Marketing Exam 3

(1) Electricity is a necessity with few substitutes. Assume that its price elasticity is −0.15. What is your interpretation of this price elasticity? (2) If the cable company raised its rates by 20 percent, what is of change in the demand then? (A formula you may need: % change in quality = Price Elasticity *% change in price)

(1) It is inelastic because it's absolute value is less than 1 based on the equation and the demand will only decrease slightly if the price goes up. (2) The price elasticity demand decreases 3% (-0.15*0.20 = -0.03)

1. You are the marketing manager for a personal device company that produces Amazing Tablets. The accounting department reports that a total fixed cost for the tablets is $5,000,000, and the variable cost per is $600. You expect to sell 100,000 tablets (i.e., 100,000 units) in the upcoming year. What is the price of the tablets at the break-even point? Break-even price = Variable costs per unit + (Fixed Costs / Units)

600 + (5,000,000/100,000) Break-even price = $650

In addition to merchandise and payments, information flows throughout the supply chain. Which of the following statements is a good characterization of the flow of information in a supply chain? A. A manufacturer will send and receive information from buyers, stores, and distribution centers B. Stores will send and receive information only from manufacturers C. Distribution centers will send and receive information directly from customers D. Customer will send and receive information from stores and manufacturers

A. A manufacturer will send and receive information from buyers, stores, and distribution centers

Generally, less money is spent on advertising in B2B markets than in B2C markets because A. B2B marketing usually involves more personal selling. B. B2B marketing is too expensive to use advertising. C. business customers prefer incentives. D. B2B markets are too homogeneous to use advertising.

A. B2B marketing usually involves more personal selling

When her company's dry goods deliveries were late for the third time, Pilar withheld payment from her supplier until it was back on schedule. This is an example of ________ power. A. Coercive B. Reward C. Referent D. expertise

A. Coercive

"Buy one, get one free" is a ________ sales promotion. A. Deal B. Coupon C. Sample D. Sweepstake

A. Deal

Many health insurance policies require patients to call and get preapproval for tests or procedures. The health insurance company acts as a(n) ________ for the purchase of these medical services. A. Gatekeeper B. Initiator C. Influencer D. decider

A. Gatekeeper

Kiki is the head of marketing for a nonprofit agency that supports the arts. She just received the go-ahead from her board of directors to conduct the agency's first-ever advertising campaign. Her first step will be to A. Identify the target audience B. Set the advertising objectives C. Determine the advertising budget D. Evaluate and select the media

A. Identify the target audience

An advertisement for Titleist golf balls that airs on the cable television Golf Channel network is an example of what type of media channel? A. Niche B. Mass C. Select D. Product placement

A. Niche

In the United States, the regulation of advertising involves a complex mix of laws and informal restrictions designed to A. Protect consumers from deceptive practices B. Stimulate domestic demand C. Reduce international competition D. Promote social marketing

A. Protect consumers from deceptive practices

In ________ many firms provide similar products that are considered substitutes for each other. A. Pure competition B. Oligopolistic competition C. Monopolistic competition D. A monopoly

A. Pure competition

Cost-based methods do not recognize the role that consumers' or competitors' prices play in the marketplace. A. True B. False

A. True

The final step of the business-to-business buying process is a formal vendor performance analysis. A. True B. False

A. True

When CarMax promises a "no-haggle" pricing structure, it exhibits ________ because it provides additional value to potential used car buyers by making the process simple and easy. A. a customer orientation B. a status-quo pricing structure C. competitive parity D. a competitor orientation

A. a customer orientation

Generally, when advertising to consumers, the objective of an advertising campaign is A. a pull strategy—to get the product into stores by having consumers demand it. B. a push strategy—to increase demand by focusing on wholesalers, retailers, or salespeople. C. to win advertising awards. D. to offset sales promotion costs.

A. a pull strategy—to get the product into stores by having consumers demand it.

What is the primary objective of a penetration pricing strategy? A. Maximize short-term profits by setting a high initial price B. Capture a large market share by setting a low initial price C. Maintain price stability over the product lifecycle D. Encourage brand loyalty by offering premium features

B. Capture a large market share by setting a low initial price

Kate is hoping to get a chance to bid on supplying carpeting to Upper Class Hotels. She is eager to move forward, but must wait until the hotel company A. Completes vendor negotiations B. Develops a list of product specifications C. Has an opening in the buying center D. Agrees to move Kate's firm from the evoked set to the retrieval set

B. Develops a list of product specifications

Dalinda is creating an advertising message designed to appeal to consumers' fears of having their home broken into. Dalinda's message will focus on a(n) ________ appeal. A. Niche marketing B. Emotional C. Informational D. institutional

B. Emotional

A ________ advertising schedule uses heavy advertising during some periods followed by periods of no advertising. A. Continuous B. Flighting C. Pulsing D. Penetrating

B. Flighting

________ are specifically designed to retain customers by offering premiums or other incentives to customers who make multiple purchases over time. A. Coupons B. Loyalty programs C. Contests D. Sweepstakes

B. Loyalty programs

Both the B2B and B2C buying processes begin with A. Central planning B. Need recognition C. Postpurchase dissonance D. Alternative evaluation

B. Need recognition

Cedric was struggling selling his golf photography outside a PGA event. When he offered a T-shirt with a golf photograph on it with any framed golf photo, sales picked up. Cedric discovered the value of sales promotions— specifically using ________ in encouraging customers to buy. A. Deals B. Premiums C. Samples D. Sweepstakes

B. Premiums

H&M has adopted the inventory management system that delivers less merchandise on a more frequent basis than in traditional inventory systems. The firm gets the merchandise just in time for it to be used in the manufacture of another product or for sale when the customer wants it. This is an example of a ________ inventory system. A. Cross-docking B. Quick response (QR) C. UPC D. EDI

B. Quick response (QR)

After using market research to identify the target audience for his advertising campaign, George will next use this information to A. Identify the target audience B. Set the advertising objectives C. Determine the advertising budget D. Evaluate and select the media

B. Set the advertising objectives

In marketing's four Ps, place refers to all activities required to get A. Goods to a distribution location B. The right product to the right customer when that customer wants it C. Access to the physical space within a retail establishment D. Consumers to the destination

B. The right product to the right customer when that customer wants it

When Colleen shops at R.F. Malloy, each item has the actual price listed at the bottom of the price tag and an "original price" listed above that which is always much higher. This "original price" is an example of A. An everyday low price B. A reference price C. The manufacturer's cost D. A final price

B. a reference price

Value-based pricing methods include approaches to setting prices that focus on the overall value of the product offering A. as recognized by competitors. B. as perceived by the consumer. C. relative to production costs. D. in relationship to fixed and variable costs.

B. as perceived by the consumer.

Business-to-business marketing involves buying and selling goods or services by all of the following except A. Manufacturers B. Individual consumers C. Retailers D. Producers

B. individual consumers

Ana is the marketing manager for a shoe store chain. She uses a target return pricing strategy because her firm's primary objective is related to A. sales-oriented B. profit-oriented C. customer-oriented D. competitor-oriented

B. profit-oriented

Lucas bought a pickup truck to transport his equipment on weekend fishing trips. He also bought a trailer for his lawn maintenance business. His purchases were A. both B2C purchases since he is the user in both situations. B. both B2B purchases since he is the user in both situations. C. B2C and B2B, respectively. D. B2B and B2C, respectively.

C. B2C and B2B, respectively

Jameson purchased an alarm system for his car during a promotion. He considered the price after the promotion to be very attractive. However, he later learned that the firm set an artificially high reference price for the alarm system just before the promotion to make the advertised sale price more attractive. Jameson just experienced ________. A. Predatory pricing B. Bait and switch C. Deceptive pricing D. Price discrimination

C. Deceptive pricing

If all three grocery stores in town decide to charge the same price for a loaf of bread, what type of pricing tactic is being used? A. Horizontal price discrimination B. Vertical price discrimination C. Horizontal price fixing D. Vertical price fixing

C. Horizontal price fixing

Hospitals, schools, and religious organizations are examples of ________ buyers. A. Manufacturing B. Retail C. Institutional D. Factory agent

C. Institutional

In a market with ________ there are many firms providing differentiated products. A. Pure competition B. Oligopolistic competition C. Monopolistic competition D. A monopoly

C. Monopolistic competition

Gabi just bought a pottery store. She knows from the previous owner that almost 60 percent of her sales take place during the Christmas holiday season, with the other 40 percent of sales evenly distributed over the rest of the year. Gabi will probably use a ________ advertising schedule. A. Continuous B. Flighting C. Pulsing D. Penetrating

C. Pulsing

An emotional appeal aims to satisfy consumers' ________, while an informational appeal speaks to consumers' _______ A. needs; desires B. institutional focus; personal focus C. emotional desires; utilitarian needs D. top-of-the-mind awareness; bottom-of-the-mind reactions

C. emotional desires; utilitarian needs

Kendrik is the director of human resources for a small film production firm. He has a strong personal interest in technology and is known throughout the firm as the one with the most knowledge about new kinds of audio equipment. If the firm decides to upgrade its audio equipment, Kendrik will probably function in what role in the firm's buying center? A. leader B. initiator C. influencer D. decider

C. influencer

A the break-even point, A. costs are zero B. price is maximized C. profits are zero D. fixed costs are zero

C. profits are zero

When developing an advertising message, the message should focus on A. The producer B. The advertising environment C. Solving problems for consumers D. Creating investment opportunities

C. solving problems for consumers

If a firm declared that it wanted to develop a strategic relationship, but was unwilling to commit funds or any effort to make it succeed, there would be an obvious lack of A. Mutual trust B. Common goals C. A contractual arrangement D. Credible commitments

D. Credible commitments

Sales of electric components manufactured by Sean's company depend on sales of new cars. Sean's company faces ________ demand. A. Synthetic B. Situational C. Monopolistic D. Derived

D. Derived

________ channels are used to reach a broad audience; ________ channels are used to reach a narrower segment of consumers. A. Niche media; mass media B. Media mix; media buy C. Media buy; media mix D. Mass media; niche media

D. Mass media; niche media

Advertising slogans such as "Don't text and drive" and "Buy flood insurance before it is too late" are examples of ads designed to A. Provide information B. Remind consumers C. Recruit employees D. Persuade consumers to take action

D. Persuade consumers to take action

A strategy to intentionally sell below cost to push a competitor out of a market, then raise prices to new highs, is called ________. A. Bait and switch B. Deceptive pricing C. Price discrimination D. Predatory pricing

D. Predatory pricing

Florida Environmental is offering a free, all expenses-paid trip to Las Vegas for HVAC dealers that sell at least 20 units this year. Florida Environmental is using a ________ promotional strategy. A. Pull B. Puffery C. Publicity D. Push

D. Push

Sarita goes through the newspaper looking for coupons to help reduce her living expenses. Her roommate Pilar doesn't read newspapers, let alone look through them for coupons. But Pilar filled out a form from inside a cereal box entering her in a drawing for free exercise equipment. What kind of sales promotion reached Pilar? A. Loyalty program B. Deal C. Premium D. Sweepstakes

D. Sweepstakes

Hector is opening an appliance store. He has estimated a monthly profit goal based on his anticipated expenses and earning goals and uses it to set product prices. Hector is implementing a ________ pricing strategy. A. Penetration B. Price skimming C. Competitor-based D. Target return on investment (ROI)

D. Target return on investment (ROI)

Firms using a(n) ________ pricing method set their prices relative to what other firms are charging. A. improvement value B. value-based C. cost-based D. competition-based

D. competition-based

Because there are only a few firms in markets with oligopolistic competition, A. Everyone is a price taker B. Producers do not have to consider the reactions of rival firms C. Government often encourages consolidation to reduce the number of competitors D. Price wars may occur

D. price wars may occur

Rory just bought a gourmet bagel store. She is working with a freelance graphic artist who is designing her logo and print advertisements. Rory is spending days looking over the various designs and color options. She needs to remember that the creative aspect of advertising design A. Is everything B. Will determine pretesting and post testing options C. Dictates tracking alternatives D. Should not overshadow the message

D. should not overshadow the message

Unlike product, promotion, or place, price is the only part of the marketing mix A. that offers the opportunity for an oligopoly. B. that is subject to gray market manipulation. C. that leads to competition. D. that generates revenue.

D. that generates revenue

The Stanley company wants Home Depot to carry all its tools but not the tools of its competitors so that Stanley can maximize its sales. But Home Depot carries a mix of tool brands so it can maximize the sales in its tool category. This misalignment of goals will likely lead to a ________ channel conflict. A. Horizontal B. Independent C. Conventional D. vertical

D. vertical

Brigette works for Simply Shoes Inc. which buys products directly from the manufacturer and resells them to retailers, who then sell the products to consumers. Brigette works for a A. Retail distribution center B. Retail jobber C. Store representative D. wholesaler

D. wholesaler

What are the informational, persuasive, and reminder advertising?

Informational advertising creates and builds awareness, gets the consumer moving through the buying cycle to make a purchase, and it informs consumers about future sales and promotions using persuasive advertising once there is enough brand awareness. Persuasive advertising occurs during the growth period of the product life cycle. Reminder advertising uses communication to remind and prompt repurchases, this is especially true for products that have made it to the maturity stage of the product life cycle.

Benjamin, the new sales manager for Burns & Company, was alarmed that the representatives used paper to track customer information. He made a decision to upgrade to a CRM system. For Benjamin, this represented a(n) _______ situation.

New buy

Suppose that a friend asks you to drive him to the airport this weekend so he can catch a flight. He pays you for the gas used driving to the airport, and for the cost of parking the car at the airport while you help him in with his bags. He then declares that you are now "even," since he has fully compensated you for any costs you incurred in helping him get to his flight. From your perspective, what aspects of the "price" of taking your friend to the airport has he omitted?

The effort and take it took to help him with his bags, he covered the commuting cost but he didn't factor in the time and effort for assisting him with his bags

How do you perform a vendor analysis?

There are four stages: (1) figure out important issues for the vendors, (2) give weight to the important issues and the total has to be 1%, a higher score represents high importance, (3) evaluate how the vendor is performing, and (4) multiply the vendor's performance with the importance for each issue and the result will be the overall performance for the vendor.

1. What is the difference between elastic demand and inelastic demand?

When something is elastic, customers are sensitive to price changes and demand will change a lot. If something is inelastic, the demand will barely change for a product in response to a price change.

The manager of a Kroger supermarket is considering re-ordering items for his store. He will negotiate price concessions and quality improvements. The manager is engaging in a(n) ______ situation.

modify rebuy

Denise is sharing with coworkers, "This customer just made another big order, and they just keep on coming." Denise is likely selling to a customer in what kind of buying situation?

straight rebuy