Marketing Unit 3

If the price for a product increases, the demand for the complementary product will 1.) decrease 2.) become more elastic 3.) increase 4.) become more inelastic 5.) stay the same

1.) decrease

Marginal competitors will start dropping out of the market during the ___________ stage of the product life cycle. 1.) maturity 2.) growth 3.) introduction 4.) decline 5.) laggard

1.) maturity

The _________ stage of the product life cycle normally has the longest stage. 1.) maturity 2.) growth 3.) introduction 4.) decline 5.) development

1.) maturity

If a firm in a purely competitive market can differentiate its product or service, it becomes part of a(n) _______ market. 1.) monopolistic competition 2.) duopoly 3.) oligopolistic competition 4.) pure competition 5.) monopoly

1.) monopolistic competition

Brain 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 1.) relative advantages 2.) associated services 3.) trialability 4.) observability 5.) compatibility

1.) relative advantages

Sally wants to start a lemonade stand. She has calculated at what point her revenue will cover her strand's costs. Based on this calculation, she has decided she needs to sell 75 glasses of lemonade at $6 per glass. Which important element is Sally not accounting for in her analysis? 1.) Target return pricing 2.) Consumers demand 3.) Fixed and variable cost determination 4.) Break-even analysis 5.) Market share

2.) Consumers demand

One of the difficulties in measuring the effectiveness of IMC efforts is the _________ where consumers do not act immediately after receiving a marketing communications. 1.) decoding decomposition effects 2.) lagged effects 3.) noncommittal effects 4.) viral effects 5.) click-through delay

2.) lagged effects

Which of these promotional elements has the inherent weakness of extremely high expenses per exposure? 1.) advertising 2.) personal selling 3.) sales promotion 4.) publicity 5.) direct marketing

2.) personal selling

Decoding is usually done by the 1.) source 2.) receiver 3.) user 4.) encoder 5.) medium

2.) receiver

Zappos.com, an online shoe store, offers an easy, no-hassle return procedure. This relates to the _______ of its products. 1.) complexity 2.) trialability 3.) compatibility 4.) relative advantage 5.) observability

2.) trialability

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? 1.) 500 games 2.) 1,250 games 3.) 850 games 4.) 2,500 games 5.) 400 games

3.) 850 games

Which of the following is not a characteristic of products in the maturity state of the product cycle? 1.) The market may become saturated because nearly all potential customers have adopted the products. 2.) To increase the customer base, firms consider entry into new markets and new market segments 3.) Laggards are a major focus of marketing efforts 4.) Marketing costs increase as firms defend their market share 5.) Price competition is intense

3.) Laggards are a major focus of marketing efforts

New-to-the-world products, where the product category itself is new, are also called: 1.) diffusion innovation 2.) differentiated innovations 3.) discontinuous innovations 4.) repositioned products 5.) ingenious offering

3.) discontinuous innovations

When the Williams-Sonoma lowered the price of its bread maker form $479 to $267, their total revenue increased. This is an example of _______________. 1.) substitute goods 2.) unitary elasticity 3.) elastic demand 4.) consumer shortage 5.) inelastic demand

3.) 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. 1.) decoding 2.) pretesting 3.) feedback 4.) simulations 5.) encoding

3.) feedback

T/F 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. 1.) lead consumers 2.) early majority 3.) innovator 4.) diffusers 5.) early adopter

3.) innovator

Doritos is mostly likely in which stage of its products life cycle? 1.) introduction 2.) growth 3.) maturity 4.) decline 5.) fad

3.) maturity

Health clubs often use a low, introductory offer price to get people to join their club. These low prices represent a ______________ pricing strategy. 1.) status quo 2.) target return 3.) sales orientation 4.) maximizing profits 5.) customer-oriented

3.) 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 1.) creating diversification and reducing risk. 2.) avoiding marketing saturation from products that have been on the market for a long time. 3.) satisfying the changing needs of current and new customers. 4.) reduction in cost of ingredients. 5.) keeping up in a market where sales come mostly from new products.

3.) satisfying the changing needs of current and new customers.

The right communication channel to use in IMC is 1.) the traditional channel used in the particular retail sector 2.) network advertising, local newspaper, and regional radio stations 3.) the one that will connect to the desired recipients. 4.) the one with the best encoding capabilities 5.) the one that maximizes decoding difficulty

3.) the one that will connect to the desired recipients.

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 contribution per unit is 1.) 1,250 2.) 1,000 3.) 250 4.) 80 5.) It cannot be determined from the information provide

4.) 80

Integrate 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 _____________. 1.) a promotion channel 2.) a communication chain 3.) a marketing matrix 4.) a consistent message across all audiences 5.) a media mix useful to all types of companies

4.) a consistent message across all audiences

The send of an integrated marketing communication 1.) must work with the advertising specialists to ensure all recipients interpret the message accurately 2.) can assess the manner in which receivers interpret the message through gross rating points 3.) controls the meaning all receivers take from the message 4.) has little control over what meaning any individual receiver will take form the message 5.) should attempt to control how the message is received

4.) has little control over what meaning any individual receiver will take form the message

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): 1.) innovator 2.) early adopter 3.) early majority 4.) late majority 5.) laggard

4.) 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. Ryan can market this current products only to his current customers or 1.) intensity his prototyping. 2.) expand his early adopter market segment. 3.) diversify. 4.) market the same products to similar customers. 5.) focus on concept testing.

4.) market the same products to similar customers.

The best approach to promotion budgeting is ____________ budgeting method whereby the company determines its promotion objectives, outlines to the tasks to accomplish these objectives, and determines the promotion cost of performing these tasks. 1.) percentage of sales 2.) competitive parity 3.) all-you-can-afford 4.) objective and task 5.) relative scale

4.) objective and task

If a telecommunications drastically cuts the price for cellular phone service in order to eliminate local competitors, the company could be charged with 1.) unfair slotting. 2.) price fixing. 3.) loss leader pricing. 4.) predatory pricing. 5.) bait-and-switch pricing.

4.) predatory pricing.

Several year 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 1.) reduce deceptive advertising 2.) promote public interest social responsibility communications 3.) offer objective-and-task marketing communications 4.) stimulate interest, persuading consumers to investigate further 5.) signal encoding symbols to simplify the feedback loop

4.) stimulate interest, persuading consumers to investigate further

There are many options available to consumers when it comes to breakfast cereals. So, if Kellogg's significantly increase the price of Rice Krispies, consumers are more apt to buy alternate cereals instread. This illustrates which concept? 1.) cross-price elasticity 2.) the income effect 3.) the target return effect 4.) the substitution effect 5.) the break-even point

4.) the substitution effect

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. 1.) maximizing profits 2.) status quo 3.) target profit 4.) target return 5.) customer oriented

5.) customer oriented

The increase 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 1.) media advertising 2.) publicity 3.) public relations 4.) sales promotions 5.) direct marketing

5.) direct marketing

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 asked for __________ data. 1.) parity and affordability 2.) sales and promotion 3.) attitude change 4.) rule-of-thumb 5.) frequency and reach

5.) frequency and reach

The goal of any marketing communication is to 1.) maximize personal selling 2.) increase public relations check-through rates 3.) overwhelm negative publicity with commercial speech 4.) replace cause-related marketing with non-cause-related marketing 5.) get the right message to the right audience through the right media

5.) get the right message to the right audience through the right media

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 _______ pricing strategy. 1.) prestige 2.) premium 3.) everyday low prices 4.) price skimming 5.) high/low

5.) high/low

Which of the following markets is most likely to be characterized by oligopolistic competition in the United States? 1.) soybeans 2.) men's clothing 3.) electrical service to the home 4.) pens and pencils 5.) smartphone service providers

5.) smartphone service providers

An awareness matric that occurs when consumers recognize a name (e.g., of a brand) that has been presented to them.

Aided recall

Testing where the form attempts to determine whether the product will perform according to its design and whether it satisfies the need for which it was intended.

Alpha testing

uses potential consumers, who examine the product prototype in a "real use" setting to determine its functionality, performance, potential problems, and other issues specific to its use

Beta testing

enables managers to examine the relationships among cost, price, revenue, and profit over different levels of production and sales

Break-even analysis

are used to assess the effectiveness of advertising expenditures

Clicks

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

Communication

the percentage change in the quantity of Product A demanded compared with the percentage change in price in Product B

Cross-price elasticity

The process by which the use of an innovation spreads throughout a market group, over time and over various categories of adopters

Diffusion of innovation

T/F A Skimming price strategy tends be effective in a price- sensitive market because it discourages competitors from entering the market.

False

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

False

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

False

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

False

T/F 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

T/F 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 growns she needs to sell on a monthly basis.

False

T/F Late majority are a critical group of new products adopters because they help the products gain market acceptance.

False

T/F Old Spice repositioning its products form 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.

False

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

False

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

False

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

False

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

False

Costs that remain essentially at the same level, regardless of any changes in the volume of production

Fixed cost

represents reach multiplied by frequency

Gross rating points (GRP)

The ________ _______ of the product life cycle is marked by a growing number of product adopters, rapid growth in industry sales, and increased in both the number of competitors and the number of available product versions.

Growth stage

Occurs when competitors that product and sell competing products collude, or work together, to control prices, effectively taking price out of the decision process for consumers

Horizontal price fixing

The change in the quantity of a product demanded by consumers due to a change in their income

Income effect

The process by which ideas are transformed into new products and services that will help firms grow

Innovation

The ________ ________ for a new, innovative product or service usually starts with a single firm, and innovators are the ones to try the new offering.

Introduction stage

A strategy that the initial price is set low for the introduction of the new product of service. THe objective is to build sales, market share, and prodits quickly.

Market penetration

The ________ ________ of the product life cycle is characterized by the adoption of the product by the late majority and intense competition for market share among firms.

Maturity stage

Marketing through wireless handheld devices

Mobile marketing

Name the most common reason why new products fail:

No discernible benefits

Determines the budget required to undertake specific tasks to accomplish communication objectives

Objective-and-task method

New product introductions, especially new-to-the-world products that create new markets

Pioneers or breakthroughs

Conducted by firms before they actually bring a product or service to market to determine how many customers will try and then continue to use the product or service according to a small group of potential consumers.

Premarket tests

the overall sacrifice a consumer is willing to make to acquire a specific product or service

Price

A strategy that occurs in many markets, and particularly for new and innovative products or services, and involves consumers being willing to pay a higher price to obtain the new product or service

Price Skimming

The stages that new products move through as they enter, get established in, and ultimately leave the marketplace and thereby offers marketers a starting point for their strategy planning.

Product life cycle

The percentage of the target population exposed to a specific marketing communication at least once.

Reach

the price against which buyers compare the actual selling price of the product and that facilitates their evaluation process

Reference price

The difference of the sales revenue and the advertising cost divided by the advertising cost,.

Return on Investment (ROI)

involves taking apart a competitor's product, analyzing it, and creating an improved product that does not infringe on the competitor's patents, if any exist

Reverse engineering

Prior sales and communication activities to determine the present communication budget.

Rule-of-thumb methods

media content distributed through social interactions

Social Media

refers to consumers' ability to substitute other products for the focal brand

Substitution effect

Implemented by firms to meet a targeted profits objective

Target profit pricing

occurs when firms employ pricing strategies designed to produce a specific return on their investment, usually expressed as a percentage of sales

Target return pricing

Introduces the offering to a limited geographical area prior to a nation launch.

Test marketing

a prominent place in people's memories that triggers a response without them having to put any thought into it.

Top-of-mind awareness

The sum of the variables and fixed cost

Total cost

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

True

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

True

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

True

T/F If demand for a product in inelastic, consumers will not change their purchasing habits greatly when the price of the product changes.

True

T/F In many cases, pioneers lost their market lead and initial market share to imitators who capitalize on the pioneers' weakness.

True

T/F Tammy is assessing the effect of her firm's marketing communication. She should remember that the ultimate goal is to drive the receiver to action.

True

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

True

With the ________ _________ ________ tactic, the shipper chargers one rate, no matter where the buyer is located.

Uniform delivered pricing

The costs that vary with productive value

Variable costs

Indicates how much time viewers spend on particular web pages and the number of pages they view.

Web-tracking software

The number of times a user click on an online ad divided by the number of impressions

click-through rate (CTR)

Firms with products in the _______ ______ either position themselves for a niche segment of diehard consumers or those with special needs or they completely exit the market.

decline stage

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

diffusion

The _____________ of exposure is how often the audience is exposed to a communication within a specific period of time.

frequancy

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

This strategy assumes that if a firm can accurately specify a mathematical model that captures all the factors required to explain and predict sales and products, it should be able to identify the price at which its products are maximized.

maximizing profits

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

noise

The first physical form or service description of a new product, still in rough form, having the same properties as a new product, but produced through different manufacturing processes, is called

prototype