Exam 3 Review
Dare Denims Inc. is a retail company that displays all its manufactured products on the company website. Customers can choose from the displayed products and place their orders. The products will then be delivered to them by the company's logistics team. How many intermediary levels operate in the company's marketing channel? 0 1 2 3 4
0 In a direct channel, the producer and the ultimate consumers deal directly with each other. Many products and services are distributed this way. Because there are no intermediaries in a direct channel, the producer performs all the channel functions.
Vyviane sells scarves on Etsy.com. Her fixed costs are $6350. Vyviane sells each scarf for $49. Vyviane's unit variable cost is $16.50. Vyviane hopes to increase business by 25 percent in the 3rd quarter. She also wants to increase her price to $55 in the future. What is the break-even point quantity for Vyviane's business?
BEPq = 196 BEPq = FC / (P - VC) BEPq = 6350/(49 - 16.50) BEPq = 195.4
____________________ determine(s) consumers' willingness and ability to pay for products and services.
Demand factors **Along with price, demand factors determine consumers' willingness and ability to pay for products and services
What cost is independent of the quantity of a product produced?
Fixed cost Fixed cost is the sum of expenses of the firm that are stable and do not change with the quantity of a product
_____________ is the money or other considerations exchanged for the ownership or use of a product or service
Price From a marketing viewpoint, price is the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service.
Johnny's Taco Truck sells 2516 tacos at $2.75 per taco. His fixed costs are $2896. Variable costs are $588 total. Johnny hopes to increase his revenue by 35%. What is Johnny's profit?
Profit = $3435 Profit = (P x Q) - (FC + VC) Profit = (2.75 x 2516) - (2896 + 588)
Which of the following statements best describes market share? a. It is the difference between a firm's total cost and total revenue. b. It is the ratio of a firm's sales revenues or unit sales to those of the industry. c. It is the ratio of a firm's profits to the total cost of production. d. It is the sum of the total cost of production and the sales revenue of all the products of a firm. e. It is the sum of the sales revenue of the different products of a firm across their respective markets.
b It is the ratio of a firm's sales revenues or unit sales to those of the industry (competitors plus the firm itself).
_____ is the result of an offer designed to generate interest in a product or service and a request for additional information. a. Motivation generation b. Lead generation c. A direct order d. Traffic generation e. A limited order
b Lead generation is the result of an offer designed to generate interest in a product or service and a request for additional information.
It is common for firms to set a price such as $19.95 or $19.99 for a $20 product. This is done under the assumption that the price is viewed as being "slightly over $10" instead of "slightly under $20" by the customer who will therefore, find the price more attractive. This practice of pricing is referred to as ________________. a. target pricing. b. odd-even pricing. c. penetration pricing. d. standard markup pricing. e. skimming pricing.
b Odd-even pricing involves setting prices a few dollars or cents under an even number, while in target pricing the manufacturer deliberately adjusts the composition and features of a product to achieve the target price to consumers.
_____ includes all activities involved in selling, renting, and providing products and services to ultimate consumers for personal, family, or household use. a. Manufacturing b. Retailing c. Advertising d. Wholesaling e. Branding
b Retailing includes all activities involved in selling, renting, and providing products and services to ultimate consumers for personal, family, or household use.
Which of the following steps occurs in the implementation stage of the promotion decision process? a. designing a promotion b. pretesting the promotion c. selecting the right promotional tools d. setting the budget for a promotion e. identifying the target audience
b The implementation stage of the promotion decision process involves pretesting a promotion and carrying out the promotion.
Which of the following products is most likely price inelastic? a. a shirt b. gasoline c. a car d. airline tickets for a vacation e. a refrigerator
b The more substitutes a product or service has, the more likely it is to be price elastic. On the other hand, unique items with few substitutes are generally price inelastic. Gasoline has almost no substitutes and is there price inelastic
Which of the following statements is true of retail pricing? a. Discounting a product is referred to as markup. b. The timing of a markdown greatly affects sales. c. Taking a markdown refers to increasing the price on a product. d. Markup is the process of removing products that do not sell at their original prices. e. Retailers must decide only on the markup while setting prices.
b The timing of a markdown is important as it greatly affects sales.
The number of silver sticks ordered for the Moisture Plus product is much lower than the number of yellow tubes ordered for the original Carmex product. With a lower purchase volume, Carmex does not receive a significant discount on the silver tubes from its suppliers. Carmex managers will use a ______ pricing approach to incorporate the price of the packaging into Moisture Plus' final price. a. competition-oriented b. cost-oriented c. value-oriented d. demand-oriented
b With cost-oriented approaches, a price setter stresses the cost side of the pricing problem, not the demand side.
A channel captain is defined as a channel member that _______________________. a. owns a member at the next level down in the channel. b. coordinates, directs, and supports other channel members. c. has the weakest financial position in a marketing channel. d. holds a franchise agreement with another member in the channel. e. competes with other members at the same level for influence or profits.
b A firm becomes a channel captain because it is the channel member with the ability to influence the behavior of other members. Influence can take four forms—financial strength, expertise, identification with a particular channel member, and the legitimate right of one channel member to establish control.
Which of the following statements is true regarding break-even analysis? a. It helps analyze the relationship between variable cost and fixed cost. b. It helps determine the profitability at various levels of output c. It helps evaluate the cost to a company at different levels of product supply d. It helps determine the ratio between fixed and variable costs e. It helps determine whether the incremental return exceeds the incremental cost for the product
b Break-even analysis is a technique that analyzes the relationship between total revenue and total cost in order to determine profitability at various levels of output
Which of the following pricing approaches is based on the requirements of the customer? a. profit-oriented pricing b. demand-oriented pricing c. supply-oriented pricing d. competition-oriented pricing e. cost-oriented pricing
b Demand-oriented pricing approaches focus move heavily on expected customer tastes and preferences, rather than factors such as cost, profit, and competition.
With the typical downward sloping demand curve, as price per unit falls, demand _______________. a. decreases. b. increases. c. remains unchanged. d. is minimized.
b With a downward sloping demand curve, as price falls, more people decide to buy and unit sales (quantity) increases.
Washburn has four distinct price points for its guitar lines: entry, intermediate, professional, and collectors based on the fact that each line has very different production costs, market demand, and sales level. Thus, Washburn has implemented a _______ pricing objective. a. market share b. unit volume c. survival d. social responsibility
b Unit volume, the quantity produced or sold, is a common pricing objective. These firms sell multiple products at very different price points, matching volume demanded with price and production capacity.
A strategic channel alliance is defined as an arrangement whereby ____________________. a. a firm maintains its own salesforce and performs all channel functions by itself. b. consumers can buy products without a face-to-face meeting with a salesperson. c. one firm's marketing channel is used to sell another firm's products. d. channel conflicts are resolved by a channel captain. e. a firm tries to place its products in as many retail outlets as possible.
c A recent innovation in marketing channels is the use of strategic channel alliances, whereby one firm's marketing channel is used to sell another firm's products. Strategic alliances are popular in global marketing, where the creation of marketing channel relationships is expensive and time-consuming.
Which of the following is an advantage of advertising? a. It contains no absolute costs. b. It facilitates customized interaction. c. It can reach large numbers of people. d. Messages can be developed and adapted quickly. e. Feedback can be received immediately.
c Advertising is an efficient means for reaching large numbers of people.
Washburn's fixed costs for producing mass-produced guitars are $500,000. Its variable costs are $150 per guitar. If it prices these guitars at $250, what is the break-even quantity for this line? a. 1,500 guitars b. 1,000 guitars c. 5,000 guitars d. 2,500 guitars
c Break even quantity = fixed cost / (unit price - unit variable cost). 5,000 = $500,000 / ($250-$150).
Encoding is the process in which ________________________. a. a receiver sends a response to a sender. b. a sender interprets a response from a receiver. c. a sender transforms an idea into a set of symbols. d. receivers of a message align their frame of reference with that of a sender. e. a receiver transforms symbols back to an idea.
c Encoding is the process in which a sender transforms an idea into a set of symbols.
Describe the demand curve
The demand curve shows how quantity and price are related. This curve shows the maximum number of units that will be sold at a given price. There are demand factors that impact the price, including consumer tastes, price and availability of substitute products, and consumer income.
What is total revenue and how is it calculated?
Total money received from the sale of the product TR = P x Q
Which of the following is true of a firm's promotional mix? a. A target audience does not affect the balance of elements in the promotional mix. b. A lot of money is spent in the promotional mix in the decline stage of a product. c. Coordinating a consistent promotional effort is necessary. d. The promotional mix is independent of the channel strategies for a product. e. The composition of the promotional mix remains constant across the product life cycle.
c In putting together a promotional mix, a marketer must determine the balance of elements. Three important factors to be considered are the target audience, the product life cycle, and the channel strategies. In addition, because the various promotional elements are often the responsibility of different departments, coordinating a consistent promotional effort is necessary.
_____ is possible when consumers watch a shopping channel in which products are displayed and then place orders over the telephone or the Internet. a. Television home shopping b. Automatic vending c. Direct-mail and catalog retailing d. Direct selling e. Telemarketing
a Television home shopping is possible when consumers watch a shopping channel in which products are displayed and then place orders over the telephone or the Internet.
Which of the following is the best approach for setting a promotion budget? a. objective and task budgeting b. competitive parity budgeting c. trail budgeting d. the percentage-of-sales budgeting approach e. the all-you-can-afford budgeting method
a The best approach to budgeting is objective and task budgeting, whereby a company (1) determines its promotion objectives, (2) outlines the tasks to accomplish those objectives, and (3) determines the promotion cost of performing those tasks.
To keep consumers coming to the Mall of America from around the world, mall management must ensure that the retail offerings at the mall include a mix of national department stores and specialty retail. The mix of retailers at the Mall reflects the ______ element of the retailing mix. a. merchandise b. shopper marketing c. store location d. retail communication e. retail pricing
a The merchandise offering encompasses both the breadth and depth of the product offerings. By managing the retailers who lease space at the Mall of America, mall management manages its merchandise offerings.
The objective of logistics management in a supply chain is to minimize total logistics costs while ____________________. a. delivering the appropriate level of customer service. b. selectively distributing goods and services. c. intensively distributing goods and services. d. effectively managing the practice of forward integration. e. exclusively distributing goods and services.
a The objective of logistics management in a supply chain is to minimize total logistics costs while delivering the appropriate level of customer service where total logistics cost includes expenses associated with transportation, materials handling and warehousing, inventory, order processing, and return products handling; customer service is the ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience.
Which of the following utilities is offered by most retailers in varying degrees? a. time b. task c. information d. service e. status
a Time, place, form, and possession utilities are offered by most retailers in varying degrees.
Which of the following is a transactional function of intermediaries? a. inspecting, testing, or judging products and assigning them quality grades b. creating product assortments from several sources to serve customers c. contacting potential customers, promoting products, and seeking orders d. providing marketing information to customers and suppliers e. purchasing in large quantities and breaking into smaller amounts desired by customers
c Intermediaries perform a transactional function when they buy and sell products or services. But an intermediary such as a wholesaler also performs the function of sharing risk with a producer when it stocks merchandise in anticipation of sales.
E-kart, a nationwide chain of retail stores, deals with only electronic household appliances. It sells a wide variety of electronic products, ranging from washing machines to personal care appliances, and the products are generally expensive. E-kart is most likely a ____________________. a. scrambled merchandise store. b. category killer. c. single-line store. d. general merchandise store. e. unlimited-line store.
c Stores that carry tremendous depth in one primary line of merchandise are single-line stores.
According to the retail life cycle, which of the following retail outlets is most likely in the accelerated development stage? a. value-retail centers b. department stores c. single-price stores d. fast-food outlets e. online retailers
c According to the retail life cycle, single-price stores, factory outlet stores, and warehouse clubs are in the accelerated development stage.
Which of the following is true of vertical marketing systems? a. Wholesaler-sponsored voluntary chains are contractual vertical marketing systems. b. Retailers own manufacturers in all corporate vertical marketing systems. c. Franchising is an example of an administered vertical marketing arrangement. d. Forward integration is a practice followed in contractual vertical marketing systems. e. Producers own retailers in all corporate vertical marketing systems.
a Under a contractual vertical marketing system, independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than what they could achieve alone. The three types of contractual vertical marketing systems are wholesaler-sponsored voluntary chains, retailer-sponsored cooperatives, and franchising.
If Washburn Guitars were to lower the price of the Maya Pro DD75 to $2,499 from $2,699, sales of the guitar would increase 30%. This illustrates __________________. a. a product with elastic demand. b. a shift in the demand curve. c. a product with inelastic demand. d. an increase in the unit variable cost.
a A product with elastic demand is one in which a slight decrease in price results in a relatively large increase in demand, or units sold. The reverse is also true: with elastic demand, a slight increase in price results in a relatively large decrease in demand.
Which of the following is true of a firm that employs a fixed-price policy for its products? a. The firm charges all its buyers the same price for a single product. b. The firm sells all of its products at a single price. c. The pricing policy employed by the firm is also called dynamic-price policy. d. The pricing policy employed by the firm is discriminatory. e. The firm continuously analyzes demand and supply in order to determine price.
a One of the ways in which a firm can set a list or quoted price is by using a fixed-price policy. The fixed-price policy or one-price policy involves setting one price for all buyers of a product or service.
What is the difference between elastic demand and inelastic demand?
a product with elastic demand is one in which a slight decrease in price results in a relatively large increase in demand or units sold a product with inelastic demand means that slight increases or decreases in price will not significantly affect the demand, or units sold, for the product
To compete with the convenience of online retail, the Mall of America offers a mix of sit-down dining, fast casual, and fast food dining choices. The various dining experiences are a ______ for Mall of America as compared to online malls. a. source of parity b. point of differentiation c. wholesale distribution d. multichannel offering
b Because online retailers cannot replicate the dining experiences offered by the Mall of America, dining is a point of differentiation for the Mall of America as compared to online malls.
In which of the following cases is a firm likely to set a higher price for its product? a. There is high transparency in the market of the product b. The product is early in its life cycle c. The supply of the product is beyond market requirement d. The firm is facing survival problems e. There is low demand for the product in the market
b Generally, the greater the demand for the product, the higher the price can be set. The newer the product and the earlier it is in the life cycle, the higher the price that can usually be charged
In the retail positioning matrix, the Mall of America would be positioned in the _____ breadth of product line, and _____ value added quadrant. a. narrow, high b. medium, low c. broad, high d. narrow, low e. broad, low
c The Mall of America would fall in the broad breadth of product line, high value added quadrant of the retail positioning matrix because it has more than 400 stores and various entertainment, special event, and dining choices.
Which of the following statements is true of the wheel of retailing? a. According to the wheel of retailing, retail outlets usually reduce their prices with time. b. It explains how retail outlets structure their branding and communication efforts. c. It explains the continual change observed in retail businesses. d. Older retail outlets usually face competition from high-status, low-margin stores. e. Retail outlets usually enter a market as high-status, high-margin stores.
c The continual change observed in retail businesses is explained by two concepts: the wheel of retailing and the retail life cycle.
Which of the following statements is true of the retail life cycle? a. It explains the competition faced by retail outlets from high-status stores. b. According to the retail life cycle, retail outlets enter a market as high-margin stores. c. It represents the changes in a retailer's market share over time. d. Retailers experience maximum profits in the accelerated-development stage. e. It explains how a retail outlet enters a market.
c The process of growth and decline that retail outlets, like products, experience is described by the retail life cycle. This represents the changes in a retailer's market share or profits over time.
Gristol Corp. is a bearing company that manufactures ball bearings and associated lubricants. Its major organizational customers are automobile and aircraft manufacturers who make high-value purchases. These customers often delay making payments. In order to encourage timely payment, Gristol Corp. offers a 7% discount on the bill if the customer makes the payment within a specified period. The type of discount Gristol Corp. offers its organizational customers is called a __________________.
cash discount Cash discounts encourage retailers to pay their bills quickly. Gristol Corp. encourages its customers to pay their bills quickly by offering a 7% discount on the bill if the customer makes the payment within a specified period.
A local soft-drink manufacturer stocks it products in as many stores as possible in the state where it operates. It has an internal team to ensure good relationships with the different retailers who sell its product, and also constantly tries to get more retailers to sell its product. In this case, which of the following does the company use to cover its target market? a. backward integration b. exclusive distribution c. forward integration d. intensive distribution e. selective distribution
d Intensive distribution means that a firm tries to place its products and services in as many outlets as possible. Intensive distribution is usually chosen for convenience products or services such as candy, fast food, newspapers, and soft drinks.
The LA Galaxy wants to ensure that its employees are as passionate as the fans are about their team because the interaction between employees and customers is critical to the consumer's perception of the overall service experience. Therefore, the LA Galaxy invests significantly in _________. a. publicity b. sponsor relationships c. external marketing d. internal marketing e. public relations
d Internal marketing is based on the idea that the service organization must focus on its employees, or internal market, before successful programs can be directed at customers.
Because consumers respond more favorably to Carmex when priced at $0.99 versus $1.00, many Carmex product prices end with a 9. This demand-oriented approach is known as ________. a. target pricing b. bundle pricing c. price lining d. odd-even pricing
d Odd-even pricing involves setting a price a few dollars or cents below an even number. In theory, demand would increase as the price drops from $1.00 to $0.99 for a jar of Carmex.
Assume that the pricing manager discovered that more seats went unsold for Tuesday night games than for any other night of the week, indicating a lower demand for soccer tickets on Tuesdays. The LA Galaxy could lower the ticket price for future Tuesday night games thereby utilizing _________. a. quantity discounting b. skimming pricing c. price bundling d. off-peak pricing e. fixed pricing
d Off-peak pricing consists of charging different prices for different times of the day, or days of the week, to reflect the variations in demand for the service.
Which of the following is a disadvantage of personal selling? a. It is not very persuasive. b. It cannot be used to give complex information c. One cannot control to whom a presentation is made. d. It is very expensive. e. The feedback is delayed.
d One of the disadvantages of personal selling is that it can be extremely expensive.
Most new Carmex products are priced between $0.99 and $2.99, well within reach of the price sensitive mass consumer market. Carmex is utilizing a _________ strategy with its lip balm products. a. price lining b. skimming pricing c. prestige pricing d. penetration pricing
d Penetration pricing, a demand-oriented strategy, involves setting the initial price low on a new product to appeal immediately to the mass market.
_____ is the practice of charging a very low price for a product with the intent of driving competitors out of business. a. Price fixing b. Deceptive pricing c. Prestige pricing d. Predatory pricing e. Price discrimination
d Predatory pricing is the practice of charging a very low price for a product with the intent of driving competitors out of business and is illegal under the Sherman Act and the Federal Trade Commission Act.
Which of the following accurately describes total cost? a. It is the ratio of profit to total revenue. b. It is the product of unit price multiplied by the quantity sold. c. It is the sum of the list price and incentives and allowances. d. It is the sum of the fixed costs and variable costs. e. It is the difference between the price and perceived benefits.
d Profit equals total revenue minus total cost. Alternatively, profit equals the unit price multiplied by the quantity sold minus the sum of the fixed and variable costs.
_____ is a process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistribution, or disposal. a. Yield management b. Exclusive distribution c. Inventory control d. Reverse logistics e. Selective distribution
d Reverse logistics is a process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistribution, or disposal. The effect of reverse logistics can be seen in the reduced waste in landfills and lowered operating costs for companies.
Stores that carry a broad product line, with limited depth, are referred to as _______________. a. limited-line stores. b. single-line stores. c. category killers. d. general merchandise stores. e. specialty merchandise stores.
d Stores that carry a broad product line, with limited depth, are referred to as general merchandise stores.
Which of the following steps occurs in the evaluation stage of the promotion decision process? a. specifying the objectives for a promotion b. scheduling a promotion c. pretesting a promotion d. making needed changes to a promotion e. identifying the target audience for a promotion
d The evaluation stage of the promotion decision process involves posttesting a promotion and making the needed changes in the promotion.
If the mass-produced guitar sells 100,000 units annually at $175 per guitar, what is the total revenue? a. $175,000 b. $1,750,000 c. $6,175,000 d. $17,500,000
d Total Revenue (TR) = Price (P) x Quantity (Q). $17,500,000 = $175 x 100,000.
Which of the following is a facilitating function of intermediaries? a. purchasing products for resale or acting as an agent for the supply of a product b. assembling products at a convenient location to offer better customer service c. contacting potential customers, promoting products, and seeking orders d. extending credit to customers, physically moving a product to customers e. physically moving a product to customers
d When intermediaries perform facilitating functions, they make a transaction easier for buyers. This may entail extending credit to customers, providing information to customers, or inspecting and testing products and assigning them quality grades.
Carmex Moisture Plus is priced between $2.49 and $2.99, a high price compared the $0.99 Carmex tube. Carmex managers estimated that female consumers would be willing to pay more for the sleek packaging, benefits, and additional ingredients found in the Moisture Plus line and set the price accordingly. Which demand-oriented approach is best reflected in the price of the Moisture Plus line? a. Price setting b. Yield management pricing c. Bundle pricing d. Target pricing e. Quantity pricing
d When managers estimate the price that the ultimate consumer would be willing to pay and adjust the composition and features of the product to achieve the target price to the consumers, this is known as target pricing.
_____ are independent firms or individuals whose principal function is to bring buyers and sellers together to make sales. a. Agents b. Rack jobbers c. Drop shippers d. Brokers e. Truck jobbers
d Brokers are independent firms or individuals whose principal function is to bring buyers and sellers together to make sales.
_____ involve multiple outlets under common ownership. a. Franchises b. Independent retailers c. Contractual systems d. Corporate chains e. Wholesale systems
d Corporate chains involve multiple outlets under common ownership.
Which of the following types of wholesalers carries a broad assortment of merchandise and performs all channel functions? a. cash and carry wholesalers b. specialty merchandise wholesalers c. rack jobbers d. full-line wholesalers e. truck jobbers
d General merchandise, or full-line, wholesalers carry a broad assortment of merchandise and perform all channel functions.
The LA Galaxy understands the importance of attracting big name soccer stars like Beckham, Keane and Donovan to the team. For the consumer, the value of the game is created by players on the field. In other words, the creators of the service (the players) and the service itself (the game) are one in the same. This is an example of the ________ of services. a. inventory b. inconsistency c. irrationality d. inseparability e. intangibility
d In most cases, the consumer cannot and does not separate the deliverer of the services from the service itself.
Informing consumers in an effort to increase their level of awareness is the primary promotional objective in the _____ stage of the product life cycle. a. maturity b. growth c. end d. introduction e. decline
d Informing consumers in an effort to increase their level of awareness is the primary promotional objective in the introduction stage of the product life cycle.
The Mall of America is currently more than 4.87 million square feet and has more than 400 stores—with plans for expansion. With its large size and diverse retail offerings, the Mall of America would best be classified as a(n) _______. a. power center b. strip mall c. central business district d. regional shopping center e. multichannel retailer
d Regional shopping centers usually consist of 50-150 stores (sometimes many more) and have multiple well-known national or regional anchor stores.
Which of the following statements is true of retailing? a. Retailing includes only the actions involved in renting products to customers. b. Status is one of the utilities provided by retailers. c. Retailing creates no value for customers. d. Time is one of the utilities provided by retailers. e. Producers and suppliers meet through retailing actions.
d Retailing creates customer value and has a significant impact on the economy. Time, place, form, and possession utilities are offered by most retailers in varying degrees.
Which of the following statements best describes the function of the break-even point? a. It signifies the additional cost of manufacturing and marketing one additional unit of a product b. It signifies the point at which a percentage decrease in the cost of product will result in a percentage increase in the demand for the product c. It signifies the quantity at which the supply of a product matches the demand for the product d. It signifies the quantity at which the cost of a product equals the revenue generated from the product e. It signifies the point at which the demand for a product is less than the total supply available
d The quantity at which total revenue equals total cost is referred to as the break-even point (BEP).
Price, consumer tastes, price and availability of similar products, and consumer income are collectively called ____________________.
demand factors Factors that determine consumers' willingness and ability to pay for products and services are collectively called the demand factors.
The Mall of America utilizes _________ as it combines the traditional elements of promotion including advertising, social media, and personal selling with functional and psychological elements to position the mall and create its high-end image. a. retail location b. shopper marketing c. merchandise d. retail pricing e. retail communication
e A retailer's communication activities can play an important role in positioning a store and creating its image. Included in retail communication are the traditional elements of promotion as well social media and personal selling.
_____ includes all activities related to managing a store and the merchandise in the store. a. Wholesaling b. A marketing mix c. Retail communication d. Shopper marketing e. A retailing mix
e A retailing mix includes all activities related to managing a store and the merchandise in the store. The retailing mix includes retail pricing, store location, retail communication, and merchandise.
Which of the following elements of the promotional mix is a form of customized interaction? a. sales promotion b. advertising on the radio c. public relations d. advertising on television e. direct marketing
e Direct marketing is a form of customized interaction that uses direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet.
_____ are the result of offers that contain all the information necessary for a prospective buyer to make a decision to purchase and complete the transaction. a. Lead magnets b. Leads c. Prospects d. Quotations e. Direct orders
e Direct orders are the result of offers that contain all the information necessary for a prospective buyer to make a decision to purchase and complete the transaction.
Retail stores often bait customers into visiting their stores by advertising a popular product at a low price. However, when customers do visit the store, they are told the advertised product is out of stock and are encouraged to buy a similar product at a higher price. This type of pricing practice, which is illegal under the Federal Trade Commission Act, is called ___________________. a. predatory pricing. b. horizontal price fixing. c. deceptive pricing. d. vertical price fixing. e. price discrimination.
c Deceptive pricing refers to price deals that mislead consumers and is outlawed by the Federal Trade Commission Act. Deceptive pricing practices include bait and switch, bargains conditional on other purchases, comparable value comparison, comparisons with suggested prices, and former price comparison.
Which of the following statements is true of direct-mail and catalog retailing? a. It decreases marketing efficiency. b. It is also known as door-to-door retailing. c. It eliminates the cost of a store and clerks. d. It involves personal interaction and demonstration in consumers' homes. e. It uses telephones to sell directly to consumers.
c Direct-mail and catalog retailing eliminates the cost of a store or clerks. It also improves marketing efficiency through segmentation and targeting.
Which of the following is true of direct marketing? a. The effect of direct marketing is similar in all countries. b. There are no privacy concerns in direct marketing. c. Information technology has greatly influenced direct marketing. d. Most marketers want the ability to generalize communication efforts. e. Databases are the results of organizations' efforts to create employee profiles.
c Information technology and databases have greatly influenced direct marketing by enabling organizations to collect and maintain information about its customers.
Washburn Guitars makes signature series guitars to enhance the credibility of the Washburn brand. Creating signature series guitars would have a positive effect on all of the following except: a. demand b. brand loyalty c. unit variable cost d. brand awareness
c Producing signature series guitars may affect demand for the product, as well as brand awareness and brand loyalty. However, it would have no effect on unit variable cost (i.e., variable cost expressed on a per-unit-basis for a product).
Eskalor Inc. is a firm that manufactures bicycles. The firm has three bicycle models in the market; Zephyr, Gust, and Impetus. Although Gust and Impetus are sold at a price that nets a loss for the company, the profit the company makes from the sale of Zephyr models covers the losses from the sale of the other two models, in addition to generating a sizable profit for the company. This implies that Eskalor Inc. likely uses ____________ in setting the price for its bicycles. a. skimming pricing b. cost-plus pricing c. product-line pricing d. standard markup pricing e. odd-even pricing
c Product-line pricing refers to setting of prices for all items in a product line. While setting prices, the goal is to cover the total cost and produce a profit for the complete line, and not necessarily for each item.
Some mobile phone manufacturers encourage customers to buy the latest model of their phones through exchange offers. Customers can get a reduction on the price of the new phone in exchange for their old phone. This type of price reduction is called a ______________.
trade-in allowance A trade-in allowance is a price reduction that results from accepting a used product as part of the payment on a new product. The mobile manufacturer accepts older phones as part of the payment for the new model.
Which of the following best describes the extent of the cost the seller bears in FOB origin pricing? a. The seller bears the cost of transporting the product to the nearest retailer. b. The seller is responsible for all costs starting from the loading point to the point where the buyer receives the product. c. The seller bears the cost of transporting the product to a specific, predetermined geographic location. d. The seller selects the mode of transportation and bears the cost for hiring the mode of transport. e. The seller bears the cost of loading the product onto the vehicle that is used for transportation.
e FOB origin pricing requires the seller to pay for the cost of loading the product onto the vehicle that is used, while the buyer becomes responsible for choosing the mode of transportation, all the transportation costs, and subsequent handling of the product.
_____ utility involves enhancing a product or service to make it more appealing to buyers. a. Product b. Possession c. Time d. Place e. Form
e Form utility involves enhancing a product or service to make it more appealing to buyers.
Which of the following can be measured by price elasticity of demand? a. the impact of fixed costs and variable costs on the break-even point b. the impact of marginal revenue of a firm on its average revenue c. the sensitivity of customer demand for a product to changes in the supply of the product d. the percentage change in profit for a percentage change in product price e. the sensitivity of a firm's revenue to changes in its product's price
e Marketing managers need to know how sensitive consumer demanded & the firm's revenues are to changes in the product's price. This can be measured by the price elasticity of demand, or the percentage change in quantity demanded relative to a percentage change in price
_____ refers to the use of displays, coupons, product samples, and other brand communications to influence consumer behavior in a store. a. Category management b. Multichannel retailing c. Drop shipping d. Store-location management e. Shopper marketing
e Shopper marketing refers to the use of displays, coupons, product samples, and other brand communications to influence consumer behavior in a store.
The Mall of America, while located in chilly Minneapolis, MN, is located at the intersection of major freeways, with easy access to a major airport in a thriving metropolitan area. Store location is to the retailing mix as _____ is to the marketing mix. a. product b. price c. publicity d. promotion e. place
e Store location in the retail mix is the counterpart to place in the marketing mix.
A horizontal conflict is most likely to occur in a marketing channel if ____________________. a. disagreements arise over distribution of profit margins among channel members. b. a channel member bypasses another channel member in the same marketing channel. c. intermediaries fail to give adequate attention to a manufacturer's products. d. different types of retailers carry different brands. e. a manufacturer increases its distribution coverage in a geographical area.
e Two sources of horizontal conflict are common. First, horizontal conflict arises when a manufacturer increases its distribution coverage in a geographical area. Second, dual distribution causes conflict when different types of retailers carry the same brands.
Which of the following pricing practices is illegal according to the Consumer Goods Pricing Act? a. Price skimming b. Predatory pricing c. Target pricing d. Price discrimination e. Vertical price fixing
e Vertical price fixing involves controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price. This is illegal under the Consumer Goods Pricing Act.
If two firms are engaged in a price war, it implies that _________________ a. the firms work together in order to get better prices from its suppliers and other intermediaries. b. the firms mutually decide on a high price for their products in order to discourage new competitors from entering their market. c. the firms continuously raise the price of their products in order gain a higher profit. d. the firms compete to acquire a large number of smaller companies to improve their market share. e. the firms successively cut prices in order to increase or maintain their market share.
e Competition impacts pricing, and the quoted price must be set in a way that anticipates potential price responses from competitors. Measures must be taken to avoid a price war, which is the successive price cutting by competitors to increase or maintain their unit sales or market share.
What is subtracted from the list price in order to determine the final price in the price equation?
incentives and allowances Profit equals the list price minus incentives and allowances, plus extra fees.
Consumers cannot hold, touch, or see an LA Galaxy soccer game before the purchase decision (the decision to purchase a ticket). The fact that the consumers cannot hold, touch or see what they are purchasing before they commit to the purchase exemplifies the ____________ of services.
intangibility Services are intangible; in other words they cannot be held, touched or even seen before the purchase decision.
When the LA Galaxy played soccer in a stadium that seated 80,000-90,000 fans, many of the available tickets to each game went unsold and the stadium looked empty. With the larger stadium, the Galaxy had an issue with idle production capacity, an example of which of the 4 I's of services?
inventory Idle production capacity is when the service provider is available (there are open seats in the stadium) but there is no demand for the service which impacts inventory.
What is the difference between a movement along and a shift of a demand curve?
price causes a movement along factors that shift the demand curve: consumer tastes, price & availability of similar products, consumer income
Which competitive market is the least competitive?
pure monopoloy From most competitive to least competitive, the types of competition are pure competition, monopolistic competition, oligopoly, and pure monopoly.
Which of the following statements is true regarding a movement along a demand curve? a. It describes the relationship between quantity sold and price, assuming other factors are constant b. It helps determine the marginal revenue a company has to achieve in order to be profitable c. It implies the profits of a company have improved significantly d. It is unaffected by changes in consumer tastes and their income e. It takes into consideration variation in all the demand factors when plotting the demand curve
a A movement along a demand curve describes the relationship between quantity sold and price
Which of the following accurately describes the concern for marketers with respect to lowering prices for an inelastic product? a. Although this may result in an increase in the number of units sold, the total revenue of the company may eventually fall b. Although this may result in an increase in the demand for the product, the company may not be able to keep up supply for the product c. Although this may result in an increase in the total revenue for the company, lowering price of an inelastic product can be illegal d. The percentage increase in the total revenue of the company due to the lowered price may result in a higher level of competition in the market e. The percentage increase in the quantity demanded for the product is much greater than the percentage decrease in the price of the product
a A product with inelastic demand means that slight increases or decreases in price will not significantly affect the demand, or units sold, for the product. The concern for marketers is that while lowering prices will increase the quantity sold, total revenue will actually fall.
Which of the following is true of channel strategies? a. A pull strategy encourages consumers to ask retailers for a product. b. In a push strategy, the flow of demand stimulation is from consumers to manufacturers. c. A pull strategy directs the promotional mix to channel members. d. A push strategy directs the promotional mix at ultimate consumers. e. In a pull strategy, the flow of demand stimulation is from manufacturers to consumers.
a A pull strategy involves directing the promotional mix at ultimate consumers to encourage them to ask the retailer for a product.
_____ is also known as door-to-door retailing. a. Direct selling b. Online retailing c. Direct-mail and catalog retailing d. Telemarketing e. Television home shopping
a Direct selling, sometimes called door-to-door retailing, involves direct sales of goods and services to consumers through personal interactions and demonstrations in their home or office.
Which of the following statements is true of the communication process? a. Feedback is a sender's interpretation of a response. b. A response is the impact a message has had on a sender's knowledge. c. While decoding, a sender transforms a set of ideas into symbols. d. Consumers who read, see, or hear a message constitute the source. e. While encoding, a receiver transforms a set of symbols into an idea.
a Feedback is a sender's interpretation of a response and indicates whether a message was decoded and understood as intended.
A high-low retailer like Walgreens might temporarily cut the price of Carmex tubes to $0.49, well below its customary price to attract attention to the product and customers to the store. This temporary price reduction is an example of__________. a. loss-leader pricing b. customary pricing c. skimming pricing d. standard markup pricing
a For a special promotion, retail stores deliberately sell a product below its customers' price to attract attention to it and drive traffic into the store. The purpose of this loss-leader pricing is not to increase sales but to attract customers in hopes they will buy other products as well.
As a part of a special promotion, a retailer may decide to temporarily lower the price of one of its products in order to attract more customers. This is done under the assumption that the customers, attracted by the lower price, will purchase other products that have a high markup. This pricing practice is known as _____________________. a. loss-leader pricing. b. bundle pricing. c. target profit pricing. e. target return-on-sales pricing. d. skimming pricing.
a Loss-leader pricing refers to the deliberate selling of a product below its customary price, to attract attention to it during a special promotion.
_____ work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory. a. Manufacturer's agents b. Desk jobbers c. Rack jobbers d. Full-line wholesalers e. Truck jobbers
a Manufacturer's agents work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory.
Which of the following is the first step in choosing a supply chain configuration? a. understanding the customer b. harmonizing the supply chain with a marketing strategy c. determining the intermediaries in a distribution channel d. resolving conflicts in a supply chain e. understanding the supply chain
a Marketers today recognize that the choice of a supply chain follows from a clearly defined marketing strategy and involves three steps: understanding the customer, understanding the supply chain, and harmonizing the supply chain with the marketing strategy.
In a communication process, _____ consists of extraneous factors that can work against effective communication by distorting a message. a. noise b. a response c. feedback d. a feedback loop e. a field of experience
a Noise includes extraneous factors that can work against effective communication by distorting a message or the feedback received.
