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FINAL EXAM POOL ITEMS (5th Text Edition Chapters -- 10, 12, 13, 15, 16, 17 & 19 ... NOT 20)

ACTUAL FINAL EXAM = 35 POINTS & 35 ITEMS [3 - 5 Items Per Chapter]

Chapter 10 (5th Textbook Edition —Product Concepts)

MULTIPLE CHOICE

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

ANS: E PTS: 1 REF: 131 OBJ: 09-1 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product

2. The _____ is the starting point in creating a marketing mix.a. priceb. productc. distribution channeld. promotional mediae. production line

ANS: BThe product must be specified before other marketing mix variables can be planned.

PTS: 1 REF: 131 OBJ: 09-1 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Product

3. Why is creation of a product the starting point for the marketing mix?a. The production department must know what to produce first.b. Production strategy is the first of the four Ps listed in the marketing mix.c. Determination of the price, promotional campaign, and distribution network cannot begin

until the product has been specified.d. Product development takes the longest amount of time to complete.e. Actually, the product does not have to be the starting point--promotional strategies are

often the starting point.

ANS: CThe product is the first decision around which the others are based.

PTS: 1 REF: 131 OBJ: 09-1 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Strategy

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



c. Colord. Weighte. Size

ANS: A PTS: 1 REF: 131 OBJ: 09-1 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product

5. In the long run, regardless of the effort put into the product management process, the most important factor determining if a consumer product will succeed or fail is:a. the product mix planb. the way the firm implements its production strategyc. the marketing plan it selects for its productsd. how well the manufacturer satisfies its customers' needse. the competition encountered by the manufacturer

ANS: DProducts succeed because they deliver benefits and satisfy customer needs.

PTS: 1 REF: 131 OBJ: 09-1 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

7. The consumer product classification system is based on:a. how the market is segmentedb. the way the products are manufacturedc. the way products are usedd. the physical attributes of the producte. the amount of effort consumers spend to acquire the product

ANS: EProducts are classified by the amount of effort that is normally expended in the acquisition process.


8. _____ products are purchased with little shopping effort. These products typically are purchased regularly, usually with little planning, and require wide distribution.a. Convenienceb. Specialtyc. Branded shoppingd. Unbranded shoppinge. Generic


12. The convenience product marketing strategy includes:a. wide distribution of the productb. higher than ordinary pricesc. few retail outlets other than convenience stores



d. significantly lower promotion budgetse. products that are not easily substitutable

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


13. Compared to the other classifications of consumer products, shopping products are:a. widely available so they need little or no promotionb. usually less expensive than convenience productsc. purchased without significant planningd. usually more expensive than convenience products and are found in fewer storese. purchased immediately after the consumer realizes he or she needs them

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


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

ANS: AHarrison is comparing ads looking for a low price. This is shopping product behavior.

PTS: 1 REF: 132 OBJ: 09-2 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

16. The two types of shopping products are:a. unsought and convenienceb. generic and familyc. exclusive and intensived. heterogeneous and homogeneouse. consumer and business

ANS: D PTS: 1 REF: 132 OBJ: 09-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product

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



a. Low-prestige specialty productsb. Product equivalentsc. Heterogeneous shopping productsd. Generic convenience productse. Homogeneous shopping products

ANS: E PTS: 1 REF: 132 OBJ: 09-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

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

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


19. _____ products are seen by consumers to differ in quality, style, suitability, and lifestyle compatibility. Comparisons between these products are often quite difficult because they may have unique features and different levels of quality and price.a. Product equivalentsb. Comparative convenience productsc. Homogeneous shopping productsd. Product counterpartse. Heterogeneous shopping products

ANS: E PTS: 1 REF: 132 OBJ: 09-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

22. _____ products are searched for extensively, and substitutes are not acceptable. These products may be quite expensive, and often distribution is limited.a. Exclusive shoppingb. Homogeneous conveniencec. Branded shoppingd. Specialtye. Heterogeneous convenience




25. When deciding on distribution plans for specialty products, companies generally ensure that the items are:a. made available only as private brandsb. made available in a large number of stores in a geographic areac. made available only through the maild. distributed to a considerable number of stores in a geographic areae. distributed to only a few stores in the geographic area

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

PTS: 1 REF: 132 OBJ: 09-2 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Distribution

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


29. Unsought products typically are products that:a. consumers purchase when they see them in a convenient locationb. consumers definitely don't wantc. only require reminder advertising to be successfuld. require little or no decision making by the buyere. consumers don't know about or don't actively look for


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



ANS: CThe buyer does not actively seek to buy this product.


31. A product line is a group of products that are closely related because the:a. products share the same product managersb. products all function in a similar manner and provide similar benefitsc. same company developed the idea for each productd. products are all sold under the same brand namee. products are all priced about the same

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


35. Product mix width may be defined as:a. the number of different product categories found within an industryb. the average number of products within each product line in the companyc. the average number of products offered by the companyd. the number of different product lines an organization offers for salee. the extensiveness of the coverage of the line from high end (expensive) to low end

(inexpensive)


38. Which of the following is an example of a product modification?a. lowering the price of textbooksb. dropping a product from the product linec. changing the color of a laundry detergentd. changing the amount of management time spent overseeing productione. increasing the number of distribution outlets

ANS: CProduct modification entails changing one or more of a product's characteristics.

PTS: 1 REF: 134 OBJ: 09-3 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Product



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

ANS: EQuality modifications entail changing a product's dependability or durability.


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

ANS: AFunctional modifications are changes in a product's versatility, effectiveness, convenience, or safety.


45. Which of the following statements about planned obsolescence is true?a. Environmentalists support planned obsolescence.b. A company that is interested in producing a quality product would never engage in

planned obsolescence.c. Style modification creates planned obsolescence.d. Planned obsolescence is not an ethical issue.e. All of the statements about planned obsolescence are true.

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


46. Which of the following statements about planned obsolescence is true?a. Planned obsolescence describes the practice of causing products to become obsolete

before they actually need replacement.b. Opponents of planned obsolescence argue the practice is wasteful and unethical.c. Marketers contend that consumers, not manufacturers and marketers, decide when styles



are obsolete.d. Consumers favor style modifications because they like changes in the appearance of goods

such as clothing and cars.e. All of these statements about planned obsolescence are true.

ANS: E PTS: 1 REF: 134 OBJ: 09-3 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Product

47. A style modification is a(n):a. change in the product's durability or dependabilityb. safety improvementc. aesthetic product changed. way to add conveniencee. improvement in product versatility and effectiveness

ANS: C PTS: 1 REF: 134 OBJ: 09-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product

49. A regional utility company needs to change consumers' perceptions of its current service as being harmful to the environment. Which of the following strategies would best allow the company to accomplish this goal?a. contraction of the number of services offered by the utility companyb. adding new services to its product linec. repositioningd. disintermediatione. use of product cannibalization

ANS: CRepositioning is a firm's attempt to change customer perceptions of a product.


52. _____ commonly occurs soon after style modification.a. Implied repositioningb. Demarketingc. Marketing innovationd. Planned obsolescencee. Planned functionality

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

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



TOP: AACSB Reflective Thinking | TB&E Model Product

58. A _____ is the part of the brand that can be spoken.a. brand equityb. service markc. trademarkd. brand namee. certification mark


59. The _____ is the symbol that cannot be spoken in a brand.a. brand markb. trademarkc. brand equityd. quality marke. intangible product


62. A(n) _____ refers to brands where at least 20 percent of the product is sold outside the home country.a. evoked setb. global brandc. equity brand named. master brande. ethnocentric trademark

ANS: B PTS: 1 REF: 136 OBJ: 09-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product

64. A consumer who consistently and repeatedly purchases the same brand is said to have:a. brand loyaltyb. product equityc. product loyaltyd. product repetitione. store loyalty

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

PTS: 1 REF: 136 OBJ: 09-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

65. Brand loyalty can:a. increase product diffusion



b. encourage competitionc. shorten the amount of time a product spends in the maturity staged. help ensure repeat salese. sell a bad product

ANS: DBrand loyalty ensures repeat and regular sales.


71. Which of the following statements describes an advantage to retailers associated with developing their own brands?a. Dealers must market the brand, thus cutting into the gross margin.b. Higher gross margins are available on private brands.c. Private brands, particularly those owned by discounters, are perceived to be of a higher

quality.d. Dealers often buy in large quantities and thus always have a ready supply.e. Private brands are normally delivered more promptly by the manufacturer.

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


72. A small chain of supermarkets in the western United States sells only manufacturers’ brands. Which of the following is one of the arguments you could have used to dissuade the supermarket chain owner from selling only manufacturers’ brands?a. A well-known manufacturers’ brand will not enhance the chain's image.b. Manufacturers rarely spend money advertising the brand name to consumers.c. Manufacturers typically offer a lower gross margin than could be earned on private label

brands.d. Manufacturers force the chain to carry a large in-store inventory.e. Relying on the manufacturer or wholesaler to deliver a national brand quickly is optimistic

at best.

ANS: CThe dealer will get a higher gross margin on a private brand. See Exhibit 9.2.


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



c. bargaind. dealere. umbrella


82.A _____ is a legal term indicating the owner's exclusive right to use a brand name or other identifying mark.a. trademarkb. patentc. brandd. private brande. right of warranty

ANS: A PTS: 1 REF: 138-139 OBJ: 09-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product

84. When a product name becomes generic,:a. the firm must use black-and-white packagingb. competitors are prohibited by law from using the trademarkc. the price will have to drop to appeal to lower-income consumersd. the product name is no longer recognized as the exclusive property of one firme. a firm can reapply for exclusive trademark protection at the U.S. Patent Office

ANS: DA generic product name can be used by any firm and is public property.


85. Your boss has just told you to work on getting trademark protection for a new brand of backpack the firm has developed. The product is to be called the Thermos Pak and has a unique logo. You tell your boss that this protection will be difficult because:a. thermos is a generic product nameb. of the catchy phrase you will need to promote the new brandc. you also use abbreviated versions of your brand name like TeePee and T.P.d. brand logo designs, even as unique as yours, cannot be trademarkede. the shape of your new and unusual product cannot be legally protected

ANS: AA generic product name identifies a product by class or type and cannot be trademarked.


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



b. guarantee product qualityc. protect the productd. promote the producte. facilitate product storage, use, and convenience

ANS: B PTS: 1 REF: 140 OBJ: 09-5 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Product

88. You have to convince your boss that packaging will be the key to increasing sales of the company's new line of instant pudding mixes, so you tell him the packaging:a. will cause no environmental damageb. allows products to be shipped more easilyc. conforms to government regulationsd. can be used to help promote the producte. will conforms to all ethical standards

ANS: DPromotion is a prime function of packaging that can help stimulate sales.


92. Which of the following statements about bar codes is true?a. Bar codes are also called universal pricing codes (UPCs).b. Bar codes were first used in 2000.c. Bar codes can be read by optical scanners.d. Bar codes cannot be used as a marketing research tool.e. None of these statements about bar codes is true.

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


93. The two types of package labeling in common usage today are:a. informational and persuasiveb. promotional and nonpromotionalc. functional and persuasived. government-mandated and seller-controllede. motivational and required


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



a. descriptiveb. functionalc. repositioningd. informationale. persuasive

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


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

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


96. Which of the following is NOT one of the functions of universal product codes (UPCs)?a. allow scanners to match codes with brand names, package sizes, and pricesb. print product and price information on cash register tapesc. assist retailers in preparing records of customer purchasesd. allow retailers to accurately track sales and control inventoriese. provide the detailed nutritional information required by the FDA

ANS: EUniversal product codes do not contain nutritional information.


97. Which of the following does NOT need to be a branding and packaging consideration for companies considering global marketing?a. whether to use one brand name with no adaptation to local markets or to use one name but

adapt and modify it for each local marketb. translation or pronunciation problems with brand namesc. different currencies in each country, exchange rates, and final retail pricesd. whether to use different brand names in different markets for the same products



e. product labeling, package aesthetics, and climate considerations

ANS: CCurrency and pricing considerations are not the prime considerations when considering global branding and packaging strategies.

PTS: 1 REF: 140-141 OBJ: 09-6 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Product

98. Which of the following is NOT an important consideration for a French manufacturer that wants to market its products in Canada?a. There may be aesthetic issues associated with developing a packaging strategy.b. Alternative messages could be developed for promoting the brand.c. Keeping the current brand names will allow the firm to capitalize on current domestic

brand equity.d. Sturdy packaging will be needed to ship the products to Canada.e. Unique labels may be required by the Canadian government.

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


99. Three aspects of packaging that are especially important in international marketing are labeling, aesthetics, and:a. priceb. length of distribution channelc. counterfeiting potentiald. warrantiese. climate considerations

ANS: E PTS: 1 REF: 141-142 OBJ: 09-6 TYPE: CompTOP: AACSB Analytic | TB&E Model Product | TB&E Model Strategy

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

ANS: DAn express warranty is any written guarantee.

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



TOP: AACSB Reflective Thinking | TB&E Model Product

102. Realizing that its product needed a warranty to gain rapid market acceptance, the manufacturer of a high-tech system for investigating accidents produced:a. a statement for salespeople to read to prospective buyersb. an acknowledgment of company responsibilities for salespeople to build into presentationsc. a label stating the product is of the highest quality and backed by years of manufacturing

experienced. an advertisement stating that buyers would not perceive the purchase of this product as

riskye. a written guarantee that the product would work as promised and that it is fit for the

purpose for which it was sold

ANS: EA written guarantee is an express warranty. This guarantee states what is contained in an implied warranty.


103. The statement on the toothpaste box that brushing twice a day with this paste will remove 90 percent of all tartar from the user's teeth is an example of a(n):a. implied warrantyb. functional labelc. UPC disclaimerd. express warrantye. universal warranty

ANS: DAn express warranty is any written guarantee.


104. Due to the existence of a(n) _____, Shannon had every reason to believe the antacid he purchased would relieve his stomach problems if he followed the directions on the box.a. implied warrantyb. functional labelc. persuasive labeld. express warrantye. universal warranty

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


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



a. Label Lawb. Lanham Actc. Bill of Rightsd. Good Housekeeping Seale. Uniform Commercial Code

ANS: EThe Uniform Commercial Code regulates all sales.




Chapter 12 (5th Textbook Edition — Services and Nonprofit Organization Marketing)

MULTIPLE CHOICE

3. A(n) _____ is the result of applying human or mechanical efforts to people or objects.a. application processorb. profit intermediaryc. tangible productd. servicee. nonprofit organization


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


8. Ian Trent has an MBA and is being recruited by an investment banking firm as a sales representative. He has had ten years of experience in selling industrial supplies. He was quite successful in this job but is worried that selling investment strategies may be more difficult. What factor would be the major reason for this worry?a. Services are intangible and, therefore, different from his previous experience.b. His services and the products he sells are inseparable.c. The marketing program of investment strategies is inconsistent.d. The cost inventory management system of reimbursing him may cause a problem when he

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

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


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



c. experience qualityd. credence qualitye. heterogeneity feature


12. Aristide and Oana are considering attending a clinic to help them quit smoking. They will be better able to assess the _____ of the clinic after they attend the clinic and learn about the techniques it uses to help customers quit smoking.a. tangible attributeb. experience qualityc. creative qualityd. credence qualitye. heterogeneity feature

ANS: B PTS: 1 REF: 160 OBJ: 11-2 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Customer

14. Deidre Longo has just accepted a position at a major entertainment venue where she is responsible for selling season tickets. She formerly was a salesperson for a company that sold sound systems for arenas, stadiums, and theaters. She believed she understood why theater managers bought certain products but realizes selling tickets to individuals will be different. What is one of the key differences she can expect to find?a. The customer will select and evaluate entertainment on the basis of search qualities.b. Customers are engaged in this as a low-involvement product.c. A consumer will use experience qualities to evaluate the entertainment service.d. The use of the service will involve standardized service levels and not exhibit

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

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

PTS: 1 REF: 160 OBJ: 11-2 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Customer

15. A(n) _____ is a characteristic that cannot easily be assessed even after purchase since the customers do not have the knowledge or experience.a. heterogeneity featureb. perishable attributec. experience qualityd. search qualitye. credence quality

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



TOP: AACSB Reflective Thinking | TB&E Model Customer

16. Which of the following services would be most likely to exhibit strong credence qualities?a. a math tutorial serviceb. the repair of a leaky drainc. the preparation of a dead body for buriald. tax return preparatione. a landscaping service that mows lawns

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


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

ANS: A PTS: 1 REF: 160 OBJ: 11-2 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Product

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

ANS: BInseparability is when services or goods are produced and consumed at the same time.


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



d. simultaneous production and consumptione. flexibility

ANS: CHeterogeneity means that a service tends to be less standardized and uniform than goods.

PTS: 1 REF: 160 OBJ: 11-2 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Strategy

20. There are fewer problems caused by the service characteristic of _____ when the service being purchased requires little interaction between the service personnel and the customer.a. perishabilityb. inseparabilityc. intangibilityd. heterogeneitye. instability

ANS: D PTS: 1 REF: 160 OBJ: 11-2 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Customer

21. It is difficult to achieve consistency and standardization of services because of which service characteristic?a. customizationb. simultaneous production and consumptionc. intangibilityd. perishabilitye. heterogeneity


23. Which of the following is NOT a method firms can use to reduce the inherent variability of services?a. standardized preparation proceduresb. mechanizing the processc. standardizationd. providing tangible cuese. training of employees in performance standards

ANS: DProviding tangible cues will not increase the consistency or reliability of the service itself.

PTS: 1 REF: 160-161 OBJ: 11-2 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Strategy

24. Due to service _____, services cannot be stored, warehoused, or inventoried.a. tangibilityb. variabilityc. intangibilityd. perishability



e. heterogeneity


27. Which of the following is NOT a service component customers use to evaluate service quality?a. validityb. empathyc. assuranced. responsivenesse. reliability

ANS: A PTS: 1 REF: 161 OBJ: 11-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Customer

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

ANS: AEmpathy refers to providing caring and individualized attention to customers.


38. If a customer expects to wait one week for a pair of shoes to be mended but is told that the shoes are ready to be picked up less than 24 hours after leaving them at the repair shop, the customer's evaluation of service quality will be high. However, a two-week wait would result in a lower evaluation. The two-week gap would illustrate a gap between:a. service quality specifications and the service that is actually providedb. the service customers receive and the service they wantc. what the company provides and what the customer is told it providesd. what customers want and what management thinks customers wante. what management thinks customers want and the quality specifications management

develops to provide

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




39. If a hospital measured the service quality of its physician care in terms of the total number of people who were attended to--even if patients appeared to want more individualized care--the hospital would be exhibiting a gap between:a. what customers want and what management thinks customers wantb. the service quality specifications and the service that is actually providedc. what the company provides and what the customer is told it providesd. what management thinks customers want and the quality specifications management

develops to provide the servicee. the service customers receive and the service they want

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


40. Which of the following statements about developing marketing mixes for services is true?a. The variability and perishability of services may require adjustments in marketing mix

elements.b. Marketing mixes for services are often different than those for products.c. Elements of the marketing mix must be adjusted for the unique characteristics of services.d. The intangibility and simultaneous production and consumption of services may require

adjustments in marketing mix elements.e. All of the statements about developing marketing mixes are true.

ANS: E PTS: 1 REF: 162-164 OBJ: 11-4 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Strategy

41. Which of the following is NOT an example of a type of service processing that can occur?a. people processingb. product processingc. possession processingd. information processinge. mental stimulus processing


43. Which of the following services is an example of possession processing?a. a theatrical performanceb. an X-ray of a broken bonec. an advertising agencyd. marriage counselinge. heating system repair

ANS: EPossessions processing occurs when the service is directed to the customers’ physical possessions.




45. Which of the following services is an example of mental stimulus processing?a. taxi cab serviceb. insurancec. a professional tennis matchd. veterinarian caree. a hair cut

ANS: C PTS: 1 REF: 163 OBJ: 11-4 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Product

46. Which of the following services is an example of information processing?a. investment adviceb. a funeral servicec. pet neuteringd. the fitting of orthodontic bracese. attendance at a Major League Baseball game

ANS: AInformation processing describes services that use brain power directed at a customer’s assets.


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

ANS: DThe core service is what the consumer is buying.


52. _____ is the strategy that uses technology to deliver customized services on a mass basis.a. Mass standardizationb. Aggregated servicesc. Technological processingd. Mass customizatione. Aggregated marketing

ANS: D PTS: 1 REF: 163 OBJ: 11-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy



53. The ability of each hotel guest to use his or her room’s television to check out of the hotel room and to confirm additional charges on bills in the hotel's restaurants and gift shops is an example of:a. a cooperative serviceb. mass customizationc. aggregated standardizationd. a market development strategye. mental stimulus processing

ANS: B PTS: 1 REF: 163 OBJ: 11-4 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Product

56. Which of the following is NOT a key factor in the distribution strategy for services?a. customizationb. convenience for customersc. number of intermediaries and outletsd. scheduling of service deliveriese. location

ANS: ACustomization is a key factor in the product component of the service marketing mix.

PTS: 1 REF: 163-164 OBJ: 11-4 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Strategy

59. Promotion strategies for dealing with the unique features of services include all of the following EXCEPT:a. using personal sources of informationb. creating strong organizational imagesc. stressing tangible cuesd. using postpurchase communicatione. satisfying patronage-oriented objectives

ANS: EPatronage-oriented objectives are part of a service pricing strategy.

PTS: 1 REF: 164 OBJ: 11-4 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

60. A pest control company paints dead roaches on its trucks and uses similar graphics on its letterhead, business cards, and all promotions. The pest control company is using what type of promotion strategy?a. stressing tangible cuesb. stressing homogeneityc. using personal information sourcesd. providing packaging cuese. communicating service integration signals

ANS: A PTS: 1 REF: 164 OBJ: 11-4 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy



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

ANS: B PTS: 1 REF: 164 OBJ: 11-4 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

63. Boutique hotels are the perfect hotels for people who are tired of traditional cookie cutter hotels that all look alike. One boutique hotel chain calls its staff its cast and has them wear fashionable solid black outfits. Its corridors are softly lit, and suite doors are arches lit with recessed blue lighting. Its lobby has a ceiling-to-floor waterwall. The promotional strategy for this boutique hotel is to:a. create a strong organizational imageb. separate the point of production from the point of service consumptionc. emphasize postpurchase communicationd. stress intangible cuese. use personal information sources

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

PTS: 1 REF: 164 OBJ: 11-4 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

64. The three categories of pricing objectives for services are:a. sales-, quality-, and location-orientedb. quality-, value-, and consumer-orientedc. revenue-, operations-, and patronage-orientedd. turnover-, volume-, and capacity-orientede. equity-, cost-, and revenue-oriented

ANS: C PTS: 1 REF: 165 OBJ: 11-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing

65. A focus on maximizing the surplus of income over costs is a(n) _____ pricing objective for service firms.a. revenue-orientedb. operations-orientedc. market-share-orientedd. patronage-orientede. service-quality

ANS: A PTS: 1 REF: 165 OBJ: 11-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing



66. Determining costs can be extremely difficult for a service provider that has adopted a(n) _____ pricing objective and may limit the usefulness of the objective.a. market-share-orientedb. operations-orientedc. revenue-orientedd. patronage-orientede. break-even

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

PTS: 1 REF: 165 OBJ: 11-4 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Pricing

69. A continuing problem for most Minor League Baseball (MiLB) teams is low attendance. Event and venue sponsors want to see fans in the stadiums, and the players appreciate fan support. Given this information, which pricing strategy would you recommend MiLB teams use?a. operations-oriented pricingb. peak profitability pricingc. patronage-oriented pricingd. supply-demand pricinge. revenue-oriented pricing

ANS: CPatronage-oriented pricing tries to maximize the number of customers using the service.

PTS: 1 REF: 165 OBJ: 11-4 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Pricing

70. A focus on maximizing the number of customers using a service is a(n) _____ pricing objective for service firms.a. maximization of demandb. patronage-orientedc. profitability-orientedd. operations-orientede. revenue-oriented

ANS: B PTS: 1 REF: 165 OBJ: 11-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing

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



ANS: B PTS: 1 REF: 166 OBJ: 11-5 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

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

ANS: E PTS: 1 REF: 166 OBJ: 11-5 TYPE: DefTOP: AACSB Communication | TB&E Model Strategy

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

ANS: BRelationship marketing involves ongoing interaction between the service provider and the customer.


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

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




76. The level of relationship marketing that is least likely to be effective in the long term because its advantage is easily imitated by other firms is based on:a. personal communicationsb. social bondsc. service delivery heuristicsd. pricing incentivese. structural bonds

ANS: D PTS: 1 REF: 166 OBJ: 11-5 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing

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

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


79. Building value-added services that are not readily available from other firms into the delivery system defines relationship marketing based on the creation of:a. financial bondsb. social bondsc. service delivery paradigmsd. personal communication channelse. structural bonds

ANS: E PTS: 1 REF: 166 OBJ: 11-5 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

81. Relationship marketing programs that are based on _____ bonds have the strongest potential for sustaining long-term relationships with customers.a. financial and individualb. social and structuralc. financial, social, and structurald. financial and patronagee. financial and structural

ANS: C



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

PTS: 1 REF: 166 OBJ: 11-5 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Customer

82. Treating employees as customers and developing systems and benefits that satisfy their needs such as training, stressing teamwork, and employee empowerment is known as _____ marketing.a. organizational qualityb. relationshipc. internald. job-facetede. job-satisfaction

ANS: C PTS: 1 REF: 166 OBJ: 11-6 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Customer

84. Global competition in the services arena is intense. _____ is the world's largest exporter of services.a. Germanyb. Japanc. The United Statesd. Chinae. Canada

ANS: C PTS: 1 REF: 166 OBJ: 11-7 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model International Perspective

85. Many U.S. services industries have the potential for globalization because of their existing competitive advantages. According to the text, which of the following is an example of a service industry that possesses a distinct competitive advantage?a. soft-drink bottlingb. construction and engineeringc. book publishingd. petroleume. sports franchises

ANS: B PTS: 1 REF: 166 OBJ: 11-7 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model International Perspective

86. A _____ seeks to achieve some goal other than the usual business goals of profit, market share, or return on investment.a. nonprofit organizationb. synergistic entityc. company with no equityd. service providere. patronage-oriented organization

ANS: A PTS: 1 REF: 167 OBJ: 11-8 TYPE: Def



TOP: AACSB Reflective Thinking | TB&E Model Strategy

88. The predominant form of nonprofit organization in the United States is:a. farmsb. arts museums and programsc. private-sector volunteer organizationsd. social service firmse. government


90. _____ includes marketing activities conducted by individuals and organizations to achieve some goal other than normal business goals, such as profit, market share, or return on investment.a. Cause-related sponsorshipb. Nonprofit organization marketingc. Marketing autonomyd. Service marketinge. Social marketing


91. _____ refers to the efforts of public and private nonprofit firms to bring about mutually satisfying exchanges with their target markets.a. Autonomous marketingb. Public affairs marketingc. Social targetingd. Social marketinge. Nonprofit organization marketing


94. Which of the following statements about the marketing activities of a nonprofit organization is true?a. Nonprofit organizations use the same terminology as for-profit companies when talking

about their customers.b. Nonprofit organizations do not charge a price.c. Nonprofit organizations express their objectives in terms of profit.d. Nonprofit organizations often use undifferentiated segmentation strategies.e. All of these statements about the marketing activities of nonprofit organizations are true.

ANS: DNonprofit organizations often refer to their target markets as clients, patients, or members. Nonprofit organizations charge fees, donations, tuition, etc.—all examples of prices. The major difference between nonprofits and for-profits is the lack of a profit objective.



PTS: 1 REF: 167 OBJ: 11-8 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Strategy

95. As with for-profit organizations, the first step in developing a marketing program for a nonprofit organization is to:a. determine the marketing mixb. define organizational objectivesc. establish the financial needs of the organizationd. create a promotion to attract donorse. select a direct distribution outlet

ANS: BDefining organizational objectives will lead to selection of target markets and then to the marketing mix.

PTS: 1 REF: 167 OBJ: 11-8 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

101. A target market for a nonprofit organization:a. needs to be defined in terms of competing private-sector organizationsb. needs to be defined as the "community" in general in order to reach all potential targetsc. may include many apathetic or strongly opposed targetsd. is best defined geographically, to include the area servede. is best defined as the potential donors because their funds will ensure the survival of the

organization

ANS: CThe target markets must include both the service users and the potential donors, which may be apathetic or strongly opposed groups.


102. Nonprofit organizations face a unique challenge because the target market of the nonprofit organization is often:a. the community where it is locatedb. the people who provide the fundingc. a paid administratord. the apathetic or strongly opposed individualse. the government

ANS: DThe target market for many nonprofit services is often apathetic, disinterested, or opposed individuals who nonetheless may need the service. Alternatives a, b, and c are as likely to be targeted by for-profits as nonprofits.




104.Which of the following statements describes how a nonprofit organization should design its product offering?a. The organization should try to create products it can inventory.b. The organization should remember the product offering is not as crucial to organizational

success as the other elements of the service mix.c. The product offering should be kept as simple as possible.d. The organization will need to satisfy the needs of the target market or it will fail.e. The product offering will have to be tangible.

ANS: DAs with any type of product, to be successful the product must meet the needs of the target market.


105. A local church formed a special committee to provide aid to the homeless in its county. The church applied to the city and county governments for funding but was denied when it could not adequately state what services it would offer. In this case, the special committee failed because it had not defined its:a. user marketb. target marketc. sponsoring organizationsd. donor markete. product offering

ANS: E PTS: 1 REF: 168 OBJ: 11-8 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Product

107. If a benefit is indirect to the customer, the marketer may find a challenge in promoting a product with little:a. benefit complexityb. feature charismac. benefit strengthd. personalizatione. benefit exchange

ANS: C PTS: 1 REF: 168 OBJ: 11-8 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Promotion

110. Most governmental organizations are prohibited from:a. using publicity in any formb. engaging in personal sellingc. using public service announcementsd. advertisinge. direct marketing

ANS: D PTS: 1 REF: 168-169 OBJ: 11-8 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Strategy



112. _____ is an announcement in mass media for which no charge is made and which promotes programs, activities, or services of federal, state, or local governments or the programs, activities, or services of nonprofit organizations.a. Nonsponsored advertisingb. Public service advertisingc. Societal marketingd. Cause-related marketinge. Social advertising

ANS: B PTS: 1 REF: 169 OBJ: 11-8 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Promotion

114. In a nonprofit organization, _____ are often concerned with partially or fully defraying costs rather than achieving a profit.a. nonfiscal costsb. pricing objectivesc. cause-related goalsd. equity earningse. liquidity fees


115. In many nonprofit situations the consumer is not charged a tangible price yet must absorb time costs, embarrassment costs, or effort costs. These costs are called the organization's:a. liquidity feesb. financial costsc. fiscal pricesd. nonfinancial pricese. retained earnings


116. When services for those in relatively poor economic situations are largely paid for by those who are in better financial situations, it is known as:a. nonfinancial pricingb. the Robin Hood principlec. indirect paymentd. separation between payers and userse. indirect distribution


117. One feature that distinguishes nonprofit organization pricing decisions from profit-sector pricing decisions is _____, an example of which is university tuition. This practice also exists in the profit sector, but there it is considered to be an undesirable, temporary situation.a. below-cost pricing



b. indirect paymentc. nonfinancial pricesd. separation between payers and userse. the lost pricing objective




Chapter 13 (5th Textbook Edition — Marketing Channels)

MULTIPLE CHOICE

1. A _____ is a business structure of interdependent organizations that reaches from the point of product origin to the consumer.a. facilitating agency or place memberb. marketing mix intermediaryc. selective distribution channeld. marketing channel or channel of distributione. transportation channel or channel of movement

ANS: D PTS: 1 REF: 171 OBJ: 12-1 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution

2. Marketing channels can achieve economies of scale through:a. overcoming spatial discrepanciesb. contact expertisec. specialization and division of labord. overcoming temporal discrepanciese. overcoming discrepancies of quantity

ANS: C PTS: 1 REF: 171-172 OBJ: 12-1 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution

3. Distribution channels aid in overcoming barriers to exchange that are created in the production process by overcoming all of the following types of discrepancies EXCEPT:a. possessionb. assortmentc. quantityd. spatiale. temporal

ANS: AChannels facilitate the end goal of possession of the goods, but they do not help to overcome a discrepancy of possession.

PTS: 1 REF: 172 OBJ: 12-1 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Distribution

4. A discrepancy of _____ is the difference between the amount of product produced and the amount an end user wants to buy.a. spaceb. quantityc. assortmentd. accumulatione. possession



ANS: B PTS: 1 REF: 172 OBJ: 12-1 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

5. To facilitate manufacturing in China, Ingersoll-Rand uses 18 different local suppliers of key component parts. These suppliers are part of the _____ for Ingersoll-Rand.a. communication networkb. channel of distributionc. supply pyramidd. materials-handling networke. demand chain

ANS: B PTS: 1 REF: 171 OBJ: 12-1 TYPE: AppTOP: AACSB Diversity | TB&E Model Distribution | TB&E Model International Perspective

6. If a retail outlet does not offer all the items necessary in order for the buyer to use or to receive full satisfaction from a product purchased there, there is a:a. discrepancy of assortmentb. discrepancy of quantityc. spatial discrepancyd. temporal discrepancye. discrepancy of possession


7. A manufacturer may only produce one product, yet additional products may be required to actually use the first product. This creates a:a. discrepancy of quantityb. discrepancy of assortmentc. spatial discrepancyd. temporal discrepancye. discrepancy of possession


8. McKesson Company provides health care products to pharmacies. For example, it purchases bandages, gauze, antibacterial cream, and ointments (or anything else you would need to treat a cut or scrape) from a variety of different manufacturers. Its goal is to provide each pharmacy with every item a customer might want to treat a cut. McKesson is aiding consumers by overcoming:a. spatial discrepancyb. discrepancy of quantityc. discrepancy of assortmentd. demand discrepanciese. discrepancy of possession

ANS: CA manufacturer may only produce one product, yet additional products may be required to actually use the first product. This creates a discrepancy of assortment.




9. Certified Grocers Midwest, Inc., the Chicago-based grocery wholesale cooperative, provides all kinds of meats, cereals, canned and fresh fruits and vegetables, beauty aids, health care items, and pet products to the supermarkets in its channel. Certified Grocers is aiding consumers by overcoming:a. spatial discrepancyb. discrepancy of quantityc. discrepancy of assortmentd. demand discrepanciese. discrepancy of possession

ANS: CBy providing the central buying function on behalf of its customers, Certified overcomes the discrepancy of assortment and is able to offer many different brands of similar items.


10. A(n) _____ discrepancy is created when a product is produced but a consumer is not ready to purchase it.a. quantityb. supplyc. possessiond. temporale. assortment

ANS: D PTS: 1 REF: 172 OBJ: 12-1 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

13.Markets are often scattered over large geographic regions, yet a manufacturer may only have one location in the country. This creates a(n) _____ discrepancy.a. spatialb. temporalc. assortmentd. quantitye. ownership

ANS: ASeveral of those discrepancies are being partially overcome, but the MAIN one is spatial.




15. Marketing channels make distribution simpler by reducing the number of transactions required to get products from manufacturers to consumers. This is called:a. forward integrationb. contact efficiencyc. elimination of temporal discrepanciesd. sortinge. reciprocity

ANS: B PTS: 1 REF: 172-173 OBJ: 12-1 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution

16. The major characteristic that is used to differentiate between types of intermediaries is whether they:a. install exchange barriers such as location, time, and quantityb. prevent specialization of laborc. decrease economies of scaled. take title to the products they selle. raise profit margins for independent middlemen

ANS: DMarketing channels increase the efficiency of the buying and exchange process by reducing the number of contacts between buyers and sellers.

PTS: 1 REF: 173 OBJ: 12-2 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

17. Retailers and merchant wholesalers are examples of intermediaries that:a. take title to a productb. create temporal and spatial discrepanciesc. use consumer promotionsd. do not benefit from any economies of scalee. are accurately described by all of these statements

ANS: ARetailers and merchant wholesalers own the merchandise and control the terms of its ultimate sale.


20. A(n) _____ is an institution that buys goods from manufacturers, takes title to these goods, and resells them to businesses, government agencies, and/or other wholesalers or retailers.a. merchant wholesaler



b. agentc. drop shipperd. channel cooperativee. marketing cooperative


21. Which of the following statements about merchant wholesalers is true?a. Products typically carried by merchant wholesalers are technically simple.b. Customers of merchant wholesalers are typically concentrated.c. The buyer is generally satisfied with a long lead time when the merchant wholesaler is

acting as the facilitating intermediary.d. Frequent ordering is commonplace with a merchant wholesaler.e. Merchant wholesalers tend to carry products with low gross margin.

ANS: DSee Exhibit 12.2


22. Agents and brokers:a. have a great deal of control and risk invested in the goodsb. only represent manufacturers in sales situationsc. have a great deal of input on the terms of the saled. generally are on salary with the manufacturere. do not take title to merchandise

ANS: EAgents and brokers represent retailers, wholesalers, or manufacturers in sales situations, but the agent or broker generally has little input into the terms of the sale. Agents and brokers generally receive a fee or commission and do not take title, control, or risk concerning the merchandise.

PTS: 1 REF: 175 OBJ: 12-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution

23. _____ are wholesaling intermediaries who facilitate the sales of a product from producer to end user by representing retailers, wholesalers, or manufacturers and providing little input as to the terms of the sale.a. Marketing facilitatorsb. Channel cooperativesc. Agents and brokersd. Merchant wholesalerse. Channel functionaries

ANS: C PTS: 1 REF: 175 OBJ: 12-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

24. Generally, _____ determine what type of intermediary a manufacturer should use:



a. product characteristics, buyer consideration, and market characteristicsb. internal environmental characteristics onlyc. competitive conditions and government regulationsd. all controllable marketing factorse. only noncontrollable environmental factors

ANS: AThe correct answer combines both internal and external elements. The internal elements can be controlled by the manufacturer, while external environmental factors cannot.


25. The three basic functions channel intermediaries perform are:a. transactional, logistical, and facilitatingb. contacting, negotiating, and ownershipc. promoting, distributing, and bulk-breakingd. assorting, accumulating, and allocatinge. financing, mediating, and storing

ANS: A PTS: 1 REF: 174 OBJ: 12-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution

26. Transactional channel functions include all of the following activities EXCEPT:a. contacting buyersb. promoting the products to be soldc. taking the risks associated with product inventoriesd. negotiating the salee. physical distribution and sorting

ANS: ESee also Exhibit 12.2.

PTS: 1 REF: 174 OBJ: 12-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Product

27. Marketing channels perform all of the following logistical activities EXCEPT:a. sortingb. storingc. gradingd. risk takinge. assorting products into homogeneous or heterogeneous collections

ANS: DRisk taking is a transactional activity. See Exhibit 12.2




28. _____ includes managing the movement of raw materials and parts from their sources to production sites; managing the movement of materials, semi-finished, and finished products within and among plants, warehouses, and distribution centers; and the planning and coordinating of the physical distribution of finished goods to intermediaries and final buyers.a. Disintermediationb. Logisticsc. Materials handlingd. Intermodal transportatione. Contract logistics

ANS: B PTS: 1 REF: 174 OBJ: 12-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

29. _____ describes the process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumption.a. Contract logisticsb. Logisticsc. Cross-dockingd. Disintermediatione. Channel facilitation


31. Which of the following is NOT a sorting activity?a. assortingb. accumulationc. sorting outd. allocatione. possession

ANS: ESee Exhibit 12.2.


32. Breaking bulk at the wholesale level is called:a. allocatingb. accumulationc. storingd. downsizinge. grading

ANS: ASee Exhibit 12.2.

PTS: 1 REF: 174 OBJ: 12-2 TYPE: DefTOP: AACSB Diversity | TB&E Model Distribution | TB&E Model International Perspective



33. Which of the following are examples of facilitating functions performed by wholesaling intermediaries?a. sorting and storingb. risk taking and promotionc. assorting, accumulating, grading, and allocatingd. researching and financinge. financial management and storing

ANS: DSee Exhibit 12.2.

PTS: 1 REF: 174 OBJ: 12-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Research

34. Which of the following is NOT a channel member typically used by manufacturers as they route their products to consumers?a. retailerb. agent/brokerc. industrial distributord. producere. wholesaler

ANS: CIndustrial distributors are used for distributing industrial, not consumer products. See also Exhibit 12.3 and Exhibit 12.4.

PTS: 1 REF: 175 OBJ: 12-3 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

35. One configuration of a marketing channel entails producers selling to consumers with no intermediaries involved. This is called a:a. limited distribution systemb. conventional channelc. vertical marketing systemd. reciprocal channele. direct channel

ANS: ESee Exhibit 12.3 and Exhibit 12.4.

PTS: 1 REF: 175 OBJ: 12-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution

37. A channel typically used for industrial products is the _____ channel.a. directb. industrial distributorc. wholesalerd. retailere. extended




PTS: 1 REF: 175 OBJ: 12-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

39. Companies selling standardized items of moderate or low value to other businesses (not to consumers) often use:a. retailersb. industrial distributorsc. direct marketing organizationsd. agents and brokerse. disintermediation

ANS: B PTS: 1 REF: 175 OBJ: 12-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution

41. _____ distribution occurs when a producer selects two or more different channels to distribute the same products to target markets.a. Selectiveb. Intensivec. Multipled. Contractuale. Cumulative

ANS: C PTS: 1 REF: 176 OBJ: 12-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

45. _____ use another manufacturer's already established channel and are used most often when the creation of marketing channel relationships may be expensive and time-consuming.a. Strategic channel alliancesb. Relationship channelsc. Reverse channelsd. Multiple distribution systemse. Nontraditional channelization

ANS: A PTS: 1 REF: 176 OBJ: 12-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Strategy

49. _____ coordinates and integrates all of the activities performed by channel members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value.a. Yield management



b. Channel powerc. Materials handlingd. Supply chain managemente. Physical distribution

ANS: D PTS: 1 REF: 176 OBJ: 12-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Customer

50. Which of the following statements about supply chain management is true?a. Supply chain management is supply chain-driven.b. Supply chain management focuses on pulling products into the marketplace.c. Outsourcing is not used with supply chain management.d. Supply chain management provides customers with maximum service levels.e. Supply chain management focuses on pushing products into the marketplace.

ANS: BSupply chain management is customer-driven. Outsourcing is one option for supply chain managers. Supply chain management balances the costs of the supply chain with the level of service demands by customers; thus, customers may not get the maximum level of service.


51. Supply chain management:a. is a physical flow processb. is customer-drivenc. provides enhanced customer and economic valued. plays the role of communicator of customer demande. is accurately described by all of these statements

ANS: E PTS: 1 REF: 176-177 OBJ: 12-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution

53. A large automotive after-market business wanted to improve its current situation, which is characterized by excessive inventory, incomplete information, high logistics costs, slow reactions to environmental change, and lost profits at the retail level. Would supply chain management be of any help to the business?a. Yes, supply chain management is designed to coordinate and integrate all the activities

from raw materials to product consumption.b. No, supply chain management is only applicable to distribution strategies for products

being sold to the consumer market.c. Yes, supply chain management would be very useful because it relies so heavily on

benchmarking.d. Yes, supply chain management would alleviate all channel conflict.e. No, supply chain management requires an expensive investment of time and resources to

make it worthwhile.

ANS: AThe correct answer contains the definition of supply chain management.



PTS: 1 REF: 176-177 OBJ: 12-4 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Distribution

54. Which of the following statements concerning how market factors affect channel decisions is true?a. Industrial customers tend to buy in larger quantities and require more customer service.b. Geographically concentrated target markets should be served with an indirect sales force.c. Widely dispersed markets require fewer intermediaries.d. New firms in extremely competitive markets will be more successful if they use indirect

channels.e. A very large market requires fewer intermediaries.

ANS: AGenerally, a very large market requires more intermediaries, including wholesalers and retailers.


59. _____ is distribution aimed at maximum market coverage. It is used for many convenience goods and supplies that need to be available in every outlet where the potential customer might want to buy them.a. Selective distributionb. Channel franchisingc. Intensive distributiond. Horizontal channelinge. Exclusive distribution

ANS: C PTS: 1 REF: 178 OBJ: 12-5 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution | TB&E Model Product

60. Toothpaste is sold in grocery stores, service stations, convenience stores, drugstores, discount stores, and motel vending machines. This is a example of a(n) _____ distribution strategy.a. exclusiveb. reciprocalc. selectived. horizontale. intensive

ANS: EIntensive distribution is distribution aimed at maximum market coverage. It is used for many convenience goods that need to be available in every outlet where the potential customer might want to buy them.

PTS: 1 REF: 178 OBJ: 12-5 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Strategy

62. _____ distribution is achieved by screening dealers to eliminate all but a few in any single geographic area. Shopping goods and some specialty products that consumers are willing to search for are sold this way.



a. Intensiveb. Selectivec. Exclusived. Duale. Controlled


66.The most restrictive form of market coverage, _____ distribution, entails establishing only one or a few dealers within a given geographic area. Because buyers need to be willing to search or travel to acquire the product, this form of distribution is limited to consumer specialty goods, a few shopping goods, and major industrial equipment.a. selectiveb. intensivec. exclusived. duale. premium

ANS: C PTS: 1 REF: 179 OBJ: 12-5 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

69. A channel leader is also called a(n):a. intermediary leaderb. channel captainc. channel facilitatord. distribution supervisore. channel gatekeeper


72. Channel conflict:a. always has an adverse effect on the members of the channelb. is not caused by ideological differences because such differences would prevent the

members from ever operating as a channelc. is often caused by an inability of some channel members to keep up with the changing

timesd. can appear as either internal or externale. does not occur when multiple distribution channels are used

ANS: CIn a broad context, channel conflict can be good for a channel. It is sometimes caused by ideological differences. It appears as vertical or horizontal.


75.Horizontal channel conflict occurs most often when manufacturers practice:a. multiple distribution



b. trade loadingc. value-added pricingd. exclusive distributione. channel partnering

ANS: AHorizontal conflict occurs when more than one channel is used to handle the same brand.


77. _____ is the joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage.a. Selective partneringb. Direct distributionc. Channel partneringd. Intensive integratione. Closed channel distribution

ANS: C PTS: 1 REF: 180 OBJ: 12-6 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution

78. Which of the following is NOT a logistics component of the supply chain?a. push marketing strategyb. production schedulingc. inventory controld. warehousing and materials-handlinge. order processing

ANS: ASupply chain management focuses on pulling products into the marketplace, so you would find a pull strategy being used.


79. Which of the following is a member of a supply chain team that moves just-picked cotton to finished clothing and then to the consumer of that clothing?a. the warehouse in which the cotton was temporarily storedb. the ad agency that develops the promotion for the clothingc. the farmer who picks the cottond. the trucking company that hauls the cotton to the clothing manufacturere. all of the choices

ANS: EThe supply chain team is composed of everyone who participates in the movement from raw material to consumer, including all external participants like ad agencies, transportation companies, and lending institutions.



PTS: 1 REF: 181 OBJ: 12-7 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution | TB&E Model Product

81. _____ means that raw materials arrive at the assembly line in guaranteed working order, and finished products are generally shipped to the customer immediately after completion. It reduces inventory levels and delivers the product as it is needed in the store.a. Just-in-time manufacturingb. Electronic data interchangec. Intermodal manufacturingd. Value-added channelizatione. Contract logistics


82. Another name for just-in-time production (JIT) is:a. supply/demand reciprocityb. lean productionc. outsourcingd. mass customizatione. disintermediation


83. A newspaper article on supply chain management discusses the importance of lean production. The article focuses on the role of _____ in supply chain management.a. supply chain organizationb. just-in-time manufacturingc. materials requirement planning (MRP)d. materials-handling systemse. electronic distribution

ANS: BAnother name for just-in-time manufacturing is lean production.

PTS: 1 REF: 182 OBJ: 12-7 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Distribution

84. A strike by dockworkers at U.S. West Coast ports paralyzed transportation of goods across the Pacific Ocean and left manufacturers short of component parts and Asian importers with excess inventory. This paralysis would have had a more adverse impact on companies using:a. supply chain managementb. just-in-time manufacturingc. materials requirements procurement (MRP)d. materials-handling systemse. electronic distribution



ANS: BWith JIT, inventory parts are delivered as they are needed in production. The loss of these deliveries would cause production to cease.


85. A manufacturer of sewing machines has decided to implement just-in-time manufacturing and can expect:a. reduced errors in the purchasing systemb. increased inventory control staffc. more frequent deliveries and reduced inventoryd. finished product quality reductionse. the need for more sources of supply as backup suppliers

ANS: CJust-in-time manufacturing is based on receiving the parts from suppliers at the assembly line at the time of installation.


88. In which logistical component of the supply chain will you find electronic data interchange a common feature?a. production schedulingb. transportationc. order processingd. materials-handlinge. all of these

ANS: C PTS: 1 REF: 183 OBJ: 12-7 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Distribution

89. _____ is the direct electronic transmission, from computer to computer, of standard business forms between two organizations. When this technique is used, orders can become virtually paperless, and information about the order is available to both firms.a. Business prioritizingb. Electronic data interchangec. Just-in-time inventoryd. Real-time inventorye. Direct sourcing


90. _____ is a method of developing and maintaining an adequate assortment of materials or products to meet a manufacturer's or a customer's needs.a. The materials-handling system



b. An inventory control systemc. Direct sourcingd. Contract logisticse. Warehousing

ANS: B PTS: 1 REF: 183 OBJ: 12-7 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution

91. In which logistical component of the supply chain will you find distribution resource planning (DRP) a common feature?a. production schedulingb. transportationc. order processingd. materials-handlinge. inventory control

ANS: E PTS: 1 REF: 183-184 OBJ: 12-7 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Distribution

92. What kind of inputs are used in distribution resource planning?a. sales forecastsb. lead timesc. mode of transportation to be usedd. outstanding orderse. all of these

ANS: E PTS: 1 REF: 184 OBJ: 12-7 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Distribution

93. The goal of inventory control is to:a. minimize inventory levels while maintaining an adequate supply to meet customer

demandsb. maximize inventory levels to prevent any possibility of stockoutsc. determine order timing and order quantityd. estimate proper usage ratese. integrate JIT to reduce risks of obsolescence, theft, and damage

ANS: AInventory decisions affect physical distribution costs and service levels. The goal is to balance minimum inventory levels while meeting customer needs for stock.

PTS: 1 REF: 183 OBJ: 12-7 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Distribution

94. _____ provides time utility to buyers and sellers and aids manufacturers in managing supply and demand.a. Containerizationb. Distributionc. Storaged. Direct sourcing



e. Channelization

ANS: C PTS: 1 REF: 184 OBJ: 12-7 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution

95. _____ moves inventory into, within, and out of a warehouse.a. An inventory control systemb. A multichannel systemc. An ERP control systemd. A freight forwardere. A materials-handling system

ANS: E PTS: 1 REF: 184 OBJ: 12-7 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution

96. The goal of any effective materials-handling system is to:a. reduce the time of the order-processing systemb. optimize the inventory control systemc. increase safety proceduresd. move items quickly with minimal handlinge. reduce the length of time a product is in the transportation subsystem


98. The mode of transportation that provides the most accessibility is:a. pipelinesb. airfreightc. truck freightd. water transporte. railroad

ANS: CMotor carriers (trucks) can go to more locations than any of the other modes of transportation.


100. One major advantage of pipelines over other modes of transportation is:a. availabilityb. points servedc. flexibilityd. speede. dependability

ANS: EPipelines are rarely interrupted by weather, traffic, or labor disputes.




101. Which of the following describes a disadvantage associated with water transportation?a. cannot be used for international tradeb. high costc. capabilityd. lack of speede. product weight restrictions

ANS: DShipping via water is the slowest mode of transportation.


102. Which of the following transportation modes can most easily determine the location of a package en route between shipper and receiver?a. airb. truckc. raild. pipee. water

ANS: AIn addition to speed, air transport offers an important additional benefit to shippers, the ease of tracing shipments. See Exhibit 12.5.


103. The Canadian lobster harvest requires special handling coupled with rapid transportation to ensure the cargo reaches destinations alive. The favored transportation mode would be:a. airb. waterc. truckd. pipelinee. rail

ANS: AAir transportation ensures the speed necessary for lobster delivery. (Air Canada has developed special handling and shipping techniques for the lobsters.)See Exhibit 12.5.


104. According to experts at a conference on supply chain management, increased traceability is the key requirement needed to improve today's supply chains. In this instance, traceability refers to:a. a carrier's ability to provide the appropriate equipment and conditions for moving specific

kinds of goods



b. the consistency with which a carrier delivers goods on timec. a carrier's ability to move goods over a specific routed. the relative ease with which a shipment can be located and transferrede. none of these

ANS: DTraceability is one of the criteria used for choosing a mode of transportation.See Exhibit 12.5.


105. According to experts at a conference on supply chain management, increased traceability is the key requirement needed to improve today's supply chains. _____ provides the highest level of traceability and _____ provides the lowest level.a. water; airb. air; pipec. rail; truckd. pipe; aire. truck; water

ANS: BSee Exhibit 12.5.




Chapter 15 (5th Textbook Edition — Retailing)

MULTIPLE CHOICE

1. _____ is defined as all activities directly related to the sale of goods and services to the ultimate consumer for personal, nonbusiness use or consumption.a. Wholesalingb. Retailingc. Businessd. Franchisinge. Distribution

ANS: B PTS: 1 REF: 189 OBJ: 13-1 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

2. Which of the following is the best example of a retailer?a. the public libraryb. a radio stationc. a real estate companyd. the local Humane Societye. an advertising agency

ANS: CThe Humane Society and the library would both accept money, but nothing is directly sold. The radio station and ad agency typically sell to businesses. A real estate company is likely to be engaged in sales transactions with the ultimate consumer, even though it is also probable that some of its transactions will be with other businesses.


3. A retail store can be classified according to its:a. distribution methodb. inventory controlc. product assortmentd. management stylee. decor and atmosphere

ANS: CA retail establishment can be classified according to its ownership, level of service, product assortment, price, and gross margin.

PTS: 1 REF: 189 OBJ: 13-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product

4. Around the world, most retailers are _____, operating one or a few stores in their community, owned by a single person or partnership and not operated as part of a larger retail institution.a. independent retailers



b. chain storesc. franchise outletsd. specialty clubse. product assortment stores

ANS: A PTS: 1 REF: 190 OBJ: 13-2 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Distribution

5. Small neighborhood florists, shoe stores, and ethnic food markets are most likely to be:a. supercentersb. franchise outletsc. membership clubsd. chain storese. independent retailers

ANS: EMost retailers are independent retailers operating one or a few stores in their community.


6. Retail stores that are owned and operated as a group by a single organization are called _____. Under this form of ownership, administrative and purchasing tasks are handled by the home office.a. home base storesb. independent retailersc. franchiseesd. chain storese. strip centers


7. Ansonia owns and operates her own janitorial service, but the establishment is licensed by Maid2Clean. Ansonia’s cleaning service is a:a. doubly managed outletb. chain storec. franchised. independent retailere. licensor

ANS: CFranchises are owned and operated by individuals, but licensed by larger supporting organizations.


8. The number of different varieties of fishing lures carried by the Angler’s Store refers to the store's:a. store's supply standardb. complete retail offeringc. retail mix



d. volumee. assortment depth

ANS: EBreadth and depth refers to product assortment.


9. Which of the following types of stores has a high gross margin, a narrow product assortment, and a high level of service?a. supermarketb. warehouse clubc. convenience stored. full-line discount storee. specialty store



10. _____ shows how much the retailer makes as a percentage of sales after the cost of goods sold is subtracted.a. Net incomeb. Retained earningsc. Profitabilityd. Net equitye. Gross margin


PTS: 1 REF: 190 | 191 OBJ: 13-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing

11. As a general rule of thumb, a retailer that has a high gross margin will have:a. m-commerce capabilitiesb. an inventory management systemc. low pricesd. salespeople trained in cross-selling techniquese. high prices

ANS: EThe level of gross margin and the price level generally match. See Exhibit 13.1.




12. Housing several departments under one roof, a _____ carries a wide variety of shopping and specialty goods and provides a high level of service.a. supermarketb. specialty storec. convenience stored. super clube. department store

ANS: E PTS: 1 REF: 191 OBJ: 13-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution

13. Applying what you have learned about retailing, which type of retail store would typically have the highest labor costs?a. warehouse clubb. department storec. off-price stored. off-price retailere. discount store

ANS: BA department store carries a wide variety of shopping and specialty goods in several departments and provides a high level of service, all of which is labor intensive and adds to the cost of doing business.


14. Each department in a department store is usually headed by a _____ who selects the merchandise mix for the department and may also choose the promotional devices and personnel for that department.a. franchiseeb. financial brokerc. comptrollerd. human resources managere. buyer

ANS: E PTS: 1 REF: 191 OBJ: 13-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Promotion

15. The buyer who heads a department in a department store is responsible for the:a. store's exchange and return policiesb. store's credit policiesc. chain's expansion effortsd. merchandise mix in that departmente. store's advertising program

ANS: DEach department in a department store is usually headed by a buyer who selects the merchandise mix for the department and may also choose the promotional devices and personnel for that department.




16. The _____ at John Lewis, Britain’s largest department store chain, selects the merchandise for his or her department and is often responsible for its promotion and for managing the personnel in that department.a. buyerb. purchasing agentc. retail brokerd. merchandisere. franchisee

ANS: AEach department in a department store is usually headed by a buyer who selects the merchandise mix for the department and may also choose the promotional devices and personnel for that department.

PTS: 1 REF: 191 OBJ: 13-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Promotion

17. A _____ is not only a type of store, but also a method of retail operations. This type of retailer specializes in a given type of merchandise with a deep but narrow assortment.a. warehouse clubb. convenience storec. factory warehouse stored. specialty storee. general store


18. Which of the following statements about specialty stores is true?a. Customers usually consider price to be the most important factor in their selection of a

specialty store.b. Customers at specialty stores are not concerned with the distinctiveness of the

merchandise or the store's physical appearance.c. Specialty stores typically avoid price wars.d. Specialty stores are ineffective test markets.e. A typical specialty store carries a wider assortment of specialty merchandise than

department stores.

ANS: CCustomers usually consider price to be of secondary importance in their selection of a specialty store. Customers at specialty stores are very concerned with the distinctiveness of the merchandise or the store's physical appearance. Specialty stores provide a low-risk testing ground for new products. A typical specialty store carries a narrower assortment of specialty merchandise than department stores.




21. A manufacturer wants to introduce a line of hand-smocked children's clothing to the growing number of professional women who are now having babies. The least expensive of these outfits will be $75. Which of the following types of stores would most likely support an effective product launch?a. off-price retailerb. specialty storec. full-discount stored. general storee. warehouse club

ANS: BSmall specialty stores provide a low-risk testing ground for many new product concepts.

PTS: 1 REF: 191 OBJ: 13-3 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Pricing

22. _____ are large, departmentalized, self-service retailers that specialize in wide assortments of foodstuffs and a few nonfood items.a. Supermarketsb. Convenience storesc. Membership wholesale clubsd. Discount storese. Assortment merchandisers

ANS: A PTS: 1 REF: 191-192 OBJ: 13-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

23. Which of the following environmental trends is most directly influencing supermarket operations?a. Regional malls are hosting fewer anchor stores.b. To make a profit, supermarkets are having to carry products with high gross margins.c. The number of dual-income and single-parent families is increasing.d. Recessionary trends are decreasing the amount of money spent on nonfood items.e. Consumers are more inclined to pamper themselves.

ANS: C PTS: 1 REF: 193 | 195 OBJ: 13-3 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Strategy

26. According to the text, one way supermarkets establish long-term relationships with their customers is to:a. conduct longitudinal focus-group studiesb. avoid any obviously ethnic appealc. limit the number of nonfood items carried by the storesd. create and use loyalty marketing programse. create customer correlation studies

ANS: DOne of the trends in supermarkets is taking advantage of growing ethnicity. Also supermarkets, commonly use scrambled merchandising.




27. When supermarkets offer a wide variety of nontraditional goods and services under one roof, they are engaged in:a. cross-sellingb. trading upc. scrambled merchandisingd. disintermediatione. cross-docking

ANS: C PTS: 1 REF: 192 OBJ: 13-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product

29. The initial attraction of drugstores for consumers was the pharmaceuticals they carried, but now consumers can have their prescriptions filled at mass merchandisers, and supermarkets and through the mail. What have drugstores done to remain competitive?a. raised their pricesb. taken legal steps to prevent the sale of prescription drugs at supermarketsc. provided customers with value-added servicesd. introduced generic prescription medicinese. nothing

ANS: CThey have added such services as being open 24 hours a day, seven days a week, and installing drive-through windows.


30. _____ carry a limited line of high-turnover, high-priced goods and resemble miniature supermarkets. These self-service stores are typically located near residential areas and are open long hours, seven days a week.a. Specialty storesb. Wholesale storesc. Convenience storesd. Factory outletse. General stores

ANS: C PTS: 1 REF: 192 OBJ: 13-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Pricing

32. Prices are usually higher in convenience stores than in supermarkets because convenience stores offer:a. more specialty goodsb. a wider variety of productsc. a higher level of customer servicesd. better location, longer hours, and faster servicee. higher quality goods

ANS: D



Convenience stores carry a limited amount of high-turnover, high-priced goods and resemble miniature supermarkets. Customers patronize these stores because of convenience.


33. _____ are retailers that compete on the basis of low prices, high turnover, and high volume.a. Convenience outletsb. Discount storesc. General storesd. Department storese. Specialty stores


34. Discount stores:a. compete on the basis of low prices, high turnover, and high volumeb. offer more SKUs than department storesc. sell high-priced, low-turnover productsd. provide their customers with full servicee. compete on the basis of assortment and depth

ANS: ADiscount stores have a wider range of merchandise than department stores but less depth in any category

PTS: 1 REF: 192 OBJ: 13-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Pricing

35. _____ carry a broad assortment of nationally branded hard goods (broader than a department store) and offer customers very limited service. National chains dominate this segment.a. Full-line discount storesb. Discount specialty storesc. Factory outletsd. Fashion storese. Specialty supercenters

ANS: A PTS: 1 REF: 192-193 OBJ: 13-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Product

36. _____ is the retailing strategy of using moderate to low prices on large quantities of products and lower service to stimulate a high turnover of inventory.a. Specialty store positioningb. Merchandise positioningc. M-store retailingd. The wheel of retailinge. Mass merchandising

ANS: E PTS: 1 REF: 193 OBJ: 13-3 TYPE: Def



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

38. A retail operation that has a 90,000-square-foot facility, that houses a florist, baker, bank, craft shop, photo finisher, dry cleaner, and pharmacy under the same roof as grocery and household items is correctly called a:a. membership warehouse clubb. wholesale outletc. factory outletd. supercentere. mass merchandiser

ANS: DSupercenters offer an array of products and services, as well as groceries.


39. _____ are single-line stores that offer a nearly complete selection of one line of merchandise and use self-service, discount prices, high volume, and high turnover of merchandise to their advantage.a. Specialty discount storesb. Factory outletsc. Mass merchandisersd. Membership clubse. General stores

ANS: AA specialty discount store is also called a category killer.

PTS: 1 REF: 193 OBJ: 13-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Pricing

43. _____ sell a limited selection of brand-name appliances, household items, and groceries, usually in bulk on a cash-and-carry basis to members only.a. Super outletsb. Factory outletsc. Wholesale discountersd. Off-price discount retailerse. Warehouse membership clubs


44. A warehouse membership club:a. only sells to ultimate consumersb. is a type of category specialistc. offers a medium level of customer serviced. tends to have more educated and more affluent customers than other retail establishmentse. has extensive merchandise depth, which it uses to create demographic positioning



ANS: DWarehouse clubs sell to small businesses and ultimate consumers. They maintain low inventory holding costs because they carry a limited assortment of fast-moving items.

PTS: 1 REF: 194 OBJ: 13-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Customer

45. Laura buys supplies for her catering business at a retailer that stocks a limited selection of items, which are sold in bulk on a cash-and-carry basis to members only. As she browses through a huge store, she buys flour, a set of muffin pans, and a package of paper towels as well as an assortment of fresh produce. Laura is most likely shopping at a(n):a. off-price discount retailerb. factory outletc. industrial supply warehoused. warehouse membership clube. wholesale outlet

ANS: DWarehouse clubs sell a limited selection of brand-name appliances, household items, and groceries, usually in bulk on a cash-and-carry basis to members only.

PTS: 1 REF: 194 OBJ: 13-3 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

46. Off-price retailers:a. are often able to take advantage of manufacturers' faulty sales forecastingb. very often offer a consistent assortment of merchandisec. seldom stock brand-name merchandised. are owned by the manufacturer of the products they selle. offer very deep assortments

ANS: AOff-price retailers buy manufacturers' overruns at cost or even less.

PTS: 1 REF: 194 OBJ: 13-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing

47. A publisher of books on holiday decorating, cooking, and crafts has to find a way to dispose of its overrun and unsold end-of-season output. As a marketing consultant, you suggest the firm sell the merchandise to:a. mass merchandisersb. convenience storesc. department storesd. supermarketse. off-price discount retailers

ANS: E



Off-price discount retailers purchase goods at cost or less from manufacturers' overruns, bankruptcies, irregular stock supplies, and unsold end-of-season output. The other four categories may be current customers and would not have a use for the overruns and out-of-season stock.

PTS: 1 REF: 194 OBJ: 13-3 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Pricing

48. A _____ is an off-price retailer that is owned and operated by a manufacturer and carries one line of merchandise--its own.a. mass merchandiserb. factory outletc. wholesale clubd. discount storee. bargain basement store

ANS: B PTS: 1 REF: 194 OBJ: 13-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Pricing

50.Which of the following statements about restaurants is true?a. Restaurants are clearly a retailing establishment.b. There is a strong demand for many more restaurants.c. The demographic issue of time-poor consumers has led to a growing demand for

restaurants.d. Because barriers to entry are low, the restaurant business appeals to many people.e. Restaurants are clearly a service industry.

ANS: DAccording to the text, restaurants straddle the line between a retailing establishing and a service industry. Time poverty is not a demographic factor. At the moment food service companies are generally overexpanded.


51. _____ refers to shopping without visiting a store and is currently growing faster than in-store shopping because of the consumer demand for convenience.a. Nonstore retailingb. Customerizationc. Hypershoppingd. Niche marketinge. Specialty merchandising

ANS: A PTS: 1 REF: 195 OBJ: 13-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Customer

52. Which of the following statements about nonstore retailing is true?a. The nature of the communications between the retailer and the customer is the same in all

forms of nonstore retailing.



b. Nonstore retailing is currently growing faster than in-store retailing.c. More than 80 percent of all sales are made through nonstore retailing.d. The high growth rate for nonstore retailing is due to the growth of TV home shopping.e. Nonstore retailing is increasing at a rate lower than in-store retailing.

ANS: BNonstore retailing refers to shopping without visiting a store; convenience is playing a major role in the growth of nonstore business.


53. _____ is a low-profile, yet important, form of retailing in which consumers get products out of automated machines, and it accounts for $40 billion worth of sales each year in the United States.a. Automatic vendingb. Party-plan sellingc. Direct marketingd. A pyramid schemee. Professional selling

ANS: A PTS: 1 REF: 195 OBJ: 13-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Product

54. Manufacturers of Pampered Chef kitchen equipment and Longaberger baskets utilize party plan selling. The sales transactions usually occur in a home setting. This form of nonstore retailing is called:a. direct retailingb. personal marketingc. direct-response marketingd. vendinge. selling representation

ANS: A PTS: 1 REF: 195 OBJ: 13-4 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Pricing

56.To counter decreasing sales, U.S. direct sales retailers are:a. exploring sales opportunities in other countriesb. selling at workplaces in addition to the more traditional at-home salesc. setting up kiosks in malls in which to sell their productsd. using direct mail and telemarketinge. doing all of these

ANS: E PTS: 1 REF: 196-197 OBJ: 13-4 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Pricing

57. _____ refers to the techniques used to get consumers to buy from their home. Those techniques include direct mail, catalogs and mail order, telemarketing, and electronic retailing.a. Nonstore vendingb. In-home retailing



c. Franchisingd. Direct marketinge. Direct retailing

ANS: D PTS: 1 REF: 196-197 OBJ: 13-4 TYPE: DefTOP: AACSB Diversity | TB&E Model Strategy | TB&E Model Customer

58. Irina Gomez has decided to sell a sourcebook of Hispanic American suppliers to southeastern businesses in predominantly Hispanic areas. She plans to call prospective customers and try to sell to them over the phone. Gomez will be using which of the following retailing techniques?a. m-commerceb. indirect retailingc. franchisingd. vendinge. direct-response marketing

ANS: EDirect-response marketing (also called direct marketing) techniques include direct mail, catalogs, telemarketing, and electronic retailing.

PTS: 1 REF: 196-197 OBJ: 13-4 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Customer

59. Marketers can precisely target their customers according to demographics, geographics, and psychographics with:a. direct mailb. vending machinesc. franchise storesd. specialty retail outletse. electronic selling

ANS: A PTS: 1 REF: 196 OBJ: 13-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Customer

60. _____ is the use of a telephone to sell directly to customers.a. Telemarketingb. Two-way vendingc. Telepromptingd. Indirect marketinge. Phone vending

ANS: A PTS: 1 REF: 196-197 OBJ: 13-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

61. Telemarketing can consist of either unsolicited _____ sales calls, or _____ sales calls, which allow companies to receive orders through toll-free telephone numbers.a. order placement; lead generationb. push strategy; pull strategyc. systematic; synergisticd. qualifying; finalizing



e. outbound; inbound

ANS: EOutbound telemarketing is generally used for unsolicited selling, while inbound calls are from customers placing orders.

PTS: 1 REF: 196-197 OBJ: 13-4 TYPE: DefTOP: AACSB Technology | TB&E Model Strategy

62. Sunni received a phone call last night during supper. The caller wanted her to subscribe to a travel magazine. Since Sunni had never thought of purchasing this type of magazine before she received the call, this is obviously an example of _____ telemarketing.a. outboundb. field salesc. qualifyingd. inbounde. relationship

ANS: AOutbound telemarketing is generally used for unsolicited selling.

PTS: 1 REF: 196 OBJ: 13-4 TYPE: AppTOP: AACSB Technology | TB&E Model Strategy

65. Which of the following statements about online retailing is true?a. Online retailing is also called e-merchandising.b. After a rapid increase in sales, the popularity of online retailing has declined over the last

decade.c. Most traditional retailers are using online retailing to move merchandise that can be

purchased at their stores.d. The earliest use of online retailing was for Internet auctions.e. All of these statements about online retailing are true.

ANS: COnline retailing is called either electronic retailing or e-tailing. Online shopping has been and is growing at an astonishing rate. Internet auctions are a fairly new phenomenon.

PTS: 1 REF: 197 OBJ: 13-4 TYPE: CompTOP: AACSB Technology | TB&E Model Online/Computer

66. A(n) _____ is a continuing relationship in which an individual or business grants business rights to operate or sell a product to another individual or business.a. leasing contractb. alliance for profitc. brokered partnershipd. franchisee. countertrade




67. Which of the following is NOT a reason why individuals may be tempted to buy a franchise business rather than develop their own independent business?a. the individual can try his or her own personal innovative product and service ideas in the

businessb. to obtain a well-known product or service namec. management training requirementsd. the business’s established imagee. existence of product uniformity standards

ANS: AThe ties to the franchisor's policies may be very restrictive for an innovative businessperson because certain products and procedures must be adhered to.


73. The first task of developing a retail strategy is to:a. create a buying organizationb. decide what to buyc. define the target marketd. create a promotional strategye. define the pricing policies

ANS: CThe target market's wants and needs form the foundation for a successful retail strategy.


74. Retailers control the six Ps of the retailing mix. The six Ps include the marketing mix plus:a. personnel and presentationb. production and peoplec. potential and perceptiond. personality and persuasione. positioning and purchasing


PTS: 1 REF: 199-200 OBJ: 13-6 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

76. The merchandise mix:a. is the term used for price-bundled merchandiseb. is the term for the marketing communications used by retailersc. refers to the six levels in a buying organizationd. describes the composition of a traditional shopping centere. is the retailer's product offering




77. Data mining:a. is a relatively new method of inventory controlb. uses complex mathematical models to help retailers make better product mix decisionsc. is a computerized technique for making site location decisionsd. determines the level of quality and service desired by customerse. measures levels of services and identifies inadequate service

ANS: B PTS: 1 REF: 200 OBJ: 13-6 TYPE: DefTOP: AACSB Technology | TB&E Model Strategy

78. A marketing research company has created a database that contains monthly average retail price data for selected cuts of beef, pork, chicken, turkey, lamb, and veal. In addition to prices of various cuts of meat, the database includes information on the volume sold and the volume of "featured" products sold under retailers' weekly advertised specials and frequent shopper discounts. These data are collected at the point of sale by supermarkets using electronic scanners in checkout lines. The database allows users to use _____ to determine what meat should be stocked and when it should be stocked.a. data miningb. information dredgingc. an information management systemd. a retail paradigme. correlation and trend analyses

ANS: AData mining uses complex mathematical models to help retailers make better product mix decisions.

PTS: 1 REF: 200 OBJ: 13-6 TYPE: AppTOP: AACSB Technology | TB&E Model Strategy

82. Why is the selection of a retail location so critical to a store's success?a. Location affects pricing decisions but does not affect store image.b. Customers will not drive out of their way to find a store.c. A location decision ties up funds that will not appreciate or gain in value.d. A location decision typically requires long-term commitment of resources.e. Employee density is affected by the area in which the store is located.

ANS: DOne critical point about location choice is that it ties up a large amount of resources and is difficult to change.


83. When opening a new retail operation, the retailer needs to consider all of the following factors EXCEPT:a. traffic flowb. employee density



c. nature of the competitiond. land costse. area growth

ANS: BEmployee density is concerned with the amount of employees per 1,000 square feet in the store--not in the neighborhood. The other four factors are to be considered when deciding on a location.

PTS: 1 REF: 202 | 203 OBJ: 13-6 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Strategy

84. Which of the following statements about a retailer's promotion strategy is true?a. The design of the promotion strategy would be done separately from the creation of the

retailing mix.b. The goal of a retail store's promotion mix is to position the store in consumers' minds.c. Most advertising for retailers is carried out at the national level.d. Retailers find direct-mail marketing inefficient.e. Retail promotion strategy does not include public relations activities.

ANS: BPromotion is part of the retailing mix. Most advertising for retailers is carried out at the local level. Retailers have been very successful with direct marketing.

PTS: 1 REF: 199 OBJ: 13-6 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Promotion

85. _____ are stores that consumers purposely plan to visit. They are often built as freestanding stores.a. Destination storesb. Benefit retailersc. Relationship buildersd. Lifestyle storese. M-stores


87. Large retailers such as Target and Wal-Mart and sellers of shopping goods such as automobiles and furniture often use _____ for their locations.a. remote, rural locationsb. office complexesc. factory outletsd. freestanding storese. regional malls




88. The Summer Place has decided consumers will be drawn to its offering of wicker furniture and will even be willing to drive out of their way. The store really needs to keep its overhead costs (such as rent) low and wants to avoid locating near competitors. For a location, the Summer Place will probably choose a:a. factory outletb. strip centerc. freestanding stored. shopping centere. regional mall

ANS: CA freestanding store has the advantage of low site costs and will be a benefit if consumers are willing to seek it out.

PTS: 1 REF: 201 OBJ: 13-6 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Customer

89. _____ place a diverse group of retailers together in one location. This form of retail location first became popular in the 1950s when the U.S. population started migrating to the suburbs.a. Freestanding lifestyle centersb. Shopping centersc. Mass merchandising centersd. Scrambled merchant arease. Mega-malls

ANS: B PTS: 1 REF: 201-202 OBJ: 13-6 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution

90. Geoff Hudson wants to open a specialty store to sell sports memorabilia and is considering locating it in a regional shopping mall. Before opening his new store, he needs to understand:a. parking in malls is usually inadequateb. the leases required by mall owners are usually inexpensivec. the mall atmosphere and that of neighboring stores will help attract shoppersd. his store could be the mall anchore. there is usually a problem with store image because malls have no unified image, as a

shopping center does

ANS: CMalls have unified images, convenient parking, and expensive leases. The mall atmosphere and other stores will attract shoppers.

PTS: 1 REF: 201-202 OBJ: 13-6 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Distribution | TB&E Model Marketing Plan

91. A specialty store is considering locating a retail store in a regional shopping mall. Which of the following is NOT a likely benefit associated with a location in a mall?a. anchors that attract customersb. ample parkingc. unified image of mall



d. ability to target different demographics groupse. inexpensive leases

ANS: ELeases are usually expensive.


92. The newest generation of shopping centers is:a. regional mallsb. shopping business districtsc. lifestyle centersd. franchised centerse. strip malls

ANS: C PTS: 1 REF: 202 OBJ: 13-6 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Distribution

93. Which group is the targeted market by lifestyle centers?a. teenagers who don't driveb. consumers on a fixed incomec. laggardsd. upper-income consumers with an aversion for “the mall”e. people who engage in cocooning

ANS: D PTS: 1 REF: 202 OBJ: 13-6 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Customer

95. Another name for an anchor store is a _____.a. mass merchandiserb. generator storec. host stored. shopping center pillare. destination store


96. Anchor stores (or generator stores):a. are the stores within the mall that sell services rather than productsb. are often large department stores that are located at opposite ends of a mall to create a

heavy pedestrian traffic flowc. usually specialize in high-priced items like furnitured. is the generic name given to supermarkets that are located within shopping mallse. is a term for retail stores that "drop off" to freestanding locations

ANS: BAnchors are the large stores at the ends of shopping malls and may sell a variety of products




99. Many technologically advanced retailers are using a technique called _____ to analyze the huge amounts of data collected through their point-of-purchase scanning equipment. The analysis looks for products that are commonly purchased together to help retailers merchandise their stores to place products in the right places.a. market-basket analysisb. simulated test marketingc. product/customer correlation analysisd. market cross-tabulationse. customer lifestyle analysis

ANS: A PTS: 1 REF: 203 OBJ: 13-6 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

100. A recent pricing trend among retailers is EDLP, which stands for:a. electronic data laser purchasingb. efficient data long-range planningc. everyone doing large purchasesd. everyday low pricinge. efficient dollar loss planning


101. The main element of a store's presentation is its _____, or the overall impression conveyed by the store's physical layout, decor, and surroundings.a. merchandise depthb. locationc. price strategyd. atmospheree. total merchandise mix

ANS: D PTS: 1 REF: 202-203 OBJ: 13-6 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Creativity

106. When Boris went into Sears to buy his wife a new iron for her birthday, he only planned to spend about $30, but the sales clerk was able to show him the superiority of a $60 iron to the less expensive model. In this example, the sales clerk engaged in:a. suggestion sellingb. trading upc. bait and switchd. customer relationship retailinge. service-disguised selling

ANS: BTrading up means persuading customers to buy a higher-priced item than the one they intended to buy.




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

109. Interactivity is one of the new developments in retailing. In retailing, interactivity refers to:a. the use of improved communications with customersb. a new form of customer relationship marketingc. entertainment for customers to get them involvedd. the use of information kioskse. the creation of a static atmosphere

ANS: C PTS: 1 REF: 205 OBJ: 13-7 TYPE: DefTOP: AACSB Technology | TB&E Model Strategy

110. One of the new developments in retailing is m-commerce. The m- in commerce stands for:a. motivatedb. multimediac. marketingd. managede. mobile

ANS: E PTS: 1 REF: 205 OBJ: 13-7 TYPE: DefTOP: AACSB Technology | TB&E Model Strategy

111. One of the new developments in retailing is m-commerce. M-commerce refers to the ability to:a. use unique communication techniques to send advertising messagesb. create situations in which the AIDA technique is effectivec. more efficiently manage customer demand with inventoryd. shop using wireless mobile devicese. motivate consumers to buy more by creating more feedback channels

ANS: D PTS: 1 REF: 205 OBJ: 13-7 TYPE: DefTOP: AACSB Technology | TB&E Model Strategy

Chapter 16 (5th Textbook Edition —Integrated Marketing Communications)

MULTIPLE CHOICE

1. _____ is communications by marketers that inform, persuade, and remind potential buyers of a product in order to influence an opinion or elicit a response.a. Distributive communicationb. Perceptual communicationc. Statistically provable advertisingd. Promotione. Publicity

ANS: D PTS: 1 REF: 207 OBJ: 14-1 TYPE: DefTOP: AACSB Communication | TB&E Model Promotion

4. The main function of a promotional strategy is to:



a. convince the target customers that a firm's products offer competitive advantages over those of its competition

b. find a niche in the marketplace for the firm and its productsc. provide the firm with research information about the success of its marketing effortd. create efficient distribution channelse. guarantee control over the length of the stages of the product life cycle

ANS: AThe function of a promotional strategy is to convince the target customers that the goods and services offered provide a competitive advantage over the competition.

PTS: 1 REF: 207 OBJ: 14-1 TYPE: CompTOP: AACSB Communication | TB&E Model Customer | TB&E Model Promotion

5. A _____ is defined as a set of unique features of a company and its products perceived by the target market as significant and superior to the competition.a. comparative differentiationb. competitive advantagec. marketing mixd. special benefite. promotional plan


8. Vegetarians sometimes have trouble making sure they get enough protein in their diets. Protons are a new, poppable snack made with super-crunchy tofu. They are bite-sized nuggets that come in both sweet and savory flavors: Original Crunchy, Backyard Bar-B-Q, Tomato Herb Garden, Cinnamon Toast, and Lemon Meringue Pie. Protons’ features, including that they are organic, vegan, and cholesterol-free, give the new product its:a. differential parityb. synergistic goalc. competitive advantaged. comparative benefite. tactical objective for implementing strategy

ANS: CA competitive advantage is one or more unique aspects of an organization that cause target customers to patronize that brand rather than others.


10. Marketers use public relations to:a. earn public understanding and acceptanceb. communicate with the community in which they operatec. educate the public about company goalsd. introduce new productse. do all of these things



ANS: E PTS: 1 REF: 208 OBJ: 14-2 TYPE: CompTOP: AACSB Communication | TB&E Model Promotion

11. The promotional mix consists of:a. advertising, publicity, direct marketing, and personal sellingb. public relations, direct marketing, personal selling, and publicityc. product, promotion, price, and placed. advertising, personal selling, sales promotion, and public relationse. advertising, telemarketing, public relations, and sales promotions

ANS: D PTS: 1 REF: 207-210 OBJ: 14-2 TYPE: DefTOP: AACSB Communication | TB&E Model Promotion

12. The four major promotional tools (advertising, personal selling, sales promotion, and public relations) are known collectively as the:a. communication modelb. advertising campaignc. marketing mixd. publicity foure. promotional mix

ANS: E PTS: 1 REF: 208 OBJ: 14-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Promotion

14. _____ is any form of sponsor-identified, impersonal paid mass communication.a. Advertisingb. Publicityc. Promotiond. Public relationse. Nonpaid communication

ANS: A PTS: 1 REF: 208 OBJ: 14-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Promotion

16. Which of the following statements about advertising is true?a. The total costs of advertising are typically low.b. The signs on the outsides of buses and taxis are not a form of advertising.c. The cost per contact in advertising is low.d. Innovative media are not used in advertising.e. Advertising is any form of communication in which the sponsor is identified.

ANS: CThe total costs of advertising are typically high even though the cost of contact is low. To be advertising, the communication must be paid for. Innovative media are used in advertising. The signs are a form of advertising because they are paid for and they identify their sponsors.

PTS: 1 REF: 208 OBJ: 14-2 TYPE: CompTOP: AACSB Communication | TB&E Model Promotion



18. The marketing function that evaluates public attitudes, identifies areas within the organization that are of public interest, and executes a program of action to gain public understanding is:a. public relationsb. advertisingc. implicit communicationsd. personal sellinge. sales promotion

ANS: A PTS: 1 REF: 208 OBJ: 14-2TOP: AACSB Reflective Thinking | TB&E Model Promotion

20. Public information about a company, good, or service appearing in the mass media as a news item is:a. personal sellingb. advertisingc. mass communicationsd. publicitye. sales promotion

ANS: D PTS: 1 REF: 208-209 OBJ: 14-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Product

21. Publicity:a. will never damage a company because it performs the information task of promotionb. is free communicationc. is not persuasive with customersd. has to be purchased from the mass mediae. has many internal costs to the company associated with it

ANS: EA firm may have to hire a public relations firm to prepare new releases and persuade media personnel to print or broadcast the news. This can be expensive.

PTS: 1 REF: 208-209 OBJ: 14-2 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Promotion

23. Which of the following statements about sales promotions is true?a. Public relations cannot effectively be used with sales promotions.b. Sales promotion is a type of direct marketing.c. Marketers view sales promotions as more effective when they are created as long-term

stimulation tools.d. Trade shows, coupons, premiums, and vacation giveaways are types of sales promotions.e. All sales promotions must be aimed outside the organization.

ANS: DSales promotions can be used to improve the effectiveness of advertising and public relations activities. Sales promotions are most effective as short-term tools. Sales promotions are commonly directed at the organization's employees as well as to consumers and dealers.

PTS: 1 REF: 209 OBJ: 14-2 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Promotion



24. _____ consists of all marketing activities that stimulate consumer purchasing such as coupons, contests, free samples, and trade shows.a. Sales promotionb. Publicityc. Personal sellingd. Advertisinge. Sponsorship


28. _____ is a purchase situation in which two or more people communicate in an attempt to influence each other.a. Implicit communicationb. Personal sellingc. Mass communicationd. Public relationse. Synergistic communication

ANS: B PTS: 1 REF: 209-210 OBJ: 14-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Promotion

31. _____ is the process by which we exchange or share meanings through a common set of symbols. People also assign meanings to feelings, ideas, facts, and attitudes.a. Feedbackb. Promotionc. Advertisingd. Publicitye. Communication


32. While talking to Mr. and Mrs. Knighton, the appliance salesperson described the refrigerator as "a real money saver" and "a true bargain," but he also kept looking down at his feet and shuffling around. His nonverbal cues:a. create subservient sellingb. create differential disadvantagesc. are part of how he communicated to the Knightonsd. are a type of marketing mix feedbacke. will not effect interpersonal communications

ANS: CCommunication is the process by which we exchange or share meanings through a common set of symbols.

PTS: 1 REF: 210 OBJ: 14-3 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Promotion



33. Interpersonal communication is:a. nonpaid information such as publicityb. paid communication placed in personal mediac. long-distance communication between a business and its target marketd. direct face-to-face communication between two or more peoplee. noise-free communication

ANS: D PTS: 1 REF: 210 OBJ: 14-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Promotion

34. The two major categories of communications are:a. verbal and nonverbalb. direct and indirectc. long term and short termd. mass and interpersonale. informative and persuasive


36. Communication to large audiences, usually through a medium such as television or a newspaper, is called _____ communication.a. massb. feedback-proofc. referentiald. interpersonale. public


38. Which of the following is NOT a disadvantage a firm using mass communication might experience?a. inability to assess customer reactions to the promotion immediatelyb. clutter from competitors' messagesc. distractions around the consumer at the time of receipt of the messaged. inability to know exactly who is receiving the messagee. great expense on a per person exposed basis

ANS: EMass media reach so many people that even though the initial investment is large, cost per person is small.

PTS: 1 REF: 210 OBJ: 14-3 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Promotion

39. The communication process itself consists of:a. message, media, and transmittalb. source, receiver, and channelc. sender, receiver, and message



d. encoding, decoding, channel, sender, and receivere. comprehension, noise, and feedback


PTS: 1 REF: 210-211 OBJ: 14-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Promotion

40. The _____ is the originator of the message in the communication process.a. communicatorb. encoderc. channelerd. sendere. receiver


44. _____ is the conversion of the sender's ideas and thoughts into a message.a. Developmentb. Envelopmentc. Processingd. Decodinge. Encoding

ANS: E PTS: 1 REF: 210-211 OBJ: 14-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

45. Encoding is the:a. creation of the original ideas and thoughts of a messageb. conversion of the sender's ideas and thoughts into a messagec. transmission of a messaged. receipt and comprehension of a messagee. deciphering and understanding of a message


47. A channel in communication is:a. the only source of noiseb. the same as in distributionc. usually an ad agency or public relations firmd. someone who places advertising into mediae. any communication medium

ANS: EA channel is the transmitter of the message such as a voice, gesture, radio, newspaper, or any other communication medium.




50. _____ is anything that interferes with, distorts, or slows the transmission of information.a. Media communicationb. Feedbackc. Staticd. Nonpaid communicatione. Noise


52.Within the communication process for a car dealer’s ad, which of the following would be an example of noise?a. competing adsb. news stories in the newspaperc. the physical surroundings in which the individual reading the ad is locatedd. the presence of other people while the ad is being reade. all of these

ANS: ENoise is anything that interferes with, distorts, or slows the transmission of information.

PTS: 1 REF: 211 OBJ: 14-3 TYPE: AppTOP: AACSB Communication | TB&E Model Customer

54. _____ is the interpretation of the language and symbols sent by the source through a channel.a. Encodingb. Perceiving communicationc. Decodingd. Channelinge. Semiotics

ANS: C PTS: 1 REF: 211-212 OBJ: 14-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

55. The most successful global marketing managers realize that:a. senders of messages can communicate effectively with other cultures even if they know

nothing of the other cultureb. any message can be considered uniform by easily translating the message into all the other

languagesc. consumers' cultural environments do not play a large role in the communication process

and affect decodingd. it is imperative that every message be completely customized to each subculturee. translation and possible miscommunication of their promotional messages can occur

ANS: E PTS: 1 REF: 212 OBJ: 14-3 TYPE: CompTOP: AACSB Diversity | TB&E Model International Perspective



56. For communication to be effective:a. marketing managers should use both interpersonal and mass communicationsb. all steps of the communications process model must take placec. marketing managers must ensure a proper match between the message to be conveyed and

the target market's attitudes and ideasd. advertising messages must be general enough to cover all ages, social classes, and

education levelse. marketers should use televised instead of print communication

ANS: CCommon understanding between two communicators is required for effective communication.

PTS: 1 REF: 212 OBJ: 14-3 TYPE: CompTOP: AACSB Communication | TB&E Model Customer | TB&E Model Promotion

57. Some large retailers are successful in most areas of the country yet fail in certain regions that are heavily populated with different races and subcultures. This is because it is difficult to communicate without an understanding of:a. cultureb. locational variantsc. gender differencesd. income influencese. hypergraphics

ANS: AOne stumbling block for many firms is communicating with and selling to diverse cultures that do not share a common frame of reference.

PTS: 1 REF: 212 OBJ: 14-3 TYPE: CompTOP: AACSB Diversity | TB&E Model International Perspective

58. Ernest has three engineering degrees. He has hired an interior decorator to update his home. He is tremendously frustrated when he asks what he thinks are simple questions about weight-bearing walls and insulation requirements, and the designer is unable to understand. Yet Ernest has the same problems when the designer starts talking about mauve, cerise, and magenta. Why is the communication process not working in this instance?a. The designer is not intelligent enough to understand engineering.b. Noise is interfering with both encoding and decoding.c. The wrong medium has been used.d. The sender and receiver do not share overlapping frames of reference.e. Personal selling should not be used to market this type of product.

ANS: DWhen people receive a message, they tend to manipulate, alter, and modify it to reflect their own biases, needs, knowledge, and culture. The designer has no knowledge base in engineering.

PTS: 1 REF: 211-212 OBJ: 14-3 TYPE: AppTOP: AACSB Communication | TB&E Model Customer



59. The receiver's response to a message is _____ to the source.a. decodedb. noisec. feedbackd. channelede. static filled

ANS: C PTS: 1 REF: 212 OBJ: 14-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

64.Which of the following statements about the characteristics of the elements in the promotional mix is true?a. The speed of feedback is delayed in sales promotion, advertising, and personal selling.b. Message flexibility is greatest with advertising.c. The message flow is two-way in public relations, sales promotions, and personal selling.d. The most feedback is available with personal selling.e. The sponsor is identified in public relations, advertising, and personal selling.

ANS: DThe speed of feedback is delayed in sales promotion and advertising. Message flexibility is greatest with personal selling. The message flow is one-way in public relations and sales promotions. The sponsor is not identified in public relations. See Exhibit 14.3.


65. Which of the following statements about the characteristics of the elements in the promotional mix is true?a. Control over message content is greatest when public relations is used.b. A large audience is best reached with personal selling.c. The fastest feedback occurs with personal selling.d. The mode of communication for sales promotion is usually direct and personal.e. The message flow with advertising is two-way.

ANS: CThere is little control over message content with public relations. Personal selling reaches large audiences slowly. Sales promotions are usually indirect and impersonal. The message flow with advertising is one-way. See Exhibit 14.3.


68. What are the three basic tasks of promotion?a. informing, persuading, and convincingb. persuading, convincing, and remindingc. informing, convincing, and remindingd. informing, persuading, and remindinge. persuading, comparing, and reminding




69. Which of the following is one of the basic tasks typically performed by promotion?a. managingb. organizingc. rewardingd. persuadinge. perceiving


70. Informative promotion is generally used:a. when memory stimulus is neededb. when the brand name is well-known to consumersc. during the early stages of the product life cycled. during an attempt to gain the immediate action of a consumere. when advertising a simple, nontechnical, mature product

ANS: CInformative promotion is a necessary ingredient for increasing demand for a product category and is used when the product is introduced.


75. The goal of persuasive promotion is to:a. stimulate a purchase or other actionb. increase brand awarenessc. describe available servicesd. remind the consumers of where to buy the producte. maintain top-of-mind consumer awareness

ANS: APersuasion generally attempts to motivate a consumer to purchase a product.


76. Persuasion normally becomes the primary promotion goal when:a. a firm is trying to increase brand awarenessb. the product enters the growth stage of the product life cyclec. selling a highly technical productd. reminding consumers where to buy the producte. new products are in early stages of the product life cycle

ANS: BPersuasion attempts to motivate a consumer to purchase a particular product. It is useful after the product has been made known through informational advertising during introduction.

PTS: 1 REF: 214 OBJ: 14-4 TYPE: Comp



TOP: AACSB Communication | TB&E Model Strategy

78. _____ promotion is used to keep a familiar brand name in the public's mind and is prevalent during the maturity stage of the product life cycle.a. Influenceb. Amusementc. Informatived. Persuasivee. Reminder

ANS: E PTS: 1 REF: 214-215 OBJ: 14-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Promotion

81. Which of the following outlines a sequential four-step process for achieving promotional goals?a. communication modelb. hierarchy of impactsc. AIDA conceptd. Maslow's hierarchy of needse. Schramm's model


82. The AIDA concept:a. proves promotional effectiveness is an insignificant abstract termb. demonstrates that buyers go through nine stages on the way to making a decisionc. is a model effectively showing that advertising can move people to the purchase staged. is a model for reaching promotional objectives that outlines a sequential process for

effective promotione. is a budget plan based on the effectiveness of various promotional mixes in achieving

certain objectives


83. AIDA stands for:a. Attitude-Interest-Demand-Activityb. Attention-Interest-Desire-Actionc. Awareness-Intent-Demand-Actiond. Avoidance-Interest-Desire-Acceptancee. Attitudes-In-Developing-Acquisitions

ANS: B PTS: 1 REF: 215 OBJ: 14-5 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Strategy

84. According to the AIDA concept, the first step a marketer must achieve with potential customers is:a. attentionb. attitude alignmentc. actiond. adaptation



e. adoption

ANS: A PTS: 1 REF: 215 OBJ: 14-5 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Customer

87. Point-of-purchase displays in grocery stores, coupons, premiums, and trial-size packages are most useful when the consumer is near the _____ stage of the AIDA model.a. likingb. awarenessc. actiond. preferencee. knowledge

ANS: CThese extras are the sales promotion techniques that often push the complacent consumer into the purchase stage.


88. For which of the following purchases is Gordo most likely to pass through all four stages of the AIDA process?a. a pair of white socksb. a two-pack of light bulbsc. a loaf of breadd. gear for mountain climbinge. a six-pack of beer

ANS: DMost buyers involved in high-involvement purchases pass through the four stages of the AIDA model. The climbing gear would be the alternative most likely to create a high level of psychological risk.


89. Which of the following statements about the AIDA model is true?a. The AIDA model explains why public relations is the most important element in the

promotional mix.b. Advertising is most effective at the purchase stage of the AIDA model.c. Certain promotional tools are more effective at certain stages of the AIDA model.d. Sales promotion is not helpful during the attention stage of the AIDA model.e. The promotional mix should not be influenced by the AIDA model.

ANS: CA helpful concept for marketing managers is that as the customer moves from awareness to purchase, different promotional tools are more effective at certain points.




90. The AIDA concept:a. assumes that the second step in the purchase-decision process is inertiab. does not explain how all promotions influence purchase decisionsc. assumes that consumers regularly go through each stage of the process during all

purchasesd. indicates that the purchase decision is the same for high-involvement and low-

involvement productse. is accurately described by none of the choices

ANS: BThe second step in the AIDA concept is interest. Customers typically do not go through all stages for a low-involvement product.


93. In terms of the AIDA concept, sales promotion is most effective at creating:a. strong desire and purchase intentb. positive attitudes toward a brandc. awareness of a productd. long-term intereste. awareness of a product and purchase intent

ANS: A PTS: 1 REF: 216 OBJ: 14-5 TYPE: CompTOP: AACSB Communication | TB&E Model Promotion

95. Which of the following is LEAST likely to be a factor that would determine the nature of the promotional mix?a. stage in the product life cycleb. target market characteristicsc. funds available for promotiond. use of a push or pull strategye. size of the company

ANS: ESize of the company may or may not affect the promotional mix, depending on other factors such as available funds or product type.


97. The promotional mix elements that should be emphasized for products moving into the growth stage of the product life cycle are:a. public relations and reminder advertisingb. sales promotion and public relationsc. personal selling and persuasive advertisingd. sales promotion and personal sellinge. informational advertising and publicity



ANS: CDuring the growth stage, advertising and public relations remain strong, sales promotion declines in importance, and personal selling is used. Advertising is persuasive.

PTS: 1 REF: 217-218 OBJ: 14-6 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Promotion

98. Because automobile tires are in the maturity stage of their product life cycle, the promotional mix element _____ should NOT be emphasized in the marketing of this product.a. public relationsb. persuasive advertisingc. sales promotiond. reminder advertisinge. personal selling

ANS: ADuring the maturity stage, persuasive and reminder advertising are emphasized, as well as sales promotion. Personal selling is maintained, while the usefulness of public relations is doubtful.

PTS: 1 REF: 218 OBJ: 14-6 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Strategy | TB&E Model Promotion

99. For products like audio cassette tapes, which are in the decline stage of the product life cycle,:a. persuasive advertising is commonly usedb. heavy public relations is used to maintain brand loyaltyc. personal selling should be used to obtain distributiond. sales promotion is used to build market sharee. none of these is true


PTS: 1 REF: 218 OBJ: 14-6 TYPE: CompTOP: AACSB Communication | TB&E Model Product | TB&E Model Promotion

101. When a product is in the growth stage of its product life cycle:a. all elements of the promotional mix are equally importantb. heavy advertising is used to build brand loyaltyc. persuasive and reminder advertising is decreasedd. personal selling is ineffectivee. personal selling and sales promotions are the major elements of the promotional mix used

ANS: BHeavy advertising and decreased use of sales promotions are common during the growth stage. Reminder advertising is used when the product/brand reaches the maturity stage. During the growth stage, personal selling is used to maintain distribution.




102. What is the most effective promotional mix to use with products that are convenience goods and purchased routinely?a. personal selling and advertisingb. public relations and personal sellingc. personal selling and sales promotiond. advertising and public relationse. sales promotion and advertising

ANS: EFor routine buying decisions, the most effective promotional tools are advertising and sales promotion.

PTS: 1 REF: 218 OBJ: 14-6 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Product | TB&E Model Promotion

103. Which of the following elements of the promotional mix would be most effective for helping highly involved consumers make complex buying decisions?a. personal sellingb. reminder advertisingc. sales promotiond. public relationse. informative advertising

ANS: A PTS: 1 REF: 218 OBJ: 14-6 TYPE: CompTOP: AACSB Communication | TB&E Model Promotion | TB&E Model Customer

104. _____ is probably the most important factor in determining the promotional mix.a. The advertising agencyb. The need for feedbackc. Moneyd. Media availabilitye. Message flexibility

ANS: CWithout available funds, the promotional mix is severely limited.


105. The use of aggressive personal selling and trade advertising by a manufacturer to convince a wholesaler or retailer to carry and sell its merchandise is known as a _____ strategy.a. strong-armb. kineticc. pulld. foot-in-the-doore. push

ANS: E PTS: 1 REF: 218-219 OBJ: 14-6 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy



107.An ad in a trade magazine targeted to veterinarians urges them to prescribe Hepato for cats and dogs with damaged livers. This ad was placed by the product's manufacturer. This ad is an example of how manufacturers use a(n) _____ strategy.a. kineticb. pullc. inertiad. advertoriale. push

ANS: EA push strategy is a marketing strategy that uses trade advertising to convince a retailer (in this case the veterinarian) to carry and sell particular merchandise.

PTS: 1 REF: 218-219 OBJ: 14-6 TYPE: AppTOP: AACSB Communication | TB&E Model Strategy

112. A manufacturer using the _____ promotional strategy focuses its promotional efforts on the consumer.a. reinforcementb. personal sellingc. pushd. pulle. kinetic


113. An ad for a prescription-only antihistamine that does not make its users sleepy like many other allergy medications was run in several health and fitness magazines. The ad said that if you were interested in learning more about the new product or trying it out, you should ask your physician. The manufacturer of the drug was using a _____ promotional strategy.a. reinforcementb. personal sellingc. pushd. pulle. kinetic

ANS: DA manufacturer using the pull promotional strategy focuses its promotional efforts on the consumer.

PTS: 1 REF: 219 OBJ: 14-6 TYPE: AppTOP: AACSB Communication | TB&E Model Strategy

118._____ is the careful coordination of all promotional activities to produce a consistent, unified message that is customer focused.a. Interpersonal and mass communications (IMC) approachb. Promotional mixingc. Integrated marketing communicationsd. Creative sellinge. Relationship marketing




120. Why is the concept of integrated marketing communications (IMC) growing in popularity?a. The proliferation of thousands of media choices beyond the traditional media has made

promotion a complicated task.b. The mass market has fragmented.c. Critics of promotion have suggested that uncoordinated promotion is wasteful and

inefficient.d. Marketers have slashed their advertising spending in favor of promotional techniques that

generate immediate sales responses and have more easily measured effects.e. All of these statements help to explain why IMC is growing in popularity.

ANS: E PTS: 1 REF: 219-220 OBJ: 14-7 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Promotion

Chapter 17 (5th Textbook Edition —Advertising and Public Relations)

MULTIPLE CHOICE

1. _____ is any form of impersonal, sponsor-paid, one-way mass communication.a. Publicityb. Advertisingc. Promotiond. Public relationse. Direct marketing


3. Advertising expenditures in the United States:a. are large, but the industry is small with fewer than 400,000 employeesb. are staying level with little or no increase year to yearc. are completely controlled by the 200,000 advertising agencies in the United Statesd. exceed $250 billion per year in the huge industry that employs over three million peoplee. are dominated by the millions of small firms competing for business through price wars

ANS: AAdvertising is a visible but small industry. Advertising spending is increasing and is dominated by the largest firms.


4. The United States's top advertiser, according to dollars spent per year, is:a. Sony Corporationb. Time Warnerc. Procter & Gamble



d. General Motors Corporatione. McDonald's Corporation

ANS: C PTS: 1 REF: 223 OBJ: 15-1 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Promotion

5. Why do many brands with a large market share spend proportionally less on advertising compared to brands with small market share?a. Beyond a certain volume of promotion, diminishing returns set in.b. Certain industries have a practice of spending a low amount of dollars, relative to sales, on

advertising.c. There is no minimum level of exposure for advertising to have an effect on sales.d. Advertising will not stimulate economic growth for the industry.e. The firms with large market share do not understand the advertising-to-sales relationship.

ANS: AThere is a saturation point for advertising.


6. The advertising response function helps marketers:a. create ads that will be noticed by consumers each time the ad runsb. use their advertising budgets wiselyc. calculate the break-even points for each product being advertisedd. determine the reach and frequency of specific mediae. select an executional appeal appropriate to the product being advertised

ANS: BThe advertising response function is a phenomenon in which spending for advertising and sales promotion increases sales or market share up to a certain level but then produces diminishing results.


7. Why do companies with new brands that have a small market share tend to spend proportionately more for advertising and sales promotions compared to those with a large market share for existing products?a. as a result of experiential marketing researchb. to create the appropriate level of institutional advertisingc. to determine which executional appeal is the most effectived. to achieve a certain minimum level of exposure to measurably affect purchase habitse. to prevent product cannibalization

ANS: DThere are two reasons why companies with new brands with small market share tend to spend proportionately more for advertising and sales promotions compared to those with existing products and large market share. The first reason is in response to the advertising response function. The second reason is to create product awareness in the minds of the target audience.




9. How does advertising affect consumers?a. changes cultural practices and conventionsb. changes strongly held valuesc. manipulates society against its willd. changes negative attitudes to positive onese. makes people buy things they do not want

ANS: DAdvertising can affect attitudes but cannot alter values or force people to do things they do not want to do or believe are wrong.

PTS: 1 REF: 224 OBJ: 15-1 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Customer

12. _____ advertising is designed to enhance a company's image rather than promote a particular product.a. Publicityb. Institutionalc. Pioneeringd. Selectivee. Image


14. A unique form of institutional advertising called _____ advertising is a means for corporations to express their viewpoints on various controversial issues.a. advocacyb. persuasivec. issued. comparativee. image


17. Unlike advertising that establishes or maintains a company's identity, _____ advertising touts the benefits of a specific good or service.a. selectiveb. cooperativec. advocacyd. imagee. product




19. _____ advertising is used to stimulate demand for a new product or product category and is heavily utilized during the introductory stage of the product life cycle.a. Comparativeb. Innovativec. Focusedd. Imagee. Pioneering

ANS: E PTS: 1 REF: 225 OBJ: 15-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

22.The goal of _____ advertising is to influence demand for a specific brand of good or service. Such advertising is less informational and more emotional. The emphasis is on brand name, recall, and favorable attitude toward the brand.a. pioneeringb. objective-specificc. competitived. institutionale. comparative

ANS: C PTS: 1 REF: 225 OBJ: 15-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Strategy

23. Comparative advertising is:a. like a mirror because it compares all negative and positive features of both productsb. like a shotgun in that it compares multiple features of two productsc. like a rifle in that it only compares a single benefit or advantaged. only used by companies at the highest level of the pyramid of corporate responsibilitye. is accurately described by none of these

ANS: EComparative advertising compares two or more competing brands on one or more specific attributes. FTC monitoring of comparative advertising indicates that it is sometimes used unethically.


25._____ advertising compares two or more specifically named or shown competing brands on one or more specific attributes.a. Contrastingb. Comparativec. Pioneeringd. Superlativee. Differentiational


26. Comparative advertising:a. does not have high claim recall effectiveness



b. has always been legal but is in bad tastec. allows advertisers to falsely describe the competitiond. was not allowed before the 1970s if the other brands were mentioned by name or showne. results in high recall of the brand name of the advertised goods, but not for the named,

competing brand

ANS: DComparative advertising compares two or more specifically named or shown competing brands on one or more specific attributes; it was illegal before the 1970s.


28. Which of the following statements about comparative advertising is true?a. Comparative advertising is highly effective in Arabic countries.b. The FCC is the only federal agency that has any regulatory power over comparative

advertising.c. Comparative advertising is often used for products experiencing strong growth.d. Comparative advertising is highly regulated and is illegal in certain countries.e. None of these statements about comparative advertising is true.

ANS: DComparative advertising is not consistent with social values in Arabic countries and is not effective there. The FTC has regulatory power over comparative advertising. Comparative advertising is often used for products with sluggish growth.


29. Around election time every year, we see ads on television claiming that one candidate is superior to another in terms of experience, capability, and/or ethics. Sometimes opponents are named and even vilified in these _____ ads.a. differentialb. cooperativec. advocacyd. comparativee. image

ANS: DComparative advertising compares two or more specifically named or shown competing brands on one or more specific attributes.

PTS: 1 REF: 225 OBJ: 15-3 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Product

30. The first step in the advertising campaign decision process is to:a. make media decisionsb. evaluate the campaign



c. determine campaign objectivesd. develop advertising copye. make creative decisions


31. An advertising campaign:a. may contain a wide variety of themes and slogansb. extends for a defined period of timec. continues for the life of the productd. starts with determining which media will be usede. rarely has a specific budget

ANS: BThe advertising campaign is a series of related advertisements that focus on a common theme, slogan, and set of advertising appeals and extend for a defined period of time.

PTS: 1 REF: 225 OBJ: 15-3 TYPE: CompTOP: AACSB Communication | TB&E Model Strategy

32. A(n) _____ is a specific communication task that a campaign should accomplish for a specified target audience during a specified period of time.a. advertising objectiveb. marketing mixc. media scheduled. advertising life spane. promotional mix

ANS: A PTS: 1 REF: 226 OBJ: 15-3 TYPE: DefTOP: AACSB Communication | TB&E Model Strategy

33. One method used for setting advertising objectives is:a. campaign budgetingb. objective and taskc. the DAGMAR approachd. percentage of salese. contribution margin


34. DAGMAR is an acronym for:a. defining and achieving goals means advertising reachb. developing aggressive marketsc. designing advertising with market researchd. defining advertising goals for measured advertising resultse. developing aggressive growth markets and revenues

ANS: D PTS: 1 REF: 226 OBJ: 15-3 TYPE: Def




35. When the conservative New England Banking Company hired Campbell & Cook advertising agency to launch a new advertising campaign, the agency's first step was to:a. determine that the goal of the ads was to emphasize the bank's customer serviceb. set its marketing budgetc. decide what executional style to use in the adsd. see if sales promotion was superior to other tools within the promotional mixe. hire a spokesperson

ANS: AThe first step in any advertising campaign is to set advertising objectives.


42. When making creative decisions for the advertising campaign, the advertising manager may consider all of the following EXCEPT:a. how to develop advertising appealsb. identification of the product's benefitsc. the selection of advertising objectivesd. the selection of a unique selling propositione. the advertising message

ANS: CDetermining advertising objectives must be done before creative decisions are made.


43. In advertising, the goal is to sell the product's _____, not its _____.a. benefits; attributesb. characteristics; appealsc. values; traitsd. competitive edge; virtuese. differential advantage; properties

ANS: AA well-known rule of thumb in advertising is "Sell the sizzle, not the steak."


45.An advertising _____ identifies a reason for a person to buy a product.a. profileb. executionc. formatd. execution



e. appeal


46. An effective advertising appeal must:a. be unbelievableb. make a positive impression on the target marketc. be familiard. be inexpensivee. be similar to its competitors' advertising appeals

ANS: BAn effective advertising appeal must be believable, unique, and differ from competitors. Cost is not a concern when selecting ad appeals.


48.The dominant advertising appeal selected for the campaign will become the:a. advertising objectiveb. unique selling propositionc. media profiled. basis for comparative advertisinge. decision factor in media selection

ANS: B PTS: 1 REF: 226-227 OBJ: 15-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

50._____ is the way the advertisement portrays its information.a. Message executionb. Appeal formationc. Focus selectiond. Audience selectione. Benefit determination


67.Which of the following statements about postcampaign evaluation is true?a. Evaluating an advertising campaign can be the most demanding task facing advertisers.b. Testing ad effectiveness can be done either before or after the campaign.c. Most advertising campaigns aim to create an image for the product instead of asking for

action.d. Even if an ad campaign has been particularly successful, advertisers will typically conduct

a postcampaign evaluation.e. All of the statements about postcampaign evaluation are true.

ANS: E PTS: 1 REF: 228 OBJ: 15-3 TYPE: Comp




68. Which of the following statements about developing an advertising campaign is true?a. Advertisers use DAGMAR to determine the product's appeal.b. The last stage in the process is to execute the message.c. The product's unique selling proposition is identified early so that advertising objectives

can be efficiently set.d. Evaluating results of an advertising campaign helps marketers to adjust objectives for

future campaigns.e. In developing an advertising campaign, it is more important for the advertiser to identify

the attributes than the benefits.

ANS: DDAGMAR is used to set advertising objectives. The last stage of the process is campaign evaluation. The unique selling proposition is identified after benefits (not attributes) are defined.


69. Creative work in an advertising campaign cannot be completed without knowing which message channel will be used to convey the message to the target market. The message channel is the:a. mediumb. product networkc. attributed. appeale. executor


70. _____ is the series of decisions advertisers make regarding the selection and use of media that will optimally and cost-effectively communicate the message to the target audience.a. Promotional implementationb. Marketing mix planningc. Media planningd. Media reach and frequency strategye. Media targeted selection


71. Which of the following statements about the selection of media for advertising is true?a. Creative planning for an ad that goes on a billboard is the same as the planning for an ad

that runs on television.b. The media selection is typically unrelated to the advertising objectives.c. The appeal and executional style of the ad strongly affect the media selection.d. Creative work is finished before the media are selected.e. None of these statements about the selection of media for advertising is true.

ANS: C



Advertising objectives strongly affect the media that are selected as does the creative work, which cannot be finished until the media selection is made.


72. _____ advertising has the advantages of being both timely and geographically flexible.a. Televisionb. Newspaperc. Outdoord. Magazinee. Catalog

ANS: BNewspapers are often used by local retailers because they are current and flexible and directed to a local but wide market.


74._____ advertising is an arrangement under which a manufacturer pays a percentage of the advertising cost for an ad that a retailer places for the manufacturer's brand.a. Advocacyb. Comparativec. Institutionald. One-to-onee. Cooperative


75. One of the reasons why a retailer might avoid the use of newspaper advertising is:a. absence of geographic selectivityb. short lead timec. year-round readershipd. little demographic selectivitye. high individual market coverage



76. One of the advantages of television advertising is:a. short life of messageb. long lead timec. commercial clutterd. high costs



e. ability to reach wide and diverse audience



77. Which of the following statements about Internet advertising is true?a. It is easy to measure ad effectiveness with this medium.b. It is a medium to which all consumers have access.c. It is the fastest growing of all the advertising media.d. There is a long lead time required for creating Internet ads.e. By its very nature, this medium reaches a broad, diverse audience.

ANS: CSee Exhibit 15.3.

PTS: 1 REF: 229 | 231 OBJ: 15-4 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Online/Computer

78. One of the main advantages of _____ advertising is its extreme market selectivity.a. televisionb. newspaperc. magazined. radioe. outdoor

ANS: CMagazines are available for almost every market segment and can be highly specialized


79. Which of the following is NOT an advantage offered by radio to its advertisers?a. billions of listenersb. relatively low costc. targeting powerd. ability to change spots quicklye. timelines and geographic flexibility

ANS: ARadio stations are often local and do not reach the widest audiences.


80. Advertising in the form of a 30-minute advertisement that resembles a TV talk show is called a(n):a. infomercialb. extended sales pitch



c. mega-merciald. ad expandere. prolonged advertisement


82.Outdoor advertising:a. is often used to sell specialty productsb. is a flexible low-cost medium that can take many formsc. is a high-cost mediumd. can be used to reach a narrow, selective target markete. is not affected by noise

ANS: BOutdoor advertising is a low-cost medium, that reaches a broad and varied audience, but may be subject to many distractions (noise). It often advertises convenience and shopping products.


85.Which of the following is NOT identified in the text as a factor that influences media selection?a. audience selectivityb. cost per contactc. use of cooperative advertisingd. media flexibilitye. reach

ANS: CIf cooperative advertising is available, manufacturers usually allow use of these dollars in any media.


87. _____ usually is NOT used as a basis used for making media mix decisions.a. Media scheduleb. Cost per thousandc. Reachd. Frequencye. Audience selectivity

ANS: AThe media schedule will be the result AFTER the media mix decisions are made, based on the other four factors

PTS: 1 REF: 232 | 234 OBJ: 15-4 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Strategy



89. Advertisers categorize ads on shopping carts at grocery stores and ads at gas station pumps as examples of:a. communications networksb. alternative mediac. distribution channels for adsd. outdoor advertisinge. direct advertising


90. Why are advertisers looking to alternative media to advertise their products?a. guaranteed profitsb. maximum advertising exposurec. to cut through the clutter of traditional mediad. to minimize problems associated with reache. to maximize noise levels

ANS: C PTS: 1 REF: 232 OBJ: 15-4 TYPE: DefTOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

92. _____ measures the number of different target consumers who are exposed to a commercial at least once.a. Noise levelb. Frequencyc. Reachd. Synchronizatione. Cost per contact

ANS: C PTS: 1 REF: 232 OBJ: 15-4 TYPE: DefTOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

93. _____ is a measure of the number of times an individual is exposed to a brand message. It is used to measure the intensity of a specific medium's coverage.a. Synchronizationb. Reachc. Cost per contactd. Media schedulinge. Frequency

ANS: E PTS: 1 REF: 232 OBJ: 15-4 TYPE: DefTOP: AACSB Communication | TB&E Model Strategy

94. A medium's ability to reach a precisely defined market is its:a. audience selectivityb. market singularityc. geographic selectivityd. noise filtering abilitye. life span



ANS: A PTS: 1 REF: 232-233 OBJ: 15-4 TYPE: DefTOP: AACSB Communication | TB&E Model Strategy

96. Prices on items sold by supermarkets change frequently, and they often offer special sales to match or beat the prices of their competitors. Therefore, _____ is a major consideration when a supermarket selects an advertising vehicle.a. audience duplicationb. noise levelc. life spand. cost per contacte. flexibility

ANS: EFlexibility of the medium refers to the ability to change the message to fit changing market conditions.

PTS: 1 REF: 233 OBJ: 15-4 TYPE: AppTOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

97. Billboard advertisements often have to compete for a driver's attention with traffic, passengers, radio, or other billboards. Billboard advertising would be described as:a. lacking any geographic selectivityb. the most flexible advertising mediumc. having a high noise leveld. having a low noise levele. being a great channel for informative ads

ANS: CNoise level is the amount of distractions--other advertisements, people, competing sounds in the environment, or news stories--involved with a type of medium. Outdoor advertising such as billboards suffers from a great deal of competing noise.


98. Advertisers are often concerned with the noise level in a medium. The medium that is assumed to have the lowest noise level is:a. radiob. televisionc. direct maild. newspapere. magazines

ANS: CNoise level is the amount of distractions—other advertisements, people, competing sounds in the environment, or news stories—involved with a type of medium.




100. Advertising researchers today are discussing the qualitative factors that should be present during media selection. Which of the following is an example of one of those qualitative factors for placing television advertising?a. how well the program is liked by potential consumersb. the kind of noise filtration system used by the networkc. the clarity of the pictured. whether the medium is satellite- or cable-basede. all of the choices

ANS: AThe text discusses how audience behavior should be considered when making media selections.


101. Products in the latter stages of the product life cycle, which are advertised on a reminder basis use, a(n) _____ media schedule.a. intermittentb. burstingc. continuousd. trailinge. unremitting

ANS: C PTS: 1 REF: 234 OBJ: 15-4 TYPE: DefTOP: AACSB Communication | TB&E Model Strategy | TB&E Model Product

102. With a(n) _____ media schedule, the advertiser may schedule the ads heavily every other month to achieve a greater impact with an increased frequency and reach at those times.a. intermittentb. flightedc. periodicd. unremittinge. alternating

ANS: B PTS: 1 REF: 234 OBJ: 15-4 TYPE: DefTOP: AACSB Communication | TB&E Model Strategy | TB&E Model Promotion

103. A(n) _____ media schedule combines continuous scheduling throughout the year with a flighted schedule during the best sales periods.a. pulsingb. burstingc. unremittingd. rhythmice. vibrating


104. Which of the following products is most likely to use a pulsing media schedule?



a. romance novelsb. gasolinec. band instrumentsd. baking sodae. ceiling fans

ANS: CBand instruments would be most heavily advertised just prior to the opening of the new school year.

PTS: 1 REF: 234 OBJ: 15-4 TYPE: CompTOP: AACSB Communication | TB&E Model Strategy | TB&E Model Product

105. Which of the following products is most likely to have a seasonal media schedule?a. aromatherapy candlesb. masking tapec. airplane ticketsd. charcoale. soft drinks

ANS: DSeasonal products like charcoal are not advertised year-round because they are not used year-round.

PTS: 1 REF: 234 OBJ: 15-4 TYPE: CompTOP: AACSB Communication | TB&E Model Strategy | TB&E Model Product

106. A(n) _____ designates the vehicles, specific publications or programs, and the insertion dates of advertising.a. advertising planb. media schedulec. promotion strategyd. ad outlinee. promotional profile


111. Products such as surfboards, swimsuits, lawn mowers, allergy medication, and flower seeds are most likely to be advertised with a _____ media schedule.a. flightedb. pulsingc. seasonald. continuouse. consecutive

ANS: CProducts that are used more during certain times of the year tend to follow a seasonal strategy.

PTS: 1 REF: 234 OBJ: 15-4 TYPE: AppTOP: AACSB Communication | TB&E Model Strategy



112. _____ is the promotional mix element that evaluates public attitudes, identifies issues that may elicit public concern, and executes programs to gain public understanding and acceptance.a. Personal sellingb. Advertisingc. Mass communicationsd. Public relationse. Sales promotion


115. The recent accusations of steroid usage lodged against the alleged winner of the Tour de France created _____ for the bicycle race.a. numerous sales promotion opportunitiesb. free positive advertisingc. numerous demarketing opportunitiesd. personal selling opportunitiese. a great deal of publicity

ANS: E PTS: 1 REF: 234 OBJ: 15-5 TYPE: AppTOP: AACSB Communication | TB&E Model Strategy

116. Tools for the public relations manager include all of the following EXCEPT:a. press relationsb. product publicityc. lobbyingd. sales promotionse. corporate communications

ANS: DSales promotions are not part of public relations.

PTS: 1 REF: 234-235 OBJ: 15-5 TYPE: CompTOP: AACSB Communication | TB&E Model Strategy

124.Companies that show support for recycling efforts and other examples of green marketing through advertising are engaged in:a. event publicityb. public relations profilingc. consumer intimidationd. sponsorshipe. advocacy publicity

ANS: DGreen marketing is an important way for companies to build loyalties by promoting a popular issue.


125. How do public relations professionals use Internet Web sites?



a. to introduce new productsb. to promote existing productsc. to obtain consumer feedbackd. to showcase upcoming eventse. to do all of these things

ANS: E PTS: 1 REF: 236 OBJ: 15-5 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Promotion | TB&E Model Online/Computer

126. _____ is used by public relations specialists to handle the effects of unfavorable publicity.a. Media planningb. Crisis managementc. Message powerd. Damage controle. Communication narrowcasting


127. A newspaper article revealed that hazardous wastes buried in an on-site landfill at a paper manufacturer were leaking into the local water supply. Even though the company quickly stopped the leak and paid for an additional water purification system for the town, it still received some very negative publicity. The company should have:a. begun a pulsing advertising campaignb. implemented its crisis management planc. used an ad campaign based on a fear appeald. done nothing until the actual damage levels were determinede. ignored the publicity and assumed it would go away

ANS: BCrisis management is used to handle the effects of unfavorable publicity.




Chapter 19 (5th Textbook Edition —Pricing Concepts)

MULTIPLE CHOICE

1. According to the text, price is best described as:a. the perceived value of a good or serviceb. money exchanged for a good or servicec. the psychological results of purchasingd. the cost in dollars for a good or service as set by the producere. the value of a barter good in an exchange


2. Revenue:a. equals quantity sold times profit marginb. equals price minus costsc. equals return on investmentd. is synonymous with profite. equals price of goods times quantity sold

ANS: E PTS: 1 REF: 255 OBJ: 17-1 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing

3. _____ pay for every activity of the company.a. Revenuesb. Investmentsc. Retained earningsd. Profitse. Prices

ANS: ARevenue is price times units sold, or the total inflow of capital that is available to pay for the costs of manufacturing the good and running the business.


4. Money that is left over after paying for company activities is called:a. return on investmentb. a contribution marginc. profitd. net worthe. a current asset

ANS: C PTS: 1 REF: 255 OBJ: 17-1 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing



5. At Wal-Mart, Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer. The items, which were sold together, retailed at $28.50, but were marked down to $19.99. The $19.99 is the:a. revenueb. pricec. profitd. liquidity valuee. amortized value

ANS: BPrice is that which is given in exchange to acquire a product.


6. Which of the following statements about price is true?a. Price can relate to anything with perceived value, not just money.b. Price is that which is given up in an exchange to acquire a product.c. Customers are interested in obtaining a perceived reasonable price.d. The price paid is based on the satisfaction consumers expect to receive from a product.e. All of these statements about price are true.

ANS: E PTS: 1 REF: 255 OBJ: 17-1 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Pricing

7. Which of the following statements about price is true?a. Price and revenue are synonyms.b. Price always equals some monetary figure.c. Price is not necessarily based on the satisfaction consumers receive from a product.d. High prices result in high profits.e. All of these statements about price are true.

ANS: CPrice can relate to anything with perceived value, not just money. The price paid is based on the satisfaction consumers expect to receive from a product, not necessarily what they actually receive.


9. Why are marketing managers finding it more difficult to set prices in today's environment?a. Inflationary and recessionary periods have made customers less price-sensitive.b. Fewer dealer and generic brands are available because the competition has been

eliminated.c. The high rate of new-product introductions has led to careful reevaluation by consumers.d. Marketing managers are finding it difficult to compare prices between suppliers.e. Buyers are less informed and are less price-sensitive.

ANS: CWith constant new-product introductions, consumers have many alternative goods to choose from, and selecting the right price becomes a very complicated task for the marketing manager.




10. For convenience, pricing objectives can be divided into three categories. They are:a. refundable, competitive, and attainableb. perceived, actual, and unique-situationalc. differentiated, niche, and undifferentiatedd. profit oriented, sales oriented, and status quoe. monopolistic, fixed, and variable

ANS: D PTS: 1 REF: 256-258 OBJ: 17-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

11. An organization is using _____ when it sets its prices so that total revenue is as large as possible relative to total costs.a. profit maximizationb. market share pricingc. demand-oriented pricingd. sales maximizatione. status quo pricing

ANS: A PTS: 1 REF: 256 OBJ: 17-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

14. _____ measures the overall effectiveness of management in generating profits with its available assets.a. Return on investmentb. Economic order quantityc. Target-on-salesd. Retained earningse. Efficiency maximization


18. A company using market share pricing has a _____ pricing objective.a. profit-orientedb. sales-orientedc. demand-orientedd. supply-orientede. status quo


19. Under which of the following conditions will companies with low market share be most likely to fail?a. competing in a slow-growth industryb. competing in an industry that makes frequently purchased itemsc. competing in an industry with few product changesd. competing in an industry requiring market power and economies of scalee. competing in none of these industries



ANS: DA larger market share is required to boost economies of scale and market power.


23. As a short-term pricing objective, _____ can be effectively used on a temporary basis to sell off excessive inventory.a. profit maximizationb. profit-oriented pricingc. status quo pricingd. sales maximizatione. market share pricing

ANS: DSales maximization pricing is a short-term price reduction to increase sales.


24. If a company's pricing objective is to meet the competition or to maintain existing prices, it is using _____ pricing.a. head-onb. target return on investmentc. status quod. market sharee. demand-oriented

ANS: C PTS: 1 REF: 258 OBJ: 17-2 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

25. Which of the following statements describes an advantage of status quo pricing?a. Status quo pricing is derived from actual costs of manufacturing.b. Status quo pricing maintains the organization's differential advantage.c. Status quo pricing is active, not reactive.d. Status quo pricing causes price wars.e. Status quo pricing requires little planning.

ANS: EStatus quo pricing requires little planning because it involves just copying the competitions' pricing policies.


27. Although many factors can influence price, the primary determinants are:a. costs of manufacturing and distributionb. the demand for the good and the cost to the sellerc. demand by the consumer and perceived quality



d. distribution and promotion strategiese. stage of the product life cycle and costs to the consumer


28. _____ is defined as the quantity of a product that will be sold at various prices for a specified period.a. Market shareb. Demandc. Supplyd. Valuee. Revenue


29. The price of the good or service is a key decision for a marketer because it most significantly and directly affects the product's:a. distributionb. costsc. demandd. promotione. quality

ANS: CThe quantity of a product that people will buy depends on its price.


30. The quantity of a product that people will buy/demand is most dependent on its:a. distribution strategyb. supplyc. promotion strategyd. quality parameterse. price

ANS: E PTS: 1 REF: 258 OBJ: 17-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Customer

34. Most demand curves slope:a. horizontallyb. upward and to the rightc. downward and to the leftd. verticallye. downward and to the right

ANS: EFor most products when prices increase, demand will decrease.




35. The _____ is the quantity of a product that will be sold in the market at various prices for a specified time period, and _____ is the quantity of a product that will be offered to the market by suppliers at various prices for a specified period.a. demand; equityb. demand; supplyc. supply; demandd. inventory; demande. inventory; supply

ANS: B PTS: 1 REF: 258-259 OBJ: 17-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Strategy

36. _____ is defined as the quantity of product offered to the market by suppliers at various prices for a specified period.a. Supplyb. Demandc. Equityd. Liquiditye. Current asset


37. At a price of $6 each, 314 people want to buy sun visors designed especially for volunteers at the Peachtree Road Race, and only 314 such visors are available. In this example, a state of _____ has been achieved.a. symmetryb. marketing balancec. unitary economicsd. commerce stabilitye. price equilibrium

ANS: E PTS: 1 REF: 259 OBJ: 17-3 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

38. The point at which there is no inclination for the price to rise or fall is called price:a. equilibriumb. stabilityc. leveraged. symmetrye. status quo

ANS: A PTS: 1 REF: 259 OBJ: 17-3 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Strategy

40. The responsiveness or the sensitivity of consumer demand to changes in price is referred to as _____ and occurs when consumers buy more or less of a product when the price changes.



a. the break-even pointb. the point of equilibriumc. unitary revenued. asymmetrical demande. elasticity of demand


41. When consumers are sensitive to price changes, _____ occurs.a. inelastic demandb. elastic supplyc. elastic demandd. inelastic supplye. unitary elasticity

ANS: C PTS: 1 REF: 259 OBJ: 17-3 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Customer

42. What happens when demand is elastic?a. As price goes up, revenue goes down.b. As price goes down, revenue goes down.c. As price goes up, revenue goes up.d. As price goes up, revenue does not change.e. As price goes down, revenue does not change.

ANS: AIf demand is elastic, price increases will decrease demand by a larger amount, reducing total revenue.


43. While shopping, Anita found a "gardening kit" containing a pair of work gloves, a trowel, and a hand rake handsomely arranged in a clay flower pot. The items, which were sold together, retailed at $24.50, but had been marked down to $12.99. The retailer sold only one for $24.50 and six at the $12.99 price. Demand for the gardening kit package is:a. unitaryb. predictablec. synergisticd. inelastice. elastic

ANS: EIf demand is elastic, price increases will decrease demand by a larger amount, reducing total revenue.

PTS: 1 REF: 259-260 OBJ: 17-3 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy



44. A bakery supply catalog sells 5-pound bags of moist apricots and cranberries, sweet dates, bits of pineapple, and candied cherries to be used in fruitcakes. Each bag costs $24.95. If the price of cranberries were to increase by 5 percent, it would have no effect on the price of the fruit mix because cranberries are only one of several fruits in the package. The demand for cranberries for this particular use is:a. elasticb. derivedc. synergisticd. inelastice. joint

ANS: DThe decrease in the price will not significantly influence the price of the fruit mix.

PTS: 1 REF: 259-260 OBJ: 17-3 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

47. _____ occurs when an increase in sales exactly offsets a decrease in price so that total revenue remains exactly the same.a. Inelastic demandb. Functional elasticity of demandc. Unitary elasticityd. Highly elastic demande. Fixed elasticity


49. When price decreases and total revenue falls, demand is:a. elasticb. inelasticc. absoluted. unitarye. stable


51.Critics claim bank ATMs take advantage of the _____ of customers who suffer a poverty of time and have a strong need for convenience.a. elasticity of demandb. inelastic demand schedulec. unitary supply and demandd. ROI characteristicse. supply characteristics

ANS: BCustomers are paying a premium for the convenience of ATM use.



PTS: 1 REF: 260 OBJ: 17-3 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Customer

53.Which of the following factors does NOT directly affect the elasticity of demand?a. the other uses of a productb. the inputs needed to manufacture the productc. the availability of substitute goodsd. the price relative to a consumer's purchasing powere. a product's durability

ANS: BInputs at time of manufacture only indirectly affect the demand, if at all.


54. _____ use complex mathematical software to profitably fill unused capacity.a. Yield management systemsb. Capacity correlation systemsc. Service forecasting toolsd. Service management systemse. Capacity management software

ANS: A PTS: 1 REF: 261 OBJ: 17-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Online/Computer

55. Yield management systems are used to:a. determine the availability of product substitutes in complex industries that are

experiencing rapid changeb. profitably fill unused capacityc. predict necessary service levels to achieve revenue goalsd. determine whether it is financially more feasible to buy a new product or repair a broken

onee. create elastic demand for low-involvement products

ANS: B PTS: 1 REF: 261 OBJ: 17-4 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Customer | TB&E Model Online/Computer

57. Which of the following statements about yield management systems (YMS) is true?a. The first use of YMS was in the U.S. car industry as it looked for ways to compete with

imports.b. YMS eliminate the problem of simultaneous production and consumption from services.c. YMS cannot be used by any other businesses but services.d. YMS are complex pricing systems used to set equilibrium pricing points.e. YMS are mathematically complex systems to make use of underutilized capacity and

reduce the cost of perishability.

ANS: EYMS was first used in the airline industry, but it is now used by automobile manufacturers to make use of underutilized capacity.



PTS: 1 REF: 261 OBJ: 17-4 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Online/Computer

58. Which of the following is most likely to be a variable cost for an Internet retailer that sells spices, herbs, and seasonings to consumers?a. annual lease on mixer used to blend seasoningsb. executive salariesc. rent for building where spices and herbs are repackaged for consumersd. workers' insurancee. postage for shipping spices and herbs

ANS: EPostage is the only item that varies depending upon the amount of units sold.


59. A cost that changes with the level of output is called a(n) _____ cost.a. liquidityb. variablec. fixedd. assete. elastic


61. _____ costs do not change as output is increased or decreased.a. Assetb. Variablec. Fixedd. Symmetricale. Status quo


63. Mitch owns a pet boarding kennel. The monthly payment on the land he purchased for his kennel, the mortgage on his small office building, and his business license are all examples of _____ costs.a. marginalb. variablec. fixedd. promotionale. demand

ANS: CFixed costs do not change as output changes.





65._____ cost is the change in total costs associated with a one-unit change in output.a. Variableb. Intermittentc. Elasticd. Marginale. Flex


66. When a seller determines the selling price by adding to cost an amount for profit and expenses not previously accounted for, the seller is using _____ pricing.a. profit maximizationb. demand-orientedc. break-evend. target returne. markup

ANS: E PTS: 1 REF: 262 OBJ: 17-5 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

67. The most popular method used by wholesalers and retailers in establishing a sales price is _____ pricing.a. markupb. status quoc. formulad. marginal revenuee. break-even

ANS: A PTS: 1 REF: 262 OBJ: 17-5 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

69. An independent retailer of specialty kitchen items wants to determine what price she should put on a set of plastic wine glasses. They cost her $7. She desires a markup of 30 percent based on selling price. Which of the following is closest to the price she should charge her customers?a. $19b. $12c. $15d. $10e. $18

ANS: DPrice = Cost + MarkupPrice = 7.00 + .3Price = $10




70. An educational toy store can buy a world globe for $30. If the store owner sells the globe for $45, what is the markup based on the selling price?a. 15 percentb. 20 percentc. 25 percentd. 33 percente. 50 percent

ANS: DPrice - Cost = Markup$45 - $30 = $15$15 ÷ $45 = 33% markup


71. A distributor of bakery suppliers sells 5-pound bags of moist apricots and cranberries, sweet dates, bits of pineapple, and candied cherries for $24.95 to be used in fruitcakes. Since the amount of cranberries purchased depends on how many bags of fruit are demanded, the cost of the cranberries is a:a. variable costb. marginal contributorc. fixed costd. variable revenuee. joint cost

ANS: A PTS: 1 REF: 262 OBJ: 17-5 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Strategy

72. What is the biggest advantage associated with markup pricing?a. its simplicityb. its inability to be decoded by customersc. the way that the technique considers demandd. the fact that merchandise is never underpriced with this techniquee. its reliance on marginal costs

ANS: AWhat could be easier than adding a percentage to cost to get a price?

PTS: 1 REF: 262 OBJ: 17-5 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

73. Which of the following describes a disadvantage associated with markup pricing?a. how difficult it is to implementb. its failure to explicitly consider product demandc. its dependence on marginal costsd. too many factors influence ite. none of these

ANS: B



Because the method does not explicitly consider demand, overpricing and/or underpricing can occur.

PTS: 1 REF: 262 OBJ: 17-5 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

74. _____ is the practice of marking up prices by 100 percent (or doubling the cost to set the selling price).a. Margin pricingb. Keystoningc. Mark-on addingd. Formula doublinge. Symmetrical pricing


76. Profit maximization occurs when:a. total costs equals average fixed revenueb. average variable costs are larger than average total costsc. total costs equal total variable costsd. marginal variable costs equal average revenuese. marginal revenue equals marginal cost


77. _____ is the extra revenue associated with selling an additional unit of output.a. Average revenueb. Marginal revenuec. Marginal costd. Net profite. Average variable cost


78. As long as the revenue of the last unit produced and sold is greater than the cost of the last unit produced and sold, a firm should:a. continue manufacturingb. not use formula pricingc. continue using price equilibriumd. consider using sales maximization pricinge. reach its break-even point very shortly

ANS: ADiminishing returns have not set in, so the firm should continue manufacturing.


79. The point at which marginal cost and marginal revenue are equal always results in:



a. maximization of elasticityb. maximization of revenuec. maximization of costsd. maximization of profitse. break-even equilibrium

ANS: DUntil the point where MC = MR, each unit of sales has contributed to additional profit; therefore, profit, not revenue or costs, has been maximized at MC = MR.


80. _____ determine what sales volume must be reached for a product before the company's total costs equal total revenue and no profits are earned.a. Marginal revenue estimatesb. Price equilibrium analysesc. Break-even analysesd. Average total cost (ATC) figurese. Marginal costs of goods sold


81. Keystoning is:a. the practice of marking up prices by 100 percentb. a method used for determining the point of elasticityc. a plan for reducing marginal costsd. the practice of maintaining variable costs at one-half of total fixed costse. a method of changing consumers' perceptions about price


82. The typical break-even model assumes a given fixed cost and a:a. variable per unit costb. constant inventory turnoverc. markup cost attained through keystoningd. constant production schedulee. constant average variable cost


90.Which of the following statements describes a limitation associated with break-even analysis?a. It is sometimes difficult to ascertain whether a cost is fixed or variable.b. It requires the calculation of marginal revenue.c. It strictly considers demand.d. It assumes variable cost per item, which is difficult to calculate.e. It can only be expressed as a break-even point in dollar amounts.



ANS: ANot all costs are easily categorized because a cost may be fixed when viewed in the short term but variable when considered over a longer period of time.


92.Which of the following statements about pricing strategies throughout the product life cycle is FALSE?a. During product decline, prices may also decline until there is only one competitor left in

the market.b. Price increases during the maturity stage are cost initiated instead of demand initiated.c. The maturity stage often brings about price decreases.d. Prices stabilize when the product enters the growth stage.e. With inelastic demand, price will be set low in the introduction stage.

ANS: EWith inelastic demand, prices are set high at introduction.

PTS: 1 REF: 265 OBJ: 17-6 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Product

94.In the mature and highly competitive furniture industry, you would expect furniture manufacturers to engage in:a. a price warb. price escalationc. prestige pricingd. above-market pricinge. geographical pricing

ANS: AIn the maturity stage, with heavy competition, below-market pricing leads to price wars.

PTS: 1 REF: 266 OBJ: 17-6 TYPE: AppTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Product

97.Manufacturers can regain some control over the price their products are sold for at the retail level by:a. using an exclusive distribution systemb. developing brand loyalty in consumers by delivering quality and valuec. avoiding doing business with price-cutting discountersd. franchisinge. doing all of these

ANS: E PTS: 1 REF: 267 OBJ: 17-6 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Distribution

98. Which of the following statements about the Internet is true?a. The Internet has shifted all shopping power to consumers.b. Consumer reviews tend to be equal in quality.c. Business-to-business auctions on the Internet are likely to be more important than



consumer auctions in the future.d. Fraud is not a problem on the Internet.e. Extranets are programs that search the Internet for the best price for a particular product.

ANS: CThe Internet has shifted some, but not all, shopping power to consumers. Consumer reviews vary in quality. Fraud is a huge problem.

PTS: 1 REF: 268 OBJ: 17-6 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Online/Computer | TB&E Model Strategy

99. Shopping bots:a. encourage a more creative use of advertisingb. link manufacturers, suppliers, and customersc. create opportunities for prestige pricingd. provide a means for comparison shoppinge. create inelastic demand

ANS: D PTS: 1 REF: 267 OBJ: 17-6 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Online/Computer | TB&E Model Strategy

101.When pricing is used as part of a promotion strategy, it:a. can be effectively used in trade promotionsb. cannot be used as a public relations toolc. must be accompanied by personal sellingd. eliminates problems associated with the service characteristic of homogeneitye. makes the establishment of a price to quality relationship unnecessary

ANS: A PTS: 1 REF: 268 OBJ: 17-6 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Promotion

103.Many consumers, especially when faced with an uncertain purchase decision, think that a high price:a. is a signal of qualityb. is an indication that consumers are being ripped offc. will always lead to major price discounts to wholesalers and retailers that distribute itd. is a sign of the company's overall market sharee. indicates that the brand was slipping into the decline stage of the product life cycle but has

had a sudden resurgence of growth

ANS: ANumerous studies have shown that consumers equate high price with high quality.

PTS: 1 REF: 268-269 OBJ: 17-6 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Product

104. Marketing managers who attempt to raise the quality image of their product by selling it at high prices are following a(n) _____ strategy.a. profit maximization



b. market sharec. maintained markup pricingd. prestige pricinge. investment asset

ANS: DPrestige pricing strategy sets high prices to connote high product quality.

PTS: 1 REF: 269 OBJ: 17-6 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

106.Prestige pricing:a. equalizes supply and demandb. uses high prices to promote a high-quality productc. is the practice of marking up prices by 100 percentd. is also called leader pricinge. emphasizes the monetary nature of price

ANS: BActually, prestige pricing emphasizes all the intangible considerations buyers make when purchasing.

PTS: 1 REF: 269 OBJ: 17-6 TYPE: DefTOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy

107. The dimensions of quality that are important to consumers include:a. versatilityb. serviceabilityc. performanced. ease of usee. all of the choices

ANS: E PTS: 1 REF: 269 OBJ: 17-6 TYPE: CompTOP: AACSB Reflective Thinking | TB&E Model Product

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