Multiple choice questions:
1. Four factors influence strategic planning for pricing decisions. Which list contains all four factors discussed in chapter 5?
Target market, competition, differentiation, and environment
Environment, target market, costs, and differentiation
Environment, target market, differentiation, and pricing strategy
Costs, environment, target market, and value proposition
2. Which example BEST illustrates the Law of Supply and Demand?
As the price of corn syrup increases, cereal manufacturers raise their prices.
As the price of gas increases, drivers find ways to use their vehicles less.
As the price of clothing increases, shoppers increasingly use coupon promotions.
As the interest rate on bank deposits falls, consumers use credit cards more.
3. How do retailers' use of house branded (private label) products benefit manufacturers?
Consumers believe private labels are a better value.
Manufacturers' costs are reduced because channel partner relationships are fewer.
Manufacturers worry that private labels compete with their brands, cannibalizing sales.
Retailers sell house brand products with a greater profit margin.
4. Which of the following is NOT an organizational benefit deriving from a vertical market system?
Assuming risk of intermediary functions
Achieving greater operational efficiency
Reducing from channel partner conflicts
Realizing economies of scale
5. How does the DNA metaphor help us understand the role of branding in promotions?
The information in DNA is stored as a code; the information about a brand is stored in promotions.
DNA can make copies of itself; branding creates copies of the goods or services being promoted.
The order, or sequence, of information in a DNA molecule is fixed, just as the sequence of steps in the marketing process is fixed.
Just as DNA carries genetic information, branding carries personality information that makes brands recognizable to consumers.
6. Which of the following sentences BEST describes how non-store alternatives compete directly with retailers?
Non-store businesses also sell direct to consumers.
Wholesalers organize vertical market systems.
Specialty superstores eliminate conflict from channel partners.
Middlemen break bulk and assemble lots.
7. What information does the, break-even analysis contribute to a pricing decision?
The price above which demand for an item will decrease significantly.
The cost below which sales of an item cannot yield a profit.
The variable (incremental) cost, on average, of each unit sold.
The fixed percentage that must be added to an item to arrive at its selling price.
8. Which term applies to the model that estimates the actual profit made on sales of an item after transactional costs have been applied?
Maintenance profit analysis
Break-even analysis
Retained revenue analysis
Price waterfall analysis
9. When selecting the methodology by which a company will calculate its prices, which method and associated rationale is increasingly recommended, and why?
The value-based method, because it offers the greatest potential for competitive differentiation.
The target profit method, because it guarantees that every sale will more than cover the costs of making and marketing an offering.
The value-based method, because it makes price the primary driver of the exchange between buyer and seller.
The competition-based method, because it guarantees that a company's offerings will experience similar demand.
10. What is the key component of the distribution channel strategy of retailers in the t-shirt distribution case study in this chapter?
Cost control-because t-shirt imprinting businesses operate on narrow profit margins.
A vertical market system-because of the need for efficiency and economies of scale.
Flexibility-because specific assortments are needed quickly based on the outcome of
sporting events.
Private label merchandise-because sports companies are leaders in branded promotions.