Business Chapter 13

Marcy owns Caps for Kids and sells her hand-knitted caps for $20. The variable cost per hat created is $10, and fixed costs are $10,000. What is her breakeven point?

1,000 units

Smitty's Smoothies are a popular item priced at $3.50 per smoothie. Variable costs are $1.50 per smoothie. With fixed costs at $20,000 per year, Smitty will realize a breakeven point at _____ smoothies.

10,000

Which of the following explains how Best Buy adds value by acting as a distributor for electronics, when people can go to Tiger Direct or Newegg.com and cut out the middle man?

Best Buy adds value by providing service utility. It's employees help customer choose the model best suited for them by giving them tips and explaining things to them, allowing customers to make informed decisions.

_____ sells a small range of everyday and impulse products at easy-to-access locations with long hours and quick checkout.

Convenience stores

Distributors can create time and place utility due to the nature of the utilities' functions, but not information or service utility.

False

Drop shippers do not take legal title of the goods they help distribute; instead, they merely provide delivery services for other wholesalers.

False

Logistics does not impact a company's ability to provide products and services to its customers.

False

Marketers normally have nearly complete control over how their products are priced.

False

McDonald's placement of stores in Walmart, gas stations, and hospitals is an example of exclusive distribution.

False

One reason vendor-managed inventory is so successful is that it reduces the amount of information that must be shared between producers and suppliers. Question options:

False

Your local video store charges $39.99 instead of $40.00 for a video game. This store is using a strategy known as penny-less pricing.

False

Which of the following statements about cost-based pricing is most accurate?

It determines price by adding a fixed margin to the per unit cost of the product.

Rolls Royce Motor Cars is a company that represents the pinnacle of automotive excellence. What might best describe the company's pricing strategies?

Prestige

Cost-based pricing is a popular method of fixed margin pricing.

True

Logistics focuses primarily on the tactics involved in moving products along the supply chain.

True

The wheel of retailing helps explain the evolution of firms that enter a market on a shoestring budget and gain customers by offering lower prices. It suggests that once a customer base is established, the retailer begins offering higher-end products, more upscale facilities, and better service.

True

The goal behind penetration pricing strategy is to:

become profitable from the sheer volume of sales.

Types of nonstore retailing include online retailing, direct response retailing, and:

direct selling.

Carter Glass is the CEO of GreenHouse Gas Partners, a company that facilitates shipments of coal from the mine shaft to the end user. The company takes legal title of the merchandise, but never physically processes it. GreenHouse Gas Partners is an example of a:

drop shipper.

CDz, your local music and video store, consistently offers its videos and CDs at a lower price than competitors. The pricing tactic that CDz uses is:

everyday-low pricing.

As a manufacturer of low-cost, chocolate-covered peanuts, Venus Candies places its products in as many locations as possible in order to make it easy for customers to purchase the product. Venus Candies is employing _____ distribution.

intensive

The goal of _____ is to make it convenient for consumers to find and purchase products at many locations and in many ways.

intensive distribution

A firm's _____ is the percent of the total market for a product that is controlled by that company.

market share

Credit Gone Wild, Inc. provides check cashing services and short-term loans to customers. The company provides _____ utility making it easier for customers to possess goods and services.

ownership