Quiz Questions Ch 10 through 14

Question 1

Contacting potential customers, promoting products, and seeking orders would be an example of a(n) __________ function that intermediaries perform.

Answer 1

Transactional - Intermediaries make possible the flow of products from producers to buyers by performing three basic functions: (1) a transactional function that involves buying, selling, and risk taking because they stock merchandise in anticipation of sales; (2) a logistical function that involves gathering, storing, and dispersing of products; and (3) a facilitating function, which assists producers in making products and services more attractive to buyers. See Figure 12-2 in the textbook.

Question 2

Adding a wholesaler to the marketing channel for consumer products is most common for

Answer 2

Low-cost, low unit value items - Adding a wholesaler is most common for low-cost, low-unit value items that are frequently purchased by consumers such as candy, confectionery items, and magazines.

Question 3

Most of Lands’ End’s revenues come through catalog and Internet sales, but it also operates over a dozen retail stores and factory outlets. This makes Lands’ End an example of a(n) __________ marketer.

Answer 3

Multichannel - Multichannel marketing is the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online.

Question 4

Meyers, Inc. is an American company that manufactures and distributes coffee products in the U.S. Because of the popularity of its products, Meyers Inc. wants to enter new global markets. As a result, the firm decided to develop an international distribution network as soon as possible. The most efficient distribution arrangement in terms of cost and time for Meyers, Inc. would be to use __________.

Answer 4

A strategic channel alliance - Strategic channel alliances are popular in international marketing because developing marketing channel relationships are expensive and time consuming.

Question 5

Kroger supermarkets operate manufacturing facilities that produce everything from aspirin to cottage cheese for sale under the Kroger label. This example shows that Kroger uses

Answer 5

Backward integration - Backward integration is the practice of retailers owning a manufacturing operation.

Question 6

A wholesaler-sponsored voluntary chain refers to

Answer 6

A contractual relationship between a wholesaler and small independent retailers to standardize and coordinate buying, merchandising, and inventory management efforts.

Question 7

Customers currently link to Cisco’s website to configure, price, and order its networking equipment. Cisco then sends orders back out across the Internet to producers and assemblers including Celestica, Flextronics, and Solectron. Products are built and tested to Cisco standards, sometimes with procedures run remotely by Cisco. Most are then drop-shipped to buyers, untouched by human hands on Cisco’s payroll. The individuals who monitor these transactions and make sure each is performed in a cost-effective and timely fashion are engaged in __________.

Answer 7

Supply chain management - Supply chain management is the integration and organization of information and logistics activities across firms in a supply chain for the purpose of creating and delivering goods and services that provide value to consumers.

Question 8

Suppose a large retail chain is considering increasing the number of distribution centers that serve its retail stores from 6 to 20. If the number of suppliers, retail outlets, and customers remain unchanged, which of the following statements accurately describes what will happen as a result of this expansion?

Answer 8

Total inventory in the warehouse system will increase - As the number of warehouses increases, inbound transportation costs increase and outbound ones decrease. Since the average inventory per warehouse falls, stockouts will not increase. Extra safety stocks must be carried at each warehouse so total inventory in the system increases. Stockouts will decrease due to expanded inventories.

Question 9

Which of the following customer-service components is likely to be most critical for Honda when it purchases windshield wiper blades as a component for automobiles it manufactures?

Answer 9

Dependability and on-time delivery - The production schedule based on on-time parts availability is the critical factor. Late deliveries can shut down the production line.

Question 10

Total logistic cost factors in a supply chain include transportation, order processing, stockout, inventory, returns, and __________.

Answer 10

Warehousing and materials handling - Important total logistic cost factors in a supply chain include transportation, warehousing and materials handling, order processing, stockout, and inventory management. See Figure 12-9 in the textbook.

Question 11

During the introduction stage of the product life cycle, the place element of the marketing mix is highly involved with

Answer 11

Convincing channel intermediaries to carry the product. - In the introduction stage of the product life cycle, it is often difficult to get retailers and distributors to carry new products. See Figure 10-1 in the textbook.

Question 12

Domino’s ran an advertisement saying that in a taste test its oven-baked sandwiches beat Subway 2-to-1. With this ad, Domino’s was attempting to stimulate __________ demand.

Answer 12

Selective - Selective demand is the preference for a specific brand, whereas primary demand is the desire for the product class. As competitors launch their own products and the product progresses along its life cycle, company attention focuses on creating selective demand.

Question 13

Profit margins often peak as competitors enter the market, and aggressive pricing strategies take hold. This happens during which stage of the product life cycle?

Answer 13

Growth - The growth stage of the product life cycle is characterized by: (1) a switch to selective demand; (2) a growing proportion of repeat purchases to initial purchasers; (3) the addition of new or modified product features; and (4) peaking profit margins due to increased price competition from more competitors that have entered the market.

Question 14

DVD players would MOST LIKELY be in the __________ stage of the product life cycle.

Answer 14

Maturity - The maturity stage is characterized by a slowing of total industry sales or product class revenue. Numerous product classes and industries are in the maturity stage of their product life cycle today. These include carbonated soft drinks and DVD players.

Question 15

Harvesting is an option for a product in the __________ stage of its product life cycle.

Answer 15

Decline - Products in the decline stage tend to consume a disproportionate share of management and financial resources relative to their future worth. A company will follow one of two strategies to handle a declining product: deletion or harvesting. Harvesting is when a company retains the product but reduces marketing costs. The product continues to be offered, but salespeople do not allocate time in selling nor are advertising dollars spent. The purpose of harvesting is to maintain the ability to meet customers’ requests

Question 16

An extended introduction stage of the product life cycle occurs for which type of product?

Answer 16

High learning - A high learning product is one for which significant education of the customer is required, which results in an extended introductory stage of the product life cycle.

Question 17

__________ begins with new-product purchases first by innovators, and then by early adopters.

Answer 17

Diffusion of innovation - Figure 10-4 in the textbook shows the concept called the diffusion of innovation. Not all consumers rush to buy a product in the introductory stage. The shapes of the product life cycle curves indicate that most sales occur after the product has been on the market for some time—slowly diffusing or spreading through the population. Some people are attracted to a product early (first the innovators, then the early adopters) during the introduction and early growth stages of a product’s life cycle.

Question 18

The person responsible for managing the marketing efforts for a close-knit family of products or brands is called the __________ or __________.

Answer 18

Product manager; brand manager

Question 19

The Florida Orange Growers Association advocates drinking orange juice throughout the day rather than for breakfast only. It is primarily using which of the following market modification strategies?

Answer 19

Increasing use by existing customers - With market modification strategies, a company tries to find new customers, increase a product’s use among existing customers, or create new use situations. Promoting more frequent usage has been a strategy of the Florida Orange Growers Association, which advocates drinking orange juice throughout the day rather than for breakfast only.

Question 20

Which of the following triggers a product repositioning action?

Answer 20

Reacting to a competitor - One reason to reposition a product is because a competitor’s entrenched position is adversely affecting sales and market share.

Question 21

Quaker Oats makes the FDA-approved claim that oatmeal, as part of a low-saturated-fat, low-cholesterol diet, may reduce the risk of heart disease. It is primarily using which of the following product repositioning strategies for this product?

Answer 21

Catching a rising trend - Quaker Oats is catching a rising trend among consumers worried about heart disease and taking steps to prevent it. Finding new users is not a repositioning strategy, but a market modification strategy. Changing the value requires changing the product.

Question 22

Michelin has added a “run-flat” feature to its higher-priced tire lines so that they can travel up to 50 miles at 55 miles per hour after suffering total air loss. The marketing strategy Michelin used is called

Answer 22

Trading up - A trading up strategy, part of an overall product repositioning strategy, involves adding value to the product (or line) through additional features or higher-quality materials. Michelin added a “run-flat” feature to its higher-priced tire lines.

Question 23

When a brand name cannot be spoken, it is considered a __________.

Answer 23

Logo

Question 24

When selecting a brand name, it should: (1) suggest product features; (2) be memorable, distinctive and positive; (3) fit the company or product image; (4) have no legal or regulatory restrictions; and (5) __________.

Answer 24

Be simple and emotional - The five basic criteria for selecting a brand name are that it should: (1) suggest product benefits; (2) be memorable, distinctive and positive; (3) fit the company or product image; (4) have no legal or regulatory restrictions; and (5) be simple and emotional.

Question 25

All products sold by the Tabasco Company use the Tabasco brand. This is an example of __________.

Answer 25

Multiproduct branding - With multiproduct branding, a company uses one name for all of its products.

Question 26

The seven Ps of services refer to an expanded marketing mix for services that includes the four Ps (product, price, place, and promotion) as well as

Answer 26

People, physical environment, and process - An expanded marketing mix for services that includes the four Ps (product, price, place, and promotion) as well as people, physical environment, and process. These comprise the seven Ps of services marketing.

Question 27

Which of the following statements concerning the pricing of services is most accurate?

Answer 27

Service pricing plays a role in balancing consumer demand for services. - Price can be used in capacity management for services with variations in demand (such as airlines and hotels).

Question 28

Off-peak pricing refers to

Answer 28

Charging different prices during different times of the day or during different days of the week to reflect variations in demand for the service.

Question 29

Nonprofit service organizations use them, but public service announcements (PSAs)

Answer 29

Are under the control of the medium where aired, not the organization. - The airing of a PSA is under the control of the medium, not the organization.

Question 30

The acronym CEM in services marketing stands for __________.

Answer 30

Customer experience management

Question 31

From a marketing viewpoint, price is __________ exchanged for the ownership or use of a product or service.

Answer 31

The money or other considerations (including other products and services)

Question 32

Gem Cakes sells designer cupcakes for $4 each. Each cupcake costs $1 for the ingredients and wrapper. Monthly expenses for the shop include the following: rent is $1,000; utilities are $200; an advertisement in the local paper is $200; and wages are $4,000 per month. How much monthly profit would be expected if the business sells 6,000 cupcakes each month?

Answer 32

$12,600 - Profit = Total revenue (TR) – Total cost (TC). Profit = [(Unit price × Quantity sold) – (Fixed cost + Variable cost)]. Profit = [$24,000 – ($5,400 + $6,000)] = $12,600. The monthly variable cost is the raw material to make each cupcake ($1) times the number of cupcakes sold (6,000) or = $6,000. The monthly fixed costs are $1,000, $200, $200, and $4,000 = $5,400. The profit is $12,600 for each month.

Question 33

Which of the four pricing approaches would a new-product manager be using if he or she is deciding whether to adopt a penetration or a skimming pricing strategy?

Answer 33

Demand-oriented pricing approach - Skimming and penetration pricing strategies are demand-oriented approaches. See Figure 11-2 in the textbook.

Question 34

Bijan’s in New York City offers a five-piece set of crocodile luggage for $55,000. This is MOST LIKELY an example of __________ pricing.

Answer 34

Prestige - Prestige pricing involves setting a high price so quality- or status-conscious consumers will be attracted to the product and buy it.

Question 35

What is target pricing?

Answer 35

Estimating the price that ultimate consumers would be willing to pay for a product and then working backward through markups taken by retailers and wholesalers to determine what price they can charge wholesalers for the product

Question 36

Jane Westerlund owns a picture-framing shop, The Caplow Co. Her price must cover her costs for a typical framed picture, which consists of $8 for glass, $2 for matting, $15 for the frame, and $35 for the labor involved. She must also cover monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $300 for advertising, and $3,500 for her salary. The Caplow Co. wants a target profit of $55,000 based on a volume of 1,000 picture frames sold so it can expand the number of stores. What price should Jane Westerlund charge for a picture frame?

Answer 36

$120 - Target profit pricing is when a firm sets an annual target of a specific dollar volume of profit. The profit equation is used to calculate this profit amount, where Profit = Total revenue − Total cost; Profit = (Unit price × Quantity sold) − (Fixed cost + Variable cost). Based on the data provided: Profit = $55,000 = 1,000P – [$5,000 + ($60 × 1,000] = $120.

Question 37

Vending machines are a good example of the application of which type of competition-oriented pricing approach?

Answer 37

Customary pricing - Customary pricing for a product is a method of pricing based on tradition, a standardized channel of distribution, or other competitive factors. This is the situation with vending machines.

Question 38

Newsweek ran a pricing experiment that involved setting different newsstand prices for its magazine in different cities and recording the number of units sold. After adjusting for factors like the population of the different cities, Newsweek could plot these prices and units sold in a graph called a(n)

Answer 38

Demand curve - A demand curve is a graph that relates the quantity sold and price, showing the maximum number of units that will be sold at a given price. See Figure 11-3 in the textbook.

Question 39

Which of the following statements about price elasticity of demand is most accurate?

Answer 39

Items requiring large cash outlays relative to a consumer’s disposable income are price elastic. - Price elasticity of demand is determined by a number of factors. The more substitutes a product has, the more likely it is to be price elastic. Seasonal demand for items like snowblowers does impact price elasticity of demand since it is the product, not the time period when sold that is the key issue. Items that require a large cash outlay compared with a person’s disposable income are price elastic. With inelastic demand, reducing price decreases total revenue.

Question 40

Laura Hillenbrand’s book Unbroken, a WWII story of survival and resilience, was a New York Times bestseller in nonfiction for years. During its first year after publication, it often sold 25,000 copies a week in hardcover, at $27 apiece. The publisher’s costs were only about $5 a book. What is the total weekly revenue obtained during these weeks?

Answer 40

$675,000 - Total revenue = Unit price × Quantity sold. Total revenue is equal to the price of $27 × 25,000 copies sold, or $675,000. Costs are irrelevant to calculating total revenues.

Question 41

The Precision Writing Instruments Company makes a high-end pen known as the Cordova. Materials cost per pen is $6. Labor cost per pen is $5. Production overhead is $1,000,000. Advertising and promotion is $1,000,000. What are the total costs for sales of 500,000 units of the Cordova design?

Answer 41

$7,500,000 - Total costs = Fixed costs + Variable costs (or Q × UVC) = [($1,000,000 + $1,000,000)] + (500,000 units × $11/unit) = $2,000,000 + $5,500,000 = $7,500,000.

Question 42

Which of the following would be an example of a variable cost for a publication like SHAPE magazine that is targeted to young women seeking a healthier lifestyle?

Answer 42

The paper and ink for printing the magazine - The amount of paper and ink vary directly with the number of magazines produced and, hence, are variable costs.

Question 43

A break-even point refers to

Answer 43

The point at which total revenue and total cost are equal.

Question 44

North Safety Products manufactures butyl gloves that offer permeation resistance to gas or water vapors for workers that use dangerous chemicals like ketones. The company has fixed costs of $10 million for its butyl glove production and unit variable costs of $5 per pair. If the company charges $15 per pair, how many pairs of gloves must it sell to break even?

Answer 44

1,000,000 pairs - The break-even point is calculated as fixed costs divided by (price minus unit variable costs) or [$10,000,000 ÷ ($15 − $5)] = 1,000,000 pairs.

Question 45

Which of the following statements about profit objectives is most accurate?

Answer 45

Profit objectives are often measured in terms of return on investment. - Profit objectives in a firm are frequently measured in terms of return on investment. Firms that use a maximizing current profit objective are taking a short-term view. A target return on expense, market share, and unit volume are not profit objectives.

Question 46

Low-cost provider Allegiant Air began operations to fly into Long Beach in 2010, and into Bakersfield in 2011. It has since abandoned both efforts because rival carriers responded to its plans with very aggressive price cuts that drove it out of these two markets. The other carriers could be accused of using __________ pricing.

Answer 46

Predatory - Predatory pricing is the practice of charging a very low price for a product with the intent of driving competitors out of business, such as was the case when rival airlines drove out Allegiant Air from the Long Beach and Bakersfield markets.

Question 47

Guitar Center recently instituted “no haggle” selling prices, much to the dismay of some musicians who enjoyed bargaining and getting a better deal than a novice. But now, no matter which Guitar Center store a customer visits, that person will be quoted the same price for the same guitar. This is an example of a __________ policy.

Answer 47

One-price - A one-price policy, also called fixed pricing, is setting one price for all buyers of a product or service. The idea is simple: no matter which Guitar Center store a customer might visit, a given model of guitar is priced the same.

Question 48

A(n) __________ involves setting different prices for products and services depending on individual buyers and purchase situations in light of demand, cost, and competitive factors.

Answer 48

Flexible-price policy - A flexible-price policy involves setting different prices for products and services depending on individual buyers and purchase situations in light of demand, cost, and competitive factors.

Question 49

If you buy one pair of UVex Clear UVExtreme safety eyewear in the winter, the cost is $7.40. But if you buy 10 pairs in a single purchase, the price per pair is reduced to $6.85, a total savings of $5.50. This is an example of a

Answer 49

Quantity discount - To encourage customers to buy larger quantities of a product, firms at all levels in the channel of distribution offer quantity discounts, which are reductions in unit costs for a larger order.

Question 50

Functional discounts are offered to resellers in the marketing channel on the basis of the marketing activities they are expected to perform in the future and

Answer 50

Where they are in the channel. - To reward wholesalers and retailers for marketing functions they will perform in the future, a manufacturer often gives trade, or functional discounts. These reductions off the list or base price are offered to resellers in the marketing channel on the basis of (1) where they are in the channel and (2) the marketing activities they are expected to perform in the future.

Question 51

Pear Tree offers a wide variety of personalized cards, announcements, and stationery, available through its interactive website. Which utility does Pear Tree provide with its ability to customize its products?

Answer 51

Form - To consumers, the value of retailing is in the form of utilities provided. These include time, place, form, and possession utility. Personalization enhances the product’s form utility. See Figure 13-1 in the textbook.

Question 52

There are two general types of franchises: product-distribution and __________ franchises.

Answer 52

Business-format - There are two general types of franchises: business-format franchises, such as McDonald’s, and product-distribution franchises, such as a Ford dealership.

Question 53

Merchandise line refers to

Answer 53

The number of different types of products a store carries and its relative size of the product assortment.

Question 54

Specialty discount outlets focus on one type of product, such as office supplies (Staples) or electronics (Best Buy), at very competitive prices. They are referred to as __________ because they often dominate the market.

Answer 54

Category killers - Specialty discount outlets focus on one type of product, such as electronics and appliances (Best Buy), office supplies (Staples), or books, CDs, and DVDs (Barnes and Noble) at very competitive prices. These outlets are referred to as category killers because they often dominate the market in which they operate.

Question 55

How are television home shopping channels trying to attract new audiences?

Answer 55

By using young celebrities like the Kardashians and LeAnn Rimes - In the past, television home shopping programs have attracted mostly 40- to 60-year-old women. To begin to attract a younger audience, QVC has invited celebrities onto the show. For example, Kim, Khloe, and Kourtney Kardashian have been hosts selling their apparel line. Broadcasting live acts such as LeAnn Rimes also help attract new customers.

Question 56

Direct selling is likely to grow in markets

Answer 56

Outside the United States. - Growth in the direct selling industry is the result of two trends. First, many direct selling retailers are expanding into markets outside of the United States. Second, a number of companies are using direct selling to reach consumers who prefer one-on-one customer service and a social shopping experience rather than online shopping or big discount stores.

Question 57

Original markup refers to

Answer 57

The difference between the retailer’s cost and the initial selling price.

Question 58

T.J. Maxx and Ross stores offer customers the ‘sport’ of searching the racks for great deals on brand name products. Both retailers use a(n) __________ retailing strategy.

Answer 58

Off-price - Off-price retailing involves offering name-brand merchandise at lower than regular retail prices.

Question 59

A power center refers to

Answer 59

A huge strip mall with multiple anchor (or national) stores.

Question 60

Which type of outlet is MOST LIKELY in the maturity stage of the retail life cycle?

Answer 60

Supermarkets - According to Figure 13-5, supermarkets are in the maturity stage of their retail life cycle.

Question 61

Encoding refers to

Answer 61

The process of having the sender transform an idea into a set of symbols during the communication process.

Question 62

Mass selling refers to

Answer 62

Advertising, sales promotions, and public relations activities that are used with groups of prospective buyers. - Advertising, sales promotion, and public relations—are often said to use mass selling because they are used with groups of prospective buyers. In contrast, personal selling uses customized interaction between a seller and a prospective buyer.

Question 63

Which of the following is an inherent weakness of advertising?

Answer 63

It is difficult to receive good feedback - Advertising has some disadvantages. The costs to produce and place a message are significant, and the lack of direct feedback makes it difficult to know how well the message was received. See Figure 14-2 in the textbook.

Question 64

The Ford Focus sweepstakes is an example of which type of promotion?

Answer 64

Sales promotion - Sales promotion is a short-term inducement of value offered to arouse interest in buying a product or service. A contest like the Ford Focus sweepstakes is an example of a sales promotion.

Question 65

Gen Y consumers, born between 1977 and 1994, use a variety of media to deliver and receive messages. The practice by firms to integrate cell phones into their IMC programs is called

Answer 65

Mobile marketing - Marketers use mobile marketing (see the title of the Marketing Matters box) to communicate with Gen Y consumers through their cell phones directly or via a social network such as Twitter or Facebook. This is accomplished through applications or “apps” made popular by Apple’s iPhone and iPad or smartphones that use Google’s Android operating system.

Question 66

What is the promotional objective of the decline stage of the product life cycle?

Answer 66

Phase out - The decline stage of the product life cycle is usually a period of phase-out for the product, and little money is spent in the promotional mix. See Figure 14-3 in the textbook.

Question 67

During the planning stage of an IMC program, a firm will identify the target audience, specify the advertising objectives, __________, select the right promotional tools, and design the promotion.

Answer 67

Set the budget - During the planning phase of an IMC program, a firm will identify the target audience, specify the promotion objectives, set the budget, select the right promotional tools, design the promotion, and schedule the promotion. See Figure 14-5 in the textbook.

Question 68

The third stage in the hierarchy of effects is __________.

Answer 68

Evaluation - The five stages in the hierarch of effect are: awareness, interest, evaluation, trial, and adoption.

Question 69

The __________audit analyzes the internal communication network of the company; identifies key audiences; evaluates customer databases; assesses messages in recent ads, public relations releases, packaging, video news releases, signage, sales promotion pieces, and direct mail; and determines the expertise of company and agency personnel.

Answer 69

IMC - The IMC audit analyzes the internal communication network of the company; identifies key audiences; evaluates customer databases; assesses messages in recent ads, public relations releases, packaging, video news releases, signage, sales promotion pieces, and direct mail; and determines the IMC expertise of company and agency personnel.

Question 70

Factors such as differences in the availability of credit, the need for improved reliability and security in postal systems, and government regulations represent important challenges for __________ in the global market.

Answer 70

Direct marketing - Direct marketing faces several challenges in global markets. Several countries have requirements for mandatory “opt-in.” The mail, telephone, and Internet systems in many countries are not as well developed as they are in the United States. In addition the availability of credit and credit cards varies throughout the world, creating the need for alternatives such as C.O.D.