ziga bugule

1) ________ is the amount of money charged for a product or service.
A) Experience curve
B) Demand curve
C) Price
D) Wage
E) Salary
Answer:  C
Diff: 1     Page Ref: 290
Skill:  Concept
Objective:  10-1

2) Price is the only element in the marketing mix that produces ________.
A) revenue
B) variable costs
C) expenses
D) outfixed costs
E) stability
Answer:  A
Diff: 1     Page Ref: 290
Skill:  Concept
Objective:  10-1

3) ________ is an important element in the marketing mix. It is the only element that does not represent costs.
A) Current profit maximization
B) Market share leadership
C) Price
D) Product quality leadership
E) The target market
Answer:  C
Diff: 1     Page Ref: 290
Skill:  Concept
Objective:  10-1


4) Consumer perceptions of the product's value set the ________ for prices.
A) demand curve
B) floor
C) ceiling
D) variable cost
E) image
Answer:  C
Diff: 2     Page Ref: 291
Skill:  Concept
Objective:  10-2
5) Product costs set a(n) ________ to a product's price.
A) demand curve
B) floor
C) ceiling
D) break-even cost
E) experience curve
Answer:  B
Diff: 2     Page Ref: 291
Skill:  Concept
Objective:  10-2

6) Which of the following is a customer-oriented approach to pricing?
A) value-based pricing
B) sealed-bid pricing
C) break-even pricing
D) target profit pricing
E) C and D
Answer:  A
Diff: 2     Page Ref: 291
Skill:  Concept
Objective:  10-2

7) ________ uses buyers' perceptions of what a product is worth, not the seller's cost, as the key to pricing.
A) Value-based pricing
B) Value-added pricing
C) Variable cost
D) Price elasticity
E) Product image
Answer:  A
Diff: 2     Page Ref: 291
Skill:  Concept
Objective:  10-2


8) In ________, price is considered along with the other marketing mix variables before the marketing program is set.
A) value-based pricing
B) cost-based pricing
C) variable costs
D) price elasticity
E) building the marketing mix
Answer:  A
Diff: 2     Page Ref: 291
Skill:  Concept
Objective:  10-2
9) Value-based pricing is the reverse process of ________.
A) variable cost pricing
B) cost-plus pricing
C) cost-based pricing
D) good-value pricing
E) value-added pricing
Answer:  C
Diff: 2     Page Ref: 291
Skill:  Concept
Objective:  10-2

10) With ________, price is set to match consumers' perceptions of product value.
A) variable cost pricing
B) cost-plus pricing
C) cost-based pricing
D) value-based pricing
E) every day low pricing
Answer:  D
Diff: 2     Page Ref: 291
Skill:  Concept
Objective:  10-2

11) Measuring ________ can be difficult. A company might conduct surveys or experiments to test this in the different products they offer.
A) price elasticity
B) the demand curve
C) perceived value
D) break-even pricing
E) quantity supplied
Answer:  C
Diff: 3     Page Ref: 292
AACSB:  Communication
Skill:  Concept
Objective:  10-2

12) Underpriced products sell very well, but they produce less revenue than they would have if price were raised to the ________ level.
A) perceived
B) value-based
C) variable
D) demand curve
E) price-floor
Answer:  A
Diff: 2     Page Ref: 292
Skill:  Concept
Objective:  10-2
13) If a seller charges ________ than the buyer's perceived value, the company's sales will ________.
A) more; benefit
B) more; suffer
C) less; increase
D) less; suffer
E) none of the above
Answer:  B
Diff: 2     Page Ref: 292
Skill:  Concept
Objective:  10-2

14) Some companies have adopted a ________ strategy, offering just the right combination of quality and good service at a fair price.
A) value-based pricing
B) good-value pricing
C) cost-plus pricing
D) low-price image
E) none of the above
Answer:  B
Diff: 1     Page Ref: 293
Skill:  Concept
Objective:  10-2

15) Wal-Mart is famous for using what important type of value pricing?
A) competition-based pricing
B) everyday low pricing
C) cost-plus pricing
D) break-even pricing
E) penetration pricing
Answer:  B
Diff: 2     Page Ref: 293
Skill:  Concept
Objective:  10-2

16) ________ involves charging a constant, everyday low price with few or no temporary price discounts.
A) High-low pricing
B) Target pricing
C) Cost-plus pricing
D) EDLP
E) Penetration pricing
Answer:  D
Diff: 2     Page Ref: 293
Skill:  Concept
Objective:  10-2
17) ________ involves attaching features and services to differentiate a company's offers and to support charging higher prices..
A) Break-even pricing
B) Target pricing
C) Value-added pricing
D) Cost-plus pricing
E) Pricing-down
Answer:  C
Diff: 1     Page Ref: 293
Skill:  Concept
Objective:  10-2

18) ________ is a company's power to escape price competition and to justify higher prices and margins.
A) Variable cost
B) Pricing power
C) Target cost
D) Fixed cost
E) Unit cost
Answer:  B
Diff: 2     Page Ref: 293
Skill:  Concept
Objective:  10-2

19) To maintain and increase a company's ________, a firm must retain or build the value of its marketing offer.
A) variable cost
B) pricing power
C) target cost
D) fixed cost
E) image
Answer:  B
Diff: 3     Page Ref: 293
Skill:  Concept
Objective:  10-2
20) When there is price competition, many companies adopt ________ rather than cutting prices to match competitors.
A) pricing power
B) value-added strategies
C) fixed costs
D) price elasticity
E) image pricing
Answer:  B
Diff: 2     Page Ref: 293
Skill:  Concept
Objective:  10-2
21) Ryanair offers free flights to a quarter of its customers and rock-bottom prices to many of its other customers. Ryanair then charges for all extra services, such as baggage handling and in-flight refreshments. Which of the following best describes Ryanair's pricing method?
A) value-added pricing
B) low-cost pricing
C) cost-plus pricing
D) high-low pricing
E) image pricing
Answer:  B
Diff: 2     Page Ref: 295
Skill:  Concept
Objective:  10-2

22) ________ pricing involves setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for the company's efforts and risks.
A) Value-based
B) Fixed cost
C) Cost-based
D) Variable
E) Skimming
Answer:  C
Diff: 1     Page Ref: 295
Skill:  Concept
Objective:  10-3

23) Fixed costs ________ as the number of units produced increases.
A) decrease
B) increase
C) divide in half
D) remain the same
E) increase at a diminishing rate
Answer:  D
Diff: 2     Page Ref: 295
Skill:  Concept
Objective:  10-3
24) Costs that do not vary with production or sales level are referred to as ________.
A) fixed costs
B) variable costs
C) target costs
D) total costs
E) unit costs
Answer:  A
Diff: 1     Page Ref: 295
Skill:  Concept
Objective:  10-3
25) Rent, electricity and executive salaries are examples of ________.
A) fixed costs
B) variable costs
C) accumulated costs
D) total costs
E) marketing costs
Answer:  A
Diff: 2     Page Ref: 295
Skill:  Concept
Objective:  10-3

26) Costs that vary directly with the level of production are referred to as ________.
A) fixed costs
B) variable costs
C) target costs
D) total costs
E) unit costs
Answer:  B
Diff: 1     Page Ref: 296
Skill:  Concept
Objective:  10-3

27) ________ are the sum of the ________ and ________ for any given level of production.
A) Fixed costs; variable; total costs
B) Fixed costs; total; variable costs
C) Variable costs; fixed; total costs
D) Total costs; fixed; variable costs
E) Break-even costs; fixed; total costs
Answer:  D
Diff: 2     Page Ref: 296
Skill:  Concept
Objective:  10-3


28) SRAC is the acronym for which concept related to costs at different levels of production?
A) strategic reasoning and costs
B) short-run accounting costs
C) short-run average cost
D) strategic rights and company
E) strategic revenues and costs
Answer:  C
Diff: 2     Page Ref: 296
Skill:  Concept
Objective:  10-3
29) As production workers become better organized and more familiar with equipment, the average cost per unit decreases. This is called the ________.
A) demand curve
B) experience curve
C) short-run average cost curve
D) long-run average cost curve
E) marginal utility
Answer:  B
Diff: 1     Page Ref: 296
Skill:  Concept
Objective:  10-3

30) With a higher volume of product, most companies can expect to ________.
A) gain economies of scale
B) become less efficient
C) see average costs increase
D) have a straight, horizontal learning curve
E) find competitors using the experience curve strategically
Answer:  A
Diff: 2     Page Ref: 296
Skill:  Concept
Objective:  10-3

31) The experience curve reveals that ________.
A) repetition in production lowers costs
B) repetition in production enhances efficiency
C) the average cost drops with accumulated production experience
D) A, B, and C
E) none of the above
Answer:  D
Diff: 3     Page Ref: 296
Skill:  Concept
Objective:  10-3


32) When a downward-sloping experience curve exists, a company should usually ________ the selling price of that product in order to bring in higher revenues.
A) increase
B) greatly increase
C) decrease
D) not alter
E) none of the above
Answer:  C
Diff: 3     Page Ref: 297
Skill:  Concept
Objective:  10-3
33) Which of the following is a risk a company takes when building a strategy around the experience curve?
A) Competitors will likely not be able to meet the company's price cuts.
B) Existing technologies are likely to become more expensive as the company expands.
C) The method does not take competitors' prices into account.
D) The method may cause consumers to become frustrated with changing prices.
E) Aggressive pricing may give the product a cheap image, causing customers to lose interest.
Answer:  E
Diff: 2     Page Ref: 297
Skill:  Concept
Objective:  10-3

34) A company building its pricing strategy around the experience curve would be likely to ________.
A) price its products low
B) price its products high
C) engage in break-even pricing
D) all of the above
E) none of the above
Answer:  A
Diff: 3     Page Ref: 297
Skill:  Concept
Objective:  10-3


35) The company designs what it considers to be a good product, totals the expenses of making the product, and sets a price that adds a standard mark-up to the cost of the product. This  approach to pricing is called ________.
A) value-based pricing
B) fixed cost pricing
C) cost-plus pricing
D) variable pricing
E) skimming pricing
Answer:  C
Diff: 1     Page Ref: 297
Skill:  Concept
Objective:  10-3

36) Lawyers, accountants, and other professionals typically price by adding a standard markup for profit. This is known as ________.
A) variable costs
B) cost-plus pricing
C) value-based pricing
D) break-even price
E) penetration pricing
Answer:  B
Diff: 2     Page Ref: 297
Skill:  Concept
Objective:  10-3
37) The simplest pricing method is ________.
A) value-based pricing
B) going-rate and sealed-bid pricing
C) cost-plus pricing
D) break-even analysis
E) target profit pricing
Answer:  C
Diff: 2     Page Ref: 297
Skill:  Concept
Objective:  10-3

38) Which of the following is a reason why markup pricing is NOT practical?
A) Sellers earn a fair return on their investment.
B) By tying the price to cost, sellers simplify pricing.
C) When all firms in the industry use this pricing method, prices tend to be similar.
D) This method ignores demand.
E) With a standard markup, consumers know when they are being overcharged.
Answer:  D
Diff: 3     Page Ref: 298
Skill:  Concept
Objective:  10-3

39) One reason ________ remains popular is that sellers are more certain about costs than about demand.
A) markup pricing
B) variable pricing
C) inelasticity pricing
D) elasticity pricing
E) penetration pricing
Answer:  A
Diff: 2     Page Ref: 298
Skill:  Concept
Objective:  10-3

40) Price competition is minimized when all firms in an industry use which pricing method?
A) variable pricing
B) markup pricing
C) elasticity pricing
D) value-added pricing
E) value-based pricing
Answer:  B
Diff: 3     Page Ref: 298
Skill:  Concept
Objective:  10-3
41) Many people feel that ________ pricing is fairer to both buyers and sellers. Sellers earn a fair return on their investment but do not take advantage of buyers when buyers' demand becomes great.
A) variable
B) markup
C) elasticity
D) inelasticity
E) penetration
Answer:  B
Diff: 2     Page Ref: 298
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  10-3

42) Which of the following is a cost-based approach to pricing?
A) value-based pricing
B) going-rate pricing
C) target profit pricing
D) good value pricing
E) A and C
Answer:  C
Diff: 2     Page Ref: 298
Skill:  Concept
Objective:  10-3
43) Break-even pricing, or a variation called ________, is when the firm tries to determine the price at which it will break even or make the profit it is seeking.
A) competition-based pricing
B) target profit pricing
C) fixed cost pricing
D) value-based pricing
E) customer-based pricing
Answer:  B
Diff: 1     Page Ref: 298
Skill:  Concept
Objective:  10-3

44) Target profit pricing uses the concept of a ________, which shows the total cost and total revenue expected at different sales volume levels.
A) value-based chart
B) break-even chart
C) competition-based chart
D) demand-curve
E) unit cost
Answer:  B
Diff: 2     Page Ref: 298
Skill:  Concept
Objective:  10-3
45) The break-even volume is the point at which ________.
A) the total revenue and total costs lines intersect
B) demand equals supply
C) the production of one more unit will not increase profit
D) the company can pay all of its long-term debt
E) a firm's profit goal is reached
Answer:  A
Diff: 3     Page Ref: 298
Skill:  Concept
Objective:  10-3

46) ________ pricing works only if that price actually brings in the expected level of sales.
A) Elasticity
B) Markup
C) Variable
D) Inelasticity
E) Target profit
Answer:  E
Diff: 3     Page Ref: 298
Skill:  Concept
Objective:  10-3


47) Which of the following statements about break-even analysis is true?
A) It is used to determine how much production experience a company must have to achieve desired efficiencies.
B) It is a technique used to calculate fixed costs.
C) It determines the amount of retained earnings a company will have during an accounting period.
D) It is a technique marketers use to examine the relationship between supply and demand.
E) It is calculated using variable costs, the unit price, and fixed costs.
Answer:  E
Diff: 3     Page Ref: 298
Skill:  Concept
Objective:  10-3

48) As a manufacturer increases price, the ________ drops.
A) target
B) break-even volume
C) cost-plus pricing
D) total cost
E) sales
Answer:  B
Diff: 3     Page Ref: 299
Skill:  Concept
Objective:  10-3
49) Which of the following is an external factor that affects pricing decisions?
A) the salaries of production management
B) competition
C) the salaries of finance management
D) funds expensed to clean production equipment
E) A, B, and C
Answer:  B
Diff: 1     Page Ref: 299
Skill:  Concept
Objective:  10-4

50) ________ that influence pricing decisions include the nature of the market and demand and competitors' prices.
A) Internal factors
B) Elasticity factors
C) External factors
D) Target factors
E) Domestic factors
Answer:  C
Diff: 2     Page Ref: 299
Skill:  Concept
Objective:  10-4

51) Companies may set prices low for which of the following reasons EXCEPT ________.
A) to prevent competition from entering the market
B) to stabilize the market
C) to create excitement for a product
D) to prepare for an easy exit from a market
E) to match a competitor
Answer:  D
Diff: 2     Page Ref: 299
Skill:  Concept
Objective:  10-4

52) In order to form a consistent and effective integrated marketing program, price decisions should be coordinated with each of the following EXCEPT ________.
A) product design
B) distribution
C) competitors' prices
D) promotion decisions
E) marketing objectives
Answer:  C
Diff: 2     Page Ref: 299
Skill:  Concept
Objective:  10-4
53) With target costing, marketers will first ________ and then ________.
A) build the marketing mix; identify the target market
B) identify the target market; build the marketing mix
C) design the product; determine its cost
D) use skimming pricing; penetrating pricing
E) determine a selling price; target costs to ensure that the price is met
Answer:  E
Diff: 2     Page Ref: 300
Skill:  Concept
Objective:  10-4

54) Price setting is usually determined by ________ in small companies.
A) top management
B) marketing departments
C) sales departments
D) divisional managers
E) cross-functional teams
Answer:  A
Diff: 2     Page Ref: 300
Skill:  Concept
Objective:  10-4


55) Price setting is usually determined by ________ in large companies.
A) top management
B) divisional managers
C) product line managers
D) pricing departments
E) both B and C
Answer:  E
Diff: 2     Page Ref: 300
Skill:  Concept
Objective:  10-4

56) In industrial markets, ________ typically has the final say in setting the pricing objectives and policies of a company.
A) the sales manager
B) top management
C) the production manager
D) the finance manager
E) the pricing department
Answer:  B
Diff: 2     Page Ref: 300
Skill:  Concept
Objective:  10-4
57) In industries in which pricing is a key factor, ________ often set the best prices or help others in setting them.
A) sales managers
B) top managers
C) production managers
D) finance managers
E) pricing departments
Answer:  E
Diff: 2     Page Ref: 300
Skill:  Concept
Objective:  10-4

58) Under ________, the market consists of many buyers and sellers trading in a uniform commodity such as wheat, copper, or financial securities.
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) a pure monopoly
E) anti-trust agreements
Answer:  A
Diff: 2     Page Ref: 302
Skill:  Concept
Objective:  10-4

59) Under ________, the market consists of many buyers and sellers who trade over a range of prices rather than a single market price.
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) pure monopoly
E) socialism
Answer:  B
Diff: 2     Page Ref: 302
Skill:  Concept
Objective:  10-4

60) Under ________, the market consists of a few sellers who are highly sensitive to each other's pricing and marketing strategies.
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) pure monopoly
E) capitalism
Answer:  C
Diff: 2     Page Ref: 302
Skill:  Concept
Objective:  10-4
61) Nonregulated monopolies are free to price at what the market will bear. However, they do not always charge the full price for a number of reasons. What is NOT one of those reasons?
A) They don't want to attract competition.
B) They want to penetrate the market faster with a low price.
C) They have a fear of government regulation.
D) They want to encourage government regulations.
E) They want to please a large group of consumers.
Answer:  D
Diff: 3     Page Ref: 303
Skill:  Concept
Objective:  10-4

62) The relationship between the price charged and the resulting demand level can be shown as the ________.
A) demand curve
B) variable cost
C) target cost
D) break-even pricing
E) experience curve
Answer:  A
Diff: 1     Page Ref: 303
Skill:  Concept
Objective:  10-4
63) Consumers usually perceive higher-priced products as ________.
A) out of reach for most people
B) having high quality
C) having high profit margins
D) having cost-based prices
E) being in the introductory stage of the product life cycle
Answer:  B
Diff: 3     Page Ref: 303
Skill:  Concept
Objective:  10-4

64) Why do marketers consider prestige goods to be an exception to the typical demand curve?
A) The demand curve for prestige goods slopes downward and to the right.
B) Increasing the price of prestige goods can make them seem more desirable.
C) Demand for prestige goods often is greater than supply.
D) Prestige products such as diamonds, sapphires, and emeralds are nonrenewable resources.
E) Customers are more aware of any price changes to prestige goods.
Answer:  B
Diff: 3     Page Ref: 303
Skill:  Concept
Objective:  10-4
65) Which of the following is true about the demand curve?
A) It is used to illustrate the effect of price on the quantity supplied.
B) It is always graphically depicted by a straight line.
C) It shows the quantity of product customers will buy in a market during a period of time even if other factors change.
D) It usually slopes upward and to the right.
E) It shows the relationship between product demand and product price.
Answer:  E
Diff: 3     Page Ref: 303
Skill:  Concept
Objective:  10-4

66) When Gibson Guitar Corporation, long known for its high quality instruments, lowered its prices to compete more effectively with Japanese rivals, the company sold fewer guitars. Which of the following best explains this?
A) The Gibson guitars were not as well made as the Japanese guitars.
B) The market was already flooded with guitars.
C) The sound of the Gibson guitar was not as good as the Japanese guitars.
D) Customers did not distinguish the superiority of the Gibson guitar when it was at a lower price.
E) Customers had come to expect a higher price for a Gibson guitar.
Answer:  D
Diff: 3     Page Ref: 303
Skill:  Concept
Objective:  10-4
67) ________ describes how responsive demand will be to a change in price.
A) Price elasticity
B) Break-even pricing
C) The demand curve
D) Target costing
E) Supply
Answer:  A
Diff: 1     Page Ref: 304
Skill:  Concept
Objective:  10-4

68) If demand hardly changes with a small change in price, we say the demand is ________.
A) variable
B) inelastic
C) value-based
D) at break-even pricing
E) market penetrating
Answer:  B
Diff: 2     Page Ref: 304
Skill:  Concept
Objective:  10-4
69) If demand changes greatly with a small change in price, we say the demand is ________.
A) variable
B) inelastic
C) value-based
D) elastic
E) fixed
Answer:  D
Diff: 1     Page Ref: 304
Skill:  Concept
Objective:  10-4

70) Price elasticity of demand is ________ divided by ________.
A) percent change in quantity demanded; percent change in price
B) demand; price
C) percent change in price; percent change in quantity demanded
D) the going price; the asking price
E) none of the above
Answer:  A
Diff: 2     Page Ref: 304
Skill:  Concept
Objective:  10-4


71) Buyers are less price sensitive in all of the following situations EXCEPT ________.
A) when the product they are buying is unique
B) when the product they are buying is in high demand
C) when substitute products are hard to find
D) when the total expenditure for a product is high relative to their income
E) when the product is a specialty product
Answer:  D
Diff: 2     Page Ref: 304
Skill:  Concept
Objective:  10-4

72) The less ________ the demand, the ________ it pays for the seller to raise the price.
A) determined; less
B) elastic; more
C) elastic; less
D) constant; more
E) none of the above
Answer:  B
Diff: 3     Page Ref: 304
Skill:  Concept
Objective:  10-4
73) Each of the following economic factors can have a strong impact on a firm's pricing strategy EXCEPT ________.
A) an economic boom
B) the reseller's reaction to price changes
C) an economic recession
D) inflation
E) interest rates
Answer:  B
Diff: 2     Page Ref: 305
Skill:  Concept
Objective:  10-4

74) A company should set prices that will allow ________ to receive a fair profit.
A) resellers
B) producers
C) consumers
D) the elderly
E) competitors
Answer:  A
Diff: 2     Page Ref: 305
Skill:  Concept
Objective:  10-4


75) When companies set prices, the government and social concerns are two ________ affecting pricing decisions.
A) external factors
B) internal factors
C) economic conditions
D) demand curves
E) temporary influences
Answer:  A
Diff: 1     Page Ref: 305
Skill:  Concept
Objective:  10-4

76) Amos Zook, an Amish farmer, sells organically grown produce. Often he will trade some of his produce for dairy products produced by other Amish farmers. The sum of the values that others exchange is called a ________.
A) price
B) cost-plus price
C) dynamic price
D) common value price
E) penetration price
Answer:  A
Diff: 1     Page Ref: 290
AACSB:  Reflective Thinking
Skill:  Application
Objective:  10-1
77) Trader Joe's offers an assortment of exclusive gourmet products at impossibly low prices. These prices are not limited-time offers or special discounts. Instead, they reflect Trader Joe's ________ strategy.
A) everyday low pricing
B) cost-plus pricing
C) dynamic pricing
D) value-based pricing
E) cost-based pricing
Answer:  A
Diff: 2     Page Ref: 293
AACSB:  Reflective Thinking
Skill:  Application
Objective:  10-2


78) Jimmy's Hardware, an independent local retailer, is losing business to Wal-Mart. This is most likely because he cannot match Wal-Mart's pricing strategy of ________.
A) EDLP
B) EFGF
C) fixed prices
D) negotiated pricing
E) skimming pricing
Answer:  A
Diff: 2     Page Ref: 293
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-2

79) When McDonald's and other fast food restaurants offer "value menu" items  at surprisingly low prices, they are using ________.
A) break-even pricing
B) target profit pricing
C) value pricing
D) cost-plus pricing
E) bundling
Answer:  C
Diff: 1     Page Ref: 293
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-2
80) Consumers who have less time and patience for watching for supermarket specials and clipping coupons would most likely prefer ________.
A) variable pricing
B) high-low pricing
C) EDLP
D) break-even pricing
E) value-based pricing
Answer:  C
Diff: 3     Page Ref: 293
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-2


81) Xbox 360 decides to add a free subscription to XBOX magazine with every game bought in an effort to differentiate its offering from PS3 games. This is an example of ________.
A) good-value pricing
B) add-on pricing
C) product-support pricing
D) value-added pricing
E) cost-based pricing
Answer:  D
Diff: 2     Page Ref: 293
AACSB:  Reflective Thinking
Skill:  Application
Objective:  10-2

82) The long-run average cost curve (LRAC) helps the producer understand which of the following?
A) It shows how large a business should be, to be most efficient.
B) It deals mainly with competitors' prices.
C) It deals mainly with external factors.
D) all of the above
E) none of the above
Answer:  A
Diff: 2     Page Ref: 296
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-3
83) Assume a manufacturer with fixed costs of $100,000, a variable cost of $10, and expected sales of 50,000 units wants to earn a 20-percent markup on sales. What is the manufacturer's markup price?
A) $14
B) $15
C) $18
D) $18.50
E) none of the above
Answer:  B
Diff: 3     Page Ref: 297
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-3


84) General Motors prices its automobiles to achieve a 15 to 20 percent profit on its investment. This approach is called ________.
A) value-based pricing
B) going-rate pricing
C) cost-plus pricing
D) low-price image
E) target-profit pricing
Answer:  E
Diff: 2     Page Ref: 298
AACSB:  Reflective Thinking
Skill:  Application
Objective:  10-3

85) A company faces fixed costs of $100,000 and variable costs of $8.00/unit. They plan to directly sell their product to the market for $12.00. How many units must they produce and sell to break even?
A) 20,000
B) 25,000
C) 40,000
D) 50,000
E) not enough information to calculate
Answer:  B
Diff: 2     Page Ref: 298
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-3
86) Ecstasy Pharmaceuticals faces fixed costs with their new drug of $1,000,000. The company sells the drug in bottles of 50 pills for $10.00. They estimate that they must sell 200,000 bottles to break even. What is the total cost to produce a bottle of 50 pills?
A) $2.50
B) $5.00
C) $6.00
D) $7.50
E) not enough information to calculate
Answer:  B
Diff: 3     Page Ref: 298
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-3


87) A manufacturer is trying to determine its break-even volume. With fixed costs of $100,000, a variable cost of $10, and expected sales of 50,000 units, what should the manufacturer's unit cost be to break even?
A) $10
B) $12
C) $16
D) $20
E) none of the above
Answer:  B
Diff: 3     Page Ref: 298
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-3

88) As a manufacturer decreases price, ________ volume increases.
A) target
B) break-even
C) cost-plus pricing
D) total cost
E) sales
Answer:  B
Diff: 3     Page Ref: 299
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-3
89) P&G surveyed the market and identified an unserved segment of electric toothbrush market. Using these results, they created Spinbrush. The unorthodox order of this marketing mix decision is an example of ________.
A) competition-based pricing
B) cost-plus pricing
C) target costing
D) value-based pricing
E) penetration pricing
Answer:  C
Diff: 2     Page Ref: 300
AACSB:  Reflective Thinking
Skill:  Application
Objective:  10-4


90) PoolPak produces climate-control systems for large swimming pools. The company's customers are more concerned about service support for maintaining a system than its initial price. PoolPak may use this knowledge to become more competitive through ________.
A) target costing
B) value pricing
C) cost-plus pricing
D) a nonprice position
E) skimming pricing
Answer:  D
Diff: 2     Page Ref: 300
AACSB:  Reflective Thinking
Skill:  Application
Objective:  10-3

91) By pledging to be a leader in providing clean, renewable energy sources and developing products and services that help consumers protect the environment, Green Mountain Power competes successfully against "cheaper" brands that focus on more price-sensitive consumers.Green Mountain Power has the firm belief that even kilowatt-hours can be ________.
A) cost-plus priced
B) a demand curve
C) differentiated
D) value-based priced
E) none of the above
Answer:  C
Diff: 3     Page Ref: 300
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4
92) In Vin del Mar, Chile, there are a dozen stores specializing in selling the same quality of seafood products on one street. An individual store dare not charge more than the going price without the risk of losing business to the other stores that are selling the fish at a common price. This is an example of what type of market?
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) pure monopoly
E) socialist
Answer:  A
Diff: 2     Page Ref: 302
AACSB:  Reflective Thinking
Skill:  Application
Objective:  10-4


93) Ascot Tires has decided to decrease its prices. The company can expect that ________ for their product will increase.
A) cost-plus pricing
B) value-based pricing
C) demand
D) the experience curve
E) competition
Answer:  C
Diff: 1     Page Ref: 303
AACSB:  Reflective Thinking
Skill:  Application
Objective:  10-4

94) If Canon Camera Company follows a high-price, high-margin strategy, what will competitors such as Nikon, Minolta, and Pentax most likely do?
A) They will go out of business.
B) They will want to compete against Canon.
C) They will advertise less.
D) They will bundle their products.
E) none of the above
Answer:  B
Diff: 2     Page Ref: 304
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4
95) If Canon Camera Company follows a low-price, low-margin strategy for a product, what will competitors most likely do?
A) They will not be able to compete or may leave the market.
B) They will want to compete against Canon.
C) They will advertise less.
D) They will advertise more.
E) none of the above
Answer:  A
Diff: 3     Page Ref: 304
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4


96) Companies are fortunate to have demand that is more ________ because they may be able to set higher prices.
A) elastic
B) external
C) internal
D) inelastic
E) fixed
Answer:  D
Diff: 2     Page Ref: 304
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4

97) If demand falls by 1 percent when price is increased by 2 percent, then ________.
A) elasticity is —1/2
B) demand is inelastic
C) demand is elastic
D) buyers are not price sensitive
E) A and B
Answer:  E
Diff: 3     Page Ref: 304
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4

Refer to the scenario below to answer the following questions.

Alden Manufacturing produces small kitchen appliancesblenders, hand mixers, and electric skilletsunder the brand name First Generation. Alden attempts to target newlyweds and first-time home buyers with this brand.
In considering that most young households have limited financial resources, Alden has attempted to engage in target costing. "In doing this," Milt Alden stated, "we have better control over keeping price right in line with customers."
Alden manufactures a three-speed blender, its top seller, and a five-speed blender. The hand mixers are manufactured in two stylesa small hand-held mixer with two rotating beaters and a similar style that comes with an optional stand and attached mixing bowl. Alden's temperature-controlled skillets are manufactured in one style with three color options.
"Our product offerings are narrower," Milt Alden added, "but our line workers know each product like the back of their hands. This allows us to produce superior products while holding our prices low."

98) Milt Alden says that his line workers "know each product like the back of their hands," and that this knowledge helps the company keep its prices low. This indicates that Alden Manufacturing most likely uses which of the following strategies?
A) cost-plus pricing
B) value-based pricing
C) the experience curve
D) cost-based pricing
E) target profit pricing
Answer:  C
Diff: 2     Page Ref: 296
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-2

99) Milt Alden uses a target costing strategy. Which of the following is he most likely to do in executing this strategy?
A) base his price on competitors' prices
B) use everyday low pricing
C) use a break-even chart to determine pricing
D) start with customer-value considerations
E) start by determining the costs of a new product
Answer:  D
Diff: 2     Page Ref: 300
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4

100) If Alden raises the price on the handheld mixer by 2 percent and quantity demanded falls by 10 percent what is the price elasticity of demand?
A)  —5
B)  —8
C)  —12
D) 5
E) 12
Answer:  A
Diff: 3     Page Ref: 304
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4

101) When faced with price competition cutting prices is often not the best answer.
Answer:  TRUE
Diff: 2     Page Ref: 293
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-1

102) Prices have a direct impact on a company's bottom line.
Answer:  TRUE
Diff: 1     Page Ref: 290
Skill:  Concept
Objective:  10-1

103) Demand and consumer value perceptions set the floor for prices.
Answer:  FALSE
Diff: 2     Page Ref: 291
Skill:  Concept
Objective:  10-2

104) Product costs set a floor to the price; consumer perceptions of the product's value set the ceiling.
Answer:  TRUE
Diff: 2     Page Ref: 291
Skill:  Concept
Objective:  10-2

105) Value-based pricing is being used when costs vary directly with the level of product.
Answer:  FALSE
Diff: 3     Page Ref: 291
Skill:  Concept
Objective:  10-2


106) Value-based pricing uses the company's perception of value.
Answer:  FALSE
Diff: 2     Page Ref: 291
Skill:  Concept
Objective:  10-2
107) Value-based pricing is the reverse of cost-based pricing.
Answer:  TRUE
Diff: 2     Page Ref: 291
Skill:  Concept
Objective:  10-2

108) Using value-based pricing, a marketer would not design a product and marketing program before setting the price.
Answer:  TRUE
Diff: 3     Page Ref: 291
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-2

109) EDLP is very similar to high-low pricing.
Answer:  TRUE
Diff: 2     Page Ref: 293
Skill:  Concept
Objective:  10-2

110) Overhead cost is another term for fixed cost.
Answer:  TRUE
Diff: 1     Page Ref: 295
Skill:  Concept
Objective:  10-3

111) Cost-based pricing relies on consumer perception of value to drive pricing.
Answer:  FALSE
Diff: 2     Page Ref: 295
Skill:  Concept
Objective:  10-3

112) Average unit cost increases with accumulated production experience.
Answer:  FALSE
Diff: 1     Page Ref: 296
Skill:  Concept
Objective:  10-3


113) An upward-sloping experience curve is beneficial for a company.
Answer:  FALSE
Diff: 3     Page Ref: 297
Skill:  Concept
Objective:  10-3

114) The simplest pricing method is cost-plus pricing, which involves adding a standard markup to the cost of the product.
Answer:  TRUE
Diff: 2     Page Ref: 297
Skill:  Concept
Objective:  10-3
115) Markup pricing is popular because prices tend to be similar and price competition is thus minimized.
Answer:  TRUE
Diff: 2     Page Ref: 298
Skill:  Concept
Objective:  10-3

116) Target profit pricing is used when a firm tries to determine the price at which it will break even or make the profit it is seeking.
Answer:  TRUE
Diff: 3     Page Ref: 298
Skill:  Concept
Objective:  10-3

117) A break-even chart shows the total cost and total revenue expected at various sales volume levels.
Answer:  TRUE
Diff: 2     Page Ref: 298
Skill:  Concept
Objective:  10-3

118) Environmental elements are categorized as external factors that affect pricing decisions.
Answer:  TRUE
Diff: 2     Page Ref: 299
Skill:  Concept
Objective:  10-4

119) In a pure monopoly, the market consists of one seller.
Answer:  TRUE
Diff: 1     Page Ref: 303
Skill:  Concept
Objective:  10-4


120) Nonregulated monopolies always charge the full price because they do not fear attracting competition.
Answer:  FALSE
Diff: 2     Page Ref: 303
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4

121) Marketers may learn a few simple rules that apply equally to all price-demand relationships.
Answer:  FALSE
Diff: 2     Page Ref: 303
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4
122) The demand curve shows the number of units the market will buy in a given time period at different prices that might be charged. In normal cases, the higher the price, the lower the demand.
Answer:  TRUE
Diff: 1     Page Ref: 303
Skill:  Concept
Objective:  10-4

123) If demand changes greatly with price, we say the demand is inelastic.
Answer:  FALSE
Diff: 2     Page Ref: 304
Skill:  Concept
Objective:  10-4

124) The more elastic the demand, the more it pays for the seller to raise the price.
Answer:  FALSE
Diff: 2     Page Ref: 304
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4

125) Consumers will base their judgments of a product's value on the prices that competitors charge for similar products.
Answer:  TRUE
Diff: 2     Page Ref: 304
Skill:  Concept
Objective:  10-4


126) Pricing and price competition account for the number-one problem facing many marketing executives. What are some of the frequent problems that companies encounter?
Answer:  The pricing environment changes at a fast pace, and value-seeking customers have put increased pricing pressure on many companies. However, companies are often too quick to reduce prices in order to get a sale rather than convincing buyers that their products are worth a higher price. A company's pricing, in addition, is  often too cost-oriented rather than customer-value oriented. Companies have prices that are not revised often enough to reflect market changes. Another common problem is pricing that does not take the rest of the marketing mix into account.
Diff: 2     Page Ref: 289
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-1
127) Discuss the importance of consumer perceptions of value and costs to setting prices.
Answer:  Customer perceptions of value set the upper limit for prices, and costs set the lower limit. However, in setting prices within these limits the company must then consider other internal and external factors. Internal factors affecting pricing include the company's overall marketing strategy, objectives, and marketing mix, as well as other organizational considerations. External factors include the nature of the market and demand, competitors' strategies and prices, and other environmental factors.
Diff: 1     Page Ref: 291
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-2

128) Explain how break-even analysis can be used for target profit pricing.
Answer:  The firm determines the price at which it will break even. The firm can also add the target profit to the fixed costs and then determine the new, "break-even point," which now includes the target profit. Pricing decisions can be made by examining where the total revenue and total cost curves intersect on a break-even chart at different price points and sales volume.
Diff: 2     Page Ref: 298
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-3

129) Identify and define the internal factors affecting a firm's pricing decisions.
Answer:  The pricing strategy is largely determined by the company's target market and positioning objectives. Pricing decisions affect and are affected by product design, distribution, and promotion decisions. Costs set the floor for the company's price, which must cover all the costs of making and selling the product, plus a fair rate of return. In order to coordinate pricing goals and decisions, management must decide who within the organization is responsible for setting price.
Diff: 2     Page Ref: 299
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4
130) Compare pure competition with oligopolistic competition.
Answer:  Under pure competition, the market consists of many buyers and sellers trading in a uniform commodity. No single buyer or seller has much effect on the going market price. Under oligopolistic competition, the market consists of few sellers who are highly sensitive to each other's pricing and marketing strategies. The product can be uniform or nonuniform. There are few sellers because it is difficult for new sellers to enter the market. Each seller is alert to competitors' strategies and moves.
Diff: 3     Page Ref: 302-303
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4
131) Compare oligopolistic competition with a pure monopoly.
Answer:  Under oligopolistic competition, the market consists of a few sellers who are highly sensitive to each other's pricing and marketing strategies. There are few sellers because it is difficult for new sellers to enter the market. Under a pure monopoly, the market consists of one seller. Pricing is handled differently in each case. The seller may be a government monopoly, a private nonregulated monopoly, or a private regulated monopoly.
Diff: 3     Page Ref: 302-303
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4

132) Describe what a demand curve is and explain how it helps businesses.
Answer:  It estimates consumer demand at different prices. In a monopoly, the demand curve shows the total market demand resulting from different prices. If the company faces competition, its demand at different prices will depend on whether competitors' prices stay constant or change with the company's own prices.
Diff: 2     Page Ref: 303
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4

133) What does price elasticity reveal about a product?
Answer:  Price elasticity is a measure of the sensitivity of demand to changes in price. If demand hardly changes with a small change in price, we say the demand is inelastic. If demand changes greatly, we say the demand is elastic.
Diff: 1     Page Ref: 304
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4


134) The company must consider the impact its prices will have on resellers. Identify three ways the company can help resellers.
Answer:  The company, first of all, should set prices that give resellers a fair profit. The company should also encourage their support. Finally, the company should help resellers to sell the product effectively.
Diff: 1     Page Ref: 305
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4
135) When setting prices, the company must consider its external environment. Describe four parts of the external environment and how they affect businesses.
Answer:  Economic conditions affect both the costs of producing a product and consumer perceptions of the product's price and value. The company should encourage and support resellers and help them to sell the product effectively. The government, in the form of local, state, and federal laws, is another important influence on pricing decisions. Social concerns impact pricing, especially when a company's short-term sales, market share, and profit goals may have to be tempered by broader societal considerations.
Diff: 1     Page Ref: 305
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4

136) How important is price among the elements of the marketing mix?
Answer:  In recent decades, nonprice factors have gained increasing importance. However, price still remains one of the most important elements determining a firm's market share and profitability.
Diff: 2     Page Ref: 290
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-1

137) Why is price considered to be one of the most flexible elements of the marketing mix?
Answer:  Price can be changed quickly.
Diff: 1     Page Ref: 290
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-1

138) Explain the concept of a price floor.
Answer:  A price floor is the lowest price charged at which the company still earns some profits.
Diff: 2     Page Ref: 291
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-2


139) Explain the concept of a price ceiling.
Answer:  A price ceiling is the highest price charged at which there is still some consumer demand.
Diff: 2     Page Ref: 291
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-2
140) What must a company using value-based pricing find out about its customers?
Answer:  They must determine the specific value that individual buyers assign to different competitive offers.
Diff: 3     Page Ref: 292
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-2

141) Explain good-value pricing.
Answer:  With good-value pricing, a marketer offers just the right combination of quality and good service at a fair price.
Diff: 1     Page Ref: 293
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-2

142) What must a firm do to retain pricing power?
Answer:  To retain pricing power, a firm must retain of build the value of its market offering.
Diff: 2     Page Ref: 293
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-2

143) What costs make up a product's total cost?
Answer:  Fixed costs and variable costs make up total cost.
Diff: 1     Page Ref: 296
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-3

144) Explain the significance of a downward-sloping experience curve.
Answer:  Not only will the company's unit production cost fall, but it will fall faster if the company makes and sells more during a given time period.
Diff: 3     Page Ref: 297
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-3


145) A marketer's fixed costs are $400,000, the variable cost is $16, and they expect the product to sell for $24. What is their break-even point in units?
Answer:  The break-even point in units is 50,000 units.
Diff: 3     Page Ref: 298
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-3
146) A marketer's fixed costs are $400,000, the variable cost is $16, and they expect the product to sell for $24. What is their break-even point in dollar sales?
Answer:  The break-even point in dollar sales is $1,200,000.
Diff: 3     Page Ref: 298
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-3

147) A marketer's fixed costs are $400,000, the variable cost is $16, and they expect their product to sell for $24.  If the marketer has sales of $1,440,000, what is their profit on this product?
Answer:  The profit is $80,000.
Diff: 3     Page Ref: 298
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-3

148) Who typically sets prices in small companies? In large companies?
Answer:  Top management sets prices in small companies, whereas divisional or product line managers typically set prices in large companies.
Diff: 2     Page Ref: 300
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4

149) Explain a pure monopoly.
Answer:  The market consists of one seller that dominates the market.
Diff: 2     Page Ref: 303
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4

150) If demand is elastic, will sellers consider lowering their prices? Explain.
Answer:  Yes. A lower price will produce more needed revenue, as consumers will respond to the change in price and buy more.
Diff: 2     Page Ref: 304
AACSB:  Analytic Skills
Skill:  Application
Objective:  10-4
1) A company sets not a single price, but rather a ________ that covers different items in its line that change over time as products move through their life cycles.
A) pricing by-product
B) pricing structure
C) pricing loop
D) pricing cycle
E) pricing bundle
Answer:  B
Diff: 1     Page Ref: 311
Skill:  Concept
Objective:  11-1

2) Companies facing the challenge of setting prices for the first time can choose between two broad strategies: market-penetration pricing and ________.
A) market-level pricing
B) market-competitive pricing
C) market-skimming pricing
D) market-price lining
E) market-price filling
Answer:  C
Diff: 2     Page Ref: 312
Skill:  Concept
Objective:  11-1

3) Of the following, which statement would NOT support a market-skimming policy for a new product?
A) The product's quality and image support its higher price.
B) Enough buyers want the products at that price.
C) Competitors are not able to undercut the high price.
D) Competitors can enter the market easily.
E) C and D
Answer:  D
Diff: 3     Page Ref: 312
Skill:  Concept
Objective:  11-1

4) A firm is using ________ when it charges a high, premium price for a new product with the intention of reducing the price in the future.
A) price skimming
B) trial pricing
C) value pricing
D) market-penetration pricing
E) prestige pricing
Answer:  A
Diff: 2     Page Ref: 312
Skill:  Concept
Objective:  11-1

5) ________ pricing is the approach of setting a low initial price in order to attract a large number of buyers quickly and win a large market share.
A) Market-skimming
B) Market-penetration
C) Below-market
D) Value-based
E) Leader
Answer:  B
Diff: 1     Page Ref: 313
Skill:  Concept
Objective:  11-1

6) Accent Software faces the conditions below, all of which support Accent's use of a market-penetration pricing strategy EXCEPT that ________.
A) the market is highly price sensitive
B) production and distribution costs will fall as sales volume increases
C) the product's quality and image support a high price
D) a low price would help keep out the competition
E) A and C
Answer:  C
Diff: 3     Page Ref: 313
Skill:  Concept
Objective:  11-1


7) Which of the following is a reason that a marketer would choose a penetration pricing strategy?
A) to ensure the company has the ability to increase prices once demand decreases
B) to focus on the rapid achievement of profit objectives
C) to appeal to different consumer segments with different levels of price sensitivity
D) to create markets for highly technical products
E) to discourage competition from entering the market
Answer:  E
Diff: 3     Page Ref: 313
Skill:  Concept
Objective:  11-1
8) Companies usually develop ________ rather than single products.
A) product families
B) product lines
C) product groupings
D) product brands
E) product images
Answer:  B
Diff: 1     Page Ref: 313
Skill:  Concept
Objective:  11-2

9) A marketer must be familiar with the five major product mix pricing situations. Which of the following is NOT one of them?
A) product line pricing
B) optional-product pricing
C) captive-product pricing
D) unbundled product pricing
E) by-product pricing
Answer:  D
Diff: 3     Page Ref: 313
Skill:  Concept
Objective:  11-2

10) A challenge for management in product line pricing is to decide on the price steps between the ________.
A) various products in a line
B) product mixes
C) product groupings
D) product lines
E) various target markets
Answer:  A
Diff: 2     Page Ref: 313
Skill:  Concept
Objective:  11-2

11) When using price steps, the seller must establish perceived ________ that support the price differences.
A) nonprice competitions
B) quality differences
C) quantity levels
D) images
E) strategies
Answer:  B
Diff: 2     Page Ref: 314
AACSB:  Communication
Skill:  Concept
Objective:  11-2
12) Many producers who use captive-product pricing set the price of the main product ________ and set ________ on the supplies necessary to use the product.
A) low; low markups
B) high; low markups
C) low; high markups
D) high; high markups
E) moderately; moderate markups
Answer:  C
Diff: 2     Page Ref: 314
Skill:  Concept
Objective:  11-2

13) When amusement parks and movie theaters charge admission plus fees for food and other attractions, they are following a(n) ________ pricing strategy.
A) by-product
B) optional-product
C) captive-product
D) skimming
E) penetration
Answer:  C
Diff: 2     Page Ref: 315
Skill:  Concept
Objective:  11-2


14) HiPoint Telephone Company uses two-part pricing for its long-distance call charges. Because this is a service, the price is broken into a fixed rate plus a ________.
A) fixed rate usage
B) variable usage rate
C) standard usage rate
D) market usage rate
E) none of the above
Answer:  B
Diff: 1     Page Ref: 315
Skill:  Concept
Objective:  11-2

15) Companies involved in deciding which items to include in the base price and which to offer as options are engaged in ________ pricing.
A) product bundle
B) optional-product
C) captive-product
D) by-product
E) skimming
Answer:  B
Diff: 1     Page Ref: 314
Skill:  Concept
Objective:  11-2
16) Keeping in mind that a seller must sell by-products at a price that covers more than the cost of storing and delivering them, which of the following will by-product pricing permit a seller to do?
A) increase the main product's price
B) make extra profit
C) reduce the main product's price
D) none of the above
E) B and C
Answer:  E
Diff: 3     Page Ref: 315
Skill:  Concept
Objective:  11-2


17) With product bundle pricing, sellers can combine several products and offer the bundle ________.
A) as a working unit
B) at a reduced price
C) as a complete self-service package
D) as a reward to loyal customers
E) as segmented pricing
Answer:  B
Diff: 1     Page Ref: 315
Skill:  Concept
Objective:  11-2

18) What is a major advantage of product bundle pricing?
A) It can promote the sales of products consumers might not otherwise buy.
B) It offers consumers more value for the money.
C) It combines the benefits of the other pricing strategies.
D) It provides a more complete product experience for consumers.
E) All of the above.
Answer:  A
Diff: 2     Page Ref: 315
Skill:  Concept
Objective:  11-2

19) Which of the following is NOT a price adjustment strategy?
A) segmented pricing
B)  promotional pricing
C)  free samples
D)  geographical pricing
E)  seasonal pricing
Answer:  C
Diff: 2     Page Ref: 315
Skill:  Concept
Objective:  11-3
20) Service Industries, Inc., plans to offer a price-adjustment strategy in the near future. They could consider each of the following EXCEPT ________.
A) discount and allowance pricing
B) segmented pricing
C) physiological pricing
D) promotional pricing
E) location pricing
Answer:  C
Diff: 2     Page Ref: 315
Skill:  Concept
Objective:  11-3


21) A quantity discount is a price reduction to buyers who purchase ________.
A) frequently
B) large volumes
C) close outs
D) inferior merchandise
E) superior merchandise
Answer:  B
Diff: 2     Page Ref: 316
Skill:  Concept
Objective:  11-3

22) Trade or functional discounts are offered by manufacturers to which of the following?
A) channel members who perform tasks that the manufacturer would otherwise have to perform
B) consumers who earn a price reduction for buying in bulk
C) intermediaries such as financing institutions as a cost of doing business with them
D) manufacturers that agree to exclusive distribution contracts
E) the government market and other organizations that require bid proposals
Answer:  A
Diff: 3     Page Ref: 316
Skill:  Concept
Objective:  11-3

23) Which of the following is an example of a cash discount?
A) 2/10, net 30
B) $5.00 with a two-pack
C) a free case when you buy 12
D) when you pay cash and take the product with you
E) none of the above
Answer:  A
Diff: 3     Page Ref: 316
Skill:  Concept
Objective:  11-3
24) When General Motors provides payments or price reductions to its new car dealers as rewards for participating in advertising and sales support programs, it is granting a(n) ________.
A) trade discount
B) functional discount
C) allowance
D) promotional allowance
E) trade credit
Answer:  D
Diff: 1     Page Ref: 316
Skill:  Concept
Objective:  11-3


25) Quantity discounts provide an incentive to the customer to buy ________.
A) more products or services from a variety of sellers
B) less from another competitor
C) more from one given seller, rather than from many different sources
D) more than he or she needs
E) bundled merchandise
Answer:  C
Diff: 2     Page Ref: 316
Skill:  Concept
Objective:  11-3

26) By definition, this type of pricing is used when a firm sells a product or service at two or more prices, even though the difference in price is not based on differences in cost.
A) segmented pricing
B) variable pricing
C) flexible pricing
D) cost-plus pricing
E) reference pricing
Answer:  A
Diff: 2     Page Ref: 316
Skill:  Concept
Objective:  11-2

27) When a firm varies its price by the season, month, day, or even hour, it is using ________ pricing.
A) revenue management
B) penetration
C) variable
D) time
E) value-added
Answer:  D
Diff: 1     Page Ref: 316
Skill:  Concept
Objective:  11-3
28) Airlines, hotels, and restaurants call segmented pricing ________.
A) time pricing
B) yield management
C) location pricing
D) segmented
E) service pricing
Answer:  B
Diff: 2     Page Ref: 317
Skill:  Concept
Objective:  11-3


29) Which of the following conditions should exist for segmented pricing to be an effective strategy?
A) The market must be able to be segmented.
B) The segments must show different degrees of demand.
C) Competitors can't undersell in the segment being charged the higher price.
D) All of the above.
E) None of the above.
Answer:  D
Diff: 2     Page Ref: 317
Skill:  Concept
Objective:  11-3

30) Consumers usually perceive higher-priced products as ________.
A) not within reach of most people
B) having a higher quality
C) having high profit margins
D) popular brands
E) being in the introductory stage of the product life cycle
Answer:  B
Diff: 2     Page Ref: 317
Skill:  Concept
Objective:  11-3

31) Consumer use price less to judge the quality of a product when they ________.
A) lack information
B) lack skills to use the product
C) have experience with the product
D) are shopping for a specialty item
E) cannot physically examine the product
Answer:  C
Diff: 2     Page Ref: 317
Skill:  Concept
Objective:  11-3
32) Michael and John both own leather jackets and are currently shopping for two new ones. They both have prices in mind and refer to them when shopping. These prices are termed ________.
A) psychological prices
B) reference prices
C) comparison prices
D) price points
E) skimmed prices
Answer:  B
Diff: 2     Page Ref: 319
Skill:  Concept
Objective:  11-3

33) Which of the following refers to the prices that a buyer carries in his or her mind and refers to when looking at a given product?
A) target prices
B) reference prices
C) promotional prices
D) geographical prices
E) dynamic prices
Answer:  B
Diff: 1     Page Ref: 319
Skill:  Concept
Objective:  11-3

34) When consumers cannot judge quality because they lack the information or skill, price becomes ________.
A) less important
B) insignificant
C) an important quality signal
D) the only driver of the purchase
E) none of the above
Answer:  C
Diff: 2     Page Ref: 317
Skill:  Concept
Objective:  11-3

35) All of the following are typical ways a reference price might be formed in a buyer's mind EXCEPT ________.
A) noting current prices
B) remembering past prices
C) assessing the buying situation
D) comparing it to a new product
E) influences from sellers
Answer:  D
Diff: 2     Page Ref: 319
Skill:  Concept
Objective:  11-3
36) What type of pricing is being used when a company temporarily prices it product below the list price or even below cost to create buying excitement and urgency?
A) segmented pricing
B) psychological pricing
C) referent pricing
D) promotional pricing
E) dynamic pricing
Answer:  D
Diff: 1     Page Ref: 320
Skill:  Concept
Objective:  11-3
37) Promotional pricing can have all of the following adverse effects EXCEPT ________.
A) creating deal-prone customers
B) eroding the brand's value in the eyes of customers
C) giving pricing secrets away to competitors
D) becoming addicting to both the customer and business
E) instigating industry price wars
Answer:  C
Diff: 2     Page Ref: 320
Skill:  Concept
Objective:  11-3

38) The most likely effect of the frequent use of promotional pricing is an industry ________.
A) expansion
B) price war
C) erosion
D) cooperation
E) imbalance
Answer:  B
Diff: 2     Page Ref: 320
Skill:  Concept
Objective:  11-3

39) When customers buy products from manufacturers' dealers within a specified time period, the manufacturer sends the customer a check called a ________.
A) cash rebate
B) discount
C) dealer reduction
D) promotional pricing reward
E) discount allowance
Answer:  A
Diff: 2     Page Ref: 320
Skill:  Concept
Objective:  11-3
40) Durango China Company charges all customers within a given geographical area a single total price. The more distant the area, the higher the price. This is ________.
A) freight-absorption pricing
B) zone pricing
C) uniform-delivered pricing
D) FOB-origin pricing
E) bulk rate pricing
Answer:  B
Diff: 2     Page Ref: 321
Skill:  Concept
Objective:  11-3


41) Under which type of geographic pricing strategy does each customer pay the exact freight for the product from the factory to its destination?
A) zone pricing
B) basing-point pricing
C) uniform-delivered pricing
D) FOB-origin pricing
E) dynamic pricing
Answer:  D
Diff: 2     Page Ref: 321
Skill:  Concept
Objective:  11-3

42) Using this pricing strategy, the seller takes responsibility for part or all of the actual freight charges in order to get the desired business.
A) FOB-origin
B) freight-absorption
C) basing-point
D) loss leader
E) zone pricing
Answer:  B
Diff: 1     Page Ref: 321
Skill:  Concept
Objective:  11-3

43) Which of the following is the opposite of FOB-origin pricing?
A) basing-point pricing
B) freight-absorption pricing
C) uniform-delivered pricing
D) freight-absorption pricing
E) zone pricing
Answer:  C
Diff: 3     Page Ref: 321
Skill:  Concept
Objective:  11-3
44) Freight-absorption pricing is used for ________ and ________.
A) market penetration; higher profit margins
B) holding on to increasingly competitive markets; higher profit margins
C) market penetration; holding on to increasingly competitive markets
D) generating temporary higher profits; discouraging competitors
E) services; installations
Answer:  C
Diff: 3     Page Ref: 321
Skill:  Concept
Objective:  11-3


45) When a company charges the same rate to ship a product anywhere in the United States, it is using which form of geographic pricing?
A) F.O.B. delivered
B) F.O.B. factory
C) F.O.B. origin
D) uniform delivered
E) basing-point
Answer:  D
Diff: 1     Page Ref: 321
Skill:  Concept
Objective:  11-3

46) The Internet offers ________, where the price can easily be adjusted to meet changes in demand.
A) captive pricing
B) dynamic pricing
C) basing-point pricing
D) price bundling
E) cost-plus pricing
Answer:  B
Diff: 2     Page Ref: 322
AACSB:  Use of IT
Skill:  Concept
Objective:  11-3

47) Some companies are reversing the fixed pricing trend and using ________.
A) captive pricing
B) segmented pricing
C) promotional pricing
D) dynamic pricing
E) geographical pricing
Answer:  D
Diff: 2     Page Ref: 322
Skill:  Concept
Objective:  11-3
48) When pricing internationally, most companies adjust their prices to reflect ________.
A) local market conditions
B) cost considerations
C) local laws and regulations
D) exchange-rate fluctuations
E) all of the above
Answer:  E
Diff: 2     Page Ref: 323
AACSB:  Multicultural and Diversity
Skill:  Concept
Objective:  11-3
49) Most companies that conduct international business ________ to ________.
A) adjust their prices; take local market conditions into consideration
B) use promotional pricing; create excitement in new markets
C) use geographical pricing; reduce delivery costs
D) set a uniform price; maintain a consistent product image
E) initiate price cuts; compensate for import tariffs and taxes
Answer:  A
Diff: 2     Page Ref: 323
AACSB:  Multicultural and Diversity
Skill:  Concept
Objective:  11-3

50) Price escalation in international markets may result from differences in market conditions or ________.
A) cultural preferences
B) selling strategies
C) regional tastes
D) customer perceptions
E) language barriers
Answer:  B
Diff: 2     Page Ref: 323
AACSB:  Multicultural and Diversity
Skill:  Concept
Objective:  11-4

51) Which of the following is LEAST likely to cause price escalation in foreign markets?
A) the additional costs of product modifications
B) the additional costs of shipping and insurance
C) the additional costs of import tariffs and taxes
D) the additional costs of improving a country's infrastructure
E) exchange rate fluctuations
Answer:  D
Diff: 2     Page Ref: 323
AACSB:  Multicultural and Diversity
Skill:  Concept
Objective:  11-3

52) Price escalation in international markets may result from four of these five marketing conditions. Which one will have the LEAST effect?
A) the additional cost of physical distribution
B) exchange-rate fluctuations
C) market stability
D) higher costs of selling
E) language barriers
Answer:  E
Diff: 2     Page Ref: 323
AACSB:  Multicultural and Diversity
Skill:  Concept
Objective:  11-3

53) There are many reasons why a firm might consider cutting its price. All of the following are among them EXCEPT ________.
A) excess capacity
B) falling demand in the face of strong price competition
C) a drive to dominate the market through lower costs
D) monopolistic competition
E) a drive to gain market share and cut costs through volume
Answer:  D
Diff: 2     Page Ref: 324
Skill:  Concept
Objective:  11-4

54) Which of the following is a reason for a company to raise its prices?
A) to address the issue of overdemand for a product
B) to win a larger share of the market
C) to use excess capacity
D) to boost sales volume
E) to balance out decreasing costs
Answer:  A
Diff: 1     Page Ref: 324
Skill:  Concept
Objective:  11-4

55) Which of the following is a major factor that influence price increases?
A) cost inflation
B) surplus of raw materials
C) government intervention
D) foreign competition
E) B and C
Answer:  A
Diff: 2     Page Ref: 324
Skill:  Concept
Objective:  11-4
56) Competitors are most likely to react to a price change when ________.
A) the number of firms involved is small
B) the purchase is uniform
C) the buyers are not well informed
D) A and B
E) all of the above
Answer:  D
Diff: 2     Page Ref: 325
Skill:  Concept
Objective:  11-4

57) A competitor is likely to interpret your firm's decision to cut prices in many ways, including all of the following EXCEPT as ________.
A) an attempt to take more market share
B) an effort it to use excess capacity
C) a personal decision due to management's personality
D) an attempt to cut prices industry-wide
E) A and D
Answer:  C
Diff: 2     Page Ref: 326
Skill:  Concept
Objective:  11-4

58) When a competitor cuts its price, a company is most likely to decide to ________ if it believes it will not lose much market share or would lose too much profit by cutting its own price.
A) reduce its production costs
B) reduce its marketing costs
C) maintain its current prices and profit margin
D) increase its marketing budget to raise the perceived value of the product
E) increase its production costs to improve the quality of the product
Answer:  C
Diff: 2     Page Ref: 326
Skill:  Concept
Objective:  11-4


59) When faced with a competitor who has cut its product's price, which of the following is typically the most efficient way for a company to maintain its own price but raise the perceived value of its offer?
A) improving the quality of the product
B) introducing a higher-priced premium brand
C) altering the company's marketing communications
D) bundling the offer with add-ons
E) distributing the product through less costly channels
Answer:  C
Diff: 3     Page Ref: 326
Skill:  Concept
Objective:  11-4
60) Which of the following is NOT on an effective action that a company can take to combat a competitor's price cut on a product?
A) reduce price
B) raise perceived value
C) improve quality and increase price
D) bundle products together
E) launch a low-price "fighting brand"
Answer:  D
Diff: 2     Page Ref: 326
Skill:  Concept
Objective:  11-4

61) When a firm improves the quality and increases the price of a product in reaction to a competitor making a price reduction, the firm in essence is ________.
A) moving its brand into a less competitive position
B) adversely positioning its product
C) moving its brand into a higher price-value position
D) creating a "fighting brand"
E) changing its target market
Answer:  C
Diff: 3     Page Ref: 327
Skill:  Concept
Objective:  11-4


62) A company would most likely consider launching a low-price "fighting brand" in response to a competitor reducing prices if ________.
A) the market segment being lost is price sensitive
B) the market segment being lost is not price sensitive
C) the market segment being lost responds to arguments of higher quality
D) the market segment being lost no longer demands the product
E) the market segment being lost has shifted culturally
Answer:  A
Diff: 2     Page Ref: 327
Skill:  Concept
Objective:  11-4

63) Price-fixing, predatory pricing, retail price maintenance, and deceptive pricing are examples of ________.
A) common pricing policies
B) major public policy issues in pricing
C) common pricing strategies
D) pricing policies used mostly in the wholesale sector
E) pricing used mostly in the retail sector
Answer:  B
Diff: 1     Page Ref: 327
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  11-4
64) The Sherman, Clayton, and Robinson-Patman Acts are all federal laws that were enacted to curb the formation of ________.
A) monopolies
B) oligopolies
C) competitive markets
D) international markets
E) limited partnerships
Answer:  A
Diff: 2     Page Ref: 327
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  11-4


65) When sellers set prices after talking to competitors and engaging in collusion, they are involved in ________.
A) predatory pricing
B) discriminatory pricing
C) price-fixing
D) skimming pricing
E) penetration pricing
Answer:  C
Diff: 2     Page Ref: 328
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  11-4

66) Federal legislation on price-fixing requires that sellers set their prices ________.
A) based on their fixed and variable costs
B) without communication from competitors
C) to achieve a specific profit margin
D) without the intention of cutting into competitors' profits
E) consistently throughout a region
Answer:  B
Diff: 2     Page Ref: 328
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  11-4
67) If a large retailer sold numerous items below cost with the intention of punishing small competitors and gaining higher long-run profits by putting them out of business, the retailer would be guilty of ________.
A) price collusion
B) price-fixing
C) predatory pricing
D) discriminatory pricing
E) penetration pricing
Answer:  C
Diff: 2     Page Ref: 328-329
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  11-4


68) Which of the following would most likely be considered predatory pricing?
A) pricing below cost to get rid of a surplus
B) pricing below cost to drive out competitors
C) pricing below cost in order to entice customers to your store
D) offering a suggested retail price on the manufacturer's package
E) both B and C if the intent is to somehow harm competition
Answer:  E
Diff: 3     Page Ref: 328
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  11-4

69) The Robinson-Patman Act seeks to prevent unfair ________ by ensuring that sellers offer the same price terms to customers at a given price level.
A) marketing
B) price discrimination
C) competition
D) price collusion
E) treatment of small retailers
Answer:  B
Diff: 2     Page Ref: 330
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  11-4

70) Price discrimination is legal under which of the following conditions?
A) when a manufacturer and reseller have agreed upon a specified retail price for a product
B) when a manufacturer sells to retailers in different markets
C) when a seller can prove its costs are different when selling to different retailers
D) when a seller advertises prices that are not actually available to consumers
E) when a seller has not communicated with competitors before announcing prices
Answer:  C
Diff: 3     Page Ref: 330
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  11-4

71) Price discrimination may be used to match competition as long as the strategy is temporary, localized, and ________.
A) defensive
B) offensive
C) published
D) private
E) used in all channels
Answer:  A
Diff: 3     Page Ref: 330
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  11-4

72) Mark's Markers, a manufacturer of color markers, has required its dealers to charge a specified retail price for its markers. Mark's is most likely guilty of ________.
A) price-fixing
B) retail price maintenance
C) price discrimination
D) price collusion
E) unfair price skimming
Answer:  B
Diff: 2     Page Ref: 330
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  11-4

73) ________ results when a company uses pricing methods that make it difficult for consumers to understand just what price they are really paying.
A) Scanner fraud
B) Skimming pricing
C) Price confusion
D) Predatory pricing
E) Price collusion
Answer:  C
Diff: 2     Page Ref: 330
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  11-4


74) Failure to enter the current price into a retailer's system may result in charges of ________.
A) predatory pricing
B) scanner fraud
C) retail maintenance pricing
D) discriminatory pricing
E) price-fixing
Answer:  B
Diff: 2     Page Ref: 330
AACSB:  Use of IT
Skill:  Concept
Objective:  11-4
75) Comparison pricing claims are legal if they are truthful. However, sellers should not advertise a price reduction unless ________.
A) it is a saving from the usual retail price
B) a "factory" price, if listed, is what it is claimed to be
C) a "wholesale" price, if listed, is what it is claimed to be
D) "comparable value items" are not actually imperfect goods
E) all of the above
Answer:  E
Diff: 1     Page Ref: 330
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  11-4

76) Valeo Fashions has just introduced a new line of fashion dresses for teens. They will initially enter the market at high prices in a ________ pricing strategy.
A) market-penetration
B) market-skimming
C) competitive market
D) psychological
E) demographic
Answer:  B
Diff: 2     Page Ref: 312
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-1


77) Market-skimming pricing would likely be most effective in selling ________.
A) any convenience item
B) an electronic device for which research and development must be recouped
C) shampoo and bath soap
D) anything easily copied by competitors
E) most items at EDLP retailers such as Wal-Mart
Answer:  B
Diff: 3     Page Ref: 312
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-1

78) Among the following, a market-penetration strategy will likely be most effective with ________.
A) pharmaceuticals
B) an electronic device for which R&D must be recouped
C) convenience items for which there is much competition
D) any specialty item
E) none of the above
Answer:  C
Diff: 3     Page Ref: 313
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-1
79) When Pepsi came out with Pepsi Blue and priced it at half price to attract buyers they were using, Pepsi was using ________.
A) market-skimming pricing
B) market-penetration pricing
C) new-product pricing
D) discount pricing
E) value-added pricing
Answer:  B
Diff: 2     Page Ref: 313
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-1


80) Johnson Boats wants to introduce a new model of boat into mature markets in highly developed countries with the goal of quickly gaining mass-market share. As a consultant, you should recommend a ________ pricing strategy.
A) market-skimming
B) market-penetration
C) zone
D) loss-leader
E) captive-product
Answer:  B
Diff: 2     Page Ref: 313
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-1

81) When Circuit Town Electronics sets its televisions at three price levels of $699, $899, and $1,099, it is using ________.
A) product line pricing
B) market-skimming pricing
C) market-penetration pricing
D) break-even pricing
E) target profit pricing
Answer:  A
Diff: 1     Page Ref: 314
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-2
82) When Polaroid set the general price range of its cameras low and the markup on its film high, it was practicing ________.
A) market-penetration pricing
B) market-skimming pricing
C) product line pricing
D) captive-product pricing
E) price bundling
Answer:  D
Diff: 2     Page Ref: 314
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-2


83) When product managers at Schwinn make decisions about which types of bicycle seats, handle bars, and saddlebags to offer customers on their bikes, they are engaged in ________.
A) product line pricing
B) optional-product pricing
C) captive-product pricing
D) by-product pricing
E) value-based pricing
Answer:  B
Diff: 1     Page Ref: 314
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-2

84) Mach 3 razor blades must be used in the Mach 3 razor. Which type of pricing is most likely used?
A) product line pricing
B) optional-product pricing
C) captive-product pricing
D) by-product pricing
E) product bundle pricing
Answer:  C
Diff: 2     Page Ref: 314
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-2
85) The fact that a hot dog cost five times more at Disneyland than at Sam's Club is an example of ________.
A) allowance pricing
B) captive-product pricing
C) penetration pricing
D) segmented pricing
E) promotional pricing
Answer:  B
Diff: 2     Page Ref: 314
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-2


86) A manufacturer offers 3/10, net 30, terms to a wholesaler for a recent purchase. The wholesaler may deduct ________ percent if the bill is paid within ________ days.
A) 10; 30
B) 10; 3
C) 3; 30
D) 3; 10
E) 7; 10
Answer:  D
Diff: 3     Page Ref: 316
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-3

87) When Whallans Gift Card Shop offers a price reduction to customers who buy Christmas cards the week after Christmas, Whallans is giving a(n) ________ discount.
A) functional
B) seasonal
C) annual
D) allowance
E) credit
Answer:  B
Diff: 1     Page Ref: 316
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-3
88) The New Age Gallery has three admission prices for students, adults, and seniors. All three groups are entitled to the same services. This form of pricing is called ________.
A) time pricing
B) location pricing
C) customer-segmented pricing
D) revenue management pricing
E) generational pricing
Answer:  C
Diff: 2     Page Ref: 316
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-3


89) Brown Baby Tanning Salon offers weekly tanning sessions for $15 and season passes with unlimited tanning for $150. Brown Baby Tanning Salon is offering ________ pricing.
A) by-product
B) captive-product
C) product bundling
D) discount
E) psychographic
Answer:  D
Diff: 2     Page Ref: 316
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-3

90) Lancaster Recycling has a history of problems with customers who do not pay their bills on time. Lancaster Recycling wants to improve its cash situation, reduce bad debts, and reduce credit-collection costs. The company might consider which of the following forms of pricing?
A) by-product
B) inflation-adjusted
C) cash discounts
D) captive-product
E) penetration
Answer:  C
Diff: 3     Page Ref: 316
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-3
91) Secret Sneaker will give anyone $10 for their old sneakers, regardless of condition, when purchasing a new pair of sneakers. The end result is essentially reducing the price of the new sneakers by $10. What is this type of price adjustment called?
A) functional discount
B) captive-product
C) seasonal discount
D) trade-in allowance
E) by-product
Answer:  D
Diff: 1     Page Ref: 316
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-3


92) Bose prices its most expensive noise reduction earphones at $399.95, which is a full $100.00 more than its next most expensive earphones. It costs Bose only a few dollars more to make the most expensive earphones. Bose is using ________ pricing.
A) customer-segment
B) product-form
C) skimming
D) penetration
E) captive-product
Answer:  B
Diff: 3     Page Ref: 316
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-3

93) The Chicago Bears organization charges different prices for seats in different areas of the Soldier Field, even though the costs are the same. This form of pricing is called ________.
A) location pricing
B) skimming pricing
C) product form pricing
D) flexible pricing
E) penetration pricing
Answer:  A
Diff: 2     Page Ref: 316
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-3
94) Manor Cinemas has announced that seniors over 60 years of age can enter the theater for free prior to 4:00 p.m. when accompanied by a paying customer. This is an example of ________.
A) promotional pricing
B) discounts and allowances
C) by-product pricing
D) product bundle pricing
E) none of the above
Answer:  A
Diff: 2     Page Ref: 320
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-3


95) The JC Whitney Company of Chicago offers replacement parts for older Volkswagen Beetles. Parts are often shipped from other locations throughout the United States. However, the company charges for shipping as if every part was shipped from their Chicago headquarters. The company practices ________.
A) FOB-origin pricing
B) uniform-delivered pricing
C) zone pricing
D) basing-point pricing
E) none of the above
Answer:  D
Diff: 2     Page Ref: 321
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-3

96) If Northwest Awnings charges the same price for delivery of their product to any customer that is located within the Great Lakes states, the company is using ________.
A) psychological pricing
B) promotional pricing
C) reference pricing
D) zone pricing
E) uniform-delivered pricing
Answer:  D
Diff: 3     Page Ref: 321
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-3
97) Big Mike's Health Food Store sells nutritional energy-producing foods. The price of the products sold varies according to individual customer accounts and situations. For example, long-time customers receive discounts. This strategy is an example of ________.
A) price elasticity
B) cost-plus pricing
C) dynamic pricing
D) value pricing
E) penetration pricing
Answer:  C
Diff: 3     Page Ref: 322
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-3


98) Savings for You, a discount retail chain, is highly competitive. When entering a new market, Savings for You often cuts prices so deeply that it sells below costs, effectively pushing smaller companies with less purchasing power out of the market. Savings for You is most at risk of being accused of ________.
A) market skimming
B) price-fixing
C) deceptive pricing
D) price confusion
E) predatory pricing
Answer:  E
Diff: 2     Page Ref: 328
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-3

Refer to the scenario below to answer the following questions.

Quills, Inc., is a manufacturer of ballpoint pens, pencils, and stationery. The firm's primary distribution strategy is to sell in large volumes to office supply stores and large discount chains. Charles Powell, CEO of Quills, had hoped to manufacture and sell in large enough quantities that prices could be held low. However, in the first several months, the firm experimented with the price portion of its marketing mix in an effort to cater to a number of markets.

99) Why might have Charles Powell have avoided using market-skimming pricing at Quills?
A) A high price was likely to produce more market growth.
B) It was difficult for competitors to enter the market.
C) The costs of producing a larger volume of the firm's products were too high.
D) The quality and image of the products would not have likely supported the high initial price.
E) The market for the products was not highly price sensitive.
Answer:  D
Diff: 2     Page Ref: 312
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-1
100) By offering a set of pens packaged with stationery and matching envelopes, Quills is using ________.
A) optional product pricing
B) product bundle pricing
C) by-product pricing
D) dynamic pricing
E) price-fixing
Answer:  B
Diff: 2     Page Ref: 315
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-2
101) Pricing strategies tend to change and evolve as the average product passes through its life cycle.
Answer:  TRUE
Diff: 1     Page Ref: 312
Skill:  Concept
Objective:  11-1

102) When Murphy's Candies sets a low initial price in order to get its "foot in the door" and quickly attract a large number of buyers, the company is practicing market-skimming pricing.
Answer:  FALSE
Diff: 2     Page Ref: 312
AACSB:  Reflective Thinking
Skill:  Concept
Objective:  11-1

103) Market-skimming is a more popular strategy for pricing new products, while market-penetration is a more popular strategy for pricing products that are more advanced in the product life cycle.
Answer:  FALSE
Diff: 3     Page Ref: 312-313
Skill:  Concept
Objective:  11-1

104) Pricing is often difficult because various products have related demand and costs, and they face different degrees of competition.
Answer:  TRUE
Diff: 1     Page Ref: 313
Skill:  Concept
Objective:  11-2

105) Water Light Fishing Boats is like most companies. They commercialize their new product ideas one at a time rather than developing a product line.
Answer:  FALSE
Diff: 2     Page Ref: 313
Skill:  Concept
Objective:  11-2
106) Just Hats prices its various types of caps at ten different price levels, ranging from $2.00 to $4.95. This is an illustration of price steps.
Answer:  TRUE
Diff: 1     Page Ref: 314
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-2


107) When Johnny On the Spot, a house mover, sells boxes and pads that must be used in moving a household's furniture, the company is practicing by-product pricing.
Answer:  FALSE
Diff: 2     Page Ref: 315
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-2

108) Some industries commonly use two-part pricing, breaking the price down into a fixed fee and a fixed usage rate.
Answer:  FALSE
Diff: 3     Page Ref: 315
Skill:  Concept
Objective:  11-2

109) When a manufacturer seeks a market for by-products and accepts a price that covers more than the cost of storing and delivering those by-products, the manufacturer is able to reduce the main product's price to make it more competitive.
Answer:  TRUE
Diff: 2     Page Ref: 315
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-2

110) When using product bundle pricing, sellers combine several of their products and offer the bundle at an increased price for increased profit.
Answer:  FALSE
Diff: 1     Page Ref: 315
Skill:  Concept
Objective:  11-2

111) Most companies adjust their basic prices to account for various customer differences and changing situations.
Answer:  TRUE
Diff: 2     Page Ref: 315
Skill:  Concept
Objective:  11-3
112) A seasonal discount is a price reduction to buyers who buy merchandise or services while they are in season.
Answer:  FALSE
Diff: 2     Page Ref: 316
Skill:  Concept
Objective:  11-3


113) Manufacturers may offer functional discounts within trade channels for channel members who store inventory.
Answer:  TRUE
Diff: 3     Page Ref: 316
Skill:  Concept
Objective:  11-3

114) The basic difference between customer-segment pricing and product-form pricing is that the latter offers alternative versions of the product that are priced differently but not according to differences in their costs.
Answer:  TRUE
Diff: 3     Page Ref: 316
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-3

115) Segmented pricing is known by other names; two of the most common are revenue management and yield management.
Answer:  TRUE
Diff: 2     Page Ref: 317
Skill:  Concept
Objective:  11-3

116) When consumers cannot judge the quality of a product because they lack information or skill, they are likely to perceive a higher-priced product as having higher quality.
Answer:  TRUE
Diff: 2     Page Ref: 317
Skill:  Concept
Objective:  11-3

117) The frequent use of promotional pricing can lead to industry price wars.
Answer:  TRUE
Diff: 2     Page Ref: 320
Skill:  Concept
Objective:  11-3

118) Used too frequently, promotional pricing can have the negative effect of decreasing the brand's value in the eyes of customers.
Answer:  TRUE
Diff: 2     Page Ref: 320
Skill:  Concept
Objective:  11-3

119) The FOB-origin pricing strategy means that the goods sold are placed free on board a carrier. At that point the title and responsibility pass to the customer, who pays the freight from the factory to the destination.
Answer:  TRUE
Diff: 3     Page Ref: 321
Skill:  Concept
Objective:  11-3

120) Zone pricing involves the customer paying for the shipping if they live outside the zone where the company is located.
Answer:  FALSE
Diff: 2     Page Ref: 321
Skill:  Concept
Objective:  11-3

121) Fixed price policiesone price for all buyersis a relatively modern idea that arose at the end of the nineteenth century.
Answer:  TRUE
Diff: 2     Page Ref: 322
Skill:  Concept
Objective:  11-3

122) A company considering a price change should be more concerned about consumers' reactions than competitors' reactions.
Answer:  FALSE
Diff: 3     Page Ref: 325
Skill:  Concept
Objective:  11-4

123) Your company may respond to a competitor's price reduction by launching a low-price fighting brand. This is likely necessary if the particular market segment being lost is price sensitive and will not respond to arguments of higher quality.
Answer:  TRUE
Diff: 3     Page Ref: 327
Skill:  Concept
Objective:  11-4

124) State and federal governments accept some reasons for price-fixing when it does not limit competition.
Answer:  FALSE
Diff: 2     Page Ref: 328
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  11-4

125) When Redman's Variety raised their store prices 40 percent and then ran a 20 percent off sale, Redman's was guilty of deceptive pricing.
Answer:  TRUE
Diff: 2     Page Ref: 330
AACSB:  Ethical Reasoning
Skill:  Application
Objective:  11-4

126) Companies bringing out a new product can choose between two broad strategies: market-skimming pricing and market-penetration pricing. Distinguish between the two.
Answer:  Market skimming is used to skim revenues layer by layer from the market by entering the market with high initial prices. The product's quality and image must support its higher price, and enough buyers must want the product at that price. The costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more. Competitors should not be able to enter the market easily and undercut the high price. Market penetration is used to penetrate the market quickly and deeply to attract a large number of buyers quickly and win a large market share by setting a low price initially when it enters the market. The market must be highly price sensitive so that a low price produces more market growth. Production and distribution costs must fall as sales volume increases. Also, the low price must help keep out competition and be maintained over time.
Diff: 2     Page Ref: 312-313
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-1

127) Sensenig Propeller manufactures replica antique wooden airplane propellers. In the process of producing these products they generate a great deal of scrap hardwood. Which pricing mix strategy should they use, and how does it function?
Answer:  Using by-product pricing, Sensenig will seek a market for the hardwood or by-products and should accept any price that covers more than the cost of storing and delivering the by-products. This practice allows the Sensenig to reduce the main product's price to make it more competitive. Sensenig might even find that the by-products themselves are profitable.
Diff: 1     Page Ref: 315
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-2


128) Explain product line pricing.
Answer:  With this option, management must decide on the price steps to set between the various products in a line. The price steps should take into account cost differences between the products in a line, customer evaluations of their different features, and competitors' prices. The seller's task is to establish perceived quality differences that support the price differences between various price points.
Diff: 1     Page Ref: 313
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-2
129) Why do businesses use cash discounts when they are in essence losing some money on the sale?
Answer:  Such discounts are customary in many industries in order to reward a customer who pays their bill promptly. The practice encourages customers to pay early, giving the firm quicker and more reliable access to cash. A cash discount can also help to build customer loyalty to the firm.
Diff: 2     Page Ref: 316
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-3

130) Describe the differences between dynamic and fixed pricing.
Answer:  Throughout most of history, prices were set by negotiation between buyers and sellers.The fixed price policysetting one price for all buyersis a relatively modern idea that arose with the development of large-scale retailing at the end of the nineteenth century. Today most prices are set this way. However, some companies are now reversing the fixed pricing trend. They are using dynamic pricing, adjusting prices continually to meet the characteristics and needs of individual customers and situations. Dynamic pricing makes sense in many contexts, it adjusts prices according to market forces, and it often works to the benefit of the customer
Diff: 1     Page Ref: 322
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-3


131) Explain the factors involved in setting international pricing.
Answer:  In some cases, a company can set a uniform worldwide price. However, most companies adjust their prices to reflect local market conditions and cost considerations. A firm must consider economic conditions, competitive situations, laws and regulations, and development of the wholesale and retail system. Consumer perceptions and preferences also may vary from country to country, calling for different prices. The company may have different marketing objectives in various world markets. Costs play an important role in setting international prices. Management must prepare for price escalation that may result from the differences in selling strategies or market conditions. The additional costs of product modifications, shipping and insurance, import tariffs and taxes, exchange-rate fluctuations, and physical distributions must all be factored into the "price."
Diff: 2     Page Ref: 323
AACSB:  Multicultural and Diversity
Skill:  Application
Objective:  11-3
132) When would price cuts and price increases be necessary?
Answer:  Price cuts may be necessary when there is excess capacity. Another time to cut prices is when market share is falling in the face of strong price competition. A company may also cut prices in a drive to dominate the market through lower costs. A major factor in price increases is cost inflation. Rising costs squeeze profit margins and lead companies to pass cost increases along to customers. Another factor leading to price increases is over-demand. When a company cannot supply all its customers' needs, it can raise its prices, ration products to customers, or both.
Diff: 3     Page Ref: 324
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-4

133) When are competitors most likely to react to price changes? How can a firm anticipate the likely reactions of its competitors?
Answer:  Competitors are most likely to react when the number of firms involved is small, when the product is uniform, and when the buyers are well informed. If the firm faces one large competitor, and if the competitor tends to react in a set way to price changes, that reaction can be easily anticipated. But if the competitor treats each price change as a fresh challenge and reacts according to its self-interest, the company will have to figure out just what makes up the competitor's self-interest at the time.
Diff: 2     Page Ref: 325-326
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-4


134) What regulates pricing activities when the federal government does not?
Answer:  States often regulate these activities. The most important pieces of federal legislation affecting prices are the Sherman, Clayton, and Robinson-Patman Acts, initially adopted to curb the formation of monopolies and to regulate business practices that might unfairly restrain trade. Because these statutes can be applied only to interstate commerce, many states have adopted similar provisions for companies that operate locally. Examples include pricing within channel levels and pricing across channel levels.
Diff: 2     Page Ref: 327
AACSB:  Ethical Reasoning
Skill:  Application
Objective:  11-4
135) Compare the practices of price-fixing and predatory pricing, explaining why each is prohibited by law.
Answer:  Many federal, state, and local laws govern the rules of fair play in pricing. Two major areas of concern are price-fixing and predatory pricing. Companies that engage in price-fixing collude to set a common price for their comparable products; price-fixing undermines the core element of price competition in our free-market economy. On the other hand, predatory pricing takes price competition too far. Predatory pricing occurs when a company sells a product below cost with the intention of punishing a competitor or by putting a competitor out of business.
Diff: 3     Page Ref: 328-329
AACSB:  Ethical Reasoning
Skill:  Application
Objective:  11-4

136) For what types of products might marketers use market-skimming pricing?
Answer:  Such pricing works when the product's quality and image support the higher price; for example, companies selling high-tech electronics may use market-skimming pricing.
Diff: 2     Page Ref: 312
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-1

137) For what types of products might marketers use market-penetration pricing?
Answer:  Marketers use such pricing when attempting to attract a large number of buyers quickly and win a large market share; such pricing may be common when competition for products is high.
Diff: 2     Page Ref: 313
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-1


138) Why is product line pricing used?
Answer:  Such pricing is used to establish price rangesor price stepswithin product lines.
Diff: 1     Page Ref: 313
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-2

139) Give two examples of products for which marketers may use optional-product pricing.
Answer:  Such products may include refrigerators with icemakers and cars with options such as stereos, GPS, and cruise control.
Diff: 1     Page Ref: 314
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-2
140) Give two examples of products for which captive-product pricing may be used.
Answer:  Captive-product pricing is used when pricing theater tickets and selling refreshments at a higher rate; it is also used when pricing game consoles along with video games.
Diff: 3     Page Ref: 314
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-2

141) Give two examples of by-product pricing.
Answer:  Examples could include selling scrap metal after producing metal stampings or selling donut holes after producing donuts.
Diff: 2     Page Ref: 315
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-2

142) How do consumers benefit from product bundle pricing?
Answer:  Several products are sold together at a reduced rate; vacation packages that include air and hotel or value meals in the fast-food industry are examples.
Diff: 2     Page Ref: 315
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-2

143) Give an example of a cash discount.
Answer:  With a 2/10, net 30 arrangement, for example, the customer can deduct 2 percent if the bill is paid within 10 days.
Diff: 3     Page Ref: 316
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-3

144) List four types of segmented pricing.
Answer:  Customer-segment pricing, product-form pricing, location pricing, and time pricing are all examples.
Diff: 3     Page Ref: 316
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-3

145) Explain the psychology behind a price of $9.99 instead of $10.00.
Answer:  Consumers typically see the $9.99 product in the $9 range instead of the $10 range; the price appears to psychologically be cheaper.
Diff: 2     Page Ref: 320
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-3
146) L.L. Bean sells its catalog items FOB-origin pricing. Who pays the freight charges?
Answer:  The customer pays for the freight.
Diff: 2     Page Ref: 321
AACSB:  Reflective Thinking
Skill:  Application
Objective:  11-3

147) Explain two different ways a consumer might view a price cut.
Answer:  A consumer might believe that he or she is getting a good deal on a quality product, or a consumer might believe that the quality of the product has been reduced.
Diff: 2     Page Ref: 325
AACSB:  Analytic Skills
Skill:  Application
Objective:  11-4

148) Why is predatory pricing considered illegal?
Answer:  Predatory pricing works against the principles of a free-enterprise system; predatory pricing allows the marketers to sell below cost with the intention of punishing competitors.
Diff: 2     Page Ref: 329
AACSB:  Ethical Reasoning
Skill:  Application
Objective:  11-4

149) How can a manufacturer avoid using retail price maintenance but still exert some influence over the price retailers charge for its product?
Answer:  The manufacturer can propose a suggested retail price.
Diff: 1     Page Ref: 330
AACSB:  Ethical Reasoning
Skill:  Application
Objective:  11-4

150) How does deceptive pricing harm consumers?
Answer:  Deceptive pricing occurs when a seller states prices or price savings that mislead consumers or are actually not available to consumers.
Diff: 2     Page Ref: 330
AACSB:  Ethical Reasoning
Skill:  Application
Objective:  11-4
1) Which of the following is NOT a typical supply chain member?
A) resellers
B) customers
C) intermediaries
D) government agencies
E) raw materials supplier
Answer:  D
Diff: 1     Page Ref: 337
Skill:  Concept
Objective:  12-1

2) ________ the manufacturer or service provider is the set of firms that supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service.
A) Downstream from
B) Upstream from
C) Separated from
D) Congruous to
E) Parallel with
Answer:  B
Diff: 2     Page Ref: 337
Skill:  Concept
Objective:  12-1

3) Another term for the supply chain that suggests a sense and respond view of the market is ________.
A) supply and demand chain
B) demand chain
C) channel of distribution
D) distribution channel
E) physical distribution
Answer:  B
Diff: 3     Page Ref: 338
Skill:  Concept
Objective:  12-1


4) When suppliers, distributors, and customers partner with each other to improve the performance of the entire system, they are participating in a ________.
A) value delivery network
B) channel of distribution
C) supply chain
D) demand chain
E) all of the above
Answer:  A
Diff: 1     Page Ref: 338
Skill:  Concept
Objective:  12-1
5) Most producers today sell their goods to ________.
A) final users
B) final users and marketing members
C) intermediaries
D) the government at various levels
E) competitors
Answer:  C
Diff: 2     Page Ref: 339
Skill:  Concept
Objective:  12-1

6) A company's channel decisions directly affect every ________.
A) channel member
B) marketing decision
C) customer's choices
D) employee in the channel
E) competitor's actions
Answer:  B
Diff: 2     Page Ref: 339
Skill:  Concept
Objective:  12-1

7) Distribution channel decisions often involve ________ with other firms, particularly those that involve contracts or relationships with channel partners.
A) short-term commitments
B) long-term commitments
C) major problems
D) financial losses
E) disagreements
Answer:  B
Diff: 3     Page Ref: 339
Skill:  Concept
Objective:  12-1


8) Joe Blanco, like other producers, has discovered that his intermediaries usually offer his firm more than it can achieve on its own. Which of the following is most likely an advantage that Joe creates by working with intermediaries?
A) financial support
B) fast service
C) scale of operation
D) working relationships with foreign distributors
E) promotional assistance
Answer:  C
Diff: 2     Page Ref: 339
Skill:  Concept
Objective:  12-1
9) From the economic system's point of view, the role of marketing intermediaries is to transform the assortment of products made by producers into the assortment of products wanted by ________.
A) channel members
B) distributors
C) consumers
D) manufacturers
E) marketers
Answer:  C
Diff: 2     Page Ref: 340
Skill:  Concept
Objective:  12-1

10) Producers benefit from using intermediaries because they ________.
A) offer greater efficiency in making goods available to target markets
B) bring a fresh point of view to strategy development
C) eliminate risk
D) are generally backlogged with orders
E) refuse to store products for longer than a few days
Answer:  A
Diff: 3     Page Ref: 339
Skill:  Concept
Objective:  12-1

11) Intermediaries play an important role in matching ________.
A) dealer with customer
B) supply and demand
C) product to region
D) manufacturer to product
E) information and promotion
Answer:  B
Diff: 2     Page Ref: 340
Skill:  Concept
Objective:  12-1
12) Channel members add value by bridging the major gaps of ________ that separate goods and services from those who would use them.
A) time, place, and form
B) place, possession, and form
C) time, place, and possession
D) place, time, and need
E) place, need, and distribution
Answer:  C
Diff: 2     Page Ref: 340
Skill:  Concept
Objective:  12-1
13) Which of the following is NOT a key function that intermediaries play in completing transactions?
A) promotion
B) information
C) matching
D) financing
E) negotiation
Answer:  E
Diff: 3     Page Ref: 340
Skill:  Concept
Objective:  12-1

14) Which of the following is NOT a key function that intermediaries play in helping to fulfill a completed transaction?
A) physical distribution
B) promotion
C) financing
D) risk taking
E) storing goods
Answer:  B
Diff: 3     Page Ref: 340
Skill:  Concept
Objective:  12-2

15) In marketing terms, we say that the number of intermediary levels indicates the ________ of a channel.
A) depth
B) complexity
C) involvement
D) length
E) width
Answer:  D
Diff: 1     Page Ref: 341
Skill:  Concept
Objective:  12-1
16) To a producer of goods, a greater number of channel levels means ________ and greater channel complexity.
A) less distance between producer and end consumer
B) less control
C) more potential ideas
D) higher taxes
E) fewer channel partners
Answer:  B
Diff: 2     Page Ref: 341
Skill:  Concept
Objective:  12-1
17) All of the institutions in a channel are connected by various flows. These include physical flow, flow of ownership, payment flow, information flow, and ________ flow.
A) promotion
B) acquisition
C) customer
D) return product
E) by-product
Answer:  A
Diff: 3     Page Ref: 341
AACSB:  Communication
Skill:  Concept
Objective:  12-1

18) A distribution channel is more than a collection of firms connected by various flows; it is a(n) ________ in which people and companies interact to accomplish individual, company, and channel goals.
A) added value chain
B) complex behavioral system
C) corporate marketing system
D) vertical marketing system
E) multichannel system
Answer:  B
Diff: 2     Page Ref: 342
AACSB:  Communication
Skill:  Concept
Objective:  12-2


19) An advantage of a channel of distribution over selling direct to consumers is that each channel member plays a ________ in the channel.
A) time-saving part
B) specialized role
C) decisional role
D) informational role
E) disciplinary role
Answer:  B
Diff: 2     Page Ref: 342
Skill:  Concept
Objective:  12-2

20) ________ conflict, which occurs between different levels of the same channel, is more common than ________ conflict, which occurs among firms at the same level of the channel.
A) Horizontal; vertical
B) Vertical; horizontal
C) Contractual; corporate
D) Corporate; franchise
E) Wholesaler; retailer
Answer:  B
Diff: 2     Page Ref: 342
Skill:  Concept
Objective:  12-2
21) Historically, conventional channels have lacked the leadership to ________.
A) assign channel member roles and attain efficiency
B) attain efficiency and assign member roles
C) assign member roles and manage conflict
D) set standard pricing and promotions
E) set standard pricing and packaging
Answer:  C
Diff: 3     Page Ref: 343
AACSB:  Communication
Skill:  Concept
Objective:  12-2

22) A conventional distribution channel consists of one or more ________ producers, wholesalers, and retailers.
A) product-related
B) independent
C) contract
D) estranged
E) merchant
Answer:  B
Diff: 2     Page Ref: 344
Skill:  Concept
Objective:  12-2
23) A channel consisting of one or more independent producers, wholesalers, or retailers that seek to maximize their own profitseven at the expense of profits for the channel as a wholeis a(n) ________.
A) vertical marketing system
B) conventional distribution channel
C) independent channel allocation
D) corporate VMS
E) administered vertical marketing system
Answer:  B
Diff: 2     Page Ref: 344
Skill:  Concept
Objective:  12-2

24) An advantage of a vertical marketing system (VMS) is that it acts as a ________ system.
A) unified
B) more efficient
C) modern
D) customer-driven
E) task-driven
Answer:  A
Diff: 3     Page Ref: 344
Skill:  Concept
Objective:  12-2
25) A corporate VMS has the advantage of controlling the entire distribution chain under ________.
A) a profit-maximizing strategic plan
B) single ownership
C) mass distribution
D) a few intermediaries
E) little control
Answer:  B
Diff: 1     Page Ref: 344
Skill:  Concept
Objective:  12-2

26) Which of the following are the three major types of vertical marketing systems?
A) corporate, contractual, and chain
B) contractual, corporate, and independent
C) contractual, corporate, and administered
D) administered, independent, and franchised
E) contractual, corporate, and task
Answer:  C
Diff: 2     Page Ref: 344
Skill:  Concept
Objective:  12-2

27) A distinguishing feature of a contractual VMS is that coordination and conflict management among the independent members of the channel are attained through ________.
A) agents and brokers
B) working partnerships
C) limited liability incorporation
D) contractual agreements
E) natural competitive forces
Answer:  D
Diff: 1     Page Ref: 345
AACSB:  Communication
Skill:  Concept
Objective:  12-2

28) The most common type of contractual agreement in business is the ________.
A) franchise organization
B) vertical marketing system
C) conventional marketing channel
D) corporate VMS
E) administered VMS
Answer:  A
Diff: 3     Page Ref: 345
Skill:  Concept
Objective:  12-2
29) Leadership in which type of marketing system is assumed not through common ownership or contractual ties but through the size and power of one or a few dominant channel members?
A) horizontal marketing system
B) administered VMS
C) corporate VMS
D) multichannel distribution system
E) conventional marketing channel
Answer:  B
Diff: 2     Page Ref: 345
Skill:  Concept
Objective:  12-2

30) In a ________, two or more companies at one level join together to develop a new marketing opportunity.
A) franchise
B) horizontal marketing system
C) corporate VMS
D) multichannel distribution system
E) conventional distribution channel
Answer:  B
Diff: 1     Page Ref: 345
Skill:  Concept
Objective:  12-2
31) Hybrid marketing systems are also called ________.
A) dual distribution systems
B) multichannel distribution systems
C) administered franchises
D) horizontal multichannel systems
E) contractual marketing systems
Answer:  B
Diff: 2     Page Ref: 346
Skill:  Concept
Objective:  12-2

32) As marketing manager for Globe Imports and Exports, you want to start reaping the benefits of a multichannel distribution system. You will likely enjoy all of the following EXCEPT which one?
A) expanded sales
B) expanded market coverage
C) selling at a higher gross margin
D)  opportunities to tailor products and services to the needs of diverse segments
E) A and C
Answer:  C
Diff: 3     Page Ref: 346
Skill:  Concept
Objective:  12-2
33) The use of multichannel systems in the United States is ________.
A) decreasing
B) increasing
C) holding steady
D) spreading abroad fast
E) declining abroad
Answer:  B
Diff: 2     Page Ref: 346
Skill:  Concept
Objective:  12-2

34) The major disadvantage of a multichannel system is that it is harder to control and it can generate ________.
A) channel conflict
B) less net profit
C) fewer domestic sales
D) inefficiencies
E) declining employee morale
Answer:  A
Diff: 2     Page Ref: 346
Skill:  Concept
Objective:  12-2

35) Due in a large part to advances in technology, ________ is a major trend whereby product and service producers are bypassing intermediaries and going directly to final buyers, or radically new types of channel intermediaries are emerging to displace traditional ones.
A) the vertical marketing system
B) the corporate marketing system
C) disintermediation
D) the corporate merger
E) the hostile takeover
Answer:  C
Diff: 2     Page Ref: 347
AACSB:  Use of IT
Skill:  Concept
Objective:  12-2

36) In many industries, traditional intermediaries are dropping by the wayside because of changes in ________ and the growth of ________ marketing.
A) federal laws; business-to-business
B) state and local laws; target
C) franchise structure; independent
D) technology; direct and online
E) channel design; retail
Answer:  D
Diff: 2     Page Ref: 347
AACSB:  Use of IT
Skill:  Concept
Objective:  12-2
37) Designing a channel system calls for analyzing consumer needs, setting channel objectives, ________ and evaluation.
A) establishing a budget
B) identifying major channel alternatives
C) seeking regulatory approval
D) seeking legal advice
E) measuring objectives
Answer:  B
Diff: 2     Page Ref: 348
Skill:  Concept
Objective:  12-3


38) Which of the following should be the first step in designing a marketing channel?
A) identifying channel objectives
B) identifying what consumers want from the channel
C) analyzing channel alternatives
D) evaluating intermediaries
E) exploring international opportunities
Answer:  B
Diff: 2     Page Ref: 349
Skill:  Concept
Objective:  12-3

39) To increase a channel's service level, it must provide a greater assortment of products, more add-on services, and ________.
A) lower prices
B) more efficiency
C) faster delivery
D) better terms
E) follow-up
Answer:  C
Diff: 3     Page Ref: 349
Skill:  Concept
Objective:  12-3

40) Companies should state their channel objectives in terms of targeted levels of ________.
A) co-op advertising
B) efficiency
C) customer service
D) conflict reduction
E) profitability
Answer:  C
Diff: 2     Page Ref: 350
AACSB:  Communication
Skill:  Concept
Objective:  12-3
41) When a company is identifying its major channel alternatives, it should consider its choices in terms of types, number, and ________ of intermediaries.
A) size
B) power
C) responsibilities
D) capacity
E) none of the above
Answer:  C
Diff: 2     Page Ref: 350
Skill:  Concept
Objective:  12-3

42) Which type of product might require a more direct marketing channel to avoid delays and too much handling?
A) lower-priced products
B) perishable products
C) high-priced products
D) products in their maturity stage
E) products in their decline stage
Answer:  B
Diff: 2     Page Ref: 350
Skill:  Concept
Objective:  12-3

43) When determining the number of channel members to use at each level, three strategies are available: intensive, exclusive, and ________ distribution.
A) multichannel
B) selective
C) international
D) direct
E) extensive
Answer:  B
Diff: 1     Page Ref: 350
Skill:  Concept
Objective:  12-3

44) Sometimes a producer chooses only a few dealers in a territory to distribute its products or services. Generally these dealers are given a right to ________ distribution.
A) exclusive
B) selective
C) intensive
D) administered
E) corporate
Answer:  A
Diff: 1     Page Ref: 351
Skill:  Concept
Objective:  12-3
45) Which type of distribution is used when the producer wants more than one, but fewer than all, of the intermediaries who are willing to carry its products?
A) exclusive
B) selective
C) intensive
D) administered
E) corporate
Answer:  B
Diff: 1     Page Ref: 351
Skill:  Concept
Objective:  12-3
46) When establishing the responsibilities of channel members, the producer establishes a list price, sets discounts for intermediaries, and defines each channel member's ________.
A) sales volume
B) territory
C) legal rights
D) customers
E) mission
Answer:  B
Diff: 2     Page Ref: 351
Skill:  Concept
Objective:  12-3

47) Channel members should be evaluated using all of the following criteria EXCEPT which one?
A) economic factors
B) control
C) adaptive criteria
D) channel leadership
E) none of the above
Answer:  D
Diff: 3     Page Ref: 351
Skill:  Concept
Objective:  12-3

48) When a company compares the likely sales, costs, and profitability of different channel alternatives, it is using ________ criteria to evaluate its channel options.
A) selective
B) adaptive
C) economic
D) control
E) distribution
Answer:  C
Diff: 2     Page Ref: 351
Skill:  Concept
Objective:  12-3

49) It is common for international marketers to ________ their channel strategies for each country.
A) extend
B) adapt
C) restrict
D) seek approval for
E) eliminate
Answer:  B
Diff: 1     Page Ref: 352
AACSB:  Multicultural and Diversity
Skill:  Concept
Objective:  12-3

50) China and India each contain more than one billion people. However, companies can access only a small percentage of these potential markets due to ________.
A) inadequate distribution systems
B) indifference toward Western products
C) high regional taxes
D) the religious caste system
E) insurmountable language barriers
Answer:  A
Diff: 3     Page Ref: 352
AACSB:  Multicultural and Diversity
Skill:  Concept
Objective:  12-3

51) Marketing channel management calls for selecting, managing, ________, and evaluating channel members over time.
A) reducing conflict
B) reducing waste
C) motivating
D) pruning
E) all of the above
Answer:  C
Diff: 2     Page Ref: 352
Skill:  Concept
Objective:  12-4


52) A company should think of its intermediaries as both its ________ and ________.
A) competitors; partners
B) customers; partners
C) competitors; marketers
D) customers; employees
E) competitors; customers
Answer:  B
Diff: 2     Page Ref: 353
Skill:  Concept
Objective:  12-4
53) Most companies practice strong PRM to forge long-term relationships with channel members. What does PRM stand for?
A) primary relationship management
B) potential relationship management
C) perennial relationship management
D) partner relationship management
E) personnel roster maintenance
Answer:  D
Diff: 1     Page Ref: 353
AACSB:  Communication
Skill:  Concept
Objective:  12-4

54) Sometimes a seller requires its dealers to abstain from handling competitors' products in an arrangement called ________.
A) exclusive distribution
B) exclusive dealing
C) selective distribution
D) exclusive pricing
E) disintermediation
Answer:  B
Diff: 2     Page Ref: 356
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  12-4


55) Exclusive dealing is legal as long as it does not ________ or tend to create a monopoly and as long as both parties enter into the agreement ________.
A) substantially lessen competition; coercively
B) restrict trade; for a cause
C) substantially lessen competition; voluntarily
D) interfere with competitors; forcefully
E) create a smaller market; permanently
Answer:  C
Diff: 3     Page Ref: 356
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  12-4

56) Exclusive territorial agreements are normal in ________.
A) vertical marketing systems
B) franchises
C) integrated marketing systems
D) horizontal marketing systems
E) supply chain management
Answer:  B
Diff: 2     Page Ref: 356
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  12-4
57) If the producer of a strong brand agrees to sell its brand to a dealer only if the dealer will take some or all of the rest of the line, the result is ________.
A) exclusive distribution
B) exclusive dealing
C) always illegal
D) a tying agreement
E) disintermediation
Answer:  D
Diff: 2     Page Ref: 356
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  12-4


58) Marketing logistics involves getting the right product to the right customer in the right place at the right time. Which one of the following is NOT included in this process?
A) planning the physical flow of goods and services
B) implementing the plan for the flow of goods and services
C) controlling the physical flow of goods, services, and information
D) gathering customer's ideas for new products
E) A and C
Answer:  D
Diff: 1     Page Ref: 356
Skill:  Concept
Objective:  12-5

59) Marketing logistics involves which of the following distribution flows?
A) outbound and inbound
B) outbound, inbound, and reverse
C) inbound and reverse
D) outbound and reverse
E) outbound
Answer:  B
Diff: 2     Page Ref: 356
Skill:  Concept
Objective:  12-5

60) Which of the following is NOT an area of responsibility for a logistics manager?
A) information systems
B) warehousing
C) marketing
D) inventory
E) purchasing
Answer:  C
Diff: 2     Page Ref: 356-357
Skill:  Concept
Objective:  12-5
61) Which of the following innovations has created opportunities for significant gains in distribution efficiency?
A) tying agreements
B) Web-based logistics systems
C) partner relationship management
D) contractual vertical marketing systems
E) storage warehouses
Answer:  B
Diff: 2     Page Ref: 357
AACSB:  Use of IT
Skill:  Concept
Objective:  12-5

62) The goal of marketing logistics should be to provide a ________ level of customer service at the least cost.
A) maximum
B) targeted
C) moderate
D) minimum
E) competitive
Answer:  B
Diff: 2     Page Ref: 357
Skill:  Concept
Objective:  12-5

63) The difference between distribution centers and storage warehouses is that the former are designed to ________.
A) store goods for longer periods
B) hold larger volumes
C) move goods rather than just store them
D) primarily be owned by the manufacturer
E) be automated
Answer:  C
Diff: 2     Page Ref: 358
Skill:  Concept
Objective:  12-5

64) To reduce inventory management costs, many companies use a system called ________, which involves carrying only small inventories of parts or merchandise, often only enough for a few days of operation.
A) reduction-inventory management
B) just-in-time logistics
C) limited inventory logistics
D) supply chain management
E) economic order quantity
Answer:  B
Diff: 2     Page Ref: 359
AACSB:  Use of IT
Skill:  Concept
Objective:  12-5

65) Through the use of ________, or "smart tag" technology, a company is able to locate exactly where a product is within the supply chain.
A) RFID
B) PRM
C) VMS
D) IT
E) 3PL
Answer:  A
Diff: 2     Page Ref: 359
AACSB:  Use of IT
Skill:  Concept
Objective:  12-5

66) Which of the following transportation modes is used for digital products?
A) trucks
B) rail
C) the Internet
D) air
E) ship
Answer:  C
Diff: 1     Page Ref: 359
AACSB:  Use of IT
Skill:  Concept
Objective:  12-5

67) In choosing a transportation mode for a product, shippers must balance the considerations of speed, dependability, cost, and ________.
A) weight
B) customer choice
C) availability
D) distance
E) company reputation
Answer:  C
Diff: 3     Page Ref: 360
Skill:  Concept
Objective:  12-5


68) In the proper order, identify the correct terms for these intermodal transportation combinations: rail and truck, water and truck, water and rail.
A) fishyback; airtruck; trainship
B) piggyback; airtruck; fishyback
C) trainship; fishyback; piggyback
D) piggyback; fishyback; trainship
E) piggyback, fishyback; birdyback
Answer:  D
Diff: 2     Page Ref: 360
Skill:  Concept
Objective:  12-5
69) Companies manage their supply chains through ________.
A) skilled operators
B) information
C) the Internet
D) transportation modes
E) competitors
Answer:  B
Diff: 2     Page Ref: 360
AACSB:  Communication
Skill:  Concept
Objective:  12-5

70) Using ________, retailers can share real-time data on sales and current inventory levels with suppliers who take responsibility for ordering and delivering products to retailers, thereby saving time and money.
A) dual distribution modes
B) continuous inventory replenishment systems
C) the Internet
D) their own trucking and distribution systems
E) integrated distribution
Answer:  B
Diff: 2     Page Ref: 361
AACSB:  Use of IT
Skill:  Concept
Objective:  12-5


71) Lancaster Box Company wants to provide better customer service while trimming distribution costs through teamwork, both inside the company and among all the marketing channel organizations. Lancaster Box is thinking of ________.
A) integrated logistics management
B) supply chain management
C) customer relationship management
D) horizontal marketing system
E) disintermediation
Answer:  A
Diff: 2     Page Ref: 361
AACSB:  Communication
Skill:  Concept
Objective:  12-5
72) What is the goal of integrated supply chain management?
A) to reduce costs
B) to increase services with minimal cost through teamwork
C) to harmonize all of the company's logistics decisions
D) to reduce conflict and increase cooperation among channel members
E) all of the above
Answer:  E
Diff: 3     Page Ref: 361
AACSB:  Communication
Skill:  Concept
Objective:  12-5

73) Smart companies coordinate their logistics strategies and forge strong partnerships with suppliers and customers to improve customer service and reduce channel costs through ________.
A) cross-functional teams
B) cross-company teams
C) partnering
D) cross-functional, cross-company teams
E) segregated departmentalization
Answer:  D
Diff: 3     Page Ref: 362
AACSB:  Communication
Skill:  Concept
Objective:  12-5


74) The success of each channel member depends on the performance of ________.
A) key channel members
B) the entire supply chain
C) the channel captain
D) the manufacturer
E) the wholesaler
Answer:  B
Diff: 2     Page Ref: 362
Skill:  Concept
Objective:  12-5

75) Today, a growing number of firms now outsource some or all of their logistics to ________.
A) cross-functional teams
B) disintermediaries
C) channel members
D) third-party logistics providers
E) competitors
Answer:  D
Diff: 1     Page Ref: 362
Skill:  Concept
Objective:  12-5
76) In designing its marketing channel, Chairs for Every Occasion has moved from a make-and-sell view of its business, which focused on productive inputs and factory capacity as a starting point for marketing planning, to a sense-and respond view, which begins instead with the needs of target customers. With this new view, Chairs for Every Occasion is developing its ________.
A) supply chain
B) wholesaler chain
C) demand chain
D) logistics
E) vertical marketing system
Answer:  C
Diff: 3     Page Ref: 338
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-1


77) Proud Pets, a producer of clothing and accessories for pets, has recently partnered with a regional chain of pet stores. Which of the following would Proud Pets be LEAST likely to expect from its new channel member?
A) promoting its products through advertising
B) assembling and packaging its products for final sale
C) distributing relevant marketing research information
D) identifying raw materials and other productive inputs
E) negotiating on its products' prices
Answer:  D
Diff: 2     Page Ref: 340
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-1

78) Steve's Physco Skates sells its products to Wal-Mart, who then sells them to the consumer. This is an example of a(n) ________.
A) direct marketing channel
B) producer channel
C) indirect marketing channel
D) retailer channel
E) corporate vertical marketing system
Answer:  C
Diff: 1     Page Ref: 341
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-2
79) Joanie Calvert is experiencing a disagreement with intermediaries in the channel over who should do what and for what rewards. Joanie is experiencing ________.
A) channel delusion
B) channel conflict
C) channel disintermediation
D) channel mismanagement
E) channel intermediation
Answer:  B
Diff: 1     Page Ref: 342
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-2


80) When two Taco Bell restaurants have a disagreement over who should be able to sell in quantity at a discount to the local high school band, they are in a ________ conflict.
A) vertical
B) problematic
C) no-win
D) horizontal
E) functional
Answer:  D
Diff: 2     Page Ref: 342
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-2

81) Staples Office Supply opened an online store that created competition with many of its dealers. The corporate office created a ________ conflict.
A) vertical
B) problematic
C) no-win
D) horizontal
E) intermediation
Answer:  A
Diff: 2     Page Ref: 342
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-2
82) Which of the following is an example of horizontal channel conflict?
A) managers of two separate Holiday Inns disagreeing over what constitutes poor service
B) United Airlines competing with Northwest Airlines for customers
C) disgruntled factory workers complaining about a small pay raise
D) the BMW dealership in Fort Wayne complaining that the BMW dealership in Indianapolis is situated too close
E) A and D
Answer:  E
Diff: 3     Page Ref: 342
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-2


83) Which of the following is an example of a manufacturer-sponsored retailer franchise system?
A) fast-food restaurants such as McDonald's and Burger King
B) Starbucks operating within Target stores
C) Ford and its network of independent franchised dealers
D) licensed bottlers that bottle and sell Coca-Cola to retailers
E) motels such as Holiday Inn and Ramada Inn
Answer:  C
Diff: 3     Page Ref: 345
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-2

84) When McDonald's offers its products inside of a Wal-Mart store, it is following a ________.
A) conventional distribution channel
B) corporate VMS
C) contractual VMS
D) administered VMS
E) horizontal marketing system
Answer:  C
Diff: 3     Page Ref: 345
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-2

85) Which of the following is an example of a multichannel distribution system?
A) Wal-Mart locating to several countries
B) J. C. Penney's catalog and retail store sales
C) Avon's door-to-door distribution
D) Starbuck's location inside of book stores
E) a hotel providing guest privileges at a health spa across the street
Answer:  B
Diff: 2     Page Ref: 346
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-2

86) Blockbuster offers DVD rentals through its Total Access online rental service and through its bricks-and-mortar stores. This is an example of a(n)________.
A) contractual VMS
B) administered VMS
C) horizontal marketing system
D) conventional distribution channel
E) multichannel distribution system
Answer:  E
Diff: 1     Page Ref: 346
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-2

87) When Netflix began delivering DVDs directly to customers through the mail instead of using a brick-and-mortar system, Netflix was following the trend of ________.
A) indirect marketing
B) disintermediation
C) a franchise system
D) exclusive distribution
E) selective distribution
Answer:  B
Diff: 1     Page Ref: 347
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-2

88) Chewing gum is stocked in many outlets in the same market or community; in fact, it is placed in as many outlets as possible. This is an example of ________ distribution.
A) exclusive
B) selective
C) multichannel
D) intensive
E) disintermediated
Answer:  D
Diff: 2     Page Ref: 351
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-3


89) Which product(s) will most likely be intensively distributed?
A) Olympus digital cameras
B) BMW cars
C) Guess blue jeans
D) Coca Cola
E) Nike running shoes
Answer:  D
Diff: 1     Page Ref: 351
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-3
90) Which product will most likely be exclusively distributed?
A) BMW cars
B) Levi's blue jeans
C) Bazooka bubble gum
D) Prairie Farms yogurt
E) Coca-Cola
Answer:  A
Diff: 1     Page Ref: 351
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-3

91) Tiffany & Co jewelry can only be found in a limited number of intermediaries. This is an example of ________ distribution.
A) exclusive
B) intensive
C) quality
D) high-end
E) independent
Answer:  A
Diff: 2     Page Ref: 351
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-3


92) Why is it important for manufacturers to be sensitive to the needs of their dealers?
A) Dealers have few legal rights.
B) Poorly performing dealers will be replaced.
C) Dealers fail to provide value to the entire channel system.
D) Dealer support is essential to creating value for the customer.
E) Manufacturers cannot break commitments to channel.
Answer:  D
Diff: 2     Page Ref: 353
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-4
93) Caterpillar, the famous heavy equipment manufacturer, has a reputation for working in harmony with its worldwide distribution network of independent dealers. Caterpillar has shared its successes with its dealers and protected its dealers during difficult economic times. This is an example of ________.
A) intensive distribution
B) integrated logistics management
C) disintermediation
D) third-party logistics
E) partner relationship management
Answer:  E
Diff: 2     Page Ref: 353
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-4

94) Max Samuelson is a high-end fashion designer who markets his clothing lines through a limited number of highly reputable retailers. Max uses ________.
A) exclusive distribution
B) exclusive dealing
C) exclusive territorial agreements
D) full-line forcing
E) tying agreements
Answer:  A
Diff: 3     Page Ref: 356
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-4


95) Jewels for the Rich and Famous sells very exclusive jewelry with a minimum price of $25,000 to customers around the world. Speed of delivery to distant markets is a must. Management should consider using ________ as its main carrier.
A) rail
B) air
C) truck
D) the Internet
E) water
Answer:  B
Diff: 2     Page Ref: 360
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-5
96) Grayville Rock and Gravel, located in a seaport town, sells rock, gravel, and sand to local markets. It has just been awarded a contract with a company 500 miles down the coast. Management should consider switching from truck to ________ transport.
A) water
B) rail
C) pipeline
D) air
E) none of the above
Answer:  A
Diff: 2     Page Ref: 360
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-5

97) When Home Depot allows key suppliers to use its stores as a testing ground for new merchandising programs, it is implementing a ________.
A) shared services
B) partnership management
C) shared projects
D) third-party project
E) cross-functional, cross-company team
Answer:  C
Diff: 2     Page Ref: 362
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-5


98) UPS Supply Chain Solutions, which handles all of its clients' "grunt work" associated with logistics, is an example of ________.
A) integrated logistics management
B) a distribution center
C) selective distribution
D) a third-party logistics provider
E) a cross-functional, cross-company team
Answer:  D
Diff: 2     Page Ref: 362
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-5
Refer to the scenario below to answer the following questions.

    Miller Meat Company contracts with several Midwestern farmers to raise beef and pork for its meat processing center. To guarantee freshness, Miller Meat Company relies on a vast distribution network. For delivery to local grocers in Indiana, Miller Meat uses its own fleet of refrigerated trucks; delivery to these Indiana grocers constitutes 65 percent of Miller Meat's business. For deliveries in Illinois, Wisconsin, and points directly west of the Mississippi River, Miller Meat Company contracts with a refrigerated fleet that specializes in expediting smaller shipments. For faster delivery during peak times, Miller Meat Company often uses its own trucks to deliver to the expedited fleet's consolidation point from its distribution warehouse in Indiana. During the holiday season, however, several specialty distributors contract with Miller Meat Company to package specialty meats in gift boxes, then ship them directly to the recipients. For these specialty shipments within Indiana, Illinois, and Wisconsin, Miller uses its normal delivery mode. For all other specialty shipments, Miller ships from its distribution warehouse via air, then contracts with expedited carriers in various cities to deliver to the recipients.

99) Which of the following is one of Miller Meat Company's upstream partners?
A) local grocers in Indiana who sell the company's products
B) Midwestern farmers who raise beef and pork for the meat processing center
C) the refrigerated fleet that expedites small shipments
D) air carriers that take Miller's specialty shipments
E) recipients of Miller's gift boxes
Answer:  B
Diff: 1     Page Ref: 337
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-1


100) In using air transportation and then expedited truck carriers to deliver specialty items to customers outside of a designated delivery range, Miller Meats is using ________.
A) all of its supply chain
B) all of its value delivery network
C) indirect marketing channels
D) intermodal transportation
E) a vertical marketing system
Answer:  D
Diff: 2     Page Ref: 360
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-5

101) Producing a product or service and making it available to buyers requires building relationships not just with customers, but also with key suppliers and resellers in the company's supply chain.
Answer:  TRUE
Diff: 1     Page Ref: 337
Skill:  Concept
Objective:  12-1
102) The term supply chain may be too limited because it takes a make-and-sell view of the business.
Answer:  TRUE
Diff: 2     Page Ref: 338
Skill:  Concept
Objective:  12-1

103) In creating customer value, it is more important for a company to build relationships with downstream channel partners than with upstream supplier partners.
Answer:  FALSE
Diff: 2     Page Ref: 338
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-1

104) With the success of the Internet, few producers sell through intermediaries today.
Answer:  FALSE
Diff: 1     Page Ref: 339
AACSB:  Use of IT
Skill:  Concept
Objective:  12-1


105) Imaginative distribution systems can be used to gain a competitive advantage.
Answer:  TRUE
Diff: 1     Page Ref: 339
Skill:  Concept
Objective:  12-1

106) A major role played by intermediaries is to buy large quantities of products from many producers and break them down into the smaller quantities and broader assortments wanted by consumers.
Answer:  TRUE
Diff: 2     Page Ref: 340
Skill:  Concept
Objective:  12-1

107) Members of the marketing channel may help a company complete transactions by performing key functions such as promotion and negotiation.
Answer:  TRUE
Diff: 2     Page Ref: 340
AACSB:  Communication
Skill:  Concept
Objective:  12-1

108) It is safe to say that distribution channels are fairly simple behavioral systems in which people and companies interact to accomplish individual company and channel goals.
Answer:  FALSE
Diff: 2     Page Ref: 342
Skill:  Concept
Objective:  12-2
109) Judy Smith is the manager of the local McDonald's franchise in Carterville. Recently the home office did not let her participate in co-op advertising like the other McDonald's in her district. Now she is irritated and demands fairness. This is an example of horizontal conflict.
Answer:  FALSE
Diff: 3     Page Ref: 342
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-2

110) In a conventional distribution channel, no channel member has much control over the other members, and no formal means exists for assigning roles and resolving channel conflict.
Answer:  TRUE
Diff: 2     Page Ref: 343
Skill:  Concept
Objective:  12-3


111) When Sherwin Williams Paint Company has single ownership of integrated, successive stages of production and distribution, it has created a corporate VMS.
Answer:  FALSE
Diff: 3     Page Ref: 344
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-3

112) When the NewWay Dry Cleaners and The Easy Laundromat in your hometown join forces to follow a new marketing opportunity, they are forming a horizontal marketing system.
Answer:  TRUE
Diff: 2     Page Ref: 345
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-3

113) Always Fresh Produce Company has a route selling to more than 100 groceries, schools, and restaurants at wholesale prices. Last week the owners opened up a walk-in discounted consumer produce outlet. Always is now using a multichannel distribution system.
Answer:  TRUE
Diff: 2     Page Ref: 346
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-3

114) Disintermediation as a trend is on the rise in U.S. business.
Answer:  TRUE
Diff: 1     Page Ref: 347
Skill:  Concept
Objective:  12-3
115) Disintermediation has occurred when an online marketer takes business away from traditional brick-and-mortar retailers.
Answer:  TRUE
Diff: 2     Page Ref: 347
Skill:  Concept
Objective:  12-3

116) The faster the delivery, the greater the assortment provided, and the more add-on services supplied, the more the channel's service level is restricted.
Answer:  FALSE
Diff: 2     Page Ref: 349
Skill:  Concept
Objective:  12-3


117) Intensive distribution seeks many outlets in a market, while selective distribution seeks only one outlet in a given market area.
Answer:  FALSE
Diff: 2     Page Ref: 351
Skill:  Concept
Objective:  12-3

118) The producer and intermediaries need to agree on the terms and responsibilities of each member, including price policies, conditions of sale, territorial rights, and specific services to be performed by each party.
Answer:  TRUE
Diff: 2     Page Ref: 351
Skill:  Concept
Objective:  12-3

119) Generally speaking, a company's marketing channel objectives are influenced by the level of customer service sought, the nature of the company, its products, its marketing intermediaries, its competitors, and the environment.
Answer:  TRUE
Diff: 2     Page Ref: 350
Skill:  Concept
Objective:  12-3

120) Distribution systems are relatively consistent from county to country, making it easy for international marketers to design channels.
Answer:  FALSE
Diff: 2     Page Ref: 352
AACSB:  Multicultural and Diversity
Skill:  Concept
Objective:  12-3
121) Under the strategy of exclusive distribution, a seller allows only certain retail outlets to carry its products.
Answer:  TRUE
Diff: 2     Page Ref: 356
Skill:  Concept
Objective:  12-4

122) Some major corporations such as Procter & Gamble and General Motors have developed logistics systems that both maximize customer service and minimize distribution costs.
Answer:  FALSE
Diff: 3     Page Ref: 357
Skill:  Concept
Objective:  12-5


123) The key to managing inventory is to balance the costs and benefits of holding larger inventories with the costs and benefits of holding less.
Answer:  TRUE
Diff: 3     Page Ref: 359
Skill:  Concept
Objective:  12-5

124) When shipping large amounts of bulk products such as forest products, coal, sand, or rock over long distances, a company should choose large trucks because of their low cost per ton shipped.
Answer:  FALSE
Diff: 1     Page Ref: 360
AACSB:  Analytic Skills
Skill:  Concept
Objective:  12-5

125) Integrated logistics management aims to provide better customer service and trim distribution costs through teamwork, both inside the company and among all the marketing channel organizations.
Answer:  TRUE
Diff: 2     Page Ref: 361
AACSB:  Communication
Skill:  Concept
Objective:  12-5
126) Explain why "value delivery network" is a more relevant expression to use than the terms supply chain and demand chain.
Answer:  Supply chain takes a make-and-sell view of the business, using materials and other inputs as the starting point for market planning instead of the needs of target customers. Demand chain takes a sense-and-respond view, starting with the needs of target customers and planning a chain of resources and activities with the goal of creating customer value. However, a demand chain is a step-by-step, linear view of purchase-production-consumption activities. This does not allow for the flexibility made possible by the Internet and other technologies. Value delivery network is more appropriate because it is made up of the company, suppliers, distributors, and ultimately customers who partner with each other to improve the performance of the entire system.
Diff: 1     Page Ref: 338
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-1


127) How do channel members add value to a marketing system?
Answer:  Intermediaries reduce the amount of work that must be done by both producers and consumers. They transform the assortment of products made by producers into the assortment wanted by consumers. They buy large quantities from many producers and break them down into the smaller quantities and broader assortments wanted by consumers. Intermediaries help to match supply and demand. Channel members add value by bridging the major time, place, and possession gaps that separate goods and services from those who would use them.
Diff: 2     Page Ref: 339
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-1

128) What are the eight key functions that members of the marketing channel perform?
Answer:  Some help to complete transactions by gathering and distributing information, developing and spreading promotions, contacting prospective buyers, matching and shaping the offer to the buyer's needs, and negotiating price and other terms. Others help to fulfill the completed transactions through physical distribution, financing, and risk taking.
Diff: 2     Page Ref: 340
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-1
129) Compare and contrast a conventional distribution channel with a vertical marketing system (VMS).
Answer:  A conventional distribution channel consists of one or more independent producers, wholesalers, and retailers. Each is a separate business seeking to maximize its own profits, even at the expense of the system as a whole. No channel member has much control over the other members, and no formal means exists for assigning roles and resolving channel conflict. On the other hand, a vertical marketing system is a unified system made up of producers, wholesalers, and retailers. While members of a conventional distribution channel seek to maximize their own profits, members of a vertical marketing system all cooperate because either one member owns the others, one has contracts with the others, or one wields a more power than the others.
Diff: 3     Page Ref: 344
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-2

130) Why are multichannel distribution systems gaining popularity today?
Answer:  Multichannel distribution systems exist when a single firm sets up two or more marketing channels to reach one or more customer segments. Such a system offers advantages to firms facing large and complex markets. It allows the firms to expand sales and market coverage. It allows firms to tailor their products and services to the specific needs of diverse customer segments. Larger bottom-line profits may occur.
Diff: 2     Page Ref: 346
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-2
131) How have changes in technology and the growth of online marketing affected the design of marketing channels?
Answer:  Changes in technology and the growth of online marketing have increased disintermediation, which is the cutting out of marketing channel intermediaries by product or service producers, or the displacement of traditional intermediaries with radically new types. In many industries, traditional intermediaries are dropping by the wayside. For example, many airlines now sell directly to final buyers, cutting retailers and sales agents from their marketing channels. Online marketers take business from traditional brick-and-mortar retailers.
Diff: 2     Page Ref: 347
AACSB:  Use of IT
Skill:  Application
Objective:  12-2
132) Distinguish between the three distribution strategies.
Answer:  Producers of convenience products and common raw materials typically seek intensive distribution as a strategy to stock their products in as many outlets as possible. The goods are available where and when consumers want them, such as chewing gum. Selective distribution is used when selling to more than one but fewer than all of the intermediaries who are willing to carry a company's products in a given market. Examples are name-brand blue jeans and computers. Exclusive distribution is used when the producer wants to stock its products with only one or a few dealers in an area. Examples are expensive cars and prestige clothing.
Diff: 1     Page Ref: 351
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-3

133) Explain how companies select, motivate, and evaluate channel members.
Answer:  When selecting intermediaries, the company should evaluate each channel member's qualifications and select those who best fit its channel objectives. The company should use economic criteria, control issues, and adaptive criteria to analyze each possible channel member. Once selected, channel members must be continuously motivated to do their best. The company must sell not only through the intermediaries but also to and with them. It should work to forge long-term partnerships with channel partners to create a marketing system that meets the needs of both the manufacturer and the partners. The company must also regularly check channel member performance against established performance standards, rewarding intermediaries who are performing well and assisting or replacing weaker ones.
Diff: 2     Page Ref: 352
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-4


134) Discuss how public policy affects distribution decisions.
Answer:  For the most part, companies are legally free to develop whatever channel arrangement suits them, as long as they do not substantially lessen competition or tend to create a monopoly, and as long as both parties enter into the agreement voluntarily. Exclusive territorial agreements in which a producer attempts to keep a dealer from selling outside of a designated territory have become a major legal issue. Producers are free to select their dealers, but they must have legitimate cause to terminate a relationship with a dealer.
Diff: 3     Page Ref: 355-356
AACSB:  Ethical Reasoning
Skill:  Application
Objective:  12-4
135) Why are more and more companies turning to third-party logistics providers (3PLs)?
Answer:  A third-party logistics provider is an independent company that performs any or all of the functions required to get a producer's product to market, helping clients to tighten up sluggish, overstuffed supply chains, slash inventories, and get products to customers more quickly and reliably. Companies use third-party logistics providers because getting the product to market is the main focus of 3PLs, so they can often do it more efficiently and at a lower cost. Second, outsourcing logistics frees a company to focus more intensely on its core business. Finally, integrated logistics companies understand increasingly complex logistics environments. For example, third-party logistics partners can be especially helpful to companies attempting to expand their global market coverage.
Diff: 3     Page Ref: 362
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-5

136) What is the role of marketing intermediaries?
Answer:  The role of marketing intermediaries is to transform the assortments of products made by producers into the assortments wanted by consumers.
Diff: 1     Page Ref: 340
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-1

137) Give an example of horizontal conflict.
Answer:  This type of conflict occurs among firms at the same level of the channel; an example would be two Chevrolet dealers in the St. Louis area that complain that each is being undercut by the other.
Diff: 1     Page Ref: 342
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-2


138) Give an example of vertical conflict.
Answer:  This type of conflict occurs between different levels of the same channel; an example would be conflict created by a manufacturer toward its dealers when deciding to open an online operation.
Diff: 1     Page Ref: 342
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-2

139) Explain channel power in a conventional distribution channel.
Answer:  No channel member has much control over the other members, and no formal means exists for assigning roles and resolving channel conflict.
Diff: 2     Page Ref: 344
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-2
140) Explain channel power in a vertical marketing system.
Answer:  One channel member owns the others, has contracts with them, or wields so much power that they must all cooperate.
Diff: 2     Page Ref: 344
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-2

141) How can a firm benefit from involvement in a contractual VMS?
Answer:  A contractual VMS consists of independent firms at different levels of production and distribution that join together through contracts to obtain more economies or sales impact than each could achieve alone.
Diff: 3     Page Ref: 345
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-2

142) How can a firm benefit from participating in a horizontal marketing system?
Answer:  Two or more companies at one level join together to follow a new marketing opportunity; by working together, companies can combine their financial, production, or marketing resources to accomplish more than any one company could alone.
Diff: 3     Page Ref: 345
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-2


143) Give two examples of multichannel distribution systems.
Answer:  Students' answers will vary. Examples will include J. C. Penney's catalog distribution option and the retail store locations as well as Avon's door-to-door distribution and over-the-counter distribution options.
Diff: 2     Page Ref: 346
AACSB:  Reflective Thinking
Skill:  Application
Objective:  12-2

144) What types of products are intensively distributed?
Answer:  These products must be available where and when consumers want them; examples include chewing gum, soft drinks, toothpaste, and candy.
Diff: 1     Page Ref: 351
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-3

145) What types of products are exclusively distributed?
Answer:  Exclusive distribution is often used for expensive automobiles and prestige clothing. These products are geographically dispersed.
Diff: 1     Page Ref: 351
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-3
146) What types of products are selectively distributed?
Answer:  With this type of distribution, more than one, but fewer than all, of the intermediaries who are willing to carry a company's products are used. Products include appliances and some name-brand clothing.
Diff: 1     Page Ref: 351
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-3

147) What are two considerations when selecting intermediaries?
Answer:  A company may want to evaluate each channel member's years in business, other lines carried, growth and profit records, cooperativeness, and reputation.
Diff: 3     Page Ref: 353
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-4


148) When would an exclusive dealing contract be legally problematic?
Answer:  An exclusive dealing contract may be illegal if one party has not voluntarily agreed to the contract, or if the arrangement substantially lessens competition or tends to create a monopoly.
Diff: 3     Page Ref: 356
AACSB:  Ethical Reasoning
Skill:  Application
Objective:  12-4

149) How can a company benefit through a just-in-time logistics system?
Answer:  With such systems, producers and retailers carry only small inventories of parts or merchandise, often only enough for a few days of operations. This creates substantial savings in inventory-carrying and handling costs.
Diff: 2     Page Ref: 359
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-5

150) Explain why a firm's suppliers tap into the firm's inventory levels with a vendor-managed inventory system (VMI).
Answer:  Some suppliers might actually be asked to generate orders and arrange deliveries for their customers, based on the customers' inventory levels; in these cases, the suppliers must know their customers' inventory levels.
Diff: 3     Page Ref: 361
AACSB:  Analytic Skills
Skill:  Application
Objective:  12-5
1) ________ includes all the activities involved in selling products or services directly to final consumers for their personal, nonbusiness use.
A) Franchising
B) Retailing
C) Brokering
D) Wholesaling
E) Disintermediation
Answer:  B
Diff: 1     Page Ref: 370
Skill:  Concept
Objective:  13-1

2) In recent years, ________ has/have been growing fast. This includes selling to final consumers through direct mail, catalogs, telephone, and the Internet.
A) specialty stores
B) shopping centers
C) superstores
D) nonstore retailing
E) e-commerce
Answer:  D
Diff: 1     Page Ref: 370
AACSB:  Use of IT
Skill:  Concept
Objective:  13-1

3) ________ is the basis of all discount operations and is typically used by sellers of convenience goods. Retailers offering this level of service require customers to perform their own "locate-compare-select" process in order to save money.
A) Limited-service
B) Self-service
C) Full-service
D) Specialty-service
E) Wholesaling
Answer:  B
Diff: 2     Page Ref: 371
Skill:  Concept
Objective:  13-1

4) ________, such as Sears, provide more sales assistance because they carry more shopping goods about which customers need information. Their increased operating costs result in higher prices.
A) Self-service retailers
B) Full-service retailers
C) Off-price retailers
D) Limited-service retailers
E) Specialty-service retailers
Answer:  D
Diff: 2     Page Ref: 371
Skill:  Concept
Objective:  13-1

5) Which type of stores usually carry more specialty goods for which customers like to be "waited on" and have much higher operating costs, which are passed along to the customer?
A) self-service stores
B) category killer stores
C) full-service stores
D) independent stores
E) specialty-service retailers
Answer:  C
Diff: 2     Page Ref: 372
Skill:  Concept
Objective:  13-1

6) Which of the following retailers likely require the most emphasis on salespeople to assist customers?
A) self-service retailers
B) full-service retailers
C) off-price retailers
D) limited-service retailers
E) megaretailers
Answer:  B
Diff: 2     Page Ref: 372
Skill:  Concept
Objective:  13-1


7) ________ carry narrow product lines with deep assortments within those lines.
A) Chain stores
B) Specialty stores
C) Convenience stores
D) Discount stores
E) Off-price stores
Answer:  B
Diff: 1     Page Ref: 372
Skill:  Concept
Objective:  13-1
8) Specialty stores carry ________ with ________ within them.
A) convenience items; mostly staples
B) narrow product lines; deep assortments
C) narrow product lines; shallow assortments
D) wide product lines; shallow assortments
E) wide product lines; deep assortments
Answer:  B
Diff: 2     Page Ref: 372
Skill:  Concept
Objective:  13-1

9) Which type of store carries a wide variety of product lines and differentiates itself through service, but has been squeezed in recent years between more focused and flexible specialty stores on the one hand and more efficient, lower-priced discounters on the other?
A) chain
B) department
C) factory outlet
D) merchant wholesaler
E) independents
Answer:  B
Diff: 2     Page Ref: 372
Skill:  Concept
Objective:  13-1

10) ________ are facing slow sales growth because of slower population growth, increased competition, and the rapid growth of out-of-home eating.
A) Convenience stores
B) Department stores
C) Chain stores
D) Supermarkets
E) Hypermarkets
Answer:  D
Diff: 2     Page Ref: 372
Skill:  Concept
Objective:  13-1

11) Which type of retailer tends to be the most frequently shopped?
A) convenience stores
B) department stores
C) superstores
D) supermarkets
E) off-price retailers
Answer:  D
Diff: 2     Page Ref: 372
Skill:  Concept
Objective:  13-1
12) Which type of small store carries a limited line of high-turnover convenience goods and makes most of its revenues from cigarette, beverage, and gasoline sales?
A) convenience
B) chain
C) department
D) supermarket
E) hypermarket
Answer:  A
Diff: 1     Page Ref: 372
Skill:  Concept
Objective:  13-1

13) Which type of store is much larger than regular supermarkets and offers a large assortment of routinely purchased food products, nonfood items, and services?
A) category killer
B) chain
C) factory outlet
D) superstore
E) off-price
Answer:  D
Diff: 1     Page Ref: 373
Skill:  Concept
Objective:  13-1

14) Which type of store carries a deep assortment, has knowledgeable staff, and might actually be viewed as a giant specialty store?
A) category killer
B) chain
C) factory outlet
D) shopping center
E) independent
Answer:  A
Diff: 1     Page Ref: 374
Skill:  Concept
Objective:  13-1

15) Service retailers include all of the following EXCEPT ________.
A) hotels and motels
B) airlines
C) movie theaters
D) bowling alleys
E) convenience stores
Answer:  E
Diff: 2     Page Ref: 374
Skill:  Concept
Objective:  13-1
16) ________ retailers in the United States are growing faster than product retailers.
A) Discount
B) Merchant
C) Service
D) Specialty
E) Off-price
Answer:  C
Diff: 3     Page Ref: 374
Skill:  Concept
Objective:  13-1

17) ________ sell standard merchandise at lower prices by accepting lower margins and selling higher volume.
A) Merchant wholesalers
B) Discount stores
C) Full-service retailers
D) Limited-service retailers
E) Factory outlets
Answer:  B
Diff: 2     Page Ref: 374
Skill:  Concept
Objective:  13-1

18) Early ________ cut expenses by offering few services and operating in warehouse-like facilities in low-rent, heavily traveled districts.
A) chain stores
B) department stores
C) discount stores
D) off-price retailers
E) full-service retailers
Answer:  C
Diff: 2     Page Ref: 374
Skill:  Concept
Objective:  13-1


19) ________ have filled the ultralow-priced, high-volume gap by buying at less-than-regular wholesale prices and charging consumers less than retail.
A) Off-price retailers
B) Discount stores
C) Convenience stores
D) Chain stores
E) Limited-service retailers
Answer:  A
Diff: 1     Page Ref: 374
Skill:  Concept
Objective:  13-1
20) Which of the following is NOT one of the main types of off-price retailers?
A) independents
B) factory outlets
C) warehouse clubs
D) category killers
E) membership warehouses
Answer:  D
Diff: 2     Page Ref: 374
Skill:  Concept
Objective:  13-1

21) ________, which buy at less-than-regular wholesale prices and charge consumers less than retail, are independently owned and run or are divisions of larger retail corporations.
A) Discount stores
B) Warehouse clubs
C) Superstores
D) Independent off-price retailers
E) Full-service retailers
Answer:  D
Diff: 2     Page Ref: 374
Skill:  Concept
Objective:  13-1

22) ________ are sometimes several stores grouped together. These stores offer prices as low as 50 percent below retail on a wide range of mostly surplus, discounted, or irregular items.
A) Category killers
B) Factory outlets
C) Specialty stores
D) Superstores
E) Power centers
Answer:  B
Diff: 1     Page Ref: 374
Skill:  Concept
Objective:  13-1

23) Manufacturers send last year's merchandise and seconds to ________, while they send new merchandise to department stores.
A) convenience stores
B) chain stores
C) factory outlets
D) retailers
E) power centers
Answer:  C
Diff: 2     Page Ref: 376
Skill:  Concept
Objective:  13-1
24) ________ operate in warehouse-like facilities, sell a limited selection of items, and offer few frills. Customers pay annual membership fees and are able to purchase goods at deep discounts.
A) Warehouse clubs
B) Independent off-price retailers
C) Factory outlets
D) Discount stores
E) Superstores
Answer:  A
Diff: 1     Page Ref: 376
Skill:  Concept
Objective:  13-1

25) ________ are two or more outlets that are commonly owned and controlled.
A) Chain stores
B) Convenience stores
C) Off-price retailers
D) Independent off-price retailers
E) Power centers
Answer:  A
Diff: 1     Page Ref: 376
Skill:  Concept
Objective:  13-1

26) As a result of the great success of corporate chains, many independent stores chose to band together in either a voluntary chain or a(n) ________.
A) factory outlet
B) retailer cooperative
C) independent off-price retailer
D) warehouse club
E) convenience cooperative
Answer:  B
Diff: 2     Page Ref: 376
Skill:  Concept
Objective:  13-1

27) The main difference between ________ organizations and other contractual systems is that these systems are normally based on some unique product or service.
A) voluntary chain
B) retailer cooperative
C) franchise
D) agent
E) warehouse-club
Answer:  C
Diff: 2     Page Ref: 377
Skill:  Concept
Objective:  13-1
28) Merchandising ________ are corporations that combine several different retailing forms under central ownership.
A) conglomerates
B) agents
C) brokers
D) franchises
E) independents
Answer:  A
Diff: 2     Page Ref: 377
Skill:  Concept
Objective:  13-1

29) Retail assortments are looking more and more alike because ________.
A) customers today are more focused on service differentiation
B) national-brand manufacturers have placed their products almost everywhere
C) market segmentation has proved ineffective
D) stores are clustered together to increase their customer pulling power
E) more stores are practicing "experiential retailing"
Answer:  B
Diff: 3     Page Ref: 378
Skill:  Concept
Objective:  13-2

30) Until retailers ________ and ________ their markets, they cannot make consistent decisions about product assortment, services, pricing, advertising, store décor, or any of the other decisions that must support their positions.
A) compete with; position
B) target; compete with
C) define; profile
D) limit; serve
E) divest; eliminate
Answer:  C
Diff: 3     Page Ref: 378
Skill:  Concept
Objective:  13-2
31) Service differentiation among retailers has ________.
A) increased
B) decreased
C) stayed the same
D) franchised
E) tripled
Answer:  B
Diff: 2     Page Ref: 378
Skill:  Concept
Objective:  13-2
32) A retailer may fail because it tries to provide "something for everyone" and ends up satisfying no market well. Successful retailers ________ their target markets well and position themselves strongly.
A) increase
B) franchise
C) wholesale
D) define
E) position
Answer:  D
Diff: 2     Page Ref: 379
Skill:  Concept
Objective:  13-2

33) A retailer's ________ should differentiate the retailer while matching target shoppers' expectations. One strategy is to offer merchandise that no other competitor carries.
A) agent
B) broker
C) product assortment
D) environment
E) distribution strategy
Answer:  C
Diff: 2     Page Ref: 380
Skill:  Concept
Objective:  13-2

34) While all retailers would like to achieve ________ while charging ________, the two seldom happen together.
A) low volume; high markups
B) low volume; low markups
C) high volume; high markups
D) high volume; low markups
E) high volume; cut-rate markups
Answer:  C
Diff: 2     Page Ref: 381
Skill:  Concept
Objective:  13-2
35) In-store demonstrations, displays, contests, and visiting celebrities are examples of ________.
A) franchises
B) sales promotions
C) agent promotions
D) broker promotions
E) product life-cycling
Answer:  B
Diff: 2     Page Ref: 381
AACSB:  Communication
Skill:  Concept
Objective:  13-2
36) Press conferences and speeches, store openings, special events, newsletters, magazines, and public service activities are examples of ways retailers use ________.
A) public relations
B) sales promotions
C) personal selling
D) the wheel-of-retailing concept
E) retail convergence
Answer:  A
Diff: 2     Page Ref: 381
AACSB:  Communication
Skill:  Concept
Objective:  13-2

37) Of the following, what would most retailers consider to be the most important factor in retailing success?
A) fair prices
B) good atmosphere
C) helpful employees
D) location
E) service
Answer:  D
Diff: 3     Page Ref: 382
Skill:  Concept
Objective:  13-2


38) Why do stores cluster together?
A) to decrease competition
B) to increase their customer pulling power
C) to take advantage of tax breaks
D) to create retailer cooperatives
E) to standardize the service mix
Answer:  B
Diff: 2     Page Ref: 382
Skill:  Concept
Objective:  13-2

39) ________ were the main form of retail cluster until the 1950s.
A) Department stores
B) Discount stores
C) Independent off-price retailers
D) Central business districts
E) Independent stores
Answer:  D
Diff: 3     Page Ref: 382
Skill:  Concept
Objective:  13-2
40) A ________ is a group of retail businesses planned, developed, owned, and managed as a unit.
A) merchant wholesaler
B) franchise
C) shopping center
D) supermarket
E) hypermarket
Answer:  C
Diff: 2     Page Ref: 383
Skill:  Concept
Objective:  13-2

41) A ________ contains from 40 to 200 stores, is like a covered mini-downtown, and attracts customers from a wide area.
A) community shopping center
B) neighborhood shopping center
C) strip mall
D) regional shopping center
E) power center
Answer:  D
Diff: 2     Page Ref: 383
Skill:  Concept
Objective:  13-2


42) A ________ contains between 15 and 40 retail stores, including a department or variety store, a supermarket, specialty stores, professional offices, and sometimes a bank.
A) community shopping center
B) neighborhood shopping center
C) strip mall
D) regional shopping center
E) power center
Answer:  A
Diff: 2     Page Ref: 383
Skill:  Concept
Objective:  13-2

43) Most shopping centers are ________ containing between 5 and 15 stores; they are close and convenient for consumers.
A) community shopping centers
B) power centers
C) strip malls
D) lifestyle centers
E) factory outlets
Answer:  C
Diff: 2     Page Ref: 383
Skill:  Concept
Objective:  13-2
44) Today's trend in retail clusters is toward ________, huge unenclosed shopping centers consisting of a long strip of retail stores, including at least one large, freestanding anchor store like Wal-Mart. Each store has its own entrance with parking directly in front for shoppers who wish to visit only one store.
A) shopping malls
B) power centers
C) superstores
D) chain stores
E) regional shopping centers
Answer:  B
Diff: 2     Page Ref: 384
Skill:  Concept
Objective:  13-2


45) A ________ is a smaller mall with upscale stores, convenient locations, and expensive atmosphere. It is typically located near affluent residential neighborhoods.
A) regional shopping center
B) lifestyle center
C) community shopping center
D) franchise
E) power center
Answer:  B
Diff: 2     Page Ref: 384
Skill:  Concept
Objective:  13-2

46) The original warehouse store chain, ________, began in 1976.
A) Sam's Club
B) Price Club
C) T G & Y
D) Ben Franklin's
E) Costco
Answer:  B
Diff: 3     Page Ref: 384
Skill:  Concept
Objective:  13-3

47) According to the ________ concept, new retailing forms often begin as low-margin, low-price, low-status operations to challenge established retailers, then become successful, and eventually take the place of the established retailers they had challenged.
A) agent
B) broker
C) wheel-of-retailing
D) warehousing
E) product life cycle
Answer:  C
Diff: 2     Page Ref: 384-385
Skill:  Concept
Objective:  13-3
48) Mail-order, phone, and online shopping are all examples of ________.
A) the wheel-of-retailing concept
B) nonstore retailing
C) off-price retailing
D) full-service retailing
E) wholesaling
Answer:  B
Diff: 2     Page Ref: 385
AACSB:  Use of IT
Skill:  Concept
Objective:  13-3
49) Which of the following has NOT contributed to the growth of online business?
A) easier-to-use Web sites
B) more interesting and attractive Web sites
C) concerns about online privacy and security
D) improved online service
E) increasingly sophisticated search engines
Answer:  C
Diff: 2     Page Ref: 385
AACSB:  Use of IT
Skill:  Concept
Objective:  13-3

50) More growth in online retailing is expected from ________ retailers than other retail types.
A) click-and-brick
B) click-only
C) brick-and-mortar
D) independent
E) franchised
Answer:  A
Diff: 2     Page Ref: 385
AACSB:  Use of IT
Skill:  Concept
Objective:  13-3

51) The merging of consumers, products, prices, and retailers is called ________.
A) retail conglomeration
B) consumer convergence
C) price merging
D) retail convergence
E) retail clustering
Answer:  D
Diff: 2     Page Ref: 386
Skill:  Concept
Objective:  13-3
52) Convergence means greater ________ for retailers and greater difficulty in ________ offerings.
A) differentiating; pricing
B) sales; differentiating
C) profit margins; sales
D) competition; differentiating
E) branding; differentiating
Answer:  D
Diff: 3     Page Ref: 386
Skill:  Concept
Objective:  13-3

53) The rise of huge mass merchandisers and specialty superstores, along with retail mergers and acquisitions, has created a core group of very large and very powerful ________.
A) category killers
B) franchises
C) superpower megaretailers
D) power centers
E) lifestyle centers
Answer:  C
Diff: 2     Page Ref: 386
Skill:  Concept
Objective:  13-3

54) Retail convergence is a merging of all of the following EXCEPT ________.
A) consumers
B) employees
C) products
D) prices
E) retailers
Answer:  B
Diff: 2     Page Ref: 386
Skill:  Concept
Objective:  13-3

55) Touch-screen kiosks, customer-loyalty cards, handheld shopping assistants, and self-scanning checkout systems are all examples of how retailers use technology to ________.
A) maintain inventory costs
B) send information between stores
C) meet consumers' expectations
D) produce more accurate forecasts
E) interact with suppliers
Answer:  C
Diff: 3     Page Ref: 387
AACSB:  Use of IT
Skill:  Concept
Objective:  13-3
56) Most ________ retailers are significantly behind ________ retailers in global expansion.
A) African; Peruvian
B) European; American
C) American; European and Asian
D) Asian; American
E) Asian; African
Answer:  C
Diff: 3     Page Ref: 388
AACSB:  Multicultural and Diversity
Skill:  Concept
Objective:  13-3
57) ________, the world's second largest retailer after Wal-Mart, has embarked on an aggressive mission to extend its role as a leading international retailer.
A) McDonald's
B) Target
C) Carrefour
D) Ikea
E) Costco
Answer:  C
Diff: 3     Page Ref: 388
AACSB:  Multicultural and Diversity
Skill:  Concept
Objective:  13-3

58) ________ includes all activities involved in selling goods and services to those buying for resale or business use.
A) Wholesaling
B) Retailing
C) Franchising
D) Discounting
E) Disintermediation
Answer:  A
Diff: 1     Page Ref: 389
Skill:  Concept
Objective:  13-4

59) ________ buy mostly from producers and sell to retailers and industrial consumers.
A) Independents
B) Factory outlets
C) Wholesalers
D) Discount stores
E) Megaretailers
Answer:  C
Diff: 2     Page Ref: 389
Skill:  Concept
Objective:  13-4
60) Which wholesaler's channel function is demonstrated when a wholesaler's sales force helps a manufacturer to reach many small customers at a low cost?
A) bulk-breaking
B) selling and promoting
C) buying and assortment building
D) warehousing
E) rackjobbing
Answer:  B
Diff: 2     Page Ref: 390
Skill:  Concept
Objective:  13-4
61) Which of the following is NOT one of a wholesaler's channel functions?
A) financing
B) risk bearing
C) providing market information
D) off-price retailing
E) bulk-breaking
Answer:  D
Diff: 3     Page Ref: 390
Skill:  Concept
Objective:  13-4

62) Which wholesaler's channel function is demonstrated when a wholesaler reduces inventory holding costs and risks to suppliers and customers?
A) financing
B) transporting
C) buying and assortment building
D) warehousing
E) bulk breaking
Answer:  D
Diff: 3     Page Ref: 390
Skill:  Concept
Objective:  13-4

63) Which wholesaler's channel function is demonstrated when a buyer receives quicker delivery because wholesalers are located closer than producers?
A) financing
B) transportation
C) buying and assortment building
D) warehousing
E) risk bearing
Answer:  D
Diff: 2     Page Ref: 390
Skill:  Concept
Objective:  13-4
64) Which of the following is NOT one of the major classifications of wholesalers?
A) merchant wholesalers
B) agents
C) manufacturers' sales branches and offices
D) specialty wholesalers
E) brokers
Answer:  D
Diff: 2     Page Ref: 390
Skill:  Concept
Objective:  13-4


65) ________ are the largest group of wholesalers. The group can be divided into the two broad types of full-service and limited-service.
A) Brokers
B) Manufacturer sellers
C) Agents
D) Merchant wholesalers
E) Specialty wholesalers
Answer:  D
Diff: 2     Page Ref: 390
Skill:  Concept
Objective:  13-4

66) In order to ________, wholesalers can propose automatic reordering systems, set up management-training and advising systems, or even sponsor a voluntary chain.
A) define their target markets
B) identify more profitable customers
C) determine product and service assortments
D) build better relationships with customers
E) settle on pricing
Answer:  D
Diff: 2     Page Ref: 392
AACSB:  Communication
Skill:  Concept
Objective:  13-4

67) ________ and ________ do not take title to goods, and they perform only a few channel functions.
A) Full-service wholesalers; limited-service wholesalers
B) Brokers; agents
C) Branches; offices
D) Power centers; independent wholesalers
E) Independent wholesalers; off-price retailers
Answer:  B
Diff: 2     Page Ref: 390
Skill:  Concept
Objective:  13-4

68) A(n) ________ brings buyers and sellers together and assists in negotiations.
A) agent
B) broker
C) retailer
D) wholesaler
E) retail convergence
Answer:  B
Diff: 1     Page Ref: 390
AACSB:  Communication
Skill:  Concept
Objective:  13-4

69) ________, or manufacturers' representatives, represent a buyer or seller on a more permanent basis.
A) Brokers
B) Franchises
C) Agents
D) Retailers
E) Intermediaries
Answer:  C
Diff: 2     Page Ref: 390
AACSB:  Communication
Skill:  Concept
Objective:  13-4

70) Like retailers, wholesalers must ________ their target markets and ________ themselves effectively, for they cannot serve everyone.
A) define; position
B) position; define
C) discount; franchise
D) franchise; discount
E) identify; compare
Answer:  A
Diff: 3     Page Ref: 390
Skill:  Concept
Objective:  13-4


71) Which type of limited-service wholesaler is owned by farmers who assemble farm produce to sell in local markets?
A) cash-and-carry wholesaler
B) drop shipper
C) rack jobber
D) producer's cooperative
E) truck jobber
Answer:  D
Diff: 2     Page Ref: 391
Skill:  Concept
Objective:  13-4
72) Which type of wholesaler sells primarily to manufacturers rather than to retailers?
A) wholesale merchants
B) industrial distributors
C) cash-and-carry wholesalers
D) rack jobbers
E) drop shippers
Answer:  B
Diff: 2     Page Ref: 391
Skill:  Concept
Objective:  13-4

73) Many wholesalers  are not ________-minded; they are behind the times in personal selling, seeing selling as a single salesperson talking to a single customer instead of as a team effort.
A) absent
B) promotion
C) management
D) franchise
E) customer
Answer:  B
Diff: 2     Page Ref: 393
AACSB:  Communication
Skill:  Concept
Objective:  13-4


74) Today's large, progressive wholesalers have successfully reacted to rising costs by ________.
A) relocating in low-rent, low-tax areas
B) investing in information technology systems
C) investing less money in expensive machinery
D) increasing their markup
E) reducing promotional activities
Answer:  B
Diff: 3     Page Ref: 393
AACSB:  Use of IT
Skill:  Concept
Objective:  13-4

75) Savvy wholesalers realize that their only reason for existence comes from increasing the efficiency and effectiveness of the ________.
A) retailer
B) industry
C) distribution system
D) end customer
E) entire marketing channel
Answer:  E
Diff: 2     Page Ref: 393
Skill:  Concept
Objective:  13-4
76) At Neiman Marcus, a first-class department store, customers shop for specialty products and have come to expect assistance in every phase of the shopping process. Neiman Marcus is a ________.
A) self-service retailer
B) limited-service retailer
C) full-service retailer
D) specialty store
E) power center
Answer:  C
Diff: 1     Page Ref: 372
AACSB:  Reflective Thinking
Skill:  Application
Objective:  13-1


77) GameStop sells video games and systems, offering a narrow product line with a deep assortment within that line. GameStop is a ________.
A) department store
B) convenience store
C) category killer
D) specialty store
E) off-price retailer
Answer:  D
Diff: 1     Page Ref: 371
AACSB:  Reflective Thinking
Skill:  Application
Objective:  13-1

78) 7-Eleven, Stop-N-Go, and Circle K, small stores that traditionally have had a primary market of young, blue-collar men, are examples of ________.
A) department stores
B) convenience stores
C) category killers
D) specialty stores
E) supermarkets
Answer:  B
Diff: 1     Page Ref: 372
AACSB:  Reflective Thinking
Skill:  Application
Objective:  13-1
79) Overstock.com, a Web seller that buys furniture, clothing, electronics, and more from a variety of producers at less-than-regular wholesale prices and then charges customers less than retail, is a(n) ________.
A) discount store
B) independent off-price retailer
C) factory outlet
D) wholesale club
E) category killer
Answer:  B
Diff: 2     Page Ref: 374
AACSB:  Reflective Thinking
Skill:  Application
Objective:  13-1


80) A growing number of outlet malls now feature brands such as Coach, Polo Ralph Lauren, Dolce & Gabbana, and Giorgio Armani, causing ________ to protest to the manufacturers of these brands.
A) membership warehouses
B) agents
C) brokers
D) department stores
E) factory outlets
Answer:  D
Diff: 3     Page Ref: 374
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-1

81) McDonald's, Subway, and Pizza Hut are all examples of a ________.
A) voluntary chain
B) retailer cooperative
C) franchise
D) full-service retailer
E) power center
Answer:  C
Diff: 2     Page Ref: 377
AACSB:  Reflective Thinking
Skill:  Application
Objective:  13-1
82) In the battle for "share of stomachs," some supermarkets are cutting costs and attempting to compete more effectively with food discounters, while others are moving upscale, providing improved store environments and higher-quality food offerings. These two different strategies represent differences in ________.
A) positioning
B) place decisions
C) retail convergence
D) retail technology
E) wholesaling
Answer:  A
Diff: 2     Page Ref: 378
AACSB:  Reflective Thinking
Skill:  Application
Objective:  13-2


83) 7-Eleven has recently begun to redesign and restock its stores to offer a more upscale environment and products, such as house wines and fresh foods. 7-Eleven has changed its ________.
A) positioning
B) wholesaler
C) service level
D) size
E) relative prices
Answer:  A
Diff: 2     Page Ref: 378
AACSB:  Reflective Thinking
Skill:  Application
Objective:  13-2

84) Big and Tall Men's Shop carries goods in larger sizes; this allows the store to ________ other stores.
A) compete with
B) differentiate itself from
C) cluster with
D) affect the store atmosphere of
E) converge with
Answer:  B
Diff: 1     Page Ref: 380
AACSB:  Reflective Thinking
Skill:  Application
Objective:  13-2
85) Costco's surprise offerings of seconds, overstocks, and closeoutsoccasionally including diamondsis an example of how a retailer can differentiate itself through ________.
A) product assortment
B) services mix
C) experiential retailing
D) store atmosphere
E) high-low pricing
Answer:  A
Diff: 2     Page Ref: 380
AACSB:  Reflective Thinking
Skill:  Application
Objective:  13-2


86) Home Depot offers "how-to" classes for do-it-yourselfers, featuring instructions on how to complete home improvement projects using products sold at its stores. This is an example of how Home Depot has differentiated itself through its ________.
A) product assortment
B) services mix
C) segmentation
D) atmosphere
E) targeting
Answer:  B
Diff: 2     Page Ref: 380
AACSB:  Reflective Thinking
Skill:  Application
Objective:  13-2

87) Which of the following types of retailers is most likely to practice everyday low pricing (EDLP)?
A) discount stores
B) convenience stores
C) category killers
D) limited-service retailers
E) department stores
Answer:  A
Diff: 2     Page Ref: 381
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-2
88) Which of the following describes a way that Costco and Wal-Mart are similar?
A) Both are warehouse clubs.
B) Both target the same affluent market.
C) Both offer a similar assortment of products.
D) Both use everyday low pricing.
E) Both market a very limited number of generic-priced food, household, and apparel lines.
Answer:  D
Diff: 3     Page Ref: 381
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-2


89) Macy's department stores carry a wide range of product lines, including clothing, jewelry, kitchenware, and home furnishings. Macy's typically charges a relatively high markup, but also holds frequent sales and price promotions, in particular offering discounts to customers who use a Macy's credit card. Macy's uses ________.
A) self-service retailing
B) experiential retailing
C) high-low pricing
D) everyday low pricing
E) retail convergence
Answer:  C
Diff: 2     Page Ref: 381
AACSB:  Reflective Thinking
Skill:  Application
Objective:  13-2

90) Which of the following may be true about shoppers who prefer to shop at "lifestyle centers"?
A) They prefer inexpensive atmospheres.
B) They prefer upscale stores.
C) They prefer out-of-the-way locations.
D) They rarely dine out.
E) They are motivated by deals on last year's merchandise and seconds.
Answer:  B
Diff: 3     Page Ref: 384
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-2
91) Which of the following is most likely the greatest factor in the increasingly short life cycle of new retail forms?
A) changes in technology
B) economic swings
C) import and export regulations
D) stagnating retail convergence
E) global expansion of major retailers
Answer:  A
Diff: 3     Page Ref: 385
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-3


92) Carey David's wholesale company helps retailers train salesclerks, improve store layouts and displays, and set up inventory control systems. The channel function Cary David's is providing is ________.
A) buying and assortment building
B) selling and promotion services
C) risk bearing services
D) marketing information
E) management services and advice
Answer:  E
Diff: 2     Page Ref: 390
AACSB:  Reflective Thinking
Skill:  Application
Objective:  13-4

93) You own an independent store in your neighborhood. You still like to offer fresh seafood in your meat display case. Which type of wholesaler might best serve you?
A) cash-and-carry wholesaler
B) rack jobber
C) drop shipper
D) mail-order wholesaler
E) agents and brokers
Answer:  A
Diff: 3     Page Ref: 391
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-4
94) You own a neighborhood grocery store and would like to have non-food items delivered, priced, displayed and inventoried by a wholesaler. You do not want to purchase title to the goods. Which type of wholesaler best fits your needs?
A) cash-and-carry wholesaler
B) rack jobber
C) drop shipper
D) mail-order wholesaler
E) agents and brokers
Answer:  B
Diff: 3     Page Ref: 391
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-4


95) Kiera Roselli, a general merchandise wholesaler, constantly looks for better ways to meet the needs of her suppliers and target customers. She knows that her business adds value by increasing the efficiency and effectiveness of the ________.
A) retail process
B) entire marketing channel
C) warehousing system
D) target market
E) retail customer
Answer:  B
Diff: 2     Page Ref: 393
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-4

96) SuperValu, traditionally classified as a food wholesaler, has recently started or acquired several retail food chains of its own, including Albertsons, Jewel-Osco, and Cub Foods. Which of the following trends is this an example of?
A) movement toward self-service retailing
B) the growing domination of superstores
C) the decline of the voluntary chain
D) retail convergence
E) the blurring of distinctions between retailers and wholesalers
Answer:  E
Diff: 2     Page Ref: 394
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-4

Refer to the scenario below to answer the following questions.

    In the 1970s, Shipshewana was only a small town with a hardware store, a grain mill, a shoe store, a small restaurant, and a grocery store. Over the next two decades, the small town transformed into an international tourist attraction, attracting thousands of tourists who are intrigued with the lifestyle of Shipshewana's largest populationthe Amish.
    Ben and Mary Miller, having grown up within the Amish faith, decided to capitalize on their town's popularity and their woodworking skills. Their shop, Indiana Wood, began with a small display of handmade hickory rocking chairs, Ben Miller's specialty. But within a few months, the display at Indiana Wood included picnic tables, flower boxes, and small handmade novelty items. No other shop offers the same.
    Mary Miller decorated the shop's display room with authentic Amish décor and eventually hired three Amish friends to sew and embroider napkins and other textiles per customer request. In addition, two women from the Amish community sought permission from the Millers to display home-baked pastries and jellies on Tuesdays and Wednesdays, the town's busiest tourist days, when Shipshewana attracts swarms of visitors to its flea market on the south edge of town.
    "Shipshewana is full of specialty shops," Mary Miller stated. "People don't come here to buy things made in China or Taiwan. They want real, Amish-made goods."

97) Indiana Wood is best classified as a(n) ________ retailer.
A) full-service
B) self-service
C) limited-service
D) discount
E) off-price
Answer:  A
Diff: 1     Page Ref: 372
AACSB:  Reflective Thinking
Skill:  Application
Objective:  13-1

98) Which of the following is most critical to Indiana Wood's success?
A) place
B) price
C) differentiation
D) store atmosphere
E) services mix
Answer:  A
Diff: 2     Page Ref: 382
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-2

99) The Amish decor and shop workers give customers an authentic impression of the pride and skill built into the shop's products. These aspects also contribute to the store's ________.
A) product assortment
B) services mix
C) atmosphere
D) segmentations
E) targeting
Answer:  C
Diff: 2     Page Ref: 380
AACSB:  Reflective Thinking
Skill:  Application
Objective:  13-2

100) Which of the following would be the most logical way for Indiana Wood to expand?
A) establishing an online presence
B) pursuing retail convergence
C) implementing RFID inventory tracking
D) establishing a community-gathering environment in the store
E) joining a producers' cooperative
Answer:  A
Diff: 2     Page Ref: 385
AACSB:  Use of IT
Skill:  Application
Objective:  13-3

101) Wholesaling includes all the activities involved in selling products or services directly to final consumers for their personal, nonbusiness use.
Answer:  FALSE
Diff: 1     Page Ref: 389
Skill:  Concept
Objective:  13-1

102) Full-service retailers, such as Sears or JC Penney, provide more sales assistance because they carry more shopping goods about which customers need information.
Answer:  FALSE
Diff: 3     Page Ref: 372
AACSB:  Reflective Thinking
Skill:  Application
Objective:  13-1


103) Limited-service retailers, such as specialty stores and first-class department stores, employ salespeople who assist customers in every phase of the shopping process.
Answer:  FALSE
Diff: 2     Page Ref: 371
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-1
104) Department stores carry narrow product lines with deep assortments within those lines.
Answer:  FALSE
Diff: 1     Page Ref: 372
Skill:  Concept
Objective:  13-1

105) In recent years, convenience stores have redesigned their stores to closely focus on serving their primary target market made up of young, blue-collar men.
Answer:  FALSE
Diff: 3     Page Ref: 372
Skill:  Concept
Objective:  13-1

106) Category killers carry a deep assortment of a particular product line and have a knowledgeable staff.
Answer:  TRUE
Diff: 2     Page Ref: 374
Skill:  Concept
Objective:  13-1

107) Off-price retailers pay regular wholesale prices for their merchandise but maintain low prices by accepting lower margins and selling higher volume.
Answer:  FALSE
Diff: 3     Page Ref: 374
Skill:  Concept
Objective:  13-1

108) A discount store buys at less-than-regular wholesale prices and charges consumers less than retail.
Answer:  FALSE
Diff: 3     Page Ref: 374
Skill:  Concept
Objective:  13-1

109) Independent off-price retailers may in fact be divisions of larger retail corporations.
Answer:  TRUE
Diff: 2     Page Ref: 374
Skill:  Concept
Objective:  13-1
110) Factory outlets, independent off-price retailers, and warehouse clubs all buy their merchandise in a similar fashion.
Answer:  TRUE
Diff: 3     Page Ref: 374
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-1
111) In warehouse clubs, customers must independently bring large items to the checkout line.
Answer:  TRUE
Diff: 2     Page Ref: 376
Skill:  Concept
Objective:  13-1

112) Chain stores are located near residential areas and are open long hours, seven days a week; they carry a limited line of high-turnover goods.
Answer:  FALSE
Diff: 2     Page Ref: 376
Skill:  Concept
Objective:  13-1

113) In a retailer cooperative, independent retailers contract with each other to set up a central buying operation and conduct joint promotional efforts.
Answer:  FALSE
Diff: 2     Page Ref: 376
Skill:  Concept
Objective:  13-1

114) Merchandising conglomerates are corporations that combine several different retailing forms under different ownership.
Answer:  FALSE
Diff: 2     Page Ref: 377
Skill:  Concept
Objective:  13-1

115) Retailers first must position themselves in a market and then decide how they will define the target customers in these markets.
Answer:  FALSE
Diff: 2     Page Ref: 378
Skill:  Concept
Objective:  13-2


116) To create the right atmosphere, some retailers control every aspect of the consumer's store experience, including what customers hear and smell.
Answer:  TRUE
Diff: 1     Page Ref: 380
Skill:  Concept
Objective:  13-2

117) Power centers are decreasing in number.
Answer:  FALSE
Diff: 2     Page Ref: 384
Skill:  Concept
Objective:  13-2
118) The wheel-of-retailing concept deals mainly with wholesalers rolling out reduced service levels.
Answer:  FALSE
Diff: 3     Page Ref: 384
Skill:  Concept
Objective:  13-3

119) The life cycle of new retail forms is getting longer.
Answer:  FALSE
Diff: 2     Page Ref: 384
Skill:  Concept
Objective:  13-3

120) Unlike mass marketers, niche marketers expect to see continued growth in their online sales.
Answer:  FALSE
Diff: 3     Page Ref: 385
AACSB:  Use of IT
Skill:  Application
Objective:  13-3

121) Retail convergence means greater competition for retailers and greater difficulty in differentiating offerings.
Answer:  TRUE
Diff: 2     Page Ref: 386
Skill:  Concept
Objective:  13-3

122) The number of retailers creating communities for their customers is declining.
Answer:  TRUE
Diff: 1     Page Ref: 388
Skill:  Concept
Objective:  13-3

123) Like retailers, a wholesaler must decide on segmentation and targeting, differentiation and positioning, and the marketing mix.
Answer:  TRUE
Diff: 1     Page Ref: 390
AACSB:  Communication
Skill:  Concept
Objective:  13-4

124) In an automated warehouse, orders are fed directly from the retailer's information system to the wholesaler's, and the items are picked up by mechanical devices and taken to a shipping platform where they are assembled.
Answer:  TRUE
Diff: 2     Page Ref: 393
AACSB:  Use of IT
Skill:  Concept
Objective:  13-4
125) The distinction between large retailers and large wholesalers is becoming blurred.
Answer:  TRUE
Diff: 2     Page Ref: 394
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-4

126) Retail stores can be classified in terms of several characteristics. Name four of these.
Answer:  These include the amount of service they offer, the breadth and depth of their product lines, the relative prices they charge, and how they are organized.
Diff: 2     Page Ref: 371
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-1

127) Compare and contrast specialty stores and convenience stores.
Answer:  Specialty stores carry narrow product lines with deep assortments within those lines. Convenience stores are small stores that carry a limited line of high-turnover convenience goods. The majority of their revenues come from sales of gasoline, cigarettes, and beverages.
Diff: 1     Page Ref: 372
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-1


128) Describe the differences between discount stores and off-price retailers.
Answer:  A discount store buys at regular wholesale prices but sells standard merchandise at lower prices by accepting lower margins and selling higher volume. Off-price retailers buy at less-than-regular wholesale prices and charge consumers less than retail.
Diff: 2     Page Ref: 374
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-1

129) Describe the differences between chain stores and franchises.
Answer:  Chain stores consist of two or more outlets that are commonly owned and controlled. Chain stores have the advantage of buying in larger quantities at lower prices and sharing resources to hire specialists to help with decisions in pricing, promotion, merchandising, inventory, and sales forecasting. Franchises are not commonly owned and controlled; instead, a franchise is a contractual association between a manufacturer, wholesaler, or service organization and an independent businessperson who buys the right to own and operate one or more units within the franchise system.
Diff: 2     Page Ref: 376-77
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-1
130) Explain how Target is able to compete against Wal-Mart.
Answer:  Target has developed distinct targeting and positioning. Target's aim is to stick to low prices, but rises above the discount fray with upmarket style and design and higher-grade service. This upscale alternative really separates it from its mass-merchant peers. It targets the higher income, better-educated clientele in its stores, hence the popular high-status pronunciation of its name as "Tar-shay."
Diff: 3     Page Ref: 379
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-2


131) Three types of shopping centers are regional shopping centers, community shopping centers, and neighborhood shopping centers/strip malls. Describe how they are different from each other.
Answer:  Regional shopping centers are the largest and most dramatic shopping centers. They contain from 40 to more than 200 stores. They are like covered mini-downtowns and attract customers from a wide area. Smaller than regional shopping centers, community shopping centers contain between 15 and 40 stores. They normally contain a branch of a department store or variety store, a supermarket, specialty stores, professional offices, and sometimes a bank. Smaller still are neighborhood shopping centers/strip malls, which generally contain 5 to 15 stores. They are close and convenient for consumers, usually containing a supermarket, a discount store, and several service stores.
Diff: 3     Page Ref: 383
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-2

132) Describe how nonstore retailing has grown in the past decade.
Answer:  Though most purchases are still made in stores, more and more consumers are now shopping using a broad range of nonstore alternatives, including mail-order, television, phone, and online shopping. Easy-to-use Web sites, improved online service, and sophisticated search engines have all helped online business grow at a faster rate than retail buying. All types of retailers now use direct and online channels, with traditional brick-and-mortar retailers selling online, along with online-only retailers such as Amazon.com and eBay. Much of the growth in online sales will go to multichannel retailers who provide service both in stores and online.
Diff: 2     Page Ref: 385
AACSB:  Use of IT
Skill:  Application
Objective:  13-3
133) Why would a producer use wholesalers rather than selling directly to retailers or consumers?
Answer:  Wholesalers add value by performing one or more of the following channel functions: selling and promotion, buying and assortment building, bulk breaking, warehousing, transportation, financing, risk bearing, providing market information, and giving management services and advice. Wholesalers can perform many channel functions more efficiently and effectively than a producer can, allowing the producer to focus its energies on creating its product.
Diff: 1     Page Ref: 390
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-4


134) Explain the marketing decisions facing wholesalers.
Answer:  Wholesalers are faced with the marketing decisions of segmentation and targeting, differentiation and promotion, and the marketing mix. Progressive wholesalers are adapting their services to the needs of target customers and are seeking cost-reducing methods of doing business. Faced with slow growth in their domestic markets and developments such as the North American Free Trade Association, many large wholesalers are also now going global.
Diff: 2     Page Ref: 390
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-4

135) Explain how wholesalers have been able to use technology to cut costs.
Answer:  Many wholesalers have invested in automated warehouses and information technology systems. Delivery time can be cut as orders are fed from the retailer's information system directly into the wholesaler's. Automated warehouses increase efficiencies and drive down costs, as mechanical devices can automatically pick up items and take them to a shipping platform to be assembled. Wholesalers can also use technology for accounting, billing, inventory control, and forecasting. These computerized, automated, and Web-based systems help wholesalers contain the costs of ordering, shipping, and inventory holding.
Diff: 2     Page Ref: 393
AACSB:  Use of IT
Skill:  Application
Objective:  13-4

136) What types of products do specialty stores carry? Give an example of a specialty store.
Answer:  Specialty stores carry narrow product lines with deep assortments within those lines. Examples will vary.
Diff: 1     Page Ref: 372
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-1
137) How have department stores responded to increased competition by specialty stores?
Answer:  Many department stores have added promotional pricing to meet the threat; in addition, they have stepped up the use of store brands and single-brand "designer shops" to compete with specialty stores. Department stores are also trying mail-order, telephone, and Web selling.
Diff: 2     Page Ref: 372
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-1


138) What types of products may be sold through category killers?
Answer:  Category killers are prevalent in a wide range of categories, including books, baby gear, toys, electronics, home improvement products, linens and towels, party goods, sporting goods, and pet supplies.
Diff: 2     Page Ref: 374
AACSB:  Reflective Thinking
Skill:  Application
Objective:  13-1

139) How can discount stores sell merchandise at lower prices?
Answer:  Discount stores sell merchandise at lower prices by accepting lower margins and selling higher volumes.
Diff: 2     Page Ref: 374
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-1

140) What are three advantages a chain has over an independent retailer?
Answer:  A chain may benefit from a regionally or nationally known name, as well as an established promotional campaign. In addition, because a chain is held together by a centralized purchasing or administrative center, there is much bargaining power with suppliers.
Diff: 2     Page Ref: 376
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-1

141) How does a retailer cooperative function?
Answer:  A retailer cooperative is a group of retailers that come together to set up a jointly owned, central wholesale operation, and conduct joint merchandising and promotion efforts. Through a retailer cooperative, independents can match the buying and promotion economies of corporate chains.
Diff: 2     Page Ref: 376
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-1
142) How is a merchandising conglomerate different from a chain store?
Answer:  Merchandising conglomerates are corporations that combine several different retailing forms under central ownership, while chain stores are commonly owned outlets of the same retail form.
Diff: 3     Page Ref: 377
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-1


143) What elements comprise a store's atmosphere?
Answer:  A store's atmosphere includes the sights, sounds, and smells that customers typically associate with the store.
Diff: 1     Page Ref: 381
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-2

144) How do the practices of "high-low" pricing and everyday low pricing differ?
Answer:  With "high-low" pricing, a retailer charges higher prices on an everyday basis but also has frequent sales and other price promotions; with everyday low pricing, a retailer for the most part avoids sales and instead delivers constant, everyday low prices.
Diff: 2     Page Ref: 381
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-2

145) How have shopping centers changed in the past few decades?
Answer:  Central business districts located in downtown areas were the wave in the 1950s; such areas included department stores, specialty stores, banks, and movie theaters. With the move of people to the suburbs came branches of some of the downtown merchants in suburban shopping centers. In recent years, many cities have joined with merchants to try to revive downtown shopping areas by building malls and providing underground parking.
Diff: 3     Page Ref: 382
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-2

146) What attracts shoppers to a power center?
Answer:  Power centers are unenclosed shopping centers that consist of a long strip of retail stores, each store with its own entrance with parking directly in front for shoppers who wish to visit only one store. A power center offers convenience and variety for shoppers.
Diff: 1     Page Ref: 384
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-2
147) Briefly explain the wheel-of-retailing concept.
Answer:  According to this concept, many new types of retailing forms begin as low-margin, low-price, low-status operations. Over time, the retailers' success leads them to upgrade their facilities and offer more services; consequently, their costs increase, forcing them to increase their prices. Eventually, these retailers become prey to the new retailers entering the marketplace.
Diff: 3     Page Ref: 384
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-3

148) What constitutes retail convergence?
Answer:  Retail convergence is the coming together of shoppers, goods, and prices. Customers of all income levels are shopping at the same stores, often for the same goods. Distinctions such as discount store, specialty store, and department store are losing significance.
Diff: 2     Page Ref: 386
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-3

149) How do merchant wholesalers and agents/brokers differ?
Answer:  Merchant wholesalers "take title to" (or own) what it is they sell; agents/brokers merely serve as liaisons, bringing buyers and sellers together.
Diff: 2     Page Ref: 390
AACSB:  Analytic Skills
Skill:  Application
Objective:  13-4

150) How can wholesalers improve their use of promotions?
Answer:  Many wholesalers do not view promotion as a team effort to sell, build, and service major accounts; to address this issue, wholesalers should adopt some of the promotion techniques used by retailers, such as developing an overall promotion strategy and making greater use of supplier promotion materials and programs.
Diff: 3     Page Ref: 393
AACSB:  Communication
Skill:  Application
Objective:  13-4
1) A company's total marketing communications mix consists of a special blend of advertising, sales promotion, public relations, personal selling, and direct-marketing tools that the company uses to communicate customer value and build customer relationships. This is also called ________.
A) direct marketing
B) integrated marketing
C) the promotion mix
D) competitive marketing
E) target marketing
Answer:  C
Diff: 1 Page Ref: 402
AACSB:  Communication
Skill:  Concept
Objective:  14-1

2) The use of short-term incentives to encourage the purchase or sale of a product or service is called ________.
A) direct marketing
B) sales promotions
C) personal selling
D) public relations
E) publicity
Answer:  B
Diff: 2 Page Ref: 402
AACSB:  Communication
Skill:  Concept
Objective:  14-1

3) Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor is called ________.
A) sales promotion
B) advertising
C) direct marketing
D) personal selling
E) public relations
Answer:  B
Diff: 1 Page Ref: 402
AACSB:  Communication
Skill:  Concept
Objective:  14-1

4) Which of the five major promotion tools includes building up a positive corporate image and handling unfavorable stories and events?
A) sales promotion
B) personal selling
C) direct marketing
D) public relations
E) advertising
Answer:  D
Diff: 2 Page Ref: 402
AACSB:  Communication
Skill:  Concept
Objective:  14-1

5) Which of the following is NOT a major category in a company's promotion mix?
A) sales promotion
B) strategic positioning
C) direct marketing
D) public relations
E) advertising
Answer:  B
Diff: 2 Page Ref: 402
AACSB:  Communication
Skill:  Concept
Objective:  14-1

6) Which major promotion category makes use of catalogs, telephone marketing, kiosks, and the Internet?
A) sales promotion
B) direct marketing
C) publicity
D) public relations
E) advertising
Answer:  B
Diff: 2 Page Ref: 402
AACSB:  Communication
Skill:  Concept
Objective:  14-1


7) Which major promotion category makes use of displays, discounts, coupons, and demonstrations?
A) sales promotion
B) direct marketing
C) publicity
D) public relations
E) advertising
Answer:  A
Diff: 2 Page Ref: 403
AACSB:  Communication
Skill:  Concept
Objective:  14-1
8) The promotion mix is the company's primary communication activity; the marketing mix must be coordinated for the greatest communication impact. What is NOT included in the entire marketing mix?
A) product
B) competitor
C) price
D) place
E) promotion
Answer:  B
Diff: 2 Page Ref: 403
Skill:  Concept
Objective:  14-1

9) Mass-media advertising routinely involves a company investing millions or even billions of dollars to reach tens of ________ of customers with a single ad.
A) billions
B) thousands
C) millions
D) hundreds
E) tens
Answer:  C
Diff: 1 Page Ref: 403
AACSB:  Communication
Skill:  Concept
Objective:  14-2


10) Today's consumers do not need to rely on marketer-supplied information about products and services because they can use ________ to seek out a wealth of information.
A) public relations
B) direct marketing
C) the Internet and other technologies
D) mass market media
E) informative advertising
Answer:  C
Diff: 1 Page Ref: 403
AACSB:  Use of IT
Skill:  Concept
Objective:  14-2
11) Which of the following is NOT a factor in the changes occurring in today's marketing communications?
A) Mass markets have fragmented, and marketers are shifting away from mass marketing.
B) Improvements in communication technologies are changing how companies and customers communicate with each other.
C) Companies routinely invest millions of dollars in the mass media.
D) Mass media no longer capture the majority of promotional budgets.
E) Today's consumers are better informed about products and services.
Answer:  D
Diff: 3 Page Ref: 403
AACSB:  Communication
Skill:  Concept
Objective:  14-2

12) Moving away from ________, marketers have been shifting toward highly focused marketing, spawning a new generation of more specialized and highly targeted communications efforts.
A) mass marketing
B) advertising
C) direct marketing
D) pull strategies
E) push strategies
Answer:  A
Diff: 2 Page Ref: 403
AACSB:  Communication
Skill:  Concept
Objective:  14-2


13) Which of the following is NOT an example of a specialized and highly-targeted media that an advertiser might use to reach smaller customer segments?
A) cable television channels
B) e-mail
C) podcasts
D) network television
E) online social networks
Answer:  D
Diff: 2 Page Ref: 404
AACSB:  Use of IT
Skill:  Concept
Objective:  14-2
14) Companies are doing less ________ and more ________ as a result of an explosion of more focused media that better match today's targeting strategies.
A) marketing; media
B) media; sales
C) narrowcasting; broadcasting
D) broadcasting; narrowcasting
E) advertising; word-of-mouth
Answer:  D
Diff: 2 Page Ref: 404
AACSB:  Communication
Skill:  Concept
Objective:  14-2

15) In the "chaos scenario" predicted by some advertising industry experts, the old mass-media communications model will be abandoned in favor of ________.
A) public relations
B) direct marketing
C) push and pull strategies
D) the possibilities of new digital technologies
E) buzz marketing
Answer:  D
Diff: 2 Page Ref: 404
AACSB:  Use of IT
Skill:  Concept
Objective:  14-2


16) All of the following are reasons that marketers are losing confidence in television advertising EXCEPT which one?
A) TV ad spending is rising at a slower rate than online ad spending.
B) TV and other mass media still capture the lion share of promotional budgets.
C) Many viewers are using video on demand and TiVo-like systems.
D) Younger consumers are using different media.
E) TV audience size is on the decline.
Answer:  B
Diff: 3 Page Ref: 404
AACSB:  Communication
Skill:  Concept
Objective:  14-2
17) Companies often fail to integrate their various communications to consumers because ________.
A) historically, consumers have been able to distinguish between message sources
B) advertising departments are reluctant to work with public relations professionals
C) communications often come from different parts of the company
D) personal selling and sales promotion are in direct conflict
E) they have failed to understand the concept of brand contact
Answer:  C
Diff: 2 Page Ref: 405
AACSB:  Communication
Skill:  Concept
Objective:  14-2

18) All too often companies today have failed to ________ their various communications channels, resulting in a hodgepodge of communications to consumers.
A) promote
B) rechannel
C) integrate
D) open
E) verify
Answer:  C
Diff: 1 Page Ref: 405
AACSB:  Communication
Skill:  Concept
Objective:  14-2


19) Consumers today receive commercial messages from a broad range of sources. However, consumers ________ the way marketers do.
A) don't distinguish between message sources
B) are able to differentiate among messages sources
C) don't care about buzz marketing
D) are not able to block out messages
E) block them all out
Answer:  A
Diff: 2 Page Ref: 405
AACSB:  Communication
Skill:  Concept
Objective:  14-2
20) More companies are adopting the concept of ________, which carefully integrates and coordinates the company's many communication channels to deliver a clear, consistent, and compelling message about the organization and its brands.
A) integrated marketing communications
B) integrated personal selling
C) integrated competitive methods
D) nonpersonal communication channels
E) buzz marketing
Answer:  A
Diff: 3 Page Ref: 405
AACSB:  Communication
Skill:  Concept
Objective:  14-2

21) Advertising, sales promotion, personal selling, public relations, and direct marketing are all ________.
A) communications channels that should be integrated under the concept of integrated marketing communications
B) communications channels focused more on narrowcasting than broadcasting
C) promotional tools used for push strategies but not pull strategies
D) promotional tools used for pull strategies but not push strategies
E) promotional tools adapted for use in mass marketing
Answer:  A
Diff: 2 Page Ref: 405
AACSB:  Communication
Skill:  Concept
Objective:  14-2


22) Integrated marketing communications require a company's mass-market advertisements, Web site, e-mail, and personal selling communications to all have ________.
A) equal portions of the advertising budget
B) independent communications directors
C) separate marketing objectives
D) the same target audience
E) the same message, look, and feel
Answer:  E
Diff: 2 Page Ref: 406
AACSB:  Communication
Skill:  Concept
Objective:  14-2
23) To produce better communications consistency, a unified company image, and greater sales impact, some companies employ a(n) ________.
A) advertising agency
B) marketing communications director
C) public relations specialist
D) personal sales force
E) media planner
Answer:  B
Diff: 2 Page Ref: 407
AACSB:  Communication
Skill:  Concept
Objective:  14-2

24) Integrated marketing communications produces better communications ________ and greater ________ impact.
A) consistency; sales
B) sales; consistency
C) marketing; sales
D) variety; production
E) branding; quality
Answer:  A
Diff: 2 Page Ref: 407
AACSB:  Communication
Skill:  Concept
Objective:  14-2


25) Today, marketers are moving toward viewing communications as managing the ________ over time.
A) advertising agency
B) nonpersonal communication channels
C) word-of-mouth influence
D) customer relationship
E) product life cycle
Answer:  D
Diff: 2 Page Ref: 407
AACSB:  Communication
Skill:  Concept
Objective:  14-3
26) Integrated marketing communications involves identifying the target audience and shaping a well-coordinated ________ to elicit the desired audience response.
A) pull strategy
B) push strategy
C) promotional program
D) opinion leader
E) target market
Answer:  C
Diff: 2 Page Ref: 407
AACSB:  Communication
Skill:  Concept
Objective:  14-3

27) Using integrated marketing communications, the communications process should start with ________.
A) advertising strategy
B) the competitive-parity method
C) public relations
D) an audit of all the potential customer touch points
E) publicity
Answer:  D
Diff: 3 Page Ref: 408
AACSB:  Communication
Skill:  Concept
Objective:  14-3


28) Which of the following is NOT one of the four major communication functions?
A) feedback
B) encoding
C) noise
D) response
E) decoding
Answer:  C
Diff: 2 Page Ref: 408
AACSB:  Communication
Skill:  Concept
Objective:  14-3

29) The communication channel a company uses to move its advertising messages from sender to receiver is called the ________.
A) message
B) media
C) encoder
D) communicator
E) feedback loop
Answer:  B
Diff: 2 Page Ref: 408
AACSB:  Communication
Skill:  Concept
Objective:  14-3
30) The receiver assigns meaning to the symbols encoded by a company in its advertisements through a process known as ________.
A) disencoding
B) feedback
C) acknowledgement
D) decoding
E) response
Answer:  D
Diff: 2 Page Ref: 408
AACSB:  Communication
Skill:  Concept
Objective:  14-3


31) In the communication process, the reaction of the receiver after being exposed to a message is called the ________.
A) response
B) answer
C) noise
D) feedback
E) decoding
Answer:  A
Diff: 1 Page Ref: 409
AACSB:  Communication
Skill:  Concept
Objective:  14-3

32) When a customer lets a producer know something about its products or advertising, the customer is providing ________.
A) decoding
B) noise
C) feedback
D) encoding
E) reverse marketing
Answer:  C
Diff: 2 Page Ref: 409
AACSB:  Communication
Skill:  Concept
Objective:  14-3
33) A consumer is reading a magazine with an advertisement, but is distracted from reading the advertisement or its key points. This unplanned static or distortion during the communication process is called ________.
A) noise
B) distraction
C) feedback
D) response
E) decoding
Answer:  A
Diff: 2 Page Ref: 409
AACSB:  Communication
Skill:  Concept
Objective:  14-3


34) In the communication process, the more the sender's field of experience ________  that of the receiver, the more ________ the message is likely to be.
A) varies from; distinguishable
B) overlaps with; effective
C) connects with; ineffective
D) coincides with; creative
E) departs from; direct
Answer:  B
Diff: 3 Page Ref: 409
AACSB:  Communication
Skill:  Concept
Objective:  14-3

35) To communicate effectively, a marketing communicator must ________ the consumer's field of experience.
A) compete with
B) share
C) understand
D) create
E) reference
Answer:  C
Diff: 2 Page Ref: 409
AACSB:  Communication
Skill:  Concept
Objective:  14-3
36) Marketing communicators must be good at ________ messages that take into account how the target audience ________ them.
A) delivering; encodes
B) sending; encodes
C) encoding; decodes
D) retrieving; perceives
E) decoding; receives
Answer:  C
Diff: 3 Page Ref: 409
AACSB:  Communication
Skill:  Concept
Objective:  14-3


37) Marketing communicators must do all of the following EXCEPT ________.
A) identify the target audience
B) deliver products to the customer
C) determine the communication objectives
D) collect feedback
E) choose the media through which to send a message
Answer:  B
Diff: 2 Page Ref: 409
AACSB:  Communication
Skill:  Concept
Objective:  14-3

38) The six ________ stages that consumers normally pass through on their way to making a purchase include awareness, knowledge, liking, preference, conviction, and purchase.
A) personal readiness
B) buyer-readiness
C) objective readiness
D) purchase direct readiness
E) supplier readiness
Answer:  B
Diff: 2 Page Ref: 409
Skill:  Concept
Objective:  14-3

39) The six buyer-readiness stages include all of the following EXCEPT ________.
A) awareness
B) knowledge
C) power
D) liking
E) hesitation
Answer:  E
Diff: 2 Page Ref: 409
Skill:  Concept
Objective:  14-3
40) In the model of buyer-readiness stages, the first stage is ________.
A) preference
B) knowledge
C) liking
D) awareness
E) insistence
Answer:  D
Diff: 1 Page Ref: 409
Skill:  Concept
Objective:  14-3


41) All of the following are strategies a marketer would use to lead consumers into making the final step toward a purchase EXCEPT which one?
A) offer special promotional prices
B) offer add-on features
C) offer premiums
D) use extensive "teaser" advertising
E) C or D
Answer:  D
Diff: 3 Page Ref: 410
AACSB:  Communication
Skill:  Concept
Objective:  14-3

42) A message showing a product's quality, economy, value, or performance is called a(n) ________ appeal.
A) structural
B) rational
C) emotional
D) moral
E) standard
Answer:  B
Diff: 2 Page Ref: 411
AACSB:  Communication
Skill:  Concept
Objective:  14-3

43) Marketers using humor in their messages claim that they attract more attention and create more loyalty and belief in the brand. This type of message is called a(n) ________ appeal.
A) rational
B) structural
C) emotional
D) moral
E) standard
Answer:  C
Diff: 2 Page Ref: 411
AACSB:  Communication
Skill:  Concept
Objective:  14-3

44) Though a popular appeal, when used poorly ________ can detract from comprehension, quickly wear out its welcome, overshadow the product, or even irritate consumers.
A) humor
B) nonpersonal communication
C) direct marketing
D) integrated marketing
E) noise
Answer:  A
Diff: 3 Page Ref: 411
AACSB:  Communication
Skill:  Concept
Objective:  14-3

45) Moral appeals are directed to the audience's sense of what is "right" and ________.
A) proper
B) affordable
C) traditional
D) positive
E) emotional
Answer:  A
Diff: 2 Page Ref: 411
AACSB:  Communication
Skill:  Concept
Objective:  14-3

46) The communicator must decide how to handle message structure issues. One issue is whether to ________ or not.
A) draw a conclusion
B) make a moral appeal
C) use the pull strategy
D) use the push strategy
E) avoid competitors
Answer:  A
Diff: 3 Page Ref: 411
AACSB:  Communication
Skill:  Concept
Objective:  14-3

47) A(n) ________ argument is only likely to be effective when the audience is highly educated or likely to hear opposing claims, or when the communicator has a negative association to overcome.
A) two-sided
B) one-sided
C) moral
D) emotional
E) scientific
Answer:  A
Diff: 3 Page Ref: 412
AACSB:  Communication
Skill:  Concept
Objective:  14-3

48) In designing the message structure, marketers must decide whether to present the ________ arguments first or last in a message.
A) emotional
B) structural
C) moral
D) strongest
E) scientific
Answer:  D
Diff: 2 Page Ref: 411
AACSB:  Communication
Skill:  Concept
Objective:  14-3

49) The two broad types of ________ channels are personal and nonpersonal.
A) marketing
B) competitive
C) communication
D) buyer
E) seller
Answer:  C
Diff: 1 Page Ref: 412
AACSB:  Communication
Skill:  Concept
Objective:  14-3


50) Communication through the mail is categorized as a(n)  ________ communication channel.
A) nonpersonal
B) word-of-mouth
C) personal
D) objective
E) inefficient
Answer:  C
Diff: 2 Page Ref: 412
AACSB:  Communication
Skill:  Concept
Objective:  14-3
51) Creating word-of-mouth campaigns by cultivating opinion leaders and getting them to spread information about a product or service to others in their communities is known as ________.
A) sales promotion
B) indirect marketing
C) buzz marketing
D) stealth marketing
E) public relations
Answer:  C
Diff: 1 Page Ref: 413
AACSB:  Communication
Skill:  Concept
Objective:  14-3

52) Nonpersonal communication channels include major media, ________, and events.
A) sales calls
B) buzz marketing
C) atmospheres
D) word of mouth
E) e-mail
Answer:  C
Diff: 2 Page Ref: 413
AACSB:  Communication
Skill:  Concept
Objective:  14-3


53) Vast numbers of consumers are aware of your product. It is now your goal to enhance preference for your product. You plan to use nonpersonal communications through print media. This will include all of the following EXCEPT ________.
A) newspapers
B) magazines
C) Internet "chats"
D) direct mail
E) catalogs
Answer:  C
Diff: 1 Page Ref: 413
AACSB:  Communication
Skill:  Concept
Objective:  14-3
54) To ________, a marketer can ask target audience members whether they remember the message, how many times they saw it, and what points they remember.
A) select a message source
B) collect feedback
C) select a message channel
D) plan a media purchase
E) design a marketing appeal
Answer:  B
Diff: 2 Page Ref: 414
AACSB:  Communication
Skill:  Concept
Objective:  14-3

55) ________  from marketing communications may suggest changes in the promotion program or in the product offer itself.
A) Encoding
B) Decoding
C) Feedback
D) Noise
E) Shelter
Answer:  C
Diff: 2 Page Ref: 414
AACSB:  Communication
Skill:  Concept
Objective:  14-3


56) Companies use all of the following methods to set their advertising budget EXCEPT the ________.
A) objective-and-task method
B) integrated method
C) competitive-parity method
D) percentage-of-sales method
E) affordable method
Answer:  B
Diff: 1 Page Ref: 415
Skill:  Concept
Objective:  14-4

57) Using the ________ method for setting an advertising budget, the company starts with total revenues, deducts operating expenses and capital outlays, and then devotes some portion of the remaining funds to advertising.
A) integrated
B) moving-average
C) competitive-parity
D) percentage-of-sales
E) affordable
Answer:  E
Diff: 2 Page Ref: 415
Skill:  Concept
Objective:  14-4
58) Though the ________ method of setting an advertising budget is simple to use and helps management think about the relationships among promotion spending, selling price, and profit per unit, it wrongly views sales as the cause of promotion rather than the result.
A) percentage-of-sales
B) affordable
C) competitive-parity
D) objective-and-task
E) regression
Answer:  A
Diff: 2 Page Ref: 415
Skill:  Concept
Objective:  14-4


59) Which method of setting an advertising budget is based on analyzing competitors' spending?
A) percentage-of-sales method
B) affordable method
C) competitive-parity method
D) objective-and-task method
E) regression method
Answer:  C
Diff: 2 Page Ref: 416
Skill:  Concept
Objective:  14-4

60) Perhaps the most logical budget-setting method is the ________ method because it is based on spending necessary to accomplishing specific promotion goals.
A) percentage-of-sales
B) affordable
C) competitive-parity
D) objective-and-task
E) exponential smoothing
Answer:  D
Diff: 2 Page Ref: 416
Skill:  Concept
Objective:  14-4

61) Advertising has some shortcomings. What is NOT one of them?
A) It is impersonal.
B) It can be very costly.
C) It slowly reaches many people.
D) It carries on one-way communication with the audience.
E) It does not make audience members feel the need to respond.
Answer:  C
Diff: 3 Page Ref: 417
AACSB:  Communication
Skill:  Concept
Objective:  14-4
62) ________ is the company's most expensive promotion tool.
A) Advertising
B) Personal selling
C) Mass media
D) Public relations
E) Publicity
Answer:  B
Diff: 3 Page Ref: 417
Skill:  Concept
Objective:  14-4


63) Which promotional tool is most effective in building up buyers' preferences, convictions, and, most importantly, actions?
A) mass-market advertising
B) personal selling
C) segmented advertising
D) sales promotion
E) public relations
Answer:  B
Diff: 2 Page Ref: 417
AACSB:  Communication
Skill:  Concept
Objective:  14-4

64) Sales promotion features a wide assortment of tools. Which of the following is NOT one of these tools?
A) contests
B) premiums
C) catalogs
D) coupons
E) cents-off deals
Answer:  C
Diff: 2 Page Ref: 417
AACSB:  Communication
Skill:  Concept
Objective:  14-4

65) "Buy it now" is the message of ________.
A) personal selling
B) advertising
C) a nonpersonal communication channel
D) sales promotion
E) publicity
Answer:  D
Diff: 2 Page Ref: 417
AACSB:  Communication
Skill:  Concept
Objective:  14-4

66) ________ consists of strong short-term incentives that invite and reward quick responses from customers.
A) A patronage reward
B) A segmented promotion
C) Advertising
D) Sales promotion
E) Publicity
Answer:  D
Diff: 1 Page Ref: 417
AACSB:  Communication
Skill:  Concept
Objective:  14-4

67) ________ is very believable because news stories, features, sponsorships, and events seem more real and believable to readers than ads do.
A) The competitive-parity method
B) Public relations
C) Personal communication
D) Nonpersonal communication
E) Personal selling
Answer:  B
Diff: 2 Page Ref: 417
AACSB:  Communication
Skill:  Concept
Objective:  14-4

68) Which promotional tool is described as nonpublic, immediate, customized, and interactive?
A) segmented advertising
B) sales promotion
C) direct marketing
D) brand contacts
E) public relations
Answer:  C
Diff: 2 Page Ref: 418
AACSB:  Communication
Skill:  Concept
Objective:  14-4


69) Which promotional mix strategy directs marketing efforts toward final consumers?
A) pull
B) blitz
C) push
D) buzz
E) pulse
Answer:  A
Diff: 1 Page Ref: 418
AACSB:  Communication
Skill:  Concept
Objective:  14-4
70) Which promotional mix strategy directs marketing efforts toward market channel members?
A) pull
B) blitz
C) push
D) buzz
E) pulse
Answer:  C
Diff: 1 Page Ref: 418
AACSB:  Communication
Skill:  Concept
Objective:  14-4

71) Business-to-consumer companies are more likely to emphasize a ________ promotion strategy, while business-to-business companies are more likely to emphasize a ________ promotion strategy.
A) pull; push
B) push; pull
C) pulse; pull
D) continuity; pulse
E) pulse; continuity
Answer:  A
Diff: 1 Page Ref: 418
AACSB:  Communication
Skill:  Concept
Objective:  14-4


72) Which of the following is LEAST important for integrating a firm's marketing communications?
A) analyze internal and external trends
B) audit the pockets of communications spending throughout the organization
C) identify all customer touch points for the company and its brands
D) study the competitor's communications and promotions
E) create performance measures for all communications elements
Answer:  D
Diff: 3 Page Ref: 420-421
AACSB:  Communication
Skill:  Concept
Objective:  14-4

73) Bait-and-switch advertising ________.
A) attracts buyers under false pretenses
B) is unethical
C) is illegal
D) is deceptive
E) all of the above
Answer:  E
Diff: 1 Page Ref: 421
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  14-4
74) Which of the following would be classified as bait-and-switch advertising?
A) advertising a cheaper brand but only making a more expensive one available to customers
B) raising a product's prices
C) attempting to charge less for a brand than for manufacturers' brands
D) advertising service packages that cannot actually be provided
E) favoring certain customers over others through trade promotions
Answer:  A
Diff: 2 Page Ref: 421
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  14-4


75) A company's salespeople should always follow the rules of ________.
A) high-pressure selling
B) societal marketing
C) competition
D) fair competition
E) cooling-off
Answer:  D
Diff: 2 Page Ref: 422
AACSB:  Ethical Reasoning
Skill:  Concept
Objective:  14-4

76) A.Y. McDonald, a manufacturer of pumps and plumbing valves, employs regional salespeople to sell its products to wholesalers and cities. This is an example of ________.
A) sales promotion
B) personal selling
C) public relations
D) direct marketing
E) advertising
Answer:  B
Diff: 1 Page Ref: 402
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-1
77) Tara Keegan owns Live Well, a small chain of health stores offering a variety of natural health products and related services. In order to implement integrated marketing communications, Tara has hired a marketing communications director, whose job it will be to ensure that each ________ will deliver a consistent and positive message about the company.
A) public relations message
B) brand contact
C) advertisement
D) logo
E) media vehicle
Answer:  B
Diff: 2 Page Ref: 406
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-1


78) Harpo Enterprises maintains the Oprah Winfrey show, a Web site, and O magazine. Because Harpo Enterprises practices integrated marketing communications, these different brand contacts all maintain ________ in design and tone.
A) variety
B) contact
C) consistency
D) creativity
E) convenience
Answer:  C
Diff: 1 Page Ref: 405
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-2

79) Delia's is a clothing retailer that targets teenage girls. It runs coordinated promotions for its catalogs, Web site, and retail outlets. It uses the same models in its catalog and in its print ads as well as on its Web site. Delia's works to make sure its public relations activities as well as its sales promotions harmonize with its advertising in all venues. From this information, you can infer that Delia's is using ________.
A) buzz marketing
B) experiential marketing
C) integrated marketing communication
D) word of mouth marketing
E) database marketing
Answer:  C
Diff: 1 Page Ref: 406
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-2
80) HP's advertising agency assembles words and illustrations into an advertisement that will convey the company's intended brand message. In the communication process, HP is ________.
A) messaging
B) encoding
C) sending
D) decoding
E) responding
Answer:  B
Diff: 1 Page Ref: 408
AACSB:  Communication
Skill:  Application
Objective:  14-3


81) The decision to use a cleaning genie to communicate the strength and power of Mr. Clean cleaning liquid is representative of the ________ process of the communication model.
A) sourcing
B) encoding
C) signifying
D) decoding
E) messaging
Answer:  B
Diff: 2 Page Ref: 408
AACSB:  Communication
Skill:  Application
Objective:  14-3

82) In the communication process, an actual HP printer/fax machine advertisement is called ________.
A) encoding
B) decoding
C) noise
D) the message
E) the medium
Answer:  D
Diff: 2 Page Ref: 408
AACSB:  Communication
Skill:  Application
Objective:  14-3
83) An ad for Maybelline age-minimizing makeup in Ladies' Home Journal magazine featured actress Melina Kanakaredes and offered readers a $1-off coupon when they try the new makeup. In terms of the communication model, the sender of this message is ________.
A) Melina Kanakaredes
B) Ladies' Home Journal
C) readers who redeem the $1-off coupon
D) Maybelline
E) the target market to whom Melina Kanakaredes appeals
Answer:  D
Diff: 2 Page Ref: 408
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-3


84) An ad for Maybelline age-minimizing makeup in Ladies' Home Journal magazine featured actress Melina Kanakaredes and offered readers a $1-off coupon when they try the new makeup. In terms of the communication model, the medium of this ad is ________.
A) Melina Kanakaredes
B) Ladies' Home Journal
C) readers who redeem the $1-off coupon
D) Maybelline
E) the target market to whom Melina Kanakaredes appeals
Answer:  B
Diff: 1 Page Ref: 408
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-3

85) An ad for Maybelline age-minimizing makeup in Ladies' Home Journal magazine featured actress Melina Kanakaredes and offered readers a $1-off coupon when they try the new makeup. In terms of the communication model, which of the following would be the best way for the source to measure feedback?
A) the number of subscribers to Ladies' Home Journal
B) the number of people make up the target market
C) the number of people who redeem the coupon
D) the number of people who were exposed to the ad
E) the number of people to whom Melina Kanakaredes is an appealing spokesperson
Answer:  C
Diff: 2 Page Ref: 409
AACSB:  Analytic Skills
Skill:  Application
Objective:  14-3
86) Mercy University's initial ads for the school's new MBA program are most likely intended to create ________.
A) liking
B) awareness
C) preference
D) insistence
E) conviction
Answer:  B
Diff: 2 Page Ref: 409
AACSB:  Communication
Skill:  Application
Objective:  14-3


87) When a car-maker wants to introduce a new model, it is most likely to began with an extensive ________ advertising campaign to create name familiarity and interest.
A) sales promotion
B) competitive
C) teaser
D) moral appeal
E) two-sided
Answer:  C
Diff: 3 Page Ref: 409
AACSB:  Communication
Skill:  Application
Objective:  14-3

88) An example of a(n) ________ appeal is the Salvation Army appeal, "While you were trying to figure out what to get the man who has everything, don't forget the man who has nothing."
A) emotional
B) awareness
C) rational
D) moral
E) standard
Answer:  D
Diff: 2 Page Ref: 411
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-3

89) Which of the following represent(s) a two-sided message?
A) Listerine tastes bad twice a day.
B) Heinz Ketchup is slow good.
C) Etonic athletic shoes are built so you can last.
D) A and B
E) none of the above
Answer:  D
Diff: 1 Page Ref: 412
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-3

90) A manufacturer of a variety of technological devices asked its marketing department to develop inexpensive methods of building and maintaining brand awareness and excitement. The marketing department then recruited consumers who were early adopters of technological devices to spread the word about the company's new products. This is an example of ________.
A) public service activities
B) nonpersonal marketing
C) buzz marketing
D) sales promotion
E) direct marketing
Answer:  C
Diff: 3 Page Ref: 413
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-3

91) Toward the end of the fiscal year, the owner of a small company came back from lunch concerned because he had learned that a business targeted to the same customers as his was planning on spending $150,000 on promotion. As soon as he arrived at the office, he called his financial manager and said, "I want to budget $150,000 for next year's promotion." Which method of promotional budgeting did the owner want to use?
A) the objective-task method
B) the percentage-of-sales method
C) the competitive-parity method
D) the bottom-up method
E) the pull-push method
Answer:  C
Diff: 2 Page Ref: 416
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-4

92) An e-mail from Amazon.com offers free shipping on your next purchase of more than $35. This is an example of ________.
A) sales promotion
B) personal selling
C) public relations
D) an advertising objective
E) a push strategy
Answer:  A
Diff: 2 Page Ref: 417
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-4

93) Mariah Goldberg, a marketing manager for a manufacturer of children's toys, is looking for ways to reach potential customers who typically avoid salespeople and advertisements. Which of the following would be the most economical promotional tool for Mariah to use?
A) sales promotion
B) personal selling
C) public relations
D) direct marketing
E) brand contacts
Answer:  C
Diff: 3 Page Ref: 417
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-4

94) A newspaper article announced that VoiceStream Wireless, the nation's sixth-largest wireless carrier, was changing its name to T-Mobile and that to begin the makeover process it had replaced spokesperson Jamie Lee Curtis with Catherine Zeta-Jones. Of which element of the promotion mix is this an example?
A) sales promotion
B) advertising
C) public relations
D) personal selling
E) product
Answer:  C
Diff: 2 Page Ref: 417
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-4

95) Clean and Clear, a large producer of all-natural hair care and beauty products, is most likely to use which of the promotion mix strategies to gain increased shelf space in stores and to gain increased customer sales?
A) push
B) pull
C) push and pull
D) pulse
E) continuity
Answer:  C
Diff: 2 Page Ref: 418
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-4

96) An ad in a professional journal targeted to an audience of dentists asked dentists to recommend Crest toothpaste to their patients. It offered toothpaste samples that dentists could buy at cost to give to their patients to encourage patients to take better care of their teeth. The manufacturer of Crest toothpaste was using ________.
A) personal selling
B) direct marketing
C) a push strategy
D) a pull strategy
E) public relations
Answer:  C
Diff: 2 Page Ref: 418
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-4

97) Glasis is a type of paint made specifically for use on cars. An ad in Motor Trend magazine advising consumers to request their body shops use Glasis paint is an example of how a company uses ________.
A) word of mouth influence
B) public relations
C) buzz marketing
D) a push strategy
E) a pull strategy
Answer:  E
Diff: 2 Page Ref: 418
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-4

98) A maker of vitamin drinks wants to compete with the leading brands in the category and has decided to use a heavy push strategy, putting most of the brand's marketing budget into trade and consumer sales promotion. Which of the following is a potential disadvantage of this approach?
A) A new marketing communications model is quickly replacing mass marketing.
B) Mass media campaigns are increasingly more expensive.
C) It may be difficult to identify meaningful product differences in advertising.
D) Retail giants may be reluctant to respond to the strategy.
E) The strategy may spark a spiral of price-slashing that will undercut the brand's future for short-term gains.
Answer:  E
Diff: 3 Page Ref: 419
AACSB:  Analytic Skills
Skill:  Application
Objective:  14-4

Refer to the scenario below to answer the following questions.

John Mayes opened Sparkle Janitorial in 1999. John began by acquiring two contracts for office cleaning services from two local manufacturing facilities. For two years, John and his wife, Barb, performed the cleaning services alone. After acquiring three additional cleaning contracts in 2001, John hired two employees.
"Up to that point, we had room to grow but we really had no advertising plan," John stated. "We were relying mostly on word-of-mouth."
By 2003, Barb hired another two full-time employees to begin Sparkle's new endeavor: carpet cleaning in homes and offices.  "Competition was getting tough for both of our services at that point," Barb added. "We ran a local radio spot three times each week. Then we had an advertiser print coupons on placemats. That gave us a little more exposure."
John and Barb Mayes admit that they never realized the value of a sound promotional plan before now. "We wish we would have put together something catchy with a jingle way before now," they said.

99) Which of the following would be the LEAST effective way for John and Barb to reach new potential customers?
A) word-of-mouth influence
B) buzz marketing
C) public relations
D) network television advertising
E) direct marketing
Answer:  D
Diff: 2 Page Ref: 417
AACSB:  Analytic Skills
Skill:  Application
Objective:  14-4

100) In a recent radio spot, John and Barb gave a quick explanation of Sparkle's cleaning process and a description of the value consumers receive for their money. This is an example of a(n) ________.
A) emotional appeal
B) standard appeal
C) rational appeal
D) moral appeal
E) social appeal
Answer:  C
Diff: 2 Page Ref: 411
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-3


101) A company's marketing communications mix is also called its promotion mix.
Answer:  TRUE
Diff: 1 Page Ref: 402
AACSB:  Communication
Skill:  Concept
Objective:  14-1
102) Sales promotion makes use of press releases and special events.
Answer:  FALSE
Diff: 2 Page Ref: 403
AACSB:  Communication
Skill:  Concept
Objective:  14-1

103) Though mass marketing was effective in past decades, large companies no longer routinely invest large chunks of their advertising budgets in mass-media outlets such as television and magazines.
Answer:  FALSE
Diff: 2 Page Ref: 403
AACSB:  Communication
Skill:  Concept
Objective:  14-2

104) Mass markets have fragmented; thus, marketers are shifting away from mass marketing.
Answer:  TRUE
Diff: 1 Page Ref: 403
AACSB:  Communication
Skill:  Application
Objective:  14-2

105) Vast improvements in information technology are speeding the movement toward segmented marketing.
Answer:  TRUE
Diff: 3 Page Ref: 403
AACSB:  Use of IT
Skill:  Concept
Objective:  14-2

106) New communications technologies such as cell phones and the Internet give companies new media for interacting with targeted consumers, but these new technologies also give consumers more control of the advertising messages they receive.
Answer:  FALSE
Diff: 2 Page Ref: 403
AACSB:  Use of IT
Skill:  Concept
Objective:  14-2

107) Mass marketers can expect consumers to distinguish between commercial message sources to maintain a clear image of a company and its brands.
Answer:  FALSE
Diff: 2 Page Ref: 405
AACSB:  Communication
Skill:  Concept
Objective:  14-2
108) The integrated marketing concept ties together all of the company's messages and images.
Answer:  TRUE
Diff: 1 Page Ref: 405
AACSB:  Communication
Skill:  Concept
Objective:  14-2

109) Integrated marketing communications allows brand messages to be developed by different departments within an organization.
Answer:  FALSE
Diff: 2 Page Ref: 406
AACSB:  Communication
Skill:  Concept
Objective:  14-2

110) A marketing communications director has overall responsibility for the company's communications efforts.
Answer:  TRUE
Diff: 2 Page Ref: 407
AACSB:  Communication
Skill:  Concept
Objective:  14-2

111) The communications process should start with mass media advertising to reach many consumers.
Answer:  FALSE
Diff: 2 Page Ref: 408
AACSB:  Communication
Skill:  Concept
Objective:  14-3

112) The four major communication functions are encoding, decoding, response, and noise.
Answer:  FALSE
Diff: 2 Page Ref: 408
AACSB:  Communication
Skill:  Concept
Objective:  14-3


113) Encoding is the process by which the receiver assigns meaning to symbols.
Answer:  FALSE
Diff: 2 Page Ref: 408
AACSB:  Communication
Skill:  Concept
Objective:  14-3

114) Decoding is the process of putting thought into symbolic form.
Answer:  FALSE
Diff: 2 Page Ref: 408
AACSB:  Communication
Skill:  Concept
Objective:  14-3
115) Awareness, knowledge, and preparation are buyer-readiness stages.
Answer:  FALSE
Diff: 2 Page Ref: 409
Skill:  Concept
Objective:  14-3

116) "Teaser" advertising is most closely associated with the buyer-readiness stage of liking a product.
Answer:  FALSE
Diff: 3 Page Ref: 409
Skill:  Application
Objective:  14-3

117)  There are three types of appeal from which marketers may choose as they design their message content. These types are rational, emotional, and moral appeals.
Answer:  TRUE
Diff: 2 Page Ref: 411
AACSB:  Communication
Skill:  Concept
Objective:  14-3

118) The "Stop. Think. Tylenol." ad is an example of a moral appeal.
Answer:  FALSE
Diff: 2 Page Ref: 411
AACSB:  Reflective Thinking
Skill:  Application
Objective:  14-3


119) Advertisements for prescription drugs often feature potential benefits and negative side effects that  consumers may experience with use of the medication. These ads present two-sided arguments.
Answer:  TRUE
Diff: 1 Page Ref: 411
AACSB:  Communication
Skill:  Application
Objective:  14-3

120) Buzz marketing involves cultivating opinion leaders and getting them to spread information about a product or service to others in their communities.
Answer:  TRUE
Diff: 1 Page Ref: 413
AACSB:  Communication
Skill:  Concept
Objective:  14-3

121) The percentage-of-sales method wrongly views sales as the cause of promotion rather than the result.
Answer:  TRUE
Diff: 2 Page Ref: 415
Skill:  Concept
Objective:  14-4
122) The affordable method sets promotion budgets to match competitors' outlays.
Answer:  FALSE
Diff: 2 Page Ref: 415
Skill:  Concept
Objective:  14-4

123) Large-scale advertising conveys a positive message about the seller's size, popularity, and success.
Answer:  TRUE
Diff: 2 Page Ref: 417
AACSB:  Communication
Skill:  Concept
Objective:  14-4

124) If the pull strategy is effective, consumers will then demand the product from channel members, who will in turn demand it from producers.
Answer:  TRUE
Diff: 2 Page Ref: 418
Skill:  Concept
Objective:  14-4


125) A recent trend toward more push than pull in the mixes of consumer-goods companies may achieve short-run sales at the expense of brand equity.
Answer:  TRUE
Diff: 3 Page Ref: 418
AACSB:  Analytic Skills
Skill:  Application
Objective:  14-4

126) A company's marketing communications mixalso called its promotion mixblends five different parts. Name and define these parts.
Answer:  Advertising is any paid-for or nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Sales promotion includes short-term incentives to encourage the purchase or sale of a product or service. Public relations includes building good relations with the company's various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, or events. Personal selling includes a personal presentation by the firm's sales force for the purpose of making sales and building customer relationships. Direct marketing includes direct connections with carefully targeted individual consumers to obtain an immediate response and cultivate lasting customer relationshipsthe uses of telephone, mail, the Internet, and other tools to communicate directly with specific customers.
Diff: 2 Page Ref: 402
AACSB:  Communication
Skill:  Concept
Objective:  14-1
127) Why are profound changes in marketing communications creating both exciting and scary times for marketing communicators?
Answer:  In the past, marketers relied heavily on mass marketing. Today, however, mass markets have fragmented, consumers are better informed and sweeping changes in technology have changed how companies and consumers communicate with each other. These three factors have led to a new marketing communications model that is specialized to reach smaller customer segments with messages that are more personalized. Mass marketing can no longer be solely relied upon to deliver a marketer's message. Although these changes may frighten marketing communicators, these changes afford tremendous opportunities to reach new customers and strengthen relationships with existing customers.
Diff: 3 Page Ref: 403
AACSB:  Analytic Skills
Skill:  Application
Objective:  14-2


128) Explain the concept of integrated marketing communications (IMC).
Answer:  IMC calls for recognizing all contact points where the customer may encounter the company and its brands.. A company wants to deliver a consistent and positive message with each contact. IMC ties together all of the company's messages and images, avoiding the confusion that can arise from customers receiving varied messages from a variety of media.
Diff: 1 Page Ref: 405
AACSB:  Communication
Skill:  Application
Objective:  14-2

129) Name and define the four major communication functions.
Answer:  Encoding is the process of putting thought into symbolic form. Decoding is the process by which the receiver assigns meaning to the symbols encoded by the sender. In addition, response refers to the reactions of the receiver after being exposed to the message. Feedback is the part of the receiver's response communicated back to the sender.
Diff: 2 Page Ref: 408
AACSB:  Communication
Skill:  Application
Objective:  14-3
130) The background for a Benadryl allergy medication ad appearing in the magazine Better Homes and Gardens shows green grass and lovely flowers. The headline states "Benadryl is 54 percent more effective than the leading prescription." At the bottom of the ad, in small print, is an explanation of how the effectiveness of Benadryl was determined. The ad also shows a package of Benadryl so consumers can easily recognize it at the store. Identify the different components of the communication model for this advertisement.
Answer:  The marketers of Benadryl are the sender. These marketers encoded their ideas into the actual message, which includes the images and text of the advertisement. The medium for this communication is the page in Better Homes and Gardens. The receiver is anyone reading the magazine who sees this page of advertising; the receiver may or may not decode the message in the way the marketers intended. Noise could pop up at any stage of the communication process.
Diff: 1 Page Ref: 408
AACSB:  Communication
Skill:  Application
Objective:  14-3


131) Outline the steps in developing effective marketing communications.
Answer:  In preparing marketing communications, the marketer's first task is to identify the target audience and its characteristics. Next, the market has to determine the communication objectives and define the response sought, whether it is awareness, knowledge, liking, preference, conviction, or purchase. Then a message should be constructed with an effective content and structure. Media must be selected, both for personal and nonpersonal communication. The marketer should find highly credible sources to deliver messages. Finally, the communicator must collect feedback by watching how much of the market becomes aware, tries the product, and is satisfied in the process.
Diff: 3 Page Ref: 409
AACSB:  Communication
Skill:  Application
Objective:  14-3

132) Describe the six buyer-readiness stages along with marketing strategies that may be used at each stage.
Answer:  The six buyer-readiness stages are awareness, knowledge. liking, preference, conviction, and purchase. A marketer might use "teaser" ads to create interest and curiosity at the awareness stage. Next, marketers want to inform potential buyers of the product's high quality and its many features. Beyond knowledge, marketers want to move consumers to have stronger feelings about the product, going from liking to preference to conviction, or believing that a product is the best for them. A combination of promotion tools can be used to create positive feelings and a customer connection with the brand. The final stage is purchase, which marketers may influence through the use of premiums, add-ons, or rebates.
Diff: 3 Page Ref: 409
AACSB:  Analytic Skills
Skill:  Application
Objective:  14-3
133) Describe four common methods used to set the total budget for advertising.
Answer:  Using the affordable method, a company sets a promotion budget at the level it thinks it  can afford. Using the percentage-of-sales method, a company sets a promotion budget at a certain percentage of current or forecasted sales. Using the competitive-parity method, a company sets a promotion budget based on competitors' outlays. Using an objective-and-task method, a company sets a promotion budget based on what it wants to accomplish with promotion.
Diff: 2 Page Ref: 415-416
AACSB:  Analytic Skills
Skill:  Application
Objective:  14-4


134) Marketers can choose from two basic promotion mix strategies–push promotion or pull promotion. Compare these two strategies.
Answer:  Using the pull strategy, the producer directs its marketing activities toward final consumers to induce them to buy the product; if the pull strategy is effective, consumers will then demand the product from channel members who will in turn demand it from producers. Using a push strategy, the producer focuses instead on the channel members, persuading them to carry the product and promote it to final consumers.
Diff: 2 Page Ref: 418
AACSB:  Analytic Skills
Skill:  Application
Objective:  14-4

135) Explain how advertising may change as a product moves from the introductory stage to the growth stage of the product life cycle.
Answer:  Because there may be little awareness or little information generated about products in the introductory stage of the life cycle, marketers may spend large amounts of promotional dollars toward creating awareness. As the product moves into the growth stage, many competitors may enter the market in an attempt to move the product out of the way; in such cases, marketers may continue spending large amounts of promotional dollars for advertising. However, at this point, the marketer may decide to attempt to persuade consumers to buy based on specific product or company attributes, or to compare their product with competing products in an attempt to convince consumers that their product is superior. At the decline stage, advertising is kept at a reminder level.
Diff: 3 Page Ref: 420
AACSB:  Analytic Skills
Skill:  Application
Objective:  14-4

136) How are advertising and direct marketing different?
Answer:  Advertising is the nonpersonal promotion of ideas, goods, or services, while direct marketing is the promotion of ideas, goods, or services to carefully targeted individuals.
Diff: 2 Page Ref: 402
AACSB:  Analytic Skills
Skill:  Application
Objective:  14-1
137) How can marketers benefit from media fragmentation?
Answer:  Media fragmentation is represented through an explosion of more focused media that better match today's targeting strategies; media fragmentation allows the marketer to better reach the targeted consumers through more specific media options.
Diff: 2 Page Ref: 403
AACSB:  Analytic Skills
Skill:  Application
Objective:  14-2


138) Why do some marketers predict a marketing "chaos scenario"?
Answer:  Some experts believe that the traditional mass-media communications will cease to exist and will be entirely replaced by new digital technologies that permit more targeted and personalized marketing.
Diff: 2 Page Ref: 404
AACSB:  Analytic Skills
Skill:  Application
Objective:  14-2

139) Why should a company be concerned about integrating communications from different sources within the company?
Answer:  Customers won't separate conflicting or varying messages from different sources within a company, so failing to integrate communications could lead to blurred consumer brand perceptions.
Diff: 2 Page Ref: 405
AACSB:  Analytic Skills
Skill:  Application
Objective:  14-2

140) How do integrated marketing communications (IMC) build brand identity?
Answer:  IMC builds brand identity and strong customer relationships by tying together all of the company's messages and images.
Diff: 2 Page Ref: 406
AACSB:  Communication
Skill:  Application
Objective:  14-2

141) Why is the consumer's field of experience of interest to a marketer?
Answer:  The marketing communicator must understand the consumer's field of experience in order to create promotional messages that will be decoded as the sender intends them to be understood.
Diff: 3 Page Ref: 409
AACSB:  Communication
Skill:  Concept
Objective:  14-3
142) In the communication process, what is noise and why is it important?
Answer:  Noise is the unplanned static or distortion during the communication process, which results in the receiver getting a different message than the one the sender sent. The consumer is distracted and misses the key point.
Diff: 1 Page Ref: 409
AACSB:  Communication
Skill:  Application
Objective:  14-3


143) Describe the three types of appeals marketers use.
Answer:  Rational appeals relate to the consumer's self-interest; emotional appeals attempt to stir up either positive or negative emotions; moral appeals are directed to the consumer's sense of what is "right" and "proper."
Diff: 3 Page Ref: 411
AACSB:  Communication
Skill:  Application
Objective:  14-3

144) What role does message format play in print advertisements?
Answer:  In a print ad, for example, the headline, copy, illustrations, and color are critical. To attract attention, the advertiser may use novelty, contrasts, or eye-catching headlines.
Diff: 1 Page Ref: 412
AACSB:  Communication
Skill:  Application
Objective:  14-3

145) Why do marketers value opinion leaders?
Answer:  Opinion leaders are people whose opinions are sought by others. Marketers rely on opinion leaders to positively influence the spread of product or service acceptance through a market.
Diff: 1 Page Ref: 413
AACSB:  Communication
Skill:  Application
Objective:  14-3

146) Explain how the message source affects consumers' perceptions of the message.
Answer:  The message source will affect how the consumer perceives the message. For example, highly credible sourcessuch as certain newspaperswill be more persuasive. In some cases, the use of celebrity testimonials works well to persuade consumers to make the purchase.
Diff: 2 Page Ref: 414
AACSB:  Communication
Skill:  Application
Objective:  14-3
147) When is it most advisable to predominantly use advertising in a promotion mix?
Answer:  Advertising works well when the marketer's goal is to reach geographically dispersed groups of consumers. In addition, advertising works well when the marketer wants to control the intended message geared toward a specific group of consumers. Advertising also allows the marketer to repeat a message many times.
Diff: 2 Page Ref: 416-417
AACSB:  Communication
Skill:  Application
Objective:  14-4


148) When is it advisable to predominantly use personal selling in a promotion mix?
Answer:  Personal selling works well when the marketer's goal is to build up buyers' preferences, convictions, and actions. Personal selling allows marketers to build personal relationships with the prospective buyers and allows marketers to provide demonstrations directly to an intended audience. Many industrial companies prefer personal selling to other promotional tools.
Diff: 2 Page Ref: 417
AACSB:  Communication
Skill:  Application
Objective:  14-4

149) When is it advisable to predominantly use sales promotions in a promotion mix?
Answer:  Sales promotions are used to invite and reward quick response. Sales promotions are short-lived; therefore, sales promotions are used when the marketer intends to make a quick, dramatic impact on an intended audience with the use of coupons, samples, contest, etc.
Diff: 2 Page Ref: 417
AACSB:  Communication
Skill:  Application
Objective:  14-4

150) Describe the FTC three-day cooling off rule.
Answer:  The three-day cooling-off rule gives special protection to customers who are not seeking products. Under this rule, customers who agree in their own homes to buy something costing more than $25 have 72 hours in which to cancel a contract or return merchandise and get their money back, no questions asked.
Diff: 3 Page Ref: 422
AACSB:  Ethical Reasoning
Skill:  Application
Objective:  14-4
1) Which of the following elements of the promotion mix involves making personal connections with customers for the purpose of making sales?
A) personal selling
B) advertising
C) e-commerce
D) publicity
E) public relations
Answer:  A
Diff: 1     Page Ref: 458
Skill:  Concept
Objective:  16-1

2) A ________ is an individual acting on behalf of a company who performs one or more of the following activities: prospecting, communicating, servicing, and information gathering.
A) press agent
B) sales assistant
C) marketing director
D) salesperson
E) publicist
Answer:  D
Diff: 1     Page Ref: 459
Skill:  Concept
Objective:  16-1

3) ________ involves two-way, personal communication between salespeople and individual customers, either in person, by telephone, or through Web conferences.
A) Advertising
B) Public relations
C) Personal selling
D) Telemarketing
E) Integrated marketing communication
Answer:  C
Diff: 1     Page Ref: 459
AACSB:  Communication
Skill:  Concept
Objective:  16-1

4) What is the role of a chief revenue, or chief customer, officer?
A) to oversee sales
B) to oversee marketing
C) to oversee both marketing and sales
D) to represent customers to the company
E) to represent the company to customers
Answer:  C
Diff: 2     Page Ref: 460-461
Skill:  Concept
Objective:  16-1

5) A company can unite its marketing and sales functions through all of the following activities EXCEPT ________.
A) assigning a telemarketer the task of visiting a customer
B) arranging joint meetings to clarify all aspects of communication
C) appointing a chief customer officer to oversee both departments
D) having a salesperson preview ads and sales-promotion campaigns
E) sending brand managers on sales calls with a salesperson
Answer:  A
Diff: 3     Page Ref: 460-461
AACSB:  Analytic Skills
Skill:  Concept
Objective:  16-1

6) When a company sets out to analyze, plan, implement, and control sales force activities, the company is undertaking ________.
A) sales design
B) sales force management
C) group sales efforts
D) co-op selling and advertising
E) promotional objectives
Answer:  B
Diff: 1     Page Ref: 461
Skill:  Concept
Objective:  16-2


7) Of the three typical types of sales force structures, which one is often supported by many levels of sales management positions in specific geographical areas?
A) territorial
B) product
C) customer
D) complex systems
E) A and B
Answer:  A
Diff: 2     Page Ref: 461
Skill:  Concept
Objective:  16-2
8) All  of the following are considered advantages of a territorial sales force structure EXCEPT ________.
A) travel expenses can be minimized
B) each salesperson's job is clearly defined
C) accountability is clearly defined for each salesperson
D) salespeople develop in-depth knowledge of a product line
E) salespeople have the opportunity and incentive to build strong relationships with customers
Answer:  D
Diff: 2     Page Ref: 461
AACSB:  Reflective Thinking
Skill:  Concept
Objective:  16-2

9) Which of the following  is NOT a disadvantage of a product sales force structure?
A) extra selling costs involved with multiple sales visits from separate divisions
B) overlapping use of resources with big customers
C) salespeople spending time to see the same customer's purchasing agents
D) increased customer delivery time
E) B and C
Answer:  D
Diff: 3     Page Ref: 462
AACSB:  Reflective Thinking
Skill:  Concept
Objective:  16-2

10) Companies that use a customer sales force structure organize their salespeople by ________.
A) product
B) territory
C) industry
D) demand
E) hierarchy
Answer:  C
Diff: 2     Page Ref: 462
Skill:  Concept
Objective:  16-2
11) Hewlett-Packard's Customer Sales Group (CSG) caused frustration among customers and salespeople. What was the primary problem with the sales force structure of CSG?
A) The marketing and sales divisions had overlapping responsibilities, which caused friction.
B) Salespeople developed expertise in only one product area, which limited their sales commissions.
C) Salespeople specialized in selling only to specific customers and specific industries.
D) Salespeople were responsible for selling all H-P products instead of specializing in a few products.
E) The sales department was divided by product lines, which complicated customer service issues.
Answer:  D
Diff: 3     Page Ref: 463
AACSB:  Analytic Skills
Skill:  Concept
Objective:  16-2

12) What do many companies use to determine sales force size?
A) the workload approach
B) product availability
C) demographic characteristics of the sales force
D) the outside sales force method
E) profit margin
Answer:  A
Diff: 2     Page Ref: 464
Skill:  Concept
Objective:  16-2

13) What is the term used to identify the individuals in a company who travel to call on customers in the field?
A) product sales force
B) outside sales force
C) inside sales force
D) complex sales force
E) customer sales force
Answer:  B
Diff: 1     Page Ref: 464
Skill:  Concept
Objective:  16-2

14) Members of a company's ________ conduct business from their offices using telephones, e-mails, or visits from prospective buyers to generate sales.
A) outside sales force
B) inside sales force
C) complex sales force
D) customer sales force
E) product sales force
Answer:  B
Diff: 1     Page Ref: 464
Skill:  Concept
Objective:  16-2

15) To reduce time demands on their outside sales forces, many companies have increased the size of their inside sales forces, which include technical support people, sales assistants, and ________.
A) retail supervisors
B) sales managers
C) telemarketers
D) accountants
E) programmers
Answer:  C
Diff: 1     Page Ref: 465
AACSB:  Use of IT
Skill:  Concept
Objective:  16-2

16) A sales assistant working for an outside sales force will most likely have all of the following duties EXCEPT ________.
A) answering customer's questions when a salesperson is unavailable
B) providing administrative backup
C) confirming appointments
D) following up on deliveries
E) determining price points
Answer:  E
Diff: 2     Page Ref: 465
Skill:  Concept
Objective:  16-2


17) According to the opening scenario, the success of CDW Corporation is the direct result of its salespeople  ________.
A) working closely with the marketing department to manage accounts
B) receiving bonuses based on customer satisfaction surveys
C) receiving extensive training on complex computer systems
D) developing close, personal relationships with customers
E) using Web conferencing and e-mail to assist customers
Answer:  D
Diff: 3     Page Ref: 465-466
AACSB:  Analytic Skills
Skill:  Concept
Objective:  16-2
18) The growing trend of using a group of people from sales, marketing, engineering, finance, technical support, and even upper management to service large, complex accounts is known as ________ selling.
A) department
B) multiple
C) team
D) personal
E) simultaneous
Answer:  C
Diff: 1     Page Ref: 466
Skill:  Concept
Objective:  16-2

19) Which of the following  most likely explains why companies are adopting the team selling approach to service large, complex accounts?
A) Products have become too complicated for one salesperson to support.
B) Customers prefer dealing with many salespeople rather than one sales representative.
C) Salespeople prefer working in groups because of the opportunity for flex hours and job sharing.
D) A group of salespeople assigned to one account is cost effective for corporations.
E) Fewer skilled salespeople are working in the high-tech industry.
Answer:  A
Diff: 3     Page Ref: 466
Skill:  Concept
Objective:  16-2


20) All of the following are disadvantages of the team selling approach EXCEPT ________.
A) Selling teams can overwhelm customers.
B) Many salespeople are unaccustomed to working with others.
C) Selling teams increase costs and are time consuming.
D) Individual contributions and compensations can be difficult to assess.
E) Most salespeople are trained to excel in individual performance.
Answer:  C
Diff: 3     Page Ref: 466
AACSB:  Reflective Thinking
Skill:  Concept
Objective:  16-2

21) All of the following are problems associated with the poor selection of salespeople EXCEPT ________.
A) lower sales
B) costly turnover
C) less productivity
D) less office support
E) disrupted customer relationships
Answer:  D
Diff: 2     Page Ref: 466
Skill:  Concept
Objective:  16-2
22) According to research, which of the following is one of the four key talents a successful salesperson must possess?
A) managerial skills
B) disciplined work style
C) aggressive personality
D) technological know-how
E) fluency in a second language
Answer:  B
Diff: 2     Page Ref: 467
Skill:  Concept
Objective:  16-2

23) During the hiring process, companies that test sales applicants typically measure all of the following abilities EXCEPT  ________.
A) sales aptitude
B) organizational skills
C) accounting skills
D) analytical skills
E) personality traits
Answer:  C
Diff: 2     Page Ref: 467
Skill:  Concept
Objective:  16-2
24) The purpose of a training program for salespeople is to teach them about all of the following EXCEPT ________.
A) customers' buying habits
B) customers' buying motives
C) the company's main competitors
D) the company retirement benefits
E) the company's organizational structure
Answer:  D
Diff: 2     Page Ref: 467
Skill:  Concept
Objective:  16-2

25) What is the primary reason that companies use e-learning to conduct sales training programs?
A) Customer needs and habits are easily conveyed through e-learning.
B) Customers appreciate the flexibility of e-learning.
C) E-learning allows for more employee feedback.
D) E-learning is the best way to simulate sales calls.
E) E-learning cuts training costs.
Answer:  E
Diff: 2     Page Ref: 467
AACSB:  Use of IT
Skill:  Concept
Objective:  16-2
26) How do e-learning centers, such as the one developed by International Rectifier, help salespeople make sales?
A) Salespeople can refresh their knowledge about company products prior to making sales calls.
B) Salespeople can attend training sessions from their home offices, which saves time and money.
C) E-learning centers enable salespeople and customers to interact through Web conferencing.
D) Evaluation diagnostic tools in e-learning centers help managers monitor sales personnel.
E) E-learning centers provide product information to current customers.
Answer:  A
Diff: 3     Page Ref: 468
AACSB:  Use of IT
Skill:  Concept
Objective:  16-2


27) Commissions or bonuses that a salesperson receives from a company are categorized as the ________.
A) base salary
B) fixed amount
C) variable amount
D) fringe benefit
E) pension plan
Answer:  C
Diff: 2     Page Ref: 468
Skill:  Concept
Objective:  16-2

28) All of the following are a basic type of compensation plan for salespeople EXCEPT ________.
A) straight commission
B) straight salary
C) salary and commission
D) commission plus bonus
E) salary plus bonus
Answer:  D
Diff: 2     Page Ref: 468
Skill:  Concept
Objective:  16-2

29) Companies are increasingly moving away from high commission compensation plans because such plans often lead to salespeople ________.
A) undermining the work of the inside sales team
B) ignoring management and marketing objectives
C) being too pushy and ruining customer relationships
D) working multiple sales jobs to maximize their income
E) spend too much time traveling between customers
Answer:  C
Diff: 3     Page Ref: 469
Skill:  Concept
Objective:  16-2
30) Which sales management tool helps a salesperson know which customers to visit and which activities to carry out during a week?
A) time-and-duty analysis
B) sales force automation systems
C) call plan
D) sales quota plan
E) positive incentives plan
Answer:  C
Diff: 2     Page Ref: 469
Skill:  Concept
Objective:  16-2
31) Companies are always looking for ways to increase face-to-face selling time. All of the following are ways to accomplish this goal EXCEPT ________.
A) using phones and video conferencing instead of traveling
B) simplifying record keeping and other administrative tasks
C) developing better sales-call and routing plans
D) reducing the number of customers each sales rep must visit
E) supplying more and better customer information
Answer:  D
Diff: 3     Page Ref: 469
AACSB:  Analytic Skills
Skill:  Concept
Objective:  16-2

32) Which of the following is an advantage created by the use of a sales force automation system?
A) lower costs for training sales personnel
B) increased motivation to acquire new customers
C) decreased need for an inside sales force
D) stronger organizational climate developed by the sales team
E) more efficient scheduling of sales calls and sales presentations
Answer:  E
Diff: 3     Page Ref: 470
AACSB:  Use of IT
Skill:  Concept
Objective:  16-2

33) Firms that have adopted sales force automation systems  most likely use all of the following tools EXCEPT ________.
A) customer-contact and relationship management software
B) time-and-duty analysis software
C) smart phones
D) laptop computers
E) Webcams for videoconferencing
Answer:  B
Diff: 2     Page Ref: 470
AACSB:  Use of IT
Skill:  Concept
Objective:  16-2

34) The process of receiving drug marketing information through product Web sites is known as ________.
A) e-detailing
B) e-learning
C) Web conferencing
D) Web interfacing
E) automated selling
Answer:  A
Diff: 2     Page Ref: 470
AACSB:  Use of IT
Skill:  Concept
Objective:  16-2

35) Which of the following is a potential drawback of using Web-based technologies for making sales presentations and servicing accounts?
A) Salespeople have to invest more time in preparing for this type of interaction with customers.
B) The cost of the technology outweighs any savings gained by eliminating the need for travel.
C) The systems can intimidate salespeople who are unfamiliar with the technology.
D) Customers are less likely to buy the product when a Web conference is used.
E) Customers lack the technology required to participate in a Web conference.
Answer:  C
Diff: 3     Page Ref: 471
AACSB:  Use of IT
Skill:  Concept
Objective:  16-2

36) A company that treats its salespeople as valuable contributors with unlimited income opportunities has developed a(n) ________ that will have fewer turnovers and higher sales force performance.
A) sales force system
B) organizational climate
C) compensation package
D) sales structure
E) workload
Answer:  B
Diff: 2     Page Ref: 471
Skill:  Concept
Objective:  16-2

37) A sales ________ is the standard that establishes the amount each salesperson should sell and how sales should be divided among the company's products .
A) goal
B) task
C) quota
D) incentive
E) contest
Answer:  C
Diff: 2     Page Ref: 471
Skill:  Concept
Objective:  16-2

38) Sales ________ encourage a sales force to make a selling effort that is above and beyond the normal expectation.
A) contests
B) quotas
C) meetings
D) reports
E) plans
Answer:  A
Diff: 1     Page Ref: 471
Skill:  Concept
Objective:  16-2

39) A salesperson's ________ is often related to how well he or she meets a sales quota.
A) profit-sharing plan
B) compensation
C) call report
D) sales report
E) expense report
Answer:  B
Diff: 1     Page Ref: 471
Skill:  Concept
Objective:  16-2

40) A(n) ________ is a salesperson's write-up of his or her completed sales activities.
A) call plan
B) call report
C) sales report
D) expense report
E) time-and-duty analysis
Answer:  B
Diff: 2     Page Ref: 471
Skill:  Concept
Objective:  16-2

41) Which of the following questions would provide management with the LEAST beneficial information regarding the performance of its sales force?
A) Is the sales force meeting its profit objectives?
B) Is the sales force working well with the marketing team?
C) Are sales force costs in line with sales force outcomes?
D) Is the sales force accomplishing its customer relationship objectives?
E) Does the sales force complete its sales reports and expense reports in a timely manner?
Answer:  E
Diff: 3     Page Ref: 472
AACSB:  Reflective Thinking
Skill:  Concept
Objective:  16-2

42) Prospecting is the step in the selling process in which the salesperson ________.
A) gathers information about a prospective customer before making a sales call
B) meets the customer for the first time
C) identifies qualified potential customers
D) tells the product's "value story" to the customer
E) clarifies and overcomes customer objections to buying
Answer:  C
Diff: 2     Page Ref: 472
AACSB:  Communication
Skill:  Concept
Objective:  16-3

43) A salesperson in the prospecting stage most likely identifies potential customers through all of the following methods EXCEPT ________.
A) referrals from competing salespeople
B) referrals from current customers
C) referrals from dealers
D) referrals from suppliers
E) cold calling
Answer:  A
Diff: 2     Page Ref: 472
Skill:  Concept
Objective:  16-3


44) Which of the following is the LEAST relevant characteristic that a salesperson should consider when qualifying a prospect?
A) financial ability
B) longevity in the market
C) special needs
D) location
E) volume of business
Answer:  B
Diff: 3     Page Ref: 472
AACSB:  Analytic Skills
Skill:  Concept
Objective:  16-3
45) During the prospecting stage, a salesperson needs to discriminate between good leads and poor leads, which is known as ________.
A) closing
B) referring
C) presenting
D) qualifying
E) approaching
Answer:  D
Diff: 2     Page Ref: 472
Skill:  Concept
Objective:  16-3

46) A salesperson who researches a company's buying styles and product line is most likely in the ________ stage of the selling process.
A) prospecting
B) preapproach
C) approach
D) presentation
E) closing
Answer:  B
Diff: 1     Page Ref: 473
Skill:  Concept
Objective:  16-3


47) The salesperson meets the customer for the first time in the ________ step of the selling process.
A) prospecting
B) qualifying
C) preapproach
D) approach
E) presentation
Answer:  D
Diff: 1     Page Ref: 473
Skill:  Concept
Objective:  16-3

48) Technologies such as CDs, DVDs, handheld computers, interactive white boards, and laptop computers enable salespeople to enhance the ________ stage of the selling process.
A) prospecting and qualifying
B) preapproach
C) presentation and demonstration
D) closing
E) follow-up
Answer:  C
Diff: 2     Page Ref: 474
AACSB:  Use of IT
Skill:  Concept
Objective:  16-3
49) Which type of sales approach is best for today's customers who expect answers, results, and useful products?
A) hard-sell
B) customer-solution
C) razzle-dazzle
D) sales development
E) personal relationship
Answer:  B
Diff: 2     Page Ref: 473
Skill:  Concept
Objective:  16-3


50) According to a survey of purchasers, ________ and ________ skills are the most important qualities for a salesperson.
A) listening; problem-solving
B) presentation; listening
C) candor; problem-solving
D) concern; interpersonal
E) presentation; problem-solving
Answer:  A
Diff: 2     Page Ref: 474
AACSB:  Communication
Skill:  Concept
Objective:  16-3

51) A salesperson should seek out, clarify, and overcome any customer objections during the sales presentation in order to ________.
A) offer the buyer a discount for placing an order
B) minimize the buyer's concerns about the product
C) compliment the buyer for mentioning the objections
D) turn the objections into reasons for buying
E) turn the objections into an opportunity for humor
Answer:  D
Diff: 3     Page Ref: 474
AACSB:  Communication
Skill:  Concept
Objective:  16-3

52) The step of ________ is difficult for some salespeople because they lack confidence, feel guilty about asking for an order, or may not recognize the right time to ask for an order.
A) approaching the prospect
B) making a presentation
C) handling objections
D) closing the sale
E) following up
Answer:  D
Diff: 2     Page Ref: 474
Skill:  Concept
Objective:  16-3

53) Salespeople should be trained to recognize ________ signals from the buyer, which can include physical actions such as leaning forward and nodding or asking questions about prices and credit terms.
A) qualifying
B) approach
C) objection
D) closing
E) follow-up
Answer:  D
Diff: 1     Page Ref: 474-475
AACSB:  Communication
Skill:  Concept
Objective:  16-3

54) Which step in the sales process is necessary to ensure customer satisfaction and repeat business?
A) proper approach
B) professional presentation
C) handling objections
D) qualifying prospects
E) follow-up
Answer:  E
Diff: 1     Page Ref: 475
Skill:  Concept
Objective:  16-3

55) The sales force of CDW Corporation, as described in the opening scenario, develops strong relationships with customers as part of the ________ stage of the selling process.
A) prospecting
B) approach
C) demonstration
D) closing
E) follow-up
Answer:  E
Diff: 2     Page Ref: 475
Skill:  Concept
Objective:  16-2


56) A ________ consists of short-term incentives to encourage the immediate purchase of a product or service.
A) patronage reward
B) segmented promotion
C) sales incentive
D) sales promotion
E) publicity stunt
Answer:  D
Diff: 2     Page Ref: 475
Skill:  Concept
Objective:  16-4
57) Value merchant salespeople document and demonstrate the superior value of their products and services in hopes of ________.
A) earning business from customers based on low prices
B) gaining long-term business from customers
C) closing deals quickly to meet team sales quotas
D) gaining short-term sales that increase annual sales volume
E) challenging customers to find better deals for products and services
Answer:  B
Diff: 3     Page Ref: 476
Skill:  Concept
Objective:  16-4

58) A salesperson who would be categorized as a value spendthrift has which of the following behaviors?
A) believes management pursues a value-driven strategy
B) regularly gains more business at the same price
C) concedes on price in order to quickly close sales deals
D) documents claims to customers about superior monetary value
E) explains to the firm that it needs more evidence of excellent value
Answer:  C
Diff: 3     Page Ref: 476
Skill:  Concept
Objective:  16-4

59) Value merchant salespeople possess which of the following characteristics?
A) They give away services for free in order to close sales deals.
B) They tell the company that customers are only concerned with price.
C) They focus on revenue and volume components of their compensation plan.
D) They give price concessions without making changes in the market offering.
E) They make sales based on cost of ownership comparisons against competitors.
Answer:  E
Diff: 3     Page Ref: 476
Skill:  Concept
Objective:  16-4

60) Sales promotions are targeted toward all of the following EXCEPT ________.
A) retailers
B) investors
C) final buyers
D) business customers
E) members of the sales force
Answer:  B
Diff: 2     Page Ref: 477
Skill:  Concept
Objective:  16-4
61) The rapid growth of sales promotions in consumer markets is most likely the result of all of the following factors EXCEPT ________.
A) consumers and large retailers becoming more deal oriented
B) product managers facing pressure to increase current sales
C) competing brands attempting to differentiate from each other
D) consumers using the Internet to search for deals and save money
E) advertising efficiency on the decline because of rising costs and media clutter
Answer:  D
Diff: 3     Page Ref: 477-478
Skill:  Concept
Objective:  16-4

62) Consumers are increasingly ignoring promotions and not making immediate purchases because of ________.
A) advertising specialization
B) promotion clutter
C) promotional marketing
D) advertising clutter
E) promotion fatigue
Answer:  B
Diff: 1     Page Ref: 478
Skill:  Concept
Objective:  16-4

63) Sellers use trade promotions for all of the following reasons EXCEPT to ________.
A) encourage retailers to carry more inventory
B) convince retailers to advertise the product
C) gain more shelf space for the product
D) encourage salespeople to sign up new accounts
E) persuade retailers to buy products in advance
Answer:  D
Diff: 2     Page Ref: 478
Skill:  Concept
Objective:  16-4


64) Instead of creating only short-term sales or temporary brand switching, ________ should reinforce a product's position and build long-term customer relationships.
A) sales promotions
B) promotion clutter
C) public relations
D) trade promotions
E) advertising
Answer:  A
Diff: 2     Page Ref: 478
Skill:  Concept
Objective:  16-4
65) Of the main consumer promotion tools, which is the MOST effective for introducing a new product or creating excitement for an existing one?
A) coupons
B) samples
C) cash refunds
D) price packs
E) contests
Answer:  B
Diff: 2     Page Ref: 479
Skill:  Concept
Objective:  16-4

66) Which of the following consumer promotion tools is the MOST costly for companies ?
A) samples
B) coupons
C) premiums
D) cash refunds
E) price packs
Answer:  A
Diff: 2     Page Ref: 479
Skill:  Concept
Objective:  16-4

67) Which consumer promotion tool requires consumers to send a proof of purchase to the manufacturer?
A) cents-off deals
B) coupons
C) samples
D) cash refunds
E) promotional products
Answer:  D
Diff: 2     Page Ref: 480
Skill:  Concept
Objective:  16-4

68) Which of the following involves marking a reduced price directly on a product's packaging and often results in the stimulation of short-term sales?
A) promotional products
B) patronage rewards
C) price packs
D) samples
E) rebates
Answer:  C
Diff: 2     Page Ref: 480
Skill:  Concept
Objective:  16-4
69) ________ are goods offered either free or at low cost as an incentive to buy a product.
A) Coupons
B) Premiums
C) Price packs
D) Cash refund offers
E) Point-of-purchase promotions
Answer:  B
Diff: 2     Page Ref: 480
Skill:  Concept
Objective:  16-4

70) A ________ has the advertiser's name on it and is given as a gift to consumers.
A) sample
B) price pack
C) cents-off deal
D) promotional product
E) corporate identity material
Answer:  D
Diff: 1     Page Ref: 480
Skill:  Concept
Objective:  16-4

71) Which consumer promotion offers consumers the chance to win something by presenting them with an item such as a scratch-off card or a bingo number ?
A) game
B) contest
C) price pack
D) sweepstakes
E) point-of-purchase promotion
Answer:  A
Diff: 1     Page Ref: 480
Skill:  Concept
Objective:  16-4


72) Marathons, concerts, and festivals with corporate sponsors are examples of ________.
A) point-of-purchase promotions
B) business promotions
C) trade promotions
D) event marketing
E) personal selling
Answer:  D
Diff: 1     Page Ref: 481
Skill:  Concept
Objective:  16-4
73) Business promotion tools are used for all of the following reasons EXCEPT to ________.
A) generate business leads
B) stimulate purchases
C) reward customers
D) motivate salespeople
E) increase manufacturing
Answer:  E
Diff: 2     Page Ref: 481
Skill:  Concept
Objective:  16-4

74) Trade shows offer manufacturers the opportunity to do all of the following EXCEPT ________.
A) establish a sales contest
B) find new sales leads
C) contact customers
D) introduce new products
E) educate customers
Answer:  A
Diff: 2     Page Ref: 482
Skill:  Concept
Objective:  16-4

75) Which of the following questions would be the best one to help a marketer evaluate the return on a sales promotion investment?
A) Did the promotion run too long or too short?
B) Did customers enjoy the events associated with the promotion?
C) Did customers search the promotion's Web site for additional product information?
D) Did the promotion increase purchases from current customers or attract new customers?
E) Did the distribution of the promotional information match consumer expectations and needs?
Answer:  D
Diff: 3     Page Ref: 482
AACSB:  Analytic Skills
Skill:  Concept
Objective:  16-4

76) Today, most salespeople are well-educated, well-trained professionals who work to build and maintain long-term customer relationships by listening to their customers, assessing their needs, and organizing the company's efforts to solve customer problems.
Answer:  TRUE
Diff: 3     Page Ref: 458
Skill:  Concept
Objective:  16-1

77) Personal selling is the interpersonal component of the promotion mix.
Answer:  TRUE
Diff: 2     Page Ref: 459
AACSB:  Communication
Skill:  Concept
Objective:  16-1
78) Some corporations have no sales force, while others utilize sales agents, brokers, or manufacturer's reps.
Answer:  TRUE
Diff: 2     Page Ref: 459
Skill:  Concept
Objective:  16-1

79) Developing sales force strategy and structure is a minor element of sales force management and is an aspect that most companies fail to spend much time considering.
Answer:  FALSE
Diff: 1     Page Ref: 461
Skill:  Concept
Objective:  16-2

80) Of all the ways to structure a sales force, product sales force structure is most effective in helping the company to become more customer focused and build closer relationships with important customers.
Answer:  FALSE
Diff: 2     Page Ref: 461
Skill:  Concept
Objective:  16-2

81) The growth of product management has contributed to the increasing adoption of customer sales force structures.
Answer:  FALSE
Diff: 2     Page Ref: 461
Skill:  Concept
Objective:  16-2


82) Ken Klein is a Superior Frozen Foods salesman responsible for customers in the southwest region of Texas. Superior Frozen Foods most likely uses a territorial sales force structure.
Answer:  TRUE
Diff: 3     Page Ref: 461
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2

83) Blackstone Tools manufactures screwdrivers, wrenches, and pliers, which are sold at large hardware stores. John Garcia handles the Home Depot account, while Melinda West manages the Lowe's account. Blackstone Tools most likely uses a product sales force structure.
Answer:  FALSE
Diff: 3     Page Ref: 461-462
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2
84) Complex sales force structures include specialization by customer and territory, by product and territory, by product and customer, and by territory, product, and customer.
Answer:  TRUE
Diff: 2     Page Ref: 462
Skill:  Concept
Objective:  16-2

85) Hewlett-Packard salespeople spend more time with customers now that their administrative requirements have been decreased.
Answer:  TRUE
Diff: 2     Page Ref: 463
Skill:  Concept
Objective:  16-2

86) The workload approach to set sales force size is outdated.
Answer:  FALSE
Diff: 2     Page Ref: 464
Skill:  Concept
Objective:  16-2

87) Blue Star Supply Company wants its outside salespeople to spend more time with customers. One way for Blue Star to accomplish this goal would be for the company to hire additional technical support people and sales assistants.
Answer:  TRUE
Diff: 3     Page Ref: 464-465
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2


88) As a result of the federal government's Do Not Call Registry, telemarketing is now rarely used.
Answer:  FALSE
Diff: 2     Page Ref: 465
AACSB:  Communication
Skill:  Concept
Objective:  16-2

89) Team selling is ideal when customer problems become more complex and customers become larger and more demanding. Sales teams have the advantage of uncovering problems that an individual would not, and sales teams can develop new opportunities as well.
Answer:  TRUE
Diff: 2     Page Ref: 466
AACSB:  Communication
Skill:  Concept
Objective:  16-2
90) A-1 Pharmaceuticals requires new salespeople to receive training through seminars, sales meetings, and e-learning sessions before they meeting customers. The program used by A-1 is typical for U.S. companies that rely on skilled and knowledgeable salespeople.
Answer:  TRUE
Diff: 2     Page Ref: 467
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2

91) To discourage a salesperson from ruining a customer relationship by pushing too hard to close a deal in order to earn a commission, companies are designing compensation plans that reward salespeople for building customer relationships and growing the long-run value of each customer.
Answer:  TRUE
Diff: 3     Page Ref: 469
AACSB:  Communication
Skill:  Concept
Objective:  16-2

92) Sales force automation systems have been developed for improving how salespeople feel about their opportunities and value.
Answer:  FALSE
Diff: 1     Page Ref: 470
Skill:  Concept
Objective:  16-2


93) If Johnny Page's company is like most consumer goods companies today, he can boost sales force morale and performance through his organizational climate, sales quotas, and positive incentives.
Answer:  TRUE
Diff: 2     Page Ref: 471
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2

94) Formal sales force evaluations require management to develop and communicate clear standards for judging performance, and they provide salespeople with constructive feedback and motivation to perform well.
Answer:  TRUE
Diff: 1     Page Ref: 471
AACSB:  Communication
Skill:  Concept
Objective:  16-2

95) During the presentation step of the selling process, the salesperson tells the customer the "value story" of the product.
Answer:  TRUE
Diff: 1     Page Ref: 473
AACSB:  Communication
Skill:  Concept
Objective:  16-3
96) Because customers almost always have objections during the presentation or closing step of the selling process, all salespeople need special training in how to deal with customer objections.
Answer:  TRUE
Diff: 2     Page Ref: 474
Skill:  Concept
Objective:  16-3

97) Sales promotion consists of long-term incentives to encourage purchases or sales of a product or service.
Answer:  FALSE
Diff: 1     Page Ref: 475
Skill:  Concept
Objective:  16-4

98) A product demonstration that occurs in a grocery store or a department store is an example of a point-of-purchase promotion.
Answer:  TRUE
Diff: 1     Page Ref: 480
Skill:  Concept
Objective:  16-4

99) Manufacturers direct more sales promotion dollars toward final consumers than toward retailers.
Answer:  FALSE
Diff: 2     Page Ref: 481
Skill:  Concept
Objective:  16-4

100) Manufacturers may offer an allowance in return for the retailer's agreement to feature the manufacturer's products in some way.
Answer:  TRUE
Diff: 2     Page Ref: 481
Skill:  Concept
Objective:  16-4

101) In a short essay, describe the nature of personal selling and the role of the sales force.
Answer:  Today, most salespeople are well-educated and well-trained professionals who work to build and maintain long-term customer relationships by listening to their customers, assessing customer needs, and organizing the company's efforts to solve customer problems. Salespeople act as order takers, order getters, and creative sellers. Personal selling is the interpersonal arm of the promotion mix. The sales force acts as a critical link between a company and its customers. Salespeople represent the company to the customer and the customer to the company to produce customer satisfaction and company profit.
Diff: 2     Page Ref: 458-460
Skill:  Application
Objective:  16-1
102) Discuss the differences between the three major sales force structures. What are the potential benefits of each structure?
Answer:  In the territorial sales force structure, each salesperson is assigned to an exclusive geographic area and sells the company's full line of products or services to all customers in that territory. This organization clearly defines each person's job, fixes accountability, and increases the person's desire to build local business relationships that improve selling effectiveness. The product sales force structure allows the sales force to sell along product lines; the seller becomes very knowledgeable about products. This method can cause duplication of efforts and several salespersons calling on the same accounts. The customer sales force structure organizes along customer or industry lines; this can help a company to become more customer focused and build closer relationships with important customers.
Diff: 3     Page Ref: 461-462
AACSB:  Reflective Thinking
Skill:  Application
Objective:  16-2


103) Why are more companies using team selling? What are its pros and cons?
Answer:  Team selling is useful to service large, complex accounts. Sales teams can uncover problems, solutions, and sales opportunities that no individual salesperson could. The move to team selling is in part a reaction to similar changes within customers' buying organizations; selling teams now call on buying teams. Some pitfalls exist in the team approach. Selling teams can confuse or overwhelm customers who are used to working with only one salesperson. Some salespersons have trouble working with others. Finally, difficulties in evaluating individual contributions to the team selling effort can create some sticky compensation issues.
Diff: 2     Page Ref: 466
AACSB:  Reflective Thinking
Skill:  Application
Objective:  16-2

104) How do successful companies recruit and train their salespeople? What are the objectives of most sales force training programs?
Answer:  During the recruitment step, a company should assess the sales job itself and the characteristics of its most successful salespeople to determine the traits needed by a successful salesperson in that industry. Some companies give sales applicants formal tests, while others only interview applicants. Following selection, orientation and training must be conducted based upon the knowledge and skill levels of the recruits. Most companies train their new salespeople through seminars, sales meetings, and e-learning sessions. Training programs should teach salespeople about customers, about selling effectively, and about the company's products.
Diff: 3     Page Ref: 466-468
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2
105) Describe some of the methods used to supervise salespeople and help them work more efficiently.
Answer:  Through supervision, or helping salespeople "work smart," management can help salespeople do the right things in the right way. This includes helping salespeople identify target customers and manage their time. A weekly, monthly, or annual call plan is used in many companies to show salespeople which customers and potential customers to call on within a given time period. And because companies are always looking for ways to make their employees more efficient, they often use a time-and-duty-analysis to identify how salespeople spend their time and how they can spend more time actively selling. To increase efficiency, many companies use sales force automation systems–including laptops, smart phones, videoconferencing, and relationship management softwareso that their sales force can work anywhere, anytime.
Diff: 2     Page Ref: 469-470
AACSB:  Use of IT
Skill:  Application
Objective:  16-2


106) In a brief essay, explain methods of evaluating the performance of a sales force. Why is it important for a sales force to be evaluated?
Answer:  To evaluate its sales force, management needs to get regular information about the performance of its salespeople. Sales reports, including weekly or monthly work plans and longer-term marketing plans, are the most important source. Management also uses salespeople's expense reports and call reports to gauge sales call volume and success rates. In addition, management can use sales and profit performance data in each salesperson's territory, along with personal observation and customer surveys, to identify strengths and weaknesses in the sales force. Taking information gathered from these sources into consideration, management should provide salespeople with constructive feedback aimed at helping each salesperson succeed. Evaluating a sales force is important because that is how a company can measure its return on sales investment.
Diff: 2     Page Ref: 471-472
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2

107) Provide the seven steps in the selling process. What would be the two most difficult steps for most salespeople and why?
Answer:  Prospecting and qualifying begin the process, followed by the preapproach. Next, the salesperson makes an approach to make a presentation or demonstration. Handling objections follows, leading into closing the sale. Each sale requires a follow up to make it complete. For most salespeople, especially new ones, the prospecting and closing steps are the most difficult and require much skill. For a salesperson unfamiliar with how to identify good leads with bad ones, prospecting can be difficult. Closing can be difficult because salespeople may lack the confidence to ask for an order, or they may not recognize the appropriate moment to close a sale.
Diff: 2     Page Ref: 472-475
AACSB:  Reflective Thinking
Skill:  Application
Objective:  16-3
108) What is the follow-up step of the selling process?Why is it important?
Answer:  The follow-up step is important if the salesperson wants to ensure customer satisfaction and repeat business. Right after closing, the salesperson should complete any details on delivery time, purchase terms, and other matters. The salesperson then should schedule a follow-up call when the initial order is received, to make sure there is proper installation, instruction, and servicing. This visit would reveal any problems, assure the buyer of the salesperson's interest, and reduce any buyer concerns that might have arisen since the sale.
Diff: 2     Page Ref: 475
AACSB:  Reflective Thinking
Skill:  Application
Objective:  16-3


109) What is the relationship between the personal selling process and the management of customer relationships?
Answer:  The selling process should be understood in the context of building and maintaining profitable customer relationships, as companies are interested in more than simply securing a one-time sale. Instead, they are interested in winning and keeping major customers, creating ongoing, mutually beneficial relationships. Because they have significant contact with customers, salespeople play an important role in building and managing profitable customer relationships. Salespeople need to think of the first sale as the beginning of a relationship that will involve listening to customers, understanding their needs, and helping to coordinate the company's efforts to create customer value.
Diff: 2     Page Ref: 475
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-4

110) In a short essay, explain how sales promotion campaigns are developed and implemented.
Answer:  Sales promotion campaigns first call for setting sales promotions objectives and selecting consumer, trade, business, and/or sales force promotion tools to achieve those objectives. Other necessary decisions include the size of the incentive, the conditions for participation, how to promote and distribute the promotion package, and the length of the promotion. After the campaign has been implemented, the company evaluates the results.
Diff: 2     Page Ref: 482
Skill:  Application
Objective:  16-4
111) Happy Pet  is a large petfood company that sells its petfood to retail pet supply stores as well as wholesalers. The sales force at Happy Pet is LEAST likely to do which of the following?
A) work directly with final customers
B) build relationships with wholesalers
C) help retailers effectively sell the company's products
D) communicate regularly with business customers
E) represent wholesalers and retailers to the company
Answer:  A
Diff: 2     Page Ref: 459
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-1


112) At Finley's Fine Goods, members of the sales force and marketing department tend to have disagreements when things go wrong with a customer. The marketers blame the salespeople for poorly executing their strategies, while the salespeople blame the marketers for being out of touch with the customer. Which of the following steps should upper-level management at Finley's Fine Goods take to help bring the sales and marketing functions closer together?
A) establish a customer sales force structure
B) establish a complex sales force structure
C) appoint a new sales force manager
D) adopt a sales force automation system
E) appoint a chief revenue officer
Answer:  E
Diff: 2     Page Ref: 460-461
AACSB:  Reflective Thinking
Skill:  Application
Objective:  16-1

113) Ultra-Tech, Inc. has decided to switch to a customer sales force structure. Which of the following advantages is the company now LEAST likely to enjoy?
A) The company can become more customer-focused.
B) The company can better serve different industries.
C) The company can build closer relationships with important customers.
D) The company can better serve current customers and find new customers.
E) The company can expect salespeople to develop in-depth knowledge of numerous and complex product lines.
Answer:  E
Diff: 3     Page Ref: 462
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2
114) Johnson Business Solutions, Inc., maintains one sales force for its copy machines and a separate sales force for its computer systems. Johnson Business Solutions utilizes a ________ structure.
A) product sales force
B) customer sales force
C) territorial sales force
D) a combination of B and C
E) complex sales force
Answer:  A
Diff: 2     Page Ref: 461
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2


115) Morrill Motors splits the United States into 10 sales regions. Within each of those regions, the company maintains two sales teamsone for existing customers and one for prospects. What type of sales force structure does Morrill Motors use?
A) territorial
B) product
C) customer
D) complex
E) workload
Answer:  D
Diff: 2     Page Ref: 462
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2

116) J &M Manufacturing has 2,000 Type-A accounts, each requiring 35 calls per year, and 1,000 Type-B accounts, each requiring 15 calls per year. What is the sales force's workload?
A) 15,000 calls
B) 35,000 calls
C) 70,000 calls
D) 85,000 calls
E) 95,000 calls
Answer:  D
Diff: 3     Page Ref: 464
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2
117) Stahl, Inc., has 1,000 Type-A accounts, each requiring 28 calls per year, and 2,200 Type-B accounts, each requiring 15 calls per year. If each salesperson at Stahl, Inc., can make 1,500 sales calls per year, approximately how many salespeople will be needed?
A) 31
B) 35
C) 41
D) 45
E) 48
Answer:  C
Diff: 3     Page Ref: 464
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2


118) East Bay Communications has increased its inside sales force. This will help East Bay in all  EXCEPT which one of the following ways?
A) East Bay salespeople will have more time to sell to major accounts.
B) East Bay salespeople will have more time to find major new prospects.
C) East Bay salespeople will have more time to provide after-the-sale customer service.
D) East Bay customers will have questions answered in a timely manner.
E) East Bay customers will have full access to sales automation technology.
Answer:  E
Diff: 2     Page Ref: 464-465
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2

119) You are applying for a position with the inside sales force at Carson Medical Sales. If you earn the job, you will most likely be expected to perform all of the following tasks EXCEPT ________.
A) confirm appointments for outside salespeople
B) use the Internet to qualify prospects
C) use the telephone to find new leads
D) follow up on product deliveries
E) travel to visit customers
Answer:  E
Diff: 2     Page Ref: 464-465
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2
120) The sales force at Messimer Computing recently began telemarketing and Web selling. How will telemarketing and Web selling most likely benefit Messimer Computing?
A) The inside sales force of Messimer will receive better compensation than the outside sales force.
B) Messimer sales reps will need to spend less face-to-face time with large, high-value customers.
C) Messimer sales reps will be able to service hard-to-reach customers more effectively.
D) Messimer sales reps will be able to work from home offices more regularly.
E) The outside sales force of Messimer will be freed up to work more with the marketing department.
Answer:  C
Diff: 3     Page Ref: 465
Skill:  Application
Objective:  16-2


121) An IBM sales representative is giving a product demonstration to a Best Buy representative. Assisting with the demonstration are an engineer, a financial analyst, and an information systems specialist. If IBM wins the Best Buy account, then all four IBM representatives will service the Best Buy account. This is an example of ________.
A) team selling
B) territorial selling
C) inside selling
D) prospecting
E) sales promoting
Answer:  A
Diff: 1     Page Ref: 466
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2

122) Sales have been slow recently at B & B Materials, so management has organized a training program to improve the performance of its sales force. Which of the following would most likely lead to improved sales for B & B Materials?
A) tests to measure the analytic and organizational skills of the sales force
B) information about the marketing strategies used by competitors
C) tests to identify the personality traits of sales force members
D) a time-and-duty analysis for each salesperson
E) instructions on completing expense reports
Answer:  B
Diff: 2     Page Ref: 467
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2
123) The CEO of Comfy Carpet, Rick Hadley, was skeptical about  Web-based training until his sales manager explained that online training is  ________.
A) time consuming and difficult to use
B) used by all small companies
C) dynamic and interactive
D) cost competitive and efficient
E) useful to customers
Answer:  D
Diff: 1     Page Ref: 467
Skill:  Application
Objective:  16-2


124) At Deck Decor, a manufacturer of outdoor furniture and accessories, the marketing and sales force objectives are to grow relationships with existing customers and to acquire new business. Which of the following compensation plans should management establish to encourage the sales force to pursue both of these objectives?
A) straight salary
B) straight commission
C) salary plus bonus for new accounts
D) commission plus bonus for new accounts
E) salary plus commission plus bonus for new accounts
Answer:  E
Diff: 3     Page Ref: 468-469
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2

125) Mary Conti is sales manager for National Computer Training. She wants to evaluate the performance of her sales force that is responsible for the New England territory. Mary will most likely review all of the following in her evaluation EXCEPT ________.
A) call plans
B) sales reports
C) call reports
D) expense reports
E) territorial sales and profit reports
Answer:  A
Diff: 2     Page Ref: 471
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2
126) The sales force of Conway Pools has qualified a number of leads. Which of the following will most likely occur next?
A) The outside sales force will call on all prospects.
B) The outside sales force will close the deal with one of the prospects.
C) The outside sales force will learn as much as possible about the prospects.
D) The inside sales force will attend meetings with qualified prospects.
E) The inside sales force will  put together a presentation for the prospects.
Answer:  C
Diff: 3     Page Ref: 473
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-3


127) Marlene Arau is a member of the sales force at Urban Fashions, a clothing manufacturer. Marlene is preparing for a first meeting with a wholesaler who is a potential customer. Marlene is learning as much as she can about the wholesaler's organization. Marlene is in the ________ step of the personal selling process.
A) prospecting
B) qualifying
C) preapproach
D) approach
E) handling objections
Answer:  C
Diff: 2     Page Ref: 473
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-3

128) An insert in a Land's End catalog offers free shipping on your next purchase. This is an example of a ________.
A) sales promotion
B) POP promotion
C) trade promotion
D) price pack
E) premium
Answer:  A
Diff: 2     Page Ref: 475 and 477
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-4
129) Monty Boyd travels  frequently on West Coast Airlines for his job as an account manager. Monty earns points for every mile he flies, and he will soon have enough points to receive a free airline ticket. West Coast Airlines is building a customer relationship with Monty using which of the following?
A) publicity
B) POP reward
C) premium reward
D) sweepstakes program
E) frequency marketing program
Answer:  E
Diff: 1     Page Ref: 478
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-4


130) Toro ran a clever preseason promotion on some of its snow blower models, offering some money back if the snowfall in the buyer's market area turned out to be below average. This is an example of a(n) ________.
A) advertising specialty
B) premium pack
C) sweepstakes
D) price pack
E) rebate
Answer:  E
Diff: 2     Page Ref: 480
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-4

131) An example of a(n) ________ is a five-foot-high cardboard display of Tony the Tiger next to Frosted Flakes cereal boxes.
A) sample
B) POP promotion
C) POP pack
D) advertising promotion
E) premium
Answer:  B
Diff: 2     Page Ref: 480
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-4
132) Kirk Wilkins renewed his cell phone contract with Zip Wireless and purchased a new cell phone through the Zip Web site. If Kirk mails Zip his phone receipt, proof of purchase, and a completed form, he will receive $50 in the mail. What type of sales promotion is being used by Zip?
A) point of purchase
B) advertising specialty
C) premium
D) price pack
E) rebate
Answer:  E
Diff: 1     Page Ref: 480
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-4


Refer to the scenario below to answer the following questions.

    Reliable Tool Company is a manufacturer of hubs and axles for the trailer and heavy truck industry. Although Reliable Tool only has fifteen customers, the company is the sole supplier of hub and axle components to those customers. Monthly sales at Reliable Tool are approximately $1 million. "You might say we have all of our eggs in one basket," says owner Arthur Deetz. Therefore, it is critical that a competent sales force be maintained in order to nurture those few but large accounts. Ninety-five percent of  Reliable Tool's customers are located in Michigan, Ohio, and Indiana, which means that travel time to all customers is relatively short. However, given the nature of the industry, time spent with each customer is essential.

133) How would a customer sales force structure benefit Reliable Tool?
A) It would decrease the amount of travel required of each Reliable Tool salesperson.
B) It would enable ReliableTool salespeople to build close relationships with clients.
C) It would help Reliable Tool salespeople become experts on the specific parts they sell.
D) It would allow Reliable Tool management to better supervise and evaluate its salespeople.
E) It would eliminate the need for telemarketers and sales assistants at Reliable Tool .
Answer:  B
Diff: 1     Page Ref: 462
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2
134) Reliable Tool management is in the process of evaluating its salespeople to make sure they are value merchants instead of value spendthrifts.  Which of the following describes a Reliable Tool salesperson who is a value merchant?
A) The salesperson gives products away for free in order to close a deal.
B) The salesperson sells primarily on price comparisons with competitors.
C) The salesperson routinely gains more business at the same price.
D) The salesperson informs management that customers only care about price.
E) The salesperson regularly trades more business for lower prices.
Answer:  C
Diff: 2     Page Ref: 476
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-4


135) Which of the following promotions would be most appropriate for Reliable Tool to use in its attempt to promote its products and generate new business leads?
A) rebates
B) premiums
C) specialty advertising items
D) point-of purchase promotions
E) conventions and trade shows
Answer:  E
Diff: 1     Page Ref: 482
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-4

136) What type of company would be likely to use the territorial sales force structure?
Answer:  A company with only one product line to one industry with customers in many locations would most likely use a territorial sales force structure.
Diff: 2     Page Ref: 461
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2

137) What type of company would be likely to use a product sales force structure?
Answer:  A product sales force structure will most likely be used by companies that carry extensive product lines with the need to separate customers according to the products they buy.
Diff: 2     Page Ref: 461-462
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2
138) Explain how the workload approach helps companies set sales force size.
Answer:  Using this approach, the company first groups accounts into different classes according to size, account status, or other factors related to the amount of effort required to maintain them. The company can then determine the number of salespeople needed to call on each class of accounts the desired number of times.
Diff: 2     Page Ref: 464
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2

139) Why might a company need to hire both an inside and an outside sales force?
Answer:  Larger accounts may require special nurturing and face-to-face interaction, so an outside sales force can call on those customers. Smaller accounts and harder-to-reach customers may be able to be taken care of by an inside sales force.
Diff: 3     Page Ref: 464-465
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2
140) Why do many companies invest in ongoing training for their salespeople?
Answer:  Though training is expensive, it can be very effective in helping salespeople learn about the needs and motives of their customers, techniques for effectively selling, the company's objectives, and the strategies of major competitors. With this training, salespeople are able to better do their jobs, resulting in more revenue for the company.
Diff: 2     Page Ref: 468
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2

141) Compare the four types of compensation plans available to salespeople.
Answer:  A straight salary is a fixed amount that is not dependent on sales performance, while a straight commission is entirely based on sales performance. The two other types, salary plus bonus and salary plus commission, make a portion of the compensation fixed and a portion based on sales performance.
Diff: 3     Page Ref: 468-469
AACSB:  Reflective Thinking
Skill:  Application
Objective:  16-2

142) Why do sales supervisors provide their salespeople with annual call plans?
Answer:  The annual call plan shows which customers and prospects to call on in which months and which activities to carry out, giving supervisors more control over the activities of their salespeople.
Diff: 2     Page Ref: 469
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2
143) What does a time-and-duty analysis reveal?
Answer:  This tool, which can be used to help sales management determine how to increase selling time, indicates a salesperson's time spent selling, traveling, waiting, eating, taking breaks, and doing administrative chores.
Diff: 2     Page Ref: 469
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2

144) Why have firms adopted sales force automation systems?
Answer:  Many firms have adopted sales force automation systems to help their salespeople better manage their time, improve customer service, lower sales costs, and increase sales performance.
Diff: 2     Page Ref: 470
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-2

145) Why is a firm's organizational climate an important part of building a successful sales staff?
Answer:  How salespeople feel about their opportunities, value, and rewards for a good performance affects how well salespeople will perform; when salespeople are treated as special contributors and have great opportunities for income and promotion, their sales performance is higher.
Diff: 2     Page Ref: 471
Skill:  Application
Objective:  16-2

146) Why does a firm's number of prospects always equal or exceed its number of qualified customers?
Answer:  Prospecting identifies the total number of potential customers in an area; qualifying breaks that number of prospects down into the actual group that it is worthwhile for the salesperson to target.
Diff: 2     Page Ref: 472
AACSB:  Analytic Skills
Skill:  Application
Objective:  16-3

147) Why does a salesperson set call objectives?
Answer:  Call objectives might include qualifying the prospect, gathering more or better information, and/or making an immediate sale. With a call objective, a salesperson can be more focused on how to prepare for the sale.
Diff: 3     Page Ref: 473
Skill:  Application
Objective:  16-3
148) In what situation would a demonstration be especially critical during a salesperson's presentation?
Answer:  A demonstration may be important if the product's use or value can be better understood with a visual demonstration. For example, if comparing Brand A brass cleaner with another leading brand, a demonstration of how much more quickly Brand A works may be more convincing for the prospective buyer.
Diff: 3     Page Ref: 474
AACSB:  Reflective Thinking
Skill:  Application
Objective:  16-3

149) How does mobile couponing benefit both consumers and marketers?
Answer:  Consumers don't have to find and clip coupons . Mobile coupons allow marketers to carefully target customers and eliminate the costs associated with printing and distributing paper coupons.
Diff: 2     Page Ref: 479-480
AACSB:  Reflective Thinking
Skill:  Application
Objective:  16-4

150) What type of sales promotion would benefit a political candidate the most?
Answer:  A political candidate would likely benefit most from using specialty advertising items such as pencils or pens with the candidate's name or T-shirts with the candidate's name and/or photograph.
Diff: 3     Page Ref: 480
AACSB:  Reflective Thinking
Skill:  Application
Objective:  16-4
1) Amazon.com was the first company to use ________, which is technology that sorts through customer purchasing patterns to create personalized site content.
A) mass marketing
B) personalized marketing
C) records management
D) customer filtering
E) collaborative filtering
Answer:  E
Diff: 2     Page Ref: 489
AACSB:  Use of IT
Skill:  Concept
Objective:  17-1

2) What are the two main goals of direct marketing?
A) to identify a potential customer and obtain an immediate response
B) to obtain an immediate response and to facilitate a purchase
C) to obtain an immediate response and build a lasting customer relationship
D) to provide information and build a lasting customer relationship
E) to save marketing dollars and facilitate a purchase
Answer:  C
Diff: 2     Page Ref: 490
Skill:  Concept
Objective:  17-1

3) Modern direct marketers rely heavily on database technologies and the Internet, while early direct marketers primarily used direct mailers, telemarketing, and ________.
A) door-to-door salespeople
B) catalogs
C) POP promotions
D) e-mail
E) inside salespeople
Answer:  B
Diff: 1     Page Ref: 490
AACSB:  Use of IT
Skill:  Concept
Objective:  17-1

4) Amazon.com, eBay, and GEICO employ ________ as the only method of doing business with customers.
A) mass marketing
B) sales promotion
C) direct marketing
D) public relations
E) personal selling
Answer:  C
Diff: 1     Page Ref: 491
Skill:  Concept
Objective:  17-1

5) Direct marketing is continuing to become more ________ oriented.
A) television
B) Web
C) mail
D) telephone
E) radio
Answer:  B
Diff: 2     Page Ref: 491
AACSB:  Use of IT
Skill:  Concept
Objective:  17-1

6) All of the following are benefits of direct marketing for buyers EXCEPT ________.
A) access to numerous products
B) access to product reviews
C) guaranteed low prices
D) convenience
E) privacy
Answer:  C
Diff: 2     Page Ref: 492
Skill:  Concept
Objective:  17-1

7) All of the following are benefits of direct marketing for sellers EXCEPT ________.
A) efficiency in reaching markets
B) price and program flexibility
C) mass reach and frequency
D) lower cost-per-contact
E) efficiency in order processing
Answer:  C
Diff: 2     Page Ref: 492-493
Skill:  Concept
Objective:  17-1

8) One of the advantages of direct marketing for sellers is that direct marketing ________.
A) offers access to buyers outside local markets
B) eliminates the need for a company to employ a sales force
C) provides statistical information about industry buying habits
D) provides comparative information about customers and competitors
E) avoids expenses related to a storefront, such as rent, insurance, and utilities
Answer:  A
Diff: 3     Page Ref: 493
AACSB:  Reflective Thinking
Skill:  Concept
Objective:  17-1

9) Which of the following is essential for direct marketing to be effective?
A) an online presence
B) a good customer database
C) a well-trained sales force
D) inbound telephone marketing
E) digital direct marketing technologies
Answer:  B
Diff: 2     Page Ref: 493
Skill:  Concept
Objective:  17-1

10) A customer database is an organized collection of geographic, demographic, psychographic, and ________ data about individual customers or prospects.
A) ethical
B) cultural
C) medical
D) behavioral
E) sociological
Answer:  D
Diff: 2     Page Ref: 493
Skill:  Concept
Objective:  17-1

11) Information about a customer's age, income, and family make-up is in the ________ category of a customer database.
A) demographic
B) psychographic
C) geographic
D) behavioral
E) assessment
Answer:  A
Diff: 2     Page Ref: 493
Skill:  Concept
Objective:  17-1
12) Psychographics data in a customer database used by direct marketers includes information regarding a customer's ________ and ________.
A) interests; income
B) activities; opinions
C) age; buying preferences
D) opinions; age
E) hobbies; income
Answer:  B
Diff: 2     Page Ref: 493
Skill:  Concept
Objective:  17-1

13) All of the following are common uses for a direct marketing customer database EXCEPT ________.
A) generating sales leads
B) identifying prospective customers
C) profiling customers based on previous purchases
D) gathering marketing intelligence about competitors
E) building long-term customer relationships
Answer:  D
Diff: 3     Page Ref: 494
Skill:  Concept
Objective:  17-1

14) How does database marketing benefit consumers?
A) Companies make name-brand products and images readily available to customers.
B) Companies match customer needs and interests with products and services.
C) Customers receive better prices on products and services that they need.
D) Customers receive faster  and more reliable service from companies.
E) Customers receive instant credit from more companies.
Answer:  B
Diff: 3     Page Ref: 494
Skill:  Concept
Objective:  17-1

15) All of the following are forms of direct marketing EXCEPT ________.
A) personal selling
B) public relations
C) telephone marketing
D) direct-mail marketing
E) kiosk marketing
Answer:  B
Diff: 1     Page Ref: 495
Skill:  Concept
Objective:  17-2

16) Which kind of marketing involves sending an offer, announcement, reminder, or other item to a person at a particular address?
A) kiosk marketing
B) digital direct marketing
C) catalog marketing
D) direct-mail marketing
E) telephone marketing
Answer:  D
Diff: 1     Page Ref: 495
Skill:  Concept
Objective:  17-2

17) Catalogs, brochures, CDs, and DVDs are all examples of which type of marketing?
A) direct-response marketing
B) direct-mail marketing
C) digital direct marketing
D) kiosk marketing
E) online marketing
Answer:  B
Diff: 1     Page Ref: 495
Skill:  Concept
Objective:  17-2

18) Which of the following reasons is LEAST likely to explain why direct-mail marketing drives more than a third of all U.S. direct marketing sales?
A) less expensive than TV and magazine ads
B) high target market selectivity
C) ability to be personalized
D) measurable results
E) flexibility
Answer:  A
Diff: 3     Page Ref: 496
Skill:  Concept
Objective:  17-2

19) The use of which of the new forms of direct-mail marketing is booming?
A) fax mail
B) e-mail
C) voice mail
D) U.S. mail
E) instant messages
Answer:  B
Diff: 2     Page Ref: 496
Skill:  Concept
Objective:  17-2

20) Most companies that create print catalogs now also provide ________ catalogs to eliminate production, printing, and mailing costs.
A) DVD
B) e-mail
C) store
D) Web-based
E) personalized
Answer:  D
Diff: 2     Page Ref: 496
Skill:  Concept
Objective:  17-2

21) Which of the following is an advantage of printed catalogs over digital catalogs?
A) the ability to offer an almost unlimited amount of merchandise
B) efficiencies in production, printing, and mailing costs
C) a stronger emotional connection with customers
D) less competition for customers' attention
E) real-time merchandising
Answer:  C
Diff: 2     Page Ref: 497
AACSB:  Reflective Thinking
Skill:  Concept
Objective:  17-2

22) Marketers use ________ telephone marketing to receive orders from television ads and catalogs.
A) inbound
B) outbound
C) interactive
D) direct-response
E) business-to-business
Answer:  A
Diff: 1     Page Ref: 497
Skill:  Concept
Objective:  17-2


23) Which of the following is an advantage of a well-designed and targeted telemarketing plan?
A) real-time merchandising
B) high recruitment and referral rate
C) purchasing convenience for customers
D) emotional connections with customers
E) limitless merchandise available to customers
Answer:  C
Diff: 3     Page Ref: 497
AACSB:  Reflective Thinking
Skill:  Concept
Objective:  17-2
24) How has the National Do Not Call Registry changed the telemarketing industry?
A) Telemarketing for nonprofit groups has become nonexistent.
B) Telemarketing is no longer used by small and medium sized companies.
C) Telemarketing has replaced direct mail and personal selling because of low costs.
D) Telemarketers are more effectively developing relationships with new customers.
E) Telemarketers are more effectively managing relationships with existing customers.
Answer:  E
Diff: 3     Page Ref: 498
Skill:  Concept
Objective:  17-2

25) Why are historically online shops such as Zappos.com and JohnandKiras.com adding catalogs to their marketing methods?
A) to entertain customers with interesting products
B) to offer a wider array of merchandise
C) to save money and increase profits
D) to attract the attention of new customers
E) to reduce the need for telemarketers
Answer:  D
Diff: 3     Page Ref: 498
Skill:  Concept
Objective:  17-2

26) Which of the following is the most accurate name for a 30-minute television advertising program marketing a single product?
A) direct-response TV advertisement
B) home shopping channel
C) integrated marketing
D) direct-response commercial
E) infomercial
Answer:  E
Diff: 1     Page Ref: 499
Skill:  Concept
Objective:  17-2

27) What are two major forms of direct-response television marketing?
A) home television response and direct-response TV advertising
B) home shopping channels and infomercials
C) home-selling and toll-free response
D) call-in response and web-site response
E) home shopping channels and podcasts
Answer:  B
Diff: 2     Page Ref: 499
Skill:  Concept
Objective:  17-2
28) Direct-response advertisements always contain ________, making it easier for marketers to gauge the effectiveness of their sales pitches.
A) a mailing address for comments
B) a 1-800 number or Web address
C) a hit button to record the number of viewers
D) an order number
E) pop-ups
Answer:  B
Diff: 2     Page Ref: 500
Skill:  Concept
Objective:  17-2

29) Why have direct-response television commercials seen an increase in popularity in recent years?
A) It is has become simpler to replicate the success of classic direct-response TV ads that introduced items such as the Veg-O-Matic.
B) Traditional broadcast and cable advertising has become prohibitively expensive for many major corporations.
C) The ability to track phone calls and Web-site hits makes it easy to measure the return on advertising investment.
D) The sophisticated image of home shopping channels has given direct-response commercials more credibility.
E) Consumers are more likely to respond to this type of marketing than to other forms of direct marketing.
Answer:  C
Diff: 3     Page Ref: 500
Skill:  Concept
Objective:  17-2


30) A television program or entire channel dedicated to selling goods and services is known as a(n) ________.
A) direct-response television advertisement
B) home shopping channel
C) infomercial
D) digital catalog
E) kiosk
Answer:  B
Diff: 1     Page Ref: 500
Skill:  Concept
Objective:  17-2
31) Firms , such as Kodak and Fuji, are placing ________ in stores, airports, and other locations to provide people with information about products and services or to enable customers to place orders.
A) kiosks
B) TV monitors
C) wireless networks
D) cell phones
E) vending machines
Answer:  A
Diff: 1     Page Ref: 501
AACSB:  Use of IT
Skill:  Concept
Objective:  17-2

32) Ring-tone giveaways, mobile games, and text-in contests are all examples of ________ marketing.
A) kiosk
B) online
C) podcast
D) vodcast
E) mobile phone
Answer:  E
Diff: 1     Page Ref: 502
AACSB:  Use of IT
Skill:  Concept
Objective:  17-2


33) Marketers view mobile phones as the next big marketing medium for all of the following reasons EXCEPT ________.
A) More consumers are using their cell phones for text messaging, surfing the Web, and watching videos.
B) Unlike telemarketing, mobile phone marketing is initially appealing to most cell phone users.
C) Cell phones are very popular with the highly desirable 18-to-34-year-old demographic.
D) Cell phone users can respond instantly to time-sensitive offers.
E) Most consumers always have their cell phones with them.
Answer:  B
Diff: 3     Page Ref: 502
AACSB:  Use of IT
Skill:  Concept
Objective:  17-2
34) Which of the following enables consumers to download files from the Internet to a handheld device?
A) telemarketing
B) interactive TV
C) podcasting
D) infomercials
E) direct-mail
Answer:  C
Diff: 1     Page Ref: 503
AACSB:  Use of IT
Skill:  Concept
Objective:  17-2

35) ________ allows consumers to gain additional information about a product through the use of a remote control.
A) Mobile phone marketing
B) Infomercials
C) Podcasting
D) Vodcasting
E) Interactive television
Answer:  E
Diff: 1     Page Ref: 503
AACSB:  Use of IT
Skill:  Concept
Objective:  17-2


36) What is the fastest growing form of direct-marketing?
A) mobile-phone marketing
B) online marketing
C) interactive TV
D) direct-response television
E) podcasts
Answer:  B
Diff: 2     Page Ref: 504
Skill:  Concept
Objective:  17-3

37) The Internet gave birth to ________, which operate only on the Internet.
A) brick-and-mortar companies
B) click-and-mortar companies
C) big box companies
D) click-only companies
E) Web-and-mortar companies
Answer:  D
Diff: 1     Page Ref: 504
AACSB:  Use of IT
Skill:  Concept
Objective:  17-3
38) As one of the first ________, Amazon.com changed the rules of marketing and set the bar high for the online customer experience.
A) e-tailers
B) transaction sites
C) content sites
D) search engines
E) click-and-mortar companies
Answer:  A
Diff: 2     Page Ref: 504
AACSB:  Use of IT
Skill:  Concept
Objective:  17-3


39) New York Times on the Web, ESPN.com, and Encyclopedia Britannica Online are known as ________ because they provide financial, research, and other information.
A) search engines
B) content sites
C) portals
D) ISPs
E) e-tailers
Answer:  B
Diff: 2     Page Ref: 504
AACSB:  Use of IT
Skill:  Concept
Objective:  17-3

40) ________ is the term used to describe a company that does not use online marketing.
A) Offline business
B) Brick-and-mortar
C) Click-and-mortar
D) E-business
E) Corporate site
Answer:  B
Diff: 2     Page Ref: 504
Skill:  Concept
Objective:  17-3

41) The growth of the Internet caused many brick-and-mortar firms to ________ in response to customer demands and a changing marketplace.
A) become click-only firms
B) send out more catalogs
C) become click-and-mortar firms
D) develop more infomercials
E) expand their outside sales forces
Answer:  C
Diff: 2     Page Ref: 504
AACSB:  Use of IT
Skill:  Concept
Objective:  17-3
42) Which of the following is NOT one of the four major online marketing domains?
A) B2C (business-to-consumer)
B) B2R (business-to-retailer)
C) B2B (business-to-business)
D) C2C (consumer-to-consumer)
E) C2B (consumer-to-business)
Answer:  B
Diff: 2     Page Ref: 505
Skill:  Concept
Objective:  17-3
43) The popular press has paid the most attention to ________ online marketing, which is the online selling of goods and services to final consumers.
A) B2C
B) B2B
C) C2C
D) C2B
E) global
Answer:  A
Diff: 2     Page Ref: 505
Skill:  Concept
Objective:  17-3

44) B2B uses all of the following online resources to reach new business customers EXCEPT ________.
A) trading networks
B) social networks
C) e-mail
D) online product catalogs
E) customized Web sites
Answer:  B
Diff: 2     Page Ref: 506
AACSB:  Use of IT
Skill:  Concept
Objective:  17-3

45) The online exchange of goods and information between final consumers is called ________.
A) B2C
B) B2B
C) C2C
D) C2B
E) social networking
Answer:  C
Diff: 2     Page Ref: 507
Skill:  Concept
Objective:  17-3
46) Amazon.com Auctions, eBay, and Craigslist.com are popular market spaces that facilitate the online exchange of goods and information and are examples of ________ online marketing.
A) B2C
B) B2B
C) C2C
D) C2B
E) global commerce
Answer:  C
Diff: 2     Page Ref: 507
Skill:  Concept
Objective:  17-3
47) What is the benefit to companies of using blogs as marketing tools?
A) Blogs provide companies with additional revenue.
B) Blog content is easy to filter, monitor, and control.
C) Long-term customer relationships can be developed through blogs.
D) Demographic information about customers can be easily tracked.
E) Blogs are an inexpensive yet personal way to reach a fragmented audience.
Answer:  E
Diff: 3     Page Ref: 508
Skill:  Concept
Objective:  17-3

48) Which of the following is a potential drawback to advertising on a blog?
A) The content of a blog is difficult to control.
B) Advertising on a blog is typically expensive.
C) It is difficult to use blogs to reach highly targeted audiences.
D) Blogs are losing popularity as consumers begin to favor newer Internet forums.
E) Blogs do not provide the kind of personalized medium that today's marketers want.
Answer:  A
Diff: 3     Page Ref: 508
Skill:  Concept
Objective:  17-3

49) ________ online marketing sites are online exchanges in which consumers search out sellers, learn about their offers, and initiate purchases.
A) B2C
B) B2B
C) C2C
D) C2B
E) B2R
Answer:  D
Diff: 2     Page Ref: 508
Skill:  Concept
Objective:  17-3
50) When consumers can drive transactions with businesses, what type of online marketing is being used?
A) blogs
B) podcasting
C) social networking
D) business-to-consumer
E) consumer-to-business
Answer:  E
Diff: 1     Page Ref: 508
Skill:  Concept
Objective:  17-3


51) For most companies, the first step in conducting online marketing is to ________.
A) send e-mails
B) create a Web site
C) create a Web community
D) place promotions online
E) develop search-related ads
Answer:  B
Diff: 2     Page Ref: 508
Skill:  Concept
Objective:  17-4

52) What is the main purpose of a corporate Web site?
A) to sell the company's products directly
B) to build customer goodwill
C) to show a catalog and give shopping tips
D) to give out coupons and tell about sales events or contests
E) to point out and explain competitors' weaknesses
Answer:  B
Diff: 2     Page Ref: 509
Skill:  Concept
Objective:  17-4

53) ________ are designed to build customer goodwill and to supplement other sales channels, rather than to sell the company's products directly.
A) Marketing Web sites
B) Corporate Web sites
C) Small business Web sites
D) Non-profit corporation web sites
E) Rich media display ads
Answer:  B
Diff: 2     Page Ref: 509
Skill:  Concept
Objective:  17-4
54) ________ are designed to engage consumers in interactions that will move them closer to a direct purchase or other marketing outcome.
A) Corporate Web sites
B) Marketing Web sites
C) Web communities
D) Brand Web sites
E) Affiliate programs
Answer:  B
Diff: 2     Page Ref: 509
Skill:  Concept
Objective:  17-4


55) To attract new visitors and to encourage revisits, online marketers should pay close attention to the seven Cs of effective Web site design. Which of the following is NOT one of the seven Cs?
A) context: the site's layout and design
B) content: text, pictures, sounds, and video that the Web site contains
C) commerce: the site's ability to enable commercial transactions
D) customer: the way the customer is given incentives to use the Web site
E) connection: the degree that the site is linked to other sites
Answer:  D
Diff: 3     Page Ref: 510
AACSB:  Use of IT
Skill:  Concept
Objective:  17-4

56) Of the seven Cs of effective Web site design, ________ refers to the ways that the site enables user-to-user communication.
A) context
B) content
C) community
D) customization
E) cause
Answer:  C
Diff: 2     Page Ref: 510
AACSB:  Use of IT
Skill:  Concept
Objective:  17-4

57) According to the seven Cs of effective Web site design, a Website's capability to enable commercial transactions is its level of ________.
A) customization
B) content
C) connection
D) commerce
E) communication
Answer:  D
Diff: 2     Page Ref: 510
AACSB:  Use of IT
Skill:  Concept
Objective:  17-4

58) ________ are online ads that appear between screen changes on a Web site, especially while a new screen is loading.
A) Pop-unders
B) Interstitials
C) Search-related ads
D) Contextual ads
E) Banner ads
Answer:  B
Diff: 2     Page Ref: 511
AACSB:  Use of IT
Skill:  Concept
Objective:  17-4

59) Which of the following types of ads can users block through the use of applications developed by Web browser providers?
A) banners
B) pop-ups
C) contextual ads
D) pop-unders
E) rich-media ads
Answer:  B
Diff: 2     Page Ref: 511
AACSB:  Use of IT
Skill:  Concept
Objective:  17-4

60) Display ads that use eye-catching techniques such as float, fly, and snapback are called ________.
A) banners
B) pop-ups
C) contextual ads
D) pop-unders
E) rich-media ads
Answer:  E
Diff: 2     Page Ref: 511-512
AACSB:  Use of IT
Skill:  Concept
Objective:  17-4

61) A large percentage of online advertising expenditures goes towards ________, which are text-based ads and links that appear alongside search engine results.
A) content sponsorships
B) reminder advertisements
C) informative advertisements
D) contextual advertisements
E) corporate sponsorships
Answer:  D
Diff: 2     Page Ref: 512
AACSB:  Use of IT
Skill:  Concept
Objective:  17-4

62) When companies work with each other online and offline to promote each other, they are creating ________.
A) search-related advertisements
B) contextual advertisements
C) interstitial relationships
D) content sponsorships
E) alliance and affiliate programs
Answer:  E
Diff: 2     Page Ref: 512
Skill:  Concept
Objective:  17-4

63) What does the term viral marketing mean?
A) It is another term for online privacy.
B) It is another term for online security.
C) It refers to problems associated with computer viruses.
D) It refers to word-of-mouth marketing that occurs online.
E) It refers to negative publicity associated with company blogs.
Answer:  D
Diff: 1     Page Ref: 512
Skill:  Concept
Objective:  17-4


64) Which of the following is a primary disadvantage of viral marketing?
A) The costs of viral marketing are too high for most companies.
B) The brand associated with the viral message is usually forgotten.
C) Marketers have little control over who receives the viral message.
D) Viral messages are offensive to many potential customers.
E) Viral messages are blocked by most search engines.
Answer:  C
Diff: 3     Page Ref: 513
AACSB:  Use of IT
Skill:  Concept
Objective:  17-4
65) All of the following are examples of online social networks EXCEPT ________.
A) blogs
B) MySpace.com
C) YouTube
D) interstitials
E) virtual worlds
Answer:  D
Diff: 1     Page Ref: 513
AACSB:  Use of IT
Skill:  Concept
Objective:  17-4

66) Online communities where people socialize or exchange information and opinions are called ________.
A) corporate Web sites
B) marketing Web sites
C) online social networks
D) interactive Web sites
E) affiliate programs
Answer:  C
Diff: 1     Page Ref: 513
AACSB:  Use of IT
Skill:  Concept
Objective:  17-4


67) Which of the following is a challenge of marketing through online social networks?
A) Users often resent an intrusive marketing message.
B) Existing networks are resistant to direct advertising.
C) Most existing networks are already controlled by major corporations.
D) Virtual worlds will most likely replace social networks in the near future.
E) Measuring the frequency and volume of network usage is difficult.
Answer:  A
Diff: 3     Page Ref: 514-515
AACSB:  Use of IT
Skill:  Concept
Objective:  17-4

68) What characteristic of niche sites makes the medium MOST appealing to marketers?
A) audience sizes larger than those of social networking sites
B) wide variety of demographics and purchasing patterns
C) audiences of people with similar interests
D) commercial transaction capabilities
E) podcasting and vodcasting capabilities
Answer:  C
Diff: 3     Page Ref: 514-515
Skill:  Concept
Objective:  17-4
69) Unsolicited and unwanted commercial e-mail is known as ________.
A) phishing
B) e-tailing
C) display ads
D) pop-unders
E) spam
Answer:  E
Diff: 1     Page Ref: 516
Skill:  Concept
Objective:  17-4

70) According to your textbook, what is the most likely future for online marketing?
A) Online marketing will replace magazines, newspapers, and eventually stores as sources for information and products.
B) The growth of online marketing will continue but at a much slower pace.
C) The use of online marketing will decline until its effectiveness can be better measured.
D) Online marketing will remain an important approach in an integrated marketing mix.
E) Online social networking will become the primary type of online marketing.
Answer:  D
Diff: 3     Page Ref: 516
Skill:  Concept
Objective:  17-4


71) In an attempt to take advantage of impulsive buyers, heat merchants use ________ to deceive customers.
A) direct-mail marketing
B) telephone marketing
C) direct-response television marketing
D) mobile phone marketing
E) kiosk marketing
Answer:  A
Diff: 2     Page Ref: 517
Skill:  Concept
Objective:  17-5

72) Which of the following is a type of identity theft that uses deceptive e-mails and fraudulent web sites to fool consumers into revealing their personal data?
A) unauthorized groups
B) reverse information
C) viral feeds
D) phishing
E) spyware
Answer:  D
Diff: 2     Page Ref: 517
Skill:  Concept
Objective:  17-5
73) Which of the following is NOT a deception or fraud concern for Internet users and marketers?
A) phishing
B) viral marketing
C) eavesdropping
D) access by unauthorized groups
E) spyware
Answer:  B
Diff: 2     Page Ref: 517
Skill:  Concept
Objective:  17-5

74) What happened in direct response to the FTC finding that many Web sites were collecting personal information from children without disclosure or parental permission?
A) California enacted the California Online Privacy Protection Act.
B) Congress passed the Children's Online Privacy Protection Act.
C) Children began to be targeted by more Web sites.
D) The Direct Marketing Association developed a "Privacy Promise to American Consumers."
E) Nonprofit organizations began auditing companies' privacy and security measures.
Answer:  B
Diff: 3     Page Ref: 519
Skill:  Concept
Objective:  17-5
75) All of the following are the likely results of direct marketing abuses EXCEPT ________.
A) decreased consumer response rates
B) decreased returns on advertising expenses
C) increasingly negative consumer attitudes
D) requests for more Internet oversight and legislation
E) requests for more restrictive legislation of direct marketing
Answer:  D
Diff: 3     Page Ref: 519
Skill:  Concept
Objective:  17-5

76) Direct marketing rarely occurs on a one-to-one, interactive basis.
Answer:  FALSE
Diff: 2     Page Ref: 490
Skill:  Concept
Objective:  17-1

77) Mega Music sells products to customers only through its Web-site. Mega Music employs the direct model as its marketing approach.
Answer:  TRUE
Diff: 3     Page Ref: 491
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-1
78) For customers, the benefits of direct marketing are that it is an easy, private, and convenient way to shop.
Answer:  TRUE
Diff: 1     Page Ref: 492
Skill:  Concept
Objective:  17-1

79) Today's marketers use database marketing to promote their offerings through personalized communications to small target groups or even individual customers.
Answer:  TRUE
Diff: 1     Page Ref: 494
Skill:  Concept
Objective:  17-1

80) The marketing manager of Charlie's Car Parts uses a customer database to e-mail promotional information to customers. The demographic information in the database provides the manager with the data he needs regarding his customers' buying preferences.
Answer:  FALSE
Diff: 3     Page Ref: 493
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-1
81) Database marketing requires little initial investment beyond training personnel to code and mine data.
Answer:  FALSE
Diff: 2     Page Ref: 495
AACSB:  Use of IT
Skill:  Concept
Objective:  17-1

82) Though direct-mail permits high target-market selectivity and can be personalized, it does not allow easy measurement of results.
Answer:  FALSE
Diff: 2     Page Ref: 496
Skill:  Concept
Objective:  17-2

83) Catalog marketing has grown explosively during the past 25 years, and recently the Internet has helped boost its popularity even more.
Answer:  TRUE
Diff: 2     Page Ref: 497
Skill:  Concept
Objective:  17-2
84) With inbound telephone marketing, the company provides a toll-free phone number to receive orders from television ads, print ads, direct mail, and catalogs.
Answer:  TRUE
Diff: 2     Page Ref: 497
Skill:  Concept
Objective:  17-2

85) Do-not-call legislation has made telemarketing an ineffective form of direct marketing, especially for nonprofit groups.
Answer:  FALSE
Diff: 2     Page Ref: 498
Skill:  Concept
Objective:  17-2

86) Because of its association with somewhat questionable pitches and get-rich-quick schemes, direct-response television is becoming less popular than traditional broadcast and cable advertising.
Answer:  FALSE
Diff: 2     Page Ref: 500
Skill:  Concept
Objective:  17-2


87) You receive a text message from Upscale Furnishings about an upcoming sale on custom furniture. Upscale Furnishings is developing a direct customer relationship with you through kiosk marketing.
Answer:  FALSE
Diff: 3     Page Ref: 501
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-2

88) Because several satellite broadcast systems are now offering ITV capabilities, interactive TV is likely to become a more widely used direct marketing medium.
Answer:  TRUE
Diff: 2     Page Ref: 503
AACSB:  Use of IT
Skill:  Concept
Objective:  17-2

89) Today, many click-and-mortar companies are experiencing more online success than their click-only competitors.
Answer:  TRUE
Diff: 3     Page Ref: 504
Skill:  Concept
Objective:  17-3
90) B2C Web sites deal with exchanges between businesses and companies.
Answer:  FALSE
Diff: 1     Page Ref: 505
Skill:  Concept
Objective:  17-3

91) Unlike Internet consumers, traditional offline consumers initiate and control contact with marketers.
Answer:  FALSE
Diff: 2     Page Ref: 506
Skill:  Concept
Objective:  17-3

92) Sales via B2B online marketing are expected to decrease in the next decade.
Answer:  FALSE
Diff: 2     Page Ref: 506
Skill:  Concept
Objective:  17-3


93) Business customers of Dell Computer have access to customized Web sites that include purchasing and asset management reports and system-specific technical information. Dell uses B2B online marketing.
Answer:  TRUE
Diff: 3     Page Ref: 506-507
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-3

94) Companies such as eBay and Overstock.com facilitate C2C online marketing.
Answer:  TRUE
Diff: 1     Page Ref: 507
AACSB:  Use of IT
Skill:  Concept
Objective:  17-3

95) C2B online marketing often involves the interchange of information through Internet forums, including customers' praise for and complaints about products.
Answer:  TRUE
Diff: 2     Page Ref: 508
AACSB:  Use of IT
Skill:  Concept
Objective:  17-3

96) Companies conduct online marketing by creating a Web site, placing ads and promotions online, setting up or participating in online social networks, or mailing catalogs to potential customers.
Answer:  FALSE
Diff: 2     Page Ref: 509
AACSB:  Use of IT
Skill:  Concept
Objective:  17-4
97) Natalie Brennan has been saving her money to buy a BMW convertible. Natalie has spent hours on the BMW Web site choosing the exterior and interior colors and studying the various options and models. Natalie has been using BMW's marketing Web site.
Answer:  TRUE
Diff: 3     Page Ref: 509
Skill:  Application
Objective:  17-4

98) Banners are online ads that pop up between changes on a Web site.
Answer:  FALSE
Diff: 2     Page Ref: 511
AACSB:  Use of IT
Skill:  Concept
Objective:  17-4
99) Permission-based e-mail advertising allows marketers to send tailored messages to targeted customers who choose to have chosen to receive them.
Answer:  TRUE
Diff: 1     Page Ref: 516
AACSB:  Use of IT
Skill:  Concept
Objective:  17-4

100) Since the introduction of the Do-Not-Call Registry, fraudulent schemes such as investment scams and phony collections for charity have been on the decline.
Answer:  FALSE
Diff: 2     Page Ref: 517
Skill:  Concept
Objective:  17-5

101) In a brief essay, explain the major benefits of direct marketing to both customers and sellers.
Answer:  For customers, direct marketing is convenient, easy to use, and private. It gives buyers ready access to a wealth of products and information, at home or work and around the globe. It is immediate and interactive. For sellers, direct marketing is powerful for building customer relationships. Using database marketing, marketers can target small groups or individual consumers, tailor offers to individual needs, and promote these offers through personalized communications. It provides great timing and offers a low-cost, efficient alternative for reaching markets. Direct marketing has become the fastest-growing form of marketing.
Diff: 2     Page Ref: 492
AACSB:  Reflective Thinking
Skill:  Application
Objective:  17-1
102) How can a customer database be used as a relationship-building tool?
Answer:  A customer database is an organized collection of data about individual customers or prospects, including detailed geographic, demographic, psychographic, and behavioral data. Companies can mine their databases to learn about customers in detail, and then fine-tune their market offerings and communications to the special preferences and behaviors of target segments or individuals. As the customer relationship continues, the company can learn more about the customer and can more accurately fine-tune its offerings to satisfy the customer's needs.
Diff: 2     Page Ref: 493-494
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-2


103) In a short essay, identify the major advantage of the following forms of direct marketing: telephone, direct-mail, catalog, direct-response television, and kiosk.
Answer:  Telephone marketing provides purchasing convenience and increased product and service information. Direct mail marketing permits selectivity and personalization. Catalog marketing allows customers to buy just about anything they desire, and through online catalogs marketers can use real-time merchandising, adding or removing products based on their availability. Direct-response television marketing allows live demonstrations without salespeople coming to your home or business. Kiosk marketing places information and ordering machines in convenient places, such as airports, stores, and malls.
Diff: 3     Page Ref: 495-501
Skill:  Application
Objective:  17-2

104) How has the implementation of the National Do-Not-Call Registry changed telephone marketing?
Answer:  The National Do-Not-Call Registry was created by legislation passed in 2003; it bans most business telemarketing calls to registered phone numbers. However, people can still receive calls from nonprofit groups, politicians, and companies with which they have recently done business. Millions of customers have joined the do-not-call list, and businesses that break the laws can be fined heavily. The use of unsolicited outbound telemarketing has greatly decreased due to the law, but inbound consumer telemarketing and outbound business-to-business telemarketing remain strong and growing. Many telemarketers are shifting their call-center activity from making unsolicited cold calls on often resentful customers to managing existing customer relationships. They are developing "opt-in" calling systems, in which they provide useful information and offers to customers who have invited the company to contact them by phone or e-mail.
Diff: 2     Page Ref: 498
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-2

105) List and briefly describe the four major online marketing domains.
Answer:  a. B2C (business-to-consumer) online marketing involves businesses selling goods and   services online to final consumers. Today, almost anything can be purchased online.
b.  B2B (business-to-business) online marketing involves businesses using Web sites, e-mail,    online product catalogs, online trading networks, and other online resources to reach new   business customers, better serve existing business customers, and obtain buying efficiencies    and better prices.
c.  C2C (consumer-to-consumer) online marketing involves consumers buying or    exchanging goods or information directly with one another. Web sites such as eBay and   Craigslist.com facilitate C2C trading, and blogs are an influential source of   consumer-to-consumer information sharing.
d.  C2B (consumer-to-business) online marketing involves consumers searching out online     sellers, learning about their offers, and initiating purchases, sometimes even setting the  terms   of a transaction.
Diff: 2     Page Ref: 505-508
Skill:  Application
Objective:  17-3

106) How do Internet consumers differ from traditional offline consumers?
Answer:  They differ in their approaches to buying and in their responses to marketing. The exchange process via the Internet has become more customer-initiated and customer-controlled. In traditional marketing, the audience is somewhat passive; in online marketing, customers actively select which Web sites they will visit and what marketing information they will receive about which products and under what conditions.
Diff: 3     Page Ref: 506
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-3

107) Compare and contrast the purpose and content of a corporate Web site to that of a marketing Web site.
Answer:  Corporate Web sites are designed to build customer goodwill and to supplement other sales channels, rather than to sell the company's products directly. They offer a rich variety of information and other features in an effort to answer customer questions, build closer relationships, and generate excitement about the company. In contrast, marketing Web sites are designed to go beyond the function of a corporate Web site and actually engage consumers in an interaction that will move them closer to a direct purchase. A marketing Web site allows customers to view, research, and purchase specific items.
Diff: 3     Page Ref: 509
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-4

108) To attract new visitors and to encourage revisits, online marketers should pay close attention to the seven Cs of effective Web site design. Briefly describe four of these seven Cs.
Answer:  a. Context: the site's layout and design
b.  Content: the text, pictures, sound, and video that the Web site contains
c.  Community: the ways that the site facilitates user-to-user communication
d.  Customization: the site's ability to tailor itself to different users or to allow users to  personalize the site
e.  Communication: the ways the site enables site-to-user, user-to-site, or two-way     communication
f.  Connection: the degree that the site is linked to other sites
g.  Commerce: the site's capabilities to enable commercial transactions
Diff: 2     Page Ref: 510
AACSB:  Use of IT
Skill:  Application
Objective:  17-4

109) Describe two ways that marketers can participate in online social networks. What are the challenges and advantages of these approaches?
Answer:  Marketers can engage in online communities by participating in existing Web communities or setting up their own. Many major brands have set up MySpace pages and profiles and opened virtual stores in virtual worlds such as Second Life. Companies can efficiently market to many potential customers as more and more people participate in online social networks. However, participating successfully in existing online social networks presents challenges. First, online social networks are new and results are hard to measure, and most companies are still experimenting with how to use them effectively. Second, such Web communities are largely user controlled, so a company must learn how to add value for consumers in order to avoid being seen as an intrusion. To be effective, marketers must become a valued part of the online experience. To avoid the mysteries and challenges of building a presence on existing online social networks, many companies are now launching their own targeted Web communities. Though marketers have control of their own targeted Web communities, they must then independently market and maintain the network.
Diff: 2     Page Ref: 513-515
AACSB:  Reflective Thinking
Skill:  Application
Objective:  17-4


110) Internet marketing practices have raised a number of ethical and legal questions. Why is invasion of privacy perhaps the number-one online marketing concern?
Answer:  Web site activities provide extensive personal information. This may leave consumers open to information abuse if companies make unauthorized use of the information in marketing their products or exchanging databases with other companies. Critics worry that through database marketing, marketers know too much about consumers' lives and may not use that information responsibly, taking unfair advantage of consumers.
Diff: 2     Page Ref: 518
AACSB:  Ethical Reasoning
Skill:  Application
Objective:  17-5
111) Adams Cutlery has always relied upon advertising to market its products to final customers. However, the marketing team at Adams Cutlery now wants to begin a direct marketing campaign consisting of a company Web site, e-mails to current customers, and an online catalog. Which of the following would the marketing team expect to gain as a result of implementing this direct marketing plan?
A) the ability to increase the range of products the company offers
B) a wealth of information about competitors and their products
C) more control over customers' interactions with the company
D) the ability to learn more about their customers and tailor offerings to fit their needs
E) a higher cost-per-contact that could prove to be more cost effective than advertising in mass media
Answer:  D
Diff: 2     Page Ref: 492
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-1

112) Financial services provider USAA sends materials about teaching teenagers how to drive safely to USAA customers who have children approaching driving eligibility age. USAA is using ________ information from a customer database to determine which customers should receive the materials.
A) demographic
B) geographic
C) psychographic
D) behavioral
E) key contact
Answer:  A
Diff: 2     Page Ref: 493
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-1


113) Fiona Lambrech is the marketing director of a charity that raises funds to help provide educational services to children and families in developing countries. Fiona wants to reach a select market of individuals who have recently donated to international charities. Which of the following types of direct marketing will Fiona most likely use?
A) direct-mail marketing
B) catalog marketing
C) telephone marketing
D) kiosk marketing
E) direct-response television marketing
Answer:  A
Diff: 2     Page Ref: 495
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-2
114) Organic Designs is a small, successful chain of stores offering stylish clothes made of all-organic materials for infants, toddlers, and young children. Most of the Organic Designs stores are located in urban areas. Now Organic Designs is considering using direct marketing to reach potential customers who live outside of the company's existing markets, with the goal of creating emotional connections and long-term relationships with a new group of customers. Which of the following methods of direct marketing would most likely be effective in accomplishing this goal?
A) mobile phone marketing
B) interactive TV marketing
C) catalog marketing
D) kiosk marketing
E) direct-response television marketing
Answer:  C
Diff: 2     Page Ref: 496-497
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-2

115) Gutter Guys is a gutter installation company in Southern California that used to generate most of its sales through telemarketing but now uses direct mail to reach prospective customers.  Which of the following most likely explains the reason that Gutter Guys switched from telemarketing to direct mail?
A) Federal Trade Commission's Anti-Spam Act
B) Privacy Promise to American Consumers
C) California Online Privacy Protection Act
D) Children's Online Privacy Protection Act
E) National Do Not Call Registry
Answer:  E
Diff: 1     Page Ref: 497-498
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-2
116) Neal Murphy sells his company's unique gift items on television programs and entire channels dedicated to selling goods and services. Neal is using ________.
A) direct-response television advertising
B) Internet-based infomercials
C) B2B online marketing
D) prime-time selling
E) vodcasting
Answer:  A
Diff: 2     Page Ref: 499
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-2
117) A producer of beverages and snack foods wants to market its products to the 18-to-34-year-old demographic by providing incentives to respond instantly to time-sensitive offers. Which of the following forms of direct marketing would this producer most likely choose?
A) interactive TV
B) direct-response TV
C) mobile phone
D) direct mail
E) podcasting
Answer:  C
Diff: 3     Page Ref: 502
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-2

118) Company X began as a brick-and-mortar company. Which of the following statements MUST be true?
A) By adding online marketing options, Company X would become a click-and-mortar company.
B) Company X is also considered a click-only dot-com.
C) Company X should not be concerned about consumer-to-consumer online marketing.
D) Company X is probably not making a profit.
E) By adding online marketing options, Company X would become a click-only company.
Answer:  A
Diff: 2     Page Ref: 504
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-3


119) Office Depot is a click-and-mortar company. Which of the following is LEAST likely to be an advantage that Office Depot has over click-only competitors?
A) Office Depot is a known name with greater financial resources.
B) Office Depot has a large, established customer base.
C) By offering online marketing, Office Depot offers customers more options.
D) Customers can find a local store and check its available stock online.
E) Office Depot focuses on large accounts through its online presence and small businesses through its retail stores.
Answer:  E
Diff: 3     Page Ref: 504-505
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-3
120) Green Gardens is a click-and-mortar seller of gardening and landscaping goods and equipment, but the marketing department wants to promote the Green Gardens Web site. When customers are unable to find a product they need on the shelves of their local Green Gardens, the marketing department wants them to search for the product on the Green Gardens Web site. Which of the following marketing devices is the best match for this goal?
A) kiosks
B) e-mail
C) mobile phones
D) telemarketing
E) catalog marketing
Answer:  A
Diff: 2     Page Ref: 505
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-3

121) ABC Company sells directly to final consumers and avoids intermediaries, while catering to a broad group of demographic segments. This marketer falls under which online marketing domain?
A) B2C
B) B2B
C) C2C
D) C2B
E) A or C
Answer:  A
Diff: 1     Page Ref: 505
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-3


122) Jane Cheatham, a stay-at-home mother, regularly posts new entries on a widely read blog. In these entries, she often reviews consumer products that she uses during the course of her day. Jane participates in  ________.
A) C2B online marketing
B) C2C online marketing
C) viral marketing
D) content sponsorship
E) online social networks
Answer:  B
Diff: 1     Page Ref: 507
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-3
123) By using Priceline.com, potential buyers can bid for airline tickets, hotel rooms, rental cars, cruises, and vacation packages. It is then up to sellers to decide whether or not to accept an offered bid. This is an example of ________.
A) B2B online marketing
B) C2C online marketing
C) B2C online marketing
D) C2B online marketing
E) multi-channel marketing
Answer:  D
Diff: 1     Page Ref: 508
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-3

124) Converse has a Web site that welcomes consumers to "the Converse Century," invites readers to post their Converse stories, and offers a wide variety of Converse shoes for direct purchase. The site even allows customers to individually design their own shoes. The Converse site is most accurately categorized as which of the following types of Web sites?
A) a B2B site
B) a C2B site
C) a C2C site
D) a corporate site
E) a marketing site
Answer:  E
Diff: 2     Page Ref: 509
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-4


125) Oscar Aviation has a corporate Web site. Prospective customers are most likely able to do all of the following on the site EXCEPT ________.
A) learn about Oscar's philosophy
B) ask online questions
C) enjoy entertainment features on the site
D) purchase products
E) register to receive more information from the company
Answer:  D
Diff: 2     Page Ref: 509
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-4
126) In attempting to design an effective Web site, Company A tried to address all of the seven Cs. The site, however, has a weak layout and design. Which C does this represent?
A) customization
B) content
C) context
D) connection
E) community
Answer:  C
Diff: 2     Page Ref: 510
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-4

127) You are looking up airline schedules on the Internet. A bar at the top of the screen reads, "Stay at Holiday Inn and get a 25 percent discount!" This is a(n) ________.
A) banner
B) pop-under
C) content sponsorship
D) pop-up
E) interstitial
Answer:  A
Diff: 2     Page Ref: 511
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-4


128) You have accessed fare information on Northwest Airlines' Web site. You want to compare it with United Airlines' fares. In between screen changes, an ad appears from Alamo Car Rental. This is a(n) ________.
A) banner
B) pop-up
C) content sponsorship
D) pop-under
E) interstitial
Answer:  E
Diff: 2     Page Ref: 511
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-4
129) Uptown Cleaning Crew is a company that provides house cleaning services in major urban and suburban areas. Marketers at Uptown Cleaning Crew developed a short, humorous video promoting the company's services, and they hope that customers who see the video will be so entertained that they will pass it on to their friends and colleagues. The marketers at Uptown Cleaning Crew are using ________.
A) a content sponsorship
B) viral marketing
C) C2B marketing
D) rich media ads
E) a marketing Web site
Answer:  B
Diff: 2     Page Ref: 512
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-4

130) Runners can compare performances, set up profiles, and meet new friends on Nike's Nike Plus Web site. Nike Plus is an example of a ________.
A) C2C marketing site
B) viral marketing site
C) Web community
D) alliance and affiliate program
E) contextual advertisement
Answer:  C
Diff: 2     Page Ref: 515
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-4


131) After selecting a sweater on the Land's End Web site, Kelly Oldham filled out the required customer and credit card information. A box with a checkmark inside was next to the following statement :"Yes, I would like to receive promotional information via e-mail from Land's End." The statement suggests that Land's End is using which of the following marketing tools?
A) spam
B) phishing
C) catalog marketing
D) niche marketing
E) permission-based e-mail marketing
Answer:  E
Diff: 1     Page Ref: 516
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-4
132) Charlie Putnam received an e-mail promoting a new financial services institution that offers surprisingly low mortgage rates. The e-mail simply asked customers to provide their address, date of birth, social security number, and current mortgage information in order to receive a free loan quote. Suspicious of the offer, Charlie researched the company and discovered that the e-mail was a fraud. This is an example of ________.
A) online eavesdropping
B) phishing
C) malware
D) heat marketing
E) viral marketing
Answer:  B
Diff: 2     Page Ref: 517
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-5


Refer to the scenario below to answer the following questions.

    The Treble Clef offers a complete line of sheet music, musical instruments, and novelty gifts of a musical nature. In recent years, owner Gary Zahn has even served as the local representative of several musical instrument manufacturers, providing a contact person for three local school districts. "If we don't have it, chances are excellent that we can get it for you," Gary tells all Treble Clef visitors and customers.
    Most walk-ins are particularly interested in a specific piece of sheet music from a particular era or just browsing among the hundreds of musical knick-knacks in the store. Gary spends most of his time making presentations to beginning music students at the local schools and making bi-weekly visits to the schools in order to deliver instruments, to make minor repairs when possible, or to pick up instruments to ship to the manufacturer for more complicated repairs.
    After dragging his feet for quite some time, Gary was convinced that a Treble Clef Web site could benefit a variety of customers. He began with a simple site explaining store hours and depicting types of gifts and services available. The site received so much response that Gary added a question-and-answer option. Questions poured in, ranging from "Where can I get the sheet music for 'Hello, Dolly'?" to "Do you carry clarinet reeds?" to "My saxophone needs two new pads. When will you be at Elmhurst school to repair it?" The Web site is now able to accept credit card orders, and gifts can even be wrapped and shipped for no extra charge.
    "I don't know how we did it without our Web site," Gary admitted. "It allows us to be so responsive. And our novelties sales have doubled!"

133) What type of online marketing is  Gary Zahn using to promote the Treble Clef?
A) B2B
B) B2C
C) viral marketing
D) social networking
E) contextual advertising
Answer:  B
Diff: 1     Page Ref: 505
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-3
134) Which of the following BEST describes the Treble Clef?
A) a brick-and-mortar company that is now a click-only retailer
B) a dot-com that has added a storefront to service local customers
C) a click-and-mortar company that used to be a brick-and-mortar retailer
D) a brick-and-mortar retailer that is struggling to compete with click-only firms
E) a brick-and-mortar company that established a Web community for musicians
Answer:  C
Diff: 2     Page Ref: 504
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-3

135) Many Treble Clef customers are seeking specific sheet music that Gary does not always have in-stock. Gary would like to provide a link on the store's Web site to a sheet music supplier with which he does business. On which of the following Web site design elements should Gary focus?
A) context
B) community
C) customization
D) connection
E) content
Answer:  D
Diff: 1     Page Ref: 510
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-4

136) How does direct marketing give buyers access to more comparative information about companies, products, and competitors?
Answer:  Catalogs and Web sites, both forms of direct marketing, can provide extensive product information and helpful product reviews. Customers can easily research companies, products, and competitors by comparing information in catalogs or on business-to-consumer and consumer-to-consumer Web sites.
Diff: 2     Page Ref: 492
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-1

137) How does online marketing provide flexibility for sellers?
Answer:  Online marketing allows the marketer to make ongoing adjustments to its offers and programs. Online catalogs, if used, can be adjusted daily or even hourly if needed. Because the Internet is a global tool, it allows buyers and sellers to click from one country to another country in seconds.
Diff: 2     Page Ref: 492-493
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-1
138) What kind of information is likely to be included in a business-to-business customer database?
Answer:  Data might include products and services purchased by the customer, projected customer spending, competing suppliers, status of current contracts, key contacts and personal information, and assessments of competitive strengths and weaknesses in selling and servicing the account.
Diff: 2     Page Ref: 493-494
Skill:  Application
Objective:  17-1


139) Why are people reached by direct mail better prospects for a company than those reached by mass media such as television or magazines?
Answer:  Unlike mass media, direct mail allows for high target-market selectivity, so only consumers who are likely to become customers can be contacted; in addition, direct mail can be personalized for each individual, which helps to build customer relationships.
Diff: 2     Page Ref: 496
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-2

140) Why are printed catalogs still thriving in the face of the growing popularity of Web-based catalogs?
Answer:  Printed catalogs are more effective at creating an emotional connection with customers and continue to be one of the best ways to lead customers to online catalogs.
Diff: 2     Page Ref: 497
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-2

141) Explain how the creation of the National Do-Not-Call Registry may have helped telemarketers more than it hurt them.
Answer:  Instead of making cold calls to people who are likely to resent the intrusion, telemarketers have switched gears and now focus on managing existing customer relationships through "opt-in" calling systems that provide useful information and offers to customers who have given the company permission to contact them.
Diff: 2     Page Ref: 498-499
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-2

142) Why is the use of direct-response television growing in popularity?
Answer:  Direct-response TV commercials are usually less expensive to produce than traditional television advertisements, and the media purchase is less costly; also, it is easy for marketers to track the effectiveness of a direct-response TV commercial because the ads always include a 1-800 number or Web address.
Diff: 3     Page Ref: 500
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-2
143) Provide an example of how a marketer uses kiosk marketing.
Answer:  Answers will vary. Many airlines and hotels use kiosks as self-service check-in devices; many retail stores offer in-store ordering kiosks; kiosks in Target stores connect customers to relevant articles from Consumer Reports magazine.
Diff: 2     Page Ref: 501
Skill:  Application
Objective:  17-2
144) How can firms that use new direct marketing technologies avoid backlash from consumers who view such marketing as an invasion of privacy?
Answer:  Marketers should always target their direct marketing offers carefully and bring real value to customers through direct marketing.
Diff: 2     Page Ref: 504
AACSB:  Analytic Skills
Skill:  Application
Objective:  17-2

145) What types of services do B2B marketers offer online?
Answer:  Most major B2B marketers now offer product information, customer purchasing, and customer support services online.
Diff: 2     Page Ref: 506
Skill:  Application
Objective:  17-3

146) Explain how a company benefits from monitoring the blogosphere.
Answer:  By staying up-to-date with the content on relevant blogs, a company can gain insights from its consumers and adjust its marketing programs accordingly; for example, a company might learn about the weaknesses or strengths of a new marketing campaign by monitoring reactions on blogs.
Diff: 2     Page Ref: 507-508
AACSB:  Reflective Thinking
Skill:  Application
Objective:  17-3

147) Provide two reasons that many companies are shifting more of their marketing dollars to online advertising.
Answer:  More companies are increasing the portion of their marketing budget spent on online advertising because consumers are spending more and more time on the Internet. Rich media ads are particularly effective in engaging viewers, and search-related ads reach an audience likely to be interested in the product.
Diff: 2     Page Ref: 511
Skill:  Application
Objective:  17-4
148) What is the purpose of content sponsorship? Provide an example of content sponsorship.
Answer:  Content sponsorships are a form of Internet promotion; many companies gain exposure on the Internet by sponsoring special content on various Web sites, such as news and financial information. Sponsorships are best placed in carefully targeted sites where they can offer relevant information or service to the audience. Scotts, the lawn-and-garden company sponsors the Local Forecast section on WeatherChannel.com.
Diff: 2     Page Ref: 512
Skill:  Application
Objective:  17-4


149) Explain the goal of viral marketing.
Answer:  Viral marketing is the Internet version of word-of-mouth marketing. Viral marketing involves creating a Web site, e-mail message, or other event that is so infectious that customers will want to pass it along to their friends.
Diff: 2     Page Ref: 512-513
Skill:  Application
Objective:  17-4

150) How has the direct marketing industry taken steps to address privacy and security concerns?
Answer:  Some companies use a nonprofit self-regulatory organization that audits a company's security and privacy measures and then approves Web sites that meet its privacy and security standards. The Direct Marketing Association has started a Privacy Promise that asks member companies to agree to notify customers about the use of their private information and to honor customer requests to "opt-out" of receiving further solicitations.
Diff: 3     Page Ref: 519
Skill:  Application
Objective:  17-