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A patent owner has a 20-year monopoly to develop and use its new product, process, or
material.
If an individual is injured by a defective or unsafely designed product, the seller's legal
obligation to pay damages is called product liability.
F.O.B. 'shipping point" pricing simplifies the seller's pricing, but tends to reduce the
size of the seller's market.
Intensive distribution covers the broad area of market exposure between selective and
exclusive distribution.
When considering international markets, income is usually not an important
demographic dimension.
The simple trade era was a time when families traded or sold their 'surplus" output to
local distributors who resold these goods to other consumers or distant distributors.
Storing makes goods available where they're needed.
Shopping products that a customer sees as basically the same and wants at the lowest
price are heterogeneous shopping products.
To protect themselves from unpredictable events, most purchasing managers seek
several dependable sources of supply.
Just-in-time delivery systems typically shift more responsibility for PD activities to the
customer rather than the supplier.
Performance analysis looks for exceptions or variations from planned performance.
The cultural and social environment refers to where people live and their income.
As shown in the discussion of the 7-step approach, determining dimensions rarely
change.
Department stores keep growing in numbers, sales, and market share.
Shopping for a specialty product involves comparing the special features of different
brands.
Evaluating marketing effectiveness of an individual firm is difficult, but not impossible.
A marketing exchange is a single transaction between a firm and a customer, nothing
more.
Break-even analysis is particularly accurate because it recognizes that the demand curve
is downward sloping.
Women's changing role has created opportunities for marketing but also complications.
The main problem with integrated direct-response promotion is that it's nearly
impossible to determine if it's effective.
Learning is a change in a person's thought processes caused by prior experience.
Merchant wholesalers account for over 60 percent of all wholesale sales.
Using one or two demographic dimensions to describe market segments usually does
not provide enough detail for planning a marketing strategy.
The main difference between installations and accessory equipment is that accessories
are capital items while installations are expense items.
Channels used to retrieve products that customers no longer want are called collection
channels.
Ownership of patents, a familiar brand name, and financial strength are some of the
many resources of a firm that a manager should evaluate when searching for new
opportunities.
Although ships and barges are slow, they are the lowest cost method of freight
transporting, and are useful when speed is not critical.
Countries where gross national income (GNI) per capita is low do not offer any
opportunities for marketers.
A major advantage of average-cost pricing is that it assumes costs remain constant at
different levels of output.
GDP income measures can give the impression that people in less-developed nations
have more income than they really do.
In business markets, suppliers usually want close relationships with customers;
however, there's little benefit to the customer of having closer relationships with
suppliers.
With the contribution-margin approach to marketing cost analysis, all costs are
allocated to products, customers, or other categories.
Retailers who earn high profits generally use higher markups than retailers who have
low profits.
Because the Consumer Product Safety Commission has no power to force a product off
the market, safety is not a very important consideration in product design.
Achieving a measurable, direct response from specific target customers is the heart of
direct marketing.
In both supply chains and channels of distribution, the primary aim should be for each
firm to keep its own costs as low as possible.
The typical markup (percent) is the:
A. cost of an item divided by its selling pricetimes 100.
B. selling price minus the cost of the item, divided by the cost of the itemtimes 100.
C. selling price of an item, divided by its costtimes 100.
D. selling price minus the cost of the item, divided by the selling pricetimes 100.
E. selling price minus the cost of the item, divided by the average fixed costtimes 100.
Carol Lamb has lived in Centerville all her life. She owns a retail store that sells hobby
and craft supplies. She bought the store after working there for 7 years. Carol has just
been asked to head up the Retailers and Wholesaler Group of the Centerville Chamber
of Commerce. The most active chamber members in her group are described below:
Walden's Leather is part of a regional chain of stores that sells leather goodsmostly
men's and women's clothingwith the upscale Walden's brand name. Walden's primarily
relies on its own stores where knowledgeable salespeople offer great service. Walden
products are also sold, on a limited basis, in some fine department stores.
Publisher's Helper is a small business started by Audrey Yang that provides and stocks
display racks for paperback books and magazines. Most retailers welcome the service
Audrey provides, in part because she does her own research to determine which
paperback books and magazines sell best in Centerville.
Cuzco's is Centerville's alternative to Walmart. The store sells a wide variety of
merchandise. The company used to concentrate its product mix on small appliancesbut
now Cuzco's carries any product that it can sell profitably. Its low prices stimulate faster
turnovers and higher sales volumes.
Games Unlimited sells video games. Jamie Carraway, who owns the local store, signed
a contract with Games Unlimited and follows strict rules covering her store's operations
and the Games Unlimited marketing strategy. She pays that company a fee for
promotion it provides as well as commissions on her sales.
Johnson's Health and Beauty Supplies sells cosmetics and other health and beauty
products to retailers and salons throughout the greater Centerville area. It owns the
goods it sells to these retailer customers, and it provides all the wholesaling functions
they need.
Valu Grocer is an independent grocery store that belongs to an organization sponsored
by a large food wholesaler. The fifty stores grocery stores that share the Valu Grocer
name are linked by contracts that include basic operating procedures, storefront designs,
and joint promotion efforts.
Reddy and Sons sells equipment for several different manufacturers of plastic molding
in the Centerville area. It earns a commission from each manufacturer on the products it
sells for that manufacturer, but it does not take ownership of the equipment it sells nor
does it install the equipment.
Katrina's Salon started out as a low-status, low-price, low-margin hair salon 15 years
ago. After some success, the company moved into a nicer storefront, raised prices, and
now operates in the middle of the market.
Which of these businesses is a franchise?
A. Reddy and Sons
B. Cuzco's
C. Publisher's Helper
D. Games Unlimited
Quiet Drive Mufflers are sold only through Car Parts Now retailers. This retailer has
only one store in any given geographic area to minimize competition between stores.
Quiet Drive Mufflers uses _____ distribution.
A. intensive
B. ideal
C. selective
D. specialized
E. exclusive
Pioneering advertising is often needed during the ______________ stage of the product
life cycle.
A. sales decline
B. turbulence
C. market maturity
D. market growth
E. market introduction
______________ means target customers will generally choose a particular brand over
other brandsperhaps out of habit or past experience.
A. Brand nonrecognition
B. Brand preference
C. Brand insistence
D. Brand rejection
E. Brand recognition
Seeking a profit maximization pricing objective:
A. will help a firm to earn "all the traffic will bear."
B. requires some knowledge of the firm's demand curve to be implemented effectively.
C. with no competitors and an inelastic demand curve is likely to lead to "high" prices
in the short run.
D. may lead to a low penetration price.
E. All of these alternatives are correct.
Integrated direct-response promotion:
A. isn't necessary or useful when the channel of distribution involves intermediaries.
B. is usually part of a pushing effort rather than part of a pulling approach.
C. focuses on achieving a measurable, direct response from specific target customers.
D. All of these alternatives are correct for integrated direct-response promotion.
When a supermarket manager decides the amount to charge customers for home
delivery of grocery items, this is a decision about:
A. Product.
B. Place.
C. Promotion.
D. Price.
The Cereal Bar, a fast-food restaurant that sells breakfast cereal, wanted to see if a
different price for its Wild O's breakfast special would affect demand. So the marketing
manager used ________ when she tested two different prices at two different stores and
compared sales.
A. idea testing
B. segmentation research
C. experimental method
D. test-marketing
E. focus groups
"Competitive advertising" tries to:
A. develop selective demand rather than primary demand.
B. keep a product's name before the public.
C. promote the competitive products of an industry rather than a particular firm.
D. build demand for a product category.
E. create goodwill for a firm.
The legal obligation of sellers to pay damages to individuals who are injured by
defective or unsafely designed products is called:
A. breach of warranty.
B. product liability.
C. deficit accountability.
D. the rule of reason.
E. salutary responsibility.
In the U.S., the largest share of advertising expenditures is spent on:
A. direct mail.
B. radio.
C. TV.
D. billboards.
E. newspapers.
Which of the following area does not relate to "Place" in the Four Ps?
A. Market exposure
B. Managing channels
C. Kinds and locations of stores
D. Branding
E. Kinds of intermediaries
In the U.S., producers of games and toys spend about _____ percent of their sales
dollars on advertising.
A. 1
B. 4
C. 7
D. 10
E. 14
Which of the following U.S. marketing managers is about to make a serious mistake?
A. "We are targeting 50-59 year olds because we see this group as the fastest growing
age group over the next decade."
B. "We are refocusing on senior citizens, since they will be a growing market for many
years."
C. "We are developing special swimsuit designs for older women as that market is very
large and growing."
D. "Our company is shifting to international markets, where the population will
continue to grow at a more rapid rate."
E. None of these marketing managers seems headed for a mistake.
Using cost analysis to analyze the money being spent by a firm is analogous to using
____________ to analyze the money coming into the firm.
A. sales analysis
B. traditional accounting reports
C. performance analysis
D. the iceberg principle
E. TQM methods
"Advertising":
A. is less expensive than personal selling for reaching large and widespread target
markets.
B. is any paid form of nonpersonal presentation of ideas, goods, or services by an
identified seller.
C. is not the same as publicity.
D. is less flexible than personal selling.
E. All of these alternatives for "advertising" are correct.
Which of the following is NOT an example of how the technological environment
might affect marketing management?
A. A manufacturer uses a computer to send orders directly to a supplier's computer.
B. A retailer installs a computerized checkout scanner to replace a manual cash register
system.
C. A firm develops a substitute for saturated fat in manufactured foods.
D. All of these are examples of how the technological environment might affect
marketing management.
A limited-line store is to a single-line store as
A. a tennis shop is to a sporting goods store.
B. a paint store is to a drugstore.
C. quality is to price.
D. a CD and tape store is to a movie theater.
E. full service is to self-service.
_____ means offering a specific price for each possible job rather than setting a price
that applies for all customers.
A. Price lining
B. Odd-even pricing
C. Product bundle pricing
D. Bid pricing
E. Price leading
The "four Ps" of a marketing mix are:
A. Production, Personnel, Price, and Physical Distribution.
B. Promotion, Production, Price, and People.
C. Potential customers, Product, Price, and Personal Selling.
D. Product, Price, Promotion, and Profit.
E. Product, Place, Promotion, and Price.
Which of the following is NOT a Product-area decision?
A. Quality level.
B. Market exposure.
C. Instructions.
D. Packaging.
E. Branding.
Given its interest in the broad product-market for "ready-to-eat, health-conscious snack
foods," which of the following should the GoodHealth Foods Co. do FIRST?
A. Develop a plan for getting support from intermediaries.
B. Develop each of the four Ps at the same time.
C. Segment the product-market to try to identify homogeneous submarkets and select
an attractive target market.
D. Determine whether to compete on a price basis.
E. Decide what low-fat product or products it will offer.
Which section of a formal marketing plan for a new product is most directly related to
deciding how you want the target market to think about your product compared to
competitive products?
A. Packaging
B. Customer analysis
C. Differentiation and positioning
D. Implementation and control
E. Place
The value of a brand to its current owner or to a firm that wants to buy it is called
A. brand preference.
B. brand equity.
C. brand identity.
D. brand positioning.
E. brand reference.
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. In regard to 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."
National Printing Equipment ships its products:
A. based on freight-absorption pricing.
B. using uniform delivered pricing.
C. F.O.B. shipping point.
D. F.O.B. buyer's factory.
E. at no cost to the customer.
The AIO items used in life-style analysis include:
A. activities, intentions, and opinions.
B. attitudes, intentions, and opinions.
C. attitudes, income, and opinions.
D. activities, interests, and opinions.
E. attitudes, interests, and opinions.
A catalog merchant wants to build a new distribution center that will improve inventory
management, storage of products, shipping, and returns. The company develops a close
relationship with UPS, its main supplier of shipping services. UPS helps the catalog
merchant design its new distribution center so that it coordinates well with the shipping
processes at UPS. This arrangement reduces shipping costs and improves service to the
catalog merchant's customers. This situation is an example of:
A. Information sharing.
B. Negotiated contract buying.
C. Legal bonds.
D. Competition.
E. Relationship-specific adaptations.
A firm's "marketing mix" decision areas would NOT include:
A. Price.
B. Promotion.
C. Product.
D. Place.
E. Profit.
After buying an expensive new mobile phone, Kevin experiences ____ when he has
second thoughts and wonders if he made the right choice.
A. attitude adjustment
B. variance
C. conflict
D. dissonance
E. evaluation
Terry Harter is marketing manager for United Tools and Mike O'Reilly is the firm's
logistics manager. They work together to make decisions about how to get United's
hand and power tools to its customersa mix of manufacturing plants and final
consumers (who buy United tools at a hardware store). United Tools does not own its
own transport facilities and it works with wholesalers to reach its business customers.
Together, Harter and O'Reilly try to coordinate transporting, storing, and product
handling activities to minimize cost while still achieving the customer service level
their customers and intermediaries want. This usually requires that United keep an
inventory of most of its products on hand, but demand for its products is fairly
consistent over time so inventory is easy to manage.
Harter has identified four options for physical distribution systems she could use to
reach two of her key wholesalers, Ralston Supply and Ricotta Tool Co. The total cost
for each optionand the distribution service levels that can be achievedare as follows:
Ralston Supply expects a very high level (90 percent) of distribution customer service.
Ricotta Tool Co. is willing to settle for a 70 percent customer service level, even if that
means some products will occasionally be out of stock, if it gets products at a lower
price.
For its large retail hardware customers (like Home Depot), United regularly ships
smaller orders directly to individual stores or in some cases to the retail chain's
warehouses. Cross-country shipments usually go by rail while regional shipments
usually go by truck.
In designing the right physical distribution system, United Tools should primarily focus
on:
A. the inventory level that its current warehouse can support.
B. the lowest cost transportation method for each of its products.
C. where customers store their inventory.
D. the desired customer service level.
E. the physical characteristics of each product.
