Q&A Hero

Q: A penetration strategy tends to be effective in a price-sensitive market. Thus, one of the purposes of penetration pricing is to: a. recoup product development costs quickly b. discourage competitors from entering the market c. produce a large margin of profit per unit d. develop exclusive distribution e. attract the price-insensitive buyer who demands the latest in technology

Q: Pharmacies are a new addition to Sam's Clubs. They could exert a greater influence on the marketplace for prescription drugs than their newness indicates. Sam's has a stated philosophy of marking up merchandise a maximum of 14 percent. When that philosophy is applied to prescription drugs, especially generics, warehouse club prices can be dramatically lower than those of conventional drugstores, supermarkets, or discount store pharmacies. Sam's is using a _____ strategy to convince consumers to use its pharmacies rather than its competitors. a. penetration pricing b. price-insensitive demand c. price-skimming d. price elasticity e. cost bundling

Q: Jones Soda Company and Big Sky Brands have introduced Jones Soda Carbonated Candy, a candy that delivers a blast of the most popular Jones Soda flavors along with an oddly enjoyable tongue-tingling sensation. Which pricing strategy would be appropriate if the company wants to convince price-sensitive consumers to try it and not buy some other brand? a. price-lining b. price-fixing c. status quo pricing d. penetration pricing e. price-skimming

Q: The market for turkey products is large. If a major producer of turkeys were to introduce a boneless fresh turkey wrapped around savory dressing, most of the large market for this new product would be aware of its existence. The market is price sensitive, and there is some potential competition. The appropriate strategy would be: a. price skimming b. penetration pricing c. status quo d. cost bundling e. price lining

Q: Marketers must take care when using _____ since a lower price often signals to consumers that product quality is also low. a. price skimming b. status quo pricing c. penetration pricing d. unbundling e. cost sharing

Q: When a firm introduces a new product at a relatively low price because it hopes to reach the mass market, it is following a _____ strategy. The low price is designed to capture a large share of a substantial market and produce lower production costs. a. penetration pricing b. price-insensitive demand c. price-skimming d. price elasticity e. cost bundling

Q: The DCS Stainless Steel Gas Grill for outside cooking costs $3,995. The market for a grill that could easily replace a kitchen range is limited even though a lot of people have seen articles about this grill in cooking magazines and in the cooking section of newspapers. There is no potential competitor for this grill. The _____ strategy is probably best. a. price-skimming b. penetration pricing c. status quo d. cost bundling e. price-lining

Q: For which of the following situations would a price-skimming strategy be most appropriate? a. the addition of a new comic book series with an obviously gay hero b. the introduction of a new brand of bottled water c. the elimination of demand for low wattage light bulbs d. the introduction of a unique, roomy automobile model that has extremely low energy and fuel costs e. the introduction of a Barbie Olympic champion doll by Mattel and the International Olympic Committee

Q: When the Mosquito Magnet was introduced, it was designed to rid the immediate area of mosquitoes and other annoying insects. The technology for the Mosquito Magnet had taken years to develop. It is a patented grill-like apparatus that emits carbon dioxide to attract bugs to a fan that draws them into the device where they die. What type of pricing policy would you recommend the company use to introduce this product to the market? a. status quo pricing b. penetration pricing c. price-skimming d. flexible pricing e. leader pricing

Q: The price-skimming strategy is sometimes called a "market-plus" approach to pricing because it denotes a high price relative to the prices of competing products. This strategy works best when: a. competition is abundant b. revenues are equal to expenses c. supply is greater than demand d. production capacity is large and flexible e. demand is greater than supply

Q: A shortage of blood for transfusions for injured animals has resulted in the introduction of a synthesized product called Oxyglobin, which can be used effectively as a blood replacement. The manufacturer of the product has put a high price on the product in order to recoup its research and development costs. The manufacturer of Oxyglobin is using a _____ policy. a. price-banding b. penetration pricing c. price-lining d. bundling costs e. price-skimming

Q: A 16-ounce bottle of Prairie Herb vinegar sells for $4.95, and a 16-ounce bottle of Heinz vinegar costs $1.05. Prairie Herb vinegar is new to the market, perceived to be of higher quality, and provides a unique flavor to foods even though it is used in the same way as Heinz vinegar. Prairie Herb vinegar is most likely using a _____ policy. a. penetration pricing b. status quo pricing c. price-skimming d. bundling cost pricing e. geodemographic pricing

Q: Which of the following is a pricing policy whereby a firm charges a high introductory price, often coupled with heavy promotion? a. penetration pricing b. price skimming c. price capping d. profit pricing e. price maximization

Q: After establishing pricing goals, managers should estimate total revenue at a variety of prices. Next, they should _____. Only after performing this task are they are ready to estimate how much profit and how much market share can be earned at each possible price. a. choose the ROI target b. determine corresponding costs for each price c. estimate industry supply d. implement pricing segmentation e. establish geographic pricing heuristics

Q: The marketing manager of icruise.com (a travel Web site targeted to consumers who want a luxury vacation) finds that the firm can gain market share and become the industry leader if it slashes prices by 50 percent during the month of December. However, the vice president of finance is committed to reporting a 25 percent return on investment at all times. This conflict illustrates: a. a need to eliminate low-profit products b. a lack of corporate concentration on the marketing concept c. how pricing operates in a mature marketplace d. the need for trade-offs in pricing objectives e. how target markets can be ignored

Q: The dimensions of quality that are important to consumers include: a. versatility b. serviceability c. performance d. ease of use e. all of the choices

Q: Laurie knows little about cooking and does not want to spend the time to learn how to make a quiche. However, she has been asked to bring a quiche to an office retirement party. Not wanting to make a poor choice, she is likely to: a. intuitively make the right choice b. avoid making a decision by not attending the party c. buy the most expensive pre-made quiche (perhaps paying too much), guessing that the price is related to quality d. research the product and buy the least expensive frozen quiche she can find e. buy the least expensive frozen quiche because most consumers feel that price is not directly related to quality

Q: Prestige pricing: a. equalizes supply and demand b. uses high prices to promote a high-quality product c. is the practice of marking up prices by 100 percent d. is also called leader pricing e. emphasizes the monetary nature of price

Q: Marketing managers who attempt to raise the quality image of their product by selling it at high prices are following a(n) _____ strategy. a. profit maximization b. market share c. maintained markup pricing d. prestige pricing e. investment asset

Q: When the Apple iPhone 3G was introduced the Apple iTunes web site also began selling small program "apps" written by third parties that could be run on the iPhone. One interesting app was the "I Am Rich" application. For a price of $1,000 you could buy this app that did nothing but display a red gem on the iPhone's screen. The description of the app stated that this red icon would remind you (and others you show it to) "that you were rich enough to afford this." Six of the applications were sold before Apple Inc. removed the app from iTunes. At the $1,000 price the author of the app was using _____ pricing as part of his marketing approach. a. snob appeal b. prestige c. exclusive d. selective e. unique

Q: David likes New Balance running shoes. However, when he stopped by the Foot Locker to buy a new pair of running shoes he notice that Nike had a new pair of running shoes that cost $350. To David the higher price of the Nike shoe indicated that it would be a better pair of running shoes. This is an example of _____. a. premium pricing b. price lining c. prestige pricing d. exclusive pricing e. selective pricing

Q: Many consumers, especially when faced with an uncertain purchase decision, think that a high price: a. is a signal of quality b. is an indication that consumers are being ripped off c. will always lead to major price discounts to wholesalers and retailers that distribute it d. is a sign of the company's overall market share e. indicates that the brand was slipping into the decline stage of the product life cycle but has had a sudden resurgence of growth

Q: During the hot summer months or the week before a new class starts if there is still space available, the Nick Price golf school in Orlando, Florida offers a 25 percent reduction to get golfers during the off-season or those making a last-minute decision. This is an example of pricing strategy used as a(n): a. distribution tool b. price enhancer c. product strategy d. direct sales tool e. promotion strategy

Q: 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.

Q: Shopping bots: a. encourage a more creative use of advertising b. link manufacturers, suppliers, and customers c. create opportunities for prestige pricing d. provide a means for comparison shopping e. create inelastic demand

Q: Manufacturers can do all of the following to regain some control over the price their products are sold for at the retail level EXCEPT: a. require resellers to maintain prices in line with competitors' prices b. developing brand loyalty in consumers by delivering quality and value c. avoiding doing business with price-cutting discounters d. franchising e. using an exclusive distribution system

Q: Kroger supermarkets will place well-known brands on the shelves at high prices while offering their own Kroger brand at lower prices. This practice is an example of: a. illegal pricing b. selling against the brand c. price pressurization d. brand cutting e. private-label cannibalization

Q: In the mature and highly competitive furniture industry, you would expect furniture manufacturers to engage in: a. a price war b. price escalation c. prestige pricing d. above-market pricing e. geographical pricing

Q: When Apple Inc. developed and introduced the iPhone it was unique as it essentially combined a cellular phone with an iPod, an Internet browser, and email capabilities. As such, in the short run it seemed that demand for the product would be inelastic, with no real existing competition. The recommend pricing strategy in such a situation would be: a. low initial price, rising slightly when entering the growth stage b. high initial price, falling slightly when entering the growth stage c. high price, continuing through growth and maturity d. low price, continuing through growth and maturity e. low price initially, rising constantly through growth and into maturity

Q: 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.

Q: 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.

Q: Chulo Ibsen makes and sells hand-forged wrought iron firescreens for $125 each. He has determined that his fixed costs are $8,000, and his average variable costs per firescreen are $45. What is his break-even point in dollars? a. $22,550 b. $12,500 c. $10,000 d. $8,000 e. $5,875

Q: Ceylon Express sells bottled pasteurized tea to retailers. It has the following revenues and costs: Sales price per bottle: $0.50 Average variable costs per bottle: $0.30 Total fixed costs (annual): $50,000 Tax rate: 20 percent What is the annual break-even point in units for the company? a. 50,000 b. 250,000 c. 100,000 d. 166,667 e. 500,000

Q: Regency, Inc. makes disposable cap and gown sets for graduations. Each cap and gown set sells for $15. The average variable cost for manufacturing 10 cap and gown sets is $100. Total fixed costs for the year equal $65,000. Calculate the break-even point in units. a. 650 b. 765 c. 1,300 d. 4,334 e. 13,000

Q: Furr Friends sells kits for making personalized grave markers for pets. The company sells each kit for $25. The average variable cost for each kit is $10, and the total annual fixed costs for plant operation are $45,000. What is the break-even point in units? a. 1,800 b. 2,500 c. 3,000 d. 4,500 e. 5,000

Q: Your Memory Lane produce custom-made art prints that include graphics and icons to celebrate life's special moments. For example, on his wedding anniversary David had an art print produced that celebrated highlights of his ten years with his wife, Kathy. Suppose Your Memory Lane sells the custom artwork for $500. It estimates its average variable costs to be $200 per unit produced. It figures its fixed costs to be $900,000 per year. How many prints does it have to sell to break even? a. 2,000 prints b. 1,200 prints c. 3,000 prints d. 2,500 prints e. 6,000 prints

Q: Your Memory Lane creates custom art prints that use graphs and icons in a street scene to commemorate special occasions. Suppose Your Memory Lane has priced its product at $350 per print. Further, it has determined that the company's fixed cost is $12,500, with an average variable costs per print of $250. What is his fixed cost contribution per print? a. $225 b. $100 c. $605 d. $2.25 e. $1.25

Q: Fixed cost contribution equals: a. price times the average fixed cost b. price plus the average variable cost c. average variable cost plus average fixed cost d. break-even quantity times price e. price minus the average variable cost

Q: The typical break-even model assumes a given fixed cost and a: a. variable per unit cost b. constant inventory turnover c. markup cost attained through keystoning d. constant production schedule e. constant average variable cost

Q: _____ determine what sales volume must be reached for a product before the company's total costs equal total revenue and no profits are earned. a. Marginal revenue estimates b. Price equilibrium analyses c. Break-even analyses d. Average total cost (ATC) figures e. Marginal costs of goods sold

Q: The point at which marginal cost and marginal revenue are equal always results in: a. maximization of elasticity b. maximization of revenue c. maximization of costs d. maximization of profits e. break-even equilibrium

Q: As long as the revenue of the last unit produced and sold is greater than the cost of the last unit produced and sold, a firm should: a. continue manufacturing b. not use formula pricing c. continue using price equilibrium d. consider using sales maximization pricing e. reach its break-even point very shortly

Q: _____ is the extra revenue associated with selling an additional unit of output. a. Average revenue b. Marginal revenue c. Marginal cost d. Net profit e. Average variable cost

Q: Profit maximization occurs when: a. total costs equals average fixed revenue b. average variable costs are larger than average total costs c. total costs equal total variable costs d. marginal variable costs equal average revenues e. marginal revenue equals marginal cost

Q: The Nest is a retail store owned and operated by an interior designer. The markup on all items in the store is 100 percent over cost (or double the cost). In this case we would say that the designer uses: a. keystoning b. target ROI pricing c. break-even pricing d. marginalizing e. double sourcing

Q: Keystoning is: a. the practice of marking up prices by 100 percent b. a method used for determining the point of elasticity c. a plan for reducing marginal costs d. the practice of maintaining variable costs at one-half of total fixed costs e. a method of changing consumers' perceptions about price

Q: _____ is the practice of marking up prices by 100 percent (or doubling the cost to set the selling price). a. Margin pricing b. Keystoning c. Mark-on adding d. Formula doubling e. Symmetrical pricing

Q: An educational toy store can buy a world globe for $30. If the store owner sells the globe for $45, what is the markup based on the selling price? a. 15 percent b. 20 percent c. 25 percent d. 33 percent e. 50 percent

Q: General Mills has the "Box Top for Education" program in which several of the company's products have a little Box Top coupon on the package. Families buy the products and schools collect the coupons to redeem for money for the school. This is an example of: a. cause-related marketing b. publicity c. lobbying d. consumer education e. advocacy marketing

Q: Which of the following involves the association of a for-profit company with a nonprofit organization? a. advocacy publicity b. lobbying c. product placement d. advertising e. cause-related marketing

Q: Companies that show support for recycling efforts and other examples of green marketing through advertising are engaged in: a. event publicity b. public relations profiling c. consumer intimidation d. sponsorship e. advocacy publicity

Q: Which public relations tool involves a company spending money to support an issue, cause, or event that is consistent with corporate objectives? a. advocacy b. lobbying c. product placement d. sponsorship e. underwriting

Q: Many people have trouble defining the term "casual dress" when it comes to what is appropriate to wear to work. Levi Strauss & Co. put together a newsletter and a video detailing what was suitable for casual work attire. Levi sent the video to human resources managers all over the United States. This is an example of: a. event advocacy b. lobbying c. product placement d. consumer education e. issue sponsorship

Q: General Mills put together a brochure titled, "A Guide to Good Food, Good Health," which it made available to elementary teachers at the beginning of a school year so that the teachers could use the brochures to explain to children why it is important to eat right. This is an example of which public relations tool? a. product placement b. event sponsorship c. consumer education d. crisis management e. lobbying

Q: Stormbreaker, a new spymovie, details the story of Alex Rider who, after the death of his uncle, is recruited as an M16 spy. Armed with a special set of gadgets, Rider's mission is to save millions of lives. In James Bond fashion, the Cross pen serves as one of the key gadgets in the film. The maker of Cross pen paid to have its pen featured in this movie. This is an example of: a. advertising b. a sales promotion c. paid-for public relations d. product placement e. lobbying

Q: Which of the following is a public relations strategy that involves getting a product, service, or company name to appear in a movie or television show? a. press release b. product placement c. product publicity d. consumer education e. integrated marketing communications

Q: Publicity: a. will never damage a company because it performs the information task of promotion b. is free communication c. is not persuasive with customers d. has to be purchased from the mass media e. has many internal costs to the company associated with it

Q: An article in the Wall Street Journal about GM's turn around strategy and new upcoming product, the Volt, would be an example of _____. a. direct selling b. news marketing c. publicity d. event marketing e. direct marketing

Q: A Wall Street Journal headline is "Best Buy Wins iPhone Lineup. This article represents _____ for Best Buy and Apple Inc. a. marketing research b. sales promotion c. personal selling d. advertising e. publicity

Q: An article in Business Week about the reengineered Honda CRV is an example of: a. a sales promotion b. free advertising c. direct marketing communications d. newspaper advertising e. publicity

Q: Tools for the public relations manager include all of the following EXCEPT: a. press relations b. product publicity c. lobbying d. sales promotions e. corporate communications

Q: 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

Q: A news story on the bonuses received by executives of a bank that received bailout money from the Federal government is an example of: a. a sales promotion b. free advertising c. demarketing d. newspaper advertising e. publicity

Q: Each year, Atlanta hosts the Peachtree Road Race, a running event that attracts many world-caliber racers. This year race officials also sanctioned a race conducted in Iraq so that soldiers from the state would not have to miss the annual event. The winners of the Mid-east race as well as scenes of the actual race were televised. In terms of a promotional mix, this Iraqi Peachtree Race was as example of: a. advertising and personal selling efforts b. strategic product promotions and resulting sales c. a target marketing strategy d. sales promotion efforts e. a public relations strategy

Q: _____ is the promotional mix element that evaluates public attitudes, identifies issues that may elicit public concern, and executes programs to gain public understanding and acceptance. a. Personal selling b. Advertising c. Mass communications d. Public relations e. Sales promotion

Q: The final selling duty for most successful salespeople is closing the sale.

Q: Jayson typically negotiates the price with prospective customers because he knows price is the most effective negotiating tool when closing a sale.

Q: A good salesperson considers objections a legitimate part of the purchase decision.

Q: Before approaching the customer, a salesperson should learn as much as possible about the prospect's organization and its buyer.

Q: To qualify a sales lead, a salesperson must identify the person in an organization who has the authority to buy the product and must close the sale with that individual.

Q: Tara is a salesperson with several satisfied customers. She asks her customers to recommend her to their business associates. Tara is using cold calling to generate leads.

Q: In relationship selling, salespeople focus more time on generating leads than on qualifying leads.

Q: The first step in the selling processing is approaching the customer and probing needs.

Q: With relationship selling the salesperson would spend most of his or her contact time with the prospect talking about the product because the salesperson does not want to waste the customer's time.

Q: Relationship selling is really just a new name for transactional selling.

Q: Relationship selling is also called interactive selling.

Q: Personal selling becomes a more important promotional tool as product complexity and buyer risk increase.

Q: Dave is in charge of finding sponsors for the 2011 Riverbend Festival. He is meeting with marketing representatives from Wrangler jeans and First Tennessee National Bank, attempting to convince them to sponsor the event. Dave is engaged in personal selling.

Q: Manufacturers use trade promotions because they generate excitement among consumers.

Q: Trade shows are an excellent place to introduce new products to the marketplace.