Question 1

Which of the following promotions is targeted toward the trade rather than consumers?

Accepted Answer

Spiffs are incentives or bonuses that are offered to retailers or salespeople to encourage them to promote and sell a particular product. This type of promotion is targeted towards the trade rather than consumers. The other options such as coupons, premiums and sweepstakes, and bonus packs are targeted towards consumers to encourage them to make a purchase.

Question 2

Many retailers are opposed to everyday low pricing (EDLP) because:

Accepted Answer

All of the given reasons are potential reasons why retailers may be opposed to EDLP. EDLP takes away from trade promotions, which are a significant part of retailers' advertising budgets. Retailers may prefer frequent price specials to generate store traffic and create a sense of urgency to purchase. EDLP may also put retailers at a competitive disadvantage against warehouse stores and mass merchandisers that already use EDLP, making it harder to differentiate their business. Additionally, EDLP may not be an effective method for building market share, which is crucial for retailers trying to compete in their market.

Question 3

Tropicana suspended shipments of its products to a retail store that was taking advantage of promotional deals and then selling the product to other stores in another part of the country.The retailer was engaged in:

Accepted Answer

The retailer in question was engaging in diverting, which involves purchasing products at promotional prices with the intent of reselling them to other retailers in different regions at a higher price, thereby disrupting the manufacturer's intended distribution channels. Tropicana's decision to suspend shipments to the retailer was a response to this activity. Forward buying involves purchasing products in advance of actual demand, slotting refers to fees paid by manufacturers for shelf space in stores, EDLP (Everyday Low Pricing) is a pricing strategy, and transference charging is not a term commonly used in retail or distribution contexts.

Question 4

This program was developed by _____ whereby it has lowered the wholesale list price of many of its products while cutting promotional allowances to the trade and is known as _____.

Accepted Answer

Procter & Gamble developed a strategy known as everyday low pricing, which involves lowering the wholesale list price of its products while reducing promotional allowances to the trade.

Question 5

Which of the following statements explains why retailers such as grocery stores are critical of everyday low pricing?

Accepted Answer

Retailers are critical of everyday low pricing because it conflicts with their strategies of using promotions, discounts, and impulse buying to attract customers and generate profits.

Question 6

Which of the following statements describes a major concern marketers have with trade allowances?

Accepted Answer

Marketers are concerned that trade allowances, which are discounts given to retailers, may not be passed on to consumers in the form of lower prices. This means that the marketer is not seeing a return on their investment in the promotion, and it may not be effective in increasing sales.

Question 7

Ocean Spray offers its retail accounts a $3.00 per case discount for all of the cranberry juice they purchase during the month of May.This discount will be deducted straight from the bill.This is an example of:

Accepted Answer

An off-invoice allowance is a discount that is deducted straight from the bill. This is exactly what is being offered by Ocean Spray in this scenario, making option C the correct answer. Push money, slotting allowances, display allowances, and coop allowances all involve other types of incentives or discounts that are not being used in this situation.

Question 8

Programs involving cash payments directly to the sales force to reward them for selling the manufacturer's products involve the use of:

Accepted Answer

Cash payments directly to the sales force are known as push money or spiffs. These payments are used to incentivize sales representatives to push the manufacturer's products to customers. The other options, such as slotting fees and promotional allowances, involve payments to retailers and are not directly related to the sales force.

Question 9

A discount or deal offered to a retailer or wholesaler to encourage them to stock,promote or display a manufacturer's product is known as:

Accepted Answer

A trade allowance is a specific discount or deal offered to retailers or wholesalers in order to encourage them to promote or display a manufacturer's product, often in the form of a reduced price or rebate. Cooperative advertising refers to joint advertising efforts between a manufacturer and a retailer. Merchandising support refers to tools or resources provided to retailers to help them effectively display and sell a product, such as product training, point-of-purchase displays, or signage. A spiff (or SPIF) is a commission or bonus paid to retail salespeople for selling a particular product, while push money refers to an incentive paid to salespeople or channel partners for meeting or exceeding sales targets.

Question 10

Which of the following statements about slotting allowances is true?

Accepted Answer

All of the statements about slotting allowances are true. Retailers argue that they are justified in charging slotting fees because there are costs associated with taking on a new product, including the cost of stocking and promoting the product. They also argue that they are assuming some risks in taking on a new product, as many new products fail. Retailers can charge slotting fees because of their power in the marketplace, as well as the limited availability of shelf space in many retail stores. However, large manufacturers with popular brands and large promotional budgets may not always have to pay slotting fees, as their products may be seen as essential to the retailer's success.

Question 11

Money that must be paid to a retailer so it will take on a company's new product is known as:

Accepted Answer

Slotting allowances are fees charged by retailers to manufacturers in exchange for making room for their products in their stores. This practice helps manufacturers overcome retailer resistance to take on new products and secure shelf space for their items.

Question 12

Payments offered by manufacturers to resellers for merchandising products or running special in-store programs are called:

Accepted Answer

Promotional allowances are payments offered by manufacturers to resellers for merchandising products or running special in-store programs. Cooperative advertising refers to the shared cost of advertising campaigns between a manufacturer and a reseller, push monies refer to payments to resellers to incentivize them to push a particular product, advertising subsidies refer to financial assistance given to a retailer to help offset the costs of advertising, and slotting allowances are fees paid by manufacturers to retailers to gain valuable shelf space for their products.

Question 13

Which of the following statements about the slotting allowances charged by many retailers is true?

Accepted Answer

Retailers justify slotting allowances as a way to cover the costs associated with taking on a new product, such as setting up new displays, training staff, and conducting promotional activities. Therefore, this statement is true. The statement in option B is not entirely accurate as not all new products are successful, and the retailers face risks associated with stocking new products. Option C is not necessarily true, as small companies with niche products may also have to pay slotting allowances. Option D is false, as slotting allowances are legal but subject to regulation. Option E is also false, as slotting allowances can add significant costs to new product introductions.

Question 14

in the paper on the last Sunday of October that encourage consumers to change the box of baking soda in their refrigerator when they turn their clocks back to standard time.This is an example of how sales promotion can be used to:

Accepted Answer

The sales promotion encourages consumers to replace the box of baking soda in their refrigerator, which identifies a specific use for the established brand of baking soda. It does not introduce a new brand, defend current customers, enhance advertising efforts, or encourage repurchase after initial trial.

Question 15

_____ is a practice used by retailers whereby they stock-up on a product at a low deal or off-invoice price and resell it to consumers at higher prices when a promotional period has ended.

Accepted Answer

Forward buying is the practice of purchasing goods in bulk at a lower price and reselling them later at a higher price during a promotional period. This strategy is commonly used by retailers to take advantage of discounted prices and maximize their profits.

Question 16

An appliance manufacturer offers a $50 payment to salespeople who work at Rutgers Appliance if they sell one of the company's new refrigerators.This payment is known as:

Accepted Answer

A spiff is a payment made to salespeople for selling a specific product, and this is what the manufacturer is offering to Rutgers Appliance salespeople. The other options, such as slotting fees and trade allowances, typically refer to payments made by manufacturers to retailers, while coop money and pull money are more general terms that could refer to different types of payments or allowances.

Question 17

_____ is a practice used by some retailers and wholesalers whereby they take advantage of a promotional deal and then sell some of the product purchased at the low price to another store outside of the reseller's trade area or to a middleman who will then resell the products.

Accepted Answer

Diverting is the practice of buying a product at a promotional price and then reselling it outside of the intended market or trade area. This can be done to make a profit or to meet sales quotas.

Question 18

Some retailers have demanded payment for new products that do not reach a minimum sales target.These payments are called:

Accepted Answer

Failure fees are payments demanded by retailers when new products fail to reach a predetermined sales target. These fees are also called exit or discontinuation fees, and they are an attempt by retailers to minimize the risk of carrying new products that may not sell well. Slotting allowances, push monies, slotting fees, and street monies are all different types of payments made by manufacturers to retailers and do not specifically pertain to products that do not meet minimum sales targets.

Question 19

Companies such as Procter & Gamble use _____ to reduce fluctuations in the retail prices of their brands.

Accepted Answer

Procter & Gamble uses everyday low pricing (EDLP) to reduce fluctuations in the retail prices of their brands. EDLP is a pricing strategy where products are consistently priced lower than competitors' prices, with fewer promotions or discounts, to provide a consistent low price to consumers. This strategy helps to create predictability in pricing and reduces the need for temporary price reductions or other promotions.

Question 20

Another term used for push money that is given to retailers' or wholesalers' sales staff to encourage them to promote and sell a company's product is:

Accepted Answer

The term used for push money given to retailers' or wholesalers' sales staff to encourage them to promote and sell a company's product is known as a spiff.

Quiz 16: Sales Promotion