Question 1

Variable costs are those expenses that change as the level of production changes.

Accepted Answer

Variable costs are directly influenced by the level of production. As the production increases, the variable costs also increase, and vice versa. Examples of variable costs include raw material costs, labor costs, and supplies.

Question 2

What is something that a one-hour photo shop,a drive-up window at a fast food restaurant,and a vending machine all have in common?

Accepted Answer

All three provide time utility to customers by offering quick, convenient access to products or services. A one-hour photo shop allows customers to get their photos printed and ready to go in a short amount of time, a drive-up window at a fast food restaurant allows customers to get their food quickly without having to leave their car, and a vending machine provides 24/7 access to snacks and drinks on the go. While they do provide utility, they do not create any new utility as they are simply delivering pre-existing products or services.

Question 3

Which of the following provides customer satisfaction by converting inputs into finished products?

Accepted Answer

Form utility is the process of increasing the value of a product by converting inputs into finished products that meet customer needs. This conversion process can include manufacturing, assembling, processing or packaging. Therefore, form utility provides customer satisfaction by transforming goods or materials that have little or no value into valuable products that are useful to consumers. A merchant wholesaler and retailer are intermediaries that help move products from manufacturers to consumers, but they do not create form utility. Ownership utility refers to the value created by making a product easy to purchase and possess, such as offering convenient payment options or delivery services.

Question 4

A firm's distribution strategy is concerned with which two key elements?

Accepted Answer

A firm's distribution strategy involves both the channel of distribution (how the product is sold and delivered to customers) and physical distribution (how the product is stored, transported, and delivered). Shipping and warehousing are important aspects of physical distribution, but are not the only elements of a distribution strategy. Pricing strategy and credit standards are related to sales and financial management, and facility location and value stream mapping are related to operations management.

Question 5

Your local video store charges $39.99 instead of $40.00 for a video game.This store is using a strategy known as penny-less pricing.

Accepted Answer

The answer of Your local video store charges $39.99 instead...

Question 6

The Alpine Shop is a store that specializes in selling equipment for camping and other outdoor activities.The store has many employees who love to camp,hike,hunt,and fish.These employees often go out of their way to provide honest and helpful advice about the good and bad features of the products they sell.The efforts of these employees create which type of utility?

Accepted Answer

The efforts of the employees in providing honest and helpful advice about the products they sell create information utility, as they are enhancing the customer's knowledge and understanding of the products, which can help them make informed purchase decisions.

Question 7

A channel of distribution refers to which of the following?

Accepted Answer

A channel of distribution refers to the network of organizations and processes that links producers to consumers. Therefore, option D is the correct answer. Option A refers to physical handling of products; Option B refers to agents/brokers who take title to a product, providing ownership utility; Option C refers to marketing communication resources used to promote products. These options do not fully define a channel of distribution.

Question 8

Profit margin is the gap between the cost and the price of an item on a per product basis.

Accepted Answer

Profit margin is calculated by subtracting the cost of producing or acquiring a product from its selling price, and is expressed as a percentage of that price.

Question 9

Which of the following are marketing intermediaries that sell directly to final consumers?

Accepted Answer

Retailers sell directly to final consumers, while distributors, truck jobbers, and wholesalers typically sell to other businesses or intermediaries.

Question 10

Fixed costs are those costs companies incur regardless of the number of units sold.

Accepted Answer

Fixed costs, such as rent, salaries, and property taxes, are expenses that remain constant for a business regardless of the amount of production or sales.

Question 11

What is the goal of distribution strategy?

Accepted Answer

The goal of distribution strategy is to get the right product to the right person at the right place and time. This involves determining the best channels of distribution, managing inventory levels, and coordinating logistics to ensure timely delivery to customers. The other options are not the primary goal of distribution strategy.

Question 12

The prices quoted on the menu of an upscale restaurant all end in zeros.This approach is a way the restaurant can signal to its customers that the food it serves is a real bargain.

Accepted Answer

The statement is incorrect. Prices ending in zeros on a menu is a common practice among upscale restaurants and has more to do with creating an aesthetic appeal and simplicity for the customer rather than signaling a bargain.

Question 13

A drawback of demand-based pricing is that it is less market focused than cost-based pricing.

Accepted Answer

Demand-based pricing is actually more market-focused than cost-based pricing. Cost-based pricing is focused primarily on covering the costs of production and achieving a certain profit margin, while demand-based pricing takes into account how much the market is willing to pay for a product or service. By adjusting prices according to demand, companies can capture more revenue and profits, which ultimately benefits the market as a whole.

Question 14

Variable costs for a pizza parlour would include the cost of the insurance,rent,and property taxes.

Accepted Answer

Variable costs for a pizza parlour would include ingredients, wages for staff, and delivery expenses. Insurance, rent, and property taxes are considered fixed costs as they do not vary with the amount of pizzas sold.

Question 15

Cost-based pricing is the most popular method of fixed margin pricing.

Accepted Answer

Cost-based pricing involves setting a price based on the cost of producing a product or service plus a markup for profit. This method is commonly used by businesses to ensure they cover their costs and earn a profit.

Question 16

Which of the following satisfies customer needs by providing the right products in the right place?

Accepted Answer

Place utility refers to providing the right products at the right place, at the right time, and in the right quantity to meet customer needs. It involves ensuring efficient distribution and logistics to make products available to customers where and when they want them. Value stream mapping is a tool used to identify and eliminate waste in the production process. Contingency planning refers to preparing for unexpected events and potential disruptions to business operations. While distribution utilities may be involved in the provision of place utility, it is not as comprehensive as the concept of place utility itself.

Question 17

The main distinction among members of a channel of distribution is whether they are which of the following?

Accepted Answer

The main distinction among members of a channel of distribution is whether they are wholesalers or retailers. Wholesalers are the intermediaries who buy goods from the producers or manufacturers in bulk and sell them in smaller quantities to retailers. Retailers, on the other hand, buy goods from wholesalers and sell them directly to the end consumers. Thus, the main distinction lies in the level of operation and the target market of these intermediaries. Agents and brokers, shippers and warehousers, and producers and sellers are different types of intermediaries who may operate within a channel of distribution, but their distinction is not the main one.

Question 18

People magazine incurs salaries for reporters and photographers as fixed costs regardless of how many magazines are sold.

Accepted Answer

Fixed costs are those that do not change regardless of the level of production or sales. Salaries for reporters and photographers are examples of fixed costs for People magazine.

Question 19

Which of the following adds value by making it easier for customers to actually possess the goods and services that they purchase?

Accepted Answer

Ownership utility refers to the value added by facilitating the transfer of ownership or possession of goods and services to customers, making it easier for them to possess and use it. This can be achieved through delivery, installation, warranty, packaging, and other services that enhance the ownership experience. Retail utility refers to the value added by offering convenient and accessible locations, while form utility refers to the value added by transforming raw materials into finished products. Time utility refers to the value added by making goods and services available when customers need them.

Question 20

Consumer perception of quality can be driven by price.

Accepted Answer

Consumer perception of quality can be influenced by the price they pay for a product or service. When a product is priced higher, consumers may associate it with better quality, while lower prices may lead consumers to perceive lower quality. However, this is not always the case, as other factors such as brand image, marketing, and personal experience can also impact perception of quality.

Quiz 12: Distribution and Pricing: Right Product, right Person, right Place, right Price