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Marketing 210 midterm #3part 1

chapters 5,6,7,8 starts off with 5-6 question about pricing , then math review from chapter 6(excluding the mini case), chapter 7 slides, chapter 7 sample questions, chapter 8 sample questions,
STUDY
PLAY
Historically has been considered as the major determinant of a buyer choice by economists.
price
Which of the following is not one of the external factors affecting price decisions?
costs
If a firm is pursuing a product quality leadership pricing objective, it would charge a high price to cover the high product quality and high cost of R&D.
true
If demand is elastic rather than inelastic and the firm is interested in increasing total revenue, the firm should
lower the price
In non‐regulated monopolies, companies are:
sometimes constrained in making pricing decisions due to fear of government regulation
Demand sets a(n):
ceiling to the price that a company can charge for its product.
In perceived value pricing,
nonprice marketing mix variables are used to build up demand.
Which of the following is not one of the reasons offered why the cost plus approach to pricing is still popular?
The approach considers both demand and competition.
When a company faces intense competition or changing consumer wants and at the same time suffers from over capacity, it is most likely to adopt a in its pricing strategy.
survival objective
Demand curves:
show the relationship between price and quantity demanded. are typically downward sloping.
Steven Goss found that when he raised his price, the quantity purchased by consumers dropped slightly, but overall he made more money. Goss is facing a(n):
inelastic demand curve
Which pricing method is being used when a firm competes for business and bases its price on expectations of how competitors will price rather than on a relation to its own costs of demand?
sealed bid pricing
In a normal demand curve, changes in demand and price are:
inversely related
Realistic Gel Corporation competes in a market characterized by many buyers and sellers who trade over a range of prices rather than a single price. (The range of prices occurs because sellers can differentiate their offer to buyers.) Realistic is engaged incompetition.
monopolistic
Which of the following statements about the price elasticity of demand is true?
Buyers are less price sensitive when the product they are buying is unique. Buyers are less sensitive when the product is high in quality, prestige or exclusiveness. Buyers are less price sensitive when substitute products are hard to find or when they cannot easily compare the quality of substitutes.
Which of the following is not one of the conditions favorable to a market penetration pricing policy?
Production costs per unit increase as the level of production increases.
A market skimming pricing policy:
starts with a high price which is gradually lowered
The additional charge for bucket seats over a bench seat in an automobile is an example of:
optional product pricing.
By‐product pricing may
Either increase the final price of the main product.Ordecrease the final price of the main product.
Robin Sloan received an invoice with the following terms of payment: 10/20, N/30. These terms mean that:
payment is due within 30 days but the buyer can deduct 10 percent of anything paid within 20 days
When McCormiks Restaurant store offers a 15 percent discount on all purchases to individuals 55 years of age or older, McCormiks is practicing:
discriminatory pricing
Kandy Industries sells its products FOB origin. In this case:
each customer pays for its own freight costs. and the seller becomes a high‐cost firm to distant customers
Under which of the following does the seller agree to pay all of the freight cost to a customer
freight absorption pricing
The Lapham Company will sell up to 500 units of its product for $15 each, but charges only $13 per unit if the buyer purchases more than 500 units at one time. Lapham is offering:
quantity discounts
Which of the following is not necessary for price discrimination to work: a The cost of segmenting the market should not exceed the extra revenue obtained from price discrimination
The various segments of the market must show identical intensities of demand
Under which circumstances should a firm attempt to initiate a price cut?
excess capacity
A price increase may carry which of the following meanings to the buyer?
The item is an unusually good value. The item is "hot" (in demand) and may be unobtainable unless purchased soon .The seller is charging what the traffic will bear.
Cash discounts are offered to buyers in an effort to
improve the sellers liquidity. b reduce bad debts. c reduce credit collection costs
L.C.'s Wholesale Club charges its customers low prices to attract high sales volume. The high volume results in lower costs which in turn allows L.C. to keep prices low. L.C. appears to be practicing pricing.
market penetration
The NS Wagon Company earns $500,000 in profits on sales of $6,000,000. It has total assets of $3,000,000 and net worth of $1,750,000. Calculate its net profit margin (i.e., return on sales or net profit percentage)
8.3% (net profit ÷ sales = net profit margin (aka return on sales) $500,000 / $6,000,000 = 8.3%)
A boy purchases a wagon for $22.80 and sells it for $38. What is his markup on his selling price?
40% (Answer: Mp = P-V/P Where Mp = markup on Price, V = variable coat. P = Price Mp = (38-22.80)/38 = 40%)
You have a plan to increase your advertising by $300,000. Your current selling price is $80 per unit and your variable cost of making each unit is $50. Your current markup on selling price is 37.5%. How many units must you sell to breakeven on the additional $300,000.
10,000 units (answer : Breakeven volume = fixed cost/(price-variable cost) = 300,000/(80-50) = 10,000 units)
A firm makes shoes for a cost of $20 pair and sells them for a price that earns them a 60% markup on price. What price does the firm sell the shoes for?
$50 (Answer: P-V = MpP P-20 = .6P
P- .6P = 20 0.4P = 20 P = 20/0.4 = 50)
The Better Shoes company is selling 300,000 shoes at $100 a pair. It estimates that the price elasticity (aka, customer price sensitivity) is -1.7 and is planning on lowering its price in the domestic to $96. It has reason to believe the price change will increase its sales volume to 320,400 shoes.
true (Elasticity predicts a 1% change in price changes volume y 1.7% Percentage increase in quantity = 4 x 1.7 = 6.8%
Quantity increases to = 1.068 (300,000) = 320,400 pairs of shoes)
The Gulf Wagon manufacturing company traditionally charges a selling price of P = $22 per wagon. It has the following costs:
A variable cost = V = $12 per wagon A fixed or period cost = F = $400,000
What quantity of wagons must it sell to cover its total costs (aka the breakeven quantity (BEQ))?
40,000 wagons (BEQ = F/(P-V) BEQ = $400,000 / ($22 - $12) = $400,000 /$10 = 40,000)
The Gulf Wagon manufacturing company desires a 25% return on sales (also known as the net profit margin) and anticipates a sales volume of Q = 50,000 wagons. It has the following costs:
2
The variable cost = V = $12 per wagon The fixed or period cost = F = $400,000
What selling price must it charge to cover its total costs and produce the desired return on sales (RoS)?
26.67 per wagon (Average cost per wagon (aka breakeven price) = V + F/Q Average cost per wagon (aka breakeven price) = 12 + 400,000/50,000 Average cost per wagon (aka breakeven price) =12 + 8 = $20 Selling Price = average cost ÷ (1-RoS) Selling Price = $20 / (1 - 0.25) = $26.67 )
The Faster Shoe Company earns $500,000 in profits on sales of $6,000,000. It has total assets of $3,000,000 and the shareholders' net worth of $1,750,000. Calculate its return on investment (ROI).
16.67% (net profit ÷ assets = return on investment (ROI) $500,000 / $3,000,000 = 16.67% )
branding is apart of:
Positioning
Branding: Some customers see
Expensive, a social waste, Packaging, prefer to Inspect Own Purchase (Fruit, Fish, Meat)
Branding: Most customers see
Guides To Consistent Quality, Fast Search
Branding: example of bad packaging
Sign Of Bad Product 1957 India example of 25% of all packaged goods adulterated up to 50% by weight
Branding: example of a good fast search
Supermarket Have 7000 - 10,000 items - How To Shop without Names?)
Branding: From a Seller's point of view
Get more money for a well known Brand (13% higher price),Encourages Repeat Buying ,Allows For Segmentation , Build Corporate Image (Brand Equity) , Stock Control (pre UPC) Reduce Price Comparison ,Presell (Allows for Pull Strategy), Use Shelf Display Promotion
Branding: when to brand
Extra Demand Must Cover Costs ,Have Good Quality Control ,Should Stay With Product, Wide and Consistent Availability (Location)
Branding: When not to brand
Assume The Responsibility and Cost of Advertising and Promotion, Does Too Well
branding: example of "Does to well"
Coke, SkiDoo, Kleenex, Aspirin
Nature of Product RCoal, Pins, Nails, Cotton,
Branding: accept possible backlash
12% of names help , 36% of names reduce purchase , 52% of names are nonentities
branding:Example of individual brand names
General Mills Procter & Gamble
branding:example of blanket family name brands
Heinz, General Electric, Philips
branding:example of separate family names
Sears: Kenmore, Craftsman
branding:example of Family name with individual brand name
Kellogg's corn flakes
branding:example of global brand names (same in all countries)
Coke, Exxon, Kodak,
branding:Extension Branding
Line Extension (Lite, Caffeine-Free, Mint Flavored)
Brand Extension (Liquid Spic and Span, Lifesaver Holes)
Multibrand Strategy (Electrolux Owns Frigidare, Kelvinator,Westinghouse, RP&G) owns Nine different detergents
branding: battle of the brands
Manufacture's brand versus Wholesaler's brand versus Retailer's brand
Branding: national versus middleman/house
Manufacture's brand versus Retailer's brand
Branding: retailer's advantage using National
Pre-sold, risk is borne by manufacture, less inventory
branding: retailer's advantage using Own House
price flexibility, switch suppliers, shelf position
Branding: disadvantages using National
lower margin, may withdraw, loyalty not to store
branding: disadvantages using Own House
Do own promotion, carry the risk, higher inventory, find suppliers(consistent quality)
Branding: the fifth P(packaging and labeling)
Self-Service Consumer Opportunity for story, Part of Store Security ,Offers real Benefits
a product is anything that has value to a consumer and can be offered through a voluntary exchange
true
a company's product line consists of its various product mixes
false
harold is a loyal coca-cola customer. Loyal customers like harold are typically less price sensitive than other consumers, benefitting businesses like coca cola
true
a customized carved wood cedar wood sign for your house is an example of a convenience product
false
Kellogg's sells many different breakfast cereals, including korn flakes, rice krispies, ect. This is an indication of the breadth of the kellogg's product mix
false
the complete set of all products offered by a firm is called it's:
product mix
A __ is a group of associated items that consumers tend to use together or think of as a part of a group of similar products
product line
for a major university, undergraduate studies, graduate studies , and professional programs would be ____ within the university 's product mix
product lines
A(n)_____ is a name, symbol, design , or a term that identifies a seller's good or service as distinct from those of other sellers
brand
a firm's product mix breadth is its:
number of product lines
___is the number of items within a product line
product line depth
the decision to delete a product is never taken lightly because, generally, manufacturers have:
made substantial investments in brand development and manufacturing
the primary purpose of a brand is to :
distinctly identify one seller's goods or services from competitor's offerings
marketers spend billions of dollars annually attempting to build effective brands.The basic benefit of a brand is that it :
provides a way for a firm to differentiate its product offerings from those of its competitors.
for a brand to be effective, it needs to be :
easy for consumers to recognize and remember
when consumers associate a brand with a certain level of quality and familiar attributes allowing consumers to make quick decisions , the brand:
facilitates purchasing
brands are assets that can be legally protected through:
copyrights and trademarks
___ is the set of assets and liabilities linked to a brand that add to or subtract from the value provided by the product or service
brand equity
a firm's product mix breadth is its:
number of product lines
___is the number of items within a product line
product line depth
if many consumers in marketplace are familiar with a brand and what it stands for and have an opinion about the brand the brand has considerable:
awareness
sometimes brand names become synonymous with a product itself. if that happens, the firm:
could lose its trademark
kleenex tissues, clorox bleach, and scotch tape brands have:
become synonymous with the product itself
in a competitive market, perceived value is determined by consumers mostly:
in relationship to the value of the competitor's offerings.
nora is deciding whether to purchase brand names sneakers or a store brand. She has purchased other shoes with the same brand name in the past but was only marginally satisfied. in this situation, nora is likely to purchase the store brand sneakers because they offer:
greater perceived value
recent apple computer company ads showed a young, casually dressed, friendly and knowledgeable person as an apple computer type, while the Microsoft computer person was portrayed as a stiff, geeky, awkward person. Apple was trying to create comparative:
brand personalities
one of the major tools used by marketers to meet the needs of loyal customers :
CRM
frequent buyer/user award programs are used to :
maintain contact with loyal customers
brands can be owned by:
any firm in the supply chain
another name for a manufacturer's brand is a :
national brand
the basic reason manufacturers spend time and money building their own brand is to :
build brand equity
brands that are owned by __ are called private label brands
retailers
private label brands that are owned and managed by :
retailers
which of the following types of products and services is most likely to be sold without a brand name :
onions
consumers might not realize that old spice health and wellness products and Iams pet nutrition products are made by the same company. they are examples of
individual brands
when proctor and gamble added teeth whitening products under the crest brand, the firm was engaged in:
brand extension
shell master card, created cooperatively by shell oil company and master card is an example of:
co-branding
efforts to change a brands focus to target new markets or change the image of a brand are called:
brand repositioning
secondary packaging:
can provide info. to consumers not found on the primary packaging. is important to the retailer in terms of convenience in handling. can be an important positioning tool by helping to convey the branding image. can allow for cost efficiencies due to larger order and shipment sizes.
which is not one of the important functions of labels on products and packages?
protecting against damage to the product
what u.s , gov. agency reviews food and packaging labels to ensure claims made by the manufacturer about the product are true?
food and drug administration
one of the advantages of selling specialty goods and services is that when consumers want them, they will:
search for them
zappos, an online show company, knows shoes are typically a ___good, with consumers often spending time comparing alternatives. they overcome that, aspect of consumers' search process by offering a free, no questions asked return policy
shopping
marketers selling milk , bread, and other consumer staples, know most customers do not spend much time searching or comparing alternatives. for most consumers, these are ___goods
convenience
marketers need to think about the product offer on three levels. which of the following levels includes associated services such as warranties, financing, support and after-sale service?
augmented product
when manufacturers try to understand what customers are looking for, they are thinking about the ___component of the product offer.
core customer value
when a company launches a new product with an existing brand name this is known as:
a brand extension
when a salesperson approaches you to sell a cemetery plot, this is considered what type of product?
unsought product
when politicians sell themselves like toothpaste, then it would be nice if the voter could have the same assurance that the claims they make were tested for validity with the same rigor that toothpaste manufacturers are required to follow.
true
place is the most strategic of the four P's
true
A(n)___is the set of institutions that transfer the ownership of and move goods from one point of production to the point of consumption
marketing channel
what is true about distribution centers?
they enable retailers to carry less merchandise in individual stores.
A(n)___ is a supply chain whose members act like a unified system
vertical marketing system
a(n)__is a document used by blocking a forklift driver indicating how much of each item to get from specific storage areas
pick ticket
A(n)___is a 13 digit code retailers can use to track inventory
UPC
when cynthia's boutique receives dresses, they already have price tags and are on hangers. Cynthia's boutique receives___merchandise
floor-ready
because of its size and market power, walmart is able to operate a(n)___supply chain.
administered
in an administered vertical marketing system
there is no common ownership, and the dominant member has significant power to impose its ideas and objectives.
franchising involves a(n)___supply chain
contractual
franchising represents a popular version of a contractual vertical marketing system where:
the franchise operates a retail outlet using the name and format of the franchisor, for which the franchisee pays a fee plus royalty. a franchisor provides assistance with locating the business, developing products, advertising and management. The franchise can combine entrepreneurship with the advantages of a coordinated marketing channel. the franchisor has incentives through the royalties to continue to innovate and improve operations.
in a corporate vertical marketing system:
the participants-such as warehouses, transportation companies, and retail outlets--are typically owned by a parent company to ensure harmonious relations throughout the supply chain
in a(n)___supply chain, none of the participants has any control over the others .
conventional
in an independent supply chain, the participants collaborate solely on the interactions between the immediate customer and supplier. on the other hand, in a vertical marketing system:
firms work together with a common on the customer or operation of the supply chain. Ownership may overlap, but the emphasis is on working toward common goals and objectives. long-term relationships are more important than gaining a temporary advantage. supply chain members work as a unified system.
although conflict is likely to occur in any supply chain, it is generally more pronounced when:
the supply chain members are independent entities
yesterday, lorinda overheard a surprisingly unpleasant encounter between the manager of a hardware store where she works and a sales rep who sells a well-known line of tools. the rep insisted that his tools should be more prominently and that a better assortment would mean more sales. the manager had other plans and told him so , and the conversation turned into a loud argument. what lorinda observed is an example of:
supply chain conflict
one of the benefits of shortened lead times associated with a jit system is:
better forecasting because firms are not forecasting as far into the future
shorter lead times allow retailers:
to reduce the needed level of inventories
after installing an electronic data interchange, kay jewlers was able to reduce___, the amount between the recognition that an order needs to be placed and the arrival of the needed merchandise
lead time
manufacturers trying to implement a just-in-time delivery system need to start with:
information about customer demand
customers have little knowledge of or concern for inventory control. customers want:
the right products that meet their needs
rick is adapting the new routing software his company bought for its distribution center . he will likely include information about__in the software program in order to maximize distribution efficiency.
rate of sales at various stores, road conditions, truck capacity, store operating hours.
ticketing and marketing refers to :
creating and placing price and identification labels
some retailers require their suppliers to ship merchandise ___,thus eliminating the time and expense associated with ticketing and marketing
floor-ready
merchandise that arrives in the delivery truck ready to be sold is considered:
floor-ready
RFID offers participants in the supply chain a powerful tool for tracking inventories and reducing handling. the main reason why it has Not been more widely adopted is that:
RFID is expensive to use
___has dramatically reduced the time and labor associated with checking and receiving merchandise
RFID
in a pull supply chain,___
orders for merchandise are generated at the store level based on sales data captured at POS terminals.
in CPFR inventory management systems, ___
retailers send sales information to the manufacturer.
CPFR refers to ___ inventory management systems.
collaborative planning , forecasting, and replenishment
when electronic data interchanges (EDIs) are used to describe the benefits of new products and provide pictures and information they support the___ element in the four Ps of marketing
promotion
as a very small golf equipment manufacturer , dr. putt maintained information using bookkeeping and inventory management software and communicated with customers through email. As business expanded, dr. putt needed an electronic data interchange system that would allow him to:
receive sales data . initiate purchase orders. send and receive invoices . receive returned merchandise documentation
traditionally, marketing channel management has been the responsibility of:
marketing departments
traditionally , logistics has been the responsibility of:
operations
in marketing's four P's , place refers to all activities required to get:
the right products to the right customer when that customer wants it
logistics managers tend to focus on marketing sales while marketing managers tend to focus on keeping costs low
false
logistics managers and marketing managers ought to focus on making profitable sales and retaining profitable customers by delivering the solutions that their targeted customers want more effectively than competitive marketing systems
true