Marketing 101: Chapter 14,16,18

The basic goal of integrated marketing communications is to
A.
communicate the value proposition to the target market.
B.
create desire.
C.
manipulate consumers.
D.
outspend competitors.
E.
tell the world about your company.
A.
communicate the value proposition to the target market.
Especially for marketers with new products or services, IMC is needed because
A.
consumers need to know all about the features of new products before they make a purchase decision.
B.
consumers are unlikely to buy products they are not aware of.
C.
it is impossible for products to sell themselves through word of mouth communication.
D.
pricing decisions cannot be made without IMC.
E.
new products and services need to be integrated into the supply chain value proposition.
B.
consumers are unlikely to buy products they are not aware of.
Integrated marketing communications represents the _________________ P in the four Ps of a firm’s marketing mix.
A.
Pricing
B.
Product
C.
Promotion
D.
Place
E.
Partnering
C.
Promotion
Integrated marketing communications include all of the following EXCEPT
A.
personal selling.
B.
advertising.
C.
public relations.
D.
supply chain management.
E.
direct marketing.
D.
supply chain management.
Carlos owns a chain of retail electronic stores. He is evaluating how he allocates his firm’s IMC budget. He receives offers from a variety of advertising media, spends money on his firm’s public relations efforts, and is considering electronic media alternatives. Carl recognizes that each IMC alternative
A.
will stand on its own.
B.
is part of the whole.
C.
is part of noncommercial free speech.
D.
is less important than stealth marketing.
E.
is dictated by the nature of the supply chain.
B.
is part of the whole.
The three elements of any IMC strategy are the consumer, the channels, and
A.
the receiver.
B.
the product.
C.
evaluation of the results.
D.
the company.
E.
event sponsorship.
C.
evaluation of the results.
24.
As the number of communication media has increased, the task of understanding how best to reach target customers has
A.
shifted from creating a value proposition to revising a value proposition.
B.
increased the use of rule-of-thumb targeting.
C.
become easier.
D.
focused on reducing the lagged effect of marketing communications.
E.
become more complex.
E.
become more complex.
The IMC communication process includes all of the following EXCEPT
A.
evaluation.
B.
the sender.
C.
the transmitter.
D.
the communication channel.
E.
the receiver.
A.
evaluation.
The IMC communication process begins with ________, who must be clearly identified.
A.
the integrator
B.
the sender
C.
the transmitter
D.
the communication channel
E.
the receiver
B.
the sender
In the IMC communication process, the ____________ encodes the marketing communication message.
A.
instructor
B.
sender
C.
transmitter
D.
communication channel
E.
receiver
C.
transmitter
___________ means converting the sender’s ideas into a message, which could be verbal, visual, or both.
A.
Decoding
B.
Integrated marketing communications
C.
Precoding
D.
Encoding
E.
Tracking
D.
Encoding
In integrated marketing communications, encoding involves
A.
converting consumers’ ideas into value propositions.
B.
differentiating noncommercial speech from commercial speech.
C.
converting the decoder into the receiver.
D.
interpreting click-through rates.
E.
converting the sender’s ideas into a message, which could be verbal, visual, or both.
E.
converting the sender’s ideas into a message, which could be verbal, visual, or both.
Though a picture may be worth a thousand words, the most important facet of encoding is
A.
who draws the picture.
B.
the self-visualization process.
C.
not what is received, but rather what is sent.
D.
the sponsor rather than the receiver.
E.
not what is sent, but rather what is received.
E.
not what is sent, but rather what is received.
31.
In the IMC communication process, the ________________ is the medium that carries the message.
A.
feedback loop
B.
sender
C.
transmitter
D.
communication channel
E.
receiver
D.
communication channel
Which of the following is NOT a communication channel used in the IMC process?
A.
Radio
B.
Television
C.
Newspaper
D.
Internet
E.
Supply chain
E.
Supply chain
The right communication channel to use in IMC is
A.
the traditional channel used in that particular retail sector.
B.
network advertising, local newspapers, and regional radio stations.
C.
the one that will connect to the desired recipients.
D.
the one with the best encoding capabilities.
E.
the one that maximizes decoding difficulty.
C.
the one that will connect to the desired recipients.
In the IMC communication process, the _____________________ is the person who reads, hears, or sees and processes the message being communicated.
A.
medium
B.
sender
C.
transmitter
D.
communication channel
E.
receiver
E.
receiver
The sender of an IMC message hopes the receivers are
A.
the people for whom the message was originally intended.
B.
the people with the most buying power.
C.
consumers who are capable of discerning value.
D.
consumers who have purchased the firm’s products in the past.
E.
the market segment with the most gross rating points.
A.
the people for whom the message was originally intended.
_______________ refers to the process by which the receiver interprets the sender’s message.
A.
Decoding
B.
Stealth marketing
C.
Precoding
D.
Encoding
E.
Tracking
A.
Decoding
If you ever watched a television commercial and at the end of the message wondered what they were promoting, you may have had trouble _____________ the IMC message.
A.
decoding
B.
pre-testing
C.
precoding
D.
encoding
E.
tracking
A.
decoding
__________________ is any interference in the IMC process.
A.
Translation
B.
Looping
C.
Excessive reach
D.
Noise
E.
Feedback
D.
Noise
In the IMC process, noise can occur as a result of lack of message clarity, a poor choice of medium, or
A.
competing messages.
B.
an extended feedback loop.
C.
indirect encoding.
D.
inhibited decoding.
E.
excessive reach.
A.
competing messages.
Advertising agencies often provide the IMC function of comparing their customer’s target audience with the viewer, listener, or reader profile of the communication channel being considered. The agency is most likely trying to avoid noise problems associated with
A.
competing messages.
B.
lack of clarity in the message.
C.
a poor choice of medium.
D.
an extended feedback loop.
E.
a flaw in the medium.
C.
a poor choice of medium.
National manufacturers and retailers often pay a service provider to monitor television ads around the country, in order to ensure that their ads are shown in their entirety during the time frames that were purchased. This service provider is monitoring for IMC noise problems associated with
A.
competing messages.
B.
lack of clarity in the message.
C.
a poor choice of medium.
D.
a flaw in the medium.
E.
an extended feedback loop.
D.
a flaw in the medium.
The _____________ loop allows the receiver to communicate with the sender in the IMC process.
A.
decoding
B.
pre-testing
C.
precoding
D.
encoding
E.
feedback
E.
feedback
Most manufacturing and retailing marketers worry constantly about whether or not their IMC efforts are paying off. They assess various forms of ___________ to determine what is working and what is not.
A.
noise
B.
pre-testing
C.
precoding
D.
encoding
E.
feedback
E.
feedback
Sales data, complaints, compliments, and redemption rates for coupons and rebates are types of ________________ marketers use to assess the effectiveness of their IMC efforts.
A.
decoding
B.
pre-testing
C.
feedback
D.
simulations
E.
encoding
C.
feedback
Loretta would like to know which, if any, of her firm’s IMC efforts are working. She could use all of the following EXCEPT _______________ to provide feedback from her efforts.
A.
sales data
B.
complaints
C.
compliments
D.
redemption rates for coupons or rebates
E.
the channel
E.
the channel
Marketers often use focus groups to learn how consumers interpret their IMC messages. Experience has shown that
A.
effective branding requires marketers to encode messages the same way for each market segment.
B.
each receiver decodes IMC messages in his or her own way.
C.
action is taken before desire and interest are determined.
D.
marketers can almost always use the same message for all audiences.
E.
messages are decoded in the manner intended by the encoder.
B.
each receiver decodes IMC messages in his or her own way.
The sender of an integrated marketing communication
A.
must work with the advertising specialists to ensure all recipients interpret the message accurately.
B.
can assess the manner in which receivers interpret the message through gross rating points.
C.
has little control over what meaning any individual receiver will take from the message.
D.
controls the meaning all receivers take from the message.
E.
should attempt to control how the message is received.
C.
has little control over what meaning any individual receiver will take from the message.
Though advertising experts wish it were true, there is not always a direct link between a particular marketing communication and
A.
supply chain effectiveness.
B.
enhanced decoding processes.
C.
a consumer’s purchase.
D.
the level of noise in the IMC channel.
E.
the reach/frequency ratio.
C.
a consumer’s purchase.
Julia is driving down Interstate 95 on her way from New England to Florida and sees a billboard saying “South of the Border Restaurant and Motel is just 100 miles away.” Julia has never heard of South of the Border before. After seeing the sign, she will most likely need additional exposure to the product before deciding whether to stop at South of the Border. This is an example of
A.
rejection of advertising.
B.
subliminal advertising.
C.
product underwhelm.
D.
IMC strategy.
E.
the lagged effect.
E.
the lagged effect.
Which of the following is NOT one of the steps in the AIDA model?
A.
Awareness
B.
Intention
C.
Action
D.
Desire
E.
Interest
B.
Intention
In the AIDA model,
A.
advertising leads to interest, which hopefully leads to desire and then, action.
B.
awareness leads to integration, which hopefully leads to desire and then, action.
C.
awareness leads to interest, which hopefully leads to desire and then, action.
D.
awareness leads to interest, which hopefully leads to desire and then, attention.
E.
awareness leads to interest, which hopefully leads to determination and then, action.
C.
awareness leads to interest, which hopefully leads to desire and then, action.
In the AIDA model, the “think” stage is the ________________ stage.
A.
Awareness
B.
Action
C.
Interest
D.
Desire
E.
Intention
A.
Awareness
_______________ refers to a potential customer’s ability to recall that the brand name is a particular type of retailer, product, or service.
A.
Product familiarity
B.
Brand association
C.
Brand awareness
D.
Marketing recall
E.
Cognitive association
C.
Brand awareness
Even the best marketing communication can be wasted if the sender does not first
A.
generate consumer action.
B.
offer testimonials from past consumers.
C.
determine the level of desire needed to sustain action.
D.
gain the attention of the consumer.
E.
stimulate interest among stealth marketing consumers.
D.
gain the attention of the consumer.
Cheryl asked Nadia to help her buy some aftershave for her boyfriend. Nadia was going through a list of different brand names, when Cheryl stopped her and said, “I recognize that one.” Marketers call this
A.
selective recall.
B.
free association.
C.
aided recall.
D.
recall mapping.
E.
top-of-mind awareness.
C.
aided recall.
In the AIDA model, the “do” stage is the ________________ stage.
A.
Awareness
B.
Action
C.
Interest
D.
Desire
E.
Intentions
A.
Awareness
The highest level of awareness occurs when customers mention a specific brand name when asked about a product or service. Marketers call this
A.
the primacy effect.
B.
aided recall.
C.
top-of-mind awareness.
D.
category dominance.
E.
elevated awareness.
C.
top-of-mind awareness.
After creating awareness that the firm’s products or services exist, the next goal of integrated marketing communications is to
A.
generate consumer action.
B.
increase the level of interest among consumers.
C.
determine the level of desire needed to sustain action.
D.
gain the attention of the consumer.
E.
create intentions to purchase the product.
B.
increase the level of interest among consumers.
In the movie Field of Dreams, one of the memorable phrases is, “If you build it, he will come.” The AIDA model would suggest that after marketers “build” a product or service and create awareness among consumers, they need to
A.
determine the level of desire needed to sustain action.
B.
promote sufficiently to gain global attention.
C.
create interest among consumers, persuading them to investigate further.
D.
offer discounts to increase purchase intentions.
E.
take steps to encourage immediate purchase.
C.
create interest among consumers, persuading them to investigate further.
Several years ago, changes in advertising restrictions allowed pharmaceutical companies to begin promoting their products through traditional media. Today, it is common to see ads on television ending with, “Ask your doctor about (our medicine).” In addition to creating awareness about their drugs, the companies are hoping to
A.
reduce deceptive advertising.
B.
signal encoding symbols to simplify the feedback loop.
C.
offer objective-and-task marketing communications.
D.
stimulate interest, persuading consumers to investigate further.
E.
promote public interest social responsibility communications.
D.
stimulate interest, persuading consumers to investigate further.
Once the marketing communication has captured the interest of its target market, the goal of subsequent IMC messages should be to move the consumer from
A.
“I want it” to “I like it.”
B.
action to desire.
C.
“I like it” to “I want it.”
D.
awareness to action.
E.
feeling to thinking.
C.
“I like it” to “I want it.”
Betty is assessing the effectiveness of her firm’s marketing communications. She knows the ultimate goal is to
A.
maximize rating points.
B.
minimize marketing communication expenditures.
C.
shift encoding into decoding.
D.
use personal selling to augment public relations.
E.
drive the receiver to action.
E.
drive the receiver to action.
If marketing communications are effective, they will
A.
result in purchases by some consumers receiving the communications.
B.
offset any negative publicity the firm may have received.
C.
minimize the number of communication channels used by the firm.
D.
generate interest in the product in over half the consumers who receive the communications.
E.
include all steps of the AIDA model with equal weighting to each step.
A.
result in purchases by some consumers receiving the communications.
One of the difficulties in measuring the effectiveness of IMC efforts is the ______________, where consumers do not act immediately after receiving a marketing communication.
A.
decoding decomposition effect
B.
lagged effect
C.
noncommittal affect
D.
viral effect
E.
click-through delay
B.
lagged effect
Reaching the right audience with marketing communications is becoming more difficult because
A.
consumers are bored.
B.
government regulations are constraining free speech.
C.
personal selling is becoming less expensive, making it more competitive with advertising.
D.
the media environment has become more complicated.
E.
the AIDA model is no longer an accurate representation of how marketing communication works.
D.
the media environment has become more complicated.
The goal of any marketing communication is to
A.
maximize sales.
B.
increase public relations click-through rates.
C.
overwhelm negative publicity with commercial speech.
D.
replace cause-related marketing with non-cause-related marketing.
E.
get the right message to the right audience through the right media.
E.
get the right message to the right audience through the right media.
The proliferation of new media alternatives has led many firms to shift their promotional budgets from
A.
publicity to public relations.
B.
personal selling to advertising.
C.
integrated marketing communications to disintegrated marketing communications.
D.
stealth marketing to viral marketing.
E.
advertising to direct marketing and website development.
E.
advertising to direct marketing and website development.
Compared to other IMC alternatives, advertising is extremely effective for
A.
closing a sale.
B.
efficient message decoding.
C.
reducing the potential for noise.
D.
creating awareness and generating interest in a product.
E.
repositioning consumers in the AIDA model.
D.
creating awareness and generating interest in a product.
One difficulty associated with using advertising as part of a marketer’s IMC efforts is
A.
breaking through the clutter of other messages targeted for the same audience.
B.
it is more expensive than personal selling.
C.
it only works when communicating to the most uninformed consumers.
D.
government regulations have significantly decreased allowable advertising frequencies.
E.
all of these are correct.
A.
breaking through the clutter of other messages targeted for the same audience.
Integrated marketing communications include all of the following EXCEPT
A.
advertising.
B.
supply chain management.
C.
direct marketing.
D.
public relations.
E.
sales promotion.
B.
supply chain management.
Which statement best describes personal selling?
A.
It involves a larger audience than advertising.
B.
It is primarily indirect communication.
C.
It is primarily informational communication, as compared to advertising, which involves persuasive communication.
D.
It is the two-way flow of communication between a buyer and a seller.
E.
It involves encoding while advertising involves only decoding.
D.
It is the two-way flow of communication between a buyer and a seller.
Personal selling is an especially important part of IMC in
A.
business-to-business markets.
B.
cause-related marketing.
C.
event sponsorships.
D.
stealth marketing.
E.
Web tracking.
A.
business-to-business markets.
Ryan is debating how to allocate the IMC budget for his new ski equipment store. He knows having knowledgeable salespeople in his store can simplify buyers’ purchase decisions. He should also consider that, compared to other IMC alternatives, personal selling is
A.
easy.
B.
expensive.
C.
ineffective.
D.
overrated.
E.
simple.
B.
expensive.
Sales promotions include all of the following EXCEPT
A.
coupons.
B.
rebates.
C.
online ads.
D.
point-of-purchase displays.
E.
free samples.
C.
online ads.
Compared to mass media advertising, a key advantage of direct marketing is
A.
it allows for personalization of the message.
B.
it reaches a larger audience.
C.
it involves face-to-face contact.
D.
it uses the rule-of-thumb budgeting method.
E.
it is used almost exclusively for B2B marketing.
A.
it allows for personalization of the message.
In recent years, the component of IMC that has received the greatest increase in spending is
A.
media advertising.
B.
direct marketing.
C.
public relations.
D.
sales promotions.
E.
publicity.
B.
direct marketing.
Brenda wants to reduce mass media IMC and to increase the use of personalized marketing communication messages. To achieve this goal, Brenda will likely increase her use of
A.
sales promotions.
B.
advertising.
C.
public relations.
D.
price reductions.
E.
direct marketing.
E.
direct marketing.
The increased use of customer databases has enabled marketers to identify and track consumers over time and across purchase situations, and has contributed to the rapid growth in
A.
media advertising.
B.
publicity.
C.
public relations.
D.
sales promotions.
E.
direct marketing.
E.
direct marketing.
A major factor contributing to the growth in the use of direct marketing IMC efforts is
A.
reduced government regulation of deceptive advertising practices.
B.
expanded use of personal selling.
C.
a shift from objective-and-task to rule-of-thumb budgeting.
D.
increased use of credit and debit cards, and online shopping by consumers.
E.
the reduction in IMC noise allowing for a decreased lagged effect.
D.
increased use of credit and debit cards, and online shopping by consumers.
When purchasing books on Amazon.com, customers are shown other books and a message saying “Customers who purchased (your book) also purchased…” This is an example of
A.
mass media advertising.
B.
publicity.
C.
public relations.
D.
sales promotions.
E.
direct marketing.
E.
direct marketing.
Public relations is the component of IMC that
A.
supports other promotional efforts by generating “free” media attention.
B.
has received the greatest increase in spending.
C.
converts mass media advertising into direct marketing.
D.
most effectively uses IMC encoding.
E.
generates the most gross rating points.
A.
supports other promotional efforts by generating “free” media attention.
A _________________ can be used to create positive word of mouth, help customers form a community, and develop long-term relationships between customers and the company.
A.
corporate blog
B.
faxed newsletter
C.
Super Bowl ad
D.
full-page ad in selected newspapers
E.
public relations campaign
A.
corporate blog
Firms can use _____________ to bring customers together to share experiences around the products.
A.
surveys
B.
social media
C.
consumer outlets
D.
brand associations
E.
public relations
B.
social media
The goals of IMC need to
A.
expand as the advertising budget expands.
B.
be explicit and measurable.
C.
be encoded before they can be decoded.
D.
include both the noise effect and the transmitter effect.
E.
be separate from budget.
B.
be explicit and measurable.
Naomi is IMC manager for a chain of regional income tax service providers. Franchisees pay a percentage of their revenue to an IMC account allocated to her. As she establishes the short-term goals for her firm’s IMC efforts, her goals are likely to include
A.
expanding customer loyalty by closing the feedback loop.
B.
increasing market share, sales, and customer loyalty.
C.
increasing inquiries, awareness, and trial of her firm’s services.
D.
shifting customers to rule-of-thumb budgeting
E.
increasing the lagged effect.
C.
increasing inquiries, awareness, and trial of her firm’s services.
Lamar is assessing the long-term effectiveness of his firm’s IMC efforts. He will probably analyze the firm’s success in
A.
expanding customer loyalty by closing the feedback loop.
B.
increasing market share, sales, and customer loyalty.
C.
increasing inquiries, awareness, and trial of her firm’s services.
D.
shifting customers to rule-of-thumb budgeting.
E.
increasing the lagged effect.
B.
increasing market share, sales, and customer loyalty.
Julie is developing a budget for her firm’s IMC program. First she sets objectives. Then she chooses media, and finally she determines the cost for each product to be promoted. Julie is using the ___________________ method of establishing an IMC budget.
A.
reach and frequency
B.
track and decode
C.
objective-and-task
D.
rule-of-thumb
E.
sender-receiver
C.
objective-and-task
Using prior sales and communication activities to determine the present communication budget describes which method of IMC budgeting?
A.
reach and frequency
B.
track and decode
C.
objective-and-task
D.
rule-of-thumb
E.
sender-receiver
D.
rule-of-thumb
Yolanda asked her firm’s advertising agency to estimate how often consumers saw her firm’s IMC message and what percentage of the target audience was exposed to the message. Yolanda is asking for _____________________ data.
A.
parity and affordability
B.
sales and promotion
C.
attitude change
D.
rule-of-thumb
E.
frequency and reach
E.
frequency and reach
When Yolanda asked her firm’s advertising agency to estimate how often consumers saw her firm’s IMC message and what percentage of the target audience was exposed to the message, she was told the reach was 40, the frequency was 4, and the competitive parity was 10. The gross rating points for her firm’s campaign were
A.
160.
B.
1600.
C.
400.
D.
40.
E.
The answer cannot be determined from this information.
A.
160.
To estimate reach in terms of electronic media, marketers can use the click-through rate (CTR). To do so, they need to know the number of clicks and
A.
the number of destinations.
B.
the number of impressions.
C.
the cost per click.
D.
how much time consumers spend viewing the ad or page.
E.
the total number of clicks recorded by the industry.
B.
the number of impressions.
Jim was asked to determine the ROI for a particular advertising effort. To do so, he needs to know
A.
the internal rate of return and the projected expenditure level.
B.
the total number of units sold and the total cost of sales.
C.
sales revenue and advertising cost.
D.
gross margin and advertising cost.
E.
the advertising cost and the total communications expenditures.
C.
sales revenue and advertising cost.
An ad for Bud Light ran six times during a recently televised football game. When measuring IMC results for this ad, six would be the _____ for this telecast.
A.
frequency
B.
reach
C.
gross rating points
D.
ROI
E.
click-through rate
A.
frequency
Sally could recall the brand of toothpaste she used only when a marketing researcher mentioned the brand. This is known as
A.
aided recall.
B.
unaided recall.
C.
top-of-mind awareness.
D.
brand preference.
E.
brand indifference.
A.
aided recall.
If you send an email and include a link, you can track how many people took the desired action of clicking on the link. This is known as
A.
the click-through rate.
B.
impressions.
C.
frequency.
D.
gross rating points.
E.
reach.
A.
the click-through rate.
Which of the following is being used by a store owner who sends out a text message to all of her preferred customers announcing the arrival of this season’s new clothing?
A.
Mobile marketing
B.
Social marketing
C.
Personal selling
D.
Sales promotions
E.
Advertising
A.
Mobile marketing
The Salvation Army runs a campaign over the Christmas holidays called the Mobile Bell Ringer. Volunteers send text messages to their friends’ cell phones asking them to donate. Which type of marketing communication does this represent?
A.
Mobile marketing
B.
Public relations
C.
Personal selling
D.
Sales promotions
E.
Advertising
A.
Mobile marketing
Red Bull sends out student brand managers to distribute free samples to their peers. What form of marketing communication is this?
A.
Sales promotion
B.
Direct marketing
C.
Public relations
D.
Mobile marketing
E.
Advertising
A.
Sales promotion
Students of marketing often overlook or underestimate the importance of Place in the marketing mix simply because
A.
it happens behind the scenes.
B.
it conflicts with promotion.
C.
it occurs after making pricing decisions.
D.
no one is directly in charge of place decisions.
E.
the product itself is so much more important.
A.
it happens behind the scenes.
n marketing’s four Ps, Place refers to all activities required to get
A.
the design of the terminal location for products accomplished.
B.
the right products to the right customer when that customer wants it.
C.
access to the physical space within a retail establishment.
D.
consumers to the destination.
E.
demand chain management functionally operable.
B.
the right products to the right customer when that customer wants it.
Dawn works for a firm that buys products directly from the manufacturer and sells them to retailers, who then sell the products to consumers. Dawn works for a
A.
retail distribution center.
B.
retail jobber.
C.
store representative.
D.
wholesaler.
E.
manufacturer’s representative.
D.
wholesaler.
Stores like Home Depot and Costco act as wholesalers when they
A.
take delivery in whole-lot quantities.
B.
select limited product lines and only market them to consumers who purchase the whole line.
C.
sell products for distributors.
D.
sell to contractors or restaurant owners.
E.
compete with each other.
D.
sell to contractors or restaurant owners.
Naomi knows she has to order her store’s Christmas holiday merchandise in April to ensure delivery before the holiday season. Naomi is concerned with the supply chain management goal of
A.
providing products at the right time.
B.
providing products at the right locations.
C.
providing the right quantities.
D.
satisfying the service levels supply chain participants expect.
E.
minimizing system-wide costs.
A.
providing products at the right time.
Manufacturers use wholesalers and retailers because
A.
they have no other choice.
B.
they do not cost much.
C.
they create value for customers through convenience and cost savings.
D.
wholesalers control retailers.
E.
most manufacturers are not familiar with logistics.
C.
they create value for customers through convenience and cost savings.
By reducing the number of transactions needed to move a product from the manufacturer to the consumer, wholesalers and retailers make a supply chain
A.
longer.
B.
floor-ready.
C.
vertically integrated.
D.
selectively collaborative.
E.
more efficient.
E.
more efficient.
Steven managed an auto parts store in the 1990s. At that time, stock-outs—failure to have the parts auto mechanics needed to do their work that day—increased the likelihood of the mechanics becoming customers of competing auto supply stores. To avoid this problem and keep his business customers, Steven most likely
A.
canceled orders and shifted the business to competitors.
B.
increased promotional outlays to overcome customer dissatisfaction.
C.
used exclusive geographic territories to reduce supply chain inefficiencies.
D.
stockpiled inventory, adding to the cost of providing auto parts.
E.
returned to traditional distribution center logistics.
D.
stockpiled inventory, adding to the cost of providing auto parts.
A _______________ is a facility for the receipt, storage, and redistribution of goods to company stores or customers.
A.
circulation center
B.
distribution center
C.
supply chain hub
D.
collaborative replenishment office
E.
floor-ready franchising center
B.
distribution center
A distribution center is typically operated by
A.
the marketing department.
B.
vertically integrated consumer networks.
C.
retailers, manufacturers, or distribution specialists.
D.
corporate-government joint ventures.
E.
electronic data interchange services.
C.
retailers, manufacturers, or distribution specialists.
When a customer purchases a DVD at a Best Buy Electronics store, all of the following information flows in the supply chain are started EXCEPT
A.
the sales associate scans the UPC recording the sale.
B.
the sale is transmitted to Best Buy’s distribution center to adjust inventory data.
C.
the purchase is added to the customer’s purchasing habit records.
D.
Best Buy’s buyer aggregates sales at all stores and uses the information to send a reorder to the manufacturer.
E.
the point-of-sale terminal records the sale and sends it to Best Buy’s buyer.
C.
the purchase is added to the customer’s purchasing habit records.
In addition to merchandise and payments, information flows throughout a supply chain. Which of the following is NOT a good characterization of the flow of information in a supply chain?
A.
A manufacturer will send and receive information from buyers, stores, and distribution centers.
B.
Stores will send and receive information from manufacturers, buyers, distribution centers, and customers.
C.
Distribution centers will send and receive information from stores and manufacturers.
D.
Customers will send and receive information from stores and manufacturers.
E.
Buyers will send and receive information from stores and manufacturers.
D.
Customers will send and receive information from stores and manufacturers.
Typically, manufacturers and retailers exchange business documents through a(n) __________ system, the computer-to-computer exchange of business documents from a retailer to a vendor and back.
A.
cross-docking exchange
B.
electronic data interchange
C.
floor-ready bundling
D.
vertical conflict reduction
E.
radio frequency identification
B.
electronic data interchange
Flora is frustrated with her company’s supply chain management information system. She wants to be able to receive sales data, initiate purchase orders, send and receive invoices, and receive returned merchandise documentation. Flora needs a(n)
A.
cross-docking exchange.
B.
electronic data interchange system.
C.
floor-ready bundling system.
D.
vertical conflict reduction system.
E.
radio frequency identification system.
B.
electronic data interchange system.
Today, when a customer orders merchandise from an online vendor, the vendor usually sends an immediate order confirmation message by e-mail. Usually within a day or two, a second message arrives stating that the order is in the mail. This second message is a type of
A.
vertical contractual notice.
B.
CPFR requirement.
C.
advanced shipping notice.
D.
universal product code report.
E.
RFID tag.
C.
advanced shipping notice.
Roland has just received notification from a vendor that his clothing merchandise order has been processed and dispatched. Roland has just received a(n)
A.
horizontal contractual notice.
B.
vendor-managed inventory alert.
C.
advanced shipping notice.
D.
universal product code report.
E.
CPFR tag.
C.
advanced shipping notice.
One of the benefits of EDI is that it can reduce cycle time, which is
A.
the time from when an RFP is announced to the time a consumer purchases the finished product.
B.
the time from when funds are committed for purchase of raw materials to the time when the payment for the finished goods is actually received.
C.
the time between when finished good leave the manufacturer until the time they arrive, floor-ready, at the retailer.
D.
the time between the decision to place an order and the receipt of the merchandise.
E.
the time between when an item is sold to a customer and when a replacement is made available for purchase by another customer.
D.
the time between the decision to place an order and the receipt of the merchandise.
CPFR refers to _________ inventory management systems.
A.
collective preferential forecasting and returns
B.
collection, partnering, franchising, and receiving
C.
collaborative planning, forecasting, and replenishment
D.
corporate partnering, facilitation, and replenishment
E.
centralized planning, factoring, and receiving
C.
collaborative planning, forecasting, and replenishment
In vendor-managed inventory systems,
A.
corporations send information to retail customers, bypassing wholesalers and retailers.
B.
companies send information to cooperatives.
C.
customers send information to retailers.
D.
manufacturers send sales information to the retailer.
E.
retailers send sales information to the manufacturer.
E.
retailers send sales information to the manufacturer.
With a pull marketing strategy,
A.
orders for merchandise are generated at the store level based on sales data captured at POS terminals.
B.
there is a greater likelihood of being overstocked or out of stock than in a push supply system.
C.
merchandise is allocated to stores on the basis of demand forecasts.
D.
inventory management is less responsive to customer demand.
E.
it is more difficult to manage conditions of high uncertainty than in a push supply chain.
A.
orders for merchandise are generated at the store level based on sales data captured at POS terminals.
Which of the following is NOT an advantage of using a distribution center?
A.
More accurate sales forecasts are possible.
B.
Retailers need to keep less merchandise in the store as inventory if the stores get frequent deliveries.
C.
It is easier to avoid running out of stock or having too much stock.
D.
Use of a distribution center saves money since the storage space at a distribution center is generally less expensive than that of a store.
E.
Customers know they are dealing with a more sophisticated and financially well-off operation if the firm uses a distribution center.
E.
Customers know they are dealing with a more sophisticated and financially well-off operation if the firm uses a distribution center.
Which of the following is NOT one of the activities carried on in a distribution center?
A.
Coordinating inbound transportation
B.
Receiving, checking, storing, and cross-docking
C.
Distributing paychecks and paystubs for retail employees
D.
Getting merchandise floor ready
E.
Coordinating outbound transportation
C.
Distributing paychecks and paystubs for retail employees
Ted is glad his company finally converted to a RFID system. Now, he no longer needs to go through all the new goods to make sure what they ordered was what they received. Ted is responsible for __________ in his company.
A.
checking
B.
dispatching
C.
receiving
D.
JIT
E.
quick response
A.
checking
_______________ has dramatically reduced the time and labor associated with checking and receiving merchandise.
A.
VMI
B.
JIT
C.
RFID
D.
CPFR
E.
UPC
C.
RFID
Radio frequency identification tags are
A.
selective distribution designs used to maximize geographic efficiency.
B.
electronic discount information tags used to provide reduced prices to select customers.
C.
CPFR demand scheduling data tags.
D.
tiny computer chips that transmit information about a container’s contents.
E.
information tags used for floor-ready merchandising.
D.
tiny computer chips that transmit information about a container’s contents.
RFID offers participants in the supply chain a powerful tool for tracking inventories and reducing handling. The main reason why it has NOT been more widely adopted is
A.
the FCC has only recently allocated a frequency for RFID transmission.
B.
there are concerns that the transmissions might cause health problems if use were widespread.
C.
manufacturing capacity is limited at this time.
D.
RFID is risky and expensive to use.
E.
consumers object to their use.
D.
RFID is risky and expensive to use.
________ is when vendors ship merchandise prepackaged in the quantity required for each store to the distribution center.
A.
Traditional shipping
B.
Vertical merchandising
C.
Combination warehousing
D.
Cross-docking
E.
Horizontal merchandising
D.
Cross-docking
In a __________ distribution center, merchandise moves from vendors’ trucks to retailers’ delivery trucks in a matter of hours.
A.
traditional
B.
combination
C.
cross-docking
D.
vertical
E.
horizontal
C.
cross-docking
Merchandise that arrives in the delivery truck ready to be sold is considered
A.
quick-response packaged.
B.
ahead of the curve.
C.
lead time synchronized.
D.
floor-ready.
E.
synthesized.
D.
floor-ready.
Colin has just received a delivery from the company’s distribution center. He opens the containers and finds the popcorn and snacks are all bar-coded, priced, and the package includes an end-of-the-aisle display rack. Colin has received a __________ shipment.
A.
quick-response packaged
B.
ahead of the curve
C.
lead time synchronized
D.
floor-ready
E.
synthesized
D.
floor-ready
Some retailers require their suppliers to ship merchandise ___________, thus eliminating the time and expense associated with ticketing and marking.
A.
floor-ready
B.
flattened
C.
lead time synchronized
D.
aggregated
E.
synthesized
A.
floor-ready
Getting merchandise floor-ready entails
A.
distributing and dispatching.
B.
ticketing and marking.
C.
vertical supply chain wholesaling.
D.
intensive cross-docking.
E.
selective checking.
B.
ticketing and marking.
Retailers often perform ticketing and marking functions in their distribution centers rather than in their retail stores because ticketing and marking is often
A.
the responsibility of the dispatcher.
B.
too complex for sales personnel to manage.
C.
done in conjunction with supply chain promotional allowances.
D.
the responsibility of the logistics department and not the marketing department.
E.
inefficient and distracting.
E.
inefficient and distracting.
Each time a politician or celebrity writes a book, bookstores can expect at least some customers to want the book, but whether or not it will become a bestseller is less certain. The bookstore’s primary inventory management challenge is
A.
how to get the author to sign copies of the book.
B.
whether to price the books in the distribution center or at the retail store.
C.
which other books to promote along with this book.
D.
whether or not to display the book at the checkout counter.
E.
having enough books to satisfy customer demands versus the cost of having the inventory.
E.
having enough books to satisfy customer demands versus the cost of having the inventory.
In retailing, a just-in-time delivery system is called a _____________ system.
A.
cross-docking
B.
quick response
C.
UPC
D.
CPFR
E.
lead time
B.
quick response
______________ systems are designed to deliver smaller shipments of merchandise on a more frequent basis to retailers.
A.
Cross-docking
B.
UPC
C.
JIT
D.
CPFR
E.
Lead time
C.
JIT
At the BMW plant in Spartanburg, South Carolina, suppliers deliver parts every four hours when the plant is in operation and are responsible for removing any packaging or pallets used to deliver their products. BMW uses a ______________ inventory control system.
A.
cross-docking
B.
lead time
C.
JIT
D.
CPFR
E.
UPC
C.
JIT
Manufacturers trying to implement a just-in-time delivery system need to start with
A.
routing software.
B.
shipping schedules.
C.
distribution center design.
D.
information about customer demand.
E.
intensive distribution.
D.
information about customer demand.
After installing an electronic data interchange, Kay Jewelers was able to reduce ___________, the amount of time between the recognition that an order needs to be placed and the arrival of the needed merchandise.
A.
quick time
B.
latency
C.
lead time
D.
currency float time
E.
supply chain conflict time
C.
lead time
After installing a(n) __________ in its JIT system, Chocolate Tree (a retail chocolate store) was able to reduce lead time for merchandise orders.
A.
supply chain
B.
distribution center
C.
quick change directory
D.
electronic data interchange system
E.
collaborative planning schedule
D.
electronic data interchange system
Shorter lead times allow retailers
A.
to better forecast demand.
B.
access to a more diverse supply chain.
C.
to replace intensive distribution with franchise distribution.
D.
to skip advanced shipping notices.
E.
to reduce the needed level of inventories.
E.
to reduce the needed level of inventories.
Because manufacturers with JIT systems produce merchandise closer to the time of sale, they can
A.
organize cooperative agreements among competing manufacturers to reduce oversupply.
B.
reduce inventories needed to satisfy retailers’ demand.
C.
use exclusive geographic territories to centralize production.
D.
effectively eliminate the need for a dispatcher.
E.
replace independent supply chains with corporate supply chains.
B.
reduce inventories needed to satisfy retailers’ demand.
One of the benefits of shortened lead times associated with a JIT system is
A.
increased production efficiency.
B.
economies of scale through larger production runs.
C.
better forecasting because firms are not forecasting as far into the future.
D.
lower ticketing and marking costs.
E.
reduced tax liability.
C.
better forecasting because firms are not forecasting as far into the future.
Especially in the fashion industry where styles and trends change rapidly, a quick response system can
A.
allow retailers to better forecast long-term demand.
B.
reduce logistical overlay.
C.
increase cross-docking promotional effectiveness.
D.
align deliveries more closely with actual sales
E.
allow manufacturers to introduce unpopular styles and still be successful.
D.
align deliveries more closely with actual sales
With more frequent shipments associated with quick response (QR) systems, a retailer is
A.
likely to have lower shipping costs.
B.
more likely to add extra floor-ready merchandise.
C.
less likely to use radio frequency identification tags.
D.
more likely to engage in predatory pricing behavior.
E.
more likely to have what customers want.
E.
more likely to have what customers want.
While JIT systems have many benefits, they
A.
make the logistics function more complicated.
B.
interfere with new product development functions.
C.
confuse consumers.
D.
only work in vertical marketing systems.
E.
decrease the accuracy of demand forecasts.
A.
make the logistics function more complicated.
Leona is the logistics manager for the Barnes & Noble bookstore chain. She is weighing the many benefits of the company’s JIT system, but will need to consider that just-in-time inventory management systems increase
A.
sales force labor costs.
B.
transportation costs.
C.
promotional costs.
D.
advertising costs.
E.
new product development costs.
B.
transportation costs.
For a JIT system to be successful, the firm and its vendors must
A.
cooperate.
B.
compete.
C.
participate in a vertical marketing system.
D.
put a VMI system in place.
E.
be located within 500 miles of each other.
A.
cooperate.
When Brian took over the position of purchasing manager for Gray Lumber Company, a regional building materials supply company, he found a JIT system in place, but in spite of that, the company had frequent problems related to inventory. Shipments were often late or incomplete, there was little communication from the company’s vendors, and only superficial attempts were being made to address the problems. For companies like Gray Lumber, the critical factor in having a successful JIT system is
A.
reducing inventory.
B.
shared data.
C.
EDI systems.
D.
CPFR systems.
E.
cooperation.
E.
cooperation.
Amazon.com was an early leader in online retailing. Part of the firm’s success was due to a well-designed and efficient EDI system with book publishing companies, allowing just-in-time delivery. Even with a well-designed EDI system, Amazon.com would not have been successful without
A.
a customer rebate program.
B.
a commitment to partnering with publishing companies.
C.
cooperative advertising with brick and mortar retailers.
D.
support from government regulators.
E.
acceptance from local education unions.
B.
a commitment to partnering with publishing companies.
The basic motivating factor in designing supply chains is that
A.
collaboration creates transactional relationships.
B.
the most powerful member of the supply chain always wins.
C.
each party wants something from the others.
D.
the participants must create the best possible EDI system.
E.
retail floor salespeople need emotional support from management.
C.
each party wants something from the others.
Although conflict is likely to occur in any supply chain, it is generally more pronounced when
A.
the supply chain members are geographically too close to each other.
B.
manufacturers pressure retailers.
C.
retailers pressure manufacturers.
D.
the supply chain members are independent entities.
E.
the economy is booming.
D.
the supply chain members are independent entities.
Yesterday, Lorinda overheard a surprisingly unpleasant encounter between the manager of the hardware store where she works and a sales rep who sells a well-known line of tools. The rep insisted that his tools should be more prominently displayed and that a better assortment would mean more sales. The manager had other plans and told him so, and the conversation turned into a loud argument. What Lorinda observed was an example of
A.
sales tactics.
B.
channel conflict.
C.
retail strategy tension.
D.
passive aggressive behavior.
E.
a failure of CPFR processes.
B.
channel conflict.
In a(n) __________ marketing channel, none of the participants has any control over the others.
A.
cooperative
B.
corporate
C.
contractual
D.
administered
E.
conventional
E.
conventional
In an administered vertical marketing system,
A.
no individual participant has control over the others, since a third party administrator oversees the entire supply chain.
B.
transaction selling is the norm, with the invisible hand guiding the overall functioning.
C.
there is no common ownership, and the dominant member has significant power to impose its ideas and objectives.
D.
independent firms join together formally to decide as a group how the marketing channel will operate.
E.
participants—such as warehouses, transportation companies, and retail outlets—are typically owned by a parent company to ensure harmonious relations throughout the supply chain.
C.
there is no common ownership, and the dominant member has significant power to impose its ideas and objectives.
Franchising involves a(n) __________ marketing system.
A.
cooperative
B.
corporate
C.
contractual
D.
administered
E.
conventional
C.
contractual
In a corporate vertical marketing system,
A.
conflict tends to be a major problem.
B.
transaction selling is the norm, with the invisible hand guiding the overall functioning.
C.
there is no common ownership, and the dominant member has significant power to impose its ideas and objectives.
D.
independent firms join together formally to decide how the marketing channel will operate.
E.
participants—such as warehouses, transportation companies, and retail outlets—are typically owned by a parent company to ensure harmonious relations throughout the supply chain.
E.
participants—such as warehouses, transportation companies, and retail outlets—are typically owned by a parent company to ensure harmonious relations throughout the supply chain.
Felicia had just taken over her family’s business after spending ten years in the marketing department of a large corporation. She met with a representative from one of her firm’s biggest customers, who told her, “We should think about how we can make the pie bigger rather than fighting over the size of the slices.” She had expected a more cutthroat approach rather than this call for a
A.
partnering relationship.
B.
shared mission statement.
C.
common marketing system.
D.
corporate vertical marketing system.
E.
linked supply chain.
A.
partnering relationship.
Which of the following is NOT required to build a successful strategic relationship?
A.
mutual trust
B.
open communications
C.
creation of a joint venture
D.
common goals
E.
credible commitments
C.
creation of a joint venture
If a firm declared that it wanted to develop a strategic relationship, but was unwilling to commit funds or any effort to make it succeed, there would be an obvious lack of
A.
mutual trust.
B.
common goals.
C.
a contractual arrangement.
D.
credible commitments.
E.
open communication.
D.
credible commitments.
TT TOYS manufactures toys. The company recently started buying paint for its toys from a Chinese firm. This Chinese company is part of TT Toys’
A.
supply chain.
B.
corporate vertical marketing system.
C.
distribution center.
D.
CFPR.
E.
voluntary chain.
A.
supply chain.
A(n) __________ is the set of institutions that transfer the ownership of and move goods from the point of production to the point of consumption.
A.
marketing channel
B.
distribution center
C.
logistics chain
D.
strategic relationship
E.
electronic data interchange
A.
marketing channel
Which of the following is a TRUE statement about distribution centers?
A.
They enable retailers to carry less merchandise in individual stores.
B.
Distribution center space is typically more expensive than retail space.
C.
They are appropriate for all retailers, from the largest to the smallest.
D.
They are the quickest way to get all products to retailers.
E.
They always involve a pull marketing strategy.
A.
They enable retailers to carry less merchandise in individual stores.
A(n) __________ is a supply chain whose members act like a unified system.
A.
vertical marketing system
B.
independent marketing system
C.
concentrated marketing system
D.
conventional marketing system
E.
strategic marketing system
A.
vertical marketing system
A(n) __________ is a document used by a forklift driver indicating how much of each item to get from specific storage areas.
A.
pick ticket
B.
warehouse receipt
C.
bill of lading
D.
certificate of origin
E.
RFID tag
A.
pick ticket
A(n) __________ is a 13-digit code retailers can use to track inventory.
A.
UPC
B.
CFPR
C.
pick ticket
D.
ASN
E.
EDI
A.
UPC
When Cynthia’s Boutique receives dresses, they already have price tags and are on hangers. Cynthia’s Boutique receives __________ merchandise.
A.
floor-ready
B.
repurposed
C.
just in time
D.
quick response
E.
horizontal channel
A.
floor-ready
Price is the _____________ a consumer is willing to make to acquire a specific product or service.
A.
amount of money
B.
overall sacrifice
C.
fixed cost
D.
target return
E.
variable cost
B.
overall sacrifice
Earl was known for driving 30 miles to save a dollar on the price for his favorite beverage. Earl perceived price as ________________, while most consumers recognize price as the ______________ made to acquire a good or service.
A.
money paid; overall sacrifice
B.
variable cost; fixed cost
C.
fixed cost; variable payment
D.
overall sacrifice; monetary payment
E.
break-even amount; price elasticity
A.
money paid; overall sacrifice
The full price of a product or service includes all of the following EXCEPT
A.
taxes.
B.
shipping.
C.
travel costs.
D.
the price of alternative products and services.
E.
value of the consumer’s time.
D.
the price of alternative products and services.
Consumers judge the benefits the product delivers against the ____________ necessary to obtain it.
A.
monetary cost
B.
profit
C.
variable cost
D.
total return
E.
sacrifice
E.
sacrifice
Dean runs a woodworking business specializing in kitchen cabinets. He knows there are other firms with top-of-the-line machinery that make better quality cabinets, but he does well and has a constant flow of business. Dean obviously has
A.
figured out how to produce cheap products.
B.
priced his products well.
C.
reduced his variable costs by investing in fixed costs.
D.
avoided monopolistic competition, and is instead in a market with pure competition.
E.
learned how to use status quo pricing.
B.
priced his products well.
If firms price their products too low, it may
A.
result in lower costs.
B.
create a premium pricing effect.
C.
increase contribution per unit.
D.
result in inelastic demand.
E.
signal poor quality.
E.
signal poor quality.
Gerald has a number of customers for his lawn care service who never question his bill but expect their lawns to be perfect. These customers do not want low prices, they want
A.
a sales orientation.
B.
fixed costs.
C.
cross-price discounts.
D.
a target return.
E.
high value.
E.
high value.
Marketers can deliver high value through high or low prices, depending on
A.
profit contribution per unit.
B.
the bundle of benefits the product or service delivers.
C.
monopolistic competition.
D.
target return pricing that is greater than variable cost per unit.
E.
the income effect.
B.
the bundle of benefits the product or service delivers.
Unlike product, promotion, or place, price is the only part of the marketing mix
A.
that offers the opportunity for an oligopoly.
B.
that is subject to gray market manipulation.
C.
that leads to competition.
D.
that generates revenue.
E.
that is determined by the consumer.
D.
that generates revenue.
Price is often the most challenging of the four Ps to manage, partly because it is often ___________________________ in developing marketing strategies.
A.
the least important aspect
B.
treated as an afterthought
C.
calculated by senior consultants
D.
difficult to calculate markups
E.
the subject of cross-shopping differentiation
B.
treated as an afterthought
Historically, prices were
A.
the center of attention in almost all marketing strategies.
B.
analyzed and changed constantly.
C.
calculated to minimize contribution per unit.
D.
allowed to vary seasonally as cross-shopping tendencies fluctuated.
E.
rarely changed except in response to radical shifts in market conditions.
E.
rarely changed except in response to radical shifts in market conditions.
Chet knows the pro shops selling his golf photography will “keystone” his products. He also knows sales will decline significantly if the retail price is greater than $200. The maximum wholesale price Chet can charge is
A.
$200.
B.
$100.
C.
$50.
D.
$10.
E.
It cannot be determined from this information.
B.
$100.
Using “keystoning” as a pricing strategy
A.
creates undue complexity for retailers.
B.
avoids having to participate in pure competition.
C.
ignores consumers’ sensitivity to changes in prices.
D.
allows marketers to estimate the substitution effect.
E.
maximizes the difference between total cost and total variable cost.
C.
ignores consumers’ sensitivity to changes in prices.
Margaret has been invited to a fancy dinner party and wants to bring a good bottle of wine as a gift for the host. Since she does not know much about wine, she will likely use the price of the wines as
A.
an indicator of quality.
B.
a reflection of status quo pricing.
C.
an indicator of the variety.
D.
a measure of scarcity.
E.
a measure of the income effect.
A.
an indicator of quality.
Which of the following is NOT one of the Five Cs of pricing?
A.
Customers.
B.
Channel members.
C.
Cost.
D.
Collaboration.
E.
Company objectives.
D.
Collaboration.
Patricia and D’Wayne were working on pricing their line of handcrafted office furniture. D’Wayne said, “I think we’ve got all the main components that affect us and our products, but let’s go over the list once again. We’ve got the stores that will carry our products, our firm’s objectives, how customers will respond, and the costs.” Which of the following is missing from Patricia and D’Wayne’s list of the components?
A.
The message and media for the advertising campaign.
B.
The competition’s pricing strategies.
C.
The designs for products that haven’t yet been manufactured.
D.
The number of new employees they’ll need if the products take off.
E.
Whether or not their suppliers use sustainable raw materials.
B.
The competition’s pricing strategies.
Tess is the marketing manager for a fast food restaurant chain. She uses a target return pricing strategy because her firm’s primary objective is to
A.
increase profits.
B.
increase sales.
C.
decrease competition.
D.
build customer satisfaction.
E.
broaden the product line.
A.
increase profits.
Gary is the marketing manager for an automobile dealership. His boss tells him the firm’s primary goal is to increase their local market share from 15 to 30 percent. Gary’s pricing strategy will focus on
A.
increasing profits.
B.
increasing sales.
C.
decreasing competition.
D.
building customer satisfaction.
E.
product development.
B.
increasing sales.
Bernard’s firm has set corporate direction to become one of the leaders in each of its significant market segments. It was Bernard’s job to examine the pricing to determine how to maximize market share, even at the expense of profits in the short run. What kind of company objective would guide Bernard’s effort?
A.
Industry-oriented
B.
Sales-oriented
C.
Competitor-oriented
D.
Innovation-oriented
E.
Customer-oriented
B.
Sales-oriented
Naomi tells her sales representatives the goal is to generate at least a 20 percent return on investment for all of the industrial building supplies they sell. Naomi is using a _______________ pricing strategy.
A.
sales orientation
B.
target profit
C.
target return
D.
status quo
E.
competitive parity
C.
target return
A _________________ strategy involves accurately measuring all the factors needed to predict sales and profits at various price levels, so that the price level that produces the highest return can be chosen.
A.
sales orientation
B.
target profit
C.
target return
D.
status quo
E.
maximizing profits
E.
maximizing profits
Health clubs often use a low, introductory offer price to get people to join their club. These low prices represent a ______________ pricing strategy.
A.
maximizing profits
B.
target profit
C.
target return
D.
status quo
E.
sales orientation
E.
sales orientation
Many years ago Honda’s Accord and Ford’s Taurus were the top two selling cars in the United States. As the year was coming to an end, Ford cut the price of the Taurus, hoping to outsell the Accord and allow Ford to claim that “Taurus is the best-selling car in America.” Ford was using a ___________________ pricing strategy.
A.
maximizing profits
B.
target profit
C.
sales orientation
D.
status quo
E.
target return
C.
sales orientation
Julia wants her firm’s gourmet snacks to be the leading brand in the U.S. market. When adopting a pricing strategy designed to gain market share, she should remember that
A.
rarely is the lowest-price offering the dominant brand in a market.
B.
prestige products need to be competitively priced.
C.
companies can gain market share by offering low-quality products at a high price.
D.
total value equals total cost minus variable costs leading to price escalation.
E.
price wars are the way to become the dominant brand.
A.
rarely is the lowest-price offering the dominant brand in a market.
Sharon knew that her established customers liked her product much better than the competitors. She was planning to expand into new markets, and she was considering pricing. She was leaning toward charging a higher price than competitors to help demonstrate that hers was a high-quality product. Sharon was considering
A.
a top of market strategy.
B.
the value of quality.
C.
advantageous pricing.
D.
premium pricing.
E.
differential pricing.
D.
premium pricing.
When Ursula decides how to price new products in her gift store, she measures the value of her product offerings against those of the other stores in her area. Ursula uses a __________________ pricing strategy.
A.
maximizing profits
B.
target profit
C.
target return
D.
competitor-oriented
E.
sales oriented
D.
competitor-oriented
Ryan gave the manager of his convenience store a set of binoculars so she could see the gasoline prices charged by the other convenience store at that intersection. Ryan told the manager to always match the gasoline prices of the other store. Ryan is using a _____________________ pricing strategy.
A.
maximizing profits
B.
target profit
C.
target return
D.
status quo
E.
sales
D.
status quo
When firms set prices similar to those of competitors, they are following a strategy of
A.
me-too pricing.
B.
copycat pricing.
C.
competitive parity.
D.
market-broadening pricing.
E.
industry-standard pricing.
C.
competitive parity.
In many high-end resort markets, Westin hotels compete directly with Crown Plaza hotels. Each firm weighs the comparative advantages and disadvantages of its offerings to determine whether to price above, equal to, or below the other hotel. In these markets, the hotels are using a _______________ pricing strategy.
A.
maximizing profits
B.
target profit
C.
target return
D.
competitive parity
E.
sales oriented
D.
competitive parity
A customer orientation toward pricing implicitly invokes the concept of
A.
knowing the dimensions of the target market.
B.
positioning.
C.
the income effect.
D.
value.
E.
None of these.
D.
value.
A “no haggle” pricing policy is a type of _______________ pricing strategy.
A.
maximizing profits
B.
sales orientation
C.
target return
D.
status quo
E.
customer-oriented
E.
customer-oriented
Julia’s is an upscale women’s clothing store. Prices are based on customers’ beliefs about the value of the clothing. The store focuses on a limited target market and provides excellent customer service. Julia’s is using a ________________ pricing strategy.
A.
customer-oriented
B.
target profit
C.
target return
D.
status quo
E.
maximizing profits
A.
customer-oriented
A strategy of setting prices based on how customers develop their perceptions of value can often be the most effective pricing strategy, especially if the strategy
A.
leads the marketer to being the low-cost seller.
B.
is supported by consistent advertising and distribution strategies.
C.
challenges consumers to discard their perceptions of value.
D.
is consistent with a competitive target return strategy.
E.
does all of these.
B.
is supported by consistent advertising and distribution strategies.
Traditional demand curve economic theory is used by marketers to understand _______________ in the five Cs of pricing.
A.
competitors
B.
channel members
C.
cost
D.
customers
E.
company objectives
D.
customers
Customers must see value in a product or service before they are willing to exchange time or money to obtain it, but not all customers see the same value in a product. To analyze how many units will be sold at any given price point, marketers draw on
A.
a demand curve.
B.
the law of averages.
C.
multiple regression analyses.
D.
target return strategies.
E.
a sales orientation.
A.
a demand curve.
A demand curve shows the relationship between ___________________ in a period of time.
A.
income and demand
B.
demand and cost
C.
price and elasticity
D.
profit and price
E.
price and demand
E.
price and demand
A demand curve is built assuming that
A.
income is derived from demand.
B.
price remains the same, and fixed costs change.
C.
everything but price and demand remains the same.
D.
a change in quantity demanded causes a change in price.
E.
the firm does not advertise.
C.
everything but price and demand remains the same.
According to a typical demand curve, the higher the price,
A.
the greater the income effect.
B.
the lower the quantity consumers will buy.
C.
the lower the output of producers.
D.
the greater the production costs.
E.
the lower the cross-price elasticity.
B.
the lower the quantity consumers will buy.
Customers purchase prestige products or services for the status of owning the products, not just for the functionality. These products may not follow a typical demand curve if
A.
people don’t know the price.
B.
raising the price makes more people want to own one.
C.
similar products become less expensive.
D.
the marketer can demonstrate that functionality is more important than prestige.
E.
value is removed from the equation.
B.
raising the price makes more people want to own one.
There is an old saying, “If you have to ask the price of a yacht, you cannot afford it.” Products like yachts are most likely to be associated with
A.
cross-shopping.
B.
competitive parity pricing.
C.
target return value.
D.
prestige pricing.
E.
break-even point pricing.
D.
prestige pricing.
_________________ measures consumers’ sensitivity to price changes.
A.
Cross-price elasticity of demand
B.
Price elasticity of demand
C.
Income elasticity of demand
D.
Competitive profit elasticity of demand
E.
Inelastic demand price parity
B.
Price elasticity of demand
For which of the following is demand likely to be least sensitive to price increases?
A.
Spring break vacations.
B.
A specific brand of cereal.
C.
Prescription drugs.
D.
Theater tickets.
E.
Restaurant meals.
C.
Prescription drugs.
For which of the following is demand likely to be most sensitive to price increases?
A.
Prescription drugs.
B.
College tuition for last-semester seniors.
C.
Electricity.
D.
Hospital care.
E.
A specific brand of soft drink.
E.
A specific brand of soft drink.
Price elasticity of demand is the
A.
percentage change in quantity demanded divided by the percentage change in price.
B.
percentage change in price divided by percentage change in quantity demanded.
C.
change in price divided by change in quantity demanded.
D.
change in quantity demanded divided by the change in price.
E.
change in quantity demanded multiplied by the change in price.
A.
percentage change in quantity demanded divided by the percentage change in price.
A study found that, among addicted smokers, a 10 percent increase in the price of cigarettes resulted in a 2 percent decrease in quantity demanded. For these consumers, cigarettes have a(n) ________________ price elasticity demand.
A.
elastic
B.
inelastic
C.
cross-price
D.
income effect
E.
substitution effect
B.
inelastic
If a 1 percent decrease in price results in more than a 1 percent increase in quantity demand, demand is
A.
cross-price elastic.
B.
price inelastic.
C.
price elastic.
D.
status quo elasticity.
E.
derived demand inelastic.
C.
price elastic.
Near the end of the summer season, Sergio still has a large inventory of bathing suits. He needs to sell them rather than holding them over till next season, because colors and styles often change. He plans to offer them at 30 percent off the retail price. Sergio hopes that demand for bathing suits at the end of the season is
A.
cross-price elastic.
B.
price inelastic.
C.
price elastic.
D.
status quo elastic.
E.
derived demand inelastic.
C.
price elastic.
Assume the demand for electricity, a necessity with few substitutes, is -0.2. If the electric company raised its rates by 10 percent, we would expect
A.
a 10 percent decrease in quantity demanded.
B.
a 2 percent increase in quantity demanded.
C.
a 10 percent increase in quantity demanded.
D.
a 2 percent decrease in quantity demanded.
E.
a 5 percent decrease in quantity demanded.
D.
a 2 percent decrease in quantity demanded.
If a 1 percent decrease in price results in less than a 1 percent increase in the quantity demanded, demand is
A.
cross-price elastic.
B.
price inelastic.
C.
price elastic.
D.
status quo elasticity.
E.
derived demand inelastic.
B.
price inelastic.
Barry customizes Harley-Davidson motorcycles. No two cycles are alike. He notices that very few customers even ask the price of his motorcycles before they decide to purchase them. Demand for his motorcycles is probably
A.
price sensitive.
B.
price elastic.
C.
price inelastic.
D.
income elastic.
E.
cross-price elastic.
C.
price inelastic.
Ferrari and Lamborghini are manufacturers of very expensive automobiles. Their limited edition cars often sell for $300,000 or more. For most consumers, these are prestige products, and demand is likely to be
A.
cross-price elastic.
B.
price inelastic.
C.
price elastic.
D.
status quo elastic.
E.
derived demand inelastic.
B.
price inelastic.
Marketers of products and services associated with the wedding industry know that customers often do not care what the price is. They just want the wedding to be perfect. For these customers, demand is likely to be
A.
cross-price elastic.
B.
derived demand elastic.
C.
price elastic.
D.
status quo elastic.
E.
price inelastic.
E.
price inelastic.
The food and beverage manager at an upscale country club once offered a two-for-one happy hour price for all alcoholic beverages, only to see very little response to the special. For these consumers, demand for alcoholic beverages is
A.
cross-price elastic.
B.
derived demand elastic.
C.
price elastic.
D.
price inelastic.
E.
status quo elastic.
D.
price inelastic.
The observation that consumers are generally more sensitive to price increases than to price decreases suggests that
A.
most consumers cannot remember what price they paid the last time they bought a particular product.
B.
it is easier to lose customers with a price increase than to gain customers with a price decrease.
C.
most consumers would rather skip buying a product than pay a higher price.
D.
most consumers are emotionally attached to their favorite products and are unlikely to change, even if the price changes.
E.
firms gain more customers with price decreases than they lose with price increases.
B.
it is easier to lose customers with a price increase than to gain customers with a price decrease.
Sales of national brands of orange juice tend to increase when the economy is doing well, while sales of generic orange juice increase when the economy is not doing well. Among industry members this is called the “orange juice indicator.” This is an example of how ____________ impacts demand for products.
A.
the substitution effect
B.
the price inelasticity coefficient
C.
the income effect
D.
the target return effect
E.
cross-price elasticity
C.
the income effect
Rodi owns Hallman’s auto repair service. He has observed over the years that customers keep their high-mileage cars longer when the economy is doing poorly, creating demand for his maintenance and repair service. Rodi has observed the impact of ______________ on demand for his service.
A.
breakeven points
B.
the price inelasticity ratio
C.
the income effect
D.
target profit pricing
E.
cross-price elasticity
C.
the income effect
The more substitutes that exist in a market,
A.
the lower the price elasticity for each product.
B.
the greater the income elasticity for each product.
C.
the easier it will be to utilize a target profit pricing strategy.
D.
the more sensitive consumers will be to changes in the price of a particular product.
E.
the more likely the market will be characterized as an oligopoly.
D.
the more sensitive consumers will be to changes in the price of a particular product.
Brad always buys and uses Nike brand golf balls. If he finds a Titleist or Callaway ball in the rough, he gives it away. Brand loyal golfers like Brad allow Nike to charge a higher price and not lose many sales. By building a strong brand, Nike has effectively
A.
increased the income effect for its products.
B.
increased the cross-price elasticity for its products.
C.
focused on the competitive parity point for its products.
D.
shifted the golf ball market from a monopoly to pure competition.
E.
reduced the price elasticity of demand for its products.
E.
reduced the price elasticity of demand for its products.
Marketers spend millions of dollars annually trying to create or reinforce brand loyalty. Brand loyalty changes the demand curve for the firm’s products by
A.
reducing the price elasticity of demand.
B.
making demand more oligopolistic and less monopolistic.
C.
increasing the income effect.
D.
reducing fixed costs and increasing the gray marketing effect.
E.
shifting the market from a monopoly to pure competition.
A.
reducing the price elasticity of demand.
Cross-price elasticity is the
A.
percentage change in quantity of a product demanded divided by the percentage change in its price.
B.
percentage change in quantity demanded of product A compared to the percentage change in price of product B.
C.
change in price of product A divided by change in quantity demanded for product B.
D.
change in quantity of a product demanded divided by the change in its price.
E.
change in quantity of a product demanded divided by the change in its elasticity.
B.
percentage change in quantity demanded of product A compared to the percentage change in price of product B.
Which of the following is the most logical example of complementary products?
A.
Hot dogs and hamburgers
B.
VCRs and DVD players
C.
Hot dogs and hot dog buns
D.
Honda cars and Toyota cars
E.
A university and a corporation
C.
Hot dogs and hot dog buns
Bill is a yacht broker in the southeastern United States. For years he has had difficulty selling large yachts locally because there were few places to dock these boats. Yachts and spaces to dock them are an example of
A.
substitute products.
B.
purely competitive products.
C.
status quo pricing products.
D.
complementary products.
E.
competitive parity products.
D.
complementary products.
If the price for a product increases, the demand for the complementary product will
A.
decrease.
B.
increase.
C.
stay the same.
D.
become more elastic.
E.
become more inelastic.
A.
decrease.
Frank’s Heating and Air Conditioning Company specializes in electric heat pumps. Frank keeps track of the price of natural gas, knowing that
A.
natural gas creates more environmental greenhouse effects than coal.
B.
an increase in the price of natural gas will increase demand for his electrical heating systems.
C.
gas heating systems and electrical heating systems are complementary goods.
D.
when the price of natural gas goes up, the quantity demanded also rises.
E.
the demand for natural gas is price elastic.
B.
an increase in the price of natural gas will increase demand for his electrical heating systems.
If the price for a product increases, the demand for a substitute product will
A.
decrease.
B.
increase.
C.
stay the same.
D.
become more elastic.
E.
become more inelastic.
B.
increase.
Managers of Wendy’s fast food restaurants keep track of prices at competitors such as McDonald’s, Burger King, and Arby’s, knowing that a decrease in the prices at these other fast food restaurants will
A.
increase the income effect for their products.
B.
increase demand for their products.
C.
decrease the income effect for their products.
D.
increase the complementary effect for their products.
E.
decrease demand for their products.
E.
decrease demand for their products.
Internet comparison shopping sites like Shopping.com and Pricegrabber.com allow consumers to compare prices of substitute products much more easily than is possible without the Internet. These sites have
A.
reduced the price elasticity demand for individual products.
B.
increased the cross-price elasticity for substitute products.
C.
increased the income effect on price elasticity of demand.
D.
reduced the cross-price elasticity of demand for complementary goods.
E.
decreased the price elasticity of demand for groups of similar products.
B.
increased the cross-price elasticity for substitute products.
One problem in relying on price elasticity and demand curves when setting prices is
A.
the way a product or service is marketed can have a profound impact on price elasticity.
B.
the underlying ideas of the demand curve and elasticity are less relevant in the modern economy.
C.
only economists can properly analyze demand curves and set prices using this tool.
D.
competitors can construct the same demand curves, so there is no advantage in using them.
E.
marketing split from economics over the ideas of demand and elasticity.
A.
the way a product or service is marketed can have a profound impact on price elasticity.
In general, prices should not be based on costs because
A.
consumers are cost-conscious.
B.
producers rarely know what their costs are.
C.
consumers make their purchase decisions based on perceived value.
D.
producers need to avoid creating a cost competitive parity debate.
E.
customers are always right.
C.
consumers make their purchase decisions based on perceived value.
Liz and Sarah watched the prices of all the ingredients in their line of specialty sauces go up and up. Now, transportation costs are going through the roof. Liz suggested they could raise prices to cover these expenses because customers would understand. Which of these is the most important factor Liz and Sarah should consider before raising prices?
A.
The costs might go back down again.
B.
They will have to adjust their promotional literature.
C.
Customers do not care about the company’s costs; they care about value.
D.
Rental costs for their production facility might go up next.
E.
Consumers do not think about the cost of additional items; they are concerned mostly with the total cost for a visit to a store.
C.
Customers do not care about the company’s costs; they care about value.
Labor, materials, and energy are typically __________ costs.
A.
fixed
B.
incidental
C.
prestige
D.
inelastic
E.
variable
E.
variable
Variable costs, primarily labor and materials, are those costs that vary with
A.
seasonal demand.
B.
quality of the product.
C.
automation.
D.
production volume.
E.
all of these.
D.
production volume.
David manages a Shoney’s restaurant. He is considering staying open later in the evening. For David, the variable costs associated with staying open longer hours will include all of the following EXCEPT
A.
ingredients used in preparing food.
B.
hours worked by cooks.
C.
monthly rent on the restaurant building.
D.
energy costs.
E.
hours worked by the waiters and waitresses.
C.
monthly rent on the restaurant building.
Variable costs change with
A.
changes in fixed costs.
B.
changes in cross-price elasticity.
C.
changes in target return pricing.
D.
changes in the quantity being produced.
E.
competitive parity.
D.
changes in the quantity being produced.
____________ are costs that remain constant as the volume of production increases or decreases.
A.
Fixed costs
B.
Variable costs
C.
Beneficial costs
D.
Contribution per unit costs
E.
Break-even point costs
A.
Fixed costs
Raymond estimates that the fixed costs associated with opening a new bank branch are $500,000. He expects the branch to attract 1,000 new customer accounts in the first year, each of which will cost $50 per year to service. He also expects to generate $100,000 per year in revenue. For Raymond, the total cost of opening the new branch and remaining open for one year will be:
A.
$500,000.
B.
$550,000.
C.
$650,000.
D.
$450,000.
E.
$605,000.
B.
$550,000.
At the break-even point,
A.
costs are zero
B.
price is maximized.
C.
profits are zero.
D.
fixed costs are zero.
E.
contribution per unit is zero.
C.
profits are zero.
The break-even point is estimated by
A.
multiplying revenue per unit times the quantity sold.
B.
dividing fixed contribution per unit by variable costs.
C.
multiplying fixed costs by contribution per unit.
D.
dividing fixed costs by contribution per unit.
E.
dividing variable costs by fixed costs.
D.
dividing fixed costs by contribution per unit.
If the fixed costs of manufacturing a new cell phone are $10,000, the sales price is $60, and variable cost per unit is $20, the break-even point is
A.
100 units.
B.
4,000 units.
C.
20 units.
D.
1,000 units.
E.
250 units.
E.
250 units.
Jacob rents rooms in his hotel for an average of $100 per night. The variable cost per rented room is $20, to cover maid service and utilities. His fixed costs are $100,000 and his profit last year was $20,000. For Jacob, the contribution per unit is
A.
$100.
B.
$80.
C.
$800.
D.
$1,000.
E.
It cannot be determined from the information provided.
B.
$80.
The contribution per unit is
A.
price minus total costs.
B.
price minus total variable cost.
C.
price minus variable cost per unit.
D.
total revenue minus total cost.
E.
break-even quantity divided by total fixed costs.
C.
price minus variable cost per unit.
Jason rents rooms in his hotel for an average of $100 per night. The variable cost per rented room is $20. His fixed costs are $100,000 and his target profit is $20,000. For Jason, to earn his target profit, he will need to rent out ________ rooms.
A.
100
B.
1,500
C.
20,000
D.
1,000
E.
It cannot be determined from the information provided.
B.
1,500
Break-even analysis is useful because it allows managers to
A.
quantify the relationship between price elasticity and product elasticity.
B.
reposition products based on their break-even positioning revenue.
C.
estimate the quantity they will need to sell at a given price to break even.
D.
determine the relationship between price and quantity demanded.
E.
analyze the different elements contributing to their variable costs.
C.
estimate the quantity they will need to sell at a given price to break even.
One of the limitations associated with break-even analysis is that
A.
it assumes fixed costs are zero.
B.
it cannot adjust for high variable costs.
C.
it only tells marketers what price is needed to break even.
D.
it assumes that there is only one price.
E.
it assumes that demand is extremely inelastic.
D.
it assumes that there is only one price.
Which of the following markets is MOST likely to be characterized by oligopolistic competition in the United States?
A.
Soybeans.
B.
Pens and pencils.
C.
Soft drinks.
D.
Men’s clothing.
E.
Electrical service to the home.
C.
Soft drinks.
Because there are only a few firms in markets with oligopolistic competition,
A.
everyone is a price taker.
B.
producers do not have to consider the reactions of rival firms.
C.
government often encourages consolidation to reduce the number of competitors.
D.
price wars may occur.
E.
the many competitors will focus on product differentiation.
D.
price wars may occur.
In a market with _______________, there are many firms providing differentiated products.
A.
pure competition
B.
oligopolistic competition
C.
monopolistic competition
D.
a monopoly
E.
a duopoly
C.
monopolistic competition
Because there are many firms in monopolistic competition markets,
A.
everyone is a price taker.
B.
producers do not have to consider the reactions of rival firms.
C.
government often encourages consolidation to reduce the number of competitors.
D.
price controls may be implemented.
E.
the many competitors will focus on product differentiation.
E.
the many competitors will focus on product differentiation.
In _______________, many firms provide similar products that are considered substitutes for each other.
A.
pure competition
B.
oligopolistic competition
C.
monopolistic competition
D.
a monopoly
E.
a duopoly
A.
pure competition
Which of the following is most likely to be characterized by pure competition in the United States?
A.
Soybeans.
B.
Cereal.
C.
Soft drinks.
D.
Computer operating systems.
E.
Fast food restaurants.
A.
Soybeans.
Because there are many firms with similar products in purely competitive markets,
A.
price is determined by the laws of supply and demand.
B.
consumers develop personal preferences.
C.
firms find it easy to build strong, distinct brands.
D.
advertising is heavily used.
E.
the many competitors will focus on variable cost pricing.
A.
price is determined by the laws of supply and demand.
If a firm in a purely competitive market can differentiate its product or service, it becomes part of a _______________ market.
A.
pure competition
B.
oligopolistic competition
C.
monopolistic competition
D.
monopoly
E.
duopoly
C.
monopolistic competition
How can a company find its way out of a market characterized by pure competition?
A.
Consistently offer the lowest price until other competitors leave the market.
B.
Increase prices and attract different, quality-oriented customers.
C.
Decrease the amount of available product until the market reacts.
D.
Increase the amount of available product to flood the market.
E.
Differentiate the product in some way, even by packaging, so customers will see it as distinct.
E.
Differentiate the product in some way, even by packaging, so customers will see it as distinct.
When working on pricing, the marketer must carefully consider the objectives of other channel members to ensure
A.
everyone makes as much profit as possible.
B.
the manufacturer remains in control of the marketing channel.
C.
pricing is consistently handled by all participants in the channel.
D.
“image” does not get in the way of effective pricing.
E.
the customer is in the mix.
C.
pricing is consistently handled by all participants in the channel.
Gray markets can be a challenge to marketers because
A.
they are just as illegal as black markets.
B.
they may tarnish the manufacturer’s image.
C.
they are legal in some states and illegal in others.
D.
consumers are against them, but retailers support them.
E.
they may result in price increases across the board.
B.
they may tarnish the manufacturer’s image.
To discourage consumers from buying in gray markets, some manufacturers have
A.
warned consumers that their warranty is null and void if purchased through a gray market supplier.
B.
shifted advertising resources from gray markets to red markets.
C.
increased the price to gray markets while maintaining existing prices to blue markets.
D.
petitioned government regulators to impose price controls.
E.
lowered the quality of their products to reduce gray market demand.
A.
warned consumers that their warranty is null and void if purchased through a gray market supplier.
The fact that millions of consumers are using online search engines for comparison shopping has
A.
reduced demand.
B.
made consumers more price sensitive.
C.
reduced the income effect.
D.
reduced price elasticity of demand.
E.
increased the income effect.
B.
made consumers more price sensitive.
In addition to knowing more about the products, services, manufacturers, and retailers, Internet users know more about prices. These consumers are becoming more
A.
price insensitive.
B.
price observant.
C.
price neutral.
D.
price sensitive.
E.
adept at price negotiation for all kinds of products.
D.
price sensitive.
While prestige products and products for the status conscious command high prices and are targeted toward customers with plenty of disposable income, marketers have noticed that
A.
the rich and super-rich are getting fewer and fewer in number, and prestige pricing may become a thing of the past.
B.
most consumers don’t want flashy or high-priced products and the market is dwindling.
C.
there is a trend toward increased purchase of these products, most probably for the status conscious who would not normally be considered part of the target markets for these products.
D.
styles are changing faster than ever, and it’s hard to keep this market supplied with the products and services they want and avoid obsolete or out-of-date inventory.
E.
sales increase when prices for these items are reduced.
C.
there is a trend toward increased purchase of these products, most probably for the status conscious who would not normally be considered part of the target markets for these products.
The fact that more consumers are buying prestige items like Rolex watches and Mercedes-Benz cars and are, at the same time, shopping more at low-priced discount stores is called
A.
competition.
B.
monopolistic competition.
C.
the elastic demand phenomenon.
D.
the income effect.
E.
cross-shopping.
E.
cross-shopping.
Diane owns a bakery where she sells cupcakes. Two blocks down there is another bakery, CC’s Bakery, that sells cupcakes for $1 less than Diane. Diane decides to lower her price and match CC’s Bakery prices. What type of pricing strategy is Diane implementing?
A.
Internal pricing
B.
Profit-oriented pricing
C.
Competitor-oriented pricing
D.
Customer-oriented pricing
E.
Sales-oriented pricing
C.
Competitor-oriented pricing
Cindy went shopping for a new outfit. She bought a low-priced shirt at a discount store, and combined it with an expensive designer skirt. Which of the following terms best describes Cindy’s actions?
A.
Cross-shopping
B.
The income effect
C.
Cross-price elasticity
D.
The substitution effect
E.
Specialty shopping
A.
Cross-shopping
Thanh owns a shoe store. In this market, there are many firms competing for the same customers, but the products offered differ by quality and price. Out of the four levels of competition, which one does this market represent?
A.
Monopolistic competition
B.
Pure competition
C.
Oligopolistic competition
D.
Monopoly
E.
Dominant competition
A.
Monopolistic competition
In which of the following levels of competition does one firm control the industry and restrict competition?
A.
Monopoly
B.
Oligopoly
C.
Monopolistic competition
D.
Pure competition
E.
Dominant competition
A.
Monopoly
Winston’s Ice Cream Shop has been in the same location for two decades. Last week, a new ice cream shop opened up just one block down the street. Winston’s decides to sell ice cream below cost in order to drive the new shop out of business. What kind of pricing is Winston’s using?
A.
Predatory pricing
B.
Competitive pricing
C.
Ceiling pricing
D.
Inelastic pricing
E.
Keystoning
A.
Predatory pricing
A major hotel chain found that if it was to reduce the cost of the ice cream it currently served, it would be able to save over 400 employees’ jobs. Therefore, it switched from a high priced brand of ice cream to a more moderate priced ice cream. This is known as the
A.
substitution effect.
B.
income effect.
C.
brand effect.
D.
commercial effect.
E.
value effect.
A.
substitution effect.
The point at which the number of units sold generates enough revenue to equal the total costs of running an operation is known as the
A.
contribution per unit.
B.
fixed cost margin.
C.
break-even point.
D.
unit cost.
E.
marginal revenue.
C.
break-even point.
Your spice company’s pricing is set according to the laws of supply and demand. Therefore, when selling your spices you depend on the market to establish the price at which you will sell your spices. Which type of market are you operating in?
A.
Pure competition
B.
Oligopoly
C.
Monopoly
D.
Monopolistic competition
E.
Duopoly
A.
Pure competition
The commercial airline industry is considered what type of market?
A.
Duopoly
B.
Monopoly
C.
Monopolistic competition
D.
Pure competition
E.
Oligopoly
E.
Oligopoly