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Chapter 9

Question	Answer
1) What a product or service is worth to a customer is the:	Answer: customer value.
2) Which of the following statements is true regarding the first-degree of price discrimination?	Answer: It involves charging different prices to segments of the market according to their price elasticity or sensitivity.
3) Charging different prices to different segments according to their price elasticity or sensitivity is commonly known as:	Answer: price discrimination.
4) Price variations within a product category are called:	Answer: price bands.
5) Which of the following is most likely a reason of why some categories have large numbers of product variants?	Answer: to keep competitors from getting shelf space
6) Because more competition implies greater convergence on a standard price, a large number of suppliers in a product category most likely results in:	Answer: narrower price bands.
7) Which of the following is the the maximum price someone is willing to pay for a product?	Answer: reservation price
8) Which of the following statements is true about perceived value?	Answer: Perceived value is always relative.
9) Strategically pricing below customer value is called:	Answer: value pricing.
10) Which of the following best describes setting a price at the level determined to represent the customer's perceived value for your product?	Answer: pricing to value
11) In this situation, the manager has set a price that is higher than the target market is willing to pay. The customer looks at this situation as a bad deal and, unless the company has a monopoly or some other kind of market power, does not buy. Identify the situation.	Answer: price > perceived value > cost
12) This scenario clearly represents a failure. Usually, such products are weeded out in the new-product development process. If not, they are ultimately withdrawn from the market. Identify this scenario.	Answer: price > cost > perceived value
13) Identify the correct formula for the calculation of price elasticity of demand.	Answer: E = percent change in demand/percent change in price
14) When the absolute value of price elasticity of demand is ________, the category is price elastic.	Answer: greater than 1
15) With regard to price elasticity, if a product's price is low to the point where there is considerable value left for the customer (a good deal), an increase in price will:	Answer: not have much impact.
16) As the price of a product gets closer to customer value,	Answer: price elasticity will increase.
17) The concept of "value-in-use" is a useful method of estimating customer value for:	Answer: industrial products.
18) Identify the approach where the benefits of the product are put in monetary terms such as time savings, less use of materials, or less downtime.	Answer: value-in-use
19) Which of the following best describes a trend in business to purchase a service from an outside vendor to replace the company's operation?	Answer: outsourcing
20) Which of the following approaches to calculating customer value creates a scale that puts survey responses in monetary terms?	Answer: dollarmetric method
21) Which of the following is a marketing research method that uses theoretical profiles or concepts to determine how customers value different levels of product attributes?	Answer: conjoint analysis
22) This method is an alternative to survey-based methods and takes place in a real environment. It tries to obtain actual market data after manipulating price in different markets. Identify this method.	Answer: field experimental method
23) An understanding of the cost structure of the market provides marketing managers with:	Answer: an idea of how low some competitors can price.
24) Purchasing a competitor's product and taking it apart, studying the cost of the components, and packaging describes the process of:	Answer: reverse engineering.
25) Identify the phenomenon in which the conventional functional relationship assumed is that unit costs are a decreasing function of accumulated experience, or production volume.	Answer: the experience curve
26) Full cost plus some target margin are used to set price in a:	Answer: nonmarket-driven firm.
27) ________ are spread out over many years and sometimes different products.	Answer: Development costs
28) Development costs are best described as:	Answer: expenses involved in bringing new products to the market.
29) If there is no legal way to keep competitors out of the market, these costs must be viewed as sunk costs that do not affect decision making after the product is introduced into the market. Identify the type of cost being discussed.	Answer: development cost
30) Costs such as the corporate jet and the president's salary are examples of:	Answer: overhead costs.
31) Which of the following best describes the costs that must ultimately be covered by revenues from individual products, but are not associated with any one product?	Answer: overhead costs
32) Costs, such as the marketing manager's salary and product-related advertising and promotion expenses, are examples of:	Answer: direct fixed costs.
33) Which of the following statements is true regarding a direct fixed cost?	Answer: These costs do not vary with sales volume.
34) Which of the following describes the per-unit cost of making the product or delivering the service?	Answer: variable costs
35) Which of the following statements is true about variable costs?	Answer: These costs must be recovered by the price.
36) Which of the following is a concern for marketing managers when price is used as a cost-recovery mechanism?	Answer: a mismatch between price and customers' perceptions of value
37) Market share pricing is also known as:	Answer: penetration pricing.
38) Which of the following strategies entails giving most of the value to the customer and keeping a small margin?	Answer: penetration pricing
39) Which of the following pricing strategies is used to gain as much market share as possible?	Answer: penetration pricing
40) Identify the pricing strategy that is useful for preventing competitive entry.	Answer: penetration pricing
41) Which of the following best describes a situation when penetration pricing should be used?	Answer: when a large segment of the customer base is price-sensitive
42) The opposite of the penetration pricing is:	Answer: skimming.
43) Skimming is also known as ________ pricing.	Answer: prestige
44) Which of the following pricing strategies is the most appropriate when costs are not related to volume and managers are less concerned about building significant market share?	Answer: skimming
45) Which of the following describes a situation when skimming should be used?	Answer: when there is a strong price—perceived quality relationship
46) Which of the following describes establishing a price that provides the rate of return demanded by senior management?	Answer: return on sales pricing
47) Which of the following pricing objectives is useful only when the product has a monopoly or near monopoly position so that the market will produce the needed sales volume at the price set?	Answer: investment pricing
48) Which of the following best describes the pricing objective typically used by regulated utilities such as gas and electricity?	Answer: investment pricing
49) Telephone rates for large users such as telemarketing firms and banks fall under this category. Identify this pricing objective category.	Answer: pricing for stability
50) Which of the following pricing objectives describes a situation where the marketer attempts to price the product at the market average or match a particular brand's price?	Answer: competitive pricing
51) Which of the following pricing objectives is appropriate when customers have not been persuaded that significant differences exist among the competitors and that they view the product as a commodity?	Answer: competitive pricing
52) When Microsoft introduced the Xbox videogame console in 2001, the company priced it at $299, exactly the same price as Sony's PlayStation 2, the market leader. Identify this pricing strategy.	Answer: competitive pricing
53) Identify the concept related to the psychological aspects of price.	Answer: reference price
54) A ________ is any standard of comparison against which an observed potential transaction or purchase price is compared.	Answer: reference price
55) In the retail business, the reference price is often listed on the sales tag as the:	Answer: original price.
56) Internal reference prices are formed from advertising, past purchasing experience, and so on, and are often called ________ because the customer considers them the actual prices of the products in a category.	Answer: perceived prices
57) ________ goods are products that you have to try before assessing its quality.	Answer: Experience
58) If the quality of a product or service is difficult to evaluate even after you have purchased and used the product or service, the product falls under the category of:	Answer: credence goods.
59) High buyer power tends to ________ prices and high supplier power ________ the floor beneath which prices cannot be set.	Answer: depress; raises
60) Identify the approach that integrates a set of products and offers them in a package that is usually lower in price than the sum of the prices of the individual components.	Answer: price bundling
61) The ________ approach involves offering both a high-priced and a low-priced brand that would result in brands at multiple price tiers.	Answer: congestion pricing
62) Which of the following pricing tactics applies to products that are used together when one of the products is a consumable that must be replenished continually?	Answer: complementary pricing
63) Which of the following statements is true about value pricing?	Answer: It gives customers more value than they expect for the price paid.
64) ________ pricing gives customers more value than they expect for the price paid.	Answer: Value
65) The senior citizen discounts given at movie theaters and quantity discounts on personal computers given to large customers are examples of:	Answer: price discrimination.
66) A disposable diaper company prices its newborn disposable diapers higher than later-stage diapers to take advantage of new parents' concerns and concomitant extreme price insensitivity. This is an example of:	Answer: congestion pricing.
67) Identify the strategy that involves selling the extra production at a discount to a market separate from the main market.	Answer: second-market discounting
68) Theater tickets cost more on weekends. This is an example of:	Answer: periodic discounting.
69) Identify the strategy that allows customers to choose the option that best suits their level of usage.	Answer: per-use pricing
70) Identify the main advantage of the Web as an auction site.	Answer: the size of the audience
rtrotter@homeserv:~/MKT_TestBank/Final$ cat chapter10-done
1) Which of the following statements is true regarding integrated marketing communications (IMAnswer:?	Answer: It coordinates different elements of the marketing mix to prevent customer confusion from conflicting messages.
2) Identify the element of communication process that can be the creative part of an advertisement or Web site.	Answer: encoding
3) A person watching a television commercial at home is distracted by a crying baby. In the communication process, the crying baby can be cited as an example of:	Answer: a noise.
4) Which of the following is an example of a personal channel of communication?	Answer: sales force
5) Mass media, which includes television, newspapers, radio, direct mail, billboards, magazines, and the Internet are often referred to as ________ channels of communication.	Answer: nonpersonal
6) Companies often receive feedback from user groups who form their own electronic clubs who can form a collective opinion and quickly supply information about new or developing products. These electronic clubs are known as:	Answer: listservs.
7) Which of the following is one of the factors related to richness of communication?	Answer: possibility of customization
8) If we plot the traditional trade-off between richness and reach with reach plotted on the X-axis and richness on the Y-axis, identify the channel of communication that would be at the upper left of the line.	Answer: personal selling
9) ________ has traditionally been defined as any paid form of nonpersonal communication about an organization, product, service, or idea by an identified sponsor.	Answer: Advertising
10) Which of the following statements is true about mass media?	Answer: Television advertising is an example of mass media.
11) Which of the following statements is true regarding advertising?	Answer: Advertising is usually used to build sales in the long term.
12) Which of the following best describes any communication form that sends messages directly to a target market with the anticipation of an immediate or short-term response?	Answer: direct marketing
13) Which of the following is not a way to implement direct marketing?	Answer: sales promotion
14) ________ involves sending letters or catalogues to reach potential customers.	Answer: Direct mail marketing
15) Identify the approach that uses friends and neighbors as the sales force.	Answer: direct sales
16) Which of the following is true about direct marketing?	Answer: Many customers are put off by direct marketing efforts.
17) Communication activities that provide extra incentives to customers or the sales force to achieve a short-term objective are called:	Answer: sales promotion.
18) Which of the following best describes a communication activity that includes elements such as coupons, point-of-purchase savings, sweepstakes, rebates, and free samples?	Answer: consumer-oriented promotions
19) Promotions targeting channels of distribution in an effort to get the channels to carry and promote the product are known as:	Answer: trade promotions.
20) Identify the objective of trade promotions.	Answer: get channels to carry the product and promote it
21) Which of the following statements is true regarding sales promotion?	Answer: Customers are induced to become price-sensitive.
22) Communications for which the sponsoring organization does not pay are known as:	Answer: public relations.
23) Which of the following is the advantage of public relations?	Answer: the message originates from an unbiased source
24) Which of the following involves face-to-face communications between seller and buyer ?	Answer: personal selling
25) For companies marketing business-to-business products and services, the largest part of the marketing budget is usually allocated to:	Answer: personal selling.
26) Which of the following statements is true about personal selling?	Answer: Personal selling is expensive.
27) Which of the following is the first stage of the advertising decision-making process?	Answer: selecting the target audience
28) Which of the following is the final stage of the advertising decision-making process?	Answer: measuring advertising effects
29) The stage where customers are becoming aware of the product and developing knowledge of the product's attributes and benefits is known as:	Answer: cognitive stage.
30) Which of the following represents a level of response at which the customer has gone beyond mere knowledge of the product and has begun to develop attitudes, preferences, and perhaps interest?	Answer: affective stage
31) Visiting a retailer to see a product demonstration is an example of which of the following levels of response?	Answer: behavior
32) With reference to the three basic stages of the advertising response process, what type of objective should be used if marketing research determines that awareness is high but few potential customers perceive the product favorably?	Answer: affective objectives
33) With reference to the three basic stages of the advertising response process, inducing trial for a product is an example of which of the following?	Answer: behavioral objectives
34) Which of the following characterizes the maturity stage of the product life cycle?	Answer: competition is intense and the products are fairly similar in terms of their characteristics
35) Which of the following types of appeals focuses on the functional or practical aspects of the product and emphasize facts, learning, and persuasion?	Answer: informational appeals
36) Which of the following types of informational appeals focuses on the dominant attributes or characteristics of the product or service, or the benefits provided?	Answer: feature/benefit appeals
37) ________ appeals make either a direct or indirect claim of superiority against a targeted or general class of competitors.	Answer: Competitive advantage
38) Identify the advertisements in which some kind of announcement about the product dominates the copy.	Answer: news appeals
39) Which of the following types of appeals is used to develop an image-oriented advertisement which is used for product categories where it is difficult to establish tangible differential advantages?	Answer: emotional appeals
40) Which of the following statements is true about advertisements that are created using emotional appeals?	Answer: Advertisements created using emotional appeals focus on imagery and symbols.
41) In these ads, the copy touts how popular the product is among the target audience. Identify the informational appeal being used.	Answer: product or service popularity appeal
42) Identify the appeals that are intended to tap an underlying psychological benefit of the purchase decision?	Answer: emotional appeals
43) Respondents are shown both control and test ads. After viewing the ads, they are asked what information they recall from the ads and which they liked best. The ads with the highest recall and liking are considered to be the most effective. Identify the laboratory test conducted.	Answer: portfolio test
44) ________ is the most common form of testing for advertising concepts.	Answer: Consumer jury
45) Eye tracking is an example of:	Answer: physiological methods.
46) Which of the following types of laboratory tests is implemented by counting the number of syllables per 100 words, the length of sentences, and other structural aspects of the copy?	Answer: readability test
47) Which of the following tests is a laboratory test used for print ads?	Answer: readability test
48) Which of the following tests is most likely to be used for pretesting television commercials?	Answer: theater test
49) In this testing procedure, the researcher attempts to simulate a shopping environment by setting up a supermarket-like shopping shelf with real brands. Identify this testing procedure.	Answer: laboratory stores
50) Which of the following tests is a real-world measure?	Answer: inquiry test
51) Which of the following tests is the most widely used method for posttesting print ads?	Answer: recognition test
52) Which of the following is true regarding television advertising?	Answer: It is the best medium for action and image advertising.
53) Which of the following is true regarding print ads?	Answer: Print has archival value.
54) Which of the following statements is true regarding radio?	Answer: Radio can reach audiences quickly.
55) Which of the following is an example of a "new" media?	Answer: the Web
56) Cost-per-thousand (CPM) is a measure of:	Answer: the efficiency of a media type.
57) Gross rating point (GRP) is a popular counting measure for:	Answer: television.
58) If a commercial is shown four times on a show reaching 20 percent of the target audience, calculate the GRP (gross rating point).	Answer: 80 GRP
59) Identify the two subcategories of contextual fit.	Answer: media fit and program and ad context
60) The "flighting" pattern of advertising can be best described by:	Answer: a burst of advertising alternated with a period of no advertising.
61) Flighting or pulsing can lead to:	Answer: higher temporary peak in recall.
62) The "pulsing" pattern of advertising is characterized by:	Answer: a basic level of advertising combined with regularly scheduled bursts of advertising.
63) Which of the following statements is true regarding the percentage of sales approach to budgeting?	Answer: It selects a percentage of sales, either past or expected to devote to advertising.
64) Which of the following approaches to budgeting attempts to spend at levels proportional to the competition's spending?	Answer: competitive parity
65) Which of the following approaches to budgeting is the ultimate in "advertising as a cost of doing business" thinking and is similar in spirit to the percentage-of-sales method?	Answer: affordability
66) Which of the following approaches to budgeting involves trying different levels of spending–either in different regions or in more controlled settings–and monitoring the results?	Answer: experimentation
67) Which of the following approaches to budgeting involves using computerized decision support systems (DSSs) such as ADBUDG to structure budget decisions systematically?	Answer: decision calculus
68) Price is a communication tool.	Answer: TRUE
69) In Integrated Marketing Communications, marketing messages are coordinated to reinforce what each is saying and to prevent customer confusion from conflicting messages.	Answer: TRUE
70) The two major participants in a marketing communication process are the customers and the competitors.	Answer: FALSE
71) Personal channel of communication includes direct contact, such as a sales force or salespeople in a retail channel.	Answer: TRUE
72) Direct mail is an example of a personal channel of communication.	Answer: FALSE
73) Internet is an example of a nonpersonal channel of communication.	Answer: TRUE
74) A large portion of marketing communication is focused on personal channels of communication.	Answer: FALSE
75) B-to-B companies spend a higher percentage of their communications money on mass media like TV advertising and much less on print advertising than consumer-products companies.	Answer: FALSE
76) Advertising has traditionally been defined as any paid or unpaid form of personal communication about an organization, product, service, or idea by an identified sponsor.	Answer: FALSE
77) Advertisements offer a fair amount of control over what you can say to potential customers.	Answer: TRUE
78) Telemarketing and direct sales approach are part of sales promotion.	Answer: FALSE
79) The effectiveness of a direct-mail campaign is easy to evaluate because the response comes quickly after the date of the promotion, or not at all.	Answer: TRUE
80) Sales promotion involves communication activities that provide extra incentives to customers or the sales force to achieve a short-term objective.	Answer: TRUE
81) Sales promotion can induce customers to become brand-loyal.	Answer: FALSE
82) Public relations (PR) has more credibility than advertising.	Answer: TRUE
83) The major drawback of personal selling is the expense.	Answer: TRUE
84) For products and services where there is relatively little information processing, consumers may move from the cognitive stage directly to the behavioral stage and then form attitudes after product usage.	Answer: TRUE
85) The advertisements that use news appeals make either a direct or indirect claim of superiority against a targeted or general class of competitors.	Answer: FALSE
86) Informational appeals focus on the functional or practical aspects of the product.	Answer: TRUE
87) The most common form of testing for advertising concepts is the use of focus groups.	Answer: TRUE
88) Measuring pupil dilation is a method used in readability tests.	Answer: FALSE
89) Inquiry tests are used for print ads.	Answer: TRUE
90) The minimarket test method is limited to ads for frequently purchased consumer goods with sales objectives.	Answer: TRUE
91) Inquiry test is a type of laboratory test.	Answer: FALSE
92) TV is better than print ads to target specific audiences.	Answer: FALSE
93) TV is the best medium for action and image advertising.	Answer: TRUE
94) The number of GRPs attained by a TV schedule is the product of the reach and the frequency. In this case, frequency is the number of times the commercial is aired.	Answer: TRUE
95) A basic level of advertising combined with regularly scheduled bursts of advertising is known as "flighting" pattern of advertising.	Answer: FALSE
96) Describe the elements of the communication mix.	Answer:
97) List the six stages of the advertising decision-making process.	Answer:
98) List and briefly describe the general types of informational appeals.	Answer:
99) Describe the major types of media and the advantages of each.	Answer:
100) List and briefly describe the most commonly-used methods for setting advertising budgets.	Answer:

Created by: lonehorse

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