Deck 13: Pricing,promoting,and Distributing Products

Question 1

Sally is selling bracelets for $16.00 and the markup is $6.40.What is the markup percentage?

A)40 percent
B)12.5 percent
C)19.6 percent
D)36.4 percent
E)54 percent

Answer 1

A

Question 2

The amount added to a product's cost to meet profit targets is usually expressed as a percentage of

A)selling price.
B)selling costs.
C)component costs.
D)total costs.
E)wholesale price.

Answer 2

A

Question 3

By stocking a new,highly visible line of shampoos priced lower than local stores,Jack is trying to increase

A)the quality of hair of the youth in the area.
B)the break-even point.
C)yield management.
D)fixed costs so that the variable costs would decrease.
E)his market share of the hair product market.

Answer 3

E

Question 4

Sara is selling posters at the sale price of $12.00,and the markup percentage is 35 percent.What is the dollar amount of the markup?

A)$7.80
B)$4.20
C)$7.75
D)$3.50
E)None of these

Question 5

In setting a price for shoes,a retail store owner would need to consider all of the following costs except

A)market share objectives.
B)utilities and insurance.
C)store rent and staff salaries.
D)product displays.
E)cost of buying the shoes from the manufacturer.

Question 6

If the Piper & Son's fixed cost for making pickled peppers is $200 000,and its variable cost per jar is $1,how many jars would the company have to sell at $3 per jar to break even?

A)50 000
B)66 667
C)100 000
D)133 333
E)300 000

Question 7

Betty's Breads is trying to calculate its break-even point.Monthly fixed costs are $5255.The cost of making one loaf of bread,considering labour and materials,is $3.50.Betty's sells the bread at $6 per loaf.How many loaves does Betty's need to sell each month in order to break even?

A)251
B)626
C)1502
D)2102
E)2200

Question 8

Companies often price their products to establish ________,a company's percentage of the total market sales for a specific product type.

A)break-even point
B)sales percentage
C)variable costs
D)fixed costs
E)market share

Question 9

Piper & Son makes pickled peppers,sold in upscale supermarkets and specialty food stores.The company has profit-maximizing pricing objectives,so managers constantly monitor the prices of key ingredients such as peppers,vinegar,and garlic.How can setting the price for pickled peppers too high yield profits that are lower than the maximum?

A)The high price will cause the convenience goods to become shopping goods.
B)The high price will hurt the company's reputation,so the product will decline.
C)The high price will generate a large profit per jar,but too few jars will be sold.
D)Customers will insist on paying a lower price,resulting in less income.
E)The high price will cause expenses to rise,reducing profits.

Question 10

What are the two basic tools used in price-setting?

A)Profit maximization and market share
B)Advertising and sales promotion
C)Cost-oriented pricing and break-even analysis
D)Cost-oriented pricing and profit maximization
E)Cost-oriented pricing and market share

Question 11

What information is provided to the manager by performing a break-even analysis?

A)The break-even point identifies the total costs.
B)The break-even point identifies the point where variable costs equal fixed costs.
C)Sales volume above the break-even point makes a profit for the firm.
D)The break-even point identifies the amount of markup.
E)The break-even point identifies the intersection of the demand and supply curves.

Question 12

A highly successful bakery specializes in making cherry pie.Which of the following costs at the bakery is not variable?

A)Cost of cherries
B)Cost of flour
C)Cost of wax paper liners
D)Cost of the oven
E)Cost of heating the oven

Question 13

Shiras Watch Depot prices all watches at $150.The variable cost per watch is $70 and the fixed costs are $55 000.What is Shiras's break-even point in units?

A)687.50
B)806.25
C)702.00
D)300.00
E)453.75

Question 14

Costs that change with the quantity of a product that is produced or sold are

A)ongoing costs.
B)variable costs.
C)fixed costs.
D)product costs.
E)selling costs.

Question 15

What are the two main pricing objectives in corporate pricing?

A)Market share and company image
B)Advertising and sales promotion
C)Company survival in a competitive marketplace and profit maximization
D)Market share and profit maximization
E)Advertising and profit maximization

Question 16

How is markup percentage calculated?

A)By dividing the selling price by fixed costs
B)By adding the selling price and the cost of advertising
C)By dividing the selling price by the dollar amount of the markup
D)By dividing the dollar amount of the markup by the selling price
E)By dividing inventory by the selling price

Question 17

Piper & Son sells pickled peppers to stores for $3 per jar,and the stores sell each jar to consumers for $7.50.What is the markup percentage?

A)40 percent
B)60 percent
C)67 percent
D)150 percent
E)250 percent

Question 18

What is the purpose of using break-even analysis when attempting to set prices?

A)To determine the total costs of the product
B)To show the cost,volume,and profit relationships
C)To compare demand and supply
D)To reflect the markup needed to make a profit
E)To show the costs which must be considered in setting prices

Question 19

If the cost of one unit of product is $8 and the store sells the product for $15,what is the markup percentage?

A)46.7 percent
B)41.3 percent
C)150.3 percent
D)214.5 percent
E)66.3 percent

Question 20

What is "markup"?

A)Markup is the point at which the firm covers the fixed and variable costs.
B)Markup is the amount of money left over after all expenses have been deducted from revenues.
C)Markup is an amount equal to demand divided by product cost.
D)Markup is an amount added to the cost of the item to arrive at the selling price.
E)Markup is the point where demand equals supply.

Question 21

Promotion seeks to accomplish all the following with potential customers except

A)persuade them to purchase products.
B)persuade them to dislike all other competitors' products.
C)make them aware of products.
D)make them knowledgeable about products.
E)persuade them to like products.

Question 22

What results can be expected if Hydro Supreme Ltd.uses a price skimming strategy to price its new revolutionary irrigation systems?

A)Large profits may be earned on each sale.
B)It may generate a lot of consumer interest,but very low profits.
C)It permits the company to gain entrance into a market and then later adjust the price to a more realistic figure.
D)It generates a lot of consumer interest.
E)It will increase Hydro Supreme's market share.

Question 23

Which of the following options best describes an example of price lining?

A)Having the price of each individual song on an online music store be determined by length of song
B)Having the price of each individual song on an online music store be determined by popularity of the band
C)Having the price of each individual song on an online music store be determined by user auction
D)Having the price of each individual song on an online music store be determined by reverse auction
E)Having the price of each individual song on an online music store be determined by which of several categories the song falls into

Question 24

When is discounting used to set prices?

A)When attempting to stimulate sales
B)When odd-even psychological pricing is not successful
C)When conducting a break-even analysis
D)When a price-skimming strategy is used
E)When profit margins are too low

Question 25

Which of the following is correct with regard to break-even analysis?

A)Variable costs are really all that is important.
B)Fixed costs are all that really is important.
C)Some costs are unaffected by the number of units of product that are sold.
D)Generally speaking,retailers should charge higher prices so that they will reach the break-even point earlier.
E)Break-even analysis fails to take into account the slope of the demand curve.

Question 26

Which of the following is correct with regard to the pricing of existing and new products?

A)Price skimming is generally most effective for consumer goods,but penetration pricing is generally most effective for industrial goods.
B)The penetration pricing option is generally most effective for both consumer and industrial goods.
C)In the car rental business,setting prices below the market generally works best.
D)Penetration pricing is generally superior to a skimming strategy for new products.
E)None of these is correct.

Question 27

The pricing strategy that is used to create consumer interest and stimulate trial purchases of a new product is

A)penetration pricing.
B)price lining.
C)market pricing.
D)price fixing.
E)price skimming.

Question 28

What pricing strategy has generally been used for the new introduction of innovative technology like 8K TV?

A)Penetration pricing
B)Price lining
C)Market pricing
D)Price fixing
E)Price skimming

Question 29

Searchmont Ski Resort was finding that spring was a particularly slow time for chalet rentals.In order to increase the occupancy rate,Searchmont implemented a(n)

A)advertising campaign.
B)seasonal discount.
C)skimming pricing strategy.
D)penetration pricing strategy.
E)trade credit policy.

Question 30

What term identifies a company's policy of offering all items in certain categories (e.g. ,men's suits)at a limited number of prices?

A)Price skimming
B)Boundary pricing
C)Discounting
D)Penetration pricing
E)Price lining

Question 31

Priceline uses a form of ________ pricing,which allows sellers to alter prices privately on an individual basis.

A)penetration
B)skimming
C)dynamic
D)psychological
E)odd-even

Question 32

The owner of Julia's Craft Supply Store would like to take advantage of the fact that customers are not completely rational when making buying decisions and may prefer prices that are not stated in even dollar amounts.Which pricing tactic is she interested in?

A)Discounting
B)Price skimming
C)Psychological pricing
D)Skewed pricing
E)Price lining

Question 33

Which of the following is correct with regard to the issue of fixed versus dynamic pricing?

A)When launching new products,start-up firms generally use dynamic pricing until they get a better understanding of the market.
B)In the digital marketplace,dynamic pricing is the norm.
C)Amazon.com uses fixed pricing as its pricing strategy for its millions of retail items.
D)The reverse auction is one type of fixed pricing.
E)All of these are correct.

Question 34

Which of the following best represents the formula for the break-even point?

A)Total variable costs divided by (price minus variable costs)
B)Total variable costs divided by (price minus fixed costs)
C)Total fixed costs divided by (price minus variable costs)
D)Total fixed costs divided by (price minus fixed costs)
E)Total revenue divided by (price minus fixed costs)

Question 35

Penetration pricing involves

A)setting prices in uneven dollar amounts.
B)setting an initial low price to establish a new product in the market.
C)taking advantage of the fact that consumers do not always respond rationally to stated prices.
D)setting an initial high price to cover new product costs and generate a profit.
E)setting a limited number of prices for certain categories of products.

Question 36

Odd-even pricing involves

A)setting a limited number of prices for certain categories of products.
B)setting an initial high price to cover new product costs and generating a profit.
C)taking advantage of the fact that consumers do not always respond rationally to stated prices.
D)setting prices in uneven dollar amounts.
E)setting an initial low price to establish a new product in the market.

Question 37

Which of the following pricing strategies best describes price lining?

A)Setting an initial low price to establish a new product in the market
B)Setting an initial high price to cover new product costs and generate a profit
C)Setting individually negotiated prices for certain categories of products
D)Setting a limited number of prices for certain categories of products
E)Setting individually negotiated prices for all categories of products

Question 38

What is the best definition of the term fixed costs?

A)Costs that are needed to acquire a fixed market share
B)Costs that are needed to acquire fixed profits
C)Costs that are unaffected by the number of goods sold by the firm
D)Costs that remain the same from year to year
E)Costs that remain the same across all products

Question 39

Psychological pricing involves

A)setting an initial low price to establish a new product in the market.
B)setting prices in uneven dollar amounts.
C)setting a limited number of prices for certain categories of products.
D)setting an initial high price to cover new product costs and generating a profit.
E)taking advantage of the fact that consumers do not always respond rationally to stated prices.

Question 40

If Louisa's Craft Supply Store uses odd-even psychological pricing,then it would likely price its yarn at

A)$4.50 per ball.
B)$4 per ball.
C)$5 per ball.
D)$4.95 per ball.
E)$6 per ball.

Question 41

Which of the following is correct with regard to the various media?

A)About twice as much is spent on advertising in magazines than is spent on newspapers.
B)More money is spent on magazine advertising than on online ads
C)Radio stations are generally not highly segmented into listening categories.
D)Billboard messages are relatively expensive.
E)People tend to use radio as "background" while they are doing other things.

Question 42

Which communications vehicle appeals to many consumer senses,can be targeted to a specific audience,and reaches more people than any other medium?

A)Magazines
B)Radio
C)Television
D)Newspaper
E)Direct mail

Question 43

Which promotional strategy appeals directly to the consumer who demands the product from retailers,who,in turn,demand the product from wholesalers?

A)Product positioning
B)Layered promotion
C)Pull strategy
D)Contests
E)Push strategy

Question 44

What is the ultimate objective of any type of promotion?

A)Image enhancement
B)Creative selling
C)To increase sales
D)To advertise
E)To increase consumer knowledge of the product

Question 45

In recent years,the trend is clear.Online advertising in its various forms is quickly climbing to the top of advertiser preferences,at the expense of all the traditional media.Which of the following statements about TV advertising is correct?

A)DVRs and PVRs are helping to maintain the strength of TV advertising.
B)The shift to "online binge watching" has hurt TV advertising.
C)TV advertising is easier to measure than online ads.
D)TV advertising is ranked third in terms of advertising dollars.
E)One of the key strengths of TV advertising is the ability to customize.

Question 46

Sally selected ________ advertising because it is relatively inexpensive,faces little competition for customers' attention,and is subject to high repeat exposure.

A)outdoor
B)magazine
C)television
D)online
E)radio

Question 47

Which communications vehicle is flexible,has rapid coverage,but only lasts briefly and cannot compete in terms of image quality?

A)Direct mail
B)Newspapers
C)Magazines
D)Radio
E)Television

Question 48

Jack wants to sell his new marketing ideas from any location and yet be as global as possible.Which advertising medium should Jack use?

A)Newspaper
B)Radio
C)Outdoor
D)Online
E)Television

Question 49

In terms of advertising revenues,which medium is the most important?

A)Newspapers
B)Television
C)Radio
D)Internet
E)Magazines

Question 50

This medium is inexpensive,it effectively segments customers,and its messages disappear quickly.Which communications vehicle is being described?

A)Radio
B)Mobile
C)Newspaper
D)Television
E)Magazines

Question 51

A ________ strategy is a promotional strategy designed to encourage wholesalers and retailers to market those products to the consumer.

A)push
B)position
C)product
D)pull
E)place

Question 52

This communications vehicle is highly segmented,allows for excellent visual communication,and is long-lived,but requires a long lead-time.

A)Online
B)Television
C)Magazines
D)Newspaper
E)Outdoor

Question 53

Samantha wanted to use a flexible communication vehicle which would give her rapid coverage.She should select ________ advertising.

A)television
B)newspaper
C)magazine
D)radio
E)online

Question 54

Mega Computer,a computer manufacturer,is using direct mail to send 10 percent off coupons to its list of potential customers.This strategy is called a ________ strategy.

A)pull
B)product
C)position
D)push
E)place

Question 55

Adrianna developed a new perfume.She wanted to market the perfume via a communication vehicle that appeals to many consumer senses,targets a specific audience,and reaches as many people as possible.Adrianna would select ________ advertising.

A)television
B)magazine
C)radio
D)mobile
E)newspaper

Question 56

Which advertising medium can present only limited information and sellers have little control over who sees their advertisements?

A)Television
B)Radio
C)Online
D)Magazines
E)Outdoor

Question 57

Mega Computers,a computer manufacturer,has decided to promote its new line of computers by offering its wholesalers and retailers an additional 5 percent off list prices.This strategy is called a ________ strategy.

A)product
B)pull
C)push
D)place
E)position

Question 58

Which of the following is correct with regard to the various media?

A)Online advertising is growing every year,but it lacks consumer engagement.
B)Magazines provide a low level of consumer selectivity.
C)Radio advertisements are fairly inexpensive.
D)Magazine advertising is not very good at conveying to consumers the value of a product.
E)Outdoor advertising is the most important form of advertising based on spending by companies.

Question 59

________ are used in the initial phases to help create awareness for a new product or service.

A)Sales Promotions and outdoor media
B)Advertising and publicity
C)Personal selling and sales promotions
D)Publicity and Personal Selling
E)Direct mail and personal selling

Question 60

When Burger King tells you about a new restaurant that it is opening near you,it is attempting to fulfill which promotional objective?

A)Remind you about the product
B)Communicate information
C)Positioning products
D)Controlling sales volume
E)Eliminate competition

Question 61

The promotional tool in which a salesperson communicates one-on-one with potential customers is

A)direct mail.
B)personal selling.
C)television.
D)radio.
E)magazines.

Question 62

As a start-up company,you need to find ways to reduce costs.Which type of promotion is free?

A)Coupons
B)Gift certificates
C)Free samples
D)Publicity
E)Contests

Question 63

A ________ entitles the customer to stated savings off a product's regular price,while a ________ is a free or reduced-price item given to consumers in return for buying a specified product.

A)coupon;premium
B)premium;coupon
C)contest;premium
D)point-of-sale display;contest
E)premium;contest

Question 64

A gas station offering a free car wash with a fill-up is an example of

A)sales promotion.
B)advertising.
C)publicity.
D)premiums.
E)public relations.

Question 65

Accessibility,relative cost,and the ability to personalize messages are all strengths of ________ advertising.

A)mobile
B)magazine
C)television
D)online
E)radio

Question 66

The most expensive promotional tool on a cost per contact basis is

A)personal selling.
B)direct mail.
C)television.
D)radio.
E)magazines.

Question 67

Which of the following is a type of sales promotion?

A)Publicity
B)Contests and sweepstakes
C)Advertising
D)Personal selling
E)Public relations

Question 68

Which of the following best characterizes the difference between the roles of advertising and personal selling in the promotional mix of a firm?

A)Advertising is,at its worst,very expensive with little return,whereas personal selling is also very expensive,at its worst,but with better returns.
B)Advertising,at its best,targets a specific audience about a product,whereas personal selling,at its best,is always dependent on the clients that a seller has.
C)Advertising involves public relations with the overall population of consumers,whereas personal selling involves personalized relationships with select individuals.
D)Advertising is a relatively new method of promotion,whereas personal selling is the oldest method of promotion.
E)Advertising is non-personal in its communication about a product,whereas personal selling is highly individualized.

Question 69

Algoma Banners set up a booth to display their products and to demonstrate products to customers who have a special interest in their product.Which sales promotion technique were they using?

A)Coupons
B)Premiums
C)Contests
D)Trade shows
E)Point-of-sale displays

Question 70

Coupons,point-of-purchase displays,free samples,and trade shows are examples of

A)advertising.
B)sales promotions.
C)publicity.
D)personal selling.
E)pricing.

Question 71

Due to the high cost of personal selling,many companies turn to

A)radio advertising.
B)telemarketing.
C)coupons.
D)contests.
E)magazine advertising.

Question 72

________ attempts to build goodwill with customers by performing and publicizing a company's public service activities.

A)Personal selling
B)Public relations
C)Advertising
D)Sales promotion
E)Publicity

Question 73

Dove is introducing a new deodorant.In order to entice customers to purchase the deodorant,a free bar of soap is attached to the package.Which type of sales promotion is Dove using?

A)Point-of-sale display
B)Premium
C)Contest
D)Trade show
E)Coupons

Question 74

Brian works at the local grocery store.His supervisor asked him to use point-of-purchase displays.Brian needs to

A)set up a product display strategically located in an area to encourage consumers to buy the products.
B)set up a display where consumers can pick out one item free when they purchase a specified product.
C)pass out coupons to customers purchasing the targeted products as they are checking out.
D)set up a table and give out free samples.
E)interview customers as they are considering a purchase of the targeted products.

Question 75

What is an advantage to the firm when using trade shows as a type of sales promotion?

A)They are effective since the buyer comes to the seller.
B)Coupons may be used to encourage customers to try new products.
C)The displays serve to attract customer attention as they walk through a store.
D)Free samples may be used to allow customers to try a product for a few days without any risk.
E)Contests may increase sales by stimulating buyers' interest in a product.

Question 76

Which of the following makes it easier for customers to find a product and eliminate competitors' products from consideration?

A)POP (or POS)displays
B)Coupons
C)Trade shows
D)Contests
E)Premiums

Question 77

Which type of promotion is outside of the company's control?

A)Coupons
B)Television advertising
C)Personal selling by sales agents
D)Publicity
E)Trade shows

Question 78

A firm that wanted to conduct a short-term activity in order to boost consumer buying would use which of the following strategies?

A)Sales promotions
B)Special offers
C)Trade shows
D)Point-of-sale displays
E)Missionary selling

Question 79

The Cream Soap Company has launched a new campaign geared at increasing the sales volume of its new Fresh Smelling line of soap products.The $1.6 million campaign will cover the costs of providing samples of their soap products to be delivered with the Toronto Star newspaper to 500 000 homes in Toronto.This marketing technique is known as

A)personal selling.
B)public relations.
C)advertising.
D)publicity.
E)sales promotion.

Question 80

Which of the following represents a reason for a firm's use of personal selling promotions?

A)It is the only form of selling that works.
B)It provides a direct link between the seller and the buyer.
C)The salesforce has the capability of contacting the greatest number of potential customers.
D)Personal selling provides the lowest promotional costs per contact.
E)Sales promotions must be convenient and accessible when the purchase decision is made.