Principles of Marketing DECA Practice
Terms in this set (100)
A primary responsibility of a federal regulatory agency is issuing radio and television licenses to qualified applicants. What type of authority does the agency have?
Control of supply. Administration law is the branch of law that addresses the rules and regulations that have been established by government agencies. The legislative branch of the government establishes governmental agencies and gives them authority to enact and enforce regulations for three specific activities. In the United States the Federal Communications Commission (FCC) is responsible for issuing radio and television licenses to applicants that meet the agency's standards. The control of rates involves regulating the prices for services such as utilities. Control of process of establishing a corporation as a form of business ownership.
When a business want to make their products available to customers but do not want to over-distribute their goods and services, they are seeking
Ideal market exposure. When a business takes steps to ensure that a product is available to the target market without over-distributing the product, it is seeking ideal market exposure . If the product supply is higher than demand, the business loses money on the unsold products. Therefore, the businesses strive to obtain ideal market exposure to satisfy demand but not have a surplus of goods. Exclusive and intensive exposure. Direct distribution is a type of distribution channel in which goods and services more directly from the producer to the consumer or industrial user.
Which of the following is a characteristic of a wholesaler?
Buys goods from a producer in large quantities. Wholesalers are businesses that buy goods from producers or agents and sell them to retailers. Wholesalers typically buy a variety of goods in bulk from many producers and sell groups of related products in similar quantities to retailers. Agents assist in the sale of goods but do not buy them. Retailers sell to consumers.
What is the primary advantage to businesses that use an electric data interchange (EDI) system?
Shorten order cycle time. An EDI systems allows a business to share information with other companies, such as its vendors and customers. EDI systems automatically creates and send business's purchase orders via computer to vendors. This increases the efficiency because it reduces phone calls and paperwork, which shortens time - the time that it takes to receive, process, and deliver the order. EDI systems do not eliminate shipping errors, ensure that employees follow procedures, or reduce vertical channel conflict.
Barker's Dog Food pays Sid's Supermarket chain a large sum of money in exchange for highly visible shelf space for its dog-food products in the stores. Barker's Dog Food is paying a(n)
Slotting allowance. A slotting allowance is cash premium that manufacturers pay retailers to cover the costs of carrying a product. Retailers often set high slotting allowances because there is a lot of competition among manufacturers to get retailers to carry their products. As a result, the manufacturers who can afford to pay high slotting allowances are most often the ones that get the best shelf space for their products. Because small manufacturers may not be able to pay large slotting allowances, they do not have an equal opportunity to distribute their products, which represents a potentially unethical situation, Barker's is not paying a finder's fee, installation charge, or processing fee.
Which of the following is an example of a business that is coordinating marketing activities with channel members:
A wholesaler follows up with a producer to ensure that it will ship products to arrive in time for a retailer's scheduled promotion. Each member of a distribution channel must work together to ensure that products are available when they are needed such as when one channel member has scheduled sales promotion. If products do not arrive at stores in time for sales promotion, customers are likely to be dissatisfied and go elsewhere to purchase the items that they want or need. Therefore, channel need to communicate and follow up with each other on a regular basis. Developing an advertising schedule, researching suppliers online, and developing a press release are not examples of channel members working together to coordinate marketing activities.
Which of the following is an example of vertical conflict within a distribution channel
A retail chain develops a private brand to compete with the national brands that it sells. Vertical conflict occurs between channel members at different levels within the same distribution channel. A retailer that develops and markets a private line of products is selling products that compete with the national brands it carries. Most often the private brand is less expensive than national brands because the retailer does not spend as much money for packaging and advertising as the national brands do. This can cause conflict with the national brand manufacturers because the private brand has the potential to take some of their market share. A retailer that offers a popular item at an extremely low price to attract customers is using loss-leader technique, which may cause horizontal conflict. A business that distributes its products through all available channels in a certain area is using an intensive distribution strategy, which is a common distribution strategy for many consumer goods. Using a short distribution channel to move perishable goods is unlikely to cause ongoing channel conflict.
Which of the following is a pre-reading activity that often helps business people determine if online
information is relevant to the specific topic that they are researching:
Scanning titles and headlines. By scanning titles and headlines, business people can often determine if
an article, white paper, or book excerpt relates to the topic at hand and is worth taking the time to read in
detail. Underlining review questions, taking detailed notes, and memorizing glossary terms are not pre reading
activities that help business people determine if online information is relevant to a specific topic
that they are researching.
Pablo takes a telephone call for a coworker. So that Pablo's coworker can follow up with the telephone
caller, he should ask the caller for his/her
Name, organization, and telephone number. Effective message taking is an important part of handling
telephone calls in a businesslike manner. So that Pablo's coworker can return the telephone call, Pablo
needs to ask for and write down the caller's name, the name of the organization that the caller works for,
and the caller's telephone number. The message taker should obtain the caller's full (first and last) name
because it is possible that the caller's organization has more than one employee with the same first or
last name. The caller's zip code and address are not critical information to record when taking a
Aaron prepared a detailed report for his supervisor that described several issues that Aaron's work group
has been experiencing on a long-term project. Aaron described the most difficult or challenging issues in
the beginning of the report and ended the report with the least important points. How did Aaron organize
the information in the report?
Priority sequence. Because Aaron first describes the most challenging or critical issues, he is arranging
his report by priorities or level of importance. There is not enough information provided in the situation to
determine if Aaron's priorities were simple or complex or if they were addressed in chronological (time based)
or in alphabetical order by category.
What is the best way for an employee to obtain product specifications for a piece of office equipment?
Send a letter of inquiry to the vendor. Business people write letters of inquiry to ask for information.
Because the employee wants product specifications about equipment, s/he is most likely to get the
needed information from the vendor or manufacturer. Submitting a quotation to management, writing a
product review, and developing a cost/benefit analysis will not help the employee get the desired product
Annette sent an email to her supervisor to request a meeting to discuss the terms for a contract with a
new vendor. This is an example of
Upward communication. Upward communication moves up the chain of command from lower to higher
levels of authority. Horizontal feedback involves communication among peers within the same level of
authority in the organization. In the situation described, Annette's request to meet with her supervisor is
solicited and formal in nature.
To reinforce the company's customer-friendly image, managers should consistently
Communicate the company's service-quality expectations to employees. Image management involves
the effective use of touch points—all of the opportunities that a company has to connect with its
customers and reinforce its brand value. A company's employees are touch points because they interact
with customers. Customers often base their impressions of a business—positive and negative—on the interactions they have with the company's employees. Therefore, the company must train employees to provide the service levels that the company expects them to provide customers, which in turn reinforces the company's image. Businesses may offer stock options, profit sharing, and bonuses as part of their benefits packages. Production planning is determining how products will be produced and in what amounts. Reorganizing involves changing or restructuring the way the company will do its company's
Companies demonstrate ethical behavior in customer relationship management (CRM) by
Taking steps to secure their customers' confidential information. Companies must take steps to earn their
customers' trust and build long-term customer relationships. Customers are more likely to trust a
company if they know that the company is taking steps to protect their confidential information (e.g.,
credit-card numbers). Developing rigid customer-service policies may be ethical but may not build
positive relationships with customers. Releasing customers' personal information to others without
permission is unethical behavior. Companies typically store and maintain their customer records in
databases and use presentation software to develop visual aids for presentations.
When a business opens a second location on the other side of town to provide residents with easier
accessibility to its goods and services, it is creating ___________ utility.
Place. Place utility is usefulness created by making sure that goods or services are available where
consumers want or need them. Form utility is usefulness created by changing the shape or form of a
tangible good to make it more useful to the consumer. Time utility refers to having the goods/services
available at the time consumers want or need them. Product is not a type of utility.
PRD Manufacturing quickly realigned its production processes to meet a sudden rise in customer
demand for its products. What characteristic of an adaptable organization did the manufacturing
Agility. Agility is the ability to change quickly. Agile organizations are to anticipate changes in the
marketplace and align their resources effectively to implement the changes quickly. Because agility
requires flexibility, organizations use different strategies to stay flexible, including innovative management
and competitive aggression. Cultural intelligence, which involves a high level of cultural sensitivity and
awareness, is another characteristic of adaptable organizations.
What type of tax did Robert pay when he purchased a new bicycle from Wheeler's Bike Shop?
Sales. All levels of government—federal, state/provincial, and local—levy sales taxes most retail
transactions such as the purchase of a bicycle from a bike shop. In many jurisdictions, sales of certain
food items and medications are exempt from sales tax. Governments levy income taxes on monies
earned from a job or other sources. Individuals and businesses pay property taxes on the land and
buildings that they own. An excise or "sin" tax is levied on nonessential products such as gasoline,
cigarettes, and alcohol.
A business periodically moves its employees from one department to another to perform different tasks,
which helps boost employee morale and combat boredom. This is an example of
Job rotation. Job rotation involves periodically moving employees from one job to another. Job rotation is
an effective management training method to broaden the employees' perspective of the business.
Rotating jobs and responsibilities can benefit employees and increase their morale because they are
learning new skills. It also keeps employees from becoming bored because they are doing different tasks.
Job rotation benefits businesses because employees are cross-trained and can serve as backup
resources. Interdependency occurs when workers must rely on each other to accomplish a task or
produce a product. Job security is the likelihood that an employee will be able to keep his/her job. Task
specialization (specialization by task) involves being highly skilled in one, very small portion of a job.
Consumer spending is most likely to increase when
Unemployment rates decline. When unemployment rates decline, there are more people working and
earning an income. When people have available income, their spending tends to increase. When
business production slows, businesses produce fewer goods and services. A decline in production often
leads to facility closings and employee layoffs. When people are unemployed, they are not earning an
income, so consumer spending tends to decrease. When business activities decline over several months,
it typically indicates the beginning of an economic recession. During economic recessions, people tend to
cut back and save their money rather than spend it. When interest rates increase rapidly, it becomes
more expensive to obtain loans to buy expensive items such as cars and homes, which can reduce
To emphasize the value of diversity in the workplace, employees should
Discourage stereotypes. Stereotypes are set images or assumptions about others and often influence the
ways in which business people think about people from other cultures. Stereotyping should be
discouraged because it often prevents business people from developing cultural sensitivity.
Business people need to be open-minded rather than assume that all people in one culture behave in a
certain manner. Ethnocentrism, which is the belief that your own culture is naturally better than other
cultures, hinders the ability to value diversity in the workplace. Basing opinions on feelings can lead to
stereotyping others and developing ethnocentric attitudes. Business people cannot ignore language
Which of the following is an example of an employee engaging in negative workplace gossip:
Todd says, "I heard that the only reason that Rachel was promoted is because she is dating the boss's
son." Gossiping involves talking about other people or situations and often involves spreading rumors
that contain distorted or false information. This type of gossip is malicious and unethical because it is
hurtful and may damage a person's reputation. Todd's comment suggests that Rachel was promoted on
the basis of her dating status rather than her ability to perform her job, which is an opinion that cannot be
proven and may not be true. Leah is engaged in appropriate social conversation at work; Bob is stating a
fact; and Laura is providing an employee with critical feedback.
Which of the following is a positive way for a project manager to motivate team members to keep up their
Take team members to lunch after reaching a major project milestone. Milestones occur when a business
or project team accomplishes its mini-goals. Because long-term projects often involve achieving a series
of milestones, managers often reward their teams by celebrating their accomplishments. Celebrating
milestones reinforces positive work behavior and helps keep the momentum going for the next stage of
the project. Taking team members to lunch is one way of providing positive feedback and motivating
others to continue to work hard. Requiring team members to work weekends and providing them with
constructive criticism to improve performance may be necessary activities to complete the project;
however, these activities are not intended to motivate team members to continue working hard. Using
high-pressure tactics to encourage increased productivity may hurt morale, lead to burnout, and stifle
To determine your personal vision, you must first consider
Your values. Your values are the principles by which you live. Your values and the things that are most
important to you shape your personal vision—the future that you want to create. After you determine your
personal vision, you can evaluate the obstacles and cultural differences that you may encounter as you
work toward your vision. Others' aspirations should not a primary consideration when you determine your
Which of the following is a reason why someone might have trouble adapting to new circumstances:
Contentment. Being adaptable requires you to stretch, try new things, and get out of your comfort zone,
which can be hard to do if you're content. Objectivity and empathy are characteristics of adaptable
people; these traits make it easier for a person to adapt. Missed opportunities are a negative
consequence of refusing to adapt.
The primary purpose of building political relationships in the workplace is to
Influence others' behavior. Political relationships involve gaining influence within the organization by
building alliances with managers and colleagues. Employees who build positive political relationships in
the workplace are in a better position to persuade others to adopt organizational changes. People tend to
distrust individuals who use unethical or negative tactics to get ahead. Negative "office politics" tend to
create conflict and an overly competitive work environment.
Which of the following is a source of unearned income:
Dividends. Unearned income is money obtained from non-employment related sources. Dividends are
sums of money paid to an investor or stockholder as earnings on an investment and are one way of
obtaining unearned income. Other examples of unearned income are financial gifts such as a trust fund
or inheritance. Wages are money payments for labor on an hourly, daily, or weekly basis. A commission
is a percentage of the total sale amount paid to the individual or business that makes the sale. Fees are
charges that customers pay for services that businesses offer. Fees are earned income for businesses
and expenses for their customers.
Transaction fees and interest rates are important considerations when you are
Selecting a credit-card provider. Comparison shopping will help you determine which credit-card
providers offer the lowest interest rates and have minimal transaction fees. Doing some research before
applying for and accepting the terms of a credit card can help you save money on credit. Credit bureaus
collect your credit history to calculate your credit rating (score). Banks prepare your bank statements, and
lending institutions develop and organize the loan applications that applicants complete.
A business owner carries insurance that covers income losses that the business may experience if
hurricane damage prevents the business from operating for a short period of time. What type of property
insurance does the business owner carry?
Business-interruption. Hurricanes and other natural disasters can shut down a business for weeks or
months. When a business does not have electricity, products, or a safe building in which to operate,
employees cannot work, and the business cannot earn money. Business-interruption insurance helps
businesses cover income losses during the period in which they are unable to operate. Disability
insurance provides individuals with financial support when they cannot work due to an injury or illness.
Collision and no-fault are types of automobile insurance.
Dwayne is working on an income statement for his business. When he finishes it, he's left with his
business's "bottom line," which represents the business's
Net income. A business's net income consists of all the money remaining after operating expenses are
subtracted from gross profit. It's considered the "bottom line" because it's the final calculation on the
income statement. Operating expenses and gross profit are not referred to as the "bottom line." A profit and-loss
statement is another term for an income statement.
Which of the following best describes the finance function:
It boosts the company's growth and reduces risks. Finance is the business function that involves all
money and money management matters. Its ultimate purpose is to boost the company's growth and to
reduce its risks. It is not the same as accounting, although finance and accounting are closely interrelated
and even overlap in some areas. Accounting focuses on record-keeping activities, while finance focuses
on money-management decisions. Accounting provides information about the company's finances.
A business's specialized budgets are interrelated because each budget is
Tied to the business's overall goals. A specialized budget reflects a particular department or activity such
as purchasing, marketing, etc. Specialized budgets are interrelated because they rely on one another for
estimates of future business activities. Each department conducts business activities that help the
business achieves its overall goals. Jury of executive opinion is a qualitative sales forecasting method
that gathers opinions from company executives. Specialized budgets are not necessarily prepared in
order of importance, based on executive opinion, or communicated to all employees.
A company's human resources department scans applicants' résumés and stores them electronically so
the company can retrieve the information as needed. What type of technology is the company using to
manage human-resources information?
Imaging. Scanning involves creating an electronic copy (image) of a document. Busy human-resources
departments often receive hundreds of cover letters and résumés each week. Using imaging technology
to scan the documents and save them electronically helps the business keep the information organized
and reduces the need to save paper documents and store files manually. Simulation is a training method
in which employees encounter real-life situations in an artificial environment. Scheduling software
enables managers to establish work schedules for employees and timetables for projects. Procedural
technology is a fictitious term.
When Angela obtained marketing research from a government agency, she collected ___________
Secondary. To make important business decisions and solve problems, employees obtain and use many
types of information from a variety of sources. Secondary information is information collected by other
sources such as trade associations, periodicals, and government agencies. Primary information is new
information collected specifically for the project at hand. Marketers often use surveys, focus groups, and
interviews to obtain primary data or information. Intuitive is not a type of marketing information.
A business posts a daily survey question on its Facebook page. The business is collecting marketing
information by using __________ applications.
Social-media. Social media is a form of communication that involves sharing information, ideas, personal
messages, videos, etc. through social networking and mobile applications such as Facebook, Twitter,
and Myspace. Businesses who engage in social-media activities can collect marketing information by
monitoring the individuals who follow their social-media boards or pages. One way to collect information
is to post survey questions on the social-media website and review the responses that followers post.
This can give businesses insight as to what their target markets think about their products.
Videoconferencing is a form of technology that uses two-way audio/video transmissions, which enables
meeting participants from remote locations to communicate simultaneously. A blog is an online diary. An
online library provides users with access to books, journals, and other types of reference materials.
Marketers who send unsolicited email are legally required to provide email recipients with a(n)
Opt-out option. The law requires businesses to provide message recipients with opt-out instructions when
they send unsolicited email. The opt-out option allows message recipients to request removal from the
subscriber list. The law requires businesses to maintain the opt-out tool for a certain length of time (e.g.,
30 days) so recipients have enough time to read the message. Businesses are subject to very high fines
if they do not comply with the law. By enabling the opt-in option of an email message, subscribers permit
businesses to send promotional messages to them. A spam filter is a software application that prevents
spam messages from going into recipients' email inboxes. A host stores web pages on a server for a
What data-collection method do marketers use when they want to analyze cause-and-effect
Experiment. Marketers use experiments to collect marketing data when they want to analyze cause-and
effect relationships. Test marketing, which involves introducing a new product to a limited market to
determine its level of acceptance, is a common way that marketers collect information to analyze cause and-effect
relationships. Surveys and interviews are methods that marketers use to systematically collect
opinions and the reasons behind those opinions. Observation is a data-collection method that involves
Which of the following statements is true about exploratory research:
It serves as a starting point for more detailed research. Exploratory research involves collecting
information to help the business define its issue, situation, or concern and decide how to proceed with its
research. Marketers often use exploratory research to gain insight into the nature of a marketing problem
or to clarify concepts. Marketers conduct descriptive research when they want to make accurate
predictions about certain situations. Causal research requires careful planning and control to carry out.
If a business wants to get a general idea about a population's opinions without investing a lot of time and
effort in developing the idea, the business might consider using a(n) ___________ sampling plan.
Non probability. A sampling plan is a blueprint (course of action) for gathering marketing information from
a section of a target market. When a business develops a sampling plan, it must decide which type of
sample is most appropriate for the issue or problem at hand. There are two broad categories of
sampling—probability and non probability. Probability samples randomly select participants so that each
member of the market has an equal chance to participate. Systematic and stratified samples are types of
probability samples. Non probability samples use the researcher's personal judgment when selecting
participants. This method is less scientific than probability samples, but it is useful to businesses when
they want general information without spending a lot of time and money to obtain it.
Determine the type of rating scale used in the following survey question:
Students should decide their college major during their senior year in high school.
Strongly Agree Agree Not Sure Disagree Strongly Disagree
Likert. The Likert scale rates respondents' attitudes or feelings according to degree. In the example,
participants choose one of five response options that most closely reflect their opinions or feelings.
Researchers code each response option with a number to tabulate results. The Semantic differential
scale provides seven spaces that are bounded by descriptive antonyms at each end, such as reliable and
unreliable. The respondent places an "X" at the point or space on the continuum that best describes
his/her feelings about the object or idea that s/he is rating. Constant sum is a type of comparative rating
scale that requires the respondent to assign a value (e.g., percentage or points) to the options provided
on the questionnaire. Dichotomous survey questions require a yes or no response.
By reviewing customer complaint reports, businesses can often identify the
Areas in which they need to improve their performance. By reviewing complaint reports, a business can
often identify areas in which customers are unsatisfied—service, product quality, pricing, policies, etc.
After identifying the issues, the business can take steps to improve. Complaint reports will not help a
business identify specific products to promote or the sales volume and market share of their competitors.
The number of sales calls that salespeople make per week is in the business's sales-call report.
Which of the following is a form of qualitative research:
Focus group. Qualitative research involves collecting data that include opinions and personal
interpretations. A focus group is a method that researchers use to collect qualitative data. Businesses
often hold focus groups to obtain customers' opinions about their goods and services. Online surveys
and experiments are methods of collecting quantitative data. Sampling is the process of choosing a
representative group of consumers to survey.
An effective marketing-research questionnaire includes questions or statements that are written
In an objective way. The goal of marketing research is to obtain honest, reliable, and valid information to
facilitate decision making. For this to happen, researchers must develop objective, unbiased
questionnaires. This means that the questionnaires should not be worded in a way that influences the
respondents' answers. The questions or statements should be written clearly and should address one
topic or issue at a time so that respondents are not confused. The questionnaires should not reflect the
researcher's personality, which may affect the questionnaire's objectivity
Marta reviewed marketing data to determine if researchers followed proper procedures during the data collection
phase of the project. What activity did Marta perform?
Validation. After data collection, the next step is to validate the data. This involves ensuring that the
researchers followed proper collection procedures and conducted surveys, interviews, or observations in
an objective (unbiased) manner. After the validation process, marketers edit and code the data for
tabulation. Tabulation is the process of counting the number of responses.
Out of 25 survey respondents, 16 people rate a product's durability at five on a rating scale ranging from
one to seven. What measure of central tendency does the number five represent?
Mode. Mode is the answer to a question that respondents give most often. In the situation described,
most respondents rated the product's durability at five on the marketing research survey, which makes
the number five the mode. A median is the middle value of the established sample criteria. This means
that half of the data or responses are below the median value and half are above the median value.
Disbursement and deviation are not measures of central tendency.
What type of marketing-research error exists when the survey method contains a design flaw?
Systematic. Systematic errors involve flaws in the design of the research. These types of errors include
unclear survey questions, the use of improper interview procedures, etc. Non-response errors occur
when respondents fail to answer a survey question. Response errors, on the other hand, occur when
respondents answer questions in biased or incorrect ways, such as deliberately providing a false answer.
Because marketing-research projects can never be completely error-free, marketers estimate and
account for fluctuations—random errors—when conducting research.
When Jamie develops a questionnaire, she places very broad questions at the beginning of the
questionnaire and progressively includes questions that are narrower in scope toward the end of it. What
sequencing format is Jamie using to develop the questionnaire?
Funnel. The funnel approach involves asking very broad questions at the beginning of the questionnaire.
This helps the respondents focus and get comfortable with the survey. Then, the questionnaire
progressively asks the questions that are narrower in scope toward the end of the questionnaire. The
funnel approach helps researchers organize the questionnaire in a way that prevents question-order bias.
Branching is a technique that requires respondents to go to another place in the questionnaire to answer
specific questions if they respond a certain way to the initial question. Bridging and remote are not
One reason that a business might conduct primary research rather than use secondary marketing
information is because the
Secondary information may be outdated. Secondary information is information collected by others for
purposes other than the project at hand. Though the secondary information may have been relevant at
one time, it may be too old to reflect any changes that have occurred since it was collected; therefore, the
business might conduct its own research to obtain current results. Primary information is not always
error-free and can be expensive to obtain.
Which of the following statements is true about B2B (business-to-business) marketing:
Businesses tend to focus on personal selling rather than promotion. B2B marketing involves selling
goods and services to other businesses and organizations. Effective B2B marketers understand that
businesses' needs and wants differ from final consumers. B2B marketing tends to focus on personal
selling. This is because businesses often purchase complex or expensive equipment for their operations.
In addition, after-the-sale service is important to businesses because they often need installation, repair,
and maintenance services for their purchases. Business purchases often involve multiple decision
makers. Professional buyers—those who purchase goods and services for businesses/organizations—
tend to have extensive knowledge about the products that they buy and sell. Consumers, on the other
hand, must often seek information from their peers or experts.
Which of the following is a true statement about the marketing mix:
Marketing mix elements are interrelated and work as a unit. The marketing mix is the combination of the
four elements of marketing—product, place, promotion, and price. To be successful, businesses must
use the right blend of each element. Because each marketing mix element must work together with the
others to achieve the marketing goals, all of the marketing mix elements are interrelated and equally
important. A change to one marketing mix element affects all of the other marketing mix elements.
When a business focuses on the number of times per month that customers buy a specific product, it is
identifying a market on the basis of
Rate of use. Dividing customers into groups based on their response to a product is behavioral
segmentation. Segmenting a market by its usage rate involves categorizing customers as heavy,
moderate, light, or nonusers of a product. When determining the rate of usage, businesses consider the
number of times that customers purchase or consume a certain product. Occasion response involves
segmenting customers in relation to the demand for products that they purchase for special events (e.g.,
graduations and weddings). Businesses can also classify customers by the benefits they desire or obtain
from a product, as well as the level of loyalty they feel for a product.
A situation analysis reveals that Pullman Industries will need to increase its minimum wage to $8.75 per
hour in three months or face severe government fines for noncompliance. This is an example of a
_________ factor that affects businesses.
Regulatory. A business conducts a situation analysis to determine the firm's current business situation
and the direction in which the business is headed. A comprehensive situation analysis involves
evaluating internal and external conditions. A regulation change, such as a minimum-wage increase, is
an example of an external change that affects a business. The situation presented is not an example of a
technological, secondary, or managerial factor that affects businesses
Which of the following is a cyclical factor that many businesses consider when developing a short-term
Holiday seasons. Demand for certain products often increases at certain times of the year, such as
holidays. Businesses need to consider temporary demand increases when developing short-term sales
forecasts to ensure that they have enough products on hand to satisfy the demand. For example, the
demand for candy tends to increase around Halloween and Valentine's Day, so grocery stores need to
make sure that their sales forecasts reflect the higher demand for candy during these time periods.
Product benefits, credit policies, and labor shortages are not cyclical factors that businesses consider
when developing a short-term sales forecast.
Camille is conducting research for a report that she is writing about the mercury levels in fish. Which of
the following is the most reliable source for Camille to use:
An online article that was written last month by a well-known marine biologist. An important consideration
when evaluating the usefulness, validity, and timeliness of written information is the topic at hand and the
author's expertise. A marine biologist studies aquatic life forms, so an article written by this individual is
more likely to contain information about fish than a physics textbook, a retired brain surgeon's blog entry,
or a newsletter from an organization that studies the effects of air pollution.
What spreadsheet function enables Audrey to reorganize sales data in one column so the dollar values
appear in descending order?
Sort and filter. The sort and filter function enables computer users to change the order of data in a
spreadsheet. The find and replace function enables computer users to locate text or numerical values
within the spreadsheet and replace them with designated text or numbers. The merge function enables
computer users to consolidate information from other computer applications into one location (e.g.,
worksheet). Auto Sum is a spreadsheet function that enables computer users to obtain the sum of figures
in a row or column of a spreadsheet.
Every year, the MXQ Company contacts its customers to verify their telephone numbers, shipping and
billing information, and email addresses. The primary purpose of this activity is to
Update the company's customer records. When customers change phone numbers and email addresses,
move, or go out of business, a company needs to update its customer database to reflect the changes. A
company with outdated customer information is more likely to experience financial losses. For example, a
company may not be able to collect payment on overdue accounts if it cannot reach its customers by
telephone to follow up. Also, a company's promotional mailings are likely to be returned if it does not
have current mailing addresses for its customers. In this situation, the company has wasted money in
postage. The primary purpose of updating customer contact information is not to achieve sales quotas,
determine the customers' buying intentions, or establish goodwill through public relations.
James needs to hire a bookkeeper for his growing business. To determine the new employee's salary,
James obtained pay data from five companies in his industry that are similar in size. The research
indicated the following: Company A pays $31,205; Company B pays $29,995; Company C pays $34,800;
Company D pays $42,500; and Company E pays $36,500. James decided to set his bookkeeper's salary
at $35,000. What measure of central tendency did James use to set his new employee's salary?
Mean. The mean is a measure of central tendency. Mean is a mathematical average, which involves
adding together the raw data and dividing the sum by the number of individual data. In the example,
James added together all of the salaries of the companies that he researched ($31,205 + $29,995 +
$34,800 +$42,500 + $36,500 = $175,000). Then Jack divided the sum by the number of individual
salaries in the set of data ($175,000 ÷ 5 = $35,000). The mode of a set of numbers is the value that
appears most often in the set. The range is the difference between the largest and the smallest number
in the data set. The median is the exact middle of a data set. In the example, $34,800 is the median of
the data set.
Which of the following computer applications helps manufacturers track and manage the inventory that
they use to produce goods:
Material requirements planning (MRP). MRP software helps manufacturers streamline production efforts
and operate efficiently. The software has forecasting applications that help manufacturers determine the
quantities of and delivery systems for the raw materials that they need for production. Job sequencing
involves determining the order in which tasks must be carried out to complete a process or activity.
Reverse logistics occur when unwanted or undesirable goods are returned to a business for reuse,
recycling, or disposal. Critical path involves evaluating the sequence of steps to complete complex
project tasks and identifying alternative systems to use project resources in the most efficient manner.
So that employees are prepared to act if an accident occurs in the workplace, many businesses provide
them with ___________ training.
First-aid. Many businesses provide employees with first-aid training and certification. By knowing what to
do if accidents occur in the workplace, employees can help stabilize accident victims until professional
medical assistance arrives at the scene. Fire-response training provides employees with knowledge
about handling fires in the workplace. Security policies and actions are geared toward preventing robbery
and theft in the workplace. Fitness training involves physical exercise.
What component of a project plan outlines the manner in which information about the project will be
distributed to the project's team members and stakeholders?
Communications plan. The purpose of the communications plan is to help the project manager ensure
that information about the project is communicated to all of the project's key participants—the client, team
members, suppliers, and other key internal and external stakeholders. The risk-management plan
outlines potential risks associated with the project and provides guidance for minimizing and handling the
risks. A contingency plan outlines an alternative course of action when the project team is unable to carry
out the original plan. The change-management plan helps project managers manage how they handle
major changes to the project.
Arnie needs to buy printer toner and copy paper from the company's office-supply vendor. What is the
first step that Arnie should take?
Prepare a purchase order. Arnie needs to prepare a purchase order, which is the form that a business
(buyer) fills out to order goods from a vendor (seller). The purchase order typically contains information
such as the item's description, part number, quantity, price, and the company's shipping and billing
addresses. An invoice is an itemized statement of money owed for a good or service and is generated by
the vendor (seller). A receipt is an acknowledgement of the sale and transfer of goods and services, and
is typically provided by the seller to the buyer in consumer retail transactions. Employees complete
expense forms so their employers can reimburse them for business-related out-of-pocket expenses.
Which of the following are examples of overhead costs:
Postage, taxes, and insurance. Overhead costs are expenses that businesses incur so they can perform
their day-to-day operations. Postage, taxes, insurance, utilities, subscriptions, supplies, and rent are
examples of overhead costs. Dividends and sales are sources of income for an individual or business.
When it gets noisy in her work space, Olivia puts on her headphones and listens to soft music on her iPod
while she works. What principle of time management is Olivia following?
Knowing how she works best. Olivia is taking steps to reduce distractions that may affect her ability to
complete her work tasks in a timely manner. She is not dividing large projects into smaller parts, making
the most of her down time, or focusing on personal goals rather than work tasks.
Kara has natural artistic talent and thinks that she might want to work as an interior designer. Kara's
artistic ability is an example of a(n)
Aptitude. When exploring career options, individuals should consider their aptitudes. An aptitude is a
natural talent or a skill that a person masters quickly or easily such as drawing, painting, science, math,
etc. A hobby is an enjoyable activity that a person does in his/her leisure time. The attitudes and ways in
which a person approaches a situation are his/her mindset. A vision is the future you desire to create.
People apply their aptitudes to work toward their visions.
4. Because Nick is a high-school student who does not have a lot of paid work experience, he should
include his school activities and ____________ in his résumé.
Volunteer work. Volunteering is a great way to gain experience and learn different skills. Nick should
include this information in his résumé because it shows potential employers that he takes initiative to get
involved in different activities that interest him. It would be inappropriate for Nick to include information
about his political views, salary expectations, and physical characteristics in his résumé.
A primary benefit of taking online continuing education classes is that business professionals can
Learn at their convenience. Many organizations offer online continuing education classes that enable
businesspeople to update their professional skills at their own pace at times that are convenient for
them—after work, during lunch, on weekends, etc. Businesspeople do not take online continuing
education classes to practice their interpersonal skills, improve their personal appearance, or examine
Pricing-analytic software applications enable businesses to
Simulate the impact of pricing changes. Analytic applications enable marketers to input different variables
and analyze their outcomes. By analyzing these "what if" situations or simulations, marketers can make
sound pricing decisions that align with their objectives. Price-execution applications automate pricing
processes and generate price lists. Price-optimization applications help marketers identify favorable
. Which of the following is an example of the loss-leader pricing technique:
An appliance retailer advertises its Model X2Z refrigerator below cost to get customers into the store. A
loss leader is a product that a business prices extremely low or sells below cost. Small businesses often
suffer when large businesses continually sell items below cost because they cannot compete in terms of
pricing. When a business uses pricing tactics that affect other businesses' ability to compete, it may be
violating anti-trust laws. The electronics wholesaler is engaging in predatory pricing practices. Predatory
pricing is the practice of a firm selling a product at very low price with the intent of driving competitors out
of the market or create a barrier to entry into a market for potential new competitors. The baby-formula
producers are engaging in price fixing, which is an illegal business agreement in which businesses agree
on prices of their goods or services, resulting in little choice for the consumer. Dramatically increasing the
prices of staple goods such as bread, milk, and eggs after a natural disaster is a practice known as price
. A business is most likely to set sales-oriented pricing objectives when its focus is to
Be more competitive in the marketplace. The purpose of sales-oriented pricing objectives is to increase
the total amount of income that it generates from sales. To do this, a business may charge lower prices
to increase sales volume, or it may charge higher prices to increase the dollar value of its sales.
Businesses often set sales-oriented pricing objectives when they want to be more competitive in the
marketplace. Businesses set profit-oriented pricing objectives when they want to improve their cash flow,
earn a return on investment, or survive when they experience financial problems.
If the test-marketing process yields positive results, the next step is
Commercialization. Test marketing involves introducing a new product to a limited market to determine
what its acceptance will be. If the test market accepts the product, it is ready for commercialization.
Commercialization is the point at which a product goes into full-scale production, the marketing plan is
put in place, service and sales training are done, and the product's life cycle begins. Product innovation is
the process of generating product ideas. After screening ideas and determining the feasibility of a specific
idea or item, the business develops a prototype, which is an early model or sample of the item.
Modification is altering an existing product.
Which of the following is a reason that many products go into decline:
The market is saturated. Many products go into decline because the market is saturated. This means that
almost all of the product's potential customers have been reached, and the only opportunity for increased
sales comes with population growth or a shift in market share. If a product were to be outlawed by the
government, it would happen earlier in the product life cycle. Customer tastes shift, and superior products
become available. These are both common reasons that older products go into decline.
A potato-chip manufacturer uses large bags to market its products so it appears that there are more
chips in the bags than there actually are. This situation is an ethical issue that relates to product
Packaging. Some individuals and organizations believe that businesses are behaving unethically and are
misleading customers when they use oversized packaging to protect goods. Oversized packaging
visually suggests that the customer is getting more than the package actually contains. Obsolescence is
the state of being outmoded or unfashionable. The label provides a description of the product and its
contents. Product design is the way that the actual product appears or looks—its features such as size,
shape, color, weight, etc.
While dining at Lombardi's Italian Restaurant, Mrs. Barnhart asked the restaurant manager about
catering services. The manager told her that the restaurant does not offer catering services. When the
manager mentioned Mrs. Barnhart's question to the restaurant owner, the owner thought that catering
services would be a great way to grow the business. In this situation, a product opportunity resulted from
Customer's inquiry. A product opportunity is a favorable circumstance that presents itself to provide a
good or service that consumers are willing to buy. In the situation described, the customer asked or
inquired about a product (catering services) that the business (restaurant) did not have. By offering a new
product that many customers want, the business could reach new markets and increase its sales and
profits. The situation does not indicate that the manager complained, that the patron (Mrs. Barnhart) was
dissatisfied, or that an employee offered the suggestion to the restaurant owner.
Anna must produce 25 shirts during her work shift. This is an example of a ___________ standard
Quantity. The purpose of quantity standards is to measure the amount of work produced. Businesses set
quantity standards in order to operate at a level that will help them obtain their goals and earn profits.
Cost standards are established specifications used to measure how much a project or product costs.
Quality standards involve the degree of excellence expected from a product. A service is an intangible
product—an activity that an employee performs.
Which of the following is a way that businesses can protect consumers by helping them to get the "best
Offering unit pricing. Businesses can protect consumers by helping them to get the "best buy" through
unit pricing. Unit pricing helps consumers compare the values of similar goods. For example, many
supermarkets provide the unit price, or price per ounce, of each container of laundry detergent, as well as
the total price per container. Consumers can decide which brand is the best buy by finding the one with
the lowest unit cost. Testing products carefully, labeling products accurately, and providing instructions
are all ways to protect consumers, but they don't necessarily help consumers to get the most for their
To attract a value-oriented market, Premier Cosmetics Company is adding a lower-priced product line to
its product mix. What product-mix strategy is Premier using?
Trading-down. Trading-down is a product-mix strategy in which a business adds a lower priced product
or product line to its product mix. Trading-up is a product-mix strategy in which a business adds a higher
priced product or product line to its product mix. Cannibalization is a situation that exists when the sale of
one of a company's products takes away sales from another of its products. Polarization occurs when
there is a sharp or dramatic division of something.
Which of the following is most appropriate item to bundle with a bottle of shampoo:
Bottle of conditioner. Product bundling involves combining two or more complementary products and
selling them for one all-inclusive price. The price of the bundled products is usually lower than the
combined price of the products sold separately. Often, the goal is to get customers to try a product that
they might not have considered purchasing. Once the customers have tried it and liked the product,
companies hope that customers will purchase the goods or services at another time. It would be most
appropriate to bundle a bottle of shampoo with a bottle of conditioner because they are both hair
products. A bottle of hand lotion, a bar of soap, and a tube of toothpaste are not complementary products
Positioning a product according to the function it performs is the same as positioning by
Physical form and features. Positioning a product according to the function it performs is the same as
positioning by physical form and features. This is different from positioning by benefits because benefits
are what a customer gets from the product, rather than just what the product is. Positioning by
manufacturing or creation process means focusing on how the product was made. Positioning by
reliability means focusing on how dependable the product is.
A famous apparel designer adds bedding, towels, and other home furnishings to his/her product
offerings. What brand strategy is the designer using?
Extension. Brand extension is a brand strategy that involves using successful brands to introduce new
products. The designer already has a successful line of apparel, so s/he is adding to or extending his/her
product line with related or complementary products. In this example, all of the products are styleoriented
fabric items. Co-branding is a brand strategy in which two or more businesses join forces to
increase brand recognition, customer loyalty, and sales for both brands in ways that are mutually
beneficial. Brand licensing is a legal agreement in which a brand owner allows another company to use
the brand in exchange for a fee. Product adoption is the point at which a consumer decides if s/he will
buy a new product again
Decisions about positioning a company's corporate brand are influenced by its
Products. A corporate brand is all of the combined impressions and experiences associated with a
particular company. Positioning involves creating the desired image or impression in the minds of
consumers. Many factors affect positioning decisions. An important factor to consider is the type of
products that the company offers. For example, a service business offers intangible activities, so it might
position itself by emphasizing its employees' knowledge and expertise. On the other hand, a
manufacturer offers tangible goods, so it might consider the quality of the materials that it uses to
produce the goods. Trade characters and trademarks are branding elements that companies use to
reinforce brand awareness. Buyers are employees who purchase merchandise and/or supplies for their
employers. A company's positioning goals influence the type of merchandise that the buyers purchase.
To promote its new fat-free, low-calorie snack item, a food producer works with several large grocerystore
chains to distribute coupons and provide samples of the snack in the stores. The food producer is
Product promotion to create awareness of a good. The overall goal of product promotion is to persuade
consumers to purchase products. In the example, the food producer is promoting a tangible item—a fatfree,
low-calorie snack item. Because the item is new, the goal is to create awareness that it exists and is
available for purchase. The food producer does this by providing samples and giving out coupons to
encourage consumers to buy. Services are intangible products. Institutional promotion aims to create a
certain image in the eyes of consumers rather than to sell goods or services. Businesses engage in
institutional promotion by informing customers about the company, its ideas, and its philosophy.
When a producer directs its advertising and sales promotion to the ultimate consumer, what promotional
strategy is it using?
Pull. The pull promotional strategy involves a producer promoting its products directly to the ultimate
consumer or industrial user. This stimulates customer demand, which compels intermediaries to
purchase the products from the manufacturer to accommodate customer demand. When a producer
promotes its products to intermediaries, who then promote the products to customers, the producer is
using a push promotional strategy. Product placement involves using products as props in television
shows, movies, etc. Niche is not a promotional strategy.
When a business hires individuals to post comments about its products on Twitter, Facebook, and other
message boards, it is engaging in the unethical practice of
Stealth marketing. Stealth marketing is a deceptive practice in which a business tries to stimulate interest
in a product without disclosing to the public that the business is paying others to create the "buzz." The
business is being deceptive by misleading people into believing that the comments are placed freely and
without influence, which is unethical behavior. Placement promotion is an advertising technique that
involves placing products in movies, television shows, etc. Primary product promotion intends to
stimulate demand for an entire class of goods or services. Industry associations often use primary
promotion. Puffery involves exaggerating a product's capabilities.
3. Which of the following is an example of regulating the way businesses can advertise products to children:
The Tike Land Toy Company may run a limited number of television commercials during specific times.
Because children are impressionable and often have a difficult time interpreting promotional messages,
many governments have strict regulations about advertising to children. Depending on the jurisdiction,
the government may limit the number of times and the hours in which businesses may run television
commercials that typically target an audience of children. Placing an advertisement in the community
newspaper, providing a playing and reading space in a bookstore for children, and offering coupons on a
website for family dinner specials are not situations in which advertising negatively affects children.
An ice cream shop employee dresses in an ice cream cone costume and stands near the street holding a
sign that says, "Single Dip Cones 1/2 Off Today." What advertising medium is the ice cream shop using?
Out-of-home. Out-of-home is a category of advertising media that involves advertising messages that are
delivered to consumers when they are away from home. Human directionals, spectaculars, transit signs,
and billboards are types of out-of-home media. In the example, the ice cream shop employee is a human
directional. A human directional is type of out-of-home advertising that involves a person wearing or
holding a sign to advertise a business or product. Sometimes the human directional wears a costume. A
spectacular is an advertisement built to order and often has neon lights or moving parts. Transit
advertising involves placing signs or posters in locations of mass transportation (e.g., trains and busses).
Specialty media is a form of sales promotion that involves giving away useful items (e.g., pens and
mouse pads) that have the business's logo and/or name on them.
Ariel, who designs and sells a line of purses and tote bags, recently sent free totes bag to local female
news anchors. Ariel's goal is to have others see the local celebrities carrying the tote bags to generate
interest in her product. What form of word-of-mouth marketing is Ariel using?
Product seeding. Product seeding involves "planting" or placing the product in the hands of specific
influencers. The goal is to have the influencers be seen using or wearing the product, which will in turn
generate interest in and desire for the product. A testimonial is a statement by an identified user of a
product proclaiming the benefits received from the use of the product. Cause marketing occurs when a
business supports a cause that affects society such as protecting the environment or raising awareness
of a disease. Social media involve the use of websites and applications for social networking.
Which of the following is a type of sales promotion that provides customers with immediate rewards:
Price-off deals. Price-off deals involve discounting the prices of goods and services for a short period of
time. Because customers save money by buying the products during the sale, they receive an immediate
reward—a good or service that they want or need at a discounted price. A rebate is a return of part of the
price a customer pays for a good or service and usually is offered by the product's manufacturer. Loyalty
programs reward repeat customers by offering incentives (e.g., free item) to maintain their loyalty to the
business. Although rebates and loyalty programs provide rewards, customers must usually wait to
receive them. Product displays exhibit merchandise and do not provide rewards.
What component of a print advertisement should be designed to immediately grab the reader's attention?
Headline. The headline is a short phrase in a large font that advertisers typically place at the top of a print
advertisement. The purpose of the headline is to attract attention and encourage the audience to read
the copy. The copy is the text that provides details about the advertised product. The signature is the
name and/or symbol used to identify the business. The slogan is a catchy phrase that identifies the
business, such as "Nationwide Is On Your Side."
. All of the components of a well-designed print advertisement should present a(n)
Unified message. Each component of an effective advertisement should work together to communicate a
unified message. For example, if the graphic element does not relate to the copy or headline of an
advertisement, the meaning of the ad becomes unclear and confusing for the audience. The use of
humor, level of formality, and inclusion of an opinion depend on the nature or goal of the advertisement.
TAV Corporation is hosting a gathering with local broadcasters and newspaper editors to announce the
company's merger with CGJ Industries. What type of public-relations activity does this exemplify?
News conference. A business's public-relations department uses many activities to establish good
relations with the public. A news or press conference involves inviting members of the media to a
meeting so the business can make an announcement such as a merger with another company. A press
or news release contains written information (e.g., new product releases) that the business distributes to
the media to obtain publicity. A public service announcement is a type of institutional promotion that
informs consumers about noncontroversial issues that are in the public's interest. Social media is a form
of communication that involves sharing information, ideas, personal messages, videos, etc. through
social networking and mobile applications such as Facebook, Twitter, and YouTube.
To reinforce a positive image with the local community, a business's public-relations department may
coordinate activities that involve
Charitable causes. To reinforce a positive image and maintain goodwill with the public, a business's
public-relations department often works with external organizations such as other local businesses, the
media, and nonprofit organizations. Often, a business works with fundraising groups and nonprofit
organizations to raise money for charitable causes such as homelessness, cancer research, and
environmental issues. The public-relations department is responsible for reinforcing the corporate "brand"
rather than the product brand. The business's marketing function is responsible for activities that relate to
services and product branding. Organizational issues are internal factors that affect the business rather
than the local community.
. What is an important financial consideration when deciding whether to participate in an international trade
Travel expenses. There are many costs associated with trade shows, including employees' travel and
lodging expenses, exhibit rental space, audio/visual rentals and Internet hookups, display shipping costs,
etc. If the number of expected visitors is low and the show takes place in a distant location, the costs of
participation may not be feasible. Customer-satisfaction rates and government regulations are not
financial considerations. Production costs are expenses associated with producing goods or services.
Before Mallory updates the promotional plan for her small business, she should
Evaluate the success of previous promotional activities. A promotional plan is a framework for a
business's promotional activities. Because promotional plans are not static documents, business owners
update and change them as their circumstances change. Before updating a promotional plan, a business
owner should review and evaluate the results of previous promotional activities to determine if the
promotional objectives were achieved. If they were not, the business owner may want to make changes
and implement tactics that are more likely to accomplish the business's promotional goals. Advertising
placement is one of many tactics that businesses use to achieve promotional goals. Mallory should
review the results of previous ad placements to evaluate their success before coordinating future ad
placements with other business functions. Obtaining short-term loans to pay expenses and developing
production budgets are operating activities.
. Which of the following is an example of an intangible product:
Tennis lessons. Tennis lessons are an intangible product because they cannot be detected through the
senses. They are a productive activity someone (a teacher) is paid to perform. A tennis racket, a tennis
uniform, and a pair of sneakers are all tangible objects because they can be detected by the senses.
Monique is buying a mountain bike from a local bicycle shop. The salesperson recommends she also buy
a helmet and biking gloves. The salesperson is engaging in
Suggestion selling. By suggesting additional products or services that will enhance a customer's primary
purchase, a salesperson engages in suggestion selling. In this example, the salesperson suggests that
Monique purchase a helmet and biking gloves to go along with her primary purchase, a mountain bike.
Appropriate, well-timed suggestion selling can go a long way toward building solid partnerships with
customers. The salesperson is not engaging in post-sale opportunities (suggestion selling is a pre-sale
opportunity), competition, or advertising.
Once businesses attract customers, they can keep them by
Developing good relationships. Businesses build clientele by developing good relationships. This is
largely done by salespeople, who have the most contact with customers. Salespeople build relationships
and create goodwill for the business, and goodwill leads to loyal customers. Following company leads,
asking personal sources for referrals, and attending industry trade shows are all good ways to find new
customers, but they aren't ways to keep customers.
Making sure that customers sign a liability waiver is what type of selling policy?
Terms-of-sale. Making sure that customers sign a liability waiver is a terms-of-sale policy. Terms-of-sale
policies have to do with the parts of the sale that most directly involve customers and their needs. Selling activity
policies involve how salespeople should interact with customers. Service policies involve what
happens after the sale. Opening the relationship is a type of selling-activity policy.
Alisha is trying to sell ink cartridges to a business. She assures the company that each cartridge will last
for over 600 print jobs, even though she knows this isn't true. Alisha is guilty of
Misrepresentation. Telling the facts about a product in an inaccurate way is considered
misrepresentation. When Alisha tells a deliberate lie about her product's capabilities, she's
misrepresenting the product. Negligence, bribery, and slander are all illegal activities, but Alisha isn't
engaging in them in this example.
. A salesperson explains to a customer that a computer has a two-year warranty, which means the
customer won't have to worry about paying for computer repairs if s/he has problems. The salesperson
has identified a(n)
Hidden benefit. A hidden benefit is an advantage that cannot be seen or understood without the
assistance of a salesperson. A customer won't know about the benefit of a computer's two-year warranty
unless the salesperson tells him/her. Obvious (or apparent) benefits are advantages that need little
explanation by the salesperson—the customer already knows, or can easily recognize, the benefit. A
warranty is not necessarily a unique feature of a computer. A customer characteristic is not the same as
a hidden benefit.
Which of the following activities takes place during the preparation stage of the selling process:
Qualifying leads. Personal selling is an expensive process, so businesses want to make sure that their
salespeople call on the organizations or individuals who meet their criteria and are most likely to buy their
products. This process, which occurs during the preparation stage of selling, is qualifying (sales) leads.
Salespeople answer customers' objections during the reaching-closure phase of the selling process.
Product demonstrations typically take place when salespeople are prescribing solutions to customer
needs. Arranging installation is a follow-up activity.
Three or four times a month, Sabrina has dinner at Martinelli's Italian Restaurant because the lasagna is
the best she has ever tasted, and the service is always good. Sabrina's buying decisions are motivated
Patronage. Patronage motives are reasons for buying that are based on loyalty to a particular business.
Customers often are motivated to buy from a certain business because of price, quality, or service. In the
example, Sabrina's buying motive involves the taste (quality) of the food and the level of service that she
consistently receives. Rational buying motives involve the use of logic or reasoning to make buying
decisions. Objectivity is viewing or approaching a situation without bias. Emotional buying motives base
purchasing decisions on personal feelings, intuition, and opinions. Many emotionally-based buying
decisions involve projecting a certain appearance or social status.