Question 1

Which of the following is the marketing practice in which a company seeks to influence the price at which a product is sold?

Accepted Answer

Resale price maintenance is the marketing practice in which a company seeks to influence the price at which a product is sold. The company sets a minimum price at which the product can be sold by retailers or other distributors. This ensures that the product is sold at a consistent price across all channels and helps to maintain the perceived value of the product. Price fixing involves collusion between companies to set prices at a certain level, price discrimination involves charging different prices to different customers for the same product, predatory pricing involves pricing a product below cost to drive competitors out of the market, and referral selling involves incentivizing customers to refer others to purchase the product.

Question 2

The fee to enter a music event is set at $100 for men and $50 for women.This is an example of:

Accepted Answer

This is an example of price discrimination as different prices are being charged based on the gender of the attendee.

Question 3

An automobile company published an advertisement that said that prices for the latest model on offer started at $10,000 with an interest rate of 10 percent.The ad showed the logo and picture of a new model.When an interested customer spoke with the authorized dealer mentioned in the ad,he was informed that the bargain price was only on the older model.This is an example of:

Accepted Answer

The advertisement is misleading as it doesn't specify that the listed price is only for an older model, which can mislead customers into believing that the latest model is available at that price. Therefore, it falls under the category of misleading advertising.

Question 4

Schemes in which salespersons are paid to recruit other salespeople,and each new salesperson pays for the right to recruit other salespeople,with some of that money going to earlier recruiters is called:

Accepted Answer

The description matches the definition of pyramid selling, where the emphasis is on recruiting others to join the scheme rather than selling products. New recruits pay a fee to join, and part of that fee goes up the chain to earlier recruiters, forming a pyramid-like structure. This scheme is often illegal because it is akin to a pyramid scheme, which eventually collapses as it becomes unsustainable.

Question 5

Brian devised a scheme and instructed his partner to submit sham price quotations from dormant companies for a bulletproof-vest contract.The sham price quotations were submitted with intentionally increased prices so that one company,a Kuwaiti general trading firm,would win the contract at a lower price.The owner of the Kuwaiti general trading firm then authorized Brian to negotiate and receive all funds related to the contract.This is an example of:

Accepted Answer

This is an example of bid rigging, where fake bids are submitted to create the appearance of competition and artificially inflate the price of a contract, with the intention of awarding the contract to a pre-determined party at a lower price.

Question 6

Which of the following illegal marketing practices are the retailers primarily involved in?

Accepted Answer

The answer of Which of the following illegal marketing practices...

Question 7

A company sells a mattress,which is claimed to promote good health.It also convinces customers to become part of a club where they receive commissions if they get other people to join the club or buy mattresses.This is an example of:

Accepted Answer

The practice of convincing customers to become part of a club and receive commissions for getting others to join or buy mattresses is known as referral selling. This is different from pyramid selling, where the emphasis is primarily on getting new people to join and make payments, rather than selling a product or service of actual value.

Question 8

A university publishes a journal,which is subscribed to by individuals and bookshops.The editors have recommended $20 as the retail price.The university also maintains that the journal cannot be sold at a discount.The university has threatened to cease the supply to any bookshop that sells for less than the recommended retail price.This is an example of:

Accepted Answer

This scenario is an example of resale price maintenance, where the university is maintaining a minimum retail price for the journal and threatening to cease supply to bookshops that sell below the recommended price. This is done to ensure that the product maintains a certain image and quality, and to prevent price wars between bookshops.

Question 9

A driving school charges more to teach women drivers.Its justification is that,even though the lessons and methods are the same as used for men,they think they need to be more careful when women are driving.This is an example of:

Accepted Answer

This is an example of price discrimination as the driving school is charging different prices for the same service based on gender. They are justifying it with a perceived difference in risk, but it is still discrimination.

Question 10

Beck wanted to join a gym but was worried about the cost.The gym offered her a 100 percent rebate on a one-year membership if she gave the gym the names and telephone numbers of five of her friends.This is an example of:

Accepted Answer

This scenario is an example of referral selling, as Beck is incentivized to refer new customers to the gym in exchange for a rebate on her own membership cost.

Question 11

A software company released its web browser for free.As a result,other software companies were forced to release their own web browser for free in order to stay in the market.This is an example of:

Accepted Answer

This is an example of predatory pricing where a company sets its prices artificially low to drive competitors out of the market. By releasing a free web browser, the first software company forced other companies to also release free web browsers to stay competitive, which can lead to a loss of profits for those companies.

Question 12

MediaTeq required its employees to send photocopies of a letter to 100 people.The letter contained a list of 10 names and addresses.People were required to send $1 to the first 10 names on the list to join the MediaTeq club.After that,they had to place their names and addresses at the bottom of the list,strike off the first 10 names,and send it to 100 other people.This is an example of:

Accepted Answer

This is an example of pyramid selling or multi-level marketing. It involves the recruitment of participants who are incentivized to recruit other participants to earn commissions and rewards. The structure of the program creates a pyramid-like structure where those at the top who recruit the most members earn the most money, while those at the bottom often struggle to recruit enough members to make a profit. This type of marketing is often considered controversial and has been regulated or banned in some countries.

Question 13

Which of the following has prodded the grocery chain to exclusively cater to the needs of women customers?

Accepted Answer

The changing role of women in society is the most likely reason for the grocery chain to exclusively cater to the needs of women customers. As women become more active participants in the workforce and have less time to shop, businesses are recognizing the need to market specifically to them. There are no government regulations or groups fighting for women rights that would mandate such a decision. There is also no indication that social constraints or pressure from male members of the community would lead to this decision.

Question 14

Four companies quoted for and supplied paints to a massive housing reconstruction program.There were 200 contracts distributed over 10 years.Each company won 25 percent of the contract each year.This is an example of:

Accepted Answer

All four companies winning exactly 25 percent of the contracts each year suggests that they may have colluded and agreed to divide the contracts amongst themselves, which is known as bid rigging. This is a violation of competition law and is illegal. Bait-and-switch involves advertising a product at a low price but then trying to sell a different, more expensive product; predatory pricing involves setting prices artificially low to drive competitors out of business; referral selling and pyramid selling both involve recruiting others to sell products in a network marketing scheme. These do not seem to be applicable to the scenario described.

Question 15

Who is liable for seeking to influence the price at which a product is sold?

Accepted Answer

The answer of Who is liable for seeking to influence...

Question 16

A country allows millions of extra barrels of oil into the market to push prices downward.This squeezes smaller oil producers out of the market and expand the country's own market share.This act could be termed:

Accepted Answer

This act is an example of predatory pricing, which is when a larger firm or country intentionally sets prices lower than their competitors in order to drive them out of business and increase their market share.

Question 17

A hotel management institute develops a training program for students.The fee for the training program is $1,000.The institute offers to share the training program with other colleges for a low price.One of the terms of the contract is that the other colleges should not offer the program to their students for less than $1,000.This is an example of:

Accepted Answer

This is an example of price fixing, where the institute is setting a minimum price for the program and prohibiting other colleges from offering it at a lower price. This practice is illegal under anti-trust laws as it restricts competition and harms consumers.

Question 18

A seller refusing to sell to other channel members unless that member agrees to buy solely from that particular seller is termed:

Accepted Answer

This scenario fits the definition of exclusive dealing, where a seller tries to limit a buyer's choices and force them to purchase solely from that seller.

Question 19

Kelly visited a computer store looking for a model listed at $600.The salesperson stated that this model was out of stock and tried to sell her another model priced at $1,352.This is an example of:

Accepted Answer

This is a classic example of bait-and-switch where the salesperson lured the customer in with a low-priced item that was not available and then tried to sell them a higher-priced item.

Question 20

Four companies dealing in dairy products admitted that they met to increase the price of their common products together.Which of the following exemplifies the activity of these companies?

Accepted Answer

Price fixing is an illegal practice whereby companies agree to set a price for their products or services, thereby eliminating competition and potentially harming consumers. In this case, the four dairy companies admitted to meeting to increase the price of their common products together, which is a clear example of price fixing.

Quiz 3: Marketing Ethics