Marketing chapter 3
. A chocolate bar bought while standing in the checkout line is an example of staples. a. True b. False
False
. Line extension is the strategy of attaching unrelated products to a known brand name to gain instant recognition for the new offerings. a. True b. False
False
A market development strategy concentrates on developing new products for existing markets. a. True b. False
False
Brand extension is the strategy of developing individual offerings that appeal to different market segments while remaining closely related to the existing product line. a. True b. False
False
In value pricing, a firm seeks to maintain pricing parity with the competition. a. True b. False
False
Internet security software that requires periodic updates and annual product upgrades is considered a pure service on the goods-services continuum. a. True b. False
False
Makers of generic products are dependent on brand loyalty for their marketing success. a. True b. False
False
The seller's image is very important for those marketers who sell convenience products. a. True b. False
False
While variable costs change with level of production, they always stay the same per unit regardless of the level of production. For example, if the variables cost of making an item are $10 when producing 100 units, they will stay $10 each when 500 or 1000 units are produced. a. True b. False
False
. A product's package color, size, and label shapes are all part of its trade dress. a. True b. False
True
. Lands' End products are sold through catalogs, the Internet, and Sears retail stores. The Lands' End brand practices dual distribution. a. True b. False
True
. The strategy of selective distribution involves distributing a product through a limited number of retailers. a. True b. False
True
High-demand sporting or concert events have encountered an expensive, often illegal, form of pricing where tickets are resold at a much higher price than what it was originally bought for. This practice is called ticket scalping. a. True b. False
True
Service quality refers to the expected and perceived quality of a service offering. a. True b. False
True
Skimming pricing strategies are also known as "market-plus pricing." a. True b. False
True
Staples are convenience goods and services that consumers constantly replenish to maintain a ready inventory. a. True b. False
True
The screening and business analysis stages of new-product development determine the product's financial and technical requirements. a. True b. False
True
Javier is the business manager at his college. In his role, Javier makes a lot of business decisions. Javier has installed a vending machine in a dorm for soft drinks. The machine rents for $200 a month and the electrical use is minimal. Javier buys soft drinks for $.25 each and charges $.75 each from the vending machine. Currently, the machine has a sales volume of 400 cans a month. What is the current profit or loss from the machine? a. $0 b. Profit of $300 c. Loss of $200 d. Profit of $100
a. $0
Which of the following is the best example of demand? a. 6,000 muffin tins sold for $8 each this year b. 5,000 people willing to buy muffin tins for $8 each c. Six months' worth of an accountant's time billed at $100 per hour d. 4,000 pairs of Nike running shoes sold on Amazon.com this year
a. 6,000 muffin tins sold for $8 each this year
Which of the following can be classified as an accessory equipment? a. Desktop computers b. Printer cartridges c. Bottling units d. Natural gas pipelines
a. Desktop computers
Cameron is involved in the new product development process at Bose Corporation. Currently, Cam is assessing the potential market for a noise cancelling system for automotive exhaust. Cam's job is to determine the overall size of the market and projected annual sales of the system. Essentially, he is responsible for determining the overall financial feasibility of this concept before more time and money is invested in developing the system. Cam's analysis is part of the _________ stage of the new product development: a. business analysis b. idea generation stage c. screening stage d. test marketing stage
a. business analysis
ABC Corp., a mining equipment manufacturer, provides loaders and feeder breakers for Ground Works, a mining company. ABC Corp. regularly sends information on new products as well as on upgrades for old products to the management in Ground Works. ABC Corp relies on _____ to sell its products. a. direct channels b. industrial distributors c. manufacturer's representatives d. franchisers
a. direct channels
According to the Young & Rubicam's BrandAsset Valuator model, the _____ dimension of a brand personality is a combination of perceived quality and consumer perceptions about its growing or declining popularity. a. esteem b. differentiation c. relevance d. knowledge
a. esteem
Items such as lease payments, administrative staffing, and insurance costs, that remain stable at any production level within a certain range are known as: a. fixed costs. b. variable costs. c. profits. d. total costs.
a. fixed costs.
While Cheerios have been around for nearly 80 years, General Mills developed the gluten‐free version of the Cheerios just 2 years ago. To introduce the new product, heavy television advertising campaigns were launched to create awareness about the product. Additional promotions were introduced to induce distribution partners, like wholesalers and retailers, to carry the product. From these activities, it appears General Mills treated the Gluten-Free Cheerios as in the _______ stage of the product life cycle. a. introduction b. maturity c. decline d. growth
a. introduction
Dayer's, a popular ice-cream brand, added new flavors to its existing line of ice creams to attract kids. This is an example of _____. a. line extension b. brand engagement c. line engagement d. brand extension
a. line extension
Channels designed to return goods to their producers are called _____ channels. a. reverse b. direct c. reserve d. primary
a. reverse
A skimming pricing strategy is more commonly used by firms to: a. set a market-entry price for distinctive goods or services with little or no initial competition. b. set a relatively low price for a product when they enter new markets characterized by dozens of competing brands. c. set stable wholesale prices that undercut offers competitors make to retailers. d. reduce the raised prices of products to the original level
a. set a market-entry price for distinctive goods or services with little or no initial competition.
. Lenovo is developing a new tablet computer that they believe will revolutionize mobile computing. Since the company believes there is little direct competition for this new product, they plan to set a high price in comparison to other computer models. Lenovo is using a _____ pricing strategy. a. skimming b. market-minus c. penetration d. competitive
a. skimming
. Maddie noticed that many students on campus had t‐shirts with Greek organization letters or club names on them. Recognizing that there was a huge market for this attire, Maddie rented a store front and a silk screening machine to get into the t‐shirt business. Maddie's rent is $1,000 a month, including utilities. The silk screen machine leases for $300 a month. Maddie can buy blank t‐shirts for $6 each and determined the cost of materials for the silk screening at $2.50 per unit. Considering just the figures provided above, how many t‐shirts does she need to sell each month to breakeven if she prices the screened t‐shirts at $15? a. 225 b. 200 c. 400 d. 153
b. 200
Vandelay Industries manufactures a range of latex products. To set the price of its products, George, the CEO of Vandelay, calculates the total cost associated with the manufacturing of each product, then multiples that by 1.5 to get the sales price. Therefore, a product that cost $10 manufacture would sell for $15. Vandelay's markup percentage is: a. You cannot calculate Vandelay's markup from the information provided b. 50% c. 25% d. 150%
b. 50%
Which of the following terms refers to a series of stages consumers go through in learning about a new product, trying it, and deciding whether to purchase it again? a. Product development process b. Adoption process c. Product life cycle d. Diffusion process
b. Adoption process
Breakeven sales volume is calculated as: a. Breakeven point (in units) = Total Variable Costs/Contribution Margin b. Breakeven point (in units) = Total Fixed Costs/Contribution Margin c. Breakeven point (in units) = Total Costs/Contribution Margin d. Breakeven point (in units) = Total Costs/Selling Price
b. Breakeven point (in units) = Total Fixed Costs/Contribution Margin
The Gillette Company has a long history of developing shaving-related products for men and women. In addition, it continuously produces products that feature improvements to existing technologies, including three-bladed disposable razors and ergonomically superior handle designs. To maintain its success in new-product development, Gillette regularly organizes several small focus groups comprising people who shave in order to gain insights into what these individuals look for in a razor/blades/shaving system. At which step of the new-product development process is Gillette when it conducts these focus groups? a. Development step b. Business analysis step c. Screening step d. Commercialization step e. Idea generation step
b. Business analysis step
Which of the following distribution strategies seeks to distribute a product through a single wholesaler or retailer in a specific geographic region? a. Associative distribution b. Exclusive distribution c. Selective distribution d. Intensive distribution
b. Exclusive distribution
The original owner of a brand name can claim exclusive rights to the name even when the brand name becomes a descriptive generic name for a class of products. a. True b. False
b. False
The price of products only includes the costs incurred by the manufacturer for procuring the raw material and for processing the products. a. True b. False
b. False
Sound systems, batteries, and tires that are included in the manufacturing of a car are examples of: a. supplies. b. component parts and materials. c. installations. d. accessory equipment
b. component parts and materials.
. After a new-product concept is identified, it needs to be assessed through focus groups and in-store polling. What is the consumer reaction to the concept? These activities are part of the _________ stage of the newproduct development. a. business analysis b. concept testing c. idea generation d. screening
b. concept testing
Fixed costs typically include items such as: a. labor costs that change with the level of production. b. lease payments, administrative staffing, and insurance costs, that remain stable at any production level within a certain range. c. commission as a percentage of sales paid to sales reps. d. raw materials.
b. lease payments, administrative staffing, and insurance costs, that remain stable at any production level
Aldi is a chain of discount supermarkets based in Germany. The company has recently started opening stores across the United States. Based on this information, the product development strategy being pursued by Aldi is known as a _______ strategy. a. product development b. market development c. product penetration d. diversification e. market penetration
b. market development
The original Hummer H1 was developed and manufactured by AM General solely for the military branches. However, after publicity from photographs of its use in Operation Desert Storm, the vehicle was introduced into the consumer market in 1992. The sight of one of these military vehicles being used to haul kids to soccer games was entertaining! Selling the Hummer to consumers is an example of: a. diversification. b. market development. c. product development. d. market penetration.
b. market development.
Champagne is a product with considerable mystic. There is rarely a James Bond movie where he does not drink some Champagne with a beautiful woman! Champagne is typically associated with the "finer things in life." However, even among Champagnes, some are special - often just by the pricing strategy taken. For example, Dom Pérignon Rose Gold in the 6-liter bottle is priced at nearly $50,000, assuring this Champagne is perceived as "the finest thing in life." Dom Pérignon is using: a. high line pricing. b. prestige pricing. c. ultra pricing. d. market-based pricing.
b. prestige pricing.
A newly opened seafood restaurant advertises various deals on meal packages and special prices on dinner packages to attract customers. This is an example of _____ pricing. a. leader b. promotional c. list d. competitive
b. promotional
Vandelay Industries manufactures a range of latex products. Vandelay recently purchased new equipment to manufacture latex gloves for the medical community. The new machinery leases for $70,000 annually and can produce 10,000 pairs of gloves each day. The raw latex material for each pair of gloves costs $.03 and Vandelay sells the gloves at a wholesale price of $.10 a pair. Currently, sales are 2,500,000 annually. What is the profit on the gloves if the machinery lease is the only fixed cost considered? a. $250,000 b. $175,000 c. $105,000 d. $75,000
c. $105,000
The bookstore on your university campus uses a pricing approach where all items are marked up 50%. For a new shipment of new school hoodies, the items wholesale price is $40, so the selling price is $60. What is the contribution margin for the hoodies? a. $100 b. $40 c. $20 d. 50%
c. $20
Which of the following is an example of a volume pricing objective? a. A competitive parity objective b. A prestige pricing objective c. A market-share objective d. A value-pricing objective
c. A market-share objective
A firm has $50,000 in fixed costs, a selling price of $25 per unit, and variable costs of $5 a unit. If the fixed costs increase to $60,000: a. Profits will be increased. b. Breakeven volume will decrease. c. Breakeven volume will increase. d. Selling price will be decreased.
c. Breakeven volume will increase.
Colin owns a dog food business, but wants to develop a canine fashion line as a way of expanding his portfolio and increasing sales and profits. One of the things customers love about Colin's company is that all of the products are manufactured locally, creating jobs for young people. Though he does not have a lot of money and hopes that he won't have to hire new staff, he thinks he might have to. Rather than developing a canine fashion line, which of the following alternatives can you suggest to Colin? a. Colin should use cannibalization strategy. b. Colin should consider selling his business to a larger pet food company. c. Colin should use a market penetration strategy. d. Colin should outsource his company's jobs to cut costs. e. Colin should hire a marketing company to help him promote his products
c. Colin should use a market penetration strategy.
Using the consumer products classification system, which of the following is most likely to be true of the consumer factors for convenience products? a. Consumers tend to compare price and quality between competing products. b. Consumers tend to regard convenience of location as unimportant. c. Consumers tend to purchase convenience products frequently. d. Consumers tend to plan extensively before a purchase.
c. Consumers tend to purchase convenience products frequently.
Charged with preventing anticompetitive, deceptive, or unfair business practices, the ______ oversees enforcement of more than 70 laws, many of which influence pricing practices. a. Fair Trade Bureau b. Federal Trade & Commerce Administration c. Federal Trade Commission d. Fair Packaging and Labeling Commission
c. Federal Trade Commission
In which stage of the product life cycle is encouraging trial purchases the primary marketing challenge? a. Decline b. Introduction c. Growth d. Maturity
c. Growth
8. Ramon is a sales representative for a medical device company and works with orthopedic surgeons. During his discussions with surgeons about their work and the type of tools or devices that would help them perform better, he began to receive several interesting suggestions that Ramon passed along to the new productdevelopment team. What stage in the new-product development process does this represent? a. Screening b. Test marketing c. Idea generation d. Development
c. Idea generation
Which of the following is a disadvantage associated with product-line pricing? a. It does not allow shoppers to choose desired price ranges. b. It results in consumers having difficulty in making purchase decisions. c. It does not provide flexibility for making price changes on individual items. d. It is ineffective in differentiating between products.
c. It does not provide flexibility for making price changes on individual items.
Which of the following is true of generic products? a. They are well known national brands sold exclusively through a joint venture between a manufacturer and a retailer. b. They are identified through a brand name owned by a manufacturer or other producer. c. They are characterized by plain labels, little or no advertising, and no brand names. d. They are identified through a brand name owned by a wholesaler or retailer.
c. They are characterized by plain labels, little or no advertising, and no brand names.
Some new products are introduced and quickly are accepted by the marketplace. Other products take years before they spread across society. A product that is complex and hard to understand is likely to diffuse across society: a. complexity has no effect on diffusion. b. about the same as a simple product. c. more slowly than a simple product. d. more quickly than a simple product.
c. more slowly than a simple product.
Nike actually started as Blue Ribbon Sports in 1964. Taking the name Nike in 1971, the company was narrowly focused on running shoes, with the soles of the first shoes made in a waffle iron. Over time, the company expanded their shoe business to include shoes for all sports, and then sports equipment and apparel. It is not unusual to see a person dressed from head to foot in Nike gear and using Nike equipment as well. From this meager start, it seems Nike has engaged in: a. diversification. b. market penetration. c. product development. d. market development
c. product development.
. When a men's clothing store sells suits at four price levels ($295, $455, $525, and $650), the store's retail policy is _____ pricing. a. psychological b. unit c. product-line d. promotional
c. product-line
An example of odd pricing would be: a. rebates that lower total price. b. subtracting trade-ins from the list price. c. selling a radar detector for $129.99 instead of $130. d. a buy-two-get-one-free promotion.
c. selling a radar detector for $129.99 instead of $130.
You're the marketing director for a company that manufactures customized mining equipment used to extract fairly rare precious metals like iridium, palladium, and rhodium from the earth. You have chosen to create a fairly short distribution channel because: a. a long channel would diminish your profit margins without offering any benefits. b. there are so few customers for your product that you can manage your own sales efforts within the company. c. it is challenging to deliver the kind of highly specialized equipment you manufacture to remote locations. d. your customers are located all over the world.
b. there are so few customers for your product that you can manage your own sales efforts within the company.
The breakeven point is the point at which: a. marginal cost runs above the marginal revenue curve. b. total revenue from sales equals total cost. c. revenue from sales equals the variable cost of the product. d. the supply curve intersects the demand curve.
b. total revenue from sales equals total cost.
Almost all fast‐food restaurants offering a short menu with low prices to compete with the other restaurants. These are intended to attract very price conscious consumers and are usually a "dollar menu" or offered at prices such as $.99 and $1.49. This approach is referred to as: a. basic pricing. b. cost-plus pricing. c. value pricing. d. deep discounting
c. value pricing.
Which of the following is a limitation of breakeven analysis? a. The calculations assume that per-unit variable costs will change as different amounts are produced. b. The analysis fails to separate fixed costs from variable costs. c. It is difficult to understand and apply. d. Consumer demand for products or services is not considered.
d. Consumer demand for products or services is not considered.
A tech company is set to release a new watch with a built-in exercise and cholesterol monitor around the holidays. Because the product is new to the market, consumers know very little about it. The company wants to ensure that by the time the holiday season arrives, consumers are well informed and ready to make major purchases. Required: Which of the following steps should the company take to market its new product efficiently? a. Limit the number of distribution channels b. Spend money on fine-tuning the product rather than on marketing c. Highlight the drawbacks of competing products on the market d. Develop a campaign that focuses on product features e. Establish a call center so consumers can phone and have their questions answered
d. Develop a campaign that focuses on product features
Which of the following is true of promotional pricing? a. It uses extensive promotional allowances to get channel members to promote the product. b. It sets a high price for products that offer unique potential ability. c. It promotes goods and services at specific price ranges based on the belief that certain prices are more appealing to consumers. d. It uses lower-than-normal price as a temporary component in the selling strategy.
d. It uses lower-than-normal price as a temporary component in the selling strategy.
Uber is considering adding a service to their current offering. Instead of picking up people and taking them to their destination, Uber is thinking about adding a local pickup and delivery service for things such as documents, packages, and food products. With Walmart now offering pickup grocery service, a person could order and have Uber actually do the pickup and delivery. Focus groups indicate that there is a potentially large demand for this service. Before introducing this across the Uber system, Uber has chosen to try the service out in Phoenix and St. Louis. The pickup and delivery service is in the_________ stage of the new-product development. a. concept test b. field exam c. commercialize d. test market
d. test market
General Electric offers a wide range of products and services for a variety of markets. Not only does GE sell to consumer markets, but to industrial markets as well. The variety of the offering is impressive, from light bulbs to jet and turbo prop engines. General Electric has engaged in: a. market development. b. market penetration. c. product development. d. diversification
d. diversification
At the _____ stage in the consumer adoption process, potential buyers begin to seek information about the product. a. evaluation b. adoption c. trial d. interest
d. interest
In one of the more creative developments in global trade, Pepsi struck a deal with the Russian government in 1972 to trade their cola syrup for Stolichnaya vodka. Pepsi would send the syrup to Russia for local soft drink bottlers, while Pepsi would receive vodka to distribute in the United States. At the height of the Cold War, residents in then communist Russia could enjoy the same Pepsi as American consumers. Pepsi was able to grow sales through: a. product diversification. b. market penetration. c. product development. d. market development.
d. market development.
MycroFiber is a producer of microfiber material for the auto detailing industry. Jamal, the owner of MycroFiber is highly skilled in the technical and manufacturing areas, but does not understand pricing. Jamal knows he wants to cover the cost of production when selling his material and needs revenue to cover his overhead costs and to make a profit. To be sure he meets these goals, Jamal decides to take a cost‐based pricing approach by calculating the cost of production and adding a(n) ________. a. discount rate b. operating profit c. cost adjustment d. markup percentage
d. markup percentage
Designer companies such as Prada, Chanel, and Cartier tend to price their product very high to infer quality and exclusivity to potential customers. Strategically, this approach is known as a: a. loss avoidance objective. b. competition objective. c. sales volume objective. d. prestige objective.
d. prestige objective.
McDonald's started with a simple concept in 1940 - fast service offering only hamburgers, cheeseburgers, potato chips, and drinks at the start. However, they menu soon expanded to include French fries and milkshakes. This process of menu expansion continues to today, with a broad range of sandwiches, drinks, salads, and breakfast items to serve their customers. There does not appear to be any end in sight to the menu items! This expansion is an example of: a. diversification. b. market penetration. c. market development. d. product development.
d. product development.
A _____ strategy focuses on developing entirely new products for new markets. a. product development b. market development c. market penetration d. product diversification
d. product diversification
You're proud to be the marketing director for HootSuite, an online tool that allows social media marketers to create, schedule, and monitor their social media promotions. You don't see any reason to involve numerous intermediaries in your distribution channel because: a. you're selling to such a tiny group of customers that you can manage your own sales efforts within the company. b. you can store and warehouse your own product before it's sold. c. it would only diminish your profit margins without offering any benefits. d. you're marketing a digital product in a B2B environment.
d. you're marketing a digital product in a B2B environment.
Kiddie Car Inc. offers transportation between home, school, and activities to children whose parents are unavailable to drive them. The company charges much less on weekends than during the week. This reflects the ______ of Kiddie Car's services. a. Positioning b. Standardization c. Intangibility d. Inseparability e. Perishability
e. Perishability
Through your market research, you know that skiers who buy your brand of ski gloves rely on previous experiences with the product before choosing it over alternatives. Your ski glove has reached the _____ stage of brand loyalty. a. recognition b. ski use c. ski reference d. insistence e. preference
e. preference
You're the CEO of a national chain of carpet, flooring, and tile stores. Your company sources hundreds of finished products from a wide array of suppliers, sells them through your stores, and then contracts with independent installers to deliver and install the products in homes and businesses all across the country. Lately you've been wondering if you could improve your company's financial performance by examining all aspects of this system. Which of the following do you think would be the most useful tool for this purpose? a. Logistical cost control, a method of evaluating how to add value for your customers through logistical changes b. RFID, a tool that requires placing a tiny tracking chip on all inventoried items c. CRM, a software system that allows you to better track your interactions with your customers d. ERP, an integrated software that consolidates data from all of your stores
a. Logistical cost control, a method of evaluating how to add value for your customers through logistical
Dish Network has recently advertised a bundled package of 50 channels plus Internet for $59.99 per month but in the fine print, the advertisement notes that this offer is applicable for new subscribers only. What type of pricing policy is Dish Network using with this promotion? a. Promotional pricing b. Flexible pricing c. Odd pricing d. Penetration pricing
a. Promotional pricing
Which of the following variables of service quality best represents the readiness to serve one's customers? a. Responsiveness b. Tangibles c. Empathy d. Assurances
a. Responsiveness
When a major distributor of beauty supplies went out of business, you were able to acquire large amounts of combs, brushes, hairpins, and other accessories that you sell in your small chain of four stores. You will be restocking your stores with this merchandise for the next nine months. What kind of warehouse facility will you use for your inventory? a. Storage warehouse b. Consolidation warehouse c. Automated warehouse d. Cold-storage warehouse e. Distribution warehouse
a. Storage warehouse
Which of the following is most likely to be true of consumer innovators? a. They are the first to make trial purchases. b. They are less mobile, and do not prefer changing jobs often. c. As compared to later adopters, they rely less on impersonal information sources. d. They are unlikely to display brand loyalty toward products.
a. They are the first to make trial purchases.
Which of the following is true of pipelines as a transportation alternative? a. They can accommodate shipments of only a small number of products. b. They represent the fastest method of transportation of products especially crude oil. c. They provide the most efficient way for moving bulky commodities over long distances. d. They control the largest share of the freight business as measured by ton-miles.
a. They can accommodate shipments of only a small number of products.
A consumer that is aware of a new product and gathered information about the product so he or she can consider the benefits of the new product compared to what he or she currently uses is in the evaluation stage of the new-product adoption process. a. True b. False
a. True
Brand insistence, the ultimate stage in brand loyalty, leads consumers to refuse alternatives and to search extensively for the desired merchandise. a. True b. False
a. True
Most companies set prices using competitive pricing as their primary pricing strategy. a. True b. False
a. True
Production of private-label goods helps manufacturers reach additional market segments. a. True b. False
a. True
Small manufacturers usually assign a category manager to each major channel such as grocery stores or drugstores, instead of each retail chain. a. True b. False
a. True
Tiffany, Rolex, Gucci, and Prada represent exclusivity, meaning their prices are mostly inelastic. a. True b. False
a. True
As the marketing director for a company that produces home office equipment, you've been asked to weigh in on a suggested price for the company's new all-in-one printer. Similar products retail for $200 to $600, with most of them falling in the $350 to $400 range. You'd like to position your company's product where there is less competition, so you suggest pricing yours: a. at $150 because the lower the price, the less supply already on the market. b. at $200 because the lower the price, the higher the sales volume and the greater the profits. c. at $250 because the lower the price, the more likely you'll be to hit market equilibrium. d. at $150 because the higher the price, the more likely you are to have to discount the product later on.
a. at $150 because the lower the price, the less supply already on the market.
Many people in rural areas of West Virginia use heating oil to heat their homes during the winter months. Shield Heating Oil sells and delivers this kind of heating oil to customers across a 200-mile range, which includes some mountainous terrain. Which of the following statements is true about Shield's pricing tactics? a. It is legal for Shield to levy a special long-distance tax on its customers who live the farthest from the company's main storage facility. b. It is legal for Shield to charge slightly more to its customers who live in remote areas where it is difficult to deliver the heating oil. c. It is legal for Shield to charge slightly more to its customers who can afford to pay more. d. It is legal for Shield to charge slightly more to its customers who buy a higher volume of heating oil
b. It is legal for Shield to charge slightly more to its customers who live in remote areas where it is difficult
On a recent trip to the grocery store, Jackson noticed an in-store tasting event for a new line of yogurt-based dips. The store was providing product sampling and a coupon for 0.50 off the purchase price. Jackson tried the French Onion flavor and liked it so much he decided to purchase it for an upcoming party at his home. Which characteristic influencing adoption rates does this represent? a. Relative advantage b. Possibility of trial use c. Complexity d. Observability
b. Possibility of trial use
At the breakeven sales volume: a. Profits are equal to variable costs. b. Profits are zero. c. Losses are equal to variable cost times units sold. d. Losses are equal to fixed costs.
b. Profits are zero.
. Harry's, your family-owned business, has been serving breakfast, lunch, and dinner in your city for so long that it's practically an institution! Your lunch menu items range in price from $8.99 to $13.99. Recently, your head chef suggested adding a delicious new seafood option to the lunch menu, but the costly ingredients involved will force you to charge $17.99 for it, which is comparable to what you charge for dinner menu items. You're concerned that this will upset your long-time customers. What should you do? a. Set the price at $13.99, but cut costs on all other menu items to make up for any revenue shortfalls b. Set the price at $17.99, and trust that your customers will see the value of the new menu item c. Set the price at $14.99 for the first month, then gradually raise it to $17.99 over the next three months d. Set the price at $17.99, but raise the prices of all other menu items by $2 or more so it doesn't stand out
b. Set the price at $17.99, and trust that your customers will see the value of the new menu item
You're a senior product manager for an educational product publisher, and your team has come up with an intriguing new twist on a digital economics textbook. To get a better sense of how well this product might sell, you've invited several other senior product managers from other fields, such as business, statistics, and marketing, to provide feedback on your idea. Jonah thinks it's an amazing idea he should copy. Yvonne is sure it will be far too expensive. Marianna says it wouldn't appeal to her customers. What have you learned from this experience? a. You should only seek opinions from members of your own team who understand the product. b. The opinions you've received have to be combined and averaged to get a clear answer. c. You should ask the company's sales representatives for feedback because the jury of executive opinion technique should always be used in conjunction with the sales force composite technique. d. The jury of executive opinion approach could never work because no group could ever completely agree.
b. The opinions you've received have to be combined and averaged to get a clear answer.
Your co-worker, the operations manager of Blue Ocean Seafood Restaurants, has pointed out a slight decline in diners ordering and eating the chain's famous cheesy butter biscuits. The head of product development has a theory that people want lighter options today, and she has recommended test marketing a lower-fat version of the biscuits at select locations in eight major cities across the United States. As the marketing director, how do you respond? a. You agree that test marketing is an excellent idea because it will quickly and inexpensively provide you with the direction your company needs. b. You agree that test marketing could be helpful, but you point out that it may also reveal your ideas to your competitors. c. You agree that test marketing is an excellent idea, and you've decided to issue a memo to all managers to instruct the wait staff to strongly promote the new product so that it gets a great response. d. You reject the idea of test marketing because you feel that there will be too many variations in the results to make a wise decision.
b. You agree that test marketing could be helpful, but you point out that it may also reveal your ideas to
You're the marketing director for a software development start-up. Your company is only a week away from launching the most forward-thinking new software it has ever developed, and everyone is excited about the product's sales potential. Suddenly, the CEO says you've got to use the Delphi technique to make one more sales forecast before the launch. What do you say to change her mind? a. You describe how easily competitors could learn company secrets during this process. b. You remind her that the Delphi technique is time-consuming and can't be completed in one week. c. You inform her that the Delphi technique is an antiquated approach that no one uses anymore. d. You explain that the product is so revolutionary that there couldn't possibly be anyone out there who could provide valuable feedback.
b. You remind her that the Delphi technique is time-consuming and can't be completed in one week.
You'd like to own your own business, and you love to work with your hands, preferably outdoors. That's why a lawn and garden maintenance business is the perfect match for your abilities and interests, and you're ready to start! Which type of distribution channel will work best for launching your new service business, and why? a. Because you are marketing your services in the B2B environment, a short distribution channel works best for your new business. b. Due to the concentrated geographic location of your potential customers, you will only need one intermediary in your distribution channel who can facilitate the exchange process. c. You'd like to establish and maintain personal relationships with your clients, so you should set up a short distribution channel without intermediaries. d. Because of the challenges involved in identifying customers who actually need your lawn care services, you will need to engage the services of several sales and marketing intermediaries who can assist you.
c. You'd like to establish and maintain personal relationships with your clients, so you should set up a
Your friend Claire has just shared that she dreams of owning a world-famous Hermes Birkin handbag someday. When you inform her that there is a waiting list for these exclusive handbags, which usually sell for $12,000 and up, she says she's waiting for them to go on sale. What do you know about pricing that would influence how you respond? a. The high price of this product indicates exceptional quality and prestige, so you would encourage Claire to pay full price for the handbag. b. Prices usually drop when demand drops, so you should encourage Claire to wait for those conditions. c. High-end, exclusive brands are always expensive, even when they're on sale, so you would discourage her from spending that much money on a handbag. d. Manufacturers of high-end, exclusive brands usually do not allow discounting to protect the prestige of the brand, so you should tell Claire that she probably won't ever see a sale
d. Manufacturers of high-end, exclusive brands usually do not allow discounting to protect the prestige of the brand, so you should tell Claire that she probably won't ever see a sale
Marcia's company is at the commercialization stage of new-product development. Before company executives move forward with this stage, what advice can you give them? a. Target only opinion leaders because they are the ones who will spend the most money on the product. b. Focus on the promotional mix rather than the distribution mix. c. The marketing mix should be planned before the selection of the target market. d. The launch date should coincide with a good economic situation to maximize sales. e. Focus on the cannibalization of existing products.
d. The launch date should coincide with a good economic situation to maximize sales.
Parker Industries is a small company with a big name! Parker Industries is actually a one‐person company that imports strands of LED lights from China and sells them through its website. Parker's only overhead is a storage unit for inventory that costs $125 a month and a $25 monthly fee for website hosting. Currently, Parker imports the lights for $.99 each (including inbound shipping) and sells them for $4.49. Parker also pays shipping expenses of $.50 per light strand. If Parker found a vendor that would provide the same product for $.89 each including shipping, what would happen? a. Breakeven volume would increase b. Contribution margin would decrease c. Fixed cost would decrease d. Variable cost would decrease
d. Variable cost would decrease
