Chapter 9—Product Concepts

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** ASSESSMENT EXAM QUESTIONS – THESE ITEMS WILL DEFINITELY APPEAR ON THE FINAL EXAM **

CHAPTER 1

|1-113. |Marketing will not happen unless: |

|A) |e-commerce is flourishing. |

|B) |facilitators are present to simplify exchange. |

|C) |middlemen are present to facilitate exchange. |

|D) |two or more parties each have something they want to exchange for something else. |

|E) |an economy is market-directed rather than planned. |

|1-120. |MACRO-marketing: |

|A) |is a social process. |

|B) |tries to overcome "discrepancies of quantity" and "discrepancies of assortment." |

|C) |tries to effectively match supply and demand. |

|D) |tries to overcome the many separations between producers and consumers. |

|E) |All of the above are true statements. |

|1-204. |The three basic ideas in the "marketing concept" are: |

|A) |customer satisfaction, resource efficiency, sales maximization. |

|B) |customer satisfaction, total company effort, sales growth. |

|C) |resource efficiency, sales growth, profit maximization. |

|D) |customer satisfaction, marketing manager as chief executive, profit. |

|E) |customer satisfaction, total company effort, profit. |

CHAPTER 2

|2-57. |A marketing strategy specifies: |

|A) |a marketing mix. |

|B) |a target market and a related marketing mix. |

|C) |a target market. |

|D) |the resources needed to implement a marketing mix. |

|E) |both A and D. |

|2-64. |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 |

|2-101. |A "marketing plan" is: |

|A) |a marketing program. |

|B) |a marketing strategy. |

|C) |a marketing strategy--plus the time-related details for carrying it out. |

|D) |a target market and a related marketing mix. |

|E) |a plan that contains the necessary operational decisions. |

CHAPTER 3

|3-81. |Market segmentation: |

|A) |means the same thing as marketing strategy planning. |

|B) |assumes that most submarkets can be satisfied by the same marketing mix. |

|C) |is the same thing as positioning. |

|D) |tries to identify homogeneous submarkets within a product-market. |

|E) |All of the above are true. |

|3-135. |"Positioning" is a marketing management aid which refers to: |

|A) |a product's ability to provide both immediate satisfaction and social responsibility. |

|B) |how customers think about proposed and/or present brands in a market. |

|C) |a firm's ability to distribute products through middlemen who are in the right position to reach target customers. |

|D) |how a firm approaches customer relationship management. |

|E) |all of the above. |

CHAPTER 4

|4-94. |Rising costs and inflation are part of the uncontrollable ______________ environment. |

|A) |technological |

|B) |economic |

|C) |competitive |

|D) |legal |

|E) |cultural and social |

|4-135. |Maria Lopez runs an errand service from her home. For a fee, she will pick up dry cleaning, buy groceries, plan small parties, |

| |and do errands for her customers. The demand for this type of service has increased because of changes in the |

|A) |cultural/social environment. |

|B) |legal environment. |

|C) |technological environment. |

|D) |political environment. |

|E) |none of the above. |

CHAPTER 5

|5-84. |As the owner of a videotape rental store, Katy Hilton has an income of $72,000. She pays $30,000 per year in taxes and another |

| |$22,000 per year in grocery bills, house mortgage, and car payment. Last year she spent an additional $4,000 on a two-week |

| |vacation at a Club Med in Cancun, Mexico. What was Katy's discretionary income last year? |

|A) |$20,000. |

|B) |$4,000. |

|C) |$42,000. |

|D) |$26,000. |

|E) |$50,000. |

|5-180. |Which of the following in NOT one of the levels of consumer problem solving discussed in the text? |

|A) |Dissonance problem solving |

|B) |Routinized response behavior |

|C) |Extensive problem solving |

|D) |Limited problem solving |

|E) |None of the above, i.e. all four are discussed. |

CHAPTER 6

|6-77. |In comparison to the buying of final consumers, the purchasing of organizational buyers: |

|A) |is strictly economic and not at all emotional. |

|B) |is always based on competitive bids from multiple suppliers. |

|C) |leans basically toward economy, quality, and dependability. |

|D) |is even less predictable. |

|E) |Both A and C are true statements. |

|6-88. |Lolita King, director of procurement at Soho Glass, Inc. must approve every purchase order, and Tom Glendinnig, purchasing |

| |manager, must authorize any sales rep who wants to talk to a Soho employee. Lolita and Tom are acting as _____ and _____, |

| |respectively. |

|A) |decider and gatekeeper |

|B) |influencer and user |

|C) |gatekeeper and influencer |

|D) |buyer and decider |

|E) |user and gatekeeper |

CHAPTER 7

|7-78. |Often the most difficult step in the marketing research process is: |

|A) |analyzing the situation. |

|B) |defining the problem. |

|C) |getting problem-specific data. |

|D) |interpreting the data. |

|E) |All of the above. |

|7-87. |Data that has already been collected or published is: |

|A) |useful data. |

|B) |secondary data. |

|C) |primary data. |

|D) |free data. |

|E) |rarely--if ever--useful for marketing decision making. |

CHAPTER 8

|8-90. |"Product" means: |

|A) |all the services needed with a physical good. |

|B) |a physical good with all its related services. |

|C) |the need-satisfying offering of a firm. |

|D) |all of a firm's producing and distribution activities. |

|E) |a well-packaged item with a well-advertised brand name. |

|8-117. |Which of the following is NOT one of the consumer product classes discussed in the text? |

|A) |Unsought products |

|B) |Innovative products |

|C) |Shopping products |

|D) |Convenience products |

|E) |Specialty products |

|8-167. |Which of the following is NOT one of the text's business product classes? |

|A) |Raw materials |

|B) |Component parts and materials |

|C) |Specialty products |

|D) |Professional services |

|E) |Installations |

CHAPTER 9

|9-68. |Which of the following is NOT one of the text's product life cycle stages? |

|A) |Market maturity |

|B) |Market penetration |

|C) |Market introduction |

|D) |Sales decline |

|E) |Market growth |

|9-70. |As a product moves through its product life cycle: |

|A) |industry profits may decrease while industry sales increase. |

|B) |the nature of competition moves toward pure competition or oligopoly. |

|C) |entirely different target markets may be aimed at. |

|D) |customers' attitudes and needs may change. |

|E) |All of the above are true. |

CHAPTER 11

|11-43. |When planning physical distribution, the marketing manager should: |

|A) |set the customer service level so that every customer can get the product exactly when he wants it. |

|B) |minimize the cost of distribution for a given customer service level. |

|C) |minimize the cost of transportation. |

|D) |maximize the speed of delivery. |

|E) |make use of a distribution center. |

|11-52. |The "total cost approach" to physical distribution management: |

|A) |seeks to eliminate the storing function. |

|B) |seeks to minimize the cost of transportation. |

|C) |might suggest a high-cost transporting mode if storing costs could be reduced enough to lower total distribution costs. |

|D) |ignores inventory carrying costs. |

|E) |All of the above. |

CHAPTER 14

|14-59. |A professional salesperson: |

|A) |may negotiate prices or diagnose technical problems when a product doesn't work well. |

|B) |doesn't try to "sell" customers, but rather tries to help them satisfy their needs. |

|C) |is a representative of the whole company. |

|D) |is responsible for feeding back information about customers and competitors. |

|E) |All of the above. |

|14-63. |Which of the following is NOT one of the basic sales tasks? |

|A) |Order-taking |

|B) |Supporting |

|C) |Sales-promoting |

|D) |Order-getting |

|E) |None of the above, i.e. all are basic sales tasks |

|14-115. |Which of the following statements by a sales manager suggests a problem? |

|A) |"Taking a successful sales rep out of a territory for sales training is like spending money to teach a fish to swim." |

|B) |"I was a sales rep before becoming manager, so I don't need a job description to help me look for new salespeople." |

|C) |"I select new salespeople all by myself, because I am the one responsible for the performance of the sales force." |

|D) |Each of the above indicates a problem. |

|E) |None of the above indicates a problem. |

CHAPTER 17

|17-69. |Blue Ridge Weavers wants to set its selling price on an item so that the retail list price will be $50--taking into account the |

| |usual markups of 10 percent at wholesale and 30 percent at retail. At what price should Blue Ridge Weavers sell the item? |

|A) |$32.50 |

|B) |$31.50 |

|C) |$35.00 |

|D) |$34.00 |

|E) |$38.00 |

|17-122. |Customers are likely to be more price sensitive when: |

|A) |the total expenditure is great. |

|B) |they have to pay the bill themselves. |

|C) |the end benefit isn't very significant. |

|D) |they haven't yet spent any money related to the purchase. |

|E) |All of the above. |

CHAPTER 18

|18-39. |Marie Callender has developed a new brand of frozen dinners to compete with the well-established brands. It probably should use|

| |a marketing mix of: |

|A) |exclusive distribution, skimming pricing, and persuasive advertising. |

|B) |intensive distribution, introductory price dealing, selective demand advertising, and a combined "push" and "pull" policy.|

|C) |intensive distribution, price cutting, reminder advertising, and a "pull" policy. |

|D) |selective distribution, penetration pricing, pioneering advertising, and a "push" policy. |

|E) |selective distribution, skimming pricing, selective demand advertising, and a "push" policy. |

|18-68. |The text argues that MACRO-marketing in the United States: |

|A) |costs too much because many consumers are dissatisfied. |

|B) |is a growing concept. |

|C) |does not cost too much. |

|D) |tends to decrease consumer welfare. |

|E) |costs too much because satisfying consumers costs too much. |

Answer Key

|1-113. |D |

|1-120. |E |

|1-204. |E |

|2-57. |B |

|52-64. |E |

|2-101. |C |

|3-81. |D |

|3-135. |B |

|4-94. |B |

|4-135. |A |

|5-84. |A |

|5-180. |A |

|6-77. |C |

|6-88. |A |

|7-78. |B |

|7-87. |B |

|8-90. |C |

|8-117. |B |

|8-167. |C |

|9-68. |B |

|9-70. |E |

|11-43. |B |

|11-52. |C |

|14-59. |E |

|14-63. |C |

|14-115. |D |

|17-69. |B |

|17-122. |E |

|18-39. |B |

|18-68. |C |

BEGINNING OF TEXT CHAPTER POOL ITEMS

Chapter 9—Product Concepts

MULTIPLE CHOICE

1. A _____ is everything, both favorable and unfavorable, that a person receives in an exchange. It can be tangible, intangible, a service, an idea, or a combination of these things.

|a. |brand equity |

|b. |quality |

|c. |warranty |

|d. |transaction |

|e. |product |

ANS: E PTS: 1 REF: 131 OBJ: 09-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

2. The _____ is the starting point in creating a marketing mix.

|a. |price |

|b. |product |

|c. |distribution channel |

|d. |promotional media |

|e. |production line |

ANS: B

The product must be specified before other marketing mix variables can be planned.

PTS: 1 REF: 131 OBJ: 09-1 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

3. Why is creation of a product the starting point for the marketing mix?

|a. |The production department must know what to produce first. |

|b. |Production strategy is the first of the four Ps listed in the marketing mix. |

|c. |Determination of the price, promotional campaign, and distribution network cannot begin until the product has been |

| |specified. |

|d. |Product development takes the longest amount of time to complete. |

|e. |Actually, the product does not have to be the starting point--promotional strategies are often the starting point. |

ANS: C

The product is the first decision around which the others are based.

PTS: 1 REF: 131 OBJ: 09-1 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Strategy

4. Which of the following is NOT an example of a product's tangible feature?

|a. |brand equity |

|b. |packaging |

|c. |color |

|d. |weight |

|e. |size |

ANS: A PTS: 1 REF: 131 OBJ: 09-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

5. In the long run, regardless of the effort put into the product management process, the most important factor determining if a consumer product will succeed or fail is:

|a. |the product mix plan |

|b. |the way the firm implements its production strategy |

|c. |the marketing plan it selects for its products |

|d. |how well the manufacturer satisfies its customers' needs |

|e. |the competition encountered by the manufacturer |

ANS: D

Products succeed because they deliver benefits and satisfy customer needs.

PTS: 1 REF: 131 OBJ: 09-1 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

6. When PaintingsDirect, an online seller of contemporary original art, markets its art to home decor buyers for retailers, custom-framing stores, and intermediaries that supply furniture and home furnishings retailers, it is selling _____ products.

|a. |specialty |

|b. |consumer |

|c. |business |

|d. |convenience |

|e. |unsought |

ANS: C

Business products are purchased for (1) use in the production of other goods or services, (2) use in an organization's operations, or (3) resale to other customers.

PTS: 1 REF: 131 OBJ: 09-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

7. The consumer product classification system is based on:

|a. |how the market is segmented |

|b. |the way the products are manufactured |

|c. |the way products are used |

|d. |the physical attributes of the product |

|e. |the amount of effort consumers spend to acquire the product |

ANS: E

Products are classified by the amount of effort that is normally expended in the acquisition process.

PTS: 1 REF: 132 OBJ: 09-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

8. _____ products are purchased with little shopping effort. These products typically are purchased regularly, usually with little planning, and require wide distribution.

|a. |Convenience |

|b. |Specialty |

|c. |Branded shopping |

|d. |Unbranded shopping |

|e. |Generic |

ANS: A PTS: 1 REF: 132 OBJ: 09-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

9. Arno stopped at a newsstand to buy today’s Wall Street Journal. While he was paying for his newspaper, he noticed a Sudoku puzzle book, which he also purchased. In this example, the puzzle book is an example of a(n) _____ product.

|a. |specialty |

|b. |convenience |

|c. |business |

|d. |shopping |

|e. |unsought |

ANS: B

Convenience products are usually relatively inexpensive items that receive little shopping effort. An item bought on an impulse like the puzzle book is an example.

PTS: 1 REF: 132 OBJ: 09-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

10. While Allison was showing her new infant son to friends of her grandmother, the baby needed a diaper change, and she had brought none with her. She normally uses eco-friendly Seventh Generation brand diapers but settled for Pampers brand diaper because that was the only brand stocked at the small local grocery store. For Allison, the recent diaper purchase is an example of buying _____ products.

|a. |homogeneous shopping |

|b. |heterogeneous shopping |

|c. |convenience |

|d. |specialty |

|e. |component |

ANS: C

She spent very little shopping effort buying the diaper due to the emergency.

PTS: 1 REF: 132 OBJ: 09-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

11. Which of the following is the best example of a convenience product?

|a. |the purchase of an engagement ring |

|b. |the weekly purchase of a TV Guide |

|c. |a one-of-a-kind bird bath for the garden |

|d. |a piano stool for the new piano |

|e. |the annual vacation cruise |

ANS: B

This is a relatively inexpensive purchase. and if the individual habitually buys the magazine, she probably did not do any comparison shopping.

PTS: 1 REF: 132 OBJ: 09-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

12. The convenience product marketing strategy includes:

|a. |wide distribution of the product |

|b. |higher than ordinary prices |

|c. |few retail outlets other than convenience stores |

|d. |significantly lower promotion budgets |

|e. |products that are not easily substitutable |

ANS: A

To sell large amounts of products that consumers are unwilling to search for, there must be a large number of retail outlets.

PTS: 1 REF: 132 OBJ: 09-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

13. Compared to the other classifications of consumer products, shopping products are:

|a. |widely available so they need little or no promotion |

|b. |usually less expensive than convenience products |

|c. |purchased without significant planning |

|d. |usually more expensive than convenience products and are found in fewer stores |

|e. |purchased immediately after the consumer realizes he or she needs them |

ANS: D

Shopping products are typically items such as clothing, automobiles, and major appliances. Consumers usually compare items across brands or stores.

PTS: 1 REF: 132 OBJ: 09-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

14. Harrison wanted a gas water heater. He watched newspaper ads until he found one on sale. For Harrison the water heater is a(n) _____ product.

|a. |shopping |

|b. |convenience |

|c. |component |

|d. |unsought |

|e. |specialty |

ANS: A

Harrison is comparing ads looking for a low price. This is shopping product behavior.

PTS: 1 REF: 132 OBJ: 09-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

15. Which of the following is the best example of a shopping product for most consumers?

|a. |a light bulb for the front porch fixture |

|b. |Vital Radiance makeup by Revlon for women over 50 |

|c. |a ream of paper for your printer |

|d. |a gas grill for the new patio |

|e. |a copy of the Wall Street Journal |

ANS: D

Shopping products are typically more expensive than convenience products and are found in fewer shops. Vital Radiance describes a specialty product because of the specification of a brand name, as does The Wall Street Journal

PTS: 1 REF: 132 OBJ: 09-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

16. The two types of shopping products are:

|a. |unsought and convenience |

|b. |generic and family |

|c. |exclusive and intensive |

|d. |heterogeneous and homogeneous |

|e. |consumer and business |

ANS: D PTS: 1 REF: 132 OBJ: 09-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

17. _____ are products consumers see as being basically the same, so consumers shop for the lowest price.

|a. |Low-prestige specialty products |

|b. |Product equivalents |

|c. |Heterogeneous shopping products |

|d. |Generic convenience products |

|e. |Homogeneous shopping products |

ANS: E PTS: 1 REF: 132 OBJ: 09-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

18. Andrea needs to find a kennel for boarding her son’s dogs. There are several different kennels in her community, and Andrea believes all of them to be basically alike. The only feature she is genuinely concerned about is low price. For Andrea, the kennel for boarding dogs would be classified as a(n) _____ product.

|a. |specialty |

|b. |unsought |

|c. |heterogeneous shopping |

|d. |basic convenience |

|e. |homogeneous shopping |

ANS: E

Homogeneous products are products that consumers see as being basically the same, so consumers shop for the lowest price.

PTS: 1 REF: 132 OBJ: 09-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

19. _____ products are seen by consumers to differ in quality, style, suitability, and lifestyle compatibility. Comparisons between these products are often quite difficult because they may have unique features and different levels of quality and price.

|a. |Product equivalents |

|b. |Comparative convenience products |

|c. |Homogeneous shopping products |

|d. |Product counterparts |

|e. |Heterogeneous shopping products |

ANS: E PTS: 1 REF: 132 OBJ: 09-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

20. Which of the following products is most likely to be considered an example of a heterogeneous shopping product?

|a. |an off-campus apartment |

|b. |a package of pencils |

|c. |a Rolex watch |

|d. |a stapler |

|e. |a flea collar |

ANS: A

Heterogeneous shopping products are essentially different. Housing is one of the examples given in the text.

PTS: 1 REF: 132 OBJ: 09-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

21. When Kirby wanted a gas grill for his patio, he visited The Home Depot and Lowe's home-improvement stores, as well as three other stores that specialize in outside furnishings, in order to find the one with just the features he wanted. If Kirby represents a typical grill buyer, you know grills are a(n):

|a. |homogeneous luxury product |

|b. |shopping specialty good |

|c. |operating supply good |

|d. |convenience item |

|e. |heterogeneous shopping good |

ANS: E

Grills would be considered heterogeneous shopping products because consumers perceive various grills to have distinctive qualities such as sizes, shapes, and levels of functionality that match the style of the customer.

PTS: 1 REF: 132 OBJ: 09-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

22. _____ products are searched for extensively, and substitutes are not acceptable. These products may be quite expensive, and often distribution is limited.

|a. |Exclusive shopping |

|b. |Homogeneous convenience |

|c. |Branded shopping |

|d. |Specialty |

|e. |Heterogeneous convenience |

ANS: D PTS: 1 REF: 132 OBJ: 09-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

23. The most expensive refrigerator in the world is the Sub-Zero brand. Many consumers believe it to be the best brand made. For people who insist on having the best kitchen money can buy and will accept no less, the Sub-Zero refrigerator is an example of a(n) _____ product.

|a. |heterogeneous shopping |

|b. |specialty |

|c. |homogeneous shopping |

|d. |convenience |

|e. |exclusive |

ANS: B

Sub-Zero refrigerators are expensive, and no substitutes are acceptable.

PTS: 1 REF: 132 OBJ: 09-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

24. One of the most expensive brands of shoes for mountain climbing is the Anasazi brand. Many climbers believe it to be the safest brand made. People who want to buy the safest climbing shoes available will accept no other brand of shoe even though there are several other manufacturers of climbing shoes. Anasazi brand climbing shoes are an example of a(n) _____ product.

|a. |heterogeneous shopping |

|b. |specialty |

|c. |homogeneous shopping |

|d. |convenience |

|e. |exclusive |

ANS: B

Anasazi brand shoes are expensive, and no substitutes are acceptable.

PTS: 1 REF: 132 OBJ: 09-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

25. When deciding on distribution plans for specialty products, companies generally ensure that the items are:

|a. |made available only as private brands |

|b. |made available in a large number of stores in a geographic area |

|c. |made available only through the mail |

|d. |distributed to a considerable number of stores in a geographic area |

|e. |distributed to only a few stores in the geographic area |

ANS: E

Specialty products are searched for extensively, and substitutes are not acceptable. These products may be quite expensive, and often distribution is limited.

PTS: 1 REF: 132 OBJ: 09-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Distribution

26. Ever since Martin saw his first Bianchi EV3 Carbon Centaur Road Bike, he has wanted to purchase one, but he could not afford its $2,500 price tag. He has conducted extensive research on Bianchi bicycles and learned nothing that changed his mind about the bike’s superiority. Finally, at age 35, he has achieved the income level to be able to purchase one. For Martin, the Bianchi bike is an example of a(n) _____ product.

|a. |specialty |

|b. |consumer |

|c. |convenience |

|d. |business |

|e. |unsought |

ANS: A

The fact that Martin did not consider another brand shows the bike is a specialty product.

PTS: 1 REF: 132 OBJ: 09-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

27. _____ products are products that are not known about or not actively searched for by consumers. These products require aggressive personal selling and highly persuasive advertising.

|a. |Hidden |

|b. |Specialty |

|c. |Equity |

|d. |Unsought |

|e. |Shopping |

ANS: D PTS: 1 REF: 133 OBJ: 09-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

28. To leave her neighborhood, Keisha has to drive through a construction area that is riddled with metal pieces and nails with the potential to puncture her tires. She got another flat tire just yesterday. The flat caused her to miss an important appointment with a prospective customer. Keisha does not know Michelin has introduced PAX tires, which can keep rolling smoothly up to 120 miles, even if completely deflated by a puncture. For Keisha, Michelin PAX tires are a(n) _____ product because she doesn't know the product exists.

|a. |heterogeneous shopping |

|b. |specialty |

|c. |unsought |

|d. |convenience |

|e. |exclusive |

ANS: C

New products are often examples of unsought products until promotion reveals their existence.

PTS: 1 REF: 133 OBJ: 09-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

29. Unsought products typically are products that:

|a. |consumers purchase when they see them in a convenient location |

|b. |consumers definitely don't want |

|c. |only require reminder advertising to be successful |

|d. |require little or no decision making by the buyer |

|e. |consumers don't know about or don't actively look for |

ANS: E PTS: 1 REF: 133 OBJ: 09-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

30. Most people under the age of 25 have a strong belief in their own personal invincibility. An insurance agency targeting this group for life insurance would find this market segment categorizes the insurance as a(n) _____ product.

|a. |heterogeneous shopping |

|b. |specialty |

|c. |unsought |

|d. |relationship |

|e. |exclusive |

ANS: C

The buyer does not actively seek to buy this product.

PTS: 1 REF: 133 OBJ: 09-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

31. A product line is a group of products that are closely related because the:

|a. |products share the same product managers |

|b. |products all function in a similar manner and provide similar benefits |

|c. |same company developed the idea for each product |

|d. |products are all sold under the same brand name |

|e. |products are all priced about the same |

ANS: B

A product line is a group of closely related products offered by the organization that basically perform the same tasks and provide the same benefits.

PTS: 1 REF: 133 OBJ: 09-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

32. There are a number of detergents marketed under the Tide brand including detergent with and without fabric softener, with and without bleach, with various pleasing smells, and fragrance-free. The large variety of detergents marketed under the Tide brand is an example of a:

|a. |marketing mix |

|b. |product line |

|c. |product mix |

|d. |product equity |

|e. |mix consistency |

ANS: B

A product line is a group of closely related products.

PTS: 1 REF: 131 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

33. Along with soft drinks, Cadbury-Schweppes also markets Dentyne gum, Sour Patch Kids candy, and Mott’s apple juice. This is an abbreviated listing of the company's:

|a. |customer mix |

|b. |product line |

|c. |product mix |

|d. |line depth |

|e. |product inconsistency |

ANS: C

An organization's product mix includes all of the products that it sells.

PTS: 1 REF: 133 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

34. Most people recognize Butterball as a brand of turkey, but the Butterball _____ also includes fresh turkey breast cuts, turkey sausages, ground turkey, lunchmeat cold cuts, fresh marinated bone-in, boneless, and whole chicken, frozen chicken products, and Butterball stuffing and gravy mixes.

|a. |marketing equity |

|b. |product line |

|c. |product mix |

|d. |line depth |

|e. |product inconsistency |

ANS: C

An organization's product mix includes all of the products that it sells.

PTS: 1 REF: 133 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

35. Product mix width may be defined as:

|a. |the number of different product categories found within an industry |

|b. |the average number of products within each product line in the company |

|c. |the average number of products offered by the company |

|d. |the number of different product lines an organization offers for sale |

|e. |the extensiveness of the coverage of the line from high end (expensive) to low end (inexpensive) |

ANS: D PTS: 1 REF: 133 OBJ: 09-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

36. Procter and Gamble (P&G) manufactures Dawn dishwashing liquid. The addition of Dawn Direct Foam dishwashing liquid is a way that P&G can expand the brand’s:

|a. |line width |

|b. |breadth mix |

|c. |mix width |

|d. |line depth |

|e. |mix depth |

ANS: D

Product line depth is the number of product items in a product line.

PTS: 1 REF: 133 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

37. George Weston Limited, a Canadian food processing and distribution company, is one of the world’s largest producers of breads. The company also owns and operates a pulp and paper processing company, a major Canadian dairy, and a sugar refinery. These organizations provide Weston with product:

|a. |line height |

|b. |line consistency |

|c. |mix width |

|d. |line depth |

|e. |mix depth |

ANS: C

Product mix width refers to the number of different product lines that an organization offers for sale.

PTS: 1 REF: 133 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

38. Which of the following is an example of a product modification?

|a. |lowering the price of textbooks |

|b. |dropping a product from the product line |

|c. |changing the color of a laundry detergent |

|d. |changing the amount of management time spent overseeing production |

|e. |increasing the number of distribution outlets |

ANS: C

Product modification entails changing one or more of a product's characteristics.

PTS: 1 REF: 134 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

39. George Weston Limited, a Canadian food processing company, owns the Wonder bread brand. When Weston introduced whole grain white bread, which gives kids the bread texture and color they recognize and love and mothers the vitamins they want for their children, it was an example of a(n):

|a. |product line contraction |

|b. |quality modification |

|c. |aesthetics modification |

|d. |obsolescence factor |

|e. |functional modification |

ANS: E

Functional modification is a change in a product’s versatility or effectiveness.

PTS: 1 REF: 134 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

40. V8 juice has for years advertised itself as a refreshing and nutritional drink that contains eight different vegetables, and that is what the brand name V8 means to most consumers. When the manufacturer of V8 juice introduced V8 Orange and Mango juice, it was an example of a _____ strategy.

|a. |repositioning |

|b. |product line extension |

|c. |cannibalization |

|d. |disintermediation |

|e. |demarketing |

ANS: B

Product line extension is the adding of additional products to an existing product line in order to compete more broadly in the industry.

PTS: 1 REF: 135 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

41. Cadbury Schweppes produces several different brands of beverages including 7 Up, Canada Dry, Dr Pepper, Hawaiian Punch, and Snapple. This is an example of Cadbury's:

|a. |product line width |

|b. |product mix |

|c. |product line depth |

|d. |product mix inconsistency |

|e. |marketing mix |

ANS: C

Product line depth is the number of product items in a product line.

PTS: 1 REF: 133 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

42. Even though Bazooka bubble gum had great brand awareness, its sales were stagnating. The company’s research discovered that children that today prefer softer bubble gum and that its Joe character was viewed as an “out-of-date nerd.” As a result, Bazooka created a softer gum and updated Bazooka Joe with a backward hat, wilder hair, and ripped jeans. Bazooka hopes through this _____ to attract a younger market.

|a. |quality modification |

|b. |aesthetic modification |

|c. |demarketing |

|d. |repositioning |

|e. |functional extension |

ANS: D

Repositioning involves changing consumers’ perceptions of a product.

PTS: 1 REF: 134 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

43. A go-cart manufacturer recently added shock absorbers to make the ride in its go-carts smoother. It has not changed its prices. This is a (n) _____ modification.

|a. |upsale |

|b. |style |

|c. |dysfunctional |

|d. |repositioning |

|e. |quality |

ANS: E

Quality modifications entail changing a product's dependability or durability.

PTS: 1 REF: 134 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

44. One of the leading manufacturers of choir robes has added a fire retardant chemical to the fabric it uses in making the robes. The company has not changed its prices. This is a(n) _____ modification.

|a. |functional |

|b. |obsolescence |

|c. |quality |

|d. |repositioning |

|e. |upward extension |

ANS: A

Functional modifications are changes in a product's versatility, effectiveness, convenience, or safety.

PTS: 1 REF: 134 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

45. Which of the following statements about planned obsolescence is true?

|a. |Environmentalists support planned obsolescence. |

|b. |A company that is interested in producing a quality product would never engage in planned obsolescence. |

|c. |Style modification creates planned obsolescence. |

|d. |Planned obsolescence is not an ethical issue. |

|e. |All of the statements about planned obsolescence are true. |

ANS: C

Environmentalists consider planned obsolescence a wasteful practice as well as unethical. There are many manufacturers of quality clothing that engage in planned obsolescence. Planned obsolescence can result from any type of modification.

PTS: 1 REF: 134 OBJ: 09-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

46. Which of the following statements about planned obsolescence is true?

|a. |Planned obsolescence describes the practice of causing products to become obsolete before they actually need |

| |replacement. |

|b. |Opponents of planned obsolescence argue the practice is wasteful and unethical. |

|c. |Marketers contend that consumers, not manufacturers and marketers, decide when styles are obsolete. |

|d. |Consumers favor style modifications because they like changes in the appearance of goods such as clothing and cars. |

|e. |All of these statements about planned obsolescence are true. |

ANS: E PTS: 1 REF: 134 OBJ: 09-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

47. A style modification is a(n):

|a. |change in the product's durability or dependability |

|b. |safety improvement |

|c. |aesthetic product change |

|d. |way to add convenience |

|e. |improvement in product versatility and effectiveness |

ANS: C PTS: 1 REF: 134 OBJ: 09-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

48. For years, many people thought plastic wrap was almost impossible to use and refused to buy the product. The manufacturer of Saran plastic wrap has spent many advertising dollars advising customers on how to eliminate the problems associated with the use of plastic wrap. This manufacturer has engaged in:

|a. |diversification |

|b. |repositioning |

|c. |product development |

|d. |product line expansion |

|e. |product mix expansion |

ANS: B

Repositioning is changing consumers' perceptions about a brand.

PTS: 1 REF: 134 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

49. A regional utility company needs to change consumers' perceptions of its current service as being harmful to the environment. Which of the following strategies would best allow the company to accomplish this goal?

|a. |contraction of the number of services offered by the utility company |

|b. |adding new services to its product line |

|c. |repositioning |

|d. |disintermediation |

|e. |use of product cannibalization |

ANS: C

Repositioning is a firm's attempt to change customer perceptions of a product.

PTS: 1 REF: 134 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

50. Michelin has developed a new tire that will keep rolling smoothly for up to 120 miles after it has been punctured. Michelin has made a(n) _____ modification to its tires.

|a. |implied |

|b. |functional |

|c. |adaptive |

|d. |aesthetic |

|e. |conventional |

ANS: B

The tire is more effective because it can be driven on following a puncture.

PTS: 1 REF: 134 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Promotion

51. The introduction of Tide Simple Pleasures, a laundry detergent inspired by the natural essences of vanilla and lavender, is an example of a:

|a. |product modification |

|b. |brand mix extension |

|c. |product diversification |

|d. |brand repositioning |

|e. |demographic modification |

ANS: A

A product modification changes one of more of a product’s characteristics--in this example, its smell.

PTS: 1 REF: 134 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

52. _____ commonly occurs soon after style modification.

|a. |Implied repositioning |

|b. |Demarketing |

|c. |Marketing innovation |

|d. |Planned obsolescence |

|e. |Planned functionality |

ANS: D

Planned obsolescence is a term commonly used to describe the practice of modifying a product so that those already sold become obsolete.

PTS: 1 REF: 134 OBJ: 09-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

53. Rexona is the number one brand of deodorant worldwide. Since it was launched in the 1960s, it has added an antiperspirant, a stick deodorant, deodorant wipes, and Rexona for Men. These additions are examples of:

|a. |product line extensions |

|b. |product portfolio width adjustments |

|c. |product item contractions |

|d. |SBU expansions |

|e. |mix repositionings |

ANS: A

Product line extension occurs when a firm adds a product to an existing product line to compete more broadly in the industry.

PTS: 1 REF: 135 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

54. Cover Girl and Revlon are both recognized as leading manufacturers of cosmetics. Both companies have recently introduced cosmetics for the over-50 woman who does not have the same concerns as a 20-year-old girl. The introductions of these cosmetics are examples of the implementation of a _____ strategy.

|a. |portfolio breadth expansion |

|b. |product portfolio width adjustment |

|c. |product item contraction |

|d. |product line extension |

|e. |repositioned marketing mix |

ANS: D

Product line extension occurs when a firm adds a product to an existing product line to compete more broadly in the industry.

PTS: 1 REF: 135 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Strategy

55. The most likely reason that Ford stopped producing the Taurus automobile is:

|a. |the car was not contributing to Ford’s profits |

|b. |the Taurus brand lacked brand equity |

|c. |the Ford Taurus did not create significant cognitive dissonance |

|d. |the automobile's brand could not be trademarked |

|e. |a change in the business market |

ANS: A

This was an example of a product line contraction.

PTS: 1 REF: 135 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

56. Due to the fact the Honda Insight (a hybrid car) has never caught on with buyers, Honda decided to stop manufacturing the car in 2006. This _____ will allow Honda to concentrate its resources on more profitable vehicles.

|a. |product line contraction |

|b. |product diversification |

|c. |product development strategy |

|d. |market redeployment |

|e. |downsizing |

ANS: A

Product line contraction occurs when a company stops making a product.

PTS: 1 REF: 135 OBJ: 09-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

57. Alberto-Culver introduced Baker's Joy in the mid-1980s as a product for cooks to use to grease and flour baking pans. The product was not nearly as successful as Alberto-Culver hoped, and it discontinued the product in 2001. This is an example of the implementation of a _____ strategy.

|a. |repositioning |

|b. |cannibalization |

|c. |product line extension |

|d. |product line contraction |

|e. |divestment |

ANS: D PTS: 1 REF: 135 OBJ: 09-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Strategy

58. A _____ is the part of the brand that can be spoken.

|a. |brand equity |

|b. |service mark |

|c. |trademark |

|d. |brand name |

|e. |certification mark |

ANS: D PTS: 1 REF: 135 OBJ: 09-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

59. The _____ is the symbol that cannot be spoken in a brand.

|a. |brand mark |

|b. |trademark |

|c. |brand equity |

|d. |quality mark |

|e. |intangible product |

ANS: A PTS: 1 REF: 135 OBJ: 09-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

60. Joseph Confectionery has decided to start marketing a line of Christian-oriented candy under the Testamint brand name. The candy maker is optimistic about establishing the brand in the marketplace and has high hopes of its success. As a marketing consultant, you inform the candy maker that branding can do all of the following EXCEPT:

|a. |encourage consumer repeat purchasing |

|b. |ensure a higher margin of profit |

|c. |create product differentiation |

|d. |aid in positioning |

|e. |possibly yield a larger market share |

ANS: B

Nothing can guarantee a higher profit margin.

PTS: 1 REF: 135 OBJ: 09-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

61. According to market research conducted in 2004, Bazooka (a brand of bubble gum) was among the most recognizable brand names in the United States even though the gum needed some updating to be competitive in today’s market. Its manufacturer has carefully developed the Bazooka brand name for over 50 years and was willing to make modifications in the product because Bazooka has a valuable:

|a. |brand loyalty hierarchy |

|b. |evoked set |

|c. |brand quality standard |

|d. |perceptual map |

|e. |brand equity |

ANS: E

The term brand equity refers to the tremendous value of company and brand names.

PTS: 1 REF: 135 OBJ: 09-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

62. A(n) _____ refers to brands where at least 20 percent of the product is sold outside the home country.

|a. |evoked set |

|b. |global brand |

|c. |equity brand name |

|d. |master brand |

|e. |ethnocentric trademark |

ANS: B PTS: 1 REF: 136 OBJ: 09-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

63. Rexona, marketed by Unilever (a Dutch company), is the world's number one deodorant brand. The brand is a leader in Europe, South America, Asia, Africa, and the Middle East. Rexona is an example of a:

|a. |master brand |

|b. |global brand |

|c. |cannibalized brand |

|d. |master brand |

|e. |family brand |

ANS: B

At least 20 percent of a global brand is sold outside its home country.

PTS: 1 REF: 136 OBJ: 09-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

64. A consumer who consistently and repeatedly purchases the same brand is said to have:

|a. |brand loyalty |

|b. |product equity |

|c. |product loyalty |

|d. |product repetition |

|e. |store loyalty |

ANS: A

Brand loyalty is the consistent preference of the same brand by the same consumer. Product loyalty could easily involve a variety of brands.

PTS: 1 REF: 136 OBJ: 09-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

65. Brand loyalty can:

|a. |increase product diffusion |

|b. |encourage competition |

|c. |shorten the amount of time a product spends in the maturity stage |

|d. |help ensure repeat sales |

|e. |sell a bad product |

ANS: D

Brand loyalty ensures repeat and regular sales.

PTS: 1 REF: 136 OBJ: 09-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

66. Internet sites for manufacturers like Sherwin-Williams paint, Toyota, and General Electric can provide these businesses with a nontraditional way to:

|a. |avoid income taxes on international sales |

|b. |help their product brand names become generic |

|c. |diminish brand loyalty |

|d. |get away with deceptive market practices because the Web is not regulated |

|e. |generate brand awareness |

ANS: E

See example in text.

PTS: 1 REF: 136 OBJ: 09-4 TYPE: App

TOP: AACSB Technology | TB&E Model Product

67. A Boston diamond distributor has developed the first branded diamond called Hearts on Fire to help smaller retailers counter the volume jewelers' aggressive price discounting. This move is meant to:

|a. |take away trademark rights |

|b. |build product identity and customer loyalty |

|c. |create a catchy phrase to promote diamonds |

|d. |combat the quality appeal of generic products |

|e. |combat low-cost production of generic brands |

ANS: B

Products in categories that traditionally have not been branded are now attempting to establish brand names that companies hope will build loyalty.

PTS: 1 REF: 136 OBJ: 09-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

68. The brand names used on Del Monte, Pillsbury, Harley-Davidson, and Purina products are called _____ brands because of who owns them.

|a. |manufacturers' |

|b. |private |

|c. |family |

|d. |individual |

|e. |master |

ANS: A PTS: 1 REF: 136 OBJ: 09-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

69. About one out of every two fans sold in the United States is The Home Depot's Hampton Bay brand. This is an example of a(n) _____ brand.

|a. |manufacturers' |

|b. |international |

|c. |family |

|d. |private |

|e. |corporate |

ANS: D

A private brand is one owned by the retailer.

PTS: 1 REF: 136 OBJ: 09-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

70. Supermarket chain Albertsons has rolled out Essensia, a product line consisting of cookies, crackers, frozen foods, and frozen desserts "only available at your local store.” The Essensia brand, which is owned by Albertsons, is an example of a(n) _____ brand.

|a. |master |

|b. |private |

|c. |family |

|d. |manufacturers' |

|e. |equity |

ANS: B

Manufacturers must decide whether to use their own names on their products or to distribute the products with a wholesaler's or retailer's brand name. If they use the name of a wholesaler or retailer, it is a private branding strategy.

PTS: 1 REF: 136 OBJ: 09-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

71. Which of the following statements describes an advantage to retailers associated with developing their own brands?

|a. |Dealers must market the brand, thus cutting into the gross margin. |

|b. |Higher gross margins are available on private brands. |

|c. |Private brands, particularly those owned by discounters, are perceived to be of a higher quality. |

|d. |Dealers often buy in large quantities and thus always have a ready supply. |

|e. |Private brands are normally delivered more promptly by the manufacturer. |

ANS: B

Private brands carry higher margins because manufacturers do not need to promote them. See Exhibit 9.2.

PTS: 1 REF: 136 OBJ: 09-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

72. A small chain of supermarkets in the western United States sells only manufacturers’ brands. Which of the following is one of the arguments you could have used to dissuade the supermarket chain owner from selling only manufacturers’ brands?

|a. |A well-known manufacturers’ brand will not enhance the chain's image. |

|b. |Manufacturers rarely spend money advertising the brand name to consumers. |

|c. |Manufacturers typically offer a lower gross margin than could be earned on private label brands. |

|d. |Manufacturers force the chain to carry a large in-store inventory. |

|e. |Relying on the manufacturer or wholesaler to deliver a national brand quickly is optimistic at best. |

ANS: C

The dealer will get a higher gross margin on a private brand. See Exhibit 9.2.

PTS: 1 REF: 137 OBJ: 09-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

73. Tyler wants the Coca-Cola Barbie by Mattel for her birthday. This Mattel product contains items with the Coca-Cola trademark, and Barbie is wearing an outfit in Coca-Cola red and white. Because both brands are receiving equal treatment, this is most likely an example of:

|a. |cooperative branding |

|b. |ingredient branding |

|c. |umbrella branding |

|d. |complementary branding |

|e. |family branding |

ANS: A

Cooperative branding occurs when two brands receive equal treatment and borrow from each other’s brand equity.

PTS: 1 REF: 138 OBJ: 09-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

74. When a company markets several different products under the same brand name, it is referred to as a(n) _____ brand.

|a. |family |

|b. |generic |

|c. |bargain |

|d. |dealer |

|e. |umbrella |

ANS: A PTS: 1 REF: 137 OBJ: 09-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

75. Callaway & Kirk, a division of Callaway Arts & Entertainment, markets a collection of garden products, home décor, and apparel featuring Miss Spider and her friends, under the Sunny Patch brand name. This would be an example of a(n) _____ branding strategy.

|a. |equity |

|b. |family |

|c. |private |

|d. |individual |

|e. |disintermediation |

ANS: B

Family branding is the marketing of several different products under the same brand name.

PTS: 1 REF: 137 OBJ: 09-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

76. Most people recognize Butterball as a brand of turkey, but Butterball brand is also found on fresh turkey breast cuts, turkey sausages, ground turkey, lunchmeat cold cuts, fresh marinated bone-in, boneless, and whole chicken, frozen chicken products, and Butterball stuffing and gravy mixes. Butterball uses:

|a. |dealer branding |

|b. |brand grouping |

|c. |family branding |

|d. |generic branding |

|e. |cobranding |

ANS: C

Family branding refers to the strategy of marketing several different products under the same brand name.

PTS: 1 REF: 137 OBJ: 09-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

77. Procter & Gamble makes Camay soap for people concerned with soft skin and Safeguard for those who want deodorant protection. It is using a(n) _____ strategy.

|a. |individual branding |

|b. |family branding |

|c. |combination branding |

|d. |trademarked branding |

|e. |private branding |

ANS: A

An individual brand strategy allows for development of a unique brand image so as to distinguish the different products.

PTS: 1 REF: 137 OBJ: 09-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

78. Heinz is a leading global food manufacturer. It manufactures and markets Farleys (baby food), Linda MacCartney Foods (vegetarian meals), and Weight Watcher’s Foods (diet/slimming meals and supplements). The use of these brand names instead of the Heinz name is an example of a(n) _____ branding strategy.

|a. |individual |

|b. |synergistic |

|c. |umbrella |

|d. |family |

|e. |piggyback |

ANS: A

An individual brand strategy allows for development of a unique brand image so as to distinguish the different products.

PTS: 1 REF: 137 OBJ: 09-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

79. Maureen purchased a package of Bounce fabric sheets with Febreeze citrus scent. Since both brands were prominently listed on the package, this would be an example of:

|a. |equity branding |

|b. |cobranding |

|c. |conjunctive branding |

|d. |private branding |

|e. |complementary branding |

ANS: B

Using two or more brand names in conjunction is cobranding.

PTS: 1 REF: 138 OBJ: 09-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

80. Jennifer purchased Cascade 2in1 ActionPacs for her dishwasher. The packaging said the product combines the scrubbing power of Cascade with the grease fighting power of Dawn dishwashing detergent. What type of cobranding does this product represent?

|a. |cooperative |

|b. |complementary |

|c. |piggyback |

|d. |ingredient |

|e. |synergistic |

ANS: D

Using two or more brand names in conjunction is cobranding. Ingredient branding identifies the additional brand that makes up part of the product.

PTS: 1 REF: 138 OBJ: 09-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

81. Rosa's husband Phil has a cold. Rosa went to the store to buy something that would help Phil sleep. Rosa purchased Breathe Right nasal strips embedded with Vicks mentholated vapor rub. The package showed both the Breathe Right and the Vicks brand names. This is an example of _____ branding.

|a. |equity |

|b. |ingredient |

|c. |family |

|d. |private |

|e. |functional |

ANS: B

Using two or more brand names in conjunction is cobranding. Ingredient branding identifies the additional brand that makes up part of the product.

PTS: 1 REF: 138 OBJ: 09-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

82. A _____ is a legal term indicating the owner's exclusive right to use a brand name or other identifying mark.

|a. |trademark |

|b. |patent |

|c. |brand |

|d. |private brand |

|e. |right of warranty |

ANS: A PTS: 1 REF: 138-139 OBJ: 09-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

83. Rollerblades is a brand name for in-line skates. People often refer to Rollerblades as if it were the product name. The company that makes Rollerblades may someday find its brand name becoming a:

|a. |equity brand |

|b. |certified name |

|c. |trademark |

|d. |faux brand |

|e. |generic product name |

ANS: E

If a brand name becomes synonymous with the product category, it can become generic.

PTS: 1 REF: 139 OBJ: 09-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

84. When a product name becomes generic,:

|a. |the firm must use black-and-white packaging |

|b. |competitors are prohibited by law from using the trademark |

|c. |the price will have to drop to appeal to lower-income consumers |

|d. |the product name is no longer recognized as the exclusive property of one firm |

|e. |a firm can reapply for exclusive trademark protection at the U.S. Patent Office |

ANS: D

A generic product name can be used by any firm and is public property.

PTS: 1 REF: 139 OBJ: 09-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

85. Your boss has just told you to work on getting trademark protection for a new brand of backpack the firm has developed. The product is to be called the Thermos Pak and has a unique logo. You tell your boss that this protection will be difficult because:

|a. |thermos is a generic product name |

|b. |of the catchy phrase you will need to promote the new brand |

|c. |you also use abbreviated versions of your brand name like TeePee and T.P. |

|d. |brand logo designs, even as unique as yours, cannot be trademarked |

|e. |the shape of your new and unusual product cannot be legally protected |

ANS: A

A generic product name identifies a product by class or type and cannot be trademarked.

PTS: 1 REF: 139 OBJ: 09-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

86. Which of the following is NOT identified by the text as one of the major functions of packaging?

|a. |contain the product |

|b. |guarantee product quality |

|c. |protect the product |

|d. |promote the product |

|e. |facilitate product storage, use, and convenience |

ANS: B PTS: 1 REF: 140 OBJ: 09-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

87. Sherwin-Williams' paint brand, Dutch Boy, has come up with a packaging innovation that is getting rave reviews. The new Twist & Pour paint is packaged in an all-plastic gallon container with an easy twist-off lid, comfortable side handle, and even a pouring spout. There's no other paint product like it on the market. This innovative packaging was most likely designed for which of the following functions?

|a. |facilitate product use and convenience |

|b. |contain and protect the product |

|c. |reduce environmental damage |

|d. |facilitate recycling |

|e. |promote the product |

ANS: A

The other functions of packaging are containment and protection, promotion, the facilitation of recycling, and the reduction of environmental damage.

PTS: 1 REF: 140 OBJ: 09-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

88. You have to convince your boss that packaging will be the key to increasing sales of the company's new line of instant pudding mixes, so you tell him the packaging:

|a. |will cause no environmental damage |

|b. |allows products to be shipped more easily |

|c. |conforms to government regulations |

|d. |can be used to help promote the product |

|e. |will conforms to all ethical standards |

ANS: D

Promotion is a prime function of packaging that can help stimulate sales.

PTS: 1 REF: 140 OBJ: 09-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

89. While Starkist tuna is still available in cans, it is now also available in a 12-ounce family-size pouch. This change in packaging was the result of:

|a. |a repositioning strategy |

|b. |a new strategy of segmenting its market |

|c. |a move toward functional obsolescence |

|d. |a brand equity strategy |

|e. |a master brand strategy |

ANS: B

See C&H sugar and Campbell's examples in text.

PTS: 1 REF: 140-141 OBJ: 09-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

90. Notices on Gummy Bear brand vitamin bottles stating that the vitamins are the “best tasting children’s gummy vitamins” would most likely be an example of persuasive labeling if:

|a. |the words "new" and "improved" were also included on the package |

|b. |the federal government had not passed the Informational Labeling Act of 1996 |

|c. |consumers had not become saturated with promotional campaigns |

|d. |they were designed solely to promote the product |

|e. |they were intended to create brand equity |

ANS: D

Persuasive labeling focuses on a promotional theme.

PTS: 1 REF: 140 OBJ: 09-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

91. Notices on Gummy Bear brand vitamin bottles stating that the vitamins have no artificial colors, flavors, or preservatives would most likely be an example of _____ labeling.

|a. |UPC |

|b. |demographic |

|c. |informational |

|d. |functional |

|e. |environmental |

ANS: C

Informational labeling is designed to help consumers make proper product selections.

PTS: 1 REF: 141 OBJ: 09-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

92. Which of the following statements about bar codes is true?

|a. |Bar codes are also called universal pricing codes (UPCs). |

|b. |Bar codes were first used in 2000. |

|c. |Bar codes can be read by optical scanners. |

|d. |Bar codes cannot be used as a marketing research tool. |

|e. |None of these statements about bar codes is true. |

ANS: C

Bar codes are the same as universal product codes. They were first developed in 1974. Also bar codes can be used in single-source research.

PTS: 1 REF: 141 OBJ: 09-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

93. The two types of package labeling in common usage today are:

|a. |informational and persuasive |

|b. |promotional and nonpromotional |

|c. |functional and persuasive |

|d. |government-mandated and seller-controlled |

|e. |motivational and required |

ANS: A PTS: 1 REF: 141 OBJ: 09-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

94. Labels that contain standard promotional claims like "new," "improved," and "super" are examples of _____ labels.

|a. |descriptive |

|b. |functional |

|c. |repositioning |

|d. |informational |

|e. |persuasive |

ANS: E

Persuasive labels primarily focus on a promotional theme or logo and try to sell the customer on a new or changed feature.

PTS: 1 REF: 141 OBJ: 09-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

95. Mia's new raincoat contains a label that reads "Professional dry clean only." This is an example of a(n) _____ label.

|a. |data |

|b. |union mandated |

|c. |persuasive |

|d. |informational |

|e. |functional |

ANS: D

Informational labeling is designed to help consumers in making proper product selections and to lower cognitive dissonance after the purchase. These labels often include care and use information and an explanation of construction standards.

PTS: 1 REF: 141 OBJ: 09-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

96. Which of the following is NOT one of the functions of universal product codes (UPCs)?

|a. |allow scanners to match codes with brand names, package sizes, and prices |

|b. |print product and price information on cash register tapes |

|c. |assist retailers in preparing records of customer purchases |

|d. |allow retailers to accurately track sales and control inventories |

|e. |provide the detailed nutritional information required by the FDA |

ANS: E

Universal product codes do not contain nutritional information.

PTS: 1 REF: 141 OBJ: 09-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

97. Which of the following does NOT need to be a branding and packaging consideration for companies considering global marketing?

|a. |whether to use one brand name with no adaptation to local markets or to use one name but adapt and modify it for each |

| |local market |

|b. |translation or pronunciation problems with brand names |

|c. |different currencies in each country, exchange rates, and final retail prices |

|d. |whether to use different brand names in different markets for the same products |

|e. |product labeling, package aesthetics, and climate considerations |

ANS: C

Currency and pricing considerations are not the prime considerations when considering global branding and packaging strategies.

PTS: 1 REF: 140-141 OBJ: 09-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

98. Which of the following is NOT an important consideration for a French manufacturer that wants to market its products in Canada?

|a. |There may be aesthetic issues associated with developing a packaging strategy. |

|b. |Alternative messages could be developed for promoting the brand. |

|c. |Keeping the current brand names will allow the firm to capitalize on current domestic brand equity. |

|d. |Sturdy packaging will be needed to ship the products to Canada. |

|e. |Unique labels may be required by the Canadian government. |

ANS: C

Brand equity in France will mean little to most Canada buyers since they will be unaware of it.

PTS: 1 REF: 141-142 OBJ: 09-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

99. Three aspects of packaging that are especially important in international marketing are labeling, aesthetics, and:

|a. |price |

|b. |length of distribution channel |

|c. |counterfeiting potential |

|d. |warranties |

|e. |climate considerations |

ANS: E PTS: 1 REF: 141-142 OBJ: 09-6 TYPE: Comp

TOP: AACSB Analytic | TB&E Model Product | TB&E Model Strategy

100. Lands' End, a catalog retailer, offers a written satisfaction guarantee on all merchandise it sells. In other words, Lands' End gives its customers a(n) _____ warranty.

|a. |implied |

|b. |descriptive |

|c. |limited |

|d. |full |

|e. |express |

ANS: E PTS: 1 REF: 142 OBJ: 09-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

101. The label on Darwin's new blazer that reads "Will Not Shrink" is an example of a(n) _____ warranty.

|a. |descriptive |

|b. |limited |

|c. |implied |

|d. |express |

|e. |superfluous |

ANS: D

An express warranty is any written guarantee.

PTS: 1 REF: 142 OBJ: 09-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

102. Realizing that its product needed a warranty to gain rapid market acceptance, the manufacturer of a high-tech system for investigating accidents produced:

|a. |a statement for salespeople to read to prospective buyers |

|b. |an acknowledgment of company responsibilities for salespeople to build into presentations |

|c. |a label stating the product is of the highest quality and backed by years of manufacturing experience |

|d. |an advertisement stating that buyers would not perceive the purchase of this product as risky |

|e. |a written guarantee that the product would work as promised and that it is fit for the purpose for which it was sold |

ANS: E

A written guarantee is an express warranty. This guarantee states what is contained in an implied warranty.

PTS: 1 REF: 142 OBJ: 09-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

103. The statement on the toothpaste box that brushing twice a day with this paste will remove 90 percent of all tartar from the user's teeth is an example of a(n):

|a. |implied warranty |

|b. |functional label |

|c. |UPC disclaimer |

|d. |express warranty |

|e. |universal warranty |

ANS: D

An express warranty is any written guarantee.

PTS: 1 REF: 142 OBJ: 09-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

104. Due to the existence of a(n) _____, Shannon had every reason to believe the antacid he purchased would relieve his stomach problems if he followed the directions on the box.

|a. |implied warranty |

|b. |functional label |

|c. |persuasive label |

|d. |express warranty |

|e. |universal warranty |

ANS: A

An implied warranty states that a product is fit for the purpose for which it was sold.

PTS: 1 REF: 142 OBJ: 09-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

105. Under the _____, all sales have an implied warranty.

|a. |Label Law |

|b. |Lanham Act |

|c. |Bill of Rights |

|d. |Good Housekeeping Seal |

|e. |Uniform Commercial Code |

ANS: E

The Uniform Commercial Code regulates all sales.

PTS: 1 REF: 142 OBJ: 09-7 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

Chapter 11—Services and Nonprofit Organization Marketing

MULTIPLE CHOICE

1. Western Union is in the business of international money transfer. A Mexican working in the United States can transfer a portion of his or her earnings to family members still living in Mexico. Western Union's market for wiring money has grown dramatically over the last years because the company provides a _____ that is easy to use and reliable.

|a. |good |

|b. |tangible resource |

|c. |tangible product |

|d. |service |

|e. |synergy |

ANS: D

A service is the result of applying human or mechanical efforts to people or objects.

PTS: 1 REF: 159 OBJ: 11-1 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer

2. Many people would like to sell and buy on eBay, the most popular of the current Internet auction sites, but they have questions about the process and how to sell and price their merchandise. A company called has set up a directory of specialists to whom you can address questions. When you choose a name and click on the "Call Now" button, the specialist is contacted and will personally call and answer your questions. charges a per-minute fee to the person who contacts its specialist. would be classified as a:

|a. |good |

|b. |tangible resource |

|c. |tangible product |

|d. |service |

|e. |nonprofit organization |

ANS: D

A service is the result of applying human or mechanical efforts to people or objects.

PTS: 1 REF: 159 OBJ: 11-1 TYPE: App

TOP: AACSB Technology | TB&E Model Customer | TB&E Model Online/Computer

3. A(n) _____ is the result of applying human or mechanical efforts to people or objects.

|a. |application processor |

|b. |profit intermediary |

|c. |tangible product |

|d. |service |

|e. |nonprofit organization |

ANS: D PTS: 1 REF: 159 OBJ: 11-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

4. The service sector:

|a. |has remained steady at 44 million jobs in the United States for the last 20 years |

|b. |employs roughly 80 percent of the U.S. workforce |

|c. |is rarely capital intensive, as most services do not need high technology |

|d. |is decreasing in importance in the United States |

|e. |tends to create fewer new jobs than the manufacturing industry |

ANS: B PTS: 1 REF: 159 OBJ: 11-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

5. Baltimore's Chesapeake Habitat for Humanity (CHH) renovates vacant houses and sells them at no-interest mortgage rates to low-income home buyers. To pay some of the costs of the renovation supplies, CHH has established a for-profit company called TeamBuilds, where corporate teams pay $7,500 for an all-day team-building session with a management consultant while they work together on renovation. TeamBuilds is an example of a(n):

|a. |service provider |

|b. |possession processor |

|c. |aggregated market |

|d. |market niche |

|e. |target market |

ANS: A PTS: 1 REF: 159 OBJ: 11-1 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

6. A service cannot be touched, seen, tasted, heard, or felt in the same manner in which goods can be sensed and, therefore, is referred to as:

|a. |impervious |

|b. |extraneous |

|c. |synergistic |

|d. |perishable |

|e. |intangible |

ANS: E PTS: 1 REF: 159 OBJ: 11-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

7. Obeah used to sell office furniture and supplies, but he now has semi-retired and started a cleaning service specializing in cleaning fire- and water-damaged structures. Selling cleaning services differs greatly from selling office furniture and supplies because cleaning services are:

|a. |homogeneous |

|b. |unknowable |

|c. |intangible |

|d. |synergistic |

|e. |comestible |

ANS: C

Services are intangible; furniture is tangible.

PTS: 1 REF: 159 OBJ: 11-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

8. Ian Trent has an MBA and is being recruited by an investment banking firm as a sales representative. He has had ten years of experience in selling industrial supplies. He was quite successful in this job but is worried that selling investment strategies may be more difficult. What factor would be the major reason for this worry?

|a. |Services are intangible and, therefore, different from his previous experience. |

|b. |His services and the products he sells are inseparable. |

|c. |The marketing program of investment strategies is inconsistent. |

|d. |The cost inventory management system of reimbursing him may cause a problem when he makes investments. |

|e. |The extensiveness of distribution is unimportant when selling an investment service. |

ANS: A

Investment banking has many intangible features and benefits that make it quite different from tangible products like industrial supplies.

PTS: 1 REF: 159 OBJ: 11-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

9. A(n) _____ is a characteristic that can be easily assessed prior to purchase, such as the softness of a mattress or the color of curtains.

|a. |search quality |

|b. |intangible attribute |

|c. |experience quality |

|d. |credence quality |

|e. |heterogeneity feature |

ANS: A PTS: 1 REF: 160 OBJ: 11-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

10. TeamBuilds is a service organization that has corporate teams pay $7,500 for an all-day team-building session with a management consultant while they work together on renovating a Habitat for Humanity home. Participants in the team-building exercises would use a(n) _____ quality to evaluate TeamBuilds.

|a. |credence |

|b. |search |

|c. |information |

|d. |appraisal |

|e. |experience |

ANS: E

Only after experiencing them could participants tell whether they had gained from the exercises.

PTS: 1 REF: 160 OBJ: 11-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

11. Western Union has 225,000 locations where clients can receive money in 196 countries. Because a person can send money from a small town in Georgia to a small town in Mexico without worrying, Western Union has a high degree of _____ quality.

|a. |observation |

|b. |survey |

|c. |experience |

|d. |research |

|e. |credence |

ANS: C

Only after receiving the money can participants tell if the money remittance actually works.

PTS: 1 REF: 160 OBJ: 11-1 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer

12. Aristide and Oana are considering attending a clinic to help them quit smoking. They will be better able to assess the _____ of the clinic after they attend the clinic and learn about the techniques it uses to help customers quit smoking.

|a. |tangible attribute |

|b. |experience quality |

|c. |creative quality |

|d. |credence quality |

|e. |heterogeneity feature |

ANS: B PTS: 1 REF: 160 OBJ: 11-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer

13. Many people would like to sell and buy on eBay, the most popular of the current Internet auction sites, but they have questions about the process and how to sell and price their merchandise. A company called has set up a directory of specialists to whom you can address questions. When you choose a name and click on the "Call Now" button, the specialist is contacted and will personally call and answer your questions. _____ is a characteristic of this service because you cannot evaluate its usefulness until after you have received and used the specialist's advice.

|a. |Reliability |

|b. |Experience quality |

|c. |Search quality |

|d. |Temporal quality |

|e. |Heterogeneous satisfaction |

ANS: B PTS: 1 REF: 160 OBJ: 11-2 TYPE: App

TOP: AACSB Technology | TB&E Model Customer | TB&E Model Online/Computer

14. Deidre Longo has just accepted a position at a major entertainment venue where she is responsible for selling season tickets. She formerly was a salesperson for a company that sold sound systems for arenas, stadiums, and theaters. She believed she understood why theater managers bought certain products but realizes selling tickets to individuals will be different. What is one of the key differences she can expect to find?

|a. |The customer will select and evaluate entertainment on the basis of search qualities. |

|b. |Customers are engaged in this as a low-involvement product. |

|c. |A consumer will use experience qualities to evaluate the entertainment service. |

|d. |The use of the service will involve standardized service levels and not exhibit heterogeneity problems. |

|e. |The location of Longo's office is a key strategy criterion. |

ANS: C

Many service situations are complicated and customers do not have the knowledge to judge the quality of the actual service itself. This question is difficult because it ties together several concepts that are in different sections of the chapter.

PTS: 1 REF: 160 OBJ: 11-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer

15. A(n) _____ is a characteristic that cannot easily be assessed even after purchase since the customers do not have the knowledge or experience.

|a. |heterogeneity feature |

|b. |perishable attribute |

|c. |experience quality |

|d. |search quality |

|e. |credence quality |

ANS: E PTS: 1 REF: 160 OBJ: 11-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Customer

16. Which of the following services would be most likely to exhibit strong credence qualities?

|a. |a math tutorial service |

|b. |the repair of a leaky drain |

|c. |the preparation of a dead body for burial |

|d. |tax return preparation |

|e. |a landscaping service that mows lawns |

ANS: C

A credence quality is a characteristic that cannot easily be assessed even after purchase and experience.

PTS: 1 REF: 160 OBJ: 11-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

17. Management-labor mediation, child care, and college preparation classes are all services that are produced and consumed at the same time. All of these services exhibit the service characteristic of:

|a. |inseparability |

|b. |intangibility |

|c. |heterogeneity |

|d. |perishability |

|e. |variability |

ANS: A PTS: 1 REF: 160 OBJ: 11-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

18. LaVergne had her makeup professionally applied for her prom night. She went to the beauty salon, watched as the makeup artist applied cosmetics to her face, and then went home feeling gorgeous. LaVergne's makeover illustrates which service characteristic?

|a. |intangibility |

|b. |inseparability |

|c. |heterogeneity |

|d. |perishability |

|e. |flexibility |

ANS: B

Inseparability is when services or goods are produced and consumed at the same time.

PTS: 1 REF: 160 OBJ: 11-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

19. A reading service for the visually impaired requires each reader applicant to prepare and submit a one-hour interview tape of material chosen by the service to determine whether the reader has pleasing vocal characteristics and is accent-free so that it is not necessary to use the same reader every time. The reading service is trying to limit problems associated with the service characteristic of:

|a. |tangibility |

|b. |credence quality |

|c. |heterogeneity |

|d. |simultaneous production and consumption |

|e. |flexibility |

ANS: C

Heterogeneity means that a service tends to be less standardized and uniform than goods.

PTS: 1 REF: 160 OBJ: 11-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

20. There are fewer problems caused by the service characteristic of _____ when the service being purchased requires little interaction between the service personnel and the customer.

|a. |perishability |

|b. |inseparability |

|c. |intangibility |

|d. |heterogeneity |

|e. |instability |

ANS: D PTS: 1 REF: 160 OBJ: 11-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Customer

21. It is difficult to achieve consistency and standardization of services because of which service characteristic?

|a. |customization |

|b. |simultaneous production and consumption |

|c. |intangibility |

|d. |perishability |

|e. |heterogeneity |

ANS: E PTS: 1 REF: 160 OBJ: 11-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

22. Jackson Caputo owns and operates Jax Stables, a complete horse service that offers grooming, training, show training for handlers, boarding, and veterinary care. To maintain a quality image, Caputo regularly provides training for each employee in the company's operations, objectives, and expected performance standards. What unique aspect of services is Caputo attempting to address?

|a. |heterogeneity |

|b. |perishability |

|c. |intangibility |

|d. |simultaneous production and consumption |

|e. |unfocused targeting |

ANS: A

Heterogeneity causes inconsistency and lack of standardization. Training helps to alleviate these conditions.

PTS: 1 REF: 160 OBJ: 11-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

23. Which of the following is NOT a method firms can use to reduce the inherent variability of services?

|a. |standardized preparation procedures |

|b. |mechanizing the process |

|c. |standardization |

|d. |providing tangible cues |

|e. |training of employees in performance standards |

ANS: D

Providing tangible cues will not increase the consistency or reliability of the service itself.

PTS: 1 REF: 160-161 OBJ: 11-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

24. Due to service _____, services cannot be stored, warehoused, or inventoried.

|a. |tangibility |

|b. |variability |

|c. |intangibility |

|d. |perishability |

|e. |heterogeneity |

ANS: D PTS: 1 REF: 161 OBJ: 11-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

25. Alabama Adventure, an amusement park in Birmingham, offers reduced rates on weekdays and higher prices for those who want to attend on weekends. It also offers lower prices for patrons who enter the park after 4 p.m. This is a way to contend with the service characteristic of:

|a. |variability |

|b. |perishability |

|c. |intangibility |

|d. |inseparability |

|e. |simultaneous production and consumption |

ANS: B

Differential pricing tries to even out demand. This is important because services cannot be stored, inventoried, or warehoused.

PTS: 1 REF: 161 OBJ: 11-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Pricing

26. Virtual Bellhop is a service provider that ships awkward sporting goods to vacation destinations so its customers do not have to worry about lugging them through airports or having them damaged in transit. During the summer months and December, the company is extremely busy packaging and shipping sporting gear. During other months that are not popular vacation months, it may only have one customer a day. This inconsistency of demand means Virtual Bellhop has to deal with the problems associated with the service characteristic of:

|a. |intangibility |

|b. |inseparability |

|c. |perishability |

|d. |simultaneous production and consumption |

|e. |variability |

ANS: C

Services cannot be stored, inventoried, or warehoused.

PTS: 1 REF: 161 OBJ: 11-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

27. Which of the following is NOT a service component customers use to evaluate service quality?

|a. |validity |

|b. |empathy |

|c. |assurance |

|d. |responsiveness |

|e. |reliability |

ANS: A PTS: 1 REF: 161 OBJ: 11-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

28. Western Union allows people in one nation or one area of the country to dependably, accurately, and consistently transfer funds to each other. In other word, Western Union provides which service quality to its users?

|a. |tangibility |

|b. |responsiveness |

|c. |assurance |

|d. |responsibility |

|e. |reliability |

ANS: E

Reliability is the ability to perform the service dependably, accurately, and consistently.

PTS: 1 REF: 161 OBJ: 11-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer

29. Virtual Bellhop is a company that ships awkward sporting goods to vacation destinations so its customers to not have to worry about lugging them through airports or having them damaged in transit. Thus far, its record for getting the sporting equipment to the correct destination for the vacationer is perfect. This indicates the company excels at which component of service quality?

|a. |tangibles |

|b. |empathy |

|c. |reliability |

|d. |flexibility |

|e. |assurance |

ANS: C

Reliability is the ability to perform the service dependably and consistently.

PTS: 1 REF: 161 OBJ: 11-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

30. Many people would like to sell and buy on eBay, the most popular of the current Internet auction sites, but they have questions about the process and how to sell and price their merchandise. A company called has set up a directory of specialists to whom you can address questions. When you choose a name and click on the "Call Now" button, the specialist is contacted and will personally call and answer your questions. Users can see the ratings given to each specialist by previous users before they contact that specialist. Which service component does use to help its customers evaluate its service quality?

|a. |empathy |

|b. |assurance |

|c. |tangibles |

|d. |flexibility |

|e. |responsiveness |

ANS: B

Assurance refers to the knowledge and courtesy of the employees. Customer ratings would provide this information.

PTS: 1 REF: 161 OBJ: 11-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

31. Courtney's mother died of breast cancer, and she is afraid of getting cancer. When she went to get a baseline mammogram, she wanted a facility where the personnel would not think her fears were silly and would answer all of her questions without making her feel stupid for asking them. By which of the following components of service quality is Courtney most likely to rate the mammogram provider?

|a. |empathy |

|b. |assurance |

|c. |tangibles |

|d. |reliability |

|e. |responsiveness |

ANS: A

Empathy refers to providing caring and individualized attention to customers.

PTS: 1 REF: 161 OBJ: 11-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

32. Virtual Bellhop is a company that ships awkward sporting goods to vacation destinations so its customers to not have to worry about lugging them through airports or having them damaged in transit. The care with which the items are packed and the condition of the package when it arrives indicate concern with which aspect of service quality?

|a. |tangibles |

|b. |responsiveness |

|c. |reliability |

|d. |variability |

|e. |homogeneity |

ANS: A

Tangibles are the physical evidence of a service.

PTS: 1 REF: 161 OBJ: 11-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

33. TeamBuilds is a service organization that has corporate teams pay $7,500 for an all-day team-building session with a management consultant while they work together on renovating a Habitat for Humanity home. The _____ could be used to identify the problem if there were significant differences between what TeamBuilds says it provides to customers and what it actually provides.

|a. |gap model of service quality |

|b. |service pyramid |

|c. |four dimensions of service quality |

|d. |service paradigm |

|e. |service delineation matrix |

ANS: A

This would be an example of Gap 4.

PTS: 1 REF: 162 OBJ: 11-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

34. Clarksdale, Mississippi, is the home of the Shack Up Inn, the only inn in the world that is made up of actual shotgun houses. (Shotgun houses contain two or three rooms in a row. A resident of the house is able to stand at the front door and shoot through all the rooms and out the back door without hitting any walls.) Obviously, the shacks are not luxurious although they do have indoor plumbing and electricity. The owner decided these were the only changes customers would want to be made in the shacks. In this instance, the service provider is likely to have a gap between:

|a. |what management thinks customers want and the quality specifications that management develops to provide the service |

|b. |what the company tells the customer it provides and what is actually provided |

|c. |service quality specifications and employee training |

|d. |what customers want and what management thinks customers want |

|e. |service expectations and what customers are told to expect |

ANS: D

The owner may not understand the needs and desires of the average tourist.

PTS: 1 REF: 161 OBJ: 11-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer

35. Budget airlines are a new service in China. Neither their passengers nor the airlines themselves know what to expect from each other. Shanghai-based Spring Airlines is a start-up service with a tight budget. According to the owner of Spring Airlines, customer satisfaction levels are at 97 percent although many of Spring Airlines' employees have been throttled and had their clothes ripped off by unhappy passengers. According to the _____, there is a gap between what customers want and what management thinks customers want.

|a. |gap model of service quality |

|b. |service pyramid |

|c. |four dimensions of service quality |

|d. |service paradigm |

|e. |service delineation matrix |

ANS: A

The gap model identifies five gaps that can cause problems in service delivery and influence customer evaluation of service quality.

PTS: 1 REF: 161-162 OBJ: 11-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model International Perspective

36. At the dealer-owned Radio Shack, the store manager is frustrated at the level of service employees provide to customers even after he wrote a guide to customer service and instructed each employee to read the guide. This is an example of a gap between:

|a. |the service quality specifications and the service that is actually provided |

|b. |what the company provides and what the customer is told it provides |

|c. |the service customers receive and the service they want |

|d. |what customers want and what management thinks customers want |

|e. |what management thinks customers want and the quality specifications management develops to provide the service |

ANS: A PTS: 1 REF: 162 OBJ: 11-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer

37. An Internet company, , sold cruises by offering a "Suntan Guarantee." The guarantee promised a full refund on a Caribbean cruise if more than one-quarter inch of rain fell from 10 a.m. to 4 p.m. for a preset number of days depending on the length of the cruise. If it rained and the Internet company failed to honor its refund policy, it would represent a gap between:

|a. |what management thinks customers want and the quality specifications that management develops to provide the service |

|b. |what the company tells the customer it provides and what is actually provided |

|c. |service quality specifications and employee training |

|d. |what customers want and what management thinks customers want |

|e. |none of these |

ANS: B

This is an example of a communications gap.

PTS: 1 REF: 162 OBJ: 11-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer

38. If a customer expects to wait one week for a pair of shoes to be mended but is told that the shoes are ready to be picked up less than 24 hours after leaving them at the repair shop, the customer's evaluation of service quality will be high. However, a two-week wait would result in a lower evaluation. The two-week gap would illustrate a gap between:

|a. |service quality specifications and the service that is actually provided |

|b. |the service customers receive and the service they want |

|c. |what the company provides and what the customer is told it provides |

|d. |what customers want and what management thinks customers want |

|e. |what management thinks customers want and the quality specifications management develops to provide |

ANS: B

When these gaps are large, service quality is perceived as low. As the gaps shrink, perceptions of service quality improve.

PTS: 1 REF: 162 OBJ: 11-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

39. If a hospital measured the service quality of its physician care in terms of the total number of people who were attended to--even if patients appeared to want more individualized care--the hospital would be exhibiting a gap between:

|a. |what customers want and what management thinks customers want |

|b. |the service quality specifications and the service that is actually provided |

|c. |what the company provides and what the customer is told it provides |

|d. |what management thinks customers want and the quality specifications management develops to provide the service |

|e. |the service customers receive and the service they want |

ANS: E

There is no indication in the question that the hospital is concerned about what customers want. Rather the hospital cares more about its billable hours.

PTS: 1 REF: 162 OBJ: 11-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

40. Which of the following statements about developing marketing mixes for services is true?

|a. |The variability and perishability of services may require adjustments in marketing mix elements. |

|b. |Marketing mixes for services are often different than those for products. |

|c. |Elements of the marketing mix must be adjusted for the unique characteristics of services. |

|d. |The intangibility and simultaneous production and consumption of services may require adjustments in marketing mix |

| |elements. |

|e. |All of the statements about developing marketing mixes are true. |

ANS: E PTS: 1 REF: 162-164 OBJ: 11-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

41. Which of the following is NOT an example of a type of service processing that can occur?

|a. |people processing |

|b. |product processing |

|c. |possession processing |

|d. |information processing |

|e. |mental stimulus processing |

ANS: B PTS: 1 REF: 163 OBJ: 11-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

42. Budget airlines are a new service in China. Neither their passengers nor the airlines themselves know what to expect from each other. Shanghai-based Spring Airlines is a start-up service with a tight budget. Spring Airlines would engage in _____ processing.

|a. |people |

|b. |mechanical |

|c. |possession |

|d. |mental |

|e. |information |

ANS: A

People processing takes place when the service is directed at a customer.

PTS: 1 REF: 162 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

43. Which of the following services is an example of possession processing?

|a. |a theatrical performance |

|b. |an X-ray of a broken bone |

|c. |an advertising agency |

|d. |marriage counseling |

|e. |heating system repair |

ANS: E

Possessions processing occurs when the service is directed to the customers’ physical possessions.

PTS: 1 REF: 163 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

44. TeamBuilds is a service organization that has corporate teams pay $7,500 for an all-day team-building session with a management consultant while they work together on renovating a Habitat for Humanity home. Which category of service processing does TeamBuilds offer?

|a. |possession processing |

|b. |information processing |

|c. |mental stimulus processing |

|d. |people processing |

|e. |homogeneous processing |

ANS: C

TeamBuilds is an education program. It is directed at customers.

PTS: 1 REF: 163 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

45. Which of the following services is an example of mental stimulus processing?

|a. |taxi cab service |

|b. |insurance |

|c. |a professional tennis match |

|d. |veterinarian care |

|e. |a hair cut |

ANS: C PTS: 1 REF: 163 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

46. Which of the following services is an example of information processing?

|a. |investment advice |

|b. |a funeral service |

|c. |pet neutering |

|d. |the fitting of orthodontic braces |

|e. |attendance at a Major League Baseball game |

ANS: A

Information processing describes services that use brain power directed at a customer’s assets.

PTS: 1 REF: 163 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

47. An Internet company, , sold cruises by offering a "Suntan Guarantee." The guarantee promised a full refund on a Caribbean cruise if more than one-quarter inch of rain fell from 10 a.m. to 4 p.m. for a preset number of days depending on the length of the cruise. The _____ service offered by icruise is travel. The guarantee is a _____ service.

|a. |supplementary; core |

|b. |core; customized |

|c. |core; supplementary |

|d. |customized; standardized |

|e. |complementary; supplementary |

ANS: C PTS: 1 REF: 163 OBJ: 11-4 TYPE: App

TOP: AACSB Technology | TB&E Model Product

48. TeamBuilds is a service organization that has corporate teams pay $7,500 for an all-day team-building session with a management consultant while they work together on renovating a Habitat for Humanity home. TeamBuilds' _____ service is improved work team relationships.

|a. |primary |

|b. |core |

|c. |niche |

|d. |supplementary |

|e. |foundation |

ANS: B

Core service is the most basic benefit the consumer is buying.

PTS: 1 REF: 163 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

49. Western Union is in the business of providing a medium for international money transfers. A Mexican working in the United States can transfer a portion of his or her earnings to family members still living in Mexico. The wire transfer of funds is the _____ service the company provides.

|a. |supplementary |

|b. |benchmarked |

|c. |core |

|d. |primary |

|e. |fundamental |

ANS: C

Core service is the most basic benefit the consumer is buying.

PTS: 1 REF: 163 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

50. The service offering of G&R Talent Agency is performers suitable for appearances on college campuses. This service is an example of the agency's _____ service.

|a. |standardized |

|b. |customized |

|c. |supplementary |

|d. |core |

|e. |component |

ANS: D

The core service is what the consumer is buying.

PTS: 1 REF: 163 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

51. Western Union is in the business of providing a medium for international money transfers. A Mexican working in the United States can transfer a portion of his or her earnings to family members still living in Mexico. It is now planning to move into areas traditionally handled by banks such as offering its customers checking accounts and loans. If it does follow through and provide these additional services, they will exemplify _____ services.

|a. |complementary |

|b. |secondary |

|c. |peripheral |

|d. |supplementary |

|e. |additional |

ANS: D

Supplementary services are a group of services that support or enhance the core service.

PTS: 1 REF: 163 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

52. _____ is the strategy that uses technology to deliver customized services on a mass basis.

|a. |Mass standardization |

|b. |Aggregated services |

|c. |Technological processing |

|d. |Mass customization |

|e. |Aggregated marketing |

ANS: D PTS: 1 REF: 163 OBJ: 11-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

53. The ability of each hotel guest to use his or her room’s television to check out of the hotel room and to confirm additional charges on bills in the hotel's restaurants and gift shops is an example of:

|a. |a cooperative service |

|b. |mass customization |

|c. |aggregated standardization |

|d. |a market development strategy |

|e. |mental stimulus processing |

ANS: B PTS: 1 REF: 163 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

54. The catalog and online retailer Lands' End offers custom-fit chinos via the Web. For a price of $54, U.S.-based customers can select their style and fit preferences, enter details about their body shape, and receive a pair of custom-made pants in their mailbox two to four weeks later. For Lands' End, this means the company avoids stocking up to 2.8 billion different styles and sizes of garments. Instead, Lands' End orders each unit to be individually fashioned by a contract manufacturer that ships directly to the consumer. Lands’ End is using:

|a. |mass customization |

|b. |supplementary service |

|c. |component service |

|d. |customized service |

|e. |nonprofit marketing |

ANS: A

Mass customization uses technology to deliver customized service on a mass basis.

PTS: 1 REF: 163 OBJ: 11-4 TYPE: App

TOP: AACSB Technology | TB&E Model Customer | TB&E Model Online/Computer

55. is an Internet company that is a one-stop source of all the items needed to have a successful wedding including listings of local caterers and photographers. When someone registers on the site, he or she is sent the "Ultimate Wedding Organizer." It offers advice on what to do about "cold feet" and how to handle in-laws. recognizes that its _____ represents a portfolio of opportunities, risks, and challenges.

|a. |component combination |

|b. |offering grouping |

|c. |service mix |

|d. |SKU offering |

|e. |assembly process |

ANS: C

The service mix refers to the different services offered by the service provider.

PTS: 1 REF: 163-164 OBJ: 11-4 TYPE: App

TOP: AACSB Technology | TB&E Model Customer | TB&E Model Online/Computer

56. Which of the following is NOT a key factor in the distribution strategy for services?

|a. |customization |

|b. |convenience for customers |

|c. |number of intermediaries and outlets |

|d. |scheduling of service deliveries |

|e. |location |

ANS: A

Customization is a key factor in the product component of the service marketing mix.

PTS: 1 REF: 163-164 OBJ: 11-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Strategy

57. Marriott Hotels, as well as Hyatt Regency and Adam's Mark Inns, have expended many resources in developing Web sites that allow prospective customers to learn all that is necessary before selecting a hotel destination. The sites then allow individuals to make reservations at the hotel that best satisfies their requirements. Which of the following reflects the distribution strategy used by these hotel chains?

|a. |considerations of the storage of the service |

|b. |the development of a long channel of intermediaries |

|c. |the decision to use direct distribution |

|d. |intensity of distribution |

|e. |the physical appearance of your particular outlet |

ANS: C

The newest form of direct distribution is the Internet.

PTS: 1 REF: 164 OBJ: 11-4 TYPE: App

TOP: AACSB Technology | TB&E Model Customer | TB&E Model Online/Computer

58. Budget airlines are a new service in China. One of the major problems faced by these airlines is the tight regulatory controls the Chinese government maintains over them. The government determines which airlines get which routes, and the budget airlines do not get the most profitable business routes. The Chinese government has a major voice is setting the _____ strategies for budget airlines in that country.

|a. |distribution |

|b. |promotion |

|c. |production |

|d. |product |

|e. |demand/supply |

ANS: A

Distribution is an important part of the service mix.

PTS: 1 REF: 164 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model International Perspective

59. Promotion strategies for dealing with the unique features of services include all of the following EXCEPT:

|a. |using personal sources of information |

|b. |creating strong organizational images |

|c. |stressing tangible cues |

|d. |using postpurchase communication |

|e. |satisfying patronage-oriented objectives |

ANS: E

Patronage-oriented objectives are part of a service pricing strategy.

PTS: 1 REF: 164 OBJ: 11-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

60. A pest control company paints dead roaches on its trucks and uses similar graphics on its letterhead, business cards, and all promotions. The pest control company is using what type of promotion strategy?

|a. |stressing tangible cues |

|b. |stressing homogeneity |

|c. |using personal information sources |

|d. |providing packaging cues |

|e. |communicating service integration signals |

ANS: A PTS: 1 REF: 164 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

61. You have just started a limousine service and strive for an image of quality and luxury. Your limos are always spotlessly clean on the inside, freshly waxed, and stocked with flowers, champagne, free car phones, and televisions. Your drivers are always immaculately dressed and are required to hold the door open for patrons entering and leaving the car. Your promotional strategy is stressing:

|a. |patronage-oriented objectives |

|b. |tangible cues |

|c. |prestige prompts |

|d. |intangible motivators |

|e. |physiological prompts |

ANS: B PTS: 1 REF: 164 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

62. Def Leppard front man Phil Collen has agreed to be the national spokesperson for animal rights group People for the Ethical Treatment of Animals (PETA). He was chosen because of his lifelong commitment to vegetarianism. In terms of promotion strategy, he will be considered a(n) _____ information source.

|a. |cue control |

|b. |nonsource-controlled |

|c. |impersonal |

|d. |remote |

|e. |personal |

ANS: E

A celebrity is a person consumers are familiar with, and so can be a personal information source. Collen's association with the service is expected to reduce customers' perceived risk in using the service.

PTS: 1 REF: 164 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

63. Boutique hotels are the perfect hotels for people who are tired of traditional cookie cutter hotels that all look alike. One boutique hotel chain calls its staff its cast and has them wear fashionable solid black outfits. Its corridors are softly lit, and suite doors are arches lit with recessed blue lighting. Its lobby has a ceiling-to-floor waterwall. The promotional strategy for this boutique hotel is to:

|a. |create a strong organizational image |

|b. |separate the point of production from the point of service consumption |

|c. |emphasize postpurchase communication |

|d. |stress intangible cues |

|e. |use personal information sources |

ANS: A

One way to create a strong organizational image is to manage the physical environment of the service facility, the appearance of the service employees, and tangible items associated with the service.

PTS: 1 REF: 164 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

64. The three categories of pricing objectives for services are:

|a. |sales-, quality-, and location-oriented |

|b. |quality-, value-, and consumer-oriented |

|c. |revenue-, operations-, and patronage-oriented |

|d. |turnover-, volume-, and capacity-oriented |

|e. |equity-, cost-, and revenue-oriented |

ANS: C PTS: 1 REF: 165 OBJ: 11-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

65. A focus on maximizing the surplus of income over costs is a(n) _____ pricing objective for service firms.

|a. |revenue-oriented |

|b. |operations-oriented |

|c. |market-share-oriented |

|d. |patronage-oriented |

|e. |service-quality |

ANS: A PTS: 1 REF: 165 OBJ: 11-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

66. Determining costs can be extremely difficult for a service provider that has adopted a(n) _____ pricing objective and may limit the usefulness of the objective.

|a. |market-share-oriented |

|b. |operations-oriented |

|c. |revenue-oriented |

|d. |patronage-oriented |

|e. |break-even |

ANS: C

Revenue-oriented objectives require calculations of income and costs, which can be difficult for many services.

PTS: 1 REF: 165 OBJ: 11-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing

67. Alabama Adventure, an amusement park with a water slide, charges less for weekday admission than it does for weekend attendance. It also has a lower ticket price for patrons who arrive at 4 p.m. Because it is focusing on coordinating supply and demand by varying prices, it is using a(n) _____ pricing objective for service firms.

|a. |revenue-oriented |

|b. |operations-oriented |

|c. |image-focused |

|d. |patronage-oriented |

|e. |equity-oriented |

ANS: B

A focus on matching supply and demand by varying prices to ensure maximum use of productive capacity at any specific point in time is an operations-oriented pricing objective for service firms.

PTS: 1 REF: 165 OBJ: 11-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

68. Budget airlines are a new service in China. Shanghai-based Spring Airlines is a start-up service with three airplanes and a tight budget. Its owner boasts that his ticket prices are 40 percent cheaper than the competition, at times even equivalent to hard-seat train prices. Which method for pricing services is Spring Airlines most likely using?

|a. |operations-oriented pricing |

|b. |revenue-oriented pricing |

|c. |supply/demand pricing |

|d. |capacity planning pricing |

|e. |patronage-oriented pricing |

ANS: E

Patronage-oriented pricing tries to maximize the number of customers using the service.

PTS: 1 REF: 165 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model International Perspective

69. A continuing problem for most Minor League Baseball (MiLB) teams is low attendance. Event and venue sponsors want to see fans in the stadiums, and the players appreciate fan support. Given this information, which pricing strategy would you recommend MiLB teams use?

|a. |operations-oriented pricing |

|b. |peak profitability pricing |

|c. |patronage-oriented pricing |

|d. |supply-demand pricing |

|e. |revenue-oriented pricing |

ANS: C

Patronage-oriented pricing tries to maximize the number of customers using the service.

PTS: 1 REF: 165 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

70. A focus on maximizing the number of customers using a service is a(n) _____ pricing objective for service firms.

|a. |maximization of demand |

|b. |patronage-oriented |

|c. |profitability-oriented |

|d. |operations-oriented |

|e. |revenue-oriented |

ANS: B PTS: 1 REF: 165 OBJ: 11-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

71. The Hermitage, Tennessee home of former U.S. president Andrew Jackson offers discount ticket prices to students and senior citizens. This illustrates the _____ pricing objective.

|a. |subsidized |

|b. |operations-oriented |

|c. |profitability-oriented |

|d. |service quality |

|e. |patronage-oriented |

ANS: E

A focus on maximizing the number of customers using a service is a patronage-oriented pricing objective for service firms.

PTS: 1 REF: 165 OBJ: 11-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

72. Because many services involve a process of continuous interaction between the service organization and the customer, _____ marketing is an important strategy.

|a. |interactive |

|b. |relationship |

|c. |patronage |

|d. |nonprofit |

|e. |affiliation |

ANS: B PTS: 1 REF: 166 OBJ: 11-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

73. Satisfied customers are likely to engage in positive word-of-mouth communication, thereby helping to bring in new customers. Thus, a method for attracting, developing, and retaining customers is known as _____ marketing.

|a. |interactive |

|b. |affiliation |

|c. |patronage |

|d. |ambush |

|e. |relationship |

ANS: E PTS: 1 REF: 166 OBJ: 11-5 TYPE: Def

TOP: AACSB Communication | TB&E Model Strategy

74. Unfortunately, many institutions of higher learning have focused efforts on population segments only when they felt a segment could do something for them. For example, many schools have bombarded pre-college students when they feel they are needed to fill classroom seats. Few have taken the approach of trying to determine what the potential student really wants or needs. Often, once graduated, a former student is only thought of as an alumnus or alumna, not as someone who can again benefit from the services provided by the institution. This description suggests that _____ marketing would be useful.

|a. |interactive |

|b. |relationship |

|c. |patronage |

|d. |nonprofit |

|e. |affiliation |

ANS: B

Relationship marketing involves ongoing interaction between the service provider and the customer.

PTS: 1 REF: 166 OBJ: 11-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer

75. One of the main responsibilities of sport marketers is to keep their loyal customers as heavy users and escalate lower-level users into loyal customers. An effective tool for accomplishing this goal would be _____ marketing.

|a. |interactive |

|b. |relationship |

|c. |patronage |

|d. |nonprofit |

|e. |affiliation |

ANS: B

Relationship marketing involves ongoing interaction between the service provider and the customer. It is a means of attracting, developing, and retaining customer loyalty.

PTS: 1 REF: 166 OBJ: 11-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

76. The level of relationship marketing that is least likely to be effective in the long term because its advantage is easily imitated by other firms is based on:

|a. |personal communications |

|b. |social bonds |

|c. |service delivery heuristics |

|d. |pricing incentives |

|e. |structural bonds |

ANS: D PTS: 1 REF: 166 OBJ: 11-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

77. Mountain Express is a company that provides grocery delivery service to several small communities in Idaho. The company gives a 2 percent discount on all food orders to customers after they have used the service 10 times. An additional percentage discount is offered for each additional 15 orders up to a maximum of 8 percent. The relationship marketing strategy used by Mountain Express is based on:

|a. |following service delivery paradigms |

|b. |building social bonds |

|c. |building financial bonds |

|d. |opening personal communication channels |

|e. |creating structural bonds |

ANS: C

Building financial bonds includes the use of price incentives.

PTS: 1 REF: 166 OBJ: 11-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

78. A management consulting business stays in touch with its business customers with phone calls and greeting cards. It periodically sends out needs-assessment questionnaires and designs new services to meet the needs revealed in these surveys. This is an example of relationship marketing based on:

|a. |financial bonds |

|b. |social bonds |

|c. |service delivery |

|d. |patronage bonds |

|e. |structural bonds |

ANS: B

Building social bonds includes staying in touch with customers, learning about their needs, and designing services to meet those needs.

PTS: 1 REF: 166 OBJ: 11-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer

79. Building value-added services that are not readily available from other firms into the delivery system defines relationship marketing based on the creation of:

|a. |financial bonds |

|b. |social bonds |

|c. |service delivery paradigms |

|d. |personal communication channels |

|e. |structural bonds |

ANS: E PTS: 1 REF: 166 OBJ: 11-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

80. Hyatt Regency's Platinum Card Program allows members to bypass any line at the check-in desk and get immediate check-in service. In this example, _____ are developed by offering value-added services that are not readily available from other hotel chains.

|a. |price incentives |

|b. |social bonds |

|c. |service delivery paradigms |

|d. |personal communication channels |

|e. |structural bonds |

ANS: E

This example is similar to the Hertz example in the text.

PTS: 1 REF: 166 OBJ: 11-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

81. Relationship marketing programs that are based on _____ bonds have the strongest potential for sustaining long-term relationships with customers.

|a. |financial and individual |

|b. |social and structural |

|c. |financial, social, and structural |

|d. |financial and patronage |

|e. |financial and structural |

ANS: C

Level-three marketing programs with all three components are the strongest relationship marketing programs. See Review Learning Outcome 5.

PTS: 1 REF: 166 OBJ: 11-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Customer

82. Treating employees as customers and developing systems and benefits that satisfy their needs such as training, stressing teamwork, and employee empowerment is known as _____ marketing.

|a. |organizational quality |

|b. |relationship |

|c. |internal |

|d. |job-faceted |

|e. |job-satisfaction |

ANS: C PTS: 1 REF: 166 OBJ: 11-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Customer

83. The Container Store’s CEO believes the company has a moral obligation to ensure employees are provided with an exciting and secure atmosphere to work in on a daily basis. He is concerned about:

|a. |internal marketing |

|b. |service quality |

|c. |tangible cueing |

|d. |relationship marketing |

|e. |patronage programming |

ANS: A

Treating employees as customers and developing systems and benefits that satisfy their needs is known as internal marketing.

PTS: 1 REF: 166 OBJ: 11-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer

84. Global competition in the services arena is intense. _____ is the world's largest exporter of services.

|a. |Germany |

|b. |Japan |

|c. |The United States |

|d. |China |

|e. |Canada |

ANS: C PTS: 1 REF: 166 OBJ: 11-7 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model International Perspective

85. Many U.S. services industries have the potential for globalization because of their existing competitive advantages. According to the text, which of the following is an example of a service industry that possesses a distinct competitive advantage?

|a. |soft-drink bottling |

|b. |construction and engineering |

|c. |book publishing |

|d. |petroleum |

|e. |sports franchises |

ANS: B PTS: 1 REF: 166 OBJ: 11-7 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model International Perspective

86. A _____ seeks to achieve some goal other than the usual business goals of profit, market share, or return on investment.

|a. |nonprofit organization |

|b. |synergistic entity |

|c. |company with no equity |

|d. |service provider |

|e. |patronage-oriented organization |

ANS: A PTS: 1 REF: 167 OBJ: 11-8 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

87. Emmy award-winning actress Kirstie Alley became the spokesperson for Narconon International in 1990. Her concern about the increased drug use by young people prompted her to support this ____ whose goal is to provide treatment and rehabilitation to young people before they become hardened criminals.

|a. |nonprofit organization |

|b. |synergistic entity |

|c. |company with no equity |

|d. |service provider |

|e. |patronage-oriented organization |

ANS: A

A nonprofit organization seeks to achieve some goal other than the usual business goals of profit, market share, or return on investment.

PTS: 1 REF: 167 OBJ: 11-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer

88. The predominant form of nonprofit organization in the United States is:

|a. |farms |

|b. |arts museums and programs |

|c. |private-sector volunteer organizations |

|d. |social service firms |

|e. |government |

ANS: E PTS: 1 REF: 167 OBJ: 11-8 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

89. Which of the following is NOT an example of a nonprofit organization?

|a. |State Farm, an insurance company |

|b. |American Heart Association |

|c. |American Humane Society |

|d. |Rotary Club, a service organization |

|e. |Brotherhood of Electrical Workers, a union |

ANS: A

State Farm is a for-profit business.

PTS: 1 REF: 166 OBJ: 11-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

90. _____ includes marketing activities conducted by individuals and organizations to achieve some goal other than normal business goals, such as profit, market share, or return on investment.

|a. |Cause-related sponsorship |

|b. |Nonprofit organization marketing |

|c. |Marketing autonomy |

|d. |Service marketing |

|e. |Social marketing |

ANS: B PTS: 1 REF: 167 OBJ: 11-8 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

91. _____ refers to the efforts of public and private nonprofit firms to bring about mutually satisfying exchanges with their target markets.

|a. |Autonomous marketing |

|b. |Public affairs marketing |

|c. |Social targeting |

|d. |Social marketing |

|e. |Nonprofit organization marketing |

ANS: E PTS: 1 REF: 167 OBJ: 11-8 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

92. Habitat for Humanity, a(n) _____, renovates vacant houses and sells them at no-interest mortgage rates to low-income home buyers. The organization relies on volunteers to provide the labor and funding for its renovations.

|a. |image-oriented organization |

|b. |for-profit organization |

|c. |nonprofit organization |

|d. |service branch |

|e. |source-based organization |

ANS: C PTS: 1 REF: 167 OBJ: 11-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

93. Sierra Club and the Girl Scouts of America are nonprofit organizations that want to develop marketing strategies to bring about mutually satisfying exchanges with their target markets as they work to protect our environment. Thus, both Sierra Club and the Girl Scouts of America have:

|a. |no need to develop an understanding of pricing |

|b. |a marketing orientation |

|c. |the same organizational structure as profit-making firms |

|d. |no impact on nonbuyers |

|e. |no need for marketing skills |

ANS: B

A nonprofit organization exists to achieve some goals other than profit, but like their corporate counterparts, nonprofit managers develop marketing strategies to bring about mutually satisfying exchanges with target markets.

PTS: 1 REF: 167 OBJ: 11-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

94. Which of the following statements about the marketing activities of a nonprofit organization is true?

|a. |Nonprofit organizations use the same terminology as for-profit companies when talking about their customers. |

|b. |Nonprofit organizations do not charge a price. |

|c. |Nonprofit organizations express their objectives in terms of profit. |

|d. |Nonprofit organizations often use undifferentiated segmentation strategies. |

|e. |All of these statements about the marketing activities of nonprofit organizations are true. |

ANS: D

Nonprofit organizations often refer to their target markets as clients, patients, or members. Nonprofit organizations charge fees, donations, tuition, etc.—all examples of prices. The major difference between nonprofits and for-profits is the lack of a profit objective.

PTS: 1 REF: 167 OBJ: 11-8 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

95. As with for-profit organizations, the first step in developing a marketing program for a nonprofit organization is to:

|a. |determine the marketing mix |

|b. |define organizational objectives |

|c. |establish the financial needs of the organization |

|d. |create a promotion to attract donors |

|e. |select a direct distribution outlet |

ANS: B

Defining organizational objectives will lead to selection of target markets and then to the marketing mix.

PTS: 1 REF: 167 OBJ: 11-8 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

96. An acceptable goal of the Hype and Humble, a Los Angeles nonprofit organization dedicated to empowering women and children in crisis, for its “Day of Pampering” program would be to:

|a. |set participation goals to provide a 12 percent return on investment |

|b. |increase expenses to fit budgetary allowances |

|c. |avoid corporation pitfalls |

|d. |increase awareness in its target market to 75 percent |

|e. |gain a larger market share than other nonprofits that are administering to the same group |

ANS: D

The only appropriate goal for a nonprofit firm would be a service goal such as awareness, not a financial or market share goal.

PTS: 1 REF: 167-168 OBJ: 11-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

97. What is one of the consequences of the American Red Cross's nonprofit orientation?

|a. |The success of the Red Cross cannot be measured in financial terms. |

|b. |The Red Cross will not make as much money as a profit-oriented firm. |

|c. |The Red Cross does not have to worry about revenues and costs. |

|d. |The Red Cross is not expected to be as efficient as a for-profit firm. |

|e. |The Red Cross's success is based on how much money is donated to it. |

ANS: A

Success in a nonprofit organization is measured by how well service goals are met and how well it serves the community.

PTS: 1 REF: 167 OBJ: 11-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

98. Save-the-Redwoods League is a nonprofit group committed to preserving ancient forests in the United States. Its _____ is environmentalists, loggers, hunters, national park visitors, and lumber-producing companies.

|a. |target market |

|b. |market objective |

|c. |service providers |

|d. |market segment |

|e. |niche |

ANS: A

The goal of the organization is to convince those groups and others of the importance of their work.

PTS: 1 REF: 167-168 OBJ: 11-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

99. The International Society of Hospitality Purchasers raised $62,000 in donated goods for Gifts in Kind International, a nonprofit group that gathers and distributes new and used merchandise to charities nationwide. Contributors donated about $37,500 in goods in conjunction with recent trade shows, and $24,500 in fabric and furniture was donated by other vendors. The society and its members as well as the charities who are beneficiaries of the merchandise compose the organization's:

|a. |target markets |

|b. |market objectives |

|c. |service providers |

|d. |market segment |

|e. |niche |

ANS: A

The goal of the organization is to convince those groups and others of the importance of their work.

PTS: 1 REF: 167-168 OBJ: 11-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer

100. The major difference between the marketing orientation of FedEx and of the U.S. Marine Corps’ annual Toys for Tots program is that:

|a. |Toys for Tots does not have to be concerned with advertising or promotion |

|b. |FedEx has a target market |

|c. |quantitative methods of market research can be used at FedEx |

|d. |only FedEx has a product that can be marketed |

|e. |the rewards of the Toys for Tots program are long-term social benefits |

ANS: E

Both FedEx and the Toys for Tots program have target markets, products, advertising considerations, and the ability to do quantitative market research. But the Toys for Tots program is concerned with long-term social benefits to the public, and FedEx is primarily concerned with profit-oriented goals.

PTS: 1 REF: 167 OBJ: 11-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

101. A target market for a nonprofit organization:

|a. |needs to be defined in terms of competing private-sector organizations |

|b. |needs to be defined as the "community" in general in order to reach all potential targets |

|c. |may include many apathetic or strongly opposed targets |

|d. |is best defined geographically, to include the area served |

|e. |is best defined as the potential donors because their funds will ensure the survival of the organization |

ANS: C

The target markets must include both the service users and the potential donors, which may be apathetic or strongly opposed groups.

PTS: 1 REF: 167 OBJ: 11-8 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

102. Nonprofit organizations face a unique challenge because the target market of the nonprofit organization is often:

|a. |the community where it is located |

|b. |the people who provide the funding |

|c. |a paid administrator |

|d. |the apathetic or strongly opposed individuals |

|e. |the government |

ANS: D

The target market for many nonprofit services is often apathetic, disinterested, or opposed individuals who nonetheless may need the service. Alternatives a, b, and c are as likely to be targeted by for-profits as nonprofits.

PTS: 1 REF: 167 OBJ: 11-8 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

103. The Bridgespan Group is a not-for-profit strategic consulting firm dedicated to providing guidance for nonprofits. Which of the following would NOT be one of its target markets?

|a. |its own administrative board |

|b. |a group devoted to helping homeless people find jobs |

|c. |state government agencies |

|d. |adults interested in improving educational opportunities for children |

|e. |community members who are interested in starting a museum |

ANS: A

Except for the administrative board, all are potential users, donors, or volunteers who will need to be convinced to participate. Members of the board will need no convincing.

PTS: 1 REF: 167-168 OBJ: 11-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

104. Which of the following statements describes how a nonprofit organization should design its product offering?

|a. |The organization should try to create products it can inventory. |

|b. |The organization should remember the product offering is not as crucial to organizational success as the other elements |

| |of the service mix. |

|c. |The product offering should be kept as simple as possible. |

|d. |The organization will need to satisfy the needs of the target market or it will fail. |

|e. |The product offering will have to be tangible. |

ANS: D

As with any type of product, to be successful the product must meet the needs of the target market.

PTS: 1 REF: 168 OBJ: 11-8 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

105. A local church formed a special committee to provide aid to the homeless in its county. The church applied to the city and county governments for funding but was denied when it could not adequately state what services it would offer. In this case, the special committee failed because it had not defined its:

|a. |user market |

|b. |target market |

|c. |sponsoring organizations |

|d. |donor market |

|e. |product offering |

ANS: E PTS: 1 REF: 168 OBJ: 11-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

106. Save-the-Redwoods League is a nonprofit group committed to preserving ancient forests in the United State. The organization has relatively weak _____ because most people are not directly affected by what the organization does.

|a. |differential advantage |

|b. |benefit strength |

|c. |advantage complexity |

|d. |donor commitment |

|e. |empathy |

ANS: B

Benefit strength refers to the fact that this nonprofit cannot offer customers direct, personal benefits in an exchange relationship.

PTS: 1 REF: 168 OBJ: 11-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer

107. If a benefit is indirect to the customer, the marketer may find a challenge in promoting a product with little:

|a. |benefit complexity |

|b. |feature charisma |

|c. |benefit strength |

|d. |personalization |

|e. |benefit exchange |

ANS: C PTS: 1 REF: 168 OBJ: 11-8 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Promotion

108. Gifts in Kind International is a nonprofit organization that gathers new and used merchandise and distributes it to charities nationwide. Traditional promotional tools may be inadequate to motivate its target markets because of:

|a. |nonprofit product volunteer policies |

|b. |the absence of consumer involvement |

|c. |lack of prices for the products |

|d. |direct distribution |

|e. |infrequent use of target markets |

ANS: B

Involvement may range from extremely high (join the military, stop smoking) to low (prevent forest fires, don't litter), which is a much wider range than consumer products usually experience.

PTS: 1 REF: 168 OBJ: 11-8 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

109. Throughout the United States, dancers are joining hands, arms, and legs to present a Virtual Kickline Performance as a sign of their unified support for National Dance Week (NDW) and its mission statement. The purpose of NDW is to educate the American public on the cultural contributions of dance to our society and raise public awareness to the benefits of dance in our culture. This Virtual Kickline Performance is an example of a _____ strategy.

|a. |target market |

|b. |distribution |

|c. |product |

|d. |promotion |

|e. |direct marketing |

ANS: D

It is using volunteers to promote its message.

PTS: 1 REF: 168-169 OBJ: 11-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

110. Most governmental organizations are prohibited from:

|a. |using publicity in any form |

|b. |engaging in personal selling |

|c. |using public service announcements |

|d. |advertising |

|e. |direct marketing |

ANS: D PTS: 1 REF: 168-169 OBJ: 11-8 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

111. A business professional from The Center for Retailing at Morehead University has been donating several hours of consulting time to local nonprofit organizations each month. This could be expected to provide the center with all of the following benefits EXCEPT:

|a. |community approval |

|b. |goodwill |

|c. |immediate financial gain |

|d. |personal contacts |

|e. |personal satisfaction |

ANS: C

Donating time to a nonprofit firm will result in intangible and long-term benefits, but not immediate financial gain.

PTS: 1 REF: 169 OBJ: 11-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion

112. _____ is an announcement in mass media for which no charge is made and which promotes programs, activities, or services of federal, state, or local governments or the programs, activities, or services of nonprofit organizations.

|a. |Nonsponsored advertising |

|b. |Public service advertising |

|c. |Societal marketing |

|d. |Cause-related marketing |

|e. |Social advertising |

ANS: B PTS: 1 REF: 169 OBJ: 11-8 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

113. The Chrysalis Job Training for the Disabled program wants to notify the community about its upcoming rummage sale. As an experienced marketer and director of the program, you plan to visit several local radio and televisions stations to request:

|a. |freestanding inserts |

|b. |nonsponsored advertising |

|c. |advocacy marketing |

|d. |public service advertising |

|e. |societal marketing |

ANS: D

An announcement in mass media for which no charge is made and which promotes programs, activities, or services of nonprofit organizations is called public service advertising.

PTS: 1 REF: 169 OBJ: 11-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion

114. In a nonprofit organization, _____ are often concerned with partially or fully defraying costs rather than achieving a profit.

|a. |nonfiscal costs |

|b. |pricing objectives |

|c. |cause-related goals |

|d. |equity earnings |

|e. |liquidity fees |

ANS: B PTS: 1 REF: 169 OBJ: 11-8 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

115. In many nonprofit situations the consumer is not charged a tangible price yet must absorb time costs, embarrassment costs, or effort costs. These costs are called the organization's:

|a. |liquidity fees |

|b. |financial costs |

|c. |fiscal prices |

|d. |nonfinancial prices |

|e. |retained earnings |

ANS: D PTS: 1 REF: 169 OBJ: 11-8 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

116. When services for those in relatively poor economic situations are largely paid for by those who are in better financial situations, it is known as:

|a. |nonfinancial pricing |

|b. |the Robin Hood principle |

|c. |indirect payment |

|d. |separation between payers and users |

|e. |indirect distribution |

ANS: D PTS: 1 REF: 169 OBJ: 11-8 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

117. One feature that distinguishes nonprofit organization pricing decisions from profit-sector pricing decisions is _____, an example of which is university tuition. This practice also exists in the profit sector, but there it is considered to be an undesirable, temporary situation.

|a. |below-cost pricing |

|b. |indirect payment |

|c. |nonfinancial prices |

|d. |separation between payers and users |

|e. |the lost pricing objective |

ANS: A PTS: 1 REF: 169 OBJ: 11-8 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

Chapter 12—Marketing Channels and Supply Chain Management

MULTIPLE CHOICE

1. A _____ is a business structure of interdependent organizations that reaches from the point of product origin to the consumer.

|a. |facilitating agency or place member |

|b. |marketing mix intermediary |

|c. |selective distribution channel |

|d. |marketing channel or channel of distribution |

|e. |transportation channel or channel of movement |

ANS: D PTS: 1 REF: 171 OBJ: 12-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

2. Marketing channels can achieve economies of scale through:

|a. |overcoming spatial discrepancies |

|b. |contact expertise |

|c. |specialization and division of labor |

|d. |overcoming temporal discrepancies |

|e. |overcoming discrepancies of quantity |

ANS: C PTS: 1 REF: 171-172 OBJ: 12-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

3. Distribution channels aid in overcoming barriers to exchange that are created in the production process by overcoming all of the following types of discrepancies EXCEPT:

|a. |possession |

|b. |assortment |

|c. |quantity |

|d. |spatial |

|e. |temporal |

ANS: A

Channels facilitate the end goal of possession of the goods, but they do not help to overcome a discrepancy of possession.

PTS: 1 REF: 172 OBJ: 12-1 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

4. A discrepancy of _____ is the difference between the amount of product produced and the amount an end user wants to buy.

|a. |space |

|b. |quantity |

|c. |assortment |

|d. |accumulation |

|e. |possession |

ANS: B PTS: 1 REF: 172 OBJ: 12-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

5. To facilitate manufacturing in China, Ingersoll-Rand uses 18 different local suppliers of key component parts. These suppliers are part of the _____ for Ingersoll-Rand.

|a. |communication network |

|b. |channel of distribution |

|c. |supply pyramid |

|d. |materials-handling network |

|e. |demand chain |

ANS: B PTS: 1 REF: 171 OBJ: 12-1 TYPE: App

TOP: AACSB Diversity | TB&E Model Distribution | TB&E Model International Perspective

6. If a retail outlet does not offer all the items necessary in order for the buyer to use or to receive full satisfaction from a product purchased there, there is a:

|a. |discrepancy of assortment |

|b. |discrepancy of quantity |

|c. |spatial discrepancy |

|d. |temporal discrepancy |

|e. |discrepancy of possession |

ANS: A PTS: 1 REF: 172 OBJ: 12-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

7. A manufacturer may only produce one product, yet additional products may be required to actually use the first product. This creates a:

|a. |discrepancy of quantity |

|b. |discrepancy of assortment |

|c. |spatial discrepancy |

|d. |temporal discrepancy |

|e. |discrepancy of possession |

ANS: B PTS: 1 REF: 172 OBJ: 12-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

8. McKesson Company provides health care products to pharmacies. For example, it purchases bandages, gauze, antibacterial cream, and ointments (or anything else you would need to treat a cut or scrape) from a variety of different manufacturers. Its goal is to provide each pharmacy with every item a customer might want to treat a cut. McKesson is aiding consumers by overcoming:

|a. |spatial discrepancy |

|b. |discrepancy of quantity |

|c. |discrepancy of assortment |

|d. |demand discrepancies |

|e. |discrepancy of possession |

ANS: C

A manufacturer may only produce one product, yet additional products may be required to actually use the first product. This creates a discrepancy of assortment.

PTS: 1 REF: 172 OBJ: 12-1 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

9. Certified Grocers Midwest, Inc., the Chicago-based grocery wholesale cooperative, provides all kinds of meats, cereals, canned and fresh fruits and vegetables, beauty aids, health care items, and pet products to the supermarkets in its channel. Certified Grocers is aiding consumers by overcoming:

|a. |spatial discrepancy |

|b. |discrepancy of quantity |

|c. |discrepancy of assortment |

|d. |demand discrepancies |

|e. |discrepancy of possession |

ANS: C

By providing the central buying function on behalf of its customers, Certified overcomes the discrepancy of assortment and is able to offer many different brands of similar items.

PTS: 1 REF: 172 OBJ: 12-1 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

10. A(n) _____ discrepancy is created when a product is produced but a consumer is not ready to purchase it.

|a. |quantity |

|b. |supply |

|c. |possession |

|d. |temporal |

|e. |assortment |

ANS: D PTS: 1 REF: 172 OBJ: 12-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

11. Cutter & Buck is a high-end fashion sportswear company. Even though swimwear is a product category that does not sell year round, its sales remain steady all year because Cutter & Buck sells to wholesale distributors that stock the product. Its wholesale distributors are helping to overcome a(n) _____ discrepancy.

|a. |assortment |

|b. |spatial |

|c. |possession |

|d. |quantity |

|e. |temporal |

ANS: E

A temporal discrepancy is created when a product is produced but a consumer is not ready to purchase it.

PTS: 1 REF: 172 OBJ: 12-1 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

12. Vicobello is a major manufacturer of outdoor fountains that are currently popular in gardens. Even though fountains represent a product category that does not sell year round due to inclement weather, Vicobello's sales remain steady all year because it sells to wholesale distributors that stock the product. Its wholesale distributors are primarily helping to overcome a(n) _____ discrepancy.

|a. |assortment |

|b. |spatial |

|c. |possession |

|d. |quantity |

|e. |temporal |

ANS: E

A temporal discrepancy is created when a product is produced but a consumer is not ready to purchase it. Several of those discrepancies are being partially overcome, but the MAIN one is temporal.

PTS: 1 REF: 172 OBJ: 12-1 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

13. Markets are often scattered over large geographic regions, yet a manufacturer may only have one location in the country. This creates a(n) _____ discrepancy.

|a. |spatial |

|b. |temporal |

|c. |assortment |

|d. |quantity |

|e. |ownership |

ANS: A

Several of those discrepancies are being partially overcome, but the MAIN one is spatial.

PTS: 1 REF: 172 OBJ: 12-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

14. YKK slide fasteners (zippers) are made in Macon, Georgia, yet manufactures all over the world use zippers to manufacture, clothes, luggage, shoes, and other items. Wholesalers around the world primarily help to overcome a(n) _____ discrepancy.

|a. |creation |

|b. |temporal |

|c. |assortment |

|d. |spatial |

|e. |ownership |

ANS: D

Markets are often scattered over large geographic regions, yet a manufacturer may only have one location in the country. This creates a spatial discrepancy.

PTS: 1 REF: 172 OBJ: 12-1 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

15. Marketing channels make distribution simpler by reducing the number of transactions required to get products from manufacturers to consumers. This is called:

|a. |forward integration |

|b. |contact efficiency |

|c. |elimination of temporal discrepancies |

|d. |sorting |

|e. |reciprocity |

ANS: B PTS: 1 REF: 172-173 OBJ: 12-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

16. The major characteristic that is used to differentiate between types of intermediaries is whether they:

|a. |install exchange barriers such as location, time, and quantity |

|b. |prevent specialization of labor |

|c. |decrease economies of scale |

|d. |take title to the products they sell |

|e. |raise profit margins for independent middlemen |

ANS: D

Marketing channels increase the efficiency of the buying and exchange process by reducing the number of contacts between buyers and sellers.

PTS: 1 REF: 173 OBJ: 12-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

17. Retailers and merchant wholesalers are examples of intermediaries that:

|a. |take title to a product |

|b. |create temporal and spatial discrepancies |

|c. |use consumer promotions |

|d. |do not benefit from any economies of scale |

|e. |are accurately described by all of these statements |

ANS: A

Retailers and merchant wholesalers own the merchandise and control the terms of its ultimate sale.

PTS: 1 REF: 173 OBJ: 12-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

18. W.W. Grainger, Inc., is one of the world's largest business-to-business distributors of equipment, component parts, and supplies in the United States and Canada. It has ownership title to over 220,000 products, which are stocked in one national and nine regional warehouses to guarantee product availability and quick service to the many manufacturers who are its customers. W.W. Grainger is an example of a(n):

|a. |agent or broker |

|b. |merchant wholesaler |

|c. |retailer |

|d. |consumer market |

|e. |hypermarket intermediary |

ANS: B

A merchant wholesaler is an institution that buys goods from manufacturers and resells them to other wholesalers and retailers. Merchant Wholesalers receive and take title to the goods, own warehouses, and ship the products they sell.

PTS: 1 REF: 173 OBJ: 12-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution

19. Long Island Lefty provides retailers and other businesses with the latest and the best products for left-handed consumers. It buys all types of products from a variety of manufacturers and stores the merchandise in its New York warehouse until purchased by buyers. Long Island Lefty does not sell to end users and is an example of a(n):

|a. |agent or broker |

|b. |merchant wholesaler |

|c. |retailer |

|d. |consumer market |

|e. |hypermarket intermediary |

ANS: B

A merchant wholesaler is an institution that buys goods from manufacturers and resells them to other wholesalers and retailers. Merchant wholesalers receive and take title to the goods, own warehouses, and ship the products they sell.

PTS: 1 REF: 173 OBJ: 12-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution

20. A(n) _____ is an institution that buys goods from manufacturers, takes title to these goods, and resells them to businesses, government agencies, and/or other wholesalers or retailers.

|a. |merchant wholesaler |

|b. |agent |

|c. |drop shipper |

|d. |channel cooperative |

|e. |marketing cooperative |

ANS: A PTS: 1 REF: 173 OBJ: 12-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

21. Which of the following statements about merchant wholesalers is true?

|a. |Products typically carried by merchant wholesalers are technically simple. |

|b. |Customers of merchant wholesalers are typically concentrated. |

|c. |The buyer is generally satisfied with a long lead time when the merchant wholesaler is acting as the facilitating |

| |intermediary. |

|d. |Frequent ordering is commonplace with a merchant wholesaler. |

|e. |Merchant wholesalers tend to carry products with low gross margin. |

ANS: D

See Exhibit 12.2

PTS: 1 REF: 175 OBJ: 12-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

22. Agents and brokers:

|a. |have a great deal of control and risk invested in the goods |

|b. |only represent manufacturers in sales situations |

|c. |have a great deal of input on the terms of the sale |

|d. |generally are on salary with the manufacturer |

|e. |do not take title to merchandise |

ANS: E

Agents and brokers represent retailers, wholesalers, or manufacturers in sales situations, but the agent or broker generally has little input into the terms of the sale. Agents and brokers generally receive a fee or commission and do not take title, control, or risk concerning the merchandise.

PTS: 1 REF: 175 OBJ: 12-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

23. _____ are wholesaling intermediaries who facilitate the sales of a product from producer to end user by representing retailers, wholesalers, or manufacturers and providing little input as to the terms of the sale.

|a. |Marketing facilitators |

|b. |Channel cooperatives |

|c. |Agents and brokers |

|d. |Merchant wholesalers |

|e. |Channel functionaries |

ANS: C PTS: 1 REF: 175 OBJ: 12-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

24. Generally, _____ determine what type of intermediary a manufacturer should use:

|a. |product characteristics, buyer consideration, and market characteristics |

|b. |internal environmental characteristics only |

|c. |competitive conditions and government regulations |

|d. |all controllable marketing factors |

|e. |only noncontrollable environmental factors |

ANS: A

The correct answer combines both internal and external elements. The internal elements can be controlled by the manufacturer, while external environmental factors cannot.

PTS: 1 REF: 174 OBJ: 12-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

25. The three basic functions channel intermediaries perform are:

|a. |transactional, logistical, and facilitating |

|b. |contacting, negotiating, and ownership |

|c. |promoting, distributing, and bulk-breaking |

|d. |assorting, accumulating, and allocating |

|e. |financing, mediating, and storing |

ANS: A PTS: 1 REF: 174 OBJ: 12-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

26. Transactional channel functions include all of the following activities EXCEPT:

|a. |contacting buyers |

|b. |promoting the products to be sold |

|c. |taking the risks associated with product inventories |

|d. |negotiating the sale |

|e. |physical distribution and sorting |

ANS: E

See also Exhibit 12.2.

PTS: 1 REF: 174 OBJ: 12-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Product

27. Marketing channels perform all of the following logistical activities EXCEPT:

|a. |sorting |

|b. |storing |

|c. |grading |

|d. |risk taking |

|e. |assorting products into homogeneous or heterogeneous collections |

ANS: D

Risk taking is a transactional activity. See Exhibit 12.2

PTS: 1 REF: 174 OBJ: 12-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

28. _____ includes managing the movement of raw materials and parts from their sources to production sites; managing the movement of materials, semi-finished, and finished products within and among plants, warehouses, and distribution centers; and the planning and coordinating of the physical distribution of finished goods to intermediaries and final buyers.

|a. |Disintermediation |

|b. |Logistics |

|c. |Materials handling |

|d. |Intermodal transportation |

|e. |Contract logistics |

ANS: B PTS: 1 REF: 174 OBJ: 12-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

29. _____ describes the process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumption.

|a. |Contract logistics |

|b. |Logistics |

|c. |Cross-docking |

|d. |Disintermediation |

|e. |Channel facilitation |

ANS: B PTS: 1 REF: 174 OBJ: 12-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

30. Vicobello is a manufacturer of outdoor fountains that are currently popular in gardens. Even though fountains represent a product category that does not sell year round due to inclement weather, Vicobello's sales remain steady all year because it sells to wholesale distributors that stock the product. Vicobello sells to wholesale distributors that perform _____ functions for the manufacturer.

|a. |financial |

|b. |transactional |

|c. |facilitating |

|d. |logistical |

|e. |promotional |

ANS: D

Storing for later sale to retailers is a logistical function. See Exhibit 12.2

PTS: 1 REF: 174 OBJ: 12-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

31. Which of the following is NOT a sorting activity?

|a. |assorting |

|b. |accumulation |

|c. |sorting out |

|d. |allocation |

|e. |possession |

ANS: E

See Exhibit 12.2.

PTS: 1 REF: 174 OBJ: 12-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

32. Breaking bulk at the wholesale level is called:

|a. |allocating |

|b. |accumulation |

|c. |storing |

|d. |downsizing |

|e. |grading |

ANS: A

See Exhibit 12.2.

PTS: 1 REF: 174 OBJ: 12-2 TYPE: Def

TOP: AACSB Diversity | TB&E Model Distribution | TB&E Model International Perspective

33. Which of the following are examples of facilitating functions performed by wholesaling intermediaries?

|a. |sorting and storing |

|b. |risk taking and promotion |

|c. |assorting, accumulating, grading, and allocating |

|d. |researching and financing |

|e. |financial management and storing |

ANS: D

See Exhibit 12.2.

PTS: 1 REF: 174 OBJ: 12-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Research

34. Which of the following is NOT a channel member typically used by manufacturers as they route their products to consumers?

|a. |retailer |

|b. |agent/broker |

|c. |industrial distributor |

|d. |producer |

|e. |wholesaler |

ANS: C

Industrial distributors are used for distributing industrial, not consumer products. See also Exhibit 12.3 and Exhibit 12.4.

PTS: 1 REF: 175 OBJ: 12-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

35. One configuration of a marketing channel entails producers selling to consumers with no intermediaries involved. This is called a:

|a. |limited distribution system |

|b. |conventional channel |

|c. |vertical marketing system |

|d. |reciprocal channel |

|e. |direct channel |

ANS: E

See Exhibit 12.3 and Exhibit 12.4.

PTS: 1 REF: 175 OBJ: 12-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution

36. The only way Jim Keeler in New Mexico can get a box of Carolyn Popwell’s Festive Holiday Truffles from Washington is to order it through the mail. Popwell, who makes the candy by hand, uses a(n) _____ exclusively.

|a. |exclusive distribution system |

|b. |conventional channel |

|c. |vertical marketing system |

|d. |reciprocal channel |

|e. |direct channel |

ANS: E

The manufacturer sells directly to the consumer. See Exhibit 12.3.

PTS: 1 REF: 175 OBJ: 12-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

37. A channel typically used for industrial products is the _____ channel.

|a. |direct |

|b. |industrial distributor |

|c. |wholesaler |

|d. |retailer |

|e. |extended |

ANS: A

See Exhibit 12.4.

PTS: 1 REF: 175 OBJ: 12-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

38. Vutek manufactures printing machines used to print high resolution graphics for billboards, bus cards, banners, and posters. For distribution, you would expect Vutek to use a:

|a. |network of facilitating agents |

|b. |horizontally integrated channel |

|c. |reciprocal channel |

|d. |direct channel |

|e. |vertical marketing system |

ANS: D

For business products requiring detailed technical specifications, the most common channel structure is the direct channel because of the amount of interaction and direct communication that is required.

PTS: 1 REF: 175 OBJ: 12-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

39. Companies selling standardized items of moderate or low value to other businesses (not to consumers) often use:

|a. |retailers |

|b. |industrial distributors |

|c. |direct marketing organizations |

|d. |agents and brokers |

|e. |disintermediation |

ANS: B PTS: 1 REF: 175 OBJ: 12-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

40. Centigon is a manufacturer of customized armored vehicles for military, private, presidential, and commercial uses. Each armored vehicle is designed to deliver security on the road while also achieving optimum levels of performance and comfort. For distribution, you would expect Centigon to use a:

|a. |network of facilitating agents |

|b. |horizontally integrated channel |

|c. |reciprocal channel |

|d. |direct channel |

|e. |vertical marketing system |

ANS: D

For customized business products requiring detailed specifications, the most common channel structure is the direct channel because of the amount of interaction and direct communication required.

PTS: 1 REF: 175 OBJ: 12-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

41. _____ distribution occurs when a producer selects two or more different channels to distribute the same products to target markets.

|a. |Selective |

|b. |Intensive |

|c. |Multiple |

|d. |Contractual |

|e. |Cumulative |

ANS: C PTS: 1 REF: 176 OBJ: 12-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

42. Aquabar distributes waters, natural fruit drinks, and premium liquids in still, sparkling, and naturally carbonated forms to restaurants, spas, supermarkets, hospitals, and educational institutions. Aquabar uses _____ distribution.

|a. |intensive |

|b. |multiple |

|c. |exclusive |

|d. |cumulative |

|e. |aggregated |

ANS: B

Multiple distribution occurs when a producer selects two or more different channels to distribute the same products to target markets.

PTS: 1 REF: 176 OBJ: 12-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

43. When the new father left the maternity ward to find something to eat, he was surprised to see he could buy McDonald's fast food in the hospital dining room. McDonald's is utilizing:

|a. |an agent/broker dominated channel |

|b. |logistical distribution |

|c. |multiplicative channels |

|d. |a nontraditional channel |

|e. |a strategic channel alliance |

ANS: D PTS: 1 REF: 176 OBJ: 12-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution | TB&E Model Product

44. When Blockbuster decided to establish Radio Shack stores within its existing stores, it seemed like a "marriage made in heaven" between a video rental chain known for frequent, loyal shoppers and one of the most identifiable consumer electronics retail brands in America. Consumers who went to rent films at a Blockbuster store were surprised and unsure how to react to this example of:

|a. |an agent/broker dominated channel |

|b. |logistical distribution |

|c. |multiplicative channels |

|d. |a nontraditional channel |

|e. |a strategic channel alliance |

ANS: D PTS: 1 REF: 176 OBJ: 12-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution

45. _____ use another manufacturer's already established channel and are used most often when the creation of marketing channel relationships may be expensive and time-consuming.

|a. |Strategic channel alliances |

|b. |Relationship channels |

|c. |Reverse channels |

|d. |Multiple distribution systems |

|e. |Nontraditional channelization |

ANS: A PTS: 1 REF: 176 OBJ: 12-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Strategy

46. Selfridges is the second-largest department store in Great Britain. It works with House of Frasier, one of its competitors, to reduce operating costs by sharing channels of distribution to ship goods from 1,500 plus suppliers. Selfridges and House of Frasier are engaged in:

|a. |vertical conflict |

|b. |an integrated supply chain |

|c. |a strategic channel alliance |

|d. |an information-based distribution channel |

|e. |a distribution cooperative |

ANS: C

A strategic channel alliance is a cooperative agreement between businesses to use each other's already established distribution channels.

PTS: 1 REF: 176 OBJ: 12-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Strategy

47. Cambridge Research & Instrumentation, Inc., a pioneer of liquid crystal-based imaging solutions, and Hinds Instruments, a leading developer of advanced birefringence measurement solutions, have announced that Hinds with its considerable experience serving the advanced applications segment of this market will distribute Cambridge's highly regarded imaging technology. The two companies will engage in:

|a. |vertical conflict |

|b. |an integrated supply chain |

|c. |a strategic channel alliance |

|d. |an information-based distribution channel |

|e. |a distribution cooperative |

ANS: C

A strategic channel alliance is a cooperative agreement between businesses to use each other's already established distribution channels.

PTS: 1 REF: 176 OBJ: 12-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Strategy

48. When Delphi-Grundig, a manufacturer of state-of-the-art car radios, decided to expand its marketing efforts into countries in which its products are not currently available, it did not have the time or resources to spend on developing new channels of distribution. Delphi-Grundig should consider a(n):

|a. |industrial distributor |

|b. |franchising system |

|c. |reverse channel |

|d. |strategic channel alliance |

|e. |channel cooperative |

ANS: D

Strategic channel alliances use another manufacturer's already established channel and are used when the creation of marketing channel relationships may be expensive and time-consuming.

PTS: 1 REF: 176 OBJ: 12-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Strategy

49. _____ coordinates and integrates all of the activities performed by channel members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value.

|a. |Yield management |

|b. |Channel power |

|c. |Materials handling |

|d. |Supply chain management |

|e. |Physical distribution |

ANS: D PTS: 1 REF: 176 OBJ: 12-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Customer

50. Which of the following statements about supply chain management is true?

|a. |Supply chain management is supply chain-driven. |

|b. |Supply chain management focuses on pulling products into the marketplace. |

|c. |Outsourcing is not used with supply chain management. |

|d. |Supply chain management provides customers with maximum service levels. |

|e. |Supply chain management focuses on pushing products into the marketplace. |

ANS: B

Supply chain management is customer-driven. Outsourcing is one option for supply chain managers. Supply chain management balances the costs of the supply chain with the level of service demands by customers; thus, customers may not get the maximum level of service.

PTS: 1 REF: 176-177 OBJ: 12-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

51. Supply chain management:

|a. |is a physical flow process |

|b. |is customer-driven |

|c. |provides enhanced customer and economic value |

|d. |plays the role of communicator of customer demand |

|e. |is accurately described by all of these statements |

ANS: E PTS: 1 REF: 176-177 OBJ: 12-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

52. Peachtree Windows has no windows in inventory waiting for someone to order them. It does not make a window until it is ordered. It is able to make 27,000 different window configurations and promises delivery in five working days because of the excellent relationships it has established with its suppliers. This partnering relationship that Peachtree Windows has established with its suppliers and contractors indicates the use of:

|a. |supply chain management |

|b. |yield management |

|c. |channel networks |

|d. |horizontal marketing channels |

|e. |intensive distribution strategy |

ANS: A

Supply chain management coordinates and integrates all the activities from raw materials to product consumption.

PTS: 1 REF: 176-177 OBJ: 12-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

53. A large automotive after-market business wanted to improve its current situation, which is characterized by excessive inventory, incomplete information, high logistics costs, slow reactions to environmental change, and lost profits at the retail level. Would supply chain management be of any help to the business?

|a. |Yes, supply chain management is designed to coordinate and integrate all the activities from raw materials to product |

| |consumption. |

|b. |No, supply chain management is only applicable to distribution strategies for products being sold to the consumer |

| |market. |

|c. |Yes, supply chain management would be very useful because it relies so heavily on benchmarking. |

|d. |Yes, supply chain management would alleviate all channel conflict. |

|e. |No, supply chain management requires an expensive investment of time and resources to make it worthwhile. |

ANS: A

The correct answer contains the definition of supply chain management.

PTS: 1 REF: 176-177 OBJ: 12-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

54. Which of the following statements concerning how market factors affect channel decisions is true?

|a. |Industrial customers tend to buy in larger quantities and require more customer service. |

|b. |Geographically concentrated target markets should be served with an indirect sales force. |

|c. |Widely dispersed markets require fewer intermediaries. |

|d. |New firms in extremely competitive markets will be more successful if they use indirect channels. |

|e. |A very large market requires fewer intermediaries. |

ANS: A

Generally, a very large market requires more intermediaries, including wholesalers and retailers.

PTS: 1 REF: 178 OBJ: 12-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

55. Selfridges is the second-largest department store in Great Britain. It works with House of Frasier, one of its competitors, to reduce operating costs by sharing channels of distribution to ship goods from 1,500 plus suppliers. In choosing a channel of distribution, Selfridges more than likely relied on:

|a. |market factors |

|b. |ownership requirements |

|c. |producer factors |

|d. |production factors |

|e. |geodemographic factors |

ANS: A

Market factors include customer considerations. Customers of Selfridges anticipate great product width and depth.

PTS: 1 REF: 177-178 OBJ: 12-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Distribution | TB&E Model International Perspective

56. Canesta Company has developed a virtual keyboard out of light to be used with cell phones and personal digital assistants (PDAs). The product beams an image of a keyboard on a desk, allowing the user to type on the image. The words are picked up by the user's digital device. When introduced to the market, the device will sell for less than $50. If, in choosing its channel, Canesta is most concerned about the life cycle of the device, then its choice of channels will largely be influenced by:

|a. |factors of production |

|b. |customer characteristics |

|c. |ownership factors |

|d. |product factors |

|e. |market factors |

ANS: D

Stage of the product life cycle is a product factor.

PTS: 1 REF: 178 OBJ: 12-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

57. Canesta Company has developed a virtual keyboard out of light to be used with cell phones and personal digital assistants (PDAs). The product beams an image of a keyboard on a desk, allowing the user to type on the image. The words are picked up by the user's digital device. When introduced to the market, the device will sell for less than $50. If, in choosing its channel, Canesta is most concerned about supplying the number of consumers who have expressed interest in such a device, then its choice of channels will largely be influenced by:

|a. |exclusivity agreements |

|b. |market factors |

|c. |possession factors |

|d. |product factors |

|e. |internal environmental characteristics |

ANS: B

The size of the demand and the type of consumers are market factors.

PTS: 1 REF: 177-178 OBJ: 12-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

58. Canesta Company has developed a virtual keyboard out of light to be used with cell phones and personal digital assistants (PDAs). The product beams an image of a keyboard on a desk, allowing the user to type on the image. The words are picked up by the user's digital device. When introduced to the market, the device will sell for less than $50. If, in choosing its channel, Canesta is most concerned about its lack of financial, managerial, and marketing resources to support the product's introduction, then its choice of channels will largely be influenced by:

|a. |factors of ownership |

|b. |market factors |

|c. |producer factors |

|d. |product factors |

|e. |internal environmental characteristics |

ANS: C

Financial, managerial, and marketing issues are producer factors.

PTS: 1 REF: 178 OBJ: 12-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

59. _____ is distribution aimed at maximum market coverage. It is used for many convenience goods and supplies that need to be available in every outlet where the potential customer might want to buy them.

|a. |Selective distribution |

|b. |Channel franchising |

|c. |Intensive distribution |

|d. |Horizontal channeling |

|e. |Exclusive distribution |

ANS: C PTS: 1 REF: 178 OBJ: 12-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution | TB&E Model Product

60. Toothpaste is sold in grocery stores, service stations, convenience stores, drugstores, discount stores, and motel vending machines. This is a example of a(n) _____ distribution strategy.

|a. |exclusive |

|b. |reciprocal |

|c. |selective |

|d. |horizontal |

|e. |intensive |

ANS: E

Intensive distribution is distribution aimed at maximum market coverage. It is used for many convenience goods that need to be available in every outlet where the potential customer might want to buy them.

PTS: 1 REF: 178 OBJ: 12-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Strategy

61. Which of the following manufacturers most likely uses intensive distribution?

|a. |Cadbury Adams, manufacturer of Certs breath fresheners |

|b. |Dixieline, a manufacturer of lighting fixtures |

|c. |Citizen, a manufacturer of digital scales |

|d. |Landway USA, a manufacturer of inline skates |

|e. |Montana Rifle Company, a manufacturer of fine firearms |

ANS: A

Only Certs is a low-value product. Low-value products are commonly sold in a variety of locations.

PTS: 1 REF: 178 OBJ: 12-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

62. _____ distribution is achieved by screening dealers to eliminate all but a few in any single geographic area. Shopping goods and some specialty products that consumers are willing to search for are sold this way.

|a. |Intensive |

|b. |Selective |

|c. |Exclusive |

|d. |Dual |

|e. |Controlled |

ANS: B PTS: 1 REF: 178 OBJ: 12-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

63. Husqvarna Viking manufactures sewing machines. The company carefully screens its dealers to ensure a quality dealer image and service ability. Only a few dealers are chosen in any single geographic area. This is an example of _____ distribution.

|a. |dual |

|b. |intensive |

|c. |exclusive |

|d. |selective |

|e. |controlled |

ANS: D

Selective distribution is achieved by screening dealers to eliminate all but a few in any single geographic area. Shopping goods and some specialty goods that consumers are willing to search for are sold by selective distribution.

PTS: 1 REF: 178 OBJ: 12-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

64. Canesta Company has developed a virtual keyboard out of light to be used with cell phones and personal digital assistants (PDAs). The product beams an image of a keyboard on a desk, allowing the user to type on the image. The words are picked up by the user's digital device. When introduced to the market, the device will sell for less than $50. What level of distribution intensity should the company use?

|a. |exclusive |

|b. |controlled |

|c. |extensive |

|d. |reciprocal |

|e. |selective |

ANS: E

Screening dealers will promote a quality image for the product. Price is also a factor in its level of distribution intensity. It is not a convenience good.

PTS: 1 REF: 178-179 OBJ: 12-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Distribution | TB&E Model Product

65. The LaCoste brand apparel was once available at T.J. Maxx and a number of other nonluxury retailers. Today the LaCoste brand can only be found at Barney’s, Neiman-Marcus, Nordstrom, and LaCoste boutiques. From this information, you can surmise that LaCoste has adopted a(n) _____ distribution strategy.

|a. |extensive |

|b. |intensive |

|c. |premium |

|d. |selective |

|e. |pioneering |

ANS: D

Selective distribution is achieved by screening dealers to eliminate all but a few in any single geographic area. Shopping goods and some specialty goods that consumers are willing to search for are sold by selective distribution.

PTS: 1 REF: 178-179 OBJ: 12-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

66. The most restrictive form of market coverage, _____ distribution, entails establishing only one or a few dealers within a given geographic area. Because buyers need to be willing to search or travel to acquire the product, this form of distribution is limited to consumer specialty goods, a few shopping goods, and major industrial equipment.

|a. |selective |

|b. |intensive |

|c. |exclusive |

|d. |dual |

|e. |premium |

ANS: C PTS: 1 REF: 179 OBJ: 12-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

67. Walker Zanger, Inc. manufactures decorative tile. The company has a policy of only having one or two dealers within a given large geographic area. Buyers of Walker Zanger brand terra-cotta and mosaic tiles for home decorating will travel to acquire just the right product, so _____ distribution is appropriate for the tile.

|a. |exclusive |

|b. |intensive |

|c. |selective |

|d. |reciprocal |

|e. |premium |

ANS: A

The most restrictive form of distribution, exclusive, entails establishing one or a few dealers within a given geographic area. Because buyers need to be willing to search or travel to acquire the product, this form of distribution is limited to consumer specialty goods, a few shopping goods, and major industrial equipment.

PTS: 1 REF: 179 OBJ: 12-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

68. Caterpillar, the manufacturer of tractors and other earthmoving equipment, has an extremely high market share, which means customers seek the dealers out regardless of where they are. There are approximately 50 Caterpillar dealers in the United States--one in each state. From this information, you can surmise that Caterpillar uses _____ distribution.

|a. |selective |

|b. |premium |

|c. |intensive |

|d. |exclusive |

|e. |inclusive |

ANS: D

The most restrictive form of distribution, exclusive, entails establishing one or a few dealers within a given geographic area. Because buyers need to be willing to search or travel to acquire the product, this form of distribution is limited to consumer specialty goods, a few shopping goods, and major industrial equipment.

PTS: 1 REF: 179 OBJ: 12-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Strategy

69. A channel leader is also called a(n):

|a. |intermediary leader |

|b. |channel captain |

|c. |channel facilitator |

|d. |distribution supervisor |

|e. |channel gatekeeper |

ANS: B PTS: 1 REF: 179 OBJ: 12-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

70. DeBeers sells most of the diamonds it produces to industry. The company controls over 90 percent of the market and has great power over its distributors. In its marketing channel, DeBeers would be considered a:

|a. |channel authority |

|b. |channel member |

|c. |channel leader |

|d. |channel gatekeeper |

|e. |power broker |

ANS: C

DeBeers has control over delivery, inventory, etc.

PTS: 1 REF: 179 OBJ: 12-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

71. Johns Manville is the only manufacturer to offer a complete line of Formaldehyde-free fiber glass building insulation, which offers superior energy efficiency in hard-to-reach cathedral ceilings and flat roof cavities; plus it is an excellent sound control for interior floors. As the only manufacturer and patent-holder of this revolutionary insulation, Johns Manville has great power over its dealers. It is an example of a:

|a. |channel authority |

|b. |channel regulator |

|c. |channel captain |

|d. |channel gatekeeper |

|e. |power broker |

ANS: C

A channel captain or channel leader is a member of the marketing channel that exercises authority and power over the activities of other members in the channel.

PTS: 1 REF: 179 OBJ: 12-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution

72. Channel conflict:

|a. |always has an adverse effect on the members of the channel |

|b. |is not caused by ideological differences because such differences would prevent the members from ever operating as a |

| |channel |

|c. |is often caused by an inability of some channel members to keep up with the changing times |

|d. |can appear as either internal or external |

|e. |does not occur when multiple distribution channels are used |

ANS: C

In a broad context, channel conflict can be good for a channel. It is sometimes caused by ideological differences. It appears as vertical or horizontal.

PTS: 1 REF: 179 OBJ: 12-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

73. More than 800,000 fans are willing to buy subscriptions to watch Major League Baseball (MLB) games online at . That business is worth more than $100 million to MLB. But this online broadcast takes those fans away from the broadcasters that pay MLB hundreds of millions of dollars for the right to carry the games. This _____ creates a clash of goals and methods between MLB and broadcast television.

|a. |horizontal market share |

|b. |lateral channel takeover |

|c. |niche market conflict |

|d. |channel conflict |

|e. |market share conflict |

ANS: D

Channel members may have conflicting goals resulting in channel conflict.

PTS: 1 REF: 179 OBJ: 12-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

74. Honda uses just-in-time manufacturing to build its Odyssey minivans. Five companies that make component parts for the Honda Odyssey relocated to Alabama and states bordering Alabama when Honda announced plans to build a new Odyssey manufacturing plant in Alabama. This relocation in order to provide efficient delivery of goods indicates Honda is a:

|a. |channel captain |

|b. |horizontal integrator |

|c. |distribution champion |

|d. |distribution ombudsman |

|e. |demand maverick |

ANS: A

A channel captain exercises authority and power over the other channel members.

PTS: 1 REF: 179 OBJ: 12-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

75. Horizontal channel conflict occurs most often when manufacturers practice:

|a. |multiple distribution |

|b. |trade loading |

|c. |value-added pricing |

|d. |exclusive distribution |

|e. |channel partnering |

ANS: A

Horizontal conflict occurs when more than one channel is used to handle the same brand.

PTS: 1 REF: 180 OBJ: 12-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

76. The Discovery Channel joined with the BBC to send an expedition of top scientists to explore a seabed site off Indonesia. Because these two cable networks compete for viewership, there is a potential for _____ as a result of this project.

|a. |horizontal conflict |

|b. |trade loading |

|c. |value-added pricing |

|d. |exclusive distribution |

|e. |channel partnering |

ANS: A

Horizontal conflict occurs when more than one channel is used to handle the same brand.

PTS: 1 REF: 180 OBJ: 12-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

77. _____ is the joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage.

|a. |Selective partnering |

|b. |Direct distribution |

|c. |Channel partnering |

|d. |Intensive integration |

|e. |Closed channel distribution |

ANS: C PTS: 1 REF: 180 OBJ: 12-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution

78. Which of the following is NOT a logistics component of the supply chain?

|a. |push marketing strategy |

|b. |production scheduling |

|c. |inventory control |

|d. |warehousing and materials-handling |

|e. |order processing |

ANS: A

Supply chain management focuses on pulling products into the marketplace, so you would find a pull strategy being used.

PTS: 1 REF: 180 OBJ: 12-7 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

79. Which of the following is a member of a supply chain team that moves just-picked cotton to finished clothing and then to the consumer of that clothing?

|a. |the warehouse in which the cotton was temporarily stored |

|b. |the ad agency that develops the promotion for the clothing |

|c. |the farmer who picks the cotton |

|d. |the trucking company that hauls the cotton to the clothing manufacturer |

|e. |all of the choices |

ANS: E

The supply chain team is composed of everyone who participates in the movement from raw material to consumer, including all external participants like ad agencies, transportation companies, and lending institutions.

PTS: 1 REF: 181 OBJ: 12-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution | TB&E Model Product

80. Peachtree Windows has no windows in inventory waiting for someone to order them. It does not make a window until it is ordered. It is able to make 27,000 different window configurations and will make special adjustments to these configurations if there is a request for modifications as long as the modifications meet the company's exacting safety requirements. Peachtree Window engages in:

|a. |niche marketing |

|b. |product development |

|c. |mass customization |

|d. |marketing aggregation |

|e. |customer accumulation |

ANS: C

Mass customization is a production method whereby products are not made until an order is placed by the customer; products are made to the customer's specifications.

PTS: 1 REF: 182 OBJ: 12-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Strategy

81. _____ means that raw materials arrive at the assembly line in guaranteed working order, and finished products are generally shipped to the customer immediately after completion. It reduces inventory levels and delivers the product as it is needed in the store.

|a. |Just-in-time manufacturing |

|b. |Electronic data interchange |

|c. |Intermodal manufacturing |

|d. |Value-added channelization |

|e. |Contract logistics |

ANS: A PTS: 1 REF: 182 OBJ: 12-7 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

82. Another name for just-in-time production (JIT) is:

|a. |supply/demand reciprocity |

|b. |lean production |

|c. |outsourcing |

|d. |mass customization |

|e. |disintermediation |

ANS: B PTS: 1 REF: 182 OBJ: 12-7 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

83. A newspaper article on supply chain management discusses the importance of lean production. The article focuses on the role of _____ in supply chain management.

|a. |supply chain organization |

|b. |just-in-time manufacturing |

|c. |materials requirement planning (MRP) |

|d. |materials-handling systems |

|e. |electronic distribution |

ANS: B

Another name for just-in-time manufacturing is lean production.

PTS: 1 REF: 182 OBJ: 12-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

84. A strike by dockworkers at U.S. West Coast ports paralyzed transportation of goods across the Pacific Ocean and left manufacturers short of component parts and Asian importers with excess inventory. This paralysis would have had a more adverse impact on companies using:

|a. |supply chain management |

|b. |just-in-time manufacturing |

|c. |materials requirements procurement (MRP) |

|d. |materials-handling systems |

|e. |electronic distribution |

ANS: B

With JIT, inventory parts are delivered as they are needed in production. The loss of these deliveries would cause production to cease.

PTS: 1 REF: 182 OBJ: 12-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

85. A manufacturer of sewing machines has decided to implement just-in-time manufacturing and can expect:

|a. |reduced errors in the purchasing system |

|b. |increased inventory control staff |

|c. |more frequent deliveries and reduced inventory |

|d. |finished product quality reductions |

|e. |the need for more sources of supply as backup suppliers |

ANS: C

Just-in-time manufacturing is based on receiving the parts from suppliers at the assembly line at the time of installation.

PTS: 1 REF: 182 OBJ: 12-7 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

86. Girls can log onto and design their own special Barbie doll. They can choose the doll's skin tone, hair color, clothes, accessories, and name. The doll is created to the new owner's specifications and mailed to her by Mattel. With this doll, Mattel is using:

|a. |market aggregation |

|b. |customer accumulation |

|c. |niche marketing |

|d. |mass customization |

|e. |disintermediation |

ANS: D

The doll is uniquely tailored for each girl.

PTS: 1 REF: 182 OBJ: 12-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

87. Using their online design tools and templates, lovers need do little more than choose the type of gift they want to give including candy, apparel, candles, and more. After a template is chosen, the personalized item--complete with a message declaring love--is only a few key strokes away. "Forget the cards, if lovers have something to say, they can say it proudly on a shirt, candy bar or even a yard sign," said Steve Grubbs, owner of . "Our designers have created a Web site full of cool designs; all the customer has to do is change the text, enter the credit card and wait for the gift to arrive a few days later." offers its customers:

|a. |build-to-order |

|b. |market aggregation |

|c. |disintermediation |

|d. |market development |

|e. |batch production |

ANS: A

The gifts are uniquely tailored to each customer. Built-to-order is a synonym for mass customization.

PTS: 1 REF: 182 OBJ: 12-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product | TB&E Model Creativity

88. In which logistical component of the supply chain will you find electronic data interchange a common feature?

|a. |production scheduling |

|b. |transportation |

|c. |order processing |

|d. |materials-handling |

|e. |all of these |

ANS: C PTS: 1 REF: 183 OBJ: 12-7 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

89. _____ is the direct electronic transmission, from computer to computer, of standard business forms between two organizations. When this technique is used, orders can become virtually paperless, and information about the order is available to both firms.

|a. |Business prioritizing |

|b. |Electronic data interchange |

|c. |Just-in-time inventory |

|d. |Real-time inventory |

|e. |Direct sourcing |

ANS: B PTS: 1 REF: 183 OBJ: 12-7 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

90. _____ is a method of developing and maintaining an adequate assortment of materials or products to meet a manufacturer's or a customer's needs.

|a. |The materials-handling system |

|b. |An inventory control system |

|c. |Direct sourcing |

|d. |Contract logistics |

|e. |Warehousing |

ANS: B PTS: 1 REF: 183 OBJ: 12-7 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution

91. In which logistical component of the supply chain will you find distribution resource planning (DRP) a common feature?

|a. |production scheduling |

|b. |transportation |

|c. |order processing |

|d. |materials-handling |

|e. |inventory control |

ANS: E PTS: 1 REF: 183-184 OBJ: 12-7 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

92. What kind of inputs are used in distribution resource planning?

|a. |sales forecasts |

|b. |lead times |

|c. |mode of transportation to be used |

|d. |outstanding orders |

|e. |all of these |

ANS: E PTS: 1 REF: 184 OBJ: 12-7 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

93. The goal of inventory control is to:

|a. |minimize inventory levels while maintaining an adequate supply to meet customer demands |

|b. |maximize inventory levels to prevent any possibility of stockouts |

|c. |determine order timing and order quantity |

|d. |estimate proper usage rates |

|e. |integrate JIT to reduce risks of obsolescence, theft, and damage |

ANS: A

Inventory decisions affect physical distribution costs and service levels. The goal is to balance minimum inventory levels while meeting customer needs for stock.

PTS: 1 REF: 183 OBJ: 12-7 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution

94. _____ provides time utility to buyers and sellers and aids manufacturers in managing supply and demand.

|a. |Containerization |

|b. |Distribution |

|c. |Storage |

|d. |Direct sourcing |

|e. |Channelization |

ANS: C PTS: 1 REF: 184 OBJ: 12-7 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

95. _____ moves inventory into, within, and out of a warehouse.

|a. |An inventory control system |

|b. |A multichannel system |

|c. |An ERP control system |

|d. |A freight forwarder |

|e. |A materials-handling system |

ANS: E PTS: 1 REF: 184 OBJ: 12-7 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

96. The goal of any effective materials-handling system is to:

|a. |reduce the time of the order-processing system |

|b. |optimize the inventory control system |

|c. |increase safety procedures |

|d. |move items quickly with minimal handling |

|e. |reduce the length of time a product is in the transportation subsystem |

ANS: D PTS: 1 REF: 184 OBJ: 12-7 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

97. ZuTech makes sensitive monitors for measuring exposure to hazardous materials. ZuTech has suffered substantial losses when moving products from the assembly line to the warehouse and shipping docks. ZuTech should consider reducing the number of times an item is moved in the warehouse by installing a(n):

|a. |inventory control system |

|b. |materials-handling system |

|c. |safety procedure to manage SKUs |

|d. |order-processing system |

|e. |outsourcing system |

ANS: B

The goal of the materials-handling system is to move items quickly with minimal handling.

PTS: 1 REF: 184 OBJ: 12-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

98. The mode of transportation that provides the most accessibility is:

|a. |pipelines |

|b. |airfreight |

|c. |truck freight |

|d. |water transport |

|e. |railroad |

ANS: C

Motor carriers (trucks) can go to more locations than any of the other modes of transportation.

PTS: 1 REF: 185 OBJ: 12-7 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

99. The growers of Vidalia onions have determined that their chief priority for choosing a transportation mode within the United States is transit time. However, this must be tempered by practical cost considerations. In light of these considerations, Vidalia onion growers should use _____ to ship their onions.

|a. |railroads |

|b. |motor carriers (trucks) |

|c. |airplanes |

|d. |water transportation |

|e. |pipelines |

ANS: B

Motor carriers are not as fast as airplanes, but they are less expensive, particularly when dealing with a bulky product like onions.

PTS: 1 REF: 185 OBJ: 12-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Pricing

100. One major advantage of pipelines over other modes of transportation is:

|a. |availability |

|b. |points served |

|c. |flexibility |

|d. |speed |

|e. |dependability |

ANS: E

Pipelines are rarely interrupted by weather, traffic, or labor disputes.

PTS: 1 REF: 185 OBJ: 12-7 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

101. Which of the following describes a disadvantage associated with water transportation?

|a. |cannot be used for international trade |

|b. |high cost |

|c. |capability |

|d. |lack of speed |

|e. |product weight restrictions |

ANS: D

Shipping via water is the slowest mode of transportation.

PTS: 1 REF: 185 OBJ: 12-7 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

102. Which of the following transportation modes can most easily determine the location of a package en route between shipper and receiver?

|a. |air |

|b. |truck |

|c. |rail |

|d. |pipe |

|e. |water |

ANS: A

In addition to speed, air transport offers an important additional benefit to shippers, the ease of tracing shipments. See Exhibit 12.5.

PTS: 1 REF: 185 OBJ: 12-7 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

103. The Canadian lobster harvest requires special handling coupled with rapid transportation to ensure the cargo reaches destinations alive. The favored transportation mode would be:

|a. |air |

|b. |water |

|c. |truck |

|d. |pipeline |

|e. |rail |

ANS: A

Air transportation ensures the speed necessary for lobster delivery. (Air Canada has developed special handling and shipping techniques for the lobsters.)

See Exhibit 12.5.

PTS: 1 REF: 185 OBJ: 12-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

104. According to experts at a conference on supply chain management, increased traceability is the key requirement needed to improve today's supply chains. In this instance, traceability refers to:

|a. |a carrier's ability to provide the appropriate equipment and conditions for moving specific kinds of goods |

|b. |the consistency with which a carrier delivers goods on time |

|c. |a carrier's ability to move goods over a specific route |

|d. |the relative ease with which a shipment can be located and transferred |

|e. |none of these |

ANS: D

Traceability is one of the criteria used for choosing a mode of transportation.

See Exhibit 12.5.

PTS: 1 REF: 185 OBJ: 12-7 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

105. According to experts at a conference on supply chain management, increased traceability is the key requirement needed to improve today's supply chains. _____ provides the highest level of traceability and _____ provides the lowest level.

|a. |water; air |

|b. |air; pipe |

|c. |rail; truck |

|d. |pipe; air |

|e. |truck; water |

ANS: B

See Exhibit 12.5.

PTS: 1 REF: 185 OBJ: 12-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

106. A strike by dockworkers at U.S. West Coast ports paralyzed transportation of goods across the Pacific Ocean and left manufacturers short of component parts and Asian importers with excess inventory. The strike created low _____ because the ships could not be unloaded even though water transportation is typically highest in this criterion.

|a. |flexibility |

|b. |relative cost |

|c. |responsiveness |

|d. |capability |

|e. |accessibility |

ANS: D

Capability refers to the ability of the carrier to provide the appropriate goods and equipment for moving those goods.

PTS: 1 REF: 185 OBJ: 12-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

107. Papa John's is a pizza chain that uses UPS trucks to carry supplies to its franchises. Papa John's does not own the trucks but has contracted with UPS to have all of the trucks it uses in its deliveries to Papa John's establishments painted with the Papa John's logo and company colors. Papa John's is using:

|a. |a horizontal distribution channel |

|b. |a selective distribution channel |

|c. |outsourcing |

|d. |multi-sourcing |

|e. |a portable inventory control system |

ANS: C

Papa John's supplier is an independent third party.

PTS: 1 REF: 186 OBJ: 12-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

108. BX Logistics is a company that offers a wide range of _____ solutions to fit its clients’ needs. These services for its business customers include warehousing, inventory management, packaging, and other value-added services.

|a. |distribution downsizing |

|b. |technology interdependence |

|c. |contract logistics |

|d. |direct sourcing |

|e. |directed channel |

ANS: C

The services the company provides are all logistical.

PTS: 1 REF: 186 OBJ: 12-8 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

109. With _____, a manufacturer or supplier uses an independent third party to manage an entire function of the logistics system, such as transportation, warehousing, or order processing.

|a. |intermodal sourcing |

|b. |private warehousing |

|c. |direct sourcing |

|d. |freight forwarding |

|e. |contract logistics |

ANS: E PTS: 1 REF: 186 OBJ: 12-8 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

110. Volvo, working with FedEx, set up a warehouse in Memphis with a complete stock of truck parts. A dealer needing a part for an emergency phones a toll-free number, and the part is delivered by FedEx within 24 hours. This is an example of how manufacturers are using:

|a. |outsourcing |

|b. |cross-docking |

|c. |disintermediation |

|d. |piggybacking |

|e. |an integrated demand channel |

ANS: A

With outsourcing, a company would use an independent third party to operate some or all of its logistics system.

PTS: 1 REF: 186 OBJ: 12-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

111. A manufacturer of automobile component parts that has turned over all transportation functions to an independent third party in its supply chain has engaged in:

|a. |creating a dependent materials-handling system |

|b. |outsourcing |

|c. |removing entry barriers |

|d. |task deployment |

|e. |channel rotation |

ANS: B PTS: 1 REF: 186 OBJ: 12-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

112. Manufacturers who outsource their transportation function are seeking all the following EXCEPT:

|a. |more carriers and more services from these additional carrier alternatives |

|b. |on-time delivery and pickup at competitive rates |

|c. |electronic communications that reduce delays and errors and provide information with less paperwork |

|d. |systems for tracing and tracking shipments every step of the way |

|e. |reliable delivery without loss or damage |

ANS: A

Buyers of transportation are using fewer carriers.

PTS: 1 REF: 186 OBJ: 12-8 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

113. When Rick purchased tickets to Six Flags over Georgia on the Internet, it was an example of:

|a. |single-sourcing distribution |

|b. |one-way channelization |

|c. |electronic distribution |

|d. |mass customization |

|e. |aggregated marketing |

ANS: C

Tickets are just one of many types of products and services that can be distributed electronically. It is not one-way communication because Rick could respond to questions on his computer screen.

PTS: 1 REF: 186 OBJ: 12-8 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution

114. Horis Twild is the marketing manager for a small manufacturer of products to beautify, enhance, and maintain fish aquariums and terrariums. He decided NOT to enter the global market. His decision was probably primarily based on:

|a. |lack of common languages and cultures among global customers |

|b. |inability to support a multinational promotion strategy |

|c. |uncertainties regarding global logistics |

|d. |cultural attitudes toward fish |

|e. |lack of a unified international pricing structure |

ANS: C

Uncertainty regarding shipping usually tops the list of reasons why smaller companies resist international markets.

PTS: 1 REF: 186-187 OBJ: 12-9 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model International Perspective

R. H. Kurt & Son

R. H. Kurt & Son, Inc., distributes rifles for both hunting and target shooting, rifle barrels, triggers, cleaning equipment, and reloading equipment to sporting equipment retailers and many large discount stores. It carries products from 41 different manufacturers. The manufacturers whose products it carries are known for producing superior products and are leaders in their industries. In addition, Kurt is able to repair damaged rifles through its gunsmith service, which is available to all of its retailers.

115. Refer to R.H. Kurt. Its marketing channel is composed of:

|a. |the distribution, objectives, strategies, and tactics used to move products from the manufacturer to the retailer |

|b. |any organization that had a part in moving the product from the distributor to the retailer |

|c. |the functions of transportation, storage, inventory control, materials-handling, and order processing |

|d. |the 41 different manufacturers, R.H. Kurt, the retailers it serves, and their customers |

|e. |all organizations in the industry that make it possible for a consumer to buy his or her desired product |

ANS: D

A marketing channel is a set of interdependent organizations that facilitate the transfer of ownership as products move from producer to business user or consumer.

PTS: 1 REF: 171 OBJ: 12-1

TOP: AACSB Reflective Thinking | TB&E Model Distribution

116. Refer to R.H. Kurt. Customers at retail stores only want one rifle or one scope. They do not want to buy in the quantities the manufacturers need to sell. This _____ is overcome by the marketing channels.

|a. |discrepancy of quantity |

|b. |spatial discrepancy |

|c. |discrepancy of assortment |

|d. |discrepancy of facilitation |

|e. |discrepancy of possession |

ANS: A

Discrepancy of quantity is the difference between the amount of product produced and the amount an end user wants to buy.

PTS: 1 REF: 172 OBJ: 12-1

TOP: AACSB Reflective Thinking | TB&E Model Distribution

117. Refer to R.H. Kurt. When a consumer goes to a sporting goods store to buy a rifle scope and cleaning equipment and discovers the store does not carry rifle scopes, _____ is created, and the consumer is dissatisfied.

|a. |discrepancy of quantity |

|b. |discrepancy of assortment |

|c. |spatial discrepancy |

|d. |discrepancy of integration |

|e. |discrepancy of possession |

ANS: B

Discrepancy of assortment occurs when a retailer does not have all the items the consumer needs to receive full satisfaction.

PTS: 1 REF: 172 OBJ: 12-1

TOP: AACSB Reflective Thinking | TB&E Model Customer

118. Refer to R.H. Kurt. When Kurt solicits an order from a sporting goods store, it engages in a _____ function.

|a. |logistical |

|b. |functional |

|c. |facilitating |

|d. |customerized |

|e. |transactional |

ANS: E

See Exhibit 12.2.

PTS: 1 REF: 174 OBJ: 12-2

TOP: AACSB Reflective Thinking | TB&E Model Strategy

119. Refer to R.H. Kurt. When Kurt combines products from 41 different manufacturers into a collection retail buyers want available at one place, it is engaging in:

|a. |a transactional function |

|b. |creating an assortment |

|c. |a facilitating function |

|d. |integrating its promotional functions |

|e. |compressed distribution |

ANS: B

See Exhibit 12.2.

PTS: 1 REF: 174 OBJ: 12-2

TOP: AACSB Reflective Thinking | TB&E Model Product

120. Refer to R.H. Kurt. Given the nature of the products carried by Kurt, its 41 manufacturers most likely want Kurt to use _____ distribution.

|a. |extensive |

|b. |intensive |

|c. |reflexive |

|d. |unitary |

|e. |selective |

ANS: E

Its manufacturers would want consumers to seek out their products to maintain a superior product image.

PTS: 1 REF: 179 OBJ: 12-4

TOP: AACSB Reflective Thinking | TB&E Model Distribution

Taco Bell

After years of phenomenal growth, many food franchisers are branching out from traditional single-purpose stores. One of these innovators is Taco Bell. Taco Bell, a division of Yum Brands, is selling its Mexican-style fare at kiosks and movable carts in malls, at the corner gasoline station, on supermarket shelves, and even in school-lunch programs. In only a few years, it has more than quintupled its points of access. And it has barely begun its expansion. By the end of the decade, it aims to have 200,000 outlets; most will be nontraditional, and their success will depend on location and operating efficiency. In one of many moves to create peak operating efficiency, Taco Bell has hired an outside company to cut and slice the lettuce, tomatoes, and onions it uses in the preparation of food. Taco Bell's new direction produces greater convenience for consumers, heightens competition for some established-brand marketers, and creates a potential nightmare for franchisees.

121. Refer to Taco Bell. Beef producers, vegetable growers, Taco Bell, and consumers are part of a:

|a. |distribution cooperative |

|b. |marketing mix |

|c. |transportation channel |

|d. |marketing channel |

|e. |logistics system |

ANS: D

A marketing channel is a set of interdependent organizations that facilitate the transfer of ownership as products move from producer to business user or consumer.

PTS: 1 REF: 171 OBJ: 12-1

TOP: AACSB Reflective Thinking | TB&E Model Customer

122. Refer to Taco Bell. When Taco Bell sells its products to students through college cafeterias, it is using:

|a. |an agent/broker channel |

|b. |logistical distribution |

|c. |multiple channels |

|d. |a nontraditional channel |

|e. |a strategic channel alliance |

ANS: D PTS: 1 REF: 176 OBJ: 12-3

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product | TB&E Model Strategy

123. Refer to Taco Bell. Taco Bell appears to be moving toward _____ distribution to get its products to market.

|a. |intensive |

|b. |extensive |

|c. |product-focused |

|d. |market-focused |

|e. |exclusive |

ANS: A

Intensive distribution is aimed at maximum market coverage.

PTS: 1 REF: 178 OBJ: 12-5

TOP: AACSB Reflective Thinking | TB&E Model Distribution

124. Refer to Taco Bell. Taco Bell is potentially producing _____ among its franchisees and other distributors of Taco Bell products.

|a. |vertical conflict |

|b. |cognitive dissonance |

|c. |supply management divergence |

|d. |horizontal conflict |

|e. |disintermediation |

ANS: D

Horizontal conflict occurs among channel members on the same level.

PTS: 1 REF: 180 OBJ: 12-6

TOP: AACSB Reflective Thinking | TB&E Model Distribution

125. Refer to Taco Bell. While the preparation of the vegetables used in the food is often performed in-house, Taco Bell has chosen to use:

|a. |dependent materials-handling |

|b. |outsourcing |

|c. |removing entry barriers |

|d. |task deployment |

|e. |job rotation |

ANS: B

Outsourcing is the use of an independent third-party to perform some function.

PTS: 1 REF: 185 OBJ: 12-8

TOP: AACSB Reflective Thinking | TB&E Model Product

Chapter 13—Retailing

MULTIPLE CHOICE

1. _____ is defined as all activities directly related to the sale of goods and services to the ultimate consumer for personal, nonbusiness use or consumption.

|a. |Wholesaling |

|b. |Retailing |

|c. |Business |

|d. |Franchising |

|e. |Distribution |

ANS: B PTS: 1 REF: 189 OBJ: 13-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

2. Which of the following is the best example of a retailer?

|a. |the public library |

|b. |a radio station |

|c. |a real estate company |

|d. |the local Humane Society |

|e. |an advertising agency |

ANS: C

The Humane Society and the library would both accept money, but nothing is directly sold. The radio station and ad agency typically sell to businesses. A real estate company is likely to be engaged in sales transactions with the ultimate consumer, even though it is also probable that some of its transactions will be with other businesses.

PTS: 1 REF: 189 OBJ: 13-1 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

3. A retail store can be classified according to its:

|a. |distribution method |

|b. |inventory control |

|c. |product assortment |

|d. |management style |

|e. |decor and atmosphere |

ANS: C

A retail establishment can be classified according to its ownership, level of service, product assortment, price, and gross margin.

PTS: 1 REF: 189 OBJ: 13-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

4. Around the world, most retailers are _____, operating one or a few stores in their community, owned by a single person or partnership and not operated as part of a larger retail institution.

|a. |independent retailers |

|b. |chain stores |

|c. |franchise outlets |

|d. |specialty clubs |

|e. |product assortment stores |

ANS: A PTS: 1 REF: 190 OBJ: 13-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

5. Small neighborhood florists, shoe stores, and ethnic food markets are most likely to be:

|a. |supercenters |

|b. |franchise outlets |

|c. |membership clubs |

|d. |chain stores |

|e. |independent retailers |

ANS: E

Most retailers are independent retailers operating one or a few stores in their community.

PTS: 1 REF: 190 OBJ: 13-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

6. Retail stores that are owned and operated as a group by a single organization are called _____. Under this form of ownership, administrative and purchasing tasks are handled by the home office.

|a. |home base stores |

|b. |independent retailers |

|c. |franchisees |

|d. |chain stores |

|e. |strip centers |

ANS: D PTS: 1 REF: 190 OBJ: 13-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

7. Ansonia owns and operates her own janitorial service, but the establishment is licensed by Maid2Clean. Ansonia’s cleaning service is a:

|a. |doubly managed outlet |

|b. |chain store |

|c. |franchise |

|d. |independent retailer |

|e. |licensor |

ANS: C

Franchises are owned and operated by individuals, but licensed by larger supporting organizations.

PTS: 1 REF: 190 OBJ: 13-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution

8. The number of different varieties of fishing lures carried by the Angler’s Store refers to the store's:

|a. |store's supply standard |

|b. |complete retail offering |

|c. |retail mix |

|d. |volume |

|e. |assortment depth |

ANS: E

Breadth and depth refers to product assortment.

PTS: 1 REF: 190 OBJ: 13-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

9. Which of the following types of stores has a high gross margin, a narrow product assortment, and a high level of service?

|a. |supermarket |

|b. |warehouse club |

|c. |convenience store |

|d. |full-line discount store |

|e. |specialty store |

ANS: E

See Exhibit 13.1.

PTS: 1 REF: 191 OBJ: 13-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

10. _____ shows how much the retailer makes as a percentage of sales after the cost of goods sold is subtracted.

|a. |Net income |

|b. |Retained earnings |

|c. |Profitability |

|d. |Net equity |

|e. |Gross margin |

ANS: E

See Exhibit 13.1.

PTS: 1 REF: 190 | 191 OBJ: 13-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

11. As a general rule of thumb, a retailer that has a high gross margin will have:

|a. |m-commerce capabilities |

|b. |an inventory management system |

|c. |low prices |

|d. |salespeople trained in cross-selling techniques |

|e. |high prices |

ANS: E

The level of gross margin and the price level generally match. See Exhibit 13.1.

PTS: 1 REF: 192 OBJ: 13-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing

12. Housing several departments under one roof, a _____ carries a wide variety of shopping and specialty goods and provides a high level of service.

|a. |supermarket |

|b. |specialty store |

|c. |convenience store |

|d. |super club |

|e. |department store |

ANS: E PTS: 1 REF: 191 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

13. Applying what you have learned about retailing, which type of retail store would typically have the highest labor costs?

|a. |warehouse club |

|b. |department store |

|c. |off-price store |

|d. |off-price retailer |

|e. |discount store |

ANS: B

A department store carries a wide variety of shopping and specialty goods in several departments and provides a high level of service, all of which is labor intensive and adds to the cost of doing business.

PTS: 1 REF: 191 OBJ: 13-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing

14. Each department in a department store is usually headed by a _____ who selects the merchandise mix for the department and may also choose the promotional devices and personnel for that department.

|a. |franchisee |

|b. |financial broker |

|c. |comptroller |

|d. |human resources manager |

|e. |buyer |

ANS: E PTS: 1 REF: 191 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Promotion

15. The buyer who heads a department in a department store is responsible for the:

|a. |store's exchange and return policies |

|b. |store's credit policies |

|c. |chain's expansion efforts |

|d. |merchandise mix in that department |

|e. |store's advertising program |

ANS: D

Each department in a department store is usually headed by a buyer who selects the merchandise mix for the department and may also choose the promotional devices and personnel for that department.

PTS: 1 REF: 191 OBJ: 13-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

16. The _____ at John Lewis, Britain’s largest department store chain, selects the merchandise for his or her department and is often responsible for its promotion and for managing the personnel in that department.

|a. |buyer |

|b. |purchasing agent |

|c. |retail broker |

|d. |merchandiser |

|e. |franchisee |

ANS: A

Each department in a department store is usually headed by a buyer who selects the merchandise mix for the department and may also choose the promotional devices and personnel for that department.

PTS: 1 REF: 191 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Promotion

17. A _____ is not only a type of store, but also a method of retail operations. This type of retailer specializes in a given type of merchandise with a deep but narrow assortment.

|a. |warehouse club |

|b. |convenience store |

|c. |factory warehouse store |

|d. |specialty store |

|e. |general store |

ANS: D PTS: 1 REF: 191 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

18. Which of the following statements about specialty stores is true?

|a. |Customers usually consider price to be the most important factor in their selection of a specialty store. |

|b. |Customers at specialty stores are not concerned with the distinctiveness of the merchandise or the store's physical |

| |appearance. |

|c. |Specialty stores typically avoid price wars. |

|d. |Specialty stores are ineffective test markets. |

|e. |A typical specialty store carries a wider assortment of specialty merchandise than department stores. |

ANS: C

Customers usually consider price to be of secondary importance in their selection of a specialty store. Customers at specialty stores are very concerned with the distinctiveness of the merchandise or the store's physical appearance. Specialty stores provide a low-risk testing ground for new products. A typical specialty store carries a narrower assortment of specialty merchandise than department stores.

PTS: 1 REF: 191 OBJ: 13-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

19. Texas-based Grape Vine Market is an 18,000-square-foot store offering highly collectible food and wine—along with some other culinary perks, including a cooking school—all in a setting crafted to make shoppers feel comfortable. It stocks more than 5,500 different kinds of wine. This description alone is enough to tell you that Grape Vine Market is best described as a:

|a. |hypermarket |

|b. |convenience store |

|c. |specialty store |

|d. |department store |

|e. |general store |

ANS: C

A specialty store is not only a type of store, but also a method of retail operations, specializing in a given type of merchandise with a deep but narrow assortment.

PTS: 1 REF: 191 OBJ: 13-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

20. Texas-based Fresh Plus carries 40 brands of olive oil ranging from low to high end, including Laudemio Olive Oil at $38.99 for 16.9 ounces. Fresh Plus also boasts a large “Taste of Texas” section. TexaFrance Salsas and Pestos, Rose’s Salsa, Tom’s Tabouli, Kinky Friedman’s Salsa, Blue Bell Ice Cream, and Goodflow Juices and Honey are among the local showcased products. Fresh Plus differentiates itself from other stores through the use of:

|a. |cultural positioning |

|b. |specialty retailing |

|c. |electronic point of sale |

|d. |store location modeling |

|e. |consumer density |

ANS: B

A specialty store is not only a type of store, but also a method of retail operations, specializing in a given type of merchandise with a deep but narrow assortment. Customers are drawn by the assortment, which is highly specialized and more complete than in other types of retail stores.

PTS: 1 REF: 191 OBJ: 13-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

21. A manufacturer wants to introduce a line of hand-smocked children's clothing to the growing number of professional women who are now having babies. The least expensive of these outfits will be $75. Which of the following types of stores would most likely support an effective product launch?

|a. |off-price retailer |

|b. |specialty store |

|c. |full-discount store |

|d. |general store |

|e. |warehouse club |

ANS: B

Small specialty stores provide a low-risk testing ground for many new product concepts.

PTS: 1 REF: 191 OBJ: 13-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Pricing

22. _____ are large, departmentalized, self-service retailers that specialize in wide assortments of foodstuffs and a few nonfood items.

|a. |Supermarkets |

|b. |Convenience stores |

|c. |Membership wholesale clubs |

|d. |Discount stores |

|e. |Assortment merchandisers |

ANS: A PTS: 1 REF: 191-192 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

23. Which of the following environmental trends is most directly influencing supermarket operations?

|a. |Regional malls are hosting fewer anchor stores. |

|b. |To make a profit, supermarkets are having to carry products with high gross margins. |

|c. |The number of dual-income and single-parent families is increasing. |

|d. |Recessionary trends are decreasing the amount of money spent on nonfood items. |

|e. |Consumers are more inclined to pamper themselves. |

ANS: C PTS: 1 REF: 193 | 195 OBJ: 13-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

24. Giant Eagle is a chain of retail outlets in the U.S. Midwest that are described as large, departmentalized, self-service stores that specialize in wide assortments of foodstuffs and limited nonfood items. Giant Eagle stores are:

|a. |off-price retailers |

|b. |discount stores |

|c. |wholesale clubs |

|d. |convenience stores |

|e. |supermarkets |

ANS: E

The key factors are the emphasis on food and the size of the stores.

PTS: 1 REF: 191-192 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

25. Spar is Ireland's largest supermarket chain. Which of the following is the most likely reason why Spar supermarkets sell all types of foodstuffs as well as nonfood products including a wide range of firearms and gun accessories?

|a. |consumer demand for one-stop shopping often leads to scrambled merchandising |

|b. |the fulfillment of the wheel of retailing hypothesis |

|c. |inflationary economic climate |

|d. |repositioning as a discounter |

|e. |growth of convenience merchandising |

ANS: A

In many cases, supermarkets offer a wide variety of nontraditional goods and services under one roof (a strategy called scrambled merchandising) to respond to consumers who want convenience.

PTS: 1 REF: 193 OBJ: 13-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

26. According to the text, one way supermarkets establish long-term relationships with their customers is to:

|a. |conduct longitudinal focus-group studies |

|b. |avoid any obviously ethnic appeal |

|c. |limit the number of nonfood items carried by the stores |

|d. |create and use loyalty marketing programs |

|e. |create customer correlation studies |

ANS: D

One of the trends in supermarkets is taking advantage of growing ethnicity. Also supermarkets, commonly use scrambled merchandising.

PTS: 1 REF: 192 OBJ: 13-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Customer

27. When supermarkets offer a wide variety of nontraditional goods and services under one roof, they are engaged in:

|a. |cross-selling |

|b. |trading up |

|c. |scrambled merchandising |

|d. |disintermediation |

|e. |cross-docking |

ANS: C PTS: 1 REF: 192 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

28. Safeway, Avanza (for the Hispanic market), Publix, and other supermarket chains offer a variety of nontraditional goods and services such as video rental, flower shops, dry cleaning, and banking. This practice is called:

|a. |convenience merchandising |

|b. |retail wheeling |

|c. |specialty service |

|d. |trade-up positioning |

|e. |scrambled merchandising |

ANS: E

In many cases supermarkets offer a wide variety of nontraditional goods and services under one roof, a strategy called scrambled merchandising.

PTS: 1 REF: 192 OBJ: 13-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

29. The initial attraction of drugstores for consumers was the pharmaceuticals they carried, but now consumers can have their prescriptions filled at mass merchandisers, and supermarkets and through the mail. What have drugstores done to remain competitive?

|a. |raised their prices |

|b. |taken legal steps to prevent the sale of prescription drugs at supermarkets |

|c. |provided customers with value-added services |

|d. |introduced generic prescription medicines |

|e. |nothing |

ANS: C

They have added such services as being open 24 hours a day, seven days a week, and installing drive-through windows.

PTS: 1 REF: 192 OBJ: 13-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Customer

30. _____ carry a limited line of high-turnover, high-priced goods and resemble miniature supermarkets. These self-service stores are typically located near residential areas and are open long hours, seven days a week.

|a. |Specialty stores |

|b. |Wholesale stores |

|c. |Convenience stores |

|d. |Factory outlets |

|e. |General stores |

ANS: C PTS: 1 REF: 192 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Pricing

31. Home Depot Fuel is the name of a chain of convenience stores owned and operated by The Home Depot. These stores typically sell gas and are located just outside The Home Depot warehouse store. What else do you know about the Fuel convenience stores?

|a. |They carry a wide assortment of products. |

|b. |They carry a limited line of high-turn goods. |

|c. |They compete on the basis of low price |

|d. |They carry a limited but deep assortment of products. |

|e. |They carry the same merchandise found in The Home Depot. |

ANS: B

Convenience stores carry a limited line of high-turnover, high-priced goods and resemble miniature supermarkets.

PTS: 1 REF: 192 OBJ: 13-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Pricing

32. Prices are usually higher in convenience stores than in supermarkets because convenience stores offer:

|a. |more specialty goods |

|b. |a wider variety of products |

|c. |a higher level of customer services |

|d. |better location, longer hours, and faster service |

|e. |higher quality goods |

ANS: D

Convenience stores carry a limited amount of high-turnover, high-priced goods and resemble miniature supermarkets. Customers patronize these stores because of convenience.

PTS: 1 REF: 192 OBJ: 13-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing

33. _____ are retailers that compete on the basis of low prices, high turnover, and high volume.

|a. |Convenience outlets |

|b. |Discount stores |

|c. |General stores |

|d. |Department stores |

|e. |Specialty stores |

ANS: B PTS: 1 REF: 192 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

34. Discount stores:

|a. |compete on the basis of low prices, high turnover, and high volume |

|b. |offer more SKUs than department stores |

|c. |sell high-priced, low-turnover products |

|d. |provide their customers with full service |

|e. |compete on the basis of assortment and depth |

ANS: A

Discount stores have a wider range of merchandise than department stores but less depth in any category

PTS: 1 REF: 192 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Pricing

35. _____ carry a broad assortment of nationally branded hard goods (broader than a department store) and offer customers very limited service. National chains dominate this segment.

|a. |Full-line discount stores |

|b. |Discount specialty stores |

|c. |Factory outlets |

|d. |Fashion stores |

|e. |Specialty supercenters |

ANS: A PTS: 1 REF: 192-193 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

36. _____ is the retailing strategy of using moderate to low prices on large quantities of products and lower service to stimulate a high turnover of inventory.

|a. |Specialty store positioning |

|b. |Merchandise positioning |

|c. |M-store retailing |

|d. |The wheel of retailing |

|e. |Mass merchandising |

ANS: E PTS: 1 REF: 193 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Product

37. Kmart utilizes a strategy of moderate to low prices on large quantities of products and lower levels of service to stimulate a high turnover of inventory. Kmart offers a wide variety of different product lines. Kmart is an example of a:

|a. |factory outlet |

|b. |mass merchandiser |

|c. |convenience store |

|d. |franchising operation |

|e. |specialty store |

ANS: B PTS: 1 REF: 193 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Product | TB&E Model Promotion

38. A retail operation that has a 90,000-square-foot facility, that houses a florist, baker, bank, craft shop, photo finisher, dry cleaner, and pharmacy under the same roof as grocery and household items is correctly called a:

|a. |membership warehouse club |

|b. |wholesale outlet |

|c. |factory outlet |

|d. |supercenter |

|e. |mass merchandiser |

ANS: D

Supercenters offer an array of products and services, as well as groceries.

PTS: 1 REF: 193 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

39. _____ are single-line stores that offer a nearly complete selection of one line of merchandise and use self-service, discount prices, high volume, and high turnover of merchandise to their advantage.

|a. |Specialty discount stores |

|b. |Factory outlets |

|c. |Mass merchandisers |

|d. |Membership clubs |

|e. |General stores |

ANS: A

A specialty discount store is also called a category killer.

PTS: 1 REF: 193 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Pricing

40. Glen’s Safety First! sells a huge assortment of firefighting equipment at greatly reduced prices. It offers customers few services and competes on the basis of moderate to low prices on the large quantities of merchandise it stocks. Glen’s Safety First! is an example of a:

|a. |full-line discount store |

|b. |specialty discount store |

|c. |general store |

|d. |department store |

|e. |wholesale store |

ANS: B

A specialty discount store (also called a category killer) offers a nearly complete selection of single-line merchandise and uses self-service, discount prices, high volume, and high turnover.

PTS: 1 REF: 193 OBJ: 13-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Pricing

41. In 2004, over 2 million people visited and bought 14,000 different fine wines at discounted prices. shipped wine to over 100,000 customers generating more than $30 million in sales in 2004. has since become the most trafficked wine site in the world. As a retail operation, would be correctly labeled an online:

|a. |full-line discount store |

|b. |category killer |

|c. |general store |

|d. |department store |

|e. |off-price retailer |

ANS: B

Category killers are specialty discount stores that heavily dominate their narrow merchandise category.

PTS: 1 REF: 193 OBJ: 13-3 TYPE: App

TOP: AACSB Technology | TB&E Model Online/Computer | TB&E Model Product

42. Specialty stores such as Office Depot, Bed Bath & Beyond, and Staples are often called category killers because:

|a. |they can destroy the profit potential for a category of merchandise for other retailers |

|b. |they are located at stand-alone sites |

|c. |of their broad merchandise mix and shallow assortment |

|d. |they offer an exclusive category of merchandise |

|e. |they carry only fast-selling items |

ANS: A

Because these stores dominate their narrow merchandise segment, they are called category killers.

PTS: 1 REF: 193 OBJ: 13-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

43. _____ sell a limited selection of brand-name appliances, household items, and groceries, usually in bulk on a cash-and-carry basis to members only.

|a. |Super outlets |

|b. |Factory outlets |

|c. |Wholesale discounters |

|d. |Off-price discount retailers |

|e. |Warehouse membership clubs |

ANS: E PTS: 1 REF: 194 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

44. A warehouse membership club:

|a. |only sells to ultimate consumers |

|b. |is a type of category specialist |

|c. |offers a medium level of customer service |

|d. |tends to have more educated and more affluent customers than other retail establishments |

|e. |has extensive merchandise depth, which it uses to create demographic positioning |

ANS: D

Warehouse clubs sell to small businesses and ultimate consumers. They maintain low inventory holding costs because they carry a limited assortment of fast-moving items.

PTS: 1 REF: 194 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Customer

45. Laura buys supplies for her catering business at a retailer that stocks a limited selection of items, which are sold in bulk on a cash-and-carry basis to members only. As she browses through a huge store, she buys flour, a set of muffin pans, and a package of paper towels as well as an assortment of fresh produce. Laura is most likely shopping at a(n):

|a. |off-price discount retailer |

|b. |factory outlet |

|c. |industrial supply warehouse |

|d. |warehouse membership club |

|e. |wholesale outlet |

ANS: D

Warehouse clubs sell a limited selection of brand-name appliances, household items, and groceries, usually in bulk on a cash-and-carry basis to members only.

PTS: 1 REF: 194 OBJ: 13-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

46. Off-price retailers:

|a. |are often able to take advantage of manufacturers' faulty sales forecasting |

|b. |very often offer a consistent assortment of merchandise |

|c. |seldom stock brand-name merchandise |

|d. |are owned by the manufacturer of the products they sell |

|e. |offer very deep assortments |

ANS: A

Off-price retailers buy manufacturers' overruns at cost or even less.

PTS: 1 REF: 194 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

47. A publisher of books on holiday decorating, cooking, and crafts has to find a way to dispose of its overrun and unsold end-of-season output. As a marketing consultant, you suggest the firm sell the merchandise to:

|a. |mass merchandisers |

|b. |convenience stores |

|c. |department stores |

|d. |supermarkets |

|e. |off-price discount retailers |

ANS: E

Off-price discount retailers purchase goods at cost or less from manufacturers' overruns, bankruptcies, irregular stock supplies, and unsold end-of-season output. The other four categories may be current customers and would not have a use for the overruns and out-of-season stock.

PTS: 1 REF: 194 OBJ: 13-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Pricing

48. A _____ is an off-price retailer that is owned and operated by a manufacturer and carries one line of merchandise--its own.

|a. |mass merchandiser |

|b. |factory outlet |

|c. |wholesale club |

|d. |discount store |

|e. |bargain basement store |

ANS: B PTS: 1 REF: 194 OBJ: 13-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Pricing

49. Well-known manufacturers such as Nike, Liz Claiborne, and Mikasa have decided the most profitable way to dispose of out-of-season and irregular stock is to open stores and sell their own merchandise. These stores are types of:

|a. |seasonal outlets |

|b. |mass merchandisers |

|c. |factory outlets |

|d. |discount stores |

|e. |bargain basements |

ANS: C

A factory outlet is a type of off-price retailer that is owned and operated by a manufacturer and carries one line of merchandise--its own.

PTS: 1 REF: 194 OBJ: 13-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

50. Which of the following statements about restaurants is true?

|a. |Restaurants are clearly a retailing establishment. |

|b. |There is a strong demand for many more restaurants. |

|c. |The demographic issue of time-poor consumers has led to a growing demand for restaurants. |

|d. |Because barriers to entry are low, the restaurant business appeals to many people. |

|e. |Restaurants are clearly a service industry. |

ANS: D

According to the text, restaurants straddle the line between a retailing establishing and a service industry. Time poverty is not a demographic factor. At the moment food service companies are generally overexpanded.

PTS: 1 REF: 194 OBJ: 13-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

51. _____ refers to shopping without visiting a store and is currently growing faster than in-store shopping because of the consumer demand for convenience.

|a. |Nonstore retailing |

|b. |Customerization |

|c. |Hypershopping |

|d. |Niche marketing |

|e. |Specialty merchandising |

ANS: A PTS: 1 REF: 195 OBJ: 13-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Customer

52. Which of the following statements about nonstore retailing is true?

|a. |The nature of the communications between the retailer and the customer is the same in all forms of nonstore retailing. |

|b. |Nonstore retailing is currently growing faster than in-store retailing. |

|c. |More than 80 percent of all sales are made through nonstore retailing. |

|d. |The high growth rate for nonstore retailing is due to the growth of TV home shopping. |

|e. |Nonstore retailing is increasing at a rate lower than in-store retailing. |

ANS: B

Nonstore retailing refers to shopping without visiting a store; convenience is playing a major role in the growth of nonstore business.

PTS: 1 REF: 195 OBJ: 13-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

53. _____ is a low-profile, yet important, form of retailing in which consumers get products out of automated machines, and it accounts for $40 billion worth of sales each year in the United States.

|a. |Automatic vending |

|b. |Party-plan selling |

|c. |Direct marketing |

|d. |A pyramid scheme |

|e. |Professional selling |

ANS: A PTS: 1 REF: 195 OBJ: 13-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

54. Manufacturers of Pampered Chef kitchen equipment and Longaberger baskets utilize party plan selling. The sales transactions usually occur in a home setting. This form of nonstore retailing is called:

|a. |direct retailing |

|b. |personal marketing |

|c. |direct-response marketing |

|d. |vending |

|e. |selling representation |

ANS: A PTS: 1 REF: 195 OBJ: 13-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

55. Chez Amie manufactures children's clothing for infants and toddlers. Its has its sales representatives set up parties at homes of mothers of preschool children so that its sales reps can demonstrate the quality and value of the Chez Amie products. Chez Amie is using:

|a. |direct-response marketing |

|b. |vending |

|c. |personal marketing |

|d. |selling representation |

|e. |direct retailing |

ANS: E

Direct retailing includes door-to-door selling and party plans.

PTS: 1 REF: 195 OBJ: 13-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer

56. To counter decreasing sales, U.S. direct sales retailers are:

|a. |exploring sales opportunities in other countries |

|b. |selling at workplaces in addition to the more traditional at-home sales |

|c. |setting up kiosks in malls in which to sell their products |

|d. |using direct mail and telemarketing |

|e. |doing all of these |

ANS: E PTS: 1 REF: 196-197 OBJ: 13-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing

57. _____ refers to the techniques used to get consumers to buy from their home. Those techniques include direct mail, catalogs and mail order, telemarketing, and electronic retailing.

|a. |Nonstore vending |

|b. |In-home retailing |

|c. |Franchising |

|d. |Direct marketing |

|e. |Direct retailing |

ANS: D PTS: 1 REF: 196-197 OBJ: 13-4 TYPE: Def

TOP: AACSB Diversity | TB&E Model Strategy | TB&E Model Customer

58. Irina Gomez has decided to sell a sourcebook of Hispanic American suppliers to southeastern businesses in predominantly Hispanic areas. She plans to call prospective customers and try to sell to them over the phone. Gomez will be using which of the following retailing techniques?

|a. |m-commerce |

|b. |indirect retailing |

|c. |franchising |

|d. |vending |

|e. |direct-response marketing |

ANS: E

Direct-response marketing (also called direct marketing) techniques include direct mail, catalogs, telemarketing, and electronic retailing.

PTS: 1 REF: 196-197 OBJ: 13-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Customer

59. Marketers can precisely target their customers according to demographics, geographics, and psychographics with:

|a. |direct mail |

|b. |vending machines |

|c. |franchise stores |

|d. |specialty retail outlets |

|e. |electronic selling |

ANS: A PTS: 1 REF: 196 OBJ: 13-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Customer

60. _____ is the use of a telephone to sell directly to customers.

|a. |Telemarketing |

|b. |Two-way vending |

|c. |Teleprompting |

|d. |Indirect marketing |

|e. |Phone vending |

ANS: A PTS: 1 REF: 196-197 OBJ: 13-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

61. Telemarketing can consist of either unsolicited _____ sales calls, or _____ sales calls, which allow companies to receive orders through toll-free telephone numbers.

|a. |order placement; lead generation |

|b. |push strategy; pull strategy |

|c. |systematic; synergistic |

|d. |qualifying; finalizing |

|e. |outbound; inbound |

ANS: E

Outbound telemarketing is generally used for unsolicited selling, while inbound calls are from customers placing orders.

PTS: 1 REF: 196-197 OBJ: 13-4 TYPE: Def

TOP: AACSB Technology | TB&E Model Strategy

62. Sunni received a phone call last night during supper. The caller wanted her to subscribe to a travel magazine. Since Sunni had never thought of purchasing this type of magazine before she received the call, this is obviously an example of _____ telemarketing.

|a. |outbound |

|b. |field sales |

|c. |qualifying |

|d. |inbound |

|e. |relationship |

ANS: A

Outbound telemarketing is generally used for unsolicited selling.

PTS: 1 REF: 196 OBJ: 13-4 TYPE: App

TOP: AACSB Technology | TB&E Model Strategy

63. The Mad Stencilist has decided to demonstrate how to use its products to create custom gift tags on a local cable television channel and encourage shoppers to call a toll-free number to purchase the merchandise with a credit card. This form of retailing is called a(n):

|a. |in-store electronic shopping |

|b. |videotex |

|c. |shop-at-home network |

|d. |electronic point of sale |

|e. |catalog viewing |

ANS: C

Using a TV channel to display goods that are sold over the phone is the shop-at-home network format.

PTS: 1 REF: 197 OBJ: 13-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Product

64. The Cedar Store carries a full line of cedar swings, gliders, garden benches, and tables. All of its products can be purchased through its Web site. The site has done well since the Cedar Store's products do not need to be touched or smelled before purchase. The Cedar Store is engaging in:

|a. |online retailing |

|b. |shop-at-home networking |

|c. |mobile vending |

|d. |franchising |

|e. |electronic wholesaling |

ANS: A

Online retailing is a two-way interactive service offered to users with personal computers.

PTS: 1 REF: 197 OBJ: 13-4 TYPE: App

TOP: AACSB Technology | TB&E Model Product

65. Which of the following statements about online retailing is true?

|a. |Online retailing is also called e-merchandising. |

|b. |After a rapid increase in sales, the popularity of online retailing has declined over the last decade. |

|c. |Most traditional retailers are using online retailing to move merchandise that can be purchased at their stores. |

|d. |The earliest use of online retailing was for Internet auctions. |

|e. |All of these statements about online retailing are true. |

ANS: C

Online retailing is called either electronic retailing or e-tailing. Online shopping has been and is growing at an astonishing rate. Internet auctions are a fairly new phenomenon.

PTS: 1 REF: 197 OBJ: 13-4 TYPE: Comp

TOP: AACSB Technology | TB&E Model Online/Computer

66. A(n) _____ is a continuing relationship in which an individual or business grants business rights to operate or sell a product to another individual or business.

|a. |leasing contract |

|b. |alliance for profit |

|c. |brokered partnership |

|d. |franchise |

|e. |countertrade |

ANS: D PTS: 1 REF: 198 OBJ: 13-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

67. Which of the following is NOT a reason why individuals may be tempted to buy a franchise business rather than develop their own independent business?

|a. |the individual can try his or her own personal innovative product and service ideas in the business |

|b. |to obtain a well-known product or service name |

|c. |management training requirements |

|d. |the business’s established image |

|e. |existence of product uniformity standards |

ANS: A

The ties to the franchisor's policies may be very restrictive for an innovative businessperson because certain products and procedures must be adhered to.

PTS: 1 REF: 198 OBJ: 13-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

68. A retailer in Peoria, Illinois, is licensed to sell Snapper lawn mowers. This retailer is a:

|a. |product and trade name franchisee |

|b. |redistributor franchisor |

|c. |business format franchisee |

|d. |licensed franchisor |

|e. |relationship franchisee |

ANS: A

In product and trade name franchising, a dealer agrees to buy or sell certain products or product lines from a supplier.

PTS: 1 REF: 198 OBJ: 13-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

69. The earliest example of the use of franchising occurred in the sale of products to housewives located on the American prairie. In 1851, Isaac Singer sold traveling independent salesmen the rights to sell his sewing machines to end users. What type of franchising was this an example of?

|a. |generic |

|b. |business format |

|c. |product and trade name |

|d. |licensed |

|e. |consumer based |

ANS: C

In product and trade name franchising, a dealer agrees to buy or sell certain products or product lines from a supplier.

PTS: 1 REF: 198 OBJ: 13-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

70. Breit Ideas is an online retailer that is licensed to sell products designed by Mary Engelbreit--everything from Christmas ornaments and books to wallpaper and toys. Breit Ideas is an example of a:

|a. |product and trade name franchisee |

|b. |redistributor franchisor |

|c. |business format franchisee |

|d. |licensed franchisor |

|e. |relationship franchisee |

ANS: A PTS: 1 REF: 198 OBJ: 13-5 TYPE: App

TOP: AACSB Technology | TB&E Model Online/Computer | TB&E Model Product

71. General Nutrition Center, Uniglobe Travel, and Wendy’s are all examples of _____ because the franchisee buys the right to use the franchisor’s approach to doing business.

|a. |product and trade name franchisors |

|b. |redistributor franchisors |

|c. |business format franchisors |

|d. |licensed franchisors |

|e. |relationship franchisors |

ANS: C

Business format franchising is an ongoing relationship between a franchisor and a franchisee in which the franchisor sells a franchisee the rights to use a format or approach to doing business.

PTS: 1 REF: 198 OBJ: 13-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

72. Arby's, Jiffy-Lube, Baskin-Robbins, and Sylvan Learning Centers are examples of _____ because the franchisee buys the right to use the franchisor’s approach to doing business.

|a. |trade name franchising |

|b. |product franchising |

|c. |business format franchising |

|d. |franchise wholesaling |

|e. |logistic franchising |

ANS: C

Business format franchising is an ongoing relationship between a franchisor and a franchisee in which the franchisor sells a franchisee the rights to use a format or approach to doing business.

PTS: 1 REF: 198 OBJ: 13-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

73. The first task of developing a retail strategy is to:

|a. |create a buying organization |

|b. |decide what to buy |

|c. |define the target market |

|d. |create a promotional strategy |

|e. |define the pricing policies |

ANS: C

The target market's wants and needs form the foundation for a successful retail strategy.

PTS: 1 REF: 199 OBJ: 13-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

74. Retailers control the six Ps of the retailing mix. The six Ps include the marketing mix plus:

|a. |personnel and presentation |

|b. |production and people |

|c. |potential and perception |

|d. |personality and persuasion |

|e. |positioning and purchasing |

ANS: A

See Exhibit 13.2.

PTS: 1 REF: 199-200 OBJ: 13-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

75. Retailers such as Target and JCPenney are responding to consumer needs by changing product mixes, hours of operation, locations, and prices. These stores are changing aspects of their:

|a. |merchandising groupings |

|b. |retailing mixes |

|c. |product offerings |

|d. |retail trade areas |

|e. |store positioning strategies |

ANS: B

Retailers are altering several aspects of the six Ps of the retailing mix. See Exhibit 13.5.

PTS: 1 REF: 199-200 OBJ: 13-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

76. The merchandise mix:

|a. |is the term used for price-bundled merchandise |

|b. |is the term for the marketing communications used by retailers |

|c. |refers to the six levels in a buying organization |

|d. |describes the composition of a traditional shopping center |

|e. |is the retailer's product offering |

ANS: E PTS: 1 REF: 200 OBJ: 13-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

77. Data mining:

|a. |is a relatively new method of inventory control |

|b. |uses complex mathematical models to help retailers make better product mix decisions |

|c. |is a computerized technique for making site location decisions |

|d. |determines the level of quality and service desired by customers |

|e. |measures levels of services and identifies inadequate service |

ANS: B PTS: 1 REF: 200 OBJ: 13-6 TYPE: Def

TOP: AACSB Technology | TB&E Model Strategy

78. A marketing research company has created a database that contains monthly average retail price data for selected cuts of beef, pork, chicken, turkey, lamb, and veal. In addition to prices of various cuts of meat, the database includes information on the volume sold and the volume of "featured" products sold under retailers' weekly advertised specials and frequent shopper discounts. These data are collected at the point of sale by supermarkets using electronic scanners in checkout lines. The database allows users to use _____ to determine what meat should be stocked and when it should be stocked.

|a. |data mining |

|b. |information dredging |

|c. |an information management system |

|d. |a retail paradigm |

|e. |correlation and trend analyses |

ANS: A

Data mining uses complex mathematical models to help retailers make better product mix decisions.

PTS: 1 REF: 200 OBJ: 13-6 TYPE: App

TOP: AACSB Technology | TB&E Model Strategy

79. As competition in the retail industry has intensified, Office Depot has begun selling a _____ of office furnishings with the Christopher Lowell brand. Office Depot is the only place that you will find the Christopher Lowell brand. The prices of this merchandise are lower than prices for national brands and give consumers greater value.

|a. |private brand |

|b. |generic brand |

|c. |family brand |

|d. |promotional brand |

|e. |specialty brand |

ANS: A

Private brands are designed and developed by the retailer.

PTS: 1 REF: 201 OBJ: 13-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Pricing

80. Which U.S. retailer is the number one sales volume retailer in the world?

|a. |Sears |

|b. |JCPenney |

|c. |Target |

|d. |Kroger |

|e. |Wal-Mart |

ANS: E PTS: 1 REF: 189 | 193 OBJ: 13-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

81. Passport Furniture is a manufacturer of fine home furnishings. It offers to share the costs (up to 5 percent of the amount of products purchased by the retailer) of advertising with any retailer that carries its line of furniture. Retailers who took advantage of this offer would use:

|a. |specialty promotion |

|b. |cooperative advertising |

|c. |comparative advertising |

|d. |shared advertising |

|e. |advertising advocacy |

ANS: B

Cooperative advertising is a collaborative effort in which both the retailer and the manufacturer share the costs and benefits.

PTS: 1 REF: 201 OBJ: 13-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion

82. Why is the selection of a retail location so critical to a store's success?

|a. |Location affects pricing decisions but does not affect store image. |

|b. |Customers will not drive out of their way to find a store. |

|c. |A location decision ties up funds that will not appreciate or gain in value. |

|d. |A location decision typically requires long-term commitment of resources. |

|e. |Employee density is affected by the area in which the store is located. |

ANS: D

One critical point about location choice is that it ties up a large amount of resources and is difficult to change.

PTS: 1 REF: 201 OBJ: 13-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

83. When opening a new retail operation, the retailer needs to consider all of the following factors EXCEPT:

|a. |traffic flow |

|b. |employee density |

|c. |nature of the competition |

|d. |land costs |

|e. |area growth |

ANS: B

Employee density is concerned with the amount of employees per 1,000 square feet in the store--not in the neighborhood. The other four factors are to be considered when deciding on a location.

PTS: 1 REF: 202 | 203 OBJ: 13-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

84. Which of the following statements about a retailer's promotion strategy is true?

|a. |The design of the promotion strategy would be done separately from the creation of the retailing mix. |

|b. |The goal of a retail store's promotion mix is to position the store in consumers' minds. |

|c. |Most advertising for retailers is carried out at the national level. |

|d. |Retailers find direct-mail marketing inefficient. |

|e. |Retail promotion strategy does not include public relations activities. |

ANS: B

Promotion is part of the retailing mix. Most advertising for retailers is carried out at the local level. Retailers have been very successful with direct marketing.

PTS: 1 REF: 199 OBJ: 13-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Promotion

85. _____ are stores that consumers purposely plan to visit. They are often built as freestanding stores.

|a. |Destination stores |

|b. |Benefit retailers |

|c. |Relationship builders |

|d. |Lifestyle stores |

|e. |M-stores |

ANS: A PTS: 1 REF: 201 OBJ: 13-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

86. Gap, Inc. opened its first freestanding Banana Republic store in Japan in the fall of 2006. Its freestanding store:

|a. |contains merchandise different from that offered in Banana Republic stores in shopping centers |

|b. |is not a destination store |

|c. |creates greater visibility for the store than it would have in a shopping center |

|d. |is an off-price retailing operation for the store chain |

|e. |is described by all of these |

ANS: C PTS: 1 REF: 201 OBJ: 13-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

87. Large retailers such as Target and Wal-Mart and sellers of shopping goods such as automobiles and furniture often use _____ for their locations.

|a. |remote, rural locations |

|b. |office complexes |

|c. |factory outlets |

|d. |freestanding stores |

|e. |regional malls |

ANS: D PTS: 1 REF: 201 OBJ: 13-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

88. The Summer Place has decided consumers will be drawn to its offering of wicker furniture and will even be willing to drive out of their way. The store really needs to keep its overhead costs (such as rent) low and wants to avoid locating near competitors. For a location, the Summer Place will probably choose a:

|a. |factory outlet |

|b. |strip center |

|c. |freestanding store |

|d. |shopping center |

|e. |regional mall |

ANS: C

A freestanding store has the advantage of low site costs and will be a benefit if consumers are willing to seek it out.

PTS: 1 REF: 201 OBJ: 13-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Customer

89. _____ place a diverse group of retailers together in one location. This form of retail location first became popular in the 1950s when the U.S. population started migrating to the suburbs.

|a. |Freestanding lifestyle centers |

|b. |Shopping centers |

|c. |Mass merchandising centers |

|d. |Scrambled merchant areas |

|e. |Mega-malls |

ANS: B PTS: 1 REF: 201-202 OBJ: 13-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

90. Geoff Hudson wants to open a specialty store to sell sports memorabilia and is considering locating it in a regional shopping mall. Before opening his new store, he needs to understand:

|a. |parking in malls is usually inadequate |

|b. |the leases required by mall owners are usually inexpensive |

|c. |the mall atmosphere and that of neighboring stores will help attract shoppers |

|d. |his store could be the mall anchor |

|e. |there is usually a problem with store image because malls have no unified image, as a shopping center does |

ANS: C

Malls have unified images, convenient parking, and expensive leases. The mall atmosphere and other stores will attract shoppers.

PTS: 1 REF: 201-202 OBJ: 13-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Marketing Plan

91. A specialty store is considering locating a retail store in a regional shopping mall. Which of the following is NOT a likely benefit associated with a location in a mall?

|a. |anchors that attract customers |

|b. |ample parking |

|c. |unified image of mall |

|d. |ability to target different demographics groups |

|e. |inexpensive leases |

ANS: E

Leases are usually expensive.

PTS: 1 REF: 201 OBJ: 13-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

92. The newest generation of shopping centers is:

|a. |regional malls |

|b. |shopping business districts |

|c. |lifestyle centers |

|d. |franchised centers |

|e. |strip malls |

ANS: C PTS: 1 REF: 202 OBJ: 13-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

93. Which group is the targeted market by lifestyle centers?

|a. |teenagers who don't drive |

|b. |consumers on a fixed income |

|c. |laggards |

|d. |upper-income consumers with an aversion for “the mall” |

|e. |people who engage in cocooning |

ANS: D PTS: 1 REF: 202 OBJ: 13-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Customer

94. Les Ailes de la Mode is a Quebec retailer that wants to portray an image of quality to help reinforce its prestige image. The key element in this store's positioning strategy and classification would be:

|a. |price |

|b. |placement |

|c. |personnel |

|d. |promotion |

|e. |product |

ANS: A

Price would best indicate this store's classification and position.

PTS: 1 REF: 202 OBJ: 13-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Pricing

95. Another name for an anchor store is a _____.

|a. |mass merchandiser |

|b. |generator store |

|c. |host store |

|d. |shopping center pillar |

|e. |destination store |

ANS: B PTS: 1 REF: 202 OBJ: 13-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

96. Anchor stores (or generator stores):

|a. |are the stores within the mall that sell services rather than products |

|b. |are often large department stores that are located at opposite ends of a mall to create a heavy pedestrian traffic flow |

|c. |usually specialize in high-priced items like furniture |

|d. |is the generic name given to supermarkets that are located within shopping malls |

|e. |is a term for retail stores that "drop off" to freestanding locations |

ANS: B

Anchors are the large stores at the ends of shopping malls and may sell a variety of products

PTS: 1 REF: 202 OBJ: 13-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Distribution

97. When JCPenney announced it would open a 97,000-plus square foot anchor store in the new West Grand Promenade, it meant that JCPenney would be:

|a. |the only large store in the shopping center |

|b. |a destination store |

|c. |expected to create heavy foot traffic for the center |

|d. |in an isolated location outside the shopping center structure |

|e. |unable to control the local store's pricing policies |

ANS: C

There is typically more than one anchor store in any mall. Freestanding stores are destination stores.

PTS: 1 REF: 202 OBJ: 13-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

98. In September 2005, JCPenney opened a 97,000-plus square foot anchor store in the new West Grand Promenade. One advantage that JCPenney has because it is inside the shopping center is:

|a. |cheap lease agreement |

|b. |potential of direct competition within the shopping center |

|c. |lease restrictions on hours of operation |

|d. |inadequate parking |

|e. |none of these |

ANS: E

Lease agreements are expensive and do dictate hours of operation. Direst competition can be a disadvantage. One of the advantages of shopping centers is ample parking places.

PTS: 1 REF: 202 OBJ: 13-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Distribution

99. Many technologically advanced retailers are using a technique called _____ to analyze the huge amounts of data collected through their point-of-purchase scanning equipment. The analysis looks for products that are commonly purchased together to help retailers merchandise their stores to place products in the right places.

|a. |market-basket analysis |

|b. |simulated test marketing |

|c. |product/customer correlation analysis |

|d. |market cross-tabulations |

|e. |customer lifestyle analysis |

ANS: A PTS: 1 REF: 203 OBJ: 13-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

100. A recent pricing trend among retailers is EDLP, which stands for:

|a. |electronic data laser purchasing |

|b. |efficient data long-range planning |

|c. |everyone doing large purchases |

|d. |everyday low pricing |

|e. |efficient dollar loss planning |

ANS: D PTS: 1 REF: 202 OBJ: 13-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

101. The main element of a store's presentation is its _____, or the overall impression conveyed by the store's physical layout, decor, and surroundings.

|a. |merchandise depth |

|b. |location |

|c. |price strategy |

|d. |atmosphere |

|e. |total merchandise mix |

ANS: D PTS: 1 REF: 202-203 OBJ: 13-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Creativity

102. Texas-based Grape Vine Market is an 18,000-square-foot store offering highly collectible food and wine. Greeted by warm lighting, a muted color scheme, and REM or Fleetwood Mac on the sound system, customers first enter the wine department, a 10,000-square-foot oval featuring more than 5,500 labels from around the world. There are no aisles; instead racks are arranged asymmetrically to create flow and movement. This description is of the store's:

|a. |cultural impact |

|b. |atmosphere |

|c. |target strategy |

|d. |merchandise mix |

|e. |promotional strategy |

ANS: B

The main element of a store's presentation is its atmosphere, how the store's physical layout, decor, and surroundings convey an overall impression.

PTS: 1 REF: 202-203 OBJ: 13-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Creativity

103. Which of the following can Texas-based Grape Vine Market use to create its store atmosphere?

|a. |play REM or Fleetwood Mac music on its sound system |

|b. |a large brick fireplace in the center of the store |

|c. |store clerks who are knowledgeable about food and wine |

|d. |racks arranged asymmetrically to create flow and movement |

|e. |all of these |

ANS: E

The main element of a store's presentation is its atmosphere, how the store's physical layout, decor, and surroundings convey an overall impression.

PTS: 1 REF: 202-204 OBJ: 13-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

104. The Home Depot has selected orange as its corporate color. It's a good choice. At the gut level, orange connotes happiness and warmth. A recent article in one of the company's advertising brochures spoke about choosing colors for home decorating. It referred to this color as "joyful orange" The color orange is part of the _____ at The Home Depot stores.

|a. |cultural impact |

|b. |atmosphere |

|c. |target strategy |

|d. |merchandise mix |

|e. |promotional strategy |

ANS: B

Color is a main ingredient of a retail atmosphere.

PTS: 1 REF: 204 OBJ: 13-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Creativity

105. Whenever a customer buys a stencil at Stencil Works, a sales clerk asks the customer whether she needs brushes, paints, or tape for her stenciling project. In other words, the sales clerk engages in:

|a. |suggestion selling |

|b. |trading up |

|c. |bait and switch |

|d. |customer relationship retailing |

|e. |service-disguised selling |

ANS: A

Suggestion selling seeks to broaden customers' original purchase with related items.

PTS: 1 REF: 204 OBJ: 13-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Pricing

106. When Boris went into Sears to buy his wife a new iron for her birthday, he only planned to spend about $30, but the sales clerk was able to show him the superiority of a $60 iron to the less expensive model. In this example, the sales clerk engaged in:

|a. |suggestion selling |

|b. |trading up |

|c. |bait and switch |

|d. |customer relationship retailing |

|e. |service-disguised selling |

ANS: B

Trading up means persuading customers to buy a higher-priced item than the one they intended to buy.

PTS: 1 REF: 204 OBJ: 13-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Pricing

107. Toy Lab is a small retailer where children can design and assemble toys from bins of brightly colored parts. Each child starts in the “Dream It” section of the store by drawing a picture of his or her toy on a large piece of paper. Then, the child moves to the “Pick Your Pieces” area of the store to select the parts he or she needs to create the toy. Finally, the child moves to the “Build It” area to assemble the colored parts on large tables and put the final toy in a special box. Toy Lab is part of a recent trend in retailing, which the text calls:

|a. |nonstore retailing |

|b. |m-commerce |

|c. |convenience retailing |

|d. |e-business |

|e. |adding interactivity |

ANS: E

Interactivity is used to differentiate one store from another. Interactivity gets customers involved in the retailing experience.

PTS: 1 REF: 205 OBJ: 13-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Creativity

108. Texas-based Grape Vine Market is an 18,000-square-foot store offering highly collectible food and wine—along with some other culinary perks, including a cooking school—all in a setting crafted to make shoppers feel comfortable. Greeted by warm lighting, a muted color scheme, and REM or Fleetwood Mac on the sound system, customers first enter the wine department, a 10,000-square-foot oval featuring more than 5,500 labels from around the world. There are no aisles; instead racks are arranged asymmetrically to create flow and movement. The Grape Vine Market uses _____ to differentiate itself from supermarkets.

|a. |nonstore retailing |

|b. |m-commerce |

|c. |convenience retailing |

|d. |e-business |

|e. |interactivity |

ANS: E

Interactivity is used to differentiate one store from another. Interactivity gets customers involved in the retailing experience.

PTS: 1 REF: 205 OBJ: 13-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Creativity

109. Interactivity is one of the new developments in retailing. In retailing, interactivity refers to:

|a. |the use of improved communications with customers |

|b. |a new form of customer relationship marketing |

|c. |entertainment for customers to get them involved |

|d. |the use of information kiosks |

|e. |the creation of a static atmosphere |

ANS: C PTS: 1 REF: 205 OBJ: 13-7 TYPE: Def

TOP: AACSB Technology | TB&E Model Strategy

110. One of the new developments in retailing is m-commerce. The m- in commerce stands for:

|a. |motivated |

|b. |multimedia |

|c. |marketing |

|d. |managed |

|e. |mobile |

ANS: E PTS: 1 REF: 205 OBJ: 13-7 TYPE: Def

TOP: AACSB Technology | TB&E Model Strategy

111. One of the new developments in retailing is m-commerce. M-commerce refers to the ability to:

|a. |use unique communication techniques to send advertising messages |

|b. |create situations in which the AIDA technique is effective |

|c. |more efficiently manage customer demand with inventory |

|d. |shop using wireless mobile devices |

|e. |motivate consumers to buy more by creating more feedback channels |

ANS: D PTS: 1 REF: 205 OBJ: 13-7 TYPE: Def

TOP: AACSB Technology | TB&E Model Strategy

112. Les Ailes de la Mode is a Quebec retailer that has built its name around customer relationships. The specialty department store creates relationships with its customers through their experiences in the store. Its vice-president of marketing has said, "We are here to build a very good personalized experience--it's not just a matter of marketing strategy, it's our mission. " The shopping experience at the store includes "little extras" like free coat check, free shoeshines, baby feeding rooms, a highly trained staff (and more of them on the floor), and a place for people to go to read the newspaper. This is an example of:

|a. |lifestyle marketing |

|b. |retail positioning |

|c. |a store that emphasizes customer service |

|d. |trading up |

|e. |all of these |

ANS: C PTS: 1 REF: 204 OBJ: 13-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

Diaz

John Diaz immigrated to Tallahassee from Cuba in the 1980s. He set up a coffee shop called Diaz in a small upper-middle-class neighborhood. It rapidly became popular because of the wonderful coffee it brewed. Soon Diaz was selling the finest coffees from around the world, plus coffee-making necessities such as grinders and brewers. Within ten years, Diaz was operating a lucrative mail-order business in addition to his coffee shop.

Upon entering the shop, the first thing the customer sees is a countertop crowded with all of the machinery needed for making a perfect cup of coffee. Marble-topped tables are set in cozy nooks with overstuffed chairs. Bookshelves on one wall hold books about coffee for patrons to read while they sip. The smell is intoxicating to a real coffee lover. Coffee drinkers can take home a pound when they leave. The store carries all types of coffee from $300 per pound Kopi Luwak from Sumatra to Brazilian Cerrado for $8 a pound.

113. Refer to Diaz. In terms of ownership, Diaz's coffee shop would be classified as a(n):

|a. |franchise |

|b. |wholesaler |

|c. |independent retail operation |

|d. |agency |

|e. |chain store |

ANS: C

It is owned by a single person.

PTS: 1 REF: 191 OBJ: 13-2

TOP: AACSB Reflective Thinking | TB&E Model Distribution

114. Refer to Diaz. Which of the following would NOT be a typical method of classifying Diaz's coffee shop?

|a. |ownership |

|b. |service |

|c. |product assortment |

|d. |price |

|e. |level of profit |

ANS: E

A retail establishment can be classified according to its ownership, service, product assortment, and price.

PTS: 1 REF: 190 OBJ: 13-2

TOP: AACSB Reflective Thinking | TB&E Model Pricing

115. Refer to Diaz. The type of merchandise carried by Diaz is deep but with a narrow assortment. The store would most likely be classified as a:

|a. |convenience store |

|b. |mass merchandiser |

|c. |specialty store |

|d. |category killer |

|e. |membership club |

ANS: C

A specialty store specializes in a given type of merchandise with a deep but narrow assortment.

PTS: 1 REF: 191 OBJ: 13-3

TOP: AACSB Reflective Thinking | TB&E Model Distribution

116. Refer to Diaz. Diaz is competing directly with:

|a. |specialty stores |

|b. |convenience stores |

|c. |supermarkets |

|d. |restaurants |

|e. |all of these |

ANS: E

Diaz sells brewed coffee as do restaurants and convenience stores. It also sells a line of coffee-related merchandise, which makes it a specialty store. Because it sells specialty coffee, it also competes with supermarkets.

PTS: 1 REF: 191-195 OBJ: 13-3

TOP: AACSB Reflective Thinking | TB&E Model Distribution

117. Refer to Diaz. The smell of fresh coffee, the fact it is made where drinkers can watch the process, and the comfortable chairs all are used to create the store's:

|a. |atmosphere |

|b. |cultural impact |

|c. |target strategy |

|d. |merchandise mix |

|e. |promotional strategy |

ANS: A

The main element of a store's presentation is its atmosphere, how the store's physical layout, decor, and surroundings convey an overall impression.

PTS: 1 REF: 202-203 OBJ: 13-6

TOP: AACSB Reflective Thinking | TB&E Model Creativity

118. Refer to Diaz. What pricing strategy would you expect Diaz to use?

|a. |single pricing |

|b. |EDLP |

|c. |discount pricing |

|d. |prestige pricing |

|e. |cannot tell from the information provided |

ANS: D

Prestige pricing would best suit its positioning image as an upscale shop.

PTS: 1 REF: 202 OBJ: 13-6

TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Pricing

Golden Video

When Golden Video opened ten years ago in Long Island's Suffolk County, it competed with only one or two other video stores within a five-mile radius. Today, there are eight stores within that radius, including two Blockbusters, each a half-mile away in different directions.

There is little doubt that independently owned video stores are having a tough time competing with chains like Blockbuster, but many are finding their own special ways of surviving. Part of the solution has been in supplementary merchandise and services such as sports cards and camcorder rentals, or renting and selling the X-rated titles shunned by many chains. Lower rental fees also are prevalent among independents, but the key to success in the mom-and-pop businesses appears to be personalized service. Golden Video provides services like holding videos for its customers upon request, recommending titles, and helping parents to choose G-rated movies that they can watch with their children. To add value, Golden Video also sells comic books, sports cards, candy, and video accessories and provides repairs for VCR and DVD players at the store. With friendly and value-added services, Golden Video has boosted business in spite of the stiff competition.

119. Refer to Golden Video. Golden Video can best be described as a:

|a. |franchise |

|b. |wholesaler |

|c. |distributor |

|d. |retailer |

|e. |department |

ANS: D

Golden Video sells directly to the consumer and is therefore a retailer

PTS: 1 REF: 189 OBJ: 13-1

TOP: AACSB Reflective Thinking | TB&E Model Distribution

120. Refer to Golden Video. Stores in the video industry, such as Golden Video and Blockbuster, can be classified on each of the following bases EXCEPT:

|a. |ownership |

|b. |location |

|c. |price levels |

|d. |level of service |

|e. |product assortment |

ANS: B

Retailers can be classified according to ownership, level of service, product assortment, and price levels.

PTS: 1 REF: 189-190 OBJ: 13-2

TOP: AACSB Reflective Thinking | TB&E Model Distribution

121. Refer to Golden Video. Golden Video and Blockbuster represent which type of retailers?

|a. |membership club |

|b. |convenience store |

|c. |factory outlet |

|d. |specialty store |

|e. |mass merchandiser |

ANS: D

These stores are specialty stores because they specialize in a given type of merchandise with a deep but narrow assortment.

PTS: 1 REF: 191 OBJ: 13-3

TOP: AACSB Reflective Thinking | TB&E Model Distribution

122. Refer to Golden Video. Blockbuster Video grants individuals the right to open a Blockbuster store through the use of a contractual arrangement. This suggests that Blockbuster is a:

|a. |freestanding store |

|b. |franchise |

|c. |cooperative |

|d. |licensed outlet |

|e. |chain with one ownership |

ANS: B

A franchise is a continuing relationship in which an individual or business grants the business rights to operate or sell a product to another individual or business.

PTS: 1 REF: 198 OBJ: 13-5

TOP: AACSB Reflective Thinking | TB&E Model Distribution

123. Refer to Golden Video. The type of site location you would expect Golden Video to utilize is a:

|a. |shopping center |

|b. |strip center |

|c. |factory outlet |

|d. |regional mall |

|e. |freestanding store |

ANS: B

Golden Video is a specialty store. The customers demand convenience and the ability to get in and out quickly. As such, the store is most likely to locate in a strip center.

PTS: 1 REF: 201 OBJ: 13-6

TOP: AACSB Reflective Thinking | TB&E Model Distribution

Wawa

The first Wawa store was opened in 1964. Today the company has 15,000 employees and owns and operates more than 550 units in southeastern Pennsylvania, New Jersey, Delaware, Maryland, and northern Virginia. The chain's sales topped $2 billion in 2002. Wawa began as a store for distributing Wawa dairy products. Since then it has gotten into the gasoline business to increase store traffic, but its primary draw is hot meals and cold sandwiches in a quick-service restaurant format that mimics a shopping mall food court. Personalization is a fundamental part of the store concept and is built into things like coffee and sandwiches. The stores have an eight-head cappuccino machine where customers can mix and match whatever flavors they want and add steamed milk or cream, all for the same price as a regular cup of coffee. In addition to being restaurants, Wawa stores also do a big business in a limited line of high-turnover convenience products and can accurately be described as mini-supermarkets.

124. Refer to Wawa. Who buys most of the merchandise sold in the individual stores?

|a. |a franchisee |

|b. |the home office |

|c. |a store manager |

|d. |a licensee |

|e. |cannot be determined from the information provided |

ANS: B

According to the case, the chain stores are owned and operated as a single organization.

PTS: 1 REF: 190 OBJ: 13-2

TOP: AACSB Reflective Thinking | TB&E Model Distribution

125. Refer to Wawa. In terms of types of retail operations, Wawa stores could be categorized as:

|a. |mass merchandisers |

|b. |franchises |

|c. |department stores |

|d. |convenience stores |

|e. |discount stores |

ANS: D PTS: 1 REF: 192 OBJ: 13-3

TOP: AACSB Reflective Thinking | TB&E Model Distribution

126. Refer to Wawa. In a newspaper article about Wawa stores, the stores were described as a living example of the transformation of retailing from a prizefight to a bar fight. This description means that:

|a. |price is no longer as important an issue as it once was |

|b. |the competition has gotten fiercer |

|c. |Wawa stores are easily beating the competition |

|d. |Wawa stores have no competition |

|e. |Wawa stores use a less sophisticated retailing mix |

ANS: B

Students will need to be aware that prizefights have referees and rules, whereas bar fights do not. The point is that retailing often involves fierce competition, which may give rise to no-rules fighting and an every-retailer-for-itself attitude. See discussion of restaurants in text.

PTS: 1 REF: 194 OBJ: 13-3

TOP: AACSB Reflective Thinking | TB&E Model Strategy

127. Refer to Wawa. The decision to allow customers to create their own coffee drinks would be a part of Wawa's:

|a. |retailing mix |

|b. |promotion strategy |

|c. |production activities |

|d. |presentation effects |

|e. |customer mix |

ANS: A

The retailing mix would include decisions about product offerings.

PTS: 1 REF: 199-200 OBJ: 13-6

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

128. Refer to Wawa. Its restaurant format that mimics a shopping mall food court would be a factor in which element of the retailing mix?

|a. |product |

|b. |personnel |

|c. |presentation |

|d. |promotion |

|e. |place |

ANS: C

The mall food court look would be part of a store's atmosphere.

PTS: 1 REF: 202-203 OBJ: 13-6

TOP: AACSB Reflective Thinking | TB&E Model Distribution

129. Refer to Wawa. The ability to personalize your coffee yourself is consistent with which new development in retailing?

|a. |interactivity |

|b. |m-commerce |

|c. |atmosphere extension |

|d. |market-basket analysis |

|e. |data mining |

ANS: A

It helps the stores differentiate themselves.

PTS: 1 REF: 205 OBJ: 13-7

TOP: AACSB Reflective Thinking | TB&E Model Creativity

Chapter 14—Integrated Marketing Communications

MULTIPLE CHOICE

1. _____ is communications by marketers that inform, persuade, and remind potential buyers of a product in order to influence an opinion or elicit a response.

|a. |Distributive communication |

|b. |Perceptual communication |

|c. |Statistically provable advertising |

|d. |Promotion |

|e. |Publicity |

ANS: D PTS: 1 REF: 207 OBJ: 14-1 TYPE: Def

TOP: AACSB Communication | TB&E Model Promotion

2. Rosarita is responsible for developing a plan for the optimal use of advertising, personal selling, sales promotion, and public relations. Rosarita is developing a:

|a. |promotional strategy |

|b. |set of promotion goals |

|c. |marketing mix |

|d. |communication mix |

|e. |selling plan |

ANS: A PTS: 1 REF: 207 OBJ: 14-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

3. In 2006, the NBC television network used advertising, personal selling, public relations, and sales promotion to communicate with its target audience about its new show Kidnapped. The television network’s _____ described its plan on how to use these tools most effectively.

|a. |mass communication mix |

|b. |promotional strategy |

|c. |selling plan |

|d. |marketing mix |

|e. |strategic goals |

ANS: B

Promotional strategy is a plan for the optimal use of the elements of the promotion mix.

PTS: 1 REF: 207 OBJ: 14-1 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion | TB&E Model Customer

4. The main function of a promotional strategy is to:

|a. |convince the target customers that a firm's products offer competitive advantages over those of its competition |

|b. |find a niche in the marketplace for the firm and its products |

|c. |provide the firm with research information about the success of its marketing effort |

|d. |create efficient distribution channels |

|e. |guarantee control over the length of the stages of the product life cycle |

ANS: A

The function of a promotional strategy is to convince the target customers that the goods and services offered provide a competitive advantage over the competition.

PTS: 1 REF: 207 OBJ: 14-1 TYPE: Comp

TOP: AACSB Communication | TB&E Model Customer | TB&E Model Promotion

5. A _____ is defined as a set of unique features of a company and its products perceived by the target market as significant and superior to the competition.

|a. |comparative differentiation |

|b. |competitive advantage |

|c. |marketing mix |

|d. |special benefit |

|e. |promotional plan |

ANS: B PTS: 1 REF: 207 OBJ: 14-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

6. People who love to fish prefer American Magic Lures that are cut from ash or cedar and then hand-painted and hand-tied with a feather skirt. Advertising for American Magic Lures emphasizes how its lures, unlike others, are all handcrafted. This is its:

|a. |publicity objective |

|b. |marketing differentiator |

|c. |competitive advantage |

|d. |one-to-one marketing advantage |

|e. |sales promotional theme |

ANS: C

A competitive advantage is a set of unique features of a company and its products perceived by the target market as significant and superior to the competition. It is not the result of publicity; it is design and production based. Since this is advertising, the sales promotion theme may or may not agree; there is no indication of integrated marketing communications.

PTS: 1 REF: 207 OBJ: 14-1 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion | TB&E Model Customer

7. The ads for Don Francisco’s ground coffee simply state, "The highest quality coffee doesn’t have to be expensive." This is an example of how a product communicates its _____ with promotion.

|a. |marketing mix |

|b. |comparative differentiation |

|c. |competitive advantage |

|d. |researchable objective |

|e. |promotional theme |

ANS: C

A competitive advantage is a set of unique features of a company and its product perceived by the target market as significant and superior to the competition. It may be based on a scientific discovery, but the company didn't create it by saying it.

PTS: 1 REF: 207 OBJ: 14-1 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

8. Vegetarians sometimes have trouble making sure they get enough protein in their diets. Protons are a new, poppable snack made with super-crunchy tofu. They are bite-sized nuggets that come in both sweet and savory flavors: Original Crunchy, Backyard Bar-B-Q, Tomato Herb Garden, Cinnamon Toast, and Lemon Meringue Pie. Protons’ features, including that they are organic, vegan, and cholesterol-free, give the new product its:

|a. |differential parity |

|b. |synergistic goal |

|c. |competitive advantage |

|d. |comparative benefit |

|e. |tactical objective for implementing strategy |

ANS: C

A competitive advantage is one or more unique aspects of an organization that cause target customers to patronize that brand rather than others.

PTS: 1 REF: 207 OBJ: 14-1 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product

9. The American Plastics Council wants to create more consumer demand for products that are packaged in plastic. The council has developed a(n) _____ that sets out how it will use all of the elements of the promotional mix to create a coordinated plan that will become an integral part of the organization's marketing strategy.

|a. |promotional strategy |

|b. |tactic for communication |

|c. |mass aggregation strategy |

|d. |communication objective |

|e. |informative strategy |

ANS: A

Promotional strategy is a plan for the optimal use of the elements of the promotional mix.

PTS: 1 REF: 207 OBJ: 14-1 TYPE: App

TOP: AACSB Communication | TB&E Model Marketing Plan

10. Marketers use public relations to:

|a. |earn public understanding and acceptance |

|b. |communicate with the community in which they operate |

|c. |educate the public about company goals |

|d. |introduce new products |

|e. |do all of these things |

ANS: E PTS: 1 REF: 208 OBJ: 14-2 TYPE: Comp

TOP: AACSB Communication | TB&E Model Promotion

11. The promotional mix consists of:

|a. |advertising, publicity, direct marketing, and personal selling |

|b. |public relations, direct marketing, personal selling, and publicity |

|c. |product, promotion, price, and place |

|d. |advertising, personal selling, sales promotion, and public relations |

|e. |advertising, telemarketing, public relations, and sales promotions |

ANS: D PTS: 1 REF: 207-210 OBJ: 14-2 TYPE: Def

TOP: AACSB Communication | TB&E Model Promotion

12. The four major promotional tools (advertising, personal selling, sales promotion, and public relations) are known collectively as the:

|a. |communication model |

|b. |advertising campaign |

|c. |marketing mix |

|d. |publicity four |

|e. |promotional mix |

ANS: E PTS: 1 REF: 208 OBJ: 14-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

13. According to its Web site, Old Navy, the retail chain, shows the spirit and optimism of its clothes through the use of its new “spokesdog” Paco, a shaggy, free-spirited canine. In terms of its one-way communication strategy, Old Navy will use Paco in _____ to reach a large number of people at one time.

|a. |direct marketing |

|b. |public relations |

|c. |advertising |

|d. |implicit communications |

|e. |personal selling presentations |

ANS: C

Advertising is impersonal, one-way communication about a product that is paid for by the marketer.

PTS: 1 REF: 208 OBJ: 14-2 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion

14. _____ is any form of sponsor-identified, impersonal paid mass communication.

|a. |Advertising |

|b. |Publicity |

|c. |Promotion |

|d. |Public relations |

|e. |Nonpaid communication |

ANS: A PTS: 1 REF: 208 OBJ: 14-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

15. To increase its revenues, US Airways has decided to sell space on air-sickness bags to companies that would like to use this unique channel for their promotional messages. In terms of the promotional strategy, the air-sickness bags will be used for:

|a. |implicit communications |

|b. |publicity |

|c. |sales promotion |

|d. |public relations |

|e. |advertising |

ANS: E

Advertising is a form of sponsor-paid, impersonal one-way mass communication.

PTS: 1 REF: 208 OBJ: 14-2 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion

16. Which of the following statements about advertising is true?

|a. |The total costs of advertising are typically low. |

|b. |The signs on the outsides of buses and taxis are not a form of advertising. |

|c. |The cost per contact in advertising is low. |

|d. |Innovative media are not used in advertising. |

|e. |Advertising is any form of communication in which the sponsor is identified. |

ANS: C

The total costs of advertising are typically high even though the cost of contact is low. To be advertising, the communication must be paid for. Innovative media are used in advertising. The signs are a form of advertising because they are paid for and they identify their sponsors.

PTS: 1 REF: 208 OBJ: 14-2 TYPE: Comp

TOP: AACSB Communication | TB&E Model Promotion

17. Every year, the Discovery Channel has what it calls Shark Week, a weeklong marathon of programs on sharks. In New York, Discovery Channel street teams disguised as Surfers, Bight University faculty, and Bight University "chewleaders" will attack city streets in July visiting morning TV shows, landmarks, and high-traffic areas to promote the series. An article in the New York Times on Shark Week and the Discovery Channel's street teams would be an example of:

|a. |a sales promotion |

|b. |publicity |

|c. |advertising |

|d. |implicit communications |

|e. |a personal sales presentations |

ANS: B

Publicity is public information about a company, product, or issue appearing in the mass media as a news item.

PTS: 1 REF: 208-209 OBJ: 14-2 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion

18. The marketing function that evaluates public attitudes, identifies areas within the organization that are of public interest, and executes a program of action to gain public understanding is:

|a. |public relations |

|b. |advertising |

|c. |implicit communications |

|d. |personal selling |

|e. |sales promotion |

ANS: A PTS: 1 REF: 208 OBJ: 14-2

TOP: AACSB Reflective Thinking | TB&E Model Promotion

19. In 2006, Atlanta once again hosted the Peachtree Road Race, a running event that attracts many world-calibre racers. This year race officials also sanctioned a race conducted in Iraq so that soldiers from the state would not have to miss the annual event. The winners of the Mideast race as well as scenes of the actual race were televised. In terms of a promotional mix, this Iraqi Peachtree Race was as example of:

|a. |advertising and personal selling efforts |

|b. |strategic product promotions and resulting sales |

|c. |a target marketing strategy |

|d. |sales promotion efforts |

|e. |a public relations strategy and resulting publicity |

ANS: E

The public relations activities involved in the race in Iraq led to publicity in the form of news media reporting.

PTS: 1 REF: 208-209 OBJ: 14-2 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion

20. Public information about a company, good, or service appearing in the mass media as a news item is:

|a. |personal selling |

|b. |advertising |

|c. |mass communications |

|d. |publicity |

|e. |sales promotion |

ANS: D PTS: 1 REF: 208-209 OBJ: 14-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Product

21. Publicity:

|a. |will never damage a company because it performs the information task of promotion |

|b. |is free communication |

|c. |is not persuasive with customers |

|d. |has to be purchased from the mass media |

|e. |has many internal costs to the company associated with it |

ANS: E

A firm may have to hire a public relations firm to prepare new releases and persuade media personnel to print or broadcast the news. This can be expensive.

PTS: 1 REF: 208-209 OBJ: 14-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion

22. The Steel Recycling Institute (SRI) is an industry association that promotes and sustains the recycling of all steel products. An article in Business Week magazine about how the institute plans to stimulate consumer demand would be an example of:

|a. |direct selling |

|b. |news marketing |

|c. |publicity |

|d. |event marketing |

|e. |direct marketing |

ANS: C

Publicity is public information in mass media about a company and its products.

PTS: 1 REF: 208-209 OBJ: 14-2 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion

23. Which of the following statements about sales promotions is true?

|a. |Public relations cannot effectively be used with sales promotions. |

|b. |Sales promotion is a type of direct marketing. |

|c. |Marketers view sales promotions as more effective when they are created as long-term stimulation tools. |

|d. |Trade shows, coupons, premiums, and vacation giveaways are types of sales promotions. |

|e. |All sales promotions must be aimed outside the organization. |

ANS: D

Sales promotions can be used to improve the effectiveness of advertising and public relations activities. Sales promotions are most effective as short-term tools. Sales promotions are commonly directed at the organization's employees as well as to consumers and dealers.

PTS: 1 REF: 209 OBJ: 14-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion

24. _____ consists of all marketing activities that stimulate consumer purchasing such as coupons, contests, free samples, and trade shows.

|a. |Sales promotion |

|b. |Publicity |

|c. |Personal selling |

|d. |Advertising |

|e. |Sponsorship |

ANS: A PTS: 1 REF: 209 OBJ: 14-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

25. A $1-off coupon for Carnation Instant Breakfast powder is a form of:

|a. |public relations |

|b. |sales promotion |

|c. |personal selling |

|d. |advertising |

|e. |publicity |

ANS: B

A sales promotion is a marketing activity that stimulates consumer buying and dealer effectiveness.

PTS: 1 REF: 209 OBJ: 14-2 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion

26. During the summer of 2006, Volvo Cars of North America drove traffic to its dealerships via a sweepstakes tied to Walt Disney's summer blockbuster Pirates of the Caribbean: Dead Man's Chest. This was an example of:

|a. |a sales promotion |

|b. |publicity |

|c. |advertising |

|d. |implicit communications |

|e. |a personal sales presentation |

ANS: A

A sales promotion is a marketing activity that stimulates consumer buying and dealer effectiveness.

PTS: 1 REF: 209 OBJ: 14-2 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion

27. In 2006, GM unveiled a GM Fuel Price Protection Program that caps the per-gallon price consumers pay for gas at $1.99 when they purchase select 2006 and 2007 GM full-size utility and mid-size cars. This is an example of _____ designed to stimulate consumer buying.

|a. |a sales promotion |

|b. |a public relations activity |

|c. |advertising |

|d. |an implicit communication |

|e. |personal selling |

ANS: A

A sales promotion is a marketing activity that stimulates consumer buying and dealer effectiveness.

PTS: 1 REF: 209 OBJ: 14-2 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion

28. _____ is a purchase situation in which two or more people communicate in an attempt to influence each other.

|a. |Implicit communication |

|b. |Personal selling |

|c. |Mass communication |

|d. |Public relations |

|e. |Synergistic communication |

ANS: B PTS: 1 REF: 209-210 OBJ: 14-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

29. Java Jacket is a company that designs and prints ads on the paper jackets that go around hot coffee cups sold in coffee shops. To find clients to advertise on the coffee cup jackets, the company sent a representative to companies like Warner Brothers, , and the Wall Street Journal to tell them how their ads on coffee cup jackets would give them inexpensive exposure to a large number of potential customers. Java Jacket's activities can best be described as:

|a. |mass communication |

|b. |implicit communication |

|c. |personal selling |

|d. |public relations |

|e. |telemarketing |

ANS: C

Personal selling is the planned, face-to-face presentations in a conversation with one or more prospective purchasers for the purpose of making sales.

PTS: 1 REF: 209-210 OBJ: 14-2 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion | TB&E Model Customer

30. To increase its revenues, US Airways has decided to sell space on air-sickness bags to sponsoring companies as a different medium for their promotional messages. The most effective promotional method for US Airways to use to find companies that would like to pay to have their promotional messages delivered to the 100 or so travelers on each of its flights would be:

|a. |push advertising |

|b. |personal selling |

|c. |direct advertising |

|d. |sales promotions |

|e. |publicity |

ANS: B

Personal selling is a purchase situation involving a personal, paid-for communication between a buyer and a seller.

PTS: 1 REF: 209-210 OBJ: 14-2 TYPE: App

TOP: AACSB Communication | TB&E Model Customer

31. _____ is the process by which we exchange or share meanings through a common set of symbols. People also assign meanings to feelings, ideas, facts, and attitudes.

|a. |Feedback |

|b. |Promotion |

|c. |Advertising |

|d. |Publicity |

|e. |Communication |

ANS: E PTS: 1 REF: 210 OBJ: 14-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

32. While talking to Mr. and Mrs. Knighton, the appliance salesperson described the refrigerator as "a real money saver" and "a true bargain," but he also kept looking down at his feet and shuffling around. His nonverbal cues:

|a. |create subservient selling |

|b. |create differential disadvantages |

|c. |are part of how he communicated to the Knightons |

|d. |are a type of marketing mix feedback |

|e. |will not effect interpersonal communications |

ANS: C

Communication is the process by which we exchange or share meanings through a common set of symbols.

PTS: 1 REF: 210 OBJ: 14-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion

33. Interpersonal communication is:

|a. |nonpaid information such as publicity |

|b. |paid communication placed in personal media |

|c. |long-distance communication between a business and its target market |

|d. |direct face-to-face communication between two or more people |

|e. |noise-free communication |

ANS: D PTS: 1 REF: 210 OBJ: 14-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

34. The two major categories of communications are:

|a. |verbal and nonverbal |

|b. |direct and indirect |

|c. |long term and short term |

|d. |mass and interpersonal |

|e. |informative and persuasive |

ANS: D PTS: 1 REF: 210 OBJ: 14-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

35. Bag Media is a British company that sells space on paper bags to advertisers who want to drive consumers to their Web sites. A Bag Media representative is making a presentation to several Internet entrepreneurs who are interested in getting traffic to their Web sites. The company rep is engaged in:

|a. |telemarketing |

|b. |interpersonal communication |

|c. |publicity |

|d. |mass communication |

|e. |crowd selling |

ANS: B

Interpersonal communication is direct face-to-face communication between two or more people.

PTS: 1 REF: 210 OBJ: 14-3 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion

36. Communication to large audiences, usually through a medium such as television or a newspaper, is called _____ communication.

|a. |mass |

|b. |feedback-proof |

|c. |referential |

|d. |interpersonal |

|e. |public |

ANS: A PTS: 1 REF: 210 OBJ: 14-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

37. USA cable television uses billboard, television, magazine, and newspaper advertising to inform television viewers about new episodes of Monk, a popular television series. USA uses _____ communication.

|a. |referential |

|b. |mass |

|c. |factual |

|d. |interpersonal |

|e. |public |

ANS: B PTS: 1 REF: 210 OBJ: 14-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion

38. Which of the following is NOT a disadvantage a firm using mass communication might experience?

|a. |inability to assess customer reactions to the promotion immediately |

|b. |clutter from competitors' messages |

|c. |distractions around the consumer at the time of receipt of the message |

|d. |inability to know exactly who is receiving the message |

|e. |great expense on a per person exposed basis |

ANS: E

Mass media reach so many people that even though the initial investment is large, cost per person is small.

PTS: 1 REF: 210 OBJ: 14-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Promotion

39. The communication process itself consists of:

|a. |message, media, and transmittal |

|b. |source, receiver, and channel |

|c. |sender, receiver, and message |

|d. |encoding, decoding, channel, sender, and receiver |

|e. |comprehension, noise, and feedback |

ANS: D

See Exhibit 14.2.

PTS: 1 REF: 210-211 OBJ: 14-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

40. The _____ is the originator of the message in the communication process.

|a. |communicator |

|b. |encoder |

|c. |channeler |

|d. |sender |

|e. |receiver |

ANS: D PTS: 1 REF: 210 OBJ: 14-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

41. For its new Jeep Compass, DaimlerChrysler has launched a new campaign targeting young hip consumers. To reach its target, Jeep’s advertising agency is using music, talking bobbleheads, and other nontraditional marketing tactics to capture consumers' interest. The agency has devised a host of bobblehead characters that represent the wide variety of potential Compass buyers. DaimlerChrysler is the _____ of the message in this communication process.

|a. |sender |

|b. |decoder |

|c. |channeler |

|d. |receiver |

|e. |communicator |

ANS: A

The sender is the originator of the message in the communication process.

PTS: 1 REF: 210 OBJ: 14-3 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion

42. The manufacturer of Meridian yam products spent $25,000 to create an ad that ran in the Thanksgiving issue of a popular cooking magazine. Because it was the originator of the communication process, Meridian is a:

|a. |channel |

|b. |noise filter |

|c. |receiver |

|d. |decoder |

|e. |sender |

ANS: E PTS: 1 REF: 210 OBJ: 14-3 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion

43. The maker of Frank's RedHot pepper sauce spend $25,000 to create an ad that was targeted to consumers the southwestern U.S. market. Because it created the ad itself and did not use an ad agency, Frank's RedHot sauce engaged in:

|a. |channeling |

|b. |creating noise |

|c. |receiving |

|d. |decoding |

|e. |encoding |

ANS: E PTS: 1 REF: 210-211 OBJ: 14-3 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion

44. _____ is the conversion of the sender's ideas and thoughts into a message.

|a. |Development |

|b. |Envelopment |

|c. |Processing |

|d. |Decoding |

|e. |Encoding |

ANS: E PTS: 1 REF: 210-211 OBJ: 14-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

45. Encoding is the:

|a. |creation of the original ideas and thoughts of a message |

|b. |conversion of the sender's ideas and thoughts into a message |

|c. |transmission of a message |

|d. |receipt and comprehension of a message |

|e. |deciphering and understanding of a message |

ANS: B PTS: 1 REF: 210 OBJ: 14-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

46. For its new Jeep Compass, DaimlerChrysler has launched a new campaign targeting young hip consumers. To reach its target, DaimlerChrysler’s advertising agency is using music, talking bobbleheads, and other nontraditional marketing tactics to capture consumers' interest. The agency has devised a host of bobblehead characters that represent the wide variety of potential Compass buyers. The ad agency acted as the _____ of the message.

|a. |decoder |

|b. |sender |

|c. |encoder |

|d. |receiver |

|e. |channeler |

ANS: C

Encoding is the conversion of the sender's ideas and thoughts into a message.

PTS: 1 REF: 210-211 OBJ: 14-3 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion

47. A channel in communication is:

|a. |the only source of noise |

|b. |the same as in distribution |

|c. |usually an ad agency or public relations firm |

|d. |someone who places advertising into media |

|e. |any communication medium |

ANS: E

A channel is the transmitter of the message such as a voice, gesture, radio, newspaper, or any other communication medium.

PTS: 1 REF: 211 OBJ: 14-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

48. Campbell soup has been promoted with television commercials, radio spots, newspaper coupons, and magazine advertisements. In the communication process, these media served as _____ for transmitting the message.

|a. |senders |

|b. |decoders |

|c. |encoders |

|d. |channels |

|e. |receivers |

ANS: D

A channel is the transmitter of the message such as a voice, gesture, radio, newspaper, or any other communication medium.

PTS: 1 REF: 211 OBJ: 14-3 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion

49. When Castrol Syntec, a premium motor oil, sought a new way to reach its young, car-passionate audience, the brand found its mark with video games. In its first-ever attempt at in-game advertising, Castrol Syntec found a way to show consumers (in a virtual world) the brand's power and performance. In the communication process, the game served as a(n) _____ for transmitting the message.

|a. |sender |

|b. |decoder |

|c. |encoder |

|d. |channel |

|e. |receiver |

ANS: D

A channel is the transmitter of the message such as a voice, gesture, radio, newspaper, or any other communication medium.

PTS: 1 REF: 211 OBJ: 14-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

50. _____ is anything that interferes with, distorts, or slows the transmission of information.

|a. |Media communication |

|b. |Feedback |

|c. |Static |

|d. |Nonpaid communication |

|e. |Noise |

ANS: E PTS: 1 REF: 211 OBJ: 14-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

51. Just as Grace was in sight of a billboard for the Riverbend Antique Mall, a police car drove by with its lights flashing. Grace was so concerned with watching where the police car went that she totally missed seeing the mall's billboard. In terms of the communication process, the police car acted as:

|a. |media interruptus |

|b. |negative feedback |

|c. |static |

|d. |explicit communication |

|e. |noise |

ANS: E

Noise is anything that interferes with, distorts, or slows the transmission of information.

PTS: 1 REF: 211 OBJ: 14-3 TYPE: App

TOP: AACSB Communication | TB&E Model Customer

52. Within the communication process for a car dealer’s ad, which of the following would be an example of noise?

|a. |competing ads |

|b. |news stories in the newspaper |

|c. |the physical surroundings in which the individual reading the ad is located |

|d. |the presence of other people while the ad is being read |

|e. |all of these |

ANS: E

Noise is anything that interferes with, distorts, or slows the transmission of information.

PTS: 1 REF: 211 OBJ: 14-3 TYPE: App

TOP: AACSB Communication | TB&E Model Customer

53. For its new Jeep Compass, DaimlerChrysler is out with a new campaign targeting young hip consumers. To reach its target, DaimlerChrysler is using music, talking bobbleheads, and other nontraditional marketing tactics to capture consumers' interest. These communications are directed at the _____, the persons who will decode the message.

|a. |senders |

|b. |receivers |

|c. |encoders |

|d. |channels |

|e. |communicators |

ANS: B

Customers are the receivers who decode the message.

PTS: 1 REF: 211-212 OBJ: 14-3 TYPE: App

TOP: AACSB Communication | TB&E Model Marketing Plan

54. _____ is the interpretation of the language and symbols sent by the source through a channel.

|a. |Encoding |

|b. |Perceiving communication |

|c. |Decoding |

|d. |Channeling |

|e. |Semiotics |

ANS: C PTS: 1 REF: 211-212 OBJ: 14-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

55. The most successful global marketing managers realize that:

|a. |senders of messages can communicate effectively with other cultures even if they know nothing of the other culture |

|b. |any message can be considered uniform by easily translating the message into all the other languages |

|c. |consumers' cultural environments do not play a large role in the communication process and affect decoding |

|d. |it is imperative that every message be completely customized to each subculture |

|e. |translation and possible miscommunication of their promotional messages can occur |

ANS: E PTS: 1 REF: 212 OBJ: 14-3 TYPE: Comp

TOP: AACSB Diversity | TB&E Model International Perspective

56. For communication to be effective:

|a. |marketing managers should use both interpersonal and mass communications |

|b. |all steps of the communications process model must take place |

|c. |marketing managers must ensure a proper match between the message to be conveyed and the target market's attitudes and |

| |ideas |

|d. |advertising messages must be general enough to cover all ages, social classes, and education levels |

|e. |marketers should use televised instead of print communication |

ANS: C

Common understanding between two communicators is required for effective communication.

PTS: 1 REF: 212 OBJ: 14-3 TYPE: Comp

TOP: AACSB Communication | TB&E Model Customer | TB&E Model Promotion

57. Some large retailers are successful in most areas of the country yet fail in certain regions that are heavily populated with different races and subcultures. This is because it is difficult to communicate without an understanding of:

|a. |culture |

|b. |locational variants |

|c. |gender differences |

|d. |income influences |

|e. |hypergraphics |

ANS: A

One stumbling block for many firms is communicating with and selling to diverse cultures that do not share a common frame of reference.

PTS: 1 REF: 212 OBJ: 14-3 TYPE: Comp

TOP: AACSB Diversity | TB&E Model International Perspective

58. Ernest has three engineering degrees. He has hired an interior decorator to update his home. He is tremendously frustrated when he asks what he thinks are simple questions about weight-bearing walls and insulation requirements, and the designer is unable to understand. Yet Ernest has the same problems when the designer starts talking about mauve, cerise, and magenta. Why is the communication process not working in this instance?

|a. |The designer is not intelligent enough to understand engineering. |

|b. |Noise is interfering with both encoding and decoding. |

|c. |The wrong medium has been used. |

|d. |The sender and receiver do not share overlapping frames of reference. |

|e. |Personal selling should not be used to market this type of product. |

ANS: D

When people receive a message, they tend to manipulate, alter, and modify it to reflect their own biases, needs, knowledge, and culture. The designer has no knowledge base in engineering.

PTS: 1 REF: 211-212 OBJ: 14-3 TYPE: App

TOP: AACSB Communication | TB&E Model Customer

59. The receiver's response to a message is _____ to the source.

|a. |decoded |

|b. |noise |

|c. |feedback |

|d. |channeled |

|e. |static filled |

ANS: C PTS: 1 REF: 212 OBJ: 14-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

60. Vera ordered the Chihuahua Christmas ornament she saw advertised in the Sunday coupon supplement by phoning The Danbury Mint and placing her order. In terms of the communication process, Vera's purchase was an example of:

|a. |feedback |

|b. |noise |

|c. |implicit communication |

|d. |channeled communication |

|e. |message encoding |

ANS: A

The receiver's response to a message is feedback to the source.

PTS: 1 REF: 212 OBJ: 14-3 TYPE: App

TOP: AACSB Communication | TB&E Model Customer | TB&E Model Promotion

61. The marketing campaign for Alpo dog food uses posters in veterinarians' offices, radio and television ads, and a Web site to promote benefits of the dog food. In terms of the communication process, Alpo used several different:

|a. |source of feedback |

|b. |channels |

|c. |encoders |

|d. |decoders |

|e. |noise interrupters |

ANS: B

Channels are media of communication used for transmitting a message.

PTS: 1 REF: 211 OBJ: 14-3 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion

62. When Becca saw the ad suggesting Subway sandwiches as a dinner meal, she was offended by the spokesperson and wondered why anyone would want to do business with a company that thought being obnoxious was a good business practice. In terms of the communication process, Becca:

|a. |correctly encoded the message |

|b. |created a longer than normal communication channel |

|c. |improperly decoded the message |

|d. |had no feedback |

|e. |improperly encoded the message |

ANS: C

Decoding is interpreting the language and symbols sent by the source through a channel.

PTS: 1 REF: 211-212 OBJ: 14-3 TYPE: App

TOP: AACSB Communication | TB&E Model Customer | TB&E Model Promotion

63. Bag Media is a British company that sells space on paper bags to advertisers who want to drive consumers to their Web sites. A Bag Media representative made a presentation to several Internet entrepreneurs who are interested in getting traffic to their Web sites. When one of the Internet entrepreneurs ordered its Web address printed on 25,000 bags, it was an example of:

|a. |feedback |

|b. |decoding |

|c. |noise |

|d. |indirect transmission |

|e. |nonverbal communication |

ANS: A PTS: 1 REF: 212 OBJ: 14-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Promotion

64. Which of the following statements about the characteristics of the elements in the promotional mix is true?

|a. |The speed of feedback is delayed in sales promotion, advertising, and personal selling. |

|b. |Message flexibility is greatest with advertising. |

|c. |The message flow is two-way in public relations, sales promotions, and personal selling. |

|d. |The most feedback is available with personal selling. |

|e. |The sponsor is identified in public relations, advertising, and personal selling. |

ANS: D

The speed of feedback is delayed in sales promotion and advertising. Message flexibility is greatest with personal selling. The message flow is one-way in public relations and sales promotions. The sponsor is not identified in public relations. See Exhibit 14.3.

PTS: 1 REF: 212 OBJ: 14-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion

65. Which of the following statements about the characteristics of the elements in the promotional mix is true?

|a. |Control over message content is greatest when public relations is used. |

|b. |A large audience is best reached with personal selling. |

|c. |The fastest feedback occurs with personal selling. |

|d. |The mode of communication for sales promotion is usually direct and personal. |

|e. |The message flow with advertising is two-way. |

ANS: C

There is little control over message content with public relations. Personal selling reaches large audiences slowly. Sales promotions are usually indirect and impersonal. The message flow with advertising is one-way. See Exhibit 14.3.

PTS: 1 REF: 213 OBJ: 14-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

66. Arc Promotional Agency created the first mobile blogging competition and online reality show for SingTel, a telecommunications company in Singapore. The campaign let SingTel customers pick their dream couple and follow their lives through a moblog. SingTel used _____ to communicate with its consumers.

|a. |a corporate blog |

|b. |an interactive Web site |

|c. |narrowcasting |

|d. |a noncorporate blog |

|e. |a market concentration strategy |

ANS: A

Corporate blog are blogs that are sponsored by a company and maintained by one or more of the company’s employees.

PTS: 1 REF: 213 OBJ: 14-3 TYPE: App

TOP: AACSB Technology | TB&E Model Promotion

67. GM is using blogging to communicate with customers online. GM's vice chairman Bob Lutz—an auto industry veteran and the company's director of product development—began a blog about the company in 2005. Once readers realized it really was Lutz and not an advertising ploy, they quickly warmed to the idea and appreciated his candid comments about GM and its competition. This is an example of:

|a. |a corporate blog |

|b. |an interactive Web site |

|c. |narrowcasting |

|d. |a noncorporate blog |

|e. |a market concentration strategy |

ANS: A

Corporate blog are blogs that are sponsored by a company and maintained by one or more of the company’s employees.

PTS: 1 REF: 213 OBJ: 14-3 TYPE: App

TOP: AACSB Technology | TB&E Model Promotion

68. What are the three basic tasks of promotion?

|a. |informing, persuading, and convincing |

|b. |persuading, convincing, and reminding |

|c. |informing, convincing, and reminding |

|d. |informing, persuading, and reminding |

|e. |persuading, comparing, and reminding |

ANS: D PTS: 1 REF: 214 OBJ: 14-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

69. Which of the following is one of the basic tasks typically performed by promotion?

|a. |managing |

|b. |organizing |

|c. |rewarding |

|d. |persuading |

|e. |perceiving |

ANS: D PTS: 1 REF: 214 OBJ: 14-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

70. Informative promotion is generally used:

|a. |when memory stimulus is needed |

|b. |when the brand name is well-known to consumers |

|c. |during the early stages of the product life cycle |

|d. |during an attempt to gain the immediate action of a consumer |

|e. |when advertising a simple, nontechnical, mature product |

ANS: C

Informative promotion is a necessary ingredient for increasing demand for a product category and is used when the product is introduced.

PTS: 1 REF: 214 OBJ: 14-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion

71. The Hollymatic Patty Machine grinds and shapes meat into perfectly sized patties using a revolutionary new process that decreases shrinkage. The advertising agency is writing copy for the Hollymatic Patty Machine and has decided on a(n) _____ format because the product is so technical.

|a. |influencer |

|b. |persuasive |

|c. |reminder |

|d. |reseller |

|e. |informative |

ANS: E

Informative promotion is a necessary ingredient for a highly technical product category.

PTS: 1 REF: 214 OBJ: 14-4 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion

72. When Heinz introduced its ketchup globally, it first had to deal with the fact ketchup is not a household staple outside the United States. Heinz had to show foreign users how ketchup can be used. Globally, Heinz has had to rely primarily on _____ advertising.

|a. |reminder |

|b. |persuasive |

|c. |informative |

|d. |compulsive |

|e. |influential |

ANS: C

Informative promotion is a necessary ingredient for increasing demand for a product category and is used when the product is introduced.

PTS: 1 REF: 214 OBJ: 14-4 TYPE: App

TOP: AACSB Diversity | TB&E Model International Perspective | TB&E Model Product | TB&E Model Promotion

73. Maddie’s Beverage Company has recently introduced Wateroos, eight-ounce servings of water in juice-style containers with straws, to encourage children to drink more water. The goal of promotion developed for this new healthy alternative beverage for children would be to _____ consumers.

|a. |inform |

|b. |remind |

|c. |prompt |

|d. |influence |

|e. |encourage |

ANS: A

Informative promotion seeks to stimulate interest in a new product.

PTS: 1 REF: 214 OBJ: 14-4 TYPE: App

TOP: AACSB Communication | TB&E Model Promotion

74. The American Plastics Council wants to stimulate more consumer demand for products that are packaged in plastic. The ads will explain how plastics protect families from food spoilage and contamination. The ads will also describe how tamper-evident plastic seals provide an extra measure of product safety assurance. By trying to change customers' perception of plastic packaging, the council is using _____ promotion.

|a. |reminder |

|b. |persuasive |

|c. |declarative |

|d. |diffusive |

|e. |mass |

ANS: B

The council is trying to stimulate demand for consumer products packaged in plastics.

PTS: 1 REF: 214 OBJ: 14-4 TYPE: App

TOP: AACSB Communication | TB&E Model Product | TB&E Model Promotion

75. The goal of persuasive promotion is to:

|a. |stimulate a purchase or other action |

|b. |increase brand awareness |

|c. |describe available services |

|d. |remind the consumers of where to buy the product |

|e. |maintain top-of-mind consumer awareness |

ANS: A

Persuasion generally attempts to motivate a consumer to purchase a product.

PTS: 1 REF: 214 OBJ: 14-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion

76. Persuasion normally becomes the primary promotion goal when:

|a. |a firm is trying to increase brand awareness |

|b. |the product enters the growth stage of the product life cycle |

|c. |selling a highly technical product |

|d. |reminding consumers where to buy the product |

|e. |new products are in early stages of the product life cycle |

ANS: B

Persuasion attempts to motivate a consumer to purchase a particular product. It is useful after the product has been made known through informational advertising during introduction.

PTS: 1 REF: 214 OBJ: 14-4 TYPE: Comp

TOP: AACSB Communication | TB&E Model Strategy

77. Innovyx is an e-mail marketing service provider. It has a new ad campaign aimed at changing negative perceptions of e-mail. The ads explain how much cheaper e-mail advertising is than traditional advertising and what a high return on investment it can generate if used properly. Finally, the message ends by suggesting that companies who want to promote their products give e-mail a chance to show them what it can do. This promotion has the task of:

|a. |persuading |

|b. |informing |

|c. |reminding |

|d. |suppressing |

|e. |rewarding |

ANS: A

This promotion is aimed at persuading consumers to change their attitudes and try e-mail.

PTS: 1 REF: 214 OBJ: 14-4 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

78. _____ promotion is used to keep a familiar brand name in the public's mind and is prevalent during the maturity stage of the product life cycle.

|a. |Influence |

|b. |Amusement |

|c. |Informative |

|d. |Persuasive |

|e. |Reminder |

ANS: E PTS: 1 REF: 214-215 OBJ: 14-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

79. Hasbro, Inc. has hired actress Jamie Lee Curtis as its new spokesperson to promote the company’s board games. As part of the campaign, Curtis will appear in TV spots dressed as characters from various Hasbro games such as Battleship, Monopoly, and Clue to promote the games as great Christmas gifts to parents who played the games as children. This promotion is intended to:

|a. |amuse consumers |

|b. |influence consumers to switch to Hasbro games |

|c. |act as a reminder advertisement |

|d. |persuade nonplayers of games to try them |

|e. |act as a persuasive device for the product category |

ANS: C

Reminder promotion is used to keep a familiar brand name in the public's mind and is prevalent during the maturity stage of the product life cycle.

PTS: 1 REF: 214-215 OBJ: 14-4 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

80. For many years Jell-O gelatin has run advertisements that tell consumers that there is "always room for Jell-O." This is an example of _____ promotion.

|a. |influence |

|b. |amusement |

|c. |informative |

|d. |prevalent |

|e. |reminder |

ANS: E

Reminder promotion is used to keep a familiar brand name in the public's mind and is prevalent during the maturity stage of the product life cycle.

PTS: 1 REF: 214-215 OBJ: 14-4 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

81. Which of the following outlines a sequential four-step process for achieving promotional goals?

|a. |communication model |

|b. |hierarchy of impacts |

|c. |AIDA concept |

|d. |Maslow's hierarchy of needs |

|e. |Schramm's model |

ANS: C PTS: 1 REF: 215 OBJ: 14-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

82. The AIDA concept:

|a. |proves promotional effectiveness is an insignificant abstract term |

|b. |demonstrates that buyers go through nine stages on the way to making a decision |

|c. |is a model effectively showing that advertising can move people to the purchase stage |

|d. |is a model for reaching promotional objectives that outlines a sequential process for effective promotion |

|e. |is a budget plan based on the effectiveness of various promotional mixes in achieving certain objectives |

ANS: D PTS: 1 REF: 215 OBJ: 14-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

83. AIDA stands for:

|a. |Attitude-Interest-Demand-Activity |

|b. |Attention-Interest-Desire-Action |

|c. |Awareness-Intent-Demand-Action |

|d. |Avoidance-Interest-Desire-Acceptance |

|e. |Attitudes-In-Developing-Acquisitions |

ANS: B PTS: 1 REF: 215 OBJ: 14-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

84. According to the AIDA concept, the first step a marketer must achieve with potential customers is:

|a. |attention |

|b. |attitude alignment |

|c. |action |

|d. |adaptation |

|e. |adoption |

ANS: A PTS: 1 REF: 215 OBJ: 14-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Customer

85. Lyndon went to a Web site that sells barbecue grills and read reviews of several different models. He has requested more information about a Weber grill that appeared to meet his needs, but he is not yet willing to give up his search to find the perfect grill. As far as Weber is concerned, Lyndon is in the _____ step of the AIDA concept.

|a. |action |

|b. |attention |

|c. |liking |

|d. |interest |

|e. |desire |

ANS: D

Lyndon is aware of the product, but he is not yet convinced it is the one he wants to purchase.

PTS: 1 REF: 215 OBJ: 14-5 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

86. When Vincent saw Mike’s new Iron Horse Yakuza Aniki mountain bike, Vincent immediately knew he wanted to own one just like it some day. According to the AIDA concept, Vincent entered the _____ stage.

|a. |action |

|b. |attention |

|c. |liking |

|d. |interest |

|e. |desire |

ANS: E

The Yakuza Aniki mountain bike has created a brand preference.

PTS: 1 REF: 215 OBJ: 14-5 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

87. Point-of-purchase displays in grocery stores, coupons, premiums, and trial-size packages are most useful when the consumer is near the _____ stage of the AIDA model.

|a. |liking |

|b. |awareness |

|c. |action |

|d. |preference |

|e. |knowledge |

ANS: C

These extras are the sales promotion techniques that often push the complacent consumer into the purchase stage.

PTS: 1 REF: 215 OBJ: 14-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

88. For which of the following purchases is Gordo most likely to pass through all four stages of the AIDA process?

|a. |a pair of white socks |

|b. |a two-pack of light bulbs |

|c. |a loaf of bread |

|d. |gear for mountain climbing |

|e. |a six-pack of beer |

ANS: D

Most buyers involved in high-involvement purchases pass through the four stages of the AIDA model. The climbing gear would be the alternative most likely to create a high level of psychological risk.

PTS: 1 REF: 215 OBJ: 14-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

89. Which of the following statements about the AIDA model is true?

|a. |The AIDA model explains why public relations is the most important element in the promotional mix. |

|b. |Advertising is most effective at the purchase stage of the AIDA model. |

|c. |Certain promotional tools are more effective at certain stages of the AIDA model. |

|d. |Sales promotion is not helpful during the attention stage of the AIDA model. |

|e. |The promotional mix should not be influenced by the AIDA model. |

ANS: C

A helpful concept for marketing managers is that as the customer moves from awareness to purchase, different promotional tools are more effective at certain points.

PTS: 1 REF: 215 OBJ: 14-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

90. The AIDA concept:

|a. |assumes that the second step in the purchase-decision process is inertia |

|b. |does not explain how all promotions influence purchase decisions |

|c. |assumes that consumers regularly go through each stage of the process during all purchases |

|d. |indicates that the purchase decision is the same for high-involvement and low-involvement products |

|e. |is accurately described by none of the choices |

ANS: B

The second step in the AIDA concept is interest. Customers typically do not go through all stages for a low-involvement product.

PTS: 1 REF: 215 OBJ: 14-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

91. Protons are a new, poppable snacks made with super-crunchy tofu. They are bite-sized nuggets that come in both sweet and savory flavors: Original Crunchy, Backyard Bar-B-Q, Tomato Herb Garden, Cinnamon Toast, and Lemon Meringue Pie. Which elements of the promotional mix would be most useful in attracting attention to this new snack food?

|a. |public relations and sales promotion |

|b. |advertising and direct marketing |

|c. |direct marketing and personal selling |

|d. |public relations and direct marketing |

|e. |advertising and public relations |

ANS: E

See Exhibit 14.4.

PTS: 1 REF: 215 OBJ: 14-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Promotion

92. To provide more delivery service to the consumer market, UPS created UPS stores. According to the AIDA model, to create attention for this more convenient and less expensive way to mail packages through UPS, its marketing department should have relied on which element of the promotional mix?

|a. |public relations |

|b. |sales promotion |

|c. |event sponsorship |

|d. |personal selling |

|e. |direct marketing |

ANS: A

Public relations is best at drawing attention to a product or company.

PTS: 1 REF: 216 OBJ: 14-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Promotion

93. In terms of the AIDA concept, sales promotion is most effective at creating:

|a. |strong desire and purchase intent |

|b. |positive attitudes toward a brand |

|c. |awareness of a product |

|d. |long-term interest |

|e. |awareness of a product and purchase intent |

ANS: A PTS: 1 REF: 216 OBJ: 14-5 TYPE: Comp

TOP: AACSB Communication | TB&E Model Promotion

94. Entrepreneur Krissa Fernandes has developed flour made from ground almonds that she sells under the Platinum Nut brand for use in baking. Everyone who has baked with the new flour loves it, but she is having trouble getting potential consumers to the desire stage of the AIDA concept. Which of the following elements of the promotional mix would be most likely to move people to look for the product and buy it?

|a. |flyers placed under windshield wipers at crafts festivals |

|b. |an article in local newspaper about entrepreneurs |

|c. |increasing the number of stores carrying Platinum Nut |

|d. |a $2-off coupon for a 5-pound bag of almond flour |

|e. |a classified ad |

ANS: D

Sales promotions (coupons) are very effective at creating desire and action.

PTS: 1 REF: 216 OBJ: 14-5 TYPE: App

TOP: AACSB Communication | TB&E Model Customer | TB&E Model Promotion

95. Which of the following is LEAST likely to be a factor that would determine the nature of the promotional mix?

|a. |stage in the product life cycle |

|b. |target market characteristics |

|c. |funds available for promotion |

|d. |use of a push or pull strategy |

|e. |size of the company |

ANS: E

Size of the company may or may not affect the promotional mix, depending on other factors such as available funds or product type.

PTS: 1 REF: 216 OBJ: 14-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion

96. Frigo Design has developed easy-to-install panel sets to update any refrigerator, dishwasher, or compactor made since 1942. As Frigo Design plans its promotion for its new chalkboard panels, which of the following factors will be likely to affect its promotional mix?

|a. |Its chalkboard panels are a new product. |

|b. |Its chalkboard panels are targeted to families with school-aged children. |

|c. |Its chalkboard panels are easy to install. |

|d. |Its panels fit any refrigerator, dishwasher, or compactor made since 1942. |

|e. |All of these factors will affect Frigo's promotional mix. |

ANS: E

Nature of the product, target market, and product life cycle stage are all factors that would affect the choice of promotional mix elements.

PTS: 1 REF: 216-218 OBJ: 14-6 TYPE: App

TOP: AACSB Communication | TB&E Model Product | TB&E Model Promotion

97. The promotional mix elements that should be emphasized for products moving into the growth stage of the product life cycle are:

|a. |public relations and reminder advertising |

|b. |sales promotion and public relations |

|c. |personal selling and persuasive advertising |

|d. |sales promotion and personal selling |

|e. |informational advertising and publicity |

ANS: C

During the growth stage, advertising and public relations remain strong, sales promotion declines in importance, and personal selling is used. Advertising is persuasive.

PTS: 1 REF: 217-218 OBJ: 14-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion

98. Because automobile tires are in the maturity stage of their product life cycle, the promotional mix element _____ should NOT be emphasized in the marketing of this product.

|a. |public relations |

|b. |persuasive advertising |

|c. |sales promotion |

|d. |reminder advertising |

|e. |personal selling |

ANS: A

During the maturity stage, persuasive and reminder advertising are emphasized, as well as sales promotion. Personal selling is maintained, while the usefulness of public relations is doubtful.

PTS: 1 REF: 218 OBJ: 14-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Promotion

99. For products like audio cassette tapes, which are in the decline stage of the product life cycle,:

|a. |persuasive advertising is commonly used |

|b. |heavy public relations is used to maintain brand loyalty |

|c. |personal selling should be used to obtain distribution |

|d. |sales promotion is used to build market share |

|e. |none of these is true |

ANS: E

See Exhibit 14.5.

PTS: 1 REF: 218 OBJ: 14-6 TYPE: Comp

TOP: AACSB Communication | TB&E Model Product | TB&E Model Promotion

100. Fans of Cheerwine cherry-flavored cola are able to explain why Cheerwine is superior to any other type of cherry cola. They are scattered throughout the southeastern United States and are extremely brand loyal. The characteristics of this target market indicate that a promotional mix with _____ should be used.

|a. |less publicity and sales promotion and more personal selling |

|b. |more advertising and sales promotion and less personal selling |

|c. |more sales promotion and personal selling and less advertising |

|d. |less sales promotion and more advertising and personal selling |

|e. |more advertising and less sales promotion and public relations |

ANS: B PTS: 1 REF: 218 OBJ: 14-6 TYPE: App

TOP: AACSB Communication | TB&E Model Product | TB&E Model Promotion

101. When a product is in the growth stage of its product life cycle:

|a. |all elements of the promotional mix are equally important |

|b. |heavy advertising is used to build brand loyalty |

|c. |persuasive and reminder advertising is decreased |

|d. |personal selling is ineffective |

|e. |personal selling and sales promotions are the major elements of the promotional mix used |

ANS: B

Heavy advertising and decreased use of sales promotions are common during the growth stage. Reminder advertising is used when the product/brand reaches the maturity stage. During the growth stage, personal selling is used to maintain distribution.

PTS: 1 REF: 217-218 OBJ: 14-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

102. What is the most effective promotional mix to use with products that are convenience goods and purchased routinely?

|a. |personal selling and advertising |

|b. |public relations and personal selling |

|c. |personal selling and sales promotion |

|d. |advertising and public relations |

|e. |sales promotion and advertising |

ANS: E

For routine buying decisions, the most effective promotional tools are advertising and sales promotion.

PTS: 1 REF: 218 OBJ: 14-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Promotion

103. Which of the following elements of the promotional mix would be most effective for helping highly involved consumers make complex buying decisions?

|a. |personal selling |

|b. |reminder advertising |

|c. |sales promotion |

|d. |public relations |

|e. |informative advertising |

ANS: A PTS: 1 REF: 218 OBJ: 14-6 TYPE: Comp

TOP: AACSB Communication | TB&E Model Promotion | TB&E Model Customer

104. _____ is probably the most important factor in determining the promotional mix.

|a. |The advertising agency |

|b. |The need for feedback |

|c. |Money |

|d. |Media availability |

|e. |Message flexibility |

ANS: C

Without available funds, the promotional mix is severely limited.

PTS: 1 REF: 218 OBJ: 14-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

105. The use of aggressive personal selling and trade advertising by a manufacturer to convince a wholesaler or retailer to carry and sell its merchandise is known as a _____ strategy.

|a. |strong-arm |

|b. |kinetic |

|c. |pull |

|d. |foot-in-the-door |

|e. |push |

ANS: E PTS: 1 REF: 218-219 OBJ: 14-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

106. Petra McCoy has developed a product for cleaning grout called Grout-Chee. Everyone who has tried the product really appreciates how quickly it works, but McCoy is having trouble getting retail stores to carry the product. She has decided to send retailers free samples and use other trade promotions to encourage stores to carry her product. McCoy is using a(n) _____ promotional strategy.

|a. |kinetic |

|b. |inert |

|c. |push |

|d. |advertorial |

|e. |pull |

ANS: C PTS: 1 REF: 218-219 OBJ: 14-6 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

107. An ad in a trade magazine targeted to veterinarians urges them to prescribe Hepato for cats and dogs with damaged livers. This ad was placed by the product's manufacturer. This ad is an example of how manufacturers use a(n) _____ strategy.

|a. |kinetic |

|b. |pull |

|c. |inertia |

|d. |advertorial |

|e. |push |

ANS: E

A push strategy is a marketing strategy that uses trade advertising to convince a retailer (in this case the veterinarian) to carry and sell particular merchandise.

PTS: 1 REF: 218-219 OBJ: 14-6 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

108. Shannon Murphey wanted to increase sales at his Tyler, Texas, jewelry store, Murphey the Jeweler. After analyzing his sales figures, he decided to give away $50 gift certificates for local businesses to give to their employees. "Many people used the gift certificates as credit toward more expensive items," explains Murphey. Murphey used a(n) ______ strategy.

|a. |pull |

|b. |push |

|c. |kinetic |

|d. |inertia |

|e. |cash-flow |

ANS: A

A pull strategy is a marketing strategy that stimulates consumer demand to obtain product distribution.

PTS: 1 REF: 219 OBJ: 14-6 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

109. The American Plastics Council wants to stimulate more consumer demand for products that are packaged in plastic. The ads will be run in consumer magazines and will hopefully cause customers to ask retailers to carry more products packaged in plastic. The American Plastics Council is planning to use a(n) _____ strategy.

|a. |kinetic |

|b. |pull |

|c. |inertia |

|d. |advertorial |

|e. |push |

ANS: B

A pull strategy is a marketing strategy that stimulates consumer demand to obtain product distribution.

PTS: 1 REF: 219 OBJ: 14-6 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

110. The various Survivor shows have been promoted through personal appearances by show participants, Web sites, and merchandise with the Survivor logo as well as print and broadcast advertising. To make sure that all of the promotional messages are coordinated, CBS (the network on which the show is broadcast) should use the:

|a. |integrated marketing communications approach |

|b. |integrated communications management approach |

|c. |AIDA concept |

|d. |interpersonal and mass communications approach |

|e. |coordinated market management approach |

ANS: A

IMC is the careful coordination of all promotional messages for a product to assure the consistency of messages at every contact point.

PTS: 1 REF: 219-220 OBJ: 14-7 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

111. Slatescape sells crushed slate to be used as a decorative, permanent mulch to keep weeds out of flower beds. Initially, Slatescape was marketed heavily to home owners, but after years of radio and television advertising, Slatescape has decided to put a majority of its promotion budget into personal selling and sales promotion to lawn and garden supply stores and large discount stores such as Wal-Mart. This new strategy is a _____ strategy.

|a. |kinetic |

|b. |push |

|c. |pull |

|d. |foot-in-the-door |

|e. |reinforcement |

ANS: B

The use of aggressive personal selling and trade advertising by a manufacturer to convince a wholesaler or retailer to carry and sell its merchandise is known as a push strategy.

PTS: 1 REF: 218-219 OBJ: 14-6 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

112. A manufacturer using the _____ promotional strategy focuses its promotional efforts on the consumer.

|a. |reinforcement |

|b. |personal selling |

|c. |push |

|d. |pull |

|e. |kinetic |

ANS: D PTS: 1 REF: 219 OBJ: 14-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

113. An ad for a prescription-only antihistamine that does not make its users sleepy like many other allergy medications was run in several health and fitness magazines. The ad said that if you were interested in learning more about the new product or trying it out, you should ask your physician. The manufacturer of the drug was using a _____ promotional strategy.

|a. |reinforcement |

|b. |personal selling |

|c. |push |

|d. |pull |

|e. |kinetic |

ANS: D

A manufacturer using the pull promotional strategy focuses its promotional efforts on the consumer.

PTS: 1 REF: 219 OBJ: 14-6 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

114. Procter & Gamble uses cents-off campaigns, couponing, and free samples to increase sales of Tide detergent. In other words, it uses a _____ promotional strategy.

|a. |push |

|b. |personal selling |

|c. |pull |

|d. |reinforcing |

|e. |kinetic |

ANS: C

A manufacturer using the pull strategy focuses its promotional efforts on the consumer.

PTS: 1 REF: 219 OBJ: 14-6 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

115. To get more retailers to stock its products, Rust-Oleum paint developed a strong advertising campaign aimed at consumers. The ads show creative ways to use paint to make homes more attractive and emphasize that the paint doesn't chip, peel, or fade. Rust-Oleum is using a _____ promotional strategy.

|a. |push |

|b. |channel |

|c. |reinforcement |

|d. |pull |

|e. |kinetic |

ANS: D

A pull strategy involves ad campaigns aimed at consumers in hopes of getting consumers to demand the product from retailers who in turn will demand it from manufacturers.

PTS: 1 REF: 219 OBJ: 14-6 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

116. When Lee Apparel introduced Lee Dungarees, it carefully coordinated posters, radio and television commercials, and a Web-based interactive game that drove customers to off-line stores and back to the Web site. All of these elements produced a consistent, unified, customer-focused message. Lee Apparel used:

|a. |coordinational promotion |

|b. |promotional mixing |

|c. |integrated marketing communications |

|d. |creative selling |

|e. |processed marketing |

ANS: C

Integrated marketing communications is careful coordination of promotional messages for a product to assure the consistency of messages.

PTS: 1 REF: 219 OBJ: 14-7 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

117. In January 2005, Burger King sponsored the opener of the third season of The Apprentice. The Apprentice sponsorship was an important element in Burger King's overall marketing strategy to build social currency for the brand through contests, advertising, and other sales promotion. In 2002, the brand set out to reverse negative perceptions of Burger King through the use of a consistent and coordinated promotional message. Burger King used:

|a. |coordinational promotion |

|b. |promotional mixing |

|c. |integrated marketing communications |

|d. |creative selling |

|e. |processed marketing |

ANS: C

Integrated marketing communications is careful coordination of promotional messages for a product to assure the consistency of messages.

PTS: 1 REF: 219-220 OBJ: 14-7 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

118. _____ is the careful coordination of all promotional activities to produce a consistent, unified message that is customer focused.

|a. |Interpersonal and mass communications (IMC) approach |

|b. |Promotional mixing |

|c. |Integrated marketing communications |

|d. |Creative selling |

|e. |Relationship marketing |

ANS: C PTS: 1 REF: 219-220 OBJ: 14-7 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

119. Molson beer is produced in Canada. Coors is manufactured in the United States. A merger of the two breweries would give each brand access to a significantly larger market. To effectively reach both markets, the merged company would need to coordinate its promotional mix so as to produce a consistent, unified, and customer-focused message. In other words, the brewery would need to use:

|a. |coordinational promotion |

|b. |integrated marketing communications |

|c. |transformational marketing |

|d. |creative selling |

|e. |transactional communications |

ANS: B PTS: 1 REF: 219-220 OBJ: 14-7 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Promotion

120. Why is the concept of integrated marketing communications (IMC) growing in popularity?

|a. |The proliferation of thousands of media choices beyond the traditional media has made promotion a complicated task. |

|b. |The mass market has fragmented. |

|c. |Critics of promotion have suggested that uncoordinated promotion is wasteful and inefficient. |

|d. |Marketers have slashed their advertising spending in favor of promotional techniques that generate immediate sales |

| |responses and have more easily measured effects. |

|e. |All of these statements help to explain why IMC is growing in popularity. |

ANS: E PTS: 1 REF: 219-220 OBJ: 14-7 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion

Cable TV

It wasn't so long ago that cable swaggered around the television industry as the upstart threatening the broadcast networks. Now, cable is old news. The antagonist is the satellite dish with the capability of delivering hundreds of channels and offering an array of movies and sports events. The technology is known as direct broadcast satellite, or DBS. The new challenger has awakened the "sleeping giant" cable industry, which has hit the airwaves with some of the most aggressive advertisements the television industry has seen. The ads emphasize the downside of disconnecting cable and choosing to purchase a satellite dish. One commercial opened with a man on a couch joined by his wife with a large bowl of popcorn. They snuggle in front of their TV set, hooked up to DBS. She seemed excited about their new system and exclaimed, "So this is it?" She then asked how much the satellite dish cost. When her husband answered, the excitement was off. "There's no monthly fee?" she asked. "No more than cable," he responded. When she asked to watch the news, he sheepishly said, "Uh, can't get local news." At the end of the commercial, the spokesperson for the cable industry declared, "These days when everyone is promising you the future of television, isn't it nice to know you already have it."

121. Refer to Cable TV. The television advertising utilized by cable operators represents the means by which the company communicates to current users to influence an opinion or elicit a response. This is called:

|a. |distribution |

|b. |price |

|c. |research and development |

|d. |promotion |

|e. |publicity |

ANS: D

Promotion is communication by marketers that informs, persuades, and reminds potential buyers of a product or service to influence an opinion or elicit a response.

PTS: 1 REF: 207 OBJ: 14-1

TOP: AACSB Communication | TB&E Model Promotion

122. Refer to Cable TV. The cable industry's ad campaigns are designed to communicate to a large audience via television and radio. It uses _____ communication.

|a. |mass |

|b. |clutter |

|c. |interpersonal |

|d. |intrapersonal |

|e. |public |

ANS: A

Mass communication refers to communicating to large audiences, usually through a mass medium such as television or newspaper.

PTS: 1 REF: 210 OBJ: 14-3

TOP: AACSB Reflective Thinking | TB&E Model Promotion

123. Refer to Cable TV. The cable industry is the originator of this ad campaign against satellite dishes. The industry represents the _____ in the communication process.

|a. |communicator |

|b. |encoder |

|c. |sender |

|d. |channeler |

|e. |receiver |

ANS: C

The sender is the originator of the message in the communication process.

PTS: 1 REF: 210 OBJ: 14-3

TOP: AACSB Reflective Thinking | TB&E Model Strategy

124. Refer to Cable TV. Television represents the _____ in the communication process used by the cable industry to transmit its message.

|a. |feedback loop |

|b. |channel |

|c. |encoder |

|d. |receiver |

|e. |communicator |

ANS: B

A channel is any communication medium utilized to transmit a message.

PTS: 1 REF: 211 OBJ: 14-3

TOP: AACSB Reflective Thinking | TB&E Model Strategy

125. Refer to Cable TV. Keisha is watching television and sees an ad for DBS. Two ads later, she sees the new television ad for her local cable system. When questioned an hour later about advertising she has seen most recently, Keisha remembers a "cable" ad but cannot recall the details. Keisha's inability to recall the ad is most likely caused by _____ in the communication process.

|a. |feedback |

|b. |the use of a channel |

|c. |a shared frame of reference |

|d. |cognitive dissonance |

|e. |noise |

ANS: E

Noise is anything that interferes with, distorts, or slows down the transmission of information. Competing ads can be a source of noise.

PTS: 1 REF: 211 OBJ: 14-3

TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Customer

RugRatReaders

Greg Martin has developed his own line of children's books. The books are written for children ages 3 to 6 and are produced using cotton fiber as pages, rendering them "nearly" indestructible. This unique feature makes Martin's books superior to the competition. His products are called RugRatReaders. Martin has decided to advertise the books to his target market (women with children ages 3 to 6) via radio. He does not have a formal advertising budget, but he will spend whatever money he has in the bank after producing the books each month. His message will focus on the product and its unique features. Martin has been having problems getting retailers to stock his new product. It is Martin's hope that consumers will go to their local bookstores and ask for the RugRatReaders.

126. Refer to RugRatReaders. In all Martin's ads, he will emphasize the books’ indestructibility. This represents the product's:

|a. |tactical advantage |

|b. |competitive advantage |

|c. |feedback |

|d. |promotional result |

|e. |objective strategy |

ANS: B

A competitive advantage is a set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition.

PTS: 1 REF: 207 OBJ: 14-1

TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Product

127. Refer to RugRatReaders. Martin's choice of radio as his promotional tool is based on the fact that it is a one-way mass communication vehicle. Radio is most commonly used with which promotional mix element?

|a. |public relations |

|b. |advertising |

|c. |direct marketing |

|d. |sales promotion |

|e. |sponsorship |

ANS: B

Advertising is a form of impersonal, one-way communication paid for by the sponsor. Radio is an example of an advertising medium.

PTS: 1 REF: 208 OBJ: 14-2

TOP: AACSB Reflective Thinking | TB&E Model Promotion

128. Refer to RugRatReaders. The promotional campaign Martin is utilizing is designed to accomplish which basic promotional task?

|a. |rewarding |

|b. |persuading |

|c. |informing |

|d. |influencing |

|e. |reminding |

ANS: C

Informative promotion is important for a new product and more prevalent during the early stages of the product life cycle.

PTS: 1 REF: 214 OBJ: 14-4

TOP: AACSB Reflective Thinking | TB&E Model Strategy

129. Refer to RugRatReaders. According to the AIDA model, the first step Martin must achieve with his target market is:

|a. |attention |

|b. |interest |

|c. |liking |

|d. |desire |

|e. |action |

ANS: A

The first step in AIDA is to draw customers' attention to the product.

PTS: 1 REF: 215 OBJ: 14-5

TOP: AACSB Reflective Thinking | TB&E Model Strategy

130. Refer to RugRatReaders. In attempting to get consumers to ask the retailer for his product, Martin is using a _____ promotional strategy:

|a. |push |

|b. |pull |

|c. |kinetic |

|d. |publicity |

|e. |reinforcement |

ANS: B

A pull strategy stimulates consumer demand to obtain product distribution.

PTS: 1 REF: 219 OBJ: 14-6

TOP: AACSB Reflective Thinking | TB&E Model Strategy

Amtrak

Amtrak is taking the gloves off in advertisements and belittling its major competition, which is the airline shuttles. Amtrak's new name for its Metroliner is The Smart Shuttle. Gone are ads that were inner-directed and sold the Metroliner on its leisurely pace. In their place are ads showing rapid shots of the sleek train and business executives conducting no-nonsense meetings "eyeball-to-eyeball." The campaign, which includes television, radio, print, billboards, and posters in commuter railroad cars, targets business travelers, who, Amtrak says, incorrectly believe the train takes far longer than the airplane to travel between two cities. One television spot opens with a shot of airplanes stacked up in a tarmac traffic jam. Another shows a business traveler lumbering into the airport during a snowstorm. The announcer says, "Schedule a meeting. Take the shuttle. Then cross your fingers." The poor soul looks up at the departure board and sees a row of "Canceled" signs. The announcer continues, "Schedule a meeting. Take the Metroliner. Then cross your legs."

131. Refer to Amtrak. The means by which Amtrak communicates with business travelers about the merits and characteristics of the Metroliner is called:

|a. |distribution |

|b. |direct marketing |

|c. |promotion |

|d. |publicity |

|e. |personal selling |

ANS: C

Promotion is the means by which businesses communicate with their target audiences.

PTS: 1 REF: 207 OBJ: 14-1

TOP: AACSB Reflective Thinking | TB&E Model Strategy

132. Refer to Amtrak. The plan to optimally utilize television, radio, print, and out-of-home vehicles to target business travelers is called a:

|a. |promotional strategy |

|b. |marketing mix |

|c. |promotion goal |

|d. |selling plan |

|e. |publicity plan |

ANS: A

A promotional strategy is a plan for the optimal use of the promotion elements.

PTS: 1 REF: 207 OBJ: 14-1

TOP: AACSB Reflective Thinking | TB&E Model Strategy

133. Refer to Amtrak. Amtrak's campaign stresses that the Metroliner is more comfortable and more likely to be on time and run in inclement weather. The promotional campaign focuses on Amtrak's:

|a. |superior skill set |

|b. |special feature |

|c. |tactical strategy |

|d. |differential parity |

|e. |competitive advantage |

ANS: E

A competitive advantage is a set of unique features of a company and its products.

PTS: 1 REF: 207 OBJ: 14-1

TOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Promotion

134. Refer to Amtrak. Amtrak's campaign is designed to communicate to a large audience via television, radio, and print. This is an example of _____ communication.

|a. |mass |

|b. |clutter |

|c. |interpersonal |

|d. |intrapersonal |

|e. |public |

ANS: A

Mass communication refers to communicating to large audiences, usually through a mass medium such as television or newspaper.

PTS: 1 REF: 210 OBJ: 14-3

TOP: AACSB Reflective Thinking | TB&E Model Promotion

135. Refer to Amtrak. Amtrak originated the new campaign. Amtrak represents the _____ in the communication process.

|a. |promotional impetus |

|b. |decoder |

|c. |sender |

|d. |channeler |

|e. |receiver |

ANS: C

The sender is the originator of the message in the communication process.

PTS: 1 REF: 210 OBJ: 14-3

TOP: AACSB Reflective Thinking | TB&E Model Strategy

136. Refer to Amtrak. Television, radio, print, and out-of-home media represent the _____ in the communication process used by Amtrak.

|a. |feedback loop |

|b. |channel |

|c. |encoder |

|d. |receiver |

|e. |communicator |

ANS: B

A channel is any communication medium utilized to transmit a message.

PTS: 1 REF: 211 OBJ: 14-3

TOP: AACSB Reflective Thinking | TB&E Model Strategy

137. Refer to Amtrak. Amtrak's careful coordination of all of its promotional activities to present a single, focused communication to its consumers is an example of:

|a. |coordinational promotion |

|b. |promotional mixing |

|c. |integrated marketing communications |

|d. |creative selling |

|e. |processed marketing |

ANS: C PTS: 1 REF: 219-220 OBJ: 14-7

TOP: AACSB Reflective Thinking | TB&E Model Strategy

Methodist Church

In 2001, the United Methodist Church, the second largest Protestant denomination in the United States, launched a four-year, $20 million national ad campaign. The theologically gentle but culturally edgy ads are aimed at Americans who are unchurched--people who know the name Methodist but don't know anything else about it. The "Igniting Ministries" ads have appeared on CBS and cable TV. The purpose of the ads is to draw more people through Methodist church doors in a time when mainline Protestant denominations are struggling.

138. Refer to Methodist Church. A news article about the Methodist Church that appeared in the Rome News-Tribune was an example of which promotional mix element?

|a. |advertising |

|b. |sales promotion |

|c. |pull strategy |

|d. |public relations |

|e. |personal selling |

ANS: D

The article is an example of favorable publicity.

PTS: 1 REF: 207-208 OBJ: 14-2

TOP: AACSB Reflective Thinking | TB&E Model Strategy

139. Refer to Methodist Church. The ad campaign will use _____ communication.

|a. |mass |

|b. |interpersonal |

|c. |direct |

|d. |hierarchical |

|e. |functional |

ANS: A

Mass communications refers to communicating a concept or message to large audiences.

PTS: 1 REF: 210 OBJ: 14-3

TOP: AACSB Reflective Thinking | TB&E Model Strategy

140. Refer to Methodist Church. In terms of the communication process, the unchurched who see the ads while watching television are expected to be:

|a. |channels and encoders |

|b. |senders and receivers |

|c. |receivers and decoders |

|d. |channels and decoders |

|e. |receivers and channels |

ANS: C PTS: 1 REF: 211-212 OBJ: 14-3

TOP: AACSB Reflective Thinking | TB&E Model Strategy

141. Refer to Methodist Church. The church is hoping to see an increase of 3 percent in visitors to Methodist churches as a result of this ad. In terms of the communication process, this is the desired:

|a. |noise |

|b. |encoding |

|c. |reception |

|d. |channel |

|e. |feedback |

ANS: E

Feedback is the response to the promotional message.

PTS: 1 REF: 212 OBJ: 14-3

TOP: AACSB Reflective Thinking | TB&E Model Strategy

142. Refer to Methodist Church. According to the AIDA concept, the ads must first:

|a. |create interest in the Methodist Church |

|b. |draw attention to the Methodist Church |

|c. |act on unfulfilled needs of the unchurched |

|d. |augment current knowledge |

|e. |create a desire to attend the Methodist Church |

ANS: B

AIDA is attention, interest, desire, and action.

PTS: 1 REF: 212 OBJ: 14-5

TOP: AACSB Reflective Thinking | TB&E Model Strategy

143. Refer to Methodist Church. How might the United Methodist Church benefit from use of integrated marketing communications (IMC)?

|a. |Ads built using the IMC concept are not as closely regulated by the Federal Trade Commission. |

|b. |Noise can be eliminated from the communication channel with the use of IMC concepts. |

|c. |Correct decoding is guaranteed with the application of IMC concepts. |

|d. |The application of IMC concepts allows marketers to reach a more fragmented market. |

|e. |None of these statements explains how the United Methodist Church could benefit from the use of IMC. |

ANS: D

Nothing can eliminate noise or guaranteed correct decoding.

PTS: 1 REF: 219-220 OBJ: 14-7

TOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Promotion

Chapter 15—Advertising and Public Relations

MULTIPLE CHOICE

1. _____ is any form of impersonal, sponsor-paid, one-way mass communication.

|a. |Publicity |

|b. |Advertising |

|c. |Promotion |

|d. |Public relations |

|e. |Direct marketing |

ANS: B PTS: 1 REF: 223 OBJ: 15-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

2. Procter & Gamble's marketing efforts for its Dawn dishwashing liquid include television commercials, billboards, magazine inserts, and radio spots. These activities are all activities associated with:

|a. |advertising |

|b. |publicity |

|c. |public relations |

|d. |sales promotions |

|e. |direct marketing |

ANS: A

Advertising is any form of impersonal, paid communications in which the sponsor is identified.

PTS: 1 REF: 223 OBJ: 15-1 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion

3. Advertising expenditures in the United States:

|a. |are large, but the industry is small with fewer than 400,000 employees |

|b. |are staying level with little or no increase year to year |

|c. |are completely controlled by the 200,000 advertising agencies in the United States |

|d. |exceed $250 billion per year in the huge industry that employs over three million people |

|e. |are dominated by the millions of small firms competing for business through price wars |

ANS: A

Advertising is a visible but small industry. Advertising spending is increasing and is dominated by the largest firms.

PTS: 1 REF: 223 OBJ: 15-1 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

4. The United States's top advertiser, according to dollars spent per year, is:

|a. |Sony Corporation |

|b. |Time Warner |

|c. |Procter & Gamble |

|d. |General Motors Corporation |

|e. |McDonald's Corporation |

ANS: C PTS: 1 REF: 223 OBJ: 15-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

5. Why do many brands with a large market share spend proportionally less on advertising compared to brands with small market share?

|a. |Beyond a certain volume of promotion, diminishing returns set in. |

|b. |Certain industries have a practice of spending a low amount of dollars, relative to sales, on advertising. |

|c. |There is no minimum level of exposure for advertising to have an effect on sales. |

|d. |Advertising will not stimulate economic growth for the industry. |

|e. |The firms with large market share do not understand the advertising-to-sales relationship. |

ANS: A

There is a saturation point for advertising.

PTS: 1 REF: 223 OBJ: 15-1 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

6. The advertising response function helps marketers:

|a. |create ads that will be noticed by consumers each time the ad runs |

|b. |use their advertising budgets wisely |

|c. |calculate the break-even points for each product being advertised |

|d. |determine the reach and frequency of specific media |

|e. |select an executional appeal appropriate to the product being advertised |

ANS: B

The advertising response function is a phenomenon in which spending for advertising and sales promotion increases sales or market share up to a certain level but then produces diminishing results.

PTS: 1 REF: 224 OBJ: 15-1 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

7. Why do companies with new brands that have a small market share tend to spend proportionately more for advertising and sales promotions compared to those with a large market share for existing products?

|a. |as a result of experiential marketing research |

|b. |to create the appropriate level of institutional advertising |

|c. |to determine which executional appeal is the most effective |

|d. |to achieve a certain minimum level of exposure to measurably affect purchase habits |

|e. |to prevent product cannibalization |

ANS: D

There are two reasons why companies with new brands with small market share tend to spend proportionately more for advertising and sales promotions compared to those with existing products and large market share. The first reason is in response to the advertising response function. The second reason is to create product awareness in the minds of the target audience.

PTS: 1 REF: 224 OBJ: 15-1 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

8. When Gillette introduced its Venus razor for women, it spent several million dollars on advertising and other promotions and successfully boosted its market share. As an advertising consultant, you would advise that Gillette:

|a. |double its advertising budget in order to double its market share |

|b. |maintain the current advertising budget and continue to focus on brand awareness and market share gains |

|c. |slowly increase the amount spent on advertising and promotion to offset competitive advertisements |

|d. |shift the budget dollars from advertising to sales promotion and personal selling due to a change in the product life |

| |cycle stage |

|e. |focus on maintaining market share and spend proportionately less on advertising because additional expenditures would |

| |reap diminishing benefits |

ANS: E

The advertising response function shows that beyond a certain level of spending for advertising and sales promotion, diminishing returns set in. As a mature, successful company, Gillette can choose to spend only as much as needed to maintain market share.

PTS: 1 REF: 224 OBJ: 15-1 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

9. How does advertising affect consumers?

|a. |changes cultural practices and conventions |

|b. |changes strongly held values |

|c. |manipulates society against its will |

|d. |changes negative attitudes to positive ones |

|e. |makes people buy things they do not want |

ANS: D

Advertising can affect attitudes but cannot alter values or force people to do things they do not want to do or believe are wrong.

PTS: 1 REF: 224 OBJ: 15-1 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Customer

10. People who drink Cheerwine (a cherry-flavored cola) are extremely loyal to this product that is primarily found in the Carolinas. Which of the following statements about how increased advertising of Cheerwine would affect extremely brand loyal users of Cheerwine is true?

|a. |The advertising would have no effect because loyal users of Cheerwine have a neutral frame of reference. |

|b. |The advertising could encourage the loyal Cheerwine users to try other brands. |

|c. |The advertising could create a positive frame of reference for the loyal Cheerwine users. |

|d. |The advertising could have no effect due to the advertising response function. |

|e. |The advertising could cause the loyal Cheerwine users to buy more. |

ANS: E

Increased advertising will increase sales to brand-loyal consumers who already have a positive frame of reference for the product.

PTS: 1 REF: 224 OBJ: 15-1 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Customer

11. Procter & Gamble has run ads that promote its Children’s Safe Drinking Water program in which it shows its employees teaching people around the world how to purify their water. The program was instituted because 5,000 children die every day from diseases caused by unsafe water. These ads are examples of _____ advertising.

|a. |product |

|b. |institutional |

|c. |pioneering |

|d. |environmental |

|e. |comparative |

ANS: B

Institutional advertising is a form of advertising designed to enhance a company's image rather than promote a particular product.

PTS: 1 REF: 224 OBJ: 15-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Customer

12. _____ advertising is designed to enhance a company's image rather than promote a particular product.

|a. |Publicity |

|b. |Institutional |

|c. |Pioneering |

|d. |Selective |

|e. |Image |

ANS: B PTS: 1 REF: 224 OBJ: 15-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

13. DuPont has an advertisement that shows police officers describing how they were shot at close range in the line of duty. The advertisement explains that the lives of these public servants were saved by Kevlar bullet-proof vests and that Kevlar was invented by DuPont. This is an example of _____ advertising.

|a. |publicity |

|b. |attribute |

|c. |image |

|d. |pioneering |

|e. |institutional |

ANS: E

Institutional advertising is designed to enhance the image of the company and asks for no action except maintaining a favorable attitude toward the advertiser and its goods and services.

PTS: 1 REF: 224 OBJ: 15-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion

14. A unique form of institutional advertising called _____ advertising is a means for corporations to express their viewpoints on various controversial issues.

|a. |advocacy |

|b. |persuasive |

|c. |issue |

|d. |comparative |

|e. |image |

ANS: A PTS: 1 REF: 224 OBJ: 15-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

15. AIG is a worldwide insurance and financial services provider. The company used _____ advertising when it published an ad in which it asked why the 50 states in the United States can't function as one nation like the members of the European Union. Companies established to do business in one EU country can do business in them all. This is not true in the United States where each state has different laws.

|a. |global |

|b. |homogeneous |

|c. |pioneering |

|d. |advocacy |

|e. |image |

ANS: D PTS: 1 REF: 224 OBJ: 15-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model International Perspective

16. When Coca-Cola was accused of deliberately trying to poison consumers in India by selling them soft drinks allegedly containing 27 times the maximum amount of pesticide that is permissible, Coke ran ads in national newspapers describing how much care it takes to guarantee the safety of the products it produces. These ads were examples of _____ advertising.

|a. |advocacy |

|b. |selective |

|c. |product |

|d. |differential |

|e. |image |

ANS: A

Advocacy advertising is a means for corporations to express their viewpoints on various controversial issues or respond to media attacks.

PTS: 1 REF: 224 OBJ: 15-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Customer

17. Unlike advertising that establishes or maintains a company's identity, _____ advertising touts the benefits of a specific good or service.

|a. |selective |

|b. |cooperative |

|c. |advocacy |

|d. |image |

|e. |product |

ANS: E PTS: 1 REF: 225 OBJ: 15-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

18. General Motors runs magazine advertisements that encourage the purchase of Cadillac automobiles. This is an example of _____ advertising.

|a. |pioneering |

|b. |circumstantial |

|c. |product |

|d. |advocacy |

|e. |comparative |

ANS: C

Product advertising touts the benefits of a specific product or service.

PTS: 1 REF: 225 OBJ: 15-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion

19. _____ advertising is used to stimulate demand for a new product or product category and is heavily utilized during the introductory stage of the product life cycle.

|a. |Comparative |

|b. |Innovative |

|c. |Focused |

|d. |Image |

|e. |Pioneering |

ANS: E PTS: 1 REF: 225 OBJ: 15-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

20. Instead of sending artfully arranged flower bouquets, an entrepreneur has developed fresh fruit bouquets and is marketing them under the name Edible Arrangements. The premium fruit is cut to mimic flowers, arranged in a basket, and carefully delivered to the recipient’s home. One of the problems is convincing people that it is not a novelty product, but an attractive way to show how you feel about someone. Edible Arrangements is using _____ advertising to promote its fruit bouquets.

|a. |pioneering |

|b. |innovative |

|c. |introductory |

|d. |start-up |

|e. |focused |

ANS: A

Pioneering advertising is heavily utilized during the introductory stage of the product life cycle.

PTS: 1 REF: 225 OBJ: 15-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Product

21. Cranium, the Seattle-based toy company, has recently introduced Giggle Gear, a toy designed to let kids’ imagination run wild. With the face and headpieces that make up Giggle Gear, kids can change themselves into aliens, fairies, bugs, and robots. _____ advertising should be used to promote this new toy.

|a. |Pioneering |

|b. |Innovative |

|c. |Promotional |

|d. |Start-up |

|e. |Comparative |

ANS: A

Pioneering advertising is intended to stimulate demand for a new product.

PTS: 1 REF: 225 OBJ: 15-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Product

22. The goal of _____ advertising is to influence demand for a specific brand of good or service. Such advertising is less informational and more emotional. The emphasis is on brand name, recall, and favorable attitude toward the brand.

|a. |pioneering |

|b. |objective-specific |

|c. |competitive |

|d. |institutional |

|e. |comparative |

ANS: C PTS: 1 REF: 225 OBJ: 15-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

23. Comparative advertising is:

|a. |like a mirror because it compares all negative and positive features of both products |

|b. |like a shotgun in that it compares multiple features of two products |

|c. |like a rifle in that it only compares a single benefit or advantage |

|d. |only used by companies at the highest level of the pyramid of corporate responsibility |

|e. |is accurately described by none of these |

ANS: E

Comparative advertising compares two or more competing brands on one or more specific attributes. FTC monitoring of comparative advertising indicates that it is sometimes used unethically.

PTS: 1 REF: 225 OBJ: 15-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

24. Procter & Gamble's ads for Head & Shoulders Intensive Solutions system designed to treat the symptoms of dandruff and seborrhea emphasize the brand name and how effectively it heals the scalp. In addition, its ads demonstrates how easy it is to use the system, which looks complicated but isn’t. This is an example of _____ advertising.

|a. |comparative |

|b. |differentiational |

|c. |pioneering |

|d. |institutional |

|e. |competitive |

ANS: E

The goal of competitive advertising is to influence demand for a specific brand of good or service. Such advertising is less informational and more emotional. The emphasis is on brand name, recall and favorable attitude toward the brand.

PTS: 1 REF: 225 OBJ: 15-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Product

25. _____ advertising compares two or more specifically named or shown competing brands on one or more specific attributes.

|a. |Contrasting |

|b. |Comparative |

|c. |Pioneering |

|d. |Superlative |

|e. |Differentiational |

ANS: B PTS: 1 REF: 225 OBJ: 15-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

26. Comparative advertising:

|a. |does not have high claim recall effectiveness |

|b. |has always been legal but is in bad taste |

|c. |allows advertisers to falsely describe the competition |

|d. |was not allowed before the 1970s if the other brands were mentioned by name or shown |

|e. |results in high recall of the brand name of the advertised goods, but not for the named, competing brand |

ANS: D

Comparative advertising compares two or more specifically named or shown competing brands on one or more specific attributes; it was illegal before the 1970s.

PTS: 1 REF: 225 OBJ: 15-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion

27. Frito-Lay has run television and print commercials in which it shows that consumers prefer Frito's Stax crisps to Procter & Gamble's Pringles. This is an example of _____ advertising.

|a. |competitive |

|b. |institutional |

|c. |comparative |

|d. |image |

|e. |pioneering |

ANS: C

This comparative advertising names and shows Pringles and contrasts them to the more positive results consumers have from eating Frito’s Stax crisps.

PTS: 1 REF: 225 OBJ: 15-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Customer

28. Which of the following statements about comparative advertising is true?

|a. |Comparative advertising is highly effective in Arabic countries. |

|b. |The FCC is the only federal agency that has any regulatory power over comparative advertising. |

|c. |Comparative advertising is often used for products experiencing strong growth. |

|d. |Comparative advertising is highly regulated and is illegal in certain countries. |

|e. |None of these statements about comparative advertising is true. |

ANS: D

Comparative advertising is not consistent with social values in Arabic countries and is not effective there. The FTC has regulatory power over comparative advertising. Comparative advertising is often used for products with sluggish growth.

PTS: 1 REF: 225 OBJ: 15-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

29. Around election time every year, we see ads on television claiming that one candidate is superior to another in terms of experience, capability, and/or ethics. Sometimes opponents are named and even vilified in these _____ ads.

|a. |differential |

|b. |cooperative |

|c. |advocacy |

|d. |comparative |

|e. |image |

ANS: D

Comparative advertising compares two or more specifically named or shown competing brands on one or more specific attributes.

PTS: 1 REF: 225 OBJ: 15-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Product

30. The first step in the advertising campaign decision process is to:

|a. |make media decisions |

|b. |evaluate the campaign |

|c. |determine campaign objectives |

|d. |develop advertising copy |

|e. |make creative decisions |

ANS: C PTS: 1 REF: 225-226 OBJ: 15-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

31. An advertising campaign:

|a. |may contain a wide variety of themes and slogans |

|b. |extends for a defined period of time |

|c. |continues for the life of the product |

|d. |starts with determining which media will be used |

|e. |rarely has a specific budget |

ANS: B

The advertising campaign is a series of related advertisements that focus on a common theme, slogan, and set of advertising appeals and extend for a defined period of time.

PTS: 1 REF: 225 OBJ: 15-3 TYPE: Comp

TOP: AACSB Communication | TB&E Model Strategy

32. A(n) _____ is a specific communication task that a campaign should accomplish for a specified target audience during a specified period of time.

|a. |advertising objective |

|b. |marketing mix |

|c. |media schedule |

|d. |advertising life span |

|e. |promotional mix |

ANS: A PTS: 1 REF: 226 OBJ: 15-3 TYPE: Def

TOP: AACSB Communication | TB&E Model Strategy

33. One method used for setting advertising objectives is:

|a. |campaign budgeting |

|b. |objective and task |

|c. |the DAGMAR approach |

|d. |percentage of sales |

|e. |contribution margin |

ANS: C PTS: 1 REF: 226 OBJ: 15-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

34. DAGMAR is an acronym for:

|a. |defining and achieving goals means advertising reach |

|b. |developing aggressive markets |

|c. |designing advertising with market research |

|d. |defining advertising goals for measured advertising results |

|e. |developing aggressive growth markets and revenues |

ANS: D PTS: 1 REF: 226 OBJ: 15-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

35. When the conservative New England Banking Company hired Campbell & Cook advertising agency to launch a new advertising campaign, the agency's first step was to:

|a. |determine that the goal of the ads was to emphasize the bank's customer service |

|b. |set its marketing budget |

|c. |decide what executional style to use in the ads |

|d. |see if sales promotion was superior to other tools within the promotional mix |

|e. |hire a spokesperson |

ANS: A

The first step in any advertising campaign is to set advertising objectives.

PTS: 1 REF: 226 OBJ: 15-3 TYPE: Comp

TOP: AACSB Communication | TB&E Model Strategy

36. The UPS Store’s advertising campaign tells consumers that when it comes to mailing packages, “The UPS Store can pack it, track it, and guarantee it.” The advertising is focusing on:

|a. |production implementation |

|b. |production implementation |

|c. |a product mission |

|d. |creating product loyalty |

|e. |a product benefit |

ANS: E

The ad answers the customer's question, "What's in it for me?"

PTS: 1 REF: 226 OBJ: 15-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

37. A newspaper ad for General Mills cereal highlights its BoxTop Redemption program in which General Mills donates cash to schools when the schools redeem box tops from General Mills cereal. This ad focuses on:

|a. |a product attribute |

|b. |production implementation |

|c. |a product mission |

|d. |creating product loyalty |

|e. |a product benefit |

ANS: E

The ad answers the customer's question, "What's in it for me?"

PTS: 1 REF: 226 OBJ: 15-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Product

38. The ad described Mott’s Healthy Harvest brand fruit sauces as containing no artificial sweetener and half the calories of Mott’s original applesauce. This ad is emphasizing:

|a. |a product attribute |

|b. |production implementation |

|c. |a product mission |

|d. |a loyalty reward |

|e. |a product benefit |

ANS: A

The reduction in calories is an attribute.

PTS: 1 REF: 226 OBJ: 15-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Product

39. The ad for Xerox color copiers told readers that Xerox’s ability to print brilliant colors was due to “30 years of experience and a commitment to meeting the color needs of every kind of business.” This phrase represents the Xerox color copier’s:

|a. |unique selling proposition |

|b. |advertising objective |

|c. |media profile |

|d. |basis for comparative advertising |

|e. |basis for product identification |

ANS: A

A unique selling proposition is a desirable, exclusive, and believable advertising appeal selected as a theme for an advertising campaign.

PTS: 1 REF: 226-227 OBJ: 15-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Product

40. The slogan for an ad campaign used by Microsoft Office was, “The I’M TIED TO MY DESK era is over.” This slogan describes the software's:

|a. |unique selling proposition |

|b. |advertising objective |

|c. |basis for lifestyle strategy |

|d. |promotional mix |

|e. |basis for comparative advertising |

ANS: A

A unique selling proposition is a desirable, exclusive, and believable advertising appeal selected as a theme for an advertising campaign.

PTS: 1 REF: 226-227 OBJ: 15-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Product

41. The ad campaign for EnviroKidz organic animal cookies states that the cookies are gluten-free. This advertising highlights:

|a. |a product attribute |

|b. |the creation of brand loyalty |

|c. |how negative consumers' attitudes are modified |

|d. |a product benefit |

|e. |a loyalty reward |

ANS: A

The absence of gluten is a product attribute.

PTS: 1 REF: 226 OBJ: 15-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Product

42. When making creative decisions for the advertising campaign, the advertising manager may consider all of the following EXCEPT:

|a. |how to develop advertising appeals |

|b. |identification of the product's benefits |

|c. |the selection of advertising objectives |

|d. |the selection of a unique selling proposition |

|e. |the advertising message |

ANS: C

Determining advertising objectives must be done before creative decisions are made.

PTS: 1 REF: 226 OBJ: 15-3 TYPE: Comp

TOP: AACSB Communication | TB&E Model Strategy

43. In advertising, the goal is to sell the product's _____, not its _____.

|a. |benefits; attributes |

|b. |characteristics; appeals |

|c. |values; traits |

|d. |competitive edge; virtues |

|e. |differential advantage; properties |

ANS: A

A well-known rule of thumb in advertising is "Sell the sizzle, not the steak."

PTS: 1 REF: 226 OBJ: 15-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

44. You are the advertising campaign manager for Health Express USA, a fast-food restaurant that caters to the health-conscious. Which of the following messages would be LEAST effective in communicating product benefits?

|a. |Health Express USA allows you to eat a quick, nutritious meal. |

|b. |Health Express USA has hamburgers made from lean buffalo meat. |

|c. |Eating at Health Express USA will make you healthier. |

|d. |The healthier food at Health Express will make your wallet seem fatter, |

|e. |Even your children will love Health Express's baked fries. |

ANS: B

Lean buffalo meat is an attribute.

PTS: 1 REF: 226 OBJ: 15-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

45. An advertising _____ identifies a reason for a person to buy a product.

|a. |profile |

|b. |execution |

|c. |format |

|d. |execution |

|e. |appeal |

ANS: E PTS: 1 REF: 226 OBJ: 15-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

46. An effective advertising appeal must:

|a. |be unbelievable |

|b. |make a positive impression on the target market |

|c. |be familiar |

|d. |be inexpensive |

|e. |be similar to its competitors' advertising appeals |

ANS: B

An effective advertising appeal must be believable, unique, and differ from competitors. Cost is not a concern when selecting ad appeals.

PTS: 1 REF: 226 OBJ: 15-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

47. Ads for M&M candy that prominently feature the M&M candies in real-life situations are using a _____ appeal.

|a. |slice-of-life |

|b. |mood or image |

|c. |fun and pleasure |

|d. |demonstration |

|e. |spokesperson |

ANS: C

All except alternative c are executional styles. See Exhibits 15.2.

PTS: 1 REF: 227| OBJ: 15-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

48. The dominant advertising appeal selected for the campaign will become the:

|a. |advertising objective |

|b. |unique selling proposition |

|c. |media profile |

|d. |basis for comparative advertising |

|e. |decision factor in media selection |

ANS: B PTS: 1 REF: 226-227 OBJ: 15-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

49. In the past, Kroger supermarkets relied on the slogan "For Goodness Sake" to create the company's:

|a. |advertising objective |

|b. |unique selling proposition |

|c. |differential attribute |

|d. |basis for identification |

|e. |promotional mix |

ANS: B

This slogan is so strongly associated with Kroger that it creates the stores' unique selling proposition.

PTS: 1 REF: 226-227 OBJ: 15-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

50. _____ is the way the advertisement portrays its information.

|a. |Message execution |

|b. |Appeal formation |

|c. |Focus selection |

|d. |Audience selection |

|e. |Benefit determination |

ANS: A PTS: 1 REF: 227 OBJ: 15-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

51. The ads for Tilex Mold & Mildew cleaner show the product being applied to a mildewed bathroom shower and the mildew disappearing. These ads use a _____ executional style.

|a. |demonstration |

|b. |scientific |

|c. |fantasy |

|d. |mood or image |

|e. |lifestyle |

ANS: A

This ad shows consumers the expected benefits of using Tilex. See Exhibit 15.2.

PTS: 1 REF: 227 OBJ: 15-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

52. The ad for White House applesauce cups describes how the product provides 100 percent of your daily Vitamin C in every cup. What kind of an advertising appeal is this ad using?

|a. |environmental consciousness |

|b. |vanity and egotism |

|c. |health |

|d. |profit |

|e. |admiration |

ANS: C

See Exhibit 15.1.

PTS: 1 REF: 226 OBJ: 15-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

53. Realemon juice relies on the slogan, "Fresh Lemon Taste Made Easy." What kind of an advertising appeal is this ad using?

|a. |mood |

|b. |vanity and egotism |

|c. |health |

|d. |convenience |

|e. |admiration |

ANS: D

See Exhibit 15.1.

PTS: 1 REF: 226 OBJ: 15-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

54. An ad for an AT&T MasterCard offered zero percent interest on any balance transferred from another card by September 1, as well as no annual fee. What kind of an advertising appeal is this ad using?

|a. |environmental consciousness |

|b. |vanity and egotism |

|c. |health |

|d. |profit |

|e. |admiration |

ANS: D

See Exhibit 15.1.

PTS: 1 REF: 226 OBJ: 15-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

55. An ad for Crystal Geyser bottled water shows why and how the bottler supports the reforestation of America's forests. What kind of an advertising appeal is this ad using?

|a. |environmental consciousness |

|b. |concern |

|c. |health |

|d. |profit |

|e. |admiration |

ANS: A

See Exhibit 15.1.

PTS: 1 REF: 226 OBJ: 15-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

56. An for Toyota explains how consumers can reduce pollution by purchasing the Camry Hybrid, which creates fewer smog-forming emissions than other car models. What kind of advertising appeal is this ad using?

|a. |environmental consciousness |

|b. |concern |

|c. |health |

|d. |profit |

|e. |admiration |

ANS: A

See Exhibit 15.1.

PTS: 1 REF: 226 OBJ: 15-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

57. An ad for Kraft Easy Mac, six microwavable snack packets of macaroni and cheese, asks, "Need a snack?" and responds, "Snack the Mac." What kind of an advertising appeal is this ad using?

|a. |convenience |

|b. |taste |

|c. |health |

|d. |profit |

|e. |admiration |

ANS: A

See Exhibit 15.1.

PTS: 1 REF: 226 OBJ: 15-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

58. A SunTrust Bank ad shows a woman who has just filled her bird feeder, only to have squirrels steal the feed. The theme of the ad is that many investment banks can be like squirrels eager to dip into a customer's funds instead of providing good service. Which executional style is being used in this ad?

|a. |demonstration |

|b. |slice-of-life |

|c. |fantasy |

|d. |mood or image |

|e. |testimonial |

ANS: B

This ad depicts people in normal settings. See Exhibit 15.2.

PTS: 1 REF: 227 OBJ: 15-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

59. A magazine ad for Bosch appliances shows a father cuddling his young daughter who is giggling. Which executional style is being used in this ad?

|a. |demonstration |

|b. |slice-of-life |

|c. |fantasy |

|d. |mood or image |

|e. |testimonial |

ANS: B

This ad depicts people in normal settings. See Exhibit 15.2.

PTS: 1 REF: 227 OBJ: 15-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

60. An ad for Land O Lakes deli cheese shows someone's hands building a sandwich using generous portions of Land O Lakes brand cheese. Which executional style is being used in this ad?

|a. |demonstration |

|b. |slice-of-life |

|c. |fantasy |

|d. |mood or image |

|e. |testimonial |

ANS: A

See Exhibit 15.2.

PTS: 1 REF: 227 OBJ: 15-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

61. A magazine ad for Baker's chocolate shows a picture of a luscious chocolate cookie and is headlined, "Love cleverly disguised as chocolate." Which executional style is being used in this ad?

|a. |demonstration |

|b. |scientific |

|c. |fantasy |

|d. |testimonial |

|e. |humorous |

ANS: E

The ad is intended as gentle humor. See Exhibit 15.2.

PTS: 1 REF: 227 OBJ: 15-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

62. Ads for General Foods International Coffees all feature the slogan, "It stirs the soul." Given this information and the fact that the ads feature flowers, soft lights, and romantic settings, you know that these ads use a _____ executional style.

|a. |demonstration |

|b. |lifestyle |

|c. |spokesperson |

|d. |scientific |

|e. |mood |

ANS: E

The ads build a mood around the coffee. See Exhibit 15.2.

PTS: 1 REF: 227 OBJ: 15-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

63. In an advertisement for Dow bathroom cleaner, animated, talking scrubbing bubbles are used to show how hard the bubbles work to clean. The lively scrubbing bubbles appear in all advertisements for this product and are depicted on the packaging. This is an example of a _____ executional style.

|a. |spokesperson |

|b. |lifestyle |

|c. |slice-of-life |

|d. |fantasy |

|e. |product symbol |

ANS: E

A product symbol (such as the animated scrubbing bubbles) is an executional style that uses a character to represent the product. See Exhibit 15.2.

PTS: 1 REF: 227 OBJ: 15-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

64. In an advertisement for Planters peanuts and trail mix, a peanut wearing a monocle and a top hat and called Mr. Peanut represents the product quality. Mr. Peanut appears in all of the advertisements for Planters. This is an example of how a company can use a _____ executional style.

|a. |product symbol |

|b. |lifestyle |

|c. |spokesperson |

|d. |fantasy |

|e. |scientific evidence |

ANS: A

Message execution is the development of how the advertisement will be portrayed, and a product symbol (such as Mr. Peanut) is an executional style that uses a character to represent the product. See Exhibit 15.2.

PTS: 1 REF: 227 OBJ: 15-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

65. Which of the following statements about the use of executional styles in foreign advertising is true?

|a. |The same executional styles used in the United States are also used successfully in Europe. |

|b. |Foreign advertising is sometimes sexually oriented or aesthetically imaginative. |

|c. |The "Just Do It" campaign was especially successfully in Europe. |

|d. |Europeans prefer a direct-sell approach in their ads. |

|e. |European executional styles typically avoid the use of symbols and visual images. |

ANS: B

The U.S. and European markets prefer distinctly different executional styles of advertising.

PTS: 1 REF: 228 OBJ: 15-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model International Perspective

66. An ad for the General Electric Advantium microwave shows people rushing from one place to another and has the headline, "If your life moves this fast, maybe your oven should too." According to the ad, even though there never seems to be enough time to cook, this microwave will help you prepare home-cooked meals. This is an example of the use of a _____ executional style.

|a. |humorous |

|b. |lifestyle |

|c. |mood |

|d. |scientific |

|e. |demonstration |

ANS: B

This ad shows how well the product can fit it with the consumer's lifestyle. See Exhibit 15.2.

PTS: 1 REF: 227 OBJ: 15-3 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

67. Which of the following statements about postcampaign evaluation is true?

|a. |Evaluating an advertising campaign can be the most demanding task facing advertisers. |

|b. |Testing ad effectiveness can be done either before or after the campaign. |

|c. |Most advertising campaigns aim to create an image for the product instead of asking for action. |

|d. |Even if an ad campaign has been particularly successful, advertisers will typically conduct a postcampaign evaluation. |

|e. |All of the statements about postcampaign evaluation are true. |

ANS: E PTS: 1 REF: 228 OBJ: 15-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

68. Which of the following statements about developing an advertising campaign is true?

|a. |Advertisers use DAGMAR to determine the product's appeal. |

|b. |The last stage in the process is to execute the message. |

|c. |The product's unique selling proposition is identified early so that advertising objectives can be efficiently set. |

|d. |Evaluating results of an advertising campaign helps marketers to adjust objectives for future campaigns. |

|e. |In developing an advertising campaign, it is more important for the advertiser to identify the attributes than the |

| |benefits. |

ANS: D

DAGMAR is used to set advertising objectives. The last stage of the process is campaign evaluation. The unique selling proposition is identified after benefits (not attributes) are defined.

PTS: 1 REF: 226 OBJ: 15-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

69. Creative work in an advertising campaign cannot be completed without knowing which message channel will be used to convey the message to the target market. The message channel is the:

|a. |medium |

|b. |product network |

|c. |attribute |

|d. |appeal |

|e. |executor |

ANS: A PTS: 1 REF: 228 OBJ: 15-4 TYPE: Def

TOP: AACSB Communication | TB&E Model Strategy

70. _____ is the series of decisions advertisers make regarding the selection and use of media that will optimally and cost-effectively communicate the message to the target audience.

|a. |Promotional implementation |

|b. |Marketing mix planning |

|c. |Media planning |

|d. |Media reach and frequency strategy |

|e. |Media targeted selection |

ANS: C PTS: 1 REF: 228 OBJ: 15-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

71. Which of the following statements about the selection of media for advertising is true?

|a. |Creative planning for an ad that goes on a billboard is the same as the planning for an ad that runs on television. |

|b. |The media selection is typically unrelated to the advertising objectives. |

|c. |The appeal and executional style of the ad strongly affect the media selection. |

|d. |Creative work is finished before the media are selected. |

|e. |None of these statements about the selection of media for advertising is true. |

ANS: C

Advertising objectives strongly affect the media that are selected as does the creative work, which cannot be finished until the media selection is made.

PTS: 1 REF: 228 OBJ: 15-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

72. _____ advertising has the advantages of being both timely and geographically flexible.

|a. |Television |

|b. |Newspaper |

|c. |Outdoor |

|d. |Magazine |

|e. |Catalog |

ANS: B

Newspapers are often used by local retailers because they are current and flexible and directed to a local but wide market.

PTS: 1 REF: 229 OBJ: 15-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion

73. An ad for Gloria Vanderbilt jeans contained information about the Dillard department stores where the jeans could be purchased. This ad was most likely an example of _____ advertising.

|a. |comparative |

|b. |institutional |

|c. |cooperative |

|d. |advocacy |

|e. |strategic |

ANS: C PTS: 1 REF: 229 OBJ: 15-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion

74. _____ advertising is an arrangement under which a manufacturer pays a percentage of the advertising cost for an ad that a retailer places for the manufacturer's brand.

|a. |Advocacy |

|b. |Comparative |

|c. |Institutional |

|d. |One-to-one |

|e. |Cooperative |

ANS: E PTS: 1 REF: 229 OBJ: 15-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

75. One of the reasons why a retailer might avoid the use of newspaper advertising is:

|a. |absence of geographic selectivity |

|b. |short lead time |

|c. |year-round readership |

|d. |little demographic selectivity |

|e. |high individual market coverage |

ANS: D

See Exhibit 15.3.

PTS: 1 REF: 229 OBJ: 15-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

76. One of the advantages of television advertising is:

|a. |short life of message |

|b. |long lead time |

|c. |commercial clutter |

|d. |high costs |

|e. |ability to reach wide and diverse audience |

ANS: E

See Exhibit 15.3.

PTS: 1 REF: 229 OBJ: 15-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

77. Which of the following statements about Internet advertising is true?

|a. |It is easy to measure ad effectiveness with this medium. |

|b. |It is a medium to which all consumers have access. |

|c. |It is the fastest growing of all the advertising media. |

|d. |There is a long lead time required for creating Internet ads. |

|e. |By its very nature, this medium reaches a broad, diverse audience. |

ANS: C

See Exhibit 15.3.

PTS: 1 REF: 229 | 231 OBJ: 15-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Online/Computer

78. One of the main advantages of _____ advertising is its extreme market selectivity.

|a. |television |

|b. |newspaper |

|c. |magazine |

|d. |radio |

|e. |outdoor |

ANS: C

Magazines are available for almost every market segment and can be highly specialized

PTS: 1 REF: 230 OBJ: 15-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion

79. Which of the following is NOT an advantage offered by radio to its advertisers?

|a. |billions of listeners |

|b. |relatively low cost |

|c. |targeting power |

|d. |ability to change spots quickly |

|e. |timelines and geographic flexibility |

ANS: A

Radio stations are often local and do not reach the widest audiences.

PTS: 1 REF: 230 OBJ: 15-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion

80. Advertising in the form of a 30-minute advertisement that resembles a TV talk show is called a(n):

|a. |infomercial |

|b. |extended sales pitch |

|c. |mega-mercial |

|d. |ad expander |

|e. |prolonged advertisement |

ANS: A PTS: 1 REF: 230 OBJ: 15-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Promotion

81. The Flow-Bee hair cutting vacuum cleaner attachment is shown during a half-hour television spot. The product is demonstrated on volunteer studio audience members, testimonials are given by Flow-Bee owners, and viewers are encouraged to order the product through a toll-free telephone number. Flow-Bee is using the _____ form of advertising.

|a. |mega-mercial |

|b. |ad expander |

|c. |infomercial |

|d. |prolonged ad |

|e. |extended sales pitch |

ANS: C

Advertising in the form of a 30-minute advertisement that resembles a TV talk show is called an infomercial.

PTS: 1 REF: 230 OBJ: 15-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion

82. Outdoor advertising:

|a. |is often used to sell specialty products |

|b. |is a flexible low-cost medium that can take many forms |

|c. |is a high-cost medium |

|d. |can be used to reach a narrow, selective target market |

|e. |is not affected by noise |

ANS: B

Outdoor advertising is a low-cost medium, that reaches a broad and varied audience, but may be subject to many distractions (noise). It often advertises convenience and shopping products.

PTS: 1 REF: 231 OBJ: 15-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion

83. The U.S. Army created a video game called America’s Army to boost its recruiting efforts. The game is an example of:

|a. |an interconnect |

|b. |a videomercial |

|c. |advergaming |

|d. |a relationship tool |

|e. |an infomercial |

ANS: C

Advergaming is the placing of advertising messages in Web-based or video games to advertise or promote a product (in this case, the U.S. Army).

PTS: 1 REF: 231 OBJ: 15-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Online/Computer

84. Miller Brewing Company hired Red Sky Interactive to design an entertaining online game that would convey the brand essentials of its Miller Lite beer while appealing to its target demographic. The result: the "Miller Lite Virtual Racing League" (VRL), an online stock car racing game that allows users to customize their vehicles, compete for sponsorship money, and run their team against those of friends. Miller used _____ to reach its target market.

|a. |an infomercial |

|b. |a videomercial |

|c. |a relationship tool |

|d. |advergaming |

|e. |an interconnect |

ANS: D

Advergaming is the placing of advertising messages in Web-based or video games to advertise or promote a product.

PTS: 1 REF: 231 OBJ: 15-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Online/Computer

85. Which of the following is NOT identified in the text as a factor that influences media selection?

|a. |audience selectivity |

|b. |cost per contact |

|c. |use of cooperative advertising |

|d. |media flexibility |

|e. |reach |

ANS: C

If cooperative advertising is available, manufacturers usually allow use of these dollars in any media.

PTS: 1 REF: 232 OBJ: 15-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion

86. When the company that produces Testamints candy, the candy that comes with spiritual messages on each piece, decides how much space and/or time will be placed in each advertising medium that the company wants to use, the candy manufacturer is determining its:

|a. |marketing mix |

|b. |media mix |

|c. |promotional plan |

|d. |advertising campaign |

|e. |reach objectives |

ANS: B

The media mix is the combination of media to be used and the volume of advertising that will be conducted among the various media vehicles.

PTS: 1 REF: 232 OBJ: 15-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

87. _____ usually is NOT used as a basis used for making media mix decisions.

|a. |Media schedule |

|b. |Cost per thousand |

|c. |Reach |

|d. |Frequency |

|e. |Audience selectivity |

ANS: A

The media schedule will be the result AFTER the media mix decisions are made, based on the other four factors

PTS: 1 REF: 232 | 234 OBJ: 15-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

88. The manufacturer of Testamints candy, the candy that comes with spiritual messages on each piece, estimates the product's new advertising campaign will reach 1,750,000 people and will cost $400,000 if the company uses radio and newspaper, and $6.5 million if it uses television. The company's decision seems to rest on:

|a. |flexibility |

|b. |cost per contact |

|c. |noise level |

|d. |life span |

|e. |geographic selectivity |

ANS: B

Cost per contact is the cost of reaching one member of the market. Comparing the cost of contacting the same amount of people using different media mixes is a common aid in selecting media.

PTS: 1 REF: 232 OBJ: 15-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

89. Advertisers categorize ads on shopping carts at grocery stores and ads at gas station pumps as examples of:

|a. |communications networks |

|b. |alternative media |

|c. |distribution channels for ads |

|d. |outdoor advertising |

|e. |direct advertising |

ANS: B PTS: 1 REF: 232 OBJ: 15-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

90. Why are advertisers looking to alternative media to advertise their products?

|a. |guaranteed profits |

|b. |maximum advertising exposure |

|c. |to cut through the clutter of traditional media |

|d. |to minimize problems associated with reach |

|e. |to maximize noise levels |

ANS: C PTS: 1 REF: 232 OBJ: 15-4 TYPE: Def

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

91. After a visit to Athens, the International Olympic Committee representative said, "If you look around Athens, it is one of the most visually polluted cities in terms of outdoor advertising in all of Europe." In terms of media selection, this condition means that outdoor advertising in Athens has:

|a. |minimum reach |

|b. |no geographic selectivity |

|c. |limited flexibility |

|d. |high noise levels |

|e. |confirmed selectivity |

ANS: D

There are lots of distractions to the target audience.

PTS: 1 REF: 233 OBJ: 15-4 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

92. _____ measures the number of different target consumers who are exposed to a commercial at least once.

|a. |Noise level |

|b. |Frequency |

|c. |Reach |

|d. |Synchronization |

|e. |Cost per contact |

ANS: C PTS: 1 REF: 232 OBJ: 15-4 TYPE: Def

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

93. _____ is a measure of the number of times an individual is exposed to a brand message. It is used to measure the intensity of a specific medium's coverage.

|a. |Synchronization |

|b. |Reach |

|c. |Cost per contact |

|d. |Media scheduling |

|e. |Frequency |

ANS: E PTS: 1 REF: 232 OBJ: 15-4 TYPE: Def

TOP: AACSB Communication | TB&E Model Strategy

94. A medium's ability to reach a precisely defined market is its:

|a. |audience selectivity |

|b. |market singularity |

|c. |geographic selectivity |

|d. |noise filtering ability |

|e. |life span |

ANS: A PTS: 1 REF: 232-233 OBJ: 15-4 TYPE: Def

TOP: AACSB Communication | TB&E Model Strategy

95. Media vehicles like Time and Newsweek magazines appeal to a wide cross section of the population. In contrast, American Rifleman and Fitness magazines have high levels of:

|a. |longevity |

|b. |audience selectivity |

|c. |geographic selectivity |

|d. |flexibility |

|e. |market singularity |

ANS: B

A medium's ability to reach a precisely defined market is audience selectivity.

PTS: 1 REF: 232-233 OBJ: 15-4 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

96. Prices on items sold by supermarkets change frequently, and they often offer special sales to match or beat the prices of their competitors. Therefore, _____ is a major consideration when a supermarket selects an advertising vehicle.

|a. |audience duplication |

|b. |noise level |

|c. |life span |

|d. |cost per contact |

|e. |flexibility |

ANS: E

Flexibility of the medium refers to the ability to change the message to fit changing market conditions.

PTS: 1 REF: 233 OBJ: 15-4 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

97. Billboard advertisements often have to compete for a driver's attention with traffic, passengers, radio, or other billboards. Billboard advertising would be described as:

|a. |lacking any geographic selectivity |

|b. |the most flexible advertising medium |

|c. |having a high noise level |

|d. |having a low noise level |

|e. |being a great channel for informative ads |

ANS: C

Noise level is the amount of distractions--other advertisements, people, competing sounds in the environment, or news stories--involved with a type of medium. Outdoor advertising such as billboards suffers from a great deal of competing noise.

PTS: 1 REF: 233 OBJ: 15-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

98. Advertisers are often concerned with the noise level in a medium. The medium that is assumed to have the lowest noise level is:

|a. |radio |

|b. |television |

|c. |direct mail |

|d. |newspaper |

|e. |magazines |

ANS: C

Noise level is the amount of distractions—other advertisements, people, competing sounds in the environment, or news stories—involved with a type of medium.

PTS: 1 REF: 233 OBJ: 15-4 TYPE: Comp

TOP: AACSB Communication | TB&E Model Strategy

99. Because Samuel Cabot, Inc., a manufacturer of premium-grade wood stains, wants to spend its promotional budget on advertisements that will have a long life span so the ad will be around when the homeowner needs such a product, it should use _____ advertising.

|a. |newspaper |

|b. |radio |

|c. |television |

|d. |magazine |

|e. |creative |

ANS: D

Some media such as magazines have a long life span with the consumer, and advertisements may be seen repeatedly. Ads in other media such as radio and television are gone instantly.

PTS: 1 REF: 233 OBJ: 15-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

100. Advertising researchers today are discussing the qualitative factors that should be present during media selection. Which of the following is an example of one of those qualitative factors for placing television advertising?

|a. |how well the program is liked by potential consumers |

|b. |the kind of noise filtration system used by the network |

|c. |the clarity of the picture |

|d. |whether the medium is satellite- or cable-based |

|e. |all of the choices |

ANS: A

The text discusses how audience behavior should be considered when making media selections.

PTS: 1 REF: 233 OBJ: 15-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

101. Products in the latter stages of the product life cycle, which are advertised on a reminder basis use, a(n) _____ media schedule.

|a. |intermittent |

|b. |bursting |

|c. |continuous |

|d. |trailing |

|e. |unremitting |

ANS: C PTS: 1 REF: 234 OBJ: 15-4 TYPE: Def

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Product

102. With a(n) _____ media schedule, the advertiser may schedule the ads heavily every other month to achieve a greater impact with an increased frequency and reach at those times.

|a. |intermittent |

|b. |flighted |

|c. |periodic |

|d. |unremitting |

|e. |alternating |

ANS: B PTS: 1 REF: 234 OBJ: 15-4 TYPE: Def

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

103. A(n) _____ media schedule combines continuous scheduling throughout the year with a flighted schedule during the best sales periods.

|a. |pulsing |

|b. |bursting |

|c. |unremitting |

|d. |rhythmic |

|e. |vibrating |

ANS: A PTS: 1 REF: 234 OBJ: 15-4 TYPE: Def

TOP: AACSB Communication | TB&E Model Strategy

104. Which of the following products is most likely to use a pulsing media schedule?

|a. |romance novels |

|b. |gasoline |

|c. |band instruments |

|d. |baking soda |

|e. |ceiling fans |

ANS: C

Band instruments would be most heavily advertised just prior to the opening of the new school year.

PTS: 1 REF: 234 OBJ: 15-4 TYPE: Comp

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Product

105. Which of the following products is most likely to have a seasonal media schedule?

|a. |aromatherapy candles |

|b. |masking tape |

|c. |airplane tickets |

|d. |charcoal |

|e. |soft drinks |

ANS: D

Seasonal products like charcoal are not advertised year-round because they are not used year-round.

PTS: 1 REF: 234 OBJ: 15-4 TYPE: Comp

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Product

106. A(n) _____ designates the vehicles, specific publications or programs, and the insertion dates of advertising.

|a. |advertising plan |

|b. |media schedule |

|c. |promotion strategy |

|d. |ad outline |

|e. |promotional profile |

ANS: B PTS: 1 REF: 234 OBJ: 15-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

107. Meek's Hunting Emporium is a retail store that carries all the products hunters need or think they need. It has set up an advertising plan that allows it to advertise every day prior to the opening of quail-, deer-, and turkey-hunting seasons on four local radio stations, as well as in the local newspapers. This is an example of a:

|a. |message execution plan |

|b. |media profile |

|c. |reach program |

|d. |media schedule |

|e. |frequency timetable |

ANS: D

The media schedule designates when and where advertising will appear.

PTS: 1 REF: 234 OBJ: 15-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

108. Budweiser uses reminder advertising that runs steadily all year. This is an example of a _____ media schedule.

|a. |seasonal |

|b. |pulsed |

|c. |flighted |

|d. |consecutive |

|e. |continuous |

ANS: E

A continuous media schedule allows advertising to run steadily throughout the advertising period.

PTS: 1 REF: 234 OBJ: 15-4 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

109. Knight's Dinner Theater runs ads in the entertainment section of the local newspaper every first weekend of each month. This is a _____ scheduling plan.

|a. |flighted |

|b. |continuous |

|c. |bursting |

|d. |seasonal |

|e. |replication |

ANS: A

Flighted media scheduling schedules ads heavily for a period, then drops them, and then repeats them

PTS: 1 REF: 234 OBJ: 15-4 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

110. Mother Goose is the name of a retail store that caters to preteens. It advertises regularly both on radio and in the daily newspaper. The month prior to the beginning of each new school year, the store buys extra advertising space and time. This is an example of a(n) _____ scheduling plan.

|a. |continuous |

|b. |replication |

|c. |interval |

|d. |seasonal |

|e. |pulsing |

ANS: E

Pulsing combines continuous scheduling with an extra "pulse" during heavy sale periods.

PTS: 1 REF: 234 OBJ: 15-4 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

111. Products such as surfboards, swimsuits, lawn mowers, allergy medication, and flower seeds are most likely to be advertised with a _____ media schedule.

|a. |flighted |

|b. |pulsing |

|c. |seasonal |

|d. |continuous |

|e. |consecutive |

ANS: C

Products that are used more during certain times of the year tend to follow a seasonal strategy.

PTS: 1 REF: 234 OBJ: 15-4 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

112. _____ is the promotional mix element that evaluates public attitudes, identifies issues that may elicit public concern, and executes programs to gain public understanding and acceptance.

|a. |Personal selling |

|b. |Advertising |

|c. |Mass communications |

|d. |Public relations |

|e. |Sales promotion |

ANS: D PTS: 1 REF: 234 OBJ: 15-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

113. Pepsi-Cola like Coca-Cola was charged with selling soft drinks that had a high level of pesticides in India. A newspaper article on why Pepsi-Cola promoted an Indian-born manager to the job of chief executive officer is an example of:

|a. |a sales promotion |

|b. |free advertising |

|c. |direct marketing communications |

|d. |newspaper advertising |

|e. |publicity |

ANS: E

Publicity is the effort to capture media attention.

PTS: 1 REF: 234 OBJ: 15-5 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

114. A news story on the arrest of the chairman of Shanghai Electric Company for “violating certain rules and regulations of Chinese Communist Party” is an example of:

|a. |a sales promotion |

|b. |free advertising |

|c. |demarketing |

|d. |newspaper advertising |

|e. |publicity |

ANS: E

Publicity can be either positive or negative.

PTS: 1 REF: 234 OBJ: 15-5 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

115. The recent accusations of steroid usage lodged against the alleged winner of the Tour de France created _____ for the bicycle race.

|a. |numerous sales promotion opportunities |

|b. |free positive advertising |

|c. |numerous demarketing opportunities |

|d. |personal selling opportunities |

|e. |a great deal of publicity |

ANS: E PTS: 1 REF: 234 OBJ: 15-5 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

116. Tools for the public relations manager include all of the following EXCEPT:

|a. |press relations |

|b. |product publicity |

|c. |lobbying |

|d. |sales promotions |

|e. |corporate communications |

ANS: D

Sales promotions are not part of public relations.

PTS: 1 REF: 234-235 OBJ: 15-5 TYPE: Comp

TOP: AACSB Communication | TB&E Model Strategy

117. When Sara Lee developed crustless bread, it probably planned to rely on _____ to gain exposure for the bread and to explain how the convenience of the product justifies its higher price. Sara Lee could not have done this if the product had not been new and innovative.

|a. |marketing research |

|b. |sales promotion |

|c. |personal selling |

|d. |advertising |

|e. |publicity |

ANS: E

Publicity (a form of public relations) for new, innovative products can result in more exposure than conventional advertising and other promotional tools.

PTS: 1 REF: 235 OBJ: 15-5 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Product

118. Stormbreaker, a new spymovie, details the story of Alex Rider who, after the death of his uncle, is recruited as an M16 spy. Armed with a special set of gadgets, Rider's mission is to save millions of lives. In James Bond fashion, the Cross pen serves as one of the key gadgets in the film. The maker of Cross pen paid to have its pen featured in this movie. This is an example of:

|a. |advertising |

|b. |a sales promotion |

|c. |paid-for public relations |

|d. |product placement |

|e. |lobbying |

ANS: D

Product placement is a public relations tool and is used to create product exposure.

PTS: 1 REF: 235 OBJ: 15-5 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Product

119. On an episode of ER, one of the doctors asked a nurse for a Nitrolingual Pumpspray, which is used for acute relief of chest pain caused by angina. The free appearance of the product on the show gave its small manufacturer some needed publicity. This was an example of how _____ can result in positive publicity.

|a. |product placement |

|b. |show sponsorship |

|c. |product advertising |

|d. |product promotion |

|e. |two-way communication |

ANS: A PTS: 1 REF: 235 OBJ: 15-5 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Product

120. General Mills put together a brochure titled, "A Guide to Good Food, Good Health," which it made available to elementary teachers at the beginning of a school year so that the teachers could use the brochures to explain to children why it is important to eat right. This is an example of which public relations tool?

|a. |product placement |

|b. |event sponsorship |

|c. |consumer education |

|d. |crisis management |

|e. |lobbying |

ANS: C PTS: 1 REF: 235 OBJ: 15-5 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

121. Many people have trouble defining the term "casual dress" when it comes to what is appropriate to wear to work. Levi Strauss & Co. put together a newsletter and a video detailing what was suitable for casual work attire. Levi sent the video to human resources managers all over the United States. This is an example of:

|a. |event advocacy |

|b. |lobbying |

|c. |product placement |

|d. |consumer education |

|e. |issue sponsorship |

ANS: D

Consumer education is a type of public relations in which the user benefits by educating the consumer about the usefulness of its products.

PTS: 1 REF: 235 OBJ: 15-5 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

122. Ford Motor Company is hoping the popularity of first-season American Idol winner Kelly Clarkson will attract consumers to the artist’s 24-city concert series and drive concertgoers to dealerships. Ford’s _____ of this tour is part of Ford’s “Bold Moves” marketing campaign, and Ford is gambling that its target market will react positively to its brand being associated with the tour.

|a. |product placement |

|b. |event placement |

|c. |consumer education |

|d. |crisis management |

|e. |sponsorship |

ANS: E

Sponsorship is a public relations strategy in which a company spends money to support an issue, cause, or event that is consistent with corporate objectives.

PTS: 1 REF: 235 OBJ: 15-5 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

123. “Change Your Clock, Change Your Battery” was the name of an ad campaign jointly sponsored by Energizer and the International Association of Fire Chiefs. It was designed to encourage consumers to change the batteries in their smoke detectors when they reset their clocks due to daylight savings time changes. Energizer used:

|a. |advocacy publicity |

|b. |lobbying |

|c. |product placement |

|d. |consumer education |

|e. |cause-related marketing |

ANS: E

Cause-related marketing is a type of sponsorship involving the association of a for-profit company and a nonprofit organization.

PTS: 1 REF: 236 OBJ: 15-5 TYPE: App

TOP: AACSB Communication | TB&E Model Strategy

124. Companies that show support for recycling efforts and other examples of green marketing through advertising are engaged in:

|a. |event publicity |

|b. |public relations profiling |

|c. |consumer intimidation |

|d. |sponsorship |

|e. |advocacy publicity |

ANS: D

Green marketing is an important way for companies to build loyalties by promoting a popular issue.

PTS: 1 REF: 235 OBJ: 15-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

125. How do public relations professionals use Internet Web sites?

|a. |to introduce new products |

|b. |to promote existing products |

|c. |to obtain consumer feedback |

|d. |to showcase upcoming events |

|e. |to do all of these things |

ANS: E PTS: 1 REF: 236 OBJ: 15-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Online/Computer

126. _____ is used by public relations specialists to handle the effects of unfavorable publicity.

|a. |Media planning |

|b. |Crisis management |

|c. |Message power |

|d. |Damage control |

|e. |Communication narrowcasting |

ANS: B PTS: 1 REF: 237 OBJ: 15-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

127. A newspaper article revealed that hazardous wastes buried in an on-site landfill at a paper manufacturer were leaking into the local water supply. Even though the company quickly stopped the leak and paid for an additional water purification system for the town, it still received some very negative publicity. The company should have:

|a. |begun a pulsing advertising campaign |

|b. |implemented its crisis management plan |

|c. |used an ad campaign based on a fear appeal |

|d. |done nothing until the actual damage levels were determined |

|e. |ignored the publicity and assumed it would go away |

ANS: B

Crisis management is used to handle the effects of unfavorable publicity.

PTS: 1 REF: 237 OBJ: 15-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

Purgatory-Durango

Joe Average is "A-OK" with the Purgatory-Durango ski resort. Rather than try to keep up with big-budget competitors like Vail and Aspen, the southwestern Colorado resort has poured its meager marketing budget into a no-frills advertising approach to lure "real people" to its slopes. The advertising campaign has the catchy slogan, "You Don't Have to Be Cool to Ski Purgatory." "Movie Star," the title of a full-page color ad, features a Polaroid photo of a smiling, overweight, slightly geeky man in a neon orange ski suit that looks like it could double as hunting attire in a duck blind. His skis aren't new, his hat doesn't match his outfit, and he is wearing goggles. This ad's copy says "We are Purgatory-Durango, not Telluride. And this is John Taber--not someone the tabloids would follow to the slopes. You don't need to be a celebrity to be treated like a star at Purgatory-Durango." This year, public relations activities included passing out to news media plastic pocket protectors containing pens, a used pencil, and a comb bearing the message: "Purgatory-Durango--No. 1 in Grooming."

128. Refer to Purgatory-Durango. Purgatory-Durango's advertising slogan is most consistent with which major type of advertising?

|a. |institutional |

|b. |focused |

|c. |pioneering |

|d. |competitive |

|e. |advocacy |

ANS: D

Competitive advertising is designed to influence demand for a specific brand of good and is less informational and more emotional. The emphasis is on brand name, recall, and favorable brand attitude.

PTS: 1 REF: 225 OBJ: 15-2

TOP: AACSB Reflective Thinking | TB&E Model Strategy

129. Refer to Purgatory-Durango. The ad copy in the "Movie Star" print ad could be considered an example of which major type of advertising?

|a. |advocacy |

|b. |comparative |

|c. |institutional |

|d. |product |

|e. |pioneering |

ANS: B

The ad copy specifically names two competing brands (Purgatory-Durango and Telluride) and compares them on one specific product attribute (type of skier who frequents the resort).

PTS: 1 REF: 225 OBJ: 15-2

TOP: AACSB Reflective Thinking | TB&E Model Strategy

130. Refer to Purgatory-Durango. The "Movie Star" ad is only one of a series of ads that focus on a common theme, "You Don't Have to Be Cool to Ski Purgatory." The series of ads, taken together represent the:

|a. |promotional plan |

|b. |marketing mix |

|c. |advertising campaign |

|d. |advertising mix |

|e. |media schedule |

ANS: C

The advertising campaign is a series of related advertisements that focus on a common theme, slogan, and set of advertising appeals.

PTS: 1 REF: 225 OBJ: 15-3

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

131. Refer to Purgatory-Durango. Purgatory's ads are designed to communicate with the "Average Joe" or the middle of the ski market. The specific communication task that should be accomplished for this target market during a specified period of time is called a(n):

|a. |advertising objective |

|b. |marketing mix |

|c. |media schedule |

|d. |advertising life span |

|e. |media profile |

ANS: A

An advertising objective is a specific communication task a campaign should accomplish for a specified target audience during a specified period of time.

PTS: 1 REF: 226 OBJ: 15-3

TOP: AACSB Reflective Thinking | TB&E Model Strategy

132. Refer to Purgatory-Durango. The Purgatory-Durango campaign tells skiers that they do not have to worry about how they look on the slopes. This is a specific reason given to the target audience for why they should choose Purgatory over other ski areas. This reason is called a(n):

|a. |media profile |

|b. |advertising objective |

|c. |advertising format |

|d. |message execution |

|e. |advertising appeal |

ANS: E

An advertising appeal identifies a reason a person should purchase a product or service.

PTS: 1 REF: 226 OBJ: 15-3

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Customer

133. Refer to Purgatory-Durango. The "Movie Star" ad discussed above is an example of a _____ executional style.

|a. |slice-of-life |

|b. |fantasy |

|c. |product symbol |

|d. |lifestyle |

|e. |scientific |

ANS: D

The ad is representative of a lifestyle execution in that skiers do not have to worry about how they look on the slopes. They can be themselves. See Exhibit 15.2.

PTS: 1 REF: 227 OBJ: 15-3

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

Tambrands, Inc.

Some years ago, Tambrands, Inc., the beleaguered market leader of the $680 million tampon industry, tried to revive its sagging market share by targeting arch-rival Playtex Products, Inc. Part of its strategy was to brag about the superiority of the cardboard applicators in its new Satin Touch product and to air audacious commercials in which it compared its product directly to Playtex's plastic applicators. The ad campaign cost an estimated $12 million; though modest, it was the most Tambrands had ever spent on a new product.

Tambrands's original television commercials for Satin Touch featured a young woman wrinkling her nose and saying, "Plastic, who needs it?" The ad stressed that unlike plastic, cardboard is "flushable and biodegradable" and suggested that it's more environmentally correct. Tambrands supported the campaign with a print ad and coupon for a free sample that carried the slogan, "A free offer isn't the only reason to give up plastic."

134. Refer to Tambrands Inc. The Satin Touch ad discussed above is an example of which major type of advertising?

|a. |pioneering |

|b. |institutional |

|c. |advocacy |

|d. |parity |

|e. |comprehensive |

ANS: A

The ad is a pioneering ad because it is intended to stimulate demand for a new product.

PTS: 1 REF: 225 OBJ: 15-2

TOP: AACSB Reflective Thinking | TB&E Model Strategy

135. Refer to Tambrands, Inc. The Satin Touch campaign gives the users a specific reason why they should purchase the product (the applicators are flushable and biodegradable). This reasoning is an example of a(n):

|a. |media profile |

|b. |advertising objective |

|c. |advertising format |

|d. |message execution |

|e. |advertising appeal |

ANS: E

An advertising appeal identifies a reason a person should purchase a product or service.

PTS: 1 REF: 226 OBJ: 15-3

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Customer

136. Refer to Tambrands, Inc. The Satin Touch advertising campaign is based on which type of advertising appeal?

|a. |profit motive |

|b. |fun and pleasure |

|c. |fear |

|d. |convenience |

|e. |admiration |

ANS: D

This is an example of convenience in that the applicators are flushable and biodegradable. See Exhibit 15.1.

PTS: 1 REF: 226 OBJ: 15-3

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Customer

137. Refer to Tambrands, Inc. When analyzing the introduction of the new campaign, Tambrands claimed the ad was seen by more than half of the nation's teens and young female adults in one weekend. This refers to the advertisement's:

|a. |noise level |

|b. |reach |

|c. |frequency |

|d. |media profile |

|e. |cost per contact |

ANS: B

Reach is the number of different target consumers who are exposed to a commercial at least once during a specific time period.

PTS: 1 REF: 232 OBJ: 15-4

TOP: AACSB Reflective Thinking | TB&E Model Strategy

138. Refer to Tambrands, Inc. The new, environmentally correct applicator won Tambrands a "Green Award" from the National Environmental Concern Organization. The winning of this award represents:

|a. |free advertising |

|b. |media mixing |

|c. |crisis management |

|d. |increased frequency |

|e. |publicity |

ANS: E

Publicity was garnered by this award.

PTS: 1 REF: 234 OBJ: 15-5

TOP: AACSB Reflective Thinking | TB&E Model Strategy

LeBlanc's Pecan Company

Betty and Orville LeBlanc recently opened LeBlanc's Pecan Company retail store. In addition to shelled and unshelled pecans, the Texas store sells pecan pies, tortes, fruitcakes, fudge, pralines, chocolate pecan bark, to homemade pecan ice cream toppings, and jams and jellies. At this time, there are no other stores of this type in the Houston area. The LeBlancs are considering developing an advertising campaign for their store focusing on its wide assortment of pecan-related products. Orville LeBlanc has drawn up a list of communication tasks the advertising must accomplish. He used the DAGMAR approach to draw up this list. The new ads feature Betty LeBlanc talking to customers about the store's products. The ads have been placed on a local cable system.

139. Refer to LeBlanc's Pecan Company. The new campaign for the store is designed to stimulate demand for the LeBlanc's new store, given that the store is in the introductory stage of the product life cycle. The campaign would be considered:

|a. |pioneering |

|b. |comparative |

|c. |institutional |

|d. |exclusive |

|e. |open-ended |

ANS: A

The campaign is pioneering because it is designed to stimulate demand for a new store, given that the store is in the introductory stage of the product life cycle.

PTS: 1 REF: 225 OBJ: 15-2

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Product

140. Refer to LeBlanc's Pecan Company. The new LeBlanc's Pecan Company advertisements focus on the wide assortment of products available at the LeBlanc's store. This advertising highlights:

|a. |a product attribute |

|b. |brand loyalty |

|c. |changing a negative attitude |

|d. |market share |

|e. |target markets |

ANS: A

The wide assortment is a product attribute.

PTS: 1 REF: 226 OBJ: 15-3

TOP: AACSB Communication | TB&E Model Strategy | TB&E Model Product

141. Refer to LeBlanc's Pecan Company. When Orville LeBlanc created the list of communication tasks the advertising must accomplish, he was setting his:

|a. |marketing mix |

|b. |media schedule |

|c. |advertising objectives |

|d. |advertising life span |

|e. |media profile |

ANS: C

An advertising objective is a specific communication task that should be accomplished for a specified target market.

PTS: 1 REF: 226 OBJ: 15-3

TOP: AACSB Reflective Thinking | TB&E Model Strategy

142. Refer to LeBlanc's Pecan Company. The LeBlancs focused their campaign on reasons why customers should shop at their store. This is an example of:

|a. |comparison advertising |

|b. |an advertising objective |

|c. |an advertising format |

|d. |advertising execution |

|e. |an advertising appeal |

ANS: E

An advertising appeal is a reason for a person to buy a product.

PTS: 1 REF: 226 OBJ: 15-3

TOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Customer

143. Refer to LeBlanc's Pecan Company. When Orville LeBlanc decided which media he would use to optimally and cost-effectively reach the store's target audience, he was engaged in developing a(n):

|a. |marketing mix |

|b. |media plan |

|c. |promotional plan |

|d. |advertising campaign |

|e. |reach objectives |

ANS: B PTS: 1 REF: 228 OBJ: 15-4

TOP: AACSB Reflective Thinking | TB&E Model Strategy

144. Refer to LeBlanc's Pecan Company. If Orville LeBlanc is most interested in audience selectivity and production costs, he should select _____ as the store's primary advertising medium.

|a. |outdoor |

|b. |magazine |

|c. |cable television |

|d. |radio |

|e. |network television |

ANS: D

See Exhibit 15.3.

PTS: 1 REF: 229 OBJ: 15-4

TOP: AACSB Reflective Thinking | TB&E Model Promotion

145. Refer to LeBlanc's Pecan Company. A feature article in a Houston newspaper describing the LeBlanc's Pecan Company store and what it sells would be an example of:

|a. |newspaper advertising |

|b. |event sponsorship |

|c. |product placement |

|d. |competitive advertising |

|e. |publicity |

ANS: E

Publicity is the effort to attract media attention.

PTS: 1 REF: 234 OBJ: 15-5

TOP: AACSB Reflective Thinking | TB&E Model Promotion

Chapter 17—Pricing Concepts

MULTIPLE CHOICE

1. According to the text, price is best described as:

|a. |the perceived value of a good or service |

|b. |money exchanged for a good or service |

|c. |the psychological results of purchasing |

|d. |the cost in dollars for a good or service as set by the producer |

|e. |the value of a barter good in an exchange |

ANS: A PTS: 1 REF: 255 OBJ: 17-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

2. Revenue:

|a. |equals quantity sold times profit margin |

|b. |equals price minus costs |

|c. |equals return on investment |

|d. |is synonymous with profit |

|e. |equals price of goods times quantity sold |

ANS: E PTS: 1 REF: 255 OBJ: 17-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

3. _____ pay for every activity of the company.

|a. |Revenues |

|b. |Investments |

|c. |Retained earnings |

|d. |Profits |

|e. |Prices |

ANS: A

Revenue is price times units sold, or the total inflow of capital that is available to pay for the costs of manufacturing the good and running the business.

PTS: 1 REF: 255 OBJ: 17-1 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing

4. Money that is left over after paying for company activities is called:

|a. |return on investment |

|b. |a contribution margin |

|c. |profit |

|d. |net worth |

|e. |a current asset |

ANS: C PTS: 1 REF: 255 OBJ: 17-1 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

5. At Wal-Mart, Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer. The items, which were sold together, retailed at $28.50, but were marked down to $19.99. The $19.99 is the:

|a. |revenue |

|b. |price |

|c. |profit |

|d. |liquidity value |

|e. |amortized value |

ANS: B

Price is that which is given in exchange to acquire a product.

PTS: 1 REF: 255 OBJ: 17-1 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

6. Which of the following statements about price is true?

|a. |Price can relate to anything with perceived value, not just money. |

|b. |Price is that which is given up in an exchange to acquire a product. |

|c. |Customers are interested in obtaining a perceived reasonable price. |

|d. |The price paid is based on the satisfaction consumers expect to receive from a product. |

|e. |All of these statements about price are true. |

ANS: E PTS: 1 REF: 255 OBJ: 17-1 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing

7. Which of the following statements about price is true?

|a. |Price and revenue are synonyms. |

|b. |Price always equals some monetary figure. |

|c. |Price is not necessarily based on the satisfaction consumers receive from a product. |

|d. |High prices result in high profits. |

|e. |All of these statements about price are true. |

ANS: C

Price can relate to anything with perceived value, not just money. The price paid is based on the satisfaction consumers expect to receive from a product, not necessarily what they actually receive.

PTS: 1 REF: 255 OBJ: 17-1 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing

8. At Wal-Mart, Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer. The items, which were sold together, retailed at $28.50, but were marked down to $19.99. The retailer sold one at the $28.50 price and five at the $19.99. The retailer's revenue is:

|a. |$19. 99 |

|b. |$28.50 |

|c. |$99.95 |

|d. |$128.45 |

|e. |cannot be calculated with the information provided |

ANS: D

$28.50 + ($19.99 × 5)

PTS: 1 REF: 255 OBJ: 17-1 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Product

9. Why are marketing managers finding it more difficult to set prices in today's environment?

|a. |Inflationary and recessionary periods have made customers less price-sensitive. |

|b. |Fewer dealer and generic brands are available because the competition has been eliminated. |

|c. |The high rate of new-product introductions has led to careful reevaluation by consumers. |

|d. |Marketing managers are finding it difficult to compare prices between suppliers. |

|e. |Buyers are less informed and are less price-sensitive. |

ANS: C

With constant new-product introductions, consumers have many alternative goods to choose from, and selecting the right price becomes a very complicated task for the marketing manager.

PTS: 1 REF: 256 OBJ: 17-1 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing

10. For convenience, pricing objectives can be divided into three categories. They are:

|a. |refundable, competitive, and attainable |

|b. |perceived, actual, and unique-situational |

|c. |differentiated, niche, and undifferentiated |

|d. |profit oriented, sales oriented, and status quo |

|e. |monopolistic, fixed, and variable |

ANS: D PTS: 1 REF: 256-258 OBJ: 17-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

11. An organization is using _____ when it sets its prices so that total revenue is as large as possible relative to total costs.

|a. |profit maximization |

|b. |market share pricing |

|c. |demand-oriented pricing |

|d. |sales maximization |

|e. |status quo pricing |

ANS: A PTS: 1 REF: 256 OBJ: 17-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

12. The pricing policy used by Middleton Industries, manufacturer of Renaissance charms for bracelets and necklaces, is to set prices so its retail prices are as high as the market will tolerate. Additionally, Middleton strives to keep its costs at an industry low by using silver and gold overlays over charms made of cheap base metal. This is an example of a _____ policy

|a. |market share pricing |

|b. |profit maximization |

|c. |demand-oriented |

|d. |sales maximization |

|e. |status quo pricing |

ANS: B

Profit maximization means setting prices so that total revenue is as large as possible relative to total costs.

PTS: 1 REF: 256 OBJ: 17-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

13. Hal Macini owner of Evergreen Landscaping is more interested in earning customer goodwill than striving for maximum profit. He determines his prices by maintaining the company's profitability at a level that gives him a good living but will never make him a rich man. Macini is basing his pricing policy on:

|a. |maintaining stable sales levels |

|b. |earning satisfactory profits |

|c. |creating retained earnings |

|d. |creating the most sales possible |

|e. |decreasing consumer demand |

ANS: B

The objective of satisfactory profits is characterized by seeking a level of profits that is satisfactory to management and owner(s).

PTS: 1 REF: 256 OBJ: 17-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

14. _____ measures the overall effectiveness of management in generating profits with its available assets.

|a. |Return on investment |

|b. |Economic order quantity |

|c. |Target-on-sales |

|d. |Retained earnings |

|e. |Efficiency maximization |

ANS: A PTS: 1 REF: 256 OBJ: 17-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

15. Pierre’s Ice Cream Company produces ultra-rich ice cream, which it sells in the Cleveland, Ohio area. Last year, it managed to exceed its target ROI for the current fiscal year. The following results were found on its financial statements:

|Gross Revenues: |$250,000 |Total Assets: |$500,000 |

|Gross Profits: |$100,000 |Total Liabilities: |$200,000 |

|Net Profits after Tax: |$  50,000 |Owner's Equity: |$300,000 |

What was the actual return on investment (ROI) for Parrish Farms?

|a. |6.67 percent |

|b. |10 percent |

|c. |22 percent |

|d. |28 percent |

|e. |none of these answers |

ANS: B

ROI is net profits after taxes divided by total assets: $50,000 ÷ 500,000 = 10 percent.

PTS: 1 REF: 256 OBJ: 17-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

16. Franz Hall wants to open a business selling cotton candy from a mobile cart. He cannot decide whether to base his pricing objectives on market share, dollar sales, or unit sales. Regardless of which he chooses, his firm's pricing objective can be categorized as:

|a. |status quo |

|b. |profit oriented |

|c. |need oriented |

|d. |cost oriented |

|e. |sales oriented |

ANS: E

Sales-oriented pricing objectives are based on either market share or dollar or unit sales.

PTS: 1 REF: 257 OBJ: 17-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

17. The Fenton Company produces memorial bricks, which veterans' organizations, Chambers of Commerce, and other service organizations sell as fund raisers. The company has a target return on investment of 13 percent. This means that the Fenton Company has a(n) _____ pricing objective.

|a. |profit-oriented |

|b. |market share maximization |

|c. |status quo |

|d. |sales maximization |

|e. |supply-demand equalization |

ANS: A

Targeted ROI is one of the most common types of profit-oriented pricing objectives used.

PTS: 1 REF: 256 OBJ: 17-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

18. A company using market share pricing has a _____ pricing objective.

|a. |profit-oriented |

|b. |sales-oriented |

|c. |demand-oriented |

|d. |supply-oriented |

|e. |status quo |

ANS: B PTS: 1 REF: 257 OBJ: 17-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

19. Under which of the following conditions will companies with low market share be most likely to fail?

|a. |competing in a slow-growth industry |

|b. |competing in an industry that makes frequently purchased items |

|c. |competing in an industry with few product changes |

|d. |competing in an industry requiring market power and economies of scale |

|e. |competing in none of these industries |

ANS: D

A larger market share is required to boost economies of scale and market power.

PTS: 1 REF: 257 OBJ: 17-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

20. Bernard Hinault makes the most expensive bicycles in the world. Its target market is people who willingly pay $8,000 or more for their bicycles. If Bernard Hinault were to lower prices to target customers who want a good bike but who can't or won't spend that much for one, it would most likely use a(n) _____ pricing objective.

|a. |inelastic or supply-oriented |

|b. |market share or sales maximization |

|c. |profit maximization or target return on investment |

|d. |status quo or satisfactory profits |

|e. |demand-oriented or supply-oriented |

ANS: B

By lowering prices, Bernard Hinault can attract new buyers, thus increasing market share and sales volume.

PTS: 1 REF: 257 OBJ: 17-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Product

21. At the end of the summer, Howard Nursery reduced the price on all of its plants, fertilizer, and potting soil by 50 percent in order to liquidate this inventory. What type of pricing strategy is being used in this example?

|a. |supply oriented |

|b. |sales maximization |

|c. |target return on investment |

|d. |satisfactory profit |

|e. |profit maximization |

ANS: B

Sales maximization ignores profit and competition for the purpose of raising cash.

PTS: 1 REF: 258 OBJ: 17-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

22. Grove City Furniture Company has recently moved to a new, larger location. At this new location, it has been unable to attract sufficient customers. Frankie Alonza, its owner, does not have the cash to pay the current loan installment due on the building and inventory. Alonza has decided to reduce all merchandise prices by at least 50 percent for a weekend sale so he can earn enough to make his loan payment. His pricing objective can be classified as:

|a. |market share maximization |

|b. |satisfactory profits |

|c. |asset maximization |

|d. |sales maximization |

|e. |target ROI |

ANS: D

The strategy described will maximize sales dollars, but will not maximize or improve any of the other objectives in the long term.

PTS: 1 REF: 258 OBJ: 17-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Customer

23. As a short-term pricing objective, _____ can be effectively used on a temporary basis to sell off excessive inventory.

|a. |profit maximization |

|b. |profit-oriented pricing |

|c. |status quo pricing |

|d. |sales maximization |

|e. |market share pricing |

ANS: D

Sales maximization pricing is a short-term price reduction to increase sales.

PTS: 1 REF: 258 OBJ: 17-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

24. If a company's pricing objective is to meet the competition or to maintain existing prices, it is using _____ pricing.

|a. |head-on |

|b. |target return on investment |

|c. |status quo |

|d. |market share |

|e. |demand-oriented |

ANS: C PTS: 1 REF: 258 OBJ: 17-2 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

25. Which of the following statements describes an advantage of status quo pricing?

|a. |Status quo pricing is derived from actual costs of manufacturing. |

|b. |Status quo pricing maintains the organization's differential advantage. |

|c. |Status quo pricing is active, not reactive. |

|d. |Status quo pricing causes price wars. |

|e. |Status quo pricing requires little planning. |

ANS: E

Status quo pricing requires little planning because it involves just copying the competitions' pricing policies.

PTS: 1 REF: 258 OBJ: 17-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing

26. Queeg Industries sells all types of artists' paintbrushes. When the owner of Queeg learned that Patterson Art, one of its biggest competitors in the Northeast region, had lowered its prices on all synthetic brushes by 5 percent, he did the same. This is an example of _____ pricing.

|a. |status quo |

|b. |target return |

|c. |market share |

|d. |predatory |

|e. |cost-plus |

ANS: A

Status quo pricing is best described as meeting the competition.

PTS: 1 REF: 258 OBJ: 17-2 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

27. Although many factors can influence price, the primary determinants are:

|a. |costs of manufacturing and distribution |

|b. |the demand for the good and the cost to the seller |

|c. |demand by the consumer and perceived quality |

|d. |distribution and promotion strategies |

|e. |stage of the product life cycle and costs to the consumer |

ANS: B PTS: 1 REF: 258 OBJ: 17-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

28. _____ is defined as the quantity of a product that will be sold at various prices for a specified period.

|a. |Market share |

|b. |Demand |

|c. |Supply |

|d. |Value |

|e. |Revenue |

ANS: B PTS: 1 REF: 258 OBJ: 17-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

29. The price of the good or service is a key decision for a marketer because it most significantly and directly affects the product's:

|a. |distribution |

|b. |costs |

|c. |demand |

|d. |promotion |

|e. |quality |

ANS: C

The quantity of a product that people will buy depends on its price.

PTS: 1 REF: 258 OBJ: 17-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing

30. The quantity of a product that people will buy/demand is most dependent on its:

|a. |distribution strategy |

|b. |supply |

|c. |promotion strategy |

|d. |quality parameters |

|e. |price |

ANS: E PTS: 1 REF: 258 OBJ: 17-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Customer

31. Leo Bliss manages a guest souvenir shop in Florida. He has decided to graph the demand per week for fresh orange juice because its price varies as the demand of fresh oranges varies. The graph indicates a demand schedule that slopes downward and to the right. This graph indicates that the quantity of juice demanded increases as:

|a. |cost increases |

|b. |supply decreases |

|c. |price increases |

|d. |price decreases |

|e. |supply increases |

ANS: D

The lower the price, the more goods or services will be demanded.

PTS: 1 REF: 258 OBJ: 17-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

32. Khimaira Farms sells handcrafted cookie cutters. When graphed, the demand schedule for Khimaira Farms brand cookie cutters forms a straight line. If at $3 per cutter, 500 cookie cutters are demanded, and at $4 per cutter, 450 cookie cutters are ordered, how many will be ordered at a price of $6 per cutter?

|a. |350 |

|b. |450 |

|c. |400 |

|d. |333 |

|e. |375 |

ANS: A

With a linear demand curve, the slope of the line will remain constant. In this example, for every $1 that price increases, sales will decrease by 50 cookie cutters.

PTS: 1 REF: 258 OBJ: 17-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

33. Pursonal Touch produces and markets beaded purses. When graphed, the demand schedule for its purses is a straight line. If one purse costs $20, 5,000 beaded purses are sold. At $25, 4,500 purses are sold. How many beaded purses will be sold if the price per purse is increased to $30?

|a. |5,500 |

|b. |4,250 |

|c. |4,000 |

|d. |3,750 |

|e. |3,500 |

ANS: C

With a linear demand curve, the slope of the line will remain constant. In this example, for every $5 increase in price, sales will decrease by 500 beaded purses.

PTS: 1 REF: 258 OBJ: 17-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

34. Most demand curves slope:

|a. |horizontally |

|b. |upward and to the right |

|c. |downward and to the left |

|d. |vertically |

|e. |downward and to the right |

ANS: E

For most products when prices increase, demand will decrease.

PTS: 1 REF: 258 OBJ: 17-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

35. The _____ is the quantity of a product that will be sold in the market at various prices for a specified time period, and _____ is the quantity of a product that will be offered to the market by suppliers at various prices for a specified period.

|a. |demand; equity |

|b. |demand; supply |

|c. |supply; demand |

|d. |inventory; demand |

|e. |inventory; supply |

ANS: B PTS: 1 REF: 258-259 OBJ: 17-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

36. _____ is defined as the quantity of product offered to the market by suppliers at various prices for a specified period.

|a. |Supply |

|b. |Demand |

|c. |Equity |

|d. |Liquidity |

|e. |Current asset |

ANS: A PTS: 1 REF: 258 OBJ: 17-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

37. At a price of $6 each, 314 people want to buy sun visors designed especially for volunteers at the Peachtree Road Race, and only 314 such visors are available. In this example, a state of _____ has been achieved.

|a. |symmetry |

|b. |marketing balance |

|c. |unitary economics |

|d. |commerce stability |

|e. |price equilibrium |

ANS: E PTS: 1 REF: 259 OBJ: 17-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

38. The point at which there is no inclination for the price to rise or fall is called price:

|a. |equilibrium |

|b. |stability |

|c. |leverage |

|d. |symmetry |

|e. |status quo |

ANS: A PTS: 1 REF: 259 OBJ: 17-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

39. Jon P. Farmer is the founder of Kolopua Hawaii LLC, a company that markets Pure Hawaiian Air. Bottles of Pure Hawaiian Air contain air that smells like the floral bouquet that greets tourists as they get off the plane in Hawaii. When a tourist shop began selling Pure Hawaiian Air, it charged $5 per bottle and could not keep up with the demand. It has since raised the price to $7. Now the shop is still selling all the bottles of Pure Hawaiian Air it carries, but the owner is not forced to reorder on a daily basis. The $7 price is probably a(n):

|a. |supply schedule |

|b. |symmetrical price |

|c. |price equilibrium |

|d. |inventory equalizer |

|e. |inelastic price |

ANS: C

When demand and supply are approximately equal, price equilibrium is reached.

PTS: 1 REF: 259 OBJ: 17-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

40. The responsiveness or the sensitivity of consumer demand to changes in price is referred to as _____ and occurs when consumers buy more or less of a product when the price changes.

|a. |the break-even point |

|b. |the point of equilibrium |

|c. |unitary revenue |

|d. |asymmetrical demand |

|e. |elasticity of demand |

ANS: E PTS: 1 REF: 259 OBJ: 17-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

41. When consumers are sensitive to price changes, _____ occurs.

|a. |inelastic demand |

|b. |elastic supply |

|c. |elastic demand |

|d. |inelastic supply |

|e. |unitary elasticity |

ANS: C PTS: 1 REF: 259 OBJ: 17-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Customer

42. What happens when demand is elastic?

|a. |As price goes up, revenue goes down. |

|b. |As price goes down, revenue goes down. |

|c. |As price goes up, revenue goes up. |

|d. |As price goes up, revenue does not change. |

|e. |As price goes down, revenue does not change. |

ANS: A

If demand is elastic, price increases will decrease demand by a larger amount, reducing total revenue.

PTS: 1 REF: 259 OBJ: 17-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

43. While shopping, Anita found a "gardening kit" containing a pair of work gloves, a trowel, and a hand rake handsomely arranged in a clay flower pot. The items, which were sold together, retailed at $24.50, but had been marked down to $12.99. The retailer sold only one for $24.50 and six at the $12.99 price. Demand for the gardening kit package is:

|a. |unitary |

|b. |predictable |

|c. |synergistic |

|d. |inelastic |

|e. |elastic |

ANS: E

If demand is elastic, price increases will decrease demand by a larger amount, reducing total revenue.

PTS: 1 REF: 259-260 OBJ: 17-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

44. A bakery supply catalog sells 5-pound bags of moist apricots and cranberries, sweet dates, bits of pineapple, and candied cherries to be used in fruitcakes. Each bag costs $24.95. If the price of cranberries were to increase by 5 percent, it would have no effect on the price of the fruit mix because cranberries are only one of several fruits in the package. The demand for cranberries for this particular use is:

|a. |elastic |

|b. |derived |

|c. |synergistic |

|d. |inelastic |

|e. |joint |

ANS: D

The decrease in the price will not significantly influence the price of the fruit mix.

PTS: 1 REF: 259-260 OBJ: 17-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

45. For about a year, AMD representatives have told journalists that they do not believe that AMD will have to react in any way to the launch of Intel's Core 2 Duo processor. But just a week before Intel’s introduction of this product, AMD reduced the price of its desktop processors by 47 percent. AMD is hoping that demand for its processors will be:

|a. |elastic |

|b. |derived |

|c. |synergistic |

|d. |inelastic |

|e. |joint |

ANS: A

If demand is elastic, price decreases will increase demand by a larger amount and increase total revenue.

PTS: 1 REF: 259-260 OBJ: 17-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Product

46. Procter & Gamble dropped the price of Pringles Potato Chips in the Southeast due to price competition and consumer demand. As a result of the price reduction, Procter & Gamble increased unit sales and earnings by 10 percent due to:

|a. |price wars with other snack food makers |

|b. |increases in both supply and demand |

|c. |elasticity of demand |

|d. |price demand determinants |

|e. |market share fluctuations |

ANS: C

When Procter & Gamble reduced prices, sales and revenues increase. This shows that the demand for chips is elastic.

PTS: 1 REF: 260 OBJ: 17-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

47. _____ occurs when an increase in sales exactly offsets a decrease in price so that total revenue remains exactly the same.

|a. |Inelastic demand |

|b. |Functional elasticity of demand |

|c. |Unitary elasticity |

|d. |Highly elastic demand |

|e. |Fixed elasticity |

ANS: C PTS: 1 REF: 260 OBJ: 17-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

48. Concha y Toro, a Chilean wine, has reduced the price of one bottle from $10 to $8. It previously sold 420 bottles in the month prior to the price reduction, and it now sells 525 bottles per month. It is experiencing:

|a. |consumer surplus |

|b. |inelastic demand |

|c. |elastic demand |

|d. |unitary elasticity |

|e. |a supply inelasticity |

ANS: D

Under unitary elasticity, the increase in demand exactly offsets the decrease in price. 420 × $10 and 525 × $8 = $4,200.

PTS: 1 REF: 260 OBJ: 17-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

49. When price decreases and total revenue falls, demand is:

|a. |elastic |

|b. |inelastic |

|c. |absolute |

|d. |unitary |

|e. |stable |

ANS: B PTS: 1 REF: 260 OBJ: 17-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

50. When the NES Group lowered the price of its professional-grade meat slicers from $2,300 to $1,600, demand doubled from 4 units sold per month to 8 units per month. However, total revenue dropped. This is an example of:

|a. |substitute goods |

|b. |unitary elasticity |

|c. |elastic demand |

|d. |consumer shortage |

|e. |inelastic demand |

ANS: E

Inelastic demand is characterized by price and revenue both falling.

PTS: 1 REF: 260 OBJ: 17-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

51. Critics claim bank ATMs take advantage of the _____ of customers who suffer a poverty of time and have a strong need for convenience.

|a. |elasticity of demand |

|b. |inelastic demand schedule |

|c. |unitary supply and demand |

|d. |ROI characteristics |

|e. |supply characteristics |

ANS: B

Customers are paying a premium for the convenience of ATM use.

PTS: 1 REF: 260 OBJ: 17-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Customer

52. When Nesco brand food dehydrators sold for $59.99, Nesco sold 90 dehydrators. When the company dropped the price of its dehydrators to $44.95, it sold 145 dehydrators. Demand for the food dehydrators appears to be:

|a. |elastic |

|b. |inelastic |

|c. |unitary |

|d. |symmetrical |

|e. |asymmetrical |

ANS: A

The first price is $59.99 with total revenue of $5,399.10; the second price is $44.95 with total revenue of $6,517.75. Therefore, price dropped, and total revenue went up.

PTS: 1 REF: 260 OBJ: 17-3 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

53. Which of the following factors does NOT directly affect the elasticity of demand?

|a. |the other uses of a product |

|b. |the inputs needed to manufacture the product |

|c. |the availability of substitute goods |

|d. |the price relative to a consumer's purchasing power |

|e. |a product's durability |

ANS: B

Inputs at time of manufacture only indirectly affect the demand, if at all.

PTS: 1 REF: 260 OBJ: 17-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing

54. _____ use complex mathematical software to profitably fill unused capacity.

|a. |Yield management systems |

|b. |Capacity correlation systems |

|c. |Service forecasting tools |

|d. |Service management systems |

|e. |Capacity management software |

ANS: A PTS: 1 REF: 261 OBJ: 17-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Online/Computer

55. Yield management systems are used to:

|a. |determine the availability of product substitutes in complex industries that are experiencing rapid change |

|b. |profitably fill unused capacity |

|c. |predict necessary service levels to achieve revenue goals |

|d. |determine whether it is financially more feasible to buy a new product or repair a broken one |

|e. |create elastic demand for low-involvement products |

ANS: B PTS: 1 REF: 261 OBJ: 17-4 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Online/Computer

56. Hostlight Industries operate a chain of moderately-priced motels across the United States. There are many businesses that compete with them for tourist dollars, and some nights during the tourist season their motels are only half full. Other nights, they have to turn away guests because there are no vacancies. Assuming the quality of the rooms and the services provided by the motels remain the same, Hostlight Industries could use _____ to fill unused rooms.

|a. |a yield management system |

|b. |a capacity correlation system |

|c. |service forecasting tools |

|d. |a service management system |

|e. |capacity maintenance tools |

ANS: A

A yield management system is complex mathematical software used to profitably filled unused capacity.

PTS: 1 REF: 261 OBJ: 17-4 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Online/Computer

57. Which of the following statements about yield management systems (YMS) is true?

|a. |The first use of YMS was in the U.S. car industry as it looked for ways to compete with imports. |

|b. |YMS eliminate the problem of simultaneous production and consumption from services. |

|c. |YMS cannot be used by any other businesses but services. |

|d. |YMS are complex pricing systems used to set equilibrium pricing points. |

|e. |YMS are mathematically complex systems to make use of underutilized capacity and reduce the cost of perishability. |

ANS: E

YMS was first used in the airline industry, but it is now used by automobile manufacturers to make use of underutilized capacity.

PTS: 1 REF: 261 OBJ: 17-4 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Online/Computer

58. Which of the following is most likely to be a variable cost for an Internet retailer that sells spices, herbs, and seasonings to consumers?

|a. |annual lease on mixer used to blend seasonings |

|b. |executive salaries |

|c. |rent for building where spices and herbs are repackaged for consumers |

|d. |workers' insurance |

|e. |postage for shipping spices and herbs |

ANS: E

Postage is the only item that varies depending upon the amount of units sold.

PTS: 1 REF: 261 OBJ: 17-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

59. A cost that changes with the level of output is called a(n) _____ cost.

|a. |liquidity |

|b. |variable |

|c. |fixed |

|d. |asset |

|e. |elastic |

ANS: B PTS: 1 REF: 262 OBJ: 17-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

60. Craftarium, Inc. makes and sells beaded purses, jackets, slippers, and other fashion items. Which of the following is the BEST example of one of its fixed costs?

|a. |payment on leased delivery vehicles |

|b. |purse handles |

|c. |unbeaded jackets |

|d. |packaging for kits |

|e. |advertisements in fashion magazines |

ANS: A

The payment on leased equipment remains the same, no matter how many beaded items are produced and, therefore, is a fixed cost.

PTS: 1 REF: 262 OBJ: 17-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

61. _____ costs do not change as output is increased or decreased.

|a. |Asset |

|b. |Variable |

|c. |Fixed |

|d. |Symmetrical |

|e. |Status quo |

ANS: C PTS: 1 REF: 262 OBJ: 17-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

62. During sporting events at the local high school, Steven Urangi runs a concession stand. The costs associated with the purchase of hot dogs, mustard, relish, ketchup, chips, sodas, paper napkins, and cups are all examples of _____ costs.

|a. |marginal |

|b. |variable |

|c. |fixed |

|d. |promotional |

|e. |liquidity |

ANS: B

A cost that changes with the level of output is called a variable cost.

PTS: 1 REF: 262 OBJ: 17-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

63. Mitch owns a pet boarding kennel. The monthly payment on the land he purchased for his kennel, the mortgage on his small office building, and his business license are all examples of _____ costs.

|a. |marginal |

|b. |variable |

|c. |fixed |

|d. |promotional |

|e. |demand |

ANS: C

Fixed costs do not change as output changes.

PTS: 1 REF: 262 OBJ: 17-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

64. Monthly output at Leisure-Time, Inc. changed from 12 to 13 prefabricated gazebos, and the total costs changed from $9,000 to $10,500. What is the marginal cost for this company?

|a. |$1,500 |

|b. |$2,000 |

|c. |$1,200 |

|d. |$10,000 |

|e. |$12,000 |

ANS: A

Marginal cost is the change in total costs associated with a one-unit change in output.

PTS: 1 REF: 262 OBJ: 17-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

65. _____ cost is the change in total costs associated with a one-unit change in output.

|a. |Variable |

|b. |Intermittent |

|c. |Elastic |

|d. |Marginal |

|e. |Flex |

ANS: D PTS: 1 REF: 262 OBJ: 17-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

66. When a seller determines the selling price by adding to cost an amount for profit and expenses not previously accounted for, the seller is using _____ pricing.

|a. |profit maximization |

|b. |demand-oriented |

|c. |break-even |

|d. |target return |

|e. |markup |

ANS: E PTS: 1 REF: 262 OBJ: 17-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

67. The most popular method used by wholesalers and retailers in establishing a sales price is _____ pricing.

|a. |markup |

|b. |status quo |

|c. |formula |

|d. |marginal revenue |

|e. |break-even |

ANS: A PTS: 1 REF: 262 OBJ: 17-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

68. Kenady Appliances pays a manufacturer $800 for a convection oven, and it sells the convection oven to a customer for $1,600. The markup on the screen is:

|a. |$240 |

|b. |$160 |

|c. |$800 |

|d. |variable |

|e. |cannot be determined |

ANS: C

Markup is selling price minus cost: $1,600 - $800 = $800.

PTS: 1 REF: 262 OBJ: 17-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

69. An independent retailer of specialty kitchen items wants to determine what price she should put on a set of plastic wine glasses. They cost her $7. She desires a markup of 30 percent based on selling price. Which of the following is closest to the price she should charge her customers?

|a. |$19 |

|b. |$12 |

|c. |$15 |

|d. |$10 |

|e. |$18 |

ANS: D

Price = Cost + Markup

Price = 7.00 + .3

Price = $10

PTS: 1 REF: 262 OBJ: 17-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

70. An educational toy store can buy a world globe for $30. If the store owner sells the globe for $45, what is the markup based on the selling price?

|a. |15 percent |

|b. |20 percent |

|c. |25 percent |

|d. |33 percent |

|e. |50 percent |

ANS: D

Price - Cost = Markup

$45 - $30 = $15

$15 ÷ $45 = 33% markup

PTS: 1 REF: 262 OBJ: 17-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

71. A distributor of bakery suppliers sells 5-pound bags of moist apricots and cranberries, sweet dates, bits of pineapple, and candied cherries for $24.95 to be used in fruitcakes. Since the amount of cranberries purchased depends on how many bags of fruit are demanded, the cost of the cranberries is a:

|a. |variable cost |

|b. |marginal contributor |

|c. |fixed cost |

|d. |variable revenue |

|e. |joint cost |

ANS: A PTS: 1 REF: 262 OBJ: 17-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

72. What is the biggest advantage associated with markup pricing?

|a. |its simplicity |

|b. |its inability to be decoded by customers |

|c. |the way that the technique considers demand |

|d. |the fact that merchandise is never underpriced with this technique |

|e. |its reliance on marginal costs |

ANS: A

What could be easier than adding a percentage to cost to get a price?

PTS: 1 REF: 262 OBJ: 17-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

73. Which of the following describes a disadvantage associated with markup pricing?

|a. |how difficult it is to implement |

|b. |its failure to explicitly consider product demand |

|c. |its dependence on marginal costs |

|d. |too many factors influence it |

|e. |none of these |

ANS: B

Because the method does not explicitly consider demand, overpricing and/or underpricing can occur.

PTS: 1 REF: 262 OBJ: 17-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

74. _____ is the practice of marking up prices by 100 percent (or doubling the cost to set the selling price).

|a. |Margin pricing |

|b. |Keystoning |

|c. |Mark-on adding |

|d. |Formula doubling |

|e. |Symmetrical pricing |

ANS: B PTS: 1 REF: 262 OBJ: 17-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

75. Hippie High is a retail store that sells reproductions of clothes worn in the 1960s and the 1970s. The store's owner does not take into account competition when pricing the store's clothing. The markup on all items in the store is 100 percent over cost (or double the cost). Hippie High uses:

|a. |keystoning |

|b. |target ROI pricing |

|c. |break-even pricing |

|d. |marginalizing |

|e. |double sourcing |

ANS: A

Keystoning is the practice of marking up prices by 100 percent (or doubling the cost to set the selling price).

PTS: 1 REF: 262 OBJ: 17-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

76. Profit maximization occurs when:

|a. |total costs equals average fixed revenue |

|b. |average variable costs are larger than average total costs |

|c. |total costs equal total variable costs |

|d. |marginal variable costs equal average revenues |

|e. |marginal revenue equals marginal cost |

ANS: E PTS: 1 REF: 263 OBJ: 17-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

77. _____ is the extra revenue associated with selling an additional unit of output.

|a. |Average revenue |

|b. |Marginal revenue |

|c. |Marginal cost |

|d. |Net profit |

|e. |Average variable cost |

ANS: B PTS: 1 REF: 263 OBJ: 17-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

78. As long as the revenue of the last unit produced and sold is greater than the cost of the last unit produced and sold, a firm should:

|a. |continue manufacturing |

|b. |not use formula pricing |

|c. |continue using price equilibrium |

|d. |consider using sales maximization pricing |

|e. |reach its break-even point very shortly |

ANS: A

Diminishing returns have not set in, so the firm should continue manufacturing.

PTS: 1 REF: 264 OBJ: 17-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

79. The point at which marginal cost and marginal revenue are equal always results in:

|a. |maximization of elasticity |

|b. |maximization of revenue |

|c. |maximization of costs |

|d. |maximization of profits |

|e. |break-even equilibrium |

ANS: D

Until the point where MC = MR, each unit of sales has contributed to additional profit; therefore, profit, not revenue or costs, has been maximized at MC = MR.

PTS: 1 REF: 263-264 OBJ: 17-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

80. _____ determine what sales volume must be reached for a product before the company's total costs equal total revenue and no profits are earned.

|a. |Marginal revenue estimates |

|b. |Price equilibrium analyses |

|c. |Break-even analyses |

|d. |Average total cost (ATC) figures |

|e. |Marginal costs of goods sold |

ANS: C PTS: 1 REF: 264 OBJ: 17-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

81. Keystoning is:

|a. |the practice of marking up prices by 100 percent |

|b. |a method used for determining the point of elasticity |

|c. |a plan for reducing marginal costs |

|d. |the practice of maintaining variable costs at one-half of total fixed costs |

|e. |a method of changing consumers' perceptions about price |

ANS: A PTS: 1 REF: 263 OBJ: 17-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

82. The typical break-even model assumes a given fixed cost and a:

|a. |variable per unit cost |

|b. |constant inventory turnover |

|c. |markup cost attained through keystoning |

|d. |constant production schedule |

|e. |constant average variable cost |

ANS: E PTS: 1 REF: 264 OBJ: 17-5 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

83. Bill Needles makes and sells customized silver belt buckles for $225 each. He has determined that his fixed costs are $8,000, and his average variable costs per buckle are $145. What is his fixed cost contribution per buckle?

|a. |$45 |

|b. |$80 |

|c. |$88.89 |

|d. |$125 |

|e. |$170 |

ANS: B

$225 – $145

PTS: 1 REF: 264 OBJ: 17-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

84. Bill Needles makes and sells customized silver belt buckles for $225 each. He has determined that his fixed costs are $8,000, and his average variable costs per buckle are $145. What is his break-even point in units?

|a. |47 |

|b. |64 |

|c. |50 |

|d. |100 |

|e. |178 |

ANS: D

($8,000)/($225 – $145)

PTS: 1 REF: 264 OBJ: 17-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

85. Furr Friends sells kits for making personalized grave markers for pets. The company sells each kit for $22. The average variable cost for each kit is $13, and the total annual fixed costs for plant operation are $78,300. What is the break-even point in units?

|a. |3,559 |

|b. |6,023 |

|c. |8,700 |

|d. |2,237 |

|e. |none of the other answers |

ANS: C

Break-even quantity equals the total fixed costs ($78,300) divided by the fixed cost contribution per unit ($22 – $13 = $9).

PTS: 1 REF: 264 OBJ: 17-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

86. Regency, Inc. makes disposable cap and gown sets for graduations. Each cap and gown set sells for $15. The average variable cost for manufacturing 10 cap and gown sets is $100. Total fixed costs for the year equal $65,000. Calculate the break-even point in units.

|a. |650 |

|b. |765 |

|c. |1,300 |

|d. |4,334 |

|e. |13,000 |

ANS: E

Break-even = $65,000/[15 – (100/10)] = 13,000

PTS: 1 REF: 264 OBJ: 17-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

87. Ceylon Express sells bottled pasteurized tea to retailers. It has the following revenues and costs:

|Sales price per bottle: |$0.50 |

|Average variable costs per bottle: |$0.30 |

|Total fixed costs (annual): |$50,000 |

|Tax rate: |20 percent |

What is the annual break-even point in units for the company?

|a. |50,000 |

|b. |250,000 |

|c. |100,000 |

|d. |166,667 |

|e. |none of the other answers |

ANS: B

Break-even quantity is the total fixed costs ($50,000) divided by fixed cost contribution per unit ($.20).

PTS: 1 REF: 264 OBJ: 17-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

88. Chulo Ibsen makes and sells hand-forged wrought iron firescreens for $125 each. He has determined that his fixed costs are $8,000, and his average variable costs per firescreen are $45. What is his break-even point in dollars?

|a. |$22,550 |

|b. |$12,500 |

|c. |$10,000 |

|d. |$8,000 |

|e. |$5,875 |

ANS: B

[$8,000)/($125 – $45)] × $125 = $12,500

PTS: 1 REF: 264 OBJ: 17-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

89. MusicMatch Central makes reproduction jukeboxes, which it sells to baby boomers for $500. It estimates its average variable costs to be $200 per jukebox. It figures its fixed costs to be $600,000 per year. How many jukeboxes does it have to sell to break even?

|a. |2,000 jukeboxes |

|b. |1,200 jukeboxes |

|c. |3,000 jukeboxes |

|d. |2,500 jukeboxes |

|e. |6,000 jukeboxes |

ANS: A

Break-even quantity equals the total fixed costs ($600,000) divided by the fixed cost contribution per unit ($500 - $200 = $300).

PTS: 1 REF: 264 OBJ: 17-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing

90. Which of the following statements describes a limitation associated with break-even analysis?

|a. |It is sometimes difficult to ascertain whether a cost is fixed or variable. |

|b. |It requires the calculation of marginal revenue. |

|c. |It strictly considers demand. |

|d. |It assumes variable cost per item, which is difficult to calculate. |

|e. |It can only be expressed as a break-even point in dollar amounts. |

ANS: A

Not all costs are easily categorized because a cost may be fixed when viewed in the short term but variable when considered over a longer period of time.

PTS: 1 REF: 265 OBJ: 17-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

91. An analyst at Loude Office, a company that makes wooden desks, has calculated the sales volume at which the company's costs equal revenue. This analyst announced at the company's quarterly sales meeting that 13,000 desks at an average cost of $150 must be sold to retail stores during the next quarter to reach this point. Which important factor has been excluded from his analysis?

|a. |fixed and variable cost determination |

|b. |consumer demand |

|c. |target return pricing |

|d. |break-even analysis |

|e. |market share |

ANS: B

Loude's analyst only includes company costs and does not consider consumer demand.

PTS: 1 REF: 259 OBJ: 17-5 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

92. Which of the following statements about pricing strategies throughout the product life cycle is FALSE?

|a. |During product decline, prices may also decline until there is only one competitor left in the market. |

|b. |Price increases during the maturity stage are cost initiated instead of demand initiated. |

|c. |The maturity stage often brings about price decreases. |

|d. |Prices stabilize when the product enters the growth stage. |

|e. |With inelastic demand, price will be set low in the introduction stage. |

ANS: E

With inelastic demand, prices are set high at introduction.

PTS: 1 REF: 265 OBJ: 17-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Product

93. When Laser Technology developed and introduced a high-tech crash investigation system to be used by law enforcement officers, the company determined that demand for the product was inelastic, and there was no existing competition. The pricing strategy for the system should be:

|a. |low initial price, rising slightly when entering the growth stage |

|b. |high initial price, falling slightly when entering the growth stage |

|c. |high price, continuing through growth and maturity |

|d. |low price, continuing through growth and maturity |

|e. |low price initially, rising constantly through growth and into maturity |

ANS: B

A high initial price is used when a new product faces little competition, needs to recoup R&D costs, and has inelastic demand. Prices will fall slightly when entering the growth stage.

PTS: 1 REF: 265-266 OBJ: 17-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

94. In the mature and highly competitive furniture industry, you would expect furniture manufacturers to engage in:

|a. |a price war |

|b. |price escalation |

|c. |prestige pricing |

|d. |above-market pricing |

|e. |geographical pricing |

ANS: A

In the maturity stage, with heavy competition, below-market pricing leads to price wars.

PTS: 1 REF: 266 OBJ: 17-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Product

95. Richelieu Foods, Inc. decided to offer a much larger than customary profit margin to grocery wholesalers and retailers on its new line of organic pizzas. This pricing strategy is designed to do all of the following EXCEPT:

|a. |encourage retailers to advertise this high-margin item |

|b. |give dealers an incentive to promote the new organic pizzas |

|c. |develop wide and convenient distribution |

|d. |maximize profit margin for the producer |

|e. |encourage trial by consumers if the pizzas are priced low by retailers |

ANS: D

The pizza manufacturer is passing a large portion of the profit margin on to the wholesalers and retailers, not maximizing profit margin for itself.

PTS: 1 REF: 267 OBJ: 17-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Strategy

96. Kroger supermarkets will place well-known brands on the shelves at high prices while offering their own Kroger brand at lower prices. This practice is an example of:

|a. |illegal pricing |

|b. |selling against the brand |

|c. |price pressurization |

|d. |brand cutting |

|e. |private-label cannibalization |

ANS: B

Selling against the brand with private labels causes sales of the higher-priced brands to decline.

PTS: 1 REF: 267 OBJ: 17-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

97. Manufacturers can regain some control over the price their products are sold for at the retail level by:

|a. |using an exclusive distribution system |

|b. |developing brand loyalty in consumers by delivering quality and value |

|c. |avoiding doing business with price-cutting discounters |

|d. |franchising |

|e. |doing all of these |

ANS: E PTS: 1 REF: 267 OBJ: 17-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Distribution

98. Which of the following statements about the Internet is true?

|a. |The Internet has shifted all shopping power to consumers. |

|b. |Consumer reviews tend to be equal in quality. |

|c. |Business-to-business auctions on the Internet are likely to be more important than consumer auctions in the future. |

|d. |Fraud is not a problem on the Internet. |

|e. |Extranets are programs that search the Internet for the best price for a particular product. |

ANS: C

The Internet has shifted some, but not all, shopping power to consumers. Consumer reviews vary in quality. Fraud is a huge problem.

PTS: 1 REF: 268 OBJ: 17-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Online/Computer | TB&E Model Strategy

99. Shopping bots:

|a. |encourage a more creative use of advertising |

|b. |link manufacturers, suppliers, and customers |

|c. |create opportunities for prestige pricing |

|d. |provide a means for comparison shopping |

|e. |create inelastic demand |

ANS: D PTS: 1 REF: 267 OBJ: 17-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Online/Computer | TB&E Model Strategy

100. During the off-season, Parrish Farms, a bed-and-breakfast inn, offers a 25 percent reduction on its weekend rates to entice customers to make last-minute reservations at its Web site. This is an example of pricing strategy used as a:

|a. |distribution tool |

|b. |Internet enhancer |

|c. |product strategy |

|d. |direct sales tool |

|e. |promotion strategy |

ANS: E

See ski resort example in text.

PTS: 1 REF: 268 OBJ: 17-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Promotion

101. When pricing is used as part of a promotion strategy, it:

|a. |can be effectively used in trade promotions |

|b. |cannot be used as a public relations tool |

|c. |must be accompanied by personal selling |

|d. |eliminates problems associated with the service characteristic of homogeneity |

|e. |makes the establishment of a price to quality relationship unnecessary |

ANS: A PTS: 1 REF: 268 OBJ: 17-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Promotion

102. Canning White has decided that the pricing strategy at his sporting goods store will include advertisements offering discounts on the Nesco brand aluminum cooking set for campers. This pricing strategy clearly involves:

|a. |demand creation |

|b. |managed costs |

|c. |value-added benefits |

|d. |intangible features |

|e. |perceived quality |

ANS: A

Price is used here as a promotional tool to increase consumer interest

PTS: 1 REF: 268 OBJ: 17-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Promotion

103. Many consumers, especially when faced with an uncertain purchase decision, think that a high price:

|a. |is a signal of quality |

|b. |is an indication that consumers are being ripped off |

|c. |will always lead to major price discounts to wholesalers and retailers that distribute it |

|d. |is a sign of the company's overall market share |

|e. |indicates that the brand was slipping into the decline stage of the product life cycle but has had a sudden resurgence |

| |of growth |

ANS: A

Numerous studies have shown that consumers equate high price with high quality.

PTS: 1 REF: 268-269 OBJ: 17-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Product

104. Marketing managers who attempt to raise the quality image of their product by selling it at high prices are following a(n) _____ strategy.

|a. |profit maximization |

|b. |market share |

|c. |maintained markup pricing |

|d. |prestige pricing |

|e. |investment asset |

ANS: D

Prestige pricing strategy sets high prices to connote high product quality.

PTS: 1 REF: 269 OBJ: 17-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

105. Tom likes to drink scotch whiskey. He was familiar with the Johnny Walker Black Label brand, which he purchased for around $30. When he found a bottle of Johnny Walker Black Label priced at more than $200, he was positive that it would be a much finer whiskey. For Tom, _____ indicated quality.

|a. |premium pricing |

|b. |price lining |

|c. |prestige pricing |

|d. |exclusive pricing |

|e. |selective pricing |

ANS: C

Prestige pricing is the charging of a higher price to help promote high quality.

PTS: 1 REF: 269 OBJ: 17-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

106. Prestige pricing:

|a. |equalizes supply and demand |

|b. |uses high prices to promote a high-quality product |

|c. |is the practice of marking up prices by 100 percent |

|d. |is also called leader pricing |

|e. |emphasizes the monetary nature of price |

ANS: B

Actually, prestige pricing emphasizes all the intangible considerations buyers make when purchasing.

PTS: 1 REF: 269 OBJ: 17-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

107. The dimensions of quality that are important to consumers include:

|a. |versatility |

|b. |serviceability |

|c. |performance |

|d. |ease of use |

|e. |all of the choices |

ANS: E PTS: 1 REF: 269 OBJ: 17-6 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Product

108. The advertisements for Bernard Hinault brand bicycles claim that it is the most expensive bicycle in the world. This is an example of _____ pricing.

|a. |target return |

|b. |prestige |

|c. |market share |

|d. |maintained markup |

|e. |profit maximization |

ANS: B

Prestige pricing strategy sets high prices to connote high product quality and exclusiveness.

PTS: 1 REF: 269 OBJ: 17-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Promotion

109. Petra knows little about cooking and does not want to spend the time to learn how to make a quiche. However, she has been asked to bring a quiche to an office retirement party. Not wanting to make a poor choice, she is likely to:

|a. |intuitively make the right choice |

|b. |avoid making a decision by not attending the party |

|c. |buy the most expensive pre-made quiche (perhaps paying too much), guessing that the price is related to quality |

|d. |research the product and buy the least expensive frozen quiche she can find |

|e. |buy the least expensive frozen quiche because most consumers feel that price is not directly related to quality |

ANS: C

Most consumers equate price and quality.

PTS: 1 REF: 269 OBJ: 17-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Product

110. Kables Optic builds quality binoculars, which have innovative components (such as water resistance) and superior durability. Kables Optic has managed to keep its price lower than its competitors. However, Kables's sales have been disappointing. For a fast and simple remedy, Kables should:

|a. |reeducate the potential consumers about Kables products |

|b. |raise prices because of consumer expectations |

|c. |lower the quality of Kables products |

|d. |emphasize low price in all its advertising |

|e. |look for a different product to manufacture |

ANS: B

The price needs to fit the product quality for a more cohesive image.

PTS: 1 REF: 269 OBJ: 17-6 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Customer

Continental Lite

In the mid-1990s, Continental Airlines chose to compete head-on with Southwest Airlines by launching Continental Lite, an alternative low-fare commercial airline passenger operation. Top executives at Continental had expected its no-frills operation to break even within a year of its inception, but the airline fell short of the goal. A source close to the company explained it by saying, "Its costs were too high, and its revenues were too low." Some observers criticized Continental's marketing efforts. When the no-frills service was first launched, it lacked a distinct name or identity, missing its chance to make a splash. Then Continental tried to sell three "brands" at once--Lite, a new premium service, and its more traditional long-haul domestic flights. As one rival expressed it, "You cannot be all things to all people."

111. Refer to Continental Lite. The statement that Continental Lite had problems because "Its costs were too high, and its revenues were too low," suggests that the airline had no _____ left over after paying for airline activities.

|a. |ROI |

|b. |revenue |

|c. |profit |

|d. |returns |

|e. |COGS |

ANS: C

Profit is what is left over after paying for company activities.

PTS: 1 REF: 255 OBJ: 17-1

TOP: AACSB Reflective Thinking | TB&E Model Strategy

112. Refer to Continental Lite. Continental Lite's pricing objectives were based on gaining as much market share as possible from Southwest Airlines. This suggests that Continental Lite had _____ pricing objectives.

|a. |sales-oriented |

|b. |need-oriented |

|c. |profit-oriented |

|d. |cost-oriented |

|e. |status quo |

ANS: A

Sales-oriented pricing objectives are based on either market share or dollar or unit sales.

PTS: 1 REF: 257 OBJ: 17-2

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

113. Refer to Continental Lite. The airline industry's demand curve slopes downward and to the right. This curve indicates the quantity demanded is increased as:

|a. |cost is increased |

|b. |supply is increased |

|c. |price is increased |

|d. |price is decreased |

|e. |supply is decreased |

ANS: D

The lower the price, the more travel will be demanded.

PTS: 1 REF: 258 OBJ: 17-3

TOP: AACSB Reflective Thinking | TB&E Model Strategy

114. Refer to Continental Lite. Consumers who traveled on Continental Lite or Southwest were very sensitive to price changes. This suggests:

|a. |inelastic demand |

|b. |elastic supply |

|c. |elastic demand |

|d. |inelastic supply |

|e. |unitary elasticity |

ANS: C

Demand changes with price changes.

PTS: 1 REF: 259 OBJ: 17-3

TOP: AACSB Reflective Thinking | TB&E Model Strategy

Consumer Buying Habits

In a sluggish economy, consumers will buy even the most modest of products with the same discretion once shown only to big-ticket items, like computers, air fares, and designer clothes. The results are a growing popularity of cheaper private-label products and the likelihood that price wars among consumer goods could lead to the same kind of consolidation that occurred in the airline and electronics industries. Moreover, analysts say changing buying habits will force premium brand marketers to lower their prices to protect their positions. These companies may also upgrade products to distinguish them from private labels and promote their brands more aggressively than ever.

One analyst says that consumers are forcing product innovation. Products have to be sold on merit. As a result, there will be fewer brands of significance, but the significant brands will be stronger. Brand loyalty is believed to exist only when, or if, value is provided. How do the significant brands compete? One analyst says that a combination of sensible pricing and innovation with a strong brand name can stabilize market share. Reformulated or repackaged products are typical examples of innovative attempts to solidify market share.

115. Refer to Consumer Buying Habits. In the past, Procter & Gamble set prices on significant brands such as Pampers so that total revenue was as large as possible relative to total costs. This represents a _____ approach.

|a. |profit maximization |

|b. |market share pricing |

|c. |demand-oriented pricing |

|d. |sales maximization |

|e. |status quo pricing |

ANS: A

Profit maximization means setting prices so that total revenue is as large as possible relative to total costs.

PTS: 1 REF: 262 OBJ: 17-2

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

116. Refer to Consumer Buying Habits. One analyst said that the big brands can compete by combining sensible pricing and innovation with a strong brand name. This is done to stabilize market share. This is an example of _____ pricing.

|a. |profit-oriented |

|b. |sales-oriented |

|c. |demand-oriented |

|d. |supply-oriented |

|e. |status quo |

ANS: B

Sales-oriented pricing objectives are based upon market share.

PTS: 1 REF: 256 OBJ: 17-2

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

117. Refer to Consumer Buying Habits. Changing consumer buying habits will force premium brand marketers to lower their prices to protect their positions (maintain the same revenue). This suggests that demand for premium products is:

|a. |elastic |

|b. |devariate |

|c. |highly elastic |

|d. |fixed |

|e. |unitary |

ANS: E

If the price goes down and revenue remains the same, elasticity is unitary.

PTS: 1 REF: 260 OBJ: 17-3

TOP: AACSB Reflective Thinking | TB&E Model Strategy

118. Refer to Consumer Buying Habits. To compete against the private labels, the significant brands can upgrade products to distinguish them from private labels and advertise their brands more aggressively than ever. Most of the ads will feature cents-off coupons. This pricing strategy clearly involves manipulation of:

|a. |promotion strategy |

|b. |product mix strategy |

|c. |stockholders' equity |

|d. |distribution strategy |

|e. |credence qualities |

ANS: A

Price is used here as a promotional tool to increase consumer interest.

PTS: 1 REF: 265 OBJ: 17-6

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Promotion

119. Refer to Consumer Buying Habits. Assume a product has a strong brand name, a reasonable price, and good quality. Which of the following strategies should NOT be implemented?

|a. |improve product quality |

|b. |upgrade the packaging |

|c. |lower the price |

|d. |offer better variety |

|e. |increase promotional efforts |

ANS: C

With a strong brand name, further lowering of price is unnecessary.

PTS: 1 REF: 268 OBJ: 17-6

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Product

Specialty Cakes

Imagine you're planning an after-symphony fund-raising party, and you need a life-size grand piano cake. Or, you are a developer proposing a new shopping center to a group of investors, and you want to serve a cake shaped like an architectural rendition of the center. Is this impossible? No, you just need to contact Cecilia Villaveces Cakes. She actually built a life-size grand piano for a gala in Macon, Georgia. You can expect to pay anywhere from $75 to $10,000 for one of Cecilia's artistic creations, depending on complexity of design and size. She uses only the best ingredients, and no two cakes are ever quite alike.

120. Refer to Specialty Cakes. Although many factors determine the prices charged by Cecilia Villaveces Cakes, the two primary determinants are:

|a. |costs of manufacturing and distribution costs |

|b. |stage of the product life cycle and costs to the consumers |

|c. |the demand for the good and cost to the seller |

|d. |demand by the consumer and perceived quality |

|e. |distribution and promotion strategies used by the cake maker |

ANS: C

If there were reduced demand, than Cecilia would have to lower prices. Also, she must charge for the time, energy, and resources that go into each cake.

PTS: 1 REF: 258 OBJ: 17-3

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

121. Refer to Specialty Cakes. Many party planners in the Southeast will only use Cecilia Villaveces Cakes at their parties--no matter what the price is. They know that Cecilia's cakes can make a party a success. Moreover, the cakes are what people remember most about the parties. From this description, you should assume Cecilia Villaveces Cakes have a(n):

|a. |elastic demand |

|b. |unitary elasticity |

|c. |inelastic supply |

|d. |inelastic demand |

|e. |elastic supply |

ANS: D

Price increases do not decrease demand for cakes.

PTS: 1 REF: 259 OBJ: 17-3

TOP: AACSB Reflective Thinking | TB&E Model Strategy

122. Refer to Specialty Cakes. Which of the following is the BEST example of a fixed cost for Cecilia Villaveces Cakes?

|a. |eggs, butter, sugar |

|b. |delivery costs |

|c. |part-time employees |

|d. |electricity consumption |

|e. |food preparation licenses |

ANS: E

Delivery costs, electricity consumption, and use of part-time employees will vary according to the job.

PTS: 1 REF: 262 OBJ: 17-5

TOP: AACSB Reflective Thinking | TB&E Model Strategy

123. Refer to Specialty Cakes. Which of the following is the BEST example of a variable cost for Cecilia Villaveces Cakes?

|a. |life insurance on Cecilia |

|b. |flour and sugar |

|c. |ovens used for cooking cakes |

|d. |business license |

|e. |interest payment to the bank |

ANS: B

Only the consumption of flour and sugar would vary from cake to cake.

PTS: 1 REF: 262 OBJ: 17-5

TOP: AACSB Reflective Thinking | TB&E Model Strategy

124. Refer to Specialty Cakes. To set the price of her cakes, Cecilia simply doubles her costs, which often include several hours of labor and expensive raw materials. This method of price setting is called:

|a. |mark-on pricing |

|b. |premium pricing |

|c. |keystoning |

|d. |add-on pricing |

|e. |superimposed pricing |

ANS: C

The practice of marking prices up 100 percent is called keystoning.

PTS: 1 REF: 262 OBJ: 17-5

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

125. Refer to Specialty Cakes. There are many occasions for which people may need to buy a cake, but most people do not have the time or interest to learn about cakes and their bakers. These people who do not know about the quality of the Cecilia Villaveces Cakes might choose them because they:

|a. |equate price and quality |

|b. |know cakes are in the mature stage of their product life cycle |

|c. |realize that this is a monopolistic industry |

|d. |believe there is not a relationship between price and quality |

|e. |desire value-added services |

ANS: A

Most consumers equate price and quality.

PTS: 1 REF: 268-269 OBJ: 17-6

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Product

American Girl Doll

The American Girl catalog began as a concept to introduce today's girls to girls who lived in the past. Each historically accurate doll is carefully crafted and dressed and has books to describe her life. For example, Kristen is an 1854 pioneer girl who is growing up in Minnesota. Her story begins with her long sea voyage from Sweden. The basic doll dressed in a calico dress and striped apron plus the hardcover story of how she got to Minnesota costs $90. Six more hardback books of Kristen's life are available for $74.95. Kristen's nightgown costs $20, and a matching one for the doll owner is an additional $38. Buy both together and the price is only $50. A hand-painted wooden bed and trunk for Kristen are available for $213. Shipping costs vary with the price of the merchandise ordered.

126. Refer to the American Girl Doll. What is the revenue to American Girl if it sells 20 basic Kristen doll and books?

|a. |$90.00 |

|b. |$100.95 |

|c. |$427.95 |

|d. |$1,800.00 |

|e. |cannot be determined from the information given |

ANS: D

Revenue equals price times number of items sold.

PTS: 1 REF: 255 OBJ: 17-1 TYPE: App

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

127. Refer to the American Girl Doll. American Girl is the primary seller of historically accurate dolls with accompanying books in a market where there is very little competition. It has no cash flow problems and is not interested in maximizing its sales. From this information, you should know American Girl has _____ pricing objectives.

|a. |status quo |

|b. |psychological |

|c. |profit-oriented |

|d. |sales-oriented |

|e. |supply-derived |

ANS: C

Because it has no competitors to speak of, status quo objectives are unlikely. It is not interested in maximizing its sales, so sales-oriented objectives are also not likely.

PTS: 1 REF: 256 OBJ: 17-2 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

128. Refer to the American Girl Doll. The popularity of the American girl dolls is so great that an increase in the price of the basic Kristen doll and books by 5 percent will not significantly affect the demand for the product. The means that the demand for the American Girl doll is:

|a. |elastic |

|b. |derived |

|c. |a multiplier |

|d. |inelastic |

|e. |symmetrical |

ANS: D PTS: 1 REF: 259 OBJ: 17-3 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Strategy

129. Refer to the American Girl Doll. Which of the following factors is most likely to affect the elasticity of demand for the doll?

|a. |the absence of substitutes |

|b. |the existence of complementary products |

|c. |the price relative to purchasing power |

|d. |product durability |

|e. |a variety of alternative uses for the product |

ANS: A

There is nothing like the American Girl doll in terms of historical accuracy.

PTS: 1 REF: 260 OBJ: 17-3 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Product

130. Refer to the American Girl Doll. In terms of the costs of producing the doll and its accessories, the salary of the graphic designer who does the layout for the American Girl catalog is a(n):

|a. |markup cost |

|b. |variable cost |

|c. |fixed cost |

|d. |derived cost |

|e. |elastic cost |

ANS: C

Salaries are considered fixed costs.

PTS: 1 REF: 262 OBJ: 17-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

131. Refer to the American Girl Doll. In terms of producing the doll and its accessories, the calico fabric used to make Kristen's dress is an example of a(n):

|a. |markup cost |

|b. |variable cost |

|c. |fixed cost |

|d. |derived cost |

|e. |elastic cost |

ANS: B

How much fabric used depends on how many dolls made.

PTS: 1 REF: 262 OBJ: 17-5 TYPE: Comp

TOP: AACSB Reflective Thinking | TB&E Model Strategy

132. Refer to the American Girl Doll. You can buy a doll at Wal-Mart for $5.99. The high price of the American Girl doll is used to promote a high-quality image. The American Girl uses a _____ pricing strategy.

|a. |markup |

|b. |demand-based |

|c. |prestige |

|d. |penetration |

|e. |supply-derived |

ANS: C PTS: 1 REF: 269 OBJ: 17-6 TYPE: Def

TOP: AACSB Reflective Thinking | TB&E Model Pricing

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