MKT 13-18 (NO 15) Flashcards
(174 cards)
1
Q
Which one of the following is NOT a factor when establishing the price of a product? Potential demand Cost Product form Competition
A
Product form
2
Q
Marketers consider three factors when establishing the price for a product: .
A
costs, potential demand, and competition
3
Q
Which of the following is NOT one of the three major categories of pricing objectives?
a. Prestige
b. Volume or sales
c. Economies of scale
d. Competition
A
c. Economies of scale
4
Q
Pricing objectives vary from firm to firm and can be classified into three major categories:
A
volume or sales, competition, and prestige.
5
Q
______________ is calculated by targeting a certain percentage over cost and ______________ is calculated by targeting a certain gross profit from the sale.
a. Margin; markup
b. Markup; margin
c. Profit; cost
d. Cost-plus pricing; gross profit pricing
e. Gross profit pricing; cost-plus pricing
A
b. Markup; margin
6
Q
Markup is calculated by ________ and margin is calculated by ________
A
targeting a certain percentage over cost
targeting a certain gross profit from the sale.
7
Q
Variable costs change with the level of production.
True
False
A
True
8
Q
_______________ is the method for determining the amount of product that must be sold at a given price to generate sufficient revenue to cover total costs—both fixed and variable.
a. Profit analysis
b. Inventory turn analysis
c. Breakeven analysis
d. Gross profit analysis
A
Breakeven analysis
9
Q
In regards to managing the pricing of a product, the acronym CVP refers to:
a. Covariance Product relationship.
b. Captured Venue Profits relationship.
c. Cost Versus Profit relationship.
d. Collateral Variance Profit relationship.
e. Cost-Volume-Profit relationship.
A
e. Cost-Volume-Profit relationship.
10
Q
cost-volume-profit relationship definition
A
When setting prices, marketers will often evaluate different price and sales volume assumptions to estimate how they affect the overall profits of the company. This interplay among prices, demand, and profitability is called the cost-volume-profit (CVP) relationship.
11
Q
Jane Dough Pizza’s manager is now getting detailed costs for offering delivery service and needs to properly categorize them as either fixed or variable costs.
Boxes for pizzas being delivered?
Mileage reimbursement for delivery drivers?
Monthly salary of programmer in charge of e-commerce website?
Cost of raw materials for pizzas that get delivered?
Monthly building lease?
A
Variable cost Variable cost Fixed cost Variable cost Fixed cost
12
Q
The boxes, pizza materials, and mileage reimbursement all fluctuate based on _____, so they are variable costs
A
sales volume
13
Q
The monthly salary for a programmer and the building lease are fixed costs that don’t change in __________, so they are fixed or operating costs.
A
direct relation to sales volume
14
Q
You work in the marketing department of a household cleaning products manufacturer. When the CEO found that online purchase of consumer-packaged goods had reached only 1 percent of the $666 billion in sales in 2013, he or she charged your team with devising a plan to change that picture. Your research has shown that home delivery of cleaning supplies becomes economically feasible only when the total price hits $20 to $30.
Which of the following pricing objectives should the team use for its action plan?
A
Volume Obj.
15
Q
In the fall of 2014, Coca-Cola brought back Surge, its answer to PepsiCo’s Mountain Dew. It had first offered Surge for sale in 1996 but had stopped production in 2002. Surge was marketed as a novelty, a revival of the brand for nostalgic consumers. Assuming that buyers would want this specialty, limited-production item quickly in order to show it off to friends, the company also featured next-day delivery, exclusively from Amazon.
Which of the following price levels was most likely associated with the Surge revival?
A
prestige item level
16
Q
You have a colleague who swears by using breakeven analyses. He or she has not been on the job long enough to be able to understand the reasons why this tool isn’t always reliable.
Which of the following reasons should you share with him or her?
A
The company’s accounting system does not clearly distinguish between fixed and variable costs.
17
Q
Selena is embarrassed. After explaining to her boss how the company’s CVP (cost-volume-profit) relationship affects its pricing strategy, she realizes that she left out a key variable. Reviewing her notes, she sees that she included price, sales volume, and profit margin.
What did Selena leave out?
A
price sensitivity of consumers
18
Q
Company A and Company B both raised their prices by 30 percent. While A enjoyed a substantial increase in profits, B’s profits plunged downward.
Based on this information, which of the following is the most likely explanation for the companies’ different outcomes?
A
B’s customers are more price sensitive than A’s customers.
19
Q
Which of the following is not typically a fixed cost?
A
raw materials
20
Q
Company X is enjoying a spurt in sales of the stuffed animals it manufactures. To meet demand, the firm is spending more than ever before on cotton stuffing. However, its marketers note that they are spending less for stuffing per toy than in the past.
Based on this information, what is the most likely explanation for the difference between overall spending and per-toy spending?
A
The factory is operating more efficiently.
21
Q
Which of the following is not among the three foundations of pricing strategy?
a. margin
b. costs
c. potential demand
d. competition
A
a. margin
22
Q
As a restaurant marketer, you are responsible for setting prices on each menu item.
Your new appetizer is a fruit-and-nut salad, with a total ingredient cost of $5. The industry’s standard markup is 25 percent.
What should you charge for this appetizer?
A
Sales price is calculated as follows: Cost × (1 + markup percentage) = $5 × (1 + 0.25) = $5 × 1.25 = $6.25
$6.25
23
Q
______refers to the portion of sales revenue left over after paying the product costs of cowboy hats.
A
Margin
24
Q
Target ___ _____ are often based on norms in the hat industry.
A
markup %
25
Cost-based pricing for cowboy hats uses the___ ___ plus a target ____ ____ to calculate the sales price.
product cost
| markup %
26
Another term for margin is
gross profit
27
The relationship between price and demand __ overtime
varies
28
Some companies choose to sell a product below its production price. This strategy is
unsustainable
29
Competition may____ affect a firm’s pricing strategy more than cost
sometimes
30
The explanation of why consumer purchasing patterns vary for certain products, but not for others, when price goes up or down is referred to as
Price Elasticity
31
The concept of ______ explains why consumer purchasing patterns vary for certain products, but not for others, when price goes up or down.
elasticity
32
The three primary competitive pricing strategies are all of the following EXCEPT:
a. price lining pricing strategy.
b. skimming pricing strategy.
c. penetration pricing strategy.
d. competitive pricing strategy.
a. price lining pricing strategy.
33
Which one of the following is NOT a pricing tactic used by marketers?
a. Promotional pricing
b. Margin pricing
c. Psychological pricing
d. Product-line pricing
b. Margin pricing
34
Which of the following BEST describes the relationship between price and quality?
a. Lowering the quality of a product will lower prices because costs will be reduced.
b. Many consumers associate high prices with high quality.
c. Raising the quality of a product will raise the price because costs will be increased.
d. There is no close relationship between price and quality.
e. To raise the price of an existing product on the market, a marketer must have evidence of increased quality or be in violation of the Robinson–Patman Act.
b. Many consumers associate high prices with high quality.
35
to many consumers, ____ signals the quality of a prospective purchase
price
36
Which of the following best represents the level of government responsible for the laws/regulations impacting pricing for items such as tobacco and alcohol?
State
37
Robin must decide on her overall pricing approach. She is a premium provider of food, but operates in an extremely competitive environment, with many lower-priced alternatives. She knows it's important to establish a foothold in the market, then perhaps she can adjust pricing later to increase margins.
Which approach should she choose?
Sales objectives, competitive strategy, and promotional tactic
38
Robin has been using promotional pricing tactics for a few months, with good results. But it's not sustainable and she must raise prices at some point, hopefully without seeing too big a drop in demand. Based on her research, demand is more inelastic during the summer tourist season, but more elastic during the rest of the year.
Which time of year would it be best for Robin to experiment with raising prices?
Summer
39
Check My Work
Robin was researching some similar, competing restaurants and found one that offers food options at three price points: a value menu; a menu of organic, sustainable options; and a gourmet menu. Each had a fixed price point. That restaurant was busy and seemed to have many loyal customers. Another restaurant was very strategic about offering higher priced, organic food and promoting it as "the finest farm-to-table foods in New England." However, this business seemed to be struggling. Based on this research, Robin is choosing between using a prestige-orientated psychological pricing tactic or a product-line tactic.
Which should she choose?
product-line tactic.
40
Oh no! After all the time and money she spent obtaining the buyer intention survey, Robin learns the market research firm used defective data. Investors are giving her conflicting advice about how to redo the demand forecast. The main problem is that Robin doesn't have much time or money to conduct this research.
Investor A recommends utilizing test markets to obtain a real-world assessment of her sales potential. This will provide the most accurate data.
But Investor B supports a sales force composite, which would tap into the expertise of her own successful staff.
Which investor's approach is best?
Investor B: Sales force composite
41
The vice president of marketing of a large grocery chain has determined to deemphasize the prices of the company's products and to concentrate marketing efforts on other factors such as the products' benefits and features.
Which strategy is the vice president most likely to use?
Competitive pricing strategy
42
You are the marketing manager of a small start-up retail company. You are aware that your company's pricing strategies are an important way to communicate your firm's image to consumers. You also realize that as a start-up your company must make every effort to attract customers. After thoroughly analyzing your competitors' offerings, you decide to set the prices of your company's merchandise at odd, unusual numbers slightly below a round number. For example, instead of pricing an item at $10.00 you price it at $9.95.
What is the most likely reason to employ this odd pricing strategy?
This makes the price seem like $9.00 plus change rather than a full $10.00.
43
A retailer is facing difficult times: Sales are down and there has been a decrease in the number of customers visiting the store. The retailer decides to lower the prices on a few items, hoping this strategy will draw more customers who will not only purchase the discounted items but will also linger in the store and buy additional items.
Which type of pricing policy is the retailer using?
Promotional pricing
44
Sal is currently in the market for a new car. He considers various factors before making his purchase; for example, he considers gas mileage, power-train warranty, safety records, status, price, and convenience. He then makes a final list of six possible vehicles to purchase. However, after thinking about all these things, he dismisses them and decides instead to purchase the highest price vehicle.
Based on this information, what is the most likely reason for Sal's decision?
He assumed that the highest price car must also be the most prestigious and he would like to project a high-status image.
45
To forecast sales for your firm's new product, you want to use a forecasting technique that is based solely on input from sources internal to the firm.
Which of the following groups of techniques meets your criterion?
jury of executive opinion, sales force composite, and trend analysis
46
You planned to use trend analysis to forecast sales of the new yogurt being introduced by your dairy products firm. However, the marketing director just informed you that trend analysis is inappropriate for this purpose. Assuming he or she is correct, what is his or her most likely reason?
Because the product is new, historical data is not available.
47
When the price of Product A is raised by 1 percent, its sales drop by 0.06 percent. When the price of Product B is raised by 1 percent, its sales drop by 1.5 percent.
This means that demand for Product A is _______, while demand for Product B is ________.
inelastic, elastic
48
A new boss just took over the marketing department where you work for a women's swimwear manufacturer. You hope to impress him or her with your knowledge of an important topic in your industry: How prices affect consumer perceptions of quality.
You should make all of the following points except:
a. Perceptions of quality may be affected by the eco-friendliness of a product.
b. Supply and demand play no role in purchasing patterns when perceptions of quality are driven by price.
c. It is common for consumers to define both upper and lower limits within which their quality perceptions vary.
d. Perceptions of quality may be affected by both high and low prices.
b. Supply and demand play no role in purchasing patterns when perceptions of quality are driven by price.
49
A banana supplier sells to both supermarket chains and independent food stores in the same region. The supermarket chains always generate more revenue than the independent food stores, because the supermarket chains order bananas more frequently and in bigger volume. To increase his or her profits from the independent food stores, the supplier wants to charge them more per bushel than he or she charges the chains. However, the supplier's director of marketing advises against it.
Which of the following is the most likely reason for this advice?
This pricing policy might violate the Robinson-Patman Act.
50
In 2014, the Golden Gate Bridge toll fee rose from $6 to $7. Beginning in 2015, the toll fee will go up by a quarter for each of the next four years. Administrators explained that fees were not keeping up with inflation because "toll revenues have remained flat."
What situation are administrators counting on? Choose the correct answer.
Crossing the bridge will remain an inelastic demand.
51
Martin has opened a new, trendy restaurant in the downtown section of a large city. There are, however, many competing restaurants in the neighborhood, and Martin knows that many of them have large customer followings. In order to obtain a relatively fast rate of market acceptance, Martin decides to offer two-for-one coupons to all patrons during the restaurant’s opening weeks. After that limited time, Martin plans to withdraw the two-for-one offers and begin charging regular market prices.
Martin in using what kind of pricing strategy?
penetration
52
penetration pricing strategy is?
setting a relatively low price upon entering a competitive market. typically used by newly established restaurants hoping to lure prospective diners.
53
skimming (mkt plus)
entails entering a market with a relatively high price point
54
competitive pricing
it involves setting a price to maintain competitive parity.
55
The availability of substitutes & complements are likely to ___ elasticity of demand for your products.
increase
56
The more buyers purchase retail goods online, the _____ the elasticity of demand for your products is likely to be.
higher
57
Demand for your line of luxury evening wraps is likely to be _____ elastic than for your line of budget raincoats.
more
58
_____ trade laws require sellers to maintain______ prices for_____ merchandise.
unfair; minimum; comparable
59
Deceptive business practices, including deceptive pricing schemes, are prevented by the
FTC
60
Which of the following most closely represents US retail sales in 2016?
5.5 Trillion
61
____ is the largest private-sector employer in the United States.
Retail
62
Components of a retail strategy include all the following EXCEPT:
social/cultural choices.
63
The six components of retail strategy include:
merchandise strategy, customer service standards, pricing guidelines, promotion goals, location/distribution decisions, and store atmosphere choices
64
Every component of retail strategy presents a common set of strategic considerations.
True
False
False
65
Retailers can be classified on four bases. Which of the following is NOT a base for classifying retailers?
a. Shopping effort expended by customers
b. Forms of ownership
c. Product lines carried
d. Physical location of the retailer
e. Services provided to customers
d. Physical location of the retailer
66
The five basic types of direct marketing and nonstore retailing include direct mail, direct selling, online retailing, direct-response retailing, and automatic merchandising.
True
False
True
67
Michele King discusses SherBetter's super-premium product status. She says it doesn't make sense for GaGa to sell in a "stop and shop" type store because it is priced at $4.99 per pint. Which type of retailer would best fit GaGa's location and distribution goals?
a. 7-Eleven convenience stores
b. Specialty grocery stores such as Trader Joe's
c. Neighborhood ice cream truck vendors
d. Discount drugstores such as Walgreens and CVS
b. Specialty grocery stores such as Trader Joe's
68
Specialty retailers provide ________. SherBetter's _______ and all-natural ingredients make it a good product for Trader Joe's, which carries___ and____ foods. SherBetter's price point is too__ for convenience stores, drug stores, or neighborhood ice cream trucks.
narrow lines of merchandise.
premium status
organic; gourmet
high
69
In considering his location/distribution strategy, Jim King realized that becoming a retailer himself, by opening scoop shops, wouldn't work for GaGa because:
a. scoop shops had to be located near a recreational area, and have no other direct competitors nearby, to be successful.
b. he didn't believe there was a market for a product which people didn't know how to categorize.
c. ice cream shops in the New England area are mostly year-round and he didn't have the necessary capital.
d. GaGa was a super-premium product and as it was perceived to be expensive; it wouldn't sell in such shops.
a. scoop shops had to be located near a recreational area, and have no other direct competitors nearby, to be successful.
70
Jim would like to see the GaGa brand be an umbrella brand with other products in different categories—not just the frozen dessert category. Suppose that GaGa develops a line of baked potato chips based on a family recipe. Jim anticipates that the chips would sell best in vending machines for under $1. This would be an example of:
a. customer service strategy
b. convenience retailing
c. promotional strategy
d. nonstore retailing
d. nonstore retailing
71
In 2003, there was one flavor of SherBetter. Today, the line has expanded to include several different flavors of SherBetter, sold in pints, as well as novelty bars in several flavors. When a manufacturer makes a decision regarding the products it will offer, it is called product strategy. But when a retailer makes decisions regarding the products and product categories it will carry, it is making decisions regarding ____________.
a. distribution strategy
b. store atmospherics strategy
c. promotional strategy
d. merchandising strategy
d. merchandising strategy
72
Your sister recently opened a swanky three-floor cheese market, Fromagerie, which is quickly gaining attention from locals, the press, and restaurateurs in the area. Located near a college town, Fromagerie specializes in rare international cheeses; and on the top floor, there is a bistro where patrons can take cooking lessons, meet new people, dine, and sample some of the world's most savory cheeses before they make a purchase decision.
The bistro element of the Fromagerie is primarily an example of your sister's retail strategy in the area of:
customer service
73
Marisol's online jewelry store originally sold only earrings and necklaces for women. After adding men's rings and cuff links, profits doubled. Given that success, Marisol may soon expand her product line to include unisex watches.
Which of the following is a dimension of merchandising strategy that Marisol should consider?
the profitability of unisex watches
74
The overall ___ of each product line and product category is a key consideration in merchandising strategy.
profitability
75
Mr. Cohen wants to open a hair salon and has to decide on the geographic location of the shop. He is targeting girls and young women aged 13 and older who get their hair done frequently. What sets his shop apart from other beauty salons is that all his beauticians have been trained to employ the most modern techniques and were all in the top 5 percent of their classes in their respective cosmetology schools. He wants to locate the salon within a group of similarly distinctive, upscale retailers, service providers, and department stores with high visibility in the same region.
Mr. Cohen's location will be in which of the following types of shopping center?
planned
76
planned shopping center
is a group of retail stores designed, coordinated, and marketed to shoppers in a geographic trade area.
77
After working in retail for about a decade, Lynette decided to open her own shop. For years, she had been interested in learning about handbags and collected vintage purses. Naturally, Lynette was going to open a handbag shop. Because she knows just how expensive designer bags could be, she also decided to find ways to cut the costs associated with running a store so she could increase customer bargains. Lynette's store is open five days a week from 12 noon to 6 p.m.
Which of the following types of retailers accurately reflect Lynette's store?
Specialty store
78
Ellie's media company will be introducing a new series of films on nutrition and exercise for adolescent health. Prior to introducing the films into the market, her company executives want to generate a buzz about the new products. So far, two of the five films have won prestigious awards at national film festivals. Ellie's superiors want to target youth-serving organizations in the Pacific Northwestern region of the United States as potential consumers of these films. They are searching for a quick way to distribute information about the products to potential customers, yet they do not want to sacrifice the personalized experiences that customers have come to associate with the company. Ellie's superiors would also like to be able to measure the performance response of whichever marketing strategy they implement.
Which of the following should Ellie suggest that her superiors use to market their new products?
Direct mail
79
Direct mail
is a major component of direct marketing and comes in many forms, including brochures, palm cards, letters, and catalogues, to name a few.
Adv: ability to select a narrow target market, achieve intensive coverage, send messages quickly, choose from various formats, provide complete information, and personalize each mailing piece.
Response rates are also measurable and higher than those of other types of advertising.
80
The Ash brothers operate an online retailer that specializes in herbal teas from remote villages across the globe. A direct-response retailer, the Ash brothers' company allows customers to purchase their teas by phone, mail, or via the company's website, and then they ship the order directly to the client. The Ash brothers serve as an intermediary between product manufacturers and customers.
Which of the following is an advantage that the Ash brothers have in running this online direct-response retailer?
They are able to reach a wide base of customers and special niche markets because of the Internet
81
Luca's company is a manufacturer of desk calendars and other office supplies. In the past, he has sold only through his own website; however, as his business has grown, he has decided to add a retail partner.
Which of the following is not among the questions Luca should ask when he chooses a partner?
a. Which retailers offer the most appropriate atmospherics for selling office supplies?
b. Should his products be sold via direct mail that provides tips about how to run an office?
c. Which retailers attract buyers for home and commercial offices?
d. Should his products be sold in an office supply specialty store?
Hide Feedback
b. Should his products be sold via direct mail that provides tips about how to run an office?
82
Janice works as a consultant for a tech company. In the past, the company has relied heavily on its toll-free line to sell new products, as well as its numerous distribution channels. When customers are polled via a customer satisfaction survey, 93 percent of them report that one of the primary reasons they have continued to support the company is because of its quality customer service. Janice has been asked to brainstorm strategies to increase company sales. She suggests that the company employs automatic merchandising to cut costs and boost profits.
Why might automatic merchandising be a bad idea for this company?
Automatic merchandising sales are impersonal
83
Sue runs a high-end jewelry boutique. In the past, she provided complementary gift wrapping, but there has been so much demand for this service that she has decided to start charging for it and limiting it to only one wrapped item per customer.
Which of the following elements of retailing strategy is Sue about to change?
customer service
84
You own a mattress store called "Dream Better." Since people routinely compare your products to those offered by Sleepy's and other major competitors before making a purchase, you invest heavily in skilled salespeople and attractive displays.
"Dream Better" is best classified as a:
shopping store
85
All of the following are categories used to classify retailers except:
a. form of ownership
b. form of financing
c. product lines
d. services provided
e. shopping effort
b. form of financing
86
Unlike wholesalers and manufacturers, retailers represent the distribution channel to most consumers. Which of the following is not a reason for this consumer perception?
a. Consumers rely on retailers to obtain a wide array of merchandise.
b. Consumers have little contact with wholesalers and manufacturers.
c. Retailers determine shopping hours and locations.
d. Retailers determine merchandise selections.
e. Retailers have little contact with wholesalers and manufacturers.
e. Retailers have little contact with wholesalers and manufacturers.
87
The best retailer would have pricing ____ that are a good fit for your firm’s value image.
obj
88
The best retailer would offer a homey-looking interior, soft lights, and comfortable customer seating. These _____ elements would complement the brand.
Atmospheric
89
The availability of home delivery is important to your customers. Any retailer must offer this element as a part of its ____ ____ strategy.
customer service
90
There are __ generally accepted bases for categorizing retailers.
4
91
Chain stores are differentiated from independent stores on the basis of
form of ownership
92
Specialty and convenience retailers differ based on
shopping effort
93
Supermarkets fit into a unique retail category that combines____ and____ merchandise.
specialty
| general
94
Advertising, personal selling, sales promotion, direct marketing, and public relations are the components of the:
promo mix
95
In regards to promotion, the acronym AIDA stands for:
Attention, Interest, Desire, and Action.
96
A common promotional objective is:
to create awareness, to stimulate demand, to encourage product trial, to retain loyal customers
97
Promotions are designed to achieve___ objectives important to the firm
specific
98
A common advertising appeal is:
sex, fear, humor, celebrity testimonial, comparison to competitors
99
Which of the following is NOT considered as an advertising medium?
a. Radio
b. Television
c. Newspapers
d. Outdoor
e. Magazines
f. Direct mail
g. The packaging of the product
h. Digital media
g. The packaging of the product
100
The role of ________ is to maintain a good reputation for a brand or company.
public relations
101
Congratulations! You've been hired as the new director of promotion for Pepe's Pizza. Your task is to guide the company's expansion into two new products.
Pizza sauce for restaurants: The target customer is major chains throughout the nation. Since businesses order in larger volume than individual consumers, it's cost-effective for Pepe's to offer customized flavoring and spiciness of the pizza sauces based on customer needs.
Frozen pizza for consumers: You will work with a manufacturer to mass produce value-priced pizzas that are the closest thing to eating at Pepe's. You hope to gain distribution in grocery stores throughout the country, but also want to generate awareness and demand among consumers who have never heard of Pepe's Pizza.
Knowing that this expansion requires significant changes to Pepe's traditional promotional mix, you sit down to figure out the best approach.
Issue #1:
One way to market the pizza sauce is to run ads in food magazines; the ads could explain how Pepe's pizza sauce coats more evenly than other brands and won't leave pizza crusts soggy. For slightly more money, you can hire a salesforce to call on restaurants directly.
How should you market the pizza sauce?
Personal selling
102
Issue #2:
With your promotional plan for the pizza sauce in place, attention turns to the launch of Pepe's first frozen pizza. Two of your key managers in the advertising department are arguing about how to plan their campaign. Fran proposes one big, expensive media blitz to introduce Pepe's Frozen Pizza, arguing that you can commit the whole budget upfront because continued advertising won't be needed after buyers are aware of the brand. Sean disagrees, insisting that advertising will become more important, not less, as the product grows and matures.
Which manager's campaign is the correct choice?
Sean
103
Issue #3:
Sales Director Paula is very enthusiastic about Pepe's Frozen Pizza and is now making a case for using personal selling instead of advertising to reach consumers. In particular, she is pushing to place salespeople at stations in supermarket aisles throughout the country, where they will offer samples of Pepe's Frozen Pizza and talk it up. But the advertising executives, Fran and Sean, are in agreement on this issue: both agree that advertising is better aligned than personal selling with the nature of the product as well as its price.
Whose approach is right?
Fran & Sean
104
Issue #4:
You have now secured several grocery store chains willing to carry your frozen pizza nationwide. In exchange for carrying your brand, you have promised the stores that you'll ensure that consumers hear about the benefits of the new product through broadcast media outlets. The timing of that promotion is important, because all stores will be rolling out the pizzas right as summer starts.
However, you are reviewing the television ad budgets and are growing concerned about the high costs. You ask the PR director her opinion and she recommends dropping the advertising and going with a publicity campaign. She says that, for a fraction of the cost, publicity can result in just as much media coverage as the ads would, and that you can include all the key product benefits in any press releases that go out.
What should you do?
Advertising
105
Integrated marketing communication (IMC) requires a big-picture view of promotional planning; a total strategy that includes all marketing messages. You work for a multinational beverage company headquartered in Singapore. You have been put in charge of developing comprehensive marketing communication packages and want to ensure that you maximize the benefits for your company. To reach this goal, you work with department heads around the world to ensure that marketing and communications objectives support the corporate mission and strategies, and keep all staff informed about new developments. You also work with external partners, including advertising and PR agencies, to achieve a cohesive message for your brand and products.
Which of the following statements is most likely to be true about your IMC effort?
IMC challenges the notion that your advertising, personal selling, direct marketing, and other components of the worldwide promotion mix must stand alone.
106
You work for a weight loss company that is advertising a new weight loss smoothie. Here is a transcript of the first commercial to be aired on a local food network channel:
"Do you have tenor more pounds of excess weight to shed? If so, you should be drinking Blast Berry before every meal! Blast Berry is a weight-loss supplement, and the first of its kind to be approved by the Food and Drug Administration. In a random controlled study, 75 percent of the research participants who used Blast Berry along with exercise dropped an average of 23 pounds within two months of following the program. Blast Berry costs $19.99 for a month's supply and works for those who stick to the plan. Drink one serving before each of the three major meals of the day, and see the weight come off!"
Which of the following basic tasks of effective messaging does this message fail to accomplish?
Communicating competitive advantage and positioning
107
You work for a small tech company that has recently introduced a new mobile application called "Streamline" into the market. The mobile application is aimed at helping individuals keep track of all their social media accounts in one place and streamlining the flow of information from one program to the next. For instance, if you update your Facebook page, your Twitter and Instagram accounts will also update. After identifying the target market and conducting market research, the marketing team decides that its first set of ad campaigns should be Web-based in order to draw appropriate audiences.
When Alexa signs into her Facebook page, a banner pops up in the center of her browser advertising Streamline, the new mobile application. After clicking on the ad, Alexa learns that she can control all of her 11 social media accounts from one place.
Which of the marketing communications steps is next?
Feedback
108
You work for a young grassroots art organization that does not have a lot of funds to invest in marketing efforts but wants to create a name for the company. As a muralist, you have considerable experience beautifying schoolyards and alleys with your paintings, and suggest to your executives that you use graffiti to spread the company's name in certain neighborhoods. Because your company specializes in art, you think this would be the perfect way to market the company and its long-term social mission to fill abandoned park walls with community art and develop community gardens.
Your company agrees with the idea, so you partner with other muralists and paint the company's logo in creative ways on abandoned city walls. At first, your company receives bad publicity for the stunt, but it generates a lot of inquiries about your artwork because potential customers are intrigued by your company's level of creativity and innovation.
Which of the following statements is true about the scenario described above?
This marketing strategy is usually effective because competitors are less likely to be using the same approach.
109
Public relations refers to a firm's communications and relationships with its various publics, including customers, suppliers, the government, employees, and stakeholders. The publicity that a company garners involves unpaid placement of significant news about the company in a published medium or through favorable presentations on the radio, Internet, or television.
Why are consumers more likely to believe information that stems from the marketing aspect of public relations than they are to believe claims in advertising?
Because many consumers consider news more credible when it comes from a media organization than when it comes directly from a marketer.
110
You work for a multinational food corporation that specializes in breakfast foods. For the last ten years, your breakfast bars have dominated the market and been found on the tables of 65 percent of the families in the United States. In the last three quarters, however, your product has not been performing as well; you think the younger generation of parents perceives your bars, incorrectly, as high in sugar and fat and is unaware of their healthy ingredients. Your company develops a series of buy-one-get-one-free promotions and arranges for retailers to hand out samples at their stores. Despite all the resources you invest in this promotional campaign, the product's performance does not improve over time.
Why is the approach to marketing described in the scenario ineffective?
The company's promotional objective was inappropriate given its marketing needs.
111
Ads based on fear, humor, or sex can be effective, but also face distinctive challenges. All of the following accurately describe these challenges except:
a. Humor in an ad may distract consumers' attention from the brand.
b. People may tune out fear-based ads that seem implausible.
c. Selective perception may be a problem for humorous ads.
d. Sex-based ads are tricky when used in culturally diverse markets.
c. Selective perception may be a problem for humorous ads.
112
You work for an organization that wants to use a celebrity spokesperson to advertise its new smoking cessation programs. The company enlists the support of a local music celebrity who is well known and well liked. The celebrity has previously endorsed a local restaurant, is supporting the campaign of a local politician, and is known to partner with a local music program that works with blind children. This celebrity also is known to support awareness for lung cancer initiatives because his or her brother was a pack-a-day smoker for three decades and died of Stage IV lung cancer.
Which of the following might be a drawback of working with this particular celebrity on promoting your organization's cause?
There is marketplace confusion surrounding this celebrity.
113
Check My Work
You work for a local politician who has allegedly been linked to a local scandal. As the head of the politician's communications team, you are strategizing ways to address this issue, especially since it is an election year, and he or she wants to run for national office. You think that the best approach in addressing this problem is employing media marketing, but you still have to figure out which medium is best. You want to use a medium that is credible, flexible, and reaches wide audiences. You are not particularly concerned about cost because you believe that the expense is worth it.
Which of the following media can best help you accomplish your goal?
TV
114
Which of the following statements about cross-promotion is inaccurate?
a. It may utilize a mix of promotional tools.
b. The partners share promotional costs.
c. Its importance in the marketing world is likely to increase over time.
d. Its effectiveness is limited to complementary products.
d. Its effectiveness is limited to complementary products.
115
You and a coworker, Liam, are discussing the merits of different media options for placement of your firm's advertising. The options include TV, radio, direct mail, magazines, and outdoor.
"I'm concerned about people's limited attention spans," says Liam. "However, its low cost is a big advantage because of our tight budget."
"The short lead time for placing ads will be especially helpful, since we often change prices on short notice," you comment. "And it's great for targeting our local market."
Which of the following media options are you and Liam discussing?
radio
116
You have noticed that the most profitable diners at your restaurant are repeat customers, so you've developed a program to reward their loyalty. On every fifth visit, they will receive a free dessert and specialty coffee.
Which of the following statements about this reward program is accurate?
Advertising could be used to further the same promotional objective.
117
Personal selling would be the better choice if the company decides to pursue ? markets. Personal selling would be the better choice if the company's products are ? or ?
business
| customized/complex
118
Advertising would be the better choice if the company's products are ? standardized and ? in unit value.
highly
| low
119
As a new product grows and matures, ___ gains in importance relative to other promotional tools.
advertising
120
A product in early decline will typically experience reductions in
advertising & sales promo
121
When newly introduced, a product can benefit from both personal selling and ________ types of promotion.
non-personal (like adv.)
122
Personal selling and the sales process is closely linked to/aligned with:
AIDA concept
123
The four sales channels include all of the following EXCEPT:
a. telemarketing.
b. inside selling.
c. over-the-counter selling.
d. field selling.
e. executive selling.
e. executive selling.
124
The last step in the sales process is:
follow up
125
Professional sales representatives utilize a sequential sales process that typically includes seven steps:
(1) prospecting and qualifying
(2) approach
(3) presentation
(4) demonstration
(5) handling objections
(6) closing
(7) follow-up.
126
Which of the following basic managerial functions are performed by a sales manager?
a. Recruitment and Selection
b. Training
c. Organization
d. Supervision
e. Motivation
f. Compensation
g. Evaluation and control
All of them
127
What are the two major classifications of sales promotion?
Consumer-oriented and trade-oriented
128
As Hormel continues to innovate, it must make decisions about marketing communications and promotional mix elements that are most effective.
Decision 1
Hormel recently launched a line of ready-to-eat meals targeted to cancer patients who have fatigue, decreased appetite, and unintentional weight loss. The line is called Hormel Vital Cuisine and it's designed to specifically support the nutritional needs of cancer patients. The new products will be sold through grocery stores so they can be available to a wide number of customers. In addition to cancer patients, the products would also be appropriate for any consumer who needs superior nutrition in a ready-to-eat format.
Since this is a new product, Hormel must first gain shelf space in retail grocery stores and their primary objective is to convince grocery store chains and independent grocers to stock the items. The product managers have suggested two campaign options:
Option #1: A trade allowance program where grocers could receive 1 free case (12 items in a case) of ready-to-eat meals with every 10 cases ordered combined with personal selling to wholesale distributors
Option #2: A sweepstakes with the grand prize of a one-week vacation at a spa for cancer patients combined with a one-page full color advertisement in AARP Magazine which reaches over 47 million readers who are 50 or older.
Which campaign do you believe would be most effective?
Option #1: Trade allowance & personal selling
129
Decision 2
Hormel recently introduced Skippy Peanut Butter Bites ̶ available in double peanut butter, granola, and pretzel varieties. Hormel's target audience are busy consumers ̶ on-the-go families, young adults, or working adults who need a quick high-protein snack in between meals.
Due to Skippy's dominance in the peanut butter market, grocery stores readily adopted and created shelf space for the new product. However, Hormel has been disappointed with early sales results and seeks to entice consumers to purchase the Skippy Peanut Butter Bites as an alternative to protein bars or other high-protein snack options. The product managers have recommended two promotional campaign options:
Option #1: 15-second and 30-second advertising spots airing during NCAA football and basketball games on ESPN
Option #2: A contest for grocery store managers who can earn cash awards for selling the Skippy Peanut Butter Bites.
Which campaign do you believe would be most effective?
Option #1: Advertising on ESPN during NCAA football and basketball season
130
Decision 3
Hormel has crafted a line of pre-cooked meat items, called Fire Braised, which is aimed at the restaurant market. Each item is cooked to perfection with the highest quality meat and is fire braised and slow-cooked, which gives the appearance of visible carmelization. Hormel created this line to help restaurants gain efficiency and increase profitability by reducing the time to cook and prepare entrees. In addition to the benefits of improved productivity and profitability, a fully-cooked meat entree can also reduce the likelihood of food-borne illnesses common with raw meat products. While many restaurant chefs may favor raw ingredients, Hormel believes its Fire Braised line is superior and seeks to increase the number of restaurants who utilize the product. Compared to fresh meat, the Fire Braised line is more expensive. However, once the fresh product has been trimmed and cooked, the per-ounce price is only slightly higher.
The product managers have recommended two promotional campaign options:
Option #1: A trade show sampling program focusing on events targeted to restaurants and restaurant supply companies
Option #2: Radio advertisements on CNN's Sirius Radio channel and direct mail coupons to restaurant managers.
Which campaign do you believe would be most effective?
Option #1: Trade show program
131
You are a sales manager for a luxury automobile dealership where you have been employed since graduating from college. Your neighbor, who teaches a community college course on marketing, has asked you to make a presentation to his or her class as a guest speaker. After your lively presentation, you ask the students what they think is the main focus of personal selling.
Which of the student answers below demonstrates an understanding of the goals of this promotional tool relative to others?
Building relationships with customers that encourage them to come back.
132
Your sales work is more of a lifestyle than a job. It often involves complex customer situations and weeks of preparation and problem solving to help find workable solutions for those situations. You enjoy it because it enables you to travel to many places and interact with people continuously. However, much of your work involves careful follow-up after your customer visits.
Which personal sales channel have you chosen as a career?
field selling
133
Your temporary placement service needs to place personal selling personnel who use different communication channels according to the products they are contracted to sell. You presently have several positions to fill that require personnel experienced in various communication channels. You want to categorize the type of experience needed before you start calling your employees.
Choose the statement that inaccurately categorizes its job description to the type of personal selling communication channel it utilizes.
a. An insurance company needs sales representatives to place phone calls to prospective clients to sell renters' insurance over the phone. These sales representatives will use telemarketing.
b. A soft drink distributor needs bilingual representatives to take product orders when customers call. This involves field selling.
c. A retail outlet needs someone to sell auto repair supplies and parts to businesses and directly to customers. This outlet uses over-the-counter selling.
d. Sales representatives are needed to support technicians and purchasers on a continuous basis by phone, mail, and e-mail. They will utilize inside selling.
b. A soft drink distributor needs bilingual representatives to take product orders when customers call. This involves field selling.
134
The seven steps in the personal selling process should be aligned with the AIDA concept, which describes the consumer's buying decision process. Which of the following steps is misaligned with this concept?
a. Getting a prospect's attention is the goal of handling objections.
b. The closing of a sale brings action.
c. The presentation step generates interest and desire.
d. The demonstration step generates interest and desire.
a. Getting a prospect's attention is the goal of handling objections.
135
Your uncle is a highly successful Ford dealer. Unlike some other dealers, he trains his salespeople to strongly encourage prospects to test drive his cars. In terms of the AIDA concept, your uncle emphasizes:
generating interest and desire
136
For what main reason is personal selling the single biggest promotion expense in many firms?
Personal selling depends on direct contact with customers, which is costly as well as time consuming.
137
For the last ten years, you have been the leading sales representative in your firm. Most of the other sales reps are in awe of you because they say you make personal selling look so easy. You know better, however, because it has not always been easy nor have you always been so successful. You have learned over the years that there are some key rules of personal selling that must be followed consistently for success. One of the rookie sales reps just asked you for some tips on success in personal selling. You told him or her to give you a list of his or her thoughts on what it takes to be successful in personal selling and you will start the discussion there.
Select the true statement made by the rookie sales rep about successful personal selling tactics and approaches.
It's important to make sales presentations relevant and meaningful for the prospect.
138
A customer comes into your rental/retail outlet because he or she wants to purchase a 26-ton hydraulic log splitter. You have some models available for daily rental but they are not the latest model that your customer is looking for. There is a 26-ton model on the floor, but it would be most beneficial to show him or her firsthand the difference between your product and other cheaper models that are on the market. What demonstration options can you consider for your customer?
Select the viable demonstration option.
Allow the customer to rent a comparable unit for a day and waive the rental fee upon the return of the splitter on time and in good condition.
139
You want the salespeople on your staff to perform at their best, thus you want to make sure they are properly supervised. In determining span of control—the optimal ratio of sales representatives to sales managers—you will consider all of the following factors except:
a. each manager's ability
b. size of bonuses
c. extent of training
d. complexity of work
b. size of bonuses
140
You are the head of sales for an industrial machinery company. The approach you use to organizing your sales force is similar to that of many other B2B firms. This approach is:
product category specialization
141
You are the brand manager of a major grocery store chain and have a meeting planned with your boss. You want to convince him or her to allow you to run a coupon campaign to drive sales across the soup brands you manage. Your boss is not enthusiastic about coupon campaigns, but is willing to listen to a formal presentation from you explaining how and why your coupon campaign should be approved.
Select the talking point that you will use in your presentation.
Your coupons will encourage short-term purchases of larger quantities of soup.
142
The consumer sales promotions your company is offering has increased demand slightly, but you have come to realize that another way of putting your products in front of consumers is to incentivize resellers. You decide to investigate types of trade-oriented promotions to appeal to resellers and other market intermediaries. While these promotions will cost your company money, you believe the additional incentives to resellers will convince them to continue pushing your products.
Choose the trade-oriented promotion technique below with the incorrect description.
a. You believe that offering free samples to consumers in the flagship stores of your major resellers will convince these resellers to give your products extra shelf space.
b. You believe that if resellers are willing to feature your products prominently at the ends of shopping aisles, they would have a better chance of reaching their target market. You decide to provide resellers with special displays to stimulate sales of the promoted items. This illustrates POP advertising.
c. You believe that retailers will stock more of your products if you offer them one free case for every dozen cases they order. This is a type of trade allowance.
d. You believe that you can showcase your new product line by displaying it and demonstrating it to industry associates, so you plan to use trade shows.
a. You believe that offering free samples to consumers in the flagship stores of your major resellers will convince these resellers to give your products extra shelf space.
143
The typical firm spends more on ____ ____ sales promotion than on advertising and other sales promotion combined.
trade oriented
144
Local businesses, such as realtors or coffee shops, often give away T-shirts or mugs with their logo at community events. This is known as ____ _____ , a type of ____ ____ sales promotion.
specialty advertising
| consumer oriented
145
The focus of sales promotion was originally on ___ ____incentives but has now shifted to ___ ___ objectives.
short term
| long term
146
You have reviewed quarterly sales figures and are preparing a report on performance. This involves
eval & control
147
You are involved in the decision to make payouts based on the combination of salary and commission. This involves
Compensation
148
As part of your ? function, you are determining specified sales or profit targets that the firm expects your division salespeople to achieve.
eval & control
149
As part of your ? function, you are speaking to a group of college graduates about the opportunity for advancement, personal satisfaction, and independence afforded by sales.
Recruitment & selection
150
You are part of a managerial meeting to decide the number of retail account representatives who report to first-level sales managers. This involves
supervision
151
You are assigning sales teams to the company's major accounts, one of the tasks you perform as part of your
Organization function
152
You are allowing a new salesperson to shadow you daily for one week, fulfilling your ? function.
training
153
You are careful to create a positive work environment for your sales team and inspire confidence in them. This involves
motivation
154
You are a part of the interview team that follows the application screening process. This involves
Recruitment & selection
155
price elasticity
meas. of the responsiveness of purchasers & suppliers to price charges
156
Elasticity of Demand
the % change in the quantity of a product demanded divided by the % change in its price
157
when Elasticity of Demand is > 1
| when Elasticity of Demand is < 1
elastic
(customers for that product are sensitive to price change)
inelastic
(customers for that product are NOT sensitive to price change)
158
qualitative forecasting
techniques that rely on subjective data that reports opinions rather than using statistical data
159
Quantitative forecasting
techniques that rely on opinions that reports subjective data rather than using statistical data
IE: past sales, results from tests
160
Jury of executive opinion
qual. forecast: asses sales expectations of vari execs (internal source)
161
Delphi tech
qual forecast: gathers several rounds of feedback from experts inside and out the firm
162
Sales force composite
qual forecast: based on the combined sale estimates of the firm's sales ppl (internal source)
163
Survey of buyer intentions
Qual fc: that samples opinions among gr of current & potential customers concerning purchasing plans
164
test mkting
helps planners assess consumer responses to new-product offerings
165
trend analysis
quant fc: statistical analysis of historical sale patterns
166
Psychological pricing
belief that certain prices make products more appealing to buyers
IE: prestige and odd pricing
167
Product line pricing
firm sets a limited number of prices for a selection of merchandise (Used to satisfy customers who want dif price ranges while maintaining simplicity) Once set, difficult to change or add dif price product to the line
168
4 categories of retailers:
```
form of ownership
Shopping effort expended by customers
services provided to customers
product lines carried
(Aren't mutually exclusive)
```
169
form of ownership
easiest way to categorize retailers
| IE: chain stores and independent retailers
170
Shopping effort expended by customers
based on reasons consumers shop at certain retailers
| IE: convenience retailer, shopping stores, specialty retailers
171
services provided to customers
continuum bt self-service and full service retailers with a middle called SELF SELECTION (majority)
172
product lines carried
Specialty stores (single product w/ depth and variety), general merch (wide vari and lg number of of product lines w/ some depth), super mkt (sell mainly groceries but wide selection of others)
173
direct mkt
broad concept that includes direct mail, selling, online retail, response retailing, and auto merchandising.
174
direct response retailing
hybrid of physical retail, online retail, and direct mail promo
