Archive for August 2020

Which of the following is most likely true about a global organization?

 Which of the following is most likely true about a global organization?



A) Worldwide policies are planned by top corporate management.

B) Global operating units report to international division chiefs.

C) Executive training is restricted to domestic operations.

D) Employees are recruited exclusively from the home country.

E) It considers itself a national marketer that sells abroad.



Answer: A) Worldwide policies are planned by top corporate management.

Which of the following is true of international divisions that are structured as geographical organizations?

Which of the following is true of international divisions that are structured as geographical organizations?



A) Geographical organizations are operating units under the export department.
B) Geographical organizations are usually formed to implement whole-channel supply chains.
C) Geographical organizations are managed by product managers, each responsible for different product groups.
D) Geographical organizations are inadequate if the firm moves into joint ventures or direct investments.
E) Geographical organizations are managed by country managers responsible for salespeople, distributors, and licensees in their respective countries.


Answer: E) Geographical organizations are managed by country managers responsible for salespeople, distributors, and licensees in their respective countries.

Lemon N' Honey is a juice manufacturing company in the United States. It exports its products to Australia, licenses to China, has a joint ownership venture in France, and owns a subsidiary in Brazil. The firm will most likely need to create a(n) ________ to handle all its worldwide activities.

Lemon N' Honey is a juice manufacturing company in the United States. It exports its products to Australia, licenses to China, has a joint ownership venture in France, and owns a subsidiary in Brazil. The firm will most likely need to create a(n) ________ to handle all its worldwide activities.



A) international division
B) domestic market
C) value delivery network
D) export department
E) domestic division


Answer: A) international division

Through which of the following routes do firms generally get into international marketing?

Through which of the following routes do firms generally get into international marketing?



A) buying shares of an international company
B) shipping products to foreign customers
C) organizing an international division
D) establishing a joint venture
E) acquiring a foreign firm


Answer: B) shipping products to foreign customers

In managing their international marketing activities, most companies first ________.

In managing their international marketing activities, most companies first ________.



A) organize an import department
B) create an international division
C) initiate foreign direct investment
D) form a domestic subsidiary
E) organize an export department


Answer: E) organize an export department

Regardless of how companies go about pricing their products, their foreign prices probably will be higher than their domestic prices for comparable products. This is known as the ________ problem.

Regardless of how companies go about pricing their products, their foreign prices probably will be higher than their domestic prices for comparable products. This is known as the ________ problem.



A) price escalation
B) demand escalation
C) inflation
D) skimming price
E) deflation


Answer: A) price escalation

Kola, a leading soft drink manufacturer, has recently forayed into the Middle East markets. Based on its research that consumers in the Middle East prefer sweeter drinks, it is manufacturing soft drinks with extra sugar to meet the local requirements. In this scenario, Kola is using a(n) ________ strategy to market its product.

Kola, a leading soft drink manufacturer, has recently forayed into the Middle East markets. Based on its research that consumers in the Middle East prefer sweeter drinks, it is manufacturing soft drinks with extra sugar to meet the local requirements. In this scenario, Kola is using a(n) ________ strategy to market its product.



A) communication adaptation
B) undifferentiated marketing
C) straight product extension
D) product invention
E) product adaptation


Answer: E) product adaptation

Which of the following is a disadvantage of straight product extension?

Which of the following is a disadvantage of straight product extension?



A) It involves additional product development costs.
B) It involves changing the product to meet local requirements.
C) It requires planning a new promotional strategy to promote the product.
D) It can be costly in the long run if products fail to satisfy consumers.
E) It requires making changes in the manufacturing process.


Answer: D) It can be costly in the long run if products fail to satisfy consumers.

Botsford, a U.S. firm, builds automotive transmissions in its manufacturing facility in Taiwan to capitalize on the availability of cheap labor. Botsford's involvement in foreign markets is most likely through ________.

Botsford, a U.S. firm, builds automotive transmissions in its manufacturing facility in Taiwan to capitalize on the availability of cheap labor. Botsford's involvement in foreign markets is most likely through ________.



A) joint ownership
B) direct investment
C) management contracting
D) contract manufacturing
E) indirect exporting


Answer: B) direct investment

What is the most likely disadvantage of direct investment for an investing company?

What is the most likely disadvantage of direct investment for an investing company?



A) weak relationships with local distributors
B) minimal investment control
C) product standardization requirements
D) devalued currency risks
E) excessive freight charges


Answer: D) devalued currency risks

Which of the following is an advantage of direct investment?

Which of the following is an advantage of direct investment?



A) Direct investment involves fewer risks than joint ownership.
B) Direct investment ensures that a firm is shielded from market changes.
C) Direct investment allows a firm to keep full control over the investment.
D) Direct investment involves minimal financial or time expenditures.
E) Direct investment protects the firm from currency devaluation.


Answer: C) Direct investment allows a firm to keep full control over the investment.

Which of the following is most likely a benefit of joint ownership?

Which of the following is most likely a benefit of joint ownership?



A) It allows a firm to gain the financial and managerial resources that it may otherwise lack.
B) It is the simplest way for a domestic company to enter a foreign market.
C) It minimizes the need to build a new manufacturing facility in the foreign market.
D) It allows one firm to acquire complete ownership of the other firm in the venture.
E) It provides significant economies of scale for both the local firm and the foreign investor.


Answer: A) It allows a firm to gain the financial and managerial resources that it may otherwise lack.

Which of the following is true of joint ownership?

Which of the following is true of joint ownership?



A) The domestic firm exports management services rather than products.
B) Foreign investors gain complete possession and control over the local firm.
C) The arrangement is mandatory for businesses to enter some foreign markets.
D) A domestic company seldom needs a host country partner to enter into the market.
E) The domestic company loses its title of ownership to foreign investors in the arrangement.


Answer: C) The arrangement is mandatory for businesses to enter some foreign markets.

Which of the following is a drawback of management contracting?

Which of the following is a drawback of management contracting?



A) It prevents a company from setting up its own operations for a period of time.
B) It is a high-risk method of getting into a foreign market.
C) It yields income to the contracting firm only much later in the process.
D) It does not provide the option of buying shares in the managed company later on.
E) It requires a domestic firm to export its products to a foreign company.


Answer: A) It prevents a company from setting up its own operations for a period of time.

Which of the following is an advantage of management contracting?

Which of the following is an advantage of management contracting?



A) It involves the least change in a company's product lines.
B) It allows a contracting firm to set up its own operations at the beginning of the contract.
C) It is the simplest way to enter a foreign market.
D) It yields income from the beginning of the contract.
E) It gives a contracting firm an option to buy shares in the managed company immediately.


Answer: D) It yields income from the beginning of the contract.

Pizzaria, a renowned restaurant in Italy, enters into an agreement with Ruth's Pizza House in the United States to operate a chain of restaurants. Ruth's will provide capital for running the chain and Pizzaria will contribute its world-renowned expertise on consumer tastes. In this case, Pizzaria enters a foreign market through ________.

Pizzaria, a renowned restaurant in Italy, enters into an agreement with Ruth's Pizza House in the United States to operate a chain of restaurants. Ruth's will provide capital for running the chain and Pizzaria will contribute its world-renowned expertise on consumer tastes. In this case, Pizzaria enters a foreign market through ________.



A) contract manufacturing
B) management contracting
C) licensing
D) joint ownership
E) direct investment


Answer: B) management contracting

Under management contracting, a domestic firm ________.

Under management contracting, a domestic firm ________.



A) adopts management know-how from a foreign company
B) manufactures the products of a foreign company
C) exports its products to a foreign company
D) provides financial capital to a foreign company
E) exports management services to a foreign company


Answer: E) exports management services to a foreign company

Which of the following is most likely a benefit of contract manufacturing?

Which of the following is most likely a benefit of contract manufacturing?



A) Investing companies have complete control over the foreign manufacturer's processes.
B) Investing companies gain significant profits from handling the manufacturing of products.
C) Investing companies that are new entrants in international markets get a chance to start faster.
D) Investing companies provide new jobs in their home countries by developing manufacturing facilities.
E) Investing companies do not require the services of an overseas marketing organization or network.


Answer: C) Investing companies that are new entrants in international markets get a chance to start faster.

Which of the following is most likely a drawback of contract manufacturing?

Which of the following is most likely a drawback of contract manufacturing?



A) There are low chances of quickly starting the process.
B) There is decreased control over the manufacturing process.
C) There are significant political and economic risks involved.
D) There is little opportunity of later forming a partnership.
E) There is no possibility of buying out the local manufacturer


Answer: B) There is decreased control over the manufacturing process.

Which of the following is a disadvantage of licensing?

Which of the following is a disadvantage of licensing?



A) The licensing company gains entry into a foreign market at a high risk.
B) It takes a lot of time for the licensee to gain production expertise and name.
C) Licensing is a complex way for a manufacturer to enter international marketing.
D) The licensor potentially creates a competitor in the form of the licensee.
E) The licensee is restricted from gaining knowledge about the licensor's intellectual property.


Answer: D) The licensor potentially creates a competitor in the form of the licensee.

Montano Boutiques promotes its brand in new international markets by providing rights to local boutiques to use its patented designs and brand name. In this case, Montano Boutiques' market-entering strategy is referred to as ________.

Montano Boutiques promotes its brand in new international markets by providing rights to local boutiques to use its patented designs and brand name. In this case, Montano Boutiques' market-entering strategy is referred to as ________.



A) licensing
B) exporting
C) joint ownership
D) contract manufacturing
E) management contracting


Answer: A) licensing

Which of the following is an advantage of licensing?

Which of the following is an advantage of licensing?



A) The licensee is not required to invest money in the business.
B) The licensor has more control over the licensee than it does in its own operations.
C) The licensee gains recognition without having to develop a product from scratch.
D) The licensor earns profits without having to share its intellectual property with anyone.
E) The licensor faces no threats of competition from the licensee after the contract ends.


Answer: C) The licensee gains recognition without having to develop a product from scratch.

Providing a host-country partner the right to use a company's manufacturing process, trademark, patent, trade secret, or other item of value is referred to as ________.

Providing a host-country partner the right to use a company's manufacturing process, trademark, patent, trade secret, or other item of value is referred to as ________.



A) joint ownership
B) direct exporting
C) direct investment
D) management contracting
E) licensing


Answer: E) licensing

Which of the following is a type of joint venture?

Which of the following is a type of joint venture?



A) direct exporting
B) management contracting
C) direct investment
D) retailing
E) wholesaling


Answer: B) management contracting

Which of the following is true about joint venturing?

Which of the following is true about joint venturing?



A) Management contracting is highly risky for the domestic firm.
B) Contract manufacturing gives significant control to the domestic firm.
C) Licensing is a highly complex method for entering global markets.
D) A host country partner is necessary for selling or marketing products.
E) Companies are required to invest in the construction of foreign-based facilities.


Answer: D) A host country partner is necessary for selling or marketing products.

Valdo, a cosmetic firm located in the United States, markets its products in Asian and European countries through independent distributors. In this case, Valdo has entered international markets through ________.

Valdo, a cosmetic firm located in the United States, markets its products in Asian and European countries through independent distributors. In this case, Valdo has entered international markets through ________.



A) joint ownership
B) joint venturing
C) indirect exporting
D) direct investment
E) franchising


Answer: C) indirect exporting

Which of the following is true of exporting?

Which of the following is true of exporting?



A) It is the most complex way to enter a foreign market.
B) It involves the association of companies with host country partners.
C) It typically requires products to be extensively modified for the foreign market.
D) It involves the least change in a company's product lines.
E) It involves a huge investment if done through independent international distributors.


Answer: D) It involves the least change in a company's product lines.

Which of the following statements is true of industrial economies?

Which of the following statements is true of industrial economies?



A) They export their goods to other types of economies for raw materials.
B) They have a declining middle class population.
C) They depend on agriculture as the primary revenue generator.
D) They do not trade goods amongst themselves.
E) They consume most of their output and barter the rest for simple goods and services.


Answer: A) They export their goods to other types of economies for raw materials.

Japan is a major exporter of manufactured goods, services, and investment funds. Japan also exports its goods to other types of economies for raw materials and semifinished goods. The country's industrial structure is referred to as a(n) ________ economy.

Japan is a major exporter of manufactured goods, services, and investment funds. Japan also exports its goods to other types of economies for raw materials and semifinished goods. The country's industrial structure is referred to as a(n) ________ economy.



A) agricultural
B) emerging
C) industrial
D) raw material exporting
E) subsistence


Answer: C) industrial

An emerging economy is one which ________.

An emerging economy is one which ________.



A) imports large amounts of finished textiles and automobiles
B) offers few market opportunities for imported goods
C) consumes all or most of its output
D) needs few imports of raw textile materials and steel
E) has a rapid growth in manufacturing


Answer: E) has a rapid growth in manufacturing

A country in South America has large reserves of copper and tin. Mining forms the pillar of its economy. A major part of its revenue is generated from exporting these resources. This country is poor in many other ways. It is a good market for large equipment, tools, supplies, and trucks. Since there are many foreign residents in this country and a wealthy upper class, it is also a market for luxury goods. This country most likely has a(n) ________ economy.

A country in South America has large reserves of copper and tin. Mining forms the pillar of its economy. A major part of its revenue is generated from exporting these resources. This country is poor in many other ways. It is a good market for large equipment, tools, supplies, and trucks. Since there are many foreign residents in this country and a wealthy upper class, it is also a market for luxury goods. This country most likely has a(n) ________ economy.



A) subsistence
B) raw material exporting
C) emerging
D) developed
E) industrial


Answer: B) raw material exporting

Which of the following is true of raw material exporting economies?

Which of the following is true of raw material exporting economies?



A) These economies are major exporters of agricultural products.
B) These economies are poor markets for large equipment and trucks.
C) These economies are major exporters of manufactured goods, services, and investment funds.
D) These economies are rich in one or more resources but poor in other ways.
E) These economies consume most of their output and barter the rest.


Answer: D) These economies are rich in one or more resources but poor in other ways.

A subsistence economy is one in which ________.

A subsistence economy is one in which ________.



A) much of the revenue comes from exporting one or more natural resources
B) fast growth in manufacturing results in overall economic growth
C) a majority of the produced outputs is exported
D) manufactured goods form a majority of the exports
E) a vast majority of people engage in simple agriculture


Answer: E) a vast majority of people engage in simple agriculture

Which of the following is true of free trade zones?

Which of the following is true of free trade zones?



A) They are groups of nations organized to work toward common goals.
B) They were formed to increase trade barriers between member nations.
C) They were formed to mediate global trade disputes.
D) They require member countries to establish one currency.
E) They tend to improve imports and hinder exports.


Answer: A) They are groups of nations organized to work toward common goals.

Which of the following is true of the Uruguay Round of the WTO?

Which of the following is true of the Uruguay Round of the WTO?



A) It promoted short-term global trade growth.
B) It increased the world's merchandise tariffs by 50 percent.
C) It reduced the influence of the WTO in agriculture.
D) It toughened the international protection of intellectual property.
E) It consisted of discussions that lasted for two years.


Answer: D) It toughened the international protection of intellectual property.

Restrictive product standards are ________.

Restrictive product standards are ________.



A) tariffs
B) excise duties
C) quotas
D) nontariff trade barriers
E) exchange controls


Answer: D) nontariff trade barriers

The purpose of a quota is to ________.

The purpose of a quota is to ________.



A) protect local employment
B) provide competition to local industry
C) eliminate trade barriers between nations
D) increase the amount of foreign imports
E) increase the amount of foreign exchange


Answer: A) protect local employment

Which of the following is most likely true of a global firm?

Which of the following is most likely true of a global firm?



A) A global firm typically operates from one country.
B) A global firm engages in joint partnerships overseas.
C) A global firm sees the world as many different markets.
D) A global firm maximizes the importance of national boundaries.
E) A global firm manufactures and markets goods wherever it can do the best job.


Answer: E) A global firm manufactures and markets goods wherever it can do the best job.

Smelly Fruit: At first glance, there is little to like about the durian. The durian is a fruit popular in Thailand that is spiky outside and stinky on the inside.

Smelly Fruit: At first glance, there is little to like about the durian. The durian is a fruit popular in Thailand that is spiky outside and stinky on the inside. 


When confronted with the durian for the first time, the Wall Street Journal recently reported that westerners often describe its distinctive sulphurous smell with words like stinky socks and manure.


However, the durian is so popular in Thailand that one variety of the durian fruit, called the Kan Yao, has been selling for as high as $200. Even at that price, supply of the Kan Yao cannot keep up with demand. There are approximately 30 varieties of the durian grown in Thailand, with the most plentiful selling in the $15 range. The yellow flesh of the durian, the part you eat, has very powerful smell but possesses a sweet, nutty taste that Thais cannot seem to get enough of at any price.



  • Refer to Smelly Fruit. Suppose that a Thai farmer sells ten Kan Yao durians in the marketplace at the going rate of $200 each. If it cost a Thai farmer $125 to produce and market the Kan Yao durian that she has sold, the difference between these two numbers ($75), times the number sold (ten), represents the farmer's:


a. ROI
b. revenue
c. profit
d. returns
e. COGS

ANSWER: c


  • Refer to Smelly Fruit. Suppose that you have decided to buy land in Thailand and become a durian producer. You see that the customary price for a Kan Yao is $200, so that is the price you decide to charge for your durian crop. This suggests you are using a ___ approach to setting your price.


a. profit maximization
b. market share
c. return on investment (ROI)
d. sales maximization
e. status quo

ANSWER: e



  • Refer to Smelly Fruit. At $200 per Kan Yao, demand for the fruit appears to be higher than supply. Suppose that at a price of $225, the amount demanded exactly meets the amount farmers are willing and able to supply. In this case, the $225 price would be considered the ___ price.


a. price equilibrium
b. sales maximization
c. profit maximization
d. ROI maximization
e. yield management

ANSWER: a



  • Refer to Smelly Fruit. Over the past two years, the price for Kan Yao durian fruit has increased by 50 percent. If the amount sold has remained almost constant, we would say that demand is:


a. elastic
b. inelastic
c. unitary
d. highly elastic
e. moderately elastic

ANSWER: b



  • Refer to Smelly Fruit. The durian fruit is a unique product. To many people in Thailand, no other fruit tastes or smells anything like the durian. Its uniqueness, in the eyes of the customer, would tend to have which of the following?


a. It would have little effect.
b. It would tend to make the durian more price elastic.
c. It would tend to make the durian more price inelastic.
d. It would tend to raise the price in comparison to purchasing power.
e. It would tend to impact the durian's stage in the PLC.

ANSWER: c

American Girl Doll: The American Girl catalog began as a concept to introduce today's girls to those who lived in the past. Each historically accurate doll is carefully crafted and dressed and has books to describe her life. For example, Kristen is an 1854 pioneer girl who is growing up in Minnesota.

American Girl Doll: The American Girl catalog began as a concept to introduce today's girls to those who lived in the past. Each historically accurate doll is carefully crafted and dressed and has books to describe her life. For example, Kristen is an 1854 pioneer girl who is growing up in Minnesota. 


Her story begins with her long sea voyage from Sweden. The basic doll, dressed in a calico dress and striped apron plus the hardcover story of how she got to Minnesota, costs $90.00. Six more hardback books of Kristen's life are available for $74.95. Kristen's nightgown costs $20.00, and a matching one for the doll owner is an additional $38.00. Buy both together and the price is only $50.00. A hand- painted wooden bed and trunk for Kristen are available for $213.00. Shipping costs vary with the price of the merchandise ordered.



  • Refer to American Girl Doll. American Girl is the primary seller of historically accurate dolls with accompanying books in a market where there is very little competition. It has no cash flow problems and is not interested in maximizing its sales. From this information, you should know American Girl has ___ pricing objectives.


a. status quo
b. psychological
c. profit-oriented
d. sales-oriented
e. supply-derived

ANSWER: c



  • Refer to American Girl Doll. The popularity of the American Girl dolls is so great that an increase in the price of the basic Kristen doll and books by 5 percent will not significantly affect the demand for the product. The means that the demand for the American Girl doll is:


a. elastic.
b. derived.
c. a multiplier.
d. inelastic.
e. symmetrical.

ANSWER: d



  • Refer to American Girl Doll. Based on the information in the narrative, which of the following factors is most likely to affect the elasticity of demand for the doll?


a. The absence of substitutes
b. The existence of complementary products
c. The price relative to purchasing power
d. Product durability
e. A variety of alternative uses for the product

ANSWER: a



  • Refer to American Girl Doll. In terms of the costs of producing the doll and its accessories, the salary of the graphic designer who does the layout for the American Girl catalog is a(n):


a. markup cost.
b. variable cost.
c. fixed cost.
d. derived cost.
e. elastic cost.

ANSWER: c



  • Refer to American Girl Doll. In terms of producing the doll and its accessories, the calico fabric used to make Kristen's dress is an example of a(n):


a. markup cost.
b. variable cost.
c. fixed cost.
d. derived cost.
e. elastic cost.


ANSWER: b




  • Refer to American Girl Doll. You can buy a doll at Walmart for $5.99. The high price of the American Girl doll is used to promote a high-quality image. American Girl uses a ___ pricing strategy.


a. markup
b. demand-based
c. prestige
d. penetration
e. supply-derived


ANSWER: c

Specialty Cakes: Imagine that you're planning an aftersymphony fundraising party, and you need a lifesize grand piano cake. Or, you are a developer proposing a new shopping center to a group of investors, and you want to serve a cake shaped like an architectural rendition of the center.

Specialty Cakes: Imagine that you're planning an aftersymphony fundraising party, and you need a lifesize grand piano cake. Or, you are a developer proposing a new shopping center to a group of investors, and you want to serve a cake shaped like an architectural rendition of the center. 



Is this impossible? No, you just need to contact Cecilia Villaveces Cakes. She actually built a life-size grand piano for a gala in Macon, Georgia. You can expect to pay anywhere from $75 to $10,000 for one of Cecilia's artistic creations, depending on complexity of design and size. She uses only the best ingredients, and no two cakes are ever quite alike.



  • Refer to Specialty Cakes. Although many factors determine the prices charged by Cecilia Villaveces Cakes, the two primary determinants are:


a. costs of manufacturing and distribution costs.
b. stage of the product life cycle and costs to the consumers.
c. the demand for the good and the cost to the seller.
d. demand by the consumer and perceived quality.
e. distribution and promotion strategies used by the cake maker.

ANSWER: c



  • Refer to Specialty Cakes. Many party planners in the Southeast will only use Cecilia Villaveces Cakes at their parties--no matter what the price is. They know that Cecilia's cakes can make a party a success. Moreover, the cakes are what people remember most about the parties. From this description, you should assume Cecilia Villaveces Cakes have a(n):


a. elastic demand.
b. unitary elasticity.
c. inelastic supply.
d. inelastic demand.
e. elastic supply.

ANSWER: d



  • Refer to Specialty Cakes. Which of the following is the BEST example of a fixed cost for Cecilia Villaveces Cakes?


a. Eggs, butter, sugar
b. Delivery costs
c. Part-time employees
d. Electricity consumption
e. Food preparation licenses

ANSWER: e



  • Refer to Specialty Cakes. Which of the following is the BEST example of a variable cost for Cecilia Villaveces Cakes?


a. Life insurance on Cecilia
b. Flour and sugar
c. Ovens used for cooking cakes
d. Business licenses
e. Interest payments to the bank

ANSWER: b



  • Refer to Specialty Cakes. To set the price of her cakes, Cecilia simply doubles her costs, which often include several hours of labor and expensive raw materials. This method of price setting is called:


a. mark-on pricing.
b. premium pricing.
c. keystoning.
d. add-on pricing.
e. superimposed pricing.

ANSWER: c



  • Refer to Specialty Cakes. There are many occasions for which people may need to buy a cake, but most people do not have the time or interest to learn about cakes and their bakers. These people who do not know about the quality of the Cecilia Villaveces Cakes might choose them because they:


a. equate price and quality.
b. know cakes are in the mature stage of their product life cycle.
c. realize that this is a monopolistic industry.
d. believe that there is not a relationship between price and quality.
e. desire value-added services.

ANSWER: a

Tesla Motors: "Going green" doesn't have to be boring. The Tesla Roadster Sport is an electric car that goes from 0 to 60 in four seconds and drives more like a race car than an environmentally friendly ride.

Tesla Motors: "Going green" doesn't have to be boring. The Tesla Roadster Sport is an electric car that goes from 0 to 60 in four seconds and drives more like a race car than an environmentally friendly ride. 


But that level of performance will set you back $128,500. As of 2009, Silicon Valley-based Tesla Motors, Inc. was the only company offering highway compatible electric cars. Most Roadster Sport buyers are car enthusiasts and are buying them for the "fun toy" aspect of having an electric car rather than for environmental reasons.




  • Refer to Tesla Motors. The price of the Roadster was set so that the marginal revenue equals marginal cost. This represents a ___ approach.


a. profit maximization
b. market share pricing
c. demand-oriented pricing
d. sales maximization
e. status quo pricing

ANSWER: a



  • Refer to Tesla Motors. Say Tesla set the price of the Roadster high because the company wanted to promote a high-quality image. What type of pricing does this represent?


a. Prestige pricing
b. Elite pricing
c. Penetration pricing
d. Quality pricing
e. Complete pricing

ANSWER: a

When Jerry took delivery of his brand new (and very expensive) Jaguar automobile, he was filled with pleasure and excitement. This is an example of the ___ effect associated with the price-quality relationship.

When Jerry took delivery of his brand new (and very expensive) Jaguar automobile, he was filled with pleasure and excitement. This is an example of the ___ effect associated with the price-quality relationship.


a. durability
b. allocative
c. prestige
d. hedonistic
e. performance


ANSWER: d

Laurie knows little about cooking and does not want to spend the time to learn how to make a quiche. However, she has been asked to bring a quiche to an office retirement party. Not wanting to make a poor choice, she is likely to:

Laurie knows little about cooking and does not want to spend the time to learn how to make a quiche. However, she has been asked to bring a quiche to an office retirement party. Not wanting to make a poor choice, she is likely to:


a. intuitively make the right choice.
b. avoid making a decision by not attending the party.
c. buy the most expensive pre-made quiche (perhaps paying too much), guessing that the price is related to quality.
d. research the product and buy the least expensive frozen quiche she can find.
e. buy the least expensive frozen quiche because most consumers feel that price is not directly related to quality.


ANSWER: c

When the Apple iPhone 3G was introduced, users could buy the "I Am Rich" app for a price of $1,000. The app did nothing but display a red gem on the iPhone's screen. The description of the app stated that this red icon would remind you (and others you show it to) "that you were rich enough to afford this." Six of the applications were sold before Apple, Inc. removed the app from iTunes. At the $1,000 price, the author of the app was using ___ pricing as part of his marketing approach.

When the Apple iPhone 3G was introduced, users could buy the "I Am Rich" app for a price of $1,000. The app did nothing but display a red gem on the iPhone's screen. The description of the app stated that this red icon would remind you (and others you show it to) "that you were rich enough to afford this." Six of the applications were sold before Apple, Inc. removed the app from iTunes. At the $1,000 price, the author of the app was using ___ pricing as part of his marketing approach.


a. snob appeal
b. prestige
c. exclusive
d. selective
e. unique


ANSWER: b

David likes New Balance running shoes. However, when he stopped by the Foot Locker to buy a new pair of running shoes, he noticed that Nike had a new pair of running shoes that cost $350. To David, the higher price of the Nike shoe indicated that it would be a better pair of running shoes. This is an example of:

David likes New Balance running shoes. However, when he stopped by the Foot Locker to buy a new pair of running shoes, he noticed that Nike had a new pair of running shoes that cost $350. To David, the higher price of the Nike shoe indicated that it would be a better pair of running shoes. This is an example of:


a. premium pricing.
b. price lining.
c. prestige pricing.
d. exclusive pricing.
e. selective pricing.


ANSWER: c

Many consumers, especially when faced with an uncertain purchase decision, think that a high price:

Many consumers, especially when faced with an uncertain purchase decision, think that a high price:


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


ANSWER: a

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

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


a. distribution tool.
b. price enhancer.
c. product strategy.
d. direct sales tool.
e. promotion strategy.



ANSWER: e

Which of the following statements about the Internet is true?

Which of the following statements about the Internet is true?


a. The Internet has shifted all shopping power to consumers.
b. Consumer reviews tend to be equal in quality.
c. Business-to-business auctions on the Internet are likely to be more important than consumer auctions in the future.
d. Fraud is not a problem on the Internet.
e. Extranets are programs that search the Internet for the best price for a particular product.


ANSWER: c

Shopping bots:

Shopping bots:


a. encourage a more creative use of advertising.
b. link manufacturers, suppliers, and customers.
c. create opportunities for prestige pricing.
d. search the Web for the best price.
e. create inelastic demand.


ANSWER: d

Manufacturers can do all of the following to regain some control over the price their products are sold for at the retail level EXCEPT:

Manufacturers can do all of the following to regain some control over the price their products are sold for at the retail level EXCEPT:


a. require resellers to maintain prices in line with competitors' prices.
b. developing brand loyalty in consumers by delivering quality and value.
c. avoiding doing business with price-cutting discounters.
d. franchising.
e. using an exclusive distribution system.


ANSWER: a

Kroger supermarkets will place well-known brands on the shelves at high prices while offering their own Kroger brand at lower prices. This practice is an example of:

Kroger supermarkets will place well-known brands on the shelves at high prices while offering their own Kroger brand at lower prices. This practice is an example of:


a. illegal pricing.
b. selling against the brand.
c. price pressurization.
d. brand cutting.
e. private label cannibalization.


ANSWER: b

As a product enters the growth stage, prices generally begin to stabilize. One reason for this is that:

As a product enters the growth stage, prices generally begin to stabilize. One reason for this is that:


a. the product has begun to appeal to a broader market.
b. most competitors have been eliminated from the market.
c. manufacturers hope to recover their development costs quickly.
d. the available supply decreases.
e. All of the above are correct.


ANSWER: a

When Apple, Inc. developed and introduced the iPad, it was unique as it essentially combined a touch-based portable computer, a wireless marketplace, and an eBook reader. As such, in the short run, it seemed that demand for the product would be inelastic, with no real existing competition. The recommend pricing strategy in such a situation would be:

When Apple, Inc. developed and introduced the iPad, it was unique as it essentially combined a touch-based portable computer, a wireless marketplace, and an eBook reader. As such, in the short run, it seemed that demand for the product would be inelastic, with no real existing competition. The recommend pricing strategy in such a situation would be:


a. low initial price, rising slightly when entering the growth stage.
b. high initial price, falling slightly when entering the growth stage.
c. high price, continuing through growth and maturity.
d. low price, continuing through growth and maturity.
e. low price initially, rising constantly through growth and into maturity.


ANSWER: b

Prices generally begin to stabilize:

Prices generally begin to stabilize:


a. as a product enters the growth stage.
b. when a product if first introduced onto the market.
c. as a result of keystoning.
d. when a product enters the decline stage of the life cycle.
e. in hotly competitive markets.


ANSWER: a

Which of the following statements about pricing strategies throughout the product life cycle is NOT true?

Which of the following statements about pricing strategies throughout the product life cycle is NOT true?


a. During product decline, prices may also decline until there is only one competitor left in the market.
b. Price increases during the maturity stage are cost initiated instead of demand initiated.
c. The maturity stage often brings about price decreases.
d. Prices stabilize when the product enters the growth stage.
e. With inelastic demand, price will be set low during the introduction stage.


ANSWER: e

Which of the following statements describes a limitation associated with break-even analysis?

Which of the following statements describes a limitation associated with break-even analysis?


a. It is sometimes difficult to ascertain whether a cost is fixed or variable.
b. It requires the calculation of marginal revenue.
c. It strictly considers demand.
d. It assumes variable cost per item, which is difficult to calculate.
e. It can only be expressed as a break-even point in dollar amounts.


ANSWER: a

Fixed cost contribution equals:

Fixed cost contribution equals:


a. price times the average fixed cost.
b. price plus the average variable cost.
c. average variable cost plus average fixed cost.
d. break-even quantity times price.
e. price minus the average variable cost.


ANSWER: e

The typical break-even model assumes a given fixed cost and a:

The typical break-even model assumes a given fixed cost and a:


a. variable per unit cost.
b. constant inventory turnover.
c. markup cost attained through keystoning.
d. constant production schedule.
e. constant average variable cost.


ANSWER: e

As long as the revenue of the last unit produced and sold is greater than the cost of the last unit produced and sold, a firm should:

As long as the revenue of the last unit produced and sold is greater than the cost of the last unit produced and sold, a firm should:


a. continue manufacturing.
b. not use formula pricing.
c. continue using price equilibrium.
d. consider using sales maximization pricing.
e. reach its break-even point very shortly.


ANSWER: a

Profit maximization occurs when:

Profit maximization occurs when:


a. total costs equals average fixed revenue.
b. average variable costs are larger than average total costs.
c. total costs equal total variable costs.
d. marginal variable costs equal average revenues.
e. marginal revenue equals marginal cost.


ANSWER: e

The Nest is a retail store owned and operated by an interior designer. The markup on all items in the store is 100 percent over cost (or double the cost). In this case, we would say the designer uses:

The Nest is a retail store owned and operated by an interior designer. The markup on all items in the store is 100 percent over cost (or double the cost). In this case, we would say the designer uses:


a. keystoning.
b. target ROI pricing.
c. break-even pricing.
d. marginalizing.
e. double sourcing.


ANSWER: a

Keystoning is:

Keystoning is:


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


ANSWER: a

Mitch owns an accounting agency. The monthly payment on the land he purchased for his business, the mortgage on his small office building, and his business license are all examples of ___ costs.

Mitch owns an accounting agency. The monthly payment on the land he purchased for his business, the mortgage on his small office building, and his business license are all examples of ___ costs.


a. marginal
b. variable
c. fixed
d. promotional
e. demand


ANSWER: c

For a nail salon, the costs associated with the purchase of nail polish and other products like nail polish remover, sterilized equipment, laundry service for the towels, and the beverages given to customers, are all examples of _____ costs.

For a nail salon, the costs associated with the purchase of nail polish and other products like nail polish remover, sterilized equipment, laundry service for the towels, and the beverages given to customers, are all examples of _____ costs.


a. marginal
b. variable
c. fixed
d. promotional
e. liquidity


ANSWER: b

Which of the following is most likely to be a variable cost for an Internet retailer that sells spices, herbs, and seasonings to consumers?

Which of the following is most likely to be a variable cost for an Internet retailer that sells spices, herbs, and seasonings to consumers?


a. Annual lease on mixer used to blend seasonings
b. Executive salaries
c. Rent for building where spices and herbs are repackaged for consumers
d. Workers' insurance
e. Postage for shipping spices and herbs


ANSWER: e

Chad has calculated the sales volume at which his lemonade stand's costs equal revenue. Over dinner, he announced to his family that he only needed to sell 50 glasses of lemonade at $5 per glass to cover all his costs (such as lumber and nails for the stand, lemons, and sugar). Which important factor has Chad excluded from his analysis?

Chad has calculated the sales volume at which his lemonade stand's costs equal revenue. Over dinner, he announced to his family that he only needed to sell 50 glasses of lemonade at $5 per glass to cover all his costs (such as lumber and nails for the stand, lemons, and sugar). Which important factor has Chad excluded from his analysis?


a. Fixed and variable cost determination
b. Consumer demand
c. Target return pricing
d. Break-even analysis
e. Market share


ANSWER: b

Which of the following statements about yield management systems (YMS) is true?

Which of the following statements about yield management systems (YMS) is true?


a. The first use of YMS was in the U.S. car industry as it looked for ways to compete with imports.
b. YMS eliminate the problem of simultaneous production and consumption from services.
c. YMS cannot be used by any other businesses but services.
d. YMS are complex pricing systems used to set equilibrium pricing points.
e. YMS are mathematically complex systems to make use of underutilized capacity and reduce the cost of perishability.


ANSWER: e

Allstate has more than 1,500 price levels determined by complex algorithms that analyze 16 credit report variables, including late payments and card balances. Allstate is using a ___ to set prices.

Allstate has more than 1,500 price levels determined by complex algorithms that analyze 16 credit report variables, including late payments and card balances. Allstate is using a ___ to set prices.


a. yield management system
b. capacity correlation system
c. service forecasting tools
d. service management system
e. capacity maintenance tool


ANSWER: a

Yield management systems are used to:

Yield management systems are used to:


a. determine the availability of product substitutes in complex industries that are experiencing rapid change
b. profitably fill unused capacity
c. predict necessary service levels to achieve revenue goals
d. determine whether it is financially more feasible to buy a new product or repair a broken one
e. create elastic demand for low-involvement products


ANSWER: b

What does "YMS" stands for?

What does "YMS" stands for?


a. Yorkshire manufacturing sector.
b. Yield management systems.
c. Yes-man syndrome.
d. Yardstick measurement scale.
e. Year-end marketing services.


ANSWER: b

Which of the following would imply elastic demand?

Which of the following would imply elastic demand?


a. Price is low relative to purchasing power
b. Nondurable product
c. Low inflation rate
d. Many substitute products
e. All of these choices


ANSWER: d

All of the following factors directly affect the elasticity of demand EXCEPT:

All of the following factors directly affect the elasticity of demand EXCEPT:


a. a product's other uses.
b. inputs needed to manufacture the product.
c. availability of substitute goods.
d. price relative to a consumer's purchasing power.
e. product durability.


ANSWER: b

When Nesco brand food hydrators sold for $59.99, Nesco sold 90 dehydrators. When the company dropped the price of its dehydrators to $44.95, it sold 145 dehydrators. Demand for the food dehydrators appears to be:

When Nesco brand food hydrators sold for $59.99, Nesco sold 90 dehydrators. When the company dropped the price of its dehydrators to $44.95, it sold 145 dehydrators. Demand for the food dehydrators appears to be:


a. elastic.
b. inelastic.
c. unitary.
d. symmetrical.
e. asymmetrical.


ANSWER: a

When the NES Group lowered the price of its professional-grade meat slicers from $2,300 to $1,125, demand doubled from four units sold per month to eight units per month. However, total revenue dropped. This is an example of:

When the NES Group lowered the price of its professional-grade meat slicers from $2,300 to $1,125, demand doubled from four units sold per month to eight units per month. However, total revenue dropped. This is an example of:


a. substitute goods
b. unitary elasticity
c. elastic demand
d. consumer shortage
e. inelastic demand


ANSWER: e

If price goes up or down and revenue stays the same:

If price goes up or down and revenue stays the same:


a. elasticity is universal.
b. elasticity is quantum.
c. elasticity is solitary.
d. elasticity is unitary.
e. None of the above.


ANSWER: d

If price ___ and revenue ___ , demand is elastic.

If price ___ and revenue ___ , demand is elastic.


a. stays the same; stays the same
b. goes down; goes down
c. goes down; goes up
d. goes down; stays the same
e. goes up; stays the same


ANSWER: c

What happens when demand is elastic?

What happens when demand is elastic?


a. As price goes up, revenue goes down.
b. As price goes down, revenue goes down.
c. As price goes up, revenue goes up.
d. As price goes up, revenue does not change.
e. As price goes down, revenue does not change.


ANSWER: a

While the sales of the Apple iPhone have been great from the beginning, when Apple released its iPhone 4S and cut the price of the iPhone 4 from $399 to $199, sales exploded with one million iPhone 4 models sold the first weekend. Demand for the iPhone appears to be:

While the sales of the Apple iPhone have been great from the beginning, when Apple released its iPhone 4S and cut the price of the iPhone 4 from $399 to $199, sales exploded with one million iPhone 4 models sold the first weekend. Demand for the iPhone appears to be:


a. unitary.
b. predictable.
c. synergistic.
d. inelastic.
e. elastic.



ANSWER: e

Bottles of Pure Hawaiian Air contain air that smells like the floral bouquet that greets tourists as they get off the plane in Hawaii. When a tourist shop began selling Pure Hawaiian Air, it charged $5 per bottle and could not keep up with the demand. It has since raised the price to $7. Now the shop is still selling all the bottles of Pure Hawaiian Air it carries, but the owner is not forced to reorder on a daily basis. The $7 price is probably a(n):

Bottles of Pure Hawaiian Air contain air that smells like the floral bouquet that greets tourists as they get off the plane in Hawaii. When a tourist shop began selling Pure Hawaiian Air, it charged $5 per bottle and could not keep up with the demand. It has since raised the price to $7. Now the shop is still selling all the bottles of Pure Hawaiian Air it carries, but the owner is not forced to reorder on a daily basis. The $7 price is probably a(n):


a. supply schedule.
b. symmetrical price.
c. price equilibrium.
d. inventory equalizer.
e. inelastic price.


ANSWER: c

The ___ is the quantity of a product that will be sold in the market at various prices for a specified period, and ___ is the quantity of a product that will be offered to the market by suppliers at various prices for a specified period.

The ___ is the quantity of a product that will be sold in the market at various prices for a specified period, and ___ is the quantity of a product that will be offered to the market by suppliers at various prices for a specified period.


a. demand; inventory
b. demand; supply
c. supply; demand
d. inventory; demand
e. inventory; supply


ANSWER: b

Peggy's Twist Shack sells softserve ice cream. Peggy graphed the demand per week for vanilla ice cream cones. The graph indicates a demand schedule that slopes downward and to the right. This graph indicates that the quantity of vanilla ice cream cones demanded increases as:

Peggy's Twist Shack sells softserve ice cream. Peggy graphed the demand per week for vanilla ice cream cones. The graph indicates a demand schedule that slopes downward and to the right. This graph indicates that the quantity of vanilla ice cream cones demanded increases as:


a. cost increases.
b. supply decreases.
c. price increases.
d. price decreases.
e. supply increases.


ANSWER: d

Most demand curves slope:

Most demand curves slope:


a. horizontally
b. upward and to the right
c. downward and to the left
d. vertically
e. downward and to the right


ANSWER: e

Although many factors can influence price, the primary determinants are:

Although many factors can influence price, the primary determinants are:


a. costs of manufacturing and distribution
b. the demand for the good and the cost to the seller
c. demand by the consumer and perceived quality
d. distribution and promotion strategies
e. stage of the product life cycle and costs to the consumer


ANSWER: b

Which of the following statements describes an advantage of status quo pricing?

Which of the following statements describes an advantage of status quo pricing?


a. Status quo pricing is derived from actual costs of manufacturing.
b. Status quo pricing maintains the organization's differential advantage.
c. Status quo pricing is active, not reactive.
d. Status quo pricing causes price wars.
e. Status quo pricing requires little planning.


ANSWER: e

Dixie Furniture Company has recently moved to a new, larger location. At this new location, it has been unable to attract sufficient customers. Its owner did not have the cash to pay the current loan installment due on the building and inventory, so he decided to reduce all merchandise prices by at least 50 percent for a weekend sale to earn enough to make his loan payment. His pricing objective can be classified as:

Dixie Furniture Company has recently moved to a new, larger location. At this new location, it has been unable to attract sufficient customers. Its owner did not have the cash to pay the current loan installment due on the building and inventory, so he decided to reduce all merchandise prices by at least 50 percent for a weekend sale to earn enough to make his loan payment. His pricing objective can be classified as:


a. market share maximization.
b. satisfactory profits.
c. asset maximization.
d. sales maximization.
e. target ROI.


ANSWER: d

At the end of the summer, the Bloomin' Garden Center reduced the price on all of its plants, fertilizer, and potting soil by 50 percent in order to liquidate this inventory. What type of pricing strategy is being used in this example?

At the end of the summer, the Bloomin' Garden Center reduced the price on all of its plants, fertilizer, and potting soil by 50 percent in order to liquidate this inventory. What type of pricing strategy is being used in this example?


a. Supply oriented
b. Sales maximization
c. Target return on investment
d. Satisfactory profit
e. Profit maximization


ANSWER: b

At a price of $1,192,057, the Bugatti Veyron may be the most expensive street-legal car on the market today. Obviously, Bugatti is NOT using a(n) ___ pricing objective in setting the price for this car.

At a price of $1,192,057, the Bugatti Veyron may be the most expensive street-legal car on the market today. Obviously, Bugatti is NOT using a(n) ___ pricing objective in setting the price for this car.


a. inelastic or supply-oriented
b. market share or sales maximization
c. profit maximization or target return on investment
d. status quo or satisfactory profits
e. demand-oriented or supply-oriented


ANSWER: b

Britney is fifteen years old and wants to open her own business selling cupcakes to local coffee shops and restaurants. She is having a tough time deciding whether to base her pricing objectives on market share, dollar sales, or unit sales. Regardless of which she chooses, her pricing objective can be categorized as:

Britney is fifteen years old and wants to open her own business selling cupcakes to local coffee shops and restaurants. She is having a tough time deciding whether to base her pricing objectives on market share, dollar sales, or unit sales. Regardless of which she chooses, her pricing objective can be categorized as:


a. status quo.
b. profit oriented.
c. need oriented.
d. cost oriented.
e. sales oriented.


ANSWER: e

Thompson Pool and Patio is known for quality pool installations, excellent customer service, and reasonable prices. If you want to have a Thompson pool, you will have to wait about six months due to demand for their product. While Thompson could probably price its product higher, given the demand, they don't. Instead, the company sets its price so that it will earn a reasonable level of profits. Thompson seems to base its pricing policy on:

Thompson Pool and Patio is known for quality pool installations, excellent customer service, and reasonable prices. If you want to have a Thompson pool, you will have to wait about six months due to demand for their product. While Thompson could probably price its product higher, given the demand, they don't. Instead, the company sets its price so that it will earn a reasonable level of profits. Thompson seems to base its pricing policy on:


a. profit maximization.
b. earning satisfactory profits.
c. creating retained earnings.
d. making the most money as possible.
e. decreasing consumer demand.


ANSWER: b

When Insight Research Associates quotes a marketing research project, management will first estimate the cost to conduct the research and produce and deliver the final client report. The next step in determining the price is to add 30 percent to that cost estimate. This becomes the price estimate given to the potential research client. This suggests that Insight Research Associates uses a(n) ___ pricing objective.

When Insight Research Associates quotes a marketing research project, management will first estimate the cost to conduct the research and produce and deliver the final client report. The next step in determining the price is to add 30 percent to that cost estimate. This becomes the price estimate given to the potential research client. This suggests that Insight Research Associates uses a(n) ___ pricing objective.


a. profit-oriented
b. market share maximization
c. status quo
d. sales maximization
e. supply-demand equalization


ANSWER: a

When Apple, Inc. originally introduced its iPhone, it was priced at what many believed to be about as high as the market would allow. Within weeks, Apple lowered the price of the iPhone. It appears that Apple entered the market with a ___ approach to pricing the iPhone.

When Apple, Inc. originally introduced its iPhone, it was priced at what many believed to be about as high as the market would allow. Within weeks, Apple lowered the price of the iPhone. It appears that Apple entered the market with a ___ approach to pricing the iPhone.


a. market share pricing
b. profit maximization
c. demand-oriented
d. sales maximization
e. status quo pricing


ANSWER: b

For convenience, pricing objectives can be divided into three categories. They are:

For convenience, pricing objectives can be divided into three categories. They are:


a. refundable, competitive, and attainable
b. perceived, actual, and unique-situational
c. differentiated, niche, and undifferentiated
d. profit oriented, sales oriented, and status quo
e. monopolistic, fixed, and variable


ANSWER: d

Which of the following is not a real trend that has affected the consumer market?

Which of the following is not a real trend that has affected the consumer market?


a. The increased availability of bargain-priced private and generic brands has put downward pressure on overall prices.
b. Buyers evaluate the price of new products against the value of existing products.
c. Many firms are trying to maintain or regain their market share by raising prices.
d. The Internet has made comparison shopping easier.
e. The United States was in a recession from late 2007 until 2009.


ANSWER: c

Revenue:

Revenue:


a. equals quantity sold times profit margin
b. equals price minus costs
c. equals return on investment
d. is synonymous with profit
e. equals price of goods times quantity sold


ANSWER: e

Which of the following statements is NOT true about price?

Which of the following statements is NOT true about price?


a. Price can relate to anything with perceived value, not just money.
b. Price is that which is given up in an exchange to acquire a product.
c. Price means the same thing to the consumer and the seller.
d. The price paid is based on the satisfaction consumers expect to receive from a product.
e. Customers are interested in obtaining a perceived reasonable price.


ANSWER: c

At Walmart, Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer. The items, which were sold together, retailed at $28.50 but were marked down to $19.99. The $19.99 is the:

At Walmart, Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer. The items, which were sold together, retailed at $28.50 but were marked down to $19.99. The $19.99 is the:


a. revenue.
b. price.
c. profit.
d. liquidity value.
e. amortized value.



ANSWER: b

Price is best described as:

Price is best described as:


a. that which is given up in exchange to acquire a good or service
b. money exchanged for a good or service
c. the psychological results of purchasing
d. the cost in dollars for a good or service as set by the producer
e. the value of a barter good in an exchange


ANSWER: a

General Motors is offering the sales force at Meers Furniture Emporium a $100 reward for each Chevy Volt sold in the next 30 days. What type of trade sales promotion is the $100?

General Motors is offering the sales force at Meers Furniture Emporium a $100 reward for each Chevy Volt sold in the next 30 days. What type of trade sales promotion is the $100?


a. A trade allowance
b. Push money
c. A selling deal
d. Premium payment
e. A direct commission


ANSWER: b

Lopez is the largest Hispanic-owned meat processor in the United States. To assist retailers in marketing its products, Lopez provides point-of-sale materials and offers special introductory discounts to retailers. Lopez uses:

Lopez is the largest Hispanic-owned meat processor in the United States. To assist retailers in marketing its products, Lopez provides point-of-sale materials and offers special introductory discounts to retailers. Lopez uses:


a. functional marketing.
b. relationship selling.
c. consumer promotions.
d. startup marketing.
e. trade promotions.


ANSWER: e

Which of the following statements about online sales promotions is true?

Which of the following statements about online sales promotions is true?




a. Internet sales promotions are more effective and cost-efficient at generating responses than their off-line counterparts.
b. One of the few types of sales promotion that cannot be used online is sampling.
c. Online coupons have lower redemption rates than off-line coupons.
d. Loyalty marketing programs are ineffective when used at Web sites to encourage traffic.
e. There is no way for a marketer to build long-term, mutually beneficial relationships with customers online.


ANSWER: a

Point-of-purchase promotions work best for:

Point-of-purchase promotions work best for:



a. high-involvement products.
b. purchases that require extensive decision making.
c. complex products that require technical knowledge to operate.
d. impulse buys.
e. expensive products like perfume and jewelry.


ANSWER: d

___ are promotional exhibits set up at the retailer's location to build traffic, advertise the product, or induce impulse buying. They are targeted to consumers.

___ are promotional exhibits set up at the retailer's location to build traffic, advertise the product, or induce impulse buying. They are targeted to consumers.




a. Point-of-purchase displays
b. Freestanding inserts
c. Indirect demonstrations
d. Direct demonstrations
e. Freestanding kiosks


ANSWER: a

Club Penguin is an online role-playing game for kids aged 6 to 14 operated by the Walt Disney Company. Players pay a monthly fee to gain access to all of Club Penguin's feature, although free memberships with limited access to games is also available. Disney offers free membership to Club Penguin in the hope that kids who like the game will ask their parents to pay for the full version. Disney is using which sales promotion tool?

Club Penguin is an online role-playing game for kids aged 6 to 14 operated by the Walt Disney Company. Players pay a monthly fee to gain access to all of Club Penguin's feature, although free memberships with limited access to games is also available. Disney offers free membership to Club Penguin in the hope that kids who like the game will ask their parents to pay for the full version. Disney is using which sales promotion tool?


a. Sponsorship
b. Sampling
c. Trade promotions
d. In-pack couponing
e. Premiums


ANSWER: b

Which of the following statements about contests and sweepstakes is true?

Which of the following statements about contests and sweepstakes is true?


a. Contests depend on luck, and participation is free.
b. Contests are generally effective tools for creating long-term relationships with customers.
c. Sweepstakes are promotions that require participants to exhibit some skill.
d. Sweepstakes usually draw about ten times more participants than contests.
e. Contests and sweepstakes are not useful for creating interest and publicity.


ANSWER: d

The Pillsbury Bake-Off requires people to submit a recipe using Pillsbury baking products. Finalists are brought to Pillsbury kitchens to bake their recipes so the winner of a cash prize can be chosen. This is an example of a:

The Pillsbury Bake-Off requires people to submit a recipe using Pillsbury baking products. Finalists are brought to Pillsbury kitchens to bake their recipes so the winner of a cash prize can be chosen. This is an example of a:


a. contest.
b. sales promotion game.
c. sweepstakes.
d. push money deal.
e. P-O-P (participant of Pillsbury).


ANSWER: a

Co-branded credit cards are used in conjunction with:

Co-branded credit cards are used in conjunction with:


a. self-perpetuating premiums.
b. loyalty marketing programs.
c. trade consumer promotions.
d. consumer discount programs.
e. functional consumer discounts.


ANSWER: b

Jack's Pet Store offers customers who purchase pet food a "Baker's Dozen" card. After customers purchase 12 bags of pet food from Jack's, they get the 13th bag free. The Baker's Dozen card is an example of a:

Jack's Pet Store offers customers who purchase pet food a "Baker's Dozen" card. After customers purchase 12 bags of pet food from Jack's, they get the 13th bag free. The Baker's Dozen card is an example of a:


a. directed coupon mailing.
b. sweepstakes.
c. loyalty marketing program.
d. trade sales promotion.
e. sampling program.


ANSWER: c

When Rick purchased a Xerox color printer for his law office, he was able to mail in a proof-of-purchase and his cash register receipt to receive a check from Xerox for $200. Rick received a:

When Rick purchased a Xerox color printer for his law office, he was able to mail in a proof-of-purchase and his cash register receipt to receive a check from Xerox for $200. Rick received a:


a. premium.
b. trade allowance.
c. purchase allowance.
d. rebate.
e. functional discount.


ANSWER: d

Martina buys cola every week at the grocery store, but she always buys whatever is on sale. Coca-Cola, Pepsi, RC Cola—it doesn't matter to her. She is happy with whatever costs the least. Martina would be characterized as a:

Martina buys cola every week at the grocery store, but she always buys whatever is on sale. Coca-Cola, Pepsi, RC Cola—it doesn't matter to her. She is happy with whatever costs the least. Martina would be characterized as a:


a. loyal customer.
b. competitor's customer.
c. price buyer.
d. cherry picker.
e. freeloader.


ANSWER: c

All of the following would be a target for a trade sales promotion offered by Rubbermaid, a manufacturer of storage and organization products, EXCEPT:

All of the following would be a target for a trade sales promotion offered by Rubbermaid, a manufacturer of storage and organization products, EXCEPT:


a. a retailer called The Container Store.
b. a kitchen department in a large discount store.
c. a wholesaler of plastic storage bins.
d. a Rubbermaid distributor.
e. a consumer who needs to organize her college dorm room.


ANSWER: e

What are the two types of sales promotion?

What are the two types of sales promotion?


a. Consumer and trade
b. Informative and reminder
c. Start-up and continual
d. Adoptive and diffusive
e. Personal and impersonal


ANSWER: a

How do public relations professionals use Internet Web sites?

How do public relations professionals use Internet Web sites?


a. To introduce new products
b. To promote existing products
c. To obtain consumer feedback
d. To showcase upcoming events
e. To do all of these things


ANSWER: e

BMW of North America sponsored an instructional driving school for teenagers in major cities across the U.S. Teens received a training session that included driving techniques and accident avoidance skills.This is an example of:

BMW of North America sponsored an instructional driving school for teenagers in major cities across the U.S. Teens received a training session that included driving techniques and accident avoidance skills.This is an example of:


a. event advocacy
b. lobbying
c. product placement
d. consumer education
e. issue sponsorship


ANSWER: d

Stormbreaker, a new spy movie, details the story of Alex Rider who, after the death of his uncle, is recruited as an M16 spy. Armed with a special set of gadgets, Rider's mission is to save millions of lives. In James Bond fashion, the Cross pen serves as one of the key gadgets in the film. The maker of the Cross pen paid to have its pen featured in this movie. This is an example of:

Stormbreaker, a new spy movie, details the story of Alex Rider who, after the death of his uncle, is recruited as an M16 spy. Armed with a special set of gadgets, Rider's mission is to save millions of lives. In James Bond fashion, the Cross pen serves as one of the key gadgets in the film. The maker of the Cross pen paid to have its pen featured in this movie. This is an example of:


a. advertising.
b. a sales promotion.
c. paid-for public relations.
d. product placement.
e. lobbying.


ANSWER: d

Publicity:

Publicity:


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


ANSWER: e
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