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Use this information for question that refer to the Pricing 1 case. (WPI) case.
As a project for her marketing class, Emily Washington is researching how five local
businesses price their products. The following are brief sketches of what she has learned
about each company.
At Bella Computers, Emily has discovered that the company earned a 6 percent return
on investment this year and wants to increase it to 9 percent next year. To its retailer
customers, Bella Computers gives cash discount terms of 2/10, net 30. It also gives
retailers a 3% reduction on the invoice amount for advertising Bella products locally.
Bella gives retailers' salespeople 2% of the sale price for each Bella Computer they sell.
At Ross Pharmaceuticals, she learned that the company has invested heavily in
developing a new product that recently received a patent. Because cash is tight, the
company wants to achieve a rapid return on its investment. The new patented product is
badly needed in the market, so a very inelastic demand curve is expected.
Digital Imaging makes photographic prints for wedding photographers. It is very
concerned about competitor reactions to its pricing, so it has selected prices that will not
draw the attention of the competition and not start a price war. Digital Imaging offers
customers an 8% discount if their purchases exceed $20,000 a year.
Jack's One Hour Cleaners recently opened for business. The company invested a lot of
money in new equipment, and feels that it has to quickly get "at least 10% market share
to stay in the game." This need obviously influences the company's pricing decisions.
Jack's also plans to offer customers 20% discounts on any order over $20.
National Printing Equipment (NPE) produces equipment that helps to print newspapers
and magazines. The company sells directly to printers and through wholesalers. Its
salespeople negotiate prices with individual customers and often have to match
competitors' prices. NPE has a new product, the Gutenberg NP201, with some
competitive advantages now, but competitors are expected to follow quickly with
similar products. The new product is being introduced into a market with elastic
demand. Regarding freight charges for its equipment, NPE's invoice reads, "Seller pays
the cost of loading equipment onto a common carrier. At the point of loading, title to
such products passes to the buyer, who assumes responsibility for damage in transit,
except as covered by the transportation agency."
What is Jack's One Hour Cleaners' pricing objective?
A. profit oriented
B. target return
C. sales oriented
D. status quo oriented
E. none of these is a good answer
Answer:
Product class is based on the type of ____________.
A. customer
B. manufacturing process
C. marketing mix
D. marketing strategy
E. shopping strategy
Answer:
A high stockturn rate:
A. is only possible with a low markup percent.
B. is likely to result in low profits.
C. reduces the inventory investment and can improve profits.
D. increases the space needed for inventory.
E. None of these alternatives is correct.
Answer:
When Apple first introduced its iPhone in the U.S. market, it priced it at $600. Several
months later, Apple reduced the price to $400. And several months after that, it reduced
the price again to $200. What pricing policy was Apple using in its initial price
strategy?
A. Introductory price
B. Skimming price
C. Cash discount price
D. Penetration price
E. Everyday low price
Answer:
Which of the following is an example of a variable cost for a producer?
A. Depreciation
B. Managers' salaries
C. Rent
D. Packaging materials
E. Property taxes
Answer:
In the ____ era, families traded or sold their 'surplus" output to local distributors.
A. production
B. pure subsistence
C. sales
D. simple trade
E. marketing company
Answer:
For an intermediary, a sales promotion would mean all of the following except
A. deciding to stock a product.
B. providing a special display space.
C. expecting the promotion to go on forever.
D. giving the product extra sales emphasis.
E. assigning a larger budget to the product.
Answer:
If a firm targets business and organizational markets,
A. the geographic location of the customer is likely to be less important than in
segmenting consumer markets.
B. NAICS codes may help in segmenting manufacturers but not producers of services.
C. each customer may need to be treated as a different segment.
D. All of these alternatives are correct.
Answer:
Which of the following sources of buying information is likely to be trusted by the
greatest percentage of consumers?
A. Paid magazine ads
B. Brand websites
C. Personal recommendations
D. Online consumer opinions
E. Paid television ads
Answer:
The Robinson-Patman Act:
A. States that selling the same product to different consumers at different prices is
always illegal.
B. Makes it illegal for a firm to offer quantity discounts.
C. Requires that promotional allowances be made available to all of a firm's customers
on "proportionately equal" terms.
D. Requires that advertising allowances be made available to all buyers in equal dollar
amounts.
E. None of these alternatives is correct.
Answer:
Which of the following is LEAST likely to be a convenience product for most
consumers?
A. Peanut butter
B. Laundry detergent
C. Candy bar
D. Pair of jeans
E. Paper towels
Answer:
The Canyonlands Corporation is introducing a new product next month. To prepare for
the introduction, the marketing manager is having his sales force call on distributors to
explain the unique features of the new product, how the distributors can best promote it,
and what sales volume and profit margins they can reasonably expect. In addition,
Canyonlands is budgeting 2 percent of its estimated sales for magazine advertising.
This is an example of:
A. selective distribution.
B. a "pulling" policy.
C. exclusive distribution.
D. a "pushing" policy.
E. intensive distribution.
Answer:
Which of the following best illustrates communication "noise"?
A. Magazine sales reps telephone consumers to offer low-price subscriptions.
B. A TV ad is recorded at a higher volume than is used for most TV shows.
C. A political candidate rides through town in a car with a loud speaker-asking
pedestrians to vote for her.
D. None of these alternatives clearly illustrates "noise."
Answer:
A first step in evaluating marketing opportunities is to:
A. decide which markets the firm wishes to enter.
B. consider the objectives and resources of the firm.
C. hire a "futurist" as a marketing consultant.
D. estimate market and sales potentials.
E. find out if potential competitors are larger.
Answer:
Which of the following laws specifically makes illegal any price discrimination which
injures competition?
A. Magnuson-Moss Act
B. Robinson-Patman Act
C. Wheeler-Lea Act
D. FTC Act
E. Sherman Act
Answer:
All of the following observations concerning markups are true except
A. they guide pricing by intermediaries.
B. they are used by most retailers and wholesalers to set prices.
C. they are a cost-oriented price setting approach.
D. they are usually stated as dollar amounts.
E. they are related to selling price for convenience.
Answer:
The Clayton Act specifically aims at:
A. tying contracts.
B. price discrimination by manufacturers.
C. exclusive dealing contracts limiting a buyer's sources of supply.
D. all of these are correct.
Answer:
On his way to a GM dealership to pick up a new truck he has purchased, Ian Mann
hears a Ford ad that says that Ford trucks have more power than Chevy trucks. Ian
thought that the ad said that the Chevys had more power. This illustrates
A. selective perception.
B. learning.
C. selective retention.
D. reinforcement.
E. selective exposure.
Answer:
Once a suppler relationship has been established, purchases of the 'straight rebuy"
variety will most likely be transacted by:
A. a meeting with all buying center members.
B. a meeting with top executives only.
C. personal e-mails to the purchasing manager.
D. e-commerce computer systems.
E. phone.
Answer:
A reduction from list price given to retailers to get shelf space for a product is a:
A. shelf allocation.
B. brokerage allowance.
C. trade allowance.
D. slotting allowance.
E. push money allowance.
Answer:
Setting relatively high prices to suggest high-quality or high-status is:
A. odd-even pricing.
B. price lining.
C. leader pricing.
D. psychological pricing.
E. prestige pricing.
Answer:
In a firm operating as a total 'system" to implement the marketing concept:
A. the whole company is customer-oriented.
B. there are no departments.
C. product planning is under the control of the production or engineering departments.
D. the marketing manager directs and controls all company activities.
E. None of these is true.
Answer:
In the American Marketing Association's Statement of Ethics, which ethical value
stresses a firm's attempts to balance the needs of its buyers with the interests of sellers?
A. Honesty
B. Fairness
C. Responsibility
D. Citizenship
E. Openness
Answer:
Which of the following statements is TRUE regarding international opportunities in
marketing?
A. There is no need to consider international opportunities when the domestic market is
prosperous.
B. International trade is decreasing worldwide.
C. A product with slow sales growth in a domestic market may experience faster growth
in another country.
D. Only large firms can engage in international marketing.
E. All of these statements about international opportunities in marketing are TRUE.
Answer:
Persuading ads for a product work best in which stage of the adoption process?
A. Awareness
B. Interest
C. Evaluation and trial
D. Decision
E. Confirmation
Answer:
Byron Coffey is a sales rep for a producer of fiberglass roofing shingles. He tries to
persuade building materials wholesalers to switch from competing producers. Byron is:
A. an order taker.
B. an order getter.
C. a supporting salesperson.
Answer:
Use this information for question that refer to the Sunny Day Foods (SDF) Case.
For six months, Kim Wu has been working for Sunny Day Foods (SDF), a fast-growing
manufacturer of organic foods. After graduating college, she worked for four years as a
sales rep for a nationally known food company. But, she jumped at the chance when
SDF contacted her about becoming marketing manager for its breakfast foods division,
which sells dry cereals and a pancake mix.
Kim spent the first few months on the job trying to better understand SDF, its product
line, and marketing strategy. She reviewed the company's past marketing research,
commissioned new research, and talked to both consumers and retailers. Now, the CEO
of the company wants her thoughts on what the company's marketing strategy should be
for the next few years.
Her research indicates that among cereal customers, there are at least five segments of
customers who use SDF products.
a) One segment, the loyalists, has a strong preference for one or two of the SDF cereals.
These customers often go out of their way to visit a store with their favorite SDF cereal
and buy only that product at the store.
b) Another segment, the regulars, buys SDF cereals without much thought. For them it
is just part of their routine and, if you ask them why they pick the cereal, they'd say it's
just a habit.
c) A third segment, the deal prone, sees SDF cereals as just another organic cereal. They
view all organic cereals as pretty much the same and buy whichever brand seems to
offer the best deal that week.
d) A fourth segment, the politicos, consists of former buyers of SDF cereals. A few
years ago the company took a strong stand in a presidential race-and these customers
resented it. Now, they boycott all SDF foods because of that incident.
e) A fifth segment, SDF who?, is made up of consumers who buy organic cereals but
who don't have much awareness of particular organic brand names.
In reviewing how SDF currently brands its products, Kim sees that it is using several
different approaches. The Sunny Day Foods brand is used on most products the
company sells. But a few years ago the company brought out an instant organic oatmeal
with the Hot n Healthy name. SDF also makes cereal sold by a health food chain; the
package for that chain uses the store's own name, Nature's Foods, as the brand name for
the cereal.
Which product class best describes how loyalists view SDF cereals?
A. Impulse product
B. Shopping product
C. Specialty product
D. Regularly unsought product
Answer:
The different rates of population growth are important to marketers for all of the
following reasons except
A. sudden growth in one area may create a demand for many new shopping centers.
B. retailers in growing areas face tougher competition for a smaller number of
customers.
C. marketers always look for fast-growing markets.
D. in growing areas, demand may increase so rapidly that profits may be good even in
poorly planned facilities.
Answer:
The Federal Trade Commission Act of 1914 focuses on:
A. mergers between competitors.
B. unreasonable practices related to product warranties.
C. unfair methods of competition.
D. tying contracts.
E. attempts to monopolize.
Answer:
Which of the following is(are) TRUE?
A. A 'service mark" is to a service what a "trademark" is to a physical good.
B. "Trademark" refers to all means of product identification.
C. A "trademark" must be attached to a product to be legally protected.
D. "Trademarks" and 'service marks" must be words.
E. None of these alternatives is TRUE.
Answer:
When customers have consistently positive experiences with a brand, or they hear good
things from the firm's promotion or other customers, we can expect that customers will
_______ that brand name.
A. mistrust
B. demand
C. trust
D. tolerate
E. dislike
Answer:
