Mktg 303 Exam 2 Review Part 2

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Mktg 303 Exam 2 Review Part 2 - Quiz

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Questions and Answers
  • 1. 

    Brad always buys and uses Nike brand golf balls. If he finds a Titleist or Callaway ball in the rough, he gives it away. Brand-loyal golfers like Brad allow Nike to charge a higher price and not lose many sales. By building a strong brand, Nike has effectively

    • A.

      Increased the income effect for its products.

    • B.

      Increased the cross-price elasticity for its products.

    • C.

      Focused on the competitive parity point for its products.

    • D.

      Shifted the golf ball market from a monopoly to pure competition.

    • E.

      Reduced the price elasticity of demand for its products.

    Correct Answer
    E. Reduced the price elasticity of demand for its products.
    Explanation
    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.

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  • 2. 

    Sales of national brands of orange juice tend to increase when the economy is doing well, while sales of generic orange juice increase when the economy is not doing well. This is an example of how _______ impacts demand for products.

    • A.

      Dynamic pricing

    • B.

      The price inelasticity coefficient

    • C.

      The income effect

    • D.

      The target return effect

    • E.

      Cross-price elasticity

    Correct Answer
    C. The income effect
    Explanation
    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."

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  • 3. 

    There are many options available to consumers when it comes to breakfast cereals. So, if Kellogg's significantly increases the price of Rice Krispies, consumers are more apt to buy alternate cereals instead. This illustrates which concept?

    • A.

      The income effect

    • B.

      The substitution effect

    • C.

      The break-even point

    • D.

      The target return effect

    • E.

      Cross-price elasticity

    Correct Answer
    B. The substitution effect
    Explanation
    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.

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  • 4. 

    Earl was known for driving 30 miles just to save a dollar on the price of his favorite beverage. Earl perceived price as _______ for a good or service, while most consumers recognize price as the _______ made to acquire a good or service.

    • A.

      The money paid; overall sacrifice

    • B.

      A variable cost; fixed cost

    • C.

      A fixed cost; variable payment

    • D.

      The overall sacrifice; monetary payment

    • E.

      The break-even amount; total cost

    Correct Answer
    A. The money paid; overall sacrifice
    Explanation
    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.

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  • 5. 

    How can a company find its way out of a market characterized by pure competition?

    • A.

      Consistently offer the lowest price until other competitors leave the market

    • B.

      Increase prices and attract different, quality-oriented customers

    • C.

      Decrease the amount of available product until the market reacts

    • D.

      Increase the amount of available product to flood the market

    • E.

      Differentiate the product in some way, even by packaging, so customers will see it as distinct

    Correct Answer
    E. Differentiate the product in some way, even by packaging, so customers will see it as distinct
    Explanation
    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.

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  • 6. 

    In a(n) _______ pricing strategy, marketers rely on the promotion of sales, during which prices are temporarily reduced to encourage purchases.

    • A.

      High/low

    • B.

      EDLP

    • C.

      Price skimming

    • D.

      Uniform delivered

    • E.

      Bait-and-switch

    Correct Answer
    A. High/low
    Explanation
    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.

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  • 7. 

    Retailers use _____ 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.

    • A.

      Seasonal discounts

    • B.

      Coupons

    • C.

      Rebates

    • D.

      Cumulative quantity discounts

    • E.

      Noncumulative quantity discounts

    Correct Answer
    B. Coupons
    Explanation
    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.

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  • 8. 

    When a firm colludes with other firms to control prices, it is engaging in

    • A.

      Competitive favoritism.

    • B.

      Industry tightening.

    • C.

      Monopolistic competition.

    • D.

      Price fixing.

    • E.

      Regressive pricing.

    Correct Answer
    D. Price fixing.
    Explanation
    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.

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  • 9. 

    The major objectives associated with a market penetration pricing strategy are to

    • A.

      Capture the high end of the market demand curve and lower introduction costs.

    • B.

      Quickly build sales and market share.

    • C.

      Minimize customer dissatisfaction and maximize reference price value.

    • D.

      Provide an incentive to purchase a less desirable product to obtain a more desirable product.

    • E.

      Match competitors' prices and communicate high quality.

    Correct Answer
    B. Quickly build sales and market share.
    Explanation
    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.

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  • 10. 

    Firms using a(n) _______ pricing method set their prices relative to what other firms are charging.

    • A.

      Improvement value

    • B.

      Value-based

    • C.

      Cost-based

    • D.

      Competition-based

    • E.

      Reference-based

    Correct Answer
    D. Competition-based
    Explanation
    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.

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  • 11. 

    Stores like Home Depot and Costco act as wholesalers when they

    • A.

      Take delivery in whole-lot quantities.

    • B.

      Sell directly to consumers.

    • C.

      Sell products for distributors.

    • D.

      Sell to contractors or restaurant owners.

    • E.

      Compete with each other.

    Correct Answer
    D. Sell to contractors or restaurant owners.
    Explanation
    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.

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  • 12. 

    All of the following statements about distribution centers are true except

    • A.

      They enable retailers to carry less merchandise in individual stores.

    • B.

      Distribution center space is typically more expensive than retail space.

    • C.

      They are appropriate for all retailers, from the largest to the smallest.

    • D.

      They are the quickest way to get all products to retailers.

    • E.

      They complicate the process of predicting accurate sales forecasts.

    Correct Answer
    A. They enable retailers to carry less merchandise in individual stores.
    Explanation
    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.

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  • 13. 

    Colin has just received a delivery from the company's distribution center. He opens the containers and finds the popcorn and snacks are all bar-coded and priced and the package includes an end-of-the-aisle display rack. Colin has received a(n) __________ shipment.

    • A.

      Quick-response packaged

    • B.

      Ahead of the curve

    • C.

      Lead time synchronized

    • D.

      Floor-ready

    • E.

      Synthesized

    Correct Answer
    D. Floor-ready
    Explanation
    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.

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  • 14. 

    Felicia had just taken over her family's business after spending ten years in the marketing department of a large corporation. She met with a representative from one of her firm's biggest customers, who told her, "We should think about how we can make the pie bigger rather than fighting over the size of the slices." She had expected a more cutthroat approach rather than this call for a

    • A.

      Partnering relationship.

    • B.

      Shared mission statement.

    • C.

      Common marketing system.

    • D.

      Corporate vertical marketing system.

    • E.

      Linked supply chain.

    Correct Answer
    A. Partnering relationship.
    Explanation
    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.

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  • 15. 

    All of the following are required to build a successful strategic relationship except

    • A.

      Mutual trust.

    • B.

      Open communications.

    • C.

      Creation of a joint venture.

    • D.

      Common goals.

    • E.

      Credible commitments.

    Correct Answer
    C. Creation of a joint venture.
    Explanation
    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.

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  • 16. 

    When a manufacturer chooses one or more retailing partners, the overriding consideration must be

    • A.

      If customers can participate in mobile commerce.

    • B.

      The retailers' customary distribution intensity.

    • C.

      The satisfaction of the retailing partners.

    • D.

      The greatest possible customer convenience and satisfaction.

    • E.

      The overall cost to the manufacturer.

    Correct Answer
    D. The greatest possible customer convenience and satisfaction.
    Explanation
    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.

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  • 17. 

    Many retail golf stores have driving ranges, some with backdrops showing famous golf courses. These driving ranges allow

    • A.

      Wholesalers to evaluate promotional discounts.

    • B.

      Retailers to improve the shopping experience through an improved product line assortment.

    • C.

      Customers to increase their share of wallet spending.

    • D.

      Retailers to avoid competition from knock-off products.

    • E.

      Customers to try before they buy.

    Correct Answer
    E. Customers to try before they buy.
    Explanation
    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.

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  • 18. 

    The key factor distinguishing retailers from other members of the supply chain is that

    • A.

      They sell to consumers, businesses, and government.

    • B.

      They utilize marketing to reach consumers.

    • C.

      They use advertising to generate demand.

    • D.

      They rarely engage in personal selling.

    • E.

      They sell to customers for their personal use.

    Correct Answer
    E. They sell to customers for their personal use.
    Explanation
    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.

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  • 19. 

    In omnichannel retailing, what visible element must often be adjusted because of competition faced in different channels?

    • A.

      Supply chain

    • B.

      Return policies

    • C.

      Pricing

    • D.

      Distribution

    • E.

      Place

    Correct Answer
    C. Pricing
    Explanation
    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.

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  • 20. 

    Retailing is defined as the set of business activities that

    • A.

      Focuses on a firm's core values.

    • B.

      Focuses on transactions, but not relationships.

    • C.

      Add value to products and services sold to consumers for their personal or family use.

    • D.

      Separates wholesaling from manufacturing.

    • E.

      Occurs only in brick-and-mortar space.

    Correct Answer
    C. Add value to products and services sold to consumers for their personal or family use.
    Explanation
    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.

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