Exam Review

Jacob rents rooms in his hotel for an average of $100 per night. The variable cost per rented room is $20, to cover maid service and utilities. His fixed costs are $100,000 and his profit last year was $20,000. For Jacob, the break-even point is:

1250

A company manufactures and sells outdoor games. The games are sold for $250 per unit. The company estimates that its average variable costs is $150. It figures its fixed costs to be $85,000 per year. Sales for the previous year were $125,000. How many games does the company need to sell to break-even?

850 games

is the process by which the adoption of an innovation spreads.

Diffusion

A skimming price strategy tends be effective in a price-sensitive market because it discourages competitors from entering the market.

False

As the number of communication media has increased, the task of understanding how best to reach target customers has become easier.

False

Brands that have developed loyal customers have a higher price elasticity of demand.

False

Gross rating points (GRP) measure how often the audience is exposed to a communication within a specified period of time.

False

If Pillsbury developed a new chive-flavored crescent roll, it would not be considered a new product since it is an extension of their current product line.

False

Jenny owns a boutique. Since sales are stable, Jenny feels it is time she had a 25 percent increase in her salary. If Jenny takes this increase in compensation, it will decrease the break-even quantity of gowns she needs to sell on a monthly basis.

False

Late Majority are a critical group of new product adopters because they help the product gain market acceptance.

False

Old Spice repositioned its products from a Baby Boomer generation to a much younger target market. Since the brand was already introduced in the market, Old Spice deodorant would not be an example of a new product. True or False

False

Test marketing refers to customers who modify existing products according to their own ideas to suit their specific needs.

False

The demand curve for prestige products generally slopes downward due to higher prices.

False

The maturity phase of the product life cycle is characterized by greatly reduced competition.

False

Top-of-mind awareness is when consumers indicate that they know the brand when the name is presented to them.

False

Kyle, who is an expert in electronic products, purchased a 3D television right after they were available in the marketplace. He paid over $7,000 for it. Kyle would be considered which category of product adopters?

Innovator

In the __________ stage of the product life cycle, the primary promotion objective is to generate consumer awareness and motivate consumers to try the product.

Introduction

Which of the following is not a characteristic of products in the maturity state of the product life cycle?

Laggards are a major focus of marketing efforts.

Nancy only breaks down and buys a new product after most of her friends and family have adopted it. She deliberates on the decision and is often skeptical of marketing. Her reference group heavily influences her buying decision. Nancy is best described as a(n):

Late Majority

Ryan is a sales rep for an established paper supply company. Business is good, but he is concerned that the company has spent little on new product development and has not created a new product in over five years. Without new products, Ryan can market his current products only to his current customers or

Market the same products to similar customers

Doritos is most likely in which stage of its product life cycle?

Maturity

Marginal competitors will start dropping out of the market during the __________________ stage of the product life cycle.

Maturity

refers to any interference that stems from competing messages, a lack of clarity in the message, or a flaw in the medium.

Noise

Zappos.com, an online shoe store, offers an easy, no-hassle return procedure. This relates to the _______ of its products.

Trial-ability

Cross-price elasticity is the percentage change in quantity demanded of product A compared to the percentage change in price of product B.

True

If a firm is engaged in monopolistic competition, it should seek a way to differentiate itself.

True

If demand for a product is inelastic, consumers will not change their purchasing habits greatly when the price of that product changes.

True

In many cases, pioneers lose their market lead and initial market share to imitators who capitalize on the pioneers' weaknesses.

True

It may take several exposures to marketing communications before consumers are moved to buy.

True

Tammy is assessing the effect of her firm's marketing communications. She should remember that the ultimate goal is to drive the receiver to action.

True

When price decreases and total revenue falls, demand is inelastic.

True

Integrated marketing communications is the concept of designing marketing communications programs that coordinate all promotional activities—advertising, personal selling, sales promotion, public relations, and direct marketing—to provide

a communication chain

is the process of conveying a message to others that requires six elements—a source, a message, a channel of communication, a receiver, and the processes of encoding and decoding.

communication

Julia's is an upscale women's clothing store. Prices are based on customers' beliefs about the value of the clothing. The store focuses on a limited target market and provides excellent customer service. Julia's is using a _______ pricing strategy

customer-oriented

If the price for a product increases, the demand for the complementary product will

decrease

Like personal selling, __________ has the advantage of being customized to match the needs of specific target markets. Messages can be developed and adapted quickly to facilitate one-to-one relationships with customers.

direct marketing

The increased use of customer databases has enabled marketers to identify and track consumers over time and across purchase situations, and has contributed to the rapid growth in

direct marketing

New-to-the-world products, where the product category itself is new, are also called:

discontinuous innovations

When the Williams-Sonoma lowered the price of its bread maker from $479 to $267, their total revenue increased. This is an example of

elastic demand

Sales data, complaints, compliments, and redemption rates for coupons and rebates are types of ________ marketers use to assess the effectiveness of their IMC efforts.

feedback

Wanda asked her firm's advertising agency to estimate how often consumers saw her firm's IMC message and what percentage of the target audience was exposed to the message. Wanda is asking for ________ data.

frequency and reach

The goal of any marketing communication is to

get the right message to the right audience through the right media

The sender of an integrated marketing communication

has littler control over what meaning any individual receiver will take from the message

Dan is especially price sensitive. He has been known to line up on "Black Friday" (the day after Thanksgiving) at 4 a.m. to be among the first to buy sale items. Dan would likely respond to a(n) _______ pricing strategy.

high/low

One of the difficulties in measuring the effectiveness of IMC efforts is the ________, where consumers do not act immediately after receiving a marketing communication.

lagged effect

The ____________ stage of the product life cycle normally has the longest stage.

maturity

If a firm in a purely competitive market can differentiate its product or service, it becomes part of a(n) _______ market.

monopolistic compeition

Name the most common reason why new products fail:

no discernible benefits

The best approach to promotion budgeting is __________ budgeting method whereby the company determines its promotion objectives, outlines the tasks to accomplish these objectives, and determines the promotion cost of performing these tasks.

objective and task

Which of these promotional elements has the inherent weakness of extremely high expenses per exposure?

personal selling

If a telecommunications company drastically cuts the price for cellular phone service in order to eliminate local competitors, the company could be charged with

predatory pricing

For which of the following is demand likely to be least sensitive to price increases?

prescription drugs

Decoding is usually done by the

receiver

Brian is trying to sell a new line of ultrasound imaging equipment. Unlike existing technology, these machines are compact, creating the potential for general practice physicians to have and use them in their offices. These new products diffused rapidly because of their

relative advantage

Health clubs often use a low, introductory offer price to get people to join their club. These low prices represent a _______ pricing strategy.

sales orientation

Many restaurants offer daily specials, appetizers, entrees, and desserts not listed on their standard menu. These daily specials primarily provide the new product benefit of

satisfying the changing needs of current and new customers.

Which of the following markets is most likely to be characterized by oligopolistic competition in the United States?

smartphone service providers

Several years ago, changes in advertising restrictions allowed pharmaceutical companies to begin promoting their products through traditional media. Today, it is common to see ads on television ending with, "Ask your doctor about [our medicine]." In addition to creating awareness about their drugs, the companies are most likely hoping to

stimulate interest, persuading consumers to investigate further.

The right communication channel to use in IMC is

the one that will connect to the desired recipients

There are many options available to consumers when it comes to breakfast cereals. So, if Kellogg's significantly increases the price of Rice Krispies, consumers are more apt to buy alternate cereals instead. This illustrates which concept?

the substitution effect