Deck 15: Consumer and Trade Promotions

Question 1

In recent years, firms have shifted more of their communication budgets from advertising to trade and consumer promotions.

Answer 1

True

Question 2

Trade promotions refer to offers made to businesses, while consumer promotions refer to offers made to consumers.

Answer 2

False

Question 3

Approximately 82.5 percent of all consumer marketing dollars are now being spent on promotions, compared to 40 percent only 15 years ago.

Answer 3

True

Question 4

Only 17.5 percent of consumer marketing expenditures are now being spent on advertising.

Question 5

Promotions, both trade and consumer, normally have an immediate impact on sales, whereas advertising takes a longer period of time to have an impact.

Question 6

Coupons are a type of consumer promotion that offers customers some type of price reduction for making multiple purchases.

Question 7

The number of coupons issued totals 336 billion, which equates to over 1,2000 coupons per year for every person in the United States, including children.

Question 8

Only 18.5 percent of U.S. consumers use coupons on a regular basis.

Question 9

The primary method used to distribute coupons is through free standing inserts.

Question 10

Most coupons are distributed via print media.

Question 11

More than 10 percent of all redeemed coupons are illegally reimbursed.

Question 12

Premiums tend to be used by regular customers, rather than new customers.

Question 13

Premiums are an excellent consumer promotion to reward customers for their loyalty.

Question 14

A tie-in is the use of two or more promotions within the same promotional offer.

Question 15

In a contest, participants may be required to perform an activity to win, but they cannot be required to make a purchase.

Question 16

In a contest, participants do not need to make a purchase to enter, the winners are determined by a random drawing or random ticket, and each entrant has an equal chance of winning.

Question 17

While coupons appeal to price-conscious consumers, contests and sweepstakes appeal to individuals who enjoy high levels of excitement and stimulation.

Question 18

The manufacturer's objective in developing a bonus pack is to entice consumers to switch brands from a competing brand or to entice consumers to stock up so a competing brand's promotion is not as attractive.

Question 19

Research has indicated consumers were more likely to switch brands of a product with a bonus pack if it contained 50 percent or more additional product and if the consumer believed the manufacturer was incurring the cost of the extra product.

Question 20

Most consumers believe that consumers will pay directly or indirectly for the additional amount of merchandise that is added to a bonus pack.

Question 21

Although consumers tend to believe that manufacturers increase their prices to cover the additional merchandise added to a bonus pack, 58 percent have tried a different brand to take advantage of a bonus pack promotion.

Question 22

Tie-ins work best if consumers are offered some type of promotional incentive for a low-demand item if a high-demand item is purchased.

Question 23

Intracompany tie-ins are more difficult to coordinate than intercompany tie-ins, because with the intracompany tie-in, two firms have to agree on the promotion.

Question 24

The goal of frequency programs is to enhance brand equity and develop brand loyalty.

Question 25

The first and perhaps the most popular frequency program is the frequent-flier program used by various airlines.

Question 26

Successful frequency or loyalty programs require a strong brand name, which is built on brand parity and brand awareness.

Question 27

If customers join a frequency program because of the rewards being offered, the frequency program is very likely to fail.

Question 28

Most Americans, 55 percent, belong to at least one frequency program.

Question 29

Once a person joins a loyalty or frequency program, he or she tends to spend more with that company.

Question 30

Sampling is used primarily by food and beverage manufacturers, but can be used for almost any type of good or service.

Question 31

A fitness center offering a one-week free trial membership is an example of sampling.

Question 32

Price-offs tend to have the greatest impact on brand-loyal and current customers.

Question 33

The disadvantage of using price-offs is that, if they are used too frequently, consumers come to expect the price reduction and are not willing to pay the full price.

Question 34

Rather than use coupons to reduce the price of a product, firms can use refunds and rebates.

Question 35

While shoppers may compile shopping lists, written or mental, approximately 50 percent of all brand purchase decisions are made while in a retail store.

Question 36

Because more than two-thirds of brand decisions are made in the retail store, packaging, pricing, POP displays, and in-store promotions are critically important in swaying consumer purchase decisions.

Question 37

Trade promotions can be targeted toward retailers, wholesalers, distributors, brokers, or agents.

Question 38

Trade promotions are used by manufacturers to pull their products through the distribution channel.

Question 39

For manufacturers, the overarching goal of trade promotions is to increase sales of their particular brands.

Question 40

In terms of trade promotions, retailers will stock the brand that sells the most and will yield the highest profit margin for the retail store.

Question 41

Forward buying is when a retailer purchases excess inventory of a product while it is on-deal in one location and ships it to another location where it is off-deal.

Question 42

The most common trade allowances are off-invoice allowances, slotting fees, and exit fees.

Question 43

Slotting fees are supported by manufactures, but opposed by retailers and other channel members.

Question 44

In recent years, firms have shifted more of their communications budgets to

A) advertising
B) trade and consumer promotions
C) personal selling
D) direct marketing

Question 45

Trade promotions refer to offers made to

A) consumers
B) businesses
C) channel members
D) all of the above

Question 46

Consumer promotions refer to offers made to

A) end-users and consumers
B) businesses
C) channel members
D) all of the above

Question 47

Approximately 82.5 percent of all consumer marketing dollars are now being spent on

A) consumer and trade promotions
B) consumer promotions
C) trade promotions
D) advertising

Question 48

Approximately 54 percent of all consumer marketing dollars are now being spent on

A) promotions
B) consumer promotions
C) trade promotions
D) advertising

Question 49

Approximately 28.5 percent of all consumer marketing dollars are now being spent on

A) promotions
B) sales or consumer promotions
C) trade promotions
D) consumer advertising

Question 50

Approximately 17.5 percent of all consumer marketing dollars are now being spent on

A) promotions
B) sales or consumer promotions
C) trade promotions
D) consumer advertising

Question 51

All of the following are reasons for the shift away from advertising to a greater use of promotions, except

A) greater acceptance of promotions by consumers and in some instances a demand for a promotion before a purchase will be made
B) declining impact of advertising
C) lower cost of promotions compared to advertising
D) increased brand proliferation and brand parity

Question 52

Coupons are sales promotions that offer

A) some type of price reduction
B) customers free merchandise for making a purchase
C) consumers an opportunity to win free merchandise
D) customers some type of discount purchasing multiple items

Question 53

Approximately _____ percent of American consumers redeem coupons, although most are not avid coupon clippers.

A) 25
B) 50
C) 66
D) 85

Question 54

Of the 336 billion coupons distributed, only _____ percent were redeemed.

A) 0.8
B) 2
C) 3.2
D) 4.9

Question 55

Approximately 89.2 percent of all coupons are distributed via

A) broadcast media
B) print media
C) direct mail
D) newspapers

Question 56

A coupon placed in a box of strawberry flavored breakfast bars for 50 cents off a box of blueberry flavored breakfast bars would be an example of a(n)

A) instant redemption coupon
B) bounce-back coupon
C) cross-ruffing coupon
D) response-offer coupon

Question 57

A coupon issued to a consumer at the cash register for a can of Folger's coffee after they purchased a can of Maxwell House coffee would be an example of a(n)

A) instant redemption coupon
B) bounce-back coupon
C) cross-ruffing coupon
D) scanner-delivered coupon

Question 58

A sales clerk in a retail store honors a coupon for a 12-ounce can of chili although the coupon states it is for a 24-ounce can. This is an example of coupon

A) mass cutting
B) counterfeiting
C) misredemption
D) fraud

Question 59

With the technological advances in color printers and the ability to print coupons from the Internet, there has been an increase in coupon

A) mass cutting
B) counterfeiting
C) misredemption
D) errors

Question 60

Premiums offer a major benefit not possible with coupons, which is

A) premiums cost less than coupons
B) a higher redemption rate
C) customers pay full price for the product
D) a higher level of retail acceptance

Question 61

From the following objectives, premiums would be the best for

A) rewarding current customers
B) encouraging consumers to try a new brand
C) encouraging consumers to switch to a new brand
D) consumers who are brand-conscious

Question 62

An overlay is

A) offering two or more products using one promotion
B) the use of two or more promotions within the same promotional offer
C) the use of both a sales promotion and a trade promotion
D) the use of a coupon or premium with an in-store display or point-of-purchase display

Question 63

The use of two or more promotions within the same promotional offer is a(n)

A) tie-in
B) bonus pack
C) overlay
D) consumer promotion

Question 64

When a coupon is coupled with sweepstakes to encourage consumers to purchase a new product, it is called a(n)

A) tie-in
B) bonus pack
C) overlay
D) consumer promotion

Question 65

All of the following statements are true concerning a sweepstake except

A) participants do not need to make a purchase to enter
B) winners are determined by a random drawing or random ticket
C) participants may be required to perform some activity to win
D) every entrant has an equal chance of winning

Question 66

Contests and sweepstakes tend to appeal to

A) price-conscious consumers
B) brand-conscious consumers
C) consumers who enjoy challenges
D) consumers who like high levels of excitement and stimulation

Question 67

CVS is planning to open a new store and would like to generate traffic into the store and interest in the products being sold. Of the following, the best consumer promotion would be

A) contests and sweepstakes
B) coupons
C) premiums
D) price-offs

Question 68

Which of the following statements about bonus packs is false?

A) 75% of consumers believe they will pay for the additional product in a bonus pack, either directly or indirectly
B) 63% of consumers would choose a bonus pack over a coupon
C) 51% of consumers have purchased a bonus pack because they believed it was a good value
D) 58% of consumers have tried a different brand to take advantage of a bonus pack offer

Question 69

A consumer promotion involving two or more goods or services within the same promotional offer is a(n)

A) tie-in
B) overlay
C) trade promotion
D) frequency promotion

Question 70

An intracompany tie-in involves

A) two or more different companies offering complementary products under one promotion
B) two or more distinct products from one company in one promotion
C) two or more promotions within a company and within a single promotional offer
D) two or more promotions from different companies within a single promotional offer

Question 71

An intercompany tie-in involves

A) two or more different companies offering complementary products under one promotion
B) two or more distinct products from one company in one promotion
C) two or more promotions within a company and within a single promotional offer
D) two or more promotions from different companies within a single promotional offer

Question 72

A free liter of Pepsi with the purchase of a DiGiorno pizza is an example of a(n)

A) overlay
B) bonus pack
C) intracompany tie-in
D) intercompany tie-in

Question 73

A coupon for $2.00 off the purchase of the combination of a Betty Crocker cake mix and Betty Crocker icing is an example of a(n)

A) overlay
B) bonus pack
C) intracompany tie-in
D) intercompany tie-in

Question 74

Tie-ins work best if consumers are offered a promotional incentive for

A) a high-demand item if a low-demand item is purchased
B) a low-demand item if a high-demand item is purchased
C) two low-demand items
D) two high-demand items

Question 75

Most consumer promotion programs focus on boosting sales immediately. Few focus on developing brand loyalty and enhancing brand equity, which are the goals of

A) coupons
B) premiums
C) frequency programs
D) bonus packs

Question 76

Frequency programs have all of the following characteristics except

A) rewards are in the form of additional goods, services, discounts, or cash
B) to earn rewards, participants must accumulate a certain number of points or make a certain level of purchases over time
C) multiple purchases are required to obtain the rewards
D) the redemption process is tailored to meet the various needs of the participants

Question 77

Participation in frequency programs is the highest, at 71%, for

A) households with incomes above $75,000
B) households with incomes less than $50,000
C) individuals with a college education
D) African-Americans

Question 78

The goal of sampling is to encourage

A) repeat purchases of a product
B) free initial trial usage of a product
C) price-conscious consumers to purchase
D) brand loyalty and to enhance brand equity

Question 79

An automobile dealer that lets a customer take a new car home for the evening to test drive it is using

A) product placement
B) a tie-in
C) sampling
D) a premium

Question 80

Price-offs are an excellent method of accomplishing all of the following goals except

A) attract customers
B) reduce purchase risk
C) stimulate demand
D) enhance brand equity