Chapter 19-20

Identify the three most important financial forecasts for marketing.

sales, market share, marketing expenses

Identify the four classifications of risk.

source of the risk, result of the risk, control of the risk, insurability of the risk

__________-term expenses are for current activities or items used within one year or less.

Short

The major expense related to the price mix element is the cost of a. communicating prices to customers. b. inventory. c. offering credit. d. advertising.

c. offering credit.

Which of the following expenses would generally be associated with the distribution element of the marketing mix? a. redesigning the packaging to prevent product damage b. buying additional advertising and hiring extra salespeople c. operating a regional warehouse to reduce the time needed to get products to consumers d. offering credit, coupons, or rebates

c. operating a regional warehouse to reduce the time needed to get products to consumers

Which financial statement reports on the amount and source of revenue and the amount and type of expenses for a specific period of time? a. balance sheet b. profit and loss statement c. cash flow statement d. income statement

d. income statement

The most common way businesses develop budgets and financial forecasts is by using a. marketing-related data. b. competitors' budgets and forecasts. c. industry performance. d. past performance.

d. past performance.

The uncertainty associated with factors such as inflation, unemployment, and politics creates __________ risk.

economic

A company can avoid all business risks if its marketing mix is well designed.

false

A risk that can be reduced or even avoided by actions you take is called a human risk

false

Assets + Liabilities = Capital

false

Finances are important only in for-profit organizations.

false

Most long-term business costs apply to marketing rather than production or operations

false

Property insurance pays for damage caused to other people or their property.

false

Shoplifting loss in many businesses is as much as 30 percent of sales.

false

The first goal of risk management should be to transfer risks.

false

The most important way a business can reduce risk is by carefully selecting and training marketing personnel.

false

The possibility that a loss can occur as the result of a decision or activity is known as an opportunity.

false

The purpose of a balance sheet is to determine if the business earned a profit or loss on its operations.

false

Uncontrollable risks cannot be insured.

false

Companies face two risks when pricing products and services. What are they?

price could be to high, reducing demand and products being unsold; price could be to low, rendering the company and not making profit

The second section of a marketing plan is used to develop the marketing __________.

strategy

A risk is usually not insurable if a. it presents the chance of loss but no opportunity for gain. b. it faced by a large number of people. c. the amount of the loss can be predicted. d. it is speculative.

D. it is speculative.

Because of its importance, security and safety planning is often a responsibility of people specifically trained in that area.

true

Failure to follow laws and regulations can put a company at risk.

true

Financial forecasts are usually made for a period of at least one year or more into the future.

true

If an account remains unpaid for several months beyond its due date, it will likely never be paid.

true

Marketers need to identify ways to increase revenues while controlling the costs of marketing.

true

Promotional info. must be honest and accurate, or the company may be liable for the harm caused by inappropriate or illegal promotion

true

Sometimes a business must assume a risk because it cannot transfer, avoid, or insure against the risk

true

The information needed to prepare income statements and balance sheets is the actual financial performance of the business.

true

All marketing personnel should be trained to a. recognize safety/security problems. b. prevent accidents and injuries. c. both A and B. d. neither A nor B; security and safety management is the sole responsibility of people specifically trained in that area.

C. both A and B.

Which type of financial forecast projects changes in the amount a company will need to spend for specific operations or activities? a. expense forecast b. sales forecast c. advertising forecast d. market share forecast

A. expense forecast

Product life cycles mainly illustrate a. how demand changes for products. b. how difficult it is for a company to insure a new venture. c. that a company risks losing market share by failing to keep up with competitors. d. that it is risky for a company to ignore the law.

A. how demand changes for products

The most important source of revenue for an organization is a. the sale of its primary products and services. b. the performance of maintenance on products after the sale. c. interest earned on credit services. d. tax credits offered by the government.

A. the sale of its primary products and services

Which part of a marketing plan is used to gather information to identify possible risks and opportunities? a. Marketing Strategy b. Marketing Analysis c. Action Plan d. Conclusion

B. Marketing Analysis

If you have the chance to gain as well as lose from a risk, it is known as a a. controllable risk. b. speculative risk. c. pure risk. d. natural risk.

B. speculative risk.

This type of risk arises because of the potential actions of individual, groups, or organizations. a. natural b. pure c. human d. controllable

C. human

The cost of inventory a. is considered a type of capital expense. b. is always financed by credit extended by the seller. c. is not recovered until the products are sold and the customer pays for the purchase. d. is generally not the responsibility of the marketing team.

C. is not recovered until the products are sold and the customer pays for the purchase.

A commercial for Sure-Soft Bread was scheduled to run on TV at 6:25 p.m., but it was not shown because a thunderstorm caused the TV station to be off the air at that time. Which part of the marketing mix was most affected by this disruption? a. price b. product c. promotion d. distribution

C. promotion

Probably the most obvious risk to a product is a. the likelihood that a competitor will steal the product's formula or design. b. an outdated, obsolete design. c. the possibility of damage before the product is sold or used. d. the possibility that it will be lost on the way to the customer.

C. the possibility of damage before the product is sold or used

The Ideal Food Market does not offer its own credit card because the manager believes she would have difficulty collecting money from credit customers. Instead, the store accepts several national credit cards. The credit card companies accept the risk for the opportunity to make a profit. In this case, the Ideal Food Market is a. assuming the risk. b. insuring the risk. c. transferring the risk. d. avoiding the risk.

C. transferring the risk.

Malpractice insurance for physicians is an example of a. professional liability insurance. b. health insurance. c. product liability insurance. d. a surety bond.

a. professional liability insurance.

Which federal law prevents companies from discriminating among the people to whom they offer credit? a. the Equal Credit Opportunity Act b. the Truth-in-Lending Act c. the Fair Debt Collection Practices Act d. the Fair Credit Reporting Act

a. the Equal Credit Opportunity Act

If a business's expenses exceed revenue, what will result? a. a profit b. a loss c. bankruptcy d. a positive balance of trade

b. a loss

Which of the following would be classified as a long-term expense? a. the planning of an advertising campaign for the Christmas season b. the construction of a new outlet store c. transportation costs d. salaries and wages

b. the construction of a new outlet store

Identify the product risk that concerns businesses the most.

liability

__________ is a legal responsibility for loss or damage.

liability

In marketing, risk __________ includes providing security and safety for products, personnel, and customers and reducing the risk associated with marketing decisions and activities.

management