True/False
Indicate whether the statement is true or false.
1. National brands sold exclusively by a retail chain are called captive brands.
2. A promotional outlay for a family brand benefits all items in the line.
3. A strong brand identity can contribute to the consumers' perceptions of product quality.
4. Product managers have profit responsibility for their product group and help the retailer's category buyer maximize sales for the whole category, not just the particular manufacturer's product.
5. Brand extension is the strategy of developing individual offerings that appeal to different market segments while remaining closely related to the existing product line.
6. When a company authorizes another organization to use its brand name, the company is practicing brand diversification.
7. The practice of brand licensing expands a company's exposure in the marketplace.
8. Product positioning refers to consumers' perceptions of a product's attributes, uses, quality, and advantages and disadvantages relative to competing brands.
9. A product development strategy might include flanker brands that are introduced into the market to increase the overall market share of the company.
10. Cannibalization is the loss of sales of an existing product due to competition from a new product introduced into the market by a competing firm.
11. Consumer innovators are individuals who rely on the experiences of initial buyers before making trial purchases.
12. New product committee members spend less time conceiving and developing their own new-product ideas than reviewing and approving new-product plans that arise elsewhere in the organization.
13. One of the functions of marketing channels is to facilitate searches by both buyers and sellers.
14. Business products tend to move through longer marketing channels than consumer products.
15. A merchant wholesaler is an independently owned wholesaler that takes title to the goods.
16. The U.S. Supreme Court has ruled that horizontal territorial restrictions may meet legal criteria in certain cases but it has consistently declared vertical territorial restrictions to be illegal.
17. A meat packing unit's downstream management would oversee storage and warehousing of meat as well as the transportation of the meat to its plant where it is processed and packed.
18. The supply chain begins with the movement of finished products through the marketing channel to customers.
19. A distribution warehouse holds goods for moderate to long periods in an attempt to balance supply and demand for producers and purchasers.
20. If merchandise selection changes frequently to follow fashion trends, advertising is typically used to promote current styles effectively.
21. Salespeople involved in suggestion selling try to help customers recognize true needs rather than unwanted merchandise.
22. Chain stores are groups of retail outlets that operate under central ownership and management and handle the same product lines.
23. Specialty stores typically carry convenience and shopping goods.
24. A selling agent is an ideal marketing channel for weakly financed, production-oriented firms.
25. Vending machines are classified as a form of automatic merchandising.
26. An IMC strategy separates the promotional mix into parts and views them as isolated components.
27. Although the types of promotion may vary from a highly personalized sales presentation to such nonpersonal promotions as television advertising and dollar-off coupons, each goes through every stage in the communications process.
28. Compared with personal selling, advertising, and sales promotion, expenditures for public relations usually are high in most firms.
29. Guerilla marketing is an expensive marketing technique.
30. The goal of an ad is to improve the likelihood that a customer will buy a particular good or service.
31. Interactive advertising creates dialogue between marketers and individual shoppers, providing more materials at the user's request.
32. Cable advertising offers marketers access to more narrowly defined target audiences than other broadcast media can provide.
33. If a product or service being sold requires relatively little special handling, marketers typically emphasize personal selling in their promotional mix.
34. Over-the-counter personal selling efforts are frequently supplemented with other promotions such as special sales events, new product introductions, and direct-mail appeals.
35. A salesperson assigned to answer the telephone and take orders or answer customers' questions is involved in outbound telemarketing.
36. Relationship selling involves regular contacts between sales representatives and customers over an extended period.
37. Listening to customers and using problem-solving skills to meet customer needs is called advisory selling.
38. Creative selling mainly deals with maintaining existing business with customers.
39. Direct mail and advertising campaigns are effective in identifying prospective customers.
40. To be identified as a qualified prospect, a customer must have both the resources and the authority to make purchase decisions.
41. An assessment center is a testing approach used by sales managers to measure a candidate's skills, knowledge, and ability.
42. The concept of span of control refers to the number of sales representatives who report to first-level sales managers.
43. A straight salary plan could reduce the incentive to find new markets and land new accounts.
44. The effectiveness of a salesperson is measured entirely on the basis of the sales volume and profitability.
45. A salesperson should be judged on the basis of potential ability rather than the actual sales performance.
46. An expensive gift could be interpreted as a bribe if given in anticipation of doing business with a buyer or company.
47. Point-of-purchase advertising encourages retailers to improve on-site merchandising.
48. Push money refers to cash incentives paid by manufacturers to wholesalers to stock new products.
49. A price is the exchange value of a good or service.
50. Pricing decisions are influenced by a variety of legal constraints imposed by federal, state, and local governments.
51. Defense based on cost differentials against charges of price discrimination under the Robinson-Patman Act works only if the price differences exceed the cost differences resulting from selling to various classes of buyers.
52. The economic theory assumes that firms behave rationally which in turn results in an effort to maximize gains and minimize losses.
53. Firms which use a volume objective to guide their pricing strategy believe that increased sales are less important in the long-run competitive picture than immediate high profits.
54. Pricing objectives tied directly to meeting prices charged by major competitors emphasize the price element of the marketing mix and focus less strongly on nonprice variables.
55. Marketers determine prices in two basic ways: by applying the theoretical concepts of supply and demand and by completing cost-oriented analyses.
56. Microeconomics suggests a way of determining prices that assumes a profit-maximization objective.
57. All firms attempt to maximize profits.
58. Modern accounting procedures provide managers with a clear understanding of cost structures, so managers can readily comprehend the supply side of the pricing equation.
59. The breakeven point is the point at which total revenue equals total cost.
60. Most businesses slowly change the amounts they charge customers, even when they clearly recognize strong demand.
61. A low price is a sure sell because the demand for many goods is highly elastic.
62. When the list price of a product is discounted by the value of a used product that is turned in at the time of sale, the transaction is called a sale with a trade-in.
63. One-price policies are more likely to be applied in marketing programs based on individual bargaining.
64. Marketers implement leader pricing policies to avoid violating maximum-markup regulations and to earn a maximum return on promotional sales.
65. Auctions are the most complicated form of negotiated pricing.
66. Business and government purchasers often legally enter into contracts with favored suppliers instead of using competitive bidding.
67. Transfer pricing typically is a simple and standardized process in most organizations.
68. Every online marketer is inherently a global marketer who must understand the internal and external conditions that affect global pricing strategies.
69. Marketers today are more savvy about integrating marketing channels and standardizing pricing across channels.
70. Responding to the weakening of their control over prices brought about by e-commerce, marketers have begun to bundle a host of additional goods and services with the tangible products they offer their customers.Multiple Choice
Identify the choice that best completes the statement or answers the question.
1. A product is said to have achieved brand preference when:
a. the product becomes familiar to the consumer.
b. the marketers start selling the product at a discount.
c. the consumer sees or recognizes the product and chooses it over its competitors.
d. the product has attained monopoly position with its customers.
2. A product is generally regarded as a global brand if:
a. it is sold exclusively by a single retail chain worldwide.
b. it sells at least 20 percent outside its home country.
c. it can market its products with the same brand name in all its international markets.
d. it is easily recognized across the world by its unique trademark.
3. According to the Young & Rubicam's BrandAsset Valuator model, brand relevance is a dimension of brand personality that refers to:
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.
4. The Federal Trademark Dilution Act of 1995 deals with:
a. unregistered trademarks in the marketplace and legal protection for generic names.
b. the establishment of procedures for distinguishing generic names from genericized names.
c. the regulation of cases of cybersquatting and Internet domain name impingement.
d. the rights of a trademark holder to sue for trademark infringement.
5. The strategy of _____ refers to the introduction of new products into identifiable or established markets.
a. market penetration
b. product positioning
c. market diversification
d. product development
6. At the _____ stage in the consumer adoption process, potential buyers begin to seek information about the product.
a. trial
b. evaluation
c. interest
d. adoption
7. The process by which new goods or services are accepted in the marketplace is known as the _____ process.
a. extension
b. referencing
c. diffusion
d. polarization
8. With reference to the five characteristics of a product innovation, a product innovation is said to have a greater _____, if it is superior to previous ideas reflected in terms of lower price, physical improvements, or ease of use.
a. associability
b. compatibility
c. relative advantage
d. observability
9. Direct selling is a marketing channel that moves goods directly from producer to the:
a. retail storage warehouse.
b. channel captain.
c. marketing intermediary.
d. ultimate consumer or business purchaser.
10. ABC Corp., a mining equipment manufacturer, provides loaders and feeder breakers for Ground Works, a mining company. ABC Corp. regularly sends information on new products as well as on upgrades for old products to the management in Ground Works. ABC Corp relies on _____ to sell its products.
a. direct channels
b. industrial distributors
c. manufacturer's representatives
d. franchisers
11. Conflicts resulting from disagreements among channel members at the same level, such as two or more wholesalers or two or more retailers, or among marketing intermediaries of the same type are called _____ conflicts.
a. exclusive
b. vertical
c. horizontal
d. cross-channel
12. KitchenAid has established an electronic storefront so that its customers can purchase mixers and accessories from its website. This establishment of electronic storefront is likely to result in _____ conflict between KitchenAid and its retailers.
a. vertical
b. horizontal
c. exclusive
d. tangential
13. Products manufactured under license from a U.S. firm and then sold in the U.S. market in competition with that firm's own domestic output are called _____ goods.
a. deficient
b. subsidized
c. gray
d. exempt
14. A vertical marketing system (VMS) in which a single owner operates the entire marketing channel is called a(n) _____ marketing system.
a. corporate
b. administered
c. contractual
d. community
15. How has the general shift from a manufacturing economy to a service economy in the United States affected physical distribution?
a. Customers require more flexible-yet reliable-transportation service.
b. A very high percentage of the transportation industry's revenues is represented by the traditional high volume shipments.
c. The number of large shipments is growing much faster than the number of smaller shipments.
d. The various elements of physical distribution have become independent of decisions made in other areas.
16. A&S Corp. regularly ships its products to its warehouses. They ship three truckloads of merchandise biweekly using the services of the same trucking company. The trucking company on its part provides A&S Corp. a subsidized rate because it gets a regular business from A&S Corp. The discounted rate thus charged is called a _____ rate.
a. special
b. flat
c. spot
d. class
17. Which of the following terms represents transporters that provide service solely for internally generated freight?
a. Common carriers
b. Contract carriers
c. Private carriers
d. Regional carriers
18. Which of the following is the most widely used form of intermodal coordination?
a. Horseback service
b. Fishyback service
c. Birdyback service
d. Piggyback service
19. After identifying a target market, a retailer must:
a. concentrate on determining the ideal levels of inventory to be maintained.
b. devise marketing plans to expand their target market.
c. develop marketing strategies to attract chosen customers to its stores or websites.
d. segment the market based on factors such as family income and customer lifetime value.
20. _____ represent nonrefundable fees grocery retailers receive from manufacturers to secure shelf space for new products.
a. Switching costs
b. Franchise fees
c. Carrying costs
d. Slotting allowances
21. A lifestyle center is a type of planned shopping center that:
a. provides a wide assortment of convenience, shopping, and specialty goods, plus many service facilities.
b. is usually located near a regional or superregional mall and brings together several huge specialty stores as standalone stores in a single trading area.
c. offers a combination of shopping, live entertainment, movie theatres, restaurants, decorative fountains, and much more in an attractive outdoor environment.
d. offers a product mix that is usually confined to convenience items and some limited shopping goods.
22. A store's exterior appearance, including architectural design, window displays, signs, and entryways:
a. exerts no influence on the retailer's image.
b. exerts a major influence on the pricing of the goods sold by the store.
c. helps identify the retailer and attract its target market.
d. indicates the range and assortment of product lines it offers.
23. Macy's focuses on fashion-oriented merchandise, backed by a complete array of customer services. Hence, Macy's can be regarded as a:
a. self-selection retailer.
b. full-service retailer.
c. self-service retailer.
d. partial-assistance retailer.
24. A wide variety of services such as charge accounts, delivery, gift wrapping, and liberal return privileges are most likely to be associated with _____.
a. department stores
b. clearing houses
c. merchandise mart
d. industrial distribution stores
25. _____ are the retail stores that incur relatively high operating costs because of the wide range of services they offer.
a. Department stores
b. Industrial distributing shops
c. Merchandise marts
d. Warehouses
26. Which of the following is most likely to be true of hypermarkets?
a. They are somewhat smaller than the similar supercenters, averaging 180,000 square feet to the supercenters' 245,000 square feet.
b. They initially started as stores selling mostly electronic appliances but now sell soft goods, foods, and furniture.
c. They are giant one-stop shopping facilities that offer wide selections of grocery and general merchandise products at discount prices.
d. They carry out promotion to their customers using direct mail and sell from showrooms that display samples.
27. Which of the following statements is true of selling agents?
a. They do not provide financial assistance for the manufacturer.
b. They are ideal marketing channels for large, financially strong, and customer-oriented firms.
c. They typically have minimal control over pricing decisions and promotional outlays.
d. They mainly operate in the coal, lumber, and textiles industries.
28. A _____ is an agent wholesaling intermediary that represents manufacturers of related but noncompeting products and receives a commission on each sale.
a. manufacturers' merchant
b. selling agent
c. manufacturers' agent
d. clearing agent
29. Which of the following wholesaling intermediaries delivers goods to the consumers?
a. An auction house
b. A commission merchant
c. A broker
d. A selling agent
30. Which of the following would be an example of niche marketing?
a. Frito-Lay introducing a commercial for its new flavor "Cream-n-Onion" in India
b. Standard Chartered bank advertising its newly devised investment solution options in The Economist
c. A firm hiring people to hand out flyers about its new product at a shopping mall
d. A firm advertising a new brand of biscuits on hoardings
31. When Sara went to a convenience store to get her weekly grocery shopping done, she got a free sample of a new cereal that had just been introduced in the market. This information indicates that the cereal manufacturer is employing _____ to promote its product.
a. survey sampling
b. direct sampling
c. panel sampling
d. quota sampling
32. A newly opened spa uses a print ad to promote the service packages it offers to customers. This is an example of _____ advertising.
a. retail
b. product
c. institutional
d. corporate
33. Promotion of a concept, an idea, a philosophy, or the goodwill of an industry, company, organization, person, geographic location, or government agency is called _____ advertising.
a. institutional
b. product
c. retail
d. cooperative
34. When Think Green, a not-for-profit organization, realizes that its campaign for a "go vegan" lifestyle has lost its steam; it decides to renew the campaign by holding an international culinary contest for the best vegetarian recipe. This is an example of _____ advertising.
a. informative
b. reminder
c. evaluative
d. retentive
35. Oriental Insurance promotes identity theft insurance with an advertisement that warns viewers about stealing of credit cards and usage of fake social security numbers. Which appeal is being used in this commercial to motivate the viewers to act?
a. Factual appeal
b. Humor
c. Cooperation appeal
d. Fear appeal
36. Which of the following is a disadvantage of using television as an advertising medium?
a. Ineffective impact of the promotional message on viewers
b. Loss of control of the promotional message to the telecaster
c. Inability to attain mass coverage
d. Inability to repeat messages
37. A disadvantage of using radio as an advertising medium is that:
a. it has a highly segmented audience.
b. the message cannot be tailored easily to adapt to local preferences.
c. it is expensive.
d. it lacks flexibility.
38. _____ refers to a company's messages about general management issues.
a. Nonmarketing public relations
b. Corporate advertising
c. Institutional advertising
d. Cooperative public relations
39. A local newspaper is planning to come up with a special series on the growth of entrepreneurship within the community. Each week an article featuring a different business owner and his or her success story will be published. For the featured business owners, this type of promotion would constitute _____.
a. sales promotion
b. publicity
c. trade promotion
d. direct selling
40. Which of the following types of MPR responds to an external situation that has potential negative consequences for an organization?
a. Active MPR
b. Passive MPR
c. Proactive MPR
d. Reactive MPR
41. Personal selling is likely to be the primary component of a firm's promotional mix when:
a. the firm markets inexpensive products that require no special handling.
b. the transactions frequently involve trade-ins.
c. the price of the products is relatively low.
d. the firm markets to a large number of customers in various locations.
42. Bits Inc., a manufacturer of server processors, sends out its trained salespeople to inform prospective and existing customers about its latest range of processors and provide demonstrations. The promotional effort adopted by this company is an example of:
a. push-cash selling.
b. field selling.
c. networking.
d. over-the-counter selling.
43. Telemarketers who combine field selling with a strong customer orientation using both inbound and outbound communications are engaging in:
a. customer sampling.
b. inside selling.
c. relationship marketing.
d. over-the-counter selling.
44. A salesperson of a beer company determines that a retail store has only 10 cans of beer left in stock when it normally carries an inventory of 60. The salesperson informs the store manager of the inventory situation. Which of the following sales tasks is being performed by this salesperson?
a. Order processing
b. Creative selling
c. Missionary selling
d. Planning
45. The process of qualifying a sales prospect involves:
a. gathering information about the prospect to make initial contact go more smoothly.
b. determining a potential customer's needs, income, and purchase authority.
c. defining the company's product in terms of what it can do for the customer.
d. making the initial contact with the prospect.
46. The term "_____" refers to the postsale activities employed by salespeople that determine whether an individual who made a recent purchase will become a repeat customer.
a. sales maintenance
b. post-closing
c. dissonance reduction
d. follow-up
47. First-line sales managers need very strong sales skills, while sales managers at higher organizational levels need more _____ skills.
a. training
b. interactive
c. managerial
d. technical
48. Which of the following sales promotion techniques produces a higher response rate than most other promotions?
a. Sweepstakes
b. Rebates
c. Sampling
d. Coupons
49. A major assumption of the economic theory is that, firms will focus on:
a. minimizing the inventory turnover ratio.
b. maximizing gains and minimizing losses.
c. providing a minimum return on investment.
d. using selective distribution strategies rather than intensive distribution strategies.
50. In the context of pricing objectives, which of the following is the purpose of adopting a profitability objective?
a. Market share
b. Image
c. Sales maximization
d. Target return
51. A profit-maximizing price rises to the point at which further:
a. increases will cause proportionate decreases in the number of units sold.
b. decreases will cause disproportionate decreases in the number of units sold.
c. increases will cause disproportionate decreases in the number of units sold.
d. increases will cause disproportionate increases in the number of units sold.
52. Volume-related pricing objective with the goal of controlling a portion of the market for a firm's product is known as a ______ objective.
a. prestige
b. market-share
c. target-return
d. meeting competition
53. When New Orleans' Holy Cross School organizes a $500-per-person concert to raise funds for the operation of the school, their organizational goal is to:
a. maximize their profits.
b. implement value pricing.
c. suppress the market.
d. provide market incentives.
54. Which of the following market structure is characterized by the non-existence of direct competitors?
a. Pure competition
b. Monopolistic competition
c. Oligopoly
d. Monopoly
55. In which of the following market structures the entry of new firms into the industry is regulated by the government?
a. Pure competition
b. Monopolistic competition
c. Oligopoly
d. Monopoly
56. A cost that changes with the level of production is called a(n) _____ cost.
a. variable
b. fixed
c. average total
d. marginal
57. A cost that remains stable at any production level within a certain range is called a(n) _____ cost.
a. variable
b. fixed
c. average total
d. marginal
58. A 5 percent increase in the price of corn flour that results in a 15 percent increase in the quantity supplied yields a price elasticity of supply for corn flour of:
a. 2.0.
b. 2.5.
c. 3.0.
d. 3.5.
59. Which of the following is a practical problem involved in applying price theory concepts to actual pricing decisions?
a. All firms attempt to maximize profits.
b. It is difficult to estimate demand curves.
c. It is difficult to comprehend the supply side of the pricing equation.
d. Supply curves must be based on marketing estimates.
60. A company incurs fixed costs of $35,000 and 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. $10.00
b. $7.35
c. $17.00
d. $10.50
61. A credit allowance given for a used item when a customer purchases a new item is known as a _____.
a. rebate
b. trade-in
c. functional discount
d. cash discount
62. A firm that manufactures TVs sells them at prices of $750, $1,000, and $1,250. The manufacturer will return $75, $100, or $125 respectively, 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.
63. A(n) _____ is a general guideline that reflects marketing objectives and influences specific pricing decisions.
a. MAP
b. pricing policy
c. leader pricing strategy
d. EDLP
64. A firm that permits variable prices for different customers is adopting _____.
a. promotional pricing
b. price flexibility
c. odd pricing
d. product-line pricing
65. Which of the following is a disadvantage associated with product-line pricing?
a. It does not provide flexibility for making price changes on individual items.
b. It results in consumers having difficulty in making purchase decisions.
c. It is ineffective in differentiating between products.
d. It does not allow shoppers to choose desired price ranges.
66. _____ pricing is a pricing policy in which products are offered to consumers at less than cost to attract them to stores in the hope that they will buy other merchandise at regular prices.
a. Skimming
b. Loss leader
c. Odd
d. Variable
67. Consumers today perceive that, within price limits, there is:
a. a need for discounts and incentives.
b. obvious opportunity for psychological pricing.
c. a direct relationship between the quality and price of a product.
d. no perceivable difference in major product brands.
68. 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. competitive pricing.
69. Charles Schwab, a trading company, will face the risk of cannibalization from its e-tail channel e.Schwab if:
a. it attempts to lure customers with the Schwab database.
b. it branches out into mutual funds and tax-deferred investments.
c. it makes price cuts and creates competition with the parent company.
d. it allots all its best personnel to work at the online firm.
70. Perfect Digitals offers a UV lens and a sun protection cover for the camera lens for a wide range of its digital cameras, all at a single price. This strategy used by the company is referred to as:
a. unit pricing.
b. price flexibility policy.
c. bundle pricing.
d. competitive pricing.