Marketing Module III Exam

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124) Which of the following is the most complete and accurate description of a pure-click company? A) These are companies that launch a Web site without any previous existence as a firm. B) These firms' business models are based on advertising revenue. C) These are established companies that have an online site for selling products. D) These companies get paid every time a user visits their Web site. E) These companies sell online space to other Web sites and are paid for the service.

133) If Jose is describing chip processing speeds and memory capacity, he is describing the ________ of his firm's offering in the FABV approach. A) features B) advantages C) benefits D) value E) macroenvironment

136) If a prospective client does not want to buy from you because he has a preference for an established supply source, you are facing an objection due to ________. A) psychological resistance B) logical resistance C) price sensitivity D) relationship inertia E) reactance

77) Most retailers will put low prices on some items in order to increase traffic to the store. These low-priced products are known as ________. A) loss leaders B) price ceilings C) price skimmers D) price floors E) cold calls

79) What percentage of word-of-mouth content cascades to more than one person beyond the initial recipient? A) 4 percent B) 6 percent C) 8 percent D) 10 percent E) 25 percent

106) A group of small sellers takes the initiative and organizes a new business entity to carry on wholesaling and possibly some production. This entity is called a(n) ________. A) retailer cooperative B) franchise organization C) area-based cartel D) sponsored voluntary chain E) alternate selling channel

130) Which of the following is an example of a brick-and-click company? A) IFB Industries, a company that sells products using various channels such as Internet, retailers, direct outlets, and franchisees. B) Opera, a Web browser and Internet suite developed by Opera Software, performs common tasks such as displaying Web sites and sending and receiving e-mail messages. C) Atrutron, a company that offers its customers access to the Internet using data transmission technology. D) eBay Inc., an American company, facilitates online auctions and shopping to people and businesses across the globe to buy and sell a broad variety of goods and services. E) Yahoo! Inc., an American corporation, provides services via the Internet such as directories, e-mail, news, advertising, online mapping, and so on.

141) ________ consists of putting goods in boxes or trailers that are easy to transfer between two transportation modes. A) Containerization B) Haulage C) Inventory carrying D) Order processing E) Warehousing

141) ________ is a marketing communications tool that includes a variety of programs to promote or protect a company's image or individual products. A) Public relations B) Advertising C) Sales promotion D) Personal selling E) Direct marketing

143) A manufacturer wants to achieve rapid market penetration through a low-price policy. However, the manufacturer's dealers prefer to work with high margins and pursue short-run profitability. The major reason for this conflict is ________. A) goal incompatibility B) unclear roles C) ambiguous rights D) differences in perception E) dependence on the manufacturer

81) Hewlett-Packard is a highly respected brand. Many retailers want to be associated with the brand because of this reputation. What kind of power does Hewlett-Packard obtain due to this reputation? A) referent B) functional C) legitimate D) coercive E) reward

84) The process of deciding how to allocate company's time among prospects and customers is called ________. A) targeting B) prospecting C) allocating D) dispersing E) delegating

84) Who will most likely be willing to pay for high-value-added channels? A) early buyers of a product B) internal customers of a company C) small and matured buyers of an industry D) consumers of low involvement products E) repeat customers of a product

93) Identify the first step in the workload approach to establish sales force size. A) grouping customers into size classes according to annual sales volume B) establishing desirable call frequencies for each customer class C) determining the total workload for the country in terms of sales calls per year D) determining the average number of calls a sales representative can make per year E) calculating the total number of sales reps needed

96) ________ helps sales representatives understand how they spend their time and how they might increase their productivity. A) Time-and-duty analysis B) A sales quota C) A feed-forward approach D) An expense allowance E) A norm for prospect calls

98) Armac Ltd. is a sluice-box manufacturer based in China. A sluice-box is used for gold prospecting. Armac is interested in selling a few of its machines to an American mining company, but it wants 95 percent of the machines' price in gold and the rest in ores recovered by using the machines. This is an example of a ________. A) buyback arrangement B) functional discount C) barter deal D) compensation deal E) sealed bid

81) Jack is the sales representative of a company that designs and installs modular kitchens. The company's salesforce is trained to customize their offerings as per customer requirements. After analyzing factors such as the space available and the budget, Jack provides personalized designs to individual customers. What kind of a salesperson is Jack? Briefly explain your answer.

A salesperson whose expertise is solving a customer's problem, often with a system of the company's products and services is called a solution vendor. Here, Jack is providing different solutions to different customers after analyzing their problems. Jack can be called a solution vendor.

4) The reservation price, the maximum that most consumers will pay for a given product, is known as the ________ price. A) expected future B) usual discounted C) upper-bound D) typical E) historical competitor

116) ________ out of every 10 US consumers owned a smart phone in 2014. A) Two B) Four C) Six D) Eight E) Ten

105) A(n) ________ VMS consists of independent firms at different levels of production and distribution, integrating their programs on a contractual basis to obtain more economies or sales impact than they could achieve alone. A) administered B) contractual C) corporate D) regulated E) referent

106) Because shelf space is scarce, many supermarkets now charge a ________ for accepting a new brand, to cover the cost of listing and stocking it. A) retainer B) slotting fee C) residual fee D) contingent fee E) royalty

44) ________ is a measure of communications effectiveness that describes the percentage of target market exposed to a communication. A) Frequency B) Reach C) Width D) Depth E) Range

1) ________ refers to the means by which firms attempt to inform, persuade, and remind consumers — directly or indirectly — about the products and brands they sell. A) Human resource development B) Marketing communications C) Financial management D) Operations management E) Planning

30) When a company introduces a product at a high price and then gradually drops the price over time, it is pursuing a ________ strategy. A) market-penetration pricing B) market-skimming pricing C) value-pricing D) switching cost E) loss-leader pricing

133) Which of the following factors forms the basis of assessing sponsorship activities through supply-side methods? A) consumers' brand knowledge B) impact on sponsor's bottom line C) extent of media coverage D) brand exposure reported by consumers E) sales pattern of sponsored products

105) In addition to its store brands and nationally well-known brands of detergents, Reynold's also carries much cheaper varieties of detergents that are not advertised and have little-known names. They are often manufactured from lower-quality ingredients and save on packaging and advertising costs. These are known as ________. A) common carriers B) shills C) generics D) private labels E) marques

109) A franchise organization is an example of a(n) ________ vertical marketing system. A) corporate B) administered C) contractual D) regulatory E) controlled

114) ________ are independently owned businesses that take title to the merchandise they handle. They are full-service and limited-service jobbers, distributors, and mill supply houses. A) Brokers B) Agents C) Merchant wholesalers D) Specialized wholesalers E) Retailers' branches

119) Which of the following is true of brokers? A) Brokers represent buyers or sellers on a semipermanent basis. B) Most brokers are small businesses with a few skilled salespeople. C) Brokers bring buyers and sellers together and assist in negotiation. D) Selling brokers have contractual authority to sell a manufacturer's entire output. E) Purchasing brokers make purchases for buyers and often receive, inspect, warehouse, and ship merchandise.

152) Jaycee was using ________ when his organization tried to win the support of the leaders of one of his distributors by including them in advisory councils, boards of directors, and the like. A) dual compensation B) employee exchange C) co-optation D) joint membership E) strategic justification

38) If demand hardly changes with a small change in price, the demand is said to be ________. A) strained B) marginal C) inelastic D) flexible E) unit elastic

97) Which of the following is a form of mass communications channel? A) interactive marketing B) personal selling C) public relations D) word-of-mouth marketing E) sales presentations

150) What is the trade-off in return for the benefits associated with an integrated multichannel marketing system? A) increased market coverage B) customers who buy in one channel are more profitable than customers who buy across different channels C) lower channel costs D) two or more channels may end up competing for the same customer E) customized selling

90) ________ sales force consists of manufacturers' reps, sales agents, and brokers who earn a commission based on sales. A) Virtual B) Domestic C) Contingent D) Contractual E) Decentralized

111) ________ time is the time necessary to prepare a promotional program prior to launching it. A) Sell-in B) Link C) Setup D) Lead E) Hold

119) Mobile ad spending approached ________ worldwide in 2013. A) $14 million B) $18 million C) $48 million D) $18 billion E) $48 billion

138) E&OE is trying to minimize its inventory costs, which are extremely high. The company has realized that it can achieve this by maintaining a near-zero inventory and producing more products only once it is ordered. Which of the following will be true for E&OE? A) Short production runs will be more expensive than longer ones. B) Setup and order-processing costs will be high. C) The order point will be high. D) Order-processing costs will be lower than the inventory-carrying costs. E) E&OE can reduce the average cost per unit by producing a long run.

2) A salesperson sends e-mails to persuade prospects to buy the products of his company. This is a type of ________ marketing. A) buzz B) virtual C) word-of-mouth D) direct E) viral

98) Which of the following is a sales promotion tool that is consumer franchise building in nature? A) price-off packs B) contests and sweepstakes C) consumer refund offers D) trade allowances E) frequency awards

33) Companies that aim to ________ strive to be affordable luxuries. A) survive in the market B) partially recover their costs C) maximize their market share D) pursue value pricing E) be product-quality leaders

34) Starbucks, Aveda, and BMW have been able to position themselves within their categories by combining quality, luxury, and premium prices with an intensely loyal customer base. These companies are employing a ________ strategy. A) market-skimming B) market-penetration C) survival D) market share maximization E) product-quality leadership

44) Gap and Pottery Barn are examples of franchise organizations, where two or more retail outlets are owned and controlled by a corporation that employs central buying and merchandising and sells similar lines of merchandise.

FALSE

63) STIHL, which manufactures handheld outdoor power equipment sold to six independent US distributors and six STIHL-owned marketing and distribution centers who sell to a nationwide network of more than 8,000 servicing retail detailers, is a good example of intensive distribution.

FALSE

67) In reality, it is very easy for firms to estimate their demand and cost functions.

FALSE

69) Manufacturers can obtain greater control over the selling process by using a sales agency.

FALSE

81) In high-low pricing, retailers charge low prices on an everyday basis with occasional price increases.

FALSE

84) The macroscheduling decision calls for allocating advertising expenditures within a short period to obtain maximum impact.

FALSE

119) Loyal brand buyers tend to change their buying patterns as a result of competitive promotions.

FALSE

12) Traditionally, price was never a major determinant of buyer choice.

FALSE

121) Examples of manufacturer promotions include price cuts and feature advertising.

FALSE

121) Trustworthiness is that source of a spokesperson's credibility that describes his or her attractiveness.

FALSE

121) When firms charge different prices to different customer groups for the same product or service, it is a case of second-degree price discrimination.

FALSE

143) Situation questions focus on the problems, difficulties, and dissatisfaction a buyer might be experiencing with the existing situation.

FALSE

145) Most companies today are trying to increase the order-to-payment cycle.

FALSE

146) More stocking locations mean goods can be delivered to customers more quickly, and warehousing and inventory costs are lower.

FALSE

148) If setup costs are high, the manufacturer can produce the item often, and the average cost per item is stable and equal to the running costs.

FALSE

30) The amount spent on search ads in 2013 was $12.8 billion.

FALSE

32) Marketing channel functions such as storage and movement and communications constitute a backward flow of activities.

FALSE

33) A Web site's physical attractiveness is ensured when the site downloads quickly, the first page is easy to understand, and it is easy to navigate to other pages that open quickly.

FALSE

34) A zero-level marketing channel typically uses a wholesaler and a retailer.

FALSE

36) Microsites are less relevant for companies selling low-interest products.

FALSE

38) Discount stores usually stock leftover goods, overruns, and irregular merchandise, sold at less than retail.

FALSE

39) If Apple wanted to generate or convert sales leads, it should focus on broader search terms.

FALSE

41) A superstore is a storeless retailer serving a specific clientele who are entitled to buy from a list of retailers that have agreed to give discounts in return for membership.

FALSE

42) A retailer cooperative is a retail firm that is owned by its customers.

FALSE

42) Social media ads prompt purchase at least three times more often than e-mails, and the average order value from social media ads is thought to be 17 percent higher.

FALSE

66) Companies strive to maximize their current profits if they are plagued with overcapacity, intense competition, or changing consumer wants.

FALSE

66) The less the sender's field of experience overlaps that of the receiver, the more effective the message is likely to be.

FALSE

67) All the response hierarchy models assume that a buyer passes through affective, cognitive, and behavioral stages, in that order.

FALSE

67) At the PopSugar blog site, a team of bloggers tracks green consumer products for 5 million unique visitors per month.

FALSE

67) Selective distribution severely limits the number of intermediaries and is appropriate when the producer wants to maintain control over the service level and outputs offered by the resellers.

FALSE

68) Bloggers do not need to disclose their relationship with marketers whose products they endorse.

FALSE

68) When Sony introduced the first high-definition television to the Japanese market in 1990, it was priced at $43,000, which is an example of partial-cost recovery pricing.

FALSE

70) San Francisco bakery Mission Pie benefited from sending tweet alerts about its events on TreeHugger.com.

FALSE

73) Caterpillar uses target-return pricing to set prices on its construction equipment, and justifies a higher price by showing lower lifetime operating costs.

FALSE

73) In 2012, more than 20 percent of the total workforce worked full time in sales occupations, both nonprofit and for profit.

FALSE

76) Brands in highly differentiated product classes require heavy advertising to establish a unique image.

FALSE

49) In what ways does franchising benefit the franchisor? In what ways does it benefit the franchisee?

Franchising benefits both the franchisor and the franchisee. Franchisors gain the motivation and hard work of employees who are entrepreneurs rather than "hired hands," the franchisees' familiarity with local communities and conditions, and the enormous purchasing power of being a franchisor. Franchisees benefit from buying into a business with a well-known and accepted brand name. They find it easier to borrow money for their business from financial institutions, and they receive support in areas ranging from marketing and advertising to site selection and staffing.

72) What are the characteristics of an ideal ad campaign?

In an ideal ad campaign, the right consumer is exposed to the right message at the right place and at the right time. The consumer is not distracted from the intended message. The ad properly reflects the consumer's level of understanding of and behaviors with the product and the brand. The ad correctly positions the brand in terms of desirable and deliverable points-of-difference and points-of-parity. The ad motivates consumers to consider purchase of the brand.

93) What should a company do if its competitor's product contains features that are not available in its own product?

In such a situation, the company should subtract the value of those features from the price of its product.

62) In general, what are the five ways companies use database marketing?

In general, companies can use their databases in five ways: 1. To identify prospects — Many companies generate sales leads by advertising their product or service and including a response feature, such as a link to a home page, a business reply card, or a toll-free phone number, and building a database from customer responses. The company sorts through the database to identify the best prospects, then contacts them by mail, e-mail, or phone to try to convert them into customers. 2. To decide which customers should receive a particular offer — Companies interested in selling, up-selling, and cross-selling set up criteria describing the ideal target customer for a particular offer. Then they search their customer databases for those who most closely resemble the ideal. By noting response rates, a company can improve its targeting precision. Following a sale, it can set up an automatic sequence of activities: One week later e-mail a thank-you note; five weeks later e-mail a new offer; 10 weeks later (if the customer has not responded) e-mail an offer of a special discount. 3. To deepen customer loyalty — Companies can build interest and enthusiasm by remembering customer preferences and sending appropriate gifts, discount coupons, and interesting reading material. 4. To reactivate customer purchases — Automatic mailing programs (automatic marketing) can send out birthday or anniversary cards, holiday shopping reminders, or off-season promotions. The database can help the company make attractive or timely offers. 5. To avoid serious customer mistakes — A major bank confessed to a number of mistakes it had made by not using its customer database well. In one case, the bank charged a customer a penalty for late payment on his mortgage, failing to note he headed a company that was a major depositor in this bank. The customer quit the bank. In a second case, two different staff members of the bank phoned the same mortgage customer offering a home equity loan at different prices. Neither knew the other had made the call. In a third case, the bank gave a premium customer only standard service in another country.

128) What is third-degree price discrimination?

In third-degree price discrimination, the seller charges different amounts to different classes of buyers, as in the following cases: • Customer-segment pricing — different customer groups pay different prices for the same product or service. For example, museums often charge a lower admission fee to students and senior citizens. • Product-form pricing — different versions of the product are priced differently, but not proportionately to their costs. • Image pricing — Some companies price the same product at two different levels based on image differences. A perfume manufacturer can put the perfume in one bottle, give it a name and image, and price it at $10 an ounce. The same perfume in another bottle with a different name and image and price can sell for $30 an ounce. • Channel pricing — Coca-Cola carries a different price depending on whether the consumer purchases it in a fine restaurant, a fast-food restaurant, or a vending machine. • Location pricing — The same product is priced differently at different locations even though the cost of offering it at each location is the same. A theater varies its seat prices according to audience preferences for different locations. • Time pricing — Prices are varied by season, day, or hour. Public utilities vary energy rates to commercial users by time of day and weekend versus weekday.

45) Why do companies use infomercials?

Infomercials combine the selling power of television commercials with the draw of information and entertainment. Infomercials promote products that are complicated or technologically advanced or that require a great deal of explanation.

16) What are marketing channels? Briefly explain some of the different types of intermediaries.

Marketing channels are sets of interdependent organizations participating in the process of making a product or service available for use or consumption. They are the set of pathways a product or service follows after production, culminating in purchase and consumption by the final end user. Some intermediaries — such as wholesalers and retailers — buy, take title to, and resell the merchandise; they are called merchants. Others — brokers, manufacturers' representatives, sales agents — search for customers and may negotiate on the producer's behalf but do not take title to the goods; they are called agents. Still others — transportation companies, independent warehouses, banks, advertising agencies — assist in the distribution process but neither take title to goods nor negotiate purchases or sales; they are called facilitators.

151) How is coordination of media achieved through integrated marketing communications?

Media coordination can occur across and within media types, but marketers should combine personal and nonpersonal communications channels through multiple-vehicle, multiple-stage campaigns to achieve maximum impact and increase message reach and impact. Promotions can be more effective when combined with advertising, for example. The awareness and attitudes created by advertising campaigns can increase the success of more direct sales pitches. Advertising can convey the positioning of a brand and benefit from online display advertising or search engine marketing that offers a stronger call to action. Many companies are coordinating their online and offline communications activities. Web addresses in ads (especially print ads) and on packages allow people to more fully explore a company's products, find store locations, and get more product or service information. Even if consumers don't order online, marketers can use Web sites in ways that drive them into stores to buy.

89) Describe the adjustments that an advertiser of high-end laptops has to make to the cost-per-thousand measure.

Student answers will vary. The advertiser needs to apply several adjustments to the cost-per-thousand measure. First, they should adjust for audience quality. The product being high-end laptops, it is better advertised in a magazine read by 1 million college-going kids rather than 2 million housewives, in which case it would have an exposure value of almost zero. Second, the exposure value for the audience-attention probability must be accounted for. Readers of Chip or Digit may pay more attention to gadget ads than do readers of Newsweek. Third, the medium's editorial quality (prestige and believability) should be considered. People are more likely to believe a TV or radio ad and to become more positively disposed toward the brand when the ad is placed within a program they like. To this effect, the ads can be placed within a program like The Big Bang Theory. The fourth adjustment should be made in relation to ad placement policies and extra services (such as regional or occupational editions and lead-time requirements for magazines). Laptop ads would be better received and responded to in magazines that have greater circulation in urban areas with an office-going population or university towns with sizable student populations.

128) Jayne runs a small grocery store in a small town. As there are only a few customers, the store does not require to stock goods in large quantities. Explain why sourcing products from a wholesaler will be beneficial for Jayne.

Student answers will vary. Wholesalers are able to select items and build the assortments Jayne needs, saving considerable work. Wholesalers achieve savings for Jayne by buying large carload lots and breaking the bulk into smaller units. Thus, Jayne can benefit from lower bulk prices while buying only as much as the store can sell. Wholesalers also hold inventories, thereby reducing inventory costs and risks for Jayne.

125) JGB manufactures the K-Nine brand of dog food that is carried in supermarkets across the country. The company has always used wholesalers instead of selling directly to the retailers. However, recently, the sales team at JGB has noticed that wholesalers don't aggressively promote JGB's product line. They often don't carry enough inventory and therefore don't fill customers' orders fast enough. However, the marketing team insists that the wholesaling route is the best. What reasons can the marketing team offer to justify this?

Student answers will vary. Wholesalers' sales forces help JGB reach many small business customers at a relatively low cost. They have more contacts, and the buyers often trust them more than they trust JGB. Wholesalers can often provide quicker delivery to buyers because they are closer to the buyers. Wholesalers absorb some risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence. Wholesalers supply information regarding competitors' activities, new products, price developments, and so on.

135) An ideal event is unique but not encumbered with many sponsors, lends itself to ancillary marketing activities, and reflects or enhances the sponsor's brand or corporate image.

TRUE

18) Many consumers use price as an indicator of quality and value.

TRUE

24) Social media play a key role in earned media.

TRUE

25) Direct mail permits target market selectivity and allows early testing and response measurement.

TRUE

27) Direct marketing has the ability to test different elements of an offer strategy under real marketplace conditions.

TRUE

27) In building brand equity, marketers should be "media neutral" and evaluate all communication options on effectiveness and efficiency.

TRUE

32) Direct marketers use the RFM formula to select customers according to how much time has passed since their last purchase, how many times they have purchased, and how much they have spent since becoming a customer.

TRUE

43) Williams-Sonoma reported a tenfold increase in response rates when it adopted personalized e-mail offerings based on individuals' on-site and catalog shopping behavior.

TRUE

74) A salesperson calling on supermarkets to take repeat orders is called an order taker.

TRUE

75) Established brands usually are supported with lower advertising budgets, measured as a ratio to sales.

TRUE

78) Information gathering refers to the act of conducting market research and doing intelligence work.

TRUE

134) When the airline industry offers discounted but limited early purchases, higher-priced late purchases, and the lowest rates on unsold inventory just before it expires, what kind of a pricing technique are they said to be using?

The airline industry is using yield pricing.

126) What are the different types of price discounts and allowances?

The different types of price discounts and allowances are: • Discount — This is a price reduction given to buyers who pay their bills promptly. • Quantity discount — This is a price reduction offered to those who buy in large volumes. • Functional discount — This is offered by a manufacturer to trade-channel members if they perform certain functions like selling, storing, and recordkeeping. • Seasonal discount — This is a price reduction given to those who buy merchandise or services out of season. • Allowance — This is an extra payment designed to gain reseller participation in special programs. There are of two types: • Trade-in allowances — These are granted for turning in an old item when buying a new one. • Promotional allowances — These reward dealers for participating in advertising and sales support programs.

48) What are the five elements of an offer strategy?

The five elements of the offer strategy are the product, the offer, the medium, the distribution method, and the creative strategy.

79) The term sales representative covers a broad range of positions, tasks, and responsibilities. List and briefly describe each of the positions.

The positions include: • deliverer: the major task is the delivery of a product • order taker: who acts predominantly as an inside order taker or outside order taker • missionary: a salesperson who is not expected or permitted to take an order but whose major task is to build goodwill or to educate the actual or potential user • technician: a salesperson with a high level of technical knowledge • demand creator: one who relies on creative methods for selling tangible products • solution vendor: one whose expertise is in the solving of a customers' problems.

83) You are the sales manager of a company that manufactures and markets server computers. The company's products require high-involvement from the sellers and require salespeople to provide complex and technical information. What kind of a compensation structure do you select for your sales representatives?

The salespeople in the given scenario should have a pay structure that gives prominence to fixed pay. Fixed compensation is common in jobs with a high ratio of nonselling to selling duties, and jobs where the selling task is technically complex and requires teamwork.

91) A company that pays its bills each month for its rent, heat, interest, and salaries regardless of its output is said to be incurring what type of costs?

These are said to be a company's fixed costs.

153) What are three possible responses to low-cost competitors?

Three possible responses to low-cost competitors are: 1. further differentiate the product or service 2. introduce a low-cost venture 3. reinvent as a low-cost player

134) What are the steps involved in developing effective marketing communications?

1. Identify target audience 2. Determine objectives 3. Design communications 4. Select channels 5. Establish budget 6. Decide on media mix 7. Measure results 8. Manage integrated marketing communications

112) Identify and describe the rungs on the customer loyalty ladder in ascending order.

1. Satisfaction — Sticks with your organization as long as expectations are met. 2. Repeat purchase — Returns to your company to buy again. 3. Word of mouth/buzz — Puts his or her reputation on the line to tell others about you. 4. Evangelism — Convinces others to purchase/join. 5. Ownership — Feels responsible for the continued success of your organization.

10) Which of the following is a factor considered when a customer is evaluated based on the RFM formula? A) the amount of time passed after the customer's last visit B) the product categories purchased by the customer C) the mode of payment used by the customer D) the location from which the customer has bought goods E) the type of feedback provided by the customer

10) Which of the following is the most accurate description of a value network? A) a system of partnerships and alliances that a firm creates to source, augment, and deliver its offerings B) a system of organizations and resources involved in moving a product from supplier to customer C) an arrangement whereby an organization transforms inputs into finished goods D) a network that allows an organization take the finished products to the end-users E) a communication network that allows an organization to transfer information to end-customers

106) In second-degree price discrimination, the seller charges ________. A) less to buyers of larger volumes B) different prices depending on the season, day, or hour C) a separate price to each customer depending on the intensity of his or her demand D) different prices for different versions of the same product E) different prices for the same product depending on the channel through which it is sold

108) A group of small grocery shops forms a new business entity to buy products directly from manufacturers. The group buys products in bulk that are then distributed among members. This helps the shops obtain better profit margins. Which of the following types of vertical marketing systems can be observed here? A) contractual B) corporate C) administered D) controlled E) regulatory

109) Madame Tussaud's wax museum is a popular tourist attraction in London. The museum charges higher entry rates for tourists compared to locals. This form of price discrimination is known as ________ pricing. A) customer-segment B) image C) location D) special customer E) special event

147) Co-optation is an effort by one organization to win the support of the leaders of another by ________. A) including them in advisory councils B) engaging in mediation and arbitration C) encouraging joint memberships in trade associations D) encouraging employee exchanges E) offering strategic justifications

17) Which of the following is a disadvantage of direct marketing? A) invasion of privacy B) inability to build brand awareness C) low chances of customers avoiding messages D) inability to control marketing communication E) inability to maintain information security

23) Identify the channel function that constitutes both backward and forward flow. A) obtaining funds for financing B) storage of physical goods C) persuasive communication D) movement of physical goods E) overseeing actual transfer of ownership

35) ________ refers to simple exaggerations in advertisements that are not meant to be believed and that are permitted by law. A) Puffery B) Boosterism C) Astroturfing D) Doublethink E) Subliminal advertising

44) Atburex is a furniture manufacturing company in the United States. The company provides a 60-day credit period and also offers on-site delivery and installation. These special benefits refer to which of the following service outputs? A) service backup B) large product variety C) spatial convenience D) large lot size E) short waiting time

47) Which of the following channel alternatives is most suited to handle complex products and transactions? A) sales forces B) the Internet C) dealers D) telemarketers E) direct mails

50) Exclusive dealing arrangements are mainly used by companies looking for an edge in markets increasingly driven by ________. A) price B) efficiency C) product variety D) add-on services E) spatial convenience

55) ________ pricing takes into account a host of inputs, such as the buyer's image of the product performance, the channel deliverables, the warranty quality, customer support, and attributes such as the supplier's reputation, trustworthiness, and esteem. A) Perceived-value B) Value C) Going-rate D) Auction-type E) Markup

67) Gordron Inc. manufactures and markets medical equipment. To ensure that its salespeople are knowledgeable enough to answer all product queries, the company hires only those individuals who have a good understanding of both the medical profession and the mechanics of the equipment used. Which of the following is the most accurate classification of Gordron's salesforce? A) technicians B) demand creators C) deliverers D) order takers E) missionaries

82) Which of the following types of power is objectively observable? A) coercive power B) legitimate power C) group power D) expert power E) referent power

84) Creative strategies refer to the ________. A) way marketers translate their messages into a specific communication B) amount of creative content in a communications message C) degree of innovation involved in the marketing of a product D) novelty of a marketing communication E) type of medium used to deliver a marketing communication

88) Which of the following ads depict an informational appeal? A) Thompson Water Seal can withstand intense rain, snow, and heat. B) The California Milk Processor Board ran the successful "Got Milk?" ad to boost declining sales. C) VW advertised to active, youthful people with its famed "Drivers Wanted" campaign. D) Pringles advertised "Once You Pop, the Fun Don't Stop" for years. E) KFC has marketed its fast-food products under the slogan, "Finger Lickin' Good."

99) What is the major difference between a conventional marketing channel and a vertical marketing system (VMS)? A) Elements in a conventional marketing channel act as separate businesses whereas the elements in a VMS act as a unified system. B) A VMS has many intermediaries whereas a conventional marketing channel has a limited number of intermediaries. C) A VMS is characterized by an independent producer whereas a conventional marketing channel is characterized by multiple producers. D) A conventional marketing channel has elements such as retailers and wholesalers whereas these elements are not present in a VMS. E) Producers have complete control over the other members in a conventional marketing channel whereas this control is minimal in a VMS.

101) A(n) ________ vertical marketing system combines successive stages of production and distribution under single ownership. A) corporate B) administered C) contractual D) regulatory E) controlled

101) Compensation plans may need to vary depending on the type of salespersons. Which type of salesperson benefits from no ceiling or caps on commissions, overachievement commissions for exceeding quotas, and prize structures that allow multiple winners? A) stars B) core performers C) dogs D) cash cows E) laggards

102) Randi is most motivated when there is no ceiling or caps on her commissions, she can earn overachievement commissions for exceeding quotas, and benefits from prize structures that allow multiple winners. She is probably a ________. A) star B) core performer C) dog D) cash cow E) laggard

102) Which of the following is an advantage of using the percentage-of-sales method to determine the marketing communications budget? A) The percentage-of-sales method encourages stability when competing firms spend approximately the same portion of their sales on communications. B) The percentage-of-sales method views sales as the determiner of communications rather than as the result. C) The percentage-of-sales method leads to a budget set by market opportunities rather than the availability of funds. D) The percentage-of-sales method encourages experimentation with countercyclical communication or aggressive spending. E) The percentage-of-sales method encourages building the communication budget by determining what each product and territory deserves.

103) ________ are consumer promotion tools that provide a price reduction after purchase rather than at the retail shop. A) Rebates B) Cents-off deals C) Price packs D) Coupons E) Premiums

107) Qualities such as candor, humor, and naturalness make a spokesperson ________, which is an important component of spokesperson credibility. A) likable B) an expert C) trustworthy D) transformational E) informational

107) Which of the following consumer promotion tools refers to explicit or implicit promises by sellers that the product will perform as specified or that the seller will fix it or refund the customer's money during a specified period? A) product warranties B) coupons C) free trials D) rebates E) patronage awards

11) Companies should first think about the target market and then design the supply chain backward from that point. This strategy is called ________ planning. A) demand chain B) resource C) external channel D) materials E) strategic business

11) Which of the following is an element of an offer strategy? A) the medium used for delivery B) the number of customers in the locality C) the vision of the company D) the skills required for production E) the details of customer order received

111) Which of the following is a major advantage of adding more channels for selling? A) It helps the company increase its market coverage. B) It helps the company reduce its fixed costs. C) It reduces the likelihood of channel conflict. D) It is the best strategy for selling low-involvement consumer products. E) It results in economies of scale.

120) ________ are bite-sized software programs that can be downloaded to smart phones. A) Mobile apps B) Mini-billboards C) Loyalty programs D) Virtual maps E) Cookies

125) IBM uses the BANT acronym during which stage of the sales process? A) prospecting and qualifying B) sales preapproach C) sales presentation D) unearthing objections E) demonstrating advantages

126) An Internet service provider (ISP) is a(n) ________ company. A) pure-click B) brick and click C) brick-and-mortar D) m-commerce E) one-level

129) Consumer surveys suggest that one of the most significant inhibitors of online shopping is the absence of ________. A) pleasurable experiences B) competitive prices C) adequate technical information D) after-sales service E) facilities to compare offerings

130) ________ encompass sales forecasting, production planning, and inbound materials transportation. A) Market logistics B) Containerization C) Transportation D) Nonstore retailing E) Wholesaling

134) As inventory draws down, management must know at what stock level to request additional stock. This stock level is called the ________. A) reorder point B) least fixed point C) point of divergence D) inflection point E) critical point

134) M-commerce refers to ________. A) conducting business using mobile channels B) the use of mass media communications to attract customers C) providing mobile and on-site services to customers D) the use of a specific medium to communicate with prospects E) using the Internet as a medium for doing business

14) Internet users spend ________ of their time online searching for information. A) 5 percent B) 10 percent C) 12 percent D) 15 percent E) 20 percent

145) General Motors' executives work for a short time in some dealerships, and some dealership owners work in GM's dealer policy department. This strategy helps the company avoid conflicts with its dealers. This is an example of the ________ strategy. A) employee exchange B) dual compensation C) joint membership D) co-optation E) diplomacy

145) Which of the following is NOT one of the four important contributions an effectively trained company sales force can make to consumer marketing? A) remind end-consumers about the product B) increase stock position C) build enthusiasm D) conduct missionary selling E) manage key accounts

146) RX Corp. is a large manufacturer of electronic goods and sells its products through distributors and retailers. In order to keep pace with the growing use of the Internet, the company decides to start selling online. The company faces stiff opposition from its retailers as they believe that this will significantly reduce their profits. The company attempts to eliminate this resistance by offering its retailers commissions for processing and delivering orders received via the Web. This is an example of which of the following conflict resolution strategies? A) dual compensation B) joint membership C) arbitration D) co-optation E) strategic pricing

149) Which of the following channel conflict resolution techniques is used only if everything else proves ineffective? A) legal recourse B) mediation C) arbitration D) co-optation E) superordinate goals

15) Which of the following is an example of a public relations and publicity communication platform? A) lobbying B) company museums C) street activities D) company blogs E) incentive programs

17) A factory outlet is an example of a(n) ________ retailer. A) off-price B) specialty C) discount D) department E) catalog

17) Which of the following is an example of a word-of-mouth marketing communication platform? A) chat rooms B) billboards C) factory tours D) incentive programs E) trade shows

17) ________ tracks eye movements with cameras to measure what people read on a computer screen. A) Heat mapping B) An interstitial C) A pay-per-click ad D) A click-through rate E) Animation

18) Which of the following is an example of a personal selling communication platform? A) sales presentations B) company blogs C) telemarketing D) TV shopping E) press kits

2) A merchant is a(n) ________ in the marketing channel. A) wholesaler B) broker C) sales agent D) warehouse E) advertising agency

2) Mountain Dew's Dewmocracy promotional campaign — including advertising, events, a Web site and social media efforts designed to engage consumers in brand-related activities — is an example of ________. A) paid media B) earned media C) individualization D) word-of-mouth E) mobile marketing

2) Which of the following elements of the marketing communications mix refers to any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor via print, broadcast, network, electronic, and display media? A) advertising B) personal selling C) sales promotion D) direct marketing E) public relations

25) Which of the following is an example of a zero-level channel? A) A company takes online orders from customers and ships the products to them. B) An organization uses a combination of direct salespeople and sales agencies to increase sales. C) A company sells its products through wholesalers and retailers. D) A company sells its products through chains of supermarkets and other large sellers. E) A large company forms alliances with smaller companies to increase sales coverage.

26) Which of the following entities is present in a zero-level marketing channel? A) consumers B) retailers C) brokers D) jobbers E) wholesalers

27) Companies who believe that higher sales volume leads to lower unit costs and higher long-run profits are attempting to ________. A) maximize their market share B) skim the market C) become a product-quality leader D) merely survive in the market E) maximize their current profits

28) A jobber in a three-level marketing channel is a(n) ________. A) small-scale wholesaler B) external broker C) advertising agent D) independent evaluator E) communication channel

29) Door-to-door sales, home parties, mail order, telemarketing, TV selling, Internet selling, and manufacturer-owned stores are examples of ________. A) zero-level channels B) jobbers C) wholesalers D) manufacturer's representatives E) consumers

3) Market demassification has resulted in ________. A) niche market creation B) product standardization C) mass production practices D) intrinsic marketing channels E) just-in-time production

31) Which of the following is generally acknowledged as the most powerful advertising medium and reaches a broad spectrum of consumers at low cost per exposure? A) television B) radio C) newspapers D) magazines E) billboards

32) Which of the following is a benefit of franchising for franchisees? A) The franchisee finds it easier to borrow money from financial institutions. B) The franchisee receives ownership of the franchisor's trademark. C) The franchisee must change its operations to suit those of the franchisor. D) The franchisee collects royalty payments from the franchisor. E) The franchisee is paid by the franchisor for being part of the system.

33) According to researchers, which of the following is the correct order in which content of print advertisements matter? A) picture-headline-copy B) copy-picture-headline C) headline-copy-picture D) picture-copy-headline E) copy-headline-picture

33) Which of the following marketing communications tools is most effective at the later stages of the buying process? A) personal selling B) public relations C) advertising D) sales promotions E) direct marketing

37) Consumers are less price sensitive when ________. A) price is only a small part of the total cost spent on the product over its lifetime B) they perceive the higher prices to be unjustified C) they change their buying habits regularly D) there are many substitutes and competitors in the market E) they are buying high-cost items

40) Which of the following equations accurately describes the total number of exposures (E) of an advertising message through a given medium? A) E = reach × frequency B) E = (reach × frequency) / impact C) E = reach × frequency × impact D) E = (reach + frequency) / impact E) E = frequency / reach

43) Costs that do not vary with production levels or sales revenue are known as ________ costs. A) overhead B) variable C) average D) opportunity E) total

43) Which of the following terms refers to add-on services such as credit, delivery, installation, and repairs, and is provided by a marketing channel? A) service backup B) product accessories C) external products D) product variety E) service extensions

45) Which of the following types of distribution involves severely limiting the number of channel intermediaries? A) exclusive B) selective C) intensive D) aggressive E) retail

48) Experience-curve pricing ________. A) assumes competitors are weak followers B) allows products to project a high quality image C) is applicable only to manufacturing costs D) focuses on reducing fixed costs E) is generally risk-free

48) Which of the following is a major disadvantage of using the Internet as a marketing channel? A) It is less effective for complex products. B) It lacks convenience and practicality. C) It cannot be used to reach a wide audience. D) It is considered expensive. E) It causes the company to lose direct contact with customers.

48) Which of the following is an advantage of using television as an advertising medium? A) high attention and reach B) low absolute cost C) absence of clutter D) long duration of ad exposure E) high audience selectivity

49) Armon Apparels designs, manufactures, and distributes athletic apparel and accessories for men and women. The company has only nine distributors across the United States. These distributors control a nationwide network of 600 retailers. The company does not sell its products through other channels. This is an example of ________ distribution. A) selective B) intensive C) exclusive D) internal E) passive

49) Which of the following is a disadvantage of using television as an advertising medium? A) high absolute cost B) low audience attention C) lack of reach among audience D) high audience selectivity E) absence of clutter

5) Which of the following is NOT one of the advantages of direct mail? A) The cost per thousand is lower than for mass media. B) It permits target market selectivity. C) It can be personalized. D) It allows early testing and response measurement. E) It is flexible.

52) Which of the following products is most likely to be sold using an exclusive distribution strategy? A) designer luggage B) cigarettes C) alcoholic beverages D) car fuel E) medicine

53) Which of the following covers payment terms and producer guarantees? A) conditions of sale B) pricing policies C) exclusive dealings D) mutual services E) territorial rights

56) Which of the following channels is associated with the lowest cost per transaction? A) Internet B) telemarketing C) retail stores D) distributor E) sales force

56) Which of the following is a disadvantage of using Yellow Pages as an advertising medium? A) high competition B) poor local market coverage C) low believability D) lack of adequate reach E) high total costs

56) ________ are a means for consumers to share text, images, audio and video information with each other and with companies, and vice versa. A) Social media B) Interstitials C) Microsites D) Pay-per-click ads E) Mobile ads

57) Dollar Shave Club's irreverent online video on YouTube is an example of ________. A) social media B) an interstitial C) a microsite D) a pay-per-click ad E) a mobile ad

58) Which of the following is true for the retail industry? A) Discount stores and catalog showrooms are competing for the same customers. B) Upscale retailers see a decline in sales as middle-market retailers thrive. C) Small, specialized retailers are crowding out larger, more diverse retailers. D) Store retailing sees no competition from nonstore retailing. E) Discount stores are not doing as well as middle-market retailers.

58) Which of the following problems is most likely when a company chooses to use a sales agency instead of company salespeople? A) The company will find it difficult to control the sales process. B) They do not take title to goods or negotiate purchases or sales. C) The value-added per sale is the lowest for sales agencies. D) Agencies will pay less attention to customers who buy the most or in large volumes. E) Sales agencies are often difficult to access due to strict contractual obligations.

60) For which of the following product categories are consumers least likely to engage with on social networks? A) Purex laundry detergent B) USA Today C) Red Cross D) Salvation Army E) NBC News

61) In ________ pricing, the firm bases its price largely on competitor's prices. A) going-rate B) auction-type C) markup D) target-return E) perceived-value

61) Which of the following is an example of a category killer? A) PETCO B) Walmart C) Kohl's D) The Limited E) Tesco

63) Faith is a big fan of a popular musical group, so she created a place for other fans to communicate with each other online. Faith created a ________. A) forum B) microblog C) blog D) social network E) microsite

63) Which of the following media timing factors expresses the rate at which new customers enter the market? A) buyer turnover B) purchase frequency C) media reach D) weighted number of exposures E) advertising impressions

64) In a(n) ________, the buyer announces something he or she wants to buy, and potential sellers compete to offer the lowest price. A) Dutch auction with one buyer and many sellers B) English auction with one buyer and many sellers C) English auction with one seller and many buyers D) sealed-bid auction E) ascending auction

79) A manufacturer offers its intermediaries an extra benefit for performing a promotional activity. This is an example of the use of ________ power. A) reward B) coercive C) functional D) expert E) referent

85) A producer must modify its channel design and arrangements if ________. A) consumer buying patterns change B) the competition in the market stabilizes C) the product is in the growth stage of its life cycle D) the market size remains unchanged for a particular period E) the firm's profits stabilize

85) Which of the following is NOT a limitation of online reviews? A) People trust and value positive reviews more than negative reviews. B) Online reviews can be biased. C) Raters are influenced by previous, positive ratings. D) Social influence can lead to disproportionally positive online ratings. E) Online reviews can be fake.

99) Which of the following is a sales promotion tool that typically does NOT build brand image? A) consumer refund offers B) free samples C) premiums related to the product D) frequency awards E) coupons that include a selling message

and provide reviews on the cars' performance, their prices, and other factors. Which of the following personal communications channels is Top Gear closest to in description? A) expert channel B) formal channel C) social channel D) sponsored channel E) advocate channel

of the following terms best represents this practice? A) channel integration B) mass customization C) online personalization D) push strategy E) internal marketing

102) The most advanced supply-distributor arrangements for ________ vertical marketing systems rely on distribution programming. A) corporate B) administered C) contractual D) regulatory E) controlled

12) The average click-through in terms of the percentage of consumers who click on a link for ________ is about 2 percent. A) search engine optimization B) pay-per-click ads C) standard banner ads D) microsites E) rich media banner ads

120) "How does this problem affect your people's productivity?" is an example of a(n) ________ question. A) situation B) implication C) problem D) need-payoff E) challenge

144) Stacey wants to use a highly relevant, engaging, and implicit communications mix mode to use a "soft sell" approach for her new makeup line. The communications mix mode that has these characteristics is ________. A) sales promotions B) events and experiences C) advertising D) direct and interactive marketing E) personal selling

147) ________ refers to a planning process designed to assure that all brand contacts received by a customer or prospect for a product, service, or organization are relevant to that person and consistent over time. A) Brand engagement B) Integrated marketing communications C) Market research D) Customerization E) Marketing research

28) A company that is looking to maximize its market share would do well to follow ________ pricing. A) markup B) market-penetration C) market-skimming D) survival E) target-return

7) The "Got Milk" campaign was intended to boost sagging milk consumption among Californians in the 1990s. The campaign ads highlighted the inconvenience of running out of milk when intended to be used with certain foods, such as cookies or muffins, advising consumers to stock up on milk to avoid such inconveniences. The "Got Milk?" campaign is an example of ________ advertising. A) informational B) reminder C) institutional D) comparative E) reinforcement

7) Using the push strategy is most appropriate when ________. A) consumers are able to perceive differences between brands B) the product being sold is an impulse item C) there is high brand loyalty for the product D) the product is a high involvement purchase E) consumers choose the brand before they go to the store

84) Which of the following is the strongest differentiator for brick-and-mortar stores who want to emphasize their superiority over online retailers? A) product quality B) the shopping experience C) product range D) pricing E) the retailer's reputation

93) When Gerard and his team seek to evaluate blogs according to three dimensions — relevance, sentiment, and authority — they are focused on characterizing the ________ of word of mouth. A) speed B) source C) scale D) share E) space

94) Which of the following sales positions is most likely to have fixed compensation? A) an FMCG salesperson selling to supermarkets B) a salesperson who handles the industrial customers C) an insurance agent who works part time D) a service representative in charge of handling incoming customer queries E) a telemarketer calling up existing customers to bring in additional sales

96) One of the measures of online word of mouth at DuPont was the effort's ________, or how fast it spread. A) authority B) speed C) relevance D) scale E) sustainability

1) An advertising ________ is a specific communications task and achievement level to be accomplished with a specific audience in a specific period of time. A) medium B) objective C) channel D) budget E) copy

1) The catalog you receive from a large apparel store, displaying their new summer collection, is an example of ________ marketing. A) buzz B) direct C) virtual D) word-of-mouth E) interactive

10) Which of the following is one of the elements of a site's ease of use? A) Individual pages are clean and not crammed with content. B) The first page is easy to understand. C) Typefaces and font sizes are very readable. D) The site makes good use of color. E) The site has user-centric privacy controls.

100) A(n) ________ includes the producer, wholesaler(s), and retailer(s) acting as a unified system. A) parallel marketing channel B) vertical marketing system C) extensive marketing channel D) internal marketing system E) conventional marketing channel

102) A(n) ________ is an extra payment designed to gain reseller participation in special programs. A) seasonal discount B) allowance C) discount D) quantity discount E) functional discount

104) Gabrielle is the chief marketing officer of Boyd Pharmaceuticals. She is meeting with Trent, the chief financial officer to decide on the company's marketing communications budget. They pore over the sales reports and other financial records and determine the amount of resources they can spare for marketing communications, after resources have been allocated to other functions, such as R&D, logistics, etc. What method did Gabrielle and Trent use to arrive at the marketing communications budget? A) objective-and-task method B) affordable method C) competitive-parity method D) activity-based method E) percentage-of-sales method

104) When supermarkets and department stores drop the price on well-known brands to stimulate store traffic, they are said to be following ________ pricing. A) value B) loss-leader C) special event D) high-low E) everyday low

107) In a retailer cooperative, ________. A) profits are equally divided among members B) members plan their advertising jointly C) nonmembers cannot buy through the co-op D) members rely on distribution programming E) members standardize their selling practices

113) Which of the following is considered a wholesaler? A) retailers B) brokers C) producers D) manufacturers E) farmers

132) JBJ Sports is a leading sporting goods manufacturer from Atlanta. It has recently initiated a program in association with the Food4Kids Foundation, which raises funds to promote nutritional awareness of young children. The company plans to donate $1 for every item it sells in the North American market. Also, JBJ has roped in professional sports teams associated with it to wear the Food4Kids logo on their team gear. Which of the following best describes the motivation for JBJ's involvement in the program? A) entertaining key clients or rewarding key employees B) expressing commitment to the community or on social issues C) permitting merchandising or promotional opportunities D) stimulating quicker or greater purchase of particular brands E) identifying with a particular target market or lifestyle

135) A stock order point of 10 means ordering the product ________. A) every 10 days B) when stock falls to 10 units C) every 10 units D) when stock falls to 9 units E) in batches of 10 items

138) If a prospective client does not want to buy from you because she feels the price is too high, you are facing an objection due to ________. A) psychological resistance B) logical resistance C) apathy D) relationship inertia E) reactance

146) The most effective communications mix tool at later stages of the buying process is ________ because it is particularly effective at building buyer preference, conviction, and action. A) sales promotions B) personal selling C) advertising D) direct and interactive marketing E) events

147) When a company requires customers to pay today's price and all or part of any inflation increase that takes place before delivery, it is known as ________. A) special-customer pricing B) an escalator clause C) delayed quotation pricing D) unbundling E) time pricing

147) Which of the following is a medium of visual identity for a company? A) annual reports B) dress codes C) press releases D) seminars E) trade shows

15) E&OE produces and markets its own brand of skincare products using herbal remedies and natural ingredients through standalone stores as well as an online portal. E&OE is a(n) ________ retailer. A) off-price B) specialty C) discount D) department E) extreme value

21) Which of the following is an example of direct marketing? A) E&OE sells its herbal skincare products exclusively through its standalone stores. B) TCJ is a telemarketing firm that sells products from a number of different suppliers. C) Jayne's sells most of its products to customers through home sales parties. D) J3 is a storeless retailer that organizes the retail activity of the employees of four firms. E) Reynold's tries to minimize its staff costs by installing vending machines in its stores.

22) The ________ marketing sales system works by recruiting independent businesspeople who act as distributors. A) catalog B) multilevel C) direct-response D) corporate E) direct

23) Which of the following is the first step in setting a pricing policy? A) selecting a pricing method B) selecting the pricing objective C) determining demand D) estimating cost E) analyzing competitors' costs, prices, and offers

34) Which of the following wholesaler functions reduces inventory costs and risks to suppliers and customers? A) selling and promoting B) warehousing C) transportation D) market information E) assortment building

42) As a service output produced by marketing channels, product variety refers to the ________. A) units the channel permits a customer to purchase at once B) assortment provided by the marketing channel C) add-on services provided by the channel D) ability of a product to provide incremental value E) degree to which the channel makes it easy for customers to purchase a product

42) Which of the following is true regarding price elasticity? A) The higher the elasticity, the lesser is the volume growth resulting from a 1 percent price reduction. B) Within the price indifference band, price changes have little or no effect on demand. C) If demand is elastic, sellers will consider increasing the price. D) Price elasticity does not depend on magnitude and direction of the contemplated price change. E) When demand is inelastic, sellers should lower prices in order to increase total revenue.

46) ________ cost is the cost per unit at that level of production; it equals total costs divided by production. A) Target B) Average C) Marginal D) Opportunity E) Fixed

49) Deducting the desired profit margin from the price at which a product will sell, given its appeal and competitors' prices, is known as ________. A) overhead costing B) target costing C) activity-based costing D) benefit analysis E) estimate costing

5) Which of the following is NOT one of the possible consumer reference prices? A) typical price B) actual future price C) last price paid D) expected future price E) upper-bound price

52) The offer strategy has five elements: the product, the offer, the medium, the distribution method, and the ________. A) outside envelope B) creative strategy C) sales letter D) circular E) reply form

53) Which of the following is a disadvantage of using magazines as an advertising medium? A) low geographic and demographic selectivity B) long ad purchase lead time C) low-quality reproduction D) small "pass-along" readership E) lack of credibility

56) The key to perceived-value pricing is to ________. A) reengineer the company's operations B) deliver more unique value than competitors C) adopt subtle marketing tactics compared to competitors D) deliver more value but at a lower cost E) invest heavily in advertising in order to convey superior value

58) Which of the following statements demonstrates behavioral loyalty toward a brand? A) 2Wheels has very customer-friendly return policies for its products. B) I always buy 2Wheels products when I'm looking for bike accessories. C) Most of my friends agree that 2Wheels is the best place for durable biking gear. D) 2Wheels has the friendliest customer service people I've ever met. E) I think that 2Wheels products are the highest-quality products in their price range.

59) The social network which focuses on career-minded professionals is ________. A) Facebook B) LinkedIn C) MySpace D) Twitter E) Gawker

6) Greta is attempting to get as many orders as possible. Which direct marketing tool is generally associated with the highest order response rate? A) e-mail to an internal company list B) direct mail to an internal company list C) e-mail to a general list D) direct mail to a general list E) banner advertising on the company's Web site

6) When is a pull strategy appropriate? A) when there is low brand loyalty B) when consumers are able to perceive differences between brands C) when brand choice is made in the store D) when it is a low involvement purchase E) when the product is an impulse item

62) Which of the following auctions is characterized by one seller and many buyers? A) Walrasian auctions B) ascending bid auctions C) closed auctions D) sealed-bid auctions E) reverse auctions

62) Which of the following is a blog network? A) Facebook B) Sugar C) MySpace D) Groupon E) YouTube

64) ________ is the number of times the average buyer buys a product during the period. A) Buyer turnover B) Purchase frequency C) Customer retention rate D) Advertising impressions E) Total number of exposures

65) ________ auctions let would-be suppliers submit only one bid; they cannot know the other bids. A) Descending bid B) Sealed-bid C) English D) Dutch E) Reverse

77) Broomer threatens to withdraw all its other products from the retailers' stores if they are unwilling to push products from the "Inducer" line. This is an example of ________ power. A) reward B) coercive C) legitimate D) expert E) referent

78) Which of the following increases the likelihood a brand is discussed in face-to-face, oral communications? A) brand novelty B) brand salience C) brand excitement D) brand surprise E) brand edginess

8) In the ________ type of retailing, customers usually find their own goods, although they can ask salespeople for assistance. A) self-service B) self-selection C) full-service D) limited service E) limited-selection

83) One of the possible objectives of marketing communications is helping consumers evaluate a brand's perceived ability to meet a currently relevant need. Which of the following relevant brand needs is most likely emphasized by an advertisement for a luxury car? A) problem removal B) sensory gratification C) normal depletion D) intellectual stimulation E) problem avoidance

84) Online customer reviews are the second-most trusted source of brand information. What is the most trusted source? A) print advertising B) recommendations from friends and family C) salesperson recommendation D) celebrity endorsements E) Facebook recommendations

85) A(n) ________ appeal is a creative strategy that elaborates on product or service attributes or benefits. A) aesthetic B) informational C) bandwagon D) emotional E) transformational

97) ________ social media ground control and command center in Round Rock, Texas, has 70 employees and processes 25,000 daily social media events in 11 different languages, responding to most queries and complaints within 24 hours. A) DuPont's B) Dell's C) Gatorade's D) Wells Fargo's E) Nestlé's

A) Samples B) Coupons C) Rebates D) Price packs E) Premiums

131) PepsiCo sold its cola syrup to Russia and agreed to buy Russian vodka at a certain rate for sale in the United States for the next five years. What kind of a countertrade did both the parties indulge in?

Both the parties indulged in an offset. In such countertrade, the seller receives full payment in cash but agrees to spend a substantial amount of the money in that country within a stated time period.

51) Differentiate between brokers and agents.

Brokers and agents both perform wholesaling functions. They facilitate buying and selling, on commission of 2 to 6 percent of the selling price and generally specialize by product line or customer type. Brokers bring buyers and sellers together and assist in negotiation; they are paid by the party hiring them — food brokers, real estate brokers, insurance brokers. Agents represent buyers or sellers on a more permanent basis. Most manufacturers' agents are small businesses with a few skilled salespeople: Selling agents have contractual authority to sell a manufacturer's entire output; purchasing agents make purchases for buyers and often receive, inspect, warehouse, and ship merchandise; commission merchants take physical possession of products and negotiate sales.

100) ________ are offered by a manufacturer to trade-channel members if they will perform certain functions, such as selling, storing, and recordkeeping. A) Consumer promotions B) Quantity discounts C) Functional discounts D) Seasonal discounts E) Trade-in allowances

103) ________ reward dealers for participating in advertising and sales support programs. A) Functional discounts B) Trade discounts C) Promotional allowances D) Rebates E) Quantity discounts

105) Gabrielle is the chief marketing officer of Boyd Pharmaceuticals. She is meeting with Trent, the chief financial officer to decide on the company's marketing communications budget. They decide to trust in the prevailing collective wisdom of the industry as a whole, and not wanting to instigate a communications war, settle on spending only as much as their nearest market rival does on marketing communications. What method did Gabrielle and Trent use to arrive at the marketing communications budget? A) objective-and-task method B) affordable method C) competitive-parity method D) activity-based method E) percentage-of-sales method

114) ________ questions ask about the consequences of the buyer's problems. A) Situation B) Problem C) Implication D) Need-payoff E) Solution

27) A direct marketing channel is a ________ channel. A) one-level B) two-level C) zero-level D) three-level E) reverse-flow

4) Which of the following is an advantage of online communications for marketers? A) Consumers cannot effectively screen out your messages. B) Companies can accurately track how effective their ads are because software filters out all bogus hits. C) Companies can offer tailored information or messages that engage consumers. D) Advertisers maintain complete control over the message. E) Advertisers do not need to worry as much about context.

4) Which of the following is an example of a company that serves a niche market? A) a large apparel manufacturing company that produces a wide range of products for different segments B) a software company that creates standardized supply chain applications for manufacturers C) a manufacturer who creates tools such as bolts, latches, door handles etc. for left-handed individuals D) a large multinational manufacturer of consumer products, FMCG products, and consumer electronics E) a company that manufactures denim pants for men and women of all ages

4) ________ advertising aims to create liking, preference, conviction, and purchase of a product or service. A) Corporate B) Reminder C) Persuasive D) Reinforcement E) Informational

41) Which of the following marketing communications tools is most influential at the maturity stage of a product's life cycle? A) sales promotions B) direct marketing C) advertising D) publicity E) interactive marketing

104) ________ are unbranded, plainly packaged, less expensive versions of common products such as spaghetti, paper towels, and canned peaches. A) Common carriers B) Shills C) Generics D) Private labels E) Marques

11) Which of the following statements is true of the factors that affect an advertising budget? A) High-market-share brands usually require proportionately high advertising expenditure as a percentage of sales to maintain share. B) Brands in less-differentiated or commodity-like product classes require less advertising to establish a unique image. C) New products typically merit large advertising budgets to build awareness and to gain consumer trial. D) In a market with few competitors and moderate advertising spending, a brand must advertise more heavily to be heard. E) Established brands usually are supported with high advertising budgets, measured as a ratio to sales.

110) A ________ is a sales force promotion tool that aims at inducing the sales force or dealers to increase their sales results over a stated period, with prizes (money, trips, gifts, or points) going to those who succeed. A) trade show B) frequency program C) sales contest D) sweepstake E) patronage award

121) In which of the following stages of personal selling does a salesperson tell the product story to the buyer? A) preapproach B) prospecting C) presentation D) closing E) objection handling

123) Which of the following is NOT one of the ways companies can utilize cell phones to market to or track consumers? A) utilize GPS data to provide location-based offers B) utilize digital in-store signs that dispense coupons to smart phones C) utilize cookies to track mobile activity D) track behavior across tablets and mobile devices using screen identities E) track loyalty program participation

125) Experts recommend mobile ad copy should occupy only ________ percent of the screen, avoiding complex viewing experiences that may take a toll on consumers' battery and data availability as well as their time. A) 30 B) 40 C) 50 D) 60 E) 70

128) In IBM's BANT acronym, N stands for ________. A) noticeable B) necessary C) need D) necessity E) notify

131) Audi models featured prominently in the 2010 blockbuster Iron Man 2, including main character Tony Stark's personal R8 Spyder. Which of the following is the most rational explanation for Audi's decision to associate itself with the movie? A) to express commitment to the community or on social issues B) to identify with a particular target market or lifestyle C) to create experiences and evoke feelings D) to become part of a personally relevant moment in consumers' lives E) to entertain key clients or reward key employees

131) Which of the following questions is LEAST relevant during the preapproach stage of the sales process? A) How is the purchasing process conducted at the company? B) How is the purchasing department structured? C) How can I overcome psychological resistance? D) Is purchasing centralized? E) What is the best contact approach?

16) Which of the following is NOT one of the ways to maximize the marketing value of e-mails? A) Give the customer a reason to respond. B) Personalize the content of your e-mails. C) Offer something the customer can get via direct mail. D) Make it easy for customers to opt in as well as unsubscribe. E) Combine e-mail with other communications.

18) Avon, Tupperware, and Southwestern Company of Nashville are among companies in the multibillion-dollar ________ industry, which involves selling door-to-door or at home sales parties. A) direct marketing B) catalog showroom C) direct selling D) automatic vending E) buying services

28) A ________ is a retail firm owned by its customers. Members contribute money to open their own store, vote on its policies, elect a group to manage it, and receive dividends. A) retailer cooperative B) voluntary chain C) consumer cooperative D) merchandising conglomerate E) franchise organization

3) A manufacturer uses the company's sales force and trade promotions to carry, promote, and sell products to end users. Which of the following strategies is this manufacturer using? A) personalization strategy B) tailoring strategy C) push strategy D) pull strategy E) consumer promotion strategy

3) When Lola asked what the advertising campaign should say, she was concerned with which of the five Ms? A) Mission B) Money C) Message D) Media E) Measurement

31) When Apple introduced its iPhone, it was priced at $599. This allowed Apple to earn the maximum amount of revenue from the various segments of the market. Two months after the introduction, the price had come down to $399. What kind of a pricing did Apple adopt? A) loss-leader pricing B) market-penetration pricing C) market-skimming pricing D) target-return pricing E) value pricing

31) Which of the following is true for franchisees? A) The franchisee is paid by the franchisor to be part of the franchise system. B) The franchisee licenses a trademark to the franchisor. C) The franchisee must change its operations to suit those of the franchisor. D) The franchisee collects royalty payments from the franchisor. E) The franchisee owns the trade or service mark.

36) ________ is finding the most cost-effective media to deliver the desired number and type of exposures to the target audience. A) Media scheduling B) Content analysis C) Media selection D) Communication design E) Copy testing

37) Which element of the marketing communications mix allows for amplified expressiveness? A) sales promotion B) public relations C) advertising D) direct and interactive marketing E) personal selling

41) The weighted number of exposures (WE) of an advertising message over a given medium is given by ________. A) WE = reach × frequency B) WE = (reach × frequency) / impact C) WE = reach × frequency × impact D) WE = (reach + frequency) / impact E) WE = frequency / reach

42) Under which of the following conditions is the reach of media the most important factor in media selection? A) when introducing frequently purchased brands B) when going into a defined target market C) when launching extensions of well-known brands D) when there are strong competitors to a brand E) when there is high consumer resistance to the product

58) LCH is a leading electronics company that produces and markets its own brand of desktop and laptop computers for both individual consumers and businesses. Which of the following sequences of consumer responses is relevant as a marketing communications model for LCH's products? A) learn-do-feel B) feel-learn-do C) do-feel-learn D) feel-do-learn E) do-learn-feel

59) Matt's retail store offers all products at $2 less than its competitors. The store never runs promotional campaigns or offers special discounts. Matt's retail store is following a(n) ________ pricing policy. A) auction-type B) target-plus C) everyday low D) high-low E) going-rate

65) Which of the following sequences accurately represents the hierarchy-of-effects model of marketing communications? A) attention-interest-desire-action B) awareness-interest-evaluation-trial-adoption C) awareness-knowledge-liking-preference-conviction-purchase D) exposure-reception-cognitive response-attitude-intention-behavior E) knowledge-persuasion-decision-implementation-confirmation

66) Which of the following types of advertising timing patterns calls for spending all advertising dollars in a single period? A) frequency capping B) flighting C) concentration D) pulsing E) continuity

68) Advertisements for which of the following product categories would merit a continuous advertising timing pattern the most? A) air conditioners B) life insurance C) breakfast cereal D) automobiles E) holiday package tours

69) ________ is an advertising timing pattern that calls for advertising during a certain period, followed by a period with no advertising, followed by a second specific period of advertising activity. A) Pulsing B) Continuity C) Flighting D) Concentration E) Frequency capping

70) Flighting as an advertising timing pattern is most useful when ________. A) purchase cycle is rather frequent B) substantial advertising budget is available C) items are seasonal D) tightly defined buyer categories exist E) there are expanding market situations

72) In the corporate headquarters of a supermarket chain, ________ are responsible for developing brand assortments and listening to salespersons' presentations. A) central buyers B) brokers C) specialist buyers D) agents E) specialized wholesalers

72) ________ is continuous advertising at low levels, reinforced periodically by waves of heavier activity. A) Flighting B) Frequency capping C) Pulsing D) Concentration E) Session capping

80) Which of the following is a postpurchase service offered by retailers? A) accepting orders over the telephone B) advertising and window displays C) delivery to the customer's doorstep D) general information E) interior decoration of the retail outlet

85) Which of the following refers to the process of deciding which customers will get scarce products during product shortages? A) delegating B) prospecting C) allocating D) dispersing E) targeting

87) Your company has customer-service representatives who provide you with leads, write up proposals, fulfill orders, and provide post-sales support. Your responsibilities are to concentrate on the larger accounts with more complex and customized needs. Your company most likely has a ________ salesforce. A) distributive B) territory based C) leveraged D) decentralized E) parallel

88) The bottom rung of the customer loyalty ladder is ________. A) word of mouth/buzz B) repeat purchase C) satisfaction D) evangelism E) ownership

9) Which of the following elements of the marketing communication mix involves use of mail, telephone, fax, e-mail, or Internet to communicate with or solicit response or dialogue from specific customers and prospects? A) advertising B) personal selling C) direct marketing D) public relations E) sales promotion

91) Which of the following sources of a spokesperson's credibility describes his or her attractiveness? A) expertise B) trustworthiness C) likability D) integrity E) experience

92) Which of the following elements of the marketing communications mix consists of a collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by consumers, or the trade? A) advertising B) public relations C) sales promotion D) events and experiences E) personal selling

93) Which of the following is an example of a trade promotion? A) free samples B) discount coupons C) display allowances D) contests for sales reps E) premiums

93) Which of the following personal communication channels consist of company salespeople contacting buyers in the target market? A) expert channels B) social channels C) advocate channels D) independent channels E) informal channels

94) To monitor the Gatorade brand on social networks around the clock, ________ created a Mission Control Center — set up like a broadcast television control room — in the middle of the marketing department in its Chicago headquarters. A) Coca-Cola B) Cadbury Schweppes C) PepsiCo D) P&G E) Nestlé

94) Which of the following personal communications channels consist of family members, neighbors, friends, and associates talking to target buyers? A) expert channels B) advocate channels C) social channels D) formal channels E) sponsored channels

95) Sales promotion expenditures increased as a percentage of budget expenditure for a number of years. Growth has, however, recently slowed. Which of the following is a factor that has contributed to the growth of sales promotion expenditures? A) Many brands have come to be seen as dissimilar. B) The efficiency of advertising as a promotion has improved. C) The trade demands more deals from manufacturers. D) Consumers have become less price-oriented. E) The number of brands in the market has decreased.

96) In which of the following forms of countertrade do buyers and sellers directly exchange goods, with no money and no third party is involved? A) buyback arrangements B) offsets C) barter D) sealed bids E) compensation deals

96) Personal influence in marketing communications carries great weight when the ________. A) product being marketed is a convenience item B) purchase of the product is considered to be safe and risk-free C) product suggests something about the user's status or taste D) product being marketed is purchased on a frequent basis E) product or service in questions is used without being recommended by others

70) Briefly explain the various service outputs that marketing channels produce.

Channels produce five service outputs: 1. Lot size: The number of units the channel permits a typical customer to purchase on one occasion. 2. Waiting and delivery time: The average time customers wait for receipt of goods. Customers increasingly prefer faster delivery channels. 3. Spatial convenience: The degree to which the marketing channel makes it easy for customers to purchase the product. 4. Product variety: The assortment provided by the marketing channel. Normally, customers prefer a greater assortment because more choices increase the chance of finding what they need, although too many choices can sometimes create a negative effect. 5. Service backup: Add-on services (credit, delivery, installation, repairs) provided by the channel. The greater the service backup, the greater the work provided by the channel.

52) How do the stages of buyer readiness affect the composition of a product's marketing communications mix?

Communication tools vary in cost-effectiveness at different stages of buyer readiness. Advertising and publicity play the most important roles in the awareness-building stage. Customer comprehension is primarily affected by advertising and personal selling. Customer conviction is influenced mostly by personal selling. Closing the sale is influenced mostly by personal selling and sales promotion. Reordering is also affected mostly by personal selling and sales promotion, and somewhat by reminder advertising.

90) Describe the communication-effect research method of evaluating advertising effectiveness.

Communication-effect research, called copy testing, seeks to determine whether an ad is communicating effectively. Marketers should perform this test both before an ad is put into media and after it is printed or broadcast. Pretest critics maintain that agencies can design ads that test well but may not necessarily perform well in the marketplace. Proponents maintain that useful diagnostic information can emerge and that pretests should not be used as the sole decision criterion anyway. Many advertisers use posttests to assess the overall impact of a completed campaign. If a company hoped to increase brand awareness from 20 percent to 50 percent and succeeded in increasing it to only 30 percent, then the company is not spending enough, its ads are poor, or it has overlooked some other factor.

137) Compare and contrast the use of negative and positive appeals in advertising messages.

Communicators use negative appeals such as fear, guilt, and shame to get people to do things (brush their teeth, have an annual health checkup) or stop doing things (smoking, abusing alcohol, overeating). Fear appeals work best when they are not too strong, when source credibility is high, and when the communication promises, in a believable and efficient way, to relieve the fear it arouses. Messages are most persuasive when moderately discrepant with audience beliefs. Stating only what the audience already believes at best just reinforces beliefs, and if the messages are too discrepant, audiences will counterargue and disbelieve them. Communicators also use positive emotional appeals such as humor, love, pride, and joy. Motivational or "borrowed interest" devices — such as the presence of cute babies, frisky puppies, popular music, or provocative sex appeals — are often employed to attract attention and raise involvement with an ad. These techniques are thought necessary in the tough new media environment characterized by low-involvement consumer processing and competing ad and programming clutter. Attention-getting tactics are often too effective. They may also detract from comprehension, wear out their welcome fast, and overshadow the product.

50) What are the major characteristics of sales promotions as an element of the marketing communications mix?

Companies use sales promotion tools — coupons, contests, premiums, and the like — to draw a stronger and quicker buyer response, including short-run effects such as highlighting product offers and boosting sagging sales. Sales promotion tools offer three distinctive benefits: 1. Ability to be attention-getting — They draw attention and may lead the consumer to the product. 2. Incentive — They incorporate some concession, inducement, or contribution that gives value to the consumer. 3. Invitation — They include a distinct invitation to engage in the transaction now.

18) Sweet Treats is a startup confectionery manufacturer that sells chocolates, toffees, marshmallows, jelly candies, and so on. Should the firm adopt a push or a pull strategy? Explain your answer.

Considering that Sweet Treats is a startup, its products are likely to have low brand loyalty. Moreover, its products are likely to be impulse items. Thus, a push strategy would be more suitable.

38) How have consumers benefited from market demassification?

Consumers short of time and tired of traffic and parking headaches appreciate toll-free phone numbers, always-open Web sites, next-day delivery, and direct marketers' commitment to customer service. In addition, many chain stores have dropped slower-moving specialty items, creating an opportunity for direct marketers to promote these to interested buyers instead.

10) Pricing cues such as sale signs and prices that end in 9 are more influential when ________. A) customers have substantial knowledge about prices B) customers purchase the particular item regularly C) product quality is standardized D) product designs vary over time E) prices do not vary from time to time

105) ________ is a consumer promotion tool that involves inviting prospective purchasers to try the product without cost in the hope that they will buy. A) Sampling B) Premium C) Cross-promotion D) Free trial E) Rebate

112) When hotels drop their rates on the weekends, this form of price discrimination is known as ________ pricing. A) channel B) image C) product-form D) time E) location

115) For price discrimination to work ________. A) the market must be segmentable and the segments must show similar intensities of demand B) members in the lower-price segment must be able to resell the product to the higher-price segment C) competitors must be able to undersell the firm in the higher-price segment D) the practice must not breed customer resentment and ill will E) the extra revenue derived from price discrimination must not exceed the cost of segmenting and policing the market

115) Marcel downloaded an episode of his daughter's favorite program to his cell phone to ward off a tantrum while they were shopping. Which of the four distinctive characteristics was most critical to enable this action? A) It is tied to one user. B) It allows marketers to personalize messages. C) It is virtually always "on." D) It allows for immediate consumption as it is a distribution channel with a payment system. E) It is highly interactive given it allows for geotracking and picture and video taking.

124) Why is the Web experience different for mobile phone users than for people who are surfing from a computer? A) smaller screen sizes B) longer download times C) lack of software D) all of the above E) none of the above

133) ________ was originally pioneered by Japanese firms such as Toyota to produce goods with minimal waste of time, materials, and money. A) Electronic funds transfer (EFT) B) Market logistics C) Electronic data interchange (EDI) D) Lean manufacturing E) Supply chain management

4) Discount stores that try to keep prices as low as possible are more likely to function using ________ operations. A) limited service B) self-selection C) full-service D) self-service E) limited-selection

51) Which of the following is a disadvantage of using direct mail as an advertising medium? A) low audience selectivity B) lack of flexibility C) high competition within same medium D) relatively high cost E) lack of personalization of advertising message

54) ________ call(s) for the producer to establish a schedule of discounts and allowances that intermediaries see as equitable and sufficient. A) Exclusive dealings B) Mutual services C) Territorial rights D) Price policy E) Tying agreements

60) Staples is a giant retailer that concentrates on selling office supplies. Staples is an example of a(n) ________. A) ambush marketer B) supercenter C) megamarketer D) category killer E) guerilla marketer

62) Which of the following steps in the innovation-adoption model of marketing communications corresponds to the cognitive stage that a buyer passes through? A) interest B) evaluation C) trial D) awareness E) adoption

65) In which of the following types of advertising timing patterns do exposures appear evenly throughout a given period? A) concentration B) pulsing C) flighting D) continuity E) frequency capping

98) Which of the following statements is true of the two-step approach to mass communications? A) The influence of mass media on public opinion is more direct, powerful, and automatic than marketers have supposed. B) Communications through mass media bypasses opinion leaders and reaches the individual buyers. C) The two-step flow supports the notion that consumption styles are primarily influenced by a "trickle-down" or "trickle-up" effect from mass media. D) According to the two-step flow, people interact primarily within their own social groups and acquire ideas from opinion leaders in their groups. E) Two-step communication suggests that mass communicators should direct messages to groups of buyers who interpret the message and act accordingly.

103) Rotter Garder Inc. is a large-scale paint manufacturer and is known for its wide range of decorative paint products and industrial coatings. In addition to making paints, the company also owns and operates the retail stores that sell its products. This is an example of a(n) ________ vertical marketing system. A) administered B) contractual C) referent D) corporate E) regulated

104) Premiums, as a consumer promotion tool, are defined as ________. A) offers to consumers of savings off the regular price of a product, flagged on the label or package B) certificates entitling the bearer to a stated saving on the purchase of a specific product C) programs providing rewards related to the consumer's frequency and intensity in purchasing the company's products or services D) merchandise offered at a relatively low cost or free as an incentive to purchase a particular product E) values in cash or in other forms that are proportional to patronage of a certain vendor or group of vendors

106) Which of the following consumer promotion tools involves using one brand to advertise another noncompeting brand? A) tie-in promotion B) frequency programs C) specialty advertising D) cross-promotion E) patronage awards

122) ________ "Face Retirement" app used 3D "virtual makeover" imaging technology to show people what they might look like as they approached retirement age as part of a campaign to encourage young people to save for retirement. A) Charles Schwab's B) Ameritrade's C) Prudential's D) Bank of America's E) Fidelity Investments's

124) When Shen asks his client, "How much would you save if our company could help you reduce errors by 80 percent?" he is asking a ________ question. A) situation B) speculation C) problem D) need-payoff E) implication

126) Nadya is designing a mobile ad to promote her company's widgets. Where should the company's logo appear in the mobile ad? A) in the middle of the ad B) centered at the bottom C) centered at the top D) in the corner E) it should not appear

127) JSE Securities Exchange is the largest stock exchange in Africa. The JSE provides a market where securities can be traded freely under a regulated procedure. The company acts as an intermediary between the traders. JSE is an example of a(n) ________. A) internal broker B) infomediary C) customer community D) market maker E) third party arbitrator

129) In IBM's BANT acronym, T stands for ________. A) touch B) tempt C) team D) timeline E) turn over

142) When Goodyear began selling its popular tire brands through Sears, Walmart, and Discount Tire, independent dealers that sold the same tires at higher prices were angry. This is an example of a(n) ________ conflict. A) horizontal B) vertical C) intermediate D) multichannel E) parallel

143) Which of the following describes the public relations function of lobbying? A) sponsoring efforts to publicize specific products B) advising management about public issues, and company positions and image during good times and bad C) presenting news and information about the organization in the most positive light D) dealing with legislators and government officials to promote or defeat legislation and regulation E) promoting understanding of the organization through internal and external communications

146) ________ refers to the task of securing editorial space — as opposed to paid space — in print and broadcast media to promote or "hype" a product, service, idea, place, person, or organization. A) Advertising B) Media planning C) Communication design D) Publicity E) Copy testing

148) Winstar is a large-scale manufacturer with more than a hundred partners across the globe. When making decisions concerning distribution and channel optimization, the company invites members from its channel partners to be part of its advisory committee. This helps the company maintain harmony with its partners. Which of the following conflict resolution techniques is Winstar using? A) diplomatic counselling B) mediation C) arbitration D) co-optation E) joint membership

16) Which of the following is an example of an interactive marketing communication platform? A) product demonstrations B) factory tours C) company museums D) TV shopping E) community relations

20) Along which of the following parameters should marketers evaluate communication options when building brand equity? A) popularity B) innovativeness C) technological sophistication D) efficiency E) novelty

23) In ________, a salesperson goes to the home of a host who has invited friends, demonstrates the products, and takes orders. A) catalog marketing B) franchising C) direct-response selling D) network marketing E) direct marketing

24) After determining its pricing objectives, what is the next logical step a firm should take in setting its pricing policy? A) It should analyze its competitors' costs, prices, and offers. B) It should select its pricing method. C) It should select its final price. D) It should determine the demand for its product. E) It should estimate the cost of its product.

30) Which of the following benefits is offered by sales promotion tools? A) Sales promotion tools are more authentic and credible to buyers than others such as advertising, public relations, and personal selling. B) Sales promotion tools can reach prospects who prefer to avoid mass media and targeted promotions. C) Sales promotion tools are typically an indirect form of "soft-sell" and hence, better received by customers. D) Sales promotion tools incorporate some concession, inducement, or contribution that gives value to the consumer. E) Sales promotion tools allow buyers personal choices and encourage them to respond directly.

30) Which of the following is true for franchisors? A) The franchisor has to pay the franchisee to be part of the franchise system. B) The franchisor licenses the trademark from the franchisee. C) The franchisor must change its operations to suit those of the franchisee. D) The franchisor collects royalty payments from the franchisee. E) The franchisor pays startup costs for the franchisee.

42) Luke is considering the various options available to him to promote an energy drink, Turbozade, that has decreasing sales volumes after having peaked some time back. Which of the following marketing communications tools should Luke focus marketing efforts on to keep the sales volume up? A) advertising B) direct marketing C) events and experiences D) sales promotions E) publicity

43) Under which of the following conditions is the frequency the most important factor in media selection? A) when introducing flanker brands B) when launching infrequently purchased brands C) when going into undefined target markets D) when there is high consumer resistance to the product E) when there is modest competition to the brand in the market

43) Which of the following marketing communications tools is most influential at the reordering stage of buyer readiness? A) events and experiences B) publicity C) direct marketing D) sales promotion E) interactive marketing

44) What is the gross rating points (GRP) for a media schedule that reaches 60 percent of homes with an average exposure frequency of 4 and impact of 1.5? A) 10 B) 15 C) 160 D) 240 E) 360

46) Which of the following allows a firm to maintain control over service level and obtain more dedicated and knowledgeable selling? A) selective distribution B) intensive distribution C) push strategy D) exclusive distribution E) pull strategy

5) Of the time US consumers spend with all media, almost ________ is spent online. A) one-quarter B) one-third C) two-thirds D) one-half E) three-quarters

5) Spike Inc. is a sportswear manufacturer that recently launched its new line of customizable running shoes. The shoes come with a digital component that allows them to adapt to the runner's biomechanics. To promote this new product, Spike launches an advertising campaign and entices a famous athlete to endorse the product. This is an example of a ________. A) trade promotion B) reverse flow C) push strategy D) pull strategy E) backward flow

53) The darker side of direct marketing, from a consumer perspective, includes all of the following EXCEPT ________. A) irritation B) unfairness C) deception and fraud D) federal regulation E) invasion of privacy

54) Which of the following is NOT conducive to database marketing? A) Rushbury Theater relies on the generosity of donors to keep functioning. B) Kenilworthy retails luxury handbags and leather accessories to a select clientele. C) 2Wheels sells its most profitable products to repeat customers. D) Uncle Jim's sells its range of snacks in stores throughout the country. E) PetZone offers obedience classes, a doggie daycare, and other services for pets in the Manhattan area.

61) Which of the following advertising practices involves advertisers paying filmmakers to have their products make cameo appearances in movies and television shows? A) brand extension B) flyposting C) co-branding D) product placement E) ambush marketing

80) Which method for establishing the total marketing communications budget sets communication budgets to achieve the same amount of share-of-voice as competitors? A) comparative-parity method B) objective-and-task method C) affordable method D) competitive-parity method E) percentage-of-sales method

81) Which of the following is an ancillary service offered by retailers? A) accepting orders over the telephone B) advertising and window displays C) delivery to the customer's doorstep D) general information E) alterations and tailoring

81) ________ has enrolled more than half a million mothers in Vocalpoint, a group built on the premise that highly engaged individuals want to learn about products and share their opinions with companies and other individuals. A) Blendtec B) SodaStream C) Google D) P&G E) Vimeo

87) Which of the following ads depict a transformational appeal? A) Thompson Water Seal can withstand intense rain, snow, and heat. B) DIRECTV offers better HD options than cable or other satellite operators. C) NBA phenomenon LeBron James pitching Nike, Sprite, and McDonald's. D) Pringles advertised "Once You Pop, the Fun Don't Stop" for years. E) Excedrin stops the toughest headache pain.

89) Consulting on problems, rendering technical assistance, arranging financing, and expediting delivery are examples of the ________ task in the selling context. A) information gathering B) targeting C) communicating D) servicing E) allocating

90) Maria is flagged as a special customer at your firm because she is a satisfied customer, returns to your company to buy, puts her reputation on the line to tell others about you, and convinces others to purchase from you, which suggests she is on the ________ rung of the loyalty ladder. A) word of mouth/buzz B) repeat purchase C) satisfaction D) evangelism E) ownership

90) ________ is a source of a spokesperson's credibility that describes how objective and honest the spokesperson is perceived to be. A) Likability B) Expertise C) Experience D) Trustworthiness E) Compassion

92) Which of the following marketing communications principles implies that communicators can use their good image to reduce some negative feelings toward a brand but in the process might lose some esteem with the audience? A) principle of closure B) principle of duality C) principle of delegation D) principle of congruity E) principle of neutrality

96) According to consumer-packaged goods companies, which of the following effects is attributed to the heavy use of sales promotion? A) increased brand loyalty B) focus on long-run marketing planning C) improved brand-quality image D) increased price sensitivity E) greater coupon redemption rates

97) Which of the following is an example of a manufacturer promotion? A) price cuts B) feature advertising C) retailer coupons D) high-value trade-in credit E) retailer contests or premiums

99) Which of the following is a characteristic of the affordable method of establishing a marketing communications budget? A) fixed annual budget B) suitable for long-range planning C) priority given to role of promotion as an investment D) calculated to reflect what the company can spare for marketing communications E) based on the immediate impact of promotion on sales volume

A) impact on market share of sponsor B) amount of time a brand is clearly visible on a television screen C) amount of relevant newsprint mentioning the sponsor D) influence on consumers' brand knowledge of the sponsor E) net impact on the sponsor's bottom line

department store chain to target the upcoming Thanksgiving weekend. Which of the following advertising timing patterns is best suited for running these ads? A) continuity B) flighting C) pulsing D) concentration E) frequency capping

likely objective of Mountain Dew's sponsorship of these events? A) to enhance corporate image B) to express commitment to the community or on social issues C) to entertain key clients or reward key employees D) to create perceptions of key brand image associations E) to become part of a personally relevant moment in consumers' lives

101) Gabrielle is the chief marketing officer of Boyd Pharmaceuticals. She is meeting with Trent, the chief financial officer to decide on the company's marketing communications budget. After extensive discussions, they decide that the size of the budget will be calculated as a fraction of the overall turnover. What method did Gabrielle and Trent use to arrive at the marketing communications budget? A) affordable method B) objective-and-task method C) competitive-parity method D) activity-based method E) percentage-of-sales method

117) Which of the following types of questions directly enquires about the value or usefulness of a proposed solution? A) situation questions B) problem questions C) implication questions D) consequence questions E) need-payoff questions

14) An example of a restaurant with a narrow and deep assortment is a ________. A) small lunch counter B) cafeteria C) large restaurant D) casual dining restaurant chain E) delicatessen

142) Which of the following functions of public relations departments involves presenting news and information about the organization in the most positive light? A) corporate communications B) product publicity C) lobbying D) counseling E) press relations

4) Which of the following elements of the marketing communications mix involves a variety of short-term incentives to encourage trial or purchase of a product or service? A) advertising B) direct marketing C) public relations D) personal selling E) sales promotion

58) Apple hosts a large number of ________, which become customers' primary source of product information after warranties expire and are organized by product lines and type of user (consumer or professional). A) niche networks B) social networks C) microblogs D) blogs E) online communities

100) When Fred sends in the box top from his cereal to receive a free DVD of a cartoon featuring one of his favorite characters, he is responding to a ________. A) self-liquidating premium B) with-pack premium C) reduced-price pack D) banded pack E) free in-the-mail premium

100) Which of the following statements about technology support for salespeople is NOT true? A) Computer-based decision support systems have been created for sales manager and sales representatives. B) A Web site can help define a firm's relationships with individual accounts and identify those whose business warrants a personal sales call. C) Social media is useful in front-end prospecting and lead qualification. D) Social media is useful in back-end relationship building and management. E) All of the above are true.

101) A brand developed by a retailer and/or wholesaler that is available only in selected retail outlets is called a ________ brand. A) generic B) franchisee C) marque D) national E) private-label

108) Which of the following terms describes the practice of retailers purchasing a greater quantity during a sales promotion period than they can immediately sell? A) diverting B) panic buying C) straight rebuy D) buyout E) forward buying

111) The prices of tickets to the opera vary depending on where the person would like to be seated — in the gallery or in the stalls. This is an example of ________ pricing. A) channel B) time C) image D) product-form E) location

131) The elapsed time between an order's receipt, delivery, and payment is called the ________ cycle. A) variable-costs-to-payment B) product-to-payment C) inventory-to-sale D) order-to-inventory E) order-to-payment

135) A low price buys market share but not market loyalty. The same customers will shift to any lower-priced product that may come along. This is called the ________ trap. A) low-price B) relative-market-share C) shallow-pockets D) target-market-share E) fragile-market-share

135) When Japanese teenagers carry DOCOMO phones from NTT and use them to order goods, they are engaged in ________. A) B2B e-commerce B) brick-and-click commerce C) infomediation D) dilution E) m-commerce

149) In markets that are characterized by products that are highly homogeneous, how should a firm react to a competitor's reduction in price? A) shrink the amount of the product available B) substitute expensive materials or ingredients C) reduce product features D) reduce product services E) augment the product

2) Which of the following is true for retailing? A) Manufacturers are not considered to be retailers as they are engaged in producing the product. B) Vending machines are considered to be retailing only if they are located within stores. C) Retailing deals only with goods; it does not include services. D) Selling from a consumer's home is direct selling, but not retailing. E) Wholesalers are only considered to be retailers if they are selling to final consumers.

24) Telemarketing is a type of ________. A) direct selling B) network marketing C) multilevel selling D) close-range marketing E) direct marketing

25) Electronic shopping is a type of ________. A) direct selling B) network marketing C) multilevel selling D) corporate selling E) direct marketing

26) After estimating the demand and costs associated with alternative prices, a company has chosen to price its product in such a way that it gains the highest rate of return on its investment. The company is looking to ________. A) maximize market share B) skim the market C) become a product-quality leader D) survive in the market E) maximize current profit

36) Consumers are less price sensitive ________. A) to high cost items B) when they frequently change their buying habits C) when there are more substitutes D) when there are more competitors E) when they do not readily notice higher prices

38) Advertising and publicity tools play the most important roles in influencing buying decisions at the ________ stage of buyer readiness. A) comprehension B) conviction C) ordering D) reordering E) awareness-building

54) An umbrella manufacturing company's fixed costs are $275,000. The variable cost per unit is $5 and each umbrella is sold at $10. How many units should the firm sell in order to break even? A) 1,819 B) 5,500 C) 18,000 D) 27,500 E) 55,000

59) Electronic shelf labeling allows retailers to ________. A) check inventory levels instantaneously B) order electronically from suppliers C) run continual promotional messages D) advertise sales and special offers E) change price levels instantaneously

6) How much was total digital ad spending in 2013? A) $40.1 million B) $42.8 million C) $18.4 billion D) $40.1 billion E) $42.8 billion

7) ________ refer to the marketing communications element that involves company-sponsored activities and programs designed to create daily or special brand-related interactions with consumers. A) Publicity campaigns B) Trade promotions C) Advertisements D) Public relations E) Events and experiences

71) Which of the following tasks of the salesforce refers to conducting market research and doing intelligence work? A) servicing B) communicating C) targeting D) prospecting E) information gathering

76) A store selling expensive artwork and luxury goods typically falls into the ________ group with respect to margins and volume. A) mixed markup, high-volume B) low-volume, mixed markup C) low-volume, low-markup D) high-volume, low-markup E) high-markup, low-volume

99) Which of the following is NOT one of the advantages of inside selling? A) Inside selling is less expensive than in-person selling. B) Inside salespeople spend more time checking inventory. C) Inside salespeople spend more time following up orders. D) Inside salespeople spend more time phoning smaller accounts. E) All of the above are advantages.

A) breakfast cereal B) detergents C) beer D) electric bulbs E) refrigerator

118) DMM Industries, a manufacturer of composite metal products, sells its products using a conventional marketing channel. The company decides to adopt a vertical marketing system to improve its performance. What advantages could this provide?

Each entity in a conventional channel is a separate business seeking to maximize its own profits, even if this goal reduces profit for the system as a whole. A vertical marketing system, by contrast, acts as a unified system. This would make the company more profitable. VMSs achieve economies through size, bargaining power, and elimination of duplicated services.

136) What are some challenges associated with mobile marketing and how should advertisers overcome them?

Even with newer-generation smart phones, the Web experience can be very different for users given smaller screen sizes, longer download times, and the lack of some software capabilities. Marketers should design simple, clear, and clean sites, paying even greater attention than usual to user experience and navigation. Mobile ad copy should occupy only 50 percent of the screen, avoiding complex viewing experiences that may take a toll on consumers' battery and data availability as well as on their time. Brands should limit their ads to a pair of phrases — the offer and the tagline. Brands should place their logo in the corner of the mobile ad frame. Finally, ads should use at least one bright color, but no more than two. Calls to action should be highlighted with a bright color.

157) Identify when exclusive distribution deals are legal and when they break the law.

Exclusive arrangements are legal as long as they do not substantially lessen competition or tend to create a monopoly and as long as both parties enter into them voluntarily. Exclusive dealing often includes exclusive territorial agreements. The producer may agree not to sell to other dealers in a given area, or the buyer may agree to sell only in its own territory. The first practice increases dealer enthusiasm and commitment. It is also perfectly legal — a seller has no legal obligation to sell through more outlets than it wishes. The second practice, whereby the producer tries to keep a dealer from selling outside its territory, has become a major legal issue. Producers of a strong brand sometimes sell it to dealers only if they will take some or all of the rest of the line. This practice is called full-line forcing. Such tying agreements are not necessarily illegal, but they do violate US law if they tend to lessen competition substantially.

122) The most highly credible source would score high on at least two of the three dimensions — expertise, trustworthiness, and likability.

FALSE

128) The two-step flow supports the notion that consumption styles are primarily influenced by a "trickle-down" or "trickle-up" effect from mass media.

FALSE

131) Brick-and-click companies are those that have launched a Web site without any previous existence as a firm.

FALSE

155) MPR is effective in blanketing local communities and reaching specific groups and hence has to be planned separately from the less cost-effective advertising.

FALSE

35) Business-to-consumer telemarketing is increasing.

FALSE

37) Full-service retailers generally have the lowest costs of all retail types.

FALSE

105) A recent Nielsen survey found that online customer reviews were the most trusted source of brand information.

FALSE

106) A contractual sales force consists of part-time employees who work exclusively for the company.

FALSE

106) Social influence can lead to disproportionally positive online ratings, and subsequent raters are more likely to be influenced by previous negative ratings than positive ones.

FALSE

107) A company that sells one product line to one end-using industry with customers in many locations would use product or market structure for its salesforce.

FALSE

107) Private label or store brands are also known as generics.

FALSE

11) Price is one of the two elements of the marketing mix that produces revenue.

FALSE

111) Problem removal and normal depletion are examples of positively oriented relevant brand needs.

FALSE

112) Communications effectiveness depends solely on the content of a message, irrespective of how it is expressed.

FALSE

114) Advanced supply-distributor arrangements for administered vertical marketing systems do not rely on distribution programming.

FALSE

114) One-sided presentations that praise a product are found to be more effective than two-sided arguments that also mention shortcomings.

FALSE

114) Sales promotion consists of a collection of incentive tools designed to mainly stimulate long-term brand associations of products or services with consumers or the trade.

FALSE

115) Retailer cooperatives allow nonmember retailers to buy through them and share the profits.

FALSE

116) Adding more marketing channels increases the channel cost of selling.

FALSE

117) Fear appeals work best when they are rather strong and reinforce what the audience already believes.

FALSE

117) In a compensation deal, the seller sells a plant, equipment, or technology to another country and agrees to accept as partial payment products manufactured with the supplied equipment.

FALSE

122) Wholesalers exclude manufacturers and farmers because they are engaged primarily in production, but include retailers, as they are selling to the end consumer.

FALSE

123) Price discrimination in all forms is illegal in the United States.

FALSE

125) A price-off pack is an example of a consumer franchise building sales promotions.

FALSE

126) Personal influence carries especially great weight when products are inexpensive, risk-free, or purchased frequently.

FALSE

13) Sales agents and brokers are called facilitators in a marketing channel.

FALSE

13) Today, consumers are price takers and accept prices at face value or as given.

FALSE

130) The percentage-of-sales method leads to a budget set by market opportunities rather than by the availability of funds.

FALSE

136) The supply-side method identifies the effect sponsorship has on consumers' brand knowledge.

FALSE

137) The redemption rate for paper coupons (10 percent) far exceeds that of mobile coupons (1 percent).

FALSE

139) In a price-war trap, higher-priced competitors match the firm's lower prices but have longer staying power because of deeper cash reserves.

FALSE

139) Sales representatives who are paid mostly in commissions require more supervision than other salespeople.

FALSE

154) MPR can build credibility by placing stories in the media to bring attention to a product, service, person, organization, or idea.

FALSE

156) Exclusive dealings and tying agreements are illegal and prohibited by law.

FALSE

156) MPR's contribution to a company's bottom line is the easiest to measure among all the available promotion tools.

FALSE

17) If the product class is mature, then the advertising objective is to convince the market of the brand's superiority.

FALSE

18) Catalog marketing and telemarketing are examples of indirect marketing.

FALSE

18) Puffery refers to simple exaggerations in advertisements that are not meant to be believed and are considered illegal.

FALSE

19) Advertising elasticities were estimated to be higher for established (0.3) than for new (0.1) products.

FALSE

20) Direct marketing has not been growing as fast as US retail sales.

FALSE

21) Kraft utilized customers to name its new flavor of its iconic Vegemite product, and their selection, iSnack 2.0, increased sales dramatically.

FALSE

21) Non-digital media provide marketers and consumers with opportunities for much greater interaction and individualization than digital media.

FALSE

23) The pervasive nature of advanced communications technologies, such as the Internet, has resulted in greater exposure of customers to advertising content than it was in the 1960s.

FALSE

24) One of the shortcomings of direct marketing is that the firm cannot easily measure the response.

FALSE

25) It is difficult for marketers to trace the effects of online marketing communications.

FALSE

76) Demand creators are not permitted to take an order but expected rather to build goodwill or educate the actual or potential user.

FALSE

77) In target-return pricing, the firm adds a standard markup to the product's cost.

FALSE

77) Print advertising, newspapers and magazines, is generally acknowledged as the most powerful advertising medium.

FALSE

77) Targeting refers to the process of deciding which customers will get scarce products during product shortages.

FALSE

80) Price elasticity magnitudes are lower for durable goods than for other goods.

FALSE

81) The higher the forgetting rate associated with a brand, product category, or message, the lower the warranted level of repetition.

FALSE

82) The US government often uses Dutch auctions to procure supplies.

FALSE

83) If a calculator company produces 100,000 hand calculators at a cost of $10, but the cost drops to $9 when it produces 200,000 and $8 when it produces 400,000 hand calculators, the decline in average cost with accumulated product experience is called the price elasticity of demand.

FALSE

83) Outdoor advertising is more effective at creating new brand associations than enhancing brand awareness or brand image.

FALSE

85) Retailers can target their customers more effectively by using only a single channel to reach them.

FALSE

87) An advertiser makes "local buys" when it buys TV time in just a few markets or in regional editions of magazines.

FALSE

87) In order to clearly differentiate themselves from competitors, retailers must keep merchandise and prices consistent.

FALSE

88) The gross margin on a product bears a direct relation to the direct product profit.

FALSE

89) When a manufacturer requests a behavior that is warranted under the contract, the manufacturer is using coercive power.

FALSE

90) A manufacturer obtains referent power when it has special knowledge that intermediaries value.

FALSE

91) Coercive and referent power are subjective and depend on the ability and willingness of parties to recognize them.

FALSE

93) Accepting telephone and mail orders is an example of the ancillary services that a retailer offers.

FALSE

134) What are four distinctive characteristics of a mobile device?

Four distinctive characteristics of a mobile device include: 1. it is uniquely tied to one user 2. it is virtually always "on" given it is typically carried everywhere 3. it allows for immediate consumption because it is in effect a channel of distribution with a payment system 4. it is highly interactive given it allows for geotracking and picture and video taking

74) Why should firms avoid too much democratization of innovation?

Groundbreaking ideas can be replaced by lowest-common-denominator solutions.

97) Atronix Solutions is a major manufacturer of electronic measuring devices in the United States. The company often threatens to terminate its relationship with its intermediaries if they do not agree with its terms and conditions. What channel power does Atronix use? What are its effects?

Here, the manufacturer is using coercive power. This power can be effective, but its exercise produces resentment and can lead the intermediaries to organize countervailing power.

145) Most companies set annual quotas. Quotas can be on dollar sales, unit volume, margin, selling effort, or activity and product type. Compensation is often tied to the degree of quota attainment. What problems does the setting of quotas present to both the company and to the sales representative?

If the company underestimates and the sales reps easily achieve their quotas, the company has overpaid its reps. If the company overestimates sales potential, the salespeople will find it very hard to reach their quotas and be frustrated or quit. Another downside is that quotas can drive reps to get as much business as possible — often resulting in their ignoring the service side of the business.

53) How do the stages in a product's life cycle influence the marketing communications mix?

In the introduction stage of the product life cycle, advertising, events and experiences, and publicity have the highest cost-effectiveness, followed by personal selling to gain distribution coverage and sales promotion and direct marketing to induce trial. In the growth stage, demand has its own momentum through word of mouth and interactive marketing. Advertising, events and experiences, and personal selling all become more important in the maturity stage. In the decline stage, sales promotion continues strong, other communication tools are reduced, and salespeople give the product only minimal attention.

132) When Indu's company printed the ad for their perfume in the newspapers, the caption read, "WAS $100, NOW $75." What kind of a promotional pricing did her company use?

Indu's company used psychological discounting. This strategy sets an artificially high price and then offers the product at substantial savings.

95) Describe the challenges and opportunities that international markets pose.

International markets pose distinct challenges, including variations in customers' shopping habits, but opportunities at the same time. Behavior of markets and preferences for intermediaries differ across countries. Foreign markets provide an opportunity for growth and expansion. Many pitfalls also exist in global expansion, and retailers must also be able to defend their home turf from the entry of foreign retailers.

87) Bella's Inc. has estimated the demand and costs associated with alternative prices. It has finally chosen to price its new offering in such a way that it will maximize the rate of return on investment. What can be deduced about the company's objective?

It can be deduced that the company's main objective is to maximize its maximum current profit.

138) How does American Express utilize m-commerce?

It runs a "Link-Like-Love" social commerce program, which sends cardmembers couponless personalized offers from merchants based on their Facebook "likes" and Facebook Places check-ins that are automatically redeemed through card use. Via a partnership with Foursquare, cardmembers could also automatically receive and redeem promotional offers from merchants based on their Foursquare activity.

157) What are the major functions performed by marketing public relations? Illustrate with examples.

MPR goes beyond simple publicity and plays an important role in the following tasks: • Launching new products: The amazing commercial success of toys such as LeapFrog, Beanie Babies, and even the latest kids' craze, Silly Bandz, owes a great deal to strong publicity. • Repositioning a mature product: In a classic PR case study, New York City had extremely bad press in the 1970s until the "I Love New York" campaign. • Building interest in a product category: Companies and trade associations have used MPR to rebuild interest in declining commodities such as eggs, milk, beef, and potatoes and to expand consumption of such products as tea, pork, and orange juice. • Influencing specific target groups: McDonald's sponsors special neighborhood events in Latino and African American communities to build goodwill. • Defending products that have encountered public problems: PR professionals must be adept at managing crises, such as those weathered by such well-established brands as Tylenol, Toyota, and BP in 2010. • Building the corporate image in a way that reflects favorably on its products: Steve Jobs's heavily anticipated Macworld keynote speeches have helped to create an innovative, iconoclastic image for Apple Corporation.

156) Why are marketers concerned about the cost of logistics?

Management has become concerned about the total cost of market logistics, which can amount to as much as 30 percent to 40 percent of the product's cost. In the US grocery business, waste or "shrink" affects 8 percent to 10 percent of perishable goods, costing $20 billion annually. Stop and Shop/Giant Landover, a $16 billion grocery chain, saved an estimated annual $100 million by reducing shrink and improving customer satisfaction with a redesigned perishables department. One farmer who was not able to sell 70 percent of his carrots because of their irregular shape found that he could sell them all, and for $0.50 per pound compared with $0.17, by cutting them into "baby carrots."

50) Roler Telecom, a leading mobile telephone operator in Asia, engages in aggressive marketing promotions. The company sends promotional messages to customers and makes promotional calls on a regular basis. However, these aggressive promotion efforts often irritate its customers. What could be the likely outcome of this?

Many people don't like hard-sell, direct marketing solicitations from marketers. The given scenario is one example of this. This issue, if left unattended, will lead to increasingly negative consumer attitudes, lower response rates, and calls for greater state and government regulation.

153) Describe the four steps in market logistics planning.

Market logistics includes planning the infrastructure to meet demand, then implementing and controlling the physical flows of materials and final goods from points of origin to points of use, to meet customer requirements at a profit. Market logistics planning has four steps: 1. Deciding on the company's value proposition to its customers. (What on-time delivery standard should we offer? What levels should we attain in ordering and billing accuracy?). 2. Selecting the best channel design and network strategy for reaching the customers. (Should the company serve customers directly or through intermediaries? What products should we source from which manufacturing facilities? How many warehouses should we maintain and where should we locate them?). 3. Developing operational excellence in sales forecasting, warehouse management, transportation management, and materials management. 4. Implementing the solution with the best information systems, equipment, policies, and procedures.

88) What are the adjustments that marketers need to apply to the cost-per thousand measure when selecting specific media vehicles?

Marketers need to apply several adjustments to the cost-per-thousand measure. First, they should adjust for audience quality. For a baby lotion ad, a magazine read by 1 million young mothers has an exposure value of 1 million; if read by 1 million teenagers, it has an exposure value of almost zero. Second, adjust the exposure value for the audience-attention probability. Readers of Vogue may pay more attention to ads than do readers of Newsweek. Third, adjust for the medium's editorial quality (prestige and believability). People are more likely to believe a TV or radio ad and to become more positively disposed toward the brand when the ad is placed within a program they like. Fourth, consider ad placement policies and extra services (such as regional or occupational editions and lead-time requirements for magazines).

127) How would a merchant wholesaler operate?

Merchant wholesalers are independently owned businesses that take title to the merchandise they handle. They are full-service and limited-service jobbers, distributors, and mill supply houses.

75) Provide a general description of the four classic response hierarchy models.

Micromodels of marketing communications concentrate on consumers' specific responses to communications. All the response hierarchy models assume the buyer passes through cognitive, affective, and behavioral stages, in that order. This "learn-feel-do" sequence is appropriate when the audience has high involvement with a product category perceived to have high differentiation, such as an automobile or house. An alternative sequence, "do-feel-learn," is relevant when the audience has high involvement but perceives little or no differentiation within the product category, such as an airline ticket or personal computer. A third sequence, "learn-do-feel," is relevant when the audience has low involvement and perceives little differentiation, such as with salt or batteries. By choosing the right sequence, the marketer can do a better job of planning communications.

51) What is a microsite? Provide an example of a firm that is likely to benefit from the use of a microsite.

Microsites are individual Web pages or clusters of pages that function as supplements to a primary site. They're particularly relevant for companies selling low-interest products. People rarely visit an insurance company's Web site, for example, but the company can create a microsite on used-car sites that offers advice for buyers of used cars and a good insurance deal at the same time.

129) ShoeZone is a shoe retailer with outlets across the country. The company is trying to reduce its inventory and warehousing costs, but needs to keep delivery speeds as short as possible. What can ShoeZone do to achieve this?

More stocking locations mean goods can be delivered to customers more quickly, but warehousing and inventory costs are higher. To reduce these costs, ShoeZone might centralize its inventory in one place and use fast transportation to fill orders.

145) What techniques can a firm use to help consumers avoid sticker shock and a hostile reaction when prices rise?

One is to maintain a sense of fairness, such as giving customers advance notice so they can do forward buying or shop around. Sharp price increases also need to be explained in understandable terms. Making low-visibility price moves first is also a good technique: Eliminating discounts, increasing minimum order sizes, and curtailing production of low-margin products are examples, and contracts or bids for long-term projects should contain escalator clauses based on such factors as increases in recognized national price indexes.

110) From a consumer's perspective, what are the limitations of getting information from an online review?

Online reviews can be biased or fake. Research has shown that social influence can lead to disproportionally positive online ratings, and subsequent raters are more likely to be influenced by previous positive ratings than negative ones. Consumers posting reviews are susceptible to conformity pressures and adopting norms of others.

46) Social media play a key role in earned media. Distinguish between earned media and paid media.

Paid media includes company-generated advertising, publicity, and other promotional efforts. Earned media is all the PR and word-of-mouth benefits a firm receives without having directly paid for anything — all the news stories, blogs, and social network conversations that deal with a brand.

140) Identify three different types of personal communication channels.

Personal communications channels derive their effectiveness from individualized presentation and feedback and include direct marketing, personal selling, and word of mouth. Advocate channels consist of company salespeople contacting buyers in the target market. Expert channels consist of independent experts making statements to target buyers. Social channels consist of neighbors, friends, family members, and associates talking to target buyers.

139) Name a few products for which personal influence plays a significant role in marketing communications.

Personal influence carries especially great weight when products are expensive, risky, or purchased infrequently, and when products suggest something about the user's status or taste. On that count, life insurance, real estate, health services, automobiles, luxury items, consultation services, etc. can be expected to be significantly influenced by word-of-mouth and endorsements by credible sources.

141) When does personal influence carry the most weight?

Personal influence carries especially great weight when products are expensive, risky, or purchased infrequently, and when products suggest something about the user's status or taste. People often ask others to recommend a doctor, plumber, hotel, lawyer, accountant, architect, insurance agent, interior decorator, or financial consultant. If we have confidence in the recommendation, we normally act on the referral. Service providers clearly have a strong interest in building referral sources.

27) What is the role of print media in advertising? What are the major advantages and disadvantages associated with print advertising media?

Print media offer a stark contrast to broadcast media. Because readers consume them at their own pace, magazines and newspapers can provide detailed product information and effectively communicate user and usage imagery. At the same time, the static nature of the visual images in print media makes dynamic presentations or demonstrations difficult, and print media can be fairly passive. The two main print media — magazines and newspapers — share many advantages and disadvantages. Although newspapers are timely and pervasive, magazines are typically more effective at building user and usage imagery. Newspapers are popular for local — especially retailer — advertising. Although advertisers have some flexibility in designing and placing newspaper ads, relatively poor reproduction quality and short shelf life can diminish the ads' impact.

133) Differentiate between pure-click companies and brick-and-click companies.

Pure-click companies are those that have launched a Web site without any previous existence as a firm, while brick-and-click companies are existing companies that have added an online site for information or e-commerce. There are several kinds of pure-click companies: search engines, Internet service providers (ISPs), commerce sites, transaction sites, content sites, and enabler sites. Brick-and-click companies are formed by adding an e-commerce channel to an existing business.

109) What are the two most trusted sources of brand information?

Recommendations from friends and family and online customer reviews.

43) How do direct mail response rates relate to a campaign's long-term impact? Provide an example.

Response rates typically understate a campaign's long-term impact. Suppose only 2 percent of the recipients who receive a direct-mail piece advertising Samsonite luggage place an order. A much larger percentage became aware of the product (direct mail has high readership), and some percentage may have formed an intention to buy at a later date (either by mail or at a retail outlet). Some may mention Samsonite luggage to others as a result of the direct-mail piece. To better estimate a promotion's impact, some companies measure the impact of direct marketing on awareness, intention to buy, and word of mouth.

55) Briefly describe the process of measuring the results of marketing communications.

Senior managers want to know the outcomes and revenues resulting from their communications investments. Too often, however, their communications directors supply only inputs and expenses: press clipping counts, numbers of ads placed, media costs. In fairness, communications directors try to translate inputs into intermediate outputs such as reach and frequency (the percentage of target market exposed to a communication and the number of exposures), recall and recognition scores, persuasion changes, and cost-per-thousand calculations. Ultimately, behavior-change measures capture the real payoff. After implementing the communications plan, the communications director must measure its impact. Members of the target audience are asked whether they recognize or recall the message, how many times they saw it, what points they recall, how they felt about the message, and what their previous and current attitudes are toward the product and the company. The communicator should also collect behavioral measures of audience response, such as how many people bought the product, liked it, and talked to others about it.

143) How can companies initiate price cuts and what are the traps that companies can fall into because of this?

Several circumstances prompt a firm to cut its prices. One is excess plant capacity: The firm needs additional business and cannot generate it through increased sales effort, product improvement, or other measures. Companies sometimes initiate price cuts in a drive to dominate the market through lower costs. Either the company starts with lower costs than its competitors, or it initiates price cuts in the hope of gaining market share and lower costs. Cutting prices to keep customers or beat competitors often encourages customers to demand price concessions. Other than this, a price-cutting strategy can also lead to the following possible traps: • Low-quality trap — Consumers assume quality is low. • Fragile-market-share trap — A low price buys market share but not market loyalty. The same customers will shift to any lower-priced firm that comes along. • Shallow-pockets trap — Higher-priced competitors match the lower prices but have longer staying power because of deeper cash reserves. • Price-war trap — Competitors respond by lowering their prices even more, triggering a price war. Customers often question the motivation behind price changes. They may assume the item is about to be replaced by a new model; the item is faulty and is not selling well; the firm is in financial trouble; the price will come down even further; or the quality has been reduced. The firm must monitor these attributions carefully while initiating a price cut.

147) Which type of questions allow salespeople to understand facts or explore the buyer's present state of affairs?

Situation questions ask about facts or explore the buyer's present situation.

72) Why are social media important to marketers?

Social media provide a means for consumers/companies to share text, images, audio, and video information with each other and with companies/consumers. Social media allow marketers to establish a public voice and presence online. They can cost-effectively reinforce other communication activities. Because of their day-to-day immediacy, they can also encourage companies to stay innovative and relevant. Marketers can build or tap into online communities, inviting participation from consumers and creating a long-term marketing asset in the process.

36) What are the various functions performed by members of a marketing channel? Provide examples.

Some of the functions that the members of a marketing channel perform (storage and movement, title, and communications) constitute a forward flow of activity from the company to the customer; other functions (ordering and payment) constitute a backward flow from customers to the company. Still others (information, negotiation, finance, and risk taking) occur in both directions.

89) When Sony introduced the world's first high-definition television to the Japanese market in 1990, it was priced at $43,000. This helped Sony to scoop the maximum amount of revenue from the various segments of the market. The price dropped steadily through the years — a 28-inch Sony HDTV cost just over $6,000 in 1993, but a 40-inch Sony HDTV cost only $450 in 2014. What pricing strategy did Sony use here?

Sony used a market-skimming pricing strategy. This is a favorite for companies unveiling a new technology. Companies using this introduce their product at a high price and slowly drop the price over time.

98) Imagine that you are in charge of creating a distinctive store atmosphere at a clothing retailer. What can you do to make your store stand out in the customer experience?

Student answers will vary. Answers can include the use of fragrances, music, store design and layout, and activities.

52) Sandy's Stores is a small chain of grocery stores located in a few neighboring towns. The stores have always been largely self-service, but the company is considering making a switch to full-service stores. Offer reasons why Sandy's should stick with its current system.

Student answers will vary. As Sandy's is primarily a grocery chain, it is unlikely that customers will need much help in locating products. The high staffing cost of full-service retailing will only increase operational costs for Sandy's, without conferring any benefit.

55) Skincare company E&OE has realized that its customers are very loyal to the brand and play a large part in popularizing it by word of mouth. E&OE wants to leverage this customer loyalty by using it to generate sales outside its store format. How can E&OE achieve this?

Student answers will vary. E&OE can opt for the direct selling method, using multilevel or network marketing. A salesperson can go to the home of a loyal customer who has invited friends; the salesperson demonstrates the products and takes orders. The company can also recruit independent customers who act as distributors. The distributor's compensation includes a percentage of sales made by those he or she recruits, as well as earnings on direct sales to customers.

54) Sandy's Stores is a small chain of grocery stores located in a few neighboring towns. The stores have always been largely self-service, but the company is considering making a switch to full-service stores. Offer one possible reason why this move is justified.

Student answers will vary. Full-service retailing is preferred by customers who like to be waited upon. If most of Sandy's customers show a preference for being waited upon, this can justify the costs of full-service retailing. If Sandy's has a number of products or services for which customers need information or guidance, or stocks high-value or specialized product, full-service retailing will be justified.

75) Identify three reasons social media are rarely the only source of communications for a brand.

Student answers will vary. Here are five possible reasons social media are rarely the only source of communications for a brand: • Social media may not be as effective in attracting new users and driving brand penetration. • Research by DDB suggests that brands and products vary widely in how social they are online. Consumers are most likely to engage with media, charities, and fashion and least likely to engage with consumer goods. • Although consumers may use social media to get useful information or deals and promotions or to enjoy interesting or entertaining brand-created content, a much smaller percentage want to use social media to engage in two-way "conversations" with brands. • Technology limitations may affect the ability to execute a high quality experience. The Facebook app for contest submissions crashed the first day due to high traffic. • The Internet permits scrutiny, criticism, and even "cheap shots" from consumers and organizations.

55) Identify three ways marketers can maximize marketing effectiveness of e-mails.

Student answers will vary. Here are seven possible ways marketers can maximize marketing effectiveness of e-mails: • Give the customer a reason to respond (e.g., powerful incentives for reading e-mail pitches and online ads, such as trivia games, scavenger hunts, and instant-win sweepstakes). • Personalize the content of your e-mails and use an engaging subject line. • Offer something the customer can't get via direct mail like time-sensitive information. • Make it easy for customers to opt in as well as unsubscribe. • Run controlled split tests to explore how location, color, and other factors affect "Sign Up Now" messages. Controlled split tests assemble online matched samples of consumers with one sample given a test message that manipulates one factor and the other being a status quo control. • Combine e-mail with other communications such as social media. • Employ "heat mapping," which tracks eye movements with cameras to measure what people read on a computer screen.

133) Marco is working on promoting his company's Glazer brand of electronic razors. Market research suggests that the target audience possesses an intent to use Glazers, but is dithering over actually making the purchase. How can he modify the communications program to get customers to purchase Glazer razors?

Student answers will vary. Marco's task, once the intent to make a purchase has been fostered in consumers, is to lead them to the actual buying action. This can be achieved by offering the razors at a low introductory purchase to encourage initial use among customers, offering a discount on the price, or holding a promotional event where they can actually try out the product firsthand.

110) Supermarket chain Reynold's is considering making a switch to stocking almost exclusively private-label products in order to offer customers the lowest prices. Offer reasons why Reynold's should think twice before opting to stock exclusively private-label products.

Student answers will vary. Reynold's should think twice about opting for private-label products because consumers prefer certain national brands, and many product categories are not feasible or attractive on a private-label basis.

132) Marco is working on promoting his company's Glazer brand of electronic razors. Preliminary surveys have revealed that even though a sizable portion of the target market has developed a liking for the product due to innovative advertising, few customers would actually consider replacing their current razors with Glazers. How can Marco modify the communications program to get customers to favor Glazers over other brands?

Student answers will vary. Since customers are comfortable with their present electronic razors, Marco's communications strategy should aim to build preference for Glazers. Customers have already developed a liking for Glazers. So, Marco should focus on comparing the quality of Glazers with that of competing brands. This can be done by illustrating the improved features of Glazers that provide clean and hassle-free use. Marco could do well to compare the Glazers with other brands in terms of value, utility, and performance factors as well.

49) Integron Inc., a company that manufactures office furniture, has recently observed a dip in its profitability. Salespeople visit an average prospect at least six times before closing a deal. What suggestion can you give the company to reduce this expense of direct marketing and increase its profitability?

Student answers will vary. The company can replace some of the sales calls with telemarketing. This would help them reduce the costs and increase profitability.

53) Sandy's Stores is a small chain of grocery stores located in a few neighboring towns. The stores have always been largely self-service, but the company is considering making a switch to full-service stores. What can Sandy's do to justify this move?

Student answers will vary. To justify the increased staff costs of full-service retailing, Sandy's can add higher-value products to its line-up. The company can begin carrying a higher proportion of specialty goods.

40) How do successful direct marketers view customer interactions?

Successful direct marketers view a customer interaction as an opportunity to up-sell, cross-sell, or just deepen a relationship. They make sure they know enough about each customer to customize and personalize offers and messages and develop a plan for lifetime marketing to each valuable customer, based on their knowledge of life events and transitions. They also carefully orchestrate each element of their campaigns.

39) Dell computers is a manufacturer of computers. Dell accepts orders for computers online and ships the products to the customer. Explain the likely physical flow of materials in this case.

Suppliers to Transporters to Warehouses to Dell to Transporters to Customers

101) Only 4 percent of content cascades to more than one person beyond the initial recipient.

TRUE

109) Marketers can set communications objectives at any level of the hierarchy-of-effects model.

TRUE

118) The historical approach correlates past sales to past advertising expenditures using advanced statistical techniques.

TRUE

119) Loss leader pricing dilutes a company's brand image.

TRUE

150) As inventory draws down, management must know at what stock level to place a new order. This stock level is called the order point.

TRUE

154) Multichannel conflicts are common when the members of one channel obtain a lower price based on larger-volume purchases.

TRUE

74) Price elasticity depends upon the magnitude and direction of the contemplated price change.

TRUE

102) Consumers are more likely to share a viral video ad when the brand uses pulsing so it is not too intrusive in the video.

TRUE

104) BzzScapes are digital tools to activate widespread opinion-sharing throughout its own social media site and each member's personal social circles.

TRUE

108) The first step in the workload approach for designing salesforce size is to establish desirable call frequencies for each customer class.

TRUE

108) The lower price of generics is made possible by lower-cost labeling and packaging and minimal advertising, and sometimes lower-quality ingredients.

TRUE

108) Though the target audience can be profiled in terms of demographic, psychographic, or behavioral segments, it is often useful to do so in terms of usage and loyalty.

TRUE

110) The marketing communications objective of "brand attitude" refers to helping consumers evaluate the brand's perceived ability to meet a currently relevant need.

TRUE

112) Vertical marketing systems achieve economies through size, bargaining power, and elimination of duplicated services.

TRUE

113) A corporate vertical marketing system combines successive stages of production and distribution under single ownership.

TRUE

113) Volkswagen's famed "Drivers Wanted" advertising campaign aimed at attracting active, youthful people uses a transformational appeal as its creative strategy.

TRUE

116) Sales promotions in markets of high brand similarity can produce a high sales response in the short run but little permanent gain in brand preference over the longer term.

TRUE

117) Incessant price reductions, coupons, deals, and premiums can devalue a product in buyers' minds.

TRUE

118) If messages are too conflicting, audiences will counterargue and disbelieve them.

TRUE

118) Psychological discounting involves setting an artificially high price and then offering the product at substantial savings.

TRUE

12) Marketing channels are the set of pathways a product or service follows after production, culminating in purchase and consumption by the final end user.

TRUE

120) Celebrities are likely to be effective when they are credible or personify a key product attribute.

TRUE

120) Dominant brands offer sales promotion deals less frequently because most deals subsidize only current users.

TRUE

121) Wholesaling includes all the activities in selling goods or services to those who buy for resale or business use.

TRUE

124) The beginning communications objective associated with a new-to-the world product — like an electric car — is always establishing category need.

TRUE

132) Price pressure will increase for undifferentiated products than differentiated products.

TRUE

137) Although supply-side exposure methods provide quantifiable measures, equating media coverage with advertising exposure ignores the content of the respective communications.

TRUE

139) The supply-side measurement method focuses on potential exposure to a brand by assessing the extent of media coverage, and the demand-side method focuses on exposure reported by consumers.

TRUE

140) Escalator clauses are found in contracts for major industrial projects, such as aircraft construction and bridge building.

TRUE

148) Media coordination can occur across and within media types, but marketers should combine personal and nonpersonal communications channels through multiple-vehicle, multiple-stage campaigns to achieve maximum impact and increase message reach and impact.

TRUE

149) A public is any group that has an actual or potential interest in or impact on a company's ability to achieve its objectives.

TRUE

149) By using full-service marketing communications agencies, integrated and more effective marketing communications at a much lower total communications cost can be achieved.

TRUE

149) Order-processing costs must be compared with inventory-carrying costs because the larger the average stock carried, the higher the inventory-carrying costs.

TRUE

15) Companies should first think of the target market and then design the supply chain backward from that point. This strategy is called demand chain planning.

TRUE

15) Customers usually have a lower price threshold below which prices signal inferior or unacceptable quality, as well as an upper price threshold above which prices are prohibitive and the product appears not worth the money.

TRUE

150) A company must consider the product's stage in the life cycle and its importance in the company's portfolio before responding to a competitor's price cut.

TRUE

19) Doritos brand's "Crash the Super Bowl" contest resulted in a healthy uptick in Twitter, Facebook, and other social media activity.

TRUE

19) During the 2012 election, much of the $690 million raised online by the Obama campaign resulted from carefully targeted and tested e-mails.

TRUE

28) Of the time US consumers spend with all media, almost half is spent online.

TRUE

29) In 2013, total digital ad spending surpassed TV advertising for the first time.

TRUE

33) All functions in a marketing channel use up scarce resources and can be shifted among channel members.

TRUE

33) If a company exaggerates the features of its products in its product catalogue, it can be classified as deception.

TRUE

34) Business-to-business telemarketing is increasing.

TRUE

34) J.D. Power found that consumers who were "delighted" with an automotive manufacturer's Web site were more likely to test drive one of its vehicles as a result.

TRUE

35) One of the key recommendations for managing Web site privacy "touch points" is preventing human intrusion by using automation whenever possible.

TRUE

35) The flow of materials to refurbish products for resale constitutes a reverse flow.

TRUE

36) Retailing includes all the activities involved in selling goods or services directly to final consumers.

TRUE

38) Search engine optimization (SEO) describes activities designed to improve the likelihood that a link for a brand is as high as possible in the rank order of all nonpaid links when consumers search for relevant terms.

TRUE

39) The network marketing sales system works by recruiting independent businesspeople who act as distributors.

TRUE

40) Electronic shopping is a form of direct marketing.

TRUE

40) Internet users spend only 5 percent of their time actually searching for information.

TRUE

43) A franchise organization is a corporate retail organization.

TRUE

44) To increase the effectiveness of e-mails, some researchers are employing "heat mapping," which tracks eye movements with cameras to measure what people read on the computer screen.

TRUE

45) Advertising allows the buyer to receive and compare the messages of various competitors.

TRUE

45) The franchisor owns a trade or service mark and licenses it to franchisees in return for royalty payments.

TRUE

47) In general, personal selling is used more with complex, expensive, and risky goods and in markets with fewer and larger sellers.

TRUE

49) In the growth stage of a product's life cycle, demand has its own momentum through word of mouth and interactive marketing.

TRUE

60) Add-on services such as credit, delivery, installation, and repairs provided by the marketing channel are referred to as service backup.

TRUE

65) Social media allow marketers to build or tap into online communities, inviting participation from consumers and creating a long-term marketing asset in the process.

TRUE

65) Supercenters retail grocery items as well as a huge selection of nonfood merchandise.

TRUE

66) An intensive distribution strategy serves well for products such as snack foods and soft drinks.

TRUE

67) As discount retailers improve their quality and image, consumers have been willing to trade down.

TRUE

68) A "do-feel-learn" response sequence is considered appropriate when the audience has high involvement but perceives little or no differentiation within the product category.

TRUE

68) Distributors' territorial rights define the terms under which the producer will enfranchise other distributors.

TRUE

69) Firms are increasingly recognizing the importance of influencing consumers at the point of purchase.

TRUE

70) If the Coolest Cooler introduced its cooler to the general market and developed communications around the idea that it was going to develop awareness, interest, evaluation, trial, and then adoption, it would be using the innovation-adoption model of consumer responses.

TRUE

70) In the case of prestige goods, the demand curve sometimes slopes upward.

TRUE

71) Companies prefer customers who are less price sensitive.

TRUE

71) When it comes to social media, only some consumers want to engage with some brands, and, even then, only some of the time.

TRUE

72) A marketer who has unit costs of $16 and wants to earn a 20 percent markup on sales would charge a markup price of $20.

TRUE

72) US firms spend more on sales forces and sales force materials than on any other promotional method.

TRUE

78) One of the weaknesses of using surveys to estimate the demand curve is that consumers exaggerate their willingness to pay for new products and services.

TRUE

79) Value pricing requires a company to reengineer its operations to become a low-cost producer.

TRUE

85) The forgetting rate is the rate at which the buyer forgets the brand; the higher the forgetting rate, the more continuous the advertising should be.

TRUE

86) Concentrated advertising is well suited for products with one selling season or related holiday.

TRUE

86) Featuring exclusive national brands that are not available at competing retailers is a way of generating consumer interest in a retailer.

TRUE

87) Channel power is the ability to alter channel members' behavior so that they take actions they would not have taken otherwise.

TRUE

91) Low prices on some items serve as traffic builders or loss leaders for retailers.

TRUE

92) EDLP can lead to lower advertising costs and higher retail profits.

TRUE

93) Early buyers might be willing to pay for high-value-added channels, but later buyers will switch to lower-cost channels.

TRUE

94) Postpurchase services include shipping and delivery, gift wrapping, adjustments, and returns.

TRUE

98) AT&T found word of mouth was one of its most effective drivers of its sales.

TRUE

28) Briefly describe the current marketing communications environment.

Technology and other factors have profoundly changed the way consumers process communications, and even whether they choose to process them at all. The rapid diffusion of multipurpose smart phones, broadband and wireless Internet connections, and ad-skipping digital video recorders (DVRs) have eroded the effectiveness of the mass media. In 1960, a company could reach 80 percent of US women with one 30-second commercial aired simultaneously on three TV networks: ABC, CBS, and NBC. Today, the same ad would have to run on 100 channels or more to achieve this marketing feat. Consumers not only have more choices of media, they can also decide whether and how they want to receive commercial content.

26) Briefly describe the role of television as an advertising medium.

Television is generally acknowledged as the most powerful advertising medium and reaches a broad spectrum of consumers at low cost per exposure. TV advertising has two particularly important strengths. First, it can vividly demonstrate product attributes and persuasively explain their corresponding consumer benefits. Second, it can dramatically portray user and usage imagery, brand personality, and other intangibles. Because of the fleeting nature of the ad, however, and the distracting creative elements often found in it, product-related messages and the brand itself can be overlooked. Moreover, the high volume of nonprogramming material on television creates clutter that makes it easy for consumers to ignore or forget ads.

24) Describe how advertising objectives are set to reflect the product class.

The advertising objective should emerge from a thorough analysis of the current marketing situation. If the product class is mature, the company is the market leader, and brand usage is low, the objective is to stimulate more usage. If the product class is new, the company is not the market leader, but the brand is superior to the leader, then the objective is to convince the market of the brand's superiority.

23) Explain the classification of advertising objectives.

The classification of advertising objectives includes: • Informative advertising aims to create brand awareness and knowledge of new products or new features of existing products. • Persuasive advertising aims to create liking, preference, conviction, and purchase of a product or service. Some persuasive advertising uses comparative advertising, which makes an explicit comparison of the attributes of two or more brands. Comparative advertising works best when it elicits cognitive and affective motivations simultaneously, and when consumers are processing advertising in a detailed, analytical mode. • Reminder advertising aims to stimulate repeat purchase of products and services. • Reinforcement advertising aims to convince current purchasers that they made the right choice.

20) Garolds Stores operates as a low price retailer. It offers home fashion products, such as wall decor, frames, candles, bath and bedding products, furniture, home accents, and kitchen products. The firm has showrooms and retail stores across United States. Customers can buy products in three different ways: (1) they can place orders online and have the products shipped to their homes; (2) they can buy directly from the showrooms and retail outlets; or (3) they can place orders online and pick them up from the nearest showroom. What are the benefits that Garolds Stores could achieve by using various channels to sell to customers?

The company can increase its sales by targeting different segments of customers through various channels. Multichannel marketing allows the company to deliver the right products in the right places in the right way at the least cost.

47) DB Bank is launching a new investment product targeting senior citizens in the United States. The company decides to use direct marketing for selling the product. What direct marketing strategy would allow the company early testing and response measurement of the product?

The company can use direct mail to communicate with prospects. It permits target market selectivity, can be personalized, is flexible, and allows early testing and response measurement.

73) Ravake is a manufacturer of high-end designer apparel. Competition in the apparel industry is severe and the market is driven by price. What distribution strategy would be best suited to help Ravake obtain an edge over its competitors?

The company can use exclusive distribution. It severely limits the number of intermediaries and reduces costs. This would help the company maintain greater control over service levels.

74) National Beverage Corp. produces and distributes a wide range of beverages. It offers a selection of flavored soft drinks, juices, sparkling waters, energy drinks, nutritionally enhanced waters, and other specialty beverages. What distribution strategy will be most suitable for the company's products?

The company has to use intensive distribution, which places the goods or services in as many outlets as possible. This strategy serves well for products consumers buy frequently or in a variety of locations.

40) Eureka Forbes, an Asian consumer appliances company, sells its vacuum cleaners through door-to door sales. This allows the company to obtain a high conversion ratio. Comment on the length of the channel in the case of Eureka Forbes' vacuum cleaners.

The company is using a zero-level channel, i.e. the manufacturer sells directly to the final customer. This is the shortest channel.

19) The Norticon Group provides and manages computers and network systems for businesses and communities. Norticon sells its products through various means. It uses its sales force to sell to large customers and telemarketing to sell to smaller customers. The company also sells its products via the Internet. Briefly explain the marketing approach being used by the company.

The company is using hybrid channels or multichannel marketing which involves the use of two or more marketing channels to reach customer segments. In multichannel marketing, each channel targets a different segment of buyers, or different need states for one buyer, and delivers the right products in the right places in the right way at the least cost.

88) When Juan's company introduced its new product in the market, it introduced it at the lowest possible price assuming that the demand for the product is going to be highly responsive to the introduction price. It also believes that a higher sales volume will lead to lower unit costs and higher long-run profit. What can be said about the company's objective?

The company's objective is to maximize its market share.

22) In developing an advertising program, marketing managers can make the five major decisions known as the five Ms. List and explain each of these Ms.

The five major decisions are: 1. Mission — sales goals and advertising objectives 2. Money — factors to consider: stage in PLC, market share and consumer base, competition and clutter, advertising frequency, and product substitutability 3. Message — message generation, message evaluation and selection, message execution, and social-responsibility review 4. Media — reach, frequency, impact, major media types, specific media vehicles, media timing, and geographical media allocation 5. Measurement — communication impact and sales impact.

82) You are appointed as the B-to-B sales representative of a manufacturing company. What are the various tasks that you will have to perform as a B-to-B salesperson?

The following activities have to be performed by a salesperson: • prospecting • targeting • communicating • selling • servicing • information gathering • allocating

139) What is geofencing? Provide an example.

The idea of geofencing is to target customers with a mobile promotion when they are within a defined geographical space, typically near or in a store. The local-based service requires just an app and GPS coordinates, but consumers have to opt in. Neiman-Marcus is piloting geofencing in its stores so its salespeople know when their more valuable customers are on the premises and can look at their purchase history to provide more personalized service.

73) Gravity is a company that markets customized T-shirts to its customers. Gravity runs an ad that seeks to attract more customers. Apply the macromodel of the communications process to describe the communication between Gravity and its target customers.

The macromodel of the communications process comprises of nine key factors in effective communication. Two represent the major parties — sender (Gravity) and receiver (audience). Two represent the major tools — message (content of the ad) and media (print, TV, radio, etc). Four represent the major communications functions — encoding (creation and transmission of the ad by Gravity), decoding (the reception and comprehension of the ad by the audience), response (either ignoring the message or buying Gravity shirts), and feedback (customers providing information about the ad to measure its effectiveness). The last element is noise, random and competing messages that may interfere with the intended communication. Examples of noise in this case could be misunderstood messages from the ad, similar ads from competitors, etc.

71) Briefly describe the macromodel of the marketing communications process.

The macromodel of the communications process has nine key factors in effective communication. Two represent the major parties — sender and receiver. Two represent the major tools — message and media. Four represent major communication functions — encoding, decoding, response, and feedback. The last element in the system is noise, random and competing messages that may interfere with the intended communication. Senders must know what audiences they want to reach and what responses they want to get. They must encode their messages so the target audience can decode them. They must transmit the message through media that reach the target audience and develop feedback channels to monitor the responses. The more the sender's field of experience overlaps that of the receiver, the more effective the message is likely to be.

140) List the major objectives of events and experiences as promotion tools.

The major objectives of events and experiences as promotion tools are: 1. To identify with a particular target market or lifestyle 2. To increase salience of company or product name 3. To create or reinforce perceptions of key brand image associations 4. To enhance corporate image 5. To create experiences and evoke feelings 6. To express commitment to the community or on social issues 7. To entertain key clients or reward key employees 8. To permit merchandising or promotional opportunities

128) What are some of the reasons sales promotion expenditures might increase as a percentage of budget expenditure?

The promotion becomes more accepted by top management as an effective sales tool; competitors used promotions frequently; consumers became more price-oriented, and trade demanded more deals from manufacturers.

70) List some recent trends in retailing.

The recent trends in retail include the following: • New retail forms and combinations • Growth of giant retailers and nonstore-based retailing • Decline of middle-market retailers • Growing investment in technology • Global profile of major retailers • Growth of shopper marketing

146) What are the six steps in personal selling?

The six steps are: 1. prospecting and qualifying 2. preapproach 3. presentation and demonstration 4. overcoming objections 5. closing 6. follow-up and maintenance

111) According to researchers, what steps can improve the likelihood of starting a buzz?

The steps that can improve the likelihood of starting a buzz include: • Identify influential individuals and companies and devote extra effort to them. • S Supply key people with product samples. • Work through community influentials. • Develop word-of-mouth referral channels to build business. • Provide compelling information that customers want to pass along.

38) Members of a marketing channel perform three types of functions. Provide examples of these three functions in the context of a publishing company that publishes books and magazines.

The storage and movement of books from the company to the customer constitutes a forward flow. Ordering books and paying for them constitute a backward flow from customers to the company. Sharing information and risk taking are activities that occur in both directions.

73) What are the three main platforms for social media?

The three main platforms for social media include: 1. online communities and forums 2. blogs (individual blogs and blog networks such as Sugar and Gawker) 3. social networks (like Facebook, Twitter, and YouTube)

countertrade?

This is an example of a compensation deal. In such deals, the seller receives some percentage of the payment in cash and the rest in products.

95) List some differentiation strategies retailers can use to compete successfully in the market.

To better differentiate themselves and generate consumer interest, retailers can use the following strategies: • feature exclusive national brands that are not available at competing retailers • feature mostly private-label merchandise • feature blockbuster distinctive merchandise events • feature surprise or ever-changing merchandise • feature the latest or newest merchandise first • offer merchandise-customizing services • offer a highly targeted assortment

95) On sites such as eBay and Amazon.com, the seller puts up an item and bidders raise the offer price until the top price is reached. What kind of auctions are these?

eBay and Amazon.com are perfect examples of English auctions. Such auctions have one seller and many buyers and the highest bidder gets the item.

112) What should manufacturers do to compete against or collaborate with private labels?

• Fight selectively: manufacturers should focus on products where they can win against private labels and add value for consumers, retailers, and shareholders. • Partner effectively: seek win-win relationships with retailers through strategies that complement the retailer's private labels. • Innovate brilliantly: Add new products to beat private labels. • Create winning value propositions.

provided by marketing channels with reference to Orion.

• Lot size — Customers may be allowed to book as many tickets as they want, subject to availability. • Waiting and delivery time — This would refer to the average time customers take to book their tickets. • Spatial convenience — This refers to the ease of booking tickets. The location of Orion's retail ticketing outlets and whether the company offers online ticket booking services would be classified under spatial convenience. • Product variety — This refers to the assortment provided by the marketing channel in terms of travel destinations, holiday packages, hotel bookings, car rental services, and the like. • Service backup — This refers to the add-on services provided by the channel such as credit, discounts, delivery, refunds, and so on.

105) Company call center executives provide procedural information to clients who call in about the specifications and operation of the product. These call center employees can be called ________. A) technical support people B) sales assistants C) telemarketers D) deliverers E) consultants

109) Which of the following retailer practices involves buying more units than needed of a product under a sales promotion in a region where the manufacturer offers a promotion deal and shipping the surplus to their stores in non-deal regions? A) diverting B) panic buying C) hoarding D) stockpiling E) forward buying

120) ________ refers to buying large carload lots and dividing them into smaller units before shipping them out to consumers. A) Bulk breaking B) Containerization C) Wholesaling D) Warehousing E) Broking

123) When Saul asks his client, "What system are you using to invoice your customers?" he is asking a ________ question. A) situation B) speculation C) problem D) need-payoff E) implication

126) In IBM's BANT acronym, B stands for ________. A) budget B) background C) baseline D) benchmark E) basic

145) When a public relations department of a company advises management about public issues, and company positions and image during good times and bad, it is performing the function of ________. A) counseling B) corporate communications C) product publicity D) lobbying E) press relations

31) Which of the following statements correctly reflects a characteristic of public relations as a marketing communications tool? A) Public relations can reach prospects who prefer to avoid mass media and targeted promotions. B) They incorporate some concession, inducement, or contribution that gives value to the consumer. C) Given their live, real-time quality, public relations tools are more actively engaging for consumers. D) Public relations communications can be prepared to appeal to the addressed individual. E) Public relations tools create an immediate and interactive episode between two or more persons.

40) If consumers were largely indifferent to a $0.05 increase in the price of a gallon of milk, the price rise is said to fall within customers' ________. A) price indifference band B) experience curve C) arm's-length price D) learning curve E) net price index

41) Toyota has an advantage over Lexus due to the fact that there are more Toyota dealers, which helps customers save on transportation and search costs in buying and repairing an automobile. Which of the following service outputs relates to this competitive advantage? A) spatial convenience B) service backup C) lot size D) waiting time E) delivery time

70) A salesperson who relies on creative methods for selling a company's tangible or intangible offerings is called a(n) ________. A) demand creator B) deliverer C) order taker D) missionary E) solution vendor

78) ________ power can be effective, but its exercise produces resentment and can lead the intermediaries to organize countervailing power. A) Coercive B) Reward C) Legitimate D) Expert E) Referent

81) One of the possible objectives of marketing communications is helping consumers evaluate a brand's perceived ability to meet a currently relevant need. Which of the following is a negatively oriented relevant brand need? A) normal depletion B) sensory gratification C) social approval D) intellectual stimulation E) value enhancement

1) ________ are sets of interdependent organizations participating in the process of making a product or service available for use or consumption. A) Marketing channels B) Interstitials C) Communication channels D) Sales territories E) Marketing terrains

10) Which of the following types of retailing generally entails the highest costs? A) full-service B) self-service C) limited-selection D) limited service E) self-selection

113) Today's customers expect a salesperson to have extensive product knowledge, to be efficient and reliable, and to provide ideas to improve the customer's operations. These demands are forcing companies to make higher investments in ________. A) sales training B) internal selling C) management controls D) advertising E) sales promotions

115) Jackson, the sales representative of a European manufacturer of commercial heavy duty washing machines, calls on the hotels in California. During a sales call, he asks the housekeeping manager of a hotel "How many bed sheets do you wash in a day, on average?" This question can be classified as a(n) ________ question. A) situation B) problem C) implication D) need-payoff E) consequence

117) Which of the following is the "third screen"? A) mobile phones B) in-vehicle entertainment systems C) televisions D) computers E) elevator screens

118) Which of the following is the first step in the process of personal selling? A) prospecting and qualifying B) sales preapproach C) sales presentation D) unearthing objections E) demonstrating advantages

12) Bill and Josh are considering opening a retail store. They have identified their target market and location and are finalizing the details of the merchandise they will carry. Since the neighborhood is rundown and the customers in the area are very price-conscious, Bill and Josh want to offer goods from well-known brands, but at lower rates than the full retail prices of the products. They choose to stock excess production from manufacturers or goods that have remained unsold at other retailers. This is a description of a(n) ________ retailer. A) off-price B) specialty C) discount D) department E) catalog

128) Exxon Consulting works as an agent on behalf of business consumers to collect information on various industrial products. When faced with buying decisions, businesses can approach Exxon to obtain detailed information on the various options available to them. The company earns revenue by selling such information to various customers. Exxon Consulting can be called a(n) ________. A) infomediary B) market maker C) customer community D) third party arbitrator E) informant

13) Which of the following is an example of an advertising platform? A) posters and leaflets B) company magazines C) fairs and trade shows D) sales presentations E) continuity programs

135) ________ includes resistance to interference and a neurotic attitude toward money. A) Psychological resistance B) Logical resistance C) Price sensitivity D) Relationship inertia E) Reactance

137) A company does not set a final price until the product is finished or delivered. This is known as ________. A) delayed quotation pricing B) an escalator clause C) special-event pricing D) time pricing E) the shallow-pockets trap

139) Beyond the optimal order quantity, total cost per unit increases because ________. A) inventory-carrying cost per unit increases B) inventory-carrying cost per unit decreases C) order-processing cost per unit increases D) order-processing cost per unit increases though inventory cost decreases E) inventory-processing cost per unit falls slowly

140) An item described as low-risk and low-opportunity is a ________. A) nuisance item B) bottleneck item C) variable item D) critical item E) commodity

140) ________ channel conflict occurs between channel members at the same level. A) Horizontal B) Vertical C) Multichannel D) Administrative E) Contractual

2) ________ advertising aims to create brand awareness and knowledge of new products or new features of existing products. A) Informative B) Corporate C) Reinforcement D) Persuasive E) Reminder

2) ________ price refers to what the consumers feel the product should cost. A) Fair B) Typical C) Usual discounted D) List E) Maximum retail

3) Tracy works for a cellular phone company that offers trade-in allowances toward the upgrade of new phones, which is an example of ________. A) a sales promotion B) interactive marketing C) word-of-mouth marketing D) personal selling E) events and experiences

45) When ConAgra foods decided to cut $250 million in costs to return to a $1 price point (after sales dropped as a result of raising prices $0.25 to cover higher commodity costs), it was using ________. A) target costing B) experience-curve pricing C) ceiling pricing D) the learning curve E) promotional price elasticities

52) Which of the following is an advantage of using magazines as an advertising medium? A) high-quality reproduction B) short ad purchase lead time C) high efficiency in circulation D) no ad competition in same medium E) low cost of advertising

57) Which of the following is most likely to use database marketing? A) an airline B) a candy bar manufacturer C) a fast-food chain D) a toothpaste manufacturer E) a hairstylist

57) Which of the following is the correct order of stages that a buyer is assumed to pass through, by the four classic response hierarchy models? A) cognitive stage — affective stage — behavioral stage B) affective stage — cognitive stage — behavioral stage C) behavioral stage — affective stage — cognitive stage D) cognitive stage — behavioral stage — affective stage E) affective stage — behavioral stage — cognitive stage

57) ________ pricing is a matter of reengineering the company's operations to become a low-cost producer without sacrificing quality. A) Value B) Going-rate C) Auction-type D) Markup E) Perceived-value

58) A retailer who utilizes a(n) ________ policy charges a constant low price with little or no price promotions and special sales. A) everyday low pricing B) high-low pricing C) low cost D) going-rate pricing E) auction-type pricing

60) Moonburst is a newly launched brand of energy drinks, one among many other recently introduced competing brands. The advertising agency handling Moonburst's account decides that to better promote Moonburst, it has to zero in on an advertising medium that would offer immunity from the clutter of other brands, flexibility to alter its advertising message, and the ability to fit in with the modest advertising budget. Also, the medium has to provide a high repeat exposure of the advertising message to the target audience. The advertising agency would be happy to trade-off audience selectivity and creative possibilities if the medium satisfies the above criteria. Which of the following would be the best option for Moonburst? A) outdoor media B) radio C) magazines D) television E) Yellow Pages

65) A salesperson performing over-the-counter sales in a medical store can be referred to as a(n) ________. A) order taker B) demand creator C) solution vendor D) phisher E) missionary

73) ________ seeks to determine whether an ad is communicating effectively. A) Copy testing B) Flighting C) Pulsing D) Frequency capping E) Square inch analysis

76) Because of the acceptance that the other Broomer products have in the market, retailers are willing to stock items from the new "Inducer" line of clothing. This is an example of ________ power. A) referent B) passive C) legitimate D) coercive E) reward

77) Marketing communication strategy can be decided by conducting an image analysis by profiling the target audience in terms of ________. A) brand knowledge B) purchase patterns C) demographic characteristics D) income levels E) psychographic characteristics

77) ________ is a form of online word of mouth, or "word of mouse," that encourages consumers to pass along company-developed products and services or audio, video or written information to others online. A) Viral marketing B) Guerrilla marketing C) Microsite marketing D) Interstitial marketing E) Public relations

79) Which of the following is a prepurchase service offered by retailers? A) accepting orders over the telephone B) shipping the product C) delivery to the customer's doorstep D) general information E) interior decoration of the retail outlet

8) A firm uses its sales force to sell to large accounts and outbound telemarketing to sell to medium-sized accounts. The firm is using ________ marketing. A) hybrid B) pull C) personalized D) vertical E) internal

80) A manufacturer is using legitimate power when it ________. A) requests a behavior that is warranted under the selling contract B) threatens to withdraw a resource or terminate a relationship C) offers intermediaries an extra benefit for performing specific acts or functions D) makes the intermediaries sell more of a particular product by offering rewards E) sells more products by making use of its reputation in the market

83) In your neighborhood there is a small men's store that has a limited selection of clothing, but the selection that is carried is of very high quality and price. Services include free alterations and tailoring, personalized recordkeeping, and free dry cleaning. Inside the store are deep leather chairs and couches and thick pile carpet. Upon entering the store, a customer feels "special and rich." In terms of differentiation, what is this retailer trying to communicate by its decorations and service level? A) differentiation based on services mix and atmosphere B) differentiation based on prepurchase services C) differentiation based on postpurchase services and atmosphere D) differentiation based on ancillary services and atmosphere E) differentiation based on prepurchase and postpurchase services

87) Which of the following is NOT one of the steps that can improve the likelihood of starting positive buzz? A) Identify underserved, inactive individuals and devote extra effort to them. B) Supply key people with product samples. C) Work through community influentials. D) Develop word-of-mouth referral channels to build business. E) Provide compelling information that customers want to pass along.

88) A medical "detailer" that represents an ethical pharmaceutical house, who builds goodwill or educates the actual or potential user but is not permitted to take an order, is an example of a ________. A) missionary salesperson B) technician C) demand creator D) solution vendor E) deliverer

9) Which of the following is NOT one of the seven design elements featured in effective Web sites (as identified by Rayport and Jaworski)? A) change B) context C) content D) customization E) commerce

9) Which of the following is a major advantage of using direct mail? A) Direct mail permits target market selectivity. B) It is the best suited tool for selling complex products. C) Campaign testing is not needed for direct mail. D) Direct mail has very high conversion rates. E) It is the best method to sell industrial products.

91) Part-time paid employees who work exclusively for the company are a part of the ________ sales force. A) direct B) virtual C) contractual D) implicit E) brokered

97) Kate is coaching members of her field sales team to help them understand how they spend their time and how they might increase their productivity. She is using ________ to provide them with feedback. A) time-and-duty analysis B) a sales quota C) a feed-forward approach D) an expense allowance E) a norm for prospect calls

17) Explain the concept of a value network.

A company can be seen as being at the center of a value network, a system of partnerships and alliances that a firm creates to source, augment, and deliver its offerings. A value network includes a firm's suppliers and its suppliers' suppliers, and its immediate customers and their end customers. The value network includes valued relationships with others such as university researchers and government approval agencies. A company needs to orchestrate these parties in order to deliver superior value to the target market. Managing a value network means making increasing investments in information technology (IT) and software. Firms have introduced supply chain management (SCM) software and invited such software firms as SAP and Oracle to design comprehensive enterprise resource planning (ERP) systems to manage cash flow, manufacturing, human resources, purchasing, and other major functions within a unified framework.

109) The growth of "house brands" has skyrocketed in recent years. What benefits do intermediaries receive from sponsoring their own brands?

A private label brand (also called a reseller, store, house, or distributor brand) is a brand that retailers and wholesalers develop. These brands can be more profitable. Intermediaries search for manufacturers with excess capacity that will produce private label goods at low cost. Other costs, such as research and development, advertising, sales promotion, and physical distribution, are also much lower, so private labels can generate a higher profit margin. Retailers also develop exclusive store brands to differentiate themselves from competitors. Many price-sensitive consumers prefer store brands in certain categories. These preferences give retailers increased bargaining power with marketers of national brands.

117) What is a vertical marketing system (VMS)? What are the various types of VMSs?

A vertical marketing system includes the producer, wholesaler(s), and retailer(s) acting as a unified system. One channel member, the channel captain, owns or franchises the others or has so much power that they all cooperate. There are three types of VMSs: corporate, administered, and contractual. • A corporate VMS combines successive stages of production and distribution under single ownership. • An administered VMS coordinates successive stages of production and distribution through the size and power of one of the members. Manufacturers of dominant brands can secure strong trade cooperation and support from resellers. • A contractual VMS consists of independent firms at different levels of production and distribution, integrating their programs on a contractual basis to obtain more economies or sales impact than they could achieve alone.

37) Briefly explain the various levels of marketing channels.

A zero-level channel, also called a direct marketing channel, consists of a manufacturer selling directly to the final customer. The major examples are door-to-door sales, home parties, mail order, telemarketing, TV selling, Internet selling, and manufacturer-owned stores. A one-level channel contains one selling intermediary, such as a retailer. A two-level channel contains two intermediaries. In consumer markets, these are typically a wholesaler and a retailer. A three-level channel contains three intermediaries. In the meatpacking industry, wholesalers sell to jobbers, essentially small-scale wholesalers, who sell to small retailers.

that the T-shirt should only cost $20. What reference price is Abe using here?

Abe perceives $20 to be the "fair price" for the product.

108) What are four pieces of advice for getting a viral ad shared?

According to a viral advertising expert from Harvard Business School: Utilize brand pulsing so the brand is not too intrusive within the video; open with joy or surprise to hook those fickle viewers who are easily bored; build an emotional roller coaster within the ad to keep viewers engaged throughout; and surprise but don't shock — if an ad makes viewers too uncomfortable, they are unlikely to share it.

47) What are the advantages and disadvantages of online marketing communications?

Advantages — companies can offer or send tailored information or messages that engage consumers by reflecting their special interests and behavior; marketers can easily trace their effects by noting how many unique visitors or "UVs" click on a page or ad, how long they spend with it, what they do on it, and where they go afterward; the Internet offers contextual placement, which means marketers can buy ads on sites related to their own offerings; marketers can place advertising based on keywords customers type into search engines to reach people when they've actually started the buying process. Disadvantages — consumers can screen out messages; software-powered Web sites generate bogus clicks, which can throw off metrics; marketers can lose control of online messages, which can be hacked or vandalized.

74) Alan is an executive with an ad agency that has been entrusted with accounts for a used-car showroom, a home appliances maker, and a soap company. With reference to response hierarchy models, how does Alan plan communication strategies for the three accounts effectively?

All of the four classic response hierarchy models assume that the buyer passes through cognitive (learn), affective (feel), and behavioral stages (do), in that order. Since buying a car, used or new, represents a significant investment for the buyer, it can be said that the buyer has involvement in the purchase decision and perceives high differentiation with the product category. Hence a "learn-feel-do" sequence is considered appropriate for the used-car showroom account. Similarly, a buyer intending to purchase home appliances, such as a dishwasher or a refrigerator, has high involvement in the purchase decision, even though he perceives little differentiation within the product category. Hence, a "do-feel-learn" approach may be appropriate when planning communications for the home appliances account. Finally, a buyer has low involvement in purchasing soap that has very little differentiation within its category. For the soap company account, Alan should consider a "learn-do-feel" sequence for planning communications.

19) What are the different possible consumer reference prices?

Although consumers have fairly good knowledge of price ranges, surprisingly few can accurately recall specific prices. When examining prices, consumers often employ reference prices, comparing an observed price to an internal reference price they remember or an external frame of reference such as a posted "regular retail price." These reference prices include: • fair price — what consumers feels the product should cost • typical price • last price paid • upper-bound price — reservation price or the maximum most consumers would pay • lower-bound price — lower threshold price or the minimum most consumers would pay • historical competitor price • expected future price • usual discounted price

51) What is the role of advertising as a communications tool in marketing for business markets?

Although marketers rely more on sales calls in business markets, advertising still plays a significant role: • Advertising can provide an introduction to the company and its products. • If the product has new features, advertising can explain them. • Reminder advertising is more economical than sales calls. • Advertisements offering brochures and carrying the company's phone number or Web address are an effective way to generate leads for sales representatives. • Sales representatives can use copies of the company's ads to legitimize their company and products. • Advertising can remind customers how to use the product and reassure them about their purchase.

48) List the four categories of nonstore retailing and briefly explain each.

Although the overwhelming bulk of goods and services are sold through stores, nonstore retailing has been growing much faster than store retailing. Nonstore retailing falls into four major categories: 1. Direct selling, also called multilevel selling and network marketing, is a multibillion-dollar industry, with hundreds of companies selling door-to-door or at home sales parties. A salesperson goes to the home of a host who has invited friends; the salesperson demonstrates the products and takes orders. Pioneered by Amway, the multilevel (network) marketing sales system works by recruiting independent businesspeople who act as distributors. The distributor's compensation includes a percentage of sales made by those he or she recruits, as well as earnings on direct sales to customers. These direct-selling firms, now finding fewer consumers at home, are developing multidistribution strategies. 2. Direct marketing has roots in direct-mail and catalog marketing. It includes telemarketing, television direct-response marketing, and electronic shopping. As people become more accustomed to shopping on the Internet, they are ordering a greater variety of goods and services from a wider range of Web sites. 3. Automatic vending offers a variety of merchandise, including impulse goods such as soft drinks, coffee, candy, newspapers, magazines, and other products such as hosiery, cosmetics, hot food, and paperbacks. Vending machines are found in factories, offices, large retail stores, gasoline stations, hotels, restaurants, and many other places. They offer 24-hour selling, self-service, and merchandise that is stocked to be fresh. 4. Buying service is a storeless retailer serving a specific clientele, usually employees of large organizations, who are entitled to buy from a list of retailers that have agreed to give discounts in return for membership.

96) Apple Inc., together with subsidiaries, designs, manufactures, and markets personal computers, mobile phones, and media devices. It also sells software, services, and third-party digital content. Apple is a highly respected brand across the globe. What kind of channel power does this respect give Apple?

Apple is so highly respected that intermediaries are proud to be associated with it. This gives Apple referent power.

100) E&OE is looking to reduce its inventory costs for all its products. The company realizes that its inventory depends on the setup costs of its various products. How do setup costs affect E&OE's inventory costs?

As inventory draws down, management must know at what stock level to place a new order. The company needs to balance order-processing costs and inventory-carrying costs. Order-processing costs for E&OE consist of setup costs and running costs (operating costs when production is running) for the item. If setup costs are low, E&OE can produce the item often, and the average cost per item is stable and equal to the running costs. If setup costs are high, E&OE can reduce the average cost per unit by producing a long run and carrying more inventory. The larger the average stock carried, the higher the inventory-carrying costs.

121) VW chose to launch its GTI in the United States with a(n) ________, which was downloaded 2 million times in three weeks. A) interstitial B) app C) mini-billboard D) Facebook page E) LinkedIn ad

131) A pioneer in China, ________ created a national campaign asking Beijing residents to send text messages guessing the high temperature in the city every day for just over a month for a chance to win a one-year supply of its products. A) PepsiCo B) Coca-Cola C) Red Bull D) Poland Spring E) Unilever

144) If the shipper owns its own truck or air fleet, it becomes a ________ carrier. A) containerized B) private C) contract D) common E) diversified

29) A ________ is a wholesaler-sponsored group of independent retailers engaged in bulk buying and common merchandising. A) retailer cooperative B) voluntary chain C) consumer cooperative D) merchandising conglomerate E) franchise organization

4) Total Beverages, a maker of fruit juices and health drinks, recently launched a new brand of packaged drinking water called AquaPure. In order to induce distributors to carry the product, Total offers all its intermediaries a free refrigerator to store bottles of AquaPure. This is an example of a ________. A) consumer promotion B) push strategy C) backward flow D) reverse flow E) pull strategy

55) Which of the following is an advantage of using Yellow Pages as an advertising medium? A) low competition B) high believability C) short ad purchase lead time D) greater scope for creativity E) lack of clutter

Use of Power (Scenario) Broomer manufactures fashion apparel for women, men, and children. Its products are in high demand and apparel stores are more than willing to carry and sell Broomer's garments. The company recently introduced a new clothing line named "Inducer," targeted at youth. However, the new line is not well received by the market, and sales fail to take off even three months after its launch. 75) In an effort to boost sales, Broomer offers its retailers a higher margin for promoting and selling products from the "Inducer" line to customers. This is an example of ________ power. A) coercive B) reward C) passive D) expert E) referent

1) When consumers examine products, they often compare an observed price to an internal price they remember. This is known as a(n) ________ price. A) markup B) reference C) market-skimming D) accumulated E) target

1) ________ includes all the activities in selling goods or services directly to final consumers for personal, non-business use. A) Wholesaling B) Retailing C) Procurement D) Promoting E) Warehousing

103) Compensation plans may need to vary depending on the type of salespersons. Which type of salesperson benefits from multi-tier targets that serve as stepping stones for achievement and sales contests with prizes that vary in nature and value? A) stars B) core performers C) dogs D) cash cows E) laggards

107) In ________, the seller charges different amounts to different classes of buyers. A) perceived value pricing B) third-degree price discrimination C) first-degree price discrimination D) second-degree price discrimination E) psychological discounting

113) The airline and hospitality industries use ________, by which they offer discounted but limited early purchases, higher-priced late purchases, and the lowest rates on unsold inventory just before it expires. A) special-customer pricing B) yield pricing C) cash rebates D) location pricing E) customer-segment pricing

114) Which of the following is NOT one of the four distinctive characteristics of a mobile device? A) It is tied to one user. B) It allows marketers to personalize messages. C) It is virtually always "on." D) It allows for immediate consumption as it is a distribution channel with a payment system. E) It is highly interactive given it allows for geotracking and picture and video taking.

118) Agricultural assemblers, petroleum bulk plants and terminals, and auction companies are examples of ________. A) full-service wholesalers B) specialized wholesalers C) limited-service wholesalers D) merchant wholesalers E) brokers

119) A salesperson who is contacting possible buyers by mail or phone to assess their level of interest and financial capacity is in the ________ step of the selling process. A) preapproach B) prospecting C) qualifying D) following up E) objection handling

12) In 2010, three top B-to-B ________ were Thermo Scientific lab and research supplies ($10.8 billion), Henry Schien dental, medical, and vet supplies ($7.5 billion) and WESCO International electrical and industry maintenance supplies ($5 billion). A) inbound telemarketers B) catalog sellers C) outbound telemarketers D) infomercial marketers E) mobile marketers

122) Representatives who are taught the SPIN method to build long-term relationships may ask each of the following types of questions EXCEPT ________. A) situation B) speculation C) problem D) need-payoff E) implication

127) In IBM's BANT acronym, A stands for ________. A) action B) authority C) activate D) austerity E) autonomy

129) Becoming part of a personally relevant moment in consumers' lives through ________ can broaden and deepen a company or brand's relationship with the target market. A) advertisements B) events and experiences C) sales promotions D) public relations E) direct marketing efforts

13) In 2010, the three top B-to-C ________ were Dell ($52 billion), Staples ($9.8 billion), and CDW ($8.8 billion). A) inbound telemarketers B) catalog sellers C) outbound telemarketers D) infomercial marketers E) mobile marketers

137) ________ includes objections due to proposed contract completion time, quality of goods and services offered, purchase volume, product safety, and responsibility for financing, risk taking, promotion, and title. A) Psychological resistance B) Logical resistance C) Price sensitivity D) Relationship inertia E) Reactance

144) What function does a company's public relations department perform when it promotes understanding of the organization through internal and external communications? A) lobbying B) corporate communications C) press relations D) product publicity E) counseling

151) If a producer wants to achieve rapid market penetration through a low-price policy, while a dealer wants to work with high margins to pursue short-run profitability, the source of the channel conflict is ________. A) unclear roles and rights B) goal incompatibility C) differences in perception D) intermediaries' dependence on the manufacturer E) strategic justification

16) Aldi, Lidl, Dollar General, and Family Dollar are examples of ________, as they carry a more restricted merchandise mix than discount stores at even lower prices. A) off-price retailers B) extreme value stores C) superstores D) convenience stores E) specialty stores

18) Devin, an online marketing manager for the Gilt Groupe, sends more than 3,000 variations of its daily e-mail for its flash-sale site based on recipients' past ________, browsing history, and purchase history. A) complaints B) click-throughs C) comments D) ratings E) interstitials

19) Companies that sell products door-to-door or at home sales parties are engaging in ________. A) franchising B) network marketing C) direct-response marketing D) corporate selling E) direct marketing

19) The starting point in planning marketing communications is a ________ that profiles all interactions customers in the target market may have with the company and all its products and services. A) marketing budget B) communications audit C) market research program D) publicity campaign E) product launch

22) Which of the following channel functions constitute only a backward flow? A) movement of physical goods B) placing orders with manufacturers C) persuasive communication D) storage of physical goods E) overseeing actual transfer of ownership

29) A market-penetration pricing strategy is most suitable when ________. A) a low price slows down market growth B) production and distribution costs fall with accumulated production experience C) a high price dissuades potential competitors from entering the market D) the market is characterized by inelastic demand E) a low price encourages actual competition

3) Which of the following is NOT one of the four main categories of online marketing communications? A) Web sites B) guerrilla marketing C) search ads D) display ads E) e-mail

3) While shopping at the mall, Jane was asked by one of the sales representatives at the cosmetics counter to try out a new lipstick that her company was test marketing. The company representative asks her how much she would be willing to pay for the lipstick. After trying it out, Jane is of the opinion that $5 is just the right price for it. What type of a reference price is Jane using? A) usual discounted price B) fair price C) maximum retail price D) last price paid E) historical competitor price

30) Place advertising, or out-of-home advertising, is a broad category that includes many creative and unexpected forms to grab consumers' attention, including all of the following EXCEPT ________. A) billboards B) yellow pages C) public spaces D) product placement E) point of purchase

30) Which of the following activities is a reverse-flow channel of marketing? A) raw materials movement B) product recycling C) materials ordering D) finished goods storage E) customer order placement

35) ________ includes all the activities in selling goods or services to those who buy for resale or business use. A) Retailing B) Wholesaling C) Procurement D) Promoting E) Warehousing

38) The number of times within a specified time period that an average person or household is exposed to an advertising message is known as ________. A) impact B) frequency C) amplitude D) reach E) depth

39) If demand changes considerably, with a small change in price, the demand is said to be ________. A) unit elastic B) elastic C) inelastic D) marginal E) strained

39) Which of the following tools or combinations of tools is most influential at the comprehension stage of buyer readiness? A) sales promotion and advertising B) advertising and personal selling C) publicity and personal selling D) reminder advertising and publicity E) sales promotion and personal selling

55) Electrobar, a European manufacturer of industrial kitchenware, sells to industrial canteens, restaurants, hotels, and so forth. The company provides a one-year warranty on all products and also allows customers to pay in installments — they pay 50 percent on delivery and the rest as equal installments. This refers to which element in the "trade-relations mix"? A) price policy B) conditions of sale C) distributors' territorial rights D) exclusive dealings E) mutual services and responsibilities

56) Which of the following factors found in the macromodel of the communications process refers to random and competing messages that may interfere with the intended communication? A) negative feedback B) noise C) attenuation D) phase lag E) selective distortion

57) Which marketing channel is associated with the highest value added per sale? A) retail stores B) sales force C) distributors D) Internet E) telemarketing

57) Which of the following is a disadvantage of using the Internet as an advertising medium? A) limited audience selectivity B) increasing clutter C) lack of interactive possibilities D) relatively high costs involved E) fleeting ad exposure time

58) Which of the following is a disadvantage of using newsletters as an advertising medium? A) low audience selectivity B) high chances of runaway costs C) lack of adequate control D) relatively high costs E) lack of interactive possibilities

62) The popular music talent show American Idol has been generally acknowledged as the most profitable TV series in US history, in terms of advertising and merchandising revenue. Major sponsors of the show include Coca-Cola, AT&T Wireless, and iTunes, among others. Cups bearing the Coca-Cola logo were a prominent prop found on the show's judges' tables. The show also urged viewers to vote for contestants using AT&T's sms service. Contestants were routinely shown rehearsing for their performances with the help of Apple iPods. Which of the following advertising practices is apparent in this example? A) ambush advertising B) product placement C) angel dusting D) co-branding E) subliminal advertising

8) Which of the following elements of the marketing communications mix includes a variety of programs directed internally to employees of the company or externally to consumers, other firms, the government, and media to promote or protect a company's image or its individual product communications? A) direct marketing B) public relations and publicity C) personal selling D) advertising E) sales promotion

82) One of the possible objectives of marketing communications is helping consumers evaluate a brand's perceived ability to meet a currently relevant need. Which of the following is a positively oriented relevant brand need? A) problem removal B) social approval C) normal depletion D) problem avoidance E) incomplete satisfaction

82) Stores are using ________ to measure a product's handling costs from the time it reaches the warehouse until a customer buys it in the retail store. A) electronic data interchange (EDI) B) direct product profitability (DPP) C) radio-frequency identification (RFID) D) global positioning systems (GPS) E) compounded annual grown rate (CAGR)

83) A new firm typically starts as a local operation selling in a fairly circumscribed market by ________. A) finding and developing new intermediaries B) using a few existing intermediaries C) forming partnerships with the market leader D) creating a special channel E) forming partnerships with other firms

86) A(n) ________ appeal is a creative strategy that elaborates on a nonproduct-related benefit or image. A) logical B) transformational C) reasonable D) informational E) rational

86) According to media researcher Duncan Watts, the key to setting a song on the path to popularity is a phenomenon called ________. A) sampling B) cumulative advantage C) influence farming D) entertainment trendspotting E) buzz firing

89) ________ is one of the sources of a spokesperson's credibility that refers to the specialized knowledge that he or she claims to possess. A) Trustworthiness B) Expertise C) Acquaintance D) Likability E) Professionalism

9) Many consumers are willing to pay $100 for a perfume that contains $10 worth of scent because the perfume is from a well-known brand. What kind of pricing is the company depending on? A) going-rate pricing B) image pricing C) market-skimming pricing D) target pricing E) markup pricing

9) Which of the following is true for self-service retailing? A) They carry more shopping goods and services such as credit and merchandise-return privileges. B) This service model is favored by discount stores and customers who want to save money. C) It results in high staffing costs compared to other forms of retailing. D) Salespeople are ready to assist in every phase of the "locate-compare-select" process. E) Customers need more information and assistance than in other forms of retailing.

95) Which of the following is NOT a main part of managing the sales force? A) recruiting and selecting sales representatives B) identifying prospects for sales representatives C) training sales representatives D) motivating sales representatives E) evaluating sales representatives

97) A Japanese firm is ready to sell its recent technological innovation to the US government. But it has asked for 80 percent in cash and the rest in mica. The Japanese firm is looking to enter into a(n) ________ with the US government. A) functional discount B) compensation deal C) buyback arrangement D) offset agreement E) barter deal

99) ROC Engineering, a Chinese shipbuilding company, agrees to build a fleet of submarines for the Sri Lankan navy, for which it will be paid in the local Sri Lankan currency. As per the agreement, ROC must also spend a substantial amount of the money it generates through this deal within the country. In accordance with the contract, ROC buys Sri Lankan tea at a reduced rate. This is an example of which of the following forms of countertrade? A) descending bid B) offset C) barter D) compensation deal E) buyback arrangement

136) Briefly describe "brand awareness" as an objective of marketing communications.

Brand awareness refers to fostering the consumer's ability to recognize or recall the brand within the category, in sufficient detail to make a purchase. Recognition is easier to achieve than recall. Brand recall is important outside the store; brand recognition is important inside the store. Brand awareness provides a foundation for brand equity.

63) What situations are not conducive to database marketing?

Building a customer database may not be worthwhile when: • the product is a once-in-a-lifetime purchase (a grand piano) • customers show little loyalty to a brand (there is a lot of customer churn) • the unit sale is very small (a candy bar) so customer lifetime value is low • the cost of gathering information is too high • there is no direct contact between the seller and ultimate buyer

11) ________ is an element of the marketing communications mix that involves people-to-people oral, written, or electronic communications that relate to the merits or experiences of purchasing or using products or services. A) Personal selling B) Sales promotion C) Word-of-mouth marketing D) Public relations E) Advertising

118) Which of the following best characterizes average consumers' current media consumption patterns? A) Consumers spend more time listening to the radio than on their mobile phones, but less time on magazines and newspapers. B) Consumers spend more time reading magazines and newspapers than on their mobile phones, but less time listening to the radio. C) Consumers spend more time on mobile devices than on radio, magazines, and newspapers combined. D) Consumers spend an average of two hours and 52 minutes on radio, magazines, and newspapers combined. E) Consumers spend an average of one hour and 46 minutes on mobile devices.

141) Alcart Solutions is a large distributor of Aldor phones in Canada. The company distributes products to various retailers in the New Brunswick province. Recently Aldor received several complaints from its retailers that their orders are not delivered on time. They also complain that Alcart offers preferential treatment to some of the other retailers in the region. This is an example of ________ conflict. A) multichannel B) horizontal C) vertical D) intermediate E) parallel

144) When Estee Lauder set up a Web site to sell its Clinique and Bobbi Brown brands, Dayton Hudson reduced space for Estee Lauder products in its department stores in response to the ________ conflict. A) horizontal channel B) multichannel C) vertical channel D) grid channel E) end-customer

148) When a company maintains its price but removes or prices separately one or more elements that were part of the former offer, such as free delivery or installation, it is known as ________. A) escalating B) differentiation C) unbundling D) reverse discounting E) delayed quotation pricing

26) A(n) ________ is a storeless retailer serving a specific clientele — usually employees of large organizations — who are authorized to buy from a list of retailers that have agreed to give discounts in return for inclusion on the list. A) direct-selling vendor B) direct marketing vendor C) buying service D) automatic vendor E) corporate retailer

32) TV advertising is considered to be particularly advantageous because ________. A) the low volume of nonprogramming material on television makes it difficult for consumers to ignore or forget ads B) it provides detailed product information and effectively communicates user and usage imagery C) it can vividly demonstrate product attributes and persuasively explain their corresponding consumer benefits D) TV channels are very targeted, ads are relatively inexpensive to produce and place, and short closings allow for quick response E) it lets companies achieve a balance between broad and localized market coverage

33) Jake wants to open a Subway franchise in his small town. To do this, he must pay the company a ________ fee. A) slotting B) title C) royalty D) merchandising E) residual

59) Pepe Homes manufactures a range of bathroom accessories and fittings that include bathtubs, shower stalls, etc. While deciding on an effective advertising media vehicle for its planned advertising campaign, the marketing department decides that its advertising objectives would be best achieved if they used a medium that would portray their brand as prestigious and a symbol of luxury. To this effect, the medium should offer marketers a high degree of audience selectivity and high-quality reproduction. Which of the following advertising media would best serve the advertising purposes of Pepe Homes? A) outdoor media B) radio C) magazines D) television E) newspapers

7) Greta is marketing a product that is technologically advanced and requires a great deal of explanation. Which direct response tool should she use? A) direct mail B) e-mail C) infomercial D) inbound telemarketing E) outbound telemarketing

7) In ________ retailing, salespeople are ready to assist in every phase of the "locate-compare-select" process. A) self-service B) self-selection C) full-service D) limited service E) limited-selection

8) What percentage of total digital ad spending is accounted for by mobile? A) 1 percent B) 7 percent C) 17 percent D) 30 percent E) 43 percent

100) Which of the following is NOT true about the two-step process by which mass communications affect personal attitudes? A) The influence of mass media is mediated by opinion leaders, people whose opinions others seek or who carry their opinions to others. B) The influence of mass media on public opinion is not as direct, powerful, and automatic as marketers have supposed. C) The two-step flow supports the notion that consumption styles are primarily influenced by a trickle-up or trickle-down effect from mass media. D) People interact primarily within their own social groups and acquire ideas from opinion leaders in their groups. E) Two-step communication suggests that mass communicators should direct messages specifically to opinion leaders and let them carry the message to others.

108) When museums charge a lower admission fee to students and senior citizens, this form of price discrimination is known as ________ pricing. A) location B) channel C) customer-segment D) special-customer E) loss-leader

110) In a ________ marketing system, two or more unrelated companies put together resources or programs to exploit an emerging marketing opportunity. A) reverse flow B) vertical C) horizontal D) lateral E) forward flow

114) ________ refers to selling below cost with the intention of destroying competition. A) Bid rigging B) Loss-leader pricing C) Predatory pricing D) Price discrimination E) Price penetration

116) When a movie theater charges a lower ticket fee for children and senior citizens, it is engaging in ________ pricing. A) product-form B) image C) customer-segment D) location E) time

116) Which of the following is an example of a problem question? A) What system are you using to invoice your customers? B) How does this problem affect your people's productivity? C) What parts of the system create errors? D) How much would you save if our company could help reduce errors by 80 percent? E) Which operating system have you installed in your personal computer?

116) ________ sell and deliver a limited line of semiperishable goods to supermarkets, grocery stores, hospitals, restaurants, and hotels. A) Producers' cooperatives B) Cash and carry wholesalers C) Truck wholesalers D) Drop shippers E) Rack jobbers

13) H&A is a retail chain that specializes in selling goods at very low prices. To achieve this, it stocks a very narrow assortment of basic necessities and offers customers a "no-frills" shopping experience. H&A is an example of a(n) ________ store. A) off-price B) specialty C) hard-discount D) superstore E) convenience

13) The average click-through in terms of the percentage of consumers who click on a link for ________ is about 0.8 percent. A) search engine optimization B) pay-per-click ads C) standard banner ads D) microsites E) rich media banner ads

132) In the FABV approach, ________ describe the economic, technical, service, and social pluses delivered. A) features B) advantages C) benefits D) value E) macroenvironment

136) Optimal order quantities exist when the curves for the order-processing cost per unit and inventory-carrying cost per unit ________. A) are collinear B) are diagonal to each other C) intersect D) are parallel to each other E) equal zero

137) E&OE is trying to minimize its inventory costs, which are extremely high. The company has realized that it can achieve this by maintaining a near-zero inventory and producing more products only once it is ordered. Which of the following is true for E&OE? A) Inventory costs are lower than order-processing costs. B) Running costs are higher than inventory-carrying costs. C) Setup costs for the products are low. D) Order-processing costs are high. E) Order-processing costs are lower than setup costs.

14) Which of the following is an example of an events and experiences platform? A) fairs and trade shows B) continuity programs C) factory tours D) sales presentations E) community relations

148) The easiest measure of marketing public relations effectiveness is the ________. A) resultant effect on the company's sales figures B) effect it has on its market capitalization C) number of exposures carried by the media D) changes observed in consumers' brand knowledge E) impact it has on the company's market share

15) When Johnson & Johnson's Tylenol headache reliever would pop up on brokers' Web sites whenever the stock market fell by 100 points or more, they were using a(n) ________. A) microsite B) pay-per-click ad C) interstitial D) search ad E) banner ad

20) Which of the following is an example of direct selling? A) E&OE sells its herbal skincare products exclusively through its standalone stores. B) TCJ is a telemarketing firm that sells products from a number of different suppliers. C) Jayne's sells most of its products to customers through home sales parties. D) J3 is an online shopping portal where customers can buy directly from manufacturers. E) Reynold's tries to minimize its staff costs by installing vending machines in its stores.

25) A firm that is plagued with overcapacity, intense competition, or changing consumer desires would do better if it pursues ________ as its major objective. A) market skimming B) product-quality leadership C) survival D) profit maximization E) market penetration

27) An independent retailer using a central buying organization and joint promotion efforts with other retailers is part of a ________. A) corporate chain store B) voluntary chain C) retailer cooperative D) merchandising conglomerate E) franchise organization

35) The first step in estimating demand is to ________. A) analyze competitors' cost B) select a pricing method C) understand what affects price sensitivity D) calculate fixed costs E) decipher the experience curve

35) Which of the following circumstances are best suited for personal selling? A) when the products used are simple and easy-to-use B) when there is minimal risk involved in buying or using the products C) when the market has fewer and larger sellers D) when the products being marketed are inexpensive and easily available E) when prospective customers are spread across a wide geographic area

47) The decline in the average cost of production with accumulated production experience is called the ________. A) demand curve B) supply chain C) learning curve D) value chain E) indifference curve

47) Which of the following is a disadvantage of using newspapers as an advertising medium? A) lack of flexibility B) high costs of advertisement space C) poor reproduction quality D) low believability E) absence of local market coverage

5) Comparative advertising works best when ________. A) it elicits cognitive and behavioral motivations simultaneously B) the firm is trying to minimize brand dilution C) consumers are processing advertising in a detailed, analytical mode D) it elicits affective motivation, followed by cognitive motivation E) the advertising message uses negative fear appeals

5) Reynold's is a grocery chain that has always catered to mid-market customers. However, the owner, Mal, has noticed that an influx of new residents are buying mostly the lower-cost and discounted products. To attract customers, Mal decides to make a gradual switch to the discount store format, but to do this, he will have to cut costs wherever possible. Which of the following types of services should Mal avoid in order to lower costs? A) limited service B) self-selection C) full-service D) self-service E) limited-selection

5) Which of the following is an example of a trade promotion? A) free samples B) discount coupons C) display allowances D) contests for sales reps E) premiums

50) Competitors are most likely to react to a price change when ________. A) the firm has a weak value proposition B) the firm enjoys a monopoly C) there are few competing firms D) the product is heterogeneous E) buyers have limited information

51) Which of the following is the most elementary pricing method? A) value pricing B) going-rate pricing C) markup pricing D) target-return pricing E) perceived-value pricing

53) A manufacturer has invested $750,000 in a new product and wants to set a price to earn a 15 percent ROI. The cost per unit is $18 and the company expects to sell 50,000 units in the first year. Calculate the company's target-return price for this product. A) $18.10 B) $18.23 C) $20.25 D) $20.70 E) $25.50

54) Which of the following is a disadvantage of using outdoor media for advertising? A) low flexibility B) low repeat exposure C) limited audience selectivity D) high costs E) greater competition

55) In which of the following cases is building a database worthwhile for the company? A) Clare's creates personalized sculptures for special occasions. B) Sales of Clarity soap have fallen over the past few months in all regions. C) 2Wheels sells its most profitable products to repeat customers. D) Uncle Jim's sells its range of snacks in stores throughout the country. E) Ready-to-wear clothes brand Zeep targets the teen and tween market throughout the United States.

56) In which of the following cases is building a database worthwhile for the company? A) where the product is a once-in-a-lifetime purchase B) where customers show little loyalty to a brand C) where the company has a long relationship with its customers D) where the unit sale is very small E) where the cost of gathering the information is high

6) Which of the following is an example of a business and sales force promotion? A) advertising allowance B) free samples C) contests for sales reps D) display allowance E) discount coupons

60) All response hierarchy models of the communication process assume the buyer passes through cognitive, affective, and behavioral stages, in that order. Which of the following product categories lends itself most appropriately to such a "learn-feel-do" sequence? A) clothes B) dishwashers C) real estate D) personal computer E) air tickets

63) According to the hierarchy-of-effects model, which of the following corresponds to the behavioral stage that a buyer passes through? A) awareness B) knowledge C) purchase D) preference E) conviction

64) When GlaxoSmithKline sponsored a weight-loss community in preparation for the launch of its first weight-loss drug, Alli, which of the following was the key benefit of the online community? A) Consumers did not have commercial interests or company affiliations. B) Democratization of innovation for lowest-common denominator solutions. C) Two-way information flow led to useful, hard-to-get customer information and insights. D) A point of contact for product recalls. E) One-way communication with customers.

74) Share of ________ represents the proportion of company advertising of a product to all advertising of that product. A) wallet B) mind C) voice D) market E) cost

74) Which of the following is true for direct product profitability? A) It is highly correlated with the gross margin on a product. B) It is negligible compared to the gross margin on a product. C) It bears little relation to the gross margin on a product. D) It is significantly lower than the gross margin on a product. E) It is exactly the same as the gross margin on a product.

8) A company has developed the prototype of a mobile phone that it plans to launch in the next few months. The phone comes equipped with the most advanced technological features. As part of its test marketing efforts, the company allows customers to examine and use the prototype and also gathers feedback regarding product features and price. The results of this test marketing effort show that customers are willing to pay at least $500, considering the phone's various features. As such, the company has discovered customers' ________. A) last paid price B) expected future price C) lower-bound price D) upper-bound price E) typical price

8) ________ advertising aims to convince current purchasers that they made the right choice. A) Persuasive B) Informational C) Reinforcement D) Reminder E) Comparative

80) Which of the following extrinsic factors is most likely to sway a consumer's decision about whether to contribute to social media? A) whether they are having fun B) whether they are learning C) whether it affects their self-image D) whether the brand is novel E) whether their family is having fun

98) Key indicators of sales performance include all of the following EXCEPT ________. A) average number of sales calls per salesperson per day B) average revenue per sales call C) advanced marketing cost per sales call D) average cost per sales call E) entertainment cost per sales call

A) advertising allowance B) free samples C) contests for sales reps D) display allowance E) discount coupons

50) List the major types of limited-service wholesalers and explain how each type functions.

Cash and carry wholesalers sell a limited line of fast-moving goods to small retailers for cash. Truck wholesalers sell and deliver a limited line of semiperishable goods to supermarkets, grocery stores, hospitals, restaurants, and hotels. Drop shippers serve bulk industries such as coal, lumber, and heavy equipment. They assume title and risk from the time an order is accepted to its delivery. Rack jobbers serve grocery retailers in nonfood items. Delivery people set up displays, price goods, and keep inventory records; they retain title to goods and bill retailers only for goods sold to the end of the year. Producers' cooperatives assemble farm produce to sell in local markets. Mail-order wholesalers send catalogs to retail, industrial, and institutional customers; orders are filled and sent by mail, rail, plane, or truck.

94) What is channel power? Explain the various types of channel power.

Channel power is the ability to alter channel members' behavior so they take actions they would not have taken otherwise. • Coercive power: A manufacturer threatens to withdraw a resource or terminate a relationship if intermediaries fail to cooperate. This power can be effective, but its exercise produces resentment and can lead the intermediaries to organize countervailing power. • Reward power: The manufacturer offers intermediaries an extra benefit for performing specific acts or functions. Reward power typically produces better results than coercive power, but intermediaries may come to expect a reward every time the manufacturer wants a certain behavior to occur. • Legitimate power: The manufacturer requests a behavior that is warranted under the contract. As long as the intermediaries view the manufacturer as a legitimate leader, legitimate power works. • Expert power: The manufacturer has special knowledge of the intermediaries' value. Once the intermediaries acquire this expertise, however, expert power weakens. The manufacturer must continue to develop new expertise so intermediaries will want to continue cooperating. • Referent power: The manufacturer is so highly respected that intermediaries are proud to be associated with it. Companies such as IBM, Caterpillar, and Hewlett-Packard have high referent power. Coercive and reward power are objectively observable; legitimate, expert, and referent power are more subjective and depend on the ability and willingness of parties to recognize them.

125) What are the different forms of countertrade?

Countertrade can take the following forms: • Barter — The buyer and seller directly exchange goods, with no money and no third party involved. • Compensation deal — The seller receives some percentage of the payment in cash and the rest in products. • Buyback arrangement — The seller sells a plant, equipment, or technology to another country and agrees to accept as partial payment products manufactured with the supplied equipment. • Offset — The seller receives full payment in cash but agrees to spend a substantial amount of the money in that country within a stated time period.

10) Which of the following conditions necessitates that the objective of advertising should be to stimulate more usage of a product? A) The advertised product belongs to a nascent product category. B) The company is not the market leader. C) The advertised brand is superior to the market leader. D) The product class is mature. E) Brand usage for the product is very high.

103) Which of the following is a disadvantage of using a percentage-of-sales method to determine the marketing communications budget? A) It discourages stability when competing firms spend approximately the same percentage of their sales on communications. B) By using a percentage-of-sales method, communication expenditures tend to be extremely high irrespective of what a company can afford. C) It discourages management from thinking of the relationship among communication cost, selling price, and profit per unit. D) Dependence of the percentage-of-sales method on year-to-year sales fluctuations interferes with long-range planning. E) The percentage-of-sales method views sales as the result in itself rather than the determiner of communications.

103) Which of the following is true for distributor brands? A) They sell at higher volumes than national brands and are also known as generics. B) They are usually sold at higher prices than national brands because production costs are higher. C) They are always of better quality than national brands as production is strictly monitored. D) Distributor brands can be sold at lower prices yet generate a higher profit margin because of their lower cost structure. E) Advertising and sales promotion costs for distributor brands are much higher than those for national brands.

34) Which of the following statements is true of the role of advertising in business markets? A) Advertising is unsuitable for explaining any new features that a product might have. B) Sales calls are more economical than reminder advertisements. C) Sales calls are more effective than advertisements at reminding customers how to use a product and reassure them about their purchase. D) Sales representatives can use copies of the company's ads to legitimize their company and products. E) Advertisements are the least preferred tools when intended to generate leads for sales representatives.

76) AT&T found that one of the most effective drivers of its sales, along with unaided advertising awareness was ________. A) a blog B) an online forum C) social networks D) WOM E) pay-per-click ads

82) ________ operates an international word-of-mouth media network powered by 1 million demographically diverse, ordinary people who volunteer to talk up the products they deem worth promoting. A) Brand Advocates B) Vocalpoint C) P&G D) BzzAgent E) Influentials

1) Which of the following is an example of paid media? A) word-of-mouth about the brand B) news stories about the brand C) social network conversations about the brand D) a trade show booth about the brand E) consumers' Instagram photos that include the brand

10) ________ is an element of the marketing communications mix that involves online activities and programs designed to engage customers or prospects and directly or indirectly raise awareness, improve image, or elicit sales of products and services. A) Personal selling B) Direct marketing C) Sales promotion D) Interactive marketing E) Public relations

101) When hotels, motels, and airlines offer discounts in slow selling periods, they are said to be offering ________. A) trade discounts B) quantity discounts C) functional discounts D) seasonal discounts E) trade-in allowances

101) Which of the following consumer promotion tools offers a free amount of a product or service delivered door-to-door, sent in the mail, picked up in a store, attached to another product, or featured in an advertising offer? A) coupons B) rebates C) premiums D) samples E) price packs

106) Marketing communications budgets tend to be higher when there ________. A) is high channel support B) exists hardly any change in the marketing program over time C) are infrequent product purchases in large quantities D) are differentiated products and nonhomogeneous customer needs E) are many easily reachable customers spread over small geographic territories

11) Individual Web pages or clusters of pages that function as supplements to a primary site are ________. A) search engine optimization B) pay-per-click ads C) delighters D) microsites E) touch points

11) Which of the following is an example of a limited-service retailer? A) Customers at TAB pick out the products they want and pay at the checkout counter. B) Salespeople at Eli are always on hand to offer shoppers advice and assistance in choosing products. C) Mina's allows customers to checkout their own purchases in order to reduce the staff count. D) As CLO's offers a number of merchandise-return privileges, customers need information and assistance while shopping. E) Alison's stocks a number of specialty products and the store's salespeople generally help shoppers with all their needs.

110) When Coca-Cola carries a different price depending on whether the consumer purchases it in a fine restaurant, a fast-food restaurant, or a vending machine, then this form of price discrimination is known as ________ pricing. A) product-form B) loss-leader C) special event D) channel E) location

115) ________ serve bulk industries such as coal, lumber, and heavy equipment, assuming title and risk from the time an order is accepted to its delivery. A) Producers' cooperatives B) Cash and carry wholesalers C) Truck wholesalers D) Drop shippers E) Rack jobbers

129) Why should mobile ad developers avoid complex viewing experiences? A) They take a toll on consumers' battery. B) Consumers may have limited data availability. C) Consumers may have limited time. D) All of the above E) None of the above

132) ________ costs for a manufacturer consist of setup costs and running costs. A) Inventory-carrying B) Containerization C) Wholesaling D) Order-processing E) Transportation

134) In the FABV approach, if the salesperson is discussing the monetary terms associated with the offering, s/he is talking about ________. A) features B) advantages C) benefits D) value E) macroenvironment

15) In outbound telemarketing, the call center employees ________. A) sell high-involvement products B) initiate calls from a location closer to prospects C) offer huge discounts to customers D) initiate calls to prospects and customers E) answer the queries of consumers who call for information

16) The management of Raleigh Bicycles observes that the company's selling costs are affected by the increased number of visits that salespeople make to meet dealers. The company decides to reduce its personal selling costs by making sales calls to dealers via telephone. This marketing strategy used by Raleigh is an example of ________. A) inbound telemarketing B) search marketing C) internal marketing D) outbound telemarketing E) paid-search marketing

24) Producers often shift some functions to intermediaries. Which of the following is the most significant benefit of doing this? A) It increases customer loyalty. B) It provides the producer with greater control over operations. C) It reduces the amount of direct customer interaction. D) It lowers the producer's costs and prices. E) It ensures greater information security.

3) Which of the following is an example of retailing? A) Dylan's sends catalogs to retail, industrial, and institutional customers. B) SEZ U Inc. sells a limited line of fast-moving goods to small retailers for cash. C) BEL Inc. sells FMCG goods to merchant wholesalers and distributors. D) Praxis International sells products to consumers directly through the Internet. E) Hub Styles procures its raw materials directly from farmers in the region.

32) Market skimming pricing makes sense under all the following conditions, EXCEPT if ________. A) a sufficient number of buyers have a high current demand B) the unit costs of producing a small volume are high enough to cancel the advantage of charging what the traffic will bear C) the high initial price does not attract more competitors to the market D) consumers are likely to delay buying the product until its price drops E) the high price communicates the image of a superior product

34) Which of the following is the main advantage of radio as an advertising medium? A) low competition B) more attention than television C) longer duration of ad exposure D) flexibility E) standardized rate structures

36) Which of the following marketing communications tools is most effective at influencing customers at the conviction stage of buyer readiness? A) advertising B) publicity C) sales promotion D) personal selling E) events and experiences

37) The number of different persons or households exposed to a particular media schedule at least once during a specified time period is known as ________. A) range B) impact C) intensity D) reach E) frequency

39) The qualitative value of an exposure through a given medium is known as ________. A) frequency B) reach C) amplitude D) impact E) range

6) A company decided to conduct a market survey for its new MP3 player that the company had priced at $150. In the survey, 95 percent of participants said that the maximum they would pay for the MP3 player is $100. This is an example of which of the following possible consumer reference prices? A) historical competitor price B) expected future price C) usual discounted price D) upper-bound price E) last price paid

6) A large staff, along with a higher proportion of specialty goods and slower-moving items and many services, are usually features of ________ retailing. A) self-service B) self-selection C) limited service D) full-service E) limited-selection

60) Everyday low pricing is most suitable if ________. A) consumers are willing to perform activities such as clip coupons to avail of discounts B) consumers tend to associate price with quality C) customers are insensitive to changes in price D) the cost of conducting frequent sales and promotions is high E) consumers have sufficient time to find the best prices

61) When planning communications for a detergent brand, which of the following sequences of buyer responses should the marketer choose on which to base the communications model? A) feel-do-learn B) do-feel-learn C) feel-learn-do D) learn-do-feel E) learn-feel-do

66) Alduro Chemicals, a manufacturer of detergents, delivers chemicals used for commercial washing to various hoteliers in the United States. Most of the company's revenue comes from routine orders from its existing customers. The company uses unskilled salespeople to collect requirements from its customers. These unskilled customers are known as ________. A) demand creators B) deliverers C) missionaries D) order takers E) solution vendors

69) A sales representative whose expertise is in unraveling customers' problem is called a(n) ________. A) order taker B) missionary C) technician D) solution vendor E) demand creator

75) Mass merchandisers and discount stores typically fall into the ________ group with respect to margins and volume. A) mixed markup, high-volume B) low-volume, mixed markup C) low-volume, low-markup D) high-volume, low-markup E) high-markup, low-volume

78) American businessman King Gillette pioneered the sales model in which razor handles were given away for free or sold at a loss, but sales of disposable razor blades were very profitable. This is known as the ________ model. A) two-tiered pricing B) predatory pricing C) cross selling D) loss leading E) product churning

79) When Apple introduced the iPod in October, 2001, it was the first-of-its-kind product that offered sizable storage capacity for songs and a portable device that was not seen before in the market. Which of the following is most likely to have been the marketing communications objective for the iPod at the time of its introduction? A) developing brand awareness B) building customer traffic C) enhancing purchase actions D) establishing product category E) enhancing firm image

89) ________ is the rung of the customer loyalty ladder where the customer convinces others to purchase/join. A) Word of mouth/buzz B) Repeat purchase C) Satisfaction D) Evangelism E) Ownership

9) The predominant response function for advertising is often concave, but when it is S-shaped, ________. A) sales are flat, and advertising does not generate any sales impact B) any increase in advertising spending results in a proportionally positive increase in sales C) any increase in advertising spending results in a proportionally negative decrease in sales D) some positive amount of advertising is necessary to generate any sales impact, but sales increases eventually flatten out E) advertising is not necessary to generate any sales impact

90) Daryl convinced his prospective client that Car A was the best for him. But, the client insisted that the car cost him a good $10,000 more than Car B, the one which he was thinking of buying. Daryl told him that the amount he would have to spend on the fuel, insurance, repairs, and maintenance for Car B would be 5 times more than what he would have to spend on Car A. Finally convinced, the client consented to buy Car A. What technique did Daryl use to convince his customer?

Daryl convinced his customer that Car A offers him the lowest total cost of ownership.

41) Why is direct mail popular among marketers? What are its weaknesses?

Direct mail is a popular medium because it permits target market selectivity, can be personalized, is flexible, and allows early testing and response measurement. Although the cost per thousand is higher than for mass media, the people reached are much better prospects. Direct mail can produce prospect leads, strengthen customer relationships, inform and educate customers, remind customers of offers, and reinforce recent customer purchase decisions. The success of direct mail, however, has also become its liability — so many marketers are sending out direct-mail pieces that mailboxes are becoming stuffed, leading some consumers to disregard the blizzard of solicitations they receive.

39) How have sellers benefited from market demassification?

Direct marketers can buy a list containing the names of almost any group: left-handed people, overweight people, or millionaires. They can customize and personalize messages and build a continuous relationship with each customer. New parents will receive periodic mailings describing new clothes, toys, and other goods as their child grows. Direct marketing can reach prospects at the moment they want a solicitation and therefore be noticed by more highly interested prospects. It lets marketers test alternate media and messages to find the most cost-effective approach. Direct marketing also makes the company's offer and strategy less visible to competitors. Finally, direct marketers can measure responses to their campaigns to decide which have been the most profitable.

36) What is direct marketing? What are the various channels that direct marketers use?

Direct marketing is the use of consumer-direct (CD) channels to reach and deliver goods and services to customers without using marketing middlemen. Direct marketers can use a number of channels to reach individual prospects and customers: direct mail, catalog marketing, telemarketing, interactive TV, kiosks, Web sites, and mobile devices. They often seek a measurable response, typically a customer order, through direct-order marketing.

117) The owner of supermarket chain Reynold's has realized that customers want a wider variety of goods than is currently available. However, Reynold's cannot afford the costs of storing excess inventory. Additionally, the owner is not willing to take the risk that the new products will remain unsold. Which of the following types of wholesalers can help Reynold's meet customer demand while minimizing costs? A) producers' cooperatives B) cash and carry wholesalers C) truck wholesalers D) drop shippers E) rack jobbers

127) When it comes to ad design and copy, mobile ads should use which of the following guidelines? A) Use lots of bright colors but limit ad copy to a pair of phrases. B) Do not use color and limit ad copy to one phrase. C) Use no more than three bright colors and use as much copy as you want. D) Use four bright colors and limit ad copy to one phrase. E) Use at least one bright color, but no more than two, and limit ads to a pair of phrases.

52) Despite its weaknesses, markup pricing remains popular for which of the following reasons? A) Sellers can determine demand much more easily than they can estimate costs. B) By tying the price to cost, the pricing task becomes more sophisticated. C) When all firms in the industry use markup pricing, price competition flourishes. D) Sellers take advantage of buyers when the latter's demand becomes acute. E) Many people feel that cost-plus pricing is fairer to both buyers and sellers.

59) LCH is a leading electronics company that produces and markets its own brand of desktop and laptop computers, for both individual consumers and businesses. During the planning process, LCH conducts a ________, which profiles all interactions customers in the target market may have with LCH, its computers, and its services. A) sales promotion B) brand association C) brand contact D) response hierarchy model E) communication audit

64) The original and oldest form of direct marketing is ________. A) billboards B) banner advertising C) mail campaigns D) outbound telemarketing calls E) field sales calls

7) The minimum price that most consumers would pay for a given product is known as the ________ price. A) everyday low B) usual discounted C) fair D) typical E) lower-bound

73) In supermarkets and other retail outlets, RFID is used to ________. A) change prices instantaneously B) check for spoilage or damage to goods C) advertise special offers and discounts D) run continual promotional messages E) monitor inventory and track goods

78) Which of the following is the marketing communications objective for a new-to-the-world product, such as electric cars? A) enhancing brand awareness B) developing brand attitude C) increasing brand purchase intention D) encouraging repeat purchases E) establishing category need

102) Though it is sold only in Walmart stores, Walmart's Ol'Roy dog food has surpassed Nestlé's Purina brand as the top-selling dog food. Ol'Roy is an example of a ________. A) generic product B) national brand C) franchise D) copy-cat brand E) private label

104) An administered VMS coordinates successive stages of production and distribution through ________. A) an automated central control unit B) single ownership C) the combined efforts of all its members D) the establishment of contractual obligations E) the size and power of one of the members

104) Compensation plans may need to vary depending on the type of salespersons. Which type of salesperson benefits from consistent quarterly bonuses and social pressure? A) stars B) core performers C) dogs D) cash cows E) laggards

105) In ________, the seller charges a separate price to each customer depending on the intensity of his or her demand. A) second-degree price discrimination B) third-degree price discrimination C) psychological discounting D) special-customer pricing E) first-degree price discrimination

112) ________ time begins with the promotional launch and ends when approximately 95 percent of the deal merchandise is in the hands of consumers. A) Lead B) Hold C) Setup D) Link E) Sell-in

113) Rolex calls itself the "Official Timekeeper" of the Wimbledon and Australian Open lawn tennis championships, by virtue of its sponsorships of the marquee events. What is the most likely objective for Rolex's sponsorship deal with these events? A) to permit merchandising or promotional opportunities B) to express commitment to the community or on social issues C) to create experiences and evoke feelings D) to identify with a particular target market or lifestyle E) to increase salience of company or product name

12) Marketers often cut the cost of advertising dramatically by using consumers as their creative team. This strategy is known as ________. A) disintermediation B) public relations C) vertical integration D) reintermediation E) crowdsourcing

12) Which of the following elements of the marketing communications mix involves face-to-face interaction with one or more prospective purchasers for the purpose of making presentations, answering questions, and procuring orders? A) advertising B) sales promotion C) word-of-mouth marketing D) public relations E) personal selling

125) A large retail chain in the United States decides to expand its operations by adding an online site for e-commerce. This is called a(n) ________ company. A) B2B B) brick-and-mortar C) m-commerce D) pure-click E) brick-and-click

128) Carlos is training his new graphic design intern on the use of color in mobile ads. Which of the following is good advice when it comes to the use of color? A) Only use one bright color. B) Do not use bright colors. C) Use at least three bright colors. D) Use at least four bright colors. E) Use a bright color to highlight calls to action.

130) In which developed Asian market is mobile marketing becoming a central component of customer experiences? A) Hong Kong B) Japan C) Singapore D) South Korea E) All of the above

130) Which company uses 150 different signals — including dozens of online data feeds — to rate customer leads? A) IBM B) Avon C) SAS D) FABV E) Infer

136) When higher-priced competitors match lower prices of their competitors but have longer staying power because of deeper cash reserves, it leads to a(n) ________ trap. A) low-quality B) fragile-market-share C) price war D) escalator E) shallow-pockets

14) The practice of using call centers, where employees receive calls from customers and provide service by taking orders and answering queries, is called ________. A) customer response marketing B) guerilla marketing C) reactive marketing D) internal marketing E) inbound telemarketing

142) Which of the following is an example of a private carrier? A) MET is a transporter that operates only in the Chicago area and charges fixed prices. B) BCL is a family firm that owns only three trucks, but takes small orders for transport. C) VTV owns a fleet of trucks and transports goods for any client for a fee. D) COM is a shipping firm that transports goods by road and rail across the United States. E) BEL Inc. manufactures parts for automobiles and transports its products to customers itself.

143) As Ben manages communications for his company's watch brand, which has reached the decline stage in the product life cycle, which of the following marketing communications mix tools is he most likely to continue? A) interactive marketing B) advertising C) personal selling D) direct marketing E) sales promotion

143) The trucking firm hired by your transportation manager provides a trucking service between the city of Sacramento and the surrounding towns on a regular schedule and at fixed prices. The trucking firm saves transportation costs by transporting the goods using trains as well as trucks, instead of trucks alone. Your transportation manager has hired a(n) ________ carrier. A) airship B) airtruck C) trainship D) fishyback E) piggyback

32) Aisha is a marketing manager with Injoos, a company that manufactures packaged fruit juices. Knowing that several other companies exist in the market that offer similar products, Aisha decides to build a customer base from among those who prefer to avoid mass media and other targeted promotions. Which of the following marketing communications tools would be her best option to build a favorable impression among the prospective customers? A) advertising B) personal selling C) sales promotions D) direct marketing E) public relations

40) Which of the following marketing communications tools has the highest cost-effectiveness in the introduction stage of the product life cycle? A) personal selling B) sales promotion C) interactive marketing D) direct marketing E) events and experiences

41) JJ pays overhead each month, including his company's bills for rent, heat, interest, and salaries, which are examples of ________ costs. A) total B) average C) activity-based D) variable E) fixed

44) Costs that differ directly with the level of production are known as ________ costs. A) fixed B) overhead C) opportunity D) target E) variable

45) What is the weighted number of exposures of a media schedule that reaches 80 percent of the target audience, with an exposure frequency of 4 and impact value of 2? A) 10 B) 160 C) 240 D) 320 E) 640

46) Which of the following is an advantage of using newspapers as an advertising medium? A) long lifespan B) high reproduction quality C) huge "pass-along" audience D) high level of targeting E) good local market coverage

50) Which of the following is an advantage of using radio as an advertising medium? A) higher attention than television B) standardized rate structures C) long duration of ad exposure D) high quality reproduction E) high geographic selectivity

51) An intensive distribution strategy serves well for ________. A) premium cars B) commercial trucks C) private label products D) industrial equipment E) newspapers

51) The Internet provides marketers and consumers with opportunities for much greater interaction and ________ than do other marketing channels. A) control B) data security C) high involvement selling D) order conversion E) individualization

59) Which of the following is a positive factor when considering the development of a customer database? A) The product is a once-in-a-lifetime purchase. B) There is no contact between the buyer and seller. C) There is a lot of customer churn. D) The unit sale is very small. E) Customer lifetime value is high.

6) ________ advertising aims to stimulate repeat purchase of products and services. A) Reinforcement B) Comparative C) Persuasive D) Informational E) Reminder

61) Which of the following is NOT a benefit of a social media presence for a brand? A) Social media allows marketers to establish a public voice and presence online. B) Social media can cost-effectively reinforce other communication activities. C) Social media can encourage companies to stay innovative and relevant. D) Social media can be used to build or tap into online communities. E) Social media allows companies to have a short-term focus.

63) In which of the following auctions does the auctioneer first announce a high price for a product and then slowly decreases the price until a bidder accepts? A) a Dutch auction with one buyer and many sellers B) an English auction with one seller and many buyers C) an ascending bid auction D) a sealed-bid auction E) a Dutch auction with one seller and many buyers

64) According to the hierarchy-of-effects model, which of the following corresponds to the affective stage that a buyer passes through? A) attention B) exposure C) reception D) adoption E) conviction

68) Robert is hired as a sales representative for a company that manufactures fire extinguishers. His job description reads as follows: "The key duty of the sales representative is to unravel the customer's problems using the company's products." Which of the following positions would best describe Robert's profile? A) deliverer B) technical salesperson C) missionary salesperson D) order taker E) solution vendor

7) What percentage of total digital ad spending is accounted for by search advertising? A) 1 percent B) 7 percent C) 17 percent D) 30 percent E) 43 percent

8) OrdOnline, a pure click company offering online auctioning, decides to launch a promotional program to increase its sales. The company identifies customers who have made at least three purchases and spent at least $150 in the past six months and offers discount coupons to these customers. Which of the following strategies is used here for targeting customers? A) viral marketing B) objective screening C) internal targeting D) catalog marketing E) RFM formula targeting

83) Which of the following is NOT an example of viral marketing? A) Quicksilver puts out surfing videos and surf-culture books for teens. B) Johnson & Johnson has a popular parenting advice Web site. C) Walmart places videos with money-saving tips on YouTube. D) Mountain Dew has a record label and offers free downloads. E) Hasbro places a Facebook ad about its TV channel.

86) A company uses sales representatives for selling the company's more complex and customized products to large accounts, while using inside salespeople and Web ordering for low-end selling. Which of the following describes the company's sales force best? A) demand creators B) direct marketing force C) missionary sellers D) technical salesforce E) leveraged salesforce

91) When another customer complains about the hair salon where Georgeanna is a loyal customer, she defends it because she feels responsible for the continued success of the hair salon. This behavior suggests she has reached the ________ rung of the loyalty ladder. A) word of mouth/buzz B) repeat purchase C) satisfaction D) evangelism E) ownership

92) Fixed compensation receives more emphasis in sales rep jobs with ________. A) a high ratio of selling to nonselling duties B) a high requirement for individual initiatives C) an intensive focus on selling activities D) very little need for teamwork E) technical complexities

92) The top rung of the loyalty ladder is the ________ rung. A) word of mouth/buzz B) repeat purchase C) satisfaction D) evangelism E) ownership

95) One of the measures of online word of mouth at DuPont was the effort's ________, or whether it was not a one-shot deal. A) authority B) sentiment C) relevance D) scale E) sustainability

92) Ellie's manager has asked her to come up with ways to reduce costs of their new product by utilizing a process called "target costing." What should Ellie do?

Ellie will have to ask the marketing research department to establish the new product's desired functions and the price at which the product will sell, given its appeal and competitors' prices. Deducting the desired profit margin from this price leaves the target cost that must be achieved. Her company will then have to examine each cost element like the design, engineering, manufacturing, and sales and bring down costs so that the final cost projections are in the target range.

23) If a specific campaign does not break even in the short run, it will not be profitable in the long run if we factor in customer lifetime value by calculating the average customer longevity, average customer annual expenditure, and average gross margin, minus the average cost of customer acquisition and maintenance (discounted for the opportunity cost of money).

FALSE

66) Firms benefit when they democratize innovations and replace groundbreaking ideas with lowest-common-denominator solutions.

FALSE

90) Mass merchandisers are usually high-markup, lower-volume stores.

FALSE

100) Consumers are more likely to transmit negative WOM and pass on information about their own negative consumption experiences.

FALSE

103) P&G's Vocalpoint is a group built on the premise that moms who have conversations with three to five women each day are more influential than women who speak to 25 to 30 other women during the day.

FALSE

109) The fixed amount in a salesperson's salary is primarily designed to stimulate and reward efforts from salespeople.

FALSE

110) Variable compensation is common in jobs where the selling task is technically complex and requires teamwork.

FALSE

120) In first-degree price discrimination, the seller charges less to buyers who purchase in larger volumes.

FALSE

14) A pull strategy is particularly appropriate when there is low brand loyalty in a category, brand choice is made in the store, the product is an impulse item, and product benefits are well understood.

FALSE

14) Persuasive advertising aims to create brand awareness and knowledge of new products or new features of existing products.

FALSE

14) Pricing cues such as sale signs and prices that end in 9 are more influential when consumers are experienced in the category.

FALSE

15) Reinforcement advertising aims to stimulate repeat purchase of products and services.

FALSE

150) The public relations function of lobbying involves advising management about public issues as well as company positions and image during good times and bad.

FALSE

151) A firm in a homogeneous market that has the ability to augment its product is more likely to need to meet a competitive price reduction than one that does not have the ability to augment its product.

FALSE

151) The main objective of marketing public relations is to secure editorial space in print and broadcast media to promote or "hype" a product, service, idea, place, person, or organization.

FALSE

151) The order-processing cost per unit increases with the number of units ordered because the order costs are spread over more units.

FALSE

153) Conflicts between various franchisees of a company are an example of vertical channel conflict.

FALSE

22) The rapid diffusion of multipurpose smart phones, broadband and wireless Internet connections, and ad-skipping digital video recorders (DVRs) have augmented the effectiveness of the mass media.

FALSE

23) Earned media includes company-generated advertising, publicity, and other promotional efforts.

FALSE

25) In this new communication environment, advertising is often the single most important element of a marketing communications program for sales and building brand and customer equity.

FALSE

26) A company's best prospects are customers who have never bought its products.

FALSE

26) Personal selling refers to person-to-person oral, written, or electronic communications that relate to the merits or experiences of purchasing or using products or services.

FALSE

26) Relative to online marketing communications, traditional media offers advantages related to contextual placement.

FALSE

27) Beauty pioneer Estée Lauder does not utilize Internet marketing because the multimillion-dollar cosmetics business uses three means of communication: "telephone, telegraph, and tell a woman."

FALSE

28) Although it varies with product category, price, and the nature of the offering, in general, average response rates for e-mails is higher than order-response rates for letter-sized direct mail.

FALSE

31) When Tough Mudder launched in 2010, it spent its entire $8,000 communication budget on mobile advertising, which generated plenty of word of mouth.

FALSE

37) Average click-through for pay-per-click ads is about 0.08 percent.

FALSE

45) Clickable graphic icons and buttons that link to more details of a marketing offer have lower click-through rates than links that simply utilize an Internet address.

FALSE

46) Corporate chain stores such as Subway, Jiffy-Lube, Holiday Inn, Supercuts, and 7-Eleven account for $1 trillion of annual US sales and 40 percent of all retail transactions.

FALSE

46) Public relations is incapable of reaching prospects who prefer to avoid mass media and targeted promotions.

FALSE

48) Advertising and publicity play the most important roles in the conviction stage of buyer readiness.

FALSE

59) Lot size refers to the total number of units a channel can transmit from the manufacturer's place to the service outlet.

FALSE

60) Database marketing is ideal when a company does not have direct contact with its customers.

FALSE

62) When economic conditions are depressed, producers want to move goods to market using longer channels.

FALSE

63) Department stores only face competition from other department stores as other retailing forms are not a threat to their sales and profitability.

FALSE

64) Intensive distribution relies on only some of the intermediaries willing to carry a particular product.

FALSE

65) Intensive distribution is becoming a mainstay for specialists looking for an edge in markets increasingly driven by price.

FALSE

66) Growth in the retail market is centered firmly in the middle market, leaving luxury retailers and discounting specialists struggling.

FALSE

68) Electronic shelf labeling allows retailers to check inventory levels instantaneously.

FALSE

69) Facebook is an early warning system for firms that permits rapid response, whereas Twitter allows deeper dives to engage consumers in more meaningful ways.

FALSE

69) If a small Iowa college builds awareness among applicants from Nebraska, increases the target audience's knowledge about its offerings, communicates in a way that makes the target audience like it and prefer it to other colleges, builds intent to apply, and gets the target audience to attend, they are using an AIDA model of consumer responses.

FALSE

69) If firms wish to maximize their market share, they should opt for market-skimming pricing.

FALSE

138) What can US marketers learn about mobile marketing by looking overseas?

In developed Asian markets such as Hong Kong, Japan, Singapore, and South Korea, mobile marketing is fast becoming a central component of customer experiences. In developing markets, high smart-phone penetration also makes mobile marketing attractive. For example, Coca-Cola created a national campaign asking Beijing residents to send text messages guessing the high temperature in the city every day for just over a month for a chance to win a one-year supply of Coke products. The campaign attracted more than 4 million messages over the course of 35 days.

124) Why do retailers prefer to deal with wholesalers rather than directly with manufacturers?

In general, retailers prefer to deal with wholesalers rather than directly with manufacturers (and vice versa) as wholesalers are better at performing the following functions: • Selling and promoting: Wholesalers' sales forces help manufacturers reach many small business customers at a relatively low cost. They have more contacts, and buyers often trust them more than they trust a distant manufacturer. • Buying and assortment building: Wholesalers are able to select items and build the assortments their customers need, saving them considerable work. • Bulk breaking: Wholesalers achieve savings for their customers by buying large carload lots and breaking the bulk into smaller units. • Warehousing: Wholesalers hold inventories, thereby reducing inventory costs and risks to suppliers and customers. • Transportation: Wholesalers can often provide quicker delivery to buyers because they are closer to the buyers. • Financing: Wholesalers finance customers by granting credit, and finance suppliers by ordering early and paying bills on time. • Risk bearing: Wholesalers absorb some risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence. • Market information: Wholesalers supply information to suppliers and customers regarding competitors' activities, new products, price developments, and so on. • Management services and counseling: Wholesalers often help retailers improve their operations by training sales clerks, helping with store layouts and displays, and setting up accounting and inventory-control systems. They may help industrial customers by offering training and technical services.

29) What are the four types of advertising timing patterns available to marketers when launching a new product?

In launching a new product, the advertiser must choose among continuity, concentration, flighting, and pulsing. • Continuity means exposures appear evenly throughout a given period. Generally, advertisers use continuous advertising in expanding market situations, with frequently purchased items, and in tightly defined buyer categories. • Concentration calls for spending all the advertising dollars in a single period. This makes sense for products with one selling season or related holiday. • Flighting calls for advertising during a period, followed by a period with no advertising, followed by a second period of advertising activity. It is useful when funding is limited, the purchase cycle is relatively infrequent, or items are seasonal. • Pulsing is continuous advertising at low-weight levels, reinforced periodically by waves of heavier activity. It draws on the strength of continuous advertising and flights to create a compromise scheduling strategy. Those who favor pulsing believe the audience will learn the message more thoroughly, and at a lower cost to the firm.

54) Compare and contrast paid search ads, banner ads, and interstitials. In your response, please identify the advantages and disadvantages of each advertising format.

In paid search ads, a marketer's ad is shown based on keywords the consumer is searching, and the ads may appear above or next to the results, depending on the amount the company bids and an algorithm the search engines use to determine an ad's relevance to a particular search. Marketers pay only if the consumer clicks through on the ad. Marketers believe that consumers who click the ads are pre-screened prospects. Search ads have a 2 percent click-through rate, which is higher than banner ads or interstitials. However, Internet users only spend about 5 percent of their time online searching for information. Further, the increased popularity of search ads means popular keywords are more expensive. Marketers must be creative with their ad placements and keyword bids. Banner ads are small, rectangular boxes containing text and perhaps a picture that companies pay to place on relevant Web sites. The larger the audience, the higher the cost. In the early days of the Internet, viewers clicked on 2 percent to 3 percent of the banner ads they saw, but that percentage has quickly plummeted, and advertisers have explored other forms of communication. They are important because of the amount of time consumers spend online when they are not searching, but they have to be more attention-getting and influential, better targeted, and more closely tracked than they used to be. Interstitials are advertisements, often with video or animation, that pop up between page changes within a Web site or across Web sites. They can be targeted based on a consumer's needs or anticipated needs, as opposed to what the consumer is looking for. Because consumers find such pop-up ads intrusive and distracting, many use software to block them.

91) Describe the methods used to measure sponsorship activities.

It's a challenge to measure the success of events. The supply-side measurement method focuses on potential exposure to the brand by assessing the extent of media coverage, and the demand-side method focuses on exposure reported by consumers. Supply-side methods approximate the amount of time or space devoted to media coverage of an event, for example, the number of seconds the brand is clearly visible on a television screen or the column inches of press clippings that mention it. These potential "impressions" translate into a value equivalent to the dollar cost of actually advertising in the particular media vehicle. Although supply-side exposure methods provide quantifiable measures, equating media coverage with advertising exposure ignores the content of the respective communications. The advertiser uses media space and time to communicate a strategically designed message. Media coverage and telecasts only expose the brand and don't necessarily embellish its meaning in any direct way. Although some public relations professionals maintain that positive editorial coverage can be worth 5 to 10 times the equivalent advertising value, sponsorship rarely provides such favorable treatment. The demand-side method identifies the effect sponsorship has on consumers' brand knowledge. Marketers can survey event spectators to measure recall of the event as well as resulting attitudes and intentions toward the sponsor.

150) What is integrated marketing communications? What is its significance in the current marketing environment?

Many companies still rely on only one or two communication tools. This practice persists in spite of the fragmenting of mass markets into a multitude of minimarkets, each requiring its own approach; the proliferation of new types of media; and the growing sophistication of consumers. The wide range of communication tools, messages, and audiences makes it imperative that companies move toward integrated marketing communications. Companies must adopt a "360-degree view" of consumers to fully understand all the different ways that communications can affect consumer behavior in their daily lives. The American Marketing Association defines integrated marketing communications (IMC) as "a planning process designed to assure that all brand contacts received by a customer or prospect for a product, service, or organization are relevant to that person and consistent over time." This planning process evaluates the strategic roles of a variety of communications disciplines — for example, general advertising, direct response, sales promotion, and public relations — and skillfully combines these disciplines to provide clarity, consistency, and maximum impact through the seamless integration of messages.

135) What are mobile apps and how are they used?

Mobile apps are bite-sized software programs that can be downloaded to smart phones. Apps can perform useful functions — adding convenience, social value, incentives, and entertainment and making consumers' lives a little or a lot better.

54) Karl Lipton is the marketing communications coordinator for a major electronics manufacturer. He is assigned with charting out a communications strategy for a new range of mobile phones developed by his company. How will Karl's communications strategy look over the course of the mobile phones' life cycle?

Mobile phones have relatively short life cycles. In the introduction stage of the phones' life cycle, advertising, events and experiences, and publicity have the highest cost-effectiveness. In-store personal selling helps improve distribution coverage, while sales promotions such as discounted accessories, freebies etc., help induce trial. In the growth stage, demand has its own momentum through word of mouth and interactive marketing. Web sites are effective tools during the growth stage. As the phones reach the maturity stage, advertising, promotional events and experiences, and personal selling again become more important. As the phones enter the decline stage of their life cycle, sales promotion takes over as the most important tool in the marketing communications mix, even as other communication tools are reduced, and salespeople give the phones only minimal attention.

44) Most direct marketers apply the RFM formula to select customers. Explain this formula and how it is used to select customers.

Most direct marketers apply the RFM (recency, frequency, monetary amount) formula to select customers according to how much time has passed since their last purchase, how many times they have purchased, and how much they have spent since becoming a customer. Suppose a company is offering leather jackets. It might make this offer to the most attractive customers, those who made their last purchase between 30 and 60 days ago, who make three to six purchases a year, and who have spent at least $100 since becoming customers. Points are established for varying RFM levels; the more points, the more attractive the customer.

37) How did the Obama campaign use direct marketing during the 2012 election?

Much of the $690 million raised online by the Obama campaign resulted from carefully targeted and tested e-mails. Every day, the campaign used small groups of supporters to test as many as 18 different versions of e-mails varying in subject line, amounts requested, and sender. The winning combination went to the broad base of tens of millions of supporters. Campaign analysts found that a casual tone (such as the word hey) was often effective in subject lines and that supporters seemed to never tire of the e-mails.

146) How can a firm anticipate a competitor's reactions to a price change?

One way is to assume the competitor reacts in the standard way to a price being set or changed. Another is to assume the competitor treats each price difference or change as a fresh challenge and reacts according to self-interest at the time. Now the company will need to research the competitor's current financial situation, recent sales, customer loyalty, and corporate objectives. If the competitor has a market share objective, it is likely to match price differences or changes. If it has a profit-maximization objective, it may react by increasing its advertising budget or improving product quality. The problem is complicated because the competitor can put different interpretations on lowered prices or a price cut: that the company is trying to steal the market, that it is doing poorly and trying to boost its sales, or that it wants the whole industry to reduce prices to stimulate total demand.

48) Given the disadvantages associated with online marketing communications, is it worth it for companies to use them? In your response, please identify the disadvantages of online marketing communications.

Online marketing communications are challenging because consumers can screen out messages; software-powered Web sites generate bogus clicks, which can throw off metrics; marketers can lose control of online messages, which can be hacked or vandalized. Consumers control the flow of information by selecting who they interact with and engaging selectively in the information. However, almost half of consumer media time is spent online, and marketers must reach consumers where they are.

47) List and explain the four service levels offered by retailers.

Retailers meet widely different consumer preferences for service levels and specific services. The four levels of service usually offered by retailers are: 1. Self-service: Self-service is the cornerstone of all discount operations. Many customers are willing to carry out their own "locate-compare-select" process to save money. 2. Self-selection: Customers find their own goods, although they can ask for assistance. 3. Limited service: These retailers carry more shopping goods and services such as credit and merchandise-return privileges. Customers need more information and assistance. 4. Full-service: Salespeople are ready to assist in every phase of the "locate-compare-select" process. Customers who like to be waited on prefer this type of store. The high staffing cost, along with the higher proportion of specialty goods and slower-moving items and the many services, result in high-cost retailing.

126) Compare and contrast advertising and sales promotion as marketing communication tools.

Sales promotion expenditures increased as a percentage of budget expenditure for a number of years, although its growth has recently slowed. Several factors contributed to this growth, particularly in consumer markets. Promotion became more accepted by top management as an effective sales tool, the number of brands increased, competitors used promotions frequently, many brands were seen as similar, consumers became more price-oriented, the trade demanded more deals from manufacturers, and advertising efficiency declined. But the rapid growth of sales promotion created clutter. Loyal brand buyers tend not to change their buying patterns as a result of competitive promotions. Advertising appears to be more effective at deepening brand loyalty, although we can distinguish added-value promotions from price promotions. Price promotions may not build permanent total-category volume. Small-share competitors may find it advantageous to use sales promotion because they cannot afford to match the market leaders' large advertising budgets, nor can they obtain shelf space without offering trade allowances or stimulate consumer trial without offering incentives. Dominant brands offer deals less frequently, because most deals subsidize only current users.

56) Mal's father and grandfather ran Reynold's, a general store in the town of Bayswater. When Mal inherited the store, the town was expanding rapidly and a number of multinational franchisors showed interest in entering the town. Mal wants to turn Reynold's into a franchise of Blue Sun, a fast-food chain. What benefits can Mal gain from this move?

Student answers will vary. As the franchisor's brand is usually well-known, Mal obtains the benefit of a brand name that has already been accepted by customers. He could find it easier to get loans and financial help from banks on the basis of the well-known brand name. As the franchisor will provide everything from operational processes to marketing assistance, Mal need not spend time and effort beginning the process from scratch.

96) Skincare company E&OE retails its products through standalone stores or through its own stores within malls. The management uses this method so that customers are sure of finding only E&OE products at the stores and the brand image remains strong. In this scenario, what can E&OE do to generate consumer interest while retaining its exclusivity?

Student answers will vary. E&OE can do any or all of the following: • Feature blockbuster distinctive merchandise events. • Feature surprise or ever-changing merchandise. • Feature the latest or newest merchandise first. • Offer merchandise-customizing services. • Offer a highly targeted assortment.

97) Over the past three years, skincare products retailer E&OE has realized that it is losing sales to competitors who sell products online. E&OE has always cultivated an exclusive upscale image, and the management feels that shifting to the online route will only harm the brand image and sales in the long run. How can E&OE encourage customers to frequent its stores?

Student answers will vary. E&OE can offer more in-store services for its customers. It can offer information about the products, consultation and advice about the kinds of products to choose and allow customers to test or experience the products themselves. The retailer can also revamp the store atmosphere to be more inviting to customers, using music and fragrances and store design to create a pleasurable experience. E&OE can also increase the number of activities and experiences that customers can participate in.

71) HCN is a wholesaler that supplies consumer good products to a number of retailers. HCN has witnessed the worrying trend of its competitors losing out on suppliers who approach retailers directly. How can HCN strengthen its relationship with manufacturers and prevent this?

Student answers will vary. HCN can work to reach a clear agreement with their manufacturers about their expected functions in the marketing channel. It can gain insight into the manufacturers' requirements by visiting their plants and attending manufacturer association conventions and trade shows. HCN must also fulfill its commitments to the manufacturer by meeting the volume targets, paying bills promptly, and feeding back customer information to the manufacturers. It can also identify and offer value-added services, such as financing, on-site inventory management, parts-tracking software, and chip programming, to help its suppliers.

53) Identify two general guidelines for Search Engine Optimization and paid search ads.

Student answers will vary. Here are four general guidelines: • Broader search terms ("MP3 player" or "iPod") are useful for general brand building; more specific ones identifying a particular product model or service ("Apple iPod classic 160GB") are useful for generating and converting sales leads. • Search terms need to be spotlighted on the appropriate pages of the marketer's Web site so search engines can easily identify them. • Any one product can usually be identified by means of multiple keywords, but marketers must bid on each keyword according to its likely return on revenue. It also helps to have popular sites link back to the marketer's Web site. • Data can be collected to track the effects of paid search.

126) Reynold's, a supermarket chain, carries the K-Nine range of dog food manufactured by JGB. However, the chain does not interact directly with JGB, but obtains stocks from wholesalers. It has been suggested that Reynold's save costs by sourcing products directly from JGB. However, Mal, the CEO of Reynold's, insists that wholesalers are the most hassle-free option for Reynold's. What can Mal say to justify this?

Student answers will vary. Mal can justify this using any or all of the following reasons: • Wholesalers are able to select items and build the assortments Reynold's needs, saving Reynold's considerable work. • Wholesalers achieve savings for Reynold's by buying large carload lots and breaking the bulk into smaller units. • Wholesalers hold inventories, thereby reducing inventory costs and risks for Reynold's, who needn't hold the inventory for itself. • Wholesalers finance Reynold's by granting credit. • Wholesalers supply information regarding competitors' activities, new products, price developments, and so on.

154) E&OE wants to minimize inventory costs as far as possible. Explain one way by which it can achieve a near-zero inventory.

Student answers will vary. Manufacturers can achieve a near-zero inventory by building for order, not for stock, i.e., manufacturing a product only when it receives an order. However, this system will work only when the customers do not need a product immediately.

113) Provide five examples of things a marketer might track to measure buzz.

Student answers will vary. Marketers might track scale (how far the campaign reached), speed (how fast it spread), share of voice in that space, share of voice in that speed, whether it achieved positive lift in sentiment, whether the message was understood, whether it was relevant, whether it had sustainability (and was not a one-shot deal), and how far it moved from its source. Other marketers might characterize the source of the word of mouth. One example evaluates blogs by their relevance, sentiment, and authority. Another group measures the types of investments customers make in engaging with brands (e.g., efforts on blogs, microblogs, cocreation, forums and discussion boards, product reviews, social networks, photo and video sharing.

57) Mal's father and grandfather ran Reynold's, a general store in the town of Bayswater. When Mal inherited the store, the town was expanding rapidly and a number of multinational franchisors showed interest in entering the town. Mal wants to turn Reynold's into a franchise of Blue Sun, a fast-food chain. Why shouldn't Mal go the franchise route?

Student answers will vary. Most franchises offer franchisees limits or negligible independence in the questions of staffing, pricing, store decor, sourcing and processes. Mal may have to make changes that he does not agree with. He may not have the freedom to run the business as he thinks best.

138) An ad agency has landed an account for Savola, a brand of healthy cooking oil. Describe how the ad can effectively incorporate negative appeals in its messages.

Student answers will vary. Negative appeals such as fear, guilt, and shame are used by communicators to get people to do things (brush their teeth) or stop doing things (smoking). The cooking oil ad can use fear appeals to get consumers to start using its product. This can be achieved by depicting health risks associated with using cooking oils other than Savola, such as hypertension, heart attacks, etc. Guilt appeal can be used to depict a family grieving the death of someone who did not use Savola. Shame appeal could illustrate the case of a parent who cannot play catch with his kids because his fitness is compromised by not using Savola. However, the ad agency should take care to ensure that the negative appeals do not come across as too strong to the audiences, the credibility of the source in the ads is high, and the ad promises to relieve fears of health risks in a believable and efficient way. The ad is most persuasive when moderately discrepant with audience beliefs. If the ad merely says that using unhealthy oil leads to health risks, it only serves to reinforce the belief, and if the message exaggerates the health risks of not using Savola, audiences will only counterargue and disbelieve the ad.

111) Supermarket chain Reynold's is considering stocking a number of private-label products in order to offer customers the lowest possible prices. Explain how this strategy could benefit the company.

Student answers will vary. Private brands can be more profitable for Reynold's if it searches for manufacturers with excess capacity that will produce private label goods at low cost. Other costs, such as research and development, advertising, sales promotion, and physical distribution, are also much lower, so private labels can generate a higher profit margin. Exclusive store brands can also help Reynold's differentiate itself from competitors. Many price-sensitive consumers prefer store brands in certain categories. These preferences could give Reynold's increased bargaining power with marketers of national brands.

99) Give one example of a retailer that uses standalone stores as opposed to stores located in malls. Why do you think retailers opt for this channel?

Student answers will vary. Retailers may opt for standalone stores so that they are not associated with other retailers. It can avoid competition from conflicting attractions in a mall. Customers will be less motivated to check other options available at other retailers. Standalone stores may give a retailer an upscale image and prevent dilution of the brand identity.

135) When asked about their preferred brand of instant noodles outside a supermarket setting, customers could not remember Nissin's name, but relied on the distinct packaging to help them spot the noodles while shopping. Describe how this problem can be addressed through the objective of Nissin's marketing communications.

Student answers will vary. The objective for Nissin's marketing communications objective should be to build brand awareness, i.e. fostering the consumer's ability to recognize or recall the brand within the category, in sufficient detail to make a purchase. Recognition is easier to achieve than recall — consumers asked to think of a brand of frozen entrées are more likely to recognize Stouffer's distinctive orange packages than to recall the brand. Brand recall is important outside the store; brand recognition is important inside the store. Brand awareness provides a foundation for brand equity.

107) What is viral marketing? Please provide an example.

Student answers will vary. Viral marketing is a form of online word of mouth, or "word of mouse," that encourages consumers to pass along company-developed products and services or audio, video, or written information to others online. Student examples will vary, but an example from the text is Blendtec's Will It Blend? videos.

138) Companies sometimes initiate price cuts in an attempt to dominate the market through lower costs.

TRUE

138) Media coverage and telecasts only expose the brand and do not necessarily embellish its meaning in any direct way.

TRUE

16) Although consumers may have fairly good knowledge of the range of prices involved, very few can accurately recall specific prices of products.

TRUE

20) The newest and fastest-growing channels for communicating and selling directly to customers are digital.

TRUE

20) What you say (ad copy) is more important than the number of times you say it (ad frequency).

TRUE

29) Direct mail can produce prospect leads, strengthen customer relationships, inform and educate customers, remind customers of offers, and reinforce recent customer purchase decisions.

TRUE

31) A marketing channel overcomes the time, place, and possession gaps that separate goods and services from those who need or want them.

TRUE

41) When Johnson & Johnson's ads popped up on brokers' Web sites whenever the stock market fell by 100 points or more, it was an example of an interstitial.

TRUE

64) Consumers now receive sales offers through direct-mail letters and catalogs, television, cell phones, and the Internet. The nonstore-based retailers are taking business away from store-based retailers.

TRUE

75) To manage costs, most companies are choosing a leveraged sales force that focuses reps on selling the company's more complex and customized products to large accounts and uses inside salespeople and online ordering for low-end selling.

TRUE

78) Although newspapers are timely and pervasive, magazines are typically more effective at building user and usage imagery.

TRUE

86) After a company has chosen a channel system, it must select, train, motivate, and evaluate individual intermediaries for each channel.

TRUE

92) In competitive markets with low entry barriers, the optimal channel structure will inevitably change over time.

TRUE

115) Sales promotions often attract brand switchers, who are primarily looking for low price, good value, or premiums.

TRUE

115) Two-sided messages are more effective with more educated audiences and those who are initially opposed.

TRUE

116) In a one-sided message, presenting the strongest argument first arouses attention and interest, important in media where the audience often does not attend to the whole message.

TRUE

119) Motivational or "borrowed interest" devices — such as the presence of cute babies, frisky puppies, popular music, or provocative sex appeals — are often employed to attract attention and raise involvement with an ad.

TRUE

122) Sales promotion tools that typically are not brand building include price-off packs, contests and sweepstakes, consumer refund offers, and trade allowances.

TRUE

122) The airline industries implement yield pricing by offering discounted but limited early purchases, higher-priced late purchases, and the lowest rates on unsold inventory just before it expires.

TRUE

123) Manufacturers handle forward buying and diverting by producing and delivering less than the full order in an effort to smooth production.

TRUE

123) Merchant wholesalers are independently owned businesses that take title to the merchandise they handle.

TRUE

123) The principle of congruity implies that communicators can use their good image to reduce some negative feelings toward a brand but in the process might lose some esteem with the audience.

TRUE

124) Additional costs beyond the cost of specific promotions include the risk that promotions might decrease long-run brand loyalty.

TRUE

124) When PepsiCo sold its cola syrup to Russia for rubles and agreed to buy Russian vodka at a certain rate for sale in the United States, it was engaged in the form of countertrade known as an offset.

TRUE

125) Personal communications channels derive their effectiveness from individualized presentation and feedback and include direct and interactive marketing, word-of-mouth marketing, and personal selling.

TRUE

127) Although personal communication is often more effective than mass communication, mass media might be the major means of stimulating personal communication.

TRUE

129) Two-step communication suggests that mass communicators should direct messages specifically to opinion leaders and let them carry the message to others.

TRUE

13) An advertising objective is a specific communications task and achievement level to be accomplished with a specific audience in a specific period of time.

TRUE

131) Marketing communications budgets tend to be higher when there is much change in the marketing program over time and more complex customer decision making.

TRUE

132) Mobile ad copy should occupy only 50 percent of the screen, avoiding complex viewing experiences that may take a toll on consumers' battery and data availability as well as their time.

TRUE

133) In mobile ads, calls to action should be highlighted with a bright color.

TRUE

136) Consumers are more engaged and attentive with their smart phones than when they are online.

TRUE

140) An employee who provides clerical backup for outside salespersons, runs credit checks, follows up on deliveries, and answers customers' business-related questions is called a sales assistant.

TRUE

141) A manager is using feed-forward sales supervision when he communicates what the sales reps should be doing and motivates them to do it.

TRUE

141) Generally, consumers prefer small price increases on a regular basis to sudden, sharp increases.

TRUE

142) Implication questions ask about the consequences of a buyer's problems, difficulties, or dissatisfactions.

TRUE

142) Shrinking the amount of product instead of raising the price is a good way to counteract consumer resistance to price increases.

TRUE

144) Closing signs from the buyer include physical actions, statements or comments, and questions.

TRUE

147) Inventory cost increases at an accelerating rate as the customer-service level approaches 100 percent.

TRUE

152) Companies who want to carry near-zero inventory should build for order, not for stock.

TRUE

152) Creative public relations can affect public awareness at a fraction of the cost of advertising.

TRUE

153) MPR can hold down promotion cost because it costs less than direct-mail and media advertising.

TRUE

155) Dual compensation pays existing channels for sales made through new channels.

TRUE

16) When Staples introduced a new $69.99 paper-shredding device called the MailMate in 2006 by striking a two-episode deal with NBC's popular television program, The Office, it was using product placement.

TRUE

17) When examining products, consumers compare an observed price to an internal reference price they remember or an external frame of reference.

TRUE

21) Direct marketing produced $2.05 trillion in sales in 2012, accounting for approximately 8.7 percent of GDP.

TRUE

21) Marketing communications allow companies to link their brands to other people, places, events, brands, experiences, feelings, and things.

TRUE

22) A direct marketer must consider returned merchandise and bad debts when s/he determines the needed break-even response rate for direct mail.

TRUE

22) Paid media includes company-generated advertising, publicity, and other promotional efforts.

TRUE

24) Marketing communications in almost every medium and form have been on the rise, and some consumers feel they are increasingly invasive.

TRUE

30) Points are established for varying RFM levels; the more points, the more attractive the customer.

TRUE

31) The Internet and catalog retailing industry includes 20,000 companies with combined annual revenue of $350 billion.

TRUE

32) A Web site's ease of use means the site downloads quickly, the first page is easy to understand, and it is easy to navigate to other pages that open quickly.

TRUE

61) Products such as heating and cooling systems are usually sold and maintained by the company or by franchised dealers.

TRUE

62) "Pop-up" stores let retailers promote brands to seasonal shoppers for a limited time.

TRUE

75) When a product is more distinctive, it leads to less price sensitivity.

TRUE

76) Total costs consist of the sum of the fixed and the variable costs for any given level of production.

TRUE

79) Researchers studying print advertisements report that the picture, headline, and copy matter in that order.

TRUE

80) Reach of an advertising message is most important when launching new products, flanker brands, extensions of well-known brands, or infrequently purchased brands.

TRUE

82) The rationale behind place advertising is that marketers are better off reaching people where they work, play, and shop.

TRUE

88) A manufacturer is using reward power when it offers intermediaries an extra benefit for performing specific acts or functions.

TRUE

89) Some high-volume products may have such high handling costs that they are less profitable and deserve less shelf space than low-volume products.

TRUE

99) Viral marketing is a form of online word of mouth, or word of mouse, that encourages consumers to pass along company-developed products and services or audio, video, or written information to others online.

TRUE

137) Identify the 7Cs of design elements. Do you feel they are relevant in a mobile advertising context? Why or why not?

The 7Cs of design elements are context, content, community, customization, communication, connection, and commerce. Student opinions may vary regarding their relevance in a mobile advertising context, but they should recognize the advice for mobile advertising: Brands should limit their ads to a pair of phrases — the offer and the tagline. Brands should place their logo in the corner of the mobile ad frame. Finally, ads should use at least one bright color, but no more than two. Calls to action should be highlighted with a bright color.

119) Altrudex Inc. is involved in the manufacture, distribution, and sale of consumer electronics. The company sources over half the products it sells from companies it partly or wholly owns. It also owns a large retail chain and sells its products through them. What marketing system is Altrudex using?

The company is using a corporate VMS. A corporate VMS combines successive stages of production and distribution under single ownership.

21) NV Inc. has launched a touch sensitive handset in the Indian market and priced the same at INR 9500. Although many people are checking it out and showing interest about purchasing it, the majority of them are holding themselves back because they feel that it is not worth INR 9500. They compare the handset's feature with that of its other competitors offering the same features and come to a conclusion that it is worth INR 8500 and nothing more than that. What kind of a reference price are the consumers using?

The consumers are using the upper-bound price. Upper-bound price refers to the reservation price or the maximum that most consumers would pay.

98) A group of entrepreneurs is planning to start a food processing company. Comment on the likely evolution of the company's marketing channels.

The firm is likely to start as a local operation selling in a fairly circumscribed market, using a few existing intermediaries. At this stage, it is often difficult to convince the available intermediaries to handle the firm's line. If the firm is successful, it might branch into new markets with different channels. In smaller markets, the firm might sell directly to retailers; in larger markets, through distributors.

61) What are the five main challenges associated with database marketing?

The five main challenges associated with database marketing include: 1. Some situations are just not conducive to database marketing. Building a customer database may not be worthwhile when: (1) the product is a once-in-a-lifetime purchase (a grand piano); (2) customers show little loyalty to a brand (there is a lot of customer churn); (3) the unit sale is very small (a candy bar) so customer lifetime value is low; (4) the cost of gathering information is too high; and (5) there is no direct contact between the seller and ultimate buyer. 2. Building and maintaining a customer database require a large investment. Computer hardware, database software, analytical programs, communication links, and skilled staff can be costly. It's difficult to collect the right data, especially to capture all the occasions of company interaction with individual customers. Sometimes companies mistakenly concentrate on customer contact processes without making corresponding changes in internal structures and systems. 3. Employees may resist becoming customer-oriented and using the available information. Employees find it far easier to carry on traditional transaction marketing than to practice CRM. Effective database marketing requires managing and training employees as well as dealers and suppliers. 4. Not all customers want a relationship with the company. Some may resent knowing the company has collected that much personal information about them. Online companies should explain their privacy policies and give consumers the right not to have their information stored. European countries do not look favorably on database marketing and are protective of consumers' private information. The European Union passed a law handicapping the growth of database marketing in its 27 member countries. 5. The assumptions behind CRM may not always hold true. High-volume customers often know their value to a company and can leverage it to extract premium service and/or price discounts, so it may not cost the firm less to serve them. Loyal customers may also be jealous of attention lavished on other customers. Loyal customers also may not necessarily be the best ambassadors for the brand. One study found those who scored high on behavioral loyalty and bought a lot of a company's products were less active word-of-mouth marketers than customers who scored high on attitudinal loyalty and expressed greater commitment to the firm.

80) Briefly explain the various tasks that the salespeople of an organization perform.

The following are the basic tasks that salespeople perform: • prospecting: searching for new leads or prospects • targeting: deciding how to allocate time among prospects and customers • communicating: communicating information about the company's products and services • selling: approaching, presenting, answering questions, overcoming objections, and closing sales • servicing: providing various services to the customers — consulting on problems, rendering technical assistance, arranging financing, expediting delivery • information gathering: conducting market research and doing intelligence work • allocating: deciding which customers will get scarce products during product shortages

127) What challenges do marketers face in managing trade promotions?

The growing power of large retailers has increased their ability to demand trade promotion at the expense of consumer promotion and advertising. The company's sales force and its brand managers are often at odds over trade promotion. The sales force says local retailers will not keep the company's products on the shelf unless they receive more trade promotion money, whereas brand managers want to spend their limited funds on consumer promotion and advertising. Manufacturers face several challenges in managing trade promotions. First, they often find it difficult to police retailers to make sure they are doing what they agreed to do. Manufacturers increasingly insist on proof of performance before paying any allowances. Second, some retailers are doing forward buying — that is, buying a greater quantity during the deal period than they can immediately sell. Retailers might respond to a 10 percent-off-case allowance by buying a 12-week or longer supply. The manufacturer must then schedule more production than planned and bear the costs of extra work shifts and overtime. Third, some retailers are diverting, buying more cases than needed in a region where the manufacturer offers a deal and shipping the surplus to their stores in non-deal regions. Manufacturers handle forward buying and diverting by limiting the amount they will sell at a discount, or by producing and delivering less than the full order in an effort to smooth production. Ultimately, many manufacturers feel trade promotion has become a nightmare. It contains layers of deals, is complex to administer, and often leads to lost revenues.

86) Agatha's Inc. is about to introduce a new product in the market, but is not sure as to how it should price the product. The company is facing intense competition from five other companies. In the past, it has also failed to keep up with the changing consumer wants. In such a situation, what should be its main objective?

The main objective for Agatha's Inc. should be survival. As long as prices cover variable costs and some fixed costs, the company will stay in business. But, it is worthwhile to remember that survival is a short-run objective. In the long run, the company has to add value to its product or face extinction.

155) What is the role of information technology in the logistics system?

The market logistics task calls for integrated logistics systems (ILS), which include materials management, material flow systems, and physical distribution, aided by information technology (IT). Information systems play a critical role in managing market logistics, especially via computers, point-of-sale terminals, uniform product barcodes, satellite tracking, electronic data interchange (EDI), and electronic funds transfer (EFT).

29) What are the elements of the marketing communications mix?

The marketing communications mix consists of eight major modes of communication: 1. Advertising — Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor via print, broadcast, network, electronic, and display media. 2. Sales promotion — A variety of short-term incentives to encourage trial or purchase of a product or service including consumer promotions, trade promotions, and business and sales force promotions. 3. Events and experiences — Company-sponsored activities and programs designed to create daily or special brand-related interactions with consumers, including sports, arts, entertainment, and cause events as well as less formal activities. 4. Public relations and publicity — A variety of programs directed internally to employees of the company or externally to consumers, other firms, the government, and media to promote or protect a company's image or its individual product communications. 5. Direct marketing — Use of mail, telephone, fax, e-mail, or Internet to communicate directly with or solicit response or dialogue from specific customers and prospects. 6. Interactive marketing — Online activities and programs designed to engage customers or prospects and directly or indirectly raise awareness, improve image, or elicit sales of products and services. 7. Word-of-mouth marketing — People-to-people oral, written, or electronic communications that relate to the merits or experiences of purchasing or using products or services. 8. Personal selling — Face-to-face interaction with one or more prospective purchasers for the purpose of making presentations, answering questions, and procuring orders.

42) What are the elements of a direct mail offer? How can each be tested?

The offer strategy has five elements — the product, the offer, the medium, the distribution method, and the creative strategy. Fortunately, all can be tested. The direct-mail marketer also must choose five components of the mailing itself: the outside envelope, sales letter, circular, reply form, and reply envelope. A common direct marketing strategy is to follow up direct mail with an e-mail. The different elements of an offer strategy, such as products, product features, copy platform, mailer type, envelope, prices, or mailing lists, can be tested under real market conditions.

112) What can you learn from John Smith from the sales report reflected in the table?

The sales manager can learn many things about rep John Smith from this table. Total sales increased every year (line 3). This does not necessarily mean Smith is doing a better job. The product breakdown shows he has been able to push the sales of product B further than the sales of product A (lines 1 and 2), though A is more profitable for the company. Given his quotas for the two products (lines 4 and 5), Smith could be increasing product B sales at the expense of product A sales. Although he increased total sales by $1,100 between 2013 and 2014 (line 3), gross profits on total sales actually decreased by $580 (line 8). Sales expense (line 9) shows a steady increase, though total expense as a percentage of total sales seems to be under control (line 10). The upward trend in total dollar expense does not seem to be explained by any increase in the number of calls (line 11), though it might be related to success in acquiring new customers (line 14). Perhaps in prospecting for new customers, this rep is neglecting present customers, as indicated by an upward trend in the annual number of lost accounts (line 15). The last two lines show the level and trend in sales and gross profits per customer. These figures become more meaningful when compared with overall company averages. If Smith's average gross profit per customer is lower than the company's average, he could be concentrating on the wrong customers or not spending enough time with each customer. A review of annual number of calls (line 11) shows he might be making fewer annual calls than the average salesperson. If distances in the territory are similar to those in other territories, he might not be putting in a full workday, might be poor at sales planning and routing, or might be spending too much time with certain accounts.

50) Identify three ways a marketer might transform online marketing touch points related to privacy on the Web site into a positive customer experience.

The three ways include: 1. develop user-centric privacy controls to give customer control 2. avoid multiple intrusions 3. prevent human intrusion by using automation whenever possible

94) A toaster manufacturer who has invested $1 million in the business wants to set a price to earn a 20 percent return on investment, specifically $200,000. What pricing method should it choose?

The toaster manufacture should go for a target-return pricing. While using this pricing method, companies determine the price that yields its target rate of return on investment.

25) Give a brief description of the various factors that affect advertising budget decisions.

The various factors that affect advertising budget decisions include: • Stage in the product life cycle — New products typically merit large advertising budgets to build awareness and to gain consumer trial. Established brands usually are supported with lower advertising budgets, measured as a ratio to sales. • Market share and consumer base — High-market-share brands usually require less advertising expenditure as a percentage of sales to maintain share. To build share by increasing market size requires larger expenditures. • Competition and clutter — In a market with a large number of competitors and high advertising spending, a brand must advertise more heavily to be heard. Even simple clutter from advertisements not directly competitive to the brand creates a need for heavier advertising. • Advertising frequency — The number of repetitions needed to put the brand's message across to consumers has an obvious impact on the advertising budget. • Product substitutability — Brands in less-differentiated or commodity-like product classes (beer, soft drinks, banks, and airlines) require heavy advertising to establish a unique image.

133) Movie matinees are priced lower than the evening shows at local theaters; television advertising costs less when run after midnight. These are examples of what type of price discrimination?

These are examples of time pricing or price discrimination based on time.

111) What key indicators of sales performance do sales managers extract from call reports?

These reports provide raw data from which sales managers can extract key indicators of sales performance: • average number of sales calls per salesperson per day • average sales call time per contact • average revenue per sales call • average cost per sales call • entertainment cost per sales call • percentage of orders per hundred sales calls • number of new customers per period • number of lost customers per period • sales force cost as a percentage of total sales

52) What is paid search advertising and why is it increasing in popularity?

Thirty-five percent of all searches are reportedly for products or services. Marketers bid in a continuous auction on search terms that serve as a proxy for the consumer's product or consumption interests. When a consumer searches for any of the words with Google, Yahoo!, or Bing, the marketer's ad may appear above or next to the results, depending on the amount the company bids and an algorithm the search engines use to determine an ad's relevance to a particular search. Advertisers pay only if people click on the links, but marketers believe consumers who have already expressed interest by engaging in search are prime prospects. Average click-through in terms of the percentage of consumers who click on a link is about 2 percent, much more than for comparable online display ads, which range from 0.08 for standard banner ads with graphics and images to 0.14 for rich media (expandable banners) ads that incorporate audio and/or video.

122) Crafted Jewels is a jewelry manufacturer that sells its designs to various jewelry retailers. The retailers often complain that the company's online store acts as a competitor and reduces their profitability. What type of conflict is this? Briefly explain.

This is a case of multichannel conflict. It exists when the manufacturer has established two or more channels that sell to the same market.

130) Fred's company has recently sold its resin-producing plant to a business in India. As part of the sales price, his company agrees to accept as partial payment the production of the resin at an agreed upon price for six years. This is an example of what type of countertrade?

This is an example of a buyback arrangement. In such arrangements, the seller sells a plant, equipment, or technology to another country and agrees to accept as partial payment products manufactured with the supplied equipment.

121) Flash Designs is an apparel manufacturing company and has adopted a franchising model to distribute and sells its garments. The company recently received complaints from a particular franchisee that another competing franchisee was infringing on its territory. What type of conflict is this?

This is an example of horizontal channel conflict, between channel members at the same level.

148) You work as a sales representative in a company that manufactures surgical equipment. Before calling on an important prospect, you decide to search the Internet and find out details about him. What step in the selling process is being carried out here? What is the importance of this step?

This step is called preapproach. This helps to understand aspects such as how the purchasing process is conducted at the company, how is purchasing structured, number of purchasing departments in larger companies, and so forth. This information is useful to qualify the prospect, gather information, or make an immediate sale.

21) Cortron Consultants provides business consulting services for startups. It helps customers design their supply chains by first evaluating the target market and then proceeds backward from that point. What is this strategy of reverse design called? Briefly explain.

This strategy is called demand chain planning. This helps the companies have a clear focus on the target market.

123) UltraMotion Pictures produces and distributes music and television entertainment in the United States. The company distributes music in partnership with a large music retailer, Fromen Tunes. Fromen executives often work for a short time with UltraMotion and some of the UltraMotion executives work at the retail outlets to study Fromen's operations. This strategy minimizes the conflicts between partners. What strategy is being used here? Briefly explain.

This strategy of managing channel conflict is called an employee exchange which involves the exchange of persons between two or more channel levels. Thus participants can grow to appreciate each other's point of view.

28) What are the legal and social issues associated with advertising?

To break through clutter, some advertisers believe they have to be edgy and push the boundaries of what consumers are used to seeing in advertising. In doing so, marketers must be sure advertising does not overstep social and legal norms or offend the general public, ethnic groups, racial minorities, or special-interest groups. A substantial body of laws and regulations governs advertising. Under US law, advertisers must not make false claims, such as stating that a product cures something when it does not. They must avoid false demonstrations, such as using sand-covered Plexiglas instead of sandpaper to demonstrate that a razor blade can shave sandpaper. It is illegal in the United States to create ads that have the capacity to deceive, even though no one may actually be deceived. The challenge is telling the difference between deception and "puffery" — simple exaggerations that are not meant to be believed and that are permitted by law. Sellers in the United States are legally obligated to avoid bait-and-switch advertising that attracts buyers under false pretenses. Advertising can play a more positive broader social role. The Ad Council is a nonprofit organization that uses top-notch industry talent to produce and distribute public service announcements for nonprofits and government agencies. From its early origins with "Buy War Bonds" posters, the Ad Council has tackled innumerable pressing social issues through the years. One of its recent efforts featured beloved Sesame Street stars Elmo and Gordon exhorting children to wash their hands in the face of the H1N1 flu virus.

76) What are the features of an ideal advertising campaign?

To increase the odds for a successful marketing communications campaign, marketers must attempt to increase the likelihood that each step occurs. For example, the ideal ad campaign would ensure that: • The right consumer is exposed to the right message at the right place and at the right time. • The ad causes the consumer to pay attention but does not distract from the intended message. • The ad properly reflects the consumer's level of understanding of and behaviors with the product and the brand. • The ad correctly positions the brand in terms of desirable and deliverable points-of-difference and points-of-parity. • The ad motivates consumers to consider purchase of the brand. • The ad creates strong brand associations with all these stored communications effects so they can have an impact when consumers are considering making a purchase.

120) True Value is a retailer-owned cooperative with over 4,000 independent retail locations worldwide. Members of True Value own their individual stores and operate independently. True Value helps its members procure materials at a low cost. What kind of marketing system is True Value? Explain briefly.

True Value is a type of contractual VMS. It is a retail cooperative wherein retailers take the initiative and organize a new business entity to carry on wholesaling and possibly some production.

49) A Web site's ease of use and physical attractiveness are important to marketers because consumers use them to judge a site's performance. Please explain three things marketers should do to ensure high ratings on each.

Two criteria consumers use to judge a site's performance are ease of use and physical attractiveness. • Ease of use means: The site downloads quickly, the first page is easy to understand, and it is easy to navigate to other pages that open quickly. • Physical attractiveness is ensured when: Individual pages are clean and not crammed with content, typefaces and font sizes are very readable, and the site makes good use of color (and sound).

142) Marco is working on promoting his company's Glazer brand of electronic razors. The company estimates 50 million potential users and sets a target of attracting 8 percent of the market. He hopes to reach 80 percent of the potential customers with an advertising message. He would be pleased if 25 percent of the prospects that were aware, tried the Glazer. According to further estimates, 40 percent of all triers will become loyal users. If the cost of exposing 1 percent of the target population to one impression is $4500 on an average, determine the necessary advertising budget, according to the objective-and-task method.

Using the objective-and-task method, Marco can arrive at the marketing communications budget by following these steps: 1. The company estimates 50 million potential users and sets a target of attracting 8 percent of the market — that is, 4 million users. 2. The percentage of the market that should be reached by advertising is determined. Marco hopes to reach 80 percent (40 million prospects) with his advertising message. 3. The percentage of aware prospects that should be persuaded to try the brand is then calculated. Marco would be pleased if 25 percent of aware prospects (10 million) tried Glazers. He estimates that 40 percent of all triers, or 4 million people, will become loyal users. This is the market goal. 4. Next, the number of advertising impressions per 1 percent trial rate is estimated. Marco estimates that 40 advertising impressions (exposures) for every 1 percent of the population will bring about a 25 percent trial rate. 5. The number of gross rating points that would have to be purchased is now calculated. A gross rating point is one exposure to 1 percent of the target population. Because Marco wants to achieve 40 exposures to 80 percent of the population, he will want to buy 3,200 gross rating points. 6. Finally, the necessary advertising budget on the basis of the average cost of buying a gross rating point is estimated. To expose 1 percent of the target population to one impression costs an average of $4,500. Therefore, 3,200 gross rating points will cost $14,400,000 (= $4,500 × 3,200) in the introductory year.

84) Briefly describe the different types of pricing objectives.

When a company is preparing to sets its price, it first has to select its pricing objectives. The five major objectives available to a company are: 1. Survival — Companies pursue survival as their major objective if they are plagued with overcapacity, intense competition, or changing consumer wants. As long as prices cover variable costs and some fixed costs, the company stays in business. 2. Maximum current profit — Companies who try to maximize their current profit, estimate the demand and costs associated with alternative prices and choose the price that produces maximum current profit, cash flow, or rate of return on investment. This strategy assumes the firm knows its demand and cost functions, but in reality, these are difficult to estimate. 3. Maximum market share — Companies that want to maximize their market share believe that a higher sales volume will lead to lower unit costs and higher long-run profit. They set the lowest price, assuming the market is price sensitive. This is a market-penetration pricing strategy. 4. Maximum market skimming — Companies unveiling a new technology favor setting high prices to maximize market skimming. Companies that use this, introduce their products at a high price and slowly drop the price over time. 5. Product-quality leadership — Companies that aim to be product quality leaders strive to be affordable luxuries, i.e., they want their products and services to be characterized by high levels of perceived quality, taste, and status with a price just high enough not to be out of the consumer's reach.

22) When Yolanda went shopping, she paid a lot to buy a jacket that had a well-known designer's tag attached to it. After a few days, she came across a jacket which was undistinguishable from the one she had bought but was priced 5 times lesser than the earlier one. She didn't give this a second thought because she was convinced that the designer label she had bought was worth it. What can be deduced from this?

Yolanda was using the price as an indicator of quality. She was using image pricing. This kind of pricing is especially effective with ego-sensitive products such as perfumes, expensive cars, and designer clothing.

71) Explain the three distribution strategies based on the number of intermediaries.

• Exclusive distribution: This strategy focuses on severely limiting the number of intermediaries. It's appropriate when the producer wants to maintain control over the service level and outputs offered by the resellers, and it often includes exclusive dealing arrangements. By granting exclusive distribution, the producer hopes to obtain more dedicated and knowledgeable selling. It requires a closer partnership between seller and reseller and is used in the distribution of new automobiles, some major appliances, and some women's apparel brands. • Selective distribution: This distribution strategy relies on only some of the intermediaries willing to carry a particular product. Whether established or new, the company does not need to worry about having too many outlets; it can gain adequate market coverage with more control and less cost than intensive distribution. • Intensive distribution: This strategy places the goods or services in as many outlets as possible. This strategy serves well for snack foods, soft drinks, newspapers, candies, and gum — products consumers buy frequently or in a variety of locations.

46) Describe the darker side of direct marketing solicitations.

• Irritation. Many people don't like hard-sell direct marketing solicitations. Firms have been popping up to help block unwanted junk mail. • Unfairness. Some direct marketers take advantage of impulsive or less sophisticated buyers or prey on the vulnerable, especially the elderly. • Deception and fraud. Some direct marketers design mailers and write copy intended to mislead or exaggerate product size, performance claims, or the "retail price." The Federal Trade Commission receives thousands of complaints each year about fraudulent investment scams and phony charities. • Invasion of privacy. It seems that almost every time consumers order products by mail or telephone, apply for a credit card, or take out a magazine subscription, their names, addresses, and purchasing behavior may be added to several company databases.

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