Ch 5

Midori buys candles from a wholesaler to sell in her gift shop. Each candle costs $1.80. To cover her operating expenses and allow for a profit, she adds 25 percent to her wholesale cost. What is the markup amount?

$0.45

You receive an invoice dated April 1 for $2,000. The invoice terms are 2/10, net 30. You pay the invoice on April 5. How much will you pay?

$1,960

Last year the people of Grand Falls spent $1,500,000 on soft-serve ice cream. Peggy's Twist Shack has 15 percent of the market share. How much was spent at Peggy's Twist Shack last year?

$225,000

The marketing plan for a business must include information on which eight topics?

1.Product or service 2. Target Market 3. Competition 4. Marketing Budget 5. Business Location 6. Pricing Strategy 7. Promotional Strategy 8. Distributional Strategy

Suppose you invest $5,000 in your magazine stand at the local shopping mall and your investment earns you $550. What is your return on investment?

11%

_____ is the name, symbol, or design used to identify your product.

Branding

What is positioning? Why and how do businesses position their products? Give a real-world example of positioning.

Creating an image for a product in the customer's mind. ... To get a desired customer response. Product features, price, and quality are used in positioning. Jaguar's position their expensive cars to meet the needs of customers who want high quality and status.

Identify the three major types of pricing and briefly explain the differences between them.

Demand-Based Pricing:determined by how much customers are willing to pay-- Cost-based pricing: determined by using the wholesale cost of an item as the basis for the price -- Competition-Based pricing: determined by considering what competitors charge for the same good or service

Pricing objectives should be developed only after prices have been set. Select one: True False

F

Short-term goals are what you want your business to achieve in the next month. Select one: True False

F

What is the difference between a markup price and a markdown price?

Markup price- a price determined by adding a percentage amount to the wholesale cost of an item. Markdown price- a price determined by subtracting a percentage amount from the retail price of an item.

____ pricing is based on the belief that certain prices have an impact on how customers perceive a product.

Physiological

A marketing strategy should always be consistent with the overall goals that have been set for the business. Select one: True False

T

A marketing strategy needs to address Select one: a. all of the above b. market share. c. distribution. d. pricing.

all of the above

The marketing _____ uses the needs of customers as the primary focus during the planning, production, distribution, and promotion of a product or service.

concept

Pricing that is determined by how much customers are willing to pay for a product or service is called Select one: a. markup pricing. b. supply-side pricing. c. demand-based pricing. d. time-based pricing.

demand-based pricing.

Product characteristics that will satisfy consumer needs are called Select one: a. labeling. b. branding. c. features. d. packaging.

features

Price _____ involves offering different levels of prices for a specific category of product based on features and quality.

lining

A(n) ______ price is a price determined by subtracting a percentage amount from the retail price of an item.

markdown

A business's percentage of the total sales generated by all companies in the same market is called Select one: a. investment share. b. market share. c. saturation. d. return on investment.

market share.

Cost-based pricing is determined by using the _______ cost of an item as the basis for the price charged.

wholesale

Your mechanic tells you it will cost $50/hour to work on your car for the first five hours and $75/hour for every hour after that. The job takes seven hours. How much do you owe your mechanic?

$400

Darnell is opening a new business. What factor will have the greatest effect on his market share?

*

What three things must a business be able to do to use the marketing concept successfully?

--Identify what will satisfy the customer's needs and wants. --Develop and market products or services that customers consider better than other choices--Operate profitably

Briefly explain how a business in a highly competitive environment can increase its market share.

--Lower prices to draw in a customer base, then raise prices after gaining loyal customers--Advertising and promotional campaigns to get your name around-- Network with potential customers by becoming involved in your community to meet people who may potentially help you advise or buy from you

Why should performance standards be included in a marketing plan? How can a business develop effective performance standards, and how often should performance be evaluated? What are some questions an entrepreneur should ask to evaluate performance?

.

A business's marketing plan should never be included in the business plan. Select one: True False

F

Markup and markdown prices are two methods of competition-based pricing. Select one: True False

F

Not all products have features. Select one: True False

F

Over the past 50 years, the U.S. market has changed from being a consumer-driven market to one that is product-driven. Select one: True False

F

The objective of every pricing strategy is to increase profits. Select one: True False

F

Name the five main aspects of a product that a business must spend time developing.

Features, branding, packaging, labeling, and positioning.

Explain how the marketing concept can give small businesses an advantage over their larger competitors.

Small businesses can get to know their customers better than large businesses. They can be more responsive and have more flexibility when trying to satisfy a customer's needs.

Different products and services within the same category serve different customer needs. Select one: True False

T

In a consumer-driven economy, entrepreneurs realize that sometimes they must include products in their mix as a convenience for customers even though they may not be profitable. Select one: True False

T

It has been found that often a small percentage of the product selection makes up the majority of the sales revenue. Select one: True False

T

Marketing involves all of the processes used to determine and satisfy the needs of customers and the company. Select one: True False

T

The total market for a product must be known in order for a market share to be determined. Select one: True False

T

There will usually be more than one price that can be charged for a product. Select one: True False

T

When services are combined under one price, rather than making the customer pay for each individual part of the service, they are said to be bundled. Select one: True False

T

Once an entrepreneur has identified his/her goals, it is time to develop a Select one: a. marketing strategy. b. marketing layout. c. marketing concept. d. marketing mix.

marketing strategy.

The different products and services a business sells are its product _______.

mix

The marketing ______ is a blending of the product, price, distribution, and promotion used to reach a target market.

mix

Establishing informal ties with people who can help your business grow is called Select one: a. selling. b. networking. c. promoting. d. brainstorming.

networking

This type of pricing technique starts out with a low introductory price with the goal of building a strong customer base. Select one: a. prestige pricing b. penetration pricing c. bundling d. price skimming

penetration pricing

A marketing _______ is a written report that helps you define your market, identify your customers and competitors, outline a strategy for attracting and keeping customers, and identify and anticipate change.

plan

Creating an image for a product in the customer's mind is called Select one: a. labeling. b. positioning. c. advertising. d. distributing.

positioning

The ________ on investment is the amount earned as a result of the investment, usually expressed as a percentage.

return

If a store sells snow shovels for half-price in the middle of the summer, the store is offering customers a Select one: a. cash discount. b. quantity discount. c. trade discount. d. seasonal discount.

seasonal discount.

Generally speaking, your marketing strategy will be determined mostly by your business's Select one: a. long-term goals. b. all goals should be given equal weight when developing a marketing strategy. c. short-term goals. d. medium-term goals

short-term goals.