed equipment.
 
 
79.
Cost per action refers to
 
 
80.
Customers currently link to Cisco's website to configure, price, and order its networking equipment. Cisco then sends orders back out across the Internet to producers and assemblers including Celestica, Flextronics, Jabil, and Solectron. Products are built and tested to Cisco's standards, sometimes with procedures run remotely by Cisco. Most items are then drop-shipped to buyers, untouched by Cisco's employees. This is a description of Cisco's
 
 
81.
The demand for a business product that results from the demand for a consumer product is referred to as
 
 
82.
Determining cost, volume, and profit relationships would occur during __________ of the price-setting process.
 
 
83.
Developing, pricing, promoting, and delivering services is challenging because the quality of a service is often
 
 
84.
Diamond Line is a distributor of everything a florist needs to create a beautiful arrangement except the flowers. It sells to 10,000 flower and gift shops and 5,000 supermarkets nationwide. Each florist is called on four times a month and each supermarket is called on twice a month. Assume a 52-week calendar year and that each salesperson takes a four-week vacation. A sales call to a florist takes one hour, and a sales call to a supermarket takes two hours of selling time. An average salesperson spends 1,000 hours per year making sales calls. Calculate the number of salespeople Diamond Line needs to cover its account base. The number of salespeople is __________.
 
 
85.
The difference between the final selling price and the retailer's cost is referred to as a(n) __________.
 
 
86.
Discounting generally takes place during which stage of the retail life cycle?
 
 
87.
Disintermediation refers to channel conflict that arises when
 
 
88.
Disney uses an integrated marketing communications program (IMC) to promote group travel to its theme parks because
 
 
89.
A dominant manufacturer of office copiers decides that it will offer a "special deal" to businesses. The firm will offer a special sale on their copiers, but only if the customer also agree to purchase over-priced service agreements. This is an example of:
 
 
90.
Downsizing reduces the __________.
 
 
91.
During the evaluation phase of an IMC program, a firm will __________ and make needed changes.
 
 
92.
During the __________ stage of its product life cycle, a firm has great latitude in setting and maintaining a premium price.
 
 
93.
Employing the Internet to make products and services available for consumption or use by consumers or organizational buyers is referred to as __________.
 
 
94.
Enhancing a product or service to make it more appealing to buyers is __________ utility.
 
 
95.
Every product manufactured by the maker of Slim-Fast carries the Slim-Fast brand name. This company uses __________.
 
 
96.
An example of a smart system is (are)
 
 
97.
The executive vice president of Washburn Guitars has set a sales target of 2,000 units for a new line of guitars. This type of objective is a(n) __________ pricing objective.
 
 
98.
A __________ explains: (1) to whom a salesperson reports; (2) how a salesperson interacts with other company personnel; (3) the customers to be called on; (4) the specific activities to be carried out; (5) the physical and mental demands of the job; and (6) the types of products and services to be sold.
 
 
99.
Facebook is
 
 
100.
Facsimile, e-mail, and voice mail are common __________ technologies salespeople use today.
 
 
101.
Figure 10-3 above represents the seven stages of the new-product development process. Stage 3 is the __________ stage.
 
 
102.
Figure 10-3 above represents the seven stages of the new-product development process. Stage 4 is the __________ stage.
 
 
103.
Figure 11-1 above represents the stages of the product life cycle. What does the curve labeled "Y" represent?
 
 
104.
Figure 14-1 above represents the six steps in setting price. Which letter represents the step where a firm would offer discounts?
 
 
105.
Figure 14-2a above represents the four approaches to selecting an appropriate price level. "A" represents which approach?
 
 
106.
Figure 14-2b above represents the four approaches to selecting an appropriate price level. "B" includes customary and loss leader so it represents which approach?
 
 
107.
Figure 14-3 above is a graph that shows which pricing strategy?
 
 
108.
Figure 14-7 above shows the three major types of special adjustments to list or quoted price. "A" represents
 
 
109.
Figure 17-1 above depicts the communication process, which consists of ten key elements ("A" through "J"). The position labeled "C" is referred to as __________.
 
 
110.
The first Mountain Dew DEWmocracy campaign asked consumers to choose the next Dew's flavor, color, name, and graphics. How many people participated in the process that resulted in Voltage being introduced to the market?
 
 
111.
Five pricing practices are closely scrutinized because of potential unethical or illegal actions. They include: (1) price fixing; (2) price discrimination; (3) deceptive pricing; (4) geographical pricing; and (5) __________.
 
 
 
 
 
 
 
 
 
 

112.
For many years, Kellogg's Frosted Flakes, a ready-to-eat breakfast cereal, was perceived as a cereal for children. Tony the Tiger, a cartoon character, extolled Frosted Flakes, and advertisements depicted children enjoying the product with Tony in competitive situations. Recently, in response to declining sales of Frosted Flakes, the cereal-maker has adopted a new series of advertisements that show adults admitting that they enjoy Frosted Flakes, too. Kellogg's is attempting to __________.
 
 
113.
Formulating the sales plan involves three tasks: (1) setting objectives; (2) organizing the salesforce; and (3) __________.
 
 
114.
For years, when most consumers thought of cranberries, they thought of the Ocean Spray brand. Then Northland cranberry juice came on the market, claiming that it was superior to the Ocean Spray brand. Northland was creating __________ demand for its cranberry products.
 
 
115.
The four major types of limited-service merchant wholesalers are cash and carry wholesalers, drop shippers, truck jobbers, and __________.
 
 
116.
The four types of discounts are
 
 
117.
Franchising is a type of __________.
 
 
118.
From a marketing viewpoint, __________ is the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service.
 
 
119.
From what we heard in class about scheduling our advertising, in which type of schedule do our ads run for very short periods of time and then there are no ads at all with the ads in concentrated forms?
 
 
120.
From what we heard in class, which form of media would you choose if your ad needed the consumer's attention and needed excellent quality of reproduction.
 
 
121.
A full warranty
 
 
122.
The Gap in-store signage photo above shows that customers can save 60 percent off a second item if they purchase one at the full price. This is an example of a __________ deal to entice shoppers to buy additional items.
 
 
123.
Gatorade Thirst Quencher displays the letter G front and center along with the brand's iconic bolt. "For Gatorade, 'G' represents the heart, hustle, and soul of athleticism and will become a badge of pride for anyone who sweats, no matter where they're active." This is an example of __________ benefits of its packaging.
 
 
124.
Geographic adjustments are made by manufacturers or wholesalers to cover
 
 
125.
Given that a firm's profit is high enough for it to remain in business, an objective may be to __________, which will in turn lead to increases in market share and profit.
 
 
126.
Given your situation, you decide to set your price based on the traditional price in the channel of distribution or in your market According to the lecture, what type of pricing approach is this?
 
 
127.
__________ gives its outstanding salespeople some unconventional rewards that include new pink Cadillacs and jewelry.
 
 
128.
Google's mission is to
 
 
129.
The highest inventory carrying costs would MOST LIKELY be for which of the following services?
 
 
130.
Horizontal conflict refers to conflict that occurs between
 
 
131.
How a person establishes expectations for a service not yet experienced is influenced by word-of-mouth communications, personal needs, __________, and promotional activities.
 
 
132.
If a company chooses to employ its own salesforce, there are three basic organizational salesforce structures from which to choose, which are
 
 
133.
Imagine you have overheard the owner of a medium-sized manufacturing company saying, "We had a good year, and I think next year will be even better. I'm going to raise this year's promotion budget 4.5 percent based on the increase of last year's gross dollar sales. That will let me do more advertising than the 3.5 percent I budgeted last year." From this information, the manufacturer is using __________ budgeting.
 
 
134.
In an episode of the Glee television series, members of the glee club sold home-baked cupcakes at school to raise money. The students selling their cupcakes without any intermediary would be an example of a(n)
 
 
135.
In a __________, the salesperson tries one appeal after another, hoping to "hit the right button."
 
 
136.
In class, as we talked about price, we looked at the Bugatti Veyron. About how much is the "base price" of a Bugatti Veyron?
 
 
137.
In class, we considered a company which was selling a brand of dog food (Dog Chow). In which stage of the Product Life Cycle would the company be most likely to use sales promotions, such as discounts and coupons, to remind consumers of the brand and to increase sales?
 
 
138.
In class, we considered a company which was selling a new brand of dog food (Dog Chow). In which stage of the Product Life Cycle would the company be most likely to use free samples as a sales promotion to increase sales?
 
 
139.
In class we considered a variety of types of Organizational Products which we might market. How did we classify items such as Copiers, office equipment, cell phone, hand tools?
 
 
140.
In class, we considered how Social Media differs from Traditional Marketing. Which of the following is true of Social Media (as compared to traditional advertising)?
 
 
141.
In class, we considered how we might classify consumer goods based on the consumer's interest in the product. Based on this discussion, which of the following would be a shopping product for most consumers?
 
 
142.
In class, we considered the account management policy grid (also seen in the textbook). In which situation would you consider replacing personal sales calls with telephone sales?
 
 
143.
In class, we considered the case of a restaurant owner who needed to have the windows cleaned. One approach discussed was for the owner to offer the window cleaner "gift certificates" to the restaurant which are equal to the amount the cleaner would charge. So if the window washing bill was $200, the restaurant owner would provide a $200 gift certificate to the restaurant to pay the bill. This is called:
 
 
144.
In class, we considered the case of a restaurant owner who needed to have the windows cleaned. One approach discussed was for the owner to offer the window cleaner "gift certificates" to the restaurant which are equal to the amount the cleaner would charge. So if the window washing bill was $200, the restaurant owner would provide a $200 gift certificate to the restaurant to pay the bill. WHY would the restaurant owner want to pay in this way?
 
 
145.
In class, we considered the case of Black & Decker, who chose to use the internet to advertise their products but decided NOT to sell their products directly to consumers. Instead, their web site directs consumers to Black & Decker's distributors (on the web and in stores). By taking this approach, Black & Decker has avoided:
 
 
146.
In class, we considered the case of Casual Dining as a service. We thought about what consumers really want from their casual dining experience. One thing some consumers want is a "unique" service experience. Based on lecture, what unique element does the Cheesecake Factory offer?
 
 
147.
In class, we considered the characteristics of a GOOD brand name. We heard about the Simmons Beautyrest brand of mattresses. Which characteristic of a good brand name does this demonstrate?
 
 
 
 
 
 
 
 
 

148.
In class we considered the element of the Profit Equation. We noted that the Fixed Cost plus Variable Cost is equal to:
 
 
149.
In class we considered the element of the Profit Equation. We noted that the Unit Price times the Quantity Sold is equal to:
 
 
150.
In class, we considered the example of tuition at KSU. We noted that the tuition does not increase from 11 to 18 credit hours. What aspect of "price" did this represent?
 
 
151.
In class, we considered the way in which value-pricing is used by firms like McDonald's to provide more value to consumers. In general, this one useful approach to get consumers' attention for our product. However, as discussed, a practical problem can arise if:
 
 
152.
In class, we discussed the Product Life Cycle (PLC) concept. In which stage of the PLC would we find little (if any) competition?
 
 
153.
In class, we discussed the Product Life Cycle (PLC) concept. In which stage of the PLC would we find our product costs stable or even increasing?
 
 
154.
In class, we discussed the Product Life Cycle (PLC) concept. In which stage of the PLC would we find slow to no growth in industry sales of our product?
 
 
155.
In class, we discussed the Product Life Cycle (PLC) concept. In which stage of the PLC would we have the lowest prices and the most intensive distribution of our product?
 
 
156.
In class, we discussed the Product Life Cycle (PLC) concept. In which stage of the PLC would we typically find a high cost per unit of production?
 
 
157.
In class, we discussed the Product Life Cycle (PLC) concept. In which stage of the PLC would we typically find industry profits reaching their peak?
 
 
158.
In class, we discussed the Product Life Cycle (PLC) concept. In which stage of the PLC would we typically focus on market penetration to achieve both brand preference and intensive distribution for our product?
 
 
159.
In class, we discussed the Product Life Cycle (PLC) concept. In which stage of the PLC would we typically see an undifferentiated product strategy?
 
 
160.
In class, we discussed the Product Life Cycle (PLC) concept. In which stage of the PLC would we typically see industry pricing dropping over time?
 
 
161.
In class, we discussed the Product Life Cycle (PLC) concept. In which stage of the PLC would we typically see virtually no industry profits?
 
 
162.
In class, we discussed the Product Life Cycle (PLC) concept. In which stage of the PLC would we typically use advertising to gain category awareness in the consumers' minds?
 
 
163.
In class, we heard about a "made-to-go-viral" video done by Ruby Tuesday in which they "blow up the wrong restaurant." The point of this example was to
 
 
164.
In class, we heard about different types of financial compensation that we can offer salespeople. Which approach is most attractive to high-potential but unproven candidates for sales jobs?
 
 
165.
In class, we heard about different types of financial compensation that we can offer salespeople. Which approach links income directly to the desired results and also offers cost-control benefits to the company?
 
 
166.
In class, we heard about several "Trends" in Personal Selling. Which trend involves the ability of salespeople to retrieve the information they need at virtually any time they need it?
 
 
167.
In class, we heard about the questions a sales manager should answer in creating a sales plan. Which of the following is NOT one of those questions?
 
 
168.
In class, we heard about the ways in which social media can generate sales. Which of the following is NOT one of those ways?
 
 
169.
In class, we heard about ways in which a sales manager might plan to remove barriers to sales. Which of the following was NOT a way to remove barriers to sale?
 
 
170.
In class, we heard from Tim Apel on Personal Selling. He indicated that when people are buying a home, it is one of the largest expenditures they will make. During the sales process, customers want:
 
 
171.
In class, we heard that in order to benefit from Social Media efforts, firms must do all of the following EXCEPT:
 
 
172.
In class, we heard that "Standard Markup Pricing" involves adding a fixed percentage to the cost of all items in a specific product class. This approach to pricing is usually used to set:
 
 
173.
In class, we heard that Wal-Mart worked with P&G to move towards a "customer driven supply chain." In doing this, Wal-Mart's CFO became a _____________ for P&G.
 
 
174.
In class, we learned about the 5 phases of social media measurement. Which phase is related to share of voice and sentiment?
 
 
175.
In class, we learned about the 5 phases of social media measurement. Which phase is related to sign-ups, free trials, and content downloads?
 
 
176.
In class, we learned that there are "other intermediaries" which aid the distribution process. These other intermediaries rarely take title to the product and are not active in purchase or sales activities. These include:
 
 
177.
In class, we looked at the example of Cheerios line of breakfast cereals, which has grown to include Honey Nut Cheerios, Berry Burst Cheerios, and Fruity Cheerios. What type of innovation do these new flavors represent?
 
 
178.
In class, we looked at the example of Cheerios Snack Mix. This is a mix of 6 different snacking pieces, including MultiGrain Cheerios, Wheat Chex, round snack crackers, bread twists, Corn Chex, and twist pretzels. This would be seen as:
 
 
179.
In class, we looked at the example of JetSuite. Their last minute daily flight deals give you the chance to fly privately starting at only $536 each way (for the whole jet)!!! What characteristic of services is JetSuite's offering related to?
 
 
180.
In class, we looked at the Major Steps in the Sales Personnel Selection Process. Based on this information, if a candidate passes the in-depth interviews, what is the next step?
 
 
181.
In class, we looked at the Major Steps in the Sales Personnel Selection Process. Based on this information, if a candidate passes the initial interview, what is the next step?
 
 
182.
In class, we looked at the "recruitment pyramid." Based on this example, about how many "leads" do we need to begin with to end up with 2 people reporting for work?
 
 
183.
In class, we looked at the "recruitment pyramid." Based on this example, what is the ratio of people interviewed to actual offers?
 
 
184.
In class we looked at the Sterling Jewelry example. Sterling indicated that their holiday customers can be be very price conscious. Given this view, which of the following is NOT a tactic that Sterling is employed for the holiday season?
 
 
185.
In class we noted that a firm might price lower than the market demands in order to "manage for long-run profits." How would this work?
 
 
186.
In class we noted that a firm's "Service Image" is conveyed by its "service products." In choosing the service dimensions to create a competitive position, which service dimensions should be emphasized?
 
 
187.
In class, we noted that in order to set price for our product, it would be helpful to understand the Profit Equation. What IS that equation?
 
 
188.
In class, we noted that the demand for more and better services affect virtually all industries in a variety of ways. From what we heard in class, which of the following is NOT an example of how the demand for services affect businesses.
 
 
 
 
 
 
 
 
 

189.
In class, we noted that the "price" that a buyer pays can take on different names, depending on what is being purchases. Which of the following would NOT be another name for "price?"
 
 
190.
In class, we noted that there is a "legal view" (from the FTC) on how long a product can be considered new. According to the FTC, a product can be considered as new for:
 
 
191.
In class, we noted that the type of product can influence the promotion mix. What type of promotional tool is most likely to be of critical importance if we are selling durable goods in a B2B or a B2C market?
 
 
192.
In class, we said that Reken, the hair care brand, is an example of a company with what kind of product mix?
 
 
193.
In class, we saw an ad for Pepsi called "Now and Then" which shows Britney Spears drinking Pepsi "through the years." What type of ad is this?
 
 
194.
In class, we saw a print ad for "A crispy, thin Oreo cookie ring, drizzled with white fudge." This as was "Introducing Oreo Fudge Rings." What type of ad was this?
 
 
195.
In class, we saw a print ad for "NEW! Age Defying" Arm and Hammer Toothpaste. What type of ad was this?
 
 
196.
In class, we saw a video about a restaurant that Chef Ramsey helped out. They did not have a perfect result at their Mother's Day booking. Which of the following best captures the point of this example?
 
 
197.
In class, we talked about channels of distribution. We noted that a new channel is created once the product form is significantly altered. Which of the following involves a new channel?
 
 
198.
In class, we talked about determining the size of the Sale Force. Which approach to setting the size begins with consideration of the total salesforce budget in terms of the total sales?
 
 
199.
In class, we talked about Fixed Costs. Here at Marks Manufacturing, we want to get a good handle on our costs. Which of the following would NOT be a fixed cost?
 
 
200.
In class, we talked about Haagen-Dazs and the company's initial plans for distribution of its ice cream. The initial plan was to use their own stores and ___________ distribution.
 
 
201.
In class, we talked about how Social Media can generate sales. We noted that if your people who are in your customer's network see that your customer likes and trusts you, then they are likely to remember your brand to to buy from you. What did we call this effect?
 
 
202.
In class, we talked about the distribution channels used by Dell computers. One way that Dell sells computers is by allowing customers to go to the Dell web site and to create their own "customized" computer, which is then built to the customer's specifications and shipped to the customer's home. What type of distribution channel does this represent?
 
 
203.
In class, we talked about the stages in the personal selling process. If you are working with data from trade shows and mailing lists to identify a list of potential clients, which stage of the process are you in?
 
 
204.
In class, we talked about the stages in the personal selling process. If you are working with information to understand the potential customer's current needs and feelings about the available brands, which stage of the process are you in?
 
 
205.
In class, we talked about the stages in the personal selling process. In which stage do you attempt to establish an initial rapport with the prospect (which will set the foundation of the relationship)?
 
 
206.
In class, we talked about ways in which Social Media can help to generate sales. We said that social media can offer your customers the ability to connect with you and with each other, which can turn your target market into a community who is brand loyal. What did we call this effect?
 
 
207.
In class, we thought about criteria which can be used in evaluating sales person performance. Which type of evaluation would include an assessment of improvements in characteristics of salespeople that are related to successful performance in the sales job?
 
 
208.
In class, we thought about planning for recruiting and selecting the salesforce. Which step involves an investigation of the tasks, duties, and responsibilities of the job.
 
 
209.
In class, we thought about planning for recruiting and selecting the salesforce. Which step involves defining the actual aptitude, skills, knowledge, personal traits, and willingness to accept occupational conditions necessary to perform the job?
 
 
210.
In class, we thought about situations in which it might be a good idea to OUTSOURCE customer service. Which of the following is NOT one of the times when we might outsource?
 
 
211.
In class, we thought about what type of ad schedule would be best for a retailer like Pizza Hut. What did we suggest for them?
 
 
212.
In class we used Starbucks as an example of Managing Products and Brands. Based on what we heard, what was the original company logo?
 
 
213.
In class, we viewed an ad that Coke released for the 2008 Superbowl. It showed a big parade balloon of Coke getting away from the handlers, and then being chased into the sky by several cartoon character balloons. The goal of this ad was:
 
 
214.
In class we viewed a segment from CNBC's "The Entrepreneurs," in which two male models develop a new brand of granola. They selected the name "FEED" for their product. As they grew, they decided they needed more sophisticated packaging, and so they talked with a "branding and identity expert." Which of the following was NOT a problem identified by the expert with the existing package?
 
 
215.
Independent firms or individuals whose principal function is to bring buyers and sellers together to make sales are referred to as __________.
 
 
216.
In determining how much to spend on an integrated marketing communication campaign, you can choose to use the promotion-to-sales ratio as a guide. In class, we said that if you have a lower ratio than competition, it means:
 
 
217.
Individuals who have registered on a social networking site by completing the process involved, such as providing their name, an ID (usually an e-mail address), and a password, as well as answering a few questions (date of birth, gender, etc.) are referred to as __________.
 
 
218.
In Figure 13-10 above, which is a break-even chart that depicts a graphic presentation of a break-even analysis for a picture frame store, the vertical dashed line (above 400) identifies the firm's __________ point.
 
 
219.
Informational ads, particularly those with specific information, have been found to be interesting, convincing, and
 
 
220.
In lecture, we considered various branding strategies within a product mix. Which approach does P&G use, when they market Tide and Pringles?
 
 
221.
In lecture, we heard from Gary Trinetti talking about Supply Chain Management. Gary talked about SCM and Wal-Mart. He pointed out that there are opportunities to gain efficiencies and profits
 
 
222.
In lecture, we heard from Gary Trinetti talking about Supply Chain Management. Gary told us that supply chain management is a "new" concept, that was not used when he was in class at KSU. However, the idea of supply chain management did relate to concepts that he did learn. Which concepts are related to supply chain management according to Gary?
 
 
223.
In lecture we heard that when you make use of supply chain management, you not only need to do better than your direct competitors, but you actually need to compete against:
 
 
224.
In lecture, we noted that it is relatively easy to become a retailer. Which of the following is NOT one of the reasons that was given?
 
 
 
 
 
 
 
 
 

225.
In marketing, an idea is
 
 
226.
In Marketing in the News, we heard about 22-year-old Tai Tran, who is a key employee in Apple's social media area. According to what he shared with his class, which social media platform HAS THE MOST USERS OVERALL?
 
 
227.
In Marketing in the News, we heard about a company using an online video to introduce its new private-label diaper brand. What company took this approach?
 
 
228.
In Marketing in the News, we heard about Singapore's Selfie Coffee chain. Their unique twist on coffee is:
 
 
229.
In Marketing in the News, we heard that Apple has launched its first major customer service social media account. What platform did Apple choose for this?
 
 
230.
In Marketing in the News, we heard that ______________ are now the largest working generation in the U.S.
 
 
231.
In Marketing in the News, we heard that a selfie latte at Singapore's Selfie Coffee chain can cost:
 
 
232.
In Marketing in the News, we heard that Chinese consumers are embracing a "coffee culture" with a special obsession with:
 
 
233.
In Marketing in the News, we heard that compared to other mac and cheese brands Cracker Barrel macaroni and cheese will be positioned:
 
 
234.
In Marketing in the News, we heard that Dell is entering the U.K. with its Systems and Information Management portfolio by:
 
 
235.
In Marketing in the News, we heard that Dollar Shave is planning on growth by selling a new product to their existing target market. What new product market is Dollar Shave Club attempting to develop?
 
 
236.
In Marketing in the News, we heard that Droga5 is the ad agency that created the new ad campaign from JP Morgan Chase. The new campaign uses both:
 
 
237.
In Marketing in the News, we heard that Evian's famous advertising babies have returned in a new campaign that includes a surfing-themed global commercial. Interestingly, the commercial will not run on television in North America. Instead, the North American campaign will focus on Gigi Hadid and use:
 
 
238.
In Marketing in the News, we heard that Ford Motor Company's Lincoln brand is expanding it marketing. The focus of this new effort is summed up with the following hashtag:
 
 
239.
In Marketing in the News, we heard that for the first time, tickets to Walt Disney World in Florida and Disneyland in California will cost more during holidays and some weekends. How much extra are they charging for these peak periods? Up to:
 
 
240.
In Marketing in the News, we heard that Hennessy US did research on its target audience. It found that consumers saw the brand as:
 
 
241.
In Marketing in the News, we heard that Kraft Heinz is running a new campaign promoting their Macaroni and Cheese. An interesting detail that we heard about is that:
 
 
242.
In Marketing in the News, we heard that Lord & Taylor [Department Store] is once again reviving a symbol of its past in its current marketing campaign. What symbol are they using?
 
 
243.
In Marketing in the News, we heard that Princess Cruises decided that it needed to make some changes to appeal to the Chinese market. What changes did we hear about?
 
 
244.
In Marketing in the News, we heard that prior to their new campaign, the Lincoln brand of automobile had NOT done any marketing that gave consumers:
 
 
245.
In Marketing in the News, we heard that TE Connectivity is introducing a new campaign "What a Sensor Sees." The tech-specific campaign is aimed at:
 
 
246.
In Marketing in the News, we heard that "Tesla Motors has been crowing about the nearly 400,000 reservations it has received for its electric Model 3 sedan." From what we heard, what competitor is using this as "fodder" for its own advertising?
 
 
247.
In Marketing in the News, we heard that the Food Lion grocery store chain is focusing on providing its consumers with the freshest produce ______________________.
 
 
248.
In Marketing in the News, we heard that the FTC is suing Volkswagen over their diesel claims seeking compensation for the consumers who bought affected cars based on Volkswagen's:
 
 
249.
In Marketing in the News, we heard that the Lincoln commercials that used Matthew McConaughey were very effective in:
 
 
250.
In Marketing in the News, we heard that to improve traffic and business at Lord &Taylor they have adopted a(n) _____________ attitude toward marketing.
 
 
251.
In Marketing in the News, we heard that Virgin Radio is beginning a campaign to:
 
 
252.
In order to deliver a product that the average consumer can afford, Vizio
 
 
253.
In some instances, firms pair multiple channels with a multibrand strategy. The purpose of this strategy would be to __________ of the firm's family brand and differentiate its marketing channels.
 
 
254.
An intermediary who sells to consumers is referred to as a(n) __________.
 
 
255.
In the class discussion of pricing strategies, we talked about an approach in which we start with a Price Skimming approach and then REDUCE price as our costs decline. In lecture, this approach is called:
 
 
256.
In the retail life cycle, __________ is the stage of emergence of a retail outlet, with a sharp departure from existing competition.
 
 
257.
In the telemarketing industry, issues such as __________, ethical guidelines, and industry standards have become a topic of discussion among consumers, Congress, the Federal Trade Commission (FTC), and businesses.
 
 
258.
In the UMD10: Marketing Dashboard Map above, the annual growth rate in each state is shown, with green (which looks gray on printed paper) meaning good and red (which looks black on printed paper) meaning very bad. If an organization's 2013 sales for the entire U.S. were $50 million and its 2012 U.S. sales were $30 million, what is the annual % sales change?
 
 
259.
In thinking about price, we noted that the Final Price paid may be reduced by "incentive and allowances." What is an example of this for college tuition?
 
 
260.
The inventory carrying costs of real estate agencies are low because they
 
 
261.
Jacob has developed a lawn care service that will revolutionize the lawn care industry. However, Jacob has limited operating capital and yet he still wants a wide distribution of his new product. Which of the following options would be the BEST CHOICE for Jacob?
 
 
262.
Jane Westerlund owns a picture frame store and has generated a spreadsheet of several calculations based on different quantity, price, revenue, cost, and profit scenarios shown in Figure 13-9 above. What is the break-even point quantity for her picture frame store?
 
 
263.
A job analysis refers to
 
 
 
 
 
 
 
 
 

264.
Kellogg's changed the name of its Heartwise cereal to Fiberwise MOST LIKELY to __________.
 
 
265.
The LA Galaxy's primary target market or "core fans" is
 
 
266.
LG Electronics recently introduced the Fridge-TV with a 15" television screen mounted in the right side refrigerator door. This is an example of which type of innovation?
 
 
267.
List the following competitive markets from LEAST competitive to MOST competitive.
 
 
268.
The Little Remedies products photo shown above BEST describes which of the following?
 
 
269.
Many cosmetology schools allow their advanced students to style hair for "real world" clients for a reduced fee. The students benefit from the experience, the clients get a less expensive haircut, and the school is able to provide students with additional training without costing it anything; in fact, they even profit from it. This is an example of
 
 
270.
Many restaurants now ask consumers to evaluate their experience on a short questionnaire when they pay their bill. This assessment of consumer expectations and the actual experience they had is called a __________.
 
 
271.
Many services depend on __________ for the creation and delivery of the customer service experience.
 
 
272.
A maximizing current profit objective implies that a company chooses to
 
 
273.
The __________ measure most closely ties the cost of the social media ad to the sales revenues the ad generates.
 
 
274.
Methods for obtaining nonpersonal presentation of an organization, product, or service without direct cost, such as news releases, news conferences, and public service announcements, are referred to as
 
 
275.
Most advertising messages are made up of two elements, which are
 
 
276.
Most stores today are near several others in one of five settings: the central business district, the community shopping center, the regional shopping center, the power center, or the __________.
 
 
277.
Most stores today are near several others in one of five settings: the central business district, the community shopping center, the strip mall, the power center, or the __________.
 
 
278.
Napster was the first software that allowed an individual to easily search for and exchange MP3 music files with other individuals (in some cases illegally). When it was introduced, Napster would have been an example of a
 
 
279.
New Balance offers shoes for men, women, and children in many sizes and foot widths. It offers running, cross training, walking, golf, and other types of shoes. This an example of the __________ that New Balance offers to its customers through its own stores or other retailers such as Foot Locker or Sports Authority.
 
 
280.
The new sharing economy consists of all of the following EXCEPT:
 
 
281.
The objective of information and logistics management in a customer-driven supply chain is to minimize logistics costs while
 
 
282.
One of the advantages associated with radio as an advertising medium is that it
 
 
283.
One of the primary differences between tangible goods and services involves a consumer's ability to make prepurchase evaluations. For example, consumers can easily evaluate shoes, jewelry, and skis before making a purchase. On the other hand, consumers can evaluate services such as restaurants, ski instructors, and tanning salons only during or after their purchase. Indeed, tangible products have __________ properties, whereas services have __________ properties.
 
 
284.
One of the sales growth strategies Amazon considered early on is (the) __________.
 
 
285.
One way to get into legal trouble in pricing is to meet with the competition in order to agree what price everyone will charge and to then enforce those prices in the channel. This is:
 
 
286.
Orlando uses a wireless system to receive advertising for flat-screen monitors mounted in its buses. These ads are examples of __________.
 
 
287.
OUT! International's Hey! There's A Monster In My Room spray with a bubble-gum fragrance was designed to rid scary creatures from a kid's bedroom. Although a clever idea, it failed because it
 
 
288.
Outlets such as the Checkers Drive-In Restaurant (see the photo above), typically enter the wheel of retailing as
 
 
289.
Parallel development is the simultaneous development of both
 
 
290.
A penetration pricing policy is MOST LIKELY to be effective when
 
 
291.
Perhaps the greatest impact on salesforce communication is the application of __________ technology.
 
 
292.
A person can establish expectations for a service he or she has not yet experienced through word-of-mouth communications, personal needs, past experiences, and promotional activities. However, the actual experience(s) are determined by
 
 
293.
A popular social network used by college students to find and share the best content on the Web is
 
 
294.
The practice of using the telephone rather than personal visits to contact customers is referred to as __________.
 
 
295.
Price discrimination refers to
 
 
296.
A printed or an e-mailed announcement that is sent to members of the business press from German pharmaceutical giant Bayer stating that it is looking for a buyer for its household insecticide business as part of its restructuring program is an example of which type of publicity tool?
 
 
297.
The process of managing the entire customer experience with the company is referred to as
 
 
298.
A __________ product is a style of the times.
 
 
299.
Promotional expenditures at the introduction stage of the product life cycle are best spent on __________.
 
 
300.
Promotion objectives should possess three important qualities. They should cover a specified time period, be measurable, and
 
 
301.
Public relations refers to
 
 
 
 
 
 
 
 
 

302.
Recently, many nonprofit organizations such as the American Red Cross
 
 
303.
Recent research suggests that employees'__________, authenticity, and sincerity of the interactions affect the success of the relationships.
 
 
304.
Reductions in unit costs for a larger order are referred to as
 
 
305.
Resale restrictions have been prosecuted under the Sherman Act. Today, however, the courts apply the "__________" in such cases and consider whether such restrictions have a "demonstrable economic effect."
 
 
306.
Retailers and industrial distributors prefer exclusive distribution for two reasons. One is that __________.
 
 
307.
The revenue generated by each seat flown one mile shown in UMD12: Capacity Management above is
 
 
308.
The Reynolds's Aluminum foil box has two side tabs that say "Press Here to Lock Roll" to keep the roll of foil in place during use. This demonstrates which elements of good packaging?
 
 
309.
The sales manager instructed the salesperson to "Make five hundred customer contacts between January 1st and July 1st." The sales manager voiced a(n) __________ sales objective.
 
 
310.
A sales organization practice whereby a different salesforce calls on each separate type of buyer or market channel is referred to as a __________.
 
 
311.
Salespeople called outside order takers visit customers and __________.
 
 
312.
Salespeople for Godiva Chocolates use __________ to process orders, plan time allocations, forecast sales, and communicate with Godiva personnel and customers, thus providing better customer service.
 
 
313.
Salespeople for Timex watches use their laptop computers to process orders, plan time allocations, forecast sales, and communicate with Timex personnel and customers. The use of __________ helps the Timex salesforce provide customer service.
 
 
314.
A salesperson who is guided by the notion, "I try to sell customers all I can to convince them to buy, even if I think it is more than a wise customer would buy," has which type of orientation?
 
 
315.
The sales process at Xerox typically follows the six stages of the personal selling process. During the second stage, the salesforce prepares for a presentation by
 
 
316.
A sales quota refers to
 
 
317.
Sales research and practice show that knowledge of the customer and sales situation are key ingredients for __________.
 
 
318.
Sales support personnel who do not directly solicit orders but rather concentrate on performing promotional activities and introducing new products are referred to as __________.
 
 
319.
Sarah has a toothache. She believes it may be due to her not having regular dental check-ups in the past. She now wants to find a dentist, but does not have one that she has used in the past. Because dentistry has __________ properties, Sarah plans to ask her friends for a recommendation for a dentist they like to be sure that she finds a good one.
 
 
320.
The second task of a selling organization when it formulates a sales plan is to answer all of the following questions EXCEPT:
 
 
321.
Selling agents refer to agents who
 
 
322.
Service organizations must manage the availability of the offering so that (1) __________ and (2) the organization's assets are used in ways that will maximize the return on investment (ROI).
 
 
323.
Services are a significant part of the U.S. economy, reaching almost __________ percent of its gross domestic product.
 
 
324.
Services can be classified according to whether they are delivered by: (1) people or equipment; (2) __________; or (3) government agencies.
 
 
325.
Setting the highest initial price that customers really desiring the product are willing to pay when introducing a new or innovative product is referred to as a
 
 
326.
Several improvements in technology and business practice tools contributed to Google's success. Google developed its patented __________ algorithm that evaluates the entire link structure of the Internet and uses the link structure to determine which pages are most important.
 
 
327.
Short-term price reductions commonly used to increase trial among potential customers or to retaliate against a competitor's actions is commonly referred to as a __________.
 
 
328.
A skimming pricing policy is likely to be MOST EFFECTIVE when
 
 
329.
The social network primarily used for professional networking and job searching is
 
 
330.
Specialty merchandise wholesalers
 
 
331.
The Starch test uses aided recall to determine the percentage of those who: (1) remember seeing a specific magazine ad, (2) __________, (3) read any part of the ad, and (4) read at least half of the ad.
 
 
332.
A statement describing what is to be achieved and where and how the selling effort of salespeople is to be deployed is known as a __________.
 
 
333.
Stores that carry tremendous depth in one primary line of merchandise are referred to as
 
 
334.
The strategy of trading down involves __________.
 
 
335.
Suggestive selling is a form of __________.
 
 
336.
A supply chain refers to
 
 
337.
Suppose the following information: The cost of a full page color ad in the U.S. national edition of The Wall Street Journal (newspaper) is $327,897 and its U.S. audience size is 1,566,027. The cost of a full page color ad in the U.S. national edition Sports Illustrated (magazine) is $396,600 and has an audience size of 3,000,000. The cost of a 30-second ad on the most recent Super Bowl (television) is $3,800,000 and has an audience size of 108,400,000. Using this information, which of the following is the most appropriate metric to use to determine which medium would provide the most efficient use of your limited resources?
 
 
 
 
 
 
 
 
 

338.
Suppose you want to get "plugged in" and buy an all-electric Tesla Model S (see the photo above), the world's leading all-electric, zero-emission car that has a 265-mile range and can be recharged in three hours. The Tesla Model S Performance model has a list price of $87,500. However, you want several options (Performance Plus Package, red multi-coat armor paint, Tech package, Sound Studio Package, home charging station, performance wheels, and others) that will cost $17,500. An extended warranty will add an additional $5,000. However, if you put $50,000 down now and finance the balance over the next year, you will receive a dealer rebate of $5,000 off the list price. The dealer will give you a $7,000 trade-in allowance for your 2008 Honda Civic DX four-door sedan. In addition, you will have to pay a state sales tax of $10,000, an auto registration fee of $1,000 to the state, and a $1,000 destination charge to ship and prep the car. But because the Tesla Model S is an alternative energy vehicle, you qualify for a $2,500 state rebate and a $7,500 federal tax credit! Finally, your total finance charge is $7,000. Applying the price equation, what is your final price for the Tesla Model S?
 
 
339.
Talbot's sells women's clothes. A long sleeve scoop neck t-shirt with the Talbot's label costs $45. By comparison, you can buy a t-shirt for $5 at a Family Dollar Store, but it won't have the prestigious Talbot's label or quality. What kind of demand-oriented approach to pricing does Talbot's use?
 
 
340.
There are a lot of skateboards on the market, but the BMW Streetcarver is the only one with stabilizers and wheel design based on BMW's automobiles. This technology gives the BMW Streetcarver better control at high speeds and around sharp turns than any other brand. The skateboard is priced at $495, which leaves many consumers (especially young males) who might want to buy the Streetcarver unable to afford it. This inability to pay for the high-priced BMW-made skateboard shows the affect of __________ on sales.
 
 
341.
There are three general forms of retail ownership: contractual system, corporate chain, and __________.
 
 
342.
There are three major tasks involved in the implementation stage of the sales management process: salesforce motivation and compensation, salesforce training, and __________.
 
 
343.
There are three major tasks involved in the implementation stage of the sales management process: salesforce recruitment and selection; __________; and salesforce motivation and compensation.
 
 
344.
There's a new prescription drug on the market that helps reduce common allergy symptoms. Ads for the medicine in magazines and in medical journals would be primarily used to
 
 
345.
The three guidelines on marketing and promoting a brand using YouTube include: (1) __________; (2) create a branded channel rich in key words to improve the odds of the video showing up in user searches; and (3) target viewers by using YouTube's insights and analytic research to reveal the number of views, where they originate within YouTube, and what key words are driving user visits.
 
 
346.
The three types of personal selling are order taking, order getting, and __________.
 
 
347.
To communicate with consumers, a company can use one or more of five promotion alternatives. In Figure 17-2 above, the promotional element labeled "C" represents __________.
 
 
348.
"To remind" is the promotional objective of which stage of the product life cycle?
 
 
349.
The type of analysis that compares the differences between consumers' expectations about a service and their experience with it based on dimensions of service quality is referred to as
 
 
350.
Unit volume as a pricing objective refers to
 
 
351.
The U.S. Patent and Trademark Office website allows you to
 
 
352.
A variation of off-price retailing includes __________.
 
 
353.
The Vermont Teddy Bear Company sells handmade Teddy bears designed to be given as gifts for almost every occasion imaginable. For the Vermont Teddy Bear Company, Teddy bears are an example of a
 
 
354.
Vertical marketing systems refer to
 
 
355.
Walmart can obtain cooperation from manufacturers in terms of product specifications, price levels, and promotional support, given its position as the world's largest retailer. Walmart is an example of a(n)
 
 
356.
Walmart's $469 billion in sales in 2012 surpassed the gross domestic product of all but __________ countries for that same year.
 
 
357.
A website whose content is created and edited by the ongoing collaboration of end users is known as a(n)
 
 
358.
We heard about several dangers for the marketing related to use of social media and internet marketing. Marketers (and consumers) need to be cautious about being infected with malware from computers that have been hacked. This is an element of:
 
 
359.
What is the critical assumption when using target profit pricing?
 
 
360.
What is the marketing objective for the growth stage of the product life cycle?
 
 
361.
What is the term for when people in households only watch TV through a broadband connection?
 
 
362.
What percentage of a sales representative's time is spent selling?
 
 
363.
What type of organization is the U.S. Forest Service, which manages out national park system?
 
 
364.
What type of pricing approach is seen in this example: "Buy our digital camera and you get the how-to photography DVD for 50% less."
 
 
365.
What would MOST LIKELY occur at the preapproach stage in a business selling situation?
 
 
366.
When a new product comes out that is an improvement on an existing product and that requires some minor behavior changes or some new learning by the consumer, we would classify it as a:
 
 
367.
When a retailer owns a manufacturing operation, it is referred to as
 
 
368.
When Rose went shopping for a new purse, she thought she had found a real value—a Gucci purse for about 50% of what she was expecting to pay. When she looked at it more closely, she noticed that the purse was identical to a Gucci but was not manufactured by Gucci. This was MOST LIKELY an example of
 
 
369.
When thousands of college-age "brand ambassadors" at colleges and universities across the U.S. needed to recruit volunteers to help incoming freshmen on campus move-in day, the most effective way to reach the greatest number of students was by using
 
 
370.
Which of the following BEST DESCRIBES the goal for a firm's inventory and transportation costs?
 
 
371.
Which of the following firms uses crowdfunding to raise capital for products that are unlikely to get resources from traditional sources?
 
 
372.
Which of the following is a characteristic of the growth stage of the product life cycle?
 
 
373.
Which of the following is a demand-oriented approach to pricing?
 
 
 
 
 
 
 
 
 

374.
Which of the following promotional elements requires expensive database management that is a major weakness of the element?
 
 
375.
Which of the following quotes from a new product adopter would signal the need for a firm to counteract a usage barrier?
 
 
376.
Which of the following represent elements of Step 2 of the price-setting process?
 
 
377.
Which of the following retailers would best fit in "C" shown in Figure 16-8 above?
 
 
378.
Which of the following statements about consumer demand as a pricing constraint is MOST ACCURATE?
 
 
379.
Which of the following statements about inquiry tests is MOST ACCURATE?
 
 
380.
Which of the following statements about penetration pricing is MOST ACCURATE?
 
 
381.
Which of the following statements about services is MOST ACCURATE?
 
 
382.
Which of the following statements is MOST ACCURATE?
 
 
383.
Which of the following statements regarding corporate vertical marketing systems is MOST ACCURATE?
 
 
384.
Which of the following statements regarding order getters is MOST ACCURATE?
 
 
385.
Which of the following statements regarding salesforce compensation plans is MOST ACCURATE?
 
 
386.
Which of the following statements regarding sales goals is MOST ACCURATE?
 
 
387.
Which of the following statements regarding the preapproach stage with respect to international selling is MOST ACCURATE?
 
 
388.
Which of the following statements regarding the promotional mix is MOST ACCURATE?
 
 
389.
Which of the following statements regarding the role of salespeople is MOST ACCURATE?
 
 
390.
Which of the following weaknesses is associated with sales promotions?
 
 
391.
Which one of the following statements regarding bundle pricing is MOST ACCURATE?
 
 
392.
Which service listed below has the HIGHEST inventory carrying cost?
 
 
393.
Which type of outlet is MOST LIKELY in its decline stage of the retail life cycle?
 
 
394.
Which type of pricing assumes that different customers are willing to pay a DIFFERENT price for using the SAME AMOUNT of resources?
 
 
395.
Which type of sales presentation would be best suited for an inexperienced, less knowledgeable salesperson?
 
 
396.
With a __________, a salesperson's earnings are directly tied to sales or profits generated.
 
 
397.
With a __________ pricing strategy, a price setter stresses the __________ side of the pricing problem.
 
 
398.
With profit-oriented approaches to pricing, a price setter may choose to balance both __________ and __________ to set price.
 
 
399.
You decide to buy a new car. You talk to friends about it, research mechanical specifications in Consumer Reports, test drive different makes and models, and compare prices at several dealerships. Into which classification of consumer products would your new car purchase fall?
 
 
400.
You greatly admire a set of Waterford crystal serving bowls you see at a dinner party and decide to buy two despite their cost of $250 each. They are only available in your area in a Waterford shop 40 miles from campus. Into which classification of consumer products would the Waterford crystal serving bowls fall?
 
 
 
 
 
 
 
 
 

1.
4 important aspects of product life cycles
 
 
2.
According to the lecture, about how much does the service sector contribute to the U.S. economy?
 
 
3.
All of the following are true about the length of product life cycles
 
 
4.
As we discussed in class, services differ from products (goods) in along a variety of dimensions. Which characteristic of services means that marketers must be careful in the selection and training of their service personnel? The characteristic of:
 
 
5.
Based on lecture, which of the following would be a good example of an ancillary service seen in B2B marketing?
 
 
6.
The commercial, legal name under which a company does business is referred to as a
 
 
7.
Compared with people-based services, equipment-based services do not have the marketing concern of
 
 
8.
Factors that affect whether a consumer will adopt a new product
 
 
9.
Four key challenges that package and label designers face include: (1) connecting with customers; (2) environmental concerns; (3) health, safety, and security issues; and (4) __________.
 
 
10.
The four steps in the sequential process of building the brand equity pyramid include
 
 
11.
High definition televisions (HDTVs) are an example of a __________, OLED HDTVs are an example of a __________, and a 55" LG OLED HDTV is an example of a __________.
 
 
12.
If a customer is reluctant to try a new product because she's afraid it might make her ill, the company is MOST LIKELY facing a(n) __________ barrier.
 
 
13.
In class we noted that a firm's "Service Image" is conveyed by its "service products." In choosing the service dimensions to create a competitive position, which service dimensions should be emphasized?
 
 
14.
In class we viewed a segment from CNBC's "The Entrepreneurs," in which two male models develop a new brand of granola. They selected the name "FEED" and the product got "rave reviews." Which of the following represented a "next step" in growing their new business?
 
 
 
 
 
 
 
 
 
 
 
 

15.
In class we viewed a segment from CNBC's "The Entrepreneurs," in which two male models develop a new brand of granola. They selected the name "FEED." Which of the following was NOT a reason that they picked this name?
 
 
16.
Kemps Dairy makes Life Savers Real Fruit Sherbet (with the flavors of a favorite childhood candy). Kemps Dairy had to pay Wrigley, the owner of the Life Savers brand name, a fee to market this concoction. This is MOST LIKELY an example of __________.
 
 
17.
Mixed branding refers to a branding strategy in which a firm __________.
 
 
18.
A nonprofit organization may pay taxes if
 
 
21.
Selecting a brand name, 6 criteria
 
 
24.
The stylized blue and white waves that appear in an oval shape on every package of Ocean Spray brand products is an example of a __________.
 
 
25.
Which of the following is the BEST example of a people-based service?
 
 
 
 
 
 
 
 
 

1.
According to class, distribution's main role within the marketing mix is to:
 
 
2.
After offering a promotional allowance, the price of a product returns to its regular price level. When this happens, the retail store's gross margin on that product __________ on those items that were bought with the allowance but not sold during the price special promotion.
 
 
3.
Because its customers desire rapid delivery and a wide variety of customizable products, Dell made a conscious decision to use a(n) __________ supply chain to meet these requirements.
 
 
4.
By promising to change engine oil and filters quickly, Jiffy Lube is appealing to which buyer requirement?  
 
 
5.
Controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price is called
 
 
6.
A corporate vertical marketing system refers to
 
 
7.
Cross-docking refers to
 
 
8.
The distribution intensity associated with products such as personal computers such as those from Dell is referred to as __________.
 
 
9.
The General Mills-Nestlé strategic channel alliance
 
 
10.
Given your situation, you decide to set prices to achieve a specific annual return-on-investment (ROI). According to the lecture, what type of pricing approach is this?
 
 
11.
Given your situation, you decide to set your price based on the traditional price in the channel of distribution or in your market According to the lecture, what type of pricing approach is this?
 
 
12.
In class, we considered the case of Black & Decker, who chose to use the internet to advertise their products but decided NOT to sell their products directly to consumers. Instead, their web site directs consumers to Black & Decker's distributors (on the web and in stores). By taking this approach, Black & Decker has avoided:
 
 
13.
In class, we heard that we might adjust prices by offering quantity discounts. What is the key assumption of this pricing tactic?
 
 
14.
In class, we heard that yield management pricing requires all of the following EXCEPT:
 
 
15.
In class, we talked about channels of distribution. We noted that a new channel is created once the product form is significantly altered. Which of the following involves a new channel?
 
 
16.
In lecture, we heard from Gary Trinetti talking about Supply Chain Management. Gary talked about SCM and Wal-Mart. He pointed out that there are opportunities to gain efficiencies and profits

a. when the raw materials are grown and harvested
b. when the items are manufactured
c. when the items are transported to the Wal-Mart stores
d. for firms that facilitate the supply chain
e. All of the above are places he indicated offered opportunities to gain efficiencies and profits
 
 
17.
In lecture, we heard from Gary Trinetti talking about Supply Chain Management. He indicated that supply chain management crosses over many areas. Which of the following is NOT one the areas that SCM covers?

a. Raw Materials
b. Manufacturing
c. Transportation by airplanes, barges, trucks, and rail
d. Getting the item on the shelf in the store
e. All of the above are areas which Gary indicated supply chain management crosses over
 
 
18.
In lecture we heard that when you make use of supply chain management, you not only need to do better than your direct competitors, but you actually need to compete against:
 
 
19.
In lecture we learned that it may be easier to talk about implementing SCM than it is to align it with our Marketing Strategy. One "real life" problem we find is that:
 
 
20.
In lecture, we noted that SCM usually requires significant changes in the firm's organization structure. This is because:
 
 
21.
In lecture we noted that supply chain management requires the application of _______ to allow companies to operate their systems effectively.
 
 
22.
In Marketing in the News, we heard that Dell is entering the U.K. with its Systems and Information Management portfolio by:
 
 
23.
In Marketing in the News, we heard that in the current campaign, Burberry is doing "mass customization" by allow consumers to:
 
 
24.
Inspecting, testing, or judging products and assigning them quality grades would be an example of a __________ function.
 
 
 
 
 
 
 
 
 
 
 
 
 

25.
Logistical function activities include __________ products and services.
 
 
26.
Logistics management refers to
 
 
27.
A manufacturer estimates that consumers will accept a price of $275 for a snowboard. If the manufacturer expects to offer trade discounts of 35/15/5 to retailers, wholesalers, and jobbers, respectively, what price will the manufacturer receive for the snowboard?
 
 
28.
Multichannel marketing is the blending of different __________ that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online.
 
 
29.
One consideration in choosing a marketing channel is profitability, which is determined by the margins earned for each channel member and for the channel as a whole. Based on this information, which of the following statements would be MOST ACCURATE?
 
 
30.
One way to get into legal trouble in pricing is to decide to charge different buyers different prices even when there are no differences in the grade of the product sold to them, or in the cost of the goods. When this practice results in the lessening of competition it is considered:
 
 
31.
Pharmaceutical companies sell some of their products to hospitals and clinics directly. They also market other products to large retail chains like Walgreens that distribute them to their stores across the nation. In addition, they sell products to drug wholesalers that sell to the remaining independent drugstores in the U.S. What method of distribution BEST DESCRIBES the method used by pharmaceutical companies in this example?
 
 
32.
Retailers and industrial distributors prefer exclusive distribution for two reasons. One is that __________.
 
 
33.
Some manufacturers have tried to use the brand loyalty of their consumers to force retailers to carry only their products and none from their competitors. These manufacturers were trying to force retailers to participate in a practice known as a(n)
 
 
34.
When Sherman bought gas, he noticed the convenience store offered him a 2 percent reduction in price if he paid cash rather than if he used his credit card to pay for his purchase. The convenience store was offering him a
 
 
35.
Which is the most common form of distribution intensity used today?
 
 
36.
Which of the following statements regarding new car purchases in the U.S. is MOST ACCURATE?
 
 
37.
Which of the following types of vertical marketing systems is the LEAST LIKELY to experience channel conflict?
 
 
38.
Which type of marketing channel arrangement is especially good for a firm to use in global marketing where the creation of marketing channel relationships is expensive and time consuming?
 
 
 
 
 
 
 
 
 

39.
While Maytag appliances have the leading brand name, its sales are third in the industry. One of the things the company has done to spur sales is to create a website where potential customers can find the answers to the questions they ask during the appliance purchase process. Although Maytag considered using a __________ strategy by directing customers to Maytag appliance stores it owns, the firm decided against it and simply provides the names and addresses of all the retailers (Sears, Home Depot, etc.) that carry Maytag appliances.
 
 
40.
Within the context of a supply chain, __________ is the ability of a logistics system to satisfy users in terms of time, dependability, communication, and convenience.
 
 
41.
You decide that you can get customers into your store if you advertise a REALLY low priced product that will grab their attention. Once in the store, you tell the customer that the only one of those that you had has already sold and you try to switch them to a more expensive (and profitable) product. In doing this, you have forgotten what you learned in MKTG 25010, about how to get into legal trouble with your pricing. This would be seen as:
 
 
 

 

1.
3M is a master of the ________ pricing strategy, which uses a high initial price for a new product.
 
 
2.
According to lecture, Vending machine sales are an example of:
 
 
3.
According to the lecture, about how many U.S. jobs are in the services market?
 
 
4.
According to the lecture, __________ goals include maintaining customers relationships and keeping the brand in the consumer's mind during the off-season.
 
 
5.
According to the lecture, __________ goals include maintaining customers relationships and keeping the brand in the consumer's mind during the off-season:
 
 
6.
According to the lecture, if your target audience is concentrated in a limited geographic area, what type of promotion would you be most likely to use?
 
 
7.
According to the lecture, if you want to create mass awareness for your new "Choco-Marks" cereal, you would NOT be likely to use:
 
 
8.
According to the lecture, the dual role that retailers play which is a key to their success is:
 
 
9.
According to the lecture, which of the following is a disadvantage of Price Skimming:
 
 
10.
According to the lecture, which of the following is NOT a good example of a value provided to customers by improved services?
 
 
11.
Ace Hardware is a national ________ that allows its members, retailers of paint and hardware products, to concentrate their buying power through wholesalers and plan collaborative promotional and pricing activities.
 
 
12.
An active receiver who is "delighted" with the brand advertised and sends messages to his or her online friends about the brand is referred to as a(n):
 
 
13.
The added value a brand name gives to a product beyond the functional benefits provided is referred to as:
 
 
14.
An ad for Hydroxycut, a dietary supplement sold as a weight loss aid, depicts a handsome man with an open shirt with ripped abdominal muscles who claims that he "was shocked at how fast Hydroxycut worked" when he lost 27 pounds. This ad is using a(n):
 
 
15.
All of the following are challenges and opportunities that direct marketing faces in global markets except which?
 
 
16.
All of the following are characteristics of warehouse clubs except which?
 
 
17.
All of the following are considered to be new-product development failures or stumbles by Apple EXCEPT:
 
 
18.
All of the following are included in an ideal positioning statement EXCEPT which?
 
 
19.
All of the following statements are true about using sex appeals in advertising except which?
 
 
20.
The American Red Cross uses social marketing tools such as ________ to increase blood donations.
 
 
21.
A(n) ________ carries 3,700 to 8,000 items and usually stocks just one brand of appliance or food product.
 
 
22.
An approach to managing the assortment of merchandise in which a manager is assigned the responsibility for selecting all products that consumers in a market segment might view as substitutes for each other, with the objective of maximizing sales and profits in the category, is referred to as:
 
 
23.
________ are the result of organizations' efforts to create profiles of customers so that direct marketing tools, such as e-mail and catalogs, can be directed at specific customers.
 
 
24.
As a performance measure for social networks, the number of page views divided by visitors in a given time period is referred to as:
 
 
25.
As we discussed in class, services differ from products (goods) in along a variety of dimensions. Which characteristic of services means that marketers must be careful in the selection and training of their service personnel? The characteristic of:
 
 
26.
At the present time, StuffDOT sees which of the following social networks as its direct or principal competitor?
 
 
27.
At Xerox there is a passion for winning that provides a key incentive for sales reps. Xerox has a recognition program called the ________ where the top performers are awarded a five-day trip to one of the top resorts in the world.
 
 
28.
A basic approach to scheduling in which periods of advertising are scheduled between periods of no advertising to reflect seasonal demand is referred to as a ________ schedule.
 
 
29.
The belief that products originating from one country would be of better or worse quality than the products from another country illustrates the ________ benefits that packaging information can provide.
 
 
30.
Compared with people-based services, equipment-based services do not have the marketing concern of:
 
 
31.
A consumer is considering buying a hybrid car. The model is clearly a car (which the consumer understands well), but has some new aspects/features that may require some new learning. For this consumer, the new car is a:
 
 
 
 
 
 
 
 
 
 
 

32.
The ________ cost of a service is the cost of paying the person used to provide the service along with any needed equipment.
 
 
33.
Creating product assortments from several sources to serve customers is an example of a ________ function.
 
 
34.
Cross-docking refers to:
 
 
35.
Deceptive pricing practices are outlawed by legislation and enforced by which federal agency?
 
 
36.
The demand for a business product that results from the demand for a consumer product is referred to as:
 
 
37.
Despite the success of its Pentium chips, Intel faced a major threat from AMD's cheaper K6 chips, which were better placed to serve the emerging low-cost PC market. Intel wanted to protect the brand equity and price premium of its Pentium microprocessors, but it also wanted to avoid AMD gaining a foothold into the lower end of the market. So it created Celeron as a cheaper, less powerful version of its Pentium chips to serve this market. This is a notable example of a:
 
 
38.
Differentiation positioning requires a product to:
 
 
39.
During a recent shopping trip to Target, Carlie noticed that the store offered many Glad products, including many different types of trash bags and a large variety of food storage containers. For Glad, each of these two product groupings is an example of a:
 
 
40.
The emphasis of a marketing strategy for a discontinuous innovation would most likely be to:
 
 
41.
________-enabled smartphones give mobile consumers access to online ads, local restaurant promotions, and time-sensitive discounts at retailers.
 
 
42.
Equipment-based services do not have the marketing concern of inconsistency because ________ have been removed from the delivery of the service.
 
 
43.
Even very successful video game apps can reach the decline stage of the product life cycle quickly, so Clash of Clans and Candy Crush Saga video games have sought to ________ to address this challenge.
 
 
44.
An external evaluation with consumers that consists of preliminary testing of a new-product idea rather than the actual finished product is referred to as:
 
 
45.
From a marketing viewpoint, ________ is the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service.
 
 
46.
From what we heard in class, if you decided to set your ad budget to be the same dollar amount that is spent by your key competitor, what approach are you using?
 
 
47.
From what we heard in class, which form of media offers low cost per unit of time and good geographic flexibility?
 
 
48.
From what we heard in class, which form of media would you choose if you needed to get out ads in a flexible and timely manner to a local market?
 
 
49.
Generating insights leading to marketing actions based on ideas from massive numbers of people is called:
 
 
 
 
 
 
 
 
 

50.
he shapes of the product life cycle curve for high-learning, low-learning, fashion, and fad products vary as does:
 
 
51.
Hewlett-Packard is taking a proactive role in reducing the amount of electronic merchandise dumped in landfills by using ________ to reclaim recyclable and reusable materials.
 
 
52.
Ideally, before a new product or service is developed, a firm should have a precise __________, which is a statement defining the target market, specifying customers' needs, and defining what the product or service will be and do to satisfy consumers.
 
 
53.
If a brand manager wants to explain the benefits of using a complex product to consumers, the best social network to use is:
 
 
54.
If a company chooses to employ its own salesforce, the three basic organizational salesforce structures from which to choose are:
 
 
55.
If a customer is reluctant to try a new product because he'd have to change his normal everyday behaviors, the company introducing it is most likely facing a ________ barrier.
 
 
56.
In addition to seeking ideas from more well-known sources, organizations also get ideas from universities, inventors, and smaller, nontraditional firms. For example, General Mills partnered with Brigham Young University to license its patent for:
 
 
57.
In class, we considered a company which was selling a new brand of dog food (Dog Chow). In which stage of the Product Life Cycle would the company be most likely to use free samples as a sales promotion to increase sales?
 
 
58.
In class, we considered a variety of positioning errors that companies can make. Which of these involves failing to position the brand very well?
 
 
59.
In class, we considered a variety of types of organization products which we might market. How did we classify items such as electrical resistors, screws, electric motors, computer chips, and spark plugs?
 
 
60.
In class, we considered how we might classify consumer goods based on the consumer's interest in the product. Based o this discussion, which of the following wold be a specialty product for most consumers?
 
 
61.
In class, we considered the case of Church & Dwight company. We noted that, in the consumer product area, the company markets Household Deodorizers, Household Cleaners, Oral Care Products, Laundry Products, Pet Care Products, Personal Care Products, Arm & Hammer Baking Soda, and Deodorant & Anti-Perspirants. Based on this information, how much depth do they have in their product mix?
 
 
62.
In class we considered value pricing. We noted that PC's have almost become a commodity, with low prices and low profit margins. One way we looked at to create value pricing for these companies is to:
 
 
63.
In class, we discussed the Product Life Cycle (PLC) concept. In which stage of the PLC would we need to offer the lowest prices to our consumers?
 
 
64.
In class, we discussed the Product Life Cycle (PLC) concept. We noted that new convenience products, like frozen orange juice, made "older" products like a juice squeezer less interesting to consumers. What stage of the product life cycle would juice squeezers be in?
 
 
65.
In class, we heard about different types of financial compensation that we can offer salespeople. Which approach is simple to administer and allows for easy projection of earnings?
 
 
66.
In class, we heard about Key Digital Strategies. Which of the following is NOT one of those strategies?
 
 
 
 
 
 
 
 
 

67.
In class, we heard about several "Trends" in Personal Selling. Which trend was a version of "Buzz Marketing?"
 
 
68.
In class, we heard about the questions a sales manager should answer in creating a sales plan. Which of the following is NOT one of those questions?
 
 
69.
In class, we heard about various special adjustments to the list or quoted price. These included Geographic Adjustments, where we heard about FOB origin. What is "FOB" origin?
 
 
70.
In class, we heard about ways in which a sales manager might plan to remove barriers to sales. Which of the following was NOT a way to remove barriers to sale?
 
 
71.
In class, we heard from Dan Muller as he discussed segmentation at Timken. He noted that after doing an initial segmentation, they move on to "mico-segmentation." Which of the following was NOT one of the "mico segmentation" variables he mentioned?
 
 
72.
In class, we heard that Intellectual Property Theft costs companies about how much annually (as of when I created the lecture)?
 
 
73.
In class, we looked at a variety of possible positioning platforms that you might se for you brand. Which of the following is NOT a positioning platform that the though about?
 
 
74.
In class, we looked at the "recruitment pyramid." Based on this example, about how many "leads" do we need to begin with to end up with 2 people reporting for work?
 
 
75.
In class, we noted that a company could choose to be a service leader (innovator) or a service follower. Based on what we heard, which of the following is a good example of this?
 
 
76.
In class we noted that a firm's "Service Image" is conveyed by its "service products." In choosing the service dimensions to create a competitive position, which service dimensions should be emphasized?
 
 
77.
In class, we noted that our Variable Cost divided by the Quantity we manufacture is our:
 
 
78.
In class, we noted that the "price" that a buyer pays can take on different names, depending on what is being purchases. Which of the following would NOT be another name for "price?"
 
 
79.
In class, we noted that there is a "legal view" on how long a product can be considered new. According to the FTC, a product can be considered as new for:
 
 
80.
In class, we talked about channels of distribution. We noted that a new channel is created once the product form is significantly altered. Which of the following involves a new channel?
 
 
81.
In class, we talked about determining the size of the Sale Force. Which approach to setting the size begins with consideration of the total salesforce budget in terms of the total sales?
 
 
82.
In class, we talked about the stages in the personal selling process. If you are working with data from trade shows and mailing lists to identify a list of potential clients, which stage of the process are you in?
 
 
83.
In class, we talked about the stages in the personal selling process. If you are working with information to understand the potential customer's current needs and feelings about the available brands, which stage of the process are you in?
 
 
84.
In class, we thought about various constraints on the price that a firm can set for its products. One factor that constraints price is the underlying DEMAND. In the automotive industry, the overall demand for CARS would be a factor. This is most closely related to demand for the:
 
 
 
 
 
 
 
 
 

85.
Inconsistency of services refers to the fact that:
 
 
86.
Industrial services are support products that include items such as:
 
 
87.
In Figure 13-3 above, column D represents which type of competitive market?
 
 
88.
In lecture, we heard from Gary Trinetti talking about Supply Chain Management. Gary talked about SCM and Wal-Mart. He pointed out that there are opportunities to gain efficiencies and profits:
 
 
89.
In lecture, we heard from Gary Trinetti talking about Supply Chain Management. Gary told us that supply chain management is a "new" concept, that was not used when he was in class at KSU. However, the idea of supply chain management did relate to concepts that he did learn. Which concepts are related to supply chain management according to Gary?
 
 
90.
In lecture we noted that supply chain management requires the application of _______ to allow companies to operate their systems effectively.
 
 
91.
In lecture we saw an ad for Pine-Sol household cleaner. The ad imitated the romantic setting of perfume ads. We noted that the main goal of the ad was:
 
 
92.
In the early 1900s, your great-great-grandfather probably purchased his first automobile. After years of driving a horse and buggy, he got into his new car and drove it into his new garage. The new automobile was an example of a(n):
 
 
93.
Key target markets for Mall of America are:
 
 
94.
The largest U.S.-based TV maker is:
 
 
95.
Lindsey Smith's selling success is due in large part to her:
 
 
96.
Many cruise lines pay the customer's airfare to the point of cruise departure. What type of price adjustment are the cruise lines using?
 
 
97.
Missionary salespeople are:
 
 
98.
One type of sales objective is ________, which is typically specific for each salesperson and includes his or her product knowledge, customer service, and selling and communication skills.
 
 
99.
Order cycle time refers to:
 
 
100.
Parallel development, involving the simultaneous development of both the product and the production process, is the responsibility of:
 
 
101.
The percentage change in quantity demanded relative to the percentage change in price is referred to as:
 
 
102.
Policies that specify who salespeople should contact, what kinds of selling and customer service activities should be engaged in, and how these activities should be carried out are referred to as:
 
 
103.
A practice whereby one firm's marketing channel is used to sell another firm's products is referred to as:
 
 
104.
A pricing method where a supplier is reimbursed for all costs, regardless of what they may be, and also receives an agreed-on dollar amount of profit that is independent of the final cost of the project, is referred to as:
 
 
105.
Private branding is also referred to as private labeling or:
 
 
 
 
 
 
 
 
 
 

106.
________ provides intelligence to salespeople in the form of lead qualification, preapproach preparation, customer buying patterns, and upselling and cross-selling opportunity identification.
 
 
107.
Purchasing products for resale or acting as an agent for supply of a product would be an example of a(n) ________ function.
 
 
108.
QVC is a television home shopping network. It generates sales of more than $8 billion from its 60 million customers by:
 
 
109.
The ratio of ________ to price is referred to as value.
 
 
110.
The relationship between a product line and a product mix is:
 
 
111.
The salesperson's objective is to "gain a prospect's attention, stimulate interest, and make a transition to the presentation" during which stage in the personal selling process?
 
 
112.
The sales process at Xerox typically follows the six stages of the personal selling process. During the fourth stage, as the presentation begins, the salesperson:
 
 
113.
Sarah has a backache due to overexertion. She believes a massage would loosen her back muscles and make her feel better. She is concerned because a massage, unlike a pair of shoes, cannot be felt before she buys it. Sarah realizes massages have ________ properties.
 
 
114.
Services are defined as:
 
 
115.
A short-term inducement of value offered to arouse interest in buying a product or service is referred to as:
 
 
116.
A small electronics company has begun production of a small line of high-quality, professional studio-model components targeted at audiophiles who shop at thousands of specialty stores across the United States. How should the small electronics company best distribute its new products?
 
 
117.
The stage of the new-product development process that exposes ACTUAL products to perspective consumers under realistic purchase conditions to see if they will buy is referred to as:
 
 
118.
The Starch test uses a(n) ________ to determine the percentages of those who remember seeing a specific magazine ad, who saw or read any part of the ad identifying the product or brand, who read any part of the ad's copy, and who read at least half of the ad.
 
 
119.
Suppose you are the owner of a picture frame store and you wish to calculate how many frames you must sell to cover your fixed and variable costs at a given price. Let's assume that the demand for your frames is strong, so the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC) total $32,000 (real estate taxes, interest on a bank loan, etc.) and unit variable cost (UVC) for a picture frame is $40 (labor, glass, frame, and matting). If your picture frame store sold 2,000 picture frames, what would your profit (or loss) be?
 
 
120.
There are 7 stages of the new-product development process. Stage 6 is the __________ stage.
 
 
121.
Today, ________ percent of companies employ cross-functional teams of professionals to work with customers to improve relationships, find better ways of doing things, and create and sustain value for their customers.
 
 
122.
"To remind" is the promotional objective of which stage of the product life cycle?
 
 
 
 
 
 
 
 
 

123.
Toro decided to augment its traditional hardware retail distribution channel by also selling through mass merchandisers such as Walmart and Target and setting prices for its products substantially below those of its traditional hardware outlets. As a result, many hardware stores abandoned Toro products in favor of other manufacturers. This is an example of a firm failing to consider ________ effects when setting its final list or quoted price.
 
 
124.
The two basic forms of team selling are:
 
 
125.
Two features of successful ________ are the availability of "live chat" opportunities and the ability to provide a single source for customer problem solving.
 
 
126.
Vinyl records, cassette tapes, CDs, and music downloads (MP3 files) are all members of the same:
 
 
127.
What is the key marketing objective for advertising on social networking sites?
 
 
128.
When a product spreads through the population, it is called the:
 
 
129.
When Daniel was hired to work for Bush Refrigeration Co., he was told, "The sales training program is 18 weeks, and we'll pay you $750 per week during that time." While in training, the company used a ________ to compensate Daniel for his time and effort.
 
 
130.
When Hunter went to the hardware store looking for gloves to wear while refinishing a table, he bought one pair because that was all he needed. But when the hardware store purchased the gloves, it purchased a case containing 100 pairs of identical gloves. Which logistical function did the hardware store perform for Hunter and its other customers?
 
 
131.
Which of the following firms has made the wisest wholesaler choice for its product?
 
 
132.
Which of the following is a characteristic of the growth stage of the product life cycle?
 
 
133.
Which of the following represent elements of Step 2 of the price-setting process?
 
 
134.
Which of the following statements about advertising is most accurate?
 
 
135.
Which of the following statements about online advertising is most accurate?
 
 
136.
Which of the following statements about the price-setting process is most accurate?
 
 
137.
Which of the following statements about the role of social media for PepsiCo's "Friend Finder" is most accurate?
 
 
138.
Which of the following statements regarding corporate vertical marketing systems is most accurate?
 
 
139.
Which of the following statements regarding supply chains is most accurate?
 
 
140.
Which type of consumer product is purchased relatively infrequently and the purchase decision takes some time because the consumer compares offerings during the shopping experience?
 
 
 
 
 
 
 
 
 

 

1.
According to the textbook, Target has been successful by offering consumers the best
 
 
2.
The actions a person takes in purchasing and using products and services, including the mental and social processes that come before and after these actions, are referred to as
 
 
3.
Adaptive selling is a common form of which sales presentation format?
 
 
4.
Advertisements that focus on selling a product or service and that can take three forms—pioneering (or informational), competitive (or persuasive), and reminder—are referred to as
 
 
5.
__________ advertising can be interactive, with drop-down menus, built-in games, or search engines to engage viewers.
 
 
6.
__________ advertising is good for products that have achieved a well-recognized position and are in the mature phase of their product life cycle.
 
 
7.
Advertising, sales promotion, and public relations are often said to use __________ because they are used with groups of prospective buyers.
 
 
8.
Aggregating prospective buyers into groups that have common needs and will respond similarly to a marketing action is referred to as
 
 
9.
Airlines, hotels, and car rental firms all engage in __________ by varying prices based on time, day, week, or season to match supply and demand.
 
 
10.
All markets ultimately are composed of
 
 
11.
All of the following are examples of products or services that satisfy a consumer need except which?
 
 
12.
All of the following are stages in the personal selling process except which?
 
 
13.
Amazon wanted lower retail prices for e-books to
 
 
14.
Ann recently saw an ad for Claritin, a medicine perfect for counteracting her allergy symptoms. She immediately went to the store to purchase the product. In terms of the communication process, the Claritin ad created
 
 
15.
Another name for a drop shipper is a
 
 
16.
A(n) __________ should only be used if it accurately reflects the situation; otherwise such claims would be unethical.
 
 
17.
________ are derived from a job description, and include aptitudes, knowledge, skills, and behavioral characteristics considered necessary to perform a job successfully.
 
 
18.
________ are factors that limit the range of prices a firm may set.
 
 
19.
As product adopters, innovators
 
 
20.
As product adopters in the diffusion of innovation, members of the late majority
 
 
21.
At which stage in the product life cycle would a company's promotional objective most likely be to remind buyers of the product's existence?
 
 
22.
Aura Home Furnishings recently switched from a geographical to a marketing channel structure with different sales teams, each serving specific retail channels with different needs: big box stores, department stores, and the Aura Store within Amazon.com. In this example, Aura uses which type of sales organization structure?
 
 
23.
Bayer Aspirin is sold in the original strength, in a safety-coated version, in an extra-strength version, and in a version designed especially for women. Bayer is using a __________ strategy.
 
 
24.
Break-even analysis refers to
 
 
25.
Brokers are independent firms or individuals who
 
 
26.
A business traveler joined the Starwood Preferred Guest Program in order to earn points each time he stayed overnight in a Westin or Sheraton hotel. Once he has accumulated enough points, he can trade his points in for a free night's stay. As a member of this program, the traveler receives periodic updates on new hotels and learns of ways to earn additional points. The marketing term that best describes this scenario is
 
 
27.
Central to integrated marketing communications (IMC) is
 
 
28.
A college education would satisfy needs at what level of the Maslow hierarchy?
 
 
29.
The __________ concept means that an organization strives to satisfy consumer needs while achieving its goals.
 
 
30.
Consumer behavior includes the actions a person takes in purchasing services and using products and services, including
 
 
31.
Continuous scheduling would most likely be used for advertising
 
 
32.
Criteria for forming segments involve both similarities and differences. In terms of the needs of buyers, the similarities must be __________ a segment, and the differences must be __________ segments.
 
 
33.
Customer relationship management refers to
 
 
34.
Custom Foot guarantees your boots will be ready within three weeks. This is an example of
 
 
 
 
 
 
 
 
 
 
 

35.
Dick's Sporting Goods is a leading sports retailer that provides year-round inventory of equipment for just about any sport. Even during the off-season, equipment for seasonal sports is available at Dick's. Which utility does the Sports Authority best provide?
 
 
36.
Discounting generally takes place during which stage of the retail life cycle?
 
 
37.
During the __________ stage of the product life cycle, product proliferation occurs as competitors attempt to differentiate their company's brand from others.
 
 
38.
During which stage of the retail life cycle do companies establish multiple outlets?
 
 
39.
A dynamic pricing policy allows marketers to respond to
 
 
40.
An external search for product information is likely to occur when
 
 
41.
Factors such as the need for improved reliability and security in postal systems and new government regulations represent important challenges for __________ in the global market.
 
 
42.
Figure 4-7 illustrates the traditional progression as well as contemporary variations of
 
 
43.
A firm's profit equation equals
 
 
44.
Firms such as Ford and Frito-Lay have learned which of the following marketing lessons?
 
 
45.
Fitness trackers are in the growth stage of the product life cycle. A manufacturer selling one of these devices would most likely use advertising to
 
 
46.
Forever Quilting is a small company that makes quilting kits priced at $120. The costs of the materials that go into each kit total $45. It costs $5 in labor to assemble a kit. The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $4,500 for the monthly salary of its owner. Forever Quilting's unit variable cost for its kits is
 
 
47.
For marketers, important objectives of a point-of-purchase display are to
 
 
48.
"For World Wide Web users who enjoy books, Amazon.com is a retail bookseller that provides instant access to over 1.1 million books as well as a combination of extraordinary convenience and low prices." is a __________ statement for Amazon.com in North America.
 
 
49.
Four Seasons Hotels sell private residences in several of their properties and send direct mail to prospective residents asking them to request additional information on the telephone or through a website. In terms of direct marketing, this is known as
 
 
50.
The four utilities marketing creates are
 
 
51.
Frito-Lay ________ call on supermarkets, convenience stores, and other establishments to ensure that the company's line of snack products is in adequate supply.
 
 
52.
The headline of a General Motors advertisement in a Reader's Digest magazine read, "I believe these kids will make great engineers. Now I've got to make them believe it." The ad shows an engineer surrounded by seven young people. The ad copy talks about how General Motors believes the more the company puts into the community, the more society will get out of the community. This advertisement is an example of a(n)
 
 
53.
If used continuously, which of the following promotional elements will most likely lose its effectiveness?
 
 
 
 
 
 
 
 
 

54.
If Wendy's customers are buying an eating experience, which of the following rationales would make the most sense if you were to group the products Wendy's sells?
 
 
55.
In break-even chart in Figure 11-6a, point A identifies the firm's __________ point.
 
 
56.
Inside order takers are also referred to as
 
 
57.
In the Maslow hierarchy of needs, __________ needs involve self-preservation as well as physical and financial well-being.
 
 
58.
In the VALS framework, consumers who are looking for products and services that demonstrate success to their peers or to a peer group they aspire to are called
 
 
59.
In the VALS framework, self-expression-motivated consumers who have fewer resources and express themselves and experience the world by working on it are referred to as
 
 
60.
________ involves mutual respect and trust among buyers and sellers, and focuses on creating long-term customers, not a one-time sale.
 
 
61.
A __________ is a plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers.
 
 
62.
A is innovators
 
 
63.
Jamie goes shopping with a friend and notices her friend's durable ripstop nylon wallet. She thinks of her own worn wallet and realizes she needs a new one. In which stage of the consumer purchase decision process was Jamie when she had this realization?
 
 
64.
Jenn needed to have another set of keys made for her apartment so she went to Home Depot to have it done since she remembered her dad going there. This is an example of
 
 
65.
A limited-service wholesaler that furnishes shelves that display merchandise in stores, performs all channel functions, and sells on consignment to retailers is referred to as a
 
 
66.
Managers often use two special measures to help identify strong and weak market segments in order to provide direction for marketing efforts. One of these is the BDI, or
 
 
67.
A manufacturer can successfully use mixed branding because
 
 
68.
A manufacturer of a new all-natural-ingredient shampoo and conditioner puts free samples of the product in Sunday newspapers to
 
 
69.
Many shoe stores have sales during which they offer 50% off the second pair you purchase when you purchase the first pair at full price. This offer is an example of a
 
 
70.
Marketers often discover consumer needs by
 
 
71.
A market-product grid is a framework to relate the __________ to products offered or potential marketing actions by an organization.
 
 
72.
The McDonald's Corporation recently announced that it will begin phasing out the use of eggs from hens housed in cages. The company uses about two billion eggs annually, or a little more than 4 percent of the eggs produced in the United States. This change in McDonald's egg-containing products to appeal to healthy eating habits is a __________ strategy.
 
 
73.
The McDonald's Monopoly game is an example of which type of promotion?
 
 
 
 
 
 
 
 
 

74.
The most common form of outdoor advertising is
 
 
75.
Multichannel retailers are retailers that
 
 
76.
National sales meetings sponsored by the manufacturer and field visits to a reseller's location to inform and motivate the salespeople to sell the products are considered forms of
 
 
77.
New Balance has many offerings. It makes the Minimus line of shoes with a Vibram outsole and REVlite cushioning for those who want to "feel the trail." Its 1260v2 shoe incorporates Stabilicore technology to "deliver a plush, smooth, and stable ride." And its top of the line, 990v3 traditional running/walking shoe uses a "premium pigskin upper with mesh inserts for breathability, a stability-enhancing ABZORB insole, and ENCAP to promote a healthy gait." The strategy of appealing to different types of customers in this way is an example of
 
 
78.
One advantage of a market-product grid is that it can be used to
 
 
79.
One of the disadvantages associated with radio as an advertising medium is that it
 
 
80.
One step in evaluation of the promotion program is to
 
 
81.
Outlets such as Checkers Drive-In Restaurants typically enter the wheel of retailing with
 
 
82.
Packaging
 
 
83.
People to whom an individual looks as a basis for self-appraisal or as a source of personal standards are referred to as
 
 
84.
Perceptual map refers to
 
 
85.
Pez was originally sold in Europe as __________ in plain headless dispensers.
 
 
86.
Positioning that involves competing directly with competitors on similar product attributes in the same target market is referred to as
 
 
87.
Postponing is one technique for ________ in a sales presentation.
 
 
88.
The practice of charging a very low price for a product with the intent of driving competitors out of business is referred to as
 
 
89.
A __________ product is a style of the times.
 
 
90.
Product positioning refers to
 
 
91.
The promotional mix consists of communication tools that include advertising, public relations, sales promotion, direct marketing, and
 
 
92.
Pulse scheduling would most likely be used for advertising
 
 
93.
Rack jobbers are wholesalers that
 
 
94.
The ratio of __________ to price is referred to as value.
 
 
95.
Research shows that consumer socialization with respect to brand preferences begins at
 
 
 
 
 
 
 
 
 

96.
Retail outlets, like products, experience the process of growth and decline, which is referred to as the
 
retail life cycle.
97.
A retail outlet that focuses on one type of product at very competitive or discount prices and often dominates the market is referred to as a
 
category killer.
98.
A salesperson who calls phone numbers from a purchased list of new parents and asks, "Have you been considering the purchase of life insurance?" is engaged in the __________ stage of the personal selling process.
 
 
99.
Sales plan implementation involves
 
 
100.
The second stage in the consumer purchase decision process involves gathering facts about possible choices, and may include internal and external sources. What is this stage called?
 
 
101.
Segmentation based on some observable actions or attitudes by prospective customers, such as what benefits they seek, as well as where, how frequently, and why they buy, is referred to as
 
 
102.
Small athletic shoe manufacturers such as Vans target niche markets and make shoes designed to satisfy the needs of different specific groups of customers. This strategy is an example of
 
 
103.
A strategy of dropping a product from the product line during the decline stage of the product life cycle is referred to as
 
 
104.
A student wants to buy a smartphone so she can share pictures with her friends. An insurance claims adjuster wants to buy a smartphone to document accidents (take pictures, write a report, etc.). If they both purchase the same model smartphone, such as an Apple iPhone, which statement is most accurate?
 
 
105.
Team selling would most likely be used by a company that sells
 
 
106.
Temporal effects include
 
 
107.
Three different objectives relate to a firm's profit, which have different implications for pricing strategy. The three profit-oriented objectives include __________, managing current profit, and achieving a target return.
 
 
108.
The time a product can be stored before it spoils is referred to as its
 
 
109.
Toyota was the first auto manufacturer to introduce a self-parking feature that it called Intelligent Parking Assist. Originally it was available as an option on the Toyota Prius in the Japanese market. Toyota was trying to change consumer attitudes about the vehicle by
 
 
110.
Trademark refers to
 
 
111.
Trading down refers to __________ when repositioning a product.
 
 
112.
TransWave International is a company that markets patented electronic sensors as an early warning device for locating potential problems with buried pipelines. TransWave sends an environmental expert, a safety engineer, a legal representative to explain new regulations enacted by the U.S. Office of Pipeline Safety, and an experienced pipeline expert when it meets with a prospect. This is an example of how TransWave uses
 
 
113.
A visit to The Tonight Show Starring Jimmy Fallon by Cameron Diaz to promote a new movie would be considered which element of the promotional mix?
 
 
114.
a want refers to
 
 
 
 
 
 
 
 
 

115.
A western clothing retail store marketing vice president is developing an advertising budget using the objective and task method. She has the objective of clearing slow-moving merchandise from her shelves and is trying to choose between using radio ads or newspaper ads. Which of the following is an advantage of radio relative to newspapers as a medium for achieving the objective?
 
 
116.
What is the marketing objective for the decline stage of the product life cycle?
 
 
117.
What is the promotional objective of the decline stage of the product life cycle?
 
 
118.
What pricing strategy did the National Aeronautics and Space Administration (NASA) use to pay Lockheed Martin for the Orion lunar spacecraft?
 
 
119.
The wheel of retailing refers to
 
 
120.
When a firm offers a very low price on a product to attract customers to a store, and once in the store, the customer is persuaded to purchase a higher-priced item, the practice is referred to as
 
 
121.
When a pharmaceutical company places an ad in a home and garden magazine for its new arthritis drug, it is using a ________ strategy.
 
 
122.
When Coca-Cola promoted Coke as a morning beverage for those consumers who don't drink coffee, it used a __________ strategy.
 
 
123.
When compared to a multiple products, multiple market segments strategy, a one product, multiple market segment strategy
 
 
124.
When considering the quick-service restaurant competition, it will be most important for Wendy's to consider not only the offerings of Burger King, McDonald's, Five Guys, and other hamburger chains but also the
 
 
125.
When Home Depot switched its in-store light fixture displays to compact fluorescent light and LED bulbs, painted the roofs of its stores white, and installed solar panels, it reduced its energy use by __________ percent.
 
 
126.
When the Campbell Soup Co. introduced its new Campbell's Kettle Soups, what type of product advertisement was it most likely using in its ads?
 
 
127.
When the Office of National Drug Control Policy ran an ad with the headline, "Marijuana harmless? Didn't see the merging truck," it was using which type of ad appeal?
 
 
128.
Whether an individual is buying for personal or household use, or an organization is buying for its own use or for resale, the individual or organization would be considered
 
 
129.
Which element of the promotional mix has the inherent weaknesses related to the difficulty in getting media cooperation?
 
 
130.
Which element of the promotional mix is characterized by a customized interaction that is extremely expensive but very persuasive and likely to yield immediate feedback?
 
 
131.
Which form of retailing is Best Buy now using in airports to distribute its mobile phone and computer accessories, digital cameras, flash drives, and other consumer electronics?
 
 
132.
Which of the following is a potential problem when using fear appeals in advertising?
 
 
133.
Which of the following is not a consumer-oriented sales promotion?
 
 
134.
Which of the following is not a criterion that would support forming market segments
 
 
135.
Which of the following is not a factor that would be considered noise in the communication process?
 
 
136.
Which of the following is one of the four alternatives for branding strategy that companies can employ?
 
 
137.
Which of the following is one of the three major sales presentation formats?
 
 
 
 
 
 
 
 
 

138.
Which of the following occurs during the planning stage of the promotion decision process?
 
 
139.
Which of the following statements about attitude tests is most accurate?
 
 
140.
Which of the following statements about order getters is most accurate?
 
 
141.
Which of the following statements about the VALS framework is false?
 
 
142.
Which of the following statements best describes a good?
 
 
143.
Which of the following statements best describes a service?
 
 
144.
Which of the following statements describes an environmental force?
 
 
145.
Which of the following statements is most accurate?
 
 
146.
Which of the following statements regarding segmentation bases is most accurate?
 
 
147.
Which of the following would be an example of a fixed cost for a company that makes carbon monoxide monitoring systems for workers to wear in hazardous areas?
 
 
148.
Which type of utility is created by online shopping?
 
 
149.
The wholesalers that perform all channel functions and are found in the health foods, automotive parts, and seafood industries would be
 
 
150.
Your local Target retailer carries a variety of different items. You can find everything ranging from socks and DVDs to baby items and groceries. This is an example of the __________ carried by Target.
 
 
 
 
 
 
 
 
 

 

1.
According to the textbook, clothing manufacturer Christian Dior and retailer Neiman Marcus use ________ pricing.
 
 
2.
After an assessment of needs, a marketing manager must translate ideas from consumers into concepts for products that a firm may develop. The concepts must then be converted into a meaningful
 
 
3.
Any container in which a product is offered for sale and on which information is communicated is referred to as
 
 
4.
Architectural firms that specialize in designing and constructing one-of-a-kind custom buildings such as the Rock and Roll Hall of Fame often use which pricing strategy?
 
 
5.
As product adopters in the diffusion of innovation, members of the early majority
 
 
6.
Assessing the political and regulatory climate for marketing in a country or region of the world means not only identifying the current environment but also determining how
 
 
7.
Assume you are manager of the Outback Steakhouse, a franchised restaurant that has opened at new location in St. Louis. Describe which segmentation base(s) and possible segmentation variable(s) you would use to segment its market and explain why each supports the appropriate market segmentation strategy.
 
 
8.
Assuming there is no change in a product's price or the quantity demanded, if a business owner wants to increase her advertising expenses to $500 monthly, this would cause total costs to ________ and the break-even quantity to
 
 
9.
Based on the marketing program 3M developed for its Post-it® Flag Highlighters and Post-it® Flag Pens, one can conclude that
 
 
10.
A basic test of the usefulness of the market segmentation process is whether it leads to tangible marketing actions that can
 
 
11.
Cannibalization would most likely occur if
 
 
12.
The ________ cost of a service is the cost of paying the person used to provide the service along with any needed equipment.
 
 
13.
A country's communications, transportation, financial, and distribution systems are considered to be its
 
 
14.
Customer experience management (CEM) is
 
 
15.
Data refers to the
 
 
16.
Derived demand refers to
 
 
17.
"Do you eat at fast-food restaurants regularly: Yes or No?" is worded poorly because the word "regularly" makes it ________ question.
 
 
18.
Durable goods emphasize which of the following elements of the promotional mix?
 
 
19.
The emphasis of a marketing strategy for a continuous innovation concentrates on
 
 
20.
Figure 10-1 represents the stages of the product life cycle. What does the portion of the curve labeled C represent?
 
 
21.
Figure 11-3a shows that when the price for Red Baron frozen cheese pizzas moves from $8 to $6 per unit along the demand curve D1, the quantity demanded
 
 
22.
For routine orders, the decider is usually
 
 
23.
For upscale American families who desire a carefree driving experience, Volvo is a premium-priced automobile that offers the utmost in safety and dependability" is a ________ statement for Volvo in North America.
 
 
24.
A global market entry strategy in which a foreign company and a local firm invest together to create a local business in order to share ownership, control, and profits of the new company is referred to as
 
 
25.
Goods can be divided into ________ goods and ________ goods.
 
 
 
 
 
 
 
 
 

26.
Identify and describe each stage in the new-product development process in the correct order.
 
 
27.
Identify and describe the stages of the generalized product life cycle. For each stage, specify the marketing objective a firm should attempt to achieve.
 
 
28.
If a purchase is a new buy for a manufacturer, the seller should expect
 
 
29.
In a buying center, ________ affect the buying decision, usually by helping define the specifications for what is bought.
 
 
30.
In Japan, women give men chocolates on Valentine's Day. This is an example of
 
 
31.
In marketing, each ________ consists of people who are relatively similar to each other in terms of their consumption behavior.
 
 
32.
In marketing research, ________ involves generalizing the results from the sample to much larger groups of distributors, customers, or prospects to help decide on marketing actions.
 
 
33.
In response to Duracell's introduction of the Duracell Ultra battery, Energizer introduced an Advanced Formula battery. But unlike Duracell, Energizer priced its batteries at a low initial price, believing that consumers were too price sensitive to pay more in this category. In this case, Energizer used
 
 
34.
In terms of brand loyalty, consumers prefer specific brands but will accept substitutes for which type of consumer product?
 
 
35.
In terms of its effect on faxing, e-mail has
 
 
36.
In which type of auction is there an upward pressure on bid prices as more would-be buyers become involved?
 
 
37.
The life cycle of a product depends on product adoption by consumers as measured by
 
 
38.
Marketers pay slotting fees to grocers in payment for space—or slots—on their retail shelves. Such slotting fees significantly increase the cost of which stage of the new-product process?
 
 
39.
Marketing managers must use the combination of data, technology, and analytics to convert the data into useful information that will answer marketing questions and lead to effective marketing actions. Organizations that accomplish this successfully are often referred to as
 
 
40.
A marketing strategy that alters a product's characteristic, such as its quality, performance, or appearance, to increase its value and sales to customers is referred to as
 
 
41.
Market testing refers to
 
 
42.
Mars, America's second-largest candy company, began doing business in Russia in the late 1980s. The Snickers bar is one of the top-selling candies in Russia and is marketed in much the same way as it is in the United States. What type of global company is Mars?
 
 
43.
More than half of all U.S. households are composed of only one or two persons, so Aunt Jemima offers one serving meals, such as its Ham & Egg Scramble and Oatmeal Pancakes. Aunt Jemima is using ________ as the basis to segment its market.
 
 
44.
Most services have a limited capacity due to the ________ of the service from the service provider and the perishable nature of the service.
 
 
45.
A negative aspect of selecting unit volume as a pricing objective is that
 
 
46.
Observational data refer to
 
 
47.
Odd-even pricing refers to
 
 
48.
An organization's stockholders, its suppliers, its employees, its customers, and society at large all share what in common with regard to an organization?
 
 
49.
PepsiCo and The Strauss Group have together formed an Israeli business to market Frito-Lay's Cheetos, Ruffles, and Doritos in Israel. This global market entry strategy is known as
 
 
 
 
 
 
 
 
 

50.
The perceptual map in Figure 8-8 shows adult perceptions for beverages. Suppose a marketer is introducing a new beverage that is higher-than-average in nutrition and is intended for adults. It will probably be most useful to promote the drink as similar to what?
 
 
51.
The phrase "relatively homogeneous collections of prospective buyers" is most descriptive of
 
 
52.
The prescribed penalty for agents of foreign governments found guilty of economic espionage is
 
 
53.
The pricing strategy for 3M's Post-it® Flag Highlighters was to
 
 
54.
A product can be classified as new from all of the following perspectives except which?
 
 
55.
The purpose of the introduction of 3M Post-it® Flag Highlighters was to
 
 
56.
Recently, the United States imposed a 35% tariff on Chinese tire imports in hopes of sustaining U.S. jobs in tire manufacturing. This addition of tariffs is an example of
 
 
57.
Recipco and Tradaq are both companies that connect international companies who want to barter the products they make for the products they need without using cash or credit. Recipco and Tradaq assist international companies in making
 
 
58.
A reference value involves comparing the costs and benefits of
 
 
59.
Relationship marketing refers to
 
 
60.
The services market sells diverse services such as legal advice, auto repair, and dry cleaning, and this market represents 75 percent of all industrial firms. Which of the following is another such service firm?
 
 
61.
Sherrie sold about $800 worth of produce last weekend at a farmer's market, but it was sunny and warm both days. This Saturday and Sunday are both supposed to be rainy, so she thinks fewer people will attend. She estimates she'll only sell about three-fourths of her total for last time, or $600. This is an example of
 
 
62.
Three types of companies populate and compete in the global marketplace. Identify and describe each type.
 
 
63.
Trend extrapolation involves
 
 
64.
Which of the following illustrates a shift in the demand curve?
 
 
65.
Which of the following is a criterion used for selecting a target segment?
 
 
66.
Which of the following is an example of a product in the decline stage of the product life cycle?
 
 
67.
Which of the following statements about Trek Bicycles is false?
 
 
68.
Which of the following statements regarding pricing constraints is most accurate?
 
 
69.
Which of the products listed below would be the best candidate for full-scale market testing?
 
 
70.
While there are the four Ps of marketing, there are the ________ Ps of services marketing.
 
 
71.
Those who have flown on Singapore Air have experienced firsthand the great food that is served during the flight, the friendliness of the flight attendants, and the comfortable seating. Singapore Air creates customer value by providing its customers with
 
 
 
 
 
 
 
 
 

 

1.
The added value a brand name gives to a product beyond the functional benefits provided is referred to as
 
 
2.
Adding value to the product (or line) through additional features or higher-quality materials is referred to as
 
 
3.
All of the following are true about the price element of services except which?
 
 
4.
Because of the intangible nature of services, consumers often perceive price as a possible indicator of the __________ of the service.
 
 
5.
Black & Decker uses a __________ strategy to reach the do-it-yourself market with the Black & Decker brand name and the professional construction market with the DeWalt brand name.
 
 
6.
A branding strategy in which a company uses one name for all its products in a product class is referred to as
 
 
7.
The central element of the marketing strategy for Pez Candy, Inc., is the
 
 
8.
The communication aspect of packaging on a can of Campbell's soup would most likely be of the greatest benefit to
 
 
9.
Companies can employ several different branding strategies. In Figure 10-7, Box A represents a __________ strategy.
 
 
10.
The consumers represented by C in Figure 10-5 are called
 
 
11.
The desire for a product class rather than for a specific brand is called __________ demand.
 
 
12.
Gatorade is classified as a(n) __________ brand
 
 
13.
Gatorade offers a range of product offerings. The firm uses one name for all its products in a product class. Gatorade is using a __________ strategy.
 
 
14.
A good brand name has several characteristics, including that it should
 
 
15.
If a customer is reluctant to try a new product because he'd have to change his normal everyday behaviors, the company is most likely facing a __________ barrier.
 
 
16.
If a firm's marketing dashboard displays a CDI of 80 for a consumer packaged good, such as Hawaiian Punch, this indicates which of the following?
 
 
17.
If a firm's marketing dashboard displays a CDI over 100 for a consumer packaged good, such as Hawaiian Punch, this indicates which of the following?
 
 
18.
In terms of its effect on faxing, e-mail has
 
 
19.
In terms of the diffusion of innovation, innovators account for __________ percent of product adopters.
 
 
20.
Kemps makes Life Savers Real Fruit Sherbet (with the flavors of a favorite childhood candy). Kemps pays Wrigley, the owner of the Life Savers brand name, a fee to market this product. This is most likely an example of
 
 
21.
ll of the following are true about a skimming pricing strategy when used during the introduction stage of the product life cycle except which?
 
 
22.
Major American car manufacturers are offering buying incentives to newly graduated college students who traditionally have little or no credit. Car manufacturers are using which of the following market modification strategies?
 
 
23.
Many service businesses use off-peak pricing to reflect variations in
 
 
24.
Mars, Inc., sells Snickers, Milky Way, Twix, Skittles, Dove, Starburst, M&Ms, and Three Musketeer candy. This variety of brand names is typical of a __________ strategy.
 
 
25.
New Balance, Inc., successfully repositioned its athletic shoes to focus on fit, durability, and comfort rather than on going head-on against Nike and Adidas on fashion and professional sports. This product repositioning strategy was designed to
 
 
26.
Nike has successfully used __________ with its lines Air Jordan and Air Lebron.
 
 
27.
Over 50 percent of the dollars spent in the United States on disposable cups and plates go toward the purchase of store brands of these products that are manufacturer by others. __________ has been very successful in this disposables category.
 
 
28.
People who tried a product, were satisfied, and bought it again are called __________ purchasers.
 
 
29.
Pez was originally sold in Europe as __________ in plain headless dispensers.
 
 
30.
Place or distribution is a major factor in developing a service marketing strategy because of the __________ of services.
 
 
31.
A __________ product is a style of the times.
 
 
32.
Product life cycle refers to
 
 
33.
Products such as Yoplait's Go-GURT® portable low-fat yogurt in a tube demonstrate the importance of the __________ of packaging.
 
 
34.
Products that experience rapid sales on introduction and then an equally rapid decline are called __________ products.
 
 
 
 
 
 
 
 
 
 
 

35.
Ralston Purina advertises with the following slogan: "Your Pet, Our Passion—Premium Pet Food by Purina." The firm now offers high quality, super-premium cat and dog food based on formulations that promote "life stage nutrition." This line is an example of
 
 
36.
A risk with __________ is that too many uses for one brand name can dilute the meaning of a brand for consumers.
 
 
37.
The sale of two or more separate products in one package is referred to as
 
 
38.
Service organizations must manage the availability of the offering so that __________ and the organization's assets are used in ways that will maximize the return on investment (ROI).
 
 
39.
The shapes of the product life cycle for high-learning, low-learning, fashion, and fad products vary as does
 
 
40.
The __________ stage of the product life cycle occurs when a product is launched to its intended target market.
 
 
41.
The swoosh that appears on every Nike product is an example of a
 
 
42.
The tangibles that make up the service, such as buildings, landscaping, vehicles, furnishings, signage, brochures, and equipment, comprise which element of the seven Ps of services marketing?
 
 
43.
When Proctor & Gamble revamped Pantene shampoo and conditioner with a new vitamin formula and relaunched the brand with a multimillion-dollar advertising and promotion campaign, what strategy did it use to manage the product through its life cycle?
 
 
44.
Which of the following products would have a high-learning product life cycle curve?
 
 
45.
Which of the following products would have a low-learning product life cycle curve?
 
 
 

 

 
 
 
Architectural firms that specialize in designing and constructing one-of-a-kind custom buildings such as the Rock and Roll Hall of Fame often use which pricing strategy?
A) cost-plus pricing
B) experience curve pricing
C) standard markup pricing
D) yield management pricing
E) price lining
 
 
 
Southern gardeners normally pay $5 for a two-cubic-foot bag of pine bark mulch that they buy at their local gardening-supply and home-improvement stores to keep the weeds down in their gardens. If the price being charged by a retailer is not within a narrow range that gardeners feel is appropriate, they will use substitutions—newspaper, grass clippings, or some other kind of covering. When pricing pine bark mulch, a garden-supply or home-improvement retailer should use
A) customary pricing.
B) at-market pricing.
C) loss-leader pricing.
D) penetration pricing.
E) bundle pricing.
 
 
 
The prices for all furniture sold at American Furniture Warehouse end in $9.99, such as $599.99, $899.99, etc. American Furniture Warehouse uses
A) odd-even pricing.
B) dynamic pricing.
C) price lining.
D) bundle pricing.
E) product-line pricing.
 
 
 
A retailer purchased a gross (144) of silk shells each costing exactly $17. Although the only difference between the shells was color, when they were put on the floor, the primary colors were marked $25, the pastel colors were marked $28, and the black and white shells were marked $30. These prices were set most likely because
A) retailers using a price lining strategy will occasionally mark up items based on color, style, and expected consumer demand.
B) fewer people buy black and white shells, so the retailer has to charge a higher price to break even.
C) the retailer is using prestige pricing; black and white shells are more elegant.
D) the primary colors were priced using a penetration strategy, the pastels were priced using a skimming strategy, and the black and white shells were priced using prestige pricing.
E) price lining is essentially the same as above-, at-, or below-market pricing.
 
 
 
The latest in appliance technology allows your refrigerator to send messages to your smartphone and even photos of the interior to remind you of what you need to pick up at the store. Taking advantage of strong consumer demand for technology-enabled products, marketers set prices for these refrigerators at thousands above other models. These marketers are using a ________ pricing strategy.
A) skimming
B) penetration
C) prestige
D) price lining
E) bundle
 
 
 
The manufacturer of a fat-free ice cream with the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product. Which of the following conditions would argue against using a penetration pricing strategy?
A) The ice cream market demonstrates high levels of loyalty.
B) Economies of scale in production would be substantial.
C) Retailers are not willing to carry new brands of ice cream in the already overcrowded category.
D) Once the initial price is set, it is nearly impossible to lower the price without alienating early buyers.
E) Customers recognize the uniqueness of this patented production process
 
 
 
Supermarket managers use standard markup pricing because it is particularly suited to situations when
A) there is a large number of products and estimating the demand for each would be difficult and time consuming.
B) there is a large number of product lines, all with basically the same product attributes.
C) there is a specific profit goal that needs to be achieved.
D) there is a policy of selling every item in a product line at the same price regardless of the product class.
E) the products are perishable or seasonal.
 
 
 
If a firm estimates that its costs will fall by 10 percent each time volume doubles for its product, then the cost of the l,000th unit produced and sold will be about 90 percent of the cost of the 500th unit, and the 2,000th unit will be 90 percent of the l,000th unit. Therefore, if the cost of the 500th unit is $100, the cost of the 4,000th unit would be
A) $0.
B) $72.90.
C) $81.00.
D) $90.00.
E) $100.00.
 
 
 
Swedish company Asko, which prides itself on manufacturing and marketing some of the best-built and most prestigious appliances in the world, would most likely use which competition-oriented pricing approach?
A) customary pricing
B) above-market pricing
C) loss-leader pricing
D) target profit pricing
E) penetration pricing
 
 
 
Mike Morgan, a sales representative for a major food service distributor of Betty Crocker's Warm Delights, wanted to encourage larger purchases by his grocery customers. Morgan offered a 10 percent discount for buying 1 to 49 cases of Warm Delights within a calendar month, 12 percent for 50 to 99 cases, and 15 percent for 100 or more cases. What type of discount was Morgan offering his customers?
A) a seasonal discount
B) a quantity discount
C) a cash discount
D) a trade discount
E) a case allowance discount
 
 
 
 
 
 
 
 

 
 
 
When Kroger, a national supermarket chain, uses a special promotion to price a six-pack of soda at $2.09 (which is below its customary price level of $4.29), it is attempting to
A) drive its competition out of business.
B) attract customers in hopes they will buy other products as well.
C) fill its parking lot so its store will look successful.
D) work with the local bottler to move products that are close to their expiration dates.
E) help stimulate the local economy and generate good will with its customers.
 
 
 
When Sherman bought gas, he noticed the convenience store offered him a 2 percent reduction in price if he paid cash rather than if he used his credit card to pay for his purchase. The convenience store was offering him a
A) trade discount.
B) cash discount.
C) promotional allowance.
D) rebate.
E) functional discount.
 
 
 
A construction company was offered a 3 percent reduction in price off all invoices from a lumberyard for paying within 10 days of issue. The lumberyard was offering a
A) trade discount.
B) cash discount.
C) promotional allowance.
D) rebate.
E) flexible price.
 
 
 
Rather than billing clients by the hour, some lawyers and their clients agree on a fixed fee based on expected costs plus an agreed-on level of profit for the law firm. Which pricing approach are they using?
A) target pricing
B) cost-plus pricing
C) customary pricing
D) experience curve pricing
E) bundle pricing
 
 
 
) The fashion buyer for Neiman Marcus is in Italy to view the new collections and to order for the coming season. In Milan, she negotiates a good price for a quantity of shoes in a range of sizes and styles, FOB factory. This means that
A) the factory selects the mode of transportation, pays the freight charges, and is responsible for any damage because the seller retains title to the goods until they are delivered to Neiman Marcus.
B) Neiman Marcus selects the mode of transportation, pays freight charges, and is responsible for any damage while the shoes are in transit because title passes to the firm at the point of loading.
C) Neiman Marcus and the factory will split the freight costs.
D) the factory pays the freight cost to a designated port (airport or seaport) in the United States while Neiman Marcus pays the freight from that port to its final destination within the United States.
E) the factory passes the title when the goods are loaded but will pay all shipping costs.
 
 
 
In one of its least favorite actions, Amazon.com was caught manipulating its prices. Avid DVD buyers, buying in quantity for resale, found that the online retailer was offering different customers different prices for the same DVD, and complained vociferously. Company officials admitted that the company was trying to see how much it could charge for an item before buyers balked. Amazon was caught attempting
A) horizontal price fixing.
B) price discrimination.
C) resale price maintenance.
D) predatory pricing.
E) bait and switch pricing.
 
 
 
The price for Nintendo's Wii video game console was likely insufficient to cover its fixed and variable costs. However, the price of its video games was set high enough to cover its video game console's loss and deliver a handsome profit for all Nintendo products. This example illustrates Nintendo's use of
A) bundle pricing.
B) product-line pricing.
C) price lining.
D) customary pricing.
E) loss-leader pricing.
 
 
 
Mark Johnson, the manager of a discount consumer electronics store, was approached by the manufacturer's representative on behalf of a marketer of a popular and profitable line of DVD storage racks. The manufacturer's representative implied that if Johnson didn't raise the retail prices for the storage racks to those paid by the marketer's nondiscount customers, Johnson's supply of racks would be severely curtailed. The manufacturer's representative is guilty of attempting
A) horizontal price fixing.
B) resale price maintenance.
C) price discrimination.
D) predatory pricing.
E) bait and switch pricing.
 
 
 
 
 
 
 

 
 
 
The owner of a store that sells custom kitchen cabinets wishes to use a target return-on-sales pricing approach to establish a price for a typical section of cabinets. Assume that variable costs total $200 per unit, fixed cost is $44,000, and the storeowner desires a target profit of 20 percent return on sales at an annual volume of 400 cabinets. What price should be charged for a typical cabinet section?
A) $263.50
B) $311.00
C) $387.50
D) $445.50
E) $775.00
 
 
 
A box of Cascade dishwasher detergent shrink-wrapped with a bottle of Jet Dry is sold for $1.50 less than the regular price of the products sold separately. This is an example of ________ pricing.
A) penetration
B) prestige
C) bundle
D) odd-even
E) standard markup
 
 
 
When Dell sells various laptops, it also pre-installs Microsoft Office and other software that customers order at a discount before a laptop is shipped. This is an example of
A) price lining.
B) product-line pricing.
C) bundle pricing.
D) customary pricing.
E) prestige pricing.
 
 
 
The retail price of mobile phones (unsubsidized) has decreased from $4,000 in 1983 when Motorola commercialized the device, to less than $99 today as the volume increased from zero to millions of units sold. This is due in large part to which type of pricing approach?
A) skimming pricing
B) prestige pricing
C) experience curve pricing
D) odd-even pricing
E) customary pricing
 
 
 
To promote their business, some psychics advertise on television free tarot-card readings and other insights into their customers' futures. Unfortunately, this "free reading" has cost some unsuspecting callers as much as $700 in phone charges. This sort of pricing practice would be primarily monitored by the
A) Consumer Protection Agency.
B) U.S. Department of Justice.
C) Federal Trade Commission.
D) Federal Communications Commission.
E) Consumer Product Safety Commission.
 
 
 
Tendollars.com offers thousands of gifts, all priced at $10. This is an example of a(n)
A) skimming pricing approach.
B) loss-leader pricing approach.
C) fixed-price policy.
D) penetration pricing approach.
E) everyday low pricing approach.
 
 
 
Assume that Nike Variety tennis shoes have variable costs of $6 and sell for $24. Also assume that Nike Wimbledon tennis shoes have variable costs of $38 and sell for $48, but when fixed overhead is added, the shoe is unprofitable by $2 per pair. Which statement is most accurate regarding Nike's pricing approach with these two products?
A) Demand for each shoe is unrelated to price.
B) Nike is using a cost-plus-percentage-of-cost pricing strategy.
C) Nike is using a product-line pricing strategy.
D) Demand for each shoe is unrelated to product quality.
E) Consumers do not use price as an indication of quality.
 
 
 
You can buy a General Electric dishwasher for $399 or you can buy a similar Bosch brand dishwasher for $989. Since Bosch uses its pricing strategy to project a high-quality product image, it is most likely using ________ pricing.
A) bundle
B) standard markup
C) prestige
D) penetration
E) cost plus fixed-fee
 
 
 
It costs Lady Marion Seafood, Inc., $30 to catch, process, freeze, package, and ship five-pound packages of Alaskan salmon. The firm adds 60 percent to the cost of its salmon products and charges customers a total of $48 for a postage-paid vacuum-sealed package. What type of pricing does Lady Marion Seafood use?
A) target return-on-sales pricing
B) bundle pricing
C) standard markup pricing
D) target profit pricing
E) customary pricing
 
 
 
A custom tailor wishes to use target profit pricing to establish a price for a custom-designed business suit. Assume variable cost is $200 per suit, fixed cost is $44,000, and the target profit is $50,000 based on a volume of 50 suits. What price should be charged for a typical custom suit?
A) $520
B) $1,040
C) $1,880
D) $2,080
E) $10,000
 
 
 
Lady Marion Seafood, Inc., sells five-pound packages of Alaskan salmon. Assume that its unit variable cost per package is $30 and its fixed cost is $250,000. It wants a target profit of $38,000 based on a volume of 16,000 packages. What should the firm charge for a five-pound package of salmon?
A) $25.00
B) $33.94
C) $40.00
D) $48.00
E) $61.25
 
 
 
A hardware store advertises a ⅜-inch Black and Decker Power Drill for $29.95. You enter the store intending to purchase the drill. The salesperson informs you that they are all sold out. She tells you that the "sale" drills were factory seconds and that if you are going to be doing any kind of serious woodworking, you should buy the Model 3309, which sells for $49.99. This scenario has elements of which type of illegal pricing practice?
A) predatory pricing
B) price discrimination
C) price fixing
D) bait and switch
E) conditional bargains
 
 
 
 
 
 
 

 
 
 
Larry's Lawn Care allows customers to use a credit card for purchases. Larry pays 4 percent of the sale to the credit card company. To promote more business, Larry decides to offer a lower price to customers paying cash—that price being 3 percent less than the standard list price. Larry is giving his customers a(n)
A) functional discount.
B) trade-in allowance.
C) promotional allowance.
D) cash discount.
E) everyday low price.
 
 
 
For which of the following products is its manufacturer most likely to use basing-point pricing?
A) pet food
B) furniture
C) crystal glass bowls
D) coal
E) cut flowers
 
 
 
The Brazilian government wants to build a global positioning satellite (GPS) system. The satellite manufacturer will receive a mutually agreed-on profit over and above all costs associated with the project. The pricing approach the satellite manufacturer uses is called
A) standard markup pricing.
B) experience curve pricing.
C) cost-plus-percentage-of-cost pricing.
D) cost-plus-fixed-fee pricing.
E) bundle pricing.
 
 
 
The retail price of fax machines has decreased from over $10,000 in the early 1970s to less than $100 today. This is due in large part to
A) skimming pricing.
B) prestige pricing.
C) odd-even pricing.
D) experience curve pricing.
E) customary pricing.
 
 
 
A company in Virginia that manufactures and sells peanut brittle to retailers charges higher shipping costs for orders sent to customers living west of the Mississippi River. This Virginia company is using
A) single-zone pricing.
B) FOB origin pricing.
C) freight absorption pricing.
D) multiple-zone pricing.
E) basing-point pricing.
 
 
 
In the 1980s, typical round-trip coach airfares from the East Coast to London were more than $500. Then Freddie Laker introduced the People's Express, a competing service into Newark at $350. Major airlines matched his price—and continued to do so until they drove People's Express out of business. Then prices shot back up to over $500. A lawsuit filed under the Sherman Act resulted in the judgment that the major airlines had explicitly tried to destroy a competitor. The experience of People's Express is an example of ________ on the part of the major airlines.
A) price fixing
B) price discrimination
C) deceptive pricing
D) predatory pricing
E) pricing constraints
 
 
 
Talbots sells women's clothes. A long-sleeved scoop neck T-shirt with the Talbots label costs $45. By comparison, you can buy a T-shirt for $5 at a Family Dollar Store, but it won't have the prestigious Talbots label or quality. What kind of demand-oriented approach to pricing does Talbots use?
A) experience curve pricing
B) skimming pricing
C) demand-backward pricing
D) prestige pricing
E) flexible pricing
 
 
 
A company placing an order from the Lab Safety Supply catalog is instructed to add $25 to the total cost of the order to pay for shipping regardless of the buyer's location. Which method of shipping does this catalog supplier use?
A) FOB origin pricing
B) multiple-zone pricing
C) freight absorption pricing
D) single-zone pricing
E) basing-point pricing
 
 
 
The first Apple iPhone was introduced in 2007 at an initial price of $600. People waited in line overnight so they could be one of the first to own this unique smartphone. Which pricing strategy did Apple use to help recoup its costs for developing the smartphone?
A) penetration pricing
B) experience curve pricing
C) customary pricing
D) skimming pricing
E) target pricing
 
 
 
Creative Quilts Studio sells hundreds of colors and types of fabric and thread. To price its inventory, the owners add 50 percent to the cost of each bolt of fabric and every spool of thread. What is this pricing approach called?
A) target return-on-sales pricing
B) flexible pricing
C) cost-plus pricing
D) standard markup pricing
E) customary pricing
 
 
 
The Swedish manufacturer of Asko dishwashers concluded that consumers would be willing to pay approximately $989 for a dishwasher that was quieter than any other dishwasher on the market. Based on this price, Asko determined the margins that would have to be given to wholesalers and retailers to arrive at the $989 retail price. Asko used
A) prestige pricing.
B) price lining.
C) cost-plus pricing.
D) target pricing.
E) customary pricing.
 

 
 
 
A new car dealer can reduce the list price of a new Ford F-150 pickup truck by offering you a ________ of $1,000 for your 2006 Nissan Altima.
A) cash discount
B) functional discount
C) seasonal discount
D) trade-in allowance
E) promotional allowance
 
 
 
An ad campaign by Suave shampoo asked television viewers to identify the heads of hair of women who used Suave shampoo and conditioner and those that used the much more expensive salon hair-care products. The idea of the ad was that no one could tell which woman used the much cheaper Suave brand. By making price its selling point, Suave is most likely using
A) customary pricing.
B) loss-leader pricing.
C) prestige pricing.
D) skimming pricing.
E) below-market pricing.
 
 
 
If you were to buy one peach tree and one apple tree from the Stark Bros. fruit trees and landscaping catalog in two separate orders, you would pay a total of $109.99. However, if you order the peach and apple tree together in the same order, you pay only $89.99 each. When purchasing the two trees together, what pricing strategy does Stark Bros. employ?
A) product-line pricing
B) prestige pricing
C) price lining
D) discount pricing
E) bundle pricing
 
 
 
Consumers buy water and soda from vending machines. Usually the price of each of these products is about $1.50. If a marketer charges a significantly higher price for such products dispensed by vending machines, such as $2.50 per item, sales are likely to decline. Thus, marketers tend to be very consistent in the prices they charge for vending machine products. This is an example of marketers employing a ________ strategy.
A) below-market pricing
B) skimming pricing
C) penetration pricing
D) loss-leader pricing
E) customary pricing
 
 
 
The retail price of DVD players has decreased from $900 in the mid-1990s to about $50 today. This is due in large part to
A) skimming pricing.
B) prestige pricing.
C) odd-even pricing.
D) customary pricing.
E) experience curve pricing.
 
 
 
Bob Biltmore owns dozens of very successful print shops throughout the Midwest. Biltmore's shops specialize in low-cost black-and-white copies and feature user-friendly machines consumers can easily operate. In recent months, Biltmore has noticed many more competitors in the areas where his stores are located. In an attempt to eliminate the competition, Biltmore has decided to charge a very low price for his black-and-white copies, a price so low his competitors will be forced out of business. After the competition has been driven out, Biltmore plans to raise the price of his copies. Biltmore is planning to engage in the illegal and unethical practice of
A) price fixing.
B) price inflation.
C) deceptive pricing.
D) competitive pricing.
E) predatory pricing.
 
 
 
A Patek Philippe Sky Moon Tourbillon men's wristwatch is among the most expensive in the world, costing more than $1.5 million. This is an example of a ________ strategy.
A) penetration pricing
B) target pricing
C) bundle pricing
D) loss-leader pricing
E) prestige pricing
 
 
 
Many cruise lines pay the customer's airfare to the point of cruise departure. What type of price adjustment are the cruise lines using?
A) skimming pricing
B) promotional pricing
C) loss-leader pricing
D) prestige pricing
E) uniform delivered pricing
 
 
 
One problem in the interstate trucking industry is the number of trucks that return empty after making a delivery. There is a website where independent interstate truckers can look for loads to carry on their return trips, known as backhauls. Because the trucks would normally return empty, truckers who use this website to generate business they would not have had otherwise receive a reduced shipping rate. This reduced rate for a backhaul is an example of
A) penetration pricing.
B) target pricing.
C) cost-plus pricing.
D) odd-even pricing.
E) yield management pricing.
 
 
 
 
 
 
 

 

1.
The ability to shop over the Internet 24 hours a day, seven days a week, provides consumers with __________ utility.
 
 
2.
Activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost are referred to as
 
 
3.
Adding a fixed percentage to the cost of all items in a specific product class is referred to as
 
 
4.
All of the following are alternate names for price except which?
 
 
5.
All of the following are benefits to be stressed during the promotion of services except which?
 
 
6.
All of the following are examples of pricing objectives except which?
 
 
7.
Any intermediary between a manufacturer and end-user markets is referred to as a
 
 
8.
Any intermediary with legal authority to act on behalf of the manufacturer is referred to as
 
 
9.
As a result of legislation, consumers who do not want to receive telephone calls related to company sales efforts can
 
 
10.
At what stage of the product life cycle does it first become true that most consumers who would buy a product are either repeat purchasers of the item or have tried and abandoned it?
 
 
11.
At which stage in the product life cycle do industry profits usually peak?
 
 
12.
Brand equity is valuable to an organization because it creates a competitive advantage and
 
 
13.
A channel that includes intermediaries that are between the producer and consumers and perform numerous channel functions is referred to as
 
 
14.
Consumer packaged goods firms such as General Mills and PepsiCo as well as industrial firms such as Intel and Hewlett-Packard employ a product manager to manage
 
 
15.
Consumer products are classified into four categories based on the effort the consumer spends on the decision, the attributes used in making the purchase decision, and the
 
 
16.
Convenience products refer to
 
 
17.
Cost-plus pricing refers to
 
 
18.
A custom tailor wishes to use target profit pricing to establish a price for a custom-designed business suit. Assume variable cost is $200 per suit, fixed cost is $44,000, and the target profit is $50,000 based on a volume of 50 suits. What price should be charged for a typical custom suit?
 
 
19.
Deceptive pricing practices are outlawed by legislation and enforced by which federal agency?
 
 
20.
The description of how new forms of retail outlets enter the market is referred to as the
 
 
21.
During the introduction stage of the product life cycle, the place (distribution) element of the marketing mix is highly involved with
 
 
22.
Enterprise car rental agency differentiates itself from other similar agencies by providing a delivery service. This delivery service is particularly valuable to someone who has been left stranded without transportation. By making it easy to rent temporary transportation, Enterprise is emphasizing which utility?
 
 
23.
An even more imprecise term than distributor, __________ can mean the same as retailer, wholesaler, and more.
 
 
24.
__________ exists when producers and ultimate consumers deal one-on-one with each other.
 
 
25.
Experts suggest that online retailers should think of their websites as __________ if they are to attract and retain customers.
 
 
26.
The Federal Trade Commission (FTC) advises that products should be labeled as "new" only
 
 
27.
A firm needs to drive down logistics costs as long as it can deliver expected
 
 
28.
A firm's profit equation equals
 
 
29.
For shopping products, the consumer
 
 
30.
Four cost concepts are important in pricing decisions: total cost, variable cost, unit variable cost, and
 
 
31.
The four I's of services consist of
 
 
32.
The four most popular types of franchise arrangements are
 
 
33.
Four of the 40 largest businesses in the United States are retailers—Walmart, Costco, Home Depot, and
 
 
34.
The four stages of the retail life cycle are
 
 
35.
The four utilities offered to consumers through retailing are
 
 
36.
Generally, the length of time it takes for a product category to move from the introduction stage to the decline stage of its product life cycle is
 
 
 
 
 
 
 
 
 
 
 

37.
A good brand name has several characteristics, including that it should
 
 
38.
A good has tangible attributes that a consumer's __________ can perceive.
 
 
39.
Goods can be divided into __________ goods and __________ goods.
 
 
40.
If you were to buy one peach tree and one apple tree from the Stark Bros. fruit trees and landscaping catalog in two separate orders, you would pay a total of $109.99. However, if you order the peach and apple tree together in the same order, you pay only $89.99 each. When selling the two trees together for a reduced price, what pricing strategy does Stark Bros. employ?
 
 
41.
An imprecise term for intermediaries that perform a variety of functions, including selling, maintaining inventories, extending credit, and so on, is
 
 
42.
Individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users are referred to as a
 
 
43.
Industrial distributors perform functions that are most like which intermediary in the consumer products marketing channel?
 
 
44.
Intangible items such as theater performances, legal advice, or music streaming that an organization provides to consumers are referred to as
 
 
45.
An integral part of the package that typically identifies the product or brand, who made it, where and when it was made, how it is to be used, and package contents and ingredients is referred to as
 
 
46.
An intermediary that sells to other intermediaries, usually to retailers in consumer markets, is referred to as
 
 
47.
In terms of price, which of the following types of consumer product would be relatively inexpensive?
 
 
48.
In the telemarketing industry, issues such as __________, ethical guidelines, and industry standards have become a topic of discussion among consumers, Congress, the Federal Trade Commission (FTC), and businesses.
 
 
49.
__________ is an intermediary that sells to consumers.
 
 
50.
A __________ is essentially a sequence of linked suppliers and customers in which every customer is, in turn, a supplier to another customer until a finished product reaches the ultimate consumer or industrial user.
 
 
51.
A level of distribution density whereby a firm tries to place its products in a few retail outlets in a specific geographical area is referred to as
 
 
52.
Limited- and single-line stores are often referred to as
 
 
53.
A major factor in developing a service marketing strategy is __________ because of the inseparability of services from the producer.
 
 
54.
Marketing channels help create value for consumers through four utilities. These utilities are
 
 
55.
The marketing metrics related to a retailer's products or merchandise include all of the following except which?
 
 
56.
Mattel has a contractual agreement to let Colgate use the Barbie name and image on kids' toothpaste and toothbrushes. Colgate pays Mattel a fee for the use of the Barbie name and image. This is an example of
 
 
57.
Most consumers realize that the quality of diamonds varies, and most believe the higher the price of a diamond, the higher its quality. This is an example of price influencing the perception of overall quality and therefore __________ to consumers.
 
 
58.
Multichannel marketing
 
 
59.
Music played in the grocery store has a slow tempo to get shoppers to stay longer and hopefully put more items in their cart. Music is part of the grocery store's
 
 
60.
New Balance, Inc., successfully repositioned its athletic shoes to focus on fit, durability, and comfort rather than on going head-on against Nike and Adidas on fashion and professional sports. This product repositioning strategy was designed to
 
 
 
 
 
 
 
 
 

61.
The new-product development process is
 
 
62.
Nike has successfully used __________ with its lines Air Jordan and Air Lebron.
 
 
63.
One of the eight primary marketing-related reasons for new-product failure is
 
 
64.
One of the primary benefits of branding for consumers is that branding
 
 
65.
Online retail purchases by consumers can be the result of several very different approaches, including going directly to online malls, paying dues to become a member of an online discount service, and
 
 
66.
Packaging
 
 
67.
Penetration pricing refers to
 
 
68.
People who tried a product, were satisfied, and bought it again are called __________ purchasers.
 
 
69.
Prestige pricing refers to
 
 
70.
Price fixing is illegal under the
 
 
71.
Price fixing refers to
 
 
72.
price refers to
 
 
73.
The pricing approach that results in the manufacturer deliberately adjusting the composition and features of the product to achieve a calculated price for consumers is referred to as
 
 
74.
The primary purpose of a trademark is to
 
 
75.
Procter & Gamble has a large __________ that includes product groupings such as beauty and grooming (Crest toothpaste and Gillette razors), household care (Downy fabric softener and Tide detergent), and Pampers diapers.
 
 
76.
Product life cycle refers to
 
 
77.
A product refers to
 
 
78.
A product that is new in some way but requires no new behaviors to be learned by consumers is a
 
 
79.
The __________ provided by retailers create value for consumers.
 
 
80.
Reducing the package content without changing package size while maintaining or increasing the package price is referred to as
 
 
81.
A reference value involves comparing the costs and benefits of
 
 
82.
Rent, executive salaries, and insurance are typical examples of
 
 
 
 
 
 
 
 
 

83.
Retailers and industrial distributors prefer exclusive distribution for two reasons. One is that
 
 
84.
Retailing is an important marketing activity. Not only do producers and consumers meet through retailing actions, but retailing also creates
 
 
85.
Retail outlets, like products, experience the process of growth and decline, which is referred to as the
 
 
86.
Retail outlets vary by their merchandise lines, the key distinction being the __________ of the items offered to customers.
 
 
87.
A retail outlet that focuses on one type of product at very competitive or discount prices and often dominates the market is referred to as a
 
 
88.
The sales of products and services to consumers through personal interactions and demonstrations in their homes or offices is referred to as
 
 
89.
The Samsung brand includes the familiar Samsung Electronics, but also Samsung Heavy Industries, Samsung Engineering, Samsung C&T (construction), and Samsung Life Insurance. This company uses
 
 
90.
Setting a market price for a product or product class based on a subjective feel for the competitors' price or market price as the benchmark is referred to as
 
 
91.
Skimming pricing refers to
 
 
92.
Some singers record a great song that shoots to the top of the charts. The singers then go on tour and have sold-out concerts everywhere they appear. Just as quickly (particularly if they are unable to follow their first hit song with a second one), they are singing in half-filled concert halls, then smaller clubs, and eventually no one wants to hear them perform. Such "one-hit wonder" singers are best categorized as being __________ products (or services).
 
 
93.
Stores that carry a broad product line, with limited depth, are referred to as
 
 
94.
Subway restaurants that offer sandwiches made exactly to each customer's preference are providing __________ utility.
 
 
95.
The swoosh that appears on every Nike product is an example of a
 
 
96.
A technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output is referred to as
 
 
97.
The Tesla Motors Model S, an all-electric-powered automobile, is in which stage of its product life cycle?
 
 
98.
The three basic functions intermediaries perform are
 
 
99.
The three categories for equipment-based services are
 
 
100.
The three commonly used terms to describe levels of service in retailing are
 
 
101.
The three degrees of distribution density are
 
 
102.
The three major types of vertical marketing systems are administered, corporate, and
 
 
103.
To help consumers assess and compare services, marketers try to make them tangible or
 
 
104.
To increase value the most, marketers should
 
 
105.
The two basic components of a customer's evaluation of a service are
 
 
106.
The two main classifications of business products are
 
 
107.
The two most common pricing alternatives for products in the introduction stage of the product life cycle are
 
 
 
 
 
 
 
 
 
 

108.
The type of analysis that compares the differences between consumers' expectations about a service and their experience with it based on dimensions of service quality is referred to as
 
 
109.
Value-pricing refers to
 
 
110.
Vending machines are an example of
 
 
111.
Vertical marketing system refers to
 
 
112.
Wells Fargo is one of the best-run banks in the United States. It reaches retail customers through 8,700 stores, a worldwide network of 13,000 ATMs, and its online banking service. Which utility does Wells Fargo best provide?
 
 
113.
What is the first step in choosing the right supply chain?
 
 
114.
When a firm tries to place its products or services in as many outlets as possible, the density of distribution is referred to as
 
 
115.
When only one retailer in a geographical area carries a firm's products, the density of distribution is referred to as
 
 
116.
Which is the most common form of distribution intensity used today?
 
 
117.
Which of the following is a way that a product line might be established?
 
 
118.
Which of the following is considered a durable good?
 
 
119.
Which of the following is the best example of a nondurable good?
 
 
120.
Which of the following statements about the price-setting process is most accurate?
 
 
121.
Which of the following statements regarding odd-even pricing is most accurate?
 
 
122.
Which type of consumer product is often very expensive, purchased infrequently, and takes an extensive amount of time to make the purchase decision?
 
 
123.
The white apple used by Apple in advertising and on its products is an example of a
 
 
124.
With respect to promotion, which of the following strategies would most likely be used for unsought products?