Question 1

Admiral Motors is the dominant firm in the auto market. When Admiral announces an increase in the prices of its automobiles, Chord and Frysler, the smaller firms in the market usually quickly announce similar price increases for their own cars. This situation is an example of demand-oriented pricing.

Accepted Answer

The answer of Admiral Motors is the dominant firm in...

Question 2

Wholesalers are marketing intermediaries who sell goods or services to ultimate consumers.

Accepted Answer

Wholesalers are marketing intermediaries who sell goods or services to retailers, not ultimate consumers.

Question 3

Webster Industries is one of the first producers of a unique consumer product. The company has chosen a low-price strategy, hoping this will enable them to quickly attract many customers while discouraging potential competitors from entering the market. Webster's approach to pricing is a classic example of the skimming strategy.

Accepted Answer

The statement is incorrect. Webster's approach to pricing is not a classic example of the skimming strategy. Skimming strategy involves charging a high price initially for a unique product and gradually lowering it over time. Webster's approach is a low-price strategy, which is more aligned with a penetration pricing strategy.

Question 4

Community Catering Services, Inc., advertises that they are the "friendliest caterers in town." Their prices are no lower than the rates charged by competing caterers, but they put a lot of emphasis on getting to know the needs of their customers. They tailor their efforts to meet these needs, providing a unique dining experience that exactly matches the customer's expectations. Community Catering is likely to find that this approach is more effective in achieving its goals than the use of aggressive price-cutting.

Accepted Answer

Community Catering Services, Inc. is likely to find that emphasizing friendly customer service and tailoring their efforts to meet customer needs is more effective in achieving their goals than aggressive price-cutting.

Question 5

Small firms often rely on nonprice competition when competing against larger firms.

Accepted Answer

Small firms cannot usually compete with larger firms on price alone, so they often rely on nonprice competition strategies such as offering superior customer service, targeting niche markets, or providing unique products or experiences.

Question 6

Gill's Gadgets establishes the price it charges for its products by determining the cost of production and then adding on a desired profit margin. Gill's strategy is known as target costing.

Accepted Answer

Gill's strategy is known as cost-plus pricing, not target costing. Target costing involves setting a target price based on market conditions and then designing the product to meet that price.

Question 7

Pattie Bunz operates the Zestee Burgers restaurant. The cost of pickles, onions, buns, catsup, and meat patties would all be considered variable costs for her type of business.

Accepted Answer

Variable costs are costs that vary with the level of production or sales, such as the cost of ingredients needed to make the burgers at Zestee Burgers. Therefore, pickles, onions, buns, catsup, and meat patties would all be considered variable costs for Pattie Bunz's business.

Question 8

Miranda is a marketing manager for a large manufacturer. Her boss has asked her to evaluate a new-product idea. One of the things Miranda wants to determine is how much of this product her firm would have to sell in order to break even. In order to compute this break-even level of sales, she will need to know the price of the good, the total fixed costs, and variable cost of producing each unit.

Accepted Answer

To compute the break-even level of sales, the price of the good, total fixed costs, and variable cost of producing each unit are necessary. Therefore, Miranda does need to know these factors to determine the break-even point.

Question 9

Brokers are marketing intermediaries that do not take title to the goods they help distribute.

Accepted Answer

Brokers act as intermediaries between buyers and sellers and help facilitate transactions without taking ownership of the goods being traded.

Question 10

One way firms can gain a competitive advantage without relying on low prices is by developing close, friendly relationships with their customers.

Accepted Answer

Developing close, friendly relationships with customers can help firms gain their loyalty and trust, leading to repeat business and positive word-of-mouth recommendations. This can give the firm a competitive advantage over other businesses that may solely rely on offering low prices.

Question 11

For most firms, price competition is the most important way to gain a competitive advantage over rivals.

Accepted Answer

While price is an important factor, there are other ways for firms to gain a competitive advantage such as differentiation, innovation, quality, customer service, branding, and marketing. Focusing only on price competition can lead to a race to the bottom and erode profit margins.

Question 12

The pricing objectives of a firm should be set independently of the other elements of their marketing mix.

Accepted Answer

The pricing objectives of a firm should be set in conjunction with and consideration of the other elements of the marketing mix, such as product, promotion, and place. The pricing strategy should align with the overall business objectives and marketing goals, and consider factors such as target market, competition, and consumer demand.

Question 13

Shuichi owns and operates his own sushi bar. His fixed costs would include rent, insurance, and property taxes.

Accepted Answer

Fixed costs refer to regular expenses that are not affected by the level of business activity, such as rent, insurance, and property taxes. As such, they are part of the cost structure of a business and would be considered as fixed costs for Shuichi's sushi bar.

Question 14

Budd's Floral Shoppe is located in a large town that has several other florists. The owner, Rose Budd, is likely to find that the presence of many larger competitors means that the only way she can survive is to charge rock-bottom prices.

Accepted Answer

While the competition in the area may impact Budd's Floral Shoppe, there are other strategies Rose Budd could employ to survive, such as offering unique products, exceptional customer service, targeted marketing efforts, or focusing on a specific niche market. Competing on price alone may not be the most effective or sustainable strategy.

Question 15

Retailers are marketing intermediaries who sell to ultimate consumers.

Accepted Answer

Retailers are businesses that sell directly to consumers, which makes them marketing intermediaries.

Question 16

Organizations that assist in moving goods and services from producers to business and consumer users are called supply-side transition specialists.

Accepted Answer

The correct term for organizations that assist in moving goods and services from producers to business and consumer users is "marketing intermediaries" or "supply chain intermediaries". The idea of "supply-side transition specialists" is not widely recognized or accepted in marketing and supply chain management.

Question 17

A channel of distribution consists of the marketing intermediaries who join together to transport and store goods in their path from producers to consumers.

Accepted Answer

This statement accurately describes a channel of distribution.

Question 18

Rather than having frequent special sales, Walt's Warehouse has a pricing strategy that maintains lower prices than competitors all the time. Walt's pricing strategy is known as everyday low prices (EDLP).

Accepted Answer

The statement correctly describes Walt's pricing strategy as everyday low prices (EDLP), which maintains lower prices than competitors consistently rather than having frequent special sales.

Question 19

Carlotta owns and manages the Carlite Car Wash. She charges $8 per car wash. Her fixed costs are $600 per month, while her variable costs per car wash amount to $2. Carlotta must wash 60 cars to break even.

Accepted Answer

Carlotta's break-even point is calculated by dividing her fixed costs by the contribution margin per car wash. The contribution margin is $8 (price) - $2 (variable cost) = $6. Therefore, $600 / $6 = 100 cars to break even.

Question 20

Agents and brokers and wholesalers are types of marketing intermediaries.

Accepted Answer

Agents, brokers, and wholesalers are all examples of marketing intermediaries.

Quiz 21: Managing the Marketing Mix: Product, Price, Place and Promotion