INTRODUCTION TO MARKETING

MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville INTRODUCTION TO MARKETING Chapter 1 Marketing: The Art and Science of Satisfying Customers 1. A marketing philosophy summarized by the phrase “a good product will sell itself” is characteristic of the _____ era. a) production b) sales c) marketing d) relationship 2. Assume you want to increase the number of customers by applying the MARKETING CONCEPT. Which of the following strategies would be most consistent with this approach? a) Reduce product costs c) Offer more product variety than competitors b) Target markets d) Promote heavily If a company such as J.B) Trucking wanted to avoid MARKETING MYOPIA, it should define its business as ________. a) transportation b) trucking c) materials handling d) freight hauling 3. Chapter 2 Strategic Planning and the Marketing Process LEVELS OF STRATEGIC PLANNING 4. In the strategic planning process, the ____ is developed FIRST. a) corporate strategy. c) the mission statement. e) business-unit strategy. b) marketing strategy. d) the marketing mix. Boston Consulting Group 5. The Disney Picture unit of the company focuses on family films and animated features. In fact, Disney periodically recycles even its oldest animated films such as Snow White back into the theaters to delight another generation of fans. The aspect of the firm fits into the _____ category of the BCG growth-market share matrix. a) problem child b) dog c) cash cow d) star e) question mark A question mark is EXPECTED to develop into a: a) cash cow or a star. b) dog or a star. c) cash cow. 6. d) problem child) e) star. 7. According to the Boston Consulting Group, marketers may classify their products as all of the following except: a) cash contributors. b) stars. c) dogs. d) question marks. e) cash cows. A SBU with high product-market growth and high relative market share would be referred to as a: a ) question mark. b) dog. c) cash cow. d) problem child. e) star. A question mark is EXPECTED to develop into a: a) cash cow or a star. b) dog or a star. c) cash cow. A star is EXPECTED to develop into a: a) cash cow or a dog. b) dog or a star. c) cash cow. A cash cow is EXPECTED to develop into a: a) dog. b) dog or a problem child. c) question mark. 1 8. 9. d) problem child. e) star. 10. d) problem child. e) dog. 11. d) problem child. e) star. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville SWOT Analysis 11. In SWOT analysis, the ____ refer to characteristics INTERNAL to the organization. a) S and O b) S and W c) W and O d) W and T In SWOT analysis, the ____ refer to characteristics EXTERNAL to the organization. a) S and O b) S and W c) W and O d) W and T 12. 17. According to the SWOT matrix, an organization should try to CONVERT ___ to ___. a) strengths, opportunities. c) threats, opportunities. e) threats, strengths. b) threats, weaknesses. d) opportunities, strengths. 13. According to the SWOT matrix, an organization should try to MATCH _____ to _____. a) strengths, opportunities. c) threats, opportunities. e) threats, strengths. b) threats, weaknesses. d) opportunities, strengths. 14. Strengths and weaknesses refer to issues that are environmental (i.e., external to the firm) and opportunities and threats refer to issues that are internal to the firm. Competitive Growth Strategies 15. The two major parts of a marketing strategy are_____ and _____: a) target market selection, the marketing mix. c) target market selection, SWOT analysis. b) BCG analysis, portfolio analysis. d) intensive growth, diversified growth. 16. In pursuing a strategy of market penetration, which of the following IS NOT relevant? a) improve existing products. c) add product features. b) make available at more outlets. d) offer coupons. In pursuing a strategy of market development, which of the following IS NOT relevant? a) new uses for the product. c) add product features. b) seek out new markets. d) lower prices. In pursuing a strategy of product development, which of the following IS NOT relevant? a) increase product quality. c) new uses for the product . b) improve existing products. d) make available at more outlets. 17. 18. Levels of Strategic Planning FIRST-LAST 19. In the strategic planning process, which of the steps below is developed FIRST? a) objectives. c) corporate strategy. e) business-unit strategy. b) SWOT. d) goals. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 2 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 20. In the strategic planning process, the _____ is performed FIRST a) BCG analysis. c) business-unit strategy. e) corporate strategy b) marketing mix. d) marketing strategy. In the strategic planning process, which of the steps below is developed LAST? a) corporate strategy. c) the mission statement. e) business-unit strategy. b) marketing strategy. d) the marketing mix. 21. BEFORE-AFTER 22. In the strategic planning process, the ____ is developed BEFORE ____. a) functional plan, strategic plan. d) ALL OF THE ABOVE. b) operational plan, functional plan. e) NONE OF THE ABOVE. c) operational plan, strategic plan. 23. In the strategic planning process, the ____ is developed BEFORE ____. a) mission statement, the SWOT. d) objectives, corporate strategy. b) corporate strategy, mission statement. e) NONE OF THE ABOVE. c) corporate strategy, objectives. Competitive Growth Strategies 24. The marketing mix is used in: a) developing business-unit strategy. c) developing marketing strategy. e) NONE…. b) developing the marketing plan. d) evaluating market development. 251. Intensive growth strategies is an approach useful for: a) developing business-unit strategy. c) developing marketing strategy. b) developing the marketing plan. d) evaluating market development. Which of the following is NOT one of the strategies for intensive growth? a) market penetration. c) product development. b) diversification. d) market development. The two major parts of a marketing strategy are_____ and _____: a) target market selection, the marketing mix. c) target market selection, SWOT analysis. b) BCG analysis, portfolio analysis. d) intensive growth, diversified growth. Three main strategies for intensive growth are market penetration, product development, and: a) sales penetration. c) market saturation. e) market growth. b) product improvement. d) market development. Which of the following is NOT one of the strategies for intensive growth? a) market penetration. c) product development. b) diversification. d) market development. In pursuing a strategy of market penetration, which of the following IS NOT relevant? a) improve existing products. c) add product features. b) make available at more outlets. d) offer coupons. 3 e) NONE …. 26. 27. 28. 29. 30. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 31. In pursuing a strategy of market development, which of the following IS NOT relevant? a) new uses for the product. c) add product features. b) seek out new markets. d) lower prices. In pursuing a strategy of product development, which of the following IS NOT relevant? a) increase product quality. c) new uses for the product . b) improve existing products. d) make available at more outlets. More than 90 percent of cereal is consumed at breakfast, but ads for Kellogg’s Cracklin’ Oat Bran say it tastes like oatmeal cookies and makes “a great snack anytime)” Kellogg’s is implementing a strategy of ________ with this product. a) market penetration c) product development b) market development d) product diversification 32. 33. 344. Locating new markets for existing products is called ________. a) market penetration c) product development b) market development d) product diversification 35. Which of the following is a MARKET PENETRATION STRATEGY for new product development? a) Morton Salt advertises a way to use salt/ vinegar to make a homemade metal polish. b) Ford Motor Company introduces an electric car. c) Black & Decker sells small home appliances. d) Procter & Gamble sells its traditional products in new overseas markets. Welch’s targeting of seniors with commercials promoting the health benefits of grape juice, a product they had seldom consumed in the past, is an example of the NEW PRODUCT DEVELOPMENT STRATEGY of _____. a) market penetration b) market development c) product developmentd) product diversification 36. 37. In keeping with its corporate strategy of “building a global luxury accessories business,” Ralph Lauren introduced a new line of footwear. In business terms, the actions of Ralph Lauren are described as _____. a) market penetration b) market development c) product development d) product diversification 38. General Motors’ acquisition of Hughes Aircraft Corporation, a firm that makes aircraft components and electronics, is an example of the STRATEGY of ________. a) market penetration b) market development c) product development d) product diversification Chapter 3 The Marketing Environment, Ethics, and Social Responsibilities 39. Consumerism is the _____. a) study of consumer behavior b) orientation of forward-thinking businesses who are interested in developing transactional relationships with their customers c) social movement directed toward protecting consumers from harmful business practices d) enforcement of the Consumer Bill of Rights by the U.S. Justice Department e) political movement directed toward limiting consumers’ right to litigation 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 4 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 40. _____ refers to claims of superiority that neither sponsors nor critics of the ads can prove as true or untrue) a) Status quo advertising c) Dynamic advertising e) Metaphoric promotions b) Puffery d) Fair and equitable advertising _____ is the tendency to prefer products or people of one’s own culture over those from other countries. a) Nationalization b) Ethnocentrism c) Domestication d) Expropriation e) Democratization 41. Chapter 4 E-Business in Contemporary Marketing 42. When pricing, distribution, and promotion for online Web sites are NOT coordinated among the manufacturer, distributor, and/or retailer, it is considered a ________. a) failure to integrate the marketing message b) channel conflict c) relationship marketing failure d) conflict of interests Chapter 5 – Consumer Buying Behavior 43. The five major stages of the consumer buying decision process, in order, are a) problem recognition, purchase, evaluation of alternatives, postpurchase evaluation, rebuy. b) information search, establishment of product criteria, evaluation of alternatives, purchase, postpurchase evaluation. c) problem recognition, information search, evaluation of alternatives, purchase, postpurchase evaluation. d) problem recognition, information search, evaluation of alternatives, postpurchase evaluation, purchase) e) information search, evaluation of alternatives, purchase, trial adoption period, postpurchase evaluation. The five categories of situational influences are a) store atmosphere, location, aromas, sounds, and lighting. b) product involvement level, physical surroundings, social surroundings, time perspective, and purchase reason. c) antecedent states, physical surroundings, social surroundings, time perspective, and space dimensions. d) purchase reason, time perspective, social surroundings, physical surroundings, and buyer’s momentary mood) e) social surroundings, physical surroundings, time pressures, purchase reason, and lifestyles. The U.S. Army recruits soldiers based on the slogan, “An army of one,” implying that people can reach their full personal potential in the U.S. Army. This is an appeal to what need according to MASLOW’S HIERARCHY of needs? a) Esteem b) Social c) Safety d) Physiological e) Self-actualization 44. 45. Chapter 6 – Business Markets and Buying Behavior 46. Which method of business buying is necessary when products are highly homogeneous and examination of each item is not feasible? a) Homogeneous selection b) Description c) Negotiation d) Sampling e) Inspection 5 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 47. Barry Gluckman of WP International, a major marketer of word-processing software, calls the secretary of Renee Doucette, director of purchasing for MMK, Inc) He sets up an appointment to discuss an upcoming purchase of software) The secretary plays the role of ___________ in this purchase decision. a) order giver b) decider c) buyer d) buying center captain e) gatekeeper Chapter 7 – GLOBAL MARKETS AND INTERNATIONAL MARKETING (M-C) 48. Standardizing many Nike and Adidas shoe models worldwide is an example of a) customization. c) nationalization. e) internationalization. b) culturalization. d) globalization. Globalization of markets requires developing marketing strategies as if the world were one market. Which one of the following marketing mix variables is most difficult to standardize for globalization? a) Labels c) Product characteristics e) Package b) Brand name d) Media allocation Swiss-based Nestlé has taken a global approach to marketing its chocolate products. Which of the following is most easily standardized? a) Advertising b) Promotion c) Price d) Product e) Distribution 49. 50. Chapter 8 — Marketing Research and Sales Forecasting 51. A firm has conducted market research and found that customer satisfaction with its product is quite high. Nonetheless, repurchase behavior is very low. The research design evidently has a problem with a) secondary data) b) reliability. c) validity. d) generalizability. e) reporting findings. If Little Caesars wants to determine the impact of different coupon offers on pizza unit sales, it needs to conduct a) causal research. c) exploratory research. e) stratified sampling. b) survey research. d) hypothesis development. Marketing researchers at Essex Co. repeated a particular experiment several times and discovered that the results produced each time were nearly identical. This phenomenon would indicate that the results were a) predictable) b) valid) c) compatible) d) reliable) e) unusable) In what type of sampling does every element have a known chance of being selected? a) Quota b) Probability c) Stratified d) Random e) Nonprobability Which sampling design gives every member of the population an equal chance of appearing in the sample? a) Quota b) Poll c) Random d) Stratified e) Nonprobability 52. 53. 54. 55. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 6 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville CHAPTER 9 – Target Markets: Segmentation and Evaluation 56. To find a target market, a firm can use the a) socioeconomic strategy and the psychological strategy. b) undifferentiated strategy, the concentrated strategy, and the differentiated strategy. c) product differentiation strategy and the customer differentiation strategy. d) demographic strategy and the psychographic strategy. e) total market strategy and the undifferentiated strategy. Why would a company use the undifferentiated strategy? a) The undifferentiated strategy is expensive to implement but tends to produce the most sales. b) The needs of individual consumers in the target market for a specific product are similar, so the organization can satisfy most customers with a single marketing mix. c) The undifferentiated strategy requires less time and fewer resources. d) The needs of individual consumers are dissimilar, and distinctive marketing mixes are required to satisfy them. e) The undifferentiated strategy is the one strategy that provides maximum satisfaction to the whole market. General Motors has learned that some people want sports cars, while others want vans, trucks, sedans, and economy cars. In this instance, General Motors has found its markets to be a) heterogeneous. b) concentrated) c) undifferentiated) d) homogeneous. e) focused) The purpose of market segmentation is to a) differentiate products. b) identify a single marketing mix that will be satisfactory for the general market. c) meet the needs of homogeneous markets. d) divide a total market to enable a marketer to develop a more precise marketing mix. e) reduce the overall cost of marketing activities. If Jaguar division of Ford Motor Co. focused all its marketing efforts on professionals earning over $250,000, it would be using a(n) ___________ strategy. a) concentrated b) multisegmented c) stratified d) undifferentiated e) homogeneous McDonald’s uses a segmentation strategy for its sandwiches based on market characteristics such as age, gender, or income) Which of the following segmentation variables is McDonald’s using? a) Psychographic b) Education c) Geographic d) Demographic e) Product-related Segmentation variables are usually grouped into four categories: a) attitudes, lifestyles, behaviors, and gender. b) geopolitical, income, behavioristic, and psychographic) c) demographic, geographic, psychographic, and behavioristic) d) demographic, geographic, religion, and income) e) geographic, demographic, psychographic, and attitudes. 57. 58. 59. 60. 61. 62. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 7 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 63. In addition to population and geography, a researcher might combine other indicators to segment markets geographically. Of the indicators listed, which one would marketers be least likely to use? a) Income and job growth c) Average size of the households b) Migration patterns d) Product usage patterns Socioeconomic market segmentation is another name for ________ segmentation. a) product-related b) demographic c) psychographic d) geographic Ford Motor Company surveyed 10,000 customers to analyze their needs and preferences in automobiles. At the end of the survey, respondents were asked to provide demographic information, including age) Responses concerning preferences were strikingly similar for each group within a specific five-year age range) This result is called the ________ effect. a) income b) life cycle c) cohort d) Hafner’s Life cycle stages include all of the following except: a) unmarrieds b) first child c) remarrieds 64. 65. 66. d) empty nesters 67. According to Engel’s laws: a) As family income increases, the percent spent on recreation and education increases. b) As income increases, the percent spent for clothing and household operations increases. c) As income increases, the percent spent for food and medical items increases. d) As income decreases, the percent spent on housing and food decreases. The type of segmentation that divides a population into groups with similar psychological characteristics, values, and lifestyles is ________. a) demographic b) polymorphic c) psychographic d) parallelgraphic VALS2 defines eight personality types that impact purchasing decisions. Which set of traits is NOT part of the VALS2 matrix? a) Achievers and Strivers c) Thinkers and Believers b) Actualizers and Survivors d) Creators and Definers The 80/20 principle states that ________. a) market segmentation succeeds 80 percent of the time and fails 20 percent b) roughly 80 percent of total product sales come from 20 percent of customers c) 80 percent of the market segment is tapped, and 20 percent has not yet been reached d) 80 percent of the market can be segmented, and 20 percent cannot Product-usage segmentation can be an important tool for marketers as they attempt to ____. a) eliminate competition b) identify heavy users and lure them away from a competitive brand c) reduce costs from 80 percent to 20 percent d) increase profitability The best product to market using an undifferentiated marketing strategy would be ____ . a) luxury automobiles b) snack foods c) table salt d) imported wine 8 68. 69. 70. 71. 72. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 73. An undifferentiated marketing strategy ________. a) serves the consumer better because the products offered are designed to meet the needs of a specific group of people b) benefits from the control and efficiency of short production runs c) is able to compete effectively because it is able to capture high profits in small segments of the market d) is efficient from a production and promotional point of view The strategy sometimes referred to as mass marketing is also known as ________. a) concentrated marketing c) undifferentiated marketing b) macromarketing d) differentiated marketing As compared with undifferentiated marketing, the firm that practices differentiated marketing may generally expect ________. a) less sales by segment c) greater total promotional costs b) lower total production costs d) lower inventory costs A firm that chooses to target potential customers by zip code, specific occupation, or even lifestyle can be said to be practicing ________. a) megamarketing c) micromarketing b) hypermarketing d) concentrated marketing Burt’s Bees skin care products, manufactured with all natural ingredients, are marketed using which strategy? a) Undifferentiated marketing c) Micromarketing b) Differentiated marketing d) Concentrated marketing Which of the following LEAST describes concentrated marketing? a) It is very effective for large corporate competitors that have marketplace clout. b) It is utilized by firms that wish to focus on multiple segments. c) It is an effective strategy for specialty or unique products. d) It is more impacted by shifts in consumer buying habits and other external factors. A company that chooses to focus its efforts on satisfying only one market segment for profit is using a ________ strategy. a) niche marketing c) undifferentiated marketing b) elimination marketing d) designer marketing A positioning map ________. a) is used primarily by companies utilizing undifferentiated marketing strategies b) will remain constant through the entire product life cycle c) shows how consumers view a product relative to competitive products d) outlines how to introduce a new product to the marketplace A marketer may change segmentation strategy ________. a) if the company should go through internal changes in systems and operations b) as the product progresses through the stages of the product life cycle c) on the whim of current management 9 74. 75. 76. 77. 78. 79. 80. 81. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville d) when the company realizes they have successfully reached their target market 82. Demographics: a) segments people on the basis of what they do with a product. b) segments people on the basis of when they use a product. c) uses qualitative data to explain why seemingly homogeneous consumers are not. d) segments people on the basis of shared attitudes, opinions, and interests. e) are measurable characteristics such as age and gender. Which of the following is not an example of a demographic segmentation variable? a) lifestyle c) race and ethnicity e) age b) income and social class d) gender What is PRIZM? a) a method of removing heterogeneous variables from a target market b) a method of data mining used by marketing managers to implement market development strategies c) a database that classified every U.S. zip code according to demographic and lifestyle characteristics d) a method of confirming that the chosen target market is representative of the ideal market segment e) a positioning strategy used in the introduction of new consumer products What is VALS? a) a system used for psychographic segmentation b) a database of people who have purchased similar products c) a strategy used for implementing geodemographic segmentation d) a method of confirming that the chosen target market is representative of the ideal market segment e) a method of removing heterogeneous variables from a target market The 80/20 rule is most directly related to __________ segmentation. a) demographic c) geodemographic e) psychographic b) behavioral d) socioeconomic Why would a company adopt an undifferentiated targeting strategy when there is so much evidence of the benefits of a differentiated strategy? a) to more efficiently focus on its CRM strategy b) to remove the need for disintermediation c) to move a product to the next stage of its product life cycle d) to take advantage of economies of scale e) all of the above Psychographic segments market in terms of shared activities, interests, and opinions. a) True b) False The VALS system is a crucial part of geodemographic segmentation. a) True b) False 10 83. 84. 85. 86. 87. 88. 89. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 90. The 80/20 rule has a powerful influence on behavioral segmentation. a) True b) False Perceptual maps are a tool for implementing positioning strategies. a) True b) False Segmentation is most appropriate for use with homogeneous markets. a) True b) False A differentiated targeting strategy is one in which the organization directs its marketing efforts at two or more segments by developing one marketing mix to be used in all selected segments. a) True b) False For market segmentation to be effective, a firm must be able to reach a chosen segment with a particular marketing mix. a) True b) False The demographic characteristics of a market can be measured readily through observation of surveys. a) True b) False The two major categories of markets are: a) business and reseller. c) consumer and business. e) consumer and reseller. b) consumer and producer. d) consumer and government. An undifferentiated targeting strategy can be effective when: a) many individuals have similar needs and are satisfied by several marketing mixes. b) many individuals have diverse product needs but are satisfied by a single marketing mix. c) used only in the consumer market. d) many individuals have diverse product needs that can be satisfied by a single marketing mix. e) many individuals have similar product needs that can be satisfied by a single marketing mix. Markets made up of individuals with diverse product needs are called __________ markets. a) homogeneous c) differentiated e) geodemographic b) heterogeneous d) segmented 91. 92. 93. 94. 95. 96. 97. 98. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 11 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville Segment I The firm Marketing mix Segment II Target market Segment III 99. The diagram ABOVE illustrates which targeting strategy? a) Undifferentiated c) Concentrated e) Differentiated b) Multivariable d) Price differentiation A firm with limited resources can compete with much larger organizations by: a) concentrating its efforts on a single segment. b) using a differentiated targeting strategy. c) using a geographical segmentation variable) d) using multivariable segmentation. e) concentrating its efforts on the total population. Consequences that may be associated with the differentiated targeting strategy are: a) an increase in sales and a decrease in total marketing costs. b) the use of excess production capacity and a decrease in total marketing costs. c) an increase in sales and the use of excess production capacity. d) a decrease in production costs and a decrease in total marketing costs. e) an increase in sales and a decrease in total production costs. Which of the following is not a necessary condition for effective segmentation? a) Consumers’ needs must be homogeneous. b) The segments must be divisible) c) The estimated sales potential of the segments must be measurable) d) At least one segment must provide enough profit to support a special marketing mix. e) The segments must be accessible) 100. 101. 102. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 12 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville Marketing mix I The firm Marketing Marketing mix mix II II Segment I Segment II Target market Segment III Target markets Marketing mix III 103. The type of segmentation illustrated in the diagram ABOVE: a) is effective when customers’ needs are homogeneous. b) is used when a firm directs its efforts at the market with a particular product. c) is used when a firm attempts to differentiate a particular product in customers’ minds. d) ordinarily entails higher marketing costs than a concentrated targeting strategy. e) is used by all products of staple food items. The segmentation variables that are measured most easily are: a) product benefits. c) buyer behavior. e) buyer personality. b) demographic characteristics of buyers. d) buyer motives. Geographic segmentation variables include: a) climate, citizenship, and terrain. b) city size, lifestyles, and climate) c) population density, social class, and urban/rural values. d) urban/rural values, motives, and lifestyles. e) terrain, city size, and urban/rural values. Coppertone Suncare focuses more of its marketing efforts on Miami than Portland despite their similarity in size) Here the firm is responding to differences in: a) family life cycle) c) market density. e) psychographics. b) gender. d) demographics. The three psychographic dimensions most commonly used in market segmentation are: a) personality, perception, and learning. c) motives, attitudes, and lifestyles. b) personality, perception, and behavior. d) attitudes, personality, and perception. e) personality, motives, and lifestyles. 104. 105. 106. 107. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 13 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 108. Through a program called Club Rewards, Diners Club International, the entertainment credit card, allows cardholders to purchase merchandise and trips using points earned based on dollar-volume charges per month. Diners’ program is based on which of the following variables? a) Lifestyle c) Behavioristic e) Benefit b) Demographic d) Psychographic Which one of the following product categories is most likely to be segmented based on family life cycle? a) Dictionaries c) Cosmetics e) Beer b) Jewelry d) Automobiles 109. Chapter 10 — Relationship Marketing and CRM 110. Which of the following is an example of affinity marketing? a) University of Iowa branded credit card c) Blockbuster Rewards video card b) Hallmark’s Gold Crown card d) United Airlines Mileage Plus program The Eddie Bauer edition of the Ford Explorer is an example of ________. a) co-branding b) co-marketing c) lateral partnership d) internal partnership Which level is NOT part of the relationship marketing continuum? a) Focus on price c) Focus on customer integration b) Focus on social interactions d) Focus on independent partnership A firm might use PROACTIVE methods such as visiting, calling, or mailing written surveys to clients to assess customer satisfaction. The opposite of PROACTIVE is _______. Best Buy Rewards Program tracks customer sales, and periodically issues coupons to customers based on prior purchases. This program is classified as ________ marketing. a) affinity b) database c) frequency d) user segmentation 111. 112. 113. 114. 115. Which of the following is an EXAMPLE of AFFINITY MARKETING? a) University of Iowa branded credit card c) Blockbuster Rewards video card b) Hallmark’s Gold Crown card d) United Airlines Mileage Plus program 116. YouTube offers viewers the option to share a video they’ve seen by sending it to one or more emails in a viewer’s address book. Using one visitor to reach many people is a form of ______ marketing. a) frequency b) viral c) interactive d) lateral 117. Which of the following would be the most desired effect in the development of a buyerseller relationship between two companies? a) Increase in inventories c) Less competition b) More favorable financing terms d) Lower barriers to market entry 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 14 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 118. The Eddie Bauer edition of the Ford Explorer is an example of ________. a) co-branding b) co-marketing c) lateral partnership d) internal partnership 119. Proctor & Gamble pays special attention to the needs of national retailers, such as Target and Wal-Mart, through _____. a) national account selling c) electronic data interchanges b) business-to-business databases d) vendor managed inventory 120. Compared with the traditional system of business-to-business communication, electronic data interchange (EDI) ________. a) has a smaller capacity to gather marketing information b) improves its users' efficiency and competitiveness c) produces a substantial amount of paper and waste d) is currently inefficient until the system can be updated Which of the following is an important competitive advantage that results from effective supply chain management? a) Variable costs b) Lower level of costly innovation c) Improved conflict resolution within the chain d) Autonomy and independence among the chain's members When partners in a strategic alliance form a new business unit to implement their plans, they have created a ________. a) joint venture c) development team b) collusion organization d) merged organization Assume Boeing has formed a vertical alliance with another company. Of the firms listed, which of the following would be the most likely candidate? a) Airbus, a European consortium of aircraft manufacturers b) Pratt & Whitney, an aircraft engine manufacturer c) Northrop Grumman, a radar and defense systems manufacturer d) Lockheed Martin, a military defense contractor One of the most important measures for evaluating customer relationship programs is the ___. a) weekly cost of program administration b) average amount of each transaction the program generates c) lifetime value of a customer d) yearly income the program provides Long-term customers are usually ________. a) less valuable to a company than short-term customers b) more difficult to deal with than short-term customers c) expensive investments because the upkeep is costly d) more valuable assets than new ones because they buy more and cost less to serve Lifetime value of a customer and payback calculations recognize that ________. a) customers will always be there, regardless of the industry or product b) customer complaints have little relevance to how people actually behave c) long-term customers are usually more valuable than new ones d) customer satisfaction is not the determinant of how loyal the customer will be 15 121. 122. 123. 124. 125. 126. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 127. 128. If a customer buys an average of two paperback books per month from a bookstore at a price of $5 each for a period of three years, and each book costs the bookstore $3 with their monthly expense to service that customer at fifty cents, what is the lifetime value of the customer? a) $12.60 b) $108 c) $126 d) $1,080 A video store runs a Frequent Renter program. The store issues coupons for $50 worth of DVD rentals, and the store estimates that the overhead cost of stocking and renting DVDs to each Frequent Renter customer is $5 per month. Additionally, the customer pays $15 per month for unlimited rentals over a 12-month enrollment period) How long does the store estimate the payback period will be? a) Four months b) Five months c) Six months d) Eight months CHAPTER 11 — Product and Service Strategies 129. Which of the following products typically has the longest distribution channel length? a) Convenience products. b) Staples c) Specialty products d) Shopping products 130. BENCHMARKING seeks to achieve superior performance that results in a competitive advantage in the marketplace by all of the following except: a) Continuously repeating the process to search for and identify areas that need improvement b) Comparing internal processes with similar processes of industry leaders c) Identifying processes that need improvement d) Producing more product output at a lower cost-per-unit Which of the following is a single PRODUCT LINE? a) Four-door sedans offered by various automakers b) 125 passenger jets manufactured by Airbus and Boeing c) Hershey Kisses in a variety of flavors including almond, dark chocolate, and caramel d) Different brands of toothpaste If Honda were to acquire a bicycle manufacturer, it would add to the ______ of Honda’s PRODUCT MIX. a) depth b) width c) length d) cluster Johnson & Johnson manufactures more than 100 brands in nearly 50 product categories. The total number of products they manufacture is called the product _____. a) line extension b) cluster map c) mix length d) life cycle expectancy During the INTRODUCTORY STAGE of the PLC, ________. a) competitors rush into the market with offerings similar to those of the innovator b) technical problems are common as companies fine-tune product design c) heavy promotional outlays emphasize differences that exist between products d) profits for the product category decline, sometimes actually becoming negative 131. 132. 133. 134. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 16 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 135. A characteristic of the GROWTH STAGE of the PLC is ________. a) low prices are established b) effective competitors improve and modify their products c) early buyers of the product make their initial purchases d) buyers are hesitant to make repurchases Widgets were introduced a few years ago. The number of companies making widgets has increased recently, drawn by high profits. At the same time, differentiated products for different market segments have begun to emerge) Widgets appear to be in the ________ stage of the PLC) a) growth b) introductory c) maturity d) decline Competition between brands intensifies during which stage of the PLC? a) Maturity stage b) Introductory stage c) Growth stage d) Diminishing demand period Greta has been analyzing the competitive standing of one of her products. Since Greta’s product was introduced, 20 similar products have appeared, forcing her to change DISTRIBUTION STRATEGIES. Greta has also needed to change PRICING STRATEGIES in order to remain competitive) Sales volume has dipped, and she suspects sales of her product have reached a saturation level. At what stage of the PLC is the product? a) Introductory b) Growth c) Maturity d) Decline Genuine Products has been involved in intensive price competition with another company. Profits are low and market researchers are concerned that losses will soon occur due to a reduced market for the item. This product appears to have reached the ________ stage of the product life cycle) a) introductory b) maturity c) decline d) growth Fashions with abbreviated PLC’s are called ________. a) trends b) perishables c) fads d) staples A viable marketing strategy would be to promote the differences that separate competing products during the ________ stage of the product life cycle) a) introduction b) stabilization c) growth d) maturity 136. 137. 138. 139. 140. 141. CHAPTER 12 — Developing and Managing Brand and Product Categories 142. Advertising is often used heavily to promote a product at which level of BRAND LOYALTY? a) Brand recognition b) Brand preference c) Brand insistence d) Brand equity 143. Luxury items are often representative of which level of BRAND LOYALTY? a) Brand comprehension b) Brand recognition c) Brand insistence d) Brand preference 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 17 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 144. The Kirkland brand is owned by Costco, and the products can be purchased only at Costco stores. Costco contracts with manufacturers to produce and package products under the Kirkland name) This arrangement is called ________. a) family branding b) individual branding c) generic branding d) private labeling Small appliances and related products bearing the General Electric brand are available only through Wal-Mart stores. This type of PRODUCT DISTRIBUTION STRATEGY is called ________ branding. a) declining life cycle b) unique c) captive d) exclusive Lipton markets tea, herbal tea, and iced tea under the Lipton name) This BRANDING STRATEGY is called ________ branding. a) family b) extension c) individual product d) private label Dawn, Joy, and Ivory are dish liquid brands manufactured by Proctor & Gamble) The BRANDING STRATEGY for these products is called ________ branding. a) private b) family c) generic d) individual A company wishing to emphasize a MARKET SEGMENTATION STRATEGY for its products should strongly consider using ________ branding. a) family b) captive c) generic d) individual The added value that a certain brand name gives to a product in the marketplace is called brand ________. a) knowledge b) esteem c) recognition d) equity PRODUCT POSITIONING can be important to a new product development strategy because ________. a) its results are shown by strong brand recognition, but not by brand insistence b) it is never used with family brands, only individual brands c) it reflects consumers’ perceptions of the product’s advantages and disadvantages d) the product is at eye level on the shelf, which allows an advantageous position PRODUCT CANNIBALIZATION is the ________. a) expected outcome from the implementation of market penetration b) erosion of a competitor’s market share c) erosion of an equity brand due to the brand strategy of a competitor d) erosion of market share due to other products from the same manufacturer The STAGES OF CONSUMER ADOPTION include all but the following actions except: a) Awareness of product and seeking out information b) Evaluation of the likely benefits c) Providing feedback to the company through relationship marketing d) Trial purchase and evaluation leading to acceptance or rejection One of the five categories describing ADOPTERS of new products is the ________. a) strivers b) sluggards c) brand loyalists d) early majority 18 145. 146. 147. 148. 149. 150. 151. 152. 153. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 154. Marketers can accelerate the ADOPTION PROCESS by ________. a) paying retailers and wholesalers to heavily promote the product b) test marketing the product first c) manipulation of one of the five characteristics of a product innovation d) introducing the product into a foreign market first CHAPTER 13 — Marketing Channels and Supply Chain Management 155. The two critical components of DISTRIBUTION STRATEGY are ________ and ________. a) marketing channels; logistics and supply-chain management b) physical distribution; relationship marketing c) location; cost d) warehousing; transportation 156 MARKETING INTERMEDIARIES are ________. a) middlemen who operate between producers and consumers or business user b) management consulting firms that advise producers on distribution strategy c) “personal shoppers” who are paid to purchase products for busy customers and businesses d) financial institutions that arrange for financing terms for business purchases The traditional marketing channel proceeds from producer to ________. a) business user c) agent to business user b) agent to wholesaler to retailer to customer d) wholesaler to retailer to consumer One factor that would ordinarily result in a LONGER MARKETING CHANNEL is ________. a) a product with a low level of technical complexity b) a high level of geographic concentration of customers c) the manufacturer’s desire to control the channel d) the product’s need for specialized knowledge, technical information, and regular service A common, and often accurate, generalization is that the lower the unit price of the product, the ____. a) more likely the product will be sold direct b) shorter the channel will be c) more likely its is that marketing channel length will not be affected d) longer the channel will be DISTRIBUTION INTENSITY refers to ________. a) tying agreements held with intermediaries b) the amount of monthly cooperative advertising that a producer contracts with a retailer c) the number of intermediaries through which a producer distributes goods within a particular market d) the concentration of wholesalers carrying competing products in a given geography 19 157. 158. 159. 160. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 161. When a selective distribution strategy is chosen by a firm, ________. a) the firm seeks to distribute its products through all available channels b) a single wholesaler or retailer in an area is granted exclusive rights to sell its line c) only a limited number of retailers in a market area can handle its line d) the number of product outlets available to the consumer is unlimited If KitchenAid established an electronic storefront where customers could purchase mixers and accessories from the company’s Web site, it would cause ________ with retailers. a) vertical channel conflicts c) exclusive dealing agreements b) horizontal channel conflicts d) tying agreements Goods manufactured abroad and then sold in the U.S. market in competition with U.S. counterparts are called ________ goods. a) black market b) inferior c) grey d) horizontal Technology that uses a tiny chip with identification information that can be read by a scanner from a distance is called ________. a) RFID b) UPC c) enterprise resource technology d) logistics technology If a company attempts to reduce transportation costs by using low-cost, relatively slow water transportation, the result may be ________. a) increased production costs c) increased inventory costs b) decreased inventory costs d) decreased production costs The three forms of intermodal coordination are ________. a) piggyback, fishyback, and birdyback c) carrier, inland, and express b) port, sea, and air d) rail, truck, and boat 162. 163. 164. 165. 166. CHAPTER 14 — Retailers, Wholesalers, and Direct Marketers 167. When developing a retail strategy, which task should be completed FIRST? a) Selecting a target market c) Establishing customer service standards b) Determining a merchandising strategy d) Outlining a promotional strategy 168. The physical characteristics and amenities of a retail store that attract customers and satisfy their shopping needs is called ________. a) atmospherics c) environmental psychographics b) point-of-sale closure d) elements of place satisfaction Nordstrom, Neiman Marcus, and Saks Fifth Avenue are all stores that are classified as ________ retailers. a) shopping b) specialty c) lifestyle d) image A new kind of limited-line retailer has emerged over the past 15 years. These stores combine wide selection and low prices in a single product line and are known as ________. a) economy limited line stores b) price killers c) category killers d) smorgasbord stores 20 169. 170. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 171. A department store is a ________. a) series of limited-line retail stores that benefit from close proximity to one another b) supermarket of product lines offering the lowest price possible c) large display of rooms that contain samples of products stored in a warehouse d) series of limited-line or specialty stores gathered under one roof. CHAPTER 15 — Integrated Marketing Communications (IMC) 172. A firm’s promotional STRATEGY does not include which of the following? a) Personal selling b) Advertising c) Noise d) Publicity 173. Which of the following is not one of the OBJECTIVES of promotion? a) Creating homogeneous demand c) Increasing demand b) Providing information d) Differentiating a product The OBJECTIVE of the promotion “Kids eat free on weekends” is to ___ during periods of low demand) a) stabilize sales c) increase market share b) accentuate product value d) offer value Business-to-business customers are more likely to be served by firms whose PROMOTIONAL MIX relies heavily on ________. a) advertising b) personal selling c) public relations d) publicity The dominant PROMOTIONAL MIX component for unique, highly technical, or custommade products is ordinarily ________. a) trade shows b) publicity c) personal selling d) advertising PRODUCT PLACEMENT is a form of non-personal selling where ________. a) a company pays to have products displayed at the ends of grocery store aisles b) a company pays to have products displayed prominently in a motion picture c) companies do promotional tie-ins, such as Disney movie toys as incentives in every McDonald’s Happy Meal d) a company positions its TV commercials during prime hours for its target market In the introductory stage of the PLC, the seller of a new product would heavily emphasize the PROMOTIONAL TOOL of ________. a) advertising b) publicity c) personal selling d) public relations ________ dominates the PROMOTIONAL MIXES for low-unit value products. a) Personal selling b) Direct mail c) Advertising d) Telemarketing 174. 175. 176. 177. 178. 179. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 21 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 180. Of the following, which is NOT ordinarily thought of as a part of the promotional mix? a) Publicity b) Public relations c) Sales promotion d) Customer service The PROMOTIONAL TOOL that is generally free, though under the least amount of control by a firm of any component of the promotional mix, is ________. a) publicity b) public relations c) sales promotion d) advertising GUERILLA MARKETING can best be described as ________. a) a defensive strategy that places counter-advertising in a market targeted against strong competitive products b) free promotion initiated by fans, loyal customers, or other interested product users c) a relatively new approach to promotion that avoids orthodox media and attempts to find innovative, low-cost ways to reach a target market d) any negative campaign against a product or a company because of poor performance, incited by angered consumers who share experiences on blogs and message boards All of the following are advantages of GUERILLA MARKETING except: a) Reaches a wide audience c) Attracts attention due to its innovation b) Low cost d) Less cluttered with competitors trying to do the same Finding a successful promotional mix can be a challenge for marketers who must balance the variables that comprise the mix. Which of the following is NOT a variable of the PROMOTIONAL MIX? a) Characteristics of the product c) Stage of the product life cycle b) Positioning of competitive products d) Product price Which promotional tools would more likely be used by a company adopting a PUSH STRATEGY of product promotion? a) Print and TV advertising c) Cooperative advertising and sales incentives b) Testimonials and product sampling d) Coupons and rebates MARGINAL ANALYSIS ________. a) is the measurement of how many additional units must be sold to increase a product’s market share by 1 percent b) is the essentially the same as the task-objective method c) creates arbitrary percentage allocations to future sales figures d) involves making promotional expenditures until one additional dollar of expense generates an additional dollar of revenue 181. 182. 183. 184. 185. 186. CHAPTER 16 — Advertising and Public Relations 187. A product in the introductory stage of the PLC is often promoted using ______ advertising. a) reminder b) persuasive c) cooperative d) informative 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 22 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 188. Four firms are operating in a particular market. Firm A has a 40 percent market share, Firm B has a 30 percent market share, and Firms C and D each have 15 percent market shares. Based only on this information, which of these firms is LEAST LIKELY to use comparative advertising? a) Firm A b) Firm B c) Firm C d) Firm D RADIO SHACK is advertising SIRIUS SATELLITE radio as a present for the holiday season. The television ad benefits both companies and is an example of ________ advertising. a) informative b) cooperative c) institutional d) retail All the following are part of the TACTICAL EXECUTION of an advertising campaign EXCEPT: a) Establishing the advertising budget b) Writing and producing commercials and ads c) Using post tests to determine the effectiveness of advertising d) Pretesting advertising alternatives Compared with broadcast networks, advertising on cable gives marketers access to ________ target audiences. a) smaller b) more broadly defined c) more narrowly defined d) much larger Co-branding and co-marketing are EXAMPLES of ________. a) publicity c) cross-promotion b) marketing public relations d) sales promotion A company’s ad proclaims its product is the “most effective” in alleviating flu symptoms. This ad could be guilty of ________. a) deception b) puffery c) violating FTC regulations d) lying. 189. 190. 191. 192. 193. CHAPTER 17 — Personal Selling and Sales Promotion 194. Personal selling is likely to be the dominant promotional element when marketing ____. a) toothpaste to consumers c) truck tires to General Motors b) beer to a foreign population d) convenience goods in general 195. A primary component of a firm’s PROMOTIONAL MIX when consumers are geographically concentrated is likely to be ________. a) advertising b) publicity c) public relations d) personal selling 196. The MOST EXPENSIVE sales method overall is ________. a) over-the-counter sales because of the high overhead in retail operations b) telemarketing because of the technology costs c) telemarketing because of the high rejection rate from customers who avoid telemarketers d) field selling, largely because of the travel costs of sales personnel 23 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 197. When products require extensive explanation and interaction, the best sales method is usually ________. a) telemarketing b) field selling c) over-the-counter selling d) indirect selling Meeting customers’ needs by listening to them, understanding their problems, paying attention to details, and following through after the sale is called ________ selling. a) consultative b) transaction c) missionary d) cross Jamie works for a local bank. Whenever a new customer opens a checking account, Jamie makes sure to mention some of the other financial services the bank offers. Jamie is engaged in ________. a) cross-selling b) team selling c) transaction selling d) SFA Which of the following is usually NOT considered to be a SALES PROMOTION tool? a) Point-of-purchase advertising c) Trade shows b) Specialty advertising d) Direct mail advertising Consider the following three products: Product A is a mature product with a good brand image) Product B is a new product with no brand image yet. Product C is a mature product with a poor brand image) Sales promotions can help which product(s)? a) Product A only b) Product B only c) Products A and B d) Products A, B, and C 199. 200. 201. 202. 203. Sales promotion that appeals to marketing intermediaries rather than consumers… a) industry promotion b) trade promotion c) publicity d) public relations Which of the following is NOT an example of a trade allowance? a) Rebate b) Buying allowance c) Slotting allowance d) Promotional allowance Which promotion is intended to capture the impulse purchase? a) Trade allowances c) Point-of-purchase displays b) Trade shows d) Push money The sales promotion method that aggressively promotes the company’s name, product brand, product message, or upcoming event is called ________. a) sampling b) point-of-purchase displays c) trade shows d) specialty advertising Manufacturers motivate sales personnel through ________. a) trade allowances b) spiff or push money c) trade shows 204. 205. 206. 207. d) sales training. CHAPTER 18 – Pricing Concepts 208. Many credit cards offer so-called “teaser” rates -- low introductory rates that rise after a few months. The use of teaser rates is an example of which type of PRICING OBJECTIVE? a) Profitability b) Volume c) Meeting the competition d) Prestige 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 24 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 209. PROFITABILITY PRICING OBJECTIVES include ________. a) market growth c) sales maximization b) prestige d) target return on sales or investment PRICING OBJECTIVES that seek sales maximization or achievement of a stated market share are examples of ________ objectives. a) profitability c) meeting competition b) volume d) prestige Profit maximization is ________. a) a volume pricing objective b) not a pricing objective c) determined by the point at which the marginal revenue curve intersects the marginal cost curve d) achieved by most firms in the marketplace One of the major benefits derived from target-return OBJECTIVES is that they ________. a) eliminate competition c) encourage increased investments by stockholders b) generate excess profit d) serve as a means of evaluating performance The PRICING OBJECTIVE advocated in classical economic theory is to ________. a) increase market share c) provide a minimum return on investment b) maximize profits d) increase market growth The PIMS project revealed that the two most important factors influencing profitability were _____. a) sales cost and market demand c) profit margin and market share b) product quality and market share d) profit maximization and competition An example of a CUSTOMARY PRICE would be ________. a) $3 for a pair of 3-D glasses at the movies b) $459 for a color TV c) $1 to park in the lot at Hartwell Field. d) $27,500 for a 2006 Toyota Camry In the analysis of economic cost and revenue curves, variable costs ________. a) remain stable at any production level within a certain range b) can be calculated by dividing the total of fixed costs by the number of units produced c) change with the level of production d) represent the change in total cost that results from producing one more unit of production 210. 211. 212. 213. 214. 215. 216. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 25 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 217. Below is the MARGINAL REVENUE and MARGINAL COST at various levels of output: Output 100 150 200 250 Marginal Revenue $12 12 14 14 Marginal Cost $10 10 14 14 At what level of output is profit maximized? a) 100 units b) 150 units c) 200 units 218. d) 250 units The most popular METHOD OF PRICING is ________ pricing. a) cost-plus b) breakeven c) incremental-cost d) full-cost The BREAKEVEN POINT is the point at which the ________. a) revenue from sales equals the price of the product b) supply curve intersects the demand curve c) total revenue from sales equals the total cost of the product sold d) marginal cost curve intercepts the marginal revenue curve Mignon d’Armitage manufactures jewelry. This firm is planning to introduce a new necklace and is trying to determine how many units it must sell in order to break even. FIXED COSTS are $100,000 and VARIABLE COSTS for each unit will be $20. At the PRICE of $45 each, the number of units that must be sold in order to BREAK EVEN is ________. a) 2,500 b) 4,000 c) 5,000 d) 7,500 The Acme Flashlight Company BREAKS EVEN at 20,000 flashlights at $6 each, with the average VARIABLE COST per flashlight of $4. The amount of its FIXED COSTS is ________. a) $20,000 b) $40,000 c) $60,000 d) $80,000 A company has FIXED COSTS of $35,000 and has average VARIABLE COSTS of $7 per item. This company sells 10,000 units and just BREAKS EVEN. The unit selling PRICE for the product is ________. a) $10 b) $7.35 c) $17 d) $10.50 A product is priced to sell for $12 with average VARIABLE COSTS of $8. The company expects to earn a PROFIT of $400,000 with its total FIXED COSTS of $120,000. The minimum number of units that must be sold in order to reach this TARGET RETURN is ________. a) 400,000 b) 130,000 c) 120,000 d) 80,000 219. 220. 221. 222. 223. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 26 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 224. A five-pound bag of roasted peanuts sells for $8, and the average VARIABLE COSTS are $4 per bag. If the total FIXED COSTS for the roasted peanuts are $80,000, the BREAKEVEN POINT in bags is ________. a) 20,000 b) 40,000 c) 80,000 d) 120,000 In considering whether to expand to a second location, a retailer might want to use BREAKEVEN ANALYSIS to examine the sales level needed to achieve ________. a) a marginal analysis b) breakeven points c) a target return d) demand curves The approach to pricing that violates the MARKETING CONCEPT is ________. a) customary pricing c) modified breakeven analysis b) purely cost-oriented pricing d) value-added pricing A theater that lowers prices in the afternoon to offset low demand, and raises prices in the evening when demand rises is practicing ________. a) modified breakeven analysis c) exploitation of the local theater-goers b) yield management d) marginal pricing. 225. 226. 227. CHAPTER 19 – Pricing Strategies 228. Which of the following is NOT an advantage of SKIMMING PRICING? a) It allows a manufacturer to quickly recover its research and development costs. b) It allows a firm to maximize revenue from a new product before competitors enter the field) c) Potential competitors see innovative firms reaping large financial returns and decide to enter the market. d) It is a useful tool for segmenting a product’s overall product on price) 229. PENETRATION PRICING is sometimes referred to as ________. a) market-plus b) market-minus c) cost-plus d) prestige PENETRATION PRICING works best when the demand for a product is ________. a) elastic b) highly elastic c) inelastic d) highly inelastic The pricing strategy that permits marketers to control demand in the introductory stages of the PLC and then adjust productive capacity to match changing demand is known as ________ pricing. a) penetration b) value-added c) skimming d) monopolistic Discounts off the list price given to channel members for performing marketing functions are called ________ discounts. a) cash b) trade c) quantity d) transportation 230. 231. 232. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 27 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 233. If a business were offering a cash discount of 5 percent if consumers pay the invoice within 30 days with the full face amount of the invoice due 30 days after that, the terms would be stated ________. a) 5/60, net 90 b) 5/30, net 60 c) 5/15, net 45 d) 10/30, net 60 When General Motors introduced the Saturn, it priced the SL sports sedan at $2,000 less than the Toyota Corolla DLX and $1,500 less than comparable Nissan and Honda automobiles. This is an example of the PRICING STRATEGY called ________. a) skimming b) penetration c) competitive d) loss leader If customers want to take the discount on an invoice for $300 dated April 1 with terms of 3/10 net 30, they should submit to the creditor the sum of ________. a) $285 by April 15 b) $291 by April 10 c) $297 by April 30 d) $300 by April 12 Which statement best describes ALLOWANCES? a) Allowances are used in conjunction with quantity and cash discounts. b) Allowances are the same as transfer prices. c) Allowances are offered only to marketing channel members in order to increase sales. d) Allowances result in reductions of the monetary price the purchaser pays. 234. 235. 236. 237. Pricing a product “FREE ON BOARD PLANT” or “FREE ON BOARD ORIGIN” ________. a) means the buyer pays all shipping charges from the manufacturer’s dock b) allows the same total price to be quoted to all customers, regardless of their distance from the factory c) has the effect of dividing the market into different regions with a different price being charged in each d) is based on the belief that certain prices or price ranges are more appealing than others An EXAMPLE of ODD PRICING would be ________. a) a buy-two-get-one-free promotion b) selling a radar detector for $129.99 instead of $130 c) subtracting trade-ins from the list price d) rebates that lower total price When the price of Cheerios cereal is displayed as 14.7 cents per ounce, this is an example of ________ pricing. a) odd b) commodity c) unit d) penetration The practice of marketing merchandise at a limited number of prices is called ____ pricing. a) product-line b) odd c) one-price d) limited 238. 239. 240. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 28 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 241. A retailer wants to increase the number of customers shopping in her store. Which of the following has the greatest potential for success? a) Promotional pricing b) Price flexibility c) Prestige pricing d) Unit pricing “Buy three shock absorbers and get the fourth free,” as advertised by an auto repair shop, is an example of ________ pricing. a) promotional b) variable c) one-policy d) product-line Large-scale enterprises often have a dilemma with setting the ________ price, which is the price they charge themselves when sending goods from one company profit center to another. a) list b) transfer c) removal d) basing ________ occurs when a company offers two or more complementary products and sells them for a single price) a) Smorgasbord packaging c) Protective pricing b) Bundle pricing d) Combination pricing For the purpose of transfer pricing, any part of the organization to which revenue and controllable costs can be assigned, such as a department, is referred to as a ________. a) profit center b) revenue center c) controllable costs centerd) sales department. 242. 243. 244. 245. 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 29 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville SUPPLEMENTAL QUESTIONS 124. Brand names can become GENERIC over time, as they have with all of the following EXCEPT: a) Nylon b) Coca-Cola c) Aspirin d) Escalator 125. A brand name that has been given LEGAL PROTECTION is known as a ________. a) patent b) copyright c) trademark d) royalty 154. In the AIDA concept, the D indicates ________ a) Delivery of the promotional message c) Desire for the product being promoted b) Decoding the message d) Decision to listen to the message From the perspective of the marketing communications process, two consumers talking to each other during a television commercial represent ________. a) interaction b) noise c) decoding d) coding Which group of activities is NOT considered to be a form of sales promotion? a) Trade shows, product demonstrations, displays b) Telemarketing, publicity, home shopping channels c) Coupons, rebates, sweepstakes d) Limited-time discounts on consumer products and services Which of the following would typically NOT be an EXAMPLE of direct mail promotion? a) Catalog from Lands’ End advertising free shipping for a limited time b) Promotional DVD sent by a college in Vermont c) Reminder postcard sent to a car owner offering 15 percent off the cost of an oil change d) Advertisement in the newspaper In measuring the effectiveness of promotional spending, marketers prefer the common method of direct-sales-results testing, which measures ________. a) the conversion rate of Internet shoppers b) comsumers’ attitudes about product value and performance c) the impact of promotional spending upon product revenue d) the beginning of the AIDA strategy. 155. 164. 169. 173. 180. Though DIFFICULT AND COSTLY, it is essential that a marketing plan include an assessment strategy for ______. a) creating advertising c) defending criticisms of advertising ethics b) measuring the effectiveness of advertising d) creating selective perception 181. The simplest and least costly level of assessment of public relations effectiveness involves ____. a) conducting extensive focus group assessments b) measuring target audiences to see if the messages were received and understood c) counting the number of press releases distributed d) evaluating governmental response to public relation announcements 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 30 MG103: Introduction to Marketing Boone & Kurtz Montgomery College--Rockville 188. The cost of a single sales call is ________. a) more than $300 c) between $100 and $200 b) between $200 and $300 d) under $100 A university recently purchased a new supercomputer. Personal selling was likely involved in the purchase for all of the following reasons EXCEPT: a) It is an expensive product. c) It passed through a long distribution channel b) It is a technically complex product. d) It requires complicated installation. Salespeople usually have the most difficulty with ________. a) approaching potential buyers c) closing the sale b) handling objections d) following up after the sale A growing trend among firms using a customer-oriented organizational structure of the sales function is ________. a) centralization c) vertical structure b) decentralization d) a national accounts organization Which of the following sales promotions has the highest response rate? a) Sweepstakes b) Rebates c) Sampling d) Coupons The PRICING STRATEGY used in selling Lexus automobiles is usually ________. a) meeting competitors’ prices c) prestige b) return on investment d) revenue maximization In which of the following types of MARKET STRUCTURES would a producer have the least amount of flexibility in setting prices? a) Pure competition b) Monopolistic competition c) Oligopoly d) Monopoly Which MARKET STRUCTURE best describes the U.S. auto industry? a) Pure competition b) Monopolistic competition c) Monopoly 184. 191. 192. 195. 208. 210. 211. d) Oligopoly 214. An example of a firm most likely engaged in monopolistic competition is ________. a) 300-acre farm c) Aluminum Corporation of America (Alcoa) b) General Motors Corporation d) Macy’s department store 69b95e09-f87e-4cf9-bbcf-5258e7ed010a.doc 11/07/09 31