Chapter 11: Small Business Pricing, Distribution, and Location

True or false: Channels are important to a firm's marketing strategy and profits.

True

______ are firms that specialize in arranging international shipments, which include packaging, transportation, and paperwork.

Freight forwarders

Which of the following describe a sales promotion that is likely to be used by businesses? (Check all that apply.)

Contests like sweepstakes and games that introduce the new product. Introductory techniques like giveaways, samples, and tastings. Discounting using coupons, rebates, and other promotions.

______ is an existing firm with the correct manufacturing capabilities that makes products for other businesses.

Contract manufacturer

Which of the following statements regarding price lining are correct? (Check all that apply.)

Often there are three levels: a bare bones, midrange, and high-end with the bells and whistles. Each product has a different level of quality or number of features. This pricing strategy attempts to appeal to several different markets and budgets.

Random discounting refers to sales

run on a schedule that is unpredictable to the customer.

A ___ promotion is a form of communication that encourages the customer to act immediately

sales

A ___ promotion is a form of communication that encourages the customer to act immediately.

sales

______ is a strategy where the price for an item is relatively low and then charging much higher prices for the expendables it uses.

Captive pricing

______ are the people and firms who connect producers of goods and services with customers.

Channels

Which of the following statements about odd-even pricing are correct? (Check all that apply.)

Consumers believe that products that are priced using an odd number cost less. Studies have found that customers positively react to odd prices. It is simply setting a price that ends with a 9, 7, or 5.

______ exporting is exporting without using intermediaries.

Direct

______ is a method of selling in which catalogs, brochures, and other pieces of marketing materials are mailed directly to customers.

Direct mail

______ marketing is the use of creative and relatively inexpensive ways to reach your customers.

Guerrilla

Which of the following statements about optimum price are correct? (Check all that apply.)

If sales are too low, the owner might ask whether the price is too high. It is the highest price that will generate the most income for a good or service. If sales are too high, the owner might ask whether a price is too low.

Which of the following objectives do small business look at to achieve to ensure their survival in the early years? (Check all that apply.)

Increasing market share Maximizing profits

______ exporting is exporting using intermediaries such as agents, export management companies, or export trading companies.

Indirect

Which of the following are true of direct marketing? (Check all that apply.)

It enables a manufacturer to control where a product goes. It can be relatively inexpensive

In the context of traditional layouts for retail operations, which of the following are true of the free-form layout? (Check all that apply.)

It has visual impact. It lays out a store in sections with aisles meandering through the store.

Which of the following issues is a firm owner working out of a leased workspace likely to face in the context of day-to-day operations? (Check all that apply.)

Lack of specifications about operating hours Hidden charges that have not been added to a property's lease papers

______ are sales made from ads in newspapers or magazines, with purchases taken online or by phone as well as by mail.

Mail order

______ is a price-setting method where an amount is added to the cost of a product to set the retail price and provide a profit.

Markup Pricing

Which of the following statements about freight forwarders are correct? (Check all that apply.)

Many of these companies are small businesses and have faced many of the same problems. They are specialists in export-related activities. Their services include tariff schedules, shipping, insurance, transportation arrangements, and custom clearing.

______ marketing is using several different channels to reach your customers.

Multichannel

Which of the following are examples of an external reference price? (Check all that apply.)

Newspaper advertisements Comparison shopping. Advice from friends.

Which of the following statements about direct mail are correct? (Check all that apply.)

One advantage of using the direct mail approach is the ability to sell on a business' schedule. Businesses don't have to make major inventory investments, thus there are low costs for getting started. It takes many forms including postcards, catalogs, and videos.

______ is a strategy where the price is set above the competitors' price to indicate that the firm's product is of higher quality.

Premium pricing

______ is a strategy where the price is set above the competitors' price to indicate that the firm's product is a status symbol.

Prestige pricing

______ is the idea that the market's demand for a product or service is sensitive to changes in its price.

Price elasticity

______ is the practice of setting price points: good, better, and best.

Price lining

______ is contact via telephone for the purpose of selling a product or service.

Telemarketing

A(n) ______ is an intermediary business that represents a manufacturer's product or service to other business-to-business intermediary firms.

agent

The ______ is the highest price that will produce a desired level of sales in an intended market.

optimum price

______ is setting a price at the highest level the market will bear.

Price skimming

Selling goods or services to consumers without intermediaries, typically to select customer groups and typically with tracking of the results, is called

direct marketing

A______ is the amount that an entrepreneur adds to costs to provide a profit.

markup

True or false: An internal reference price is founded on a consumer's expectation of what the price should be based on their own knowledge.

True

An estimation of what a price should be based on information external to a consumer is called an ______ reference price.

external

Which of the following statements about telemarketing are correct? (Check all that apply.)

It is the most expensive form of direct marketing. Many consumers find this type of marketing annoying, but it is still a viable form of direct marketing. It can be either inbound where customers call the company or outbound where the company calls the customer.

Maximing profits

The price of a firm's product or service should be above the average price as this adds to financial gains.

Markup pricing is a price-setting method where

an amount is added to the cost of a product to set the retail price and provide a profit.

Periodic discounting are sales

conducted at predictable intervals, such as before major holidays.

In the context of concessions associated with subletting properties, Blank______ refer to the permanent modifications made to a location to fit a business's needs.

leasehold improvements

A consumer's mental image of what a product's price should be based on experience and the consumer's estimate of what the comparative value might be is called a(n)______ reference price.

internal

A(n) ______ is a nonprofit organization or institution that provides business services by using workers who have disabilities or who are rehabilitated.

sheltered workshop

A markup is

the amount an owner adds to a good or service's costs to provide a profit.

______ are other businesses that bring customers to a shopping area.

Traffic generators

Direct exporting is

exporting without using intermediaries.

Increasing market share

A firm's product or service should be priced lower than that of the competition to take the competitor's percentage of total sales amount.

The amount of profit, usually stated as a percentage of the total price, is called

margin

Captive pricing is a strategy

where the price for an item is relatively low and then charging much higher prices for the expendables it uses.

Prestige pricing is a strategy

where the price is set above the competitors' price to indicate that the firm's product is a status symbol.

A(n) ______ is an intermediary business that buys and sells to businesses rather than consumers.

wholesaler

Which of the following are examples of price elastic goods and services?

Tickets to movies Eating out Travel

Which of the following statements about price skimming are correct? (Check all that apply.)

It is usually possible to do this only if the business is the only one to produce the product or service. It is usually a brand new product, for example when 4K televisions first were introduced. This strategy is used to recoup R&D and other costs.

Which of the following statements regarding multichannel marketing are correct? (Check all that apply.)

It refers to using several outlets for contacting your customers. A business should clearly provide contact information on its product's packaging in case the retailer doesn't carry the product. A business should include multiple ways for the customer to make contact including a phone number, website address, and email.

Which of the following statements about guerrilla marketing are correct? (Check all that apply.)It

The key to it is to capture the customer's attention. It is a fairly new marketing concept. Its a unusual and nearly free form of advertising.

Which of the following layout formats are used for manufacturing operations? (Check all that apply.)

The process layout The production line layout

Which of the following statements regarding mail order are correct?

These are sales made from ads in newspapers or magazines. Customers can read the advertisements at their leisure and have time to decide whether to make a purchase. A company has customer service people to process phone, mail, and online purchases.

Which of the following statements about agent are correct? (Check all that apply.)

They are paid a commission for their services. They represent manufacturers and sell to businesses. They are referred to as an intermediary.