Chapter 1 (26) Marketing: The Art and Science of Satisfying Customers 1. The want-satisfying power of a product is its ________. a) utility b) price c) buyer’s attraction d) function 2. FedEx offers a variety of package delivery services. In doing so the firm creates ______ utility. a) time b) place c) ownership d) form 3. Convenience stores and vending machines create all of the following utilities except ________. a) ownership b) form c) customer d) place 4. In the history of marketing, WHEN did the production era end in the United States? a) Late 1800s with the mass immigration of skilled workers to America b) 1920s with the improvement in production capabilities c) 1960s with the establishment of overseas production facilities d) 21st century with the introduction of robotics 5. 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 6. A company produces a high-quality product, with a maximum monthly output of 10,000 units. Production levels are constant and the company relies on its marketing department to find customers. This approach is consistent with which era in marketing history? a) Production era b) Relationship era c) Marketing era d) Sales era 7. Which of the following contributed to the transition from the production era to the sales era? a) Increased consumer demand c) Increase in urbanization b) More sophisticated production techniques d) The Great Depression 8. A company with a ________ orientation assumes that customers will resist purchasing products not deemed essential. Therefore, the marketing department will need to overcome this resistance through personal selling and advertising. a) production b) marketing c) relationship d) sales 9. A BUYER’S MARKET is characterized by ________. a) more goods and services than buyers to buy them b) more buyers than available goods and services c) practically no competition in the marketplace d) slow economic growth 10. The emergence of the MARKETING CONCEPT can best be explained by ________. a) higher production levels b) a shift from a production to a sales orientation c) a shift from a seller’s market to a buyer’s market d) a focus on product quality 11. In the RELATIONSHIP ERA, firms focus on ________ relationships with ________. a) short term; customers and suppliers c) short term; customers b) long term; customers and suppliers d) long term; customers 12. 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 13. 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 14. All of the following are examples of nontraditional marketing EXCEPT ________ marketing. a) political b) cause c) event d) organization 15. State bureaus of tourism and conventions typically engage in ________ marketing. a) organization b) person c) place d) cause 16. An example of interactive media marketing would be ________. a) a customer having input in creating their own products, such as Subway or Build-a-Bear b) an intermediary wholesaler who links sale of goods from manufacturer to consumer c) buyer-seller communication through the Internet, virtual reality kiosks and CD-ROMs d) Consumer Reports 17. What is the ultimate objective of one-to-one marketing? a) Find new customers c) Turn customers into advocates b) Create regular purchasers d) Turn customers into loyal supporters 18. The application of RELATIONSHIP MARKETING requires attention to levels of customer loyalty. Which of the following is the highest level as defined by this type of marketing? a) Loyal supporter of the company and its goods and services b) Advocate who not only buys the products but recommends them to others c) Regular purchaser of the company's products d) Stockholder who literally buys into the organization and its mission 19. RELATIONSHIP MARKETING focuses more attention on ________ customers, because new customers are ________ to acquire compared to existing customers. a) existing; less expensive c) existing; more expensive b) new; less expensive d) new; more expensive 20. Many hotel chains offer free stays and other perks to repeat customers. This is an example of _. a) relationship marketing c) team marketing b) transaction-based marketing d) a strategic alliance 21. A biotechnology company and a university medical school work to develop a new drug to treat arthritis. This is an example of ________. a) a joint marketing agreement c) a one-to-one marketing program b) marketing research d) a strategic alliance 22. What are the subfunctions of physical distribution? a) Buying, selling and financing c) Warehousing and transporting b) Risk taking and market research d) Standardizing and grading 23. Financing is one of the ________ functions. a) exchange b) pricing c) commercial d) facilitating 24. The physical distribution functions of marketing are ________. a) storing and transporting c) financing and risk taking b) standardization and grading d) buying and selling 25. Marketers are responsible for three primary marketing functions, which are further divided into eight sub-functions. Which of the following is NOT one of the primary functions? a) Facilitating c) Servicing b) Physical distribution d) Exchange 26. Which of the following is a FACILITATING FUNCTION of marketing? a) Buying b) Selling c) Standardization and grading d) Distribution Chapter 2 (50) Strategic Planning 1. Effective RELATIONSHIP MARKETING is based in part on the use of ________. a) inside information about competitors c) larger advertising budgets b) databases to track customer preferences d) knowledge about changes in economic conditions 2. Within the last few years, IBM has decided to sell off its desktop PC business. This decision was the result of ________ planning. a) tactical b) marketing c) strategic d) economic 3. Best Buy wanted to open a new store in Rogers, Arkansas, but instead decided to renovate a closed Kmart. This decision was the result of ________ planning. a) tactical b) marketing c) strategic d) economic 4. Long-term plans focusing on those organizational objectives that will significantly affect the firm for five or more years are usually referred to as ________ plans. a) strategic b) marketing c) economic d) tactical 5. If Chevrolet was/were planning to introduce a sports car powered by a hydrogen-oxygen fuel cell when the price of gasoline in the United States reached $4 per gallon, this would best be described best as a(n) ________ plan. a) economic b) technological c) strategic d) tactical 6. The U.S. Sports and Fitness Federation is determining where they should build their permanent training facility. They want it near a populated center but rural enough to provide ample room. The federation is engaged in ________ planning. a) strategic b) travel c) marketing d) economic 7. A company’s plans that focus largely on current and near-future activities are referred to as ________ plans. a) strategic b) marketing c) economic d) tactical 8. Preparation of quarterly and semi-annual plans by personnel such as the general sales manager or advertising director would be classified as ________ planning. a) consumer b) tactical c) strategic d) managerial 9. SuperSavers Market, a small grocery store chain, is working on its tactical plans. The personnel most involved in this operational planning process would be: a) Top management, such as the owner b) Middle management, such as the merchandising, marketing, and advertising managers c) Store managers d) Supervisory management, such as shift managers and night auditors 10. Tactical planning should be done ________. a) by supervisory personnel b) as part of the departmental rules and procedures plans c) to set divisional budgets, policies, and procedures d) by CEOs and CFOs 11. What is the third step in the planning process? a) Obtaining necessary financing c) Assessing strengths, weaknesses, and opportunities b) Writing a marketing plan d) Establishing organizational objectives 12. The planning process begins with ________. a) writing the mission statement c) formulating a marketing plan b) establishing organizational objectives d) hiring a senior planner 13. Which of the following (best) represents a mission statement best? a) U.S. Army: Be all that you can be b) Bass Pro Shop: To be the leading merchant of outdoor recreational products, inspiring people to love, enjoy, and conserve the great outdoors c) Kellogg's: Breakfast cereals at a price everyone can afford d) Wal-Mart: Stores big enough to make shopping interesting for every family member 14. All of the following are company objectives EXCEPT: a) Increase sales by 10 percent per year b) Reduce product errors to less than 1 percent c) To be regarded as the quality and market leader of the worldwide hotel industry d) To achieve a 25 percent market share in less than three years 15. The basic objectives or goals of an organization are derived from its ________. a) strategic plan b) tactical plan c) corporate strategy d) mission statement 16. All planning strategies have the goal of creating ________. a) sustainable competitive advantage c) a strategic window b) short-term competitive advantage d) leverage 17. The ________ is the organizational program for selecting a target market and satisfying customers in that market through the marketing mix. a) marketing objectives c) relationship marketing b) marketing strategy d) strategic plan 18. The overall, company-wide program for selecting a particular target market and then satisfying consumers in that market through careful blending of the elements of the marketing mix is known as a ________. a) corporate strategy b) strategic plan c) strategic window d) marketing strategy 19. Which of the following companies has often followed a second-mover strategy? a) Apple Computer b) eBay c) Target d) Amazon.com 20. Comparing a first-mover to a second-mover strategy, a first-mover strategy is ________ risky and offers a ________ reward) a) more; higher. b) more; lower. c) less; higher. d) less; lower. 21. In SWOT terms, General Motors' difficulty competing with other car makers due to its lack of responsiveness to changing consumer preferences constitutes a ________. a) strategic window c) productivity challenge b) leveraged situation d) constraint on its activity 22. In a SWOT analysis, a constraint is present when ________. a) internal organizational weaknesses prevent taking advantage of an opportunity b) environmental threats attack organizational weaknesses c) organizational strengths grasp opportunities d) environmental threats are stronger than organizational strengths 23. In SWOT analysis, a vulnerability occurs when ________. a) internal organizational weaknesses prevent taking advantage of an opportunity b) environmental threats attack organizational weaknesses c) organizational strengths grasp opportunities d) environmental threats are posed to organizational strengths 24. In a SWOT analysis, a problem exists when ________. a) internal organizational weaknesses prevent taking advantage of an opportunity b) environmental threats attack organizational weaknesses c) organizational strengths grasp opportunities d) environmental threats are stronger than organizational strengths 25. An example of a firm's weakness discovered by a SWOT analysis might be ________. a) changing buyer tastes in the marketplace c) inadequate financing capabilities b) the presence of modern production facilities d) An addition to the current product line 26. An example of a firm's strength discovered by a SWOT analysis might be ________. a) ownership of valuable patents c) changing buyer tastes in the marketplace b) a narrow current product line d) existing government policies adverse to the industry 27. SWOT analysis is designed to reveal, among other things, a firm' core competencies, also known as its ________. a) financial resources b) strengths c) leverage d) vulnerabilities 28. Southwest Airlines has one lowest levels of operating expenses in the airline industry. This is classified as a(n) ________. a) opportunity b) constraint c) strength d) threat 29. An example of a threat to a firm discovered by a SWOT analysis might be ________. a) cost advantages present because of advanced technology b) the chance to acquire firms with needed technology c) likely entry of new competitors in the industry d) too narrow a product line for the firm 30. One of the major problems with strategic windows is ________. a) they are presented when the market stays relatively stable for long periods b) acquiring competencies for the firm is usually a major flaw c) they are not affected by a firm's competencies, constraints, or vulnerabilities d) they exist for only a limited time 31. Those limited occasions when the key requirements of a market and the particular competencies of a firm (best) fit together best constitute ________. a) marketing planning b) a strategic window c) strategic planning d) a tactical door 32. At a time when computer users were having trouble storing, sending and displaying photos, pple introduced the iMac computer, which was equipped with a digital camera interface and photo-handling software) This product was a result of Apple recognizing ________. a) product innovations c) a strategic window b) competitive constraints d) financial opportunities 33. Jose is part of a team analyzing current demographic trends. The team will make a recommendation concerning the groups of consumers toward whom the firm should direct its marketing effort. Jose’s team is involved in which element of the firm’s marketing strategy? a) Target market b) Distribution c) Product d) Promotion 34. All of the following are marketing mix variables except ________. a) distribution b) product c) target market d) pricing 35. Jenny has been appointed marketing manager for Sparkling Cleaning Products. Her job ocuses on decisions involving customer service, package design, brand names, and warranties. The area of marketing strategy in which Jenny will work is most likely ________. a) product strategy c) retailing and distribution strategy b) resource valuation and pricing d) target market development 36. Decisions involving transportation, warehousing, inventory control, and order processing relate to ________ strategy. a) pricing b) competitive c) product d) distribution 37. Decisions about distribution strategy involve such challenges as ________. a) where to advertise c) when to raise prices to cover costs b) placing an automatic stamping machine in the plant d) warehouse design/inventory control 38. Maxwell has been named to an upper-level management position at QVC) He will be working ith transportation media, order processing, and development of marketing channels. Maxwell is involved in developing ________ strategies. a) product b) distribution c) promotional d) marketing 39. Which of the following terms (best) fits the activity of promotion best? a) Making products available c) Maintaining a high level of regulation b) Finding a convenient location d) Communicating between buyers and sellers 40. The marketing mix decisions which are most closely regulated and subject to public scrutiny usually relate to ________ strategy. a) product b) promotional c) distribution d) pricing 41. Newsletters, catalogs, and invitations to company-sponsored events are most closely associated with the marketing mix activity of ________. a) pricing b) distribution c) product development d) promotion 42. All of the following are part of the marketing environment except ________. a) political-legal b) competitive c) product d) socio-cultural 43. The rule of three states that the three leading firms in an industry will have ________ percent of the market. a) less than 25 b) around 50 c) between 70 and 90 d) nearly 100 44. As chief executive of Stalwart Shipfitting Company, a diversified producer of marine supplies and equipment, John needs a method for spotting promising product lines that warrant commitment of additional resources, as well as those that should be removed from the firm's product portfolio. A good choice for this firm would be ________. a) computer models c) a marketing audit b) strategic business units d) an inventory audit 45. The strategic business unit (SBU) concept is best identified as a ________. a) planning tool that separates tactical and operational issues for analysis b) device used primarily to separate marketing costs from production expenses c) marketing planning tool best suited to the needs of large, diversified organizations d) way to create units of business activity based solely on sales potential 46. Each strategic business unit (SBU) within a firm has its own individual ________. a) advertising consultant c) board of directors b) government watch dog agency d) competitors 47. Which of the following is a marketing planning tool? a) Market share/market growth matrix (BCG) c) Market vulnerability/business opportunity matrix b) Consumer scanning model d) Market sheet analysis 48. Microsoft Windows generates considerable income for the parent company but is also expensive to support. However, the expense is acceptable because Windows is the world's dominant operating system. Windows would be classed under the market share/market growth matrix as a ________. a) star b) cash cow c) question mark d) dog 49. The reason IBM management decided to sell its desktop computer business was, according to the market share/market growth matrix, the business was a(n) ________. a) eagle b) question mark c) cash cow d) dog 50. According to the market share/market growth matrix, a successful product typically ________. a) begins as a question mark, then a star, and eventually moves to the status of cash cow b) begins as a star, fades to a question mark, and finally becomes a dog and is dropped c) begins as a cash cow, moves to question mark, and finally becomes a star d) starts life as a cash cow and fades to a dog when it’s dropped Chapter 2-A (39) Supplemental Questions on Strategic Planning Marketing Planning 1. TOOLS for marketing planning include all the following EXCEPT: a) strategic window c) me too strategy e) NONE of the above) b) second mover strategy d) BCG Matrix 2. All the following are STEPS in the marketing planning process, EXCEPT: a) developing strategies c) identifying a mission b) developing objectives d) implementing strategy e) ALL the above are steps in the process 3. All planning strategies have the GOAL (OBJECTIVE) of a) creating a strategic window c)converting weaknesses to strengths e) NONE of the above) b) creating a target market d) matching strengths to weaknesses 4. Which of the following is NOT part of Michael Porter’s model? a) bargaining power--buyers c) substitute products/services e) NONE b) SBU strategies d) potential new entrants LEVELS OF STRATEGIC PLANNING FIRST-LAST 5. 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. 6. 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. 7. 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. BEFORE-AFTER 8. 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. 9. In the strategic planning process, ____ is developed BEFORE ____. a) the mission statement, the SWOT. d) objectives, corporate strategy. b) corporate strategy, mission statement. e) NONE OF THE ABOVE) c) corporate strategy, objectives. Boston Consulting Group 10. Argo is the world’s leading brand of small vehicles that are designed to be driven on all types of terrains and in all types of weather. The vehicles can carry up to six passengers. The market for such vehicles has become stagnant due to the recent economic downturn. In terms of the BCG growth-market share matrix, Argo would be classified as a _____. a) problem child b) dog c) cash cow d) star e) question mark 11. Cherokee Electronics is and has been for years the United State’s leading manufacturer of two-way radios, but with the growth of handheld communications devices, Cherokee has seen its market gradually disappear. In terms of the BCG growth-market share matrix, Cherokee’s two-way radio would be classified as a _____. a) problem child b) dog c) cash cow d) star e) question mark 12. Cherokee Electronics is and has been for years the United State’s leading manufacturer of two-way radios, but with the growth of handheld communications devices, the market for two-way radios is disappearing. Worldwide Electronics, one of Cherokee’s competitors, has a small share of the two-way radio market. In terms of the BCG growth-market share matrix, Worldwide’s two-way radio would be classified as a _____. a) problem child b) dog c) cash cow d) star e) question mark 13. 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 14. 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. 15. Based on the work by the Boston Consulting Group, products with a dominant share of the market and good prospects for growth are a) cash cows. b) question marks. c) stars. d) pigs. e) dogs. 16. The Boston Consulting Group classifies products that have a dominant market share but low prospects for growth and that generate more cash than is required to maintain market share as a) cash cows. b) dogs. c) stars. d) question marks. e) cash contributors. 17. The director of marketing for Bond-Rite tapes tells the rest of the management team, ―When it comes to our videotape unit, our strategy will be to use funds generated here to support our venture in the industrial bonding market.‖ This strategy indicates that the videotape unit falls into which one of the following BCG classifications? a) Question mark b) Dog c) Problem child d) Cash cow e) Star 18. Products that have a relatively low market share and low prospects for growth are considered by the Boston Consulting Group to be a) stars. b) question marks. c) dogs. d) cash cows. e) cash contributors. 19. According to the Boston Consulting Group, question marks are characterized as products a) encompassing the greatest number of products. b) having substantial reported profits but needing a lot of cash to finance the rate of growth. c) generating more cash than is required to maintain share) d) existing at a cost disadvantage and revealing few opportunities for growth at a reasonable cost. e) having a small share of a growing market and requiring large amounts of cash to build market share) BCG Matrix 20. 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. 21. A SBU with high product-market growth and low relative market share would be referred to as: a) question mark. b) dog. c) cash cow. d) problem child) e) star. 22. A SBU with low 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. 23. A SBU with low product-market growth and low relative market share would be referred to as a: a) question mark. b) dog. c) cash cow. d) problem child) e) star. 24. A question mark is EXPECTED to develop into a: a) cash cow or a star. b) dog or a star. c) cash cow. d) problem child) e) star. 25. A star is EXPECTED to develop into a: a) cash cow or a dog. b) dog or a star. c) cash cow. d) problem child) e) dog. 26. A cash cow is EXPECTED to develop into a: a) dog. b) dog or a problem child) c) question mark. d) problem child) e) star. ON EVERY TEST, THE YOU WILL SEE THESE QUESTIONS OR QUESTIONS SIMILAR TO THESE 27. 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. 28. 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. 29. 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. CORE QUESTIONS Competitive Growth Strategies 30. The marketing mix is used in: a) developing business-unit strategy. c) developing marketing strategy. e) NONE of the above) b) developing the marketing plan. d) evaluating market development. 31. Intensive growth strategies is an approach useful for: a) developing business-unit strategy. c) developing marketing strategy. e) NONE of the above) b) developing the marketing plan. d) evaluating market development. 32. Which of the following is NOT one of the strategies for intensive growth? a) market penetration. c) product development. b) diversification. d) market development. 33. Intensive growth and diversified growth are strategies useful in: a) developing corporate strategy. c) developing a marketing plan. b) developing a marketing strategy. d) developing growth strategies for SBU’s. 34. 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. 35. 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. 36. Which of the following is NOT one of the strategies for intensive growth? a) market penetration. c) product development. b) diversification. d) market development. 37. 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. 38. 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. 39. 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. ESSAY Chapter 2 — Strategic Planning 1. In order, list the steps involved in the development of a successful marketing plan. 2. Distinguish between an organization’s mission and its objectives. Provide an example of each. 3. List Porter’s Five Forces. How does the model fit together, and how has the Internet affected this model? 4. Explain the difference between a first-mover and second-mover strategy. Give examples of companies that have followed each strategy. 5. Define SWOT analysis. Why would an organization undertake a SWOT analysis of itself? 6. What is a strategic window? Give an example of a strategic window that exists today. 7. Discuss the concept of the target market. What roles do diversity and demographics play in a target market? 8. What is a marketing mix? In order for a product to succeed, what can be said about the variables in the product mix? 9. What does a distribution strategy involve? Define two marketing channels. Chapter 3 MULTIPLE CHOICE 1. The process of collecting information about the external marketing environment is called ________. a) environmental management c) marketing management b) marketing research d) environmental scanning 2. When analyzing recent data from the U.S. Census Bureau to uncover new markets for his firm’s product, Kevin is engaged in ________. a) environmental management c) environmental scanning b) research and development d) marketing management 3. The five components of the marketing environment are: a) competitive, economic, social, technological, and political. b) cultural, legal, technological, economic, and political. c) legal, economic, competitive, technological, and socio-cultural. d) economic, political-legal, social, technological, and competitive. e) NONE of the above. 4. U.S. companies must form strategic alliances with Chinese and Mexican firms when doing business in those countries because ________. a) such alliances are required by the laws of Mexico and China b) without such a relationship, the U.S. firm will not be trusted in either place c) it is necessary to have employees who speak Spanish and Chinese fluently d) there are differences in engineering and technology between the nations 5 To acquire regional expertise and comply with local laws in the global market, many domestic firms have found it desirable to ________. a) form political action committees b) buy foreign products to beat tariff restrictions c) form strategic alliances with companies in foreign countries d) relocate manufacturing facilities to that market 6. An industry with only a few competing firms is called a(n) ________. a) regulated monopoly b) pure monopoly c) perfect competition d) oligopoly 7. Which of the following industries would most likely be an oligopoly? a) Telecommunications b) Computer c) Automobile d) Agricultural 8. The competition between Chevron and Amoco oil companies is ________. a) a form of oligopoly because they are the only game in town b) monopolistic since each is selling in a different market and not competing c) direct because they are targeting the person who wants to purchase gasoline and related products d) substitution because of various gasoline formulations 9. Marketers must constantly monitor their competitors' products, prices, distribution, and promotional efforts because the ________. a) competitors may be violating the truth-in-advertising laws b) actions of competitors may threaten the firm’s monopoly position c) actions of competitors may create an oligopoly within an industry d) new product offerings by a competitor may require adjustments to one or more components of the firm's marketing mix 10.Kelly has the option of going to Cancun or Vail during spring break. In this context, Cancun and Vail are in ________ competition. a) direct b) indirect c) pure d) monopolistic 11.Which regulatory period focused on the reduction of monopolistic tendencies of the marketplace by passing regulations such as the Sherman Act? a) Consumer protection b) Deregulation c) Competitor protection d) Antimonopoly 12.Office Hut is selling products well under cost in an attempt to drive other companies out of the industry. Office Hut could be guilty of violating which federal law? a) Sherman Antitrust Act c) Clayton Act b) North American Free Trade Agreement d) Robinson-Patman Act 13.The federal agency with the authority to enforce U.S. laws regulating unfair business practices and prohibiting unfair and deceptive advertising is the ________. a) Consumer Product Safety Commission c) Department of the Treasury b) Department of Commerce d) Federal Trade Commission 14.The ________ wields the broadest powers of any agency to influence marketing activities. a) Federal Communications Commission c) Federal Marketing Commission b) National Commerce Commission d) Federal Trade Commission 15.The FTC makes a determination that a proprietary medication is superior to aspirin in reducing pain, but is not easier on the stomach. The agency requires the manufacturer of the pain reliever to run advertisements retracting the claim of reduced stomach distress. These new ads are designed to ________. a) eliminate differentiation resulting from the previous ads b) reverse the effect of reciprocity caused by the earlier ads c) correct the deceptive claims contained in the prior advertisements d) create a new image for the product 16.All of the following are federal regulatory agencies except: a) New York Stock Exchange c) Securities and Exchange Commission b) Food and Drug Administration d) Federal Elections Commission 17.Which of the following federal agencies concerns itself with regulation of the use of telephones, radio, and television? a) Federal Power Commission c) Federal Communications Commission b) Consumer Products Safety Commission d) Environmental Protection Agency 18.The gross domestic product (GDP) for the United States is a measure of the sum of all goods and services ________. a) exported in a year c) imported in a year b) manufactured in a year d) sold through U.S. retail outlets in a year 19.Business cycle stages include all of the following except: a) recovery b) recession c) depression d) inflation 20.Which retailer would benefit the most during a period of strong economic growth? a) Wal-Mart b) Target c) Neiman Marcus d) Home Depot 21.All of the following are characteristics of a recovery period except: a) Businesses provide low-priced products and superior service b) New product lines are introduced c) Consumers are cautiously optimistic d) Businesses hold down costs 22.When prices rise due to excess demand and increasing cost of production, the resulting monetary condition is known as ________. a) recession b) depression c) inflation d) recovery 23.During periods of inflation, prices ________ and consumer demand ________. a) increase; decreases c) decrease; increases b) increase; increases d) decrease; decrease 24.During recent recessions, consumers have shifted their buying patterns by ________. a) borrowing money to buy goods b) increasing spending across the board c) buying now in the belief that prices will rise later d) emphasizing basic, functional products with low price tags 25.Which of the following would not be a wise marketing strategy during a recession? a) Raise prices to make up for lost sales b) Increase promotional outlays to create interest in the store or product c) Improve customer service to attract more trade d) Launch lower-priced products 26.When looking at consumer income, marketers are most interested in ________ income) a) discretionary b) deferred c) inflationary d) disposable 27.When gasoline prices are high, many oil companies promote ways to save gasoline) By providing tips on car maintenance, carpooling, and idling in traffic, oil companies can begin the process of ________. a) supply control b) counter-advertising c) brand promotion d) demarketing 28.The benefits of using RFID tags are still being discovered) However, critics have found the one major drawback might be ________. a) loss of jobs with the simplification of tracking capabilities b) cancer in laboratory animals who wear the RFID tags c) replacement of the bar code as the standard data control method d) invasion of privacy and erosion of personal freedom 29.Assume that Quaker Oats is offering a new product designed to meet the nutritional needs of women between the ages of 45 and 60. Quaker Oats is responding to ________ trends. a) demographic b) economic c) social d) political 30.The social force within the environment that aids and protects the buyer by exerting legal, moral, and economic pressure on business is known as ________. a) competition c) demographic diversity b) consumerism d) socio-cultural influences 31.The majority of ethical questions are raised in connection with which component of marketing strategy? a) Product b) Distribution c) Price d) Promotion 32. The use of bottles with concave bottoms which give the impression that the containers hold more liquid than they do raises issues of ethics in ________ strategy. a) product b) price c) packaging d) distribution 33. After manufacturing and selling products, a company must determine how much of the aftermarket it wants to control and to what extent. Exerting control over wholesalers and retailers could become an ethical issue in ________ strategy. a) product b) packaging c) distribution d) price 34.Television advertising that suggests consumers take a proactive role in family health care by requesting that their physicians prescribe specific medications they see advertised raises issues of ethics in ________ strategy. a) price b) promotion c) distribution d) product 35.A manufacturer provides discounts to a large retailer in exchange for product advertising, special placement within the stores, and a guarantee that the retailers will purchase a certain volume of product over a three-month period) The manufacturer will not, however, extend this offer to other retailers in the marketplace) This practice raises legal and ethical questions concerning ________. a) promotion b) pricing c) personal privacy d) distribution 36.Which of the following is the most highly regulated aspect of marketing strategy? a) Promotion b) Product c) Pricing d) Distribution 37.Social responsibility can be forced upon an organization through government regulation and ________. a) labor unions b) consumerism c) suppliers d) trade associations 38.A firm’s philosophy when dealing with society as a whole is to ―play by the rules‖ and no more) What level of corporate social responsibility is this firm exhibiting? a) Legal b) Economic c) Ethical d) Philanthropic 39.A firm donates money and used office equipment to a local school. It also contributes money and labor to build a new park. What level of corporate social responsibility is this firm exhibiting? a) Economic b) Legal c) Philanthropic d) Ethical 40.Which statement is correct? Planned obsolescence is the process of producing and offering products ________. a) that require less technology c) in travel-size packaging b) with limited durability, such as disposable diapers and razors d) that are recyclable 41.The production, promotion, and reclamation of environmentally sensitive products is known as ________. a) pollution b) recycling c) planned obsolescence d) green marketing Chapter 3 Legal and Regulatory Forces Prohibits exaggerated health claims; requires all processed foods to be a Sherman Act 51 labeled) 52 Regulates unwanted telephone solicitations. b Clayton Act 53 Provides penalties for dealing in counterfeit consumer goods or goods c Robinson-Patman Act that threaten health or safety. 54 Refined copyright laws to protect digital versions of copyrighted d Wheeler-Lea Act materials. 55 Prohibits using price maintenance agreements between manufacturers e Digital Millennium and re-sellers. Copyright Act (1996) 56 Regulates collection through the Internet of personal information from a Lanham Act (1946) children. 57 Protects existing trademarks from misuse on the Internet. b Fair Packaging and Labeling Act (1966) 58 Prohibits contracts or conspiracies in restraint of trade; prohibits c Magnuson-Moss Warranty monopolies. (FTC) Act (1975) 59 Prohibits acquisition of stock of another corporation that would d Telephone Consumer substantially lessen competition. Protection Act (1991) 60 Provides protections and regulation of brand names, trademarks, etc) e Federal Trademark Dilution Act (1995) 61 Prohibits price discrimination and other practices that may tend to lessen a Trademark Counterfeiting competition. Act (1980) 62 Prohibits producers from giving disproportionate services to large buyers; b Children’s Online Privacy prohibits price discrimination. Act (2000) 63 Gives FTC authority to regulate standards for product warranties. c Consumer Goods Pricing Act (1975) 64 Prohibits unfair and deceptive acts and places food/drug advertising d Nutrition Labeling and under jurisdiction of FTC) Education Act (1990) 65 Prohibits unfair or deceptive packaging or labeling of consumer products. e Cellar-Kefauver Act (1950) 66 Protects public from unreasonable injury from consumer products not a FTC covered by other agencies. 67 Regulates food, drugs, medical devices, cosmetics, and potentially b FDA hazardous consumer products. 68 Regulates general business practices; regulates false and deceptive c CPSC advertising, pricing, etc) 69 Sets and Regulates environmental standards. d FCC 70 Regulates communication by wire, radio, and television. e EPA ETHICAL ISSUES IN THE MARKETING MIX Figure 3.3 (Boone) 71 price fixing a product 72 bribery b promotion 73 predatory competition c distribution 74 planned obsolescence d price 75 dealer rights 76 pollution 77 price discrimination 78 fair packaging and labeling 79 dumping 80 bait-and-switch 81 allowances 82 deceptive pricing 83 exclusive territories 84 false and deceptive advertising 85 warranties ESSAY 1. Define environmental scanning. What are the five components of the external marketing environment? 2. Define and describe environmental management in relation to the marketing environment. 3. Discuss, giving examples of each, the three types of competition in the marketplace) 4. The type of competitive strategy a firm uses is based on the answers to three questions. Discuss these questions and their possible answers. 5. Assume your firm produces both consumer necessities and consumer luxuries. How will the economic environment affect the demand for both types of products? 6. What products or services may employ a demarketing strategy? Besides demarketing, what other methods do businesses use to compensate for limited resources? 7. What is consumerism? What can marketers do to protect the consumer’s right to be heard? 8. Discuss the role of ethics in marketing research. Give examples of regulations that have been put in place to ensure ethical behavior. 9. What ethical issues might arise when developing a product strategy? 10. Describe the role of ethics in promotion strategy. Chapter 4 (29) E-Business in Contemporary Marketing 1. While marketing's function has always been to bring buyers and sellers together, the Internet has the significant advantage of _______. a) identifying legitimate buyers c) making comparison shopping more common b) offering increased speed and efficiency d) providing the consumer with more options 2. Big Martin Corporation uses its Web site to target customers and promote its products. Big Martin is engaged in ________. a) e-business b) e-commerce c) e-marketing d) online communications 3. The strategic process of creating, distributing, promoting, and pricing goods and services to a target market through both computer and non-computer technologies is called ________. a) electronic marketing b) online marketing c) electronic commerce d) offline business 4. When establishing a marketing strategy for e-marketing, what must be developed? a) Customer service staff to handle complaints c) Multi-lingual sales force b) Marketing mix to address target markets d) Toll-free telephone number 5. As a strategic tool for marketers, technology has the potential to achieve all of the following except: a) increased consumer satisfaction c) increased size of the target market b) increased speed and efficiency d) reduced overall marketing costs 6. EXAMPLES of interactive marketing materials include all of the following EXCEPT: a) coupon dispensers on store shelves c) interactive store kiosks b) point-of-sale brochures d) direct mail 7. When is it most practical for a company to set up separate corporate and marketing Web sites? a) When the Web sites are managed from two different locations. b) When the corporation has numerous subsidiaries or divisions c) When the headquarters is located in a foreign country d) It is never a good idea to separate corporate and marketing Web sites 8. CORPORATE WEB SITES are intended to accomplish all of the following EXCEPT: a) provide investor information b) facilitate the link between the consumer and marketing Web sites c) establish overall goodwill for the corporation d) process transactions for all products manufactured by the corporation 9. The most important goal of a MARKETING WEB SITE is to provide ________. a) a better way to hire new employees b) information on the corporation c) product information and facilitate transactions d) a fun environment that consumers will want to revisit 10. Web sites that allow interaction of a company, its employees, suppliers and any other authorized users for the purpose enhancing relationships and improving the efficiencies for all parties are called ________. a) cybernets b) extranets c) e-nets d) e-commerce 11. Home Depot has a Web site service called the Business Toolbox, which provides the company’s small business customers a multitude of basic business services from payroll processing to data storage) This innovative Web site can be considered ________. a) Home Depot’s commitment to expanding its product line b) private exchange or c-business c) assimilation of the distribution system d) an administrative timesaver that allows customers to focus on projects that will require more purchases from Home Depot 12. All of the following statements are true about ELECTRONIC EXCHANGES, EXCEPT: a) They were set up to create a place for buyers and sellers catering to a specific industry b) They work best for private-sector organizations c) They have evolved into e-procurement Web sites offering bidding and purchasing processes d) They were popular at one time, but are now dwindling in number 13. A cell phone manufacturer needs 1,000 metric tons of high-grade plastic quickly. The company consults a special Web-based marketplace where buyers and sellers of plastic meet. This market is called a(n) ________. a) private network b) electronic exchange c) electronic data interchange d) extranet 14. An online store where customers can view and order merchandise is called a(n) ________. a) cybermall b) corporate Web site c) online community d) electronic storefront 15. Lands’ End and Eddie Bauer are EXAMPLES of ________ and ________ Web sites. a) shopping; B2B b) shopping; B2C c) corporate; B2B d) corporate; B2C 16. When major retailers expand beyond the traditional bricks-and-mortar store to e-tailing, the Web site that they create is called a(n) ________. a) distribution upgrade c) e-market b) integrated promotional portal d) electronic storefront 17. A bot is one of the newer e-business tools and is defined as ________. a) design-building software that allows consumers to feel comfortable shopping and purchasing b) the total cost of all purchased selections, including tax and shipping charges c) a tool to avoid bottleneck, where demand for a Web site exceeds the site’s ability to service the consumers d) a robot that searches programs that perform comparative shopping by sorting through Web data and returning information to the consumer 18. B2C e-marketing Web sites are basically comprised of two types described as ________. a) financial and manufacturing c) public and private b) shopping and informational d) communications and data storage 19. Concerning online shopping, all of the following statements are correct EXCEPT: a) Online shopping got off to a rocky start. b) Many of the most successful e-tailers have bricks-and-mortar operations. c) Customer service is less important for e-tailers than for bricks-and-mortar retailers. d) Virtual stores provide greater flexibility. 20. Secure Sockets Layer (SSL) is a technical term for the ________. a) next generation of anti-spam and anti-spyware technology b) ability to combine apparel and accessories on a virtual model for online shopping c) two-way encryption of data with security keys on each end d) integration of customers, suppliers, and other partners in a communications network 21. Legal contracts regarding real estate, insurance, and other financial transactions are now possible online due to the development of ________. a) the electronic wallet c) online banking b) the electronic signature d) thumbprint scanning 22. COPPA is a U.S. law that ________. a) requires Web sites targeting children under the age of 13 to obtain ―verifiable parental consent‖ before collecting data about the children that could be used to identify them b) defines the amount of wire used in each computer to economize on metals c) deals with problems on Internet auction sites relating to delivery of purchased goods d) stands for ―Collective Online Personal Privacy Agenda,‖ an activist group 23. Phishing is defined as ________. a) looking through options found in an Internet search inquiry b) pop-ups that direct users to other Web sites c) an acronym for Providing Heightened Internet Security by Heeding Internet Navigation Guidelines d) trolling for personal data by posing as a legitimate Web site familiar to the user 24. Mattel Toy's Web site offers only specialty products, such as American Girl dolls, because ________. a) the company can make more profit from speciality items b) customers are not able to purchase speciality items from store locations c) the company wants to focus on its non-gaming divisions d) protecting distribution channels is part of the corporate strategy 25. 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 c) relationship marketing failure b) channel conflict d) conflict of interests 26. Which is the most common form of Internet advertising? a) Web ad b) Pop-up ad c) Search marketing d) Banner ad 27. Keith is a marketer for Olympus cameras. He has organized an arrangement with a search engine by which Olympus pays the search engine a fee for listing the company in the top three results when a computer user enters ―digital camera‖ into the search engine) This is an example of _____. a) B2C e-commerce b) active marketing c) search marketing d) B2B e- commerce 28. The CLICK-THROUGH RATE is a measure of the ________. a) number of people who accidentally access a firm's Web site and have to ―click through‖ to leave b) rate at which people use certain search engines, seeking specific Web sites c) percentage of people presented with a banner ad that click on it, thereby linking to a Web site or pop-up page of information linked to the ad d) number of people actually get onto the Internet in the course of a day 29. A basic measurement of WEB SITE EFFECTIVENESS is the CONVERSION RATE, which is the _____. a) number of people who, having previously visited the site, return to it for additional visits b) proportion of visitors who mark the Web site as a favorite c) percentage of people presented with a banner ad who click on it d) percentage of Web site visitors who make purchases Chapter 5 (49) Consumer Buying Behavior MULTIPLE CHOICE 1. Which of the following statements reflects Carla’s INTERPERSONAL DETERMINANTS concerning her purchase of an Apple computer? a) She believes you get what you pay for when purchasing products. b) She perceives that Apple offers the best customer service) c) Her family will only buy Apple products. d) She purchased a condo in a trendy area of town and wants her furnishings to reflect the lifestyle she leads. 2. KURT LEWIN’S theory of consumer behavior asserts that consumer behavior is a function of personal factors and their interaction with ________. a) perception b) learning c) attitudes d) interpersonal influences 3. Cultural differences are particularly important for ________. a) firms marketing internationally b) not-for-profit organizations c) firms marketing to a specific target market in a single city d) dealing with issues having historical significance 4. An EXAMPLE of a CORE VALUE of the United States culture would be the ________. a) work ethic c) dignity of the elderly b) importance of team spirit d) importance of personal achievement 5. A shift in CULTURAL VALUES away from accumulating material possessions to spending time with family and friends would pose problems for those who market ________. a) travel services c) state parks and picnic areas b) luxury cars d) children’s games and toys 6. When groups establish values and behaviors they deem appropriate for their members, those VALUES AND BEHAVIORS are called group ________. a) rules b) norms c) ideals d) behaviors 7. The relative position of an individual within a group is called ________. a) cultural assimilation c) status b) a role d) the Asch phenomenon 8. The single group within society that is most vulnerable to REFERENCE GROUP influence is ________. a) the older consumer who feels somewhat left out of things. b) unmarried women, many of whom feel a need for stability in their lives. c) new immigrants who want to capture the American dream. d) children, who base most of their buying decisions on outside influences. 9. REFERENCE GROUP influences would most likely have the greatest impact on which product purchase? a) Refrigerator c) iPod b) Mercedes Benz d) Starbucks latte 10. REFERENCE GROUPS have a greater impact on the purchasing decision when the _. a) consumer is already established as the opinion leader in the group b) purchase is hard to recognize or see by the group c) product is common d) purchase is unique and conspicuous 11. The ASCH phenomenon states that individuals will ________. a) follow their personal influences more closely than any other influence b) follow the majority opinion even if it contradicts the individual’s beliefs c) purchase products that maintain a positive looking-glass self d) avoid extended problem-solving behavior 12. PEER PRESSURE is closely related to which purchasing behavior concept? a) Cognitive dissonance c) Cultural influences b) Opinion leaders d) Asch phenomenon 13. OPINION LEADERS tend to ________. a) lead the group on most issues b) purchase products before other consumers, and then quickly pass on their impressions of the products c) have above-average income d) avoid extended problem-solving behavior 14. Which statement concerning the DEMOGRAPHICS of the American family is LEAST correct? a) The percentage of married people has declined in the past century. b) More than 20 percent of all households are comprised of extended families. c) A majority of adult women work outside of the home) d) Marketers are taking advantage of the longer work week of each household) 15. A newly married couple is looking to rent an apartment. The decision is likely to be ____. a) syncratic b) made by the individual with the best credit history c) made by the individual with the highest income d) autonomic 16. Due to the purchasing power of teen consumers, manufacturers and retailers are creating products that appeal to their ________. a) limited attention span c) tendency towards individualism b) desire to be part of a group d) growing independence 17. The personal determinants of consumer behavior include the ________. a) culture in which a person is raised b) individual’s needs and motives c) family to which one belongs d) society from which one comes 18. Helene, an industrial sales representative, made sure her company car was equipped with OnStar in case she ever had car trouble or got lost while traveling between appointments. Which level of MASLOW’S HIERARCHY OF NEEDS is Helene addressing? a) Physiological c) Esteem b) Safety d) Self-actualization 19. Which statement is MOST correct concerning MASLOW’S HIERARCHY OF NEEDS? a) Maslow’s hierarchy is proving irrelevant in the technological age) b) Each cultural group has its own needs hierarchy. c) Countries with a higher standard of living provide marketers with more opportunities to fill needs higher on Maslow’s hierarchy. d) Marketers can do little to entice consumers to fulfill needs in the various hierarchy levels. 20. The needs for fulfillment, realizing one’s own potential, and fully using one’s talents and capabilities are examples of ________ needs. a) self-actualization c) social b) physiological d) esteem 21. A person who is satisfying the most basic level of needs is operating at which level of MASLOW’S HIERARCHY OF NEEDS? a) Self-actualization c) Physiological b) Esteem d) Belongingness 22. Bristol-Myers Squibb, a large pharmaceutical company, has developed a campaign featuring Lance Armstrong promoting their development of anti-cancer drugs. The campaign slogan, ―Together We Can Prevail‖ meets which criteria in MASLOW’S HIERARCHY OF NEEDS? a) Esteem b) Belongingness c) Safety d) Physiological 23. Perception is defined as a blend of ________. a) likes and dislikes c) actual stimuli and wanted perception b) emotions and thoughts d) needs and wants 24. All of the following are stimulus factors EXCEPT: a) basic motivations of the individual c) the object’s weight b) size of the object d) the object’s shape 25. The invention of DVR technology makes it easier for consumers to use their ________. a) subliminal perception c) learning processes b) perceptual screens d) cognitive dissonance 26. Which of the following would be most likely to break through a person’s PERCEPTUAL SCREEN? a) Newspaper ad featuring white type on a black background b) Black-and-white classified ad c) Reducing the size of an ad d) Using fewer colors in an ad 27. Advertising can break through PERCEPTUAL SCREENS with all of the following examples EXCEPT: a) closure c) blogs and electronic bulletin boards b) subliminal ads d) virtual reality 28. NEUROMARKETING is defined as ________. a) using the Internet to view products on informational Web sites b) selling products through subliminal perception c) eliciting emotions to stimulate purchases d) using technical data to appeal to the cognitive decision making tendencies in consumers 29. The cognitive component of attitude ________. a) is a measure of the emotional content of the attitude b) deals with the aesthetic content of the attitude c) refers to the individual’s knowledge and information about an object or concept d) measures the speed with which one learns about the attitude object 30. Food manufacturers often set up tables in grocery stores where customers can sample featured products. The goal of this type of promotion is to influence the ________ component of attitude) a) behavioral b) rational c) cognitive d) affective 31. An advertisement that creates warm feelings of goodwill toward the advertiser and its products is altering which component of attitudes? a) Cognitive b) Behavioral c) Traditional d) Affective 32. Rewarding purchasers of a product by sending coupons to encourage further purchases is an EXAMPLE of ________. a) a marketer trying to revive a failing product b) promotional activities aimed at increasing store traffic c) neuromarketing d) reinforcement 33. In the learning process, REINFORCEMENT is ________. a) the immediate expected change in behavior as a result of experience b) the reduction in drive that results from a proper response c) an individual’s reaction to a set of cues d) any strong stimulus that impels action 34. REINFORCEMENT in the purchasing process is illustrated in which of the following scenarios? a) A chef purchases mushrooms for a second time from a wholesaler, even though the first order was disappointing. When the quality is poor once again, the chef cancels all future orders. b) An appliance distributor replaces a warrantied dishwasher free of charge within two days of a service call. c) A needle on the gas gauge signals a driver pull into a service station. d) The smell of hot dogs at a ballpark induces a dieting man to order ―a dog with everything on it.‖ 35. People are likely to buy products they believe will move them closer to their ____ self. a) real b) looking-glass c) model d) ideal 36. In the area of SELF-CONCEPT THEORY, the REAL SELF is ________. a) the way the individual views himself or herself b) the way the individual thinks other people see him or her c) the individual’s personal set of objectives to which he or she aspires d) an objective view of the total person 37. The LOOKING-GLASS SELF is defined as ________. a) an objective view of oneself b) often different from self-image because people may choose to project a different image to others c) usually the same as the ideal self because most people want others to perceive them as successful d) a personal view of how a person wants to be 38. During the SEARCH step of the CONSUMER DECISION PROCESS, the consumer __. a) realizes it’s time to make a change from the present situation b) develops a set of evaluative criteria to guide the purchase decision c) begins to notice favorable word-of-mouth communication about the product d) gathers information about the attainment of a desired state of affairs 39. Marketers can help smooth out the purchase decision and purchase act phases of the consumer decision-making process by ________. a) introducing new variables such as a price change b) helping customers arrange for financing and delivery c) explaining the difference between two product alternatives d) keeping out of the way as much as possible 40. The evaluative criteria used by consumers in the decision making process may be ________. a) set aside if the consumer finds a better means of making the purchase decision b) used to identify alternative brands for consideration and possible purchase) c) invoked during the first stage of the decision process d) objective facts or subjective opinions about the alternatives 41. One of the ways in which marketers can attempt to affect the outcome of the alternative evaluation stage of the consumer decision-making process is by ________. a) trying to get consumers to expand their evoked sets to include their product b) attempting to convince consumers that a competing brand does not meet their criteria c) providing persuasive evidence about their products in a useful format d) helping consumers to identify potential problems or needs 42. The number of alternatives a consumer actually considers in making a purchase decision is referred to as ________. a) the evoked set c) evaluative criteria b) customer options d) cognitive choices 43. Product features a consumer considers when choosing among alternatives is known as the ________. a) appraisal standards c) assessment parameters b) evaluative criteria d) selection rules 44. At which STAGE of the consumer decision-making process might COGNITIVE DISSONANCE occur? a) Search c) Purchase decision and purchase act b) Evaluation d) Post purchase evaluation 45. COGNITIVE DISSONANCE ________. a) is defined as pre-purchase anxiety and doubt b) is more likely to occur as the cost and complexity of the purchase increases c) is more likely to occur when there is a balance between attitudes, beliefs, and knowledge d) decreases if the product does not have the desired features 46. Marketers can attempt to shape the outcome of the POST-PURCHASE EVALUATION by ________. a) helping consumers to identify potential problems or needs b) offering personal assistance with any problem experienced with the product c) attempting to convince consumers that a competing brand does not meet their criteria d) trying to get consumers to expand their evoked sets to include their product 47. The introduction of a new brand into an array of familiar brands for which a consumer has previously set evaluative criteria may create the need for ________. a) limited problem solving c) comparison shopping b) extended problem solving d) brand evaluation 48. When a product is unique or difficult to categorize, the thought process involved in a purchase decision is known as ________. a) research analysis c) limited problem solving b) extensive analysis buying d) extended problem solving 49. Marketers can influence the outcome of the evaluation stage of the consumer purchase decision process by ________. a) attempting to convince consumers that certain attributes are more important than others in deciding which product to buy from among an array of them b) identifying which evaluative criteria are important to the individual, and pointing out which brand best meets those criteria c) trying to get the customer to reduce the size of the evoked set to exclude many of the choices d) attempting to convince the consumer to spend more than was budgeted for the purchase to acquire more features they might prefer ESSAY Chapter 5 -- Consumer Buying Behavior 1. Define consumer behavior. Discuss the Lewin model and how it has been adapted for consumer behavior. 2. Discuss the classifications of consumer behavior influences. 3. Discuss the three categories of interpersonal determinants of consumer behavior. 4. What is a subculture? Why should marketers pay attention to subcultures? Give some examples of subculture markets that companies might pursue) 5. Describe the Asch phenomenon and discuss its relationship to the concept of reference groups. 6. Discuss the concept of social class, and name the six levels of class ranking. What variables are used to determine social class? 7. What is an opinion leader? Why are they important to marketers, and how has the Internet affected the power of the opinion leaders? 8. Marketers define the role of each spouse in terms of four categories. List the categories and provide an example of a purchase decision that traditionally falls into each category. 9. Discuss the role of children and teenagers in the consumer marketplace) How are marketers targeting this subculture? 10. Explain the difference between a need and a motive) Provide examples of each. 11. Discuss Maslow’s Hierarchy of Needs, and list a product that can be promoted to fulfill each need) What is the primary criticism of this theory? 12. What are perceptions? 13. What are perceptual screens? Explain ways in which marketers can overcome these screens. 14. Discuss the three components of attitude and how marketers can change attitudes. 15. As a marketing research intern for a personal-care products company, you are asked to present information on the learning process to the marketing department. Discuss the elements of learning you would include in your presentation. What advice would you give your peers about shaping? 16. Discuss the four components of self-concept and explain how marketers can utilize this information. 17. Explain the difference between a high-involvement purchase decision and a low- involvement purchase decision. Give an example of each and explain your classifications. 18. List and describe the steps in the consumer decision process. 19. What are evaluative criteria? What are some of the evaluative criteria a consumer might use when searching for an apartment? 20. Define cognitive dissonance) How can marketers manage a consumer’s cognitive dissonance? 21. Describe the three categories of problem solving behavior and provide an example for each. Chapter 6 (49) Business-to-Business (B2B) Marketing MULTIPLE CHOICE 1. The four segments of the B2B marketplace include all of the following EXCEPT: a) government c) commercial market b) entertainment industry d) trade industries 2. Compared to the purchasing process for CONSUMER PRODUCTS, ________. a) distribution channels for business products are significantly longer b) customer relationships for business products tend to be short-term and transactions-based c) personal selling plays a much larger role in business products markets d) customer service plays a smaller role in the distribution of business products 3. Marketing strategies to reach consumers differ from strategies designed to reach businesses because ________. a) consumers expect a higher level of customer service than do businesses b) businesses respond better to advertising than do consumers c) consumers act in groups but business buyers act alone d) business buying often involves more technical issues and customized products 4. Comparing the business to the consumer market, all of the following statements are correct EXCEPT: a) Business products tend to be more complex. b) Negotiations are often longer and include more decision makers. c) Distribution channels are longer and more complex in the business market. d) Customer relations are relatively enduring and complex in the business market. 5. The trade industries consist of ________. a) manufacturers c) farmers b) wholesalers and retailers d) transportation 6. INSTITUTIONS, as a component of the B2B market, ________. a) tend to have greater financial resources than industrial customers b) provide business services to the other members of the market c) may have rigid purchasing procedures d) are accountable to their clients and stockholders 7. The GOVERNMENT segment of the B2B market commonly buys products ________. a) for resale to the public c) that are customized and not commonly available b) to provide public benefits d) from domestic sources only 8. Which of the following is NOT found in e-commerce serving the business market? a) Private portals that allow customers access to products and vendors b) Service pages accessed using passwords provided by B2B marketers c) Online auctions where business goods may be purchased d) Chat rooms dedicated to opinions of new products 9. Which of the following is NOT a commonly used basis for segmenting the business market? a) Demographics using the size of the firm c) Educational attainments of buyers b) Customer type d) Product end-use application 10. Zardo, Inc) divides its customers into the following categories: small business, large business, government, and not-for-profit institutions. Which type of SEGMENTATION is Zardo practicing? a) End-use c) Demographic b) Customer type d) Purchase category 11. The system for grouping businesses that grew out of the NAFTA accord is known as the ________. a) Standard Industrial Classification System b) Industrial Data Recording System c) Standard Industrial Census System d) North American Industry Classification System 12. Customer relationship management systems are most useful in which type of segmentation? a) End-use c) Customer type b) Demographic d) Purchase category 13. Texas Instruments produces chips used in a variety of devices, from cell phones to hand calculators. Which type of SEGMENTATION would make the most business sense for a company like Texas Instruments? a) End-use c) Customer type b) Purchase category d) Demographic 14. In the B2B marketplace, SEGMENTATION based on the precise way in which the business will use the product is called ________. a) segmentation by purchasing situation c) end-use application segmentation b) segmentation by customer type d) segmentation by demographic characteristics 15. Which of the following is NOT a characteristic that distinguishes B2B markets from consumer markets? a) Organizational markets are more geographically concentrated) b) More people exert influence on the organizational buying decision. c) The organizational market tends to have a greater number of buyers. d) Organizations often engage in multiple sourcing and vendor analysis. 16. Some of the best statistical information for companies seeking opportunities in the B2B marketplace can be found in which media? a) Internet b) Dun & Bradstreet reports c) trade and business publications d) Census of Manufacturers and Census of Retailing and Wholesaling 17. All of the following statements concerning B2B marketing are correct EXCEPT: a) Business markets are more geographically concentrated than consumer markets. b) Locating near a customer reduces costs, inventories and time) c) Companies that serve the federal government tend to be concentrated in and around Washington, D)C) d) The Internet is having little impact on the geographic concentration of business markets. 18. The location of a business supplier near its customers will ordinarily NOT have an effect on which of the following? a) Supplier costs c) End-use applications of products b) Ability of the supplier to render better service d) Supplier parts inventories 19. Dell Computer purchases parts and resources for its computers from suppliers worldwide) This practice is known as ________. a) outsourcing c) joint demand b) global sourcing d) derived demand 20. The demand for automated teller machines (ATMs) is based on consumer demand for banking convenience) This is an example of ________. a) joint demand c) volatile demand b) derived demand d) demand variability 21. After Hurricane Katrina, roadways needed to be repaired and rebuilt, resulting in an increase in the demand for concrete, stone, and steel reinforcement. The price of these materials began to rise due to ________ demand) a) linked c) coordinated b) derived d) joint 22. A manufacturer that produces glass for microwave oven doors, shower enclosures, and patio tabletops is segmenting the market on the basis of ________. a) cost-plus considerations c) benefits offered b) end-use application d) design factors 23. If the demand for product A stays constant regardless of the increase or decrease in demand for product B, it can be said that product A is experiencing ________ demand) a) derived b) joint c) volatile d) inelastic 24. Reducing inventories to absolute minimum levels and requiring vendors to deliver the items as they are needed in the production process is known as ________. a) in real time (IRT) c) on time delivery (OTD) b) just-in-time (JIT) d) next-time in (NTI) 25. Which of the following questions would most likely NOT be considered when deciding whether to manufacture needed parts and equipment in-house? a) Do we have the needed capability? b) Can someone else do this job better than we can? c) Can someone else do this work cheaper than we can? d) By manufacturing this equipment, do we create new distribution systems? 26. OUTSOURCING is often chosen as an alternative to making goods in-house or providing in- house services because ________. a) savings often exceed 40 percent on average b) savings often rise as the contract firm (the outsource) becomes familiar with the job c) outsourcing solves security problems when proprietary technology is involved d) outsourcing allows firms to concentrate their resources on their core businesses 27. NAFTA has made it easier for U.S. companies to ________. a) decentralize b) nearshore c) outsource d) consolidate 28. All of the following are DRAWBACKS OF OUTSOURCING EXCEPT: a) lower-than-anticipated cost savings c) poor customer service b) concerns over proprietary technology d) higher risk of losing touch with customers 29. Product factors important to the buying decision include all of the following EXCEPT: a) replacement cost c) operating and maintenance costs b) purchase price d) service 30. The organizational buying process has more steps than the consumer buying process, which can be attributed to ________. a) the limited number of suppliers in the B2B marketplace b) the importance of integrating the responsibilities of the wholesalers or retailers c) interpersonal and environmental influences not seen in consumer buying decisions d) business purchasing that introduces new complexities that do not affect consumers 31. A firm has decided to purchase hybrid delivery vehicles in response to rising gasoline prices. Which STEP in the business buying process does this illustrate? a) Determining the characteristics of the needed product b) Recognizing a problem or opportunity c) Searching for qualified sources d) Evaluating proposals and selecting suppliers 32. Establishing specifications for a needed product is part of which STEP in the business buying process? a) Recognizing a need b) Describing characteristics of a needed good c) Qualifying potential vendors d) Selecting an order routine 33. Adam, a purchasing agent for the American Heart Association, has made a list of potential suppliers for payroll services. Adam is currently at which STEP in the organizational buying process? a) Recognizing a problem or opportunity b) Determining the characteristics and quantity of the needed product c) Describing the characteristics of the needed product d) Searching for and qualifying potential sources 34. Procedures that measure characteristics, such as a supplier’s reliability, price, and order accuracy would be part of which STEP in the organizational buying process? a) Searching for potential sources c) Recognizing a need b) Analyzing proposals d) Evaluating proposals and selecting suppliers 35. Which of the following is the FINAL STEP in the business buying process? a) Selecting an order routine b) Evaluating proposals and selecting suppliers c) Obtaining feedback and evaluating performance d) Acquiring and analyzing proposals 36. A unique purchase situation in the business market that requires considerable effort on the decision maker’s part is called ________. a) a straight rebuy c) new-task buying b) a modified rebuy d) a selective rebuy 37. When a business purchaser accepts the terms of sale of an item that has performed satisfactorily in the past and requires no new information to decide to purchase it again, the buying situation is a ________. a) straight rebuy c) contract purchase b) service purchase d) modified rebuy 38. Which product might an ink manufacturer purchase on a STRAIGHT REBUY? a) Warehouse storage tanks b) Manufacturing equipment c) Process oils that are refined to the exact specifications required to produce ink d) New computer network 39. When business purchasers shift from straight rebuy to modified rebuy behavior, it is often due to ________. a) a change in the accelerator principle b) the routine buying format being outdated c) corporate expansion d) a deterioration in supplier service or delivery 40. RECIPROCITY has been most common in industries featuring ________ products with ________ prices. a) homogeneous; different c) homogeneous; similar b) diverse; different d) diverse; similar 41. A company’s BUYING CENTER encompasses ________. a) a representative from each department within an organization b) a gatekeeper and a buyer c) everyone who is involved in any aspect of the buying process d) a top-notch buying department 42. One type of BUYING CENTER role is a(n) ________. a) influencer, who supplies information to guide evaluation of alternatives b) contractor, who has the formal authority to select a supplier c) distributor, who controls the information that all buying center members will review d) technician, who presents technical requirements 43. The function performed by the GATEKEEPER in the company buying center is to ________. a) supply information to guide evaluation of alternatives b) select a supplier and implement the procedures for securing the goods and services c) choose which goods and services will actually be bought d) control the information that all buying center members will review 44. When comparing INTERNATIONAL BUYING CENTERS to DOMESTIC BUYING CENTERS, participants are ________ to identify and the size of the buying center is ________. a) easier; smaller c) easier; larger b) more difficult; smaller d) more difficult; larger 45. The General Services Administration (GSA) of the U.S. federal government ________. a) buys goods and services strictly for its own internal use b) buys goods and services strictly for use by other government agencies including the departments of Defense and Transportation c) is a central management agency involved in procurement, property management, and information resources management d) oversees state and local purchasing guidelines for those products not usually bought by the federal government 46. Some of the challenges faced by GOVERNMENT PURCHASERS include all of the following EXCEPT: a) Assuring that minority groups are fairly represented in the buying process b) Meeting the needs of users who do not work in their organization c) Inflexible and slow purchasing procedures that were written nearly 50 years ago d) Coordinating the purchasing between the federal, state and local agencies 47. INSTITUTIONAL MARKETS are characterized by ________. a) similar buying practices b) multiple-buying influences, even within the same institution c) few group purchasing arrangements d) little negotiation to secure volume discounts 48. Which of the following types of organizations would NOT ordinarily be considered a part of the institutional market? a) Public libraries c) Educational foundations b) Department stores d) Churches 49. In order to receive quantity discounts on needed purchases, many institutions ________. a) tend to purchase products they do not need b) insist on equal treatment under the Robinson-Patman Act c) join cooperative associations to pool purchases d) rely on their independence and future growth ESSAY Chapter 6 -- Business-to-Business (B2B) Marketing 1. Define B2B marketing. How does it compare to the consumer marketplace in terms of size and transaction volume? 2. Describe some of the differences between B2B marketing and consumer product marketing. 3. Identify and describe the four categories of business markets. 4. What is the NAICS? How does it differ from the SIC system it replaced? 5. Assume a firm sells similar products to different types of organizational customers. Which type of segmentation would be most suitable? 6. Identify and describe the major approaches to segmenting the organizational market. 7. List four characteristics that differentiate the B2B market from the consumer market. 8. Discuss the demand characteristics that distinguish business markets from consumer markets. 9. Just-in-time (JIT) inventory practices are effective in boosting efficiency and cutting the cost of holding large inventories. As a result of the widespread use of this process, what changes has the B2B marketplace experienced? 10. Discuss the make, buy, or lease decision for industrial organizations. 11. What is outsourcing? Why do firms outsource production, and what are some potential drawbacks of outsourcing? 12. What is the difference between offshoring and nearshoring? Discuss some offshoring trends occurring in the global marketplace today. 13. What distinguishes the business buying process from the consumer buying process? What do B2B marketers need to understand about organizational buying behavior? 14. What factors influence business buying decisions? 15. What is the role of a professional buyer? 16. In addition to price, what other factors are important in the final purchasing decision? 17. List the eight stages of the buying process for businesses. 18. Describe the three organizational buying situations. How do they correlate to the purchasing decisions of consumers? 19. Explain the difference between value analysis and vendor analysis. 20. Identify and describe the five roles that buying center participants contribute to the organizational purchasing process. 21. What are some advantages to the team selling concept? 22. Describe the unique challenges of selling to government markets. Chapter 7 (47) Global Marketing MULTIPLE CHOICE 1. The most profitable SERVICE EXPORT for the United States is ________. a) retailing c) medical services b) business and financial services d) entertainment 2. RELATED-PARTY TRADE is defined as the trade relationship between ________. a) countries with free trade agreements c) companies in the same industries b) countries with the same language d) a corporation and its subsidiaries 3. Before entering a country, marketers need to determine if the country has a(n) ________, which is the underlying foundation to support marketing efforts. a) moral code b) legal system c) infrastructure d) trade organization 4. The new European Union currency, the euro, is based on the idea that ________. a) tying other European currencies to the euro will stabilize exchange rates b) the presence of the euro will eliminate soft currencies from the marketplace c) having a single currency will strengthen Europe’s competitiveness in the global marketplace d) the euro will strengthen the area’s barter economy 5. American companies operating in a foreign nation are regulated by all the following EXCEPT: a) formal negotiations and legal requirements of the host nation b) the International Monetary Fund c) international law d) U.S. law 6. ISO 9000 standards set requirements for ________. a) product quality b) prices c) worker compensation d) environmental protection 7. ISO 14000 standards set requirements for ________. a) product quality b) prices c) worker compensation d) environmental protection 8. The controversial 1996 law that attempted to impose trade sanctions on Cuba is the ____. a) Helms-Burton Act c) Export Trading Act b) Cuban Trade Restriction Act d) North American Free Trade Agreement 9. Which of the following is NOT a trade barrier to an exporter? a) Tariffs b) Import quotas c) Subsidies d) Related party trade 10. The Republic of Eastern Africa imposes a duty on imported goods to pay for government services. This is best described as a(n) ________. a) protective tariff b) revenue tariff c) import quota d) subsidy 11. A complete ban on the import of a product is known as a(n) ________. a) import quota b) embargo c) revenue tariff d) protective tariff 12. EXCHANGE CONTROL is an administrative barrier to international trade that _____. a) requires companies that export to sell foreign currencies to the central bank or other foreign agency, and importers to buy foreign currencies from the same organization b) supports domestic industry through grants of money or research support c) completely bans the importation of a product d) sells products in a foreign market cheaper than they are sold domestically 13. The ideal way for a nation to stop a foreign company from dumping is to ________. a) pay the exporter with soft currency c) cite international law b) impose protective tariffs d) appeal to the IMF 14. When a group of nations agree to the free trade of goods among themselves by abolishing tariffs and trade restrictions, the nations have created a ________. a) common market b) customs union c) trading block d) free-trade area 15. Among the forms of multinational economic integration, the one that seeks to reconcile all government regulations affecting trade is the ________. a) common market b) customary union c) free-trade area d) united state 16. The ________ type of multinational organization features free trade of goods among its members, and a uniform tariff for trade with nonmember nations. a) common market c) customs union b) common area of administration d) free-trade area 17. Which organization was established as a result of GATT? a) NAFTA b) EU c) WTO d) FTAA 18. The progress the WTO has made toward its goals of liberalizing world financial services, telecommunications, and maritime markets has been ________. a) slow -- its activities have focused on complaint resolution, not trade barriers b) rapid -- several major new treaties have been ratified in the last two years c) about as expected -- there have been the usual victories and the usual defeats d) extremely fast -- some authorities claim a new world order by the year 2010 19. Which of the following is one of the major policy initiatives of the WTO? a) Increasing the average level of education worldwide b) Liberalizing world financial services c) Promoting and protecting the environment d) Regulating automobile production by less-advanced nations 20. Assume China and the United States are involved in a trade dispute) Which organization will attempt to resolve the dispute? a) United Nations b) GATT c) EU d) WTO 21. The United States would eventually like NAFTA to become ________. a) the FTAA c) a global free-trade area b) part of the EU d) focused on energy-producing industries 22. All of the following statements about the FTAA are correct except: a) NAFTA nations will become members of the FTAA) b) FTAA would be the largest free-trade zone in the world) c) FTAA would include nations from both North and South America) d) FTAA is scheduled to go into effect in 2008. 23. The goal of the EU is ________. a) establishing manufacturing standards b) expanding globally c) removal of all barriers to free trade among its members d) absorption of the former Eastern bloc of nations 24. Comparing the EU to the United States, the EU’s GDP is ________ than that of the United States while its population is ________. a) smaller; smaller b) smaller; larger c) larger; larger d) larger; smaller 25. An organization that provides first-time exporters with expertise in locating foreign buyers, handling paperwork, and conforming to local labeling and testing laws is called a(n) ______. a) export facilitator c) trade assistance corporation b) export title company d) export management company 26. An arrangement where a small firm teams with, and serves as a subcontractor for, a larger international company on a foreign project is called ________. a) international trade mentorship c) an offset agreement b) trade facilitation d) a mutual trade agreement 27. ________ is a contractual arrangement in which a wholesaler or retailer agrees to meet the operating requirements of a manufacturer. a) Foreign licensing b) Franchising c) Joint licensing d) Offset licensing 28. All of the following are advantages of foreign licensing over exporting, EXCEPT: a) Access to the local partners’ (licensees’) marketing information b) Access to local distribution channels c) Protection from certain legal barriers d) Less control of the venture by the licensor 29. The contractual agreement by which a domestic firm grants foreign marketers the right to distribute a firm’s merchandise or use its trademark, patent, or process in a specified geographic area is called ________. a) subcontracting through a foreign provider c) reciprocal partnership b) franchising as the franchiser participant d) foreign licensing 30. McDonald’s and Starbucks have extensive operations in foreign markets. McDonald’s has generally used the ________ approach, while Starbucks has used the ________ approach. a) direct investment; franchise c) franchise; direct investment b) franchise; foreign licensing d) foreign licensing; franchise 31. Honda, a Japanese firm, builds a factory in Alabama to make minivans to be marketed to Americans. This strategy is best described as ________. a) a joint venture between Honda and Alabama legislatures seeking to increase employment opportunities b) foreign marketing by Honda c) international direct investment by Honda in the United States d) indirect exporting 32. ________ is the international market entry strategy that involves high levels of involvement and risk potential, but also offers a competitive advantage over other alternatives. a) Franchising c) Foreign licensing b) Offset agreements d) International direct investment 33. Which of the following is NOT an example of international direct investment by a firm? a) Foreign sales office c) Acquisition of an existing foreign company b) Overseas marketing subsidiaries d) Export management company 34. A firm with significant operations and marketing activities outside its home country is a(n) __. a) monopoly b) active exporter c) multinational corporation d) overseas marketer 35. ExxonMobil can best be described as a ________. a) global exporter c) domestic corporation b) multinational corporation d) global importer 36. A multidomestic marketing strategy indicates that a firm ________. a) customizes its marketing decisions to effectively reach individual marketplaces b) disregards the principles of market segmentation c) considers all foreign countries to have equally competitive situations with respect to its industry d) employs universal promotional messages 37. A standard marketing strategy that is modified only minimally for use in each of the firm’s foreign markets is a ________ marketing strategy. a) single space b) monolithic marketing c) global d) multidomestic 38. Which of the following advantages does NOT ordinarily arise out of customizing marketing strategies for different international markets? a) Lower production costs per unit of product through economies of scale b) Attention to local preferences c) Products tailored to target market needs d) Promotions that appeal to local tastes 39. DELL is famous for their build-to-order computers. However, the company’s decision to sell pre-built computers in China’s retail stores is a result of ________. a) global marketing strategy c) countertrade policy b) multinational marketing strategy d) multidomestic marketing strategy 40. Alternative strategies from which international marketers can choose in selecting an appropriate product/promotion strategy include ________. a) product adaptation and dual adaptation b) promotion adaptation and direct exporting c) countertrading and product invention d) global marketing and multinational marketing 41. In the international market, a product adaptation strategy combines ________. a) changes in promotion strategy with changes in the product itself b) the domestic product with promotional changes tuned to the foreign market c) product changes with the same promotional strategy used in the domestic market d) product characteristics not seen in the home country with a foreign promotional strategy 42. Developing a completely new product to take advantage of a unique foreign opportunity is called product ________. a) development b) commercialization c) invention d) origination 43. Which of the following statements is true regarding international aspects of distribution strategy? a) Transportation systems and warehousing facilities may be unavailable or of poor quality in a given foreign market. b) Switzerland’s train system, the Volksbahn, is of especially poor quality. c) Due to different cultural approaches to business, international marketers should avoid local distributors. d) Europeans have never responded to direct-by-television sales efforts. 44. Which of the following need NOT be considered in making an international distribution decision? a) Precisely duplicating domestic distribution strategies b) Quality of the firm’s products c) Available transportation options d) Warehousing facilities 45. Pricing decisions in a foreign market can most likely be limited by which constraint? a) Ecological b) Political c) Social d) Ethical 46. The Organization of Petroleum Exporting Countries (OPEC) is a marketing organization ___. a) with a pricing strategy of controlling world prices through collective action b) regulated by NAFTA and the EU c) which uses countertrade to obtain valuable foreign investments d) formed to address the growing competition from Venezuela and North Sea crude exploration 47. In which of the following industries do foreign investors in the United States have a notably strong presence? a) Pharmaceuticals c) Entertainment b) Textile processing d) Automobile manufacturing ESSAY 1. How does GLOBALIZATION benefit U.S. business? 2. Define the U.S. GDP and determine whether the United States has, overall, a service economy or manufacturing economy. In your discussing your choice, include some industries that comprise the manufacturing and service segments and how they contribute to the GDP. 3. Discuss some factors that can influence ENVIRONMENTAL MARKETING STRATEGIES. 4. What are the six areas marketers must study before advising their company to enter a foreign market? Who should provide the necessary research, data, and information? 5. What does ISO 9000 and ISO 14000 certification represent? 6. Explain the difference between a PROTECTIVE TARIFF and a REVENUE TARIFF. Give an example of each. What is DUMPING? 7. Compare a FREE-TRADE AREA, an ECONOMIC UNION, and a CUSTOMS MARKET. 8. Name two trade agreements exclusive to the Western Hemisphere) What is the purpose of the agreements and which nations are involved? What is FTAA? 9. What is the EUROPEAN UNION? Describe its goals, and discuss some of their successes and challenges. How does it compare to NAFTA? 10. Describe the methods available for entering international markets. 11. What are some ways to facilitate exporting to a foreign market? 12. Explain the difference between a FRANCHISE and a FOREIGN LICENSING agreement. Which arrangement do firms such as McDonald’s use to enter foreign markets? 13. What is a MULTINATIONAL CORPORATION? How have these organizations evolved? 14. Compare the two different approaches to developing a MARKETING MIX for an international market. 15. Discuss the PRODUCT AND PROMOTIONAL STRATEGIES that might be applied in a specific foreign market. 16. What is COUNTERTRADE? Why would a country choose to countertrade? Chapter 8 (49) Marketing Research and Sales Forecasting MULTIPLE CHOICE 1. Much of the early MARKETING research consisted of ________. a) written testimonials received from purchasers of a firm’s products b) use of mailed questionnaires to gather data c) telephone surveys conducted to assess household preferences d) sampling studies using techniques derived from voting records 2. Research seeking to discover the cause of a problem by discussing the problem with informed sources and examining pre-existing data is defined as ________. a) situation analysis c) exploratory research b) informal investigation d) cost or bottom line analysis 3. Once a firm has DEFINED THE PROBLEM it seeks to solve, researchers can begin _. a) looking for government data that will provide the needed information b) exploratory research involving discussion of the problem with informed people c) completely changing the marketing mix d) deciding whether to experiment or conduct a survey 4. Concerning the use of internal data for marketing research, it could be said that _______. a) most internal data are not current enough to be used b) internal controls limit the use of such data c) tracking consumer information lacks detail and consistency d) sales analysis is one of the least expensive and most important sources of marketing information available to a firm 5. MARKETING COST ANALYSIS is performed to evaluate ________. a) effectiveness of the sales force b) current levels of corporate assets and liabilities c) profitability of certain customers, territories, or product lines d) whether summaries of invoices and orders received can be useful 6. After a problem has been defined and an exploratory investigation is conducted, the marketing researcher should be able to ________. a) collect both primary and secondary data c) immediately proceed to a solution b) draw significant conclusions d) formulate a hypothesis 7. Raj is deciding which customers to include in a sample) Where is he in the marketing research process? a) Formulating a hypothesis c) Creating a research design b) Collecting data d) Defining a problem 8. Information collected for the first time specifically for a marketing research study is called ________ data) a) secondary b) primary c) soft d) experimental 9. Penelope is using data collected and published by a TRADE ASSOCIATION in her marketing research study. What kind of data is Penelope using? a) Secondary data b) Primary data c) Soft data d) Hard data 10. SECONDARY DATA has two important advantages over PRIMARY DATA) These advantages include: a) Wide variety of statistics and large sample groups used to create the data b) High level of detail and endorsement by other users c) Accuracy of the data specifically gathered for the research study d) Cost and speed of locating the data 11. The FINAL STEP in the marketing research process is ________. a) interpreting the findings and presenting the information to decision makers b) in-depth computer analysis of the data followed by database update c) evaluating the research design for improvement and efficiency d) providing feedback to researchers concerning their effectiveness in helping decision makers 12. External secondary marketing research data include ________. a) sales force activity reports compiled by the sales manager b) company sales and expense records from accounting c) information obtained from a syndicated research service d) product performance reviews made by the engineering department 13. The reference book that can help marketers track down trade organizations that may have data pertinent to their company is the ________. a) U.S. Government’s Survey of Current Business b) Who’s Who in American Industry c) Gale Publishing’s Encyclopedia of Associations d) Thomas’ Register of American Industry 14. Lawrence, President of Riley & Associates, is looking for a book of secondary data combining statistics for population, effective buying income, and retail sales. The book he is looking for is ________. a) U.S. Governors’ Handbook on EBI (Effective Buying Income) b) U.S. Government’s Statistical Abstract of the U.S. c) Gale Publishing’s Encyclopedia of Associations d) Sales and Marketing Management’s Survey of Media Markets 15. A good way to gather data from specialized trade journals would be to access an online periodical database such as ________. a) Ulrich’s Guide to International Periodicals b) Monthly Catalog of United States Government Publications c) CompuServe’s Knowledge Index d) Department of Commerce’s U.S. STATS 16. General Motors is debating which marketing research options to employ. The traditional PERSON- TO-PERSON methods have been effective; however, the new director of MARKET research is campaigning for ONLINE-BASED research. What argument for this method might she use? a) Consumers are more relaxed when sitting at home in front of their computers, therefore it is more likely the responses they give to surveys will be truthful. b) Online research has been standardized for each industry, making it easier to understand) c) A well-designed, Internet-based marketing research project can cost less and yield information faster than results of offline research. d) Person-to-person methods most often incorporate researcher bias into the surveys and observations. 17. The total group of people that a researcher wants to study is called the ________. a) population or universe b) sample or unit c) quota or target d) cluster or group 18. A group of people chosen from a DEFINED POPULATION to be survey respondents or research participants is called a ________. a) quota b) cluster c) sample d) community 19. The basic characteristic of a PROBABILITY SAMPLE is that ________. a) every individual in the relevant universe has an equal chance of being selected b) there is a chance that any member of the population being selected c) all possible members of the population have provided information d) 100 percent of all subgroups have been handpicked 20. A PROBABILITY SAMPLE constructed so that randomly selected subsamples of different groups are represented in the total sample is a ________ sample) a) stratified b) convenience c) quota d) cluster 21. Orlando & Associates are conducting an OPINION POLL for Mike concerning his chances in the upcoming race for mayor. Since they have a list of all registered voters in town, the most efficient sampling method they could use for this poll would be the ________ sample) a) random b) stratified c) nonprobability d) quota 22. The types of NONPROBABILITY SAMPLES include ________ samples. a) convenience and quota b) cluster and convenience c) stratified and convenience d) random and cluster 23. ―On the street‖ interviews conducted by a broadcaster with anyone who passes by are examples of ________ sampling. a) media b) convenience c) cluster d) stratified 24 A survey of freeway drivers that includes 100 drivers north of downtown, 100 south of downtown, 100 west of downtown, and 100 east of downtown is an example of a ________ sample) a) vehicle b) cluster c) quota d) convenience 25. Erica is a marketing researcher involved in improving drug store layouts. Erica would like to know which customers browse, and which seek out specific products, such as cold remedies. The BEST METHOD for Erica to collect this data would be by ________. a) observation c) voluntary mail-back questionnaires b) controlled experiment d) interviews at the cash register 26. How do marketers obtain PRIMARY DATA? a) Trend analysis, exponential smoothing, and the Delphi technique b) Observation, survey, and experiments c) Private data, government data, and internal data d) Marketing information systems, business intelligence, and consumer intentions 27. Market researchers might employ the SURVEY METHOD when it is________. a) necessary to obtain exact demographic information, such as income levels b) not necessary to establish contact or involvement with the respondent c) more cost-effective than secondary data collection d) coupled with observation to create a ―complete‖ research technique 28. All of the following statements concerning TELEPHONE INTERVIEWING are true EXCEPT: a) Telephone surveys are quick and inexpensive) b) Digital dialing and automated voices are not utilized because they are ineffective) c) Surveys are limited by the Do Not Call Registry, Caller ID, and unlisted numbers. d) Surveys have a relatively high response rate) 29. Which of the following statements about PERSONAL INTERVIEWS is MOST TRUE? a) Personal interviews provide biased and inaccurate information. b) Personal interviews allow the researcher to collect more detailed information compared to other survey techniques. c) Personal interviews are a quick method of data collection. d) Due to the length and content of questions, there is little flexibility in conducting personal interviews. 30. Which statement concerning the use of FOCUS GROUPS is incorrect? a) Focus groups can be a valuable tool for conducting exploratory research, developing new product ideas, and testing alternative marketing strategies. b) The group size is 8 to 12 individuals and a moderator to lead the general discussion. c) Peer pressure and dishonesty can occur in a focus group. d) The group should be moderated using a well-structured questionnaire) 31. Net Assets is a regional Internet company that has decided to conduct ONLINE RESEARCH through their business. A major feature of such online research is that ________. a) people consider it more intrusive than telephone interviewing b) the ease of answering a survey online encourages higher response rates c) it can be extraordinarily time-consuming d) longer responses can have a large negative effect on cost 32. WHICH IS TRUE about MARKETING research using the EXPERIMENTAL METHOD? a) It is the least expensive of all marketing research procedures. b) Most marketing research experiments are conducted in the laboratory. c) The researcher controls or manipulates a test group and compares the results with those from a control group. d) It is a nonscientific investigation compared to survey research. 33. McDonald’s introduces a new line of fish sandwiches to fifteen stores in the eastern United States for a six-month period) If the product and promotional efforts behind it are successful, the company may launch them nationwide) What type of research is being conducted to determine potential success? a) Test market b) Exploratory research c) Random sampling d) Focus groups 34. The biggest stumbling blocks for American companies doing research outside the United States are __. a) linguistic and cultural issues, as well as the country’s business environment b) lack of an effective research plan and a means of carrying it out c) lack of skilled personnel and high-tech hardware d) the economics of performing the research job 35. All of the statements concerning INTERPRETATIVE RESEARCH are correct EXCEPT: a) It involves observing a customer in his or her natural setting. b) It is often used to interpret consumer behavior in foreign cultures. c) It was developed by social anthropologists. d) It is a relatively inexpensive source of primary data) 36. A MARKETING research firm has set up a special store where customers are told they may be observed while shopping. Customer behavior is observed in this setting, and then the firm interprets the data based on an understanding of social and cultural characteristics of that setting. What type of research is this firm conducting? a) Secondary data collection c) Controlled experiment b) Interpretative research d) Focus group 37. Keith is working on a computerized search through one of his company’s massive data files. The purpose of the search is to try to detect patterns in product sales. Keith is engaged in ________. a) data forecasting c) data mining b) marketing decision support systems d) sales forecasting 38 The collection of customer information in huge amounts and entered into a database to be used for DATA MINING is called a ________. a) data warehouse c) statistical database b) marketing decision data cube d) data storage base 39. Which of the following is a QUALITATIVE sales forecasting technique? a) Econometric forecasting model c) Exponential smoothing b) Delphi technique d) Trend analysis 40. Carlos, CEO of Fresh Foods, wants a QUALITATIVE forecasting technique that is quick, inexpensive, and can be effectively used to forecast sales in the short run and for new product development. The method he should use is ________. a) a sales force composite c) the Delphi technique b) a survey of buyer intentions d) jury of executive opinion 41. All of the following are best utilized as SHORT-RUN sales forecasting techniques EXCEPT: a) survey of buyer intentions c) jury of executive opinion b) the Delphi technique d) sales force composite 42. Rather than relying completely on company executives, the QUALITATIVE forecasting technique that seeks opinions from outside the firm, such as university researchers and scientists, is known as ________. a) jury of executive opinion c) the Delphi technique b) exponential smoothing d) the sales force composite 43. The sales forecasting technique that typically works from the bottom up is called ________. a) the sales force composite c) trend analysis b) market testing d) exponential smoothing 44. QUANTITATIVE forecasting methods use techniques such as ________. a) exponential smoothing c) executive opinion summaries b) sales force composite d) consumer surveys 45. If you wanted to use a QUANTITATIVE forecasting method that could be used to forecast sales of new products, which method would you select? a) Survey of buyer intentions c) Test market forecasting b) Exponential smoothing d) Trend analysis 46. Landsdown Dairy is planning to introduce a new flavored milk drink. As marketing manager, you want to appraise consumer response to this new product. The procedure typically used would be ________. a) trend analysis c) test markets b) a jury of executive opinion d) the Delphi technique 47. A major benefit of TEST MARKETS as a QUANTITATIVE forecasting method is ________. a) they provide realistic information on actual purchases rather than intent to buy. b) they are quick and provide salespeople with an opportunity to explain their markets. c) they are effective with stable customer demand and environmental conditions. d) they are useful for predicting for the long term. 48. QUANTITATIVE forecasting methods include ________. a) sales force composites c) the Delphi technique b) survey of buyer intentions d) trend analysis 49. The most commonly used QUANTITATIVE forecasting method is ________. a) trend analysis c) test markets b) exponential smoothing d) forecast model management ESSAY Chapter 8--Research 1. Define marketing research and provide an example) 2. Identify and describe three types of marketing research companies. 3. In order, list the six steps of the marketing research process. 4. What is a hypothesis? Do all studies need to test a specific hypothesis? 5. Distinguish between primary and secondary data) Can primary and secondary data be internal and external? Provide examples of each type of data) 6. Identify the strengths and limitations of secondary data) 7. Describe probability and nonprobability sampling, and discuss different variations of each. 8. Describe the three methods market researchers utilize for collecting primary data) 9. Identify the resources available to assist U.S. organizations in researching global markets. 10. What is interpretative research? Give an example) 11. Define a MIS and discuss its importance to marketing managers. 12. What is a MDSS? How does it take MIS one step further? 13. What are the qualitative approaches to sales forecasting? 14. What is test marketing? What are some challenges with test marketing new products? 15. Discuss the quantitative methods of preparing a sales forecast. Chapter 9 (35) Market Segmentation, Targeting, and Positioning MULTIPLE CHOICE 1. To be effective, market segmentation must meet which of the following basic requirements? a) The firm must avoid focusing on non-variables, such as profitability and volume) b) The market segment must have measurable purchasing power and size) c) The company must expand beyond its marketing capabilities to capture growing markets. d) The market segment must reflect the population’s changing attitudes and lifestyles. 2. A commonly used basis for segmenting consumer markets is ________. a) geographic segmentation based on locations b) career segmentation based on industry affiliation c) national segmentation based on citizenship d) institutional segmentation based on membership 3. 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 4. ________ is the largest metropolitan area in the world) a) New York b) Tokyo c) Mexico City d) London 5. The most common method of market segmentation is ________. a) product sampling c) economic segmentation b) demographic segmentation d) psychographic segmentation 6. Socioeconomic market segmentation is another name for ________ segmentation. a) product-related b) demographic c) psychographic d) geographic 7. All of the following statements are true regarding socioeconomic market segmentation EXCEPT: a) It is the most common type of market segmentation. b) It is easy to accomplish in foreign markets where factors such as income and life cycle stage are not measured) c) It is defined by variables that include age, gender, income, occupation, and education. d) It is most often compiled through data taken from the U.S. Census. 8. The COHORT effect describes ________. a) why members of the same psychographic group decide to vote the same way b) how Generation X uses its financial power to influence product trends c) the predictability of demographic characteristics in analyzing purchase habits, product usage rates, and brand preference d) the tendency of members of a generation to be influenced and bound together by events occurring during the key formative years when they were 17 to 22 years of age 9. 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 10. A ________ is an example of a product which has target markets differentiated by age groups. a) headache remedy b) breakfast cereal c) light bulb d) laundry detergent 11. The family life cycle ________. a) is a way to apply psychographic segmentation b) refers to the process of family formation and dissolution c) provides insights into relationships among age, occupation, income, and housing d) is composed of the 11 stages of personal growth from infancy to retirement 12. Life cycle stages include all of the following except: a) unmarrieds b) first child c) remarrieds d) empty nesters 13. 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. 14. Using demographic segmentation abroad is ________. a) challenging because many countries do not take regular censuses b) standardized, with most countries using guidelines set forth by the U.S. census c) simplified due to the wealth of income data available in certain countries, such as Italy and Japan d) sometimes worthless because the integrity of the data is called into question 15. 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 16. 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 17. Segmentation by benefits is a type of product-related segmentation used to ________. a) determine the marketer’s effectiveness in satisfying the consumer b) measure brand loyalty c) evaluate post-consumption d) focus on the attributes that people seek in a product 18 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 19. The product-related segment of the consumer market based on the attributes people seek when they buy a product is called the ________ segment. a) price-shopper b) lifestyle c) expenditure pattern d) benefits-sought 20. 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 21. The product-related segmentation of consumers based according to the strength of their attachment and allegiance to their preferred products is called ________ segmentation. a) values and lifestyles c) psychographic b) business-to-business d) brand loyalty 22. The best product to market using an undifferentiated marketing strategy would be ____ . a) luxury automobiles b) snack foods c) table salt d) imported wine 23. 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 24. The strategy sometimes referred to as mass marketing is also known as ________. a) concentrated marketing c) undifferentiated marketing b) macromarketing d) differentiated marketing 25. Abecrombie and Fitch markets apparel to children, teens, and adults through two different storefronts called Abecrombie and Fitch and abecrombie) This practice is called ________. a) undifferentiated marketing c) mass marketing b) differentiated marketing d) micromarketing 26. 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 27. 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 28. 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 29. 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. 30. 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 31. The four basic determinants of a market-specific segmentation strategy include company resources, product homogeneity, stage in the PLC, and ________. a) product demand c) environmental constraints b) competitors’ strategies d) organizational efficiencies 32. ―Crest is a cavity fighter‖ is an example of a positioning strategy based on product ________. a) price/quality b) class c) attributes d) users 33. Which of the following would be a good example of a product user positioning strategy? a) ―Chef Plauché of Galatoire’s offers cuisine to please the most finely tuned palate)‖ b) ―Feed the whole family and don’t break the bank at Jaeger’s Homestyle Restaurant.‖ c) ―Bob’s Rib House award-winning barbeque ribs -- the biggest and best in town!‖ d) ―Dinners on the Go offers complete nutritious meals delivered right to your door.‖ 34. A positioning map ________. a) is used primarily by companies utilizing undifferentiated marketing strategies b) will remain constant through the entire PLC) c) shows how consumers view a product relative to competitive products d) outlines how to introduce a new product to the marketplace 35. 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 PLC) c) on the whim of current management d) when the company realizes they have successfully reached their target market ESSAY Chapter 9 -- Market Segmentation, Targeting, and Positioning 1. Under what circumstances are marketers most likely to use geographic segmentation when marketing their products? Give an example) 2. Explain why the cohort effect is important to marketers, and name a cohort group. What is the defining age span of a cohort group? 3. What does age segmentation tell a researcher about marketing opportunities? List the major age segments, and describe the buying characteristics of each segment. 4. Explain Engle’s three laws. Why are they of interest to marketers? 5. Identify the six psychographic consumer segments worldwide, as defined by Roper. Where are these groups typically found? 6. Identify and describe the four bases for segmenting consumer markets. 7. Identify the steps in the market segmentation process. 8. Identify and describe four strategies for reaching target markets. 9. List and provide an example of each of the six positioning strategies. 10. What is a positioning map? How does the map assist a firm with repositioning decisions? Chapter 10 (40) Relationship Marketing and CRM 1. An organizational culture steeped in customer orientation is more likely to be ________. a) old-fashioned and traditional b) subjected to high turnover because of disgruntled employees c) focused on the profitability of new customers rather then trying to maintain present ones d) relationship oriented rather than transaction-based 2. Internal marketing programs ________. a) attempt to create satisfied employees b) encourage employees to view each other as competitors c) require firms to share resources with business partners d) generate significant annual revenue for a company 3. 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 4. What is a potential drawback of a company focusing on price? a) It makes advertising and promotional expenses worthless. b) It doesn’t provide the firm with a competitive advantage) c) It cuts into profits. d) It will not motivate customers to enter into a buying relationship. 5. At the second level of the development of a buyer-seller relationship, the interaction is ________. a) focused on price and other financial incentives b) personalizing the relationship by reaching out to the customer with social interaction c) transformed structurally into an interdependent partnership d) analyzing data from the initial purchase to determine the chance of a repeat sale 6. Cannondale Bicycles has an owner’s group called ―The Chain Gang.‖ Members receive e-mails listing cycling-related tips, as well as access to a special Web site) This is an EXAMPLE of which level of relationship marketing? a) First b) Second c) Third d) Fourth 7. An EXAMPLE of a first-level relationship marketing program would be a(n) ________. a) fan club for a famous entertainer c) club for owners of a particular model of car b) alumni association d) two-for-one deal on airline tickets 8. Proactive methods a firm might use to assess customer satisfaction would include ________. a) visiting, calling, or mailing written surveys to clients b) soliciting complaints from dissatisfied customers c) using mystery shoppers to evaluate the quality of service provided d) monitoring Usenet and other Web discussion groups 9. All of the following are characteristics of the third level of relationship marketing except: a) Primary bond is structural b) Degree of customization is medium to high c. Potential for sustained competitive advantage is low d) Buyer and seller are true partners 10. An example of a typical third-level relationship marketing program would be a(n) _____. a) newspaper ad trying to stimulate sales of health foods b) frequent user or frequent flyer program c) extensive training program for retailers of a manufacturer's goods d) giveaway of tickets to a trade show passing through town 11. The first step in measuring customer satisfaction is ________. a) developing new products and placing them in the market b) hiring a first-rate market research firm c) finding out what customers need, want, and expect d) mining the Web for blogs and discussion groups to obtain customer feedback 12. Companies should not avoid complaining customers because ________. a) a firm’s rank in the JD Power survey could drop b) complaints handled promptly and effectively could lead to greater customer loyalty c) a company should not be ashamed of its mistakes d) in most cases, they want something free and can be easily appeased with a coupon or gift card 13. Why do customers prefer to have continuing relationships with businesses or suppliers? a) Humans are creatures of habit. b) Businesses and suppliers always provide consistent high quality. c) By reducing the number of choices, the decision-making process is made easier. d) There are a limited number of suppliers in most industries. 14. 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 15. 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 16.A marketing effort sponsored by an organization that solicits responses from individuals who share common interests and activities is called ________ marketing. a) frequency b) affinity c) internal d) database 17. Properly used, databases have the capacity to ________. a) calculate the amount of a customer's next purchase b) force customers or targeted customer groups to buy more c) reduce customer retention and referral rates d) identify a firm's most profitable customers 18. ________ assist marketers by providing software when it is needed to capture, manipulate, and analyze consumer data) a) Application service providers c) Database managers b) Consumer data providers d) Internet service providers 19. 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 20. Successful customer relationship management programs ________. a) are focused on the technological process b) must be implemented from the grassroots level up c) require an investment in training because the firm is transforming itself d) cannot communicate effectively across functions 21. Which of the following products has the highest annual customer defection rate? a) Residential tree and lawncare c) Newspaper subscriptions b) Internet service providers d) Long distance telephone 22. Which of the following would be the most desired effect in the development of a buyer-seller relationship between two companies? a) Increase in inventories c) Less competition b) More favorable financing terms d) Lower barriers to market entry 23. The first priority in the decision to form a partnership is to locate companies that ________. a) can add value to the relationship b) would otherwise compete, in order to eliminate them c) has weak management in order to pirate resources from them d) will avoid potential monopolistic situations 24. A biotechnology company and a medical school have formed a partnership to develop a new class of cancer-fighting drugs. This is a(n) ________ partnership. a) buyer b) seller c) internal d) lateral 25. The Eddie Bauer edition of the Ford Explorer is an example of ________. a) co-branding b) co-marketing c) lateral partnership d) internal partnership 26. Partnering by businesses often leads to ________. a) higher prices c) lowered levels of customer satisfaction b) inferior products d) enhanced revenues 27. 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 28. One of the advantages of national account selling is ________. a) the buyer's ability to demonstrate its depth of commitment to the seller b) a strengthened buyer-seller relationship through collaboration c) showing loyalty to a specific buyer through its favored status d) increased costs, but increased profits as well 29. 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 30. Which of the following is an important competitive advantage that results from effective supply chain management? a) Variable costs c) Improved conflict resolution within the chain b) Lower level of costly innovation d) Autonomy and independence among the members 31. Whirlpool and Sears are working together on a collaborative effort involving forecasting, planning, and replenishment of merchandise in the store) The two companies are utilizing ________. a) comarketing b) CPFaR c) supply chain management d) VMI 32. A firm can improve the speed and efficiency of its supply chain operations by ________. a) cultivating its upstream relationships and putting pressure on its downstream ones b) sacrificing the needs of upstream members of the chain in favor of those downstream c) keeping communication with suppliers to a minimum to avoid company leaks d) coordinating its operations with those of other members of the chain 33. Strategic alliances are formed to ________. a) satisfy corporate officers c) create a competitive advantage b) avoid problems related to anti-trust legislation d) present a united front to labor unions 34. When partners in a strategic alliance form a new business unit to implement their plans, they have created a ________. a) joint venture b) collusion organization c) development team d) merged organization 35. 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 36. One of the best 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 37. 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 38. 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 39. 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 40. A video store runs a Frequent Renter program. The store issues coupons for $50 worth of DVD rentals, and estimates that the overhead cost of 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 (96) Product and Service Strategies 1. Using the broad application of the word ―product,‖ a television set is a(n) ________. a) obsolete technology in comparison with the Internet b) means of providing entertainment c) lucrative item for appliance stores d) machine used to receive broadcast signals 2. A product should be defined broadly in order to avoid ________. a) incorrectly positioning the product b) offending consumers who comprise the target market c) unnecessary advertising expenditures d) misidentifying the wants it is capable of satisfying 3. Consumer goods such as milk, bread, and soft drinks are generally classified as ____ products. a) convenience b) utilitarian c) shopping d) specialty 4. Which of the following products are, for most consumers, UNSOUGHT? a) Designer clothes b) Magazines c) Long-term insurance d) Furniture 5. Which of the following products would generally be classified as a staple? a) Plumbing repair kit b) Personal computer c) Gasoline d) Newspaper 6. Supermarkets usually display items such as candy, gum, and magazines near the checkout counter because they are ________. a) purchased on impulse c) subject to shoplifting b) easier to replenish d) purchased infrequently 7. A consumer expects to purchase CONVENIENCE products ________. a) without having full knowledge about what is sought b) immediately and with minimal effort c) after visiting numerous stores and comparing prices d) by traveling any distance required to get what is wanted 8. Consumer SHOPPING products typically include items such as ________. a) Coca-Cola and Snapple Iced Tea c) clothing, furniture, and appliances b) bread, milk, and gasoline d) Rolex watches and BMW automobiles 9. Of the following, which would most likely have the greatest influence on a decision to buy a heterogeneous SHOPPING product? a) Product’s style c) Location of the store b) Store’s name and reputation d) Price and perceived value of the product 10. Financial, legal, and medical services constitute ________. a) convenience services b) shopping goods c) specialty services d) customized services 11. _________ products rely LEAST on personal selling. a) Specialty b) Shopping c) Unsought d) Convenience 12. _________ products rely LEAST on location of purchasing opportunity? a) Specialty b) Shopping c) Unsought d) Convenience 13. Which of the following products typically has the longest distribution channel length? a) Convenience products. b) Staples c) Specialty products d) Shopping products 14. Which of the following correctly matches consumer factors and marketing mix factors in the consumer products classification system? a) Specialty products -- personal selling is not important b) Convenience products -- consumer makes infrequent purchases of these products c) Shopping products -- relatively short channel of distribution is typical d) Emergency products -- these are unsought products 15. Business products would ordinarily include all of the following EXCEPT: a) installations b) accessory equipment c) specialty products d) component parts 16. ________ are business products most similar to consumer specialty products. a) Installations b) Accessory equipment c) Raw materials d) Component parts/materials 17. Industrial distributors are more often found selling ________. a) accessory equipment b) business services c) raw materials d) installations 18. Sandra is working on a purchase decision for her company. The product under consideration is expensive, has a short distribution channel, and isn’t purchased frequently. In addition, Sandra is working closely with a seller’s marketing representative) Which type of product is Sandra’s company considering purchasing? a) Accessory equipment b) Installations c) Component parts and materials d) Supplies 19. Spark plugs, batteries, and tires that are included with the purchase of a car are examples of ___. a) installations b) accessory equipment c) component parts and materials d) supplies 20. Raw materials resemble component parts and materials in that they are ________. a) considered capital investments to be held for several years b) part of the buyers’ final products c) finished products before they enter into the production of other products d) expended without finding their way into finished goods 21. In the business market, fax paper, pencils, and office stationery are examples of ________. a) maintenance items c) operating supplies b) repair items d) accessory equipment 22. BENCHMARKING (best practices) 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 23. When a company institutes a continuous effort to improve products and work processes, they are practicing ________. a) total quality management c) ISO 9002 certification b) benchmarking d) process improvement 24. Russell works for a cell phone provider. When dealing with customers he always conveys confidence that he can provide the exact assistance they need) Which service quality variable is Russell exhibiting? a) Assurance b) Responsiveness c) Empathy d) Reliability 25. 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 26. The combination of product lines represents a company’s product ________. a) mix b) cluster c) lifecycle d) concept 27. If Honda acquired a bicycle manufacturer, it would add to the __ of Honda’s product mix. a) depth b) width c) length d) cluster 28. The number of product lines a firm offers is referred to as ________. a) depth b) width c) clusters d) length 29. 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 30. In a process called ________, products pass through a series of stages from their initial appearance to their decline) a) product life potential b) promotional cycle c) pricing cycle d) PLC 31. 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 32. 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 33. 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 34. Competition between brands intensifies during which stage of the PLC? a) Maturity stage b) Introductory stage c) Growth stage d) Diminishing demand period 35. Product differentiation and heavy advertising occur most during the __ stage of the PLC) a) maturity b) introductory c) growth d) decline 36. 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 37. 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 PLC) a) introductory b) maturity c) decline d) growth 38. Fashions with abbreviated life cycles are called ________. a) trends b) perishables c) fads d) staples 39. A viable marketing strategy would be to promote the differences that separate competing products during the ________ stage of the PLC) a) introduction b) stabilization c) growth d) maturity PRODUCT CLASSIFICATIONS (Consumer) CONVENIENCE SHOPPING PRODUCTS SPECIALTY PRODUCTS UNSOUGHT PRODUCTS PRODUCT CLASSIFICATIONS (Business) INSTALLATIONS ACCESSORY EQUIPMENT COMPONENT PARTS RAW MATERIALS CONSUMER PRODUCTS CLASSIFICATION (Marketing Impact) PRODUCTS CONVENIENCE SHOPPING SPECIALTY Consumer Factors Planning Time in Purchasing (1) (11) (21) Purchase Frequency (2) (12) (22) convenient location (3) (13) (23) price/quality (4) (14) (24) Marketing Mix Factors Price (5) (15) (25) Seller’s Image (6) (16) (26) Channel Length (7) (17) (27) Sales Outlets (8) (18) (28) Promotion a) many extensive very high frequent long very important b) few considerable relatively occasional relatively short important high c) very few very little low seldom short unimportant BUSINESS PRODUCTS CLASSIFICATION (Marketing Impact) ACCESSORY COMPONENT RAW FACTOR INSTALLATIONS EQUIPMENT PARTS MATERIALS SUPPLIES Organizational Planning Time (51) (61) (71) (81) (91) Purchase Frequency (52) (62) (72) (82) (92) Price/Quality (53) (63) (73) (83) (93) Marketing Mix Price (54) (64) (74) (84) (94) Channel Length (55) (65) (75) (85) (95) Promotion (56) (66) (76) (86) (96) a) extensive more frequent high long personal selling by producer b) less extensive frequent relatively high relatively short personal selling c) very little infrequent low-to-high short advertising by producer d) low very short advertising Introduction Growth Maturity Decline MARKETING GAIN STRESS MAINTAIN BRAND HARVEST/ OBJECTIVE AWARENESS DIFFERENTIATION LOYALTY DELETION Competition Few More Many Reduced Product One Versions Full Product Line Best Sellers Price Skimming/Penetration Gain Market Share Defend Market Share Stay Profitable Promotion Inform/Educate Stress Differences Reminder Orientation Minimal Promotion Place Limited More Outlet Maximum Outlets Fewer Outlets NAME THE CLASSIFICATIONS OF: 1) CONSUMER PRODUCTS), 2) BUSINESS PRODUCTS NAME THE stages in the PLC Product Mix: length, depth, width. ESSAY QUESTIONS Chapter 11 — Product and Service Strategies 1. List the six factors that distinguish services from goods. 2. List and describe the categories of consumer products. How does this grouping influence the method in which the products are marketed? 3. What are the three categories of convenience products? Give examples of each type) 4. Discuss the characteristics of shopping products. What are homogeneous and heterogeneous products? 5. Describe the five categories of business products. 6. What are the major types of business products, and what is the basis for this classification? 7. What is Total Quality Management (TQM)? Discuss the standards the United States and Europe have established in the quality management movement. 8. Define benchmarking and discuss how it helps to improve a marketing strategy. 9. What are the five variables of service quality? Define service gap. 10. How do elements of the marketing mix change during the PLC? 11. Identify and describe the stages of the PLC) 12. Explain the concept of extending the PLC, and list actions that can be taken. Chapter 12 (44) Developing and Managing Brand and Product Categories 1. 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 2. Jim stops at the local convenience store on his way home to buy a six-pack of beer. He goes in thinking he’ll purchase his usual brand, but ends up buying another because it is on sale) Jim is at which stage of brand loyalty? a) Brand insistence b) Brand awareness c) Brand preference d) Brand recognition 3. Laura wants a particular brand of golf ball, but her local pro shop is out. Instead she buys a substitute) Laura’s behavior is described as brand ________. a) awareness b) insistence c) preference d) recognition 4. Brand recognition as a stage of brand loyalty occurs when the ________. a) product becomes familiar to the consumer b) product is inexpensive c) consumer sees or recognizes the product and chooses it over its competition d) product is first introduced or test marketed 5. Luxury items are often representative of which level of brand loyalty? a) Brand comprehension b) Brand recognition c) Brand insistence d) Brand preference 6. The Kirkland brand is owned by Costco, and the products can only be purchased 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 7. Small appliances and related products bearing the General Electric brand are only available through Wal-Mart stores. This type of product distribution strategy is called ________ branding. a) declining life cycle b) unique c) captive d) exclusive 8. Lipton markets tea, herbal tea, and iced tea under the Lipton name) This strategy is called ________ branding. a) family b) extension c) individual product d) private label 9. 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 10. 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 11. If a firm elects to use FAMILY BRANDING, its products should be ________. a) similar in quality, or the firm risks harming its overall product image b) sufficiently different so as not to compete directly with each other c) sold in different geographic markets so customers do not realize the relationship d) sold only to a single large retail chain to protect the manufacturer’s reputation 12. 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 13. Young & Rubicam’s Brand Asset Valuator model identifies the dimension of brand personality called ―relevance‖ as ________. a) the extent of consumer awareness of a brand and understanding of what kind of product it stands for b) the real and perceived appropriateness of a brand to a big consumer segment c) the way in which brand equity is assigned to the brand by evaluating institutions d) a brand’s ability to stand apart from competitors 14. A company may be able to market a product successfully at a higher price due to the product’s ________. a) trademark b) brand mark c) high brand equity d) trade name 15. All of the following are aspects or dimensions of the Young & Rubicam Brand Asset Valuator Model EXCEPT ________. a) differentiation b) relevance c) esteem d) price 16. International brand equity ________. a) defines a global brand as selling at least 20 percent of the products outside of the home country b) is difficult to evaluate as not every foreign company tracks market share c) has two components that include traditional and Internet sales d) is of interest only when companies are involved in mergers, partnerships, or strategic alliances 17. Responsibilities of a CATEGORY MANAGER include all of the following except ________. a) setting performance standards and measuring actual results against the standard b) finding growth opportunities c) staffing a sales force, including the national sales teams assigned to the major retailers d) determining the marketing mix of the product assortment within the category 18. 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 19. A brand name that has been given legal protection is known as a ________. a) patent b) copyright c) trademark d) royalty 20. If Sunbeam were to develop a new coffee machine and branded it ―The Coffee Maker,‖ the company would not be able to register the term as its trademark because ________. a) registered trademarks cannot contain words that are in general use b) there is already a competitive product with the same name registered overseas c) to be registered, it must contain the company’s name d) Sunbeam already manufactures a coffee maker under a different product name 21. The leaping jaguar hood ornament featured on cars of the same name is part of the company’s ________. a) private brand b) trade dress c) brand identity d) individual mark 22. Packaging created for the purpose of marketing assistance accomplishes all of the following except: a) Enhancing shelf visibility c) Changing consumer behavior b) Offering convenience for the consumer d) Locating new markets for existing products 23. Bic’s application of its name to disposable razors and utility lighters is an example of ________. a) brand extension b) line extension c) brand licensing d) brand preference 24. 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 25. 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 b) market development c) product development d) product diversification 26. General Motors’ acquisition of Hughes Aircraft Corporation, a firm that makes aircraft components and electronics, is an example of the product development strategy of ________. a) market penetration b) market development c) product development d) product diversification 27. Locating new markets for existing products is called ________. a) market penetration b) market development c) product development d) product diversification 28. Which of the following is a MARKET PENETRATION STRATEGY for new product development? a) Morton Salt advertises a way to use salt and 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. 29. 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 development d) product diversification 30. The introduction of brand new products into readily identifiable or established markets is referred to as product ________ strategy. a) development b) positioning c) diversification d) improvement 31. 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 32. 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 33. 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 34. One of the five categories describing adopters of new products is the ________. a) strivers b) sluggards c) brand loyalists d) early majority 35. The complexity of an innovation affects its ADOPTION RATE ________. a) because consumers are slow to adopt products they find difficult to understand or use b) if the product is inconsistent with the values of potential adopters c) when a free or discounted trial is provided to delay the product acceptance d) when the superiority of the product is visible to the consumer 36. EARLY PURCHASERS of new products are often also ________. a) a subset of the target market b) innovators c) opinion leaders d) employees of the firm that have directly participated in the product development 37. 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 38. If potential buyers can ________, the rate of adoption may increase) a) measure compatibility c) decline a trial use b) acknowledge the complexity d) observe the tangible advantages of the innovation 39. Product managers may also be known as ________. a) product directors b) brand managers c) product line directors d) trade-name managers 40. Companies are beginning to replace product managers with a new position that is now responsible for profit and loss, as well as the marketing functions. The title of the new position is called ______. a) marketing executive c) director of marketing strategies b) product innovator d) category manager 41. The new product failure rate is approximately ________ percent. a) 25 b) 37 c) 66 d) 80 42. The NEW PRODUCT DEVELOPMENT STAGE during which ideas with commercial potential are separated from those not meeting company objectives is called ________. a) idea generation b) business analysis c) screening d) evaluation 43. A type of marketing research project undertaken during the BUSINESS ANALYSIS STAGE of the new product development process that often uses focus groups and in-store polling to gather data is known as ________. a) telephone screening b) idea generation c) sample distribution d) concept testing 44. The federal agency that has assumed jurisdiction over the safety of every consumer product except food, automobiles, and a few other products regulated by other agencies is the ________. a) FTC b) FDA c) CPSC d) USDA ESSAY Chapter 12 — Developing and Managing Brand and Product Categories 1. Discuss the levels of brand loyalty. 2. What are family, individual, manufacturers’, captive, and private brands? What are some benefits of each alternative? 3. Discuss the four dimensions of the Young & Rubicam Brand Asset Valuator model. 4. Explain the difference between a brand manager and a category manager. Which is more common today? 5. Distinguish between a brand and a trademark. 6. Why do firms create brand extensions? 7. What are the four alternative approaches to new product development strategy? Explain each. 8. Identify and describe the consumer adoption process and its stages. 9. What product characteristics affect the rate of adoption of a new product? 10. Discuss the steps in the new product development process. Chapter 13 (70) Marketing Channels and Supply Chain Management MULTIPLE CHOICE 1. 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 2. Physical distribution extends beyond transportation to include all of the following decision areas except _____. a) inventory control b) material handling c) risk analysis d) protective packaging 3. 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 4. DIRECT SELLING as a marketing channel carries goods directly from producer to ________. a) retail storage warehouse c) intermediary that will take title and possession b) channel captain d) ultimate consumer or business purchaser 5. The term “industrial distributor” is essentially synonymous with the term ________. a) wholesaler b) middle users c) franchiser d) retailer 6. Direct selling is most common ________. a) with raw material purchases in the B2B marketplace b) between retailers and consumers c) more common with products that do not require installation d) the best way to sell products that require little demonstration 7. Which of the following is an example of direct selling to the consumer market? a) Purchase of hair care products from a beauty salon c) Gateway computers at Best Buy b) Car purchase from a Honda dealer d) Party plan selling jewelry 8. Business customers are more geographically concentrated and fewer in number than individual consumers, which results in ________. a) shorter business channels compared to consumer goods channels b) moving products effectively through wholesale and retail markets simultaneously c) reduction in price from producer to user d) more middlemen and unique channel structures than consumer channels 9. 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 10.Cynthia, a marketing director for a chemical company, is looking for an independent intermediary who will take title to the goods and provide sales, technical support, and customer service to business purchasers. Cynthia is looking for a(n) ________. a) extended channel member b) industrial distributor c) direct seller d) reverse channel seller 11.Small producers in the industrial market may attempt to market their offerings to large wholesalers by utilizing agents that are called ________. a) industrial distributors c) direct marketers b) manufacturers’ representatives d) auction companies 12.In addition to traditional drug stores, Dr Scholl’s foot care company has decided to market through home medical care supply centers and telemarketing to podiatrists. This is an example of ________. a) reverse marketing channels c) scrambled merchandising b) home marketing d) dual distribution 13.The variables that affect the selection of a channel strategy include all of the following EXCEPT: a) product characteristics c) legal and liability issues b) the size of the producer and competitive environment d) market factors 14.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 15.Which product would NOT be sold through a short channel? a) Deck of cards c) Dairy products b) Custom-made computer system d) Package of pretzels in a vending machine 16.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 17.Marketing intermediaries are generally most beneficial to ________. a) producers with wide product lines b) well-financed national manufacturers c) suppliers with a small and concentrated market of customers d) a small producer trying to sell to large customers 18. 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.When a selective distribution strategy is chosen by a firm, ________. a) the firm seeks to distribute its products through all available channels in its trade areas 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 20.Achieving cooperation that resolves conflict among marketing channel members is primarily the responsibility of the ________. a) manufacturer b) channel captain c) channel power broker d) wholesaler 21.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 22.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 23.Sherwin-Williams Paint Company sells the paint it manufactures through its company-owned retail paint stores. Their marketing channel is a(n) ________ marketing system. a) corporate b) horizontal c) administered d) contractual 24.The difference between a retail cooperative and a wholesale-sponsored-voluntary chain is that the __. a) wholesaler buys ownership shares of the retail operations b) cooperative has private label brands c) retailers purchase ownership shares of the cooperative d) wholesaler-sponsored voluntary chain has contractual agreements 25.The supply chain begins with ________. a) the finished good rolling off the end of the production line b) firms seeking new markets for their products c) the product being loaded aboard the rail car for shipment d) the raw material inputs for the manufacturing process of a product 26.Managing warehouse and storage facilities is part of ________. a) upstream supply chain management c) forward integration b) backward integration d) downstream supply chain management 27.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 28.Physical distribution elements include all of following EXCEPT: a) customer service and order processing b) inventory control and materials handling c) raw material procurement and operations management d) transportation and warehousing 29.Management at Granger Industries is evaluating their distribution system to determine if cost- cutting measures will impact performance) Ralph, an employee with experience in annual cost- cutting negotiations, suggests the company consider synergies between elements of the distribution system instead of judging each activity on its own merits. What Ralph is trying to avoid with the cuts is ________. a) angering loyal customers c) losing their comparative advantage b) suboptimization d) ignoring the customer-service standards 30.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 31.A condition in which the manager of each physical distribution function attempts to minimize costs but, due to the impact of one physical distribution task on the other, obtains less than optimal results is known as ________. a) slow order processing c) inventory fluctuations b) suboptimization d) a poor customer service standard 32.An example of a customer service standard is ________. a) ―We provide credit for good accounts; all others must pay cash.‖ b) ―Our purpose is to minimize time utility.‖ c) ―We will deliver orders within four days or less.‖ d) ―We maintain large inventories to ship dated goods.‖ 33.A home furnishings distributor needs to ship products to another warehouse 500 miles away. The company vans are needed for local deliveries, so the warehouse must call an outside carrier to ship the products. What type of freight carrier will the company most likely call? a) Private carrier b) Common carrier c) Contract carrier d) Intermodal freight company 34. ________ is the form of transportation that has the lowest transport cost per ton. a) Railroad b) Water freight, either barge or oceangoing c) Air freight d) Pipeline 35.The most efficient, if not the fastest, means of transporting products such as natural gas and crude oil is by ________. a) water carrier b) piggyback c) pipeline d) bulk motor carrier 36.The highest-cost mode of transportation is ________. a) overnight common carrier b) air freight c) non-stop rail express d) high pressure pipeline 37.Tractor trailers of products ride stacked on barges along the Mississippi River. When they reach shore, they will be attached to truck cabs and driven to warehouses hundreds of miles away. The first type of intermodal hauling is called ________. a) birdyback service b) piggyback service c) fishyback service d) a double stack 38.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 39.The major difference between a storage warehouse and a distribution warehouse is: a) Storage warehouses attempt to balance supply and demand for producers and purchasers. b) A distribution warehouse is used for products with seasonal supply or demand) c) No major logistical differences exist. d) Distribution warehouses store products for moderate to long periods of time) Identify as having a short (a) or a long (b) distribution channel. (Boone, Table13.1) 40) business users 43) limited product line 41) small orders 44) perishable goods 42) geographically concentrated ● inexpensive ● standardized ● small orders ● geographically dispersed ● expensive ● complex ● large orders ● geographically concentrated ● perishable ● low technology ● consumers ● satisfied w/intermediaries ● durable ● high technology ● business users ● disssatisfied w/intermediaries ● limited product line ● broad product line Identify the direction of supply chain management: a) = upstream, b) = downstream, c) = neither 45) raw materials 46) customer service 47) warehouse and storage ● production ● marketing ● inbound logistics ● finished product storage ● customer service ● sales ● outbound logistics ● warehouse and storage In comparing transportation modes consider that: (Boone, Figure 13.3) a) = very low, b) = low, c) = average, d) = high, e) = very high Rate the various modes on the basis of cost: 48) truck 49) water 50) pipeline SPEED COST DEPENDABILITY FLEXIBILITY RAIL 51 56 61 66 WATER 52 57 62 67 TRUCK 53 58 63 68 PIPELINE 54 59 64 69 AIR 55 60 65 70 ESSAY Chapter 13 — Marketing Channels and Supply Chain Management 1. Define a marketing intermediary. Give two examples. 2. Compare and contrast merchant wholesalers and agents/brokers. Provide an example of a wholesaler and an agent/broker. 3. What is dual distribution? What technological advances are increasing the use of dual distribution? Give two examples of dual distribution in the marketplace) 4. What are reverse channels? Why are they necessary? 5. List and explain the three levels of distribution intensity. 6. Describe the concept of channel captain within the marketing channel. 7. Discuss the two categories of channel conflict. Give an example of each. 8. What is a vertical marketing system? Distinguish between forward integration and backward integration. 9. Discuss the three types of contractual marketing systems (CMS). 10. Define supply chain, and describe a manufacturing supply chain. 11. What is RFID? What is its purpose? 12. Identify the elements of the physical distribution system and the questions each must address. 13. Define and discuss the concept of suboptimization. 14. Identify and describe the types of service provided by the three classes of freight carriers. 15. Identify and discuss in detail the major transportation alternatives. 16. What is the advantage of intermodal transportation? Give examples of intermodal hauling. 17. Discuss the concept of protective packaging and materials handling. Chapter 14 (28) Retailers, Wholesalers, and Direct Marketers 1. After identifying a target market, a retailer must ________. a) develop marketing strategies to attract chosen customers to their stores b) get sufficient funding to change all displays and store decor c) contact new suppliers to purchase products that fit their target d) develop new pricing strategies to increase the prestige image and value 2. The combination of all the components of the retailing mix results in a store’s ________. a) retail economy c) retail prestige b) projections of sales d) retail image 3. 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 4. General product categories, specific product lines, specific products within lines, and the depth and width of its assortment are considerations retailers must bear in mind when developing their ________. a) ―geographic fit‖ c) pricing strategy b) target market d) merchandising strategy 5. The amount a retailer adds to the product’s cost to determine the selling price is called ________. a) overhead expenses b) markup c) markdown d) the return on investment objective 6. The Purple Pumpkin, a local women’s clothing store, buys formal gowns for an average of $75 each and prices them to sell for an average of $200. Purple Pumpkin’s average markup on the selling price for these gowns is ________ percent. a) 37.5 b) 62.5 c) 100 d) 166.6+ 7. A supervisor at a retail store directs an associate to mark down all merchandise currently selling for $9.98 to $5.98. The percentage of markdown (rounded to the nearest full percent) is ________ percent. a) 25 b) 33 c) 40 d) 66 8. When a retailer tries to convince a customer to buy a higher-priced item than he or she had originally intended, it is called ________. a) personal promotional c) selling up b) one-on-one persuasion d) value-added selling 9. Reminding a customer that the flashlight they just purchased requires batteries (which you have available for sale) is an example of ________. a) cross selling b) reminding c) customer service d) suggestion selling 10. 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 11. Independent retailers ________. a) compete through retail cooperatives and friendly, personalized service b) account for less than 25 percent of total retail sales c) are few in number d) have limited resources and inflexible operating hours, and are not knowledgeable about local market conditions 12. Consumers usually compare prices, assortments, and quality levels of competing outlets before making purchase decisions at ________. a) department stores b) mass merchandisers c) specialty stores d) shopping stores 13. Nordstrom, Neiman Marcus, and Saks Fifth Avenue are all stores that are classified as ________ retailers. a) shopping b) specialty c) lifestyle d) image 14. IKEA (home furnishings and housewares) and Pottery Barn are examples of ________. a) superstores b) limited-line stores c) regional shopping stores d) anchor stores 15. 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 16. All of the following retailers are considered to be category killers EXCEPT: a) Best Buy b) Target c) Barnes & Noble d) Home Depot 17. 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 18. ________, facing high operating costs and inconvenient downtown locations, have fought back against increasing competition by closing certain departments and branching out into regional shopping centers. a) Extended supermarkets b) Catalog retailers c) Hypermarkets d) Department stores 19. Costco, Wal-Mart, and Sam’s Club are examples of ________. a) superstores b) discount houses c) ―no frills‖ retailers d) warehouse clubs 20. Discount houses have all of the following characteristics EXCEPT: a) Less customer service b) Lower prices c) Wider and deeper product lines d) Less atmospherics 21. The type of retail store that stocks only designer labels or well-known, brand-name clothing at prices equal to or below regular wholesale is the ________. a) super center b) off-price retailer c) department store d) variety store 22. Hypermarkets are ________. a) somewhat smaller than the similar supercenters, averaging 180,000 square feet to the supercenters’ 245,000 square feet b) stores that began their history selling mostly appliances but now sell soft goods, foods, and furniture c) giant one-stop shopping facilities that offer wide selections of grocery and general merchandise products at discount prices d) stores that promote to their customers using direct mail, and sell from showrooms that display samples 23. It is becoming increasingly difficult to classify retailers as a result of ________. a) direct selling b) mass merchandising c) retail convergence d) TV home selling 24. Which of the following retailers follows scrambled merchandising to the greatest degree? a) Home Depot b) Best Buy c) Target d) JC Penney 25. Independent wholesaling intermediaries include ________. a) agents and brokers who take title for the goods b) intermediaries who take title, as well as those that do not c) producers who retain title after the sale of the goods d) sales branches that sell directly to the end user 26. Examples of merchant wholesalers include all of the following except: a) food broker calling on mass merchandisers b) truck jobber restocking the snack aisle (chips and pretzels) in a grocery store c) industrial distributor selling accessory equipment d) rack jobber servicing a truck stop with inexpensive impulse items 27. The two broad categories of independent wholesaling intermediaries include ______ and _____. a) contract agents; wholesalers b) full-function intermediaries; exclusive-function intermediaries c) brokers; agents d) merchant wholesalers: agents and brokers 28. An example of a company that relies heavily on direct selling is ________. a) Sears b) Goodyear Corporation c) Dell Computer d) Barnes & Noble ESSAY 1. Define the wheel of retailing. 2. List the seven components of retailing strategy that project the retail image of a firm. 3. How do retailers identify target markets? Explain the major strategies by which retailers reach their target markets. 4. What is a lifestyle center? Why are they popular? List a store typically found in a lifestyle center. 5. Identify and give examples of the five classifications of retailers. 6. Define category killers and give some examples. 7. Explain retail convergence and give an example) 8. What is scrambled merchandising? 9. Distinguish between a wholesaler and a wholesaling intermediary. 10. Describe six types of non-store retailing. Chapter 15 (82) Integrated Marketing Communications (IMC) 1. A GOAL of any integrated marketing communication system (IMC) would be to ________. a) create a unified message at the lowest possible cost b) create a message that will keep the consumer from tuning out c) hire an agency to handle each element of the promotional strategy d) consolidate the promotional responsibilities within an organization 2. An integrated marketing communications STRATEGY begins with ________. a) separating the parts of the promotional mix into categories based on the media that is being utilized b) isolating and eliminating non-promotional contacts between the consumer and the organization c) consumer wants and needs and works in reverse to the product, brand, or organization d) the realization that different components of promotion should deliver different messages to their target audiences 3. In an integrated marketing communications program, which of the following is not one of the ways in which a customer may have contact with the organization? a) Direct mail b) Feedback from competitors c) Personal selling d) Internet messages 4. Sam just received a free trial sample of a bath soap. This is an EXAMPLE of ________. a) direct sampling b) direct marketing c) personal selling d) guerilla marketing 5. 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 6. The AIDA concepts refer to the steps in ________. a) developing an IMC program c) distributing a product b) the consumer purchase decision process d) promoting a product 7. 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 8. A firm’s promotional STRATEGY does not include which of the following? a) Personal selling b) Advertising c) Noise d) Publicity 9. 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 10. Stephanie works for a company that designs home computer network hardware) Her company is introducing a wireless networking device that is faster, more stable, and more secure than existing technology. Stephanie is designing a promotional campaign that emphasizes the technology’s features and advantages. What are the two overall goals of this PROMOTIONAL CAMPAIGN? a) Provide information and increase primary demand b) Provide information and increase selective demand c) Increase primary demand and differentiate a product d) Differentiate a product and provide information 11. A differentiated demand schedule for a product ________. a) means that competitive products are viable alternative for each other in the mind of the consumer b) implies a unique product with no competitive offerings c) means that products have perceived differences that allow more price flexibility d) means that alternate media, Internet, and print advertising are required to set a product apart from its competition 12. The promotional OBJECTIVE of accentuating a product’s value ________. a) seeks to create homogeneous demand for that class of product b) serves to reduce season-to-season fluctuations in the sales rate of the product c) is based on obtaining information from product consumers and telling them they were right in their choice of purchase item d) is best achieved by explaining why a particular product has greater ownership utility to its buyers than competing products 13. Marketers of fine jewelry may choose to emphasize the product’s quality and desirable features as a way of building brand image) Making consumers feel that the product fits into their lifestyle will increase the consumers’ willingness to purchase the product, regardless of price) This is an example of a promotional OBJECTIVE to ________. a) increase market share c) increase product demand b) accentuate the product’s value d) differentiate the product 14. Eric is concerned about one of the products he manages. Sales have declined recently so he begins an intensive promotional campaign. What is Eric’s overall promotional OBJECTIVE? a) Increase selective demand c) Stabilize sales b) Provide information d) Increase primary demand 15. 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 16. 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 17. The dominant PROMOTIONAL MIX component for unique, highly technical, or custom-made products is ordinarily ________. a) trade shows b) publicity c) personal selling d) advertising 18. 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 19. 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 20. ________ dominates the PROMOTIONAL MIXES for low-unit value products. a) Personal selling b) Direct mail c) Advertising d) Telemarketing 21. SALES PROMOTION is subdivided into ________ and ________ promotion. a) trade; consumer b) Internet; traditional c) domestic; international d) wholesale; retail 22. 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 23. 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 24. 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 25. 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 26. 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 27. At the Coca-Cola 500 NASCAR race, Pepsi gives hats to spectators as they enter the racetrack. Each person willing to wear the hat during the race was given a coupon for a free Pepsi product. A television camera captures various people in the crowd wearing the hat, with the Pepsi logo prominently displayed) Pepsi is engaging in ________. a) guerilla marketing b) ambush marketing c) direct marketing d) public relations 28. Because DIRECT MARKETING is interactive, it ________. a) attempts to create brand awareness b) allows marketers to tailor individual responses to meet consumers’ needs c) can easily assess if a consumer feels the call to action to purchase the product d) is very informal and difficult to measure its effectiveness 29. 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 30. One of the advantages of the direct mail medium is that ________. a) it offers the ability to reach a broad target market b) the per-reader cost is less expensive than other types of advertising c) response rates are measurable and higher than those of other types of advertising d) there is less chance of being mislead by the message or source of the message 31. One of the problems with catalogs as promotional tools is that ________. a) some people still view catalogs as junk mail b) frequent updating is not feasible, so prices are locked for longer periods of time c) they do not offer an opportunity for interaction with the company d) they are limited to the B2C marketplace 32. 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 PLC) b) Positioning of competitive products d) Product price 33. Nestle’s enters the market with a new line of ice cream. Wholesalers and retailers are only marginally impressed as they already have access to more than 200 flavors from 15 different brands. Nestle’s would be wise to generate momentum for the ice cream by creating a(n) ________ strategy. a) pulling promotional c) supply/demand promotional b) pushing promotional d) advertising promotional 34. 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 35. Setting the PROMOTIONAL BUDGET allocation based on a predetermined dollar amount for each unit sold or produced is called the ________. a) fixed-sum-per-unit method c) standard budgeting b) fixed-cost method d) variable cost budgeting 36. 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 37. Setting aside a specified percentage of sales for promotional mix expenses -- either based on past records or projected for the future -- is known as ________ budgeting. a) fixed percent applied c) fixed-sum-per unit b) percentage-of-sales d) competitive match 38. Finding out what other organizations spend on promotion and matching it, either dollar-for-dollar or in terms of market share, is called ________ budgeting. a) industry parity c) meeting competition b) category match d) market match 39. 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 40. PUBLIC SERVICE ANNOUNCEMENTS are ________. a) costly for non-profit organizations to broadcast b) ads that generate awareness or educate the public c) any type of information released by a public relations department d) media ads that promote medical products THE PROMOTIONAL MIX (TABLE 15.2) a) Selling c) Sales Promotion e) Public Relations b) Advertising d) Direct Marketing 51. can be adapted to mass audiences 59 enhances credibility of the product 52. high cost per exposure 60. relatively low price per exposure 53. short-term sales increases 61. Permits measurement of effectiveness 54. Tailors the message to fit the customer 62. inaccurate measurement of results 55. high cost per contact 63. difficult to differentiate from competitors’ efforts 56. Elicits an immediate response 64. much effort directed toward non-marketing goals 57. suffers from image problem 65. creates a positive attitude toward the product 58. may annoy consumers 66. allows strict control over the final message FACTORS INFLUENCING PROMOTIONAL MIX (TABLE 15.3) a) Personal Selling b) Advertising 71. low unit value 75. considerable service needed 79. geographically concentrated 72. complex product 76. limited number of buyers 80. minimal service needed 73. ultimate consumer 77. standardized product 81. large number of buyers 74. high unit value 78.. business customer 82. geographically dispersed ESSAY Chapter 15 — Integrated Marketing Communications (IMC) 1. Explain the AIDA concept. 2. What are the five objectives of promotion? 3. Define PRIMARY DEMAND and SELECTIVE DEMAND) Give an example of how two companies might attempt to increase each type of demand) 4. What are the components of the promotional mix? 5. Differentiate PUBLICITY from PUBLIC RELATIONS? List the disadvantages of both. 6. Why do marketers use GUERILLA MARKETING? What are some of the disadvantages? 7. Why are marketers embracing direct marketing (DM)? Describe four types of DM methods. 8. Identify the FIVE VARIABLES that impact a company’s decision about which elements (personal selling and non-personal selling) will be used in the promotional mix. 9. What are the four most common methods of developing a PROMOTIONAL BUDGET? 10. How would a marketing manager measure the EFFECTIVENESS of an online promotion? Chapter 16 (49) Advertising and Public Relations 1. Which of the following is not part of the nonpersonal elements of the PROMOTIONAL MIX? a) Customer service c) Trade promotion b) Television advertising d) Publicity 2. By definition, the communication objective of advertising is to ________. a) eliminate noise in the transmission, feedback, and encoding of a message b) provide direct customer contact through effective public relations c) inform or persuade the members of a particular audience d) cut promotion costs and decrease the cost of reaching each consumer 3. The TYPE OF ADVERTISING most closely related to PUBLIC RELATIONS is _____ advertising. a) product b) institutional c) informative d) newspaper 4. The radio advertisements for Archer Daniels Midland state that the company is the ―supermarket to the world)‖ This is considered to be ________ advertising. a) product b) institutional c) informative d) corporate 5. Assume UPS offers a new service that allows home computer users to pay shipping charges and print shipping labels at home) UPS advertises the new service on TV and in magazines. These ads are EXAMPLES of ________ advertising. a) product b) institutional c) reminder d) persuasive 6. The American Heart Association runs ads in major magazines promoting its mission and successes. These ads are EXAMPLES of ________ advertising. a) product b) institutional c) reminder d) persuasive 7. A product in the introductory stage of the PLC is often promoted using ________ advertising. a) reminder b) persuasive c) cooperative d) informative 8. Persuasive advertising ________. a) reinforces the effect of previous promotional activity b) increases demand for an existing good or service, organization, or other concept c) develops initial demand for a newly introduced product d) is used primarily in the maturity and decline stages of the PLC) 9. The type of advertising that strives to reinforce previous promotional activity by keeping the name of the good, service, organization, person, place, idea, or cause before the public is ________ advertising. a) retentive b) reminder c) informative d) promotional 10. When Bufferin advertises that it contains more pain reliever than aspirin or Tylenol it is using ________ advertising. a) cooperative b) comparative c) advocacy d) institutional 11. 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 12. In general, marketers that participate in comparative advertising ________. a) sell products with smaller market shares than category leaders b) are the market share leaders c) are trying to eliminate one or more competitors as a means of driving up prices d) work for small companies 13. 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 14. The two types of INTERACTIVE ADVERTISING include ________ and ________ advertising. a) product; purpose b) search; display c) cooperative; solo d) online; off-line 15.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 16.Nationwide Insurance promotes identity theft insurance with an advertisement that warns of stolen credit cards and falsified social security numbers. Which appeal is being used in this commercial to motivate the viewer to action? a) Objective facts b) Humor c) Sex d) Fear 17. Which type of ads typically loses its effectiveness the soonest? a) Fear b) Sex c) Humor d) Objective facts 18.The LEAST aggressive of the Internet advertising styles is the ________. a) interstitial b) banner c) missile d) pop-up 19.All of the following are ADVANTAGES of television as an advertising medium except: a) mass coverage b) repetition c) flexibility d) public trust 20.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 21.Which advertising medium dominates local markets? a) Radio b) Network television c) Cable television d) Newspapers 22.Lack of flexibility compared to other media is the biggest DISADVANTAGE of ________. a) television b) radio c) newspapers d) magazines 23.Assume reach is 250,000 households and frequency is 2. What is the GROSS RATING POINT? a) 125,000 b) 250,000 c) 500,000 d) 1,000,000 24.Most large companies in industries characterized by large advertising expenditures ________. a) rely solely on their internal advertising departments b) have developed extraordinarily creative and independent advertising departments c) have successfully reduced their cost of advertising by bringing the advertising function in-house as much as possible d) will hire an independent advertising agency to assist them in planning and preparing advertisements 25.The Philadelphia Eagles football team and Staples, an office supply retailer, are sponsoring a School Teacher Grant Program. Each month, 25 teachers will be awarded money to fund programs that benefit their schools. The program, jointly funded by each organization, is an example of a ________. a) joint venture c) cooperative advertising campaign b) cross-promotion d) vertical alliance 26.Co-branding and co-marketing are examples of ________. a) publicity c) cross-promotion b) marketing public relations d) sales promotion 27.A local newspaper is doing a special interest story on the growth of entrepreneurial business within the community. Each week an article featuring a different business owner and his or her success story will be published) This type of activity would be considered ________ for the business owners. a) sales promotion c) marketing public relations b) publicity d) nonmarketing public relations 28.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 29.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 30.Advertising pretesting is most advantageous in ________. a) assessing advertisements after they are used b) adjusting current advertising programs c) decreasing costs as compared with alternative methods d) saving the cost of placing ineffective ads 31.It is not uncommon for magazine publishers to run multiple print jobs of the same magazine, where each job contains changes in advertising copy to suit the target market requirements of various advertisers. These magazines are then sent to the regions appropriate for the advertising content contained within. In trade terms, the publisher creates ________ of the magazine) a) split runs b) circulation exceptions c) monthly issues d) exception runs 32.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 ADVERTISING MEDIA ALTERNATIVES (TABLE 16.1) a) broadcast television c) newspapers e) magazines b) radio d) direct mail 41. extensive coverage 44. intense coverage 47. limited segmentation 42. consumer resistance 45. limited life 48. personalization 43. long life 46. segmented audience 49. prestige ESSAY Chapter 16—Advertising and Public Relations 1. What is comparative advertising and who typically uses it? How do federal regulators view comparative advertising? 2. What is cooperative advertising? Whom does it benefit? 3. Define reach and frequency. How do advertisers calculate gross rating point? Give a numerical example) 4. Differentiate between public relations and publicity. 5. What is cross-promotion and why is it used? What other marketing activities are considered to be types of cross-promotion? Give an example of each type) 6. List and describe the major types of posttests used to evaluate advertising effectiveness. 7. NAME some examples of puffery that you have encountered) Chapter 17 (36) Personal Selling and Sales Promotion 1. 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 2. 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. 3. 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 4. The role of a sales representative in the promotion process has changed from that of persuader to that of ________. a) technician and expert on product repair c) consultant and problem solver b) process designer d) close friend and confidant 5. 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 6. 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 7. 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 8. When personal selling efforts use telephone technology in a sales approach where the sales representative initiates the calls, it is known as ________ telemarketing. a) outward b) proactive c) network d) outbound 9. The Lands’ End catalog provides a toll-free number for customers to call and place orders. The staff is pleasant and knowledgeable and will place orders and answer questions. This is an example of ________. a) a marketing communications element c) inbound telemarketing b) a promotional mix component d) customer-driven technology 10. Cleveland Solvents has a field sales staff, a customer service department, and two individuals who manage the ―tech hotline)‖ These individuals not only answer technical questions from customers, they also identify customer needs and recommend products that can fill those needs. They have the ability to initiate and close sales on the spot. These individuals are essentially participating in ________. a) market analysis b) inside selling c) telemarketing d) outside sales 11. Meeting customer 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 12. 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 13. When visiting one of his major accounts, Matt is accompanied by finance and product specialists. These specialists are able to answer specific questions so that a customer can make a purchase decision. This is an example of ________ selling. a) transaction b) team c) cross d) missionary 14. When a considerable amount of analytical decision-making by the customer is involved in purchasing a product or service, the salesperson will probably use ________. a) missionary selling c) creative selling b) order processing d) over-the-counter selling 15. Pharmaceutical companies frequently use ________ to market their product. a) consultant selling b) missionary selling c) creative selling d) order processing 16. The first step in the sales process is ________. a) Presenting the product or service c) Demonstrating the product b) Prospecting for potential customers d) Approaching the potential customer 17. The salesperson’s initial contact with the prospective customer is called the ________. a) precall b) prospecting step c) approach d) client-qualifying stage 18. Prior to making the approach to a potential customer, the salesperson should ________. a) outline objections and effective responses b) break down product features and benefits by category c) participate in sales training exercises d) collect and analyze information about the potential customer 19. Salespeople usually have the most difficulty with ________. a) approaching potential buyers c) closing the sale b) handling objections d) following up after the sale 20. Which of the following is among the sales manager’s greatest challenges? a) Training b) Recruitment and selection c) Compensation d) Evaluation 21. Firms that market similar products throughout large areas often organize their sales forces ________. a) geographically c) by types of customers b) on a product basis d) by specific accounts 22. 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 23. ________ explains that motivation depends on the expectations people have of their ability to perform a job, and how performance relates to attaining rewards they desire) a) Marketing research c) Performance theory b) Maslow’s hierarchy of needs d) Expectancy theory 24. SALES PROMOTION techniques were originally intended as ________. a) integral parts of the marketing plan b) short-term incentives aimed at producing immediate buying responses c) international promotions designed to replace advertising d) replacements for other elements of the promotional mix 25. 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 26. SALES PROMOTIONS are most effective when ________. a) there is no timeframe to consider b) they are used in conjunction with other forms of advertising c) the product is new to the market d) there is a monetary reward or savings 27. 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 28. The form of SALES PROMOTION most commonly distributed by means of free-standing inserts in magazines and Sunday newspapers is called a ________. a) coupon b) sample c) premium d) specialty item 29. The sales promotion technique that rewards a consumer with an item either for free or at reduced cost when they purchase another product is called a ________. a) sampling b) prize c) premium d) specialty advertising 30. Which of the following sales promotions has the highest response rate? a) Sweepstakes b) Rebates c) Sampling d) Coupons 31. Sampling produces a ________ response rate and is also ________ expensive than other consumer promotion techniques. a) lower; less b) lower; more c) higher; less d) higher; more 32. Sales promotion that appeals to marketing intermediaries rather than consumers is called ________. a) industry promotion b) trade promotion c) publicity d) public relations 33. Which of the following is NOT an example of a trade allowance? a) Rebate b) Buying allowance c) Slotting allowance d) Promotional allowance 34. Which promotion is intended to capture the impulse purchase? a) Trade allowances c) Point-of-purchase displays b) Trade shows d) Push money 35. 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 36. Manufacturers motivate sales personnel through ________. a) trade allowances b) spiff or push money c) trade shows d) sales training ESSAY Chapter 17 — Personal Selling and Sales Promotion 1. Under what conditions does personal selling typically become a primary component of the firm’s promotional mix? 2. Describe over-the-counter and field selling. Which is more expensive? 3. Distinguish between inbound and outbound telemarketing. 4. Discuss the three major personal selling approaches. 5. How does the AIDA model match up with the seven steps of selling? 6. What are some of the questions that should be answered during precall planning? 7. Define expectancy theory of motivation and explain how sales managers can apply it to their sales team. 8. Distinguish between salary and commission. 9. What is a sales promotion? Explain how a sales promotion can supplement other promotional activities. 10. Discuss the different types of consumer-oriented sales promotions. Chapter 18 (47) Pricing Concepts 1. The A)G. Harding Company has been charged with price discrimination under the federal Robinson-Patman Act. Which of the following would be the best defense against this charge? a) The price differential is justified because they are meeting a competitor’s price in good faith. b) They need the extra profit to survive) c) There are mechanical differences between the selling situations involved) d) Agree to charge the same price to everyone in an attempt to settle the dispute) 2. State laws requiring sellers to maintain specified minimum prices for comparable merchandise are called ________ laws. a) fair-trade b) unfair-trade c) price-discrimination d) loss-leader 3. 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 4. PRICING OBJECTIVES that seek profit maximization or to attain a target return on investment are examples of ________ pricing objectives. a) profitability b) volume c) competitive d) prestige 5. PROFITABILITY PRICING OBJECTIVES include ________. a) market growth c) sales maximization b) prestige d) target return on sales or investment 6. When a firm decides on a minimum acceptable profit level and seeks to increase its sales subject to this profit constraint, its PRICING OBJECTIVE is ________. a) sales maximization c) target costing b) increasing cost d) prestige pricing 7. 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 8. Short-run or long-run profitability goals usually stated as percentages of sales or investment are known as ________ OBJECTIVES. a) profit maximization b) volume c) target-return d) prestige 9. 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 10. 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 11. 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 12. One type of volume PRICING OBJECTIVE is ________. a) cost recovery b) cost-plus pricing c) market-share d) return on investment 13. 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 14. At present, long-distance telephone services and wireless carriers are both tending to adhere to a ________. a) competitive pricing objective c) breakeven pricing approach b) prestige pricing policy d) psychological pricing model 15. If Proctor & Gamble were to introduce a value-priced brand of laundry detergent, they should ________. a) just emphasize the low price b) attempt to convince consumers the lower-priced brand offers comparable quality to higher- priced products c) demonstrate the prestige the consumer gets along with this product d) put less product in the customary package to offset the low-profit margin 16. ________ is a new pricing strategy that has emerged in recent years which emphasizes the benefits of a product in comparison to the price and quality levels of competing offerings. a) Benefits maximization b) Head-on pricing c) Prestige pricing d) Value pricing 17 The PRICING STRATEGY used in selling Lexus automobiles is usually ________. a) meeting competitors’ prices c) prestige b) return on investment d) revenue maximization 18. Analysis has shown that ingredients account for less than 5 percent of a perfume’s cost. Therefore, a perfume that costs $135 or more per ounce reflects the marketer’s adoption of a PRICING OBJECTIVE related to ________. a) brand name recognition c) meeting competitors’ prices b) creating image or prestige d) sales maximization 19. 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 -- the same price it’s been since 1958 d) $27,500 for a 2006 Toyota Camry 20. 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 21. Which MARKET STRUCTURE best describes the U.S. auto industry? a) Pure competition b) Monopolistic competition c) Monopoly d) Oligopoly 22. A MARKET STRUCTURE with large numbers of buyers and sellers of differentiated products is called ________. a) monopolistic competition b) pure competition c) oligopoly d) supply and demand 23. 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 24. Below is the MARGINAL REVENUE and MARGINAL COST at various levels of output: Output Marginal Revenue Marginal Cost 100 $12 $10 150 12 10 200 14 14 250 14 14 At what level of output is profit maximized? a) 100 units b) 150 units c) 200 units d) 250 units 25. 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 26. A 10 percent increase in the price of eggs that results in a 5 percent decrease in the quantity of eggs demanded yields a price elasticity of demand for eggs of ________. a) 0.1 b) 0.5 c) 1.0 d) 1.5 27. When the calculated elasticity of demand or supply is greater than 1.0, that demand or supply is said to be ________. a) elastic b) stagnant c) marginal d) inelastic 28. If a product’s elasticity of demand or supply is less than 1.0, then it is referred to as ________. a) proportionate b) disproportionate c) elastic d) inelastic 29. Demand curves must be estimated based on ________. a) marketing research c) profit maximization b) past practices in the industry d) effective accounting procedures 30. The most popular METHOD OF PRICING is ________ pricing. a) cost-plus b) breakeven c) incremental-cost d) full-cost 31. Of the following, the method that uses a base-cost figure per unit and adds a markup to cover unassigned costs and to provide a profit is ________ pricing. a) marginal analysis b) breakeven c) modified breakeven d) cost-plus 32. The statement that best describes full-cost pricing is: a) It allocates only those fixed costs that can be directly attributed to production. b) It explicitly considers demand and competition. c) It uses all relevant variable costs in setting the product’s price) d) It relates overhead expenses to expected revenue) 33. Incremental-cost pricing ________. a) uses all relevant variable costs in setting a product’s price b) is directly based on price theory and profit maximization c) uses only those costs that are directly attributable to a specific output d) recovers all fixed costs that are not attributable to total variable cost (TVC) 34. The technique that allows a business person to determine the number of goods or services that must be sold at a given price to generate sufficient revenue to cover TOTAL COSTS is called ________ analysis. a) solid state b) marginal c) breakeven d) cost-volume-profit 35. The number of units of product that must be sold at a certain price in order to recover FIXED COSTS can be calculated using ________. a) breakeven analysis c) macroeconomic price theory b) cost-plus pricing d) marginal analysis 36. 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 37. 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 38. 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 39. 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 40. 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 41. 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 42. 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 43. 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 44. A marketing decision-maker can compare the actual profit consequences of different prices considering demand conditions using the technique of ________ analysis. a) elasticity b) modified breakeven c) marginal cost d) PIMS 45. When most of a firm’s costs are fixed over a wide range of outputs, the primary determinant of profitability will be the ________. a) control the firm can exercise over costs b) amount of variable cost that can be recovered with the sale of each unit c) amount of revenue generated by sales d) total number of units that can be sold 46. 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 47. Which PRICING OBJECTIVE is more important to consider with international markets than domestic markets? a) Profitability b) Price stability c) Meeting competition d) Volume ESSAY 1. Use the data in the following table, along with marginal analysis, to find the optimal price) Price Units Sold Total Cost $100 100,000 $ 7,000,000 $ 90 200,000 $12,000,000 $ 80 400,000 $22,000,000 $ 70 700,000 $37,000,000 $ 60 900,000 $47,000,000 $ 50 1,000,000 $52,000,000 2. Identify and discuss the major categories of pricing objectives used by for-profit organizations. 3. What are some common PRICING OBJECTIVES used by not-for-profit organizations? 4. List the market structures discussed in the context of economic theory, and provide an example of an industry or business for each of the four types. 5. Assume a price per unit equals $100, fixed costs total $50,000, and variable costs are $70 per unit. 6. What are the major weaknesses of traditional breakeven analysis? 7. Identify the major PRICING OBJECTIVES facing marketers who conduct business internationally. Chapter 19 (45) Pricing Strategies 1. Because it involves the use of a high price relative to prices of competing products or services, the SKIMMING PRICING STRATEGY is sometimes referred to as ________ pricing. a) market-plus b) competitive c) penetration d) functional 2. In order to recover research and development costs rapidly and earn high initial high profits, Sony set a high price for its plasma TVs. The pricing strategy Sony used is called ________ pricing. a) market share b) skimming c) penetration d) competitive 3. 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) 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) 4. PENETRATION PRICING is sometimes referred to as ________. a) market-plus b) market-minus c) cost-plus d) prestige 5. Penetration pricing works best when the demand for a product is ________. a) elastic b) highly elastic c) inelastic d) highly inelastic 6. 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 7. A strategy of offering prices that are consistently lower than those of competitors is called ________ pricing. a) penetration b) skimming c) everyday low d) competitive 8. Which of the following pricing strategies tries to remove price as a competitive weapon? a) Penetration pricing c) Skimming pricing b) Everyday low pricing d) Competitive pricing 9. A product’s MARKET PRICE is ordinarily the ________. a) same as the product’s list price b) list price less any allowances and discounts that may be involved in the purchase c) list price less any discounts and allowances plus any geographic considerations that may apply d) price that consumers pay using a credit card 10. Discounts off the list price given to channel members for performing marketing functions are called ________ discounts. a) cash b) trade c) quantity d) transportation 11. If a business was 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 12. 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 13. 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 14. If a manufacturer offered an intermediary a percentage discount off the list price of products it handled in exchange for performing certain wholesaling activities, this would be classified as a ________. a) cash rebate b) list price c) cumulative discount d) trade discount 15. A quantity discount is ________. a) either cumulative or non-cumulative, depending on the frequency of purchase b) often used in conjunction with trade-ins c) a payment to channel members for performing some marketing function d) a type of promotional allowance 16. An attempt to integrate promotional strategies within the marketing channel is a ________. a) quantity discount b) rebate c) trade-in d) promotional allowance 17. 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. 18. A one-time reduction in list price typically offered at time of sale is referred to as a(n) ________. a) allowance b) rebate c) cumulative discount d) non-cumulative discount 19. A firm that manufactures TVs sells them at prices of $750, $1,000, and $1,250. The manufacturer will return $75, $100, or $125 by mail to those who purchase its brand of TV. This reduction in price is an example of a ________. a) promotion allowance b) trade-in c) rebate d) quantity discount 20. 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 21. The type of geographical pricing that allows the firm to adjust the price by allowing the buyer to subtract transportation expenses from the bill is called ________ pricing. a) uniform-delivered b) basing point c) freight absorption d) FOB plant 22. The type of pricing arrangement that allows a firm’s customers to deduct freight charges from their bills is called ________ pricing. a) basing point b) promotional allowance c) freight absorption d) FOB plant 23. Pricing that is the exact opposite of FOB-origin pricing is ________. a) zone pricing c) uniform-delivered pricing b) freight absorption d) the basing point system 24. When a manufacturer quotes the same price for goods (including freight charges) to a buyer in Miami, another in Los Angeles, and a third in Dallas, the seller is quoting a ________ price) a) uniform-delivered b) destination c) zone d) basing point 25. Promotional pricing is ________. a) the same as skimming pricing, but only when a trade secret or patent is involved b) lower-than-normal pricing as a temporary component in the selling strategy c) advertising prices that are higher than what is actually asked in-store d) when a firm uses extensive promotional allowances to get channel members to promote the product 26. Firms with high fixed costs often expand their markets, quoting the same prices to all customers regardless of shipping expenses, under the plan called ________. a) zone pricing c) uniform-delivered pricing b) freight absorption pricing d) the basing point system 27. 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 28. 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 29. The practice of marketing merchandise at a limited number of prices is called ________ pricing. a) product-line b) odd c) one-price d) limited 30. A major challenge with PRODUCT-LINE PRICING is that ________. a) once price lines have been set, it is difficult to re-price individual items b) it does not result in improved consumer decisions c) consumers are easily confused by this pricing option d) it may be in violation of the LePetomaine Act 31. 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 32. When a men’s clothing store sells suits at four price levels ($295, $455, $525, $650), the store’s retail policy is ________ pricing. a) unit b) promotional c) product-line d) psychological 33. ―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 34. In the absence of other cues, ________. a) many buyers interpret low prices as signals of high-quality products b) price offers no clue of a product’s quality to prospective purchasers c) price is an important indicator of product quality to consumers d) the relationship between price and quality holds true only in declining economies 35. The process by which buyers ask a number of potential suppliers to submit price quotes on a proposed purchase or contract, of which the lowest will be accepted, is called ________. a) specification b) competitive bidding c) noncompetitive bidding d) auctioning 36. Buyers and sellers often set purchase terms using negotiated contracts when ________. a) only one available supplier exists b) there are a multitude of suppliers c) research and development work is not necessary d) purchases exceed $5,000 37. 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 38. A Swedish telephone maker transfers phones costing $10 to produce to its U.S. subsidiary for a transfer price of $20. The U.S. subsidiary sells the phones to retailers for $25 each and spends $5 per phone in promotion and distribution expense) The U.S. subsidiary ________. a) makes $10, on which it pays U.S. taxes b) makes $15, all of which is taxable in the United States c) breaks even on the deal because it spends all its revenues d) makes a total of $25 on the deal because the phones are effectively free 39. If a company is expanding into the global market and will be facing rather low foreign marketing costs, which is the recommended price approach? a) Standard world price c) Market-differentiated pricing b) Dual pricing d) Transfer pricing 40. If foreign marketing costs are so low they do not impact overall costs, the pricing strategy to recommend is ________. a) standard worldwide price c) market-differentiated pricing b) dual pricing approach d) promotional pricing 41. The global pricing strategy that allows the greatest flexibility in setting prices to reflect local marketplace conditions is ________. a) standard worldwide price c) market-differentiated pricing b) dual pricing approach d) flexible pricing 42. Online marketers run the risk of CANNIBALIZATION when they ________. a) compete with off-price houses on the Net b) self-inflict price cuts by creating competition among their own products c) construct new stores alongside their Web sites d) hold onto tradition in the face of new technology 43. The use of bots to search out price quotes on specified products forces Internet marketers to ________. a) keep prices low b) install ―bot-stoppers‖ c) use printer-disabling viruses to prevent their prices from becoming common knowledge d) close their Web sites and go back to a bricks-and-mortar operation 44. ________ 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 45. 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 center d) sales department 19X1: SETTING PRICES : On your Scantron card, match the number of the items with the appropriate letter. 1 cost-plus pricing 18 cash flow a PRICING OBJECTIVE 2 ROI 19 price leaders b PRICING STRATEGY 3 random discounting 20 periodic discounting c PRICING TACTIC 4 negotiated pricing 21 bait pricing d NONE of the above 5 premium pricing 22 customary pricing e 6 price lining 23 prestige pricing 7 odd-even pricing 24 reference pricing 8 survival 25 market share 9 secondary-market 26 comparison pricing discounting 10 EDLP 27 bundle pricing 11 product quality 28 price skimming 12 multiple-unit pricing 29 captive pricing 13 profit 30 survival pricing 14 penetration pricing 31 profit pricing 15 markup pricing 32 ROI pricing 16 status quo 33 cash flow pricing 17 special-event pricing 19X2: SETTING PRICES : 41 cost-plus pricing 56 status quo PRICING STRATEGY 42 ROI 57 special-event pricing a Differential Pricing 43 random discounting 58 cash flow b New-Product Pricing 44 negotiated pricing 59 price leaders c Product-Line Pricing 45 premium pricing 60 periodic discounting d Psychological Pricing 46 price lining 61 bait pricing e Promotional Pricing 47 odd-even pricing 62 customary pricing 48 survival 63 prestige pricing 49 secondary-market 64 reference pricing pricing 50 EDLP 65 market share 51 product quality 66 comparison discounting 52 multiple-unit pricing 67 bundle pricing 53 profit 68 price skimming 54 penetration pricing 69 captive pricing 55 markup pricing GROUP WORK 19X3: SETTING PRICES : (Real-World) EXAMPLE(S) 1 cost-plus pricing 2 random discounting 3 negotiated pricing 4 premium pricing 5 price lining 6 odd-even pricing 7 secondary-market pricing 8 EDLP 9 product quality 10 multiple-unit pricing 11 penetration pricing 12 markup pricing 13 special-event pricing 14 price leaders 15 periodic discounting 16 bait pricing 17 customary pricing 18 prestige pricing 19 reference pricing 20 comparison discounting 21 bundle pricing 22 price skimming 23 captive pricing 24 demand-based pricing ESSAY Chapter 19 – Pricing Strategies BASED ON YOUR LECTURE NOTES: a) Discuss the strategic issues involving following a SKIMMING PRICING STRATEGY vs. following a PENETRATION PRICING STRATEGY. b) Discuss the strategic issues involving CANNIBALIZATION. Other than one of the examples in the textbook, give an example…. 1. Explain everyday low pricing. 2. What are allowances? What are the major categories of allowances? 3. What are the geographic considerations of pricing? 4. Explain psychological pricing and give three examples of this concept. 5. Discuss the four major types of pricing policies, as well as flexible alternatives. 6. Discuss the practice of promotional pricing and the role of loss leaders and leader pricing. 7. What is the IMPORTANCE of transfer pricing? How is it relevant to an firm’s profit center? 8. Discuss the three alternative strategies for pricing exports. 9. What is bundle pricing? Other than one of the examples in the textbook, give an example….