Marketing MCQ: September 2018

Archive for September 2018

Managers who are satisfied with their current market share and profit situation sometimes adopt "status quo" objectives. Which of the following phrases would not be used in status quo pricing?

A. Meet competition.

B. Stabilize prices.

C. Avoid competition.

D. Slightly raise prices.

E. Promote more aggressively.

Answer: (D) Raising prices in this situation would most likely boost your competitor's position and reduce your customer base. Meeting competition (A) would be likely with a status quo objective and is incorrect. (B) is also incorrect because maintaining stable prices may discourage price competition and leave the situation in the status quo. (C) should not be selected because the manager utilizing a status quo objective does want to avoid price competition. Finally, (E) is incorrect because it's a promotional function that would not be used in a status quo situation.

With regard to Internet marketing, which of the following statements is FALSE?

A. Use of e-mail is growing.

B. Business-to-business advertising is growing on the Internet.

C. Primary users of the Internet are baby boomers.

D. Primary users of the Internet are college students and Generation X.

E. It allows sellers to learn more about buyers.

Answer: (C) The primary users of the Internet today are Gen X and college students (D). The use of e-mail is growing (A) and B2B advertising is fast growing on the Internet (B). Internet marketing does allow buyers to learn more about sellers (E). Therefore, all the above statements are true. However, the statement that says that the primary users of the Internet are baby boomers (C) is false, which makes it the right response to this question.

Sales promotion refers to promotion activities that stimulate interest, trial, or purchase by consumers. It would thus include activities other than

A. advertising

B. publicity

C. personal selling

D. point-of-purchase materials

E. (A), (B), and (C) are correct

Answer: (E) Advertising, publicity, and personal selling are promotion activities and are not a form of sales promotion; thus, sales promotion would not include those activities. Advertising (A) is part of the promotion mix; however, it is not the best choice of those given, and thus is incorrect. (B) is also incorrect; although it is a promotion mix, it is not part of sales promotion. (C) is also incorrect, because it is not the best choice of those given. Point-of-purchase materials (D) would be a form of sales promotion used to stimulate interest, trial, and purchase of products at the point-of-sale; therefore, it is incorrect.

The income that is left after taxes for a family to make payments on necessities is called

A. gross profit

B. disposable income

C. net profit

D. discretionary income

E. family income

Answer: (B) Disposable income is the income left after paying taxes, which is used to make necessary expenditures such as housing and car payments. (A) refers to business transactions and is the money left over, for a business, to cover the expenses associated with running that business (i.e., sales expenses and operating expenses) and is incorrect. (C) is also incorrect. Net profit is what a company has earned from their operations during a specified time period. Discretionary income (D) is that income left over after taxes and after payments for necessities, so it is incorrect. Family income (E) is money that the family, or household, earns and is incorrect.

A widely available measure of the output of the whole economy and the total market value of goods and services produced in a year in the United States is called

A. economic systems

B. gross domestic product

C. gross sales

D. gross margin

E. gross national product

Answer: (B) The economy's gross domestic product (GDP) is a widely available measure of the output of the whole economy and the total market value of goods and services for the United States (produced in a year). The economic system (A) is the way an economy organizes to use scarce resources to produce the goods and services and then distribute them to society for consumption; thus, (A) is incorrect. Gross sales (C) is the total amount charged to all customers during a given time period, and is incorrect. Gross margin (D) refers to businesses and the money they have to cover expenses of selling and other business operations. (E) is incorrect. The term used to be used to define the output of the economy, but was dropped in favor of gross domestic product.

The United States

A. and England have the highest divorce rate in the world—about 45% of marriages end in divorce

B. has the lowest divorce rate in the world—about 12% of marriages end in divorce

C. has the highest divorce rate in the world—about 38% of marriages end in divorce

D. and England have the lowest divorce rate in the world—about 24% of marriages end in divorce

E. has a divorce rate of about 13%

Answer: (C) The United States does have the highest divorce rate in the world— about 38% of the marriages in the U.S. end in divorce. England has nothing to do with divorce rates in the United States. Their divorce rate is lower than the U.S. rate; thus, (A) is incorrect. (B) is incorrect. The U.S. does not have the lowest divorce rate in the world; the opposite is true. (D) is also incorrect. Not only does England not have the lowest divorce rate, but the percentage given is incorrect. The United States does not have a divorce rate of 13%, it is closer to 38%; thus, (E) is not the most correct choice.

The birthrate in the United States is currently

A. starting to drop because more couples are waiting to have children

B. rising sharply due to returning soldiers starting new families

C. rising sharply due to the abundance of women at the child-bearing age

D. dropping because more women are entering the workforce and there is less of a want for large families

E. Both (A) and (D) are correct.

Answer: (E) The U.S. birthrate is starting to drop now with more couples waiting longer to have children and more women entering the work force, and there is less of a want for larger families. (A) is true but is not the best choice because (D) is also correct. (B) is incorrect. The only time the birthrate rose sharply due to returning soldiers was during the post-World War II "baby boom," which lasted about 15 years into the early 1960s. (C) is incorrect because the birthrate is simply not rising sharply. This is affected by the fact that there is not an abundance of women at the childbearing age. (D) is true, but not the best answer because (A) is also correct.

Which of the following is a major disadvantage associated with the collection of primary data in the course of marketing research?

A. It provides the most recent data possible.

B. It is typically expensive.

C. It allows for secrecy from competitors.

D. It fits the firm's marketing needs well.

E. Data collection is rapid.

Answer: (B) Primary data, while costly to acquire, does have a number of big pluses, including the provision of fresh market information (A), providing a level of secrecy from competitors' prying eyes (C), fitting the company's marketing needs snugly (D), and rapid information acquisition. Taken together, the considerable advantages of collecting primary data need to be weighed against the initial high acquisition cost.

Marketing research

A. should be planned by research specialists who understand research techniques better than marketing managers

B. consists mainly of survey design and statistical techniques

C. is only needed by producers who have long channels of distribution

D. is needed to keep isolated marketing managers in touch with their markets

E. should not be an ongoing process

Answer: (D) Research is needed to help keep marketing managers in touch with their markets. (A) is incorrect, because research should be planned by both specialists and marketing managers to make sure the user's needs are being met. (B) is incorrect because marketing research is much more than just survey design and statistics. (C) is incorrect. Marketing research is used by everyone involved in the marketing process. (E) is incorrect. Marketing research should be an on-going process.

Which of the following research methods require the most care in interpreting the results?

A. Random sampling

B. Mail surveys

C. Telephone surveys

D. Personal interview surveys

E. All of the above

Answer: (E) All survey results require care in result interpretation. The researcher should be trained in this area. (A), (B), (C), and (D) all require care but are not the best answers for the question. Each must be analyzed carefully and the results accurately stated with care.

A research proposal

A. is stated right after the problem is defined

B. is a plan that specifies what information will be obtained and how

C. can include information about costs

D. Only (A) and (C) are correct

E. Only (B) and (C) are correct

Answer: (E) A research proposal is a plan that specifies what information is needed and how it will be obtained. In addition, most proposals have information as to the cost of the data collection. (A) is incorrect. A research proposal is stated after the situational analysis, not after the problem definition. (B) is a definition of a research proposal and is included in the body of the proposal, but is not the best answer. (C) usually is part of the research proposal, but is not the best answer. (D) is incorrect because both (A) and (C) are NOT correct.

Which of the following steps of the market research process typically takes over half of the time in completing the research?

A. Problem definition

B. Situational analysis

C. Data collection

D. Problem-solving

E. Alternative development

Answer: (A) Trying to ascertain what the problem is takes the majority of time in the process. (B) is incorrect. Although situational analysis may be time consuming, it does not take as much time as problem definition, and rarely would it require as much as half of the research time. Data collection (C) is time consuming but does not take as much time as problem definition. Problem solving (D) takes place after data collection, and usually doesn't require the time and effort that the other phases do; thus, it is incorrect. The development of alternative solutions (E) again takes time, but the problem definition takes the most time, and in a lot of cases, takes well over half the research time. Therefore, (E) is incorrect.

Which of the following is the first step in undertaking a marketing research project?

A. Define the problem.

B. Solve the problem.

C. Collect problem-specific data.

D. Analyze the situation.

E. Define a sample.

Answer: (A) Defining the problem is the first step that should be undertaken. Solving the problem (B) is the final step that should be undertaken, and is thus incorrect. Collecting problem-specific data (C) cannot be undertaken until the problem is defined. Analyzing the situation (D) is the second step, and therefore is incorrect. Defining a sample (E) shouldn't be undertaken until after the situation has been analyzed.

What type of buying is required for nonstandardized products that require careful examination?

A. Negotiated contract buying

B. Inspection buying

C. Sampling buying

D. Description buying

E. Routinized response buying

Answer: (B) Every item should be inspected if nonstandardized products have been ordered. (A) is not correct because negotiated contract buying is agreeing to a contract that allows for changes in the purchase agreement. (C) is also incorrect; sampling buying means looking at only a small part of the potential purchase, and would not be the best method of purchase in this situation. Description buying (D) is the purchase of a product based on a verbal or written description. A routine response buying situation (E) is where the purchaser is making a normal purchase of products purchased before, and should not be used in this situation.

Multiple buying influence means that several people share in making purchase decisions. These people are called

A. users

B. buyers

C. influencers

D. gatekeepers

E. All of the above

Answer: (E) Many people are involved in certain purchase decisions. All of the people listed could have a possible buying influence through the concept of multiple buying influences. Users (A) is a correct choice, however, not the most correct, since all of the individuals listed may have an influence on the final purchase decision. Buyers (B) are those involved in the purchase process; however, the process may have been initiated by a user or someone else. Thus, even though by itself this would be correct, it is not the best answer. Influencers (C) are those that influence the purchase decision and may share in the purchase decision; however, this is not the most correct answer. Gatekeepers (D) may also be influencers, such as secretaries and other administrative assistants; however, this is not the most correct choice.

By evaluating suppliers and how they are working out for a company, buyers can make better (and more informed) decisions. A formal rating of suppliers on all relevant areas of performance is called a(n)

A. evaluation

B. check-list

C. vendor analysis

D. subjective interpretation

E. buyer analysis

Answer: (C) Vendor analysis is the process used to evaluate suppliers and how they are working out for the company. An evaluation (A) is not the most correct answer. An evaluation is less formal and not as detailed as a vendor analysis. A checklist (B) may be part of a vendor analysis but more information is needed to make an assessment of the vendor than is provided for in a checklist, so this answer is incorrect. Subjective interpretation (D) may be used in analyzing the vendor, but objective measurement is also needed, making this a poor choice. Buyer analysis (E) could be performed by the vendor, but is not needed by the buyer analyzing the vendor. Therefore, this answer is not correct.

Employers hire buying specialists. These specialists are called what?

A. Purchasing agents

B. Sales managers

C. Order takers

D. Order getters

E. Any of the above

Answer: (A) People who specialize in buying are called purchasing agents. (B) is the manager in the marketing area who is concerned with personal selling. Order takers (C) are salespeople who get orders from, or sell to, the regular or "typical" customer. Order getters (D) are salespeople who specialize in generating new business. Finally, any of the above (E) is incorrect. There is only one most correct choice.

A routine repurchase that may have been made many times before is called

A. new-task buying

B. straight rebuy

C. modified rebuy

D. purchase

E. None of the above

Answer: (B) Straight rebuy is a routine purchase of an item that is commonly purchased. (A) is not correct because new task buying occurs when an organization has a new need and the buyer wants a great deal of information about the product prior to purchase. (C) is also incorrect. Modified rebuy is the in-between process of buying where some review is done, although not as much as in a new-task buying situation. Purchase (D) is incorrect because the question relates to a repurchase. (E) is incorrect, because there is a correct answer.

Which of the following is the best example of product development?

A. American Express increased advertising expenditures to encourage customers to use the card when they went out to dinner, not just for shopping.

B. To reach new customers, Taco Bell opened new retail outlets in airports, office buildings, zoos, and hospitals.

C. Suave boosted sales by introducing a new line of shampoo products.

D. Nintendo purchased Cover Girl and expanded into cosmetic products.

E. None of the above are good examples of product development.

Answer: (C) Product development deals with offering new or improved products for current or present markets; thus, (C) is correct. (A) is incorrect because American Express is trying to penetrate the market by attempting to increase current product usage. (B) is not correct because Taco Bell is expanding its market with a current product and are therefore attempting market development. (D) is incorrect because Nintendo is taking a whole new product into an entirely new market or attempting new venture strategies. (E) is not the best choice because there is a correct answer.

Which of the following is NOT a step in the approach to segmenting product markets?

A. Name the possible product markets.

B. List the potential customer needs.

C. Estimate the size of the product market segments.

D. Form a heterogeneous market.

E. All of the above are steps in the process.

Answer: (D) Forming heterogeneous markets is the opposite of what one wants to do in the development of product-market segments. The marketer, or product manager, should be looking for homogeneous market segments. (A) is incorrect. The marketer should strive to find a name for the possible segments. (B) is also incorrect because the marketer should list the potential customer needs (as well as wants) for each of the segments. (C) is incorrect because the marketer needs to know the approximate size of the market in order to assure profitability. Since (D) is a correct choice, (E) is incorrect.

The marketing concept came to the forefront of American business during which of the following eras?

A. Simple trade era

B. Marketing department era

C. Production era

D. Sales era

E. Marketing company era

Answer: (E) The marketing company era saw the development of the marketing concept that states that marketers should strive to satisfy consumer wants and needs, at a profit! (A) is incorrect because the marketing concept was not developed or practiced during this era. (B) is incorrect. During the marketing department era, all marketing functions were brought together under one department, but this was not a company-wide practice. (C) is incorrect because during the production era no consideration was given to the market or what customers wanted. (D) is incorrect. During the sales era, a company stresses selling over marketing because of the increase in competition.

In macro-marketing, which of the following universal functions of marketing have to be performed?

A. Buying

B. Transporting

C. Marketing information

D. All of the above

E. None of the above

Answer: (D) All of the above functions must be performed. The buying function (A) is the purchase of products or services, and is essential in macro-marketing. Likewise, transportation (B) is a required function of macro-marketing, and includes physically moving products to various locations within a channel of distribution. Marketing information (C) is the communication function performed in macro-marketing and is one of the eight universal functions that marketers perform. All three of these answers help make up the eight universal functions of marketing performed in a macro-marketing environment. (E) is incorrect because all are universal macro-marketing functions.

The manufacturing of a telephone, using various raw materials, is an example of what type of utility?

A. Task

B. Possession

C. Time

D. Form

E. Place

Answer: (D) Form utility deals with something that is made out of some other material(s), usually called raw materials, thus the manufacturing of a telephone creates form utility. Task utility (A) is incorrect because this is service- related and deals with a person providing a task for someone. (B) is incorrect because possession utility refers to having the right to use or consume a good or service. Time utility is having a product ready for the customer(s) when she or he needs or wants it, so (C) is incorrect. Place utility (E) refers to having a product for a customer where they want it, thus (E) is incorrect.

Which of the following are NOT examples of support goods?

A. Services

B. Supplies

C. Installations

D. Accessory equipment

E. All of the above are examples of support goods

Answer: (E) Support goods are those goods used to assist in producing other goods and services. Support goods may include services, supplies, installations, and accessory equipment, thus all of the above are correct. (A), (B), (C), and (D) are all examples of support goods, thus each are incorrect choices.

What is meant by commercialization of a new product?

A. Create a product prototype.

B. Test the product and product strategy in the marketplace.

C. Position and offer the product in the marketplace.

D. Identify the new product niche.

E. None of the above.

Answer: (C) The final phase of the new product planning process is known as commercialization. This is when the product is positioned in the marketplace and launched. (A) is incorrect because prototype development occurs in the development phase. The market testing phase (B) of the new product development process involves exposing the actual product to consumers under realistic, yet somewhat controlled, conditions. The new product's niche (D) is defined during the initial strategic phase of the new product development cycle. Finally, (E) is not correct, because there is a correct answer.

The process of offering a product for sale on a limited basis in a defined geographic area in order to gauge consumer reaction to the actual product is known as

A. selected controlled markets

B. store audits

C. standard markets

D. test markets

E. None of the above

Answer: (D) Test marketing is performed to see if consumers will actually buy the product. Additionally, changes can be made to the marketing mix variables in a controlled setting. Selected controlled markets are those markets in which the total test is conducted by an outside organization or agency. The tests are conducted by paying retailers for shelf space, guaranteeing distribution to the most popular test market(s), so (A) is incorrect. (B) is not the correct answer. Store audits are conducted by groups (such as A.C. Nielsen), measuring sales in grocery stores and the number of cases ordered by the stores. Standard markets (C) is also incorrect because standard markets are those test sites where companies sell a new product through normal channels, and then monitor the results. (E) is incorrect because there is a correct choice.

Which type of new product test is most likely to answer the questions: "How does the customer perceive the product?" and "Who would use the product?"

A. An internal test

B. A concept test

C. Commercialization

D. Weighted point system

E. Non-weighted point system

Answer: (B) Concept tests usually rely on written descriptions of new products, and may be augmented with sketches of other literature. Several key questions are asked during the concept testing phase of new product development, including "How does the consumer perceive the product," and "who would use the product?" The firm would internally evaluate all new products and proposals to see if they "fit" the product strategy, so an internal test (A) is incorrect. (C) is not correct. A weighted point system (D) can establish criteria for product screening, but does not answer the above questions. Likewise, a non-weighted point system can establish criteria, but it doesn't provide answers to the above questions, thus (E) is incorrect.

If Mark pays the Hershey Company for the right to use its name on his line of T-shirts, then Mark is using which strategy?

A. Manufacturer's branding

B. Licensed branding

C. Co-branding

D. Private branding

E. Line extension

Answer: (B) Licensing a brand means giving another firm the right to a trademark and/or brand name in exchange for a yearly fee (royalty). Therefore, licensed brand (B) correctly describes Mark's brand sponsorship strategy.

The stage of the product life cycle characterized by overcapacity, intense competition, and the eventual elimination of weaker competitors is called the

A. maturity stage

B. introduction stage

C. growth stage

D. decline stage

E. renewal stage

Answer: (A) The four stages in the product life cycle (PLC) are introduction, growth, maturity, and decline in that particular order with respect to time. The introduction stage (B) is characterized by low sales and profits when the product is new in the market. This is followed by growth (C) where both sales and profits rapidly increase. Then comes maturity (A) where the product faces intense competition, sales and profits reach their peaks, and weaker competitors drop out of the market. Therefore, (A) is the right answer.

When choosing the best medium to deliver a firm's message, the first and most important factor to be decided is

A. the package design of the product

B. to specify the target market and target audience

C. to choose the most expensive medium because the most money spent will guarantee the greatest effectiveness

D. the products' placement in a store

E. the medium the competitive producers are using

Answer: (B) Before any medium is chosen, a firm must specify the target market and audience, and know their interests, habits, and behavior. Answers (A) and (D) do not have anything to do with the medium chosen. As many marketers will say, the most expensive medium (C) is not always the best if it does not target the correct audience. (E) is also incorrect, but should be researched after the target market and audience are identified.

Which of the following dimensions of service marketing refers to the notion that the quality of a service depends upon who provides it as well as when, where, and how it is provided?

A. Intangibility

B. Inseparability

C. Perishability

D. Homogeneity

E. Variability

Answer: (E) Service marketing is different from product marketing in at least four ways. They are intangibility (A), inseparability (B), perishability (C), and variability (E). Homogeneity is not one of the traits of services, so (D) should be eliminated. The correct answer is (E) because variability refers to the fact that the quality of a service is contingent upon who provided the service, and when, where, and how it was provided.

When a company enters a new product category for which its current brand names are not appropriate, it will likely follow which strategy?

A. Product extension

B. Line extension

C. Brand extension

D. New brand

E. Variety seeking

Answer: (D) There are four branding strategies, namely line extensions, brand extensions, multibrands, and new brands. These four strategic options are contingent upon two factors: brand name (existing versus new) and product category (existing versus new). Variety seeking (E) and product extension (A) should be ruled out right at the onset since they are irrelevant to branding options. Only in the new brand option (D) does a firm concoct a new brand name for a new product category. Therefore, the correct answer is (D).

Burdwick's Menswear Store has decided to segment its market based on gender, income, and occupation. Which of the following would most appropriately describe their form of segmentation?

A. Geographic segmentation

B. Demographic segmentation

C. Benefit segmentation

D. Psychographic segmentation

E. Behavioral segmentation

Answer: (B) Geographic segmentation deals with breaking down a market based on the geographic location of consumers, so (A) is incorrect. Benefit segmentation deals with the different benefits from a product sought by consumers, so (C) is incorrect. Psychographic segmentation involves consumers' lifestyles (D) and behavioral segmentation divides a market based on usage behavior of consumers (E). Both (D) and (E) do not utilize gender, income, or occupation to segment markets, so they are incorrect choices. However, demographic segmentation (B) does take into consideration consumers' demographics such as income, occupation, and gender. Therefore, the right answer is (B).

Which of the following types of advertising develops primary demand for a product category as opposed to demand for a specific brand?

A. Institutional

B. Competitive

C. Product

D. Reminder

E. Pioneering

Answer: (E) Pioneering advertising is usually done early in the product's life cycle and informs potential customers of the product and its benefits, generating primary demand for the category. Institutional advertising (A) promotes a specific organization, not a product. Competitive advertising (B) aims to develop customers' preference for a specific brand. Product advertising (C) aims to sell a product. Reminder advertising (D) aims to keep the product name before the public later in the product's life cycle.

Choosing a product difference that competitors cannot easily copy would be an example of which of the following kinds of differentiation?

A. Important

B. Distinctive

C. Superior

D. Preemptive

E. Vertical

Answer: (D) Preemptive differentiation is defined as the process of choosing a product attribute or difference that competitors would not be able to duplicate. In essence, the firm is taking preemptive action against its competitors; hence, the right answer is (D).

The way a product is perceived by customers on important attributes is called

A. product position

B. image psychology

C. market segmentation

D. BCG matrix

E. product life cycle

Answer: (A) Neither the product life cycle (E) nor the BCG Matrix (D) nor market segmentation (C) nor image psychology (B) describe the way a product is perceived by customers on two important attributes. The correct answer is product positioning (A).

Advertising belongs to which aspect of the marketing mix?

A. Product

B. Price

C. Place

D. Promotion

E. Perception

Answer: (D) Advertising falls under promotion, which is the communication between the seller and potential buyer to influence attitudes and behavior. Product (A), price (B), and place (C) are all parts of the marketing mix, but advertising does not fit under them. Perception (E) is not one of the "4 P's" in the marketing mix.

You finally decided (after some coaxing from your friends) that a good way to get into shape is in-line skating. You suddenly become aware of television and radio advertising about Rollerblade products. This is an example of

A. selective retention

B. selective perception

C. selective response

D. selective exposure

E. None of the above

Answer: (D) This question involves selective processes when one is exposed to stimuli. With selective exposure (D) our minds and eyes seek out and notice information that interests us. In the example, rollerblade products begin to interest you, so you notice ads about them more often. Selective retention (A) occurs when we remember only what we want to remember. This may occur after we have been exposed, suddenly, to the information. Selective perception (B) is when we screen out or modify ideas, messages, and information that conflict with previously learned attitudes and beliefs. Selective response (C) is incorrect because there is not a category called selective response. (E) is incorrect because one of the above, (D), is true.

All of the following are criticisms leveled against marketing by critics EXCEPT

A. selling shoddy or unsafe products

B. forcing consumers to shop online

C. using high pressure selling

D. using deceptive advertising

E. having excessive markups

Answer: (B) Critics often complain that companies intentionally sell substandard products to consumers (A) in order to make excessive profits (E). Others claim that some companies use overly aggressive sales (C) methods to "push" products onto consumers. Finally, some claim that advertising is often guilty of misleading consumers with deceptive advertising (D). The only choice that does not constitute a valid criticism of marketing is (B) and that is the right answer.

Which of the following is the best choice when large volumes of goods must be stored regularly?

A. Private warehouse

B. Public warehouse

C. Distribution center

D. Containerization

E. All of the above should be utilized to store goods regularly.

Answer: (A) Private warehousing would be the best choice. If a company stores large volumes of goods on a regular basis, they should probably use company-owned or private warehouses. Public warehouses (B) are best suited to seasonal use. (C) a distribution center's main function is to redistribute the stock, not to store it, so this would be an incorrect choice. Containerization (D) refers to the grouping of individual items into economical shipping quantities, and is incorrect. All of the above should not be utilized given the situation, so (E) is not the best choice.

When a demand curve is "inelastic,"

A. total revenues go down if price goes down

B. total revenues go down if price goes up

C. total revenues stay the same if price goes down

D. total revenues stay the same if price goes up

E. total revenues go up if price goes down

Answer: (A) Price multiplied by quantity demanded equals total revenues. When a demand curve is inelastic, small changes in price do not cause a change in the quantity demanded. Therefore, if the price goes up, so will total revenues. Similarly, if price goes down, revenues too would decline since quantity demanded remains unchanged. In other words, when the demand is inelastic, both changes in price and revenues move in the same direction (up or down). Only (A) correctly reflects the concept of inelastic demand.

Sugar Bear Fresh Farm Produce is a premium item sold in exclusive stores where freshness and quality are crucial. Which form of transportation should Sugar Bear Fresh Farm Produce utilize in order to get their goods from Colorado to Pennsylvania?

A. They shouldn't ship that far.

B. Air

C. Water

D. Train

E. Pipeline

Answer: (B) Because of spoilage, Sugar Bear may want to utilize air. In order to increase their market and serve their customers, Sugar Bear may well want to serve the Pennsylvania market, so (A) is incorrect. Water (C) is probably unavailable between Colorado and Pennsylvania, and even if it were, the mode of transportation is probably far too slow for a perishable product. Train (D) may be a viable method of transportation, however, since the produce is a perishable product, the slower forms of transportation like train may not be the best choice for a long journey (unless refrigerated cars are used, and the customer service level is low). Pipelines (E) are not feasible options since fresh produce cannot be sent through this form of transportation.

When preparing to market internationally, what is the typical chronological progression (or order) that most companies would follow?

A. Export department; international division; multinational organization

B. International division; export department; multinational organization

C. Multinational organization; international division; export department

D. Multinational organization; export department; international division

E. Export department; multinational organization; international division

Answer: (A) The simplest step is to begin shipping out the goods. As the company gets more involved in exporting, they will create an international division to handle all of the international activities. Finally, they begin thinking of themselves as global marketers, and become a multinational organization. Answers (B), (C), and (D) are incorrect because they do not begin with the simplest step of exporting. Answer (E) is incorrect because creating an international division after becoming a multinational organization is backwards.

When entering a foreign market, a marketer may need to adapt or modify which of the following promotional methods to meet the culture norms of the target market?

A. Theme

B. Copy color

C. Product's name

D. Media

E. All of the above

Answer: (E) The company must consider each of the elements before entering a foreign market since not doing so could result in embarrassment for the marketer (or worse). Although theme is a correct answer (A), it of itself is not sufficient to support the promotional program. Copy color (B) is important, and the impact of color for the foreign market should be studied; however, it is not the best choice. Product name (C) and the media mix (D) are also important considerations, and are correct, but by themselves they are not the best choice.

Which of the following statements about positioning is FALSE? Positioning techniques

A. require a firm to collect data about consumer perceptions of products

B. are sometimes called perceptual mapping techniques

C. typically rely on a "product space" diagram to show the relationship among competing products

D. may use information on consumers' "ideal products" so that the preferences of different consumer segments can be considered

E. place products on a graph based on price level and quantity demanded

Answer: (E) Positioning deals with consumers' perceptions (A). It uses a graphing tool called a perceptual map (B) or a product space diagram (C), and it sometimes incorporates consumers' ideal preferences (D). The only choice that is incorrect is (E) since positioning does not always map brands based on price and quality. The two attributes could be anything that would be relevant to the product category in question. Therefore, the correct answer is (E).

Judy and Dale want to calculate the selling price (on COST) of an item that has a cost of $10.00 and a markup percent on cost of 40%. What is their selling price?

A. $16.67

B. $10.00

C. $10.50

D. $12.00

E. $14.00

Answer: (E) The key to remember is that this calculation is being performed on COST, not retail price. (A), $16.67, is incorrect; this would be the answer if the question had asked for a 40% markup on retail price. (B) cannot be correct because it is at cost. (C) is not correct because Selling Price = Cost + Markup. So SP = $10.00 = .4($10), or $14.00. (D) is also an incorrect answer.

Which of the following is a marketing management tool that shows how customers perceive proposed and/or present brands?

A. Market segmentation

B. Diversification

C. Market penetration

D. Brand equity

E. Positioning

Answer: (E) Positioning is giving a product a specific image that differentiates it from its competition and this is done to occupy a certain place in consumers' minds in relation to competing brands. The specific positioning tool that depicts consumers' perceptions of brands is called a perceptual map or product space. Hence, (E) is the right answer.

When trying to calculate markup based on product cost, Doc and Den wanted to determine the markup on a product that cost $150 and sold for $200. What is their markup?

A. $25

B. $40

C. $50

D. $60

E. $110

Answer: (C) When figuring markup based upon cost, Selling Price = Cost + Markup. Since $200 = $150 + $50, (A), (B), (D), and (E) are all incorrect. Utilizing the formula, $200 - $150 = $50. Remember, this is the markup based upon cost, NOT retail selling price.

The McHenry Store, a retailer of fine clothing, wants to calculate both the cost and selling price of a new suit they received from a fine clothing tailor. The amount of markup on selling price is 20%, and the amount of markup is $100. Can they calculate both the cost and the selling price of the product?

A. Definitely not; they must have more information.

B. Certainly; the selling price is $500 and the cost is $400.

C. Certainly; the selling price is $1,000 and the cost is $400.

D. Of course they can; the selling price is $500 and the cost is $200.

E. Yes; the cost is $100 and the selling price is $120.

Answer: (B) The cost is $400, and the selling price is $500. (A) is incorrect since the selling price and cost can be calculated. (C) is incorrect since Markup % on Selling Price X Selling Price = Amount of Markup. When calculated, the answer is C = $400 and SP = $500; thus, (D) is also wrong. (E) is incorrect. If the amount of markup is $100, and the markup percent on selling price is $120, this answer cannot possibly be right.

Jan and Bob Winfield want to calculate the cost of a new chair they just bought. Jan told Bob that the retail selling price of the chair was $1,000, and that the markup percent on the selling price was 60%. What would their cost be?

A. $1,000

B. $600

C. $625

D. $400

E. $150

Answer: (D) The cost would be $400. (A) is incorrect; the cost will not be equal to or in excess of the selling price. (B) is incorrect; $600 is 60% X $1,000. (C) is incorrect because this is the markup percentage on cost of 60%. (E) is incorrect because Cost = Selling Price - Markup (C = SP - M). Thus, 1,000 - 60%(1,000) = 400, and the cost of the product was $400.

The MOLE, a toy retailer, wants to calculate the selling price for some of their stuffed dolls. They know that they paid $400 each for the dolls, and they want a 60% markup on selling price. What should their selling price be?

A. $640

B. $350

C. $750

D. $1,000

E. $5,300

Answer: (D) Their selling price should be $1,000. (A) is incorrect because this gives a 60% markup as a percentage of the $400 cost. (B) cannot be correct because $350 is below cost, thus MOLE would be selling at a loss. (C) is incorrect because in order to calculate selling price, the formula to utilize is SP = COST + MARKUP (SP = C + M). Since the cost of $400 + 60%(SP) is not $750, this choice is wrong. (E) is also incorrect because the cost plus 60% of the selling price does not equal $5,300.

Joe Fisherman wants to know his percent markup on retail of a pair of shoes for which he paid $1,000. He knows the amount of markup was $600. Which of the following would answer his question?

A. 40%

B. 150%

C. 50%

D. 60%

E. 100%

Answer: (D) In order to calculate percent of markup to selling price one would use the formula amount of markup/selling price = percent of markup to selling price. Since this comes out to 60%, (D) is correct. (A) is incorrect because $600/1,000 = 60%. (B), (C), and (E) are also incorrect for the same reason.

With a selling price of $2,000 and a cost of $800, what would the markup (at retail) be for this product?

A. $1,000

B. $2,000

C. $1,200

D. $800

E. $1,250

Answer: (C) When trying to find the markup based upon selling price, the formula to use is Amount of Markup = Selling Price - Cost. In this example, since the selling price is $2,000 and the cost is $800, the answer is $1,200. (A), (B), (D), and (E) are incorrect calculations.

Based upon retail selling price, if John Doe wants to figure out the actual amount of markup of a product he plans to retail, he should

A. divide the selling price by the cost

B. divide the cost by the selling price

C. subtract the cost from the selling price

D. subtract the cost from the markup

E. Cannot be determined from the information given

Answer: (C) When one wants to calculate the markup of a product, at retail, the correct formula is Amount of Markup = Selling Price - Cost. Thus, (C) is correct. (A), (B), and (D) are incorrect formulas and won't yield the markup. (E) is incorrect because the answer is available from the given data.

A selective distribution policy might be used to avoid selling to wholesalers and/or retailers for a number of reasons. Which of the following reason(s) could be given for following a selective strategy?

A. Retailers/wholesalers have a poor credit rating.

B. The intermediaries have a reputation for making too many returns or requests for service calls.

C. The middlemen place orders that are too small to justify making calls or providing service.

D. The intermediaries are not in a position to do a satisfactory job.

E. All of the above are good reasons.

Answer: (E) The question deals with the establishment of a selective distribution policy that is used to avoid sales to certain intermediaries. All of the reasons stated are excellent reasons to utilize this type of distribution. (A) is true but not the most correct response. Poor credit translates to inefficient use of cash for the producer or manufacturer, and perhaps a poor cash flow. Too many returns (B) cause additional expenses for the producer in terms of human and capital resources. If there is only one intermediary making these returns, the problem is probably with the channel member and not the products themselves. In order to create economies of scale, the producers need to produce in large enough amounts to make cost of the product competitive with other products on the market. Sales in very small amounts cost the manufacturer (C). If there are numerous small accounts, the manufacturer may want to consider utilizing distributors for their products. Thus (C) is true, but not the most correct response. (D) is also true, but not the most correct response. If the intermediary channel member cannot help with product sales in a satisfactory (or better) manner, than the manufacturer may want to avoid doing business with them.

Sales promotion expenditures are growing and are aimed toward which of the following group(s)?

A. Final consumers or users

B. Middlemen, or intermediaries

C. Employees

D. Mature markets

E. All of the above

Answer: (E) Sales promotion activities should be aimed at final consumers, intermediaries, employees, and mature markets in order to be effective. Final consumers (A) is true but not the best choice. Firms utilize sales promotions aimed at final consumers to increase demand, or to speed up the time of purchase. (B) is true but not the most correct choice. If the firm wants to stress price-related matters, then sales promotions aimed toward intermediaries may be effective. (C) is true but also not the best choice. Emphasis on getting new customers, introducing new products or selling an entire company line of products would be instances when sales promotions should be used for employees. Finally, (D) is true but not the most correct choice. Mature markets utilize heavy sales promotions when competition for customers and attention from middlemen is required.

What is the term used that means the seller pays the cost of loading the products onto some transportation vehicle, then at the point of loading, title passes to the buyer who usually also assumes responsibility for damage en route and pays the freight costs?

A. Freight absorption pricing

B. Zone pricing

C. F.O.B. pricing

D. Uniformed delivered pricing

E. Loading cost pricing

Answer: (C). (A) means absorbing freight costs so that a firm's delivered price meets the nearest competitors, and is incorrect. (B) refers to making an average freight charge to all buyers within specific geographic areas and is incorrect. (D) is also incorrect and refers to making an average freight charge to all buyers. (E) is a nonsense answer and is incorrect.

A music lover wanting a higher-quality sound from a CD player is most apt to use which of the following levels of problem solving?

A. Limited problem solving

B. Routinized response behavior

C. Extensive problem solving

D. Psychological variable problem solving

E. Social influences

Answer: (C) This person is seeking an infrequently purchased, expensive, potentially high-risk product and would most likely utilize extensive problem solving. Limited problem solving (A) would be used by a consumer when they regularly select a particular means of personal needs satisfaction, such as buying a recently issued CD. (B) is incorrect. Routinized response would be used for a low involvement, regularly purchased product such as sugar, salt, or a favorite brand of beer. Psychological variables (D) include motivation, perception, etc., and are not related to this particular question. Social influences (E) include family, social class, reference groups, etc., and are not relevant to this level of problem solving.

Communicating information between the seller and the potential buyer, or others in the channel, to influence attitudes and behavior is known as

A. marketing

B. promotion

C. pricing

D. channels of distribution

E. All of the above

Answer: (B) The communication of information between buyer and seller to influence an outcome behavior is known as promotion. Marketing (A) provides direction to make sure the right products are produced and delivered to customers. It includes the entire marketing mix of price, place, promotion, and channels of distribution, and is thus incorrect. Pricing (C) is also incorrect and is one of the marketing mix variables that deals with the economic aspect of setting a final price for the product. Channels of distribution (D) are concerned with getting the product to the consumer.

When a consumer experiences cognitive dissonance, this means

A. without confirmation, the adopter may buy something else next time he makes a purchase

B. the consumer's doubts may lead to tension

C. the customer is experiencing uncertainty about the correctness of his purchase decision

D. the consumer may seek additional information to confirm his purchase decision

E. All of the above may happen

Answer: (E) Without confirmation the adopter may buy something else the next time he makes a purchase (A). Additionally, he may not comment positively about the product to others. Doubts about a purchase lead to tension, which causes cognitive dissonance. This answer is not the best choice, although it is accurate. (B) is also an incorrect choice, although the information is true. Tension is caused by purchase doubts. (C) is incorrect, again when, as with the other choices, considered in light of choice (E). When a customer experiences uncertainty about a purchase, this is known as cognitive dissonance. The consumer may seek additional information about the product in order to confirm that the purchase was the correct decision (D); the statement is true, but, even so, does not by itself constitute the best answer.

True work in "green marketing" requires companies to practice the three R's of waste management which are

A. recycle, recycle, recycle

B. response, reinforcement, and reward

C. reducing, reusing, and recycling

D. recycling, response, and reward

E. reduce, recycle, and renew

Answer: (C) The three R's of waste management that best embody the essence of "green marketing" are reducing packaging, reusing packaging, and recycling packaging. Therefore, (C) is the right answer.

Deciding to target several market segments and design separate offers for each is called

A. undifferentiated marketing

B. differentiated marketing

C. concentrated marketing

D. mass marketing

E. cause marketing

Answer: (B) Differentiated marketing (segmentation) takes place when a firm offers different marketing mix elements to various segments of customers just as described in this question. Therefore, (B) is the correct answer. Undifferentiated marketing (A) and mass marketing (D) are the same and both are incorrect because they do not involve any segmentation at all. Concentrated marketing (segmentation) (C) occurs when a firm pursues just one segment of consumers with a unique marketing mix. That is not the case in this question. Cause marketing (E) is a joint marketing effort between a profit and nonprofit organization to benefit a social cause. Therefore, (E) is incorrect.

Freight forwarders can often charge shippers lower rates than basic carriers because they

A. will only deliver to selected locations

B. only handle large shipments

C. combine the small shipments of many shippers into more economical shipping quantities

D. do not deal with international shipments

E. ship only small quantities

Answer: (C) Freight forwarders consolidate small shipments from different shippers and then ship in bulk quantities to take advantage of lower shipping rates. In other words, they specialize in performing the "accumulation" regrouping activity. Therefore, (C) is the right answer.

Environmental scanning is an important step in planning a market opportunity analysis. In relation to international marketing, which of the following environments deals with nationalism (putting a country's interests before everything else)?

A. Economic

B. Technological

C. Political

D. Legal

E. Natural environmental

Answer: (C) The political environment of a country deals with how the people feel about their country and government. They may express their feelings with actions. (A) is incorrect because the economic environment would concentrate more on the GDP, imports, exports, etc. (B) is also incorrect. The technological environment would deal more with how equipped and skilled the country is when dealing with technological advances. The legal environment (D) deals with the country's law and legal/judicial systems. The natural environment (E) would also be incorrect, because the concern here would be the physical environment.

From a consumer's viewpoint, what kind of innovation would an improved electric blanket be?

A. Innovation

B. Continuous innovation

C. Dynamically continuous innovation

D. Discontinuous innovation

E. None of the above

Answer: (C) An improved electric blanket would be considered a dynamically continuous innovation. Radically new behavior is not required by the consumer to use an electric blanket, although a slight change in behavior is required. An innovation would simply be a new product or concept on the market, so (A) is incorrect. With continuous innovation, no new behaviors are required so (B) would not be the best choice. Discontinuous innovation involves making the consumer establish entirely new consumption patterns. A significant amount of time must be spent by the seller educating the consumer, so (D) is not correct. Since there is a correct answer, (E) is incorrect.

Tuttie Babe Bikes, a manufacturer of mountain, ten speed, and other bikes, wants to divide its entire market into different groups. One group is for those who exercise, another for those who need transportation, and so on. They want to develop a different marketing mix for each of these groups. This process of dividing consumers into different groups with similar needs is called

A. positioning

B. market

C. segmenting

D. combining

E. marketing

Answer: (C) This is the process of clustering people, current or potential consumers, into groups or segments with like needs or wants. (A) is incorrect. Positioning defines how consumers view brands in a market. (B) is not the most correct response. A market refers to the entire population who may have a need for a product. No thought is given to breaking the market down into smaller homogenous groups or segments. (D) is also incorrect. Combiners take the smaller segments and combine them into larger subgroups. And finally, marketing (E) is the entire process of getting a product or service from the producer to the final consumer, and thus is not the best response.

When assessing a market situation utilizing the GE Strategic Planning Grid, which of the following is NOT considered when looking at business strengths?

A. How long a company has been in business

B. If the firm has people with the right talents for implementation

C. Whether the plan is consistent with the firm's profit objectives

D. Whether the plan is consistent with the firm's image

E. Whether the plan could establish a profitable market share given its technical capability, costs, and size

Answer: (A) The General Electric Planning Grid helps managers make three-part judgments (high, medium, or low) about business strengths and industry attractiveness of proposed or existing product market plans. How long a company has been in business is not a primary factor when utilizing the GE Grid to assess business strengths. (B) is a factor. If the company doesn't have the people with talents, such as technical knowledge, marketing skills, etc., the weakness hinders the probability of success for the plan. (C) is a factor. If the product does not fit into the overall profit objectives, then it may not be a good fit for the company. (D) is also a factor utilized in business strength analysis. A firm works hard and spends a lot of time and money developing a particular image. Any product development or introduction assessment utilizing the GE Grid would have to pay heed to the firm's image, and not introduce a product that may conflict with such an image. (E) is also a factor. The firm must consider its abilities and size, as well as the cost of the proposed plan to introduce a product. If a situation arises that is not profitable, or if there are not enough resources and/or capabilities available to the firm to create a positive and profitable market share situation, the market opportunity should not be used.

What type of research seeks to find in-depth, open-ended responses?

A. Quantitative

B. Marketing

C. Chi square

D. Experimental

E. Qualitative

Answer: (E) By definition, qualitative research seeks to find in-depth, open-ended responses to questions posed. This type of research tries to elicit thoughts respondents may have about a particular topic without giving too many guidelines. Quantitative research (A) seeks structured responses that can be summarized and generalized to populations; thus, this response is incorrect. Marketing research (B) includes both quantitative and qualitative data, and is too broad a category. Chi square (C) is also incorrect. This is a statistical technique used to help summarize quantitative data. Experimental (D) is also incorrect. In an experimental setting the researcher would generally use quantitative data.

Which of the following is true about a Market Information System (MIS)?

A. MIS is a way of continually gathering and analyzing data to provide marketing managers with information they need to make decisions.

B. MIS is very expensive and only large firms can develop an effective system.

C. The information obtained from the MIS is all the information a manager needs to know for decision-making.

D. MIS should only be used when all other avenues for research have been explored.

E. MIS should not be used in marketing.

Answer: (A) MIS is a way of continually gathering and analyzing data that can be used for decision-making. (B) is incorrect. With the development of low-cost micro-computers, small as well as large firms can access powerful MIS systems. (C) is not the best choice because marketing managers must use marketing research to supplement data that have become available through MIS. (D) is incorrect. Other avenues of research should be explored, but not at the expense of MIS. Marketers should have an effective MIS implemented for better marketing results; thus, (E) is incorrect.

Johanna wants to start a new dance studio and needs to calculate the cost and selling price she should charge for lessons. Her accountant told her that the markup percent ON COST should be 15%, and that the amount of markup should be $17.00. What should her cost and selling price be?

A. cost = $100; selling price = $90

B. cost = $113.33; selling price = $130.33

C. cost = $113.33; selling price = $150

D. cost = $100; selling price = $19.55

E. cost = $13; selling price = $30

Answer: (B) This is a difficult question. However, the answer can be calculated as C = $113.33, while SP = $130.33. The formula to calculate cost and selling price is as follows: Markup % on Cost X Cost = Amount of Markup. Thus, .15 X Cost = $17. Since $17/.15 = $113.33, this is the cost. Because this is the cost, (A), (C), (D), and (E) cannot be correct. SP = Cost + Markup, so SP = $113.33 + .15($113.33) or SP = $113.33 + $17, which equals = $130.33.

When designing a research study, the researcher must make sure that the research study actually measures what it is supposed to measure. This concept is called

A. reliability

B. validity

C. communication

D. observation

E. sampling statistics

Answer: (B) Validity means that the study actually measures what it purports to measure. Reliability (A) means that the research instrument measures the same thing over and over. Communication (C) deals with a method of gathering data and reporting the findings. Observation (D) is a type of research. Finally, sampling statistics (E) refer to the means used to generalize a sample to a population.

A "buying center"

A. is always identified on a firm's organization chart

B. is always controlled by the purchasing manager

C. is usually located in big cities

D. refers to all purchasing managers in an industry

E. varies from purchase to purchase

Answer: (E) A "buying center" comprises all those individuals who are involved in the purchase decision on behalf of a firm. A "buying center" is something that is mainly applicable to business marketing. "Buying centers" are not identified on a firm's organizational chart; therefore, (A) is incorrect. There is no evidence to support either (B) or (C), so both are incorrect. Since "buying centers" are firm-specific, (D) is incorrect. Finally, "buying centers" vary from purchase to purchase; thus, the correct answer is (E).

"Economies of scale" means that

A. the more producers there are in a country, the greater the need for retailers

B. larger countries enjoy more economic growth than smaller countries

C. as a company produces larger numbers of a particular product, the cost of each product goes up

D. as a company produces larger numbers of a particular product, the cost of each product goes down

E. smaller companies are more economical

Answer: (D) A firm can exploit "economies of scale" when it reduces its unit costs by operating at high volumes of throughput. (A) and (B) have no bearing on scale economies, so they are both incorrect. (C) is false because the unit costs actually increase when the production levels go up. (E) should be ruled out since "economies of scale" does not refer to the size of the company. The right answer is (D) since in this case unit costs decline as production levels increase.

Which stage of the product life cycle would have the lowest industry profits, where a firm entering may experience profit losses?

A. Market introduction

B. Market growth

C. Market maturity

D. Sales decline

E. Sales and profits decline, then rise

Answer: (A) During the market introduction phase, a new idea is being brought to the market. Consumers are not looking for the product, so firms must invest heavily in promotion to begin to secure sales for their products. (B) is incorrect. During growth, profits for the industry actually are rising, and then peak. Maturity (C) is also incorrect. Although the profits decrease during this stage, they are not at their lowest. (D) is also incorrect. In the sales decline stage, profits will eventually become zero; but this is not the lowest of the four stages. In introduction, there may be negative profits. (E) is not one of the four stages of the product life cycle and is incorrect.

Which of the following are important when considering what objectives a firm sets for themselves?

A. To engage in specific activities that will perform a socially and economically useful function

B. To develop an organization to carry on the business and implement its strategies

C. To earn the highest possible profits

D. All of the above are true.

E. Only (A) and (B) are true.

Answer: (D) When setting objectives, a firm seeks to engage in specific activities that will perform a socially and economically useful function. The firm also seeks to implement effective strategies and to earn a profit.

Which of the following promotional methods may best be described as mass selling?

A. Personal selling and sales promotion

B. Advertising and publicity

C. Encoding and decoding

D. Personal selling and public relations

E. Product and promotion

Answer: (B) Advertising and publicity are methods of communicating with large numbers of people at the same time and can be referred to as mass selling. (A) is incorrect because personal selling is face-to-face with one person or a small group of people. (C) describes two steps of the communication process, and is incorrect. Personal selling and public relations (D) are incorrect. Public relations, one could argue, may be mass selling; however, as stated above, personal selling is not. Product and promotion (E) are two variables of the marketing mix, and are not promotional methods; thus, the answer is incorrect.

The first step in segmenting international markets is to

A. develop a marketing mix

B. segment by country or region looking at cultural, demographic, and other characteristics

C. list the suppliers who serve the market

D. consider the list of the suppliers who serve the market

E. consider the list of business and organizational buyers

Answer: (B) In international segmentation, the first step usually involves a broad, macro-level decision based on the target countries' demographic, cultural, and political environments. If the macro-environment looks favorable, then the firm proceeds with a more detailed, micro-analysis of the market characteristics. As such, (B) is the correct answer.

Bit Johnson sells four units of his famous BJ733 barbecue grill system, resulting in a total revenue of $420. His total revenue for five units is $460. The price on the four units is $105 per unit and the price for the five units (per unit) is $92. What is the marginal revenue for the fifth unit?

A. $13

B. $40

C. -$40

D. $52

E. $26

Answer: (B) Marginal revenue for this problem is calculated by subtracting the $420 total revenue for four units from the $460 total revenue for the five units. This is the formula used to calculate marginal revenue. The price per unit given for this problem is simply not needed and not taken into account when making calculations for marginal revenue. When this calculation is performed, there is a marginal revenue figure of $40 (A), (C), (D), and (E) are not the correct answer, and are miscalculations or guesses.

When doing positioning, a good marketing manager should

A. focus on the needs of baby boomers

B. avoid target marketing strategies

C. plan on making physical product changes rather than image changes

D. rely on customers' perceptions of existing and/or proposed brands

E. focus on what he or she feels are the important features of the product

Answer: (D) Positioning is based on customers' perceptions of the firm's and its competitors' product offerings. Therefore, a good positioning strategy ought to be based on customers' perceptions of brands as stated in (D).

A segmentation of the toothpaste market would most likely reveal that

A. most consumers are concerned about brightness of teeth

B. factors such as taste and price are unimportant

C. different market segments seek different product benefits

D. the entire market can be served with one marketing strategy

E. price is the most important selling point

Answer: (C) If one were to segment the toothpaste market, it would be logical to assume that different consumer segments would seek different product benefits (C). For instance, kids may want a good-tasting, sparkly toothpaste, while socializers may want breath-freshening toothpaste and so on. Therefore, (C) is the correct answer. The other choices can be ruled out since there is no logical basis to make such assumptions.

Which of the following best describes the conditions found in the market maturity stage of the product life cycle?

A. Consumers view the products in the market as homogenous.

B. Industry profits begin to rise.

C. Promotional advertising is unnecessary.

D. Industry sales are at their lowest point.

E. New firms can only enter the market during this phase.

Answer: (A) The question focuses on the understanding of the product life cycle and its maturity stage. In market maturity, products vary only slightly from that of the competition. Because of this, a lot of product differentiation is minute, and the focus may be on low prices. In addition competitors may have copied marketing variables from the industry leader. (B) is incorrect. Industry profits begin to decline in this phase because of the numbers of competitors who have entered the market. Promotional advertising is necessary during this phase, so that companies can point out their product differences, thus (C) is incorrect. (D) is incorrect. Industry sales are not at their lowest; conversely, they are at their highest. (E) is also incorrect. A firm can enter the market during any phase of the product life cycle.

When developing a final price for a product, the marketing manager needs to know several things about product cost. Which of the following costs, in relation to accounting costs, is most related to product output?

A. Breakeven point

B. Average cost

C. Total cost

D. Total variable cost

E. Total fixed cost

Answer: (D) Total variable costs are costs such as expenses for parts and wages and are directly related to the output of the product. The break-even point (A) has a relationship with product output, but not directly, and is not the most correct choice. Average costs (B) are calculated by dividing the total cost by the related quantities, and has a relation to product output, but not as directly as variable costs. Total cost (C) includes not only variable costs, but also fixed costs, and is not the best response. Total fixed costs (E) is not the best response because fixed costs have a "fixed" total cost no matter how many of the products are produced. The fixed costs are incurred even when there is no output.

Which of the following is used by a company to help separate brand names for each of the company's products, when the products are of varying quality or type?

A. Licensed brands

B. Dealer brands

C. Manufacturer brands

D. Individual brands

E. Licensed-dealer brands

Answer: (D) Individual branding is used to accomplish the above purpose of separating brands. It is used to help avoid consumer confusion of the products offered for sale by a company or business unit. Licensed brands (A) are well-known brands that resellers generally pay a fee to offer for sale to consumers. Dealer brands (B) are brands that are owned or created by intermediaries. Manufacturer's brands (C) are brands owned and/or created by manufacturers or producers. Finally, licensed-dealer brands (E) is incorrect. These brands would be owned by a dealer and licensed to other dealers.

Which of the following sales promotion techniques are generally NOT aimed at middlemen, or intermediaries?

A. Trade shows

B. Push money

C. Aisle displays

D. Catalogs

E. All of the above are traditionally aimed at middlemen or intermediaries.

Answer: (C) Aisle displays are generally aimed at the final consumer or user of the good, and are frequently seen in retail stores, especially grocery stores. Trade shows (A) are aimed toward the intermediaries and try to solicit orders for particular types of products. Push money (B) is given to intermediaries in order to encourage them to pay particular attention to a manufacturer's product or product line. This is an incorrect response. Catalogs (D) are sent to intermediaries to give additional product information, such as discounts, price, technical data, etc.; this is an incorrect answer. Final consumers may also utilize catalogs. (E) is incorrect, because all of the above are not traditional methods of promoting to intermediaries or middlemen.

Baby's Notion and Lotion shop requires a minimum markup of 50% at retail on a new line of lotions. If Baby feels that the line of lotions should retail for $20 per lotion, which of the following is the maximum amount she should pay for each lotion she buys?

A. $12

B. $14

C. $15

D. $16.80

E. None of the above

Answer: (E) If Baby is retailing her lotions at $20 per lotion, and needs to achieve a 50% markup at retail, she cannot pay over $10 for each bottle of lotion that she purchases. (A), (B), (C), and (D) have costs that are too high for Baby to achieve her desired markup. Remember that Sales Price = Cost + Markup (SP = C + M). Therefore, $20 (Baby's Retail Price) = C + 50%($20). So, $20 = C + 10, and therefore C = $10. The maximum Baby can pay for each of the bottles of lotion is $10. Of course, less would provide for a greater markup.

Which kind of positioning involves providing the most upscale product or service and charging a premium price to cover the higher costs?

A. More for more

B. More for the same

C. More for less

D. The same for less

E. Less for less

Answer: (A) This question deals with a firm's tradeoff between product quality and price. When firm's provide a high-end upscale product (more) at a premium price (more) they are using a more-for-more positioning platform. Therefore, (A) is the best answer. In contrast, when a firm offers a low-end, basic product at a very low price, it is adopting a less-for-less positioning strategy.

Which social class group is matched correctly with their approximate size for those social classes in the United States?

A. Upper-class—32%

B. Upper-middle class—38%

C. Lower-middle class—1.5%

D. Upper-lower (or "working") class—12.5%

E. Lower-lower class—16%

Answer: (E) The lower-lower class makes up approximately 16% of the American population. The relative size of the other groups is as follows: (A) is incorrect and should be 1.5%; (B) is also incorrect and should be 12.5%; (C) is incorrect and should be 32%; and (D) is also incorrect, and should be 38%. These figures are important for marketers, especially in the product development areas, so they can develop effective products and marketing plans for given markets.

The AIDA model in marketing communication refers to four promotion tasks that include

A. getting attention, holding interest, creating demand, and obtaining action

B. getting attention, holding interest, creating desire, and obtaining action

C. becoming aware, holding interest, arousing desire, and obtaining action

D. getting attention, holding intrigue, arousing desire, obtaining action

E. becoming aware, holding interest, arousing desire, and providing assistance

Answer: (B) The AIDA model in marketing communications refers to four sequential promotion tasks that are attention-interest-desire-action. Therefore, the correct answer is (B)

The accuracy of quantitative data is affected by

A. the response rate

B. the sample size

C. the sampling procedure

D. (A), (B) and (C)

E. None of the above

Answer: (D) All of the above are required in order to have accurate, reliable, and valid research results. (A) is required for data accuracy, but is not the best answer and is incorrect. (B) and (C) are also required to give data accuracy, but are not the best choices. Since all of the above are required, none of the above (E) is incorrect.

Which of the following would make up the cultural and social environment that have an effect on consumer's buying behaviors?

A. Languages people speak

B. Religious beliefs

C. Consumer's views on marriage and family

D. All of the above.

E. Both (B) and (C)

Answer: (D) The language people speak is part of the site-specific culture, and has an effect on how buyers behave (A). Although this answer is true, it is not the most correct. Additionally, religious beliefs (B) held by individuals will influence a consumer's behavior and affect the way consumers respond to promotions and specific products. Although true, this is not the best answer. Views on marriage and the family (C) will affect a consumer's choice of products and will have an impact on selective exposure and retention, but this is not the most correct response. (E) is not correct.

Trying to balance the interests of people who want to drink beer and the dangers of losing lives because of drunk driving is an example of

A. green marketing

B. the micro-macro dilemma

C. a marketing exchange

D. a subsistence economy

E. relationship marketing

Answer: (B) The micro-macro dilemma (B) takes place when a certain activity may be beneficial for some people but not necessarily for the entire society. The dilemma described in the question describes just that. Drinking beer responsibly and within moderation is fine and many people enjoy that activity. However, the same activity in a different situation may cost people their lives due to drunk-driving fatalities. Therefore, (B) is the right answer.

A poorly written and worded question that has different meanings to different respondents, when used in a marketing research setting, is said to have poor

A. validity

B. accuracy

C. reliability

D. confidence interval

E. sample

Answer: (A) Validity is the extent that a research instrument (such as a questionnaire) measures what it purports, or is intended, to measure. If the question has a different meaning to different people, it is invalid. (B) is incorrect. Accuracy refers to the extent that collected data are error free. A poorly worded question may not have an impact on accuracy. Reliability (C) is incorrect. Reliability refers to the fact that the questionnaire, or research instrument, measures the same thing over and over. Thus, every time the instrument is used it measures the same thing. The research can be reliable; however, it still may not be valid. In other words it is measuring the incorrect thing over and over. (D) is incorrect. Confidence intervals have to do with sampling accuracy. A confidence interval is the range on either side of an estimate that would likely contain the true population values. Samples (E) have nothing to do with question wording, and is thus incorrect. Samples are small portions of a population under study that should reflect the overall population.

In a new-task buying situation, a good salesperson should contact the client's

A. influencers

B. buyers (purchase managers)

C. deciders

D. gatekeepers

E. All of the above

Answer: (E) A new-task buying situation is one in which a firm typically faces a new problem that requires the collective wisdom of several key decision makers within an organization. It is therefore recommended that a salesperson contact each one of the decision makers who are involved in the buying decision including the influencers (A), buyers (B), deciders (C), and gatekeepers (D). Since (E) includes all of these options, it is the best answer for this question.

An important family life-cycle category to sell to, and an attractive market for many products and services because of the unusually high income period for the workers in the demographic segment, may be

A. empty nesters

B. senior citizens

C. divorced people

D. single/unmarried people

E. young marrieds with children

Answer: (A) The children have left the house, so these people are able to spend their money in other ways. Additionally, they tend to have higher incomes, which can be spent on themselves. Their homes are paid-off, or almost paid off, and their expenses are low. Senior citizens (B) have lower incomes and tend to have additional expenditures on health care. Many divorced individuals (C) actually find themselves in a financial bind, and their expenditures are limited to necessities. Single/unmarrieds (D) will not start off with a high income. Young marrieds with children (E) will find most of their money going to the children and child-related expenditures.

Which of the following is NOT included in the five-step problem-solving process utilized by consumers when purchasing products and services?

A. Awareness of a problem

B. Information gathering and recall

C. Alternative solution evaluation

D. Solution selection

E. Purchase decision sharing among friends and family

Answer: (E) Purchase decision sharing is not part of the five-step problem-solving process. Although many consumers share decisions, this step should be called purchase evaluation. (A) is part of the problem-solving process and is therefore incorrect. (B) is also not the best answer, although information gathering and/or recall is part of the process. Development of alternative solutions (C) is essential to the process, and is therefore also incorrect. Solution selection (D) is incorrect, although it too is part of the problem-solving process.

Vertical marketing channel-systems, in which the whole channel focuses on the same target market at the end of the channel, could best be described as which of the following?

A. A corporate channel system

B. An administered channel system

C. A contractual channel system

D. It could be described by both (A) and (B).

E. It could be described by (A), (B), or (C).

Answer: (E) Vertical marketing channels of distribution can be a corporate channel (A) where the corporation owns the entire channel of distribution. However, this is not the best response. It can be an administered channel (B) where the channel members informally agree on which services the channel members will perform; however, this is not the most correct response. A vertical channel system could also be contractual (C) where the members agree, by contract, to cooperate with each other, and also which functions should be provided by each of the members. This, however, is not the most correct response. (D) is true, both corporate channels and administered channels could provide or develop a vertical channel system, however, so could a system under contract, which (D) leaves out. Thus, this is not the best response.

Which of the following conditions are favorable to successful branding?

A. The dependability and availability of the product are limited.

B. The demand for the general product class is small.

C. There are no economies of scale.

D. The demand is strong enough so that the market price can be high enough to make the branding effort profitable.

E. All of the above are favorable conditions for successful branding.

Answer: (D) The demand of a product should be strong enough to make the branding effort possible. If there is no dependability and availability of a product (A), favorable branding will not occur. The demand for the general product (B) should be large, not small, for favorable branding conditions. Economies of scale (C) should be present for favorable branding to occur. Because (D) is the correct choice, (E) cannot be correct.

Pillsbury has one manufacturing plant for each of their products. Which of the following would they utilize in order to get a mixture of their products to individual stores?

A. Distribution centers

B. Public warehouses

C. Private warehouses

D. Freight forwarders

E. Air distribution

Answer: (A) Pillsbury needs a distribution center to get their desired mix of products to each of their individual customers. A public warehouse (B) or a private warehouse (C) refer only to the ownership of the warehouse (i.e., a private warehouse is owned by the company while a public warehouse has an independent owner), and would not help to redistribute Pillsbury's products. Freight forwarders (D), while they do combine shipments, perform that function for different firms or companies, not for the same company. Air distribution (E), although a potential mode of transportation, is a poor answer because it has nothing to do with product mixture.

A marketing manager must compete for customers with competitors who are offering very similar types of products, and where there are just a few sellers in the industry. This environmental situation would best be described as

A. an oligopoly

B. head-on competition

C. a democracy

D. industry leadership

E. a monopoly

Answer: (A) According to a traditional economic point of view, most products move toward oligopolistic competition or pure competition as they move through the product life cycle. The situation best describes a situation with relatively few sellers. (B) is not the most correct answer, although it may refer to the situation. The competition may be head-on, or it may not be. (C) is also incorrect. Democracy refers to a governmental environment. (D) is also incorrect. Industry leadership is a descriptive phrase for the company that has top sales, or market share, in a particular industry or field. (E) is incorrect. A monopoly would best be defined as little, or no competition, with one company dominating an industry.