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Test 930 MARKETING MANAGEMENT 1

1. The Uniform Commercial Code that regulates the way companies do business across state lines in the United States is the basis for which of the following international agreements:

A. Contracts for the International Sale of Goods (CISG) B. General Agreement on Tariffs and Trade (GATT) C. North American Free Trade Agreement (NAFTA) D. International Monetary Fund (IMF)

2. Which of the following retailers would be most likely to be part of the producer to retailer to consumer channel:

A. Small boutique C. Specialty shopB. Large retail chain D. Locally owned pharmacy

3. If a wholesaler objects to a supplier's policies restricting trade or competition, it is illegal for the supplier to __________ with the wholesaler.

A. refuse to deal C. communicateB. comply D. do business

4. Moving a product to market and making it available and accessible to customers are important activities that influence the rest of the

A. product mix. C. promotional plan.B. marketing mix. D. merchandise plan.

5. What does a channel of distribution usually need to be able to manage or avoid conflict within the channel?

A. Updated technology C. Equal authorityB. Strong leadership D. Limited competition

6. Before a business can effectively evaluate members in its distribution channel, it must firstA. assess its logistics needs. C. identify potential vendors.B. conduct a location feasibility study. D. develop a strategic alliance.

7. When developing performance standards for suppliers, businesses should make sure that the standards are fair, understandable, and

A. measurable. C. sensitive. B. convenient. D. unique.

8. One of the advantages of rehearsing an oral presentation is that it gives the businessperson the opportunity to

A. organize new information. C. time the presentation. B. prepare attractive visuals. D. anticipate questions.

9. The focus of most letters that a business writes to its customers should be about theA. customers' interests. C. business's history.B. business's services. D. customers' opinions.

10. What is a type of informal communication that coworkers often use to communicate with each other?A. Structured C. NetworkB. Feedback D. Grapevine

11. What might a business lose if an advertisement attracted new customers, but they were greeted by a discourteous employee?

A. Negative impression C. Service problemsB. Frequent complaints D. Repeat business

Copyright © 2008 by Marketing Education Resource Center®, Columbus, Ohio


12. The most important business policy affecting customers directly is the ___________ policy.A. promotional C. creditB. product D. service

13. A company purchased a POS terminal for use in its new facility. This POS terminal would be classified in economic terms as a(n) __________ good.

A. industrial C. intangibleB. ultimate D. consumer

14. Which of the following would affect demand for a consumer magazine:A. The magazine's delivered circulation C. The usefulness of the magazineB. The number of inserts in the magazine D. The cost of advertising in the magazine

15. A country's easy monetary policy is often used to correct the problem ofA. unemployment. C. globalization. B. high taxes. D. import quotas.

16. Private enterprise is often called a __________ economy.A. traditional C. commandB. market D. subsistence

17. Leonardo's is considering opening a second location in a nearby city. The owners are concerned with the competition they might face from a business that is not quite like theirs, but also competes for scarce consumer dollars. What form of competition are they facing?

A. Indirect C. DirectB. Price D. Nonprice

18. What is the most appropriate instructional method for telling new employees about the history of the company?

A. Mentor C. LectureB. Demonstration D. Simulation

19. What usually decreases as the rate of inflation increases?A. Purchasing power C. Export quotasB. Interest rates D. Money supply

20. The contraction stage of the business cycle is characterized by decreases inA. sales and profits for businesses. C. interest rates on loans.B. savings by consumers. D. unemployment.

21. One way to develop an achievement orientation is to establishA. safe conditions. C. personal relationships. B. flexible deadlines. D. reachable goals.

22. When businesses use teams to solve problems, they often are encouraging the teams to A. manage diversity. C. decide legal issues. B. bring about change. D. provide training.

23. Recognizing the work and accomplishments of employees often helps to build theirA. agreement. C. self-esteem. B. understanding. D. sensitivity.

24. Businesses should view negotiation as a way toA. keep negative people quiet. C. get the action they want.B. get something done. D. build strong relationships.


25. Which of the following speculative risks would most likely increase or decrease a business's income:A. Facing a product liability suit C. Investing in a variety of stocks B. Receiving an insurance settlement D. Losing the services of key executives

26. Which of the following is the most critical step in reducing business risk:A. Installing a telephone code C. Developing a financial plan B. Organizing an inventory system D. Preparing an employment policy

27. A business had sales last year of $235,000 and is forecasting a 4% increase for the coming year. What is the sales forecast in dollar figures?

A. $240,000 C. $244,400B. $239,000 D. $238,500

28. Budgets can be described in terms of:A. account books, bills, and bankruptcy. C. desires, debt, and discipline. B. money, maps, and management. D. savings, sales, and success.

29. Using the following information in a financial statement, determine what percent of net sales is gross margin: net sales is $9,000; cost of goods sold is $6,000; and gross margin is $3,000.

A. 50% C. 67%B. 33% D. 72%

30. The Tillman Company allocates its marketing budget by first setting its various marketing goals and then determining costs associated with meeting those goals. What budgeting method is the Tillman Company using to allocate marketing funds?

A. Forecast-and-outcome C. Rule-of-thumb B. Objective-and-task D. Competitive parity

31. A business calculates the return on marketing investment (ROMI) to determine the A. overall operating expenses. C. success of a marketing program. B. response rates of opt-in e-mail. D. need for additional government bonds.

32. The Kenton Company introduced a new product line that earned significant profits, but also took market share from its other products. This is an example of product

A. shifting. C. cannibalization. B. mix. D. transference.

33. Why do human resources personnel usually have the responsibility of conducting exit interviews with employees who are leaving the company rather than the employees' immediate supervisors?

A. Employees may be reluctant to give information in person.B. Employees rarely have any valuable information or suggestions.C. Employees may be reluctant to criticize the department or supervisor. D. Employees may have suggestions for improving the human resources department.

34. Which of the following is an indicator that governments use to measure the state of the economy:A. Consumer spending C. Tax incentive B. Regional competition D. Market structure

35. Training which is conducted for the business, on a contractual basis, by professional consultants, educational agencies, or trade and professional organizations is known as __________ training.

A. group C. external B. internal D. on-the-job


36. The two approaches supervisors may take toward disciplinary problems areA. remediation and disciplinary suspension.B. peer counseling and supervisory discipline.C. preventive discipline and corrective discipline.D. preventive discipline and corrective counseling.

37. Which of the following is an example of an external resource that a business might need to complete a project:

A. Vendor C. Team leaders B. Company supervisor D. Employees

38. The KEY Company needs to replace its marketing vice president. To find external candidates with specific qualifications, the company might consider

A. placing an ad in the local newspaper. C. contacting an executive recruiter. B. promoting the marketing manager. D. contracting with a temporary agency.

39. When processing payroll, why is it important for businesses to gather information about deductions and hours worked?

A. To estimate commission rate C. To forecast expenses B. To calculate net pay D. To analyze liabilities

40. The search capabilities of the Internet allow businesses to locate large amounts of specific information in a matter of seconds and

A. protect the privacy of the web site. C. analyze the value of the data. B. create targeted questionnaires. D. download the data for future use.

41. How could a business use marketing-research information it has gathered about the average age, income, educational levels, and spending patterns of area consumers?

A. To establish an appropriate operating budget C. To identify problems within the businessB. To create a mailing list for the business D. To develop a profile of the typical customer

42. Businesses often ask for the customer's zip code at the checkout counter to obtain immediate information about

A. how much customers can pay for products. C. a geographic area for a direct-mail campaign.B. how often customers visit the business. D. the average age of customers.

43. When a company is determining how to manage its marketing information, it must consider its needs and its

A. channels. C. resources. B. ratios. D. ranges.

44. Would a successful business ever change its marketing strategy?A. No, changing marketing strategies is a complicated process.B. Yes, a business should have no more than two marketing strategies.C. Yes, changes in the marketplace require changes in marketing strategy.D. No, once a business has a workable strategy, it should always be used.

45. Which of the following is a demographic characteristic used in market segmentation:A. Income level C. LifestyleB. Loyalty response D. Personality

46. Which of the following is a geographic characteristic that businesses often use to identify market segments:

A. Natural environment C. Location of population B. Country of origin D. Physical surrounding


47. Why is it important for a business to continually perform the marketing planning process, and revise and update its marketing objectives and strategies?

A. To maintain adequate inventory levels C. To reflect current wants and needs B. To gather information from outside sources D. To identify rising costs and expenses

48. Why do businesses often conduct an environmental scan to gather information about changes or trends that are beginning to develop in the marketplace?

A. To develop new products C. To analyze training needs B. To identify potential threats D. To predict future sales

49. Before deciding to enter the international market, businesses usually assess global trends and opportunities to make sure there is a

A. method in place to expedite distribution. B. market for their products in other countries. C. work force that understands technological advancements. D. government that is based on a democratic system.

50. Which of the following is an example of an internal change that could affect a business's sales forecast:A. A new product line is to be offered by the business.B. The birth rate increased following the Iraqi war.C. A direct competitor is planning a new promotional campaign.D. The economy is struggling with a major drop in stock market prices.

51. Which of the following is a characteristic of all effective marketing goals:A. Controversial C. Impractical B. Qualitative D. Specific

52. One reason it is important for a business to develop a marketing plan is that the planA. reduces the need to implement corrective action or contingency plans. B. provides guidelines for personnel to meet the company's objectives. C. increases the business's financial security in an unpredictable environment. D. allows the business to focus on short-term goals instead of long-term goals.

53. One reason why a business conducts an annual review of the marketing plan is toA. check for mistakes. C. share information with employees.B. meet federal standards. D. set the stage for long-term market planning.

54. What do most businesses maintain to help them plan future sales and promotional activities?A. Operating procedures C. Inventory systems B. Advertising proofs D. Customer records

55. As a result of conducting an environmental scan, a business might find that the rate of unemployment is slowly increasing, which is an example of a(n) __________ factor.

A. economic C. political B. geographic D. cultural

56. Which of the following is a way that accidents are costly to employees:A. Expensive repairs C. Lost productionB. Lost income D. Decreased sales

57. Which of the following is the last step in the industrial purchasing process:A. Confirm delivery. C. Identify needs.B. Negotiate discounts. D. Select supplier.


58. Why is production important to businesses?A. It creates goods and services businesses can sell.B. It prevents businesses from wasting resources.C. It enables businesses to charge high prices.D. It informs businesses about consumers' needs and wants.

59. Which of the following is one of the biggest expenses that employees can help a business to control:A. Payroll C. RentB. Advertising D. Taxes

60. Before negotiating a maintenance contract for new office equipment, a business owner should compare the vendor's standard contract with the

A. financial data. C. product warranty.B. compliance policies. D. restocking charges.

61. Why is it important for a business to keep its selling area neat and clean?A. To interest employees C. To please vendorsB. To satisfy inspectors D. To attract customers

62. When a business pays a fee to a research firm so it can obtain secondary marketing information from a subscriber-accessible database, it is purchasing marketing data from

A. syndicated services. C. Intranet resources. B. mining scouts. D. statistical wholesalers.

63. If a business does not have internal resources to address legal and regulatory issues, it may decide to contract the services of a(n)

A. research analyst. C. tax accountant. B. organizational consultant. D. law firm.

64. One reason that a business tracks its marketing budget is to make sure that the projected expenses are the same as

A. the operating costs. C. last year's sales forecast. B. last year's expenditures. D. the actual expenses.

65. What should job applicants offer to do in the closing paragraph of an interview follow-up letter?A. Work for a reduced salary C. Send an appropriate giftB. Provide further information D. Accept any available job

66. Employees or companies are most likely to lose professional certification or operating licensure if they participate in

A. lobbying efforts. C. dangerous events. B. illegal activities. D. offensive actions.

67. Amy's job involves developing products and implementing strategies to communicate the products' value to consumers through imagery. In which area of marketing management does Amy work:

A. Buying C. Branding B. Logistics D. Finance

68. Which of the following is a potential consequence of unethical behavior associated with the product function of marketing:

A. Industry collusion C. Physical injury B. Customer loyalty D. Biased information

69. A primary goal of marketing management is to utilize a variety of resources to A. force consumers to buy. C. attract and keep customers. B. promote self-interests. D. encourage free trade.


70. One reason it is important for marketing professionals to follow ethical standards is toA. improve working conditions and financial security. B. remove the risk of uncontrolled competition in the marketplace. C. build positive relationships with other individuals and businesses. D. prevent unnecessary changes in the business environment.

71. Which of the following is an advantage to marketing professionals who participate in professional organizations:

A. Networking opportunities C. Complimentary goods B. Financial responsibilities D. Instant recognition

72. A time-management technique that helps to ensure that the most important tasks get done is to prepare a(n)

A. lead list. C. daily schedule. B. estimated budget. D. job description.

73. If the only reason a business sets very low prices on products is to try to drive competitors out of business, that practice is considered to be

A. ineffective. C. misleading. B. unethical. D. deceptive.

74. In determining the selling price of a good or service, most of the factors to be considered by the seller are internal to the business.

A. True, most factors affecting price are directly controlled by the business.B. True, most factors affecting price are internal to the business.C. False, most factors affecting price are not controlled by the firm.D. False, most factors affecting price are directly controlled by the business.

75. An exclusive suite hotel that changes its marketing strategy to appeal to families rather than to executives is an example of

A. regional advertising. C. product screening.B. concept testing. D. product repositioning.

76. Why does a company need to know what stage of the product life cycle its products are in?A. To prevent imitators from entering the marketB. To find new uses for the productC. To predict the length of the life cycleD. To adapt its marketing strategies

77. Satellite communications systems often impact the product/service management function by helping businesses to

A. use software. C. track shipments.B. evaluate information. D. order replacements.

78. When Devon had an idea for a new product option based on an existing product, the new product is called a(n)

A. model replacement. C. substitute. B. brainstorm. D. intangible item.

79. How do marketers measure the feasibility of a product idea?A. Write a marketing proposal. C. Develop a customer survey. B. Make a prototype of the product. D. Evaluate it against general criteria.

80. Which of the following is an example of an ongoing process that businesses can use to recognize product opportunities:

A. Reviewing sales forecasts C. Analyzing corporate objectives B. Talking with customers and employees D. Adding items to the product mix


81. Businesses that satisfactorily handle purchasers' problems with a warranted or guaranteed product usually increase

A. employee morale. C. consumer complaints.B. customer loyalty. D. government intervention.

82. Which of the following laws prevents Joe Camel from being seen on television advertisements for tobacco products:

A. The Cigarette Labeling and Advertising Act of 1967B. The Fair Packaging and Labeling Act of 1967C. The Federal Food, Drug, and Cosmetic Act of 1938D. The Public Health Cigarette Smoking Act of 1971

83. Which product mix strategy should be tried first when sales of a product or product line decline?A. Expansion C. AlterationB. Contraction D. Trading-up

84. A business might bundle products together to sell at a lower price for a limited time in order to A. eliminate cash shortages. C. monitor promotional activities. B. limit product returns. D. encourage future sales.

85. Under which of the following circumstances should the supply of employees increase:A. The business is closed for the day. B. There is a high demand for customer service.C. There are few customers in the store.D. The business is in an off-season.

86. What is a strategy that a business might use to position its product?A. Determine the target market C. Develop a promotional planB. Focus on a competitor's weakness D. Advertise a mission statement

87. A direct benefit to businesses of promotional activities isA. a reduction in costs. C. deceptive advertising.B. debates over controversial issues. D. increased product sales.

88. Which of the following is an example of a socially responsible promotional message:A. If you want to be the center of attention, buy our product. B. Our products outperform our competitors' products. C. We construct our products with recycled materials. D. The first 100 customers who visit the business will receive a free coffee cup.

89. Which of the following is a technological tool that marketers often use to record information and send it as direct mail, so customers can view product data on their personal computers:

A. Sample pack C. Cassette tape B. Tracking cookie D. Compact disk

90. A local dry cleaner sent out mailings promoting its alteration services that the company thought consumers might be unaware of. This kind of direct-mail promotion is known as

A. reminder. C. utility.B. persuasive. D. informative.

91. A primary advantage for marketers who use direct mail to promote products is thatA. it is more effective in creating brand awareness than television advertising. B. most marketers find that it is more effective than micro-marketing methods. C. it is usually less expensive than personal selling methods. D. marketers can deliver their messages to a broad audience.


92. What is one of the main reasons that a business develops a promotional plan?A. To identify target market C. To create consumer demandB. To select advertising media D. To conduct market research

93. You successfully sell the company's new product line to Ms. Jones, and she offers to put you in touch with other businesses that might be interested in your product. What type of benefit of building a clientele is this?

A. Loyalty C. ReferralB. Word-of-mouth advertising D. Repeat sales

94. Priority Auto maintains a database of e-mail addresses for its service customers. When it is time for the next service check, an e-mail is sent to remind the customer to bring in the vehicle. This is an example of how technology

A. enhances communication and follow-up with customers.B. streamlines all aspects of the selling process.C. contributes to intraorganizational communication.D. facilitates cross-functional teaming.

95. Which of the following might a salesperson rely on to obtain firsthand product knowledge:A. Vendor information C. Personal experience B. Customer opinion D. Government reports

96. Which of the following is an example of a hidden benefit that salespeople should point out to customers:A. Material C. ComfortB. Appearance D. Warranty

97. Reaffirming the buyer-seller relationship is a step in the selling process that often leads toA. repeat sales. C. discovering needs.B. initial contact. D. reaching closure.

98. Which of the following is an ethical issue that a business manager might encounter:A. Span of control C. Conflict of interest B. Balance of trade D. Return on investment

99. Intermediaries are among the environmental factors that affect a business's planning because intermediaries are responsible for

A. keeping pace with technological changes. C. providing information about competitors. B. researching the target market. D. linking producers and consumers.

100. The primary purpose for establishing marketing policies is to A. inform employees about government regulations. B. provide guidelines for decision making. C. reduce operating costs and waste. D. confirm brand awareness with targeted messages.


1. AContracts for the International Sales of Goods (CISG). This agreement was developed by the United Nations and is also referred to as the Vienna Convention. It is based on the Uniform Commercial Code (UCC) which is a large set of business laws that clarify many laws relating to commercial transactions in the United States. These laws govern the way that companies do business with each other and with consumers across state lines. Many nations throughout the world have adopted the CISG which provides uniformity to international contracts and business dealings. The General Agreement on Tariffs and Trade (GATT) is an agreement among many nations to encourage economic cooperation and liberalization of international trade. The North American Free Trade Act (NAFTA) is an agreement among the United States, Canada, and Mexico eliminating all of their trade barriers. The International Monetary Fund (IMF) provides loans to countries to encourage international trade and stabilize monetary systems.SOURCE: BL:004SOURCE: Jennings, M.M. (2000). Business: Its legal, ethical and global environment (5th ed.)

[pp. 213-215]. Cincinnati: West Legal Studies in Business, South-Western College Publishing.

2. BLarge retail chain. Large department stores and retail chains are among those who usually deal directly with producers. When it is not possible for a producer to reach a large number of consumers on a direct basis, retailers can provide wide distribution of products to consumers at lower costs than producers can on a direct basis. All of the other alternatives are businesses that would buy from intermediaries because their orders would be too small for direct purchase from the producers.SOURCE: CM:003SOURCE: MB LAP 3—Channels of Distribution

3. ARefuse to deal. It is illegal for a supplier to refuse to deal with a channel member in an existing distribution channel solely because the channel member disagrees with a policy that may be illegal in itself (i.e., restricts trade or limits competition). Suppliers routinely communicate and do business with wholesalers, but not doing so is not illegal. Suppliers usually try to comply with a wholesaler's requests.SOURCE: CM:005SOURCE: Pride, W.M., & Ferrell, O.C. (2000). Marketing: Concepts and strategies (2000e)

[pp. 366-367]. Boston: Houghton Mifflin.

4. BMarketing mix. Although distribution decisions do not necessarily precede other marketing decisions, they must be acknowledged as an important influence on the marketing mix of a product. Products must be available and accessible in order for customers to be able to buy. Product mix, promotional plans, and merchandise plans are also considered in the marketing mix.SOURCE: CM:007SOURCE: Pride, W.M., & Ferrell, O.C. (2000). Marketing: Concepts and strategies (2000e) [p. 351].

Boston: Houghton Mifflin.

5. BStrong leadership. A channel of distribution that has strong leadership is often able to manage or avoid conflict because the leadership has the power to assign specific responsibilities to each channel member. Strong leadership has the authority to set goals for the entire channel and demand cooperation, which reduces the possibility of conflict. When a channel has strong leadership, channel members work for the good of the channel rather than for their individual goals. A channel of distribution does not need updated technology or limited competition to manage or avoid conflict within the channel. Equal authority might create conflict because there is no clear leader who has power and control over the channel.SOURCE: CM:008SOURCE: Boone, L.E., & Kurtz, D.L. (2004). Contemporary marketing (11th ed.) [pp. 444-445]. Mason,

OH: Thomson/South-Western.

Copyright © 2008 by Marketing Education Resource Center®, Columbus, Ohio

Test 930 MARKETING MANAGEMENT — KEY 11

6. AAssess its logistics needs. As a company grows and changes, its needs and objectives often change, too. Before a business can determine if channel members meet its needs, it must first determine its own needs. By assessing logistics needs such as customer requirements, industry trends, environmental issues, technological developments, and current distribution inefficiencies, it can establish criteria to evaluate channel-member performance level. Identification of potential vendors and the development of a strategic alliance are factors that are considered after the logistics needs assessment is complete. A location feasibility study is conducted when a company wants to evaluate property for business operations.SOURCE: CM:011SOURCE: Coyle, J.J., Bardi, E.J., & Langley, C.J. (2003). The management of business logistics: A

supply chain perspective (7th ed.) [p. 421]. Mason, OH: South-Western.

7. AMeasurable. Standards are specifications or statements that are used as a basis for comparing or judging goods or services. Standards help a business evaluate how well its suppliers are meeting its needs. So the business can determine at what level its suppliers are meeting its needs, the standards should be measurable. Each standard should have a numerical value assigned to determine its worth or rating. To build and maintain positive channel relationships, the standards should be fair and communicated so that each channel member understands what is expected. The standards do not need to be convenient, sensitive, or unique.SOURCE: CM:016SOURCE: Coyle, J.J., Bardi, E.J., & Langley, C.J. (2003). The management of business logistics: A

supply chain perspective (7th ed.) [pp. 484-486]. Mason, OH: South-Western.

8. CTime the presentation. Rehearsing the presentation provides the businessperson with an opportunity to time the presentation and decide what revisions are needed before the actual presentation. In many situations, businesspeople are allowed only a certain amount of time to make presentations. Therefore, it is necessary to include all the important information within that time frame. Timing the presentation in advance will allow the businessperson to be sure that the complete message is being presented. Visuals should be prepared in advance in order to use them during the rehearsal. All information should be included in the presentation before it is rehearsed. Businesspeople do not rehearse presentations to anticipate questions.SOURCE: CO:025SOURCE: Hyden, J.S., Jordan, A.K., Steinauer, M.H., & Jones, M.J. (1999). Communicating for

success (2nd ed.) [p. 94]. Cincinnati: South-Western Educational.

9. ACustomers' interests. Businesses' letters to customers should have a "you" perspective. The letters may include information about the business's history and/or services, but these factors should be linked to meeting customers' needs. In most cases, customers' opinions are not known by businesses and cannot be addressed.SOURCE: CO:133SOURCE: Locker, K.O. (2000). Business and administrative communication (5th ed.) [p. 282].

Boston: Irwin/McGraw-Hill.

10. DGrapevine. Grapevine is an oral communication method in which information is passed around the company but not formally announced or verified. Coworkers frequently discuss company issues and pass on information from one department to another through the grapevine. Employees often obtain information and communicate it to others by the grapevine before management makes an official announcement. Feedback is evaluative information given by supervisors to employees. Network is a system of contacts within and outside the organization. Structured is formal communication.SOURCE: CO:014SOURCE: DuBrin, A.J. (2003). Essentials of management (6th ed.) [pp. 357-359]. Mason, OH:

South-Western.


11. DRepeat business. A business needs to maintain a positive relationship with customers in order to attract repeat business. Customers who encounter discourteous treatment by employees often do not return. The loss of repeat business is very costly because it is more expensive to attract new customers than to keep existing ones. Also, customers who are poorly treated usually tell others. As a result, many potential customers may decide not to do business with the company. Customers who are treated discourteously by employees often complain about the business, develop a negative impression of the business, and experience service problems.SOURCE: CR:003SOURCE: Rokes, B. (2000). Customer service: Business 2000 (pp. 11-14). Mason, OH: South-

Western.

12. BProduct. The most important business policy affecting customers is the product policy. Management decides what kind of products to offer, and these products attract customers more than any other feature of the business. Service policies provide special features that other, similar businesses may not offer, such as delivery or installation. Credit policies are the arrangements by which customers can purchase now and pay later. Promotional policies are guidelines affecting the kinds of special activities, such as contests and prizes, that businesses use to attract customers and to increase sales.SOURCE: CR:007SOURCE: HR LAP 25—Interpreting Business Policies

13. AIndustrial. The POS terminal was purchased by the business to carry out its daily operations. It is, therefore, considered an industrial good. Goods and services that are purchased by the ultimate consumer are referred to as consumer goods. Intangible goods are those goods which cannot be touched. For example, a motion picture and a bus ride are intangible.SOURCE: EC:002SOURCE: EC LAP 10—Goods and Services

14. CThe usefulness of the magazine. The primary factor in determining demand is product usefulness, or utility. Consumers will buy magazines that are useful or of particular interest to them. The cost of advertising in the magazine would affect the decision of businesses interested in purchasing advertising. Inserts are advertisements printed on separate sheets for inclusion in newspapers. Delivered circulation would be an indication of demand since it is a figure based on the number of copies sold on newsstands and through subscriptions.SOURCE: EC:005SOURCE: EC LAP 11—It's the Law (Supply and Demand)

15. AUnemployment. If a country is experiencing a time of high unemployment, it often relaxes the monetary policy to stimulate economic growth. For example, interest rates might be lowered to encourage businesses to borrow money to expand. As a result, more jobs become available and the high unemployment problem is eliminated. A country's easy monetary policy is not used to correct the problem of high taxes, globalization, or import quotas.SOURCE: EC:073SOURCE: McConnell, C.R., & Brue, S.L. (2005). Economics: Principles, problems, and policies

(16th ed.) [pp. 278-279]. Boston: McGraw-Hill/Irwin.


16. BMarket. Private enterprise is often called a market economy because individuals and businesses in the marketplace answer the economic questions of what, how, and for whom to produce. A private enterprise or market economy is an economic system in which individuals and groups, rather than government, own or control the means of production. A traditional or subsistence economy is an economic system in which people produce only what they must have in order to exist and all economic decisions are based on habit and tradition. A command economy is an economic system in which all or many of the means of production and distribution are owned and controlled by the government.SOURCE: EC:009SOURCE: EC LAP 15—Private Enterprise

17. AIndirect. Indirect competition is a rivalry between or among businesses that offer dissimilar goods or services. All businesses compete for scarce consumer dollars that might be spent on goods and services different from their own. Price competition is a type of rivalry between or among businesses that focuses on the use of price to attract scarce customer dollars. Nonprice competition is a type of rivalry between or among businesses that involves factors other than price. Direct competition is rivalry between or among businesses that offer similar types of goods or services.SOURCE: EC:012SOURCE: EC LAP 8—Ready, Set, Compete!

18. CLecture. The lecture method is useful for presenting general information to a large number of people at one time. In demonstrations, new employees watch procedures to be learned as they are presented by an experienced worker. Mentors are experienced workers who answer questions and guide new employees during the first few weeks of employment. Simulation is a technique that approximates reality.SOURCE: HR:361SOURCE: MN LAP 44—Orienting New Employees

19. APurchasing power. Purchasing power is a consumer's ability to purchase goods and services. The rate of inflation, the percentage of change in price levels, has a major effect on purchasing power because when inflation is high, a dollar will not buy as much. For example, if the rate of inflation increases from last year to this year, $1.00 will buy less this year than it did last year. If inflation increases and incomes stay the same, people will lose purchasing power and not be able to buy the same amount of goods and services. Money supply is the total quantity of money that exists at one time in a nation. The interest rate is the percentage figure used in calculating interest charges. Export quotas are the restrictions on the quantity of goods that can move out of a country.SOURCE: EC:083SOURCE: O'Sullivan, A., & Sheffrin, S.M. (2003). Economics: Principles in action (pp. 342-343). Upper

Saddle River, NJ: Prentice Hall.

20. ASales and profits for businesses. The contraction stage occurs when the demand for products starts to fall and unemployment rises. Consumers spend less and save more during the contraction phase. This results in fewer sales and less profits for businesses. Interest rates on loans increase rather than decrease during this phase.SOURCE: EC:018SOURCE: EC LAP 9—Business Cycles


21. DReachable goals. Individuals who have an achievement orientation want to do their best and be successful. One way to develop an achievement orientation is to establish reachable goals. Achieving goals builds confidence and self-esteem and encourages individuals to continue achieving. If the goals are unrealistic, individuals might fail, which often leads to giving up rather than trying to achieve in the future. In order to achieve, it is often necessary to establish firm deadlines. Establishing personal relationships and safe conditions are not ways of developing an achievement orientation. SOURCE: EI:027SOURCE: Kimbrell, G., & Vineyard, B.S. (2006). Succeeding in the world of work (p. 198). New York:

Glencoe/McGraw-Hill.

22. BBring about change. Team building is an organizational development technique that businesses often use to bring about change. When businesses develop teams, they often want the teams to address certain problems within the organization. The purpose of the teams is to find solutions to the problems and recommend changes that will correct the problems. One issue that teams might address is the way the business handles diversity in the workplace. Teams are not expected to decide legal issues or provide training. However, they may suggest that the business hire an attorney or provide training to employees to solve certain problems.SOURCE: EI:044SOURCE: Lussier, R.N. (2003). Management fundamentals: Concepts, applications, skill development

(2nd ed.) [pp. 219-223]. Mason, OH: South-Western.

23. CSelf-esteem. Self-esteem is the way a person feels about him/herself at any given time. Recognizing the work and accomplishments of employees often helps to build their self-esteem because it makes them feel good about themselves. Recognition helps people feel important and respected, which leads to an increase in self-esteem. Understanding is grasping the meaning. Agreement is a negotiation outcome. Sensitivity is responsiveness to the feelings of others. SOURCE: EI:014SOURCE: QS LAP 13—Gimme Five!

24. DBuild strong relationships. Negotiation can be a means of strengthening long-term relationships with customers, suppliers, coworkers, and other businesses. Negotiation demands a spirit of cooperation. Entering negotiation with the idea of getting a certain action, keeping negative people quiet, or getting something done will not produce a situation that allows everyone to feel they have gained through the process.SOURCE: EI:062SOURCE: U.S. Small Business Administration, Online Women's Business Center. (n.d.). Negotiating:

You've Done It Before. Retrieved October 25, 2005, from http://www.sba.gov/test/wbc/docs/manage/negotiating.html

25. CInvesting in a variety of stocks. Investing in a variety of stocks is a speculative risk because there is a chance of loss, no change, or gain. Depending on which stocks a business buys and how well they perform in the market, the business could significantly increase or decrease its income. Businesses cannot purchase insurance to protect them from losses that result from speculative risks because taking the risk is voluntary. Businesses receive insurance settlements to cover losses from pure risks. Losing the services of key executives due to injury or death is a pure risk that can be covered by life insurance. Businesses also purchase insurance to protect them from losses that might result from a product liability suit.SOURCE: FI:080SOURCE: Meyer, E.C., & Allen, K.R. (2000). Entrepreneurship and small business management:

Teacher's manual (2nd ed.) [p. 377]. New York: Glencoe/McGraw-Hill.


26. CDeveloping a financial plan. The development of a financial plan is the most critical step in reducing business risk. The goal of the financial plan is to reduce the need for capital to the lowest possible level and still produce the desired profit. Managers need to become familiar with financial terms and with the five financial tools that are used to make the necessary estimates in order to alter their marketing strategy to reflect financial realities. Organizing an inventory system, installing a telephone code, and preparing an employment policy are not steps in reducing business risk.SOURCE: FI:084SOURCE: BA LAP 2—Risk Management

27. C$244,400. In order to determine the sales forecast in dollar figures, multiply the percent of increase by last year's sales figure ($235,000 x 4% or .04 = $9,400). Add this figure to last year's sales ($235,000 + $9,400 = $244,400) to obtain a sales forecast of $244,400.SOURCE: FI:096SOURCE: IM LAP 4—Forecasting Sales

28. BMoney, maps, and management. Budgets can be described in terms of money, maps, and management. Budgets are about money, can be compared to maps, and are great management tools. Account books, bills, and bankruptcy; desires, debt, and discipline; and savings, sales, and success are all related to certain aspects of budgeting, but none describes its main characteristics as well as money, maps, and management.SOURCE: FI:106SOURCE: FI LAP 3—Money Tracks

29. B33%. The formula for determining gross margin as a percentage of sales is gross margin divided by net sales = percent of gross margin. In this case, divide gross margin by net sales ($3,000 ÷ $9,000 = .33 or 33%).SOURCE: FI:102SOURCE: Stull, W.A. (1999). Marketing and essential math skills: Teacher's edition (p. 240).

Cincinnati: South-Western Educational.

30. BObjective-and-task. A marketing budget is an estimate of income and expenses associated with marketing activities for a specific time. Businesses use one, or a combination of, methods to determine how much money to allocate for anticipated marketing expenses. The objective-and-task method involves setting marketing goals (objectives) and determining the tasks (activities) necessary to achieve the goals. After determining the tasks that the business needs to implement to achieve the goals, the business can estimate the costs associated with the tasks. The rule-of-thumb considers historical data to allocate the budget, such as previous sales, and the previous expenses of similar marketing activities. Competitive parity is a rule-of-thumb budgeting method that is based upon the company's market share. Forecast-and-outcome is a fictitious term.SOURCE: FI:320SOURCE: Grewal, D., & Levy, M. (2008). Marketing (pp. 476-478). New York: McGraw-Hill.

31. CSuccess of a marketing program. The return on marketing investment (ROMI) is the profit divided by the investment, which provides information about how successful a marketing program or an element of a marketing program was in terms of what the returns (generally sales revenue) were for the money expended (invested). E-mail response rates might be variables considered when determining the ROMI. A business does not calculate the ROMI to determine overall operating expenses, nor does it calculate ROMI to determine the need for additional government bonds.SOURCE: FI:321SOURCE: Etzel, M. J., Walker, B. J., & Stanton, W. J. (2007). Marketing (14th ed.) [p. 14]. New York:

McGraw-Hill.


32. CCannibalization. This is the situation that exists when the sale of one of a company's products takes away sales from another of its products. A business must monitor the financial gains of new products that it provides against financial losses that the existing products experience resulting from lower market share. If market share and financial losses are significant, the business might consider eliminating the existing, older products. This situation might occur if the cost to produce or stock a product is higher than the sales it brings in. Product mix is the particular assortment of goods and services that a business offers in order to meet the needs of its market(s) and its company goals. Product shifting and product transference are fictitious terms.SOURCE: FI:324SOURCE: Etzel, M. J., Walker, B. J., & Stanton, W. J. (2007). Marketing (14th ed.) [pp. 573-573].

New York: McGraw-Hill.

33. CEmployees may be reluctant to criticize the department or supervisor. Employees may resign because they are unhappy with their supervisor or the way the department is managed. If their supervisor conducts the exit interview, they may not be truthful in explaining their reasons. For this reason, it is better to have the human resources department conduct exit interviews. Employees will be more comfortable giving critical information that may help the business to make improvements. Most employees are not reluctant to give information in person. They often have valuable suggestions for improving their departments rather than the human resources department.SOURCE: HR:357SOURCE: Everard, K.E., & Burrow, J.L. (2001). Business principles and management (11th ed.)

[p. 640]. Cincinnati: South-Western.

34. AConsumer spending. Governments monitor consumer spending because it indicates the state of the economy. Consumer spending is an indication of the state of the economy because consumers spend money when the economy is stable or growing. However, if the economy is slowing down, consumers usually reduce spending because they are concerned about possible unemployment or an increase in interest rates. Regional competition, tax incentive, and market structure are not indicators that governments use to measure the state of the economy.SOURCE: EC:081SOURCE: Burrow, J.L. (2006). Marketing (2nd ed.) [p. 395]. Mason, OH: South-Western.

35. CExternal. External training is readily available in most locations. Internal training is provided by management or the company's training staff and is usually conducted within the business. On-the-job training occurs when employees receive instruction at the work site and learn by doing. Group training involves a small group of employees or the entire workforce in training at the same time and is usually used for explaining theory or reasons for a specific operation.SOURCE: HR:362SOURCE: MN LAP 42—Training/Human Resource Development

36. CPreventive discipline and corrective discipline. Preventive discipline involves managing people in a certain way so that behaviors which would require discipline are prevented. Corrective discipline is used to discourage further violations after infractions have already occurred. Remediation is the umbrella term which includes both forms of disciplinary action. Corrective counseling is a discussion of an infraction and may be used as part of the corrective discipline process. Peer counseling involves persons on an equal level. It may also be used to change negative behaviors. Supervisory discipline refers to the level of the employee being disciplined.SOURCE: HR:369SOURCE: MN LAP 53—Remedial Action


37. AVendor. A vendor or supplier provides goods and services to the business that the business cannot produce itself. To complete a project, a business might need certain supplies or special services that it does not have within the organization. Because the business cannot obtain the supplies or services within the organization, the supplies or services are external resources. Company supervisors, team leaders, and employees are internal human resources.SOURCE: HR:400SOURCE: Gido, J., & Clements, J.P. (2003). Successful project management (2nd ed.) [pp. 241, 415].

Mason, OH: South-Western.

38. CContacting an executive recruiter. Recruiters are individuals or firms that help businesses locate qualified employees for a fee. Executive recruiters usually specialize in locating high-level candidates who possess specific qualifications. Because executive recruiters have the resources and networking capabilities, they often can find qualified candidates for businesses quickly and less expensively than the businesses themselves. Placing a classified ad in the local newspaper and contracting with a temporary agency are not the most reliable methods for attracting qualified, high-level executives. Promotions involve internal rather than external job candidates.SOURCE: HR:408SOURCE: Dessler, G. (2000). Human resource management (8th ed.) [pp. 147-149]. Upper Saddle

River, NJ: Prentice Hall.

39. BTo calculate net pay. Net pay is the amount of money an employee actually receives after all deductions are subtracted from gross pay. In order to calculate net pay, businesses must gather information about deductions and hours worked. For example, some employees might have deductions for taxes, health insurance premiums, union dues, and retirement funds, while other employees have deductions only for taxes. Therefore, the amount of deductions will be different. Also, some employees are paid a higher hourly rate than others, and some employees are paid a straight salary. Businesses must consider all of the differences when processing payroll in order to calculate the correct net pay for each employee. Businesses do not gather information about deductions and hours worked to estimate commission rate, forecast expenses, or analyze liabilities.SOURCE: HR:394SOURCE: Kapoor, J.R., Dlabay, L.R., Hughes, R.J., & Hoyt, W.B. (2005). Business and personal

finance (pp. 612-613). New York: Glencoe/McGraw-Hill.

40. DDownload the data for future use. Businesses often use the search capabilities of the Internet to look for marketing information that would take a long time to find using conventional research techniques. The technology that makes the Internet possible allows businesses to quickly and inexpensively search for information throughout the world. Searching online allows businesses to locate large amounts of specific information in a matter of seconds. Once a business locates useful marketing information online, it can download the information to a disk and print hard copies. This enables businesses to refer to the data whenever necessary and keep the information for future use. The search capabilities of the Internet do not allow businesses to create targeted questionnaires, analyze the value of the data, or protect the privacy of the web site.SOURCE: IM:183SOURCE: Hair, J.F., Jr., Bush, R.P., & Ortinau, D.J. (2000). Marketing research: A practical approach

for the new millennium (pp. 120-124). Boston: Irwin/McGraw-Hill.

41. DTo develop a profile of the typical customer. Demographic information is often gathered through marketing research. The business can use such information to develop a profile of the typical customer in order to try to meet customers' needs. The business cannot create a mailing list from this information since names and addresses are not included in the data. The information also would not help the business to identify internal problems or set up an operating budget.SOURCE: IM:010SOURCE: IM LAP 5—Nature of Marketing Research


42. CA geographic area for a direct-mail campaign. Businesses often collect zip code information to find out where their customers live. Then, they use the information to mail promotional materials to residents of those areas. Zip code information does not tell how often customers shop. While zip codes are useful when researching census or other demographic information, they will not in themselves tell how much customers can pay or the average age.SOURCE: IM:182SOURCE: U.S. Small Business Administration (n.d.). What is marketing research? Retrieved August 28,

2007, http://www.sba.gov/starting_business/marketing/research.html

43. CResources. Because companies provide different products to different target markets, their marketing-information needs differ, too. Therefore, a company must consider its unique needs and resources when developing a system to manage its marketing information. For example, a large business that has several staff members (human resources) and a lot of money (financial resources) has the ability to build a more complex technological system than a small company with a few employees and little money. A company does not consider ratios, channels, and ranges when it determines how to best manage its marketing information.SOURCE: IM:163SOURCE: Kotler, P., & Armstrong, G. (1999). Principles of marketing (8th ed.) [pp. 99-100]. Upper

Saddle River, NJ: Prentice Hall.

44. CYes, changes in the marketplace require changes in marketing strategy. Changes such as price increases, new competition, or an increase in operating expenses require that businesses have flexible strategies. A responsible business operation will be prepared to redesign its strategies as needed.SOURCE: MP:001SOURCE: IM LAP 7—Pick the Mix

45. AIncome level. Demographic segmentation divides a market by characteristics people have in common that affect their purchasing power. In addition to income level, demographic characteristics include age, gender, educational level, life stage, and occupation. Lifestyle and personality are examples of psychographic characteristics. Loyalty response is a type of behavioral segmentation.SOURCE: MP:003SOURCE: IM LAP 9—Have We Met?

46. CLocation of population. Geographic segmentation is the division of a market on the basis of where consumers are located. Many businesses identify market segments based on geographics because people in different parts of the country or in different parts of the world have different wants and needs based on where they live. For example, people who live in mountainous areas need different products than people who live by an ocean. By identifying these various market segments, businesses will be able to understand their different wants and needs. Country of origin is the part of the world from which a person has come. Natural environment and physical surrounding are not considered geographic characteristics.SOURCE: MP:004SOURCE: Boone, L.E., & Kurtz, D.L. (2004). Contemporary marketing (11th ed.) [p. 235]. Mason, OH:

Thomson/South-Western.


47. CTo reflect current wants and needs. Marketing planning is the process of identifying objectives, and developing marketing strategies to achieve those goals. Because the market is continually changing, marketing planning is an ongoing process. Businesses need to continually perform this process in order to revise and update marketing objectives and strategies to reflect current wants and needs. If businesses fail to remain current, they run the risk of losing customers to competitors that are more in tune with current wants and needs. Part of the marketing planning process involves gathering information from outside sources in order to identify new trends. Businesses do not continually perform the marketing planning process to maintain adequate inventory levels or to identify rising costs and expenses.SOURCE: MP:006SOURCE: Boone, L.E., & Kurtz, D.L. (2004). Contemporary marketing (11th ed.) [pp. 40-41].

Mason, OH: Thomson/South-Western.

48. BTo identify potential threats. Businesses often use a procedure known as environmental scanning to gather information about changes or trends that are beginning to develop in the marketplace. This procedure allows businesses to identify changes at an early stage and decide if they present a threat to the way the business is currently operating. Identifying potential threats enables a business to adapt and remain competitive. Businesses do not conduct environmental scans to develop new products, analyze training needs, or predict future sales. However, the results of an environmental scan might lead a business to develop new products or provide additional training for salespeople.SOURCE: MP:008SOURCE: Zikmund, W.G., & d'Amico, M. (1999). Marketing (6th ed.) [pp. 43-44]. Cincinnati: South-

Western College.

49. BMarket for their products in other countries. Before businesses decide to enter the international market, they usually assess global trends and opportunities to make sure there is a market for their products in other countries. Businesses want to find out if foreign countries have prosperous economies which will allow citizens to buy products. They also want to find out what consumers in other countries want and need. Once they assess the situation, businesses can decide if they will be successful in the international market. Then, they analyze the distribution method. It is not always necessary for a work force to understand technological advancements, as many products are not technical in nature. Businesses are not restricted to dealing with governments that are based on a democratic system.SOURCE: MP:011SOURCE: Boone, L.E., & Kurtz, D.L. (2004). Contemporary marketing (11th ed.) [pp. 102-105].


50. AA new product line is to be offered by the business. Internal changes are circumstances within the business. They include changes in personnel, promotion, pricing, product lines, distribution processes, and marketing strategies. The business has control over internal changes and can adapt its sales forecast accordingly. External changes occur outside the business, and businesses have no control over these changes. Competitors' actions, population changes, and economic changes are examples of external factors that can affect sales forecasts.SOURCE: MP:013SOURCE: IM LAP 3—Nature of Sales Forecasts

51. DSpecific. A marketing plan is a set of procedures or strategies for attracting the target customer to a business. Marketing goals are the goals that a business seeks to reach with its marketing plan. Effective marketing goals are attainable, measurable, time bound, and specific. The goals are not necessarily qualitative, which are goals based on expert opinion and personal experience, nor are they always controversial. The business should not develop impractical goals.SOURCE: MP:015SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2006). Marketing essentials (p. 34). New York:

Glencoe/McGraw-Hill.


52. BProvides guidelines for personnel to meet the company's objectives. A marketing plan is a set of procedures or strategies designed to attract target customers to a business. A comprehensive marketing plan identifies the specific actions and activities that a company will use to attract its target customers. Therefore, the marketing plan provides guidance for employees who are carrying out the marketing activities. Because internal and external factors change, a marketing plan does not reduce the need for a business to develop corrective action or contingency plans, nor does it increase its financial security. Marketing plans contain both short-term and long-term goals.SOURCE: MP:018SOURCE: Boone, L.E., & Kurtz, D.L. (2002). Contemporary marketing (p. 202). Mason, OH: South-

Western.

53. DSet the stage for long-term market planning. Businesses review their marketing plans to do long-term planning, which may result in expansion or diversification. Businesses do not review marketing plans to check for mistakes, meet federal standards, or share information with employees.SOURCE: MP:022SOURCE: Meyer, E.C., & Allen, K.R. (2000). Entrepreneurship and small business management:

Teacher's manual (2nd ed.) [p. 175]. New York: Glencoe/McGraw-Hill.

54. DCustomer records. Most businesses maintain customer records that contain information about what customers are buying, when they are buying, and how much they are buying. By analyzing this information, businesses are able to plan future sales and promotional activities that will appeal to customers and encourage them to buy. Without this type of information, businesses might have no idea what customers will want to buy in the future. Businesses do not maintain advertising proofs, inventory systems, or operating procedures to help them plan future sales and promotional activities.SOURCE: NF:002SOURCE: Burrow, J.L. (2006). Marketing (2nd ed.) [pp. 120-121]. Mason, OH: South-Western.

55. AEconomic. An environmental scan is an analysis of external forces that influence a business's success. The fluctuation of unemployment rates is an economic factor because unemployment has an effect on consumers' ability to buy goods and services. If consumers are unemployed, they do not have income to spend. As a result, businesses do not sell as much because consumers are not buying. When this situation occurs, businesses often reduce expenses in an attempt to stay in business until the rate of employment starts to rise again. The rate of unemployment is not a geographic, political, or cultural factor.SOURCE: NF:015SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2006). Marketing essentials (pp. 30-32, 84-86).

New York: Glencoe/McGraw-Hill.

56. BLost income. Accidents are costly to both employers and employees. One way that accidents are costly to employees involves missing work and losing income. Some workers may be temporarily or permanently disabled and lose income for a long period of time or have their income drastically reduced. Expensive repairs, lost production, and decreased sales are ways that accidents are costly to employers.SOURCE: OP:009SOURCE: RM LAP 3—Handling Accidents

57. AConfirm delivery. The final step in the industrial purchasing process is expediting, or following up, to confirm delivery. Once the purchase order has been accepted, the purchaser usually contacts the vendor as the agreed-upon delivery date approaches in order to make sure the shipment will arrive on schedule. Selecting suppliers, negotiating discounts, and identifying needs are earlier steps in the industrial purchasing process.SOURCE: OP:015SOURCE: PU LAP 1—Purchasing


58. AIt creates goods and services businesses can sell. Production is important to businesses because without production, businesses would have nothing to sell. All businesses must have products to sell in order to remain in business. Businesses must control production costs so that they do not have to charge higher prices than competitors. Marketing research, not production, informs businesses about consumers' wants and needs. Only if production is efficient does it prevent businesses from wasting resources.SOURCE: OP:017SOURCE: BA LAP 1—Nature of Production

59. APayroll. One of a business's biggest expenses is payroll. Therefore, it is important for businesses to get full value for their payroll dollars in order to control expenses. Employees who arrive on time and work their designated hours are helping to ensure that the business receives the time it pays for. Advertising, taxes, and rent are other types of business expenses that are not under the employee's control.SOURCE: OP:025SOURCE: MN LAP 56—Employee Role in Expense Control

60. CProduct warranty. A warranty is a promise made by the seller to the buyer that the seller will repair or replace a product that does not perform as expected. The terms of warranties vary but might include free labor, parts, and service calls for a specific amount of time after the purchase. It is important to compare the terms of a maintenance contract for a new piece of equipment because it is possible that many stipulations in the warranty are covered in the standard maintenance contract. In this situation, the business owner could pay for goods and services offered in the maintenance contract that are already provided in the warranty. Restocking fees are charges that a buyer pays to return unwanted goods to the seller. Compliance policies and financial data are general terms and are not generally used to compare maintenance contracts.SOURCE: OP:027SOURCE: CA Dept. of Consumer Affairs. (n.d.). Consumer Tips on Product Service Contracts.

Retrieved August 28, 2007, from http://www.bear.ca.gov/service-contract/service-tips.pdf

61. DTo attract customers. Customers usually prefer to shop at businesses that are clean and neat. Keeping the selling area in good condition promotes an image that appeals to customers and encourages them to buy. Customers are more likely to be attracted to clean businesses, which often leads to an increase in sales. Businesses do not keep their selling areas neat and clean in order to satisfy inspectors, please vendors, or interest employees.SOURCE: OP:032SOURCE: Berman, B., & Evans, J.R. (2004). Retail management: A strategic approach (9th ed.)

[pp. 318-320]. Upper Saddle River, NJ: Prentice Hall.

62. ASyndicated services. Many businesses do not have the resources to obtain primary information to make marketing decisions. Therefore, they often use secondary marketing information, which is data that is collected for purposes other than the project or problem at hand. Purchasing relevant secondary information from reputable sources is a cost-effective way of obtaining a variety of information to help businesses make marketing decisions. Many businesses subscribe to syndicated services, which are organizations that have access to vast amounts of information, such as statistical data, demographics, and psychographics. Businesses do not subscribe to obtain data from mining scouts, Intranet resources, or statistical wholesalers.SOURCE: OP:181SOURCE: Burns, A.C., & Bush, R.F. (2000). Marketing research (3rd ed.) [pp. 193-195]. Upper Saddle



63. DLaw firm. Many businesses do not have the expertise to address legal issues such as complex contracts, lawsuits, and other legal issues. When such issues arise, they often contract these services from law firms. Lawyers have the special training and necessary knowledge to interpret the various laws that affect businesses. A tax accountant possesses knowledge about taxation issues that affect businesses. A research analyst interprets certain types information or data. A business would hire an organizational consultant if it wanted to find ways to streamline and improve business processes and workflow.SOURCE: OP:182SOURCE: Kapoor, J.R., Dlabay, L.R., Hughes, R.J., & Hoyt, W.B. (2005). Business and personal

finance (p. 111). New York: Glencoe/McGraw-Hill.

64. DThe actual expenses. A marketing budget is an estimate of the projected income and expenses for a certain period--usually 12 months. Businesses track their budgets to make sure they are not spending too much money. If businesses do not review their budgets, and they spend too much money on their marketing activities, they may not have enough income to cover the expenses. Therefore, ideally, the projected and actual expenses are the same. Although a business often considers historical data (e.g., previous sales and expenses) when developing the budget, costs tend to increase somewhat, and are not variables to consider when actually tracking the budget. Operating costs are projected on the operating budget rather than the marketing budget.SOURCE: OP:185SOURCE: Ivancevich, J., & Duening, T. (2007). Business: Principles, practices, and guidelines (2nd ed.)

[p. 562]. Mason, OH: Thomson.

65. BProvide further information. By offering to provide further information, applicants are indicating their interest in the job without stating it directly. They are reinforcing their desire to be hired. Interviewers usually take this type of offer to mean that the applicant wants to be seriously considered for the position. Applicants have applied for a specific job and should not offer to take anything that is available. The job they have applied for has a specific salary range, and it would be inappropriate to offer to work for less. Applicants are not expected to send gifts of any type to interviewers.SOURCE: PD:029SOURCE: Daggett, W.R., & Miles, J.E. (1998). The dynamics of work: Introduction to occupations

(2nd ed.) [p. 72]. Cincinnati: South-Western Educational.

66. BIllegal activities. When people participate in illegal business activities, they are not only breaking societal laws, they are breaching a professional code of conduct, or ethical behavior. Often, professionals that have special certification to work in a specific field are subject to probation or certification loss if they break the law and breach the industry's code of ethics. Companies that have licenses to perform certain business activities can also have their licensure revoked. Participating in dangerous events or offensive actions does not always involve breaching ethics. Lobbying efforts are activities that are intended to influence legislation.SOURCE: PD:130SOURCE: Miller, R.L., & Jentz, G.A. (2005). Fundamentals of business law (6th ed.) [p. 126]. Mason,

OH: Thomson/South-Western.

67. CBranding. A brand is all of the combined impressions and experiences associated with a particular company, good, or service. Businesses develop strategies to position their products and communicate certain images about the products to attract their target markets. People who work to create products, and implement strategies to position and brand the products are commonly called brand managers. Logistics refer to the framework a business uses to coordinate various efforts, such as product distribution. Buying is a function (activity) of purchasing or product acquisition. Finance involves managing and obtaining funds for the use of achieving the business's goals. SOURCE: PD:133SOURCE: Etzel, M. J., Walker, B. J., & Stanton, W. J. (2007). Marketing (14th ed.) [pp. 227-228].



68. CPhysical injury. When a marketer's actions contradict the behavior standards that an organization establishes, the marketer is being unethical. Unethical behavior can occur in all aspects of marketing including promotion, channel management, research, and product management. When marketers do not behave ethically, they often face negative consequences. For example, if a business sells an untested product, consumers might incur injury or illness if the product is misused or consumed. Customer loyalty is a positive outcome of ethical behavior. Collusion, or price fixing, is unethical behavior associated with the pricing function. Biased information is a consequence of marketing research that is performed incorrectly or haphazardly.SOURCE: PD:135SOURCE: Zikmund, W.G., & d'Amico, M. (1999). Marketing (6th ed.) [p. 54]. Cincinnati: South-Western

College.

69. CAttract and keep customers. Marketing management involves all of the systematic processes that companies use to develop and deliver products to their customers and to communicate how those products provide customer value and satisfaction. Companies use these processes, strategies, and activities to attract and keep customers because without customers, the companies would not be in business. While companies must meet business objectives, they should promote product value to the customers rather than their self-interests. Businesses cannot force consumers to buy their products. Free trade occurs when countries allow product exchange with other nations with few, if any, government restrictions. SOURCE: PD:136SOURCE: Kotler, P., & Keller, K. L. (2006). Marketing management (12th ed.) [pp. 6-7]. Upper Saddle

River, NJ: Prentice-Hall/Pearson Education.

70. CBuild positive relationships with other individuals and businesses. Ethical standards are guidelines for behavior. Because personal ethics among people vary, some industries develop ethical standards so that each person working in the industry knows what is acceptable and not acceptable behavior in the profession. Businesses and employees who follow these standards demonstrate integrity and build trust with customers, other organizations, and community members. The primary purpose of following ethical standards in marketing is not to remove competition from the marketplace, improve working conditions and financial security, or prevent changes in the business environment.SOURCE: PD:137SOURCE: Etzel, M. J., Walker, B. J., & Stanton, W. J. (2007). Marketing (14th ed.) [pp. 17-18].


71. ANetworking opportunities. A professional organization consists of people who work in the same career or industry, who share common business interests, and who work together to focus on expanding professional knowledge and building strong professional standards. Networking is exchanging information with others for the purpose of professional or business development and/or advancement. By sharing information with others, marketing professionals often obtain new ideas, discover new ways to address problems, and learn about new job opportunities. Financial responsibilities might be considered disadvantages. Complimentary goods and instant recognition are not primary advantages to marketers who participate in professional organizations.SOURCE: PD:144SOURCE: Kimbrell, G., & Vineyard, B.S. (2006). Succeeding in the world of work (pp. 112-114).

New York: Glencoe/McGraw-Hill.


72. CDaily schedule. After you identify your activities, estimate how much time they will take, and identify their importance, you need to schedule when the activity will be completed during the day. A scheduled activity is much more likely to be carried out than one that has not been put on the schedule. A budget estimates what income and expenses will be for a specific period of time. A lead list is a list of organizations or individuals who might be interested in a salesperson's good or service. A job description is a written record of the duties and responsibilities associated with a particular job.SOURCE: PD:019SOURCE: OP LAP 1—About Time (Time Management in Business)

73. BUnethical. Setting very low prices on products to try to drive competitors out of business is an example of predatory pricing. In most cases, this type of pricing is considered unethical because its only purpose is to eliminate competition. Once businesses have driven out competitors, they usually raise prices because customers now have nowhere else to buy those products. This type of pricing often is effective in attracting customers; however, it is unethical because it eliminates competition. This type of pricing is not misleading or deceptive because it clearly advertises a very low price.SOURCE: PI:015SOURCE: Churchill, G.A., Jr., & Peter, J.P. (1998). Marketing: Creating value for customers (2nd ed.)

[pp. 326-327]. Boston: Irwin/McGraw-Hill.

74. CFalse, most factors affecting price are not controlled by the firm. Most of the factors to be considered in setting prices are external to the business. These factors are not controlled by the firm and include such factors as supply and demand, economic conditions, competition, and channel members.SOURCE: PI:002SOURCE: PI LAP 3—Factors Affecting Selling Price

75. DProduct repositioning. Product/Service management continues even after the product is established in the market. Its performance must be monitored so that, if necessary, changes can be made to extend its life cycle. Sometimes a product is repositioned in order to attract new users. An exclusive suite hotel that changes its marketing strategy to appeal to families rather than to executives is repositioning itself as a family-oriented property. Concept testing is exploring the concept, or idea, for a product in order to obtain feedback. Product screening is the process of considering each idea for a new product and discarding those that seem unworkable. Advertising is any paid form of nonpersonal promotion of ideas, goods, or services.SOURCE: PM:001SOURCE: PP LAP 5—Product/Service Planning

76. DTo adapt its marketing strategies. Businesses change their marketing strategies as their products go through the stages of the life cycle. This means that companies need to know where products are in their life cycles in order to use marketing strategies appropriate for each stage. It is not usually possible to prevent imitators from entering the market or to predict the length of a product's life cycle. Finding new uses for the product is a marketing strategy that is used to boost sales for a mature product.SOURCE: PM:024SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2002). Marketing essentials (3rd ed.)

[pp. 557-559]. Woodland Hills, CA: Glencoe/McGraw-Hill.


77. CTrack shipments. An important part of product/service management involves maintaining and improving the good or service because customers expect a quality good or service that keeps up with advances in technology. Satellite communications systems make it possible for businesses to track shipments for customers, thereby improving the good or service. If a business sells a product, it can track the product from the time it is ordered until it is delivered. If the business sells a service such as delivery, it can use satellite communications systems to track the delivery process. Satellite communications systems do not help businesses to order replacements, evaluate information, or use software.SOURCE: PM:039SOURCE: Zikmund, W., & d'Amico, M. (2001). Marketing: Creating and keeping customers in an

e-commerce world (7th ed.) [pp. 124-125]. Mason, OH: South-Western.

78. CSubstitute. Often, people think of new product ideas by altering existing products. The substitute item does not always replace the original item, but it provides the target market with another option that will still satisfy its needs and wants. For example, when making notes, people have their choice of using small notepaper or post-its, which are small notepads with an adhesive that sticks to objects. Brainstorming is a creative-thinking technique. A model is a small-scale representation of an item. Intangible products cannot be detected through the senses and are services that people perform rather than items people make.SOURCE: PM:127SOURCE: PM LAP 11—Unleash Your Oh! Zone (Product Idea Generation)

79. DEvaluate it against general criteria. Before a business invests time, personnel, and money to take an idea and turn it into a product, it must determine if the product is feasible or reasonable to make and market successfully. By establishing criteria (judgment statements or standards), the business can weigh the pros and cons of the idea before going forward with product development. A business develops a product prototype after determining that the idea is feasible. A survey is a marketing-research tool that a business uses to obtain information about a good or service. Simply developing a customer survey does not establish the feasibility of the product idea. Additionally, writing a marketing proposal does not help the business determine the product idea's feasibility.SOURCE: PM:129SOURCE: Clark, B., Sobel, J., & Basteri, C.G. (2006). Marketing dynamics (p. 281). Tinley Park, IL:

Goodheart-Willcox.

80. BTalking with customers and employees. A product opportunity is a situation in which a business acts on the chance to provide a good or service to a market segment that wants and is willing to pay for the product. Businesses must develop processes for recognizing product opportunities so that they can continue to compete in the marketplace. By talking with customers and the employees who are in contact with customers, a business can get ideas about what customers want. Then, the business can analyze the feedback to develop new products to meet the customers' needs. Reviewing sales forecasts, analyzing corporate objectives, and adding items to the product mix do not help businesses recognize product opportunities.SOURCE: PM:136SOURCE: Zikmund, W., & d'Amico, M. (2001). Marketing: Creating and keeping customers in an

e-commerce world (7th ed.) [pp. 286-287]. Mason, OH: South-Western.

81. BCustomer loyalty. Warranties and guarantees can be used to foster customer loyalty. When a business handles a customer's problem with a warranted or guaranteed product satisfactorily, the customer feels good about the business and is more likely to buy from it again. Increasing employee morale is not the purpose of handling such problems effectively, although that may occur. Satisfactorily handling problems generally reduces the number of consumer complaints and decreases the possibility of government intervention.SOURCE: PM:020SOURCE: PP LAP 4—Warranties and Guarantees


82. DThe Public Health Cigarette Smoking Act of 1971. This law banned radio and television advertising of tobacco products. The Fair Packaging and Labeling Act of 1967 includes laws that require product labels to identify the product, provide the names and addresses of the producer or distributor, and describe the contents of packages. The Federal Food, Drug, and Cosmetic Act of 1938 bans the production, transportation, and sale of misbranded or adulterated foods, drugs, cosmetics, and medical devices; requires testing of new drugs and generic labeling of all drugs; sets standards for production and sale of poisonous substances; and sets quality standards for foods. The Cigarette Labeling and Advertising Act of 1967 requires labels of cigarette packages to include warnings about the hazards of smoking.SOURCE: PM:017SOURCE: PP LAP 7—Consumer Protection in Product Planning

83. CAlteration. Alteration is making changes in the company's products or product lines. It is wise to try this method first when product sales of a product or product line decline because it is less expensive than developing a new product or product line. Expansion is adding product items or product lines. This would not solve the problem of declining sales of another product or product line. Contraction is deleting or removing products or product lines. This method could be used if alteration does not succeed. Trading-up is adding a higher priced product or product line to the product mix. This would not stop the decline of sales in other product lines.SOURCE: PM:003SOURCE: PP LAP 3—Product Mix

84. DEncourage future sales. Product bundling involves combining goods and/or services and offering them to customers as one product for a lower price than if the customers were to buy all of the products individually. The reason why businesses bundle products is to get customers to try a product they would not normally purchase. If the customers try the product, and like it, they might purchase the product as an unbundled item at another time, which encourages future sales. Businesses do not bundle products so they can limit returns, monitor promotional activities, or eliminate cash shortages.SOURCE: PM:041SOURCE: Boone, L.E., & Kurtz, D.L. (2004). Contemporary marketing (11th ed.) [pp. 425-426].


85. BThere is a high demand for customer service. It's the basic law of supply and demand: The supply of employees should always meet or exceed the demand for their services in order for a business to prevent long customer waits and poor service. If there are only a few customers in the store, it is actually okay for the supply of employees to go down because it will still be possible to meet their service needs. It makes sense that when the business is closed, there will be fewer employees at work. During off-seasons (e.g., winter in the lawn-care industry), it is acceptable to have a small supply of employees (e.g., landscapers) to take care of service demands.SOURCE: PM:013SOURCE: PM LAP 1—Customer Service Supersized!

86. BFocus on a competitor's weakness. Before a positioning strategy is chosen, a company must decide how it is going to differentiate itself from competitors. One way is to identify a weakness that a competitor has. Then, the company points out that it has something to offer that the competitors don't have. A business usually determines its target market before developing a positioning strategy. Once the strategy is in place, a business might develop a promotional plan and advertise a mission statement.SOURCE: PM:043SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2002). Marketing essentials (3rd ed.)

[pp. 560-561]. Woodland Hills, CA: Glencoe/McGraw-Hill.


87. DIncreased product sales. Businesses use promotion to "spread the word" to consumers that they offer certain products which often result in increased sales. Businesses may also benefit from a more favorable corporate image. Deceptive advertising, added costs, and debates over controversial issues are disadvantages to the business.SOURCE: PR:001SOURCE: PR LAP 2—Promotion

88. CWe construct our products with recycled materials. Social responsibility is the duty of a business to contribute to the well-being of society. Many consumers are concerned about the environment and prefer to purchase items made with recycled materials. Businesses often develop promotional messages that inform consumers that they make their products with recycled materials. When a business claims that its products perform better than its competitors' products, it is comparing products. A message that implies that a person can be popular if s/he purchases a certain product is sending a materialistic message. Giving out coffee cups is an example of a sales promotion.SOURCE: PR:099SOURCE: Arens, W.F. (2004). Contemporary advertising (9th ed.) [p. 71]. Boston: Irwin/McGraw Hill.

89. DCompact disk. A compact disk is a small optical disk that has the ability to hold large amounts of information. A business can record promotional information about its products on compact disks and send the disks as direct mail to the business's target market. The direct-mail recipients can then view the promotional information on their computers. A cookie is a text file that is put on a web-site visitor's hard disk and then later retrieved during subsequent visits to the site in order to track Internet behavior. Cassette tapes record and play audio data by using a tape recorder, which many people consider obsolete. Sample packs, which are samples of a product that a recipient can try, are often part of direct-mail promotional pieces. However, sample packs do not necessarily include compact disks.SOURCE: PR:100SOURCE: Arens, W.F. (2004). Contemporary advertising (9th ed.) [p. 571]. Boston: Irwin/McGraw Hill.

90. DInformative. Informative direct mail provides consumers with background information on a good or service. The dry cleaner wants consumers to know what types of alterations it offers. Persuasive direct mail is a type of direct mail used by businesses to encourage immediate action through the use of self-addressed, stamped, reply envelopes or toll-free telephone numbers. Reminder direct mail is a type of direct mail primarily intended to make the consumer consider the good or service. Utility direct mail is the functional part of a direct mailing such as a business-reply postcard.SOURCE: PR:007SOURCE: PR LAP 3—Ad-quipping Your Business

91. CIt is usually less expensive than personal selling methods. Direct mail is defined as promotional messages that are sent directly to consumers' homes and businesses. Direct mail appears in many forms, including postal mail (e.g., catalogs, sales letters) and electronic mail (e-mail). Personal selling is a form of promotion that determines client needs and wants and responds through planned, personalized communication that influences purchase decisions and enhances future business opportunities. Although developing direct-mail pieces can be expensive, personal selling is generally considered the most expensive promotional method. Micro-marketing is a general term that is sometimes used to describe target marketing. Direct mail (e.g., junk mail, spam) is not necessarily more effective in creating brand awareness than television advertising. Direct mail is used more often with targeted markets, rather than broad audiences. SOURCE: PR:089SOURCE: Kotler, P., & Armstrong, G. (1999). Principles of marketing (8th ed.) [p. 507]. Upper Saddle



92. CTo create consumer demand. One of the main objectives of developing a promotional plan is to create consumer demand for the business's goods or services. The promotional plan is a framework for the promotional activities of a business. A business designs a specific plan in the hopes of attracting customers and creating in them a desire to purchase the business's goods or services. Identifying the target market, selecting advertising media, and conducting market research are steps in developing a promotional plan rather than reasons for developing one.SOURCE: PR:073SOURCE: Lovelock, C., & Wright, L. (1999). Principles of service marketing and management (p. 513).

Upper Saddle River, NJ: Prentice Hall.

93. CReferral. Referrals are individuals or businesses to whom salespeople are recommended. Loyal customers often provide salespeople with leads to new clients. Repeat sales are sales made to the same customer over and over again. Word-of-mouth advertising is promotion or publicity for a business provided by customers who tell others of their satisfaction. Loyalty is preference for a business that results from building goodwill.SOURCE: SE:828SOURCE: SE LAP 115—Keep Them Loyal (Building Clientele)

94. AEnhances communication and follow-up with customers. This use of technology improves communication and follow-up and leads to repeat business. Customers are more likely to respond positively when they are reminded about needed service. Cross-functional teaming refers to improving the ability of different teams within an organization to work together in various areas. This would streamline the follow-up step but not all aspects of the selling process. Intraorganizational communication refers to communication within the organization rather than outside of the organization.SOURCE: SE:107SOURCE: Ingram, T.N., LaForge, R.W., Avila, R.A., Schwepker, C.H., & Williams, M.R. (2001).

Professional selling: A trust-based approach (pp. 131-133). Mason, OH: South-Western.

95. CPersonal experience. An effective way of obtaining firsthand product knowledge is for a salesperson to use the product personally. Salespeople who use the products they sell find out exactly how the product works and often are better able to answer customers' questions. Personal experience is a good way of learning about products. Customer opinion, vendor information, and government reports are not ways of obtaining firsthand product knowledge.SOURCE: SE:062SOURCE: Burrow, J.L. (2002). Marketing (pp. 465-467). Mason, OH: South-Western.

96. CComfort. Hidden benefits are advantages that cannot be seen or understood without the assistance of a salesperson. For example, when buying a pair of shoes, the customer can see the color and style of the shoes but may be unaware of the shoe's comfort unless the salesperson points out that benefit. Explaining hidden benefits often helps a salesperson to increase sales. Material, appearance, and warranty are examples of features rather than benefits.SOURCE: SE:109SOURCE: SE LAP 113—Find Features, Boost Benefits (Feature-Benefit Selling)

97. ARepeat sales. Reaffirming the buyer-seller relationship through effective follow-up serves to nurture and maintain this relationship after the initial sale. This reaffirmation often leads to repeat sales because the customer is satisfied with the service. Initial contact is the approach. Discovering needs and reaching closure take place before reaffirming the buyer-seller relationship.SOURCE: SE:048SOURCE: SE LAP 126—The Selling Process


98. CConflict of interest. Managers might encounter a conflict of interest if they are unable to be objective when making decisions about employees. For example, if they are friends with an employee, they might not want to give that person a negative performance evaluation even though it is justified. In those situations, managers should remove themselves in order to be ethical and allow a manager who is not a friend of the employee to conduct the evaluation. Balance of trade is the difference between the value of a nation's exports and its imports. Span of control is the number of workers reporting to a manager. Return on investment is income received from an investment in a business.SOURCE: SM:002SOURCE: DuBrin, A.J. (2003). Essentials of management (6th ed.) [pp. 91-93]. Mason, OH: South-

Western.

99. DLinking producers and consumers. Intermediaries, or middlemen, are all of the businesses or individuals which perform the activities needed in getting a good or service from those who produce it to those who consume it. Businesses must choose the intermediaries with whom they do business very carefully in order to operate successfully. Some intermediaries are a good source of information about competitors, but they are not responsible for providing such information. Intermediaries are also not responsible for researching a business's target market or keeping it up to date about technological changes.SOURCE: SM:011SOURCE: MN LAP 43—External Planning Considerations

100. BProvide guidelines for decision making. Marketing policies are general guidelines that help businesses make various marketing decisions. For example, in the product-management function of marketing, product policies provide guidelines for the goods and services the business offers to its customers. In the selling function of marketing, selling policies guide the personal selling effort and outline how things should be done. Promotion policies are the general guidelines for the promotion function of marketing. The primary purpose of marketing policies is not to inform employees about government regulations, reduce operating costs and waste, or confirm brand awareness with targeted messages. SOURCE: SM:025SOURCE: Rue, L., & Byars, L. (2006). Business management: Real-world applications and connections

(pp. 241-242). Woodland Hills, CA: McGraw-Hill.

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