Marketing 1

1. One of the main functions of the legal procedure is to A. establish laws. C. resolve disputes. B. enact legislation. D. regulate business.

1. C Resolve disputes. The legal procedure is the process of reviewing disputes or claims and resolving them in a fair manner. Businesses are often involved in disputes with other entities, such as suppliers or competitors. If a business believes it has been wronged by another, the business follows the appropriate legal procedure to resolve the issue. Enacting legislation, establishing laws, and regulating business are not the main functions of the legal procedure.

10. A good example of a casually operated group is a A. football team selecting a strategy or play. C. few players tossing a football during practice. B. football team running laps around the field. D. few friends talking about football.

10. D Few friends talking about football. If the group's purpose is to give and find out opinions, the way the group operates is casual. No real "rules" exist beyond the normal standards of common courtesy. When the football players toss the football or run laps during practice, they are likely to operate under the direction of the coach. In a similar way, selecting a strategy or play may require the football players to conduct a more formal group discussion.

11. Businesspeople need to use the correct words in written communication in order to make sure that the receiver __________ the message. A. understands C. accepts B. agrees with D. approves of

11. A Understands. Using the correct words in written communication is one way for businesspeople to make sure that the receiver understands the message. Correct and accurate language usage generally conveys the intended message and makes it easier for people to understand. Using the correct words will not necessarily ensure that the receiver accepts, agrees with, or approves of the message.

12. Which of the following is an example of a complimentary close: A. Enclosure C. Yours truly B. To Whom It May Concern D. Dear Occupant

12. C Yours truly. The complimentary close respectfully signals the end of a business letter. "Dear Occupant" and "To Whom It May Concern" are examples of impersonal salutations, which are greetings that do not use the receiver's name. The word "Enclosure" indicates that additional materials that have been referenced in the letter are in the envelope with the letter.

13. When encouraging the reader to take a specific course of action, persuasive messages are most effective when the message source demonstrates a high level of A. credibility. C. adaptability. B. inconsistency. D. objectivity.

13. A Credibility. The purpose of a persuasive message is to convey information that encourages the reader to take a specific course of action. Credibility is believability. A believable source demonstrates knowledge in a confident, trustworthy, and responsible manner. People are more likely to take action when they feel that the source is credible. Message receivers do not tend to take action if the source exhibits inconsistent behavior. A message receiver will first consider the source's credibility before it considers the source's adaptability. Objectivity is viewing things in an unbiased manner. Since the message sender is trying to get the message receiver to take a certain course of action, the message receiver has a specific opinion. Therefore, the message sender may exhibit some bias about the topic at hand.

14. When staff members wish to discuss problems related to their jobs, they should communicate with A. their immediate supervisor. C. the company president. B. the personnel department. D. their coworkers.

14. A Their immediate supervisor. Problems related to work should be discussed with the employee's immediate supervisor because this person should be the first to be told that a problem exists, and s/he should be given an opportunity to resolve it. The personnel department deals with problems connected to the hiring or firing of employees. Discussing problems with coworkers is often done but is not recommended. It is not part of the company president's job to deal with individual problems unless they cannot be solved by a subordinate.

15. What can you do to project to customers that they are important to the business? A. Use customer names in conversations. B. Stare at customers so they know you are listening. C. Request a supervisor's assistance in resolving problems. D. Speak loudly so that customers can easily hear your responses.

15. A Use customer names in conversations. Customers enjoy hearing their names, and they feel important when they realize employees have taken the time to learn them. You should maintain eye contact, not stare. You should speak at a comfortable volume—not too loudly or too softly. You should try, whenever possible, to resolve customers' problems without involving a supervisor.

16. Sharon is a customer service representative who spends most of her day on the phone with customers. Her company prohibits her from eating at her work station so she won't be tempted to eat while talking with customers. This is an example of a(n) __________ policy. A. service C. product B. employee D. customer

16. B Employee. Businesses have policies that explain how employees are to act and how they are to deal with customers. Some of these policies include rules about eating and smoking on the job. Businesses make these policies to present a certain image to customers. Service policies are established to provide special features that other, similar businesses may not offer in order to persuade customers to choose their business over another. Some policies affect customers directly, such as guidelines for offering credit. A product policy is a guideline affecting the kinds of goods and services that businesses offer to customers.

17. Which of the following is not an action to take in helping the slow/methodical, or analytical, customer: A. Demonstrate merchandise carefully C. Summarize benefits of buying now B. Seek agreement on key selling points D. Show a large selection of products

17. D Show a large selection of products. Slow/Methodical, or analytical, customers require a lot of time in making buying decisions. They want to know everything about a product so that they make the best decision. In addition, they do not buy immediately. They want time to think about and research the product. Therefore, you should avoid showing them too many products, as this will only compound their problem in reaching buying decisions. The other alternatives are guidelines for helping slow/methodical, or analytical, customers.

18. Determine the type of utility being created in the following situation: A business offers a credit plan to allow customers to purchase items they want. A. Price C. Form B. Place D. Possession

18. D Possession. Possession utility is created when the ownership of a product is transferred from the seller to the customer. Credit plans allow customers to pay for their purchases gradually, thereby increasing their ability to own (possess) more products. Place utility involves making goods and services available at the place (location) they are wanted or needed by customers. Form utility occurs when the shape or form of a product is altered to make it more useful to the customer. Price is a component of the marketing mix but is not a type of economic utility.

19. A Vermont ski shop has not yet received its November shipment of ski supplies. Since the holiday rush is only days away, you would expect prices of existing stock to A. decrease. C. remain the same. B. increase. D. fluctuate.

19. B Increase. Since the holidays usually bring people in need of ski equipment, this situation should create a seller's market in which buyers will be willing to pay higher prices to buy what they need. Prices usually increase in a seller's market instead of decreasing, remaining the same, or fluctuating.

2. Jason would like to start a small business which he could operate from his home. His business would not cost a great deal to start, and he has experience and interest in that type of business. What form of ownership should he consider? A. Monopoly C. Sole proprietorship B. Partnership D. Corporation

2. C Sole proprietorship. A sole proprietorship is a form of business ownership in which the business is owned by one person and is easy to open, but the owner has limited capital and limited capabilities. Jason will not need a great sum of money, and he has experience in that type of business. A partnership is a form of business ownership in which the business is owned by two or more persons who combine their capital and capabilities. It is relatively easy to start. A corporation is owned by issuing stock and is difficult to form and operate. A monopoly is a condition in which a market is controlled by one supplier, and there are no substitute goods or services readily available.

9. Which of the following is a general guideline for answering the telephone in a businesslike manner: A. Identify the firm or department and yourself B. Address the caller by his/her first name C. Take immediate action on the caller's request D. Record the correct spelling of each caller's name

9. A Identify the firm or department and yourself. General guidelines for answering a business telephone include greeting the caller, identifying yourself and the business or department, and asking how you can be of assistance to the caller. It is not always necessary to get the correct spelling of the caller's name. Immediate action may also not be required. Callers should not be called by their first names unless they are personal acquaintances of the individual answering the telephone.

20. Efficient resource use is an advantage of the ________ organizational structure. A. regional C. matrix B. vertex D. regulated

20. C Matrix. Businesses can structure the way they do their work in a variety of ways. The matrix organizational structure uses horizontal authority to integrate departmental functions with product orientation. For example, an engineer, a marketing specialist, a financial coordinator, and a manufacturing employee are members of different departments but often work together to develop or refine one product. The advantage to businesses using this organizational structure is that the business is applying its resources efficiently because a representative from each of the major departments is knowledgeable about various aspects of the product. Vertex, regional, and regulated are not terms that describe types of business organizational structures.

21. The ultimate goal of a company that redirects its marketing effort to an untapped market segment is to increase its A. profit. C. expenses. B. prices. D. output.

21. A Profit. If the company can create demand in a new market segment, this will help to increase sales, which will increase profits. Increasing expenses will decrease profits. Increasing prices could decrease sales. Increasing output may be needed to meet the needs of the new market, but that is not the company's ultimate goal.

22. Stable prices and interdependence are characteristics of a(n) A. technical monopoly. C. monopoly. B. oligopoly. D. differentiated oligopoly.

22. B Oligopoly. An oligopoly is a market structure in which there are relatively few sellers, and industry leaders usually determine the prices. Because an oligopoly has interdependent multiple sellers, product prices are usually stable. A monopoly is a condition in which a market is controlled by one supplier or single seller, and there are no substitute goods or services readily available. A technical monopoly is a type of monopoly in which the seller controls the market with one or more technical products. Differentiated oligopoly is a fictitious term.

23. What is an advantage of specialization of labor? A. Management can rotate jobs. C. Worker dependency increases. B. It's easier to train workers. D. Jobs may become obsolete.

23. B It's easier to train workers. For example, it is easier to train workers to specialize in sewing on shirt collars than to train them to perform all the tasks necessary to sew, iron, and package the finished shirts. The dependency of workers upon each other is a disadvantage. Job obsolescence is a disadvantage to workers. Management uses job rotation to overcome some of the disadvantages of specialization.

24. During which phase of a business cycle does the demand for goods and services begin to exceed the production capacity of the business community? A. Trough C. Peak B. Expansion D. Contraction

24. C Peak. Peak is the phase of the business cycle when economic prosperity reaches a high point, and the demand for goods and services begins to exceed the production capacities of producers. Expansion is the beginning of growth in economic activity. Contraction occurs when the economy declines. Consumers spend less and save more, and economic activities decline. During trough, economic activities are at their lowest level.

25. The way that businesspeople in different countries behave is based on what is acceptable in their business A. activities. C. contracts. B. subcultures. D. policies.

25. B Subcultures. A subculture is a group with distinguishing characteristics that exists within a culture. The customs, habits, and traditions of businesspeople are considered to be a business subculture. The businesspeople in different countries have different business subcultures, which means that the businesspeople from one country share certain beliefs, values, and ideals that are different from those of people in other countries. The way they behave in business is based on those beliefs and values. Therefore, in order to trade successfully throughout the world, businesspeople need to understand what is acceptable business behavior in other countries. Business policies, activities, and contracts differ from one business to another and do not have a significant impact on business behavior.

26. Ultimately, employees with initiative try to further their education to prepare themselves for A. job advancement. C. membership in professional organizations. B. lateral job changes. D. certification.

26. A Job advancement. Employees with initiative seek to further their education/training to prepare themselves for career advancement. In many fields, supplemental preparation has become a prerequisite for promotion. Lateral job changes would not require advanced education. Many professional organizations offer advanced education for their members; however, that is not a membership requirement. Certifications are obtained to secure a job or advance in careers.

27. Accepting blame for failure and credit for success is an indication of a person's A. initiative. C. consideration. B. responsibility. D. interpersonal skills.

27. B Responsibility. Responsible individuals are accountable for things that are within their control. Initiative is the ability and willingness to think or act without being told. Interpersonal skills are how a person gets along with others. Consideration means showing kindness or thoughtfulness to others.

28. An employee who consistently displays a positive attitude is likely to have A. decreased chances of promotion. C. increased self-consciousness. B. difficulty with relationships. D. increased chances of success

28. D Increased chances of success. A positive attitude means looking on the bright side of things. Expecting good things to happen is one way of increasing one's chances of success in life. People who have positive attitudes are more likely to achieve their goals. A positive attitude can help to reduce self-consciousness and improve the ability to develop satisfactory relationships. Positive people are also more likely to be promoted.

29. Which of the following is a true statement regarding negative feedback: A. Most negative feedback points out a person's strengths, as well as his/her weaknesses. B. Negative feedback reinforces a message receiver's attitude or behavior. C. The primary purpose of negative feedback is to embarrass the message receiver. D. Negative feedback expresses disapproval about a specific behavior.

29. D Negative feedback expresses disapproval about a specific behavior. Negative feedback is defined as criticism or disapproval. The purpose of negative feedback is to change or improve the message receiver's behavior, rather than reinforce an existing attitude or behavior. Although negative feedback can embarrass the message receiver, its purpose is to help the message receiver improve or change a particular attitude or behavior. Negative feedback addresses a person's weaknesses, while positive feedback communicates information about his/her strengths.

3. What marketing function is concerned with obtaining information about the preferences, opinions, habits, trends, and plans of current and potential customers? A. Selling C. Marketing-information management B. Product/Service management D. Promotion

3. C Marketing-information management. This marketing function involves gathering, accessing, synthesizing, evaluating, and disseminating information for use in making business decisions. The type of information that is gathered often includes data about customers' preferences, opinions, habits, trends, and plans. Product/Service management involves obtaining, developing, maintaining, and improving a product or service mix in response to market opportunities. Selling involves determining client needs and wants and responding through planned, personalized communication that influences purchase decisions and enhances future business opportunities. Promotion is communicating information about goods, services, images, and/or ideas to achieve a desired outcome.

30. What should you develop to persuade others to believe what you say? A. Personal credibility C. Creativity B. Nonverbal language D. Speaking skills

30. A Personal credibility. Credibility is believability. When you are credible, others believe what you say. If people get in the habit of believing you, they are more likely to be persuaded to agree with you or follow your lead. Nonverbal, or body, language includes gestures, facial expressions, and any other way of communicating without the use of words. Creativity is the ability to generate unique ideas, goods, or services. Speaking skills involve the ability to communicate clearly with words. Although nonverbal language, creativity, and speaking skills may help you to persuade others, they will not necessarily make others believe what you say.

31. Which of the following is an example of using posture to express assertiveness: A. Explaining why you must refuse a request for help B. Raising your eyebrows when you have questions C. Standing up straight when talking to other people D. Frowning when you disagree or disapprove

31. C Standing up straight when talking to other people. Posture is the way in which you hold your body. Other ways you can use posture to express assertiveness include leaning toward the speaker to show your interest in what is being said or crossing your arms across your chest to indicate a negative response to what is being said. Explaining why you must refuse a request for help is an example of verbal assertiveness. Raising your eyebrows and frowning are facial expressions used in nonverbal assertiveness.

32. Which of the following is an example of a conflict response mode: A. Frustration C. Mediation B. Avoidance D. Exclusion

32. B Avoidance. The ways that people react to conflict are called conflict response modes. One of these modes is avoidance, which is the effort to avoid conflict. This type of behavior might include ignoring the situation or pretending that it doesn't exist. Avoidance behavior will not resolve conflict. Frustration is a negative effect of conflict rather than a response mode. Mediation is a method of resolving conflict. Exclusion is feeling left out or excluded from an activity.

33. Tim and his classmates all feel that their teacher's grading scale is unfair. While everyone else sits around and grumbles about it, Tim decides to ask his teacher for a meeting to discuss the grading scale. Which characteristic of a change leader is Tim displaying in this situation? A. Knows how to coach others C. Loves to learn new things B. Persuasive D. Not afraid to "go for it"

33. D Not afraid to "go for it." Instead of sitting back with the rest of the class and complaining about the unfair grading scale, Tim decides to take action. He is not afraid to "go for it." Change leaders are people of action. They're not satisfied with sitting on the sidelines. They stand up for what they believe in and aren't afraid to challenge the status quo (the way things exist right now). Change leaders are also persuasive, love to learn new things, and know how to coach others, but these are not the characteristics Tim displays in this situation.

34. Because the United States is made up of people from all parts of the world, it has many different A. governments. C. courts. B. cultures. D. sanctions.

34. B Cultures. The cultures of ethnic groups from all parts of the world are the customs, habits, and traditions that have been developed over time. Many people whose ancestors are from other countries retain their cultures and celebrate different holidays. The United States has one government that is a democracy which includes many different courts; but these were established to carry out different kinds of legal functions, not because U.S. citizens are from all over the world. Sanctions are trade restrictions placed by one country against another country that is violating international law.

35. Businesses that offer revolving charge accounts and send customers updated statements showing the status of their accounts are following which federal law? A. Equal Credit Opportunity Act C. Fair Credit Billing Act B. Truth-in-Lending Act D. Fair Credit Reporting Act

35. B Truth-in-Lending Act. The Truth-in-Lending Act requires businesses to provide credit customers with all the information that applies to their accounts and send customers regular updated statements showing the status of their accounts. The purpose of the Equal Credit Opportunity Act is to make the granting of credit fair by prohibiting the denial of credit based on the applicant's gender, race, age, marital status, or national origin. The Fair Credit Billing Act requires businesses which extend credit to respond within 30 days to any customer's complaint or inquiry about a billing error. The Fair Credit Reporting Act gives consumers the right to inspect the files of their credit history at any credit agency and to have any mistakes corrected.

36. Which of the following statements about understanding your spending habits is true: A. A key aspect of opening a bank account C. The first step in creating a financial plan B. A key aspect in exceeding financial goals D. The last step in creating a financial plan

36. C The first step in creating a financial plan. Knowing how you spend your money—understanding your spending habits—is the first step in creating a financial plan. Knowing your spending habits does not guarantee that you will exceed your financial goals. Although it's helpful to know how many checks you expect to write in a month, you don't need to understand your spending habits to open a bank account.

37. The Chrysler Theater is hosting the road show of "Annie." In which of the following cases would the theater be liable for damages: A. A guest trips on loose carpet in the hallway and sprains an ankle. B. During intermission, one attendee accidentally spills a drink on someone. C. An attendee's car parked in a city lot gets broken into during the performance. D. People complain that the theater-goers in front of them blocked their view of the show.

37. A A guest trips on loose carpet in the hallway and sprains an ankle. The theater is responsible for making sure the facility is safe and free of obstacles; therefore, it would be liable for damages. A car damaged in a parking lot owned by the city would not be the theater's responsibility. Complaining about someone blocking one's view would not bring about damage relief. The drink being spilled was an accident and is between the individuals involved.

38. Business managers use accounting information to help them to A. reduce insurance premiums. C. calculate excise taxes. B. allocate their funds. D. pay labor union dues.

38. B Allocate their funds. Managers use the accounting information that tells them the amount of funds available in order to develop operating budgets. These budgets specify how much money may be spent for such expenses as rent, salaries, insurance, etc. Insurance premiums are the monies paid to cover a contractual agreement in which one party will pay for specified losses incurred by the other party. Excise taxes are determined by government. They apply to certain items, such as gasoline, and are paid by the buyer. Labor union dues are paid by the union members.

39. A business's buying buildings, vehicles, and equipment is an example of money flowing out in order to acquire A. products. C. staples. B. assets. D. supplies.

39. B Assets. Business owners must spend money to obtain assets, which are anything of value that the business owns. This results in money flowing out of a business. Some examples of business assets include land, buildings, vehicles, and equipment. Supplies are industrial goods that are constantly being purchased and used up in the operation of a business. Products are goods and services. Staples are goods for which there is constant demand.

4. What type of intermediary would purchase baseball bats from one producer, mitts from another, and balls from still another, and then sell an assortment to sporting goods stores? A. Retailer C. Producer B. Agent D. Wholesaler

4. D Wholesaler. A wholesaler is a business that buys goods from producers or agents and sells them to retailers. Agents do not buy goods from producers; rather, they assist in selling and promoting a producer's goods. Producers are growers, providers, or manufacturers of goods or services. Retailers are businesses that buy consumer goods or services and sell them to the ultimate consumer.

40. Benny's Bike Shop manufactures bicycles for its customers during the year. Benny's purchases sprockets from Spikes Sprockets, tires from Tiny's Tires, and frames from Freddie's Frames. The expense of purchasing these items is known as A. gross profit. C. revenue. B. operating expenses. D. cost of goods sold.

40. D Cost of goods sold. Cost of goods sold includes all costs used in obtaining or producing the goods or services that a business sells, such as materials and supplies. Operating expenses are all other expenses in operating the business such as wages, advertising, insurance, rent, and utilities expenses. Gross profit is revenue minus cost of goods sold. Revenue is the total amount of money earned by a business.

5. Electronic billing, purchase-order verification, bar-code technology, and image processing are examples of A. horizontal channel integration. C. functions of the finance department. B. integrated data between channel members. D. vertical channel integration.

5. B Integrated data between channel members. The technology of electronic billing, purchase-order verification, bar coding, and image processing enable channel members to integrate data. Vertical and horizontal channel integration are methods of organizing distribution channels. The finance department may utilize the methods to share data, but the methods are not unique to that department.

6. Branch locations of a business that operate in the same city and target the same customers may experience __________ channel conflict. A. community C. vertical B. horizontal D. dominant

6. B Horizontal. Horizontal conflict occurs between businesses at the same level in the distribution channel. Branch locations of a business that operate in the same community are on the same level. The branches may experience horizontal channel conflict because they are targeting, and competing for, the same customers. Vertical conflict occurs between different levels of the same channel, such as between the local branch and the corporate office. Community and dominant are not types of channel conflict.

7. The systematic gathering, recording, and analyzing of data about problems related to the marketing of goods and services is known as A. marketing research. C. information flow. B. secondary data. D. situation analysis.

7. A Marketing research. Marketing research usually focuses on a specific problem the business needs to solve. Information flow is the process of moving information through the appropriate channels or making information accessible to those who need it. A situation analysis is a determination of a firm's current business situation and the direction in which the business is headed. Marketing research gathers primary data rather than secondary data information collected for purposes other than the project at hand.

8. When Jeremy extended his hand toward Hank as they were introduced, Hank said, "Hello, Jeremy," but he ignored Jeremy's hand and kept his own hands in his pockets. What kind of nonverbal message was Hank sending? A. We have a lot in common. C. I don't want to know you. B. I am glad to meet you. D. We have met before.

8. C I don't want to know you. There are several situations in which nonverbal communication is a better indicator of a person's attitude than words. In this situation, Hank has made a polite verbal response, but he has indicated by refusing to shake hands that he is not glad to meet Jeremy and does not really want to know Jeremy. Even if they had met before, shaking hands would have been appropriate.