Question 1

Retailers use __________ extensively. This occurs when the retailer compares sale prices to regular prices. such as when Best Buy promotes a DVD player as "Regularly $99. Now $49."

Accepted Answer

The described pricing strategy is known as reference pricing, where the retailer compares sale prices to regular prices to create a sense of value and urgency for the customer. The example of Best Buy promoting a DVD player as "Regularly $99. Now $49" is a clear example of reference pricing in action.

Question 2

Firms such as IKEA and The Home Depot are known for their use of __________ because they set reasonably low prices but still offer high-quality products and adequate customer services.

Accepted Answer

The description provided in the question suggests that these firms are using value-based pricing, which involves setting prices based on the value that a product or service provides to the customer, rather than on production costs or competition. This way, customers perceive that they are getting a good deal, while the company can still maintain its profitability.

Question 3

Which of the following $\bold{\text{IS NOT}}$ a situation that can cause customers to be less sensitive to price increases?

Accepted Answer

Customers are more likely to be sensitive to price increases when the total expenditure on a product is high, as it represents a larger portion of their budget. The other options (A, B, C, E) describe situations where customers might be less sensitive to price changes due to lack of alternatives, product uniqueness, necessity, or perceived value.

Question 4

The most basic benefit of marketing channels is __________ where channels reduce the number of contacts necessary to exchange products.

Accepted Answer

Contact efficiency is the most basic benefit of marketing channels because they simplify the process of exchanging products by reducing the number of necessary contacts between producers and consumers.

Question 5

A __________ is an organized system of marketing institutions through which products. resources. information. funds and/or product ownership flow from the point of production to the final user.

Accepted Answer

A marketing channel is a system of marketing institutions (e.g., wholesalers, retailers) responsible for promoting, physically distributing, and transferring ownership of products from the point of production to the final user or consumer. It also involves the flow of information, funds, and resources between these institutions. The terms "supply chain" and "distribution hub" may refer to specific parts of the overall marketing channel system, but they do not encompass the entire network of institutions involved in marketing a product. "Marketing network" and "product network" are not commonly used terms in this context.

Question 6

Because the company was angered by the actions of its resellers. Acme Manufacturing decided to slow down deliveries and postpone product availability to these resellers. What type of power is Acme wielding in the channel?

Accepted Answer

Acme Manufacturing is using coercive power by punishing the resellers for their actions.

Question 7

The goal of __________ is to maximize sales. gain widespread market acceptance. and capture a large market share quickly by setting a relatively low initial price.

Accepted Answer

The goal described in the question is aligned with the strategy of penetration pricing, which sets a low initial price to quickly capture a large market share and gain widespread market acceptance. This strategy may not necessarily maximize sales in the short term, but it aims to build a customer base and increase sales volume in the long term. Price skimming refers to setting a high initial price for a new product, while odd pricing is the practice of setting prices ending in odd numbers, such as $9.99 instead of $10. First-mover pricing and market acceptance pricing are not commonly used pricing strategies.

Question 8

The Club is a local hair salon and day spa that caters to an upper-middle class clientele. Although price competition in the local area has been increasing. the owners of The Club have decided to focus their marketing efforts on quality. service. and value. and to resist the temptation to compete on price. In pursuing this non-price strategy. managers of The Club are ascribing to which of the following assumptions?

Accepted Answer

The managers of The Club believe that their differentiation strategy is difficult for competitors to copy, which is based on the assumption that competitors cannot easily replicate The Club's distinguishing features. The other options would not support the strategy of focusing on quality, service, and value instead of competing on price.

Question 9

Many products. such as candy. soft drinks. and gum are sold via intensive distribution. However. this strategy has a major drawback. What is it?

Accepted Answer

Intensive distribution can lead to loss of control over pricing and product display as the manufacturer has to rely on third-party retailers for distribution.

Question 10

In the Mercedes dealer network. individual dealers are given the sole right to sell Mercedes vehicles within a defined geographic area. What type of distribution does Mercedes employ?

Accepted Answer

Mercedes employs exclusive distribution by granting individual dealers exclusive rights to sell its vehicles in specific geographic areas, limiting the number of outlets to maintain a high level of service quality and brand prestige.

Question 11

Ensuring the availability of products in the right place in the right quantities at the right time in a cost efficient manner is the main focus of:

Accepted Answer

The answer of Ensuring the availability of products in the...

Question 12

Which member of the marketing channel has the primary responsibility of fulfilling the channel's main functions?

Accepted Answer

The primary responsibility of fulfilling the channel's main functions is shared among all members of the marketing channel, as each plays a crucial role in ensuring the product reaches the end consumer effectively.

Question 13

What is the most appropriate type of distribution to use when customers need the opportunity to comparison shop. or when after-sale services are important?

Accepted Answer

Selective distribution allows for a limited number of outlets to carry a product, while still providing opportunities for comparison shopping and after-sale services. This ensures that the product is available in enough locations to reach a wide audience, but not so many that it becomes diluted or hard to find.

Question 14

In business markets. __________ is used to quote prices in terms of reductions or increases based on transportation costs or the actual physical distance between the buyer and the seller.

Accepted Answer

Geographic pricing is used to quote prices in terms of reductions or increases based on transportation costs or the actual physical distance between the buyer and the seller. Transfer pricing refers to the pricing of goods or services between different units or divisions within the same company. Countertrade refers to the exchange of goods or services as payment instead of using currency. Logistics pricing refers to the pricing of transportation and other logistical services. GPS pricing does not exist as a commonly used term in business markets.

Question 15

The creation of an extended enterprise in the supply chain depends heavily on the ability of channel members to integrate their operations. Which of the following IS NOT a key factor in successful supply chain integration?

Accepted Answer

Coercive power, or the use of force or threats to compel someone to do something, is not a key factor in successful supply chain integration. It goes against the principles of trust, interdependence, cooperation, and mutual benefit. Successful integration depends on collaboration and mutual respect, rather than coercion.

Question 16

In terms of marketing channel functions. which of the following statements describes the concept of discrepancy of quantity?

Accepted Answer

Discrepancy of quantity refers to the situation where manufacturers produce products in large quantities while customers usually want only one or a few items. So, the best choice is E.

Question 17

The Fairmont Hotel is widely known for its exceptional quality and impeccable customer service. Not surprisingly. the Fairmont sets prices at the top end of all competing hotels. Which pricing strategy is the Fairmont using?

Accepted Answer

The pricing strategy used by the Fairmont Hotel is prestige pricing. This strategy involves setting high prices to create the perception of superior quality and status in the market. The Fairmont Hotel is known for its exceptional quality and service, and the high prices charged by the hotel contribute to this perception.

Question 18

Price elasticity is defined as:

Accepted Answer

Price elasticity refers to the responsiveness or sensitivity of customers to changes in price. It measures the change in demand for a product due to a change in its price. A product is considered elastic if a slight change in price leads to a significant change in demand, while a product is considered inelastic if the change in demand is negligible even with a significant change in price.

Question 19

Because service capacity is perishable and service demand is highly time dependent. service firms employ yield management strategies in an effort to:

Accepted Answer

Yield management allows service firms to maximize revenue by balancing price and capacity utilization, ensuring that the service is priced optimally to fill unused capacity, and to maximize revenue through targeted pricing and promotion strategies. Yield management also helps in balancing the variable costs associated with delivering a service, ensuring that costs remain under control while filling up spare capacity. Therefore, the best choice is E.

Question 20

The inherent goal of product differentiation is to make the demand curve for a product more inelastic. This happens because increased differentiation:

Accepted Answer

When a company increases differentiation, it reduces the number of perceived substitutes for their product. This makes the demand curve for their product more inelastic, meaning that customers are less likely to switch to a different product because there are fewer viable alternatives. This can increase the company's market power and allow them to charge a higher price for the product without losing as many sales.

Quiz 6: The Marketing Program