Mktg 303 Exam 2 Review Part 2

When Kellogg's significantly increases the price of Rice Krispies, consumers are more likely to buy alternate cereals instead. This is because consumers will substitute Rice Krispies with other breakfast cereals that are more affordable. The concept being illustrated here is the substitution effect, which refers to the change in consumer behavior when the price of one product increases, leading to a shift in demand towards substitute products.

A successful strategic relationship requires several key elements, including mutual trust, open communications, common goals, and credible commitments. However, the creation of a joint venture is not necessarily required for a successful strategic relationship. While a joint venture can be a beneficial outcome of a strategic relationship, it is not a prerequisite for success. Other forms of collaboration and partnership can also lead to successful strategic relationships.

In a market characterized by pure competition, where multiple competitors offer similar products at similar prices, it becomes crucial for a company to differentiate its product in order to stand out. By making the product distinct, even through packaging or other means, the company can attract customers who perceive it as unique and valuable. This differentiation strategy allows the company to create a competitive advantage and potentially gain market share, as customers are more likely to choose their product over others.

Firms using a competition-based pricing method set their prices relative to what other firms are charging. This means that they consider the prices set by their competitors and adjust their own prices accordingly in order to remain competitive in the market. This pricing method takes into account the prices charged by other firms and aims to attract customers by offering competitive prices.

The given statement suggests that the demand for national brands of orange juice increases when the economy is doing well, indicating that consumers have higher incomes and are willing to spend more on premium products. On the other hand, the demand for generic orange juice increases when the economy is not doing well, suggesting that consumers have lower incomes and are more price-sensitive, opting for cheaper alternatives. This demonstrates how changes in consumers' income levels impact their demand for different products, making the correct answer "the income effect."

Retailers use coupons because they believe their use will induce customers to try new products, convert first-time users to regular users, increase purchases, and protect market share. Coupons provide customers with a financial incentive to purchase a product, making it more likely that they will try it or make repeat purchases. Additionally, coupons can attract new customers who may not have otherwise tried the product. By offering discounts through coupons, retailers can also protect their market share by encouraging customers to choose their product over competitors.

The correct answer is "floor-ready". This is because the passage mentions that the popcorn and snacks are bar-coded, priced, and included an end-of-the-aisle display rack. This indicates that the shipment is ready to be placed directly on the sales floor without any additional preparation or setup needed.

Retailing is the set of business activities that add value to products and services sold to consumers for their personal or family use. This means that retailing involves enhancing the products and services in some way to make them more appealing and valuable to the consumers. It focuses on meeting the needs and preferences of individual consumers and providing them with a satisfactory shopping experience. Retailing is not limited to brick-and-mortar stores, as it can also occur online or through other channels.

The driving ranges in retail golf stores allow customers to try out the golf equipment before making a purchase. This gives customers the opportunity to experience the product firsthand and determine if it meets their needs and preferences. Trying before buying can help customers make more informed purchasing decisions and increase their satisfaction with the product.

The representative's statement suggests that they want to work together with Felicia's firm to expand the business and increase overall success, rather than engaging in competition or conflict. This indicates a desire for a collaborative and cooperative relationship, which aligns with the concept of a partnering relationship.

In a high/low pricing strategy, marketers rely on the promotion of sales, during which prices are temporarily reduced to encourage purchases. This strategy involves setting higher prices initially and then offering discounts or promotions to attract customers. It creates a sense of urgency and excitement among consumers, as they perceive the discounted prices as a good deal. This strategy is commonly used in retail and allows businesses to maintain higher profit margins while still attracting price-sensitive customers.

Brand-loyal golfers like Brad who only buy Nike golf balls despite finding other brands in the rough demonstrate a reduced price elasticity of demand. This means that even if Nike raises the price of their golf balls, these loyal customers are still willing to purchase them, allowing Nike to charge a higher price without losing many sales. This indicates that Nike has successfully built a strong brand that has reduced the responsiveness of demand to changes in price.

In omnichannel retailing, pricing must often be adjusted because of competition faced in different channels. This is because different channels may have different pricing strategies or may offer promotions and discounts that need to be competitive with other retailers. Adjusting pricing allows retailers to remain competitive and attract customers across various channels.

When a firm colludes with other firms to control prices, it is engaging in price fixing. This means that the firms involved agree to set a certain price for their products or services, rather than allowing competition to determine the price. This practice is illegal in many countries as it restricts competition and can lead to higher prices for consumers.

A market penetration pricing strategy aims to quickly build sales and market share by setting low prices for a product or service. By offering lower prices than competitors, the strategy attracts customers and encourages them to choose the product over alternatives. This can help the company gain a larger market share and increase sales volume. The objective is to penetrate the market rapidly and establish a strong presence before competitors can catch up.

Retailers are distinguished from other members of the supply chain because they sell products directly to customers for their personal use. This means that retailers are focused on meeting the needs and preferences of individual consumers, as opposed to selling to businesses or government entities. While retailers may utilize marketing and advertising techniques to reach and attract customers, the key factor that sets them apart is their direct interaction with consumers for personal consumption purposes.

Earl's behavior of driving 30 miles just to save a dollar on his favorite beverage indicates that he perceives price as the money paid for a good or service. He is willing to go out of his way and incur additional costs (such as time and transportation expenses) to save money on the purchase. On the other hand, most consumers recognize price as the overall sacrifice made to acquire a good or service, which includes not only the monetary payment but also the time, effort, and any other costs associated with the purchase.

Stores like Home Depot and Costco act as wholesalers when they sell to contractors or restaurant owners. This means that they are selling products in bulk quantities to these specific types of customers, who will then use the products for their own businesses. This is different from selling directly to consumers, selling products for distributors, or competing with each other.

Distribution centers do not enable retailers to carry less merchandise in individual stores. Instead, distribution centers allow retailers to store and distribute a larger amount of merchandise efficiently, reducing the need for excess inventory in individual stores. This helps retailers to optimize their inventory levels and ensure that products are readily available to meet customer demand.

When a manufacturer chooses retailing partners, the most important factor should be the convenience and satisfaction of the customers. This means that the manufacturer should select partners who can provide a seamless and enjoyable shopping experience for the customers. By prioritizing customer convenience and satisfaction, the manufacturer can ensure that their products are easily accessible and meet the needs and expectations of the customers. This approach can lead to increased customer loyalty and ultimately, higher sales for the manufacturer.