Deck 22: Pricing and Promotion

Question 1

Businesses that plan properly are always able to avoid markdowns.

Answer 1

False

Question 2

Price is so important to customers that they will always accept lower quality in order to save money.

Answer 2

False

Question 3

Businesses should study the products and services offered by competing businesses in order to determine what to buy.

Answer 3

True

Question 4

A decision about the variety of products to be stocked must balance customer needs and the financial capability of the business.

Question 5

Buying printer paper from a supplier that a business has used before is an example of a modified rebuy.

Question 6

Payment terms stated on an invoice as "net 30 days" means that the buyer must make a payment on the account every month.

Question 7

Discounts are subtracted from the list price to determine the product's selling price.

Question 8

A cash discount is a reduction in product prices offered to customers who cash their checks at the seller's business.

Question 9

For wholesalers and retailers, the cost of goods sold is the price they pay their supplier to buy the product plus the cost of transporting it to their location for resale to their customers.

Question 10

A markup is the amount added to the cost of goods sold to determine the selling price.

Question 11

Both a strategy of setting a high price and a strategy of setting a low price can result in a satisfactory profit for the business.

Question 12

To determine a price that will earn a specific profit, the business must first determine the costs of producing and marketing the product, plus all related operating expenses.

Question 13

Offering free delivery adds to operating expenses.

Question 14

Effective promotion is based on effective communication.

Question 15

Advertising includes all forms of paid and non-paid promotion that deliver a message to many people at the same time.

Question 16

Businesses sometimes use advertising to gain support for ideas or causes.

Question 17

An advertising poster in a store window is a form of direct advertising.

Question 18

The reasons people buy are known as customer objections.

Question 19

Salespeople need to be well informed and knowledgeable about the products and services they represent.

Question 20

Which of the following would not be a useful guide in determining what to purchase?

A) Feedback from customers
B) Company records
C) Personal favorites of the business's owners
D) Comparison studies of competing businesses

Question 21

Which of the following is a disadvantage for a business that buys all of its products from one supplier?

A) The supplier would likely charge a higher price.
B) If the supplier's workers went on strike, the buyer might not be able to get the products it needs.
C) The business may not be able to get good credit terms from the supplier.
D) The supplier's service may not be as good if it doesn't have to worry about other suppliers.

Question 22

A price reduction that manufacturers give to their channel partners in exchange for additional services is a

A) seasonal discount
B) cash discount
C) quantity discount
D) trade discount

Question 23

Purchasing snow blowers in the summer to help the manufacturer balance production and inventory levels often qualifies the buyer for a

A) cash discount
B) seasonal discount
C) quantity discount
D) trade discount

Question 24

The actual price a customer pays for a product is the

A) cost of goods sold
B) selling price
C) markup
D) discount

Question 25

For manufacturers, the total cost of the materials, operations, and personnel used to make a product is the

A) cost of goods sold
B) selling price
C) markup
D) discount

Question 26

The cost of goods sold plus operating expenses plus net profit equals the

A) gross profit
B) margin
C) markup
D) selling price

Question 27

On an invoice, credit terms that require the buyer to pay in full in 30 days but would grant the buyer a 2 percent discount for paying within 10 days would be expressed as

A) 2/30, n/10
B) full 30, 2/10
C) 2/10, n/30
D) 10/2, n/30

Question 28

Which of the following is not an example of an operating expense?

A) Advertising
B) Taxes
C) Depreciation
D) Cost of goods sold

Question 29

The manufacturer of a product that is very popular will benefit from pricing based on

A) consumer demand
B) meeting competitors' prices
C) earning a specific profit
D) selling more merchandise

Question 30

An example of mass media advertising is

A) special interest magazines
B) network and local television
C) billboards
D) counter displays

Question 31

Which of the following is an example of a buying motive?

A) Desire for good health
B) Credit cards
C) Brand name
D) Suggestion selling

Question 32

An effort by the customer to avoid making a decision to purchase is usually demonstrated by the use of

A) objections
B) buying motives
C) body language
D) suggestion selling

Question 33

When a business is purchasing a product for the first time, it is engaging in a(n)

A) order submission
B) modified rebuy
C) new task purchase
D) straight rebuy

Question 34

Important areas that can affect a business's costs and profits include

A) damaged or stolen merchandise
B) markdowns
C) merchandise returns
D) all of the responses

Question 35

Bethany needs a new cell phone and asks her roommate's advice.In which stage of the consumer decision-making process is Bethany engaging?

A) problem recognition
B) information search
C) personal selling
D) alternative evaluation

Question 36

A promotional activity designed to familiarize customers with a new product and to create a demand for it in local businesses is

A) personal selling
B) outdoor advertising
C) product samples
D) telemarketing

Question 37

In self-service merchandising, customers are persuaded to buy through

A) effective sales demonstrations
B) thorough study of advertisements
C) merchandise displays and labels
D) all of the responses

Question 38

In addition to the Federal Communications Commission, the federal agency that regulates promotion is the

A) Federal Trade Commission
B) Internal Revenue Service
C) Supreme Court
D) Commerce Department

Question 39

Advertising that is misleading in any material respect is

A) substantiated advertising
B) false advertising
C) acceptable on cable television
D) corrective advertising

Question 40

Match each item with the correct statement below.

-Amount by which the original selling price is reduced before sale.

A)Advertising
B)cash discount
C)corrective advertising
D)cost of goods sold
E)false advertising
F)full disclosure
G)list price
H)margin
I)markdown
J)markup
K)net profit
L)seasonal discount
M)trade discount
N)turnover

Question 41

Match each item with the correct statement below.

-Reduction in price given for paying by a certain date.

A)Advertising
B)cash discount
C)corrective advertising
D)cost of goods sold
E)false advertising
F)full disclosure
G)list price
H)margin
I)markdown
J)markup
K)net profit
L)seasonal discount
M)trade discount
N)turnover

Question 42

Match each item with the correct statement below.

-Advertising that violates the law.

A)Advertising
B)cash discount
C)corrective advertising
D)cost of goods sold
E)false advertising
F)full disclosure
G)list price
H)margin
I)markdown
J)markup
K)net profit
L)seasonal discount
M)trade discount
N)turnover

Question 43

Match each item with the correct statement below.

-Difference between selling price and all costs and expenses.

A)Advertising
B)cash discount
C)corrective advertising
D)cost of goods sold
E)false advertising
F)full disclosure
G)list price
H)margin
I)markdown
J)markup
K)net profit
L)seasonal discount
M)trade discount
N)turnover

Question 44

Match each item with the correct statement below.

-Advertising designed to change a false impression left by earlier misleading information.

A)Advertising
B)cash discount
C)corrective advertising
D)cost of goods sold
E)false advertising
F)full disclosure
G)list price
H)margin
I)markdown
J)markup
K)net profit
L)seasonal discount
M)trade discount
N)turnover

Question 45

Match each item with the correct statement below.

-Providing all information that allows consumers to make an informed buying decision.

A)Advertising
B)cash discount
C)corrective advertising
D)cost of goods sold
E)false advertising
F)full disclosure
G)list price
H)margin
I)markdown
J)markup
K)net profit
L)seasonal discount
M)trade discount
N)turnover

Question 46

Match each item with the correct statement below.

-Amount added to the cost of goods sold to calculate a selling price.

A)Advertising
B)cash discount
C)corrective advertising
D)cost of goods sold
E)false advertising
F)full disclosure
G)list price
H)margin
I)markdown
J)markup
K)net profit
L)seasonal discount
M)trade discount
N)turnover

Question 47

Match each item with the correct statement below.

-Difference between selling price and cost of goods sold.

A)Advertising
B)cash discount
C)corrective advertising
D)cost of goods sold
E)false advertising
F)full disclosure
G)list price
H)margin
I)markdown
J)markup
K)net profit
L)seasonal discount
M)trade discount
N)turnover

Question 48

Match each item with the correct statement below.

-Price reduction given to channel partners in exchange for additional services.

A)Advertising
B)cash discount
C)corrective advertising
D)cost of goods sold
E)false advertising
F)full disclosure
G)list price
H)margin
I)markdown
J)markup
K)net profit
L)seasonal discount
M)trade discount
N)turnover

Question 49

Match each item with the correct statement below.

-Cost to produce a product or buy it for resale.

A)Advertising
B)cash discount
C)corrective advertising
D)cost of goods sold
E)false advertising
F)full disclosure
G)list price
H)margin
I)markdown
J)markup
K)net profit
L)seasonal discount
M)trade discount
N)turnover