Mktg test 3

Shelia's Cookie Shop has fixed costs of $21,000, variable costs of $3,000, and it produces 4,500 cookies. What is Shelia's Cookie Shop's average variable costs? a.$4 b.$5.33 c.$7 d.$0.67

$0.67. Average variable cost, the variable cost per unit produced, is calculated by dividing the variable costs by the number of units produced. ($3,000 / 4,500 = $0.67).

Add It Up produces and sells calculators. The company's average fixed costs totaled $5.60, average variable costs totaled $2.50, and the company produced 7,500 calculators last year. Calculate Add It Up's total cost. a.$60,750 b.$105,000 c.$16,800 d.$23,250

$60,750. Total cost is the sum of average fixed costs and average variable costs times the quantity produced. ($5.60 + $2.50) x 7,500 = $60,750.

The Stove Shop manufactures gas fireplace surrounds and is evaluating a new model that will incorporate stainless steel material to provide a sleek and modern look to the typical gas-log fireplace. The Stove Shop sells its fireplaces to retail outlets that specialize in custom or semi-custom installation to the residential market. The Stove Shop believes the new product will be successful but wants to identify the breakeven point in order to establish minimum goals for the first quarter of production. The Stove Shop estimates that its fixed costs to produce the new model will be $140,000. It believes a wholesale price of $249 will enable retail outlets to offer the product for sale at $525 to its residential customers. Variable costs are estimated to be $110. How many units will The Stove Shop need to sell in order to reach the breakeven point? a.1,007 units b.390 units c.507 units d.337 units

1,007 units. The formula to calculate breakeven is fixed costs divided by the per unit contribution to fixed costs. The per-unit contribution to fixed costs is determined by subtracting variable costs from the price (Breakeven = 140,000/(249 − 110); 1,007 units).

When 4 buyers purchase the products of 6 producers, 24 transactions are required. If one intermediary serves both producers and buyers, the number of possible transactions is _______. a.4 b.12 c.10 d.18

10. Without an intermediary, there would be 24 possible transactions (# producers x # consumers = 4 x 6 = 24). When one intermediary serves both producers and buyers, the number of possible transactions is 10 (# producers + # consumers = 4 + 6 = 10)

What is the reorder point if the usage rate is 20 units per day, the order lead time is 8 days, and the safety stock is 60? a.1,208 b.500 c.220 d.88

220. The reorder point = (Order lead time × Usage rate) + Safety stock. In this example, (8 × 20) + 60 = 220.

In a simple economy of 3 producers and 10 consumers, there would be _______ possible transactions without an intermediary. With one intermediary, the number of possible transactions would be _______. a.30; 13 b.30; 10 c.10; 30 d.13; 30

30; 13. Without an intermediary, there would be 30 possible transactions (# producers x # consumers = 3 x 10 = 30). With a single intermediary, there would be 13 possible transactions (# producers + # consumers = 3 + 10 = 13).

The Nintendo Switch retails for $299 at GameStop and the cost to GameStop is $200. What is the markup as a percentage of selling price? a.66% b.75% c.33% d.50%

33%. The markup as a percentage of selling price is calculated by dividing the dollar markup ($99) by the retail price ($299). Therefore, it is $99/$299 = 33%.

Beats by Dr. Dre headphones are sold at Target for $159.00, and Target is able to purchase them for $90. What is the markup percentage of cost that Target is using on this product? a.48.6% b.76.7% c.52.4% d.43.3%

76.7%. The markup percentage of cost is calculated by dividing the dollar markup ($69) by the cost ($90). Therefore, $69/$90 = 76.7%.

Beats by Dr. Dre headphones are sold at Target for $159.00, and Target is able to purchase them for $90. What is the markup percentage of cost that Target is using on this product? a.76.7% b.43.3% c.52.4% d.48.6%

76.7%. The markup percentage of cost is calculated by dividing the dollar markup ($69) by the cost ($90). Therefore, $69/$90 = 76.7%.

Pricing decisions are impacted by many factors. Which of the following factors is NOT related to pricing? a.Costs b.Expectations of other channel members c.A company's stock price d.Consumers' interpretation and response

A company's stock price

In which of the following situations is dual distribution likely to be determined illegal? a.A manufacturer's outlet store undercuts its independent retailers' prices for the same products. b.A manufacturer sells its products exclusively through its own website and its own retail stores. c.A retailer's prices at its stores undercut a manufacturer's own prices. d.A manufacturer sells its products exclusively online through its own website and an independent website.

A manufacturer's outlet store undercuts its independent retailers' prices for the same products. Courts do not consider dual distribution when it allows for competition. If a manufacturer severely undercuts its independent retailers' prices on the same products, this could be determined to be illegal.

Which of the following products will most likely use the longest distribution channel? a.Fine china b.Milk c.Canned vegetables d.Automobiles

Canned vegetables. Less expensive, standardized products with long shelf lives can go through longer channels with many intermediaries. Complex and expensive items (automobiles), perishable products (milk), and fragile products (fine china) are likely to have shorter distribution channels. Therefore, canned vegetables most likely have the longest distribution channel.

Canon has several lines of digital cameras and often markets its Rebel DSLR camera body with a basic lens at an affordable price of $399. However, consumers who desire additional lenses might pay $400 or more for each additional lens. What type of pricing is Canon utilizing for its Rebel product line? a.Penetration b.Premium c.Captive d.Bait

Captive. Marketers may utilize captive pricing for items within a product line where the basic product is priced low but items that are required to operate or enhance the basic product are priced higher.

Which of the following is a limited-service wholesaler? a.Cash-and-carry wholesaler b.Limited-line wholesaler c.General-merchandise wholesaler d.Specialty-line wholesaler

Cash-and-carry wholesaler. A limited-service wholesaler is a merchant wholesaler that provides fewer marketing services than a full-service wholesaler. Examples include cash-and-carry wholesalers, rack jobbers, drop shippers, and truck wholesalers.

You represent a group of investors who are exploring alternatives for entering the retailing business. Many of these investors have significant past experience working for other retailing companies and they realize the retailing business is very competitive. They also realize there is a high failure rate for startups in this industry. They ask you to recommend a retailing strategy that would meet the following criteria:No storefront would be neededNo personal selling would be neededNo traditional store operating expenses are necessaryCustomers can place orders via the internet, telephone, or mailLow operating expenses and limited customer service requiredWhich of the following retailing strategies are you going to recommend they use? a.Vending b.Telemarketing c.Direct selling d.Catalog marketing

Catalog marketing. Catalog marketing would be the most logical choice given these criteria. The advantages of catalog retailing include efficiency and convenience for customers because they do not have to visit a store. The retailer benefits by being able to locate in remote, low-cost areas, save on expensive store fixtures, and reduce both personal selling and store operating expenses.

Direct selling is effective in countries like China for which of the following reasons? a.Asian countries prefer this method of shopping as they do not like to waste time at malls or shopping centers. b.The Chinese place high value on Western products and see direct selling as an easy way to gain access to American products. c.Collective societies, like China, appreciate the one-on-one attention given in a direct selling situation. d.The State Administration for Industry and Commerce (SAIC) in China has banned telemarketing, so direct selling is the best way for retailers to reach Chinese consumers.

Collective societies, like China, appreciate the one-on-one attention given in a direct selling situation. Direct selling is most successful in other countries, particularly collective societies like China. Collective societies prize the one-on-one attention and feeling like they are connecting with the salesperson.

Which of the following best describes circumstances under which competition-based pricing should be utilized? a.Commonly utilized when competing products are heterogeneous b.Commonly utilized when varying levels of demand are present in the marketplace c.Commonly utilized among producers of relatively homogeneous products when consumers are sensitive to price d.Commonly utilized among producers of customized products

Commonly utilized among producers of relatively homogeneous products when consumers are sensitive to price. Competition-based pricing is utilized by producers of relatively homogeneous products particularly when the target market considers price to be an important purchase consideration.

Many consumers love shopping at discount stores like T.J. Maxx, HomeGoods, or Marshall's. Cindy and Tamra were recently shopping at HomeGoods and saw some dining room chairs they really liked. The price tag had a retail price of $79.95 with additional detail of manufacturer's suggested retail price of $129.95. They thought this was a great discount and decided to purchase two chairs for their apartment. What type of pricing strategy does HomeGoods utilize in pricing the chairs and other merchandise? a.Price leaders b.Comparison discounting c.Special-event pricing d.Odd-even pricing

Comparison discounting

Anheuser-Busch, Inc often gathers market research information to determine the prices that MillerCoors, Heineken, and various craft breweries such as New Belgium Brewing Co. and Sierra Nevada Brewing Co. are charging for their products. Anheuser-Busch then attempts to set prices at a similar level as these other companies' products. What type of method is Budweiser utilizing? a.Demand-based pricing b.Status quo pricing c.Cost-plus pricing d.Competition-based pricing

Competition-based pricing

Using horizontal channel integration allows a firm to _______. a.increase efficiency and develop economies of scale in advertising and other marketing functions b.combine all stages of the distribution channel under a single company's ownership c.use contractual agreements to open franchise locations d.better communicate with other members of the distribution channel

increase efficiency and develop economies of scale in advertising and other marketing functions. One of the main benefits of merging under a horizontal marketing system is that the new company should enjoy increased efficiency and economies of scale in its marketing mix.

Carmen Sanchez is a sales representative for Sherwin Williams and her territory includes an approximately 120-mile radius of her "home" retail store. Her customers are painting contractors and facility managers of office complexes, apartment buildings, hospitals, and other businesses who might have commercial painting needs. Carmen uses her company vehicle and spends about five hours each day in her car visiting her customers and prospecting for new business. Since her territory is so large, Carmen puts about 200 miles on her car each day that consumes a lot of gasoline. She tries to be economical when choosing gas stations, but it doesn't really matter how much the gas costs—she pays the price. In this case, demand for gasoline is _______. a.inelastic b.variable c.unitary d.elastic

inelastic. Demand is inelastic when a change in price has little to no effect on the demand or quantity purchased.

When Coke Zero was added to the line of Coca-Cola products, it most likely was introduced using _______ distribution. a.selective b.full-market c.intensive d.exclusive

intensive. Coke Zero was most likely introduced using intensive distribution. Intensive distribution is done using all available outlets to distribute a product.

Sales are most likely to have a direct relationship to product availability for products that use _______ distribution. a.exclusive b.intensive c.multichannel d.selective

intensive. Sales of low-cost convenience products may be directly related to product availability. This is a characteristic of intensive distribution.

JanSport offers a line of backpacks in a variety of styles and sizes. The company needs to make sure that it has an adequate assortment of backpacks available to meet customer demand as part of the _______ stage of logistics. a.materials handling b.warehousing c.transportation d.inventory management

inventory management. Companies need to make sure they do not have either a shortage of products or too big of a surplus.

JanSport offers a line of backpacks in a variety of styles and sizes. The company needs to make sure that it has an adequate assortment of backpacks available to meet customer demand as part of the _______ stage of logistics. a.inventory management b.transportation c.warehousing d.materials handling

inventory management. Having an adequate assortment of backpacks available to meet customer needs is part of inventory management. Companies need to make sure they do not have either a shortage of products or too big of a surplus.

The internet may increase resentment between intermediaries and manufacturers because _______. a.communication between the manufacturers and intermediaries is more open and clear b.it makes it easier for the manufacturers to take the role of channel captain c.it allows manufacturers to create a direct channel that competes with retailers d.role expectations posted on a manufacturer's website are unclear to intermediaries

it allows manufacturers to create a direct channel that competes with retailers. A manufacturer's online presence creates a capability for direct sales to consumers that did not exist previously.

Victor knows that if he decides to buy a franchise, he will most likely have to supply _______. a.management know-how and labor b.buildings and daily operations c.marketing assistance and management know-how d.labor and daily operations

labor and daily operations. Franchisees supply labor and capital, operate the franchised business, and agree to abide by the provisions of the franchise agreement.

Business consumers frequently buy _______, while consumers typically buy _______. a.on credit; with cash b.large quantities; limited quantities c.new products; used products d.through catalogs; online or in-store

large quantities; limited quantities. Business consumers frequently buy in large quantities. Consumers generally buy limited quantities of a product. For example, if a consumer wants to buy pens, he or she might buy a pack of five pens; however, a business might buy dozens of pens for the office staff.

FX Productions, one of the production companies behind the television show Atlanta, made several marketing mix decisions that were related to distribution. All of the following are distribution decisions, except _______. a.selling merchandise through its official website b.making the show available for streaming on Netflix, Amazon, Hulu or other streaming services c.leasing a billboard in Times Square to feature the star of the show d.airing Atlanta on FX

leasing a billboard in Times Square to feature the star of the show. The Times Square billboard is a promotion decision. The airing and streaming of the show, the website, and the musical score are all distribution decisions.

Kaitlynn is debating opening a Jimmy John's Gourmet Sandwiches franchise. As she is looking over the information, the major advantage that she sees for opening a franchise is _______. a.freedom provided as a franchisee b.adaptability of franchise menus c.limited capital required to open a franchise d.a high gross margin

limited capital required to open a franchise. Through a franchise agreement, franchisees get several advantages, including the ability to start a business with limited capital. Franchises also have lower failure rates than independent establishments and they can build on the established reputation of the national brand.

Many department store retailers traditionally plan a "White Sale" in mid-January to motivate shoppers to their store and encourage them to spend money after the holiday season. A traditional "White Sale" typically covers towels, sheets, and other staple items that consumers do not routinely purchase. The term was coined as sheets, pillowcases, and towels were traditionally white in color—hence the name, "White Sale." Over the years, shoppers have come to expect the traditional sale of household linens and delay their purchase until the early part of the year when they know these products' prices will be drastically reduced. The "White Sale" is an example of the _______ strategy. a.captive pricing b.bait pricing c.price lining d.periodic discounting

periodic discounting

Freight transportation companies that have the ability to transport products in many different ways including ships, rails, trucks, and air service are known as _______. a.freight forwarders b.air-land-sea carriers c.megacarriers d.shipping experts

megacarriers. Megacarriers are freight transportation companies that offer several shipment methods, including ships, rails, trucks, and air service. Prior to the development of megacarriers, transportation companies used to be generally specialized in only one mode.

Some retailers utilize _______ as a pricing strategy by offering discounts after Christmas or back-to-school offers to attract consumers to shop. However, this strategy may backfire as consumers may put off purchases in anticipation of a sale or reduced-price offer. a.random discounting b.price lining c.periodic discounting d.captive pricing

periodic discounting. Periodic discounting is the temporary reduction of prices on a patterned or systematic basis. Many retailers have annual holiday or seasonal sales.

Halloween Center is a specialty costume store that operates a retail location from late August through early November. The company needs some warehouse space to store its costumes. Because of the seasonality of its operations, they are most likely looking to lease a _______. a.temporary warehouse b.private warehouse c.public warehouse d.bonded warehouse

public warehouse. The Halloween Center is most likely looking for a public warehouse. A public warehouse is a storage space that can be leased for a shorter length of time.

Cook Right Pans has two types of warehouses that it uses. The first is a _______ that it leases to store excess inventory during times when its production output is greater than the demand for its pots and pans. The second is a _______ that is used to coordinate the shipping of completed products and is designed for quickly shipping products rather than for storage. a.private warehouse; public warehouse b.public warehouse; distribution center c.private warehouse; distribution center d.preassembly warehouse; postproduction warehouse

public warehouse; distribution center

A customer's _______ refers to whether the price will move customers closer to purchase of the product and the degree to which the price enhances their satisfaction with the purchase experience and with the product after purchase. a.response to the price b.interpretation of the price c.external reference price d.internal reference price

response to the price. Customer response refers to whether the price will move customers closer to purchase of the product and the degree to which the price enhances their satisfaction with the purchase experience and with the product after purchase.

Tri-County Supply is a wholesaler that works in the home construction industry, providing building supplies such as doors, windows, gutters, and other components used in home construction. Tri-County Supply takes ownership of the components, which means that it assumes the risk associated with the products if it is unable to sell them to home builders. Tri-County Supply is a _______. a.rack jobber b.sales office c.merchant broker d.merchant wholesaler

merchant wholesaler. Tri-County Supply is a merchant wholesaler, which is an independently-owned business that takes title of goods, assumes ownership risks, and buys and resells products to other wholesalers, business customers, or retailers.

Select Comfort, a producer of adjustable air mattresses, sells its products through retail chains, direct mail sales, and on its website. This is an example of _______. a.multichannel distribution b.logistics c.materials handling d.direct marketing

multichannel distribution. Multichannel distribution is the use of a variety of marketing channels to ensure maximum distribution.

Select Comfort, a producer of adjustable air mattresses, sells its products through retail chains, direct mail sales, and on its website. This is an example of _______. a.multichannel distribution b.materials handling c.logistics d.direct marketing

multichannel distribution. Multichannel distribution is the use of a variety of marketing channels to ensure maximum distribution.

Mitch Harris is an avid car collector and enjoys buying and selling British sports cars. He's currently on the market for a Lotus Evora and has seen them advertised between $42,000 and $65,000 depending upon the model year, options, and condition of the vehicle. Mitch is very interested in one particular advertisement and plans to contact the owner to discuss the vehicle. The owner is asking $54,500 for the vehicle, but Mitch believes he will be able to utilize _______ pricing to purchase the vehicle. a.negotiated b.premium c.bait d.penetration

negotiated. Negotiated pricing occurs when the final price is established through bargaining between the seller and the customer.

Commercials for Fruit of the Loom's new Everlight underwear for women discuss how light the fabric is saying, "You won't even notice you're wearing it." Fruit of the Loom is using _______ to distinguish its product from other brands. a.price competition b.materials promotion c.nonprice competition d.product quality

nonprice competition

Pricing is a unique component to the marketing mix because _______. a.of its flexibility b.it is often the first thing that consumers notice about a product c.it is the only thing that marketers can control d.of its ability to create relationships with consumers

of its flexibility. Pricing remains a flexible and convenient way to adjust the marketing mix. In many situations, marketers can adjust prices quickly—over a few days or even in minutes. Such flexibility is unique to this component of the marketing mix.

Precision Equipment is updating the way it ships its products. Specifically, it is improving _______ by adding electronic ordering to its system, adding automated machines to move items in the warehouse, and partnering with UPS to ensure priority shipping with the carrier. a.logistics b.inventory management c.warehousing d.order processing

order processing. Precision Equipment is improving its order processing system, which includes three main tasks: order entry, order handling, and order delivery. Electronic ordering improves the order entry process, the machines improve order handling, and the partnership with UPS improves order delivery.

When marketers at Consolidated Mustard Company tried to determine demand for their product, they found that at 50 cents, consumers wanted 2,000 jars; at $1.00, they wanted 6,000 jars; and at $1.50, they wanted 4,000 jars. What can Consolidated conclude? a.Consolidated Mustard Company has an elastic product. b.Consolidated Mustard Company engages in price competition. c.Consolidated Mustard Company did poor market demand research. d.Consolidated Mustard is a prestige good.

Consolidated Mustard is a prestige good. Prestige products, such as selected perfumes and jewelry, tend to sell better at higher prices than at lower ones. However, the price can only be raised so high—if the price keeps increasing, eventually demand will begin to decrease. This is the case with Consolidated Mustard.

Which of the following descriptions is most appropriate for price lining? a.Marketers utilize this approach in order to appeal to price-sensitive shoppers. b.This strategy tends to build market share quickly to encourage product trial. c.Consumer demand for products is relatively inelastic and consumers tend to concentrate their purchases without responding to slight changes in price. d.This strategy may generate customer resentment if customers believe the retailer is setting artificially low prices in order to entice customers to the store in order to sell them higher-priced merchandise.

Consumer demand for products is relatively inelastic and consumers tend to concentrate their purchases without responding to slight changes in price.

Which of the following includes the various bases for pricing? a.Variable, competitive, and cost b.Profit, status quo, and survival c.Markup, cost, and cost-plus d.Demand-based, competition-based, and cost-based

Demand-based, competition-based, and cost-based

_______ have wide product mixes and are often organized into separate departments. Separate departments help to facilitate marketing efforts and internal management. a.Discount stores b.Convenience stores c.Superstores d.Department stores

Department stores. Department stores, such as Macy's and Nordstrom, have wide product mixes and are organized into separate departments to facilitate marketing efforts and internal management.

Which of the following is the final step in the process of establishing prices? a.Determination of a specific price b.Selection of a pricing strategy c.Assessment of target market's evaluation of price d.Selection of a basis for pricing

Determination of a specific price

What is the first step in establishing prices? a.Development of pricing objectives b.Evaluating competitors' prices c.Determining a basis for pricing d.Determination of a specific price

Development of pricing objectives. The first step in setting prices is developing pricing objectives—goals that describe what a firm wants to achieve through pricing.

Advo Systems is an organization that mails product brochures and coupons to potential consumers who can then purchase these products by mail or by phone. Advo Systems illustrates which of the following methods of selling retail products? a.Direct-response marketing b.Catalog marketing c.Specialty retailing d.Party plan

Direct-response marketing. Direct-response marketing occurs when a retailer advertises a product and makes it available through mail or telephone orders. Advo Systems is engaging in direct-response marketing.

Which of the following is least likely to be considered when deciding on a retailer's location? a.Customer characteristics b.Placement of competitors' stores c.Kinds of product being sold d.Distance from corporate headquarters

Distance from corporate headquarters. Retailers consider various factors when evaluating potential locations, including the position of the firm's target market within the trading area, kinds of products being sold, characteristics, and placement of competitors' stores. The distance from corporate headquarters is not likely to be considered when determining a store's specific location.

A medical supply wholesaler has seen growth in its business recently and has decided to open a new facility designed for moving the products being sold. It will combine shipments received from manufacturers and ship them to medical facilities almost immediately. This new facility would be best classified as which of the following? a.Distribution center b.Public warehouse c.Private warehouse d.Bonded warehouse

Distribution center. The medical supply wholesaler is most likely looking for a distribution center. Distribution centers are large facilities used for receiving, warehousing, and redistributing products to stores or customers. They are specially designed for rapid flow of products and are usually one-story buildings with access to transportation networks, such as major highways and/or railway lines.

What is the typical shape of the demand curve for most products? a.Downward sloping b.Upward sloping c.C-shaped d.U-shaped

Downward sloping. The shape of the demand curve for most products is downward sloping.

Which of the following methods is utilized to gather data about competitive prices? a.Employing comparative shoppers who gather data at competitors' stores b.Purchasing syndicated marketing research services c.Incorporating it as a regular part of marketing research d.All of the answer choices are ways to gather data about competitive prices

Employing comparative shoppers who gather data at competitors' stores, Purchasing syndicated marketing research services, Incorporating it as a regular part of marketing research

Recently Walmart utilized a commercial showing employees using a big pair of scissors to cut prices and stated "low price guarantee." Walmart also utilizes signage throughout the store on various items that say, "Low Prices" or "Low Price Guarantee." What type of pricing strategy is Walmart utilizing? a.Customary pricing b.Bundle pricing c.Odd-even pricing d.Everyday low pricing (EDLP)

Everyday low pricing (EDLP)

JD's Diner offers Coca-Cola products to its customers. They have an agreement with Coca-Cola that they are not allowed to carry products from PepsiCo or any other competitor. Coca-Cola is engaging in which of the following channel management practices? a.Tying agreements b.Restricted sales territories c.Refusal to deal d.Exclusive dealing

Exclusive dealing. Coca-Cola is engaging in exclusive dealing. Exclusive dealing is a situation in which a manufacturer forbids an intermediary from carrying products of competing manufacturers. Here, Coca-Cola is forbidding JD's Diner from carrying PepsiCo products.

Pnina Tornai is a wedding dress designer targeting upscale brides. Her wedding dresses have been worn by celebrities and featured in television programs. Which form of distribution would Pnina Tornai most likely use for her wedding gowns? a.Dealer b.Intensive c.Exclusive d.Selective

Exclusive. Exclusive distribution is using only a single outlet in a fairly large geographic area to distribute a product. Pnina Tornai uses exclusive distribution, with her high-quality dresses only available in one location in the United States.

Firms that stress low price tend to market differentiated products. True False

False. Firms that stress low price as a key marketing-mix element tend to market standardized products.

Differential pricing is effective mainly when focusing on only one market segment. a.True b.False

False. For differential pricing to be effective, the market must consist of multiple segments with different price sensitivities.

The objective of maintaining or increasing market share depends on growth in industry sales. True False

False. Maintaining or increasing market share need not depend on growth in industry sales. An organization can increase its market share even if sales for the total industry are flat or decreasing.

After marketers determine a specific price, it will not change. True False

False. Marketers may need to refine a price in order to make it consistent with circumstances (such as a sluggish economy) and with pricing practices in a particular market or industry.

Meijer is an example of an extreme-value store. a.True b.False

False. Meijer is a discount store. Extreme-value stores are a fraction of the size of conventional discount stores and typically offer very low prices—generally $1 to $10—on smaller size name-brand nonperishable household items. Extreme-value stores include stores like Dollar General and Family Dollar.

Seasonal discounts provide price incentives to customers during peak selling seasons. True False

False. Seasonal discounts are price reductions to buyers who purchase goods or services out of season.

The primary advantage of franchising is the complete control the franchisee has over the business. a.True b.False

False. The franchisor can dictate many aspects of the business: décor, menu, design of employees' uniforms, types of signs, hours of operation, and numerous details of business operations. Therefore, the franchisee does not have complete control.

The reorder point is computed by multiplying the service standard by the order lead time. a.True b.False

False. To calculate the reorder point, the marketer must know the order lead time, the usage rate, and the amount of safety stock required.

With prestige products, a firm will always be able to sell more at a higher price. a.True b.False

False. With prestige products, demand tends to increase with higher prices. After a certain point, however, raising the price backfires: If the price goes too high, the quantity demanded goes down.

Aldi, normally the low-price leader in grocery stores, is starting to become concerned with the increasing number of Lidl stores in the United States. To maintain its leader status, which of the following methods will Aldi most likely employ? a.Raise prices on most items and compete on quality and services b.Lower prices below cost on all items to draw shoppers into stores c.Ignore competitors' prices and keep current prices d.Hire comparison shoppers to purchase a typical basket of goods from Lidl and compare prices

Hire comparison shoppers to purchase a typical basket of goods from Lidl and compare prices. Marketers are in a better position to establish prices when they know the prices charged for competing brands. One way to collect data on prices at competitors' stores is to hire comparison shoppers.

The Comfort Station Restaurant features daily lunch specials just like grandma used to make and enjoys serving "comfort-style" food—food that nurtures and comforts the soul. The restaurant is near a large office complex and competes against many national chains such as Chipotle, McDonald's, and Subway. It typically offers its lunch specials at $8.99 per person, but recently lowered its prices to $6 per person hoping that consumers would relate this price to Subway's $6 sandwich deal, which was so popular. Which of the following objectives is The Comfort Station Restaurant most likely seeking to achieve? a.Increasing per-item revenue b.Decreasing total costs c.Increasing the number of competitors d.Increasing market share

Increasing market share. A temporary price reduction can help achieve a goal of increased market share.

Which of the following best describes the shape of the demand curve for a prestige product? a.It has a straight-line shape showing that consumers are less willing to purchase the product at higher prices than lower prices. b.It has a curved shape showing that consumers are willing to purchase greater quantities at higher prices than lower prices. However, beyond a certain high price point, demand declines. c.It has a straight-line shape showing that consumers are willing to purchase greater quantities at higher prices than lower prices. d.It has a straight-line shape showing that consumers' willingness to purchase the product stays the same regardless of the product's price.

It has a curved shape showing that consumers are willing to purchase greater quantities at higher prices than lower prices. However, beyond a certain high price point, demand declines.

Which of the following statements is NOT an advantage of nonprice competition? a.It enhances customer loyalty toward a product or service brand. b.Customers are less likely to seek competitive brands. c.Marketers have a wide array of factors to differentiate the product from competitor brands. d.It is very flexible and can be quickly changed.

It is very flexible and can be quickly changed. The major factors utilized in nonprice competition (e.g., product features, service, product quality, promotion) cannot be quickly changed in response to competitor tactics. However, marketers who utilize price competition can quickly respond to changes in competitors' prices.

For which of the following products is exclusive distribution most appropriate? a.Computers b.Hair dryers c.Smartphones d.Luxury cars

Luxury cars

Mike's Bikes has expanded sales of its bicycles throughout most of the United States. As it finishes its expansion, it wants to find an intermediary to handle its sales functions in the new territory west of the Rocky Mountains. This intermediary would be restricted to that territory and Mike's Bikes would retain control over pricing and other marketing decisions. Mike's Bikes should hire a _______. a.manufacturers' agent b.selling agent c.commission merchant d.limited-line wholesaler

Manufacturers' agent. Manufacturers' agents are independent intermediaries that represent sellers. They handle sales functions, but they have little or no control over a product's price or marketing policies.

_______ pricing, which is typically used by retailers such as Best Buy, calculates the retail price by adding a predetermined percentage of the cost to the cost of the product. a.Competition-based b.Demand-based c.Cost-plus d.Markup

Markup

Apple has successfully introduced several new products utilizing a skimming approach where it charges the highest possible price during the introduction stage of the product life cycle. Which of the following is NOT one of the benefits of a skimming strategy? a.Creates cash flow to offset the development costs associated with product creation b.Helps keep demand consistent with production capabilities c.Protects the marketer from problems that arise when prices are set too low to cover costs d.May achieve lower levels of sales but still recoup developmental costs

May achieve lower levels of sales but still recoup developmental costs

Apple has successfully introduced several new products utilizing a skimming approach where it charges the highest possible price during the introduction stage of the product life cycle. Which of the following is NOT one of the benefits of a skimming strategy? a.Creates cash flow to offset the development costs associated with product creation b.May achieve lower levels of sales but still recoup developmental costs c.Helps keep demand consistent with production capabilities d.Protects the marketer from problems that arise when prices are set too low to cover costs

May achieve lower levels of sales but still recoup developmental costs. A disadvantage of price skimming relates to risks related to misjudging demand and facing insufficient sales at the higher price point.

Which of the following is NOT a technique associated with psychological pricing? a.Reference pricing b.Bundle pricing c.Penetration pricing d.Multiple-unit pricing

Penetration pricing

_______ pricing is often utilized to discourage competitors from entering the market. a.Captive b.Penetration c.Product-line d.Bundle

Penetration. Penetration pricing is the strategy of setting a low price for a new product and its main purpose is to build market share quickly to encourage product trial.

_______ pricing is utilized by marketers as a product-line pricing strategy and is implemented by charging the highest price for products that are the most versatile and most desirable version of a product. a.Premium b.Penetration c.Bait d.Captive

Premium. Premium pricing is utilized by marketers as a product-line pricing strategy and is implemented by charging the highest price for products that are the most versatile and most desirable version of a product.

Jennifer Sloan was recently hired by IBM as a solutions sales representative upon graduation from college and after working with the company for two years, now earns a base salary of $90,000 as well as commissions on sales and bonuses for exceeding her quarterly sales quotas. Jennifer is a fashionista and enjoys purchasing the latest styles and fashions from high-end designers such as Chanel, Dolce Gabbana, and her favorite red-soled shoes from Christian Louboutin that cost $500 or more per pair.Jennifer realizes that comparable products from other brands are priced much lower but enjoys the added luxury of these designer labels and feels that the quality is much better. In addition, Jennifer meets regularly with senior executives including vice presidents and presidents of companies and believes her image is related to her success as a sales representative. What type of pricing strategy do Christian Louboutin, Chanel, and Dolce Gabbana most likely utilize? a.Customary b.Odd-even c.Prestige d.Reference

Prestige. With prestige pricing, prices are set at an artificially high level to convey a quality image.

Best Buy is a national retailer specializing in entertainment, appliances, computers, and stereo equipment. Best Buy is considered a category killer retailer since it has a wide range of merchandise in limited product categories and are able to negotiate special discounts from suppliers due to its ability to purchase in bulk. Best Buy encourages customers to shop the competition but make their purchase from Best Buy—either online or in the stores since Best Buy will meet or exceed any advertised price on any of its products. What type of practice is Best Buy implementing through its price-match guarantee? a.Integrated pricing b.Value-conscious pricing c.Nonprice competition d.Price competition

Price competition. Price competition emphasizes price as the product differential. In this case, Best Buy is focusing specifically on price matching so that it can compete on price, not differentiated product features.

Which of the following statements is true with regard to price? a.Pricing considerations always involve an exchange of money. b.Perceived quality is the only factor that influences consumers' perceptions of the value associated with a product's price. c.Price is the value paid for a product in a marketing exchange. d.Price is relatively unimportant to buyers.

Price is the value paid for a product in a marketing exchange.

Which of the following pricing strategies is NOT utilized when establishing prices for a product line? a.Bait pricing b.Price skimming c.Premium pricing d.Captive pricing

Price skimming. Marketers have several strategies from which to choose when employing product-line pricing: captive pricing, premium pricing, bait pricing, and price lining.

Producers commonly provide intermediaries with discounts, or reductions, from list prices and they are classified into five categories. Which of the following is NOT a type of discount offered to business markets? a.Allowance b.Quantity c.Quality d.Trade

Quality. The five types of discounts used for business markets are trade, quantity, cash, seasonal, and allowance.

Jeep wants to transport new vehicles from its plant in Toledo, Ohio, to the dealers in Southern California. Which of the following methods would be the cheapest for transporting this cargo? a.Railroads b.Airplanes c.Trucks d.Birdyback

Railroads

A Perfect Pair is a designer clothing boutique featuring fresh fashions for women who like to dress in up-to-the-minute fashions and have high levels of discretionary income to spend on clothing. The store does not offer very many discounts on clothing since it purchases in small amounts and frequently sells all that it orders. However, A Perfect Pair does price reductions on a nonsystematic basis, so customers are sometimes surprised to visit the store and notice items have been reduced from regular price. What pricing strategy is A Perfect Pair utilizing? a.Captive pricing b.Product-line pricing c.Random discounting d.Penetration pricing

Random discounting. Random discounting occurs when there is a temporary reduction of prices on an unsystematic basis.

Which regulations or laws limit the use of price differentials? a.Robinson-Patman Act and Clayton Act b.Federal Trade Commission Act c.Wheeler-Lea Act d.Sherman Antitrust Act

Robinson-Patman Act and Clayton Act

Which of the following describes a disadvantage of using an industrial distributor? a.Industrial distributors work on commission and do not take title of products. b.They are dedicated to selling only one brand. c.Since they are independent firms, they may be difficult to control. d.They have limited ability to provide customers with parts or repair services quickly.

Since they are independent firms, they may be difficult to control.

You are conducting a business startup workshop sponsored by the Small Business Administration (SBA). The workshop attendees are all aspiring business owners who are excited and fearful about the prospect of starting their own business. Early in the workshop, you asked the attendees to complete a questionnaire about their major concerns in starting a new business. The majority of the respondents indicated their biggest concerns were limited capital and lack of business experience.Based on these concerns, which of the following business strategies do you think would be most appropriate for these workshop attendees? a.Start their business as a franchisee b.Start their business as a mail-order wholesaler c.Start their business as a full-service wholesaler d.Start their business as a merchant wholesaler

Start their business as a franchisee. Franchising enables a franchisee to start a business with limited capital and benefit from the business experience of others.

Dallas owns a pet grooming business called Pawsatively Perfect. He only works weekdays between 8 a.m. and 5 p.m. He has loyal customers and enjoys all of the pets he grooms. Dallas is happy with the amount of business he currently has and would like to maintain his current work load. Dallas would likely employ which type of pricing objective? a.Cash flow b.Survival c.Status quo d.Product quality

Status quo. In status quo pricing, firms identify price levels that help stabilize demand and sales. Dallas is happy with the amount of business he currently has and wants to maintain his current work load. He would likely use status quo pricing.

After appearing on a national talk show to discuss her line of bracelets and rings, Natalie expected sales volume to increase. Unfortunately, the sales volume was higher than expected and her company had $250,000 in lost sales because it did not have enough inventory. The $250,000 represents which of the following inventory management costs? a.Stockout b.Carrying c.Shortage d.Safety stock

Stockout. When too few products are carried in inventory, the result is a shortage of products referred to as a stockout. Stockouts can result in customer dissatisfaction that leads to lower sales, and even loss of customers and brand switching.

Which of the following actions should a firm follow when marginal costs are equal to marginal revenue? a.Stop producing additional units in order to maximize profitability b.Produce fewer units to decrease total costs c.Increase advertising to enhance consumer demand d.Reduce prices to create higher demand for the product

Stop producing additional units in order to maximize profitability. Profit is highest when marginal costs equal marginal revenue. Beyond this point, the additional cost of producing another unit exceeds the additional revenue generated, and profits decrease. Therefore, when this point is reached, firms should stop producing additional units.

Nicole manages a boutique that sells unique gifts and stationery. She wants to update the store's strategic plan. Which of the following aspects of the store is the least flexible? a.Store atmosphere b.Store image c.Store location d.Product assortment

Store location. A firm's location decision is extremely important. Once decided, location is the least flexible variable of the marketing mix.

Rosie and John both are buying textbooks for the class. Rosie prefers the online option and purchases her copy of the textbook from the publisher's website. John likes the feel of the book in his hands and buys a print copy from his college bookstore. Rosie is purchasing her book through _______, while John is purchasing his through _______. a.a direct marketing channel; a wholesaler b.an indirect marketing channel; a retailer c.a direct marketing channel; a retailer d.a retailer; a wholesaler

a direct marketing channel; a retailer. The publisher's website is a direct channel. In this case, Rosie is purchasing the book directly from the publisher, which is the producer of the book. John is buying the textbook through a retailer.

Customers receive the benefits of form utility from an intermediary when _______. a.the retailer has many locations available to purchase a desired product b.the consumer is pre-approved for purchase and does not have to complete paperwork c.a retailer offers to add a monogram to a product d.the product is preassembled in the manufacturer's packaging

a retailer offers to add a monogram to a product. Form utility from an intermediary is when the intermediary assembles, prepares, or otherwise refines the product to suit individual consumer needs. The retailer offering to add a monogram is an example of an intermediary providing form utility. Having the product preassembled in the manufacturer's packaging is form utility, but not provided by the intermediary.

Fiat Chrysler has an agreement with GAC Group, a Chinese automobile manufacturer, to produce Jeeps in China to be sold to Chinese customers. This agreement gives Fiat Chrysler access to the Chinese market without having to pay import tariffs on cars produced in the United States and sold in China. This is an example of _______. a.a strategic channel alliance b.tying agreements c.horizontal channel integration d.dual distribution

a strategic channel alliance. This is an example of a strategic channel alliance. The agreement gives Fiat access to GAC's distribution network in China and allows the cars to be sold in China at a lower price due to the reduced import tariffs.

Best Buy stores have knowledgeable staff to provide information to consumers on products ranging from televisions to laptops. They also offer repair and support services through the Geek Squad. These are examples that Best Buy is _______. a.facilitating comparison shopping b.participating in multichannel retailing c.trying to appeal to business customers d.adding value for customers

adding value for customers. Retailers add value for customers by providing services and assisting in making product selections.

Versace's men's cologne "Gucci Guilty" is most likely considered a prestige product. If the marketing managers at Versace wanted to test the elasticity of the demand to confirm its prestige product status, which of the following outcomes would they likely expect? a.The demand for the product would be lower at higher prices. b.The demand for the product would be unaffected by the price. c.The demand for the product would vary widely based on the price. d.The demand for the product would diminish at a certain higher price point.

The demand for the product would diminish at a certain higher price point.

Which of the following factors or situations would affect the success of a company's use of nonprice competition? a.The existence of unique product features that consumers value b.Cutting prices in response to a competitor's pricing strategy c.Employing an everyday low-price strategy d.The marketer's ability to negotiate favorable price terms with suppliers

The existence of unique product features that consumers value. Nonprice competition is effective only under certain conditions. A company must be able to distinguish its brand through unique product features, higher product quality, effective promotion, distinctive packaging, or excellent customer service.

Agatucci's Restaurant is marketing a line of frozen pizzas based on its famous recipe it has served at the restaurant for the last 40 years. The pizzas will be sold in grocery stores across the country, and prior to the national roll-out, Agatucci's used test marketing to determine the appropriate price and market niche for its pizzas. It discovered that the typical grocery store would sell 25 pizzas per day at $6.99, 45 pizzas per day at $7.49, and 38 pizzas per day at $8.99. Which of the following best describes what Agatucci's learned as a result of its test marketing and pricing study? a.Demand for Agatucci's pizza is inelastic. b.The pizzas are considered a prestige product. c.Demand for Agatucci's pizza is a normal, downward sloping curve. d.Consumers are not very interested in purchasing the Agatucci brand.

The pizzas are considered a prestige product.. The data indicate that Agatucci's pizzas are considered prestige goods—these products are desirable because its expense makes buyers feel elite. Quantity demanded is greater, not less, at higher prices.

Which of the following statements about price as an element of the marketing mix is true? a.Price has limited effects on a firm's sales and profitability. b.Developing the price for a product or service is a lengthy process and is very inflexible. c.Development of the price and pricing-related objectives involves a long-term commitment and once set, is rarely changed. d.The pricing element of the marketing mix is very flexible, and marketers can quickly respond to changes in demand or competitors' actions.

The pricing element of the marketing mix is very flexible, and marketers can quickly respond to changes in demand or competitors' actions. The pricing element of the marketing mix is very flexible, and marketers can quickly respond to changes in demand or competitors' actions.

The marketing manager for the BMW X5 is developing pricing objectives and sent the following objective statement to the Vice President for review, "Increase market share in the large SUV market to 22% and achieve a 15% return on investment." Which of the following statements is correct regarding this objective statement? a.The statement should include a time frame for accomplishing the objective. b.The statement should be more general rather than specific. c.The statement should be related to the price of the product. d.The statement should include a comparison to the competition.

The statement should include a time frame for accomplishing the objective. Pricing objectives should be stated explicitly, in measurable terms, and include a time frame for accomplishing them.

Which of the following is a challenge for traditional specialty retailers? a.Stores are often very large and require the retailer to pay close attention to average sales per square foot. b.They have high costs in proportion to sales. c.They tend to have less sales expertise than their main competitors, department stores. d.They struggle with understanding their customers and, therefore, which products to carry.

They have high costs in proportion to sales.

Nonprice competition emphasizes distinctive product features, service, and product quality. a.True b.False

True

Selective distribution is desirable when customer service from a channel member is important. a.True b.False

True

A pricing strategy should yield a certain price or range of prices, which is the final step in the pricing process. a.True b.False

True. A pricing strategy should yield a certain price or range of prices, which is the final step in the pricing process.

A manufacturer may try to prohibit intermediaries from selling its products outside designated sales territories to tighten control over distribution of its products. a.True b.False

True. To tighten control over product distribution, a manufacturer may try to prohibit intermediaries from selling outside of designated sales territories.

The use of wholesalers permits producers to concentrate on developing and manufacturing products that match consumers' wants. a.True b.False

True. Using wholesalers gives producers a distinct advantage because the specialized services wholesalers perform allow producers to concentrate on developing and manufacturing products that match customers' needs and wants.

When launching its Dove Men+Care line of men's skin care products, Unilever told its distributors that they had to carry the new line if they still wanted to carry the rest of the Dove line of products. They would have been engaging in which of the following channel management practices? a.Tying agreements b.Refusal to deal c.Restricted sales territories d.Dual distribution

Tying agreements. This would be a tying agreement in which the manufacturer furnishes a product to a channel member with the stipulation that the channel member must purchase other products as well. In this case, the distributors must purchase the Men+Care products if they wanted to carry Dove.

Stepan is a global manufacturer of chemicals such as surfactants and polymers that are sold to manufacturers such as Procter & Gamble for use in its shampoos, laundry detergent, and soap products. Stepan competes with a variety of other chemical suppliers and knows that in general, it is a higher-priced and higher-quality supplier. However, Stepan doesn't know exactly how much its competitors charge for similar products. Which of the following practices should Stepan utilize to identify the prices competitors are charging for similar products? a.Using consumer pricing surveys b.Stealing price lists from a display at a trade show c.Hiring sales representatives from competitors' companies and asking them to share price information d.Pretending to be a buyer and soliciting pricing information from the competitor

Using consumer pricing surveys

Stepan is a global manufacturer of chemicals such as surfactants and polymers that are sold to manufacturers such as Procter & Gamble for use in its shampoos, laundry detergent, and soap products. Stepan competes with a variety of other chemical suppliers and knows that in general, it is a higher-priced and higher-quality supplier. However, Stepan doesn't know exactly how much its competitors charge for similar products. Which of the following practices should Stepan utilize to identify the prices competitors are charging for similar products? a.Using consumer pricing surveys b.Hiring sales representatives from competitors' companies and asking them to share price information c.Pretending to be a buyer and soliciting pricing information from the competitor d.Stealing price lists from a display at a trade show

Using consumer pricing surveys. The most ethical approach to obtaining pricing information is to use marketing research.

Which of the following is the best definition of value? a.Value combines price with quality attributes and is often used by consumers to differentiate among competing brands. b.Consumers do not consider trade-offs when making purchasing decisions. c.Generally, consumers are not concerned with the value they receive for their money. d.Value is considered the amount of money that consumers pay for a good or service.

Value combines price with quality attributes and is often used by consumers to differentiate among competing brands.

Aldi's food stores that are owned by a German company have been expanding across the United States and feature a smaller retail store space with a limited selection of brand-name merchandise. Aldi's has worked hard to develop partnerships with suppliers to source items and package private or store-brand merchandise that's similar to a national brand product. For example, Aldi's offers its Millville brand of cookies and snack items such as a strawberry grain bar that's similar in appearance and taste to Nutrigrain. Aldi customers appreciate both high-quality products at a reasonable price point. What type of shoppers does Aldi's attract? a.Value-conscious b.Economy-sensitive c.Prestige-sensitive d.Price-conscious

Value-conscious

A recent consumer trend has led grocery stores to expand their offering of organic produce, grass-fed beef, free-range chicken, and other products that consumers view as highly desirable given their attributes related to the use of pesticides, ethical treatment of animals, and environmental impact of the products. Consumers are willing to pay more for products that possess these positive attributes. What pricing concept best characterizes consumers' willingness to pay higher prices for products that possess desirable features or characteristics? a.Supply b.Competitive differentiation c.Demand d.Value

Value. This is an example of the role of value, which is more than just a product's price.

Which two modes of transportation are used when containers are shipped by fishyback? a.Water carriers and railroads b.Pipelines and railroads c.Water carriers and pipelines d.Water carriers and trucks

Water carriers and trucks. Fishyback refers to using truck trailers and water carriers to transport products. Intermodal shipping such as this has gained popularity as transportation costs have increased.

_______ occurs when a shopper researches a product online and then heads to the nearest store to make the actual purchase. a.Showrooming b.Webhaggling c.Webrooming d.Window shopping

Webrooming. Webrooming occurs when shoppers research products online then head to the nearest store to make the actual purchase.

FedEx provides overnight shipping of packages across the United States. If a customer in San Francisco wants a package to be delivered to Atlanta the following morning, speed is very important, and the customer is willing to pay a higher price for the speed. FedEx would most likely use _______ for transporting the overnight package from San Francisco to Atlanta. a.airplanes b.waterways c.trucks d.pipelines

airplanes. Airplanes offer very fast speed, allowing the shipment to arrive by the following morning. The cost associated with this mode of transportation is also very high.

Skippy Peanut Butter offers grocery stores a discounted price on cases of peanut butter when the grocery store agrees to participate in advertising and sales support programs such as newspaper flyers or point-of-purchase displays. This discount is known as a(n) _______ discount. a.cash b.allowance c.seasonal d.trade

allowance. An allowance is a discount used to assist the buyer in making the purchase and to ensure that dealers participate in advertising and sales support programs.

The primary difference between a manufacturers' agent and an industrial distributor is that _______. a.an agent is employed as part of the producer's sales staff, but a distributor is not employed b.an agent is typically unskilled and does not have technical knowledge while employees of an industrial distributor are highly trained c.an agent does not take title of a product, but a distributor does take title d.an agent deals with multiple manufacturers and a distributor sells one manufacturer's product exclusively

an agent does not take title of a product, but a distributor does take title

Steven Spielberg is considering starting his own cable company. He is aware that the barriers to entry are high and he would be competing against just a few cable providers. The cable industry can be considered _______. a.a monopoly b.monopolistic competition c.perfect competition d.an oligopoly

an oligopoly. In an oligopoly, there are few sellers that operate and barriers to competitive entry are high. Examples of oligopolies include the airline, automotive, cable, and pharmaceutical industries.

In _______, marketers put a low price on one item in the product line with the intention of selling a higher-priced item in the line. a.psychological pricing b.captive pricing c.price lining d.bait pricing

bait pricing. In bait pricing, marketers put a low price on one item in the product line with the intention of selling a higher-priced item in the line.

Mattress Doctor utilizes direct mail and social media advertising on Facebook to promote its special offers such as a Beauty Rest mattress set for $499. Lucy and Dan visited the store thinking they would purchase the set for $499 but realized after trying out different models of Simmons mattresses that they would have to spend considerably more money for a mattress set that they liked and found comfortable. The Mattress Doctor is using _______ pricing to attract customers to the store. a.captive b.penetration c.bait d.premium

bait. In bait pricing, marketers may put a low price on one item in the product line with the intention of selling a higher-priced item in the line.

Every time Ayame drives by the Eastgate Mall, she receives a push notification on her smartphone from Kohl's alerting her to a special or an in-store deal. Kohl's is utilizing _______ to reach customers. a.pop ups b.beacons c.text messaging d.signals

beacons. Retailers are utilizing beacons that can send real-time messages and offers to customers with Bluetooth-enabled smartphones.

Stephanie has recently opened a popcorn business selling a variety of popcorn flavors such as caramel, buffalo wing, and cheddar cheese. Stephanie is interested in determining the _______ for each flavor of popcorn that would help her figure out the level of popcorn she needs to sell in order to cover her costs of production. a.equilibrium level b.breakeven point c.demand curve d.price elasticity

breakeven point

The level at which the costs of producing a product equals the revenue made from selling the product is termed _______. a.marginal revenue point b.equilibrium level c.breakeven point d.profit maximization point

breakeven point. The breakeven point is the point at which the costs of producing a product equal the revenue made from selling the product.

Which of the following collection of retailers is most likely to be found at a power shopping center? a.Macy's, Nordstrom, Marshall's, and Kohl's b.Coach, Kate Spade, Nike, and Lane Bryant outlets c.Target and small specialty shops d.buybuy BABY, T.J. Maxx, Bed Bath & Beyond, and Home Depot

buybuy BABY, T.J. Maxx, Bed Bath & Beyond, and Home Depot. Power shopping centers combine off-price stores such as T.J. Maxx and category killers like buybuy BABY, Bed Bath & Beyond, and Home Depot.

Gap, an American clothing retailer, has come under fire recently for its use of manufacturing facilities in Myanmar. The UN has investigated the Myanmar government's crimes against Rohingya Muslims in Myanmar's Rakhine state saying it is a human rights catastrophe. Gap's continuation of clothing production in a country accused of crimes against humanity concerns _______. a.distribution management b.purchasing c.operations management d.logistics management

c.operations management. Operations management is concerned with managing activities from production to final delivery through system-wide coordination. As the most public and visible aspect of the supply chain, operations management decisions can involve fair trade, working conditions, and child labor concerns.

Horizontal channel integration _______. a.makes it more difficult to achieve economies of scale b.can be done by merging two retailers c.results in coordination of activities in a distribution channel by a single member d.is a result of legal agreements such as those used for franchise locations

can be done by merging two retailers

Horizontal channel integration _______. a.is a result of legal agreements such as those used for franchise locations b.can be done by merging two retailers c.makes it more difficult to achieve economies of scale d.results in coordination of activities in a distribution channel by a single member

can be done by merging two retailers. Horizontal channel integration is when organizations at the same level of operation are combined under one management. This can be done by merging two organizations at the same level in the marketing channel such as retailers.

Many small restaurants visit Costco to purchase supplies for their food and operating items. While Costco is a retailer, it combines retailing with _______ functions, allowing small businesses that are able to supply their own transportation the ability to pay for and take their products immediately. a.commission merchant b.selling agent c.cash-and-carry wholesaler d.truck jobber

cash-and-carry wholesaler. Costco combines retailing with cash-and-carry wholesaler functions. Small business customers can use Costco much like a family can use the grocery store, paying cash for products and transporting them when they leave.

Welty Popcorn is a manufacturer of gourmet popcorn that is sold in small, independent retailers rather than large retail chains. Most wholesalers do not want to carry Welty Popcorn because their customers are all small retailers. Welty most likely deals with _______. a.cash-and-carry wholesalers b.truck wholesalers c.commission merchants d.general-merchandise wholesalers

cash-and-carry wholesalers. These wholesalers typically have small businesses as customers that pay cash and provide their own transportation. The small businesses rely on cash-and-carry wholesalers since most wholesalers do not take on very small retailers.

A(n) _______ is a very large specialty store that competes on the basis of lower prices and enormous product availability. a.category killer b.off-price retailer c.traditional specialty store d.warehouse club

category killer. A category killer is a very large specialty store that concentrates on a major product category and competes on the basis of low prices and broad product availability.

Isabella works at a discount store and is coordinating her store's supply chain. She has a system that collects information on sales demand and on consumer behavior. The system then determines optimal product allocations for her store's shelves between competitors for each type of product. Isabella is working on _______. a.improving atmospherics b.expanding product mix width c.category management d.identifying target customers

category management. Category management is a retail strategy of managing groups of similar, often substitutable products produced by different manufacturers. It is an important part of developing a collaborative supply chain and involves collecting data and sharing it between retailers and manufacturers.

IMA Wholesalers is a distributor of car repair parts and supplies, selling to both retailers and auto repair service businesses. Recently, IMA has been promoting the Pennzoil brand of oil over the Quaker State brand of oil by offering larger discounts to the channel members. If IMA continues to do this, _______ is likely to result. a.channel conflict b.horizontal channel integration c.vertical channel integration d.channel disintegration

channel conflict. Channel conflicts arise when intermediaries overemphasize competing products or diversify into product lines traditionally handled by other intermediaries. IMA is promoting one brand over another, which is likely to lead to channel conflict.

Last summer, Colonial Gardens Center had a fine arts fair where artists were invited to sell their work in booths located throughout the center. This helped draw in traffic to the two department stores and various specialty stores located at Colonial Gardens. Colonial Gardens Center is most likely a _______. a.community shopping center b.lifestyle shopping center c.neighborhood shopping center d.regional shopping center

community shopping center. This is most likely a community shopping center. These include one or two department stores, some specialty stores, and convenience stores, drawing consumers looking for products not available in neighborhood shopping centers. Community shopping centers are planned and special events are used to attract shoppers.

A private warehouse is a _______. a.company-operated facility for storing and shipping products b.business that leases storage space to other firms c.facility specially designed for rapid flow of products d.company that offers storage and transportation services

company-operated facility for storing and shipping products. A private warehouse is a company-owned facility for storing and shipping products. It is useful for firms that require special handling and storage and want control of the design and operation of the warehouse.

Old Navy sells its clothing directly to consumers through its own retail outlets. This is an example of a(n) _______. a.administered vertical marketing system. b.contractual vertical marketing system. c.dual distribution system. d.corporate vertical marketing system.

corporate vertical marketing system. Vertical channel integration is when two or more stages of the marketing channel are combined under one management. One type of vertical channel integration is the corporate vertical marketing system in which all levels of distribution, from manufacturers to retailers, are under a single owner.

The formula to calculate the markup as a percentage of cost places _______ in the denominator. a.profit b.cost c.quantity d.markup

cost. The formula to calculate markup as a percentage of cost places cost in the denominator or divides the dollar amount of markup by cost.

The Wheeler-Lea Act and the Federal Trade Commission Act prohibit _______. a.price discrimination b.independent pricing policies c.deceptive pricing d.price-fixing

deceptive pricing

Jacobsen's Department store featured advertisements that showed a man's suit on sale for $199.99—marked down from $250. However, it was found that the suit was never actually sold at the $250 price point. This is an example of _______. a.price discrimination b.deceptive pricing c.price fixing d.predatory pricing

deceptive pricing. Deceptive pricing is the use of false or misleading statements or practices to persuade buyers that a product is a better deal than it really is.

If a retailer is reviewing its inventory and notices that the usage rate for one of the products it stocks has decreased, the retailer should _______. a.increase the order lead time of the product b.decrease safety stock c.decrease its reorder point d.increase the amount of safety stock

decrease its reorder point. In inventory management, the reorder point = (order lead time × usage rate) + safety stock. If usage rate decreases, then the reorder point should also decrease.

If the demand for coffee beverages is similar to most products, if Starbucks were to increase the price of its coffee beverages, demand or sales of these beverages to consumers would most likely _______. a.depend on competitor responses to the price increase b.decrease c.increase d.stay the same

decrease. Demand for coffee is most likely elastic—an increase in price will result in a decrease in sales or a decline in demand.

Off-price retailers compete primarily on the basis of _______. a.deeply discounted prices on name-brand merchandise b.low prices and broad product availability in one major product category c.high-quality private brands at low prices d.broad selection of products including food, electronics, and clothing

deeply discounted prices on name-brand merchandise

Off-price retailers compete primarily on the basis of _______. a.deeply discounted prices on name-brand merchandise b.low prices and broad product availability in one major product category c.broad selection of products including food, electronics, and clothing d.high-quality private brands at low prices

deeply discounted prices on name-brand merchandise. Off-price retailers are stores that buy name-brand manufacturers' seconds, overruns, returns, and off-season merchandise for resale to consumers at deep discounts.

If Kellogg's is forcing its retailers to place its cereals in prime locations on the shelves so that customers can see them easier than the competition, it would be _______. a.demonstrating channel power b.integrating the channel vertically c.integrating the channel horizontally d.leading channel cooperation

demonstrating channel power. Kellogg's would be demonstrating channel power. Channel power is the ability of one channel member to influence another's goal achievement. In this case, Kellogg's would be influencing the retailers' sales.

Alamo Rent A Car uses _______ depending on the number of reservations it has, how many cars are on the lot, and how many cars it expects to be returned. It can change its prices based on these factors several times throughout the day. a.dynamic pricing b.markup pricing c.status quo pricing d.cost-plus pricing

dynamic pricing. Dynamic pricing is used by many service industries. Dynamic pricing is an attempt to balance supply and demand. It is a type of demand-based pricing.

If an inverse relationship exists between a product's price and the quantity demanded for the item, the demand is described as _______. a.elastic b.unknown c.inelastic d.unitary

elastic. If demand is elastic, a change in price causes an opposite or inverse change in total revenue.

Companies have been using computer technology to integrate order processing with production, inventory, accounting, and transportation in a system referred to as _______. a.electronic data interchange (EDI) b.inventory management c.expected data input d.just-in-time (JIT) delivery

electronic data interchange (EDI). An electronic data interchange (EDI) is a computerized means of integrating order processing with production, inventory, accounting, and transportation.

An arrangement under which a producer forbids an intermediary to carry products made by competing manufacturers is called _______. a.a tying agreement b.exclusive distribution c.exclusive dealing d.refusal to deal

exclusive dealing

Abdul has started a lawn mowing business in his neighborhood. He spends $4 every month for a small advertisement in the community newsletter. He also pays for gasoline to use in the lawn mower. The money Abdul spends on the advertisement is a _______ cost and the money he spends on gasoline is a _______ cost. a.variable; fixed b.variable; variable c.fixed; variable d.fixed; fixed

fixed; variable. The money Abdul spends on the advertisement is a fixed cost. It does not vary with the number of lawns that Abdul mows. The money Abdul spends on gasoline is a variable cost. It will increase as Abdul mows more lawns.

Demand-based pricing would be appropriate for all of the following, except _______. a.theater performances b.airlines c.food trucks d.hotels

food trucks. Demand-based pricing is appropriate for industries in which companies have a fixed amount of available resources that are perishable, such as airline seats, hotel rooms, concert seats, and so on.

Colin brags to his friend Reid that his new bike shop has lots of parking and great visibility from Harper Avenue, and his nearest business neighbors are several hundred feet away. Colin has selected a _______ site for his retail business. a.neighborhood shopping center b.community shopping center c.traditional business district d.freestanding

freestanding. Some retailers, including Colin's shop, opt for freestanding structures that are not connected to other buildings, but may be located within planned shopping centers.

A firm that consolidates shipments from many smaller firms into efficient lot sizes is known as a _______. a.freight forwarder b.logistics optimization engineer c.freight consolidator d.megacarriers

freight forwarder. Freight forwarders consolidate shipments from many smaller firms into efficient lot sizes. They are able to get the smaller firms better rates on shipping since the shipments will be combined with those of other firms. Freight forwarders may even reduce delivery time and the likelihood of damage.

Department stores, convenience stores, and warehouse clubs can all be classified as _______. a.specialty retailers b.superstores c.variety stores d.general-merchandise stores

general-merchandise stores. They are general-merchandise retailers. General-merchandise retailers are retail establishments that offer a variety of product lines that are stocked in considerable depth. They include department stores, convenience stores, warehouse clubs, discount stores, supermarkets, superstores, hypermarkets, and warehouse showrooms.

When Disney merged with Pixar, the merger gave Disney the ability to produce animated films more efficiently. This is an example of _______. a.an administered vertical marketing system (VMS) b.horizontal channel integration c.vertical channel integration d.a corporate vertical marketing system (VMS)

horizontal channel integration

The courts have held _______ to be a restraint of trade among intermediaries handling the same brands. However, courts have often adopted conflicting positions in regard to this issue and believe it can promote competition under certain circumstances. a.tying agreements b.restricted sales territories c.exclusive dealing d.refusal to deal

restricted sales territories. Over the years, the courts have adopted conflicting positions in regard to restricted sales territories. Although the courts have deemed restricted sales territories a restraint of trade among intermediaries handling the same brands (except for small or newly established companies), they have also held that exclusive territories can actually promote competition among dealers handling different brands.

Liz has decided to open a store that will offer second-hand children's items for sale. She will buy gently-used items and resell them to customers who are looking for children's clothes and books at discounted rates. No other store in the area seems to be offering children's items at the prices her store will offer. Liz is identifying her _______ before she opens her store. a.store location b.target customer c.product mix depth d.retail positioning

retail positioning. Retail positioning is the process of identifying an unserved or underserved market segment and serving it through a strategy that distinguishes the retailer from others in the minds of consumers in that segment.

Kate owns a refreshment-stand business at the community ballpark. She goes to a warehouse store like Costco and purchases snacks and canned soda that she will sell at her refreshment stand. Kate is considered a _______. a.retailer b.producer c.broker d.wholesaler

retailer. A retailer is an organization that purchases products for the purpose of reselling them to ultimate consumers. Kate is purchasing products for her refreshment stand to sell to ultimate consumers.

Laurie bought herself a new jacket using a marketing channel that has only one intermediary. That intermediary is classified as a _______. a.wholesaler b.industrial distributor c.retailer d.broker

retailer. If a marketing channel for consumer products has only one intermediary, that intermediary is a retailer.

Amazon, Target, Kroger, Bed Bath & Beyond, and Lowe's are examples of _______. a.end-users b.retailers c.wholesalers d.manufacturers

retailers. A retailer is an organization that purchases products for the purpose of reselling them to ultimate consumers. The companies mentioned are all examples of retailers.

A manager at Owens Corning, a manufacturer of fiberglass, insulation, and related products, is updating the way the company interacts with its sales force. The manager has decided to open up offices in key areas that will provide support services for the sales force, carry inventory, and offer services to construction customers. This type of office is known as a _______. a.sales branch b.merchant wholesaler c.full-service wholesaler d.sales office

sales branch. A sales branch is a manufacturer-owned intermediary that sells products and provides support services to the manufacturers' sales force. It carries inventory, while a sales office does not.

General Electric sells its home appliances through a network of dealers and only a few large retailers. It most likely distributes using _______ distribution. a.exclusive b.dealer c.selective d.intensive

selective. By only distributing through dealer networks and only a few large retailers, General Electric is using selective distribution. Selective distribution means using only some of the available outlets to distribute a product in an area.

One downside for customers to cost-plus pricing is _______. a.customers often receive products made from low-grade materials b.the final price is not given up front c.price fluctuates based on current demand d.sellers may increase stated costs to gain a larger profit

sellers may increase stated costs to gain a larger profit

Wholesaling involves all of the following activities, except _______. a.selling products for use in general business operations b.selling products to the ultimate consumer c.selling products that will be used to make other products d.selling products that will be resold

selling products to the ultimate consumer. Wholesaling refers to all transactions in which products are bought for resale, making other products, or general business operations. It does not include exchanges with ultimate consumers.

Sephora is a store that offers a wide variety of cosmetics and beauty products. It would most likely be categorized as a(n) _______. a.specialty retailer b.discount store c.off-price retailer d.superstore

specialty retailer. Sephora is a specialty retailer, which emphasizes narrow and deep assortments. Sephora sells only cosmetics and beauty supplies but has a deep assortment of those products.

Exclusive distribution is _______. a.appropriate for convenience products b.not suitable for infrequently purchased products c.suitable for products consumed over a long period of time d.desirable when a special effort is important

suitable for products consumed over a long period of time. Exclusive distribution uses only one outlet in a relatively large geographic area. This method is suitable for products purchased infrequently, consumed over a long period of time, or that require a high level of customer service or information.

Exclusive distribution is _______. a.not suitable for infrequently purchased products b.appropriate for convenience products c.desirable when a special effort is important d.suitable for products consumed over a long period of time

suitable for products consumed over a long period of time. Exclusive distribution uses only one outlet in a relatively large geographic area. This method is suitable for products purchased infrequently, consumed over a long period of time, or that require a high level of customer service or information.

Veril loves shopping at the Palisades Center Mall in West Nyack, New York. It has four-stories with 16 anchor stores and more than 200 retailers. If she is hungry, Veril can choose from 16 sit-down restaurants and a food court. Occasionally, Veril and her friends go to Palisades to visit the bowling alley, movie theater, ice skating rink, climbing wall and ropes course, or Ferris wheel. Palisades Center Mall would be classified as a _______. a.megamall b.superregional shopping center c.lifestyle shopping center d.power mall

superregional shopping center. Superregional shopping centers have the widest and deepest product mixes that attract customers from many miles away. They often feature special attractions beyond stores such as movie theaters and skating rinks.

Some shopping centers are designed to attract customers from many miles away. They offer the deepest and widest product mixes and even include attractions like theme parks. These are known as _______. a.power shopping centers b.community shopping centers c.regional shopping centers d.superregional shopping centers

superregional shopping centers. Superregional shopping centers have the widest and deepest product mixes and attract customers from many miles away. They often have special attractions beyond the stores such as skating rinks, amusement parks, or theme parks.

Marketers improve their ability to establish prices appropriately when _______. a.the main objective is image building b.there is nonprice competition c.their products are of better quality than the competition's d.they know prices charged for competing brands

they know prices charged for competing brands

Discounts that are used to attract and keep effective resellers by compensating them for performing certain functions such as transportation or warehousing are called _______ discounts. a.cash b.seasonal c.allowance d.trade

trade. Discounts that are used to attract and keep effective resellers by compensating them for performing certain functions such as transportation or warehousing are called trade discounts.

Sometimes called limited-line retailers, _______ carry a narrow product mix with deep product lines. a.category killers b.traditional specialty retailers c.warehouse clubs d.off-price retailers

traditional specialty retailers

A wholesaler of produce wants to create a shipping plan for a variety of fruits and vegetables. The managers of the wholesaler want to use _______ because it has the most flexible schedules and routes of all transportation modes. a.trucks b.pipelines c.airplanes d.waterways

trucks. Trucks provide the most flexible schedule and routes of all major transportation modes because they can go almost anywhere. They do not have to conform to a set schedule and can move goods from warehouse to customer wherever there are roads.

When the Quaker Oats Company manufactures its Quaker Chewy Bars, it places several boxes of the bars into larger shipping boxes that are then stacked onto pallets. These pallets can then be easily moved around using forklifts in a process called _______. a.unit loading b.containerization c.warehousing d.piggybacking

unit loading. Unit loading is the process of putting one or more boxes on a pallet or skid that can then be loaded efficiently using mechanical means such as forklifts, trucks, or conveyer systems.

While at the mall, Adrienne decides to buy a new smartwatch. She purchases one using a credit card. The transaction takes place at a machine and involves no contact with a person. This transaction most likely used _______. a.telemarketing b.direct-response marketing c.vending d.a party plan

vending. Vending is the use of machines to dispense products. Small, standardized, routinely purchased products are best suited for vending machines, but there are vending machines that sell electronics, sunscreen, and medicines.

Hamilton Manufacturing, located in New Hampshire, offers to ship items to different parts of the country according to _______. That is, customers in the Southwest, Midwest, Southeast, Rocky Mountains, and Pacific regions pay different prices according to transportation costs to those areas. a.zone pricing b.F.O.B. destination pricing c.freight absorption pricing d.uniform geographic pricing

zone pricing. Zone pricing sets uniform prices for each of several major geographic zones; as the transportation costs across zones increase, so do the prices.

Which of the following statements is true regarding market share pricing objectives? a.Market share pricing is typically stated in actual dollar amounts. b.Market share is a measure of a firm's profitability in achieving sales revenues. c.A firm's market share is unrelated to the level of growth in the overall market. d.An organization can increase its market share even if sales for the total industry are flat or declining.

An organization can increase its market share even if sales for the total industry are flat or declining. Market share is a product's sales in relation to total industry sales.

Which of the following is calculated by dividing the variable costs by the number of units produced? a. Average variable cost b. Breakeven point c. Average fixed cost d. Average total cost e. Marginal cost

Average variable cost

Which of the following best explains consumers' motivations to respond positively to bundle pricing? a.Consumers appreciate the opportunity to save time related to shopping and enjoy increased convenience. b.Consumers associate the price with prestige products and believe they are receiving a higher quality product c.Consumers respond positively to pricing based on tradition and the price they expect to pay for certain items. d.Consumers are able to compare the price of the items to the price charged at competing retailers.

Consumers appreciate the opportunity to save time related to shopping and enjoy increased convenience. Bundle pricing is attractive to consumers when the single price generally is markedly less than the sum of the prices of the individual products. The bundled combination is valuable to the customer since it increases convenience and reduces the time required to shop.

Which of the following statements is true regarding consumers' reliance on the price-quality relationship? a.Consumers are more likely to rely on the price-quality relationship when they cannot judge the quality of the product themselves. b.Consumers are more likely to rely on the price-quality relationship when they are making purchases via the internet. c.Consumers are always willing to pay more for a product to have higher levels of product quality. d.Consumers often associate higher prices with lower levels of product quality.

Consumers are more likely to rely on the price-quality relationship when they cannot judge the quality of the product themselves.

Which of the following is not one of the benefits of television home shopping for a marketer engaged in direct marketing? a.Consumers can seek out hard-to-find items b.Time spent showing a product can be varied c.Products can be demonstrated easily d.Customers can shop at home

Consumers can seek out hard-to-find items. Benefits from television home shopping include easy product demonstration, the ability to vary the length of the demonstration, and having customers shop at home at their convenience. Online retailing allows consumers to seek out hard-to-find items.

What type of pricing is typically utilized by defense contractors when placing bids for projects with the government? a.Demand-based b.Cost-plus c.Competition-based d.Markup

Cost-plus. Cost-plus pricing applies a specific dollar amount or percentage of the cost that is added to the seller's cost to establish the final price of a product or service. This type of pricing is frequently utilized in government and defense contracts.

Which of the following products would most likely be classified as a prestige product based upon consumer demand and responses to price fluctuations? a.Cristal champagne b.Sony PlayStation game system c.Bounty paper towels d.Budweiser beer

Cristal champagne

Marketers at Procter & Gamble (P&G) want to calculate the price elasticities of demand for two of their products: Dawn dishwashing detergent and Pampers diapers. The company raised prices slightly over the last year to offset increased costs and want to analyze the effects of that price change. To calculate price elasticity of demand for each product, the marketers looked at the change in prices and quantities demanded of each product, separately, from last August and this August. They found that Dawn dishwashing liquid had a price elasticity of demand of −1.24 while Pampers diapers had a price elasticity of demand of −0.41. They discovered that the percentage change in quantity demanded for Pampers was much less than the percentage change in quantity demanded for Dawn. Which of the following is true? a.Increasing the price for Dawn will lead to an increase in revenue. b.Increasing the price for Pampers will lead to a decrease in revenue. c.Dawn is an inelastic good. d.It would be more beneficial for P&G to raise the price of Pampers than raise the price for Dawn.

It would be more beneficial for P&G to raise the price of Pampers than raise the price for Dawn. When comparing the demand elasticities of two products, the product with the lower (more negative) number is more elastic than the product with the higher (less negative) number. The percentage change in quantity demanded caused by a percentage change in price is much greater for products with elastic demand than for products with inelastic demand. The marketers discovered that the percentage change in the quantity demanded of Pampers was much less than the percentage change in the quantity demanded of Dawn which means that Dawn is more elastic than Pampers. The less elastic the demand, the more beneficial it is for the seller to raise the price. As a result, it would be more beneficial for P&G to raise the price of Pampers than raise the price of Dawn.

Parker Bell has been using an iPhone 7 for several years and is eligible for an upgrade from Verizon on his next phone. Over the last few years, Parker's iPhone screen has been replaced three times—a common issue for many smartphone users. Parker had purchased the phone insurance but quickly found that although the insurance would replace his phone, he would have to pay $149 and would likely receive a refurbished unit rather than a brand new phone. Parker was watching TV one night and noticed an advertisement for the Droid Turbo 2 phone featuring "the world's first shatterproof screen." Parker decided he was going to replace his iPhone 7 with the Droid Turbo 2 and didn't even consider other models. He had a reason to care about screen maintenance and out-of-pocket expenses and is excited to get the new Droid Turbo 2. What type of practice is Motorola using in its marketing of the Droid Turbo 2? a.Value-conscious pricing b.Price competition c.Nonprice competition d.Feature superiority

Nonprice competition. Motorola is using nonprice competition—emphasizing factors other than price to distinguish the product from competing brands.

An advertisement for West Bank illustrates the bank's personal connections with customers unlike the larger bank it competes against. West Bank uses the tagline, "We know you by name." What type of practice is West Bank using in marketing its services? a.Value-conscious pricing b.Nonprice competition c.Feature superiority d.Price competition

Nonprice competition. West Bank is using nonprice competition—emphasizing factors other than price to distinguish the bank from competitors.

Lorenzo noticed on a recent shopping trip to Walmart that many of the items in the store had prices with an $0.88 ending. For example, a household multi-surface cleaner was priced at $2.88. Walmart is utilizing which pricing strategy? a.Reference pricing b.Customary pricing c.Odd-even pricing d.Price skimming

Odd-even pricing. Odd-even pricing involves ending a price with certain numbers. Through this strategy, marketers try to influence buyers' perceptions of the product.

Which of the following is the fastest growing form of retail, especially among Millennials? a.Online grocery shopping b.Online movie and music purchases c.Online clothing and apparel shopping d.Online banking

Online grocery shopping

Which of the following types of retailer has put the most pressure on category killers? a.Online retailers b.Discount stores c.Superstores d.Off-price retailers

Online retailers. Online retailing has put pressure on category killers and taken away market share in recent years. Bed Bath & Beyond, a category killer, has struggled against online retailers such as Amazon.

Griffin Audio specializes in creating high-fidelity speakers for the music enthusiast and has received awards for the sound quality of the speaker systems. It is launching a line of over-the-ear headphones and ear buds and seek to position its new products as a higher quality and prestigious alternative to one of its top competitors, Beats by Dr. Dre. Which of the following pricing strategies should Griffin Audio utilize? a.Offer coupons to purchase the headphones and ear buds at a substantial discount compared to the Beats headphones b.Price the headphones and ear buds at a lower price than the Beats headphones c.Price the headphones and ear buds at a higher price than the Beats headphones d.Price the headphones and ear buds at the same price as the Beats headphones

Price the headphones and ear buds at a higher price than the Beats headphones. In this example, price should be used symbolically, and Griffin Audio should price the product high to emphasize the quality and enhance the prestige associated with owning the product.

Manufacturers of convenience products such as chewing gum reach customers through thousands of retailers. What marketing channel are these manufacturers most likely to use? a.Producer, retailer, and consumer b.Producer and consumer c.Producer, wholesaler, agent, retailer, and consumer d.Producer, wholesaler, retailer, and consumer

Producer, wholesaler, retailer, and consumer. Gum is a convenience good. Producer to wholesaler to retailer to consumer is a practical option for producers that sell to hundreds of thousands of customers through thousands of retailers.

Which of the following mathematical expressions is true with regard to pricing and the generation of a firm's revenue? a.Profit = (price × quantity sold) − total costs b.Total costs = price × quantity sold c.Revenue = quantity sold − total costs d.Profit = price × quantity sold

Profit = (price × quantity sold) − total costs

_______ pricing is often employed by marketers such as cell phone companies including Verizon and AT&T who attempt to influence a customer's perception of price to make a product's price more attractive or evoke a customer's emotions in the purchase decision. a.Psychological b.Bait c.Captive d.Premium

Psychological

Blue Ribbon Farms is a family-owned farm and sells its seasonal produce, meat, eggs, and bakery items at several farmers' markets within a 60-mile radius of the farm. The owners utilize a Square payment system for credit cards, which is conveniently attached to a digital device such as an iPhone or iPad; however, the farm is charged a credit card fee of 8% of the retail price to process each credit card transaction. In order to encourage shoppers to pay with cash, Blue Ribbon Farms offers a 10% discount on purchases for consumers who pay by cash or check. Blue Ribbon Farms is utilizing a _______ pricing strategy. a.random discounting b.premium c.penetration d.differential

differential. A differential pricing strategy means charging different prices to different buyers for the same quality and quantity of product.

Sonia is planning a trip to Belize. She is looking for places to stay through the online rental service Airbnb. After comparing many different places, she decides on where she wants to stay and books her lodging. Airbnb is able to use _______ that allows distribution and _______ to occur simultaneously. a.just in time distribution; consumption b.digital distribution; consumption c.multichannel distribution; electronic data interchange d.multichannel distribution; purchasing

digital distribution; consumption. Digital distribution involves delivering content through the internet to a computer or other device. For example, when you watch a TV show on Netflix or Hulu or listen to music on Pandora or Spotify, those networks stream the content to your device so that you can consume them at the same time.

Companies such as Avon and Amway choose to market their products to ultimate consumers. They use face-to-face sales presentations either at home or at work. This strategy is referred to as _______. a.telemarketing b.catalog marketing c.direct-response marketing d.direct selling

direct selling. Direct selling is the marketing of products to ultimate consumers through face-to-face sales presentations at home or at the workplace. It is used by Avon, Amway, and Herbalife, among others.

Vaughn was wide awake at 2 a.m., so he decided to watch television. He ended up watching an infomercial about Gotham Steel frying pans. Vaughn became convinced he needed the dishwasher safe, scratch-resistant cookware and immediately called the 1-800 number listed on the screen to order a frying pan. This is an example of _______. a.direct selling b.direct-response marketing c.catalog marketing d.telemarketing

direct-response marketing. Direct-response marketing occurs when a retailer advertises a product and makes it available through mail or telephone orders.

Brookdale is a regional self-service store that sells name-brand and private-brand clothing, home goods, and electronics at low prices. Brookdale is an example of a _______. a.category killer b.hypermarket c.department store d.discount store

discount store

Target is a self-service store that sells general merchandise. It is a _______. a.specialty retailer b.department store c.superstore d.discount store

discount store. Discount stores are self-service general-merchandise outlets that offer products at low prices. They have lower profit margins than conventional retailers, but higher sales volume. Target, Walmart, and Five Below are examples of discount stores.

In recent years, Target has become more upscale in its appearance and offerings, charging slightly higher prices for products. It has also introduced low-cost clothing lines by designer labels. These changes have blurred the line between _______. a.superstores and warehouse clubs b.discount stores and specialty retailers c.discount stores and department stores d.department stores and specialty retailers

discount stores and department stores. To better compete against department stores, some discount stores have raised prices while improving their service, atmosphere, location, and product offerings.

Clifton Medical Supplies has hired a wholesaler to sell its medical products to business customers. Although the wholesaler never physically possesses the products, it takes ownership of them and is responsible if the products do not sell. The wholesaler sells the product and then makes arrangements for Clifton to ship the products directly to the businesses. The wholesaler is a _______. a.truck wholesaler b.drop shipper c.rack jobber d.cash-and-carry wholesaler

drop shipper. Drop shippers are limited-service wholesalers that take title of goods, negotiate sales, and arrange delivery from the producer directly to the customer without ever taking physical possession of the product.

American Eagle allows shoppers to buy its clothing through its stores or through its website, ae.com. This is an example of _______. a.vertical integration b.dual distribution c.horizontal channel integration d.tying agreements

dual distribution. Dual distribution occurs when a firm uses two or more marketing channels to distribute the same products to the same target market. Gap selling its clothing both online and in stores is an example of dual distribution.

When dealing with large grocery stores, Nestlé sells its Gerber baby foods directly to retailers. For smaller grocery stores, however, Gerber baby food is sold to wholesalers who in turn sell it to the stores. Nestlé is using _______. a.industrial distributors b.dual distribution c.agents d.a strategic channel alliance

dual distribution. Dual distribution occurs when a firm uses two or more marketing channels to distribute the same products to the same target market. Here, Gerber is being sold both directly to retailers and through intermediaries.

Pierre runs a grocery store and is working with his suppliers in the planning and implementation of the flow of products from the manufacturer to his store. The goal is to make the transportation and storage of products more efficient and effective. He is engaging in _______. a.channel management b.logistics management c.operations management d.procurement

logistics management. Logistics management involves planning, implementing, and controlling the efficient and effective flow and storage of products and information from the point of origin to consumption to meet customers' needs and wants. Pierre is engaging in logistics management. b. Incorrect. Logistics management involves planning, implementing, and controlling the efficient and effective flow and storage of products and information from the point of origin to consumption to meet customers' needs and wants. Pierre is engaging in logistics management.

The breakeven point is important for firms to know and understand because if a company is unable to sell products at this point or higher, it is _______. a.experiencing an increase in total costs b.losing money c.experiencing a decline in marginal costs d.creating a profit

losing money. Failing to reach the breakeven point in sales leads to losses.

Taylor Fence Company manufactures fencing popular for farms and large fields. It sells them in retail locations exclusively through wholesalers. It has been unable to find a wholesaler willing to sell the fencing to retailers in remote areas because the wholesalers do not find them to be profitable. Taylor Fence should consider using a _______ to reach these retail customers. a.limited-line wholesaler b.mail-order wholesaler c.drop shipper d.rack jobber

mail-order wholesaler. Mail-order wholesalers use catalogs instead of a sales force to sell products to retail buyers. They can reach customers in remote areas that other wholesalers find unprofitable to serve.

Because Gem Supply's sales have continued to decline, the jewelry manufacturer has found that the costs associated with maintaining its own five-person sales force are prohibitive. The firm's marketing director begins to look for a small company or individual willing to perform the sales function for Gem Supply in its least productive region, the Far West. The ideal entity would carry complementary but non-competing lines. Such a firm or individual would be classified as a _______. a.selling agent b.specialty-line wholesaler c.rack jobber d.manufacturers' agent

manufacturers' agent. Manufacturers' agents, which account for more than half of all agent wholesalers, are independent intermediaries that represent two or more sellers and usually offer complete product lines to customers. Restricted to a particular territory, a manufacturers' agent handles noncompeting and complementary products. Gem Supply is a manufacturers' agent.

Nabisco Foods has noticed a decline in sales for its various brands of cookies, and sales for cookies in general are declining. However, Nabisco still hopes that its Oreo cookies can achieve a higher percentage of sales compared to competing cookie brands. This is an example of a _______ pricing objective. a.profit b.market share c.survival d.status quo

market share. Market share is a product's sales in relation to total industry sales, and organizations can increase their market share even if sales for the total industry are flat or declining.

Nabisco is considering two pricing objectives. The first is to sell one out of every three crackers consumed in the world, an objective based on _______ ; the second is to meet, but not beat, competitors' prices of cookie products, which is a _______ objective. a.cash flow; market share b.market share; cash flow c.survival; status quo d.market share; status quo

market share; status quo. A market share pricing objective looks at the product's sales in relation to total industry sales. Nabisco's first objective is focused on market share. Status quo objectives can focus on several dimensions, such as maintaining a certain market share, meeting (but not beating) competitors' prices, etc. Nabisco's second objective clearly focuses on maintaining the status quo.

Auto Parts USA uses _______ when selling parts to its sister store, Auto Essentials. That is, it uses the full price less a small discount to reflect the lack of sales effort and other expenses. a.cost plus investment b.standard full cost c.market-based cost d.actual full cost

market-based cost. Market-based cost is calculated at the market price less a small discount to reflect the lack of sales effort and other expenses.

Product managers for Green Giant are meeting to discuss ways so that they can improve the packaging of their frozen foods to reduce damage and make loading and transportation more efficient. This is an attempt to improve _______. a.warehousing b.materials handling c.order processing d.inventory management

materials handling. Materials handling is the physical handling of tangible goods, supplies, and resources. Packaging goods correctly can help prevent damage or breakage during handling and transportation and make loading and transportation more efficient.

Louis Vuitton is a fashion brand often associated with elite or high-profile customers who can afford spending $1,000 or more on a purse. One of its most popular handbags is the Alma, which is a structured bag and part of the Monogram collection. Louis Vuitton closely monitors its sales and wanted to test the elasticity of demand. It noticed that when the Alma bag was priced at $1,500, a greater quantity was sold compared to a retail price of $1,300. However, if the price was $1,750, sales of the bag declined. The pricing research conducted by Louis Vuitton demonstrates that the Alma bag is a _______ product. a.convenience b.reverse-demand c.standard d.prestige

prestige. This is an example of a prestige product that tends to sell better at higher prices than at lower ones. However, after a certain point, raising the price backfires.

The mathematical result of dividing the percentage change in quantity demanded by the percentage change in price is known as the _______. a.average variable cost b.marginal revenue c.price elasticity of demand d.marginal cost

price elasticity of demand. The price elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price.

In the mid-1990s, Archer Daniels Midland Company was accused of _______. The company, along with its Japanese and Korean competitors, agreed to a set price for lysine, an additive found in animal feed, for their mutual benefit. a.price interference b.price fixing c.predatory pricing d.deceptive pricing

price fixing. Price fixing occurs when competing firms agree to raise, lower, or maintain prices for mutual benefit.

The Dollar Store has most items priced at $1, but they do carry some items priced at $3, $5, and even $10. This is an example of _______. a.psychological pricing b.price lining c.penetration pricing d.bait pricing

price lining. In price lining, goods are sold at certain predetermined prices that reflect explicit price breaks. Pricing items at $1, $3, $5, and $10 is an example of price lining.

Busch Stadium in St. Louis, Missouri, where the St. Louis Cardinals baseball team is based, is surrounded by a large number of restaurants and bars who are interested in attracting fans before and after games to dine or drink at their locations. Recently, one bar offered $1 drafts and another decided to offer $1 pitchers. The manager of a third bar decided to offer a buy-one-get-one half-price special on entrees as she knew that lowering prices on beer could result in a(n) _______ that could erode profits and be harmful to all competitors. a.advertising battle b.competitive game c.price war d.competitive skirmish

price war

Maja is always searching for a bargain. She regularly shops at several different grocery stores in order to find the lowest prices. She is not brand loyal and is willing to buy generic branded items in order to save money. Maja is a _______ consumer. a.price-conscious b.price-discretionary c.prestige-sensitive d.value-conscious

price-conscious. Price-conscious consumers strive to pay low prices. They want the lowest prices, even if the products are not of the highest quality.

Carly works at Kellogg's and is on a team developing a new breakfast cereal. She is currently trying to contact different companies who can provide the specific ingredients and equipment needed to make the cereal. She will work with the procurement department to reach an agreement with the companies selected to provide the ingredients and equipment. She is currently engaging in _______. a.procurement b.sourcing c.purchasing d.logistics management

procurement. Carly is engaging in procurement, sometimes called supply management. Procurement involves the processes used to obtain resources to create value through sourcing, purchasing, and recycling, including materials and information.

Juno Chang is the owner of a local upscale, fine dining restaurant and typically sets prices in order to achieve a 50% return on sales revenues. This is an example of a _______ pricing objective. a.cash flow b.status quo c.profit d.market share

profit. Profit objectives are typically stated in terms of either actual dollar amounts or a percentage of sales revenues.

Online sales are _______ by 2022. a.projected to grow b.projected to rise then fall rapidly c.expected to remain the same d.expected to fall slightly

projected to grow

Cook Right Pans has two types of warehouses that it uses. The first is a _______ that it leases to store excess inventory during times when its production output is greater than the demand for its pots and pans. The second is a _______ that is used to coordinate the shipping of completed products and is designed for quickly shipping products rather than for storage. a.private warehouse; distribution center b.pre-assembly warehouse; postproduction warehouse c.private warehouse; public warehouse d.public warehouse; distribution center

public warehouse; distribution center. Public warehouses lease storage space and related logistics facilities to other companies. Distribution centers are large facilities used for receiving, warehousing, and redistributing products to stores or customers. They are specially designed for rapid flow of products.

Rental car companies purchase thousands of new cars each year for their fleets. Companies like Hertz and Enterprise Rent-A-Car are likely to receive _______ discounts when purchasing from automobile manufacturers. a.trade b.cash c.seasonal d.quantity

quantity. Quantity discounts encourage customers to buy large quantities when making purchases.

Brad is a _______ for a magazine distributor. His job is to go into grocery stores and maintain the magazine displays, making sure the magazines are in stock and that older magazines have been removed. a.truck jobber b.cash-and-carry wholesaler c.rack jobber d.commission merchant

rack jobber. Brad is a rack jobber. Rack jobbers are full-service specialty-line wholesalers that own and maintain display racks in stores. The retailers provide the space and the rack jobbers set up displays, mark merchandise, stock shelves, and keep records. They specialize in high-margin nonfood items.

Walmart has begun requiring that its suppliers add _______ to their shipments. The shipments can then be tracked using radio waves to help Walmart and its suppliers make the supply chain more efficient. a.mobile scanners b.radio frequency identification (RFID) tags c.LED trackers d.UV chips

radio frequency identification (RFID) tags. Radio frequency identification (RFID) tags allow firms to use radio waves to track tagged materials. The technology has broad applications, including tracking inventory, paying for goods and services, asset management, and data collection.

Suppose that Sony has determined that its popular PlayStation game system _______ when it has total costs of $7 million and sells $7 million worth of product in the same fiscal year. a.achieves equilibrium b.has profit loss c.is profitable d.reaches the breakeven point

reaches the breakeven point

A firm implementing a value-conscious strategy should _______. a.show a comparison to external reference prices b.promote the prestige of their product or brand and signify higher status affiliations c.recognize consumers who are concerned about both price and quality of a product d.set prices higher than the competition to attract customers

recognize consumers who are concerned about both price and quality of a product

Disneyland Railroad trains use biodiesel made with used cooking oil that comes from Disney hotels and restaurants. Disneyland is obtaining the fuel through _______. a.sourcing b.acquiring c.purchasing d.recycling

recycling

Pricing a product at a moderate level and physically positioning it next to a more expensive model or brand in the hope that the customer will use the higher price as a comparison is known as _______. a.reference pricing b.customary pricing c.penetration pricing d.prestige pricing

reference pricing. Pricing a product at a moderate level and physically positioning it next to a more expensive model or brand in the hope that the customer will use the higher price as a comparison is known as reference pricing.

With the largest department stores, widest product mixes, and deepest product lines of all shopping centers, _______ shopping centers have well-coordinated management and marketing activities. a.lifestyle b.neighborhood c.regional d.community

regional. Regional shopping centers usually have the largest department stores, widest product mixes, and deepest product lines of all shopping centers. With 150,000 or more consumers in their target market, regional shopping centers must have well-coordinated management and marketing activities.

Walmart is working with its suppliers, using tools such as electronic billing, purchase order verification, and bar code technology, to integrate data used to improve overall performance. This is an example of _______. a.channel conflict b.a horizontal marketing system c.a vertical marketing system d.supply chain management

supply chain management. Supply chain management (SCM) refers to the coordination of all the activities involved with the flow and transformation of supplies, products, and information throughout the supply chain to the ultimate consumer. It integrates the functions of operations management, logistics management, procurement, and marketing channel management so that products are produced and distributed in the right quantities, to the right locations, and at the right times. Walmart's activities are a part of supply chain management.

Chris is an advertising manager for a local car wash. The company has been trying to get new customers to visit the wash by having a staff member make phone calls in a process called _______. Since this strategy has not been as successful as he had hoped, he is instead going to mail out postcards advertising the car wash. The cards, part of a strategy called _______, will include a toll-free number where potential customers can call and order prepaid cards to use at the car wash. a.television home shopping; direct selling b.direct-response marketing; direct selling c.telemarketing; catalog marketing d.telemarketing; direct-response marketing

telemarketing; direct-response marketing

If all firms producing the same product charge the same price for it, _______. a.the firm with the lowest production costs is the most profitable b.the firm that advertises the most will sell the most units c.a price war will ensue d.none of the firms will be the market share leader

the firm with the lowest production costs is the most profitable. If all firms producing the same product charge the same price for it, the firm with the lowest production costs is the most profitable.

When Alexa visited a furniture store called the Barrington Store for the first time, it was a lot larger than she expected. She was surprised that it had a warehouse feel and large displays of merchandise. There was minimal service, but it had a lot of stock on hand that she was able to carry away in large cartons. The Barrington Store can most likely be categorized as a _______. a.superstore b.supermarket c.warehouse showroom d.discount store

warehouse showroom. Barrington Store is a warehouse showroom. Warehouse showrooms are retail facilities in large, low-cost buildings with large on-premises inventories and minimal service. Customers often have some marketing functions such as transportation and financing of the purchase shifted to be their responsibility. Most consumers carry away purchases in manufacturers' cartons.

Marginal revenue (MR) minus marginal costs (MC) tells a company _______. a.whether a unit makes a profit b.if fixed costs could be reduced by producing additional units c.the point at which the costs of producing a product equals the revenue made from selling the product d.the ideal price for each unit

whether a unit makes a profit. If MR is a unit's addition to revenue and MC is a unit's addition to cost, marginal revenue (MR) minus marginal costs (MC) tells a company whether the unit is profitable. When MR − MC = 0, profit is the highest.

A general-merchandise wholesaler would be expected to carry a _______ product mix. a.narrow and shallow b.wide and deep c.narrow and deep d.wide and shallow

wide and shallow. General-merchandise wholesalers carry a wide product mix but offer limited depth within those product lines.

Eliminating wholesalers from marketing channels _______. a.would likely increase prices consumers pay b.would likely decrease prices consumers pay c.increases the efficiency of marketing channels d.eliminates the functions performed by wholesalers

would likely increase prices consumers pay. If wholesalers are eliminated, the functions performed by wholesalers would still need to be performed. Manufacturers and retailers would likely not perform these functions as efficiently as wholesalers, resulting in higher prices paid by consumers.