Deck 13: Small Business Marketing: Price and Promotion

Question 1

Restaurants, personal computers, and airline travel all tend to have a demand that is ______.

A) price elastic
B) price inelastic
C) price volatile
D) price subjective

Answer 1

A

Question 2

Which of the following is one of the most flexible components of the marketing mix?

A) product
B) promotion
C) place
D) price

Answer 2

D

Question 3

The "right" price, as determined by the small business owner, is a range between what the market will bear and what the product ______.

A) value is perceived to be
B) costs
C) is worth
D) image is perceived to be

Answer 3

B

Question 4

Total costs fall into two general categories: ______.

A) tangible costs and intangible costs
B) fixed costs and variable costs
C) production costs and service costs
D) singular costs and dual costs

Question 5

Health care, food products, and a Ferrari tend to have a demand which is ______.

A) price elastic
B) price inelastic
C) price volatile
D) price subjective

Question 6

While shopping at the supermarket, Selina was dismayed to find that the price of orange juice was now 50% more than what she was used to paying. As a result, Selina purchased grapefruit juice, which was closer to what she usually pays. Based on this example, orange juice is ______.

A) a necessity
B) a luxury good
C) inelastic
D) elastic

Question 7

The value of a product depends on the benefits received compared to the ______.

A) quality of the product
B) quantity purchased of the product
C) monetary cost
D) raw materials used to produce the product

Question 8

The effect that price changes have on sales is known as ______.

A) the demand curve
B) the supply curve
C) the price elasticity
D) the price curve

Question 9

The number of competitors and their proximity influences what a small business owner can charge because the competition represents ______.

A) substitute choices to the customer
B) a better product for the consumer
C) better quality as perceived by the consumer
D) less expensive products

Question 10

The success of Walmart is directly related to its ______.

A) prices
B) advertising
C) high shrinkage
D) economy of scale advantages

Question 11

Consumers typically do not want the cheapest product available, they want the ______.

A) best product for the highest price
B) most reasonable product at the highest price
C) most reasonable product at the lowest price
D) best product for the most reasonable price

Question 12

Establishing the ______ for goods and services at appropriate levels of production is a critical component of the marketing mix.

A) right advertising angle
B) correct sales force
C) best management team
D) right price

Question 13

Products for which customers are price sensitive are said to be ______.

A) price elastic
B) price inelastic
C) price volatile
D) price subjective

Question 14

The number of units of a product people would be willing to purchase at differing price levels is known as ______.

A) the demand curve
B) the supply curve
C) the product curve
D) the price curve

Question 15

Small business owners can compete with large chains like Walmart and Amazon by focusing on ______.

A) lower prices
B) wider selection
C) flexibility
D) convenience

Question 16

If the price of a product increases by 10 percent and sales volume falls by 1 percent, demand for the product is ______.

A) price elastic
B) price inelastic
C) price volatile
D) price subjective

Question 17

Products for which customers are not sensitive to price changes are said to be ______.

A) price elastic
B) price inelastic
C) price volatile
D) price subjective

Question 18

People purchase premium products despite the higher costs because ______.

A) they perceive greater benefits and increased quality
B) they perceive increased quality and fewer benefits
C) they perceive greater benefits with a decrease in quality
D) they perceive higher status and higher quality

Question 19

If the price of the product falls by five percent and the volume of sales increases by eight percent, the demand for the product is ______.

A) price elastic
B) price inelastic
C) price volatile
D) price subjective

Question 20

______ represents what the consumer considers a product to be worth.

A) Price
B) Value
C) Supply
D) Demand

Question 21

At Marco's Men's Store, all ties are priced at one of three different price points: $16.95, $24.95, and $33.95. This is an example of what type of pricing tactic?

A) price lining
B) prestige pricing
C) reference pricing
D) odd pricing

Question 22

Setting the price of a new product higher than expected in order to recover development costs is known as ______.

A) penetration pricing
B) price skimming
C) psychological pricing
D) price lining

Question 23

How many units of a product must be sold in order for the business to break even if total fixed costs are $500, the product is selling for $14, and the average variable cost is $8?

A) 100.3 units
B) 84.3 units
C) 63.3 units
D) 38.3 units

Question 24

Which of the following is not a consideration in establishing the "right" price for a product or service?

A) competition
B) consumer demand
C) your gut
D) costs

Question 25

With an inelastic product, since there are not usually many substitutes, a/an ______ strategy can be used, setting the prices higher.

A) skimming
B) penetration
C) odd
D) reference

Question 26

When the goals of a business are stabilizing market prices, establishing market position, building an image, and developing a reputation, which of the following strategies should be used?

A) penetration pricing
B) price skimming
C) psychological pricing
D) price lining

Question 27

______ is common in retail goods for which consumers have an idea of what the price "should be" and have a "usual" price in mind for that item.

A) Price lining
B) Prestige pricing
C) Reference pricing
D) Odd pricing

Question 28

To accomplish the goals of maximizing short- or long-run profits and to quickly recover development costs, which of the following is an appropriate strategy?

A) penetration pricing
B) price skimming
C) psychological pricing
D) price lining

Question 29

Sales commissions, raw materials, and labor costs are generally ______.

A) fixed costs
B) variable costs
C) a breakeven point
D) a demand curve

Question 30

The point at which total cost equals total revenue and the business is neither making nor losing money is known as ______.

A) the profit area
B) the loss area
C) the breakeven point
D) the profit point

Question 31

At Sally's Sun Boutique, items are always priced at $4.98 or $8.99 rather than $5.00 or $9.00. This is an example of what type of pricing tactic?

A) price lining
B) prestige pricing
C) reference pricing
D) odd pricing

Question 32

Home electronics such as personal computers, cellular phones, and VCRs are often introduced using which of the following strategies?

A) penetration pricing
B) price skimming
C) psychological pricing
D) price lining

Question 33

Setting the price of a new product below what is expected in order to gain faster market share is known as ______.

A) penetration pricing
B) price skimming
C) psychological pricing
D) price lining

Question 34

Costs like rent, property taxes, and utilities are generally ______.

A) fixed costs
B) variable costs
C) the breakeven point
D) asset costs

Question 35

What the competition charges and what consumers are willing to pay sets the price ______ while costs of producing the product establish the price ______.

A) ceiling; floor
B) floor; ceiling
C) demand curve; supply curve
D) fixed costs; variable costs

Question 36

Costs that do not change with the number of sales made are called ______.

A) fixed costs
B) variable costs
C) the breakeven point
D) asset costs

Question 37

What would be the breakeven point in dollars if total fixed costs were $300, the average variable costs were $9, and the price per unit was $18?

A) $16
B) $33
C) $400
D) $600

Question 38

How many units of a product would have to be sold if total fixed costs are $300, desired profit for the product is $2,000, the price at which the product is selling is $15, and the average variable cost is $8?

A) 329 units
B) 288 units
C) 243 units
D) 153 units

Question 39

To accomplish the goals of increasing sales, increasing store traffic, and discouraging competition, which of the following is an appropriate strategy?

A) penetration pricing
B) price skimming
C) psychological pricing
D) price lining

Question 40

Costs that change in direct proportion to sales are known as ______.

A) fixed costs
B) variable costs
C) the breakeven point
D) asset costs

Question 41

If a business knows how many units will be sold and what the fixed costs and the variable costs will be, ______ allows the selling price to be set to produce a given rate of return.

A) cost-plus pricing
B) target-return pricing
C) penetration pricing
D) reference pricing

Question 42

Setting the price of a product in a way that will alter its perception to customers is known as ______.

A) penetration pricing
B) price skimming
C) psychological pricing
D) price lining

Question 43

The two basic categories of credit include ______.

A) business credit and industry credit
B) industry credit and personal credit
C) consumer credit and business credit
D) trade credit and consumer credit

Question 44

______ advertisements discuss the existence of the business, the competitive advantage, or the product features and benefits.

A) Informational
B) Persuasion
C) Reminder
D) Perception changing

Question 45

The type of credit frequently offered to customers who are purchasing big-ticket items like cars and boats where the customer makes a down payment and then monthly payments is known as a/an ______.

A) open charge account
B) installment account
C) line of credit
D) debit card

Question 46

Grouping product prices into ranges such as low-, medium-, and high-priced items is known as which of the following?

A) prestige pricing
B) odd pricing
C) reference pricing
D) price lining

Question 47

______ is a way to bring attention to a product or business by publishing or broadcasting a message to the public through various media.

A) Word-of-mouth
B) Personal selling
C) Advertising
D) Negotiating

Question 48

Small businesses can easily fall into the mindset of being concerned about ______ now, and working on improving ______ later.

A) expenses; income
B) sales; profit margins
C) sales; expenses
D) profit margins; sales

Question 49

Which of the following is a good example of outdoor media?

A) newspapers
B) radio
C) television
D) billboards

Question 50

People often equate quality with price. This belief has led to which of the following pricing strategies?

A) prestige pricing
B) odd pricing
C) reference pricing
D) price lining

Question 51

Advantages of ______ advertising are that it is flexible, timely, covers local markets well, is believable, is relatively inexpensive, and can use inserts and coupons.

A) magazine
B) newspaper
C) yellow pages
D) Internet

Question 52

Advantages of ______ advertising are that it can be targeted to a specific audience, it comes at a relatively low cost, and there are short lead times so ads can be developed quickly.

A) radio
B) magazine
C) television
D) direct mail

Question 53

The ______ of the target market should affect the choice of advertising media that are used.

A) income
B) habits
C) age
D) gender

Question 54

Trade credit can take the form of all but which of the following?

A) consignment goods
B) seasonal dating
C) extended payment periods
D) reference payment periods

Question 55

The type of credit that operates like a revolving credit account where customers can purchase goods up to a certain dollar limit without a new credit check for each purchase is known as a/an ______.

A) open charge account
B) installment account
C) line of credit
D) debit card

Question 56

Credit extended from one business to another business is known as which of the following?

A) trade credit
B) consumer credit
C) courtesy credit
D) extensive credit

Question 57

Overpricing a product or service to make consumers curious is an example of what type of pricing tactic?

A) target-return pricing
B) creativity in pricing
C) cost-plus pricing
D) reference pricing

Question 58

The amount that is added to the overall cost of a product when setting the final selling price to ensure a profit is known as which of the following?

A) markup
B) the specified percentage
C) net income
D) gross margin

Question 59

Credit extended to customers for the purchase of products is known as which of the following?

A) trade credit
B) consumer credit
C) insufficient credit
D) extensive credit

Question 60

The type of credit where the consumer takes possession of the goods and the business then bills the consumer is known as a/an ______.

A) open charge account
B) installment account
C) line of credit
D) debit card

Question 61

Advantages of ______ advertising are that it results in high, repeated exposure at low cost and with limited competition.

A) Internet
B) magazine
C) outdoor
D) direct mail

Question 62

______ is any activity that stimulates sales and is not strictly advertising or personal selling.

A) Promotional mix
B) Sales promotion
C) Advertising
D) Personal selling

Question 63

______ is an aspect of PR consisting of any message about an organization that is communicated through the mass media that does not require payment.

A) Public relations
B) Advertising
C) Personal selling
D) Promotion

Question 64

The first step in the personal-selling process is ______.

A) questioning
B) approach
C) pre-approach
D) demonstration

Question 65

Scenario 13-1. Merle is considering purchasing a new lawn mower. He wants a mower that is self-propelled, has a higher horsepower rating, and a high level of quality instilled in the workmanship. Merle begins his search by looking in the yellow pages of the local phone book. Several small lawn mower dealers are listed along with several big-name wholesalers such as Walmart. Merle is not sure where to begin.

-In Scenario 13-1, if Merle knew about the components of the marketing mix, he would realize that ______ is one of the most flexible components.

A) the product
B) the promotion
C) the place
D) the price

Question 66

When used with advertising and personal selling, ______ can give a short-term boost to sales.

A) promotional mix
B) media reporting
C) sales specials
D) sales promotions

Question 67

Using coded or dated coupons can let the researcher compare different media. This is known as ______.

A) split ads
B) in-store opinions
C) telephone surveys
D) response tracking

Question 68

Which of the following is a common problem among self-produced small business advertising?

A) cost of the ad
B) content of the ad
C) trying to cram too much into the ad
D) quality of the message

Question 69

______ can help coordinate media mixes in order to reach markets.

A) Advertising agencies
B) Media agencies
C) Art and graphic design services
D) Broadcast agencies

Question 70

______ are a good place to get ads produced since their services usually cost less than advertising agencies.

A) Radio and television studios, newspaper offices, and magazine offices
B) Media agencies
C) Art and graphic design agencies
D) Custom ad agencies

Question 71

______ can help by conducting preliminary studies, developing an advertising plan, creating advertisements, selecting the appropriate media, evaluating the effectiveness of the advertising, and conducting ad follow-up.

A) Advertising agencies
B) Media agencies
C) Art and graphic design services
D) Broadcast agencies

Question 72

Which of the following is not a public relations activity?

A) lobbying
B) event sponsorship
C) an employee picnic
D) press releases

Question 73

______ are a common advertising strategy that uses an authority to present the message.

A) Slice-of-life messages
B) Fantasy messages
C) Comparative messages
D) Testimonial messages

Question 74

Creating goodwill rather than making immediate sales is known as ______.

A) foolish advertising
B) goodwill advertising
C) institutional advertising
D) reverse psychology advertising

Question 75

The biggest drawback to personal selling is ______.

A) time
B) cost
C) poor customer service
D) lack of knowledge

Question 76

Abe's Advertising Company is currently working on a TV ad campaign which includes a classic song to position the product. Advertisers hope that the music will bring about a sense of nostalgia among potential customers. Which advertising strategy is Abe's using?

A) testimonial
B) humor
C) comparative message
D) slice-of-life message

Question 77

______ advertisements get customers to take immediate action, such as buying the product.

A) Informational
B) Persuasion
C) Reminder
D) Perception changing

Question 78

Which of the following is not a technique for measuring advertising effectiveness?

A) response tracking
B) split ads
C) telephone surveys
D) testimonials

Question 79

Winston, a television satellite company manager, decides to drop a brief questionnaire in the monthly bill sent out to all satellite customers, in an effort to find out if they are satisfied with the level of service from the company and to learn how they found out about the service. This is an example of which tool for measuring advertising effectiveness?

A) response tracking
B) split ads
C) in-store opinions
D) statement questionnaires

Question 80

The steps in the personal-selling process, in order, are which of the following?

A) approach, pre-approach, questioning, demonstration, handling objections, closing the deal, suggestion selling, and follow-up
B) pre-approach, approach, questioning, demonstration, handling objections, closing the deal, suggestion selling, and follow-up
C) demonstration, pre-approach, approach, questioning, handling objections, closing the deal, suggestion selling, and follow-up
D) questioning, demonstration, approach, pre-approach, handling objections, closing the deal, suggestion selling, and follow-up