Marketing 301 Exam 3

Kelly is an independent consultant for a well-known cosmetics company. Her career allows her to work mostly from home and to develop meaningful business relationships with a variety of customers. Debra is considering joining the company as a consultant as well and is curious about pricing and revenue. Kelly explains that she buys products wholesale from the company and doubles the price for her customers. She makes 50% of the proceeds from every purchase. Debra has noticed that Kelly sometimes offers deals and gives away free hostess gifts to customers who host beauty parties. She wonders how Kelly is able to do this while still making a profit. Kelly says she offers deals to draw in customers. While she loses some of the profit she might make, she also induces some customers to buy. The same strategy applies to hostess gifts. She values customers who host parties, both for their business and for the additional business their parties bring in. Giving hostess gifts recognizes their contribution while also providing the hostess with a new product. When that same hostess needs a refill on her product, Kelly is then able to make up for the earlier loss and ensure repeat business.
1) Kelly’s discount and gift strategy is based on which of the following assumptions?
Customers will restock their cosmetic supply.
Which of the following, if true, weakens Kelly’s argument in favor of her discount and gift strategy?
Most party hostesses Kelly works with become competing cosmetics consultants.
By doubling the price of products to earn a profit, Kelly risks what potential customer assumption?
The price is more than the value.
Kelly also offers free shipping to customers outside of her service area. She reasons that making any profit from a far-away customer is better than limiting herself to one service areas. Her decision to offer free shipping is most likely based on which of the following assumptions?
The shipping costs are lower than her profits on the sales.
Rex and Clyde are launching a new furniture-making business. Before they begin manufacturing, they discuss pricing and costs. Rex believes that the products should determine the price. His goal is to develop a quality product, determine the cost of its production, and price it accordingly. Customers, he asserts, will buy the product based on their faith in its value. Clyde, on the other hand, believes that before designing a product, they should analyze the value perceptions of their customers: what would customers be willing to pay. Based on that information, they should design a product that fits within the pricing parameters.
5) Which of the following, if true, supports Rex’s argument in favor of adopting his proposed pricing strategy?
Current market trends indicate that consumers value quality over price.
Which of the following, if true, strengthens Clyde’s argument in favor of adopting his proposed pricing strategy?
Those shopping for furniture generally choose the least expensive option, as determining furniture quality is difficult.
Which question best describes the point of issue between Rex and Clyde?
Should the company employ a cost-based or value-based pricing strategy?
Which of the following, if true, is a potential drawback of value-based pricing?
A company may have to sacrifice quality to meet price expectations.
Janson is a recognized car manufacturer known for producing top-of-the-line models at lofty prices. The recent economic decline has severely affected its sales and has prompted company leaders to analyze their market. One leader suggests that the company branch out from its traditional high-end line of automobiles and offer a less expensive version of one of its vehicles.
9) Which of the following, if true, supports the leader’s idea to introduce a value-priced vehicle?
Overall profits would increase due to alignment with economic conditions.
The leader’s recommendation is based on which of the following assumptions?
Drivers prefer less expensive cars during periods of economic decline.
All of the following are potential benefits to the leader’s proposal EXCEPT which one?
increased expenditures
Before deciding to manufacture a new vehicle, company leaders should address all of the following questions EXCEPT which one?
What is the best advertising strategy?
Which of the following pricing methods involves setting prices based on the costs of producing, distributing, and selling a product plus a fair rate of return for effort and risk?
cost-based pricing
What is the purpose of a demand curve?
to demonstrate how product demand determines price
Product mix strategies differ from other product pricing strategies in which of the following ways?
Prices in a product mix are set to maximize profit on several products, not one.
Market-skimming pricing and market-penetration pricing are strategies used with which type of products?
new products
Which of the following involves temporarily lowering pricing to fuel sales on a short term basis?
promotional pricing
Harold sells ice cream from an ice cream truck. It costs Harold $0.75 for each ice cream bar; Harold sells the ice cream bars for $1.50. Which of the following is Harold using to determine his prices for ice cream bars?
cost plus pricing
On a Budget Stores realizes that it holds a special place in the market. Consumers rely on their low prices and react extremely negatively at any changes in price—if prices fall too low, the customers do not purchase items because they feel that the items are of low quality; if prices are raised too high, customers do not purchase items because they feel the price is not worth the value they are getting for the product. Consequently, On a Budget Stores keeps its prices in a small range: usually between $1 and $5. Which of the following does On a Budget Stores use to determine its prices?
price elasticity
Video Game Palace has developed a brand new video game system that is the latest thing in video games. As no one else has this type of technology, the company has decided to set the prices for the new system significantly higher than its competitors, gradually lowering the price as the system’s novelty wears off. Which of the following is Video Game Palace using to determine its prices?
market-skimming pricing
Tooth Brite Tooth Care, Inc. sells several products related to dental care: toothbrushes, toothpaste, dental floss, tooth whitener, and mouthwash. Which of the following product mix pricing strategies would be the most helpful to Tooth Brite Tooth Care?
product bundle pricing
Legal Eagle Law Firm knows that people are not likely to trust a lawyer who works for low fees—the customer will trust the lawyer’s ability to win cases. Consequently, the firm charges very high prices in the hopes that customers will choose the firm for their legal needs. Which of the following pricing strategies is being used by Legal Eagle Law Firm?
psychological pricing
Which of the following is LEAST likely to be a consideration when setting the price for a product?
frequency of advertising
Which of the following is LEAST likely to be used to increase product sales in a particular market?
introducing a fighter brand
Which of the following price increases is most likely to lead to a negative customer reaction?
A company sets high prices in order to take advantage of customer need.
Doors Inc. is a technology company that focuses on creating operating systems, which are the software packages that run everything on a computer. The company is releasing the newest version of its operating system and is deciding on the appropriate pricing strategy. The CEO favors an aggressive market-penetration pricing strategy in order to gain market share, even if it means pricing the operating system at a level at which the company would lose money on every sale. The CFO favors market-skimming pricing.

Which of the following, if true, would strengthen the CFO’s argument for adopting a price skimming strategy?

Large organizations are eager to adopt the new version because of improved enterprise functions.
Doors Inc. is a technology company that focuses on creating operating systems, which are the software packages that run everything on a computer. The company is releasing the newest version of its operating system and is deciding on the appropriate pricing strategy. The CEO favors an aggressive market-penetration pricing strategy in order to gain market share, even if it means pricing the operating system at a level at which the company would lose money on every sale. The CFO favors market-skimming pricing.

Which of the following, if true, would strengthen the CEO’s argument for adopting market-penetration pricing?

There are significant economies of scale in production.
As Vice President of Marketing for Holden-Evan, a highly successful consumer products company, you have been asked by your superiors to price a new product for the company, an electric razor. Your first chore is to determine the basis on which you will determine price.

Before you have a chance to analyze the situation, an advisor from sales tells you that this razor will never break into a tough market unless it has an absolute rock-bottom price.

Which of the following identifies the best reason for why you should ignore advice to employ a competitive price approach in which you undercut all competitors?

By setting the price before you know the costs, you could lose money on every razor you sell.
You are considering a cost-plus pricing method for the razor.

Which of the following identifies the greatest danger in using this pricing method?

The price that is set will dramatically decrease demand
Another pricing method you are considering is break-even pricing. With this method, you compute how many units you will need to sell at a given price to break even. Your VP of Finance, who is focused on profits, is against using this method to set the price.

Which of the following best explains why the VP of Finance is against break-even pricing?

Break-even pricing computes a price that simply offsets costs without actually generating a profit.
Using break-even pricing, suppose your revenue estimate falls short of the break-even point.

Which of the following modifications will not result in reaching the break-even point?

Lower the break-even point and keep the price, costs, and sales steady.
Rather than break-even pricing, you are considering setting your price using the target profit approach.

Which of the following best explains why target profit pricing is an improvement over break-even pricing?

Target profit pricing sets a price that will generate revenue above the break-even point so a profit can be achieved.
Another value-based approach is value-added pricing.

Which of the following products is using a value-added pricing approach?

a 3G smart phone with all standard features and a few very exciting extra features at a price that is higher than the industry standard
Your current estimates for the razor list $555,000 in fixed costs and $29 per unit in variable costs. Previously, expected sales for the unit were 50,000. New data suggests expected sales of 70,000 units.

To obtain a 15 percent profit, what price range should you set?

between $43 and $44
The estimated demand for various prices for the razor are listed below. Your colleague suggests a break-even price of about $30.

PRICE EXPECTED DEMAND
$30 135,000
$35 92,500
$40 60,500
$45 50,000
$50 41,500
$55 20,000

Which of the following best explains why a break-even price of $30 is incorrect?

To sell 135,000 units, you would need to charge more than $30 per unit.
A different colleague wants to charge a premium price for the razor. To make a profit of $316,000 he suggests that you price the razor at the highest possible price, $55, and expect sales of 20,000 units.

PRICE EXPECTED DEMAND
$30 135,000
$35 92,500
$40 60,500
$45 50,000
$50 41,500
$55 20,000

Which of the following best explains why a price of $55 is incorrect?

To generate enough revenue to make a $316,000 profit, you would need to raise the price to over $70 per unit.
Another option you are considering is a value-based approach using good-value pricing.

Which of the following accurately describes a good-value pricing approach?

a less expensive model that has features that are similar to the name brand product
Suppose that you have identified a target market of upper-middle-class women and next need to estimate demand for your target market. After weighing the advantages of both the prestige demand curve and a normal demand curve, you elect to use a prestige demand curve. Which of the following statements best supports your decision?
Demand will increase as the price increases because your market perceives the handbag as a prestige item.
Setting a ________ sales goal would result in ________ production costs and ________.
low; high; lower market share
What is most likely to happen if you targeted middle-class women and used a market penetration pricing method for the Bien Tote handbags?
you will obtain greater market share
The best way to gain higher profits is to target ________ and sell the Bien Tote handbags at a ________ price.
wealthy women, higher
Which of the following identifies the best reason for not setting a low price for the purpose of driving your competitor out of business?
It is illegal
Break-even pricing is a good way to determine pricing for a target market of ________ women because ________.
middle-class; it makes the purse more affordable
Suppose that you determined that your break-even price was too low. Which of the following is the best way to break even without raising the price of the handbag?
Increase volume and distribution to reduce the per-unit production costs.
Suppose that you decided to sell the Bien Tote bag through an online retailer that sells expensive goods at a discount. You price the bag lower than the Grazzi, which is selling at a high-end retailer, and higher than the handbags sold at a national chain. Which target market(s) is most likely to purchase the bag from this retailer?
all target markets
Suppose a high-end retailer is selling both the Bien Tote bag and the Grazzi. The Bien Tote bag is priced higher than the Grazzi. All of the following are true except for which statement?
Wealthy and upper-middle-class women will be just as likely to purchase either bag.
Which of the following statements is false?
All three target markets want to purchase a product at the lowest price.
Launch is an up-and-coming regional airline. It offers comfortable but modest business travel, weekend getaways, and even “Spring Break” trips. Launch strategically places ads on popular social networking sites used by many young adults and runs trendy commercials that portray hip 20-somethings shedding business suits for swimsuits and lucratively networking on trips.
1) Upon what assumption is Launch’s advertising based?
Young adults in Launch’s market are career-minded but still like to have fun.
Launch executives believe they can expand the company’s market to a wider range of customers while still retaining its hip image among young adults. They will accomplish this by running the same ads on Internet sites with various demographics. Which of the following, if true, undermines this goal?
Young adults are unlikely to consider a product “hip” if it is aimed at multiple groups.
Launch has introduced a new line of commercials modeled after the initial ads but aimed at a different group. These show excited families going on vacations, with children happily boarding aircraft. Which of the following best justifies the decision to air these commercials?
Since the airing of the commercials, Launch has seen a 20% increase in young family travelers.
Allison and Tessa have started a new, home-based business: Sweet Cheeks. They create personalized diaper cakes (inedible “cakes” formed with baby supplies such as cloth diapers, toys, and clothes), which are commonly given as baby shower gifts. They live in a community made up primarily of young couples who have or are considering having children. To spread the word about their business, they have enlisted the aid of social networking sites and have decided to participate in local trade fairs.
4) Based on Tessa and Allison’s market, which of the following is the best prediction about the potential for success of their new endeavor?
Diaper cakes are likely to be a popular product in this community.
At the trade fair, Tessa and Allison give out coupons for 10% off a diaper cake. Which of the following could be a NEGATIVE impact of this sales promotion?
failure to turn a profit from offering early discounts
Tessa and Allison’s marketing strategy relies upon which of the following assumptions?
Many members of their target market use social media or attend local trade fairs.
A small local boutique is in danger of closing. Though the community has had a renewed focus on supporting small businesses, the boutique simply cannot draw in enough customers. Earlier in the year, it launched a large ad in the local newspaper and even had a featured article in the Community section. But despite these efforts, the boutique noticed little to no change in sales. It currently advertises only in the local newspaper. Upon the suggestion of another local business owner, who pointed out that social media ads are cheaper than newspaper ads, the boutique has decided to develop a Facebook page to replace its newspaper ads and promote the store within the community.
7) Which statement best describes a flaw in the boutique’s earlier marketing plan?
It advertises exclusively through the newspaper.
Which of the following, if true, best supports the idea to market using social networking instead of newspaper ads?
Research shows that 59% of all shoppers in the community have Facebook accounts, whereas only 19% read the newspaper.
Which of the following, if true, most weakens the idea to market using social networking instead of newspaper ads?
The boutique has no employees with social networking skills and no available resources to train or replace them.
The boutique decides to replace its advertising with social network ads. After three months, the boutique has seen its business remain relatively constant. Based on these results, which of the following conclusions can be drawn?
Social networking ads provide more value per dollar than newspaper ads.
Which of the following is true about the promotion mix?
It needs to be coordinated with other parts of the marketing mix
Which of the following is NOT a recent change in marketing communications?
the use of a promotion mix
Which of the following execution styles features showing how a product falls in line with the way a particular set of people choose to live their lives?
lifestyle
Which of the following is an advantage public relations efforts have over advertising?
Public relations is more cost effective.
Which of the following is NOT involved in the selection of advertising media?
determining which product to advertise
A company is attempting to develop a better method of informing the public about its products and developing a good image in the eyes of the public. Consequently, the company hires a team to focus on advertising and public relations, trains employees to sell product directly to consumers, and incorporates discounts and sales into its budget to encourage product sales. Which of the following is this company working on?
its promotion mix
Viva La Video Game is a company that understands that a successful promotion strategy includes a skillful coordination of all marketing strategies. Consequently, the company focuses on blending a mix of personal selling, advertising, direct marketing, sales promotion and public relations in order to push its products. Which of the following is Viva La Video Game engaging in?
integrated marketing communications
Book Club Books has spent millions of dollars promoting its new book club in several different media outlets. However, despite their outrageous outlay of money, few people have joined Book Club Books. Which of the following best describes Book Club Books?
The company has a horrendous return on advertising investment
Dreamboat Dolls has done everything possible to ensure that the pubic recognizes its brand. The logo is emblazoned on every Dreamboat Doll and is featured in every single commercial. Children can buy notebook paper with the company logo on it, as well as other school supplies such as book covers, pencils, spiral notebooks, folders and 3-ring binders. The company even has several employees whose only job is to drive company cars with the logo painted on their sides around schools and playgrounds. Which of the following public relations tools is Dreamboat Dolls using?
corporate identity materials
Holistic Consumables is a grocery store that sells organic food. The company wishes to know how customers view its stores and its products, so it has hired a company to analyze how many times a customer mentions the store online, posts videos of its advertisements, or “likes” an article about the store or mention of the store. Which of the following is Holistic Consumables measuring?
consumer expressions
Which of the following elements of the promotion mix is most dependent on the image of the company?
public relations
Which of the following is NOT a consideration when developing an advertising strategy?
product lines
The nature of the promotions mix has been most affected by which of the following?
changes in communication technology and communication strategies
Sapphire is a specialty jewelry retailer based in the United States. The company retails gold jewelry, diamonds, and designer watches. The company is in the process of setting its advertising budget for each product line. Sapphire’s chief financial officer thinks that the objective-and-task method for setting budgets would be appropriate, while another senior manager wishes to use the competitive-parity method.

Which of the following, if true, would most seriously weaken the chief financial officer’s argument?

It is difficult to determine which specific tasks will achieve Sapphire’s objectives.
Sapphire is a specialty jewelry retailer based in the United States. The company retails gold jewelry, diamonds, and designer watches. The company is in the process of setting its advertising budget for each product line. Sapphire’s chief financial officer thinks that the objective-and-task method for setting budgets would be appropriate, while another senior manager wishes to use the competitive-parity method.

Assume that one of the managers favors the competitive-parity method because she believes that competitors’ budgets represent the collective wisdom of the industry. Which of the following would be the most effective counterargument?

Companies differ greatly, and each has its own special promotion needs.
As a Brand Manager for a for Holden-Evan, a global consumer products company it is your task to develop the brand of Bee!, a newly acquired energy drink. You main task is to create an advertising campaign for the product that successfully competes against established major players in the market. A key difference between Bee! and other energy drinks is Bee!’s appeal to women.

Which of the following is the most important thing to communicate for your first Bee! ad?

that Bee! is for women
Before being sold to Holden-Evan, Bee! had experienced a great deal of success in Denver and had a large market share in the local market. One of your assistants advises you to re-run the local ads that were being used in Denver just before Bee! was sold to Holden-Evan.

Should you take your assistant’s advice and re-run the Denver adds?

No, you want to introduce Bee! and the Denver ads were for an already established product.
You are considering using a persuasive approach in your initial ad campaign for Bee!

Which of the following should you try to persuade your customers to do?

Give Bee! a try
A member of your team thinks that you need to focus on getting people to switch to Bee!

Which strategy would be most effective in getting people to switch to Bee!?

point out the strengths of Bee!
In determining an advertising budget, someone in the finance department suggests that you use the affordable method of advertising budgeting that is based on the product’s current profits.

Should you take this suggestion and use the affordable method of advertising budgeting?

No, a new product cannot be expected to have enough profits at this point that support a high advertising budget.
You are considering this message for the product: “Bee! — the woman’s healthy choice to renew your energy.”

Which of the following most concerns you about adopting this message for the product?

The message focuses exclusively on women, possibly causing men to feel excluded.
You think the “Slice of Life” approach that features a working mother who struggles to balance work, exercise and children as a good approach for Bee!

Which feature do you consider to be the primary strength of this approach?

It is the only approach that focuses on balancing health, family, and work.
You are considering running a print add in a magazine called Working Mother that focuses on women balancing work and family priorities. Without explaining himself, your boss emails that he doesn’t think this is a good choice.

Which of the following is most likely to identify the cause of your boss’s objection to Working Mother?

it has no specific focus on health and exercise
You are looking into holding promotional events for Bee! that distribute balloons with the Bee! logo and free samples of the product.

Which of the following would be the best choice as a location for a promotional event?

community center that features a swimming pool and tennis
A member of your team wants to run commercials for Bee! during a morning talk show. You are against this idea. You have compiled a list of reasons for not buying commercial time during the talk show.

Which of the following does not belong on your list?

Morning talk show audiences are over 40 percent male.
Stan and Ted run competing car lots in a small city. Stan takes a very business-driven approach to his lot. He strives only to bring customers in and sell them a car. Profits are his primary focus and his skill as an adept negotiator often pays off. Ted takes a more customer-driven approach to his business. He wants customers to walk away from his lot, satisfied, whether or not he makes a profit. If he doesn’t have the vehicle a customer is looking for, he’ll send them to Stan’s lot. He listens to his customers and takes into account what they value.
1) Which of the following, if true, supports Stan’s business philosophy?
Stan’s lot consistently tops Ted’s lot in revenue.
Which of the following, if true, supports Ted’s business philosophy?
Ted earns 64% more repeat business than Stan.
Last year, Stan sold more in initial purchases, but Ted gained more business from repeat customers. What conclusion best supports these results?
Ted’s focus on customer satisfaction creates a rapport of trust with buyers.
Stan and Ted are most likely to disagree about the answer to which of the following questions?
Is it better to make a sale or make a customer happy?
A major university has a simple recruiting scheme: personalized attention to prospective students. The university employs a dedicated team of student ambassadors who act as the college’s sales team, promoting the attractions of the school and sending prospective students to informal, unsupervised social events attended only by current university students.
5) Which of the following is the most likely result of this recruiting approach?
Prospective students will feel welcome.
Which of the following is the most likely drawback of this recruiting approach?
Parents of prospective students, who are often instrumental in college selection, are not specifically targeted.
The university’s recruiting technique is based on which of the following assumptions?
Prospective students crave the personalized attention of their potential classmates.
Two huge engineering firms are bidding on a U.S. Air Force contract to develop an updated version of the force’s refueling tanker. Company A has developed an innovative, high-tech design that it hopes to sell based on its cost effectiveness and state-of-the-art technology. Company B has also developed an original and technologically advanced aircraft, but it is a bit more costly because it includes an offer to work in a partnership with the Air Force to customize its designs to fit the branch’s needs.
8) Which of the following is the best benefit for the Air Force of choosing Company A’s design?
cost effectiveness
Which of the following is the best benefit for the Air Force of choosing Company B’s design?
design flexibility
The Air Force decides to give the contract to Company B. What conclusion can you draw from this decision?
Air Force leadership values customization over price.
The phenomenon that occurs when a company becomes attached to a salesperson is known as which of the following?
salesperson owned loyalty
The practice of using people from several departments in a company in order to service a large sales account is known as which of the following?
team selling
Which of the following is the focus of value selling?
delivering and demonstrating customer value
Which of the following groups is NOT targeted by sales promotion tools?
suppliers
What is push money?
money given in return for promoting a product
American Motors does not have a strong advertising team. Instead, it relies on its employees to build strong relationships with customers and to promote its products. Employees make personal presentations to customers in order to intrigue and interest them in purchasing. Which of the following best describes what American Motors does to sell products?
personal selling
The salespeople at Multilevel Computing work from a central office. They have a team of telemarketers that find new customers and sell product, as well as a team of technical support persons that troubleshoot problems with the computer products. Which of the following best describes what is in place at Multilevel Computing?
inside sales force
Ted’s Telemarketers is a company that focuses on making the sale – they have high sales volume but few repeat customers. Which of the following is the best method for Ted’s Telemarketers to follow to ensure they get repeat business?
focus on value selling
A company is attempting to convince a retailer to feature its product. In return for premium shelf space, the company gives the retailer a $50 reduction in price on each case the retailer purchases. Which of the following is the company offering the retailer?
an allowance
Awesome Hair Products is attempting to promote their company and get more sales for their products. In order to do this, the company has made an agreement to be the official promoter of the 2013 Miss America Pageant, and has made arrangements to supply all of the hair care products that the contestants will use during the contest. Which of the following has Awesome Hair Care products done?
sponsored an event
The most important aspect of sales promotion can be considered which of the following?
the relationship with the customer
Sales force management depends largely upon which of the following?
finding, training, and motivating quality salespeople
Personal selling differs from reliance on consumer promotion tools in which of the following ways?
Consumer promotion tools are financially based rather than relationship based, while the opposite is true of personal selling.
Robinson Inc. is a conglomerate with six distinct businesses, each offering multiple products and services. The company is in the process of restructuring its sales force. While the CFO prefers to continue with the existing territorial sales force structure, the CEO feels that other approaches should be examined.

Which of the following, if true, would strengthen the argument for a product sales force structure?

Robinson has a large and diverse portfolio of offerings
Which of the following most strongly supports a move to team selling for Robinson?
Most of Robinson’s customers use a team-based approach to make purchasing decisions.
Curtis Precision Manufacturing has named you as its new National Sales Manager. Your task is develop special sales teams to sell specialized metal finishing products to highly targeted customers.

The first product features anodizing equipment that manufacturers of such things as electronic devices and automotive parts use to coat titanium with a layer of metal oxide. The second product is a line of waxes, sealants, and polishes for protecting metal boat hulls. The third product is a jewelry and silver polishing kit.

Which of the three products is likely to require the least amount of training for its team members?

Curtis polishing kits, because they need to be easy enough for ordinary consumers to use
You are considering options for choosing a sales force for the anodizing equipment.

Which of the following would best support choosing a product sales force for selling anodizing equipment?

Most companies that buy anodizing equipment use it to manufacture only a single product.
You are lining up individuals for different sales teams.

Why does it make sense to have your most personable sales personnel be chosen for a customer sales force structure?

Sales reps in a customer sales force need to develop strong long-term relationships with customers built on trust and reliability.
You are thinking of using a territorial sales force for one of your products.

Which of the following is the best reason to use a territorial sales force?

A territorial sales force allows resources to be saved in travel, organization, manpower, and planning.
Some of your sales personnel are versatile and can quickly become comfortable in selling almost any product. Other salespeople like to specialize in a single product or discrete product line.

In which kind of sales force(s) should your most versatile salespeople be placed?

customer or territorial sales forces
It turns out that in some areas of the country, the marinas and boat stores that buy Curtis boat products need an extraordinary amount of expert advice. The products behave differently in different weather conditions and a great deal of knowledge is required to use them correctly.

Which sales force structure would you recommend for these areas?

a product sales force because that structure works best when the customers require a lot of expertise
For Curtis anodizing equipment, a single salesperson can typically be expected to book $8 million in annual sales. Due to the recent economic slump, your boss has downgraded expectations from $42 million to $36 million for the entire team.

How many salespeople should the team have?

six
For Curtis anodizing equipment, you would like to assign some of your product sales force to answer telephones and emails regarding the technical use of the product. However, you don’t have enough manpower to keep people in the office for these tasks.

Which of the following identifies the best solution to your problem?

pay stales staff for one extra hour each day to respond to calls and emails from own customers using smart phones
You are allocating resources for developing a high quality comprehensive customer website to help clients solve problems and find out more about Curtis products.

In which of the following would you allocate the greatest amount of funds and resources?

a website for the boat products because they only are sold to a the greatest number of customers
You have decided to have your entire sales force for anodizing equipment use team selling for all of your customers. You are worried, however, that your salespeople are so competitive that they won’t work well together.

Which of the following would best ensure success of a highly competitive sales team?

Reward the entire team for all sales rather than individuals.
As customers visit the website of an online-only specialty skin care company, Revitalize, they are greeted with a pop-up message: “Thank you for visiting! How may I help you today?” This message comes from one of the dozens of live customer service representatives the company employs to provide a direct, customer-focused shopping experience. Like in a physical store, customers may choose to ignore the offered service or have their questions answered immediately by an actual person trained in product knowledge.
1) Revitalize’s customer support service is based on which of the following assumptions?
Virtual customers appreciate having good service, even online.
Which statement describes the most important benefit of Revitalize’s sales greetings?
Customers have the option of guided assistance or shopping on their own, meeting individualized needs.
Which statement, if true, best describes a drawback Revitalize could experience as a result of virtual sales greetings?
Many customers shop online because they do not want the hassle of a sales representative.
Revitalize sells more than 40% more product than its nearest competitor. All of the following could account for this statistic EXCEPT which one?
Revitalize and its competitor employ roughly the same business model.
Kim and LeAnn have developed a creative design for handbags targeted toward parents. The bags are crafted from baby blankets, uniforms, or other sentimental materials. Each bag is personalized, using the customer’s own materials, and is fashioned in one of several stylish models. After multiple orders from friends and family, the women decide to market their bags to the public. Kim feels that the best approach is to open a small physical store where customers could come to browse the displays and place a custom order. LeAnn, however, wants to set up an online store so that customers can browse online and send in their materials for the order.
5) Which question best describes the point of issue between the partners?
Should Kim and LeAnn sell their creations in a physical or virtual environment?
Which of the following is a drawback to Kim’s idea of opening a physical store?
They would reach only customers within their local region.
Which of the following, if true, is a drawback of LeAnn’s idea of a virtual store?
Customers would need to rely on pictures rather than tangible models.
Logan is the marketing director for an innovative company that seeks to make space flight possible for the general public. As test flights near completion and the company prepares for its initial commercialized flights, Logan’s focus is to reach out to potential passengers. As “space tourism” is still extraordinarily expensive and carries an element of the unknown, he has developed an in-depth customer database that reveals the most likely market for this endeavor. However, a trusted adviser has suggested that advertising through a website that targets a much wider audience would be more effective than a specified direct mailing campaign that would appeal only to the database-selected few. “While it might produce fewer immediately benefits,” he argues, “it makes more people aware of our service. We shouldn’t market only to those who can afford space travel now; we should consider people that may be able to afford it in five years.”
8) All of the following questions, EXCEPT which one, is directly relevant to Logan’s decision?
Do people generally consider space travel safe?
Logan decides that the best strategy is to launch a direct-mailing campaign to strategically selected customers. Which of the following is most logically similar to his decision?
hand-selecting athletes to test the new features of a running shoe
Which of the following, if true, most supports Logan’s argument to market directly to a select group of likely customers instead of a broader campaign?
Logan’s company has extremely high costs and must begin earning revenue immediately to remain in business
How does direct marketing differ from mass marketing?
Direct marketing relies on one-on-one interaction while mass marketing targets large groups.
Which of the following marketing methods involves sending an item directly to a person?
direct mail marketing
Which of the following online marketing domains has been given the most attention by the popular press?
business-to consumer
Which of the following allows marketers to send highly targeted, tightly personalized, relationship-building messages?
e-mail marketing
Which of the following is NOT a concern associated with online marketing?
expense of maintaining websites
Joanne’s House of Style is a clothing store that caters to high end customers. Lately, the store has had trouble reigning in its advertising budget. The worse part of it all is that the large monetary outlay for advertising has not had any effect on sales. Which of the following would be the best move for Joanne’s House of Style?
switch to direct marketing techniques
Better Batteries are sold by a company that specializes in low cost energy sources. In order to advertise its product, the company has invested in making several advertising programs designed specifically to highlight the functionality of Better Batteries. Which of the following is the company using?
infomercials
Vicky’s Vivacious Curves is a clothing store that wants to reach out to an increasingly online market. Consequently, “Vicky”, the avatar of the company, has created an online journal in which she talks about the company’s products, announces sales and promotions and answers “concerned shopper” questions. Which of the following is Vicky’s Vivacious Curves making use of?
blogs
Reba’s Fried Chicken does not want to sell its products online, but wants to create an online presence to allow customers to give feedback, suggestions and critiques on its products. It also wants to allow customers to find more information about its products without having to come into its stores. Which of the following should Reba’s Fried Chicken create?
a corporate website
Edward visited an online site in order to investigate a product. While he was there, he was asked to enter in his personal information and credit card number in order to receive more information about the product. Which of the following applies to Edward?
Edward was a victim of phishing
Which of the following is NOT a reason that a company would choose to use direct marketing strategies?
it requires less effort from marketers
Why is online marketing so successful in today’s society?
Consumers spend a lot of time online.
Which of the following is a common factor in all forms of direct marketing?
the ease of contact with customers
Selenium Inc. is a multi-platform retailer based in the United States that does most of its business through direct-mail marketing. The company sells approximately 800 products including statues, die-cast vehicles, T-shirts, posters and lithographs, plush toys, and household decorative items. Selenium management is exploring ways of improving its direct marketing mechanism.

Which of the following, if true, would most strengthen the argument for continuing direct-mail marketing?

The consumers direct-mail marketing reaches are much better prospects compared to those reached by advertising.
Selenium Inc. is a multi-platform retailer based in the United States that does most of its business through direct-mail marketing. The company sells approximately 800 products including statues, die-cast vehicles, T-shirts, posters and lithographs, plush toys, and household decorative items. Selenium management is exploring ways of improving its direct marketing mechanism.

One manager argues that Selenium’s image will suffer if customers receive too many e-mails about its different services and offerings. Which of the following, if true, is the most effective counterargument?

Customers can use a menu of e-mail selections to opt into receiving only communications marketing products they are interested in.
Swazzi is a national clothing store chain that sells clothing to all age groups. Its CEO wants to increase its spending in online advertising, but also wants to track the results to determine the effectiveness of its ad campaigns. Suppose that you are the marketing director and it is your responsibility to determine how to allocate the advertising budget and evaluate the results. Your first task was to analyze the existing sales data and identify the best way to spend your online advertising budget. You reviewed the following chart and determined that the campaign that would give you the most for your dollars was Plan B, placing a banner at top of page.

What is the flaw behind this conclusion?

Host Type of Ad Cost # of Displays # of Clicks Revenue
A “Take our survey” ad $0.25 per displays 5000 600 60 buys, $200each
B Banner a top of page $3 per click 10000 3000 400 buys, $80each
C Test ad on search engine $5 per purchase 10000 2000 350 buys, $40each
(1point

Both Plan A and Plan C generate more revenue per dollar spent.
One of Swazzi’s current ad campaigns is running ads in both the online and print versions of Dangerfield Weekly, an influential business magazine. Data show that although Swazzi spends a lot of money on this campaign, it doesn’t result in significant revenue. Another of Swazzi’s current ad campaigns is a three-month campaign running an ad on Antler Pacific, a popular website for outdoor adventurers. It has produced strong results, but its terms are expiring and the website wants to lock you into a long-term contract based on these results. You decided to continue the Dangerfield Weekly campaign even though it is not profitable and to discontinue the Antler Pacific campaign even though it is profitable.

Which of the following recommendations best justifies your decision?

Continue an unprofitable ad campaign that generates an intangible benefit.
Review the following table of segmentation data.

Segmentation Variable Money Spent on Clothes (Per Person Average, Per Year)
Generation Baby Boomers (30% of the population): $780
Generation X (24% of the population): $770
Millennials (29% of the population): $790
Gender Men (49% of the population): $490
Women (51% of the population): $850
Education High-school diploma or less (30% of the population): $850
College degree (60% of the population): $900
Advanced degree (10% of the population): $2000
Occupation: Professional, white-collar workers (40% of the population): $1600
Blue-collar workers (25% of the population): $640
Other, such as students and retirees (35% of the population): $820

Based on the data in this table, what are the most important segmentation variables in terms of money spent on clothing purchases?

Gender and occupation; because they have the most significant variation in spending
Review the following table that provided additional segmentation data.

Segmentation Variable Money Spent on Clothes (Per Person Average, Per Year)
Shopping Habits Brick and Mortar Store Shopper (70% of the population): $1480
Online Shopper (35% of the population): $750
Primary Computer Used for Internet Browsing and Shopping Laptop (44% of the population): $770 Tablet (8% of the population): $1250
Smart phone (48% of the population): $760
User of Social Media Yes (54% of the population): $1500
No (46% of the population): $730

Based on the data in this table, what is the most important segmentation variable to Swazzi in terms of money spent on clothing purchases?

user of social media, because there is a significant variation in spending levels between people who use social media and people who don’t use social media
Review both segmentation variable charts again. Based on the data in these charts, which of the following groups would be the least important demographic for Swazzi clothing?
blue-collar males who do not use social media
Based on the data in the two charts, suppose you identified the ideal demographic for Swazzi clothing as female professionals who use social media, and the next most promising demographic as blue-collar females who use social media. Which of the following best rebuts this determination?
Male professionals who are users of social media have the closest demographics to female professionals who are users of social media.
Suppose you decided to create a community-based website for the company. The community-based website most likely to create a culture that increases brand awareness or encourages people to buy Swazzi clothing is one that ________.
helps people to feel connected with the Swazzi brand through social sharing and interactive tools
Suppose an ad agency created several plans to draw people to your website. You narrowed the options to two choices: a humorous commercial for Swazzi clothing, full of elaborately choreographed gags; and a “paper doll” activity allowing users to put their own faces on virtual characters and try on Swazzi clothing.

Which is the better choice?

The paper doll activity—Web users respond well to interactive activities.
Suppose that you created and executed three ad campaigns targeted at different market segments. After three months, you review data showing the results of each campaign, as shown in the following chart.

Target of Marketing Campaign Average money spent at Swazzi, per person, in month prior to campaign Average money spent at Swazzi, per person, in month 1 of campaign Average money spent at Swazzi, per person, in month 2 of campaign Average money spent at Swazzi, per person, in month 3 of campaign
Professional women who use social media $100 $120 $110 $125
Blue-collar men who use social media $20 $50 $60 $65
Blue-collar women who don’t use social media $50 $60 $65 $65

Based on this data, the marketing campaign that was the most successful was the one that targeted ________ because ________.

blue-collar men who use social media; they increased their spending at Swazzi the most
Suppose you determined that the best evidence that your website achieved its goals was that the traffic to your website increased following the onset of your ad campaign.

Which of the following statements best disproves this conclusion?

There is no correlation between increased traffic to your website and the objectives of your ad campaign.