Deck 13: Pricing, Promoting, and Distributing Products

Question 1

What are the two basic tools used in price-setting?
Profit maximization and market share
Advertising and sales promotion
Cost-oriented pricing and break-even analysis
Cost-oriented pricing and profit maximization
Cost-oriented pricing and market share

Answer 1

Cost-oriented pricing and break-even analysis

Question 2

Companies often price their products to establish ________, a company's percentage of the total market sales for a specific product type.
breakeven point
sales percentage
variable costs
fixed costs
market share

Answer 2

market share

Question 3

What pricing strategy has generally been used for HDTV?
Penetration pricing
Price lining
Market pricing
Price fixing
Price skimming

Answer 3

Price skimming

Question 4

If total fixed costs are $100 000, the price for which the product sells is $15.00, and variable cost per unit is $8.00, what is the break-even point?
20 275 units
16 274 units
14 286 units
18 283 units
12 356 units

Question 5

Which of the following best represents the formula for the breakeven point?
Total variable costs divided by (price minus variable costs)
Total variable costs divided by (price minus fixed costs)
Total fixed costs divided by (price minus variable costs)
Total fixed costs divided by (price minus fixed costs)
Total revenue divided by (price minus fixed costs)

Question 6

What is the purpose of using break-even analysis when attempting to set prices?
To determine the total costs of the product
To show the cost, volume, and profit relationships
To compare demand and supply
To reflect the markup needed to make a profit
To show the costs which must be considered in setting prices

Question 7

What is "markup"?
Markup is the point at which the firm covers the fixed and variable costs.
Markup is the amount of money left over after all expenses have been deducted from revenues.
Markup is an amount equal to demand divided by product cost.
Markup is an amount added to the cost of the item to arrive at the selling price.
Markup is the point where demand equals supply.

Question 8

The pricing strategy that is used to create consumer interest and stimulate trial purchases of a new product is
penetration pricing.
price lining.
market pricing.
price fixing.
price skimming.

Question 9

What information is provided to the manager by performing a break-even analysis?
The break-even point identifies the total costs.
The break-even point identifies the point where variable costs equal fixed costs.
Sales volume above the break-even point makes a profit for the firm.
The break-even point identifies the amount of markup.
The break-even point identifies the intersection of the demand and supply curves.

Question 10

Which of the following is correct with regard to breakeven analysis?
Variable costs are really all that is important.
Fixed costs are all that really is important.
Some costs are unaffected by the number of units of product that are sold.
Generally speaking, retailers should charge higher prices so that they will reach the breakeven point earlier.
Breakeven analysis fails to take into account the slope of the demand curve.

Question 11

Sara is selling posters at the sale price of $12.00, and the markup percentage is 35%. What is the dollar amount of the markup?
$7.80
$4.20
$7.75
$3.50
None of these

Question 12

If the cost of one unit of product is $12 and the store sells the product for $22, what is the markup percentage?
32 percent
41 percent
45 percent
21 percent
66 percent

Question 13

The amount added to a product's cost to meet profit targets is usually expressed as a percentage of
selling price.
selling costs.
component costs.
total costs.
wholesale price.

Question 14

Which of the following is correct with regard to the pricing of existing and new products?
Price skimming is generally most effective for consumer goods, but penetration pricing is generally most effective for industrial goods.
The penetration pricing option is generally most effective for both consumer and industrial goods.
In the car rental business, setting prices below the market generally works best.
Penetration pricing is generally superior to a skimming strategy for new products.
None of these are correct.

Question 15

What are the two main pricing objectives in corporate pricing?
Market share and company image
Advertising and sales promotion
Company survival in a competitive marketplace and profit maximization
Market share and profit maximization
Advertising and profit maximization

Question 16

How is markup percentage calculated?
By dividing the selling price by fixed costs
By adding the selling price and the cost of advertising
By dividing the selling price by the dollar amount of the markup
By dividing the dollar amount of the markup by the selling price
By dividing inventory by the selling price

Question 17

What results can be expected if Trimar Videos used a price skimming strategy to price its video equipment?
Large profits may be earned on each sale.
It may generate a lot of consumer interest, but very low profits.
It permits the store to gain entrance to a market and then later adjust the price to a more realistic figure.
It generates a lot of consumer interest.
It will increase Trimar's market share

Question 18

By stocking a new, highly visible line of shampoos priced lower than local stores, Jack is trying to increase
the quality of hair of the youth in the area.
the break-even point.
yield management.
fixed costs so that the variable costs would decrease.
his market share of the hair product market.

Question 19

Costs that change with the quantity of a product that is produced or sold are
on-going costs.
variable costs.
fixed costs.
product costs.
selling costs.

Question 20

A music storeowner would begin to price DVDs by taking into consideration all of the following costs except
market share objectives.
utilities and insurance.
store rent and staff salaries.
product displays.
cost of buying DVDs from the manufacturer.

Question 21

What is the ultimate objective of any type of promotion?
Image enhancement
Creative selling
To increase sales
To advertise
To increase consumer knowledge of the product

Question 22

What term identifies a company's policy of offering all items in certain categories (e.g., men's suits) at a limited number of prices?
Price skimming
Boundary pricing
Discounting
Penetration pricing
Price lining

Question 23

Julia, owner of Julia's Craft Supply Store would like to take advantage of the fact that customers are not completely rational when making buying decisions and may prefer prices that are not stated in even dollar amounts. Which pricing tactic is she interested in?
Discounting
Price skimming
Psychological pricing
Skewed pricing
Price lining

Question 24

When Burger King tells you about a new restaurant that it is opening near you, it is attempting to fulfill which promotional objective?
Remind you about the product
Communicate information
Positioning products
Controlling sales volume
Eliminate competition

Question 25

A ________ strategy is a promotional strategy designed to encourage wholesalers and retailers to market those products to the consumer.
push
position
product
pull
place

Question 26

Searchmont Ski Resort was finding that spring was a particularly slow time for chalet rentals. In order to increase the occupancy rate, Searchmont implemented a(n)
advertising campaign.
seasonal discount.
skimming pricing strategy.
penetration pricing strategy.
trade credit policy.

Question 27

Which promotional strategy appeals directly to the consumer who demands the product from retailers, who, in turn, demand the product from wholesalers?
Product positioning
Layered promotion
Pull strategy
Contests
Push strategy

Question 28

Which of the following is correct with regard to the pricing of new products?
There are two basic strategies available: follow-the-leader and price leadership.
Price skimming is more effective than penetration pricing.
Penetration pricing is generally more effective than price skimming.
Price skimming involves trying to sell a new product only to customers with the highest income levels.
Penetration pricing is designed to stimulate trial purchase.

Question 29

Which of the following is correct with regard to the issue of fixed versus dynamic pricing?
When launching new products, startup firms generally use dynamic pricing until they get a better understanding of the market.
In the digital marketplace, dynamic pricing is the norm.
Amazon.com uses fixed pricing as its pricing strategy for its millions of retail items.
The reverse auction is one type of fixed pricing.
All of these are correct.

Question 30

Penetration pricing involves
setting prices in uneven dollar amounts.
setting an initial low price to establish a new product in the market.
taking advantage of the fact that consumers do not always respond rationally to stated prices.
setting an initial high price to cover new product costs and generate a profit.
setting a limited number of prices for certain categories of products.

Question 31

Promotion seeks to accomplish all of the following with potential customers except
persuade them to purchase products.
persuade them to dislike all other competitors' products.
make them aware of products.
make them knowledgeable about products.
persuade them to like products.

Question 32

Psychological pricing involves
setting an initial low price to establish a new product in the market.
setting prices in uneven dollar amounts.
setting a limited number of prices for certain categories of products.
setting an initial high price to cover new product costs and generating a profit.
taking advantage of the fact that consumers do not always respond rationally to stated prices.

Question 33

If Louisa's Craft Supply Store uses odd-even psychological pricing, then it would likely price its yarn at
$4.50 per ball.
$4 per ball.
$5 per ball.
$4.95 per ball.
$6 per ball.

Question 34

Odd-even pricing involves
setting a limited number of prices for certain categories of products.
setting an initial high price to cover new product costs and generating a profit.
taking advantage of the fact that consumers do not always respond rationally to stated prices.
setting prices in uneven dollar amounts.
setting an initial low price to establish a new product in the market.

Question 35

"Sears Good," "Sears Better," and "Sears Best" are examples of
market pricing.
price fixing.
psychological pricing.
price lining.
price discounting.

Question 36

Why would a business firm want to use controlling sales volume as a promotional objective?
A company will aggressively push its products through wholesalers and retailers who persuade customers to buy it.
The production and distribution systems will run more smoothly when the firm achieves a more stable sales volume during the year.
The company is trying to appeal to a specific segment of the market.
Consumers are more likely to purchase a product when they have been informed about it.
The company wants to be able to communicate information to consumers when it is more economical to do so.

Question 37

When is discounting used to set prices?
When attempting to stimulate sales
When odd-even psychological pricing is not successful
When conducting a break-even analysis
When a price-skimming strategy is used
When profit margins are too low

Question 38

Many e-tailers, such as eBay and Priceline, use ________ pricing.
penetration
skimming
dynamic
psychological
odd-even

Question 39

Mega Computers, a computer manufacturer, has decided to promote its new line of computers by offering its wholesalers and retailers an additional 5 percent off list prices. This strategy is called a ________ strategy.
product
pull
push
place
position

Question 40

Mega Computer, a computer manufacturer, is using direct mail to send 10 percent off coupons to its list of potential customers. This strategy is called a ________ strategy.
pull
product
position
push
place

Question 41

Jack wants to sell his new marketing ideas from any location and yet be as global as possible. Which advertising medium should Jack use?
Word of mouth
Radio
Outdoor
E-commerce
Television

Question 42

In terms of advertising revenues, which medium is the most important?
Newspapers
Television
Radio
Internet
Magazines

Question 43

Which advertising medium can present only limited information and sellers have little control over who sees their advertisements?
Television
Radio
Direct mail
Magazines
Outdoor

Question 44

The promotional tool in which a salesperson communicates one-on-one with potential customers is
direct mail.
personal selling.
television.
radio.
magazines.

Question 45

Which of the following is correct with regard to the various media?
Direct mail advertising has the highest advance costs of any advertising technique.
Direct mail advertising has the lowest cost-effectiveness of any advertising technique.
Radio advertisements are very expensive.
Magazine advertising is not very good at conveying to consumers the value of a product.
Outdoor advertising is the most important form of advertising based on spending by companies.

Question 46

All of the following are advantages of advertising for internet sellers except
relationship building.
reduced expenses.
feedback.
flexibility.
convenience.

Question 47

During the ______ phase of the consumer buying process, marketers emphasize ______.
buyers evaluate products after purchase; sales promotion
buyers seek information; sales promotion
consumers recognize the need to make a purchase; personal selling
buyers compare competing products; advertising and public relations
buyers purchase products; sales promotion

Question 48

The communications vehicle that appeals to many consumer senses, can be targeted to a specific audience, and reaches more people than any other medium is
magazines.
radio.
television.
newspaper.
direct mail.

Question 49

This communications vehicle is highly segmented, allows for excellent visual communication, and is long-lived, but requires a long lead-time.
Direct mail
Television
Magazines
Newspaper
Outdoor

Question 50

All of the following are weaknesses of internet marketing except
profitability.
information overload.
limited markets.
future prospects.
consumer concerns about security issues.

Question 51

Sally selected ________ advertising because it is relatively inexpensive, faces little competition for customers' attention, and is subject to high repeat exposure.
outdoor
magazine
television
direct mail
radio

Question 52

Which of the following is correct with regard to the various media?
About twice as much is spent on advertising in magazines than is spent on newspapers.
Newspapers generally allow advertisers to target their audiences well.
Radio stations are generally not highly segmented into listening categories.
Billboard messages are relatively expensive.
People tend to use radio as "background" while they are doing other things.

Question 53

During the ______ phase of the consumer buying process, marketers emphasize ______.
buyers evaluate products after purchase; personal selling
buyers seek information; sales promotion
consumers recognize the need to make a purchase; advertising and publicity
buyers compare competing products; advertising and public relations
buyers purchase products; advertising

Question 54

The most expensive promotional tool on a cost per contact basis is
personal selling.
direct mail.
television.
radio.
magazines.

Question 55

Adrianna developed a new perfume. She wanted to market the perfume via a communication vehicle that appeals to many consumer senses, targets a specific audience, and reaches as many people as possible. Adrianna would select ________ advertising.
television
magazine
radio
direct mail
newspaper

Question 56

Samantha wanted to use a flexible communication vehicle which would give her rapid coverage. She should select ________ advertising.
television
newspaper
magazine
radio
direct mail

Question 57

What is meant by the term "product placement?"
Making sure that products are prominently visible on store shelves
Using brand-name products as part of the storyline of TV shows
Choosing the channel of distribution with the lowest overall cost
Placing free sample of products in consumers' mailboxes so they can actually try the product
Providing free product samples to influential consumers

Question 58

The communications vehicle that is flexible, has rapid coverage, but lasts briefly and cannot target audiences very well is
direct mail.
newspapers.
magazines.
radio.
television.

Question 59

The communications vehicle that is inexpensive, that effectively segments the customers, but is not very long lasting is
radio.
direct mail.
newspaper.
television.
magazines.

Question 60

The communications vehicle that is very selective about its audience, allows a more personalized message, and whose response rate is very predictable is
direct mail.
television.
magazines.
radio.
newspaper.

Question 61

Which of the following makes it easier for customers to find a product and eliminate competitors' products from consideration?
POS displays
Coupons
Trade shows
Contests
Premiums

Question 62

The combination of distribution channels that a firm selects to get a product to its end users is its
distribution mix.
distribution strategy.
distribution network.
channel selection.
channel intermediaries.

Question 63

Due to the high cost of personal selling, many companies are turning to
radio advertising.
telemarketing.
coupons.
contests.
magazine advertising.

Question 64

Dove is introducing a new deodorant. In order to entice customers to purchase the deodorant, a free bar of soap is attached to the package. Which type of sales promotion is Dove using?
Point of sale display
Premium
Contest
Trade show
Coupons

Question 65

Which of the following is a type of sales promotion?
Publicity
Contests and sweepstakes
Advertising
Personal selling
Public relations

Question 66

As a start-up company, you need to find ways to reduce costs. Which type of promotion is free?
Coupons
Gift certificates
Free samples
Publicity
contests

Question 67

Which of the following represents a reason for a firm's use of personal selling promotions?
It is the only form of selling that works.
It provides a personal link between the seller and the buyer.
The sales force has the capability of contacting the greatest number of potential customers.
Personal selling provides the lowest promotional costs per contact.
Sales promotions must be convenient and accessible when the purchase decision is made.

Question 68

A gas station offering a free car wash with a fill-up is an example of
sales promotion.
advertising.
publicity.
premiums.
public relations.

Question 69

The Cream Soap Company has launched a new campaign geared at increasing the sales volume of its new Fresh Smelling line of soap products. The $1.6 million campaign will cover the costs of providing samples of their soap products to be delivered with the Toronto Star newspaper to 500 000 homes in Toronto. This marketing technique is known as
personal selling.
public relations.
advertising.
publicity.
sales promotion.

Question 70

A retailer is
an individual or firm that helps to distribute a product.
an intermediary who sells products to other businesses for resale to final consumers.
an intermediary who sells products directly to consumers.
a network of independent companies through which a product passes from producer to end-user.
the combination of distribution channels by which a firm gets its products to end-users.

Question 71

A_______ entitles the bearer to stated savings off a product's regular price, while a________ is a free or reduced-price item given to consumers in return for buying a specified product.
coupon; premium
premium; coupon
contest; premium
point-of-sale display; contest
premium; contest

Question 72

When McDonald's announces that there are 168 Ronald McDonald houses in 12 countries, this announcement fits best in the category of
publicity.
creative selling.
personal selling.
public relations.
missionary selling.

Question 73

The most negative aspect of publicity is that
it is expensive.
it isn't believable to many people.
it isn't that important.
it is viewed as being biased.
it isn't controllable by the company.

Question 74

________ attempts to build goodwill with customers by performing and publicizing a company's public service activities.
Personal selling
Public relations
Advertising
Sales promotion
Publicity

Question 75

Which type of promotion is outside of the company's control?
Coupons
Television advertising
Personal selling by sales agents
Publicity
Trade shows

Question 76

Brian works at the local grocery store. His supervisor asked him to use point-of-sale displays. Brian needs to
set up a product display so it is located in an area to encourage consumers to buy the products.
set up a display where consumers can pick out one item free when they purchase a specified product.
pass out coupons to customers purchasing the targeted products as they are checking out.
set up a table and give out free samples.
interview customers as they are considering a purchase of the targeted products.

Question 77

What is an advantage to the firm when using trade shows as a type of sales promotion?
They are effective since the buyer comes to the seller.
Coupons may be used to encourage customers to try new products.
The displays serve to attract customer attention as they walk through a store.
Free samples may be used to allow customers to try a product for a few days without any risk.
Contests may increase sales by stimulating buyers' interest in a product.

Question 78

Coupons, point-of-purchase displays, free samples, and trade shows are examples of
advertising.
sales promotions.
publicity.
personal selling.
pricing.

Question 79

A wholesaler is
the combination of distribution channels by which a firm gets its products to end-users.
an intermediary who sells products to other businesses for resale to final consumers.
an individual or firm that helps to distribute a product.
a network of independent companies through which a product passes from producer to end-user.
an intermediary who sells products directly to consumers.

Question 80

Algoma Banners set up a booth to display their products and to demonstrate products to customers who have a special interest in their product. Which sales promotion technique were they using?
Coupons
Premiums
Contests
Trade shows
Point-of-sale displays