Chapter 11-13 Bus 198

Bob's Bakery sells gourmet cupcakes for $5. The variable cost per cup cake is currently $3 and fixed costs are $10,000. What is your breakeven point?

5,000 units

_____ pricing is the most popular method of fixed margin pricing.

Cost-based

_____ offer consumers immediate price reductions

Coupons

All of the following are characteristics of services EXCEPT

permanence

Costs that fluctuate based on production levels achieved are called _____ costs

variable

The _____ is a theory that describes the upscale evolution of many retail firms; however, it does not account for stores that launch at the higher end of the market or for firms that retain their reputation as discount retailers

wheel of retailing

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

1,000 units

Assume your product is priced at $10. The variable cost per unit is currently $5, and fixed costs are $10,000. What is your breakeven point?

2,000 units

CDz, a local music and video retailer, spends $250 a month in advertising and inventory management. The business buys videos at a cost of $6.00 per unit and then sells each unit for $16.00. Assuming no other costs, CDz would have to sell _____ in order to break even in any one month.

25 units

Which of the following statements about traditional retail stores and nonstore retailing is most accurate?

Although nonstore retailers are growing, they are growing at a slower pace than they did in the early part of the decade

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

Best Buy adds value by providing service utility. How many consumers are up-to-the-minute on flat panel television technology or computers, and know the exact model they are looking for? Answer: not many. Therefore, Best Buy provides the service the consumer needs to make an informed decision.

_____ is the method used to determine the number of units a firm must sell at a specific price to cover all costs.

Breakeven analysis

_____ dominate the market by offering a huge variety of one type of product.

Category killers

______ like Costco, help producers move their product more efficiently and effectively to the consumers.

Channel intermediaries

_____ is the process of continually collecting information from the external marketing environment.

Environmental scanning

_____ costs remain constant regardless of the rate of production in a given time period.

Fixed

Smitty's Smoothies are a popular item priced at $3.50 per smoothie. Variable costs are $1.50 per smoothie. With fixed costs at $20,000 per year, Smitty will realize a $6,000 profit if:

He sells 13,000 smoothies during the year

_____ aims to increase traffic in retail stores using special sales on a limited number of products and higher everyday prices on others

High/low pricing

Kelly has a conundrum: he has an amazingly earth-friendly product that nobody is buying. In his zealotry for mother earth he forgot to ask himself what the real world applications might be for a reusable hemp toilet roll. What might the problem be, from a product perspective?

His product has negative interest. Since it's an unsought product, he really ought to ratchet down the green zealotry and try something less extreme

Smitty's Smoothies has fixed costs of $1,600 per month. The only variable costs Smitty incurs are for the ingredients and labor needed to produce smoothies. These costs are $1.50 per drink. Smitty sells his delicious concoctions for $3.50 each. Which of the following statements is correct?

In order to break even, Smitty must sell at least 800 smoothies each month

What is odd pricing?

It's the idea that if a television costs $599 instead of $600, consumers perceive the first one to be far cheaper than it actually is.

_____ aims to price a handful of items temporarily below cost to drive in-store traffic.

Loss leader pricing

_____ consist(s) of small ticket items that businesses consume on an ongoing basis but are not needed to develop a final product.

Maintenance, repair, and operating products

_____ involves hiring independent contractors to sell products within personal networks and recruit salespeople in return for a percentage of commissions

Multilevel marketing

_____ utility adds value by making it easier for customers to actually possess the goods and services that they purchase.

Ownership

_____ satisfies customer needs by providing the right products in the right place.

Place utility

_____ is the difference between the price of a good and the cost to make the good, on a per product basis; and, it is usually expressed as a percentage.

Profit margin

_____ is the positive difference between revenue and costs

Profitability

Sherri told Liz that her firm will compete on price because that's good business. Which statement best explains her position?

Sherri has a thing or two to learn about business. The goal of pricing strategy is to match the competition by any means necessary, and compete on other factors

Why have door-to-door sales had a recent resurgance in our high-tech society?

The National Do Not Call list has diminished telemarketing as an option for direct selling

When Peter's Pickles rolled out its new line of gourmet, designer-flavored pickles, management sat down to do a breakeven analysis. They quickly realized that they needed to make a change if the new line was to be profitable in the first year. What did they talk about?

They discussed either raising prices or decreasing costs.

The goal behind penetration pricing strategy is to

become profitable from the shear volume of sales

Par-Tee Golf sells only golf-related goods, but it offers a huge selection of clubs, golf bags, and accessories. It has become the dominant seller of golf equipment in many cities. Par-Tee is a

category killer

HP relies heavily on wholesale and retail channel partners to distribute its computers. Dell elects to sell most of its computers directly to consumers without using intermediaries. Clearly, these firms have different

channels of distribution

Odd pricing refers to the practice of

charging prices that fall slightly below even dollars and cents, such as charging $5.99 instead of $6.00

The stage of the selling process where the salesperson actually asks the customer to make the purchase is known as

closing

Analysis of market share is a key to understanding the firm's

competitive environment

MBI's sales strategy is based on having its sales representatives take the time to develop lasting relationships with their customers. The focus is on obtaining a thorough understanding of the needs of each customer so that the representatives can provide practical ways to meet these needs with MBI's products and services. This is an example of a form of promotion known as

consultative selling

The difference between consumer products and business products is

consumer products are for personal use and business products are for a business's operation and/or production

The fact that your favorite ice cream company regularly releases new flavors indicates that it is following a strategy of _____. Sampling the ice cream in the store is part of what will diffuse the product more quickly because of its _____.

continuous innovation; trialability

With their extended hours and numerous locations in a given community, 7-Eleven stores offer _____ to consumers, who find it easy to stop in and make this type of purchase

convenience products

Consumer product classifications include

convenience products, shopping products, specialty products, and unsought products

A product has three product layers. They are the

core benefit, actual product, and augmented product

Which of the following would most likely be classified as a variable cost in breakeven analysis for a furniture manufacturer?

cost of lumber and upholstery

In _____, marketers determine price based on what consumers are willing to pay and then subtract desired margins to yield target costs

demand-based pricing

Joe and Chris are working on a book together that they plan to publish via a print-on-demand (POD) website. As they sit down to plan everything out for their pricing strategy, Chris asks the question, "What will the market bear?" What analysis

demand-based pricing

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

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

Examples of nonstore retailers include online retailing, direct response retailing, and

direct selling

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

everyday-low pricing

Walmart and Costco achieve long-term profitability through volume sales. Each uses the

everyday-low pricing strategy

Fashion trend setters such as Gucci who establish one retail outlet in a given area are utilizing a(n) ______ distribution strategy

exclusive

The stages of the new product development process are

idea generation, idea screening, analysis, development, testing, and commercialization.

The Alpine Shop is a store that specializes in selling equipment for camping and other outdoor activities. The store has many employees who love to camp, hike, hunt, and fish. These employees often go out of their way to provide honest and helpful advice about the good and bad features of the products they sell. The efforts of these employees create

information utility

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

intensive distribution

Companies like McDonald's, who place their stores in as many location as possible, are using a strategy called

intensive distribution

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

intensive distribution

As the president of Chip City a chain of home electronic stores, you are struggling with ways to attract customers to your stores. One employee suggests temporarily marking down a few items in the store below cost to drive traffic into the store. This employee is suggesting you use a(n) _____ strategy

loss-leader pricing

Peter is starting a new business. He recognizes that before developing his marketing strategy he must identify similar characteristics, attributes, and behaviors of his total market, and then group his customers according to these characteristics, attributes, and behaviors. This process if referred to as

market segmentation

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

market share

Online selling, direct response retailing, and vending machines are all examples of

nonstore retailers

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

ownership utility

Joanne works in the marketing department for a toy manufacturer. Her company will be introducing a new type of toy and wants to obtain a dominant market share while discouraging competitors from offering similar toys. The best strategy for achieving this goal would be

penetration pricing

BOGO—Buy One, Get One free—at Payless Shoes is a great example of what kind of promotion?

premium promotion

It's probably not even remotely arguable that Rolls Royce Motorcars is a company that represents the pinnacle of automotive excellence. What might best describe the company's pricing strategies?

prestige

One thing that a one-hour photo shop, a drive-up window at a fast food restaurant, and a vending machine all have in common is that they

provide time utility

Which of the following are B2C marketing segmentations?

psychographic

Online retailing grew over 14% in 2010. Experts predict the e-tailing growth rate in the future will

remain robust

Veronica customizes frosted cupcakes in her shop for her customers while they wait. Veronica provides _____ utility by providing fast, friendly, and personalized service

service

When Apple introduced the iPod, the company used _____, with the purpose of maximizing profitability by offering new products at a premium price

skimming pricing

A well-chosen target market embodies the following characteristics:

size, profitability, accessibility, and limited competition

The emerging promotional tool with the most impressive return on investment is

social media

Derishia has a toothache and has set up an appointment with Dr. Smiley, her dentist. She isn't looking forward to the trip, but she knows that Dr. Smiley can't fix her tooth unless she pays him a visit. This illustrates the _____ characteristic of services

inseparability

Ian has decided to start a business installing voice over Internet protocol (VOIP) software on computers that allows individuals to make phone calls via the Internet. To get his business up and running, Ian has decided to place an ad in the paper. He does not have any money, so he has to put the cost of the ad on his credit card. Ian will spend more money than he will make in the first three months due to the fact that his VOIP business is in the _____ stage of its life cycle.

introduction

One of the major advantages of publicity is that it

is often viewed by consumers as more credible than advertising

One reason Apple's iPhone might have high diffusion rate is because

its use is highly observable

Jesse is a marketing manager for a large Midwest-based producer of food products. He is in the process of developing the _____, which is the creation of the following elements: product, price, promotion, and place.

marketing mix

Marketers can actively influence the _____, but they usually are unable to control the _____.

marketing mix; external environment

Many firms develop a formal _____ to answer the question: Who is your target market and how do you plan to reach them?

marketing plan

If a product increases its sales during the _____ stage, it is doing so by capturing market share from competitors.

maturity

Demographic segmentation divides the market by

measurable characteristics

_____ integrates advertising of branded products into interactive games

Advergaming

_____ is the nonpersonal, paid communication a company places to influence consumer purchases

Advertising

_____ involves making slight modifications to existing products in an effort to distinguish a product from the competition.

Continuous innovation

_____ segmentation is a vital starting point for most marketers.

Demographic

_____ provides customer satisfaction by converting inputs into finished products.

Form utility

Filbert has the corner on the U.S. market for an electric nutcracker gizmo. Market share for his machine in the U.S. is near 90%, and he is not worried about competition. He's considering branching out internationally to sell the "Powercracker" in developing nations. What specifically should he consider as he formulates his marketing plan?

He needs to know about the global marketing mix, including social/cultural segments

Chris is developing a picture book for kids that is truly innovative. It's something every grandparent in the world will want to buy for their kids' kids. Innovation doesn't pay the bills, however. In order to make his book a success, what will he need to consider first and foremost?

He needs to know if grandparents are his target market, or if it can be broadened out or narrowed down from that demographic.

_____ are items consumers receive free of charge in return for making a purchase.

Premiums

_____ is the paid integration of branded products in movies and on television.

Product placement

_____ are used to encourage consumers to purchase higher-priced items and are commonly used in the car and electronics industries.

Rebates

_____ are marketing intermediaries that sell directly to final consumers

Retailers

_____ reduce the risk of purchasing something new by allowing consumers to try the product before making a purchase.

Samples

The fastest growing category of promotional spending is

Sponsorship

The key elements of the external marketing environment include all of the following EXCEPT

The key elements of the external marketing environment include all of the following EXCEPT

What do Uno's Pizzeria and LensCrafters have in common?

Their products are a mix of goods and services

What do gasoline for a car, ketchup for french fries, and a lady's scarf have in common?

They are pure goods

Cigarettes have become very expensive in the past ten years or so, due to punitive government taxation. They are still sold primarily at convenience stores and enjoy highly dispersed placement, however. In addition, they are usually sold to lower class members of society. In light of all of this, how can we (re)classify cigarettes as a product?

They are still convenience products

At the most fundamental level, a consumer buys a product to obtain

a core benefit

If a company wanted to get the most bang for its advertising buck, what might be the best idea?

a viral Web campaign

The average grocery store carriers _____ different products.

about 50,000

Utilized by businesses, _____ include(s) small, movable capital purchases, designed for a relatively short productive life

accessory equipment

The physical good or delivered service that provides a core benefit is called the

actual product

The sales process follows six key stages, but before the process begins, salespeople must have

an understanding of the product, industry, and competition

In the introduction stage of the product life cycle, marketing efforts are focused on

building customer awareness of the product

Ellen is in charge of developing a promotional strategy for a new product her company will soon introduce. She thinks word-of-mouth promotion is likely to be very effective and wants to keep the cost of the campaign relatively low. A key component of her campaign is likely to be

buzz marketing

Procter & Gamble's Tremor marketing group has had a great deal of success with its use of

buzz marketing

The goal of distribution strategy is to

get the right product to the right person at the right place and time.

The purpose of missionary selling is to

create goodwill by providing information and assistance to customers

When B2B marketers divide the market based on the characteristics of customers, they are using

customer-based market segmentation

Marketing in foreign markets can require altering the goods or services offered to meet the taste of local customers. Therefore, business leaders must develop a _____ to meet customer needs in each key market

global marketing mix

Due to technological changes, pagers and videocassettes are slowly phasing out. These products are in the _____ stage of the product life cycle.

decline

As head of marketing for BoonDoggle, Inc., your research suggests the spending habits of 18- to 25-year-old female college students differ from most other consumers. For this reason you and your team have developed strategies for this consumer market. This describes _____ in the _____ market.

demographic segmentation; B2C

Which of the following sets of terms describe approaches used by B2C marketers to segment their markets?

demographic, psychographic, and behavioral factors

BMW is busy working on rolling out a new model. They've worked everything out "on paper" and pared down a list of groundbreaking new ideas, and culled that into a working prototype that is ready for testing. Not only will their internal team of experts run the new car through its paces in this stage of development, but it will also be tested by consumers in limited informal groups. What stage of the new product development process is BMW at?

development

Hans owns and operates a petroleum refinery and is considering selling gasoline door to door, the way the milk man used to do things. What part of distribution strategy is he dealing with?

direct channel

With the invention of the telephone, Alexander Graham Bell created a completely new way for people to communicate over long distances. His invention demonstrates

discontinuous innovation

All of the following statements about channel intermediaries (distributors) are true, EXCEPT

distributors make distribution channels more complex by increasing the number of transactions required of buyers and sellers.

Marketers see product placement as a way to prevent consumers from skipping their ads while watching TV. Media experts estimate that product placement in TV shows will be close to ____ by 2014

doubling

A product in the _____ stage is experiencing periods of rising sales and profits

growth

You are a salesperson for a local company. You've just finished presenting your sales message to a consumer. The next step in the selling process is to

handle objections

Premier Events is an event-planning company located in Lexington, Kentucky. This small company has been in business for two years but has few contracts. After reviewing competitors' successes and failures, the owner decides to alter Premier's marketing mix. Which of the following elements is NOT a part of this process?

economic strategy

Sponsorships are one of the

fastest growing categories of promotional spending

Tim is not a well-rounded salesman. He is still in training, and hasn't closed a whole lot of sales to begin with. But when he scored a huge order, his focus was on getting it out the door, and he forgot what is perhaps the most important step. What is it?

follow-up

By transforming flour and sugar into cookies, Nabisco is adding value by providing

form utility

Creating top-ten lists, establishing an industry Hall of Fame, or launching a petition drive are all ways that marketers can

generate publicity

When purchasing raw materials, businesses are most concerned with

price and service

By definition, a(n) ____ satisfies consumer wants and needs.

product

The _____ is a theoretical model that includes the stages of introduction, growth, maturity, and decline.

product life cycle

Apple and Lady Gaga have a shared interest in the paid integration of branded products into movies and online videos known as

product placement

Jim works in the marketing department of a large firm. He recently spent much of his time working on new packaging ideas for one of his company's products. This work would contribute to the _____ of the company's _____.

product strategy; marketing mix

Decisions about advertising, publicity, and product placement are all part of the firm's _____ strategy in its marketing _____.

promotion; mix

Businesses that advertise in magazines and on the Internet are utilizing a form of segmentation referred to as

psychographic

When firms in B2C markets divide up the potential market according to values, attitudes, and lifestyles, they are making use of _____ segmentation

psychographic

In its broadest sense, _____ refers to an organization's ongoing efforts to create positive relationships with its consumers, employees, suppliers, the community, the general public, and the government

public relations

The more difficult it is for consumers to grasp what a product does and how it works, the slower that product's _____ tends to be.

rate of diffusion

As gas prices rise, hybrid vehicles are being considered by more consumers. This is because the _____ of hybrid cars rises in comparison to standard cars when gasoline becomes more expensive.

relative advantage

Internet advertising has seen tremendous growth in the last year. Industry expert eMarketer estimates U.S spending on Internet advertising will double by 2013 in the area of

search engine optimization

Facebook's privacy control issues in 2009 & 2010 had a negative impact on their customer relations. This marketing decision impacted the ______ marketing environment between Facebook and the consumer

social/cultural

Expensive products that consumers purchase infrequently and are unwilling to accept substitutes for are _____. On the other hand, _____ are widely distributed and widely promoted by the product producers.

specialty products; convenience products

Researchers have identified five product characteristics that affect the rate of adoption and diffusion. Which of the following is NOT one of these five characteristics

stability

Big Bull Energy Drink focuses its marketing on young males engaged in athletics who are seeking thrills. The company advertises its product at skateboard parks and ski resorts. This customer group that Big Bull clearly focuses its marketing efforts toward represents the

target market.

The ability of firms to take advantage of mass customization and just-in-time inventory methods demonstrates the importance of staying current with _____ elements of a firm's marketing _____.

technological; environment

A firm's distribution strategy is concerned with two key elements:

the channel of distribution and physical distribution

The external marketing environment is influenced by all of the following EXCEPT

the distribution environment

Psychographic segmentation is

traditionally not used as the core basis for segmentation but instead complements other types of market segmentation in B2C markets

Nike's "hip hoop" global marketing approach was designed to "connect Nike with a creative lifestyle" in China. Nike unique approach resulted in

unprecedented sales growth in 2010

The main distinction among members of a channel of distribution is whether they are

wholesalers or retailers

In the growth stage of the product life cycle, competition

will begin as competing firms introduce their own versions of the product