MKTG 370 Exam #3 Practice Quizzes

Which of the following is not one of the five Cs of pricing?
A. Company objectives
B. Competition
C. Commissions
D. Costs
E. Channel members
C (commissions)
As the marketing vice president of her firm, Jana is considering implementing a companywide pricing policy that all products must achieve a target profit margin of 15 percent so the firm can achieve its overall growth objectives. What type of company objective is this?
A. Profit-orientation
B. Sales-orientation
C. Competitor-orientation
D. Customer-orientation
E. Market-orientation
A (profit-orientation)
Jana’s firm is entering a new market and she plans to set prices to take sales away from the established market leader even though it will mean profits might suffer. This corresponds to which of the following company objectives?
A. Profit-orientation
B. Sales-orientation
C. Competitor-orientation
D. Customer-orientation
E. Market-orientation
B (sales-orientation)
_____ is a tactic in which a firm deliberately prices a product above the prices set for competing products to capture those customers who always shop for the best, or for whom price does not matter.
A. Target return pricing
B. Target profit pricing
C. Status quo pricing
D. Competitive parity
E. Premium pricing
E (premium pricing)
Best Buy will match competitor prices for customers who bring in proof that a particular product is being sold at a lower price by a competitor, thus using
A. premium pricing.
B. competitive parity.
C. status quo pricing.
D. target return pricing.
E. target profit pricing.
C (status quo pricing)
Jack works for a firm in the northwestern region that is clearly the market leader, and has determined he must implement a regionwide price reduction of all product lines to discourage new firms from entering the lucrative market. Which of the following company objectives is involved?
A. Profit orientation
B. Sales orientation
C. Competitor orientation
D. Customer orientation
E. Market orientation
C (competitor orientation)
A _____ orientation explicitly invokes the concept of value such as when a firm uses a “no-haggle” pricing structure to make the purchase process simpler and easier.
A. profit
B. sales
C. competitor
D. customer
E. market
D (customer)
A _______ shows how many units of a product or service consumers will demand during a specific period of time at different prices.
A. price point analysis
B. break-even analysis
C. demand curve
D. product curve
E. price elasticity curve
C (demand curve)
In the classic downward-sloping demand curve, as price increases, the demand for the product or service
A. increases.
B. stays the same.
C. decreases.
D. levels off.
E. doubles.
C (decreases)
With _____ products and services, a higher price might lead to a greater quantity sold, but only up to a certain point.
A. status quo
B. prestige
C. predatory
D. price elastic
E. substitute
B (prestige)
_____ measures how changes in price affect the quantity of the product demanded.
A. Break-even analysis
B. Competitive parity
C. Target return pricing
D. Market-oriented pricing
E. Price elasticity of demand
E (price elasticity of demand)
In the trucking industry, demand for fuel remains relatively stable even in times when the price of fuel increases, indicating that demand for fuel in this segment is
A. elastic.
B. inelastic.
C. price sensitive.
D. expandable.
E. flexible.
B (inelastic)
In a(n) _______ demand scenario, relatively small changes in price will generate fairly large changes in the quantity demanded.
A. elastic
B. inelastic
C. target profit
D. target return
E. competitive parity
A (elastic)
Airlines that offer lower fares on seats shortly before the flight’s departure date to fill empty seats are utilizing what type of pricing tactic?
A. Status quo pricing
B. Premium pricing
C. Cross-pricing
D. Complementary pricing
E. Dynamic pricing
E (dynamic pricing)
In the past, Jaleel’s vacation time has been spent at home catching a few local attractions when she could afford them. This year, she received a big bonus at work and has decided to finally take the trip to Europe that she has always dreamed about. Jaleel’s purchasing behavior has changed due to
A. the income effect.
B. the substitution effect.
C. cross-price elasticity.
D. the complementary products effect.
E. the substitute products effect.
A (the income effect)
Which of the following explains why the demand for Blu-ray discs increases when the demand for Blu-ray players increases?
A. The income effect
B. The substitution effect
C. Cross-price elasticity
D. The complementary products effect
E. The substitute products effect
D (complementary products effect)
_____ indicates that the demand for related products can either be positively or negatively related.
A. The income effect
B. The substitution effect
C. Cross-price elasticity
D. Complementary products effect
E. The supply curve
C (cross-price elasticity)
Variable costs are affected by
A. profit margins.
B. production levels.
C. marketing outlays.
D. contribution per unit.
E. the break-even point.
B (production levels)
Marta estimates that the fixed costs associated with opening her new hair salon are $100,000. She expects the salon to attract 500 new customers in the first year, each of which will cost $25 to service. Marta expects to generate $50,000 per year in revenue. For Marta, the total cost of opening her hair salon and staying in business for one year will be
A. $50,000.
B. $87,500.
C. $100,000.
D. $112,500.
E. $150,000.
D ($112,500)
In break-even analysis, when the break-even point is reached _______ is (are) zero.
A. profits
B. demand
C. supply
D. the contribution per unit
E. costs
A (profits)
If the fixed costs of manufacturing a new jet ski are $24,000, the sales price is $9,000, and the variable cost per unit is $1,000, the break-even point is
A. 1 unit.
B. 2 units.
C. 3 units.
D. 4 units.
E. 5 units
C (3 units)
The _____ is the price less the variable cost per unit.
A. profit margin
B. break-even point
C. target return price
D. contribution per unit
E. fixed cost
D (contribution per unit)
_____ involves determining the point at which the number of units sold generates just enough revenue to equal the total costs.
A. Contribution margin analysis
B. Break-even analysis
C. Predatory pricing
D. Total cost calculation
E. Fixed cost analysis
B (break-even analysis)
In _____, one firm provides the product or service in a particular industry, which results in less price competition.
A. a monopoly
B. an oligopoly
C. monopolistic competition
D. oligopolistic competition
E. pure competition
A (monopoly)
In the soft drink industry only a few firms dominate, which is characterized as
A. a monopoly.
B. an oligopoly.
C. pure competition.
D. competitive parity.
E. monopolistic competition.
B (an oligopoly)
When a firm sets a very low price for one or more of its products with the intent to drive its competition out of business, it is engaged in
A. monopolistic competition.
B. gray market pricing.
C. predatory pricing.
D. competitive parity.
E. the substitution effect
C (predatory pricing)
The most common form of competition is _____ where many firms compete for customers in a given market but with differentiated products.
A. oligopolistic competition
B. market saturation
C. pure competition
D. competitive parity
E. monopolistic competition
E (monopolistic competition)
Standardized products such as grains and chemical products, where consumers perceive them as substitutable, are characteristic of
A. monopolies.
B. oligopolies.
C. pure competition.
D. competitive parity.
E. monopolistic competition.
C (pure competition)
_____ employs irregular but not necessarily illegal methods; generally, it legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by the manufacturer.
A. A monopoly
B. A gray market
C. Pure competition
D. A black market
E. A price war
B (a gray market)
What tactic have manufacturers taken to reduce gray market distribution?
A. Refusing to grant distribution rights to companies overseas
B. Nullifying warranties on products that are not purchased from authorized dealers
C. Bringing lawsuits against distributors that carry competing product lines
D. Engaging in price wars with manufacturers of competing products
E. Refusing to allow substitute products
B (Nullifying warranties on products that are not purchased from authorized dealers)
_____ pricing methods do not recognize the role that consumers or competitors’ prices play in the marketplace.
A. Value-based
B. Improvement value
C. Cost-based
D. Cost of ownership
E. Competitor-based
C (cost-based)
Some grocery retailers have invested in their own private brands, charging just slightly lower than national brands to signal the quality of the products is good, involving the use of
A. variable costing.
B. cost-based pricing.
C. value-based pricing.
D. competitor-based pricing.
E. predatory pricing.
D (competitor-based pricing)
Improvement value and cost of ownership are two approaches to which method of pricing?
A. Mark-up pricing
B. Cost-based pricing
C. Value-based pricing
D. Competitor-based pricing
E. Price elasticity
C (value-based pricing)
Using the _____ pricing method, consumers may be willing to pay more for a particular product because, over its entire lifetime, it will eventually be less expensive to own than a cheaper alternative.
A. cost of ownership
B. improvement value
C. premium
D. competitor-based
E. cost-based
A (cost of ownership)
In terms of a pricing strategy, _____ adds value by reducing consumers’ search costs; consumers can spend less of their valuable time comparing prices, including sale prices, at different stores.
A. cost-based pricing
B. high/low pricing
C. predatory pricing
D. EDLP
E. competitor-based pricing
D (EDLP)
A(n) _____ strategy relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases.
A. predatory pricing
B. high/low pricing
C. cost-based pricing
D. EDLP
E. competitor-based pricing
B (high/low pricing)
A(n) _____ strategy is attractive because it attracts two distinct market segments: those who are not price sensitive along with more price-sensitive customers.
A. cost-based pricing
B. high/low pricing
C. predatory pricing
D. EDLP
E. competitor-based pricing
B (high/low pricing)
Retailers using a high/low pricing strategy often communicate this through the creative use of _____, which is the price against which buyers compare the actual selling price of the product and that facilitates their evaluation process.
A. price lining
B. the improvement value
C. prices ending in odd numbers
D. a reference price
E. the cost of ownership
D (a reference price)
The objective of _____ is to build sales, market share, and profits quickly by providing an incentive to purchase the product immediately.
A. price lining
B. price skimming
C. market penetration pricing
D. price fixing
E. experience curve effects
C (market penetration pricing)
When using a market penetration strategy, as sales continue to grow, the costs continue to drop, allowing even further reductions in the price. This is due to
A. markdowns.
B. price lining.
C. seasonal discounts.
D. improvement value.
E. experience curve effects.
E (experience curve effects)
People who are considered “innovators” in that they are willing to pay a higher price to obtain a new product or service, would likely not object to a _______ strategy.
A. price lining
B. price skimming
C. predatory pricing
D. price fixing
E. bait-and-switch pricing
B (price skimming)
In addition to offering the potential to build sales, market share, and profits, _____ discourages competitors from entering the market because the profit margin is relatively low.
A. price lining
B. price skimming
C. predatory pricing
D. penetration pricing
E. experience curve effects
D (penetration pricing)
_____ is used to market products to innovators who are willing to pay the very highest prices to obtain brand-new examples of technology advances, with exciting product enhancements.
A. Price lining
B. Price skimming
C. Penetration pricing
D. Price fixing
E. High/low pricing
B (price skimming)
For _____ to work, the product or service must be perceived as breaking new ground in some way, offering consumers new benefits currently unavailable in alternative products.
A. price lining
B. loss leader pricing
C. penetration pricing
D. price fixing
E. price skimming
E (price skimming)
Manufacturers like _____ because it allows them to offer price cuts to consumers directly, rolling them out and shutting them off quickly.
A. markdowns
B. quantity discounts
C. seasonal discounts
D. coupons
E. rebates
E (rebates)
When Suddenlink Communications offers its customers a discount when they order their television, Internet, and phone service all with Suddenlink on just one bill, it is an example of
A. leader pricing.
B. quantity discounting.
C. price bundling.
D. a markdown.
E. a rebate.
C (price bundling)
The most common implementation of a quantity discount at the consumer level is the _______ discount.
A. size
B. MSRP
C. slotting
D. zone
E. premium
A (size)
Consumers who shop after-Christmas sales to stock-up on wrapping paper and bows at deep discounts are taking advantage of
A. size discounts.
B. seasonal discounts.
C. predatory pricing.
D. rebates.
E. price bundling.
B (seasonal discounts)
A beauty products manufacturer packages its face wash and facial moisturizer together for a price lower than what it would cost to buy the products separately. This tactic is referred to as
A. price lining.
B. price bundling.
C. leader pricing.
D. predatory pricing.
E. markdown pricing.
B (price bundling)
Supermarket chains often implement _____, a pricing tactic of selling leading brands of products below their own cost to build store traffic.
A. price lining
B. value-in-use
C. leader pricing
D. predatory pricing
E. cost-based pricing
C (leader pricing)
_____ are expressed in the form of a percentage, such as “3/10, n/30,” or “3%, 10 days, net 30.”
A. Cash discounts
B. Seasonal discounts
C. Noncumulative quantity discounts
D. Advertising allowances
E. Cumulative quantity discounts
A (cash discounts)
Criticized by small manufacturers of grocery products, _____ are fees paid to retailers simply to get new products into stores or to gain more or better shelf space for their products.
A. seasonal allowances
B. cash discounts
C. advertising allowances
D. slotting allowances
E. quantity discounts
D (slotting allowances)
Savvy consumers often purchase automobiles from dealerships at the end of the quarter or at year-end since dealers who meet their quotas during a particular time period earn _____ in the form of rebates on all the cars they purchased from the manufacturer.
A. seasonal discounts
B. advertising allowances
C. slotting allowances
D. cumulative quantity discounts
E. noncumulative quantity discounts
D (cumulative quantity discounts)
When a manufacturer based in New York City charges more to ship to customers in Los Angeles and less to ship to customers in Memphis, it is using
A. zone pricing.
B. variable pricing.
C. uniform delivered pricing.
D. flexible delivered pricing.
E. inflated pricing.
A (zone pricing)
With use of _______ pricing, a shipper charges one rate no matter where the buyer is located.
A. zone
B. even
C. uniform delivered
D. category delivered
E. cost-based
C (uniform delivered)
_____ is a form of deceptive price advertising where sellers advertise items for a very low price without intending to sell any of them because they plan to pressure sales of higher-priced items.
A. Deceptive reference pricing
B. Loss leader pricing
C. Bait and switch
D. Predatory pricing
E. Price discrimination
C (bait and switch)
When a firm sets a very low price for one or more of its products with the intent to drive its competition out of business, it is using the illegal practice of
A. deceptive reference pricing.
B. loss leader pricing.
C. bait and switch.
D. predatory pricing.
E. price discrimination.
D (predatory pricing)
A local pizza parlor located on campus offers a student rate for its pizza lunch special. This is a form of
A. predatory pricing and is legal.
B. predatory pricing and is illegal.
C. bait-and-switch pricing and is legal.
D. price discrimination and is illegal.
E. price discrimination and is legal.
E (price discrimination)
Manufacturers attempt to reduce retail price competition among retailers and support the manufacturer’s merchandise by encouraging retailers to
A. engage in predatory pricing whenever possible.
B. offer slotting allowances to customers.
C. offer loss leader pricing whenever possible.
D. sell their merchandise at the MSRP.
E. refrain from offering cash discounts.
D (sell their merchandise at the Manufacturer Suggested Retail Price)
____ occurs when parties at different levels of the same marketing channel (e.g., manufacturers and retailers) agree to control the prices passed on to consumers.
A. Horizontal price fixing
B. Vertical price fixing
C. Loss leader pricing
D. Predatory pricing
E. Price discrimination
B (vertical price fixing)
Supply chain management refers to a set of approaches and techniques firms employ to efficiently and effectively integrate their manufacturers, warehouses, transportation intermediaries, stores, and
A. suppliers.
B. customers.
C. competitors.
D. buying centers.
E. top-level executives.
A (suppliers)
As noted in your text, each participant in a successful marketing channel adds
A. time.
B. overhead.
C. inefficiencies.
D. value.
E. pricing pressure.
D (value)
All of the following are examples of the value provided by a supply chain in the production of kitchen stoves except
A. the transportation company gets the stove to the retailer.
B. the retailer educates the customer about product features, and delivers and installs the stove.
C. the product design team develops initial drawings for a new product offering.
D. the stove maker turns the components into the stove.
E. the components manufacturer helps the stove manufacturer by supplying parts and materials.
C (the product design team develops initial drawings for a new product offering)
A _____, which may be operated by retailers, manufacturers, or distribution specialists, is a facility for the receipt, storage, and redistribution of goods to company stores or customers.
A. logistics center
B. fulfillment center
C. distribution center
D. marketing channel
E. supply chain
C (distribution center)
When Clarissa sells the jewelry she makes at craft fairs or on her personal website, she is utilizing a(n) _____ marketing channel.
A. modified
B. indirect
C. secondary
D. ancillary
E. direct
E (direct)
In _____ marketing channels, one or more intermediaries work with manufacturers to provide goods and services to customers.
A. modified
B. indirect
C. secondary
D. ancillary
E. direct
B (indirect)
When supply chain members that buy and sell to one another are not in agreement about their goals, _____ channel conflict can occur.
A. vertical
B. independent
C. competitive
D. horizontal
E. administered
A (vertical)
When there is disagreement among members at the same level of marketing channels such as when Best Buy and Sears engage in a price war on Maytag appliances, _____ channel conflict can occur.
A. vertical
B. independent
C. competitive
D. horizontal
E. administered
D (horizontal)
When the members of a marketing channel operate to satisfy their own objectives and maximize their own profits, often at the expense of the other members, the channel operates as
A. a vertical marketing system.
B. an independent marketing channel.
C. a corporate vertical marketing system.
D. a contractual vertical marketing system.
E. an administered vertical marketing system.
B (independent marketing channel)
As the dominant member of the channel of distribution, Coca-Cola holds a lot of power in the relationship with independent grocery stores, and as such, it performs the functions of restocking merchandise, setting up special displays and rotating merchandise. This is an example of
A. an independent marketing channel.
B. a horizontal marketing system.
C. an administered vertical marketing system.
D. a contractual vertical marketing system.
E. a corporate vertical marketing system.
C (an administered vertical marketing system)
_____ power is exhibited when one channel member wants to be associated with another channel member; the channel member with whom the others want to be associated has the power to get them to do what they want.
A. Coercive
B. Referent
C. Expertise
D. Legitimate
E. Information
B (referent)
_____ power is when one channel member threatens to punish or punishes another channel member for not undertaking certain tasks, such as delaying payment for a late delivery.
A. Coercive
B. Referent
C. Expertise
D. Legitimate
E. Information
A (coercive)
When companies enter into agreements that allow them to obtain economies of scale and coordination to reduce conflict, it is an example of
A. information power.
B. legitimate power.
C. an administered vertical marketing system.
D. a contractual vertical marketing system.
E. a corporate vertical marketing system.
D (a contractual vertical marketing system)
The most common type of contractual vertical marketing system is
A. franchising.
B. a joint venture.
C. just-in-time inventory.
D. exporting.
E. vendor-managed inventory.
A (franchising)
The international fashion retailer Zara’s parent company, Inditex, owns the manufacturing plants, warehouse facilities, retail outlets, and design studios, which is an example of
A. an independent marketing channel.
B. a vertical marketing system.
C. an administered vertical marketing system.
D. a contractual vertical marketing system.
E. a corporate vertical marketing system.
E (corporate vertical marketing system)
To create strong partnering relationships, supply chain members must develop mutual trust, openly communicate, have common goals, recognize the benefits of interdependence, and
A. maximize market share.
B. set out to make the most profits.
C. be willing to invest in each other’s success.
D. minimize transportation expenditures for suppliers.
E. maximize the profitability of the largest channel member.
C (be willing to invest in each other’s success)
_____ is an electronic document sent by a supplier to a retailer prior to the shipment of a merchandise order.
A. A universal product code
B. A radio frequency identification tag
C. An advanced shipping notice
D. An electronic data interchange
E. A merchandise shipping confirmation
C (advanced shipping notice)
Purchase data collected at the point of sale are stored in
A. RFID tags.
B. data warehouses.
C. ASN documents.
D. electronic data interchanges.
E. JIT inventory management systems.
B (data warehouses)
A(n) _____ involves the computer-to-computer transmission of sales data, purchase orders, invoices, and data about returned merchandise between a retailer and its vendors.
A. electronic data interchange
B. electronic data warehouse
C. stock keeping unit
D. universal product code
E. radio frequency identification tag
A (electronic data interchange)
Frito-Lay is an example of a company that partners with retailers by implementing _____ system, involving taking on the responsibility of managing inventory levels at the retailers where its products are sold.
A. a stock-keeping unit
B. an independent marketing channel
C. an electronic data warehouse
D. a vendor-managed inventory
E. a radio frequency identification tag
D (a vendor-managed inventory)
_______ is an approach for improving marketing channel efficiency in which the manufacturer is responsible for maintaining the retailer’s inventory levels in each of its stores.
A. EDI
B. VMI
C. ASN
D. UPC
E. JIT
B (VMI)
In a distribution center, which person would be responsible for the financial planning and analysis of merchandise, and its allocation to stores?
A. Planner
B. Dispatcher
C. Supervisor
D. Shipping manager
E. Warehouse manager
A (planner)
The _____ is the person who coordinates deliveries to the distribution center.
A. planner
B. dispatcher
C. supervisor
D. shipping manager
E. warehouse manager
B (dispatcher)
_______ is the process of going through the goods upon receipt to make sure they arrive undamaged and that the merchandise ordered was the merchandise received.
A. Receiving
B. Checking
C. Cross-docking
D. Marking
E. Ticketing
B (checking)
Radio frequency identification tags are
A. demand scheduling data tags.
B. information tags used on floor-ready merchandise.
C. shipping tags used to record weight limits of different types of trucks.
D. tiny computer chips that transmit information about the contents of containers.
E. electronic discount information tags used to provide reduced prices to select customers.
D (tiny computer chips that transmit information about the contents of containers)
_____ is a practice in which merchandise cartons are prepackaged by the vendor for a specific store.
A. Pick-ticketing
B. Just-in-time inventory
C. Radio-frequency identification
D. Checking
E. Cross-docking
E (cross-docking)
What two additional tasks are required in order to make merchandise “floor-ready”?
A. Receiving and checking
B. Scanning and stocking
C. Uncrating and checking
D. Ticketing and marking
E. Picking and scanning
D (ticketing and marking)
A forklift operator in a warehouse who needs to know how much of each item to get from specific storage areas would consult
A. an RFID tag.
B. an ASN document.
C. a checking slip.
D. a UPC label.
E. a pick ticket.
E (a pick ticket)
JIT inventory systems are associated with all of the following except
A. frequent deliveries of less merchandise.
B. reduced lead time.
C. more inventory to warehouse.
D. increased product availability.
E. lower inventory investment.
C (more inventory to warehouse)
The amount of time between the recognition that an order needs to be placed and the arrival of the needed merchandise at the seller’s store ready for sale is referred to as
A. just-in-time.
B. quick time.
C. pick time.
D. down time.
E. lead time.
E (lead time)
How can a company find its way out of a market characterized by pure competition?
A. Differentiate the product in some way, even by packaging, so customers will see it as distinct
B. Consistently offer the lowest price until other competitors leave the market
C. Increase prices and attract different, quality-oriented customers
D. Increase the amount of available product to flood the market
E. Decrease the amount of available product until the market reacts
A (Differentiate the product in some way, even by packaging, so customers will see it as distinct)

(The difference between pure competition and monopolistic competition is that in pure competition, products are not differentiated, but in monopolistic competition, they are, so the way to move out of a purely competitive market is to differentiate the product in some way)

Historically, prices were
A. the center of attention in almost all marketing strategies.
B. rarely changed except in response to radical shifts in market conditions.
C. allowed to vary seasonally as cross-shopping tendencies fluctuated.
D. calculated to minimize contribution per unit.
E> analyzed and changed constantly.
B (rarely changed except in response to radical shifts in market conditions)
One reason Taco Bell raised its prices was the result of an increase in _____.
A. profits
B. sales to loyal customers
C. market share
D. competitors’ prices
E. costs
E (costs)

(Taco Bell found its costs rising and felt it needed to raise prices accordingly, although cost should not be the sole factor considered in setting prices, it is one of the five Cs of pricing)

The quick service restaurant (QSR) market is considered a(n)_______.
A. pure competition
B. monopoly
C. commodities competition
D. monopolistic competition
E. oligopoly
D (monopolistic competition)

(The quick service restaurant, QSR, market has monopolistic competition, this occurs when there are many competitors with differentiated offerings, different QSRs have established distinct brands that differentiate them from competitors)

Taco Bell’s predominant pricing strategy is _______.
A. profit-oriented
B. volume-oriented
C. customer-oriented
D. competitor-oriented
E. sales-oriented
C (customer oriented)

(Taco Bell is concerned about providing value to its customers, which is the hallmark of a customer-oriented pricing strategy)

Giving consumers larger quantities at a low price would help Taco Bell regain _____.
A. status quo pricing
B. a competitive advantage
C. prestige product status
D. word-of-mouth advertising
E. the highest profit margin in fast food
B (a competitive advantage)

(Taco Bell’s research indicated that consumers did not want to trade off between low price and large quantity, Taco Bell can improve its value and thus its competitive advantage by meeting both of those needs at once instead of forcing customers to choose)

According to the typical demand curve, lower prices will result in _____ being sold.
A. a smaller variety of items
B. similar quantities
C. a greater variety of items
D. larger quantities
E. smaller quantities
D (larger quantities)

(Most demand curves show that demand rises—and larger quantities are sold—at lower prices)

_______ measures consumers’ sensitivity to price changes.
A. Income elasticity of demand
B. Cross-price elasticity of demand
C. Price elasticity of demand
D. Competitive profit elasticity of demand
E. Inelastic demand price parity
C (Price elasticity of demand)

(Price elasticity of demand measures how changes in price affect the quantity of the product demanded)

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. competitors can construct the same demand curves, so there is no advantage in using them.
C. marketing split from economics over the ideas of demand and elasticity.
D. only economists can properly analyze demand curves and set prices using this tool.
E. the underlying ideas of the demand curve and elasticity are less relevant in the modern economy.
A (the way a product or service is marketed can have a profound impact on price elasticity)

(Demand curves and price elasticity are the result of many factors, not the least of which is the nature of the marketing mix)

What characterizes a market with oligopolistic competition?
A. The absence of competition
B. Many firms selling differentiated products
C. Many sellers of commodities
D. A few dominant firms
E. One firm controlling the market
D (a few dominant firms)
U.S. Cellular sets prices based on adding value to its products and services. Which pricing orientation does this reflect?
A. Breakeven orientation
B. Profit orientation
C. Customer orientation
D. Competitor orientation
E. Sales orientation
C (customer orientation)

(A customer orientation is when a firm sets its pricing strategy based on how it can add value to its products or services)

Though confusing to customers, U.S. Cellular priced its bundles very similar to its competitor’s prices. Which competitor-oriented pricing strategy did U.S. Cellular use in this example?
A. Competitive parity
B. Premium
C. Elastic
D. Breakeven
E. Status quo
A (competitive parity)

(Competitive parity means firms set prices that are similar to those of their major competitors)

If the market is elastic, relatively ____ changes in price generate fairly _____ changes in the quantity demanded.
A. small; large
B. small; equal
C. small; small
D. large; small
E. large; equal
A (small; large)

(If demand is elastic, relatively small changes in price will generate fairly large changes in the quantity demanded, so if a firm is trying to increase its sales, it can do so by lowering prices)

What does U.S. Cellular need to consider in setting prices for its various data plans?
A. All of these
B. Costs
C. Customers
D. Competitors
E. Company objectives
A (all of these)
Which of the following markets is most likely to be characterized by oligopolistic competition in the United States?
A. pens and pencils
B. soybeans
C. smartphone service providers
D. men’s clothing
E. electrical service to the home
c (smartphone service providers)

(Soybeans are a purely competitive market; pens and pencils have elements of pure competition, for basic pencils, and of monopolistic competition, for particular types of pens, Men’s clothing exhibits monopolistic competition due to the large number of providers, and electrical service is often a monopoly, there are only a handful of smartphone service providers that dominate the market, which would characterize this category as oligopolistic competition)

According to a typical demand curve, the higher the price,
A. the lower the output of producers.
B. the greater the production costs.
C. the lower the quantity consumers will buy.
D. the greater the income effect.
E. the lower the cross-price elasticity.
C (the lower quantity consumers will buy)

(A typical demand curve shows quantity purchased decreasing as price increases)

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 elastic.
B. cross-price elastic.
C. income elastic.
D. price sensitive.
E. price inelastic.
E (price inelastic)

(Since Barry’s customers don’t seem to care about the price, we would not expect to see demand change much as price changes. This describes a situation where demand is price inelastic)

The full price of a product or service includes all of the following except
A. the price of alternative products and services.
B. taxes.
C. value of the consumer’s time.
D. travel costs.
E. shipping.
A (the price of alternative product and services)

(Taxes, shipping, travel costs, and the value of the consumer’s time are all elements of the full price of a product)

_______ products are products whose demands are positively related and as such, they rise or fall together.
A. Premium
B. Elastic
C. Inelastic
D. Substitute
E. Complementary
E (complementary)

(Complementary products are things that are used together and as such, their demands are positively related; In other words, a percentage increase in the quantity demanded for Product A results in a percentage increase in the quantity demanded for Product B)

For which of the following is demand likely to be most sensitive to price increases?
A. prescription drugs
B. electricity
C. college tuition for last-semester seniors
D. hospital care
E. a specific brand of soft drink
E (a specific brand of soft drink)

(A specific brand of soft drink has many substitutes, and so demand is likely to be sensitive to price increases, one exception would be extremely brand-loyal consumers)

Variable costs change with
A. changes in target return pricing.
B. competitive parity.
C. changes in the quantity being produced.
D. changes in fixed costs.
E. changes in cross-price elasticity.
C (changes in the quantity being produced)
The more substitutes that exist in a market,
A. the more sensitive consumers will be to changes in the price of a particular product.
B. the easier it will be to utilize a target profit pricing strategy.
C. the lower the price elasticity for each product.
D. the greater the income elasticity for each product.
E. the more likely the market will be characterized as an oligopoly.
A (the more sensitive consumers will be to changes in the price of a particular product)

(Substitutes, by offering reasonable alternatives, typically make consumers more sensitive to price changes)

Sell below store’s cost
Loss Leader Pricing
Push on sale items only
Bait and Switch
Harm competitor’s business
Predatory Pricing
Manufacturer favors one retailer
Price Discrimination
Horizontal collusion
Price Fixing
In determining the price for his company’s new personal computer photography printer, Raymond is assessing the total cost of owning his printer as compared to alternative products available in the market. Raymond is using _______ pricing.
A. EDLP
B. premium
C. reference-based
D. improvement value
E. cost of ownership
E (cost of ownership)

(Cost of ownership pricing considers, not just the price initially paid, but the cost of owning the product across its lifetime, the costs of owning a printer would include supplies like ink, whose cost might vary across different printers)

Verizon offered a lower data rate for its new 4G service ($50 per month) than for its existing 3G service ($60 per month). This pricing strategy is called ___________.
A. cost-based pricing
B. high/low pricing
C. leader pricing
D. market penetration pricing
E. price skimming
D (market penetration pricing)

(Verizon priced its new 4G service low to capture market share from its competitors, this is known as a market penetration strategy)

To capture market share, all the companies in the case used the same basic strategy, which was to _________.
A. reduce prices
B. use leader pricing
C. raise prices
D. engage in price fixing
E. raise costs
A (reduce prices)

(With no new customers to attract, the major phone companies sought to increase their share of the market, accomplishing that goal meant attracting customers from competitors with pricing reductions)

When the cellular providers began offering 4G service, they needed to estimate how much more (or less) consumers would be willing to pay for the product relative to other comparable products. This pricing consideration is the ___________ method.
A. competition-based
B. EDLP
C. improvement value
D. cost of ownership
E. cost-based
C (improvement value)

(The improvement value method represents an estimate of how much more, or less, consumers are willing to pay for a product relative to other comparable products)

If any of the companies in the case set a very low price for one or more of its products with the intent to drive its competition out of business, they would be guilty of the illegal pricing practice known as _______.
A. price discrimination
B. horizontal price fixing
C. bait-and-switch
D. predatory pricing
E. vertical price fixing
D (predatory pricing)

(When a firm sets a very low price for one or more of its products with the intent to drive its competition out of business, it is using predatory pricing, which is illegal)

One pricing tactic Verizon could offer consumers is to issue a refund as a portion of the purchase price returned to the buyer in the form of cash. This tactic is called a(n) _________.
A. coupon
B. allowance
c. seasonal discount
D. rebate
E. quantity discount
D (rebate)

(Rebates provide a form of discounts for consumers off the final selling price, in this case, the manufacturer, instead of the retailer, issues the refund as a portion of the purchase price returned to the buyer in the form of cash)

Most cellular providers now offer a free phone when you subscribe to their advanced data services. This is a pricing tactic called ________.
A. price bundling
B. leader pricing
C. an allowance
D. a quantity discount
E. price lining
A (price bundling)

(The practice of selling more than one product for a single, lower price, such as a phone and data service, is called price bundling)

Pricing voice plans very low in hopes of enrolling customers in higher margin data plans is essentially a form of the pricing tactic called ______.
A. leasing
B. leader pricing
C. price lining
D. a slotting allowance
E. seasonal discounting
B (leader pricing)

(Leader pricing is a tactic which aggressively prices and advertises a regularly purchased item, often priced at or just above cost, the rationale behind this tactic argues that the consumer will probably purchase other items, which sell at a higher margin, while more typical in retail, the tactic outlined in the case is a form of leader pricing)

Which of the following is NOT a reason high-end stores such as Chanel would use price skimming?
A. Their customers are interested in the status afforded by names like “Chanel.”
B. Their customers make decisions based on convenience and practicality.
C. Their customers like costly details that are not easily imitated.
D. Their customers want the latest styles as soon as they come out.
e. Their customers are not price-sensitive.
B (Their customers make decisions based on convenience and practicality)

(The customers of high-end stores do not usually make decisions based on convenience and practicality)

Why do companies such as H&M and Zara use penetration pricing?
A. They can build profits quickly.
B. They can raise prices over time.
C. Their customers are willing to pay more for their products.
D. They cannot satisfy a rapid rise in demand.
E. Their competitors are unable to enter the market easily.
A (they can build profits quickly)

(Companies who use penetration pricing can build profits quickly)

Based on _________, Chanel may set high prices for its winter coats because its customers are willing to pay more for a product that will last a lifetime.
A. high/low pricing
B. the competitor-based pricing method
C. the improvement value method
D. the cost of ownership method
E. everyday low pricing
D (the cost of ownership method)

(Using the cost of ownership method, consumers may be willing to pay more for a particular product because, over its entire lifetime, it will eventually cost less to own than a cheaper alternative)

Suppose Zara wants to know how much more consumers are willing to pay for its clothing line relative to other comparable clothing stores. The company performs research to determine how its customers value Zara’s clothing—in terms of quality, style, and versatility—compared with similar clothing that the customers have purchased elsewhere. Which method is Zara using to determine pricing in this scenario?
A. Everyday low pricing
B. Cost of ownership method
C. Reference pricing
D. High/low pricing
E. Improvement value method
E (improvement value method)
Suppose Zara features in its advertisements and in signs around the store both the original prices and sale prices of certain items.
This is an example of ___________.
A. cost of ownership pricing
B. everyday low pricing
C. horizontal price fixing
D. high/low pricing
E. improvement value pricing
D (high/low pricing)

(Sellers using a high/low pricing strategy often communicate their strategy through the use of a reference price, which is the price against which buyers compare the actual selling price of the the product, in Zara’s case, the “original” price is the reference price, and buyers will compare the sale price of the item to this original, or reference, price)

Charging a relatively high price for new and innovative products to those consumers most willing and able to pay the high price is called price
A. fixing.
B. referencing.
C. penetration.
D. bundling.
E. skimming.
E (skimming)

(There are two primary new product pricing strategies: skimming, which focuses on selling at a high price to the innovators and early adopters on the diffusion of innovation curve; and market penetration, which focuses on selling at a low price in order to gain market share as quickly as possible)

Fees paid to retailers simply to get new products into stores or to gain more or better shelf space for their products are called _______ allowances.
A location
B. space
C. placement
D. shelf
E. slotting
E (slotting)

(This is the definition of slotting allowance, some argue that slotting allowances are unethical because they put small manufacturers that cannot readily afford allowances at a competitive disadvantage)

Which of the following is not a common business-to-business pricing tactic?
A. quantity discounts
B. slotting allowances
C. seasonal discounts
D. advertising allowances
E. loss leader pricing
E (loss leader pricing)

(Business pricing tactics include seasonal discounts, cash discounts, advertising allowances, slotting allowances, quantity discounts, and uniform delivered vs zone pricing, loss leader pricing is an unethical practice in which a retailer sells a product at a price below its costs)

The improvement value method and the cost of ownership method are two approaches for setting prices that are _______ methods.
A. cost-based
B. value-based
C. competitor-based
D. production-based
E. market-based
B (value-based)

(Value-based pricing methods consider the consumers’ perceived value, with the improvement value approach, the manager tries to estimate how much more or less consumers are willing to pay for a product relative to other comparable products; the cost of ownership method determines the total cost of owning the product over its useful life)

A weakness associated with cost-based pricing methods is that they
A. are too difficult to calculate.
B. are structurally inflexible and ignore vertical price-fixing alternatives.
C. do not consider profit when calculating.
D. do not recognize the role consumers or competitors’ prices play in the marketplace.
E. do not consider fixed or variable costs.
D (do not recognize the role consumers or competitors’ prices play in the marketplace)

(Cost-based pricing methods primarily consider the firm, and not its customers or competitors)

Retailers use _______ to get rid of slow-moving or obsolete merchandise.
A. price lining
B. seasonal allowances
C. slotting allowances
D. markdowns
E. rebates
D (markdowns)

(Markdowns are the reductions retailers take on the initial selling price of the product or service and enable retailers to get rid of slow-moving or obsolete merchandise, sell seasonal items after the appropriate season, and match competitor’s prices on specific merchandise)

In which of the following tactics does a consumer pay a fee to purchase the right to use a product for a specific amount of time?
A. bundling
B. lease
C. lay-away
D. bait and switch
E. rebate
B (lease)

(For some products, discounts, coupons, and rebates may not be sufficient to bring the price to within consumers’ reach, with a lease, consumers pay a fee to purchase the right to use a product for a specific amount of time, they never own the product; they are just renting it)

In this scenario Beth represents the _____.
A. wholesaler
B. consumer
C. supplier
D. retailer
E. distributor
D (retailer)

(Beth runs a retail store that has received a large order from a group that she is trying to fill)

In this scenario Bill represents the ______.
A. consumer
B. retailer
C. supplier
D. credit bureau
E. shipping company
C (supplier)

(Bill represents the supplier, who is probably the manufacturer of the jackets)

This is a ____ type of interaction.
A. B2C
B. C2B
C. C2C
D. B2B
E. B2G
D (B2B)

(Both participants in the conversation are businesses, so this is a B2B interaction)

In order to find out what retailers might have unsold G23 jackets, Bill will probably use _______.
A. a dispatcher
B. a JIT system
C. cross-docking
D. a push supply chain
E. EDI
E (EDI)

(It would probably take too long to call every retailer to see if any of them have G23 jackets in their inventory, Bill will no doubt use EDI information-sharing capabilities to check inventory levels at different retailers)

Where does the predominant supply chain issue occur in this scenario?
A. Transportation
B. Raw materials
C. Merchandise flow
D. Pricing
E. Information flow
E (information flow)

(At the moment, merchandise availability is the major problem, but the problem was originally caused by difficulties in information flow, Beth was not informed that her order had been rejected until much too long after it was placed, leading her to believe that the order was on its way)

One of the ways that Walmart has been able to reduce the prices of its products, and add value to its customers, is by its continuing focus on streamlining all its _____ functions.
A. sales
B. RFID
C. marketing
D. supply chain management
E. production management
D (supply chain management)

(Walmart has focused its efforts on streamlining its supply chain management functions. This includes storage, transportation, delivery, and distribution as well as building collaborative relationships with its suppliers)

By combining their resources and developing shared goals, Procter & Gamble and Walmart were able to increase the value to the final consumer. Their relationship is considered _________.
A. strategic
B. contentious
C. conflicting
D. combined
E. balanced
A (strategic)

(Strategic relationships occur when supply chain members are committed to maintaining a relationship over the long term and investing in opportunities that are mutually beneficial)

Walmart and Procter & Gamble effectively implemented ________, which allowed for information to flow directly from Walmart’s store to Procter & Gamble’s production facilities. This streamlined production as well as distribution, thus reducing costs and getting products to Walmart’s customers sooner.
A. ticketing and marking
B. a corporate vertical marketing system
C. horizontal channel conflict
D. a new franchise
E. electronic data interchange
E (electronic data interchange)

(The CFPR system discussed in the case is an example of electronic data interchange, EDI, which reduces the time between the decision to place an order and the receipt of merchandise, these increased efficiencies can result in lower costs and lower prices)

The strategic relationship between Walmart and Procter & Gamble is based on __________ because both firms realize that investments in supply chain management will create savings for consumers.
A. interdependence
B. conflict
C. logistics
D. channel management
E. independence
A (interdependence)

(Interdependence between the supply chain members, Walmart and Procter & Gamble, is based on mutual benefits and is key to developing a sustainable strategic relationship)

Zara has developed the practice of delivering less merchandise to its stores on a more frequent basis. This quick response system is called a(n) ________.
A. just-in-time inventory system
B. consignment system
C. vertical marketing system
D. conventional marketing channel
E. indirect marketing channel
A (just-in-time inventory system)

(Zara uses a just-in-time inventory system which is an inventory management system that delivers less merchandise on a more frequent basis than traditional inventory systems)

As the case indicated, over time some stores had stockouts of popular merchandise while other stores were overstocked with the same item. This could lead to disagreements between the stores and Zara’s corporate headquarters, which is a form of ______.
A. horizontal channel conflict
B. channel efficiency
C. disintermediation
D. vertical channel conflict
E. multi-channel conflict
D (vertical channel conflict)

(Vertical conflict occurs between members at different levels of the channel, in this case retailers and corporate headquarters)

Zara owns its factories, distribution centers, and retail stores. This is the ______ form of a ________.
A. contractual; vertical marketing system
B. corporate; conventional marketing channel
C. administered; vertical marketing system
D. corporate; vertical marketing system
E. administered; conventional marketing channel
D (corporate; vertical marketing system)

(In a corporate vertical marketing system, the parent company, in this case Zara, has complete control and can dictate the priorities and objectives of the marketing channel because it owns multiple segments of the channel, such as manufacturing plants, warehouse facilities, and retail outlets)

Zara’s store managers use hand held devices to immediately pass purchase information back to its corporate headquarters in Spain. This is a form of _______.
A. EDI
B. ASN
C. RFID
D. consignment
E. VMI
A (EDI)

(Electronic data interchange, EDI, is the computer-to-computer exchange of business documents from a retailer to a vendor and back)

One problem that occurred for Zara was that individual store managers were ordering too much inventory on popular items. One way Zara addressed this was to implement _________, whereby Zara used mathematical processes and assumed responsibility for managing each store’s inventory.
A. RFID
B. ASN
C. cross docking
D. VMI
E. EDI
D (VMI)

(Vendor-managed inventory (VMI) is an approach for improving marketing channel efficiency in which the manufacturer is responsible for maintaining the retailer’s inventory levels in each of its stores)

Place the six information flows in their proper place on the timeline
1.) Customer to Store (DVD player purchased)
2.) Store to Buyer (POS terminal sends data)
3.) Buyer to Manufacturer (Corporate Inventory order)
4.) Store to Manufacturer (frequent, direct reorder)
5.) Store to Distribution Center (request delivery schedule)
6.) Manufacturer to Distribution Center and Buyer (advanced shipping notice)
What type of retailer is Nordstrom Rack?
A. Full-line discount store
B. Extreme-value retailer
C. Off-price retailer
D. Department store
E. Specialty store
C (off-price retailer)

(An off-price retailer offers an inconsistent assortment of brand-name merchandise at significant discounts, which describes Nordstrom Rack)

Suppose that a luxury brand chose to sell its products only through Nordstrom stores. This would be an example of what level of distribution intensity?
A. Private-label distribution
B. Intensive distribution
C. Premium distribution
D. Exclusive distribution
E. Selective distribution
D (exclusive distribution

Exclusive distribution refers to selling a product through a single retailer or, at least, a single retailer in a particular geographic area)

Nordstrom Rack sells its products in physical stores, on its website, and using its mobile app, in order to make its products available to customers when and where they want to buy them. This is part of Nordstrom’s _________ strategy.
A. store-focused
B. omnichannel
C. cooperative
D. pricing
E. private-label
B (omnichannel)

(An omnichannel, or multichannel retail strategy offers consumers multiple channels through which to shop, it is especially common for retailers to adopt a multichannel strategy by offering their products both in stores and online)

Forty-eight of the fifty brands sold by Nordstrom department stores are also offered at Nordstrom Rack. This is a key element of Nordstrom Rack’s __________ strategy.
A. private-label
B. co-op advertising
C. product
D. place
E. price
C (product)

(Since this deals with the merchandise offered at Nordstrom Rack, this is an element of Nordstrom Rack’s product strategy, by carrying the same brands, Nordstrom Rack assures customers that they will find the same high-quality brands they)

The mobile apps for both Nordstromrack.com and HauteLook allow customers to request notifications when specific merchandise is available for sale. This is an example of what benefit of the Internet as a retailing channel?
A. Risk reduction
B. Expanded market presence
C. Browsing
D. Immediate gratification
E. Personalization
E (personalization)

(This is an example of personalization, where the customer can received notifications about the particular products that interest them)

Andy purchased a number of books from Amazon.com, and he learned to trust the recommendations made to him. More than once he was pleasantly surprised at the books and authors he discovered this way. In this case, Amazon.com was creating value for Andy through
A. interactive offerings.
B. rapid delivery.
C. expanded market presence.
D. repeat business.
E. personalized offerings.
E (personalized offerings)

(Amazon is creating a personalized offering for Andy, recommending books he might enjoy based on his past purchases and other interaction with the site)

Today, retailers like Walmart, Home Depot, and Kroger dictate to their suppliers all of the following except
A. how products should be configured.
B. when products should be delivered.
C. what products should cost.
D. which competitors they should collaborate with.
E. what should be made.
D (which competitors they should collaborate with)

(Large retailers cannot dictate competitive dynamics to retailers, but they typically dictate the other factors listed)

Target would be categorized as which type of retailer?
A. Department store
B. Convenience store
C. Specialty store
D. Full-line discount store
E. Big box store
D (Full-line discount store)

(Target is a full-line discount store, it offers a broad variety of merchandise, limited service, and low prices)

The Shops at Target features different independently owned specialty stores. Which of the following is NOT true of a specialty store?
A. Sales associate expertise
B. Limited but complementary categories
C. Deep but narrow assortment
D. Very specific target segment
E. Very low prices
E (very low prices)

(Specialty stores concentrate on a limited number of complementary merchandise categories and are targeted toward very specific market segments by offering deep but narrow assortments and sales associate expertise, specialty stores are not characterized by any one price level)

The Shops at Target adds almost 400 new items to Target’s already extensive inventory. In retail terms, a unique item of inventory is called a(n) _____.
A. SKU
B. co-op
C. cookie
D. UPC
E. RFID
A (SKU)

(Stock keeping units, SKUs, represent a unique inventory item)

Gwen Stefani designed a line of Harajuku Mini kids clothing which can only be found at Target. In retailing terms this represents a(n) _______.
A. exclusive brand
B. multichannel strategy
C. brand dilution strategy
D. category killer
E. intensive distribution strategy
A (exclusive brand)

(An exclusive brand is a brand that is developed by a national brand vendor, often in conjunction with a retailer, and is sold exclusively by the retailer)

Which of the following would NOT be a benefit of in-store shopping for consumers?
A. Browsing
B. Personalized promotions
C. Touching and feeling products
D. Risk reduction
E. Cash and credit payment
B (personalized promotions)

(The interactive nature of the Internet provides an opportunity for retailers to personalize its offerings for each of its customers, some multichannel retailers are able to personalize promotions on the basis of several attributes tied to the shopper’s current or previous web sessions)

Before deciding on a retail partnership, Apple and Target should evaluate all of the following EXCEPT:
A. Channel member characteristics
B. Customer expectations
C. Number of SKUs in inventory
D. Distribution intensity
E. Channel structure
C (Number of SKUs in inventory)

(There are four important considerations in choosing a retail partner: basic channel structure, customer expectations, channel member characteristics, and distribution intensity)

By offering the exclusive products produced by its retail partners in stores and through its website, Target is using a(n) _______ strategy.
A. multichannel
B. extreme value
C. co-op
D. category killer
E. selective distribution
A (multichannel)

(A multichannel strategy involves selling in more than one channel, eg, store, catalog, and Internet)

Example Retailer:
Save-A-Lot
Sam’s Club
Walmart
Staples
Sephora
Macy’s
TJMaxx
Type of Retailer:
Supermarket
Warehouse Club
Full-Line Discount Store
Category Specialist
Specialty Store
Department Store
Off-Price Retailer
Staples has been successful using a multichannel approach. One of the contributors to this success is that the consumer sees the shopping experience as being __________ across the different retail channels.
A. challenging
B. sustainable
C. focused
D. integrated
E. difficult
D (integrated)

(It is important for multichannel retailers to provide an integrated shopping experience for customers, by making the process as seamless as possible, Staples has been able to capitalize on multichannel success)

The multichannel approach has enabled Staples to __________.
A. increase its productivity
B. increase the number of products held in retail stores
C. increase prices
D. reduce attention to customer service
E. provide only more popular items online
A (increase its productivity)

(The multichannel approach allows Staples to increase its productivity by stocking only more popular items in stores but not sacrificing product availability)

Staples has expanded its __________ efforts to sell to companies such as Wells Fargo or IBM.
A. consumer-to-business
B. unreachable
C. international
D. business-to-consumer
E. business-to-business
E (business-to-business)

(Staples has expanded its business-to-business efforts to sell to companies such as Wells Fargo or IBM)

Although the online and catalog channels are very successful for Staples, why it is important for the company to continue to operate its retail locations?
A. All of these
B. Retail locations are more successful.
C. Some customers like the anonymity.
D. Many customers do not have computers.
E. Many customers like to browse products and also ask questions of the sales associates.
E (Many customers like to browse products and also ask questions of the sales associates)

(Retailers use multiple channels to provide customers with different shopping options that are convenient to them, many customers prefer the retail location because they like to browse products and also get recommendations and advice from sales associates)

Which component of IMC was NOT used in the Jay-Z and Microsoft campaign described in the case?
A. Search engine marketing
B. Online marketing
C. Personal selling
D. Direct marketing
E. Outdoor advertising
C (personal selling)

(There is no evidence or information in the case that personal selling was used in the campaign)

A dedicated website was created where fans could post photos of the pages from Decoded that they found. In the communication process, this represented _______.
A. a feedback loop
B. noise
C. decoding
D. the receiver
E. encoding
A (a feedback loop)

(A feedback loop allows the receiver to communicate with the sender and thereby informs the sender whether the message was received and decoded properly, the photos on the website were feedback for Droga5 that their messages were understood and properly decoded, ie, that the book pages were actually being found)

Which component of IMC was used when the New York Times and New York Observer ran articles on the campaign?
A. Personal selling
B. Advertising
C. Sales promotions
D. Direct marketing
E. Public relations
E (public relations)

(Free media attention is a form of public relations)

Once the campaign generated interest, it next had to create _______ before the target audience would actually be moved to purchase Jay-Z’s book or use the Bing search engine.
A. a lagged effect
B. clarity
C. awareness
D. a feedback loop
E. desire
E (desire)

(The AIDA model of marketing communication suggests that awareness leads to interest, which leads to desire, which leads to action, in this case the ultimate actions were to use the Bing search engine and purchase Jay-Z’s memoir, this would not occur without desire, the feeling that “I want it”)

Online marketing was used extensively in this campaign. To measure the effectiveness of the online component of the campaign, Droga5 would use all of the following metrics EXCEPT:
A. Which website the viewer came from
B. GRP
C. Time spent on a page
D. Click through tracking
E. Number of pages viewed
B (GRP)

(Although GRP is an adequate measure for television and radio advertisements, assessing the effectiveness of any web-based communication efforts in an IMC campaign generally requires web tracking software to measure how much time viewers spend on particular webpages, the number of pages they view, how many times users click on banner ads, which website they came from, and so on)

One metric that could be used to measure the effectiveness of the campaign is ________, which is computed by subtracting the advertising costs from sales revenue, then dividing by the advertising costs.
A. relevance
B. ROI
C. CTR
D. impressions
E. GRP
B (ROI)

(Return on investment ROI = sales revenue – advertising cost / advertising cost, It is a metric used to evaluate advertising effectiveness)

Decoded did become a national bestseller, but it was released sometime after the campaign had concluded. This represents ______, which makes it difficult if not impossible to assess the specific impact of the campaign on book sales.
A. the lagged effect
B. a feedback loop
C. a lack of metrics
D. budgeting problems
E. communication noise
A (the lagged effect)

(Sometimes consumers don’t act immediately after receiving a marketing communication because of the lagged effect—a delayed response to a marketing communication campaign, in this case there was a lag time to the actual publication of the book, making it practically impossible to isolate the effect of the campaign on book sales)

In recent years, the component of IMC that has received the greatest increase in aggregate spending is
A. sales promotions.
B. direct marketing.
C. public relations.
D. media advertising.
E. publicity.
B (Direct marketing)

(Direct marketing has received the greatest recent increase in aggregate spending)

In the IMC communication process, the __________ encodes the marketing communication message.
A. receiver
B. communication channel
C. instructor
D. transmitter
E. sender
D (The transmitter)

(The transmitter converts the sender’s ideas into a message, which could be verbal, visual, or both)

In the AIDA model, the do stage is the __________ stage.
A. action
B. interest
C. desire
D. awareness
E. intentions
A (action)

(The action stage is the final stage of the AIDA model)

When using the objective-and-task method of IMC budgeting for multiple products and services, how often must the process be repeated?
A. once, for each individual product and service
B. once, by each management team member
C. when the prior year’s budget is exceeded
D. only when a product is removed from the line
E. never, after the first product/service
A (once, for each individual product and service)

(his process—set objectives, choose media, and determine costs—must be repeated for each product or service)

In the communication process of marketing communications, the marketing department often functions in the role of transmitter.
True
False
True

(In marketing communications, the marketing department or external agency receives the information and transforms it for use in its role as the transmitter)

__________ is any interference in the IMC process.
A. Excessive reach
B. Feedback
C. Looping
D. Noise
E. Translation
D (noise)

(Interference in the IMC process is referred to as noise, It can be caused by competing messages, a lack of clarity in the message, or a flaw in the medium)

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. offer discounts to increase purchase intentions.
C. create interest among consumers, persuading them to investigate further.
D. take steps to encourage immediate purchase.
E. promote sufficiently to gain global attention.
C (create interest among consumers, persuading them to investigate further)

(The steps in the AIDA model are awareness, interest, desire, and action)

What type of marketing uses a variety of forms to communicate directly with target customers to generate a response or transaction?
A. Sales
B. Public Relations
C. Publicity
D. Place
E. Direct
E (Direct)

(By directly communicating with its targeted customers, Frito-Lay was using direct marketing)

Frito-Lay increased its emphasis on _____ customers online to build its brand image.
A. negotiating with
B. grouping with
C. persuading
D. interacting with
E. informing
D (interacting with)

(The video states that Frito-Lay wished to interact with customers in order to engage them with the brand)

“Crash the Super Bowl” was designed to attract customers with similar interests, also known as _______.
A. mass customization
B. community building
C. public relations
D. personal selling
E. direct marketing
B (community building)

(Community building is an activity bringing together individuals with shared interests)

Some innovative firms entertain consumers with ______; these consumers then interact with the brand.
A. email
B. instant messaging
C. online games
D. blog posts
E. catalogs
C (online games)

(Online games can be an effective way to reach consumers and to encourage them to engage with the brand)

Suppose Scion is trying to reach the under 25 age group to make them long-term customers. For Scion, this group would be its’ __________.
A. niche market
B. transmitter
C. target market
D. communication channel
E. only buyer
C (target market)

(Scion is trying to reach the under 25 market to make them long-term customers, this demographic is Scion’s target market)

Suppose many young consumers that Scion was targeting with the company’s nontraditional ads had never heard of the Scion. The main goal of Scion’s initial communications would have been to build _________.
A. attention
B. desire
C. placement
D. action
E. awareness
E (awareness)

(When customers are unfamiliar with a brand, a firm should try to first create awareness of the brand)

Integrated marketing communications programs aim to have all communications work together to deliver a concise message to the consumer. What is a potential problem Toyota might face with using nontraditional media?
A. It might generate more interest in its brand.
B. Its current customers might get confused or the media might send the wrong message.
C. It will not reach its target market.
D. It will not reach new customers.
E. Consumers might actively seek out the brand.
B (Its current customers might get confused or the media might send the wrong message)
(Sometimes using nontraditional methods can confuse consumers or send the wrong message about the brand, however, using nontraditional media allows Toyota to reach new customers and generate interest in the brand)
Scion’s communication methods included skywriting and projecting images onto the sides of buildings. These are examples of which integrated marketing communications element?
A. Direct marketing
B. Advertising
C. Sales promotion
D. Mobile marketing
E. Personal selling
B (advertising)

(These are examples of advertising)

When using the rule-of-thumb method for IMC budgeting, prior sales and communication activities are used for guidance.
True
False
True

(The rule-of-thumb methods, competitive parity, percentage of sales, available budget, use prior sales and communication activities to determine the present communication budget)

The _____________ loop allows the receiver to communicate with the sender in the IMC process.
A. feedback
B. precoding
C. pretesting
D. decoding
E. encoding
A (feedback)

(A feedback loop permits the receiver to respond to the sender)

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 must recognize that each IMC alternative
A. is dictated by the nature of the supply chain.
B. is part of the whole.
C. will stand on its own.
D. is part of noncommercial free speech.
E. doesn’t help communicate value to the consumer.
B (Is part of the whole)

(An integrated marketing communication strategy will have many components that must be coordinated into an integrated whole)

The “Indoor Tanning Is Out” campaign is designed to raise awareness of the increased risk of melanoma, the deadliest form of skin cancer, and decrease usage of tanning salons. This is an example of a(n) _____ advertisement.
A. attribute-based
B. relational
C. institutional
D. product-focused
E. Public service
E (public service)

(Public service advertisements, PSAs, focus on public welfare; generally they are sponsored by nonprofit institutions, civic groups, religious organizations, trade associations, or political groups)

The “Beef, It’s What’s for Dinner” campaign to encourage beef consumption is an example of _____ advertising.
A. public service
B. institutional
C. attribute-based
D. relational
E. product-focused
B (Institutional)

(Institutional advertisements inform, persuade, or remind consumers about issues related to places, politics, or an industry)

When introducing new products, Quaker Oats uses a(n) _____ strategy by offering retailers discounts on the products along with point-of-purchase displays to motivate them to highlight the product.
A. informative
B. push
C. reminder
D. persuasive
E. pull
B (Push)

(Push strategies are designed to increase demand by focusing on wholesalers, retailers, or salespeople, these campaigns attempt to motivate the seller to highlight the product, rather than the products of competitors, and thereby push the product to consumers)

When a company wants to create and build brand awareness, it would use _____ advertising.
A. informative
B. reminder
C. push
D. pull
E. persuasive
A (informative)

(Informative advertising is a communication used to create and build brand awareness, with the ultimate goal of moving the consumer through the buying cycle to a purchase)

The Holiday Inn Priority Club is an example of _____, which is specifically designed to retain customers by offering premiums or other incentives to customers who make multiple purchases over time.
A. a premium
B. a rebate
C. a loyalty program
D. cross-promotion
E. a sampling program
C (a loyalty program)

(Loyalty programs are specifically designed to retain customers by offering premiums or other incentives to customers who make multiple purchases over time)

Bowflex and Jenny Craig develop advertisements featuring celebrities to address their target markets’ need for feeling good about themselves. This is an example of which of the following?
A. Utilitarian appeal
B. Informational appeal
C. Social appeal
D. Emotional appeal
E. Relational appeal
D (emotional appeal)

(Emotional appeals focus on feelings about the self, so advertisements for Bowflex and Jenny Craig use emotional appeals to feature celebrities or regular people talking about how much better they feel about themselves after they’ve joined the program and lost weight)

A _____ offers an item for free or at a bargain price to reward some type of behavior, such as buying, sampling, or testing.
A. sweepstakes
B. premium
C. POP display
D. rebate
E. loyalty program
B (premium)

(A premium offers an item for free or at a bargain price to reward some type of behavior, such as buying, sampling, or testing)

As a type of sales promotion, _____ encourage trial and reduce consumer risk, although they may negatively impactperceptions of brand value.
A. rebates
B. deals
C. premiums
D. coupons
E. samples
B (deals)

(Deals encourage trial and reduce consumer risk, but they may reduce perception of value)

In many cases, _____ activities support other promotional efforts by generating “free” media attention and general goodwill.
A. pulsing
B. direct marketing
C. personal selling
D. public relations
E. sales promotion
D (Public relations)

(Public relations, PR, involves managing communications and relationships to achieve various objectives, such as building and maintaining a positive image of the firm, handling or heading off unfavorable stories or events, and maintaining positive relationships with the media, in many cases, public relations activities support other promotional efforts by generating “free” media attention and general goodwill)

An example of _____ is when Tom Hanks is shown stranded on an island with a FedEx box in the movie Cast Away.
A. product placement
B. a premium
C. a loyalty program
D. event sponsorship
E. cross-marketing
A (product placement)

(When marketers use product placement, they pay to have their product included in nontraditional situations, such as in a scene in a movie or television program)

Which of the following is not an aspect of advertising?
A. It is used to sell only products.
B. Legally, the source of the message must be known or knowable.
C. It must be carried by some medium.
D. It is not free.
E. It is a persuasive form of communication.
A (it is used to sell only products)

(There are important distinctions between advertising and other forms of promotion: advertising is not free; it must be carried by some medium; legally, the source of the message must be known or knowable; and it represents a persuasive form of communication designed to get the consumer to take some action, but not necessarily to buy a product, the action could also be for a public service message such as “Don’t drink and drive”)

Firms often use _____ advertising to convince consumers to take action such as switching brands, trying a new product, or even continuing to buy the advertised product.
A. informative
B. push
C. pull
D. persuasive
E. reminder
D (persuasive)

(When a product has gained a certain level of brand awareness, firms use persuasive advertising to motivate consumers to take action, such as switching brands, trying a new product, or even continuing to buy the advertised product)

The slogans “Coolest Video Game” and “World’s Best Hamburgers” are examples of _____, which is the legal exaggeration of praise, stopping just short of deception, lavished on a product.
A. puffery
B. cross-promoting
C. inflated advertising
D. flighting
E. pulsing
A (Puffery)

(Puffery is the legal exaggeration of praise, stopping just short of deception, lavished on a product, in this example the words coolest and best are subjective measures)

_______ is a tool used to communicate the distinct attributes of a product; it can be used as a slogan or a theme and often becomes a snapshot of the entire advertising campaign.
A. A headline
B. An informational appeal
C. The media mix
D. Puffery
E. A unique selling proposition
E (unique selling proposition)

(A common strategy used by marketers is to differentiate a product by establishing its unique benefits through a unique selling proposition USP, which is often the common theme or slogan in an advertising campaign, a good USP communicates the unique attributes of the product and thereby becomes a snapshot of the entire campaign, for example, Oreo Milk’s Favorite Cookie)

When two or more firms join to reach a specific target market, it is referred to as
A. cross-promoting.
B. product highlighting.
C. product placement.
D. pulsing.
E. flighting.
A (cross-promoting)

(To achieve a successful cross-promotion, the two products must appeal to the same target market and together create value for consumers)

IKEA advertises throughout the year, but significantly increases its advertising during the back-to-school time frame, thus implementing a _____ advertising schedule.
A. flighting
B. seasonal
C. continuous
D. status quo
E. pulsing
E (pulsing)

(Pulsing combines the continuous and flighting schedules by maintaining a base level of advertising but increasing advertising intensity during certain periods, for example, the furniture retailer IKEA advertises throughout the year but boosts its advertising expenditures to promote school supplies in August)

As a means to reach large numbers of anonymous audience members, USA Today newspapers are considered to be which of the following types of media?
A. Mass media
B. Emotional media
C. Utilitarian media
D. Transatlantic media
E. Niche media
A (mass media)

(Mass media channels include national newspapers, magazines, radio, and television and are ideal for reaching large numbers of anonymous audience members)

Assessing the effectiveness of an advertising campaign while it is running by monitoring key indicators is referred to as
A. cross-checking.
B. flighting.
C. tracking.
D. pulsing.
E. sampling.
C (tracking)

(The effectiveness of an advertising campaign must be assessed before, during, and after the campaign has run, tracking includes monitoring key indicators, such as daily or weekly sales volume, while the advertisement is running to shed light on any problems with the message or the medium)

A(n) _____ is a subsection of the firm’s overall marketing plan that explicitly analyzes the marketing and advertising situation, identifies the objectives of the advertising campaign, clarifies a specific strategy for accomplishing those objectives, and indicates how the firm can determine whether the campaign was successful.
A. push strategy
B. publicity strategy
C. advertising plan
D. informational appeal
E. promotional plan
C (advertising plan)

(An advertising plan is a subsection of the firm’s overall marketing plan that explicitly analyzes the marketing and advertising situation, identifies the objectives of the advertising campaign, clarifies a specific strategy for accomplishing those objectives, and indicates how the firm can determine whether the campaign was successful)

_______ advertising generally occurs in the growth and early maturity stages of the product life cycle, when competition is most intense, and attempts to accelerate the market’s acceptance of the product.
A. Persuasive
B. Push
C. Pull
D. Reminder
E. Informative
A (persuasive)

(When a product has gained a certain level of brand awareness, generally in the growth and early maturity stages of the product life cycle, firms use persuasive advertising to motivate consumers to take action)

In a print advertisement, items used to identify the sponsor of the ad, such as the company logo or USP, are referred to as
A. advertising sponsorship.
B. copy elements.
C. headlines.
D. brand elements.
E. subheads.
D (brand elements)

(The use of brand elements, such as a logo or a unique selling proposition, helps identify the sponsor of the ad)

HGTV and Home and Gardens magazine fall into which of the following categories of media?
A. Specialty media
B. Mass media
C. DIY media
D. Utilitarian media
E. Niche media
E (niche media)

(Specialty television channels like HGTV and specialty magazines such as Home and Garden are examples of niche media—channels that are more focused and generally used to reach a narrower audience)

ExxonMobil uses a(n) _____ appeal when it explains technical aspects of its products, such as lithium ion batteries, hydrogen technology, biofuels, and CO2 capture technologies.
A. contemporary
B. informational
C. engineering
D. candid
E. emotional
B (informational)

(ExxonMobil attempts to explain some technical aspects of its products, such as lithium ion batteries, hydrogen technology, biofuels, and CO2 capture technologies, in an attempt to convince consumers that the company is environmentally friendly, efficient, innovative, and responsible)

Coppertone uses a _____ advertising schedule, where it advertises heavily in the months leading up to and during the summer, with no advertising after the season ends.
A. continuous
B. pulsing
C. flighting
D. status quo
E. seasonal
C (flighting)

(Flighting refers to an advertising schedule implemented in spurts, with periods of heavy advertising followed by periods of no advertising, this pattern generally functions for products whose demand fluctuates, such as suntan lotion, which manufacturers may advertise heavily in the months leading up to and during the summer)

Which of the following is the first step in planning and executing an advertising campaign?
A. Determine the advertising budget.
B. Create the advertisements.
C. Convey the message.
D. Identify the target market.
E. Set the advertising objectives.
D (identify the target market)

(The first step in planning and executing an advertising campaign is for firms to identify their target audience, so they can set the tone for the advertising program and help them select the media they will use to deliver the message to that audience)

he set of business activities that adds value to products and services sold to consumers for their personal or family use is referred to as
A. retailing.
B. marketing.
C. wholesaling.
D. distribution.
E. supply chain management.
A (Retailing)
When developing strategies for working with retailers, manufacturers must consider whether they should sell in more than one outlet (e.g., store, catalog, and Internet). Which of the following factors for establishing a relationship with retailers deals with this?
A. Choosing retail partners that will carry the products
B. Identifying the appropriate types of retailers to carry the products
C. Developing a retail strategy that implements the four Ps
D. Determining whether or not to use an omnichannel strategy
E. Allocating inventory throughout the channel of distribution
D (Determining whether or not to use an omnichannel strategy)
In thinking about the channel structure, the level of difficulty a manufacturer experiences in getting retailers to purchase its products is determined by all of the following except
A. the degree to which the channel is horizontally integrated.
B. the degree to which the channel is vertically integrated.
C. the degree to which the manufacturer has a strong brand.
D. the degree to which the manufacturer is desirable in the market.
E. the relative power of the manufacturer and retailer.
A (the degree to which the channel is horizontally integrated)
When choosing retail partners, a high-end cosmetics manufacturer like Estée Lauder would most likely not choose to sell to CVS or Dollar General due to
A. channel structure.
B. customer expectations.
C. channel member characteristics.
D. distribution intensity.
E. networking capabilities.
B (customer expectations)
Generally, the _____ and _____ sophisticated the channel member, the less likely that it will use supply chain intermediaries.
A. smaller; less
B. smaller; more
C. larger; more
D. shorter; more
E. larger; less
C (larger; more)
Distribution intensity is commonly divided into three levels. What are they?
A. Primary, secondary, and tertiary
B. Intensive, exclusive, and selective
C. Local, regional, and national
D.. Minimal, acceptable, and preferred
E. Standard, limited, and exclusive
B (Intensive, exclusive, and selective)
If Kleenex produced a new, eco-friendly personal-sized package of tissues, which it intended to get into as many retail outlets as possible, it should choose _____ distribution strategy.
A. variable
B. a selective
C. an intensive
D. an exclusive
E. a collective
C (an intensive)
Luxury goods firms such as Coach use _____ distribution strategy to limit sales to one or only a few select, higher-end retailers in each region, because selling its product in full-line discount stores or off-price retailers would weaken its image.
A. a collective
B. an exclusive
C. an intensive
D. a selective
E. a variable
B (an exclusive)
_____ distribution helps a seller maintain a particular image and control the flow of merchandise into an area which makes this approach attractive to many shopping goods manufacturers, such as most apparel items, home items like branded pots and pans or sheets and towels, branded hardware and tools, and consumer electronics.
A. Variable
B. Selective
C. Intensive
D. Exclusive
E. Collective
B (selective)
Which of the following food retailers is a self-service retail food store offering groceries, meat, and produce with limited sales of nonfood items?
A. Convenience store
B. Conventional supermarket
C. Category specialist
D. Supercenter
E. Warehouse club
B (Conventional supermarket)
Offering a one-stop shopping convenience to customers, _______ combine a supermarket with a full-line discount store.
A. specialty stores
B. big box retailers
C. category specialists
D. supercenters
E. warehouse clubs
D (supercenters)
Which of the following firms operates more than 3,000 supercenters in the United States accounting for the vast majority of total supercenter sales—far outpacing its competitors?
A. Meijer
B. Target
C. Kmart
D. Walmart
E. Kroger
D (Walmart)
_____ are large retailers (100,000 to 150,000 square feet) that offer a limited and irregular assortment of food and general merchandise, little service, and low prices to the general public and small businesses.
A. Convenience stores
B. Conventional supermarkets
C. Category specialists
D. Supercenters
E. Warehouse clubs
E (warehouse clubs)
Walmart, Target, and Kmart offer a broad variety of merchandise, limited service, and low prices, which would classify them as
A. department stores.
B. full-line discount stores.
C. specialty stores.
D. category specialists.
E. supercenters.
B (full-line discount stores)
_____ tailor their retail strategy toward very specific market segments by offering deep but narrow assortments and sales associate expertise.
A. Warehouse clubs
B. Full-line discount stores
C. Specialty stores
D. Category specialists
E. Supercenters
C (specialty stores)
Which of the following falls into the category of being a general merchandise retailer?
A. Bank
B. Category specialist
C. Supermarket
D. Convenience store
E. Warehouse club
B (category specialist)
Dollar General and Family Dollar stores are small, full-line discount stores that offer a limited merchandise assortment at very low prices, so they would be classified as
A. supercenters.
B. extreme value retailers.
C. specialty stores.
D. category specialists.
E. warehouse clubs.
B (extreme value retailers)
_______ offer an inconsistent assortment of brand name merchandise at a significant discount from the manufacturer’s suggested retail price.
A. Extreme value retailers
B. Category specialists
C. Off-price retailers
D. Department stores
E. Warehouse clubs
C (off-price retailers)
Which of the following would qualify as being a service retailer?
A. A supermarket
B. A drug store
C. An off-price retailer
D. A health spa
E. A convenience store
D (a health spa)
A brand that is developed by a national brand vendor, often in conjunction with a retailer, and is sold exclusively by the retailer is referred to as
A. a category specialist.
B. a selective brand.
C. a category killer.
D. an exclusive brand.
E. a co-op brand.
D (an exclusive brand)
Retailers may modify product, price, and/or promotion to attempt to increase their _____, which is the percentage of the customer’s purchases made from that particular retailer.
A. share of wallet
B. consumer position
C. distribution intensity
D. retail position
E. share of market
A (share of wallet)
The old cliché claiming the three most important things in retailing are “location, location, location” corresponds to which of the following components of the retail strategy?
A. Price
B. Product
C. Promotion
D. Place
E. Product placement
D (place)
Which of the following is considered the greatest advantage offered to consumers by brick-and-mortar stores compared to online shopping?
A. Being able to browse for products
B. Being able to use all five of their senses
C. Having personal service
D. Having both cash and credit payment options
E. Enjoying the entertainment value of shopping in stores
B (being able to use all five of their senses)
Salespeople can be particularly helpful when purchasing a(n) _____ product.
A. inexpensive
B. standard
C. complicated
D. easy-to-find
E. frequently purchased
C (complicated)
When customers purchase merchandise in stores, the physical presence of the store _____ their perceived risk of buying and _____ their confidence that any problems with the merchandise will be corrected.
A. reduces; increases
B. heightens; reduces
C. increases; increases
D. reduces; reduces
E. increases; reduces
A (reduces; increases)
Stores are limited by their _____, which is generally not an issue when shopping on the Internet.
A. ability to reduce shopper’s perception of risk
B. size
C. sales staff
D. inability to accept cash payments
E. ability to provide a social experience
B (size)
Offering live, online chat options to shoppers is a way of increasing the value of online shopping because it provides
A. enhanced browsing.
B. entertainment value.
C. personalized offerings.
D. deeper and broader selection.
E. personalized customer service.
E (personalized customer service)
Although the number of their physical stores is limited, L.L.Bean is widely known for offering unique, high-quality merchandise. Adding an Internet channel was particularly attractive because it allowed the company to _____ without having to build new stores.
A. integrate its CRM
B. personalize offerings
C. gain consumer insights
D. increase customer satisfaction and loyalty
E. expand its market presence
E (expand its market presence)
Patagonia reinforces its image of selling high-quality, environmentally friendly sports equipment in its stores, catalogs, and website. Which of the following omnichannel challenges has Patagonia overcome by emphasizing function, not fashion, in the descriptions of its products in all of its channels?
A. Integrated CRM
B. Brand image
C. Pricing
D. Supply chain
E. Cannibalization
B (brand image)
Both Walmart and JCPenney initially had separate organizations for their Internet channel but subsequently integrated them with stores and catalogs to address the _____ challenge of omnichannel retailing.
A. pricing
B. brand image
C. supply chain
D. integrated CRM
E. cannibalization
C (supply chain)
There are three elements in any integrated marketing communication strategy: the _______, the channels through which the message is communicated, and evaluation of the results of the communication.
A. product being marketed
B. promotion strategy used
C. consumer being targeted
D. message being delivered
E. cost of the communication
C (consumer being targeted)
Home Depot hired an advertising agency to develop television ads for its grand opening in southern Maine. The advertising agency represents which of the following components of the communication process?
A. Sender
B. Transmitter
C. Communication channel
D. Receiver
E. Feedback
B (transmitter)
When designing in-store signage, retailers often develop yellow signs and shelf tags with bold lettering to catch consumers’ attention. The use of visuals in this manner represents the _____ component of the communication process.
A. communication channel
B. receiver
C. feedback
D. encoding
E. sender
D (encoding)
Based on the recommendation of its advertising agency, Home Depot chose to advertise on HGTV. In this situation, HGTV represents which component of the communication process?
A. Transmitter
B. Communication channel
C. Receiver
D. Feedback
E. Noise
B (communication channel)
In the communication process, _____ refers to the process by which the receiver interprets the sender’s message.
A. encoding
B. decoding
C. feedback
D. aided recall
E. noise
B (decoding)
Macy’s is conducting marketing research to determine whether or not its advertising message could be clearly understood by its customers. This relates to which component of the communication process?
A. Sender
B. Receiver
C. Encoding
D. Feedback loop
E. Communication channel
D (feedback loop)
The AIDA model is also known as the _____ model.
A. think, feel, say
B. think, say, do
C. think, feel, do
D. feel, like, do
E. like, think, feel
C (think, feel, do)
The AIDA model represents a series of mental stages a consumer goes through and includes awareness, action, interest, and
A. desire.
B. decision making.
C. decoding.
D. deliberation.
E. debate.
A (desire)
Harley Davidson has _____ if a consumer responds “Harley” when asked about American-made motorcycles.
A. limited recall
B. interest
C. prompted recall
D. limited awareness
E. top-of-mind awareness
E (top-of-mind awareness)
The highest level of awareness is
A. interest.
B. aided recall.
C. lagged effect.
D. brand awareness.
E. top-of-mind awareness
E (top-of-mind awareness)
After the firm has piqued the interest of its target market, the goal of subsequent IMC messages should move the consumer from “I like it” to
A. “I am aware of it.”
B. “What is it?”
C. “I need more information.”
D. “I want it.”
E. “I know what it is.”
D (“I want it”)
The fact that a particular advertisement might not cause a consumer to make an immediate purchase is referred to as
A. delayed interest.
B. unaided recall.
C. a lagged effect.
D. delayed awareness.
E. top-of-mind awareness.
C (lagged effect)
From the consumer’s perspective, the elements of an IMC strategy can be viewed as being either
A. direct or indirect.
B. passive or interactive.
C. simple or complex.
D. general or specific.
E. personal or impersonal.
B (passive or interactive)
The U.S. government promoted public participation in the 2010 census during the televised Super Bowl game in its efforts is to raise awareness of when and how the census works. This is an example of which of the following promotional elements?
A. Advertising
B. Public relations
C. Sales promotions
D. Personal selling
E. Direct marketing
A (advertising)
Traditionally, advertising has been _____ and _____.
A. passive; reciprocal
B. passive; online
C. interactive; offline
D. interactive; online
E. passive; offline
E (passive; offline)
To support the other promotional efforts, firms use _____ to generate “free” media attention.
A. direct marketing
B. public relations
C. personal selling
D. sales promotion
E. advertising
B (public relations)
According to your text, sales promotions such as free samples and point-of-purchase displays are designed to build
A. long-term sales.
B. short-term sales.
C. customer loyalty.
D. brand awareness.
E. brand attitudes.
B (short-term sales)
Personalized e-mail marketing is an online, passive form of persuasive communication and would be classified as an example of
A. advertising.
B. direct marketing.
C. personal selling.
D. public relations.
B (direct marketing)
Omaha Steaks sending e-mail coupons for items that customers have purchased previously and mailing slick pictures of gourmet steaks and meal packages to addresses that have received orders in the past is an example of
A. advertising.
B. public relations.
C. personal selling.
D. direct marketing.
E. sales promotions.
D (direct marketing)
Customers can use the Internet to share their opinions about products and services via YouTube, Facebook and Twitter. In doing so, they can help facilitate the consumer decision process through use of
A. e-commerce.
B. social media.
C. computer-driven shopping.
D. mobile marketing.
E. free advertising.
B (social media)
The _____ method determines the budget required to undertake specific tasks to accomplish communication objectives.
A. task
B. available budget
C. objective-and-task
D. rule-of-thumb
E. competitive parity
C (objective-and-task)
What factors are used in the rule-of-thumb methods to determine the communication budget?
A. Prior sales and communication activities
B. Type of media and its associated cost
C. Communication objectives and target audience
D. Gross profit and type of media
E. Market share and gross profit
A (prior sales and communication activities)
Since her firm’s share of the market has increased from 2.5 to 3 percent, Allyson had determined she would set her share of communication expenses at 3 percent of sales, which is an example of the use of the _____ method.
A. objective
B. rule-of-thumb
C. objective-and-task
D. competitive parity
E. percentage of sales
D (competitive parity)
Limitations of the _____ budgeting method include not allowing firms to exploit the unique opportunities or problems they confront in a market. If all competitors use this method to set communication budgets, their market shares will stay approximately the same over time.
A. available budget
B. rule-of-thumb
C. objective-and-task
D. percentage of sales
E. competitive parity
E (competitive parity)
Jacob determined one of the metrics he would use to gauge the level of exposure his marketing message had with his target market was the number of times the target was exposed to his message throughout the six weeks of the campaign, representing its
A. reach.
B. frequency.
C. relevance.
D. gross rating points.
E. return on investment.
B (frequency)
Nathan gauged the level of exposure to his marketing campaign using the percentage of the target population exposed at least once to his advertisement, representing its
A. reach.
B. frequency.
C. relevance.
D. gross rating points.
E. return on investment.
A (reach)
Which of the following formulas is accurate for calculating gross rating points (GRP)?
A. Impressions multiplied by frequency
B. Reach multiplied by impressions
C. Reach multiplied by frequency
D. Reach divided by impressions
E. Reach divided by frequency
C (reach multiplied by frequency)
Google’s AdWords system provides a Quality Score as a measure of _____, which indicates the usefulness of an ad message to consumers doing a Google search.
A. reach
B. frequency
C. impressions
D. relevance
E. cost per click
D (relevance)
_____ is (are) the number of times an ad appears in front of the user.
A. Frequency
B. Reach
C. Impressions
D. Relevance
E. Clicks
C (impressions)
If a sponsored link was delivered 100 times and 10 people clicked on it, then the number of impressions is 100, the number of clicks is 10, and the click-through-rate (CTR) would be
A. 10 percent.
B. 100 percent.
C. 1 percent.
D. 0 percent.
E. 15 percent.
A (10 percent)
Which of the following is not an aspect of advertising?
A. It must be carried by some medium.
B. Legally, the source of the message must be known or knowable.
C. It is a persuasive form of communication.
D. It is used to sell only products.
E. It is not free.
D (It is used to sell only products)
Which of the following is the first step in planning and executing an advertising campaign?
A. Convey the message.
B. Create the advertisements.
C. Determine the advertising budget.
D. Identify the target market.
E. Set the advertising objectives.
D (Identify the target market)
A(n) _____ is a subsection of the firm’s overall marketing plan that explicitly analyzes the marketing and advertising situation, identifies the objectives of the advertising campaign, clarifies a specific strategy for accomplishing those objectives, and indicates how the firm can determine whether the campaign was successful.
A. informational appeal
B. advertising plan
C. push strategy
D. promotional plan
E. publicity strategy
B (advertising plan)
It is in the _____ step of the process of developing an advertising campaign that the metrics are articulated against which advertising success or failure of the campaign is measured.
A. convey the message
B. identify the target market
C. create the advertisements
D. set the advertising objectives
E. determine the advertising budget
D (set the advertising objectives)
When introducing new products, Quaker Oats uses a(n) _____ strategy by offering retailers discounts on the products along with point-of-purchase displays to motivate them to highlight the product.
A. pull
B. push
C. reminder
D. persuasive
E. informative
B (push)
When a company wants to create and build brand awareness, it would use _____ advertising.
A. informative
B. persuasive
C. reminder
D. push
E. pull
A (informative)
Firms often use _____ advertising to convince consumers to take action such as switching brands, trying a new product, or even continuing to buy the advertised product.
A. pull
B. push
C. reminder
D. persuasive
E. informative
D (persuasive)
_______ advertising generally occurs in the growth and early maturity stages of the product life cycle, when competition is most intense, and attempts to accelerate the market’s acceptance of the product.
A. Informative
B. Persuasive
C. Reminder
D. Push
E. Pull
B (persuasive)
As a product in the maturity stage of its life cycle, chewing gum brands would most likely require the use of _____ advertising to prompt purchases.
A. informative
B. persuasive
C. reminder
D. push
E. pull
C (reminder)
The “Beef, It’s What’s for Dinner” campaign to encourage beef consumption is an example of _____ advertising.
A. relational
B. institutional
C. public service
D. attribute-based
E. product-focused
B (institutional)
The “Indoor Tanning Is Out” campaign is designed to raise awareness of the increased risk of melanoma, the deadliest form of skin cancer, and decrease usage of tanning salons. This is an example of a(n) _____ advertisement.
A. relational
B. institutional
C. public service
D. attribute-based
E. product-focused
C (public service)
_______ is a tool used to communicate the distinct attributes of a product; it can be used as a slogan or a theme and often becomes a snapshot of the entire advertising campaign.
A. The media mix
B. A unique selling proposition
C. An informational appeal
D. Puffery
E. A headline
B (a unique selling proposition)
ExxonMobil uses a(n) _____ appeal when it explains technical aspects of its products, such as lithium ion batteries, hydrogen technology, biofuels, and CO2 capture technologies.
A. candid
B. emotional
C. engineering
D. informational
E. contemporary
D (informational)
Bowflex and Jenny Craig develop advertisements featuring celebrities to address their target markets’ need for feeling good about themselves. This is an example of which of the following?
A. Social appeal
B. Utilitarian appeal
C. Relational appeal
D. Emotional appeal
E. Informational appeal
D (emotional appeal)
As a means to reach large numbers of anonymous audience members, USA Today newspapers are considered to be which of the following types of media?
A. Mass media
B. Niche media
C. Utilitarian media
D. Emotional media
E. Transatlantic media
A (mass media)
HGTV and Home and Gardens magazine fall into which of the following categories of media?
A. DIY media
B. Mass media
C. Niche media
D. Specialty media
E. Utilitarian media
C (niche media)
Coppertone uses a _____ advertising schedule, where it advertises heavily in the months leading up to and during the summer, with no advertising after the season ends.
A. status quo
B. pulsing
C. flighting
D. seasonal
E. continuous
C (flighting)
KEA advertises throughout the year, but significantly increases its advertising during the back-to-school time frame, thus implementing a _____ advertising schedule.
A. seasonal
B. pulsing
C. flighting
D. continuous
E. status quo
B (pulsing)
In a print advertisement, items used to identify the sponsor of the ad, such as the company logo or USP, are referred to as
A. brand elements.
B. subheads.
C. headlines.
D. copy elements.
E. advertising sponsorship.
A (brand elements)
Assessing the effectiveness of an advertising campaign while it is running by monitoring key indicators is referred to as
A. pulsing.
B. flighting.
C. cross-checking.
D. sampling.
E. tracking.
E (tracking)
The _____ enforces truth in advertising laws and defines deceptive and unfair advertising practices.
A. U.S. Postal Service
B. Federal Trade Commission
C.Federal Communications Committee
D. Federal Communications Commission
E. Food and Drug Administration
B (federal trade commission)
The slogans “Coolest Video Game” and “World’s Best Hamburgers” are examples of _____, which is the legal exaggeration of praise, stopping just short of deception, lavished on a product.
A. flighting
B. pulsing
C. puffery
D. inflated advertising
E. cross-promoting
C (puffery)
In many cases, _____ activities support other promotional efforts by generating “free” media attention and general goodwill.
A. direct marketing
B. public relations
C. personal selling
D. sales promotion
E. pulsing
B (public relations)
When two or more firms join to reach a specific target market, it is referred to as
A. cross-promoting.
B. pulsing.
C. flighting.
D. product placement.
E. product highlighting.
A (cross-promoting)
As a type of sales promotion, _____ encourage trial and reduce consumer risk, although they may negatively impact perceptions of brand value.
A. coupons
B. deals
C. premiums
D. samples
E. rebates
B (deals)
A _____ offers an item for free or at a bargain price to reward some type of behavior, such as buying, sampling, or testing.
A. sweepstakes
B. loyalty program
C. premium
D. POP display
E. rebate
C (premium)
A form of sales promotion that offers prizes based on a chance drawing of entrants’ names is referred to as a
A. contest.
B. rebate.
C. sweepstake.
D. premium.
E. deal.
C (sweepstake)
The Holiday Inn Priority Club is an example of _____, which is specifically designed to retain customers by offering premiums or other incentives to customers who make multiple purchases over time.
A. a sampling program
B. a rebate
C. a premium
D. cross-promotion
E. a loyalty program
E (a loyalty program)
An example of _____ is when Tom Hanks is shown stranded on an island with a FedEx box in the movie Cast Away.
A. event sponsorship
B. product placement
C. a premium
D. a loyalty program
E. cross-marketing
B (product placement)
J. Crew teaming up with several famous brands, including Belstaff and Timex, to offer exclusive products in the J. Crew stores and on its website is an example of
A. sampling.
B. POP displays.
C. cross-promoting.
D. dual marketing.
E. product placement.
C (cross-promoting)