Busi 330 quiz 4 liberty university answers solutions 100

BUSI 330 quiz 4 Liberty University answers solutions 100

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Question 1 Which of the following products would have a lowlearning product life cycle curve?

Question 2 Many nonprofit organizations use PSAs in their media planning. What does the acronym

"PSA" stand for?

Question 3 Brand personality refers to __________.

Question 4 During the __________ stage of the product life cycle, product proliferation occurs to help

differentiate a company's brand from competitors.









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Question 5 Seiko makes watches. It markets its higher quality watches under the Seiko or LaSalle

brand name, and its lowerpriced watches are sold under the Pulsar brand. Seiko uses a __________

strategy.

Question 6 Commuters in New York often have often installed radio frequency identification (RFID)

devices on their cars that can be read automatically as they approach a toll booth. This saves time,

improves traffic flow, and means drivers don't need to keep exact change in their cars. It also offers

New York authorities the opportunity to manage traffic flow by charging different toll amounts for

different times of day, such as charging a higher toll for "rush hour" periods during the morning

and afternoon commutes. Commuters in New York are experiencing

Question 7 Since Gatorade Thirst Quencher was concocted in 1965, its marketers have introduced

Gatorade Frost in 1997, Gatorade Fierce in 1999, the Gatorade Performance Series in 2001, Gatorade

Rain in 2006, and the Gatorade G Series in 2011, to name a few. These introductions are examples

of __________.

Question 8 Bayer Aspirin is sold in the original strength, in a safetycoated version, in an extrastrength

version, and in a version designed especially for women. Bayer is using __________.

Question 9 Consider the PLC photos above. Which stage of the product life cycle (PLC) is the Apple

iPad tablet device?

Question 10 In the seven Ps of services marketing, the term "process" involves not only "what" gets

created but also

Question 11 A box of Cascade dishwasher detergent shrinkwrapped with a bottle of Jet Dry for 10

cents more than the regular price of the dishwasher detergent is an example of __________ pricing.

Question 12 SHAPE magazine is targeted at young women seeking healthier lifestyles. At a price of

$3.00 per copy, 1.25 million copies are sold. If the price per issue is increased to $3.25, only 1 million

copies would be sold. Fixed costs are $1 million and unit variable costs are $0.50 per magazine.

From the information provided here, what is SHAPE magazine's total revenue obtained at the lower

$3.00 price?

Question 13 The manufacturer of a new kind of fatfree ice cream that has the consistency and taste

of regular ice cream is thinking of using a penetration pricing strategy for its new product. Which

of the following conditions would argue AGAINST using a penetration pricing strategy for the tasty

dessert treat?

Question 14 Figure 113B Which of the following statements most likely would account for the shift

in the demand curve from D1 to D2shown in Figure 113B above?

Question 15 A manufacturing company that introduces a product must know or anticipate what

specific price its __________ currently charge or may charge in the future.

Question 16 A firm's profit equation demonstrates that profit equals __________.

Question 17 Price Premium Marketing Dashboard As the brand manager for Red Bull, what would

you conclude from the information provided in the Price Premium Marketing Dashboard above?

Question 18 All of the following statements about standard markup pricing are true EXCEPT:

Question 19 An ad campaign by Suave shampoo asked television viewers to identify the heads of

hair of women who used Suave shampoo and conditioner and those that used the much more

expensive salon haircare products. The idea of the ad was that no one could tell which woman used

the much cheaper Suave brand. By making price its selling point, Suave is most likely using __________.

Question 20 Setting a price that is dictated by tradition, a standardized channel of distribution, or

other competitive factors is referred to as __________.

Question 21 In the automobile industry, many companies use a __________, whereby a manufacturer

licenses dealers to sell its cars subject to various sales and service conditions.

Question 22 A __________ can be compared to a pipeline through which water flows—making

possible the flow of products from a producer, through intermediaries, to a buyer.

Question 23 Marketing channels help create value for consumers through four utilities. These utilities

are

Question 24 In an episode of the Glee television series, members of the glee club sold homebaked

cupcakes at school to raise money. The students selling their cupcakes without any intermediary

would be an example of a(n)

Question 25 For which of the following products would their respective manufacturers be most

likely to use exclusive distribution?

Question 26 Crossdocking is most closely related to __________.

Question 27 A large company produces paint and other home decorating products. Its goal is to

choose the best marketing channel arrangement that would give it the most control over supply

sources. Which marketing channel system should this company choose?

Question 28 The three major types of vertical marketing systems are administered, corporate, and

__________.

Question 29 The importance of time, dependability, communication, and convenience are all

important concepts of __________, within the context of the supply chain.

Question 30 Which of the following best describes the goal for a firm's inventory and transportation

costs?

Which of the following statements about Gatorade is true?

a. Michael Jordan has been a Gatorade spokesperson.

b. International opportunities were vigorously pursued.

c. Distribution of Gatorade expanded first to include convenience stores and supermarkets.

d. The original Gatorade was a liquid with a lemon-lime flavor.

e. All of the above statements about Gatorade are true.

Which of the following statements about Gatorade is true?

a. Gatorade began as a rehydration beverage for a football team.

b. Gatorade has plans to expand to the Latin American market before the end of this decade.

c. Gatorade was first only available through catalogs or mail order.

d. The Federal Trade Commission protects the Gatorade brand name from becoming generic.

e. All of the above statements about Gatorade are true.

A concept that describes the stages a new product goes through in the marketplace—introduction,

growth, maturity, and decline— is called:

a. the retail life cycle.

b. the product life cycle.

c. the marketing mix.

d. the product growth cycle.

e. product commercialization.

The stage of the product life cycle when a product is first introduced to its intended target market is

called the __________ stage.

a. growth

b. commercialization

c. launch

d. introduction

e. awareness-trial

Lack of profit in the introductory stage of the product life cycle is very often the result of:

a. insufficient allocation of resources to the marketing mix.

b. poor selection of distribution channels.

c. high taxes.

d. large investment costs in product development.

e. ineffective execution of the marketing program.

The marketing objective for a product in the __________ stage of the product life cycle is to promote

consumer awareness and gain trial.

a. introduction

b. growth

c. maturity

d. decline

e. product repositioning

A few years ago Who Wants to Be a Millionaire premiered as the first nighttime game show in a couple

of decades. The marketing for the show was intent on making television viewers aware of its

existence and excited enough about the show that we would watch the first episode. Which

of the following statements about televised game shows is true?

a. Who Wants to Be a Millionaire was in the introduction stage of the product life cycle of

televised nighttime game shows when it premiered.

b. Because television has been around for many years, all programs fall naturally into the

maturity stage.

c. Televised programs are either in the introduction stage or the growth stage and are

discontinued when they move into the maturity stage.

d. All televised programming uses a three-stage product life cycle--growth, maturity, and

decline.

e. The product life cycle is totally inapplicable to any television genre.

A product in the introduction stage of the product life cycle should have which of the following

marketing objectives?

a. to gain awareness and stimulate trial

b. to stress differentiation

c. to maintain brand loyalty

d. to gain as much distribution as possible

e. to reveal a marketing niche

One of the newest types of television shows is the category called reality shows. According to the

product life cycle, what was the objective of the marketers of these reality shows when they

were in the introduction stage of the product life cycle?

a. to gain awareness and stimulate trial

b. to stress differentiation

c. to maintain brand loyalty

d. to gain as much distribution as possible

e. to reveal a marketing niche

Gillette spent $35 million in advertising to introduce the Sensor razor to consumers. Such expenditures

are often made to stimulate __________, or desire for the product class, rather than for a

specific brand, when there are no competitors with the same product.

a. additional marketing research

b. innovative sampling

c. primary demand

d. initial data gathering

e. repeat purchase

Scientists have discovered a new medical treatment but before they can market it, physicians and

patients must be aware of its existence. In other words, its manufacturer must create

__________ demand.

a. selective

b. primary

c. derived

d. generic

e. secondary

During the introduction stage of the product life cycle, promotional expenditures are made to stimulate

consumer desire for an entire product class rather than for a specific brand. The consumer

desire that is stimulated is referred to as __________ demand.

a. selective

b. primary

c. derived

d. generic

e. secondary

The popular "Got Milk" advertising campaign was sponsored by the National Milk Board to encourage

more people to drink milk. This ad campaign stimulated __________ demand.

a. selective

b. primary

c. derived

d. generic

e. secondary

Promotional expenditures at the introduction stage of the product life cycle are spent on:

a. contests and sweepstakes.

b. creating selective demand.

c. creating primary demand.

d. personal endorsements.

e. maintaining brand loyalty.

During the growth stage of the product life cycle, promotional expenditures are made to stimulate

consumer desire for a specific brand due to increased competition. The consumer desire that

is stimulated is referred to as __________ demand.

a. selective

b. primary

c. derived

d. generic

e. secondary

As competitors introduce their own products, and the product progresses along its life cycle, company

attention is focused on creating __________ demand, or demand for a specific brand.

a. selective

b. primary

c. derived

d. generic

e. secondary

For years when most consumers thought of cranberries, they thought of the Ocean Spray brand. Then

Northland cranberry juice came on the market claiming that it was superior to the Ocean Spray

brand. Northland was creating __________ demand for its cranberry products.

a. selective

b. primary

c. derived

d. generic

e. secondary

During the introduction stage of the product life cycle, the place element of the marketing mix is highly

involved with:

a. reducing inventory costs.

b. gaining distribution outlets.

c. guaranteeing there is adequate demand if a skimming pricing strategy is used.

d. building storage warehouses and distribution centers.

e. using an intermodal logistics system.

The music industry has changed dramatically over the years. In the 1970s, consumers purchased 8-

track tapes. In the 1980s, cassette tapes caused the decline of 8-track tapes. In fact, today

consumers would experience difficulty in purchasing a new artist on 8-track tape. Now in the

2000s, compact discs have become very popular and are being purchased by music lovers of

every age and background. As sales of compact discs continue to grow at an increasing rate,

sales of cassette tapes are weakening, the profits are declining, and the product may face a fate

similar to that of 8-track tapes. Based upon this information, you can correctly conclude

cassette tapes are in the __________stage, and compact discs are in the __________ stage of

the product life cycle:

a. decline; growth

b. decline; introduction

c. maturity; growth

d. decline; maturity

e. maturity; introduction

During the introduction stage of the product life cycle, __________ may be used used. This pricing

strategy charges a high price to recoup the costs of product development.

a. penetration pricing

b. cost-plus pricing

c. ROI pricing.

d. market-oriented pricing

e. skimming pricing

INGenius ATG introduced the microware oven-sized battery recycler in 1999. It was intended for the

business market. Companies could buy the recycler and use it to restore alkaline batteries that

are not normally recharged. The recycling does not let a battery live forever; but it does give

it a charge of about 80 percent of the energy it originally had. Depending on the size of the

battery, the recycler can hold up to 96 batteries. It takes 13 hours to recharge any battery.

The recycler was introduced at $3,000. When you consider that the R & D to develop this

product was quite high, you should suspect that INGenius ATG was using a __________

strategy.



c. ROI pricing.


e. skimming pricing

A company follows a skimming strategy as part of introducing a new product to:

a. help recover costs of development and to capitalize on the price insensitivity of early

buyers.

b. capitalize on the price sensitivity of early buyers and to postpone breakeven.

c. discourage competitors and build unit volume.

d. move the product into the maturity stage once primary demand has been created.

e. do all of the above.

When Texas Instruments (TI) introduced its pocket calculator in the early 1970s, it was a tremendous

product innovation, and TI set the mail order price at $495. What is the name of the pricing

strategy Texas Instruments used?

a. rip off

b. chiseling

c. opportunistic

d. skimming

e. caveat emptor

During the introduction stage of the product life cycle, the strategy that discourages competitive entry

by charging a low price is referred to as:

a. penetration pricing.

b. cost-plus pricing.

c. ROI pricing.

d. market-oriented pricing.

e. skimming pricing.

Consumers who are frequently on the Internet more than likely use either Netscape Explorer or Netscape

as their Web browser. There is another option called Opera, which is faster and highly

customizable, a feature that neither Internet Explorer nor Netscape have. For example, it can

be set to suppress all pop-up ads and there are several mouse-controlled shortcuts available.

Opera was initially offered on the market for $29 and this included tech support. It was hoped

that this low price would build the volume of Opera users quickly. Opera used a __________

strategy.



c. ROI pricing


e. skimming pricing

To discourage competitive entry, a company can price its new product low, using penetration pricing.

This pricing strategy also helps to:

a. reduce costs.

b. increase profits.

c. build customer loyalty.

d. improve product quality.

e. build unit volume.

Which of the following statements about the introduction stage of the product life cycle is true?

a. During the introduction stage, efforts are made to increase primary demand.

b. During the introduction stage, firms may choose a skimming pricing strategy.

c. During the introduction stage, firms may choose a penetration pricing strategy.

d. Generally the promotional message is to inform and educate the consumer.

e. All of the above statements about the introduction stage of the product life cycle are true.

Opera.com introduced a new Web browser that can be easily customized to do what you want it to do—

such as suppress all pop-up ads and retrieve previously visited websites quickly. Opera is

spending a lot of money to make potential consumers aware of the existence of a Web browser

that can be customized. Sales have been slow to rise over the past year, and profit has yet to

be achieved. In what stage of the product life cycle is this product category?

a. growth stage

b. decline stage

c. commercialization stage

d. maturity stage

e. introduction stage

Technology that allows consumers to access information on the Internet from a cell phone is in the

introductory stage of its product life cycle. The industry is composed of several small firms

with state-of-the-art products that are neither standardized nor compatible with one another.

Moreover, these small firms have limited marketing expertise and little money to spend on

marketing; their common strength is engineering. This industry has welcomed the entry of a

giant in the mobile phone industry like Nokia because:

a. the small companies could leapfrog beyond Nokia's products.

b. Nokia's entry would help segment the market, establishing targets for the smaller firms.

c. Nokia set standards and is generating primary demand.

d. Nokia could solve the remaining technological problems.

e. Nokia could acquire the small, struggling firms.

Imagine that Eveready has developed solar rechargeable batteries that cost only slightly more to produce

than regular batteries (less than the rechargeable batteries currently available) and can be

recharged by sunlight up to 5 times, after which they are meant to be discarded. Unfortunately,

the production process cannot be patented, and competitors could arrive within a few months.

Eveready's marketing efforts should include all the following EXCEPT:

a. skimming pricing.

b. widespread distribution.

c. high production capacity.

d. advertising aimed at brand name awareness.

e. introductory promotions to encourage trial.

A few years ago Who Wants to Be a Millionaire premiered as the first nighttime game show in a couple

of decades. Once the show became a hit and televised several nights a week, other networks

quickly created their own version of what they hoped to be a successful game show format.

Greed and Twenty-One are the names of but two of the new shows that were created to compete

with Who Wants to Be a Millionaire. At this point in time the nighttime televised game show

entered which stage of its product life cycle?

a. growth stage

b. decline stage

c. commercialization stage

d. maturity stage


Which stage in the product life cycle is characterized by a rapid increase in sales and the appearance of

competitors?

a. introduction

b. growth

c. maturity

d. decline

e. profit

At which stage in the product life cycle do industry profits usually peak?

a. introduction

b. growth

c. maturity

d. decline

e. commercialization

Which of the following is a characteristic of the growth stage of the product life cycle?

a. advertising emphasis switches to primary demand

b. growing proportion of initial purchasers to repeat purchasers

c. slow, steady sales

d. competitors appear

e. pricing is more aggressive

A technology company has just begun to make a profit on its DVD-R discs (DVD discs in a recordable

format). Its promotional expenditures are aimed at trying to persuade potential customers of

the merits of its DVD-R discs. Even more money is being spent to develop the firm's

distribution system for its DVD-R discs. Since Apple's iMac now comes with a DVD recorder

as a standard part, several other companies have started producing DVD-R discs for the market.

What stage of the product life cycle is the DVD-R in?

a. commercialization stage

b. maturity stage

c. growth stage

d. decline stage


Which stage in the product life cycle is characterized by a slowing of industry sales?

a. introduction

b. growth

c. maturity

d. decline

e. comparability

During the maturity stage of the product life cycle, profit declines because:

a. there are fewer and fewer competitors in the market.

b. better products are only in the growth stage.

c. production costs increase the more a firm has to manufacture the same product.

d. there is fierce price competition among sellers.

e. all of the above.

The marketing objective of a firm whose product is in the maturity stage of the product life cycle is to:

a. actively search out new first time users.

b. maintain existing buyers since new ones are hard to find.

c. actively reinforce competitors' marketing efforts.

d. maintain existing distributors and actively seek out new ones.

e. shift to a skimming price strategy.

Promotional expenses at the maturity stage of the product life cycle are often directed towards:

a. creating demand for the product class.

b. reminding the consumer to use the product.

c. creating primary demand.

d. gaining new distributors.

e. eliminating distribution channels.

Which of the following statements is a characteristic of the maturity stage of the product life cycle?

a. Often this stage is entered because of environmental or technological factors.

b. During this stage companies attempt to eliminate distribution channels.

c. Industry sales revenue peaks, which is one stage after industry profit peaks.

d. Industry profits peak because production and distribution costs are declining.

e. Industry profit peaks, which is one stage after industry sales revenue peaks.

The videocassette recorder (VCR) was introduced to the market in the late 1970s. Ninety-one percent

of American homes own at least one VCR. To maintain market share in the VCR market and

to get customers to purchase additional VCRs, its manufacturers have continually provided for

higher-quality recording capabilities and made the machines easier to watch and with different

features that allowed for quicker location of recorded programs. Because the goal of VCR

manufacturers is to maintain brand loyalty and market share, the product category is in the

__________ stage of its product life cycle.

a. introduction

b. growth

c. maturity

d. decline

e. harvesting

Hershey's chocolate bars have been marketed in the United States for more than 100 years, and are still

a tremendous success, with a loyal following of consumers. The company began advertising

several years ago to hold its market share, and it has introduced several distinctive new products.

What stage of the product life cycle are Hershey's chocolate bars competing in?

a. development

b. introduction

c. growth

d. maturity

e. decline

Sales and profits both exhibit a steady downward trend throughout which stage of the product life cycle?

a. introduction

b. growth

c. maturity

d. decay

e. decline

All products are assumed to have a complete product life cycle. Which of the following is NOT a

reason why products ultimately decline?

a. poor marketing

b. emergence of superior competitive products

c. all consumers' wants and needs inevitably change

d. non-marketing failures of firms

e. all the above are reasons for decline

All of the following occur during the decline stage of the product life cycle EXCEPT:

a. sales decrease substantially.

b. the firm chooses the wrong marketing strategy, which results in an inappropriate marketing

program for the target market.

c. the uncontrollable environment changes.

d. promotional support for the product becomes minimal.

e. the number of competitors is reduced.

In the 1960s, television westerns were extremely popular. The shows were adventure shows with

settings and costumes that were very unlike what really existed. There was Bonanza, Wagon

Train, The Virginian, Laramie, etc. When viewers gradually stopped watching this category

of programs, production companies found the networks no longer wanted to televise such shows.

The television western as a product category entered the __________ stage.

a. decay

b. decommercialization

c. decline

d. maturity

e. harvested

To handle products in the decline stage of the product life cycle, companies often use either:

a. diversification or harvesting.

b. harvesting or contracting.

c. deletion or harvesting.

d. diversification or harvesting.

e. building or contracting.

Three years ago Pokémon was the hottest name in toys, but as other more high-tech toys appeared on

the market, the popularity of Pokémon waned as did its sales. Some toy experts predict

Pokémon will soon be only a memory for toy retailers. Pokémon is in the __________ stage

of its product life cycle.

a. decay

b. decommercialization

c. decline

d. maturity

e. harvested

Your product has been suffering from steadily eroding sales and profits. You have tried a number of

options to revitalize the product's sales and profits, but after seven changes in your strategy, you

have yet to find success. Which of the following actions would be the LEAST appropriate

next step?

a. Delete the product from the line.

b. Retain the product, but reduce its support costs.

c. Stimulate primary demand.

d. Contract the production of the product.

e. Contract the marketing of the product.

During the 1990s, there was a backlash against artificial colors in food and other consumer products.

As a result, a lot of companies issued products that were clear. One example was Crystal Pepsi.

The product never really found a market and was __________, or dropped from the Pepsi

product line soon after its introduction.

a. diversified

b. aggregated

c. segmented

d. deleted

e. harvested

In the 1960s, television westerns were extremely popular. The shows were adventure shows with

settings and costumes that were very unlike what really existed. There was Bonanza, Wagon

Train, The Virginian, Laramie, etc. When viewers gradually stopped watching this category

of programs, production companies found the networks no longer wanted to televise such shows.

The production companies used a __________ strategy and stopped production on all television

westerns when the networks stopped showing them.

a. diversifying

b. aggregation

c. segmentation

d. deletion

e. harvesting

A strategy of dropping a product from the product line, usually in the decline stage of the product life

cycle, is called:

a. diversifying.

b. aggregation.

c. segmentation.

d. deletion.

e. harvesting.

__________ occurs when a company retains a product but reduces marketing support costs.

a. Skimming

b. Harvesting

c. Profiting

d. Deletion

e. Divesting

When a product reaches the decline stage of the product life cycle, a firm has two choices. One choice

involves product deletion, where a product is dropped from a firm's product line. Another less

drastic choice is to retain the product in the product line, but to reduce marketing costs. When

this option called __________ is selected, advertising expenditures for the product are reduced

and salespeople do not devote their efforts to selling the product.

a. decline maintenance

b. customer need maintenance

c. divestment

d. maturity re-development

e. harvesting

A strategy of harvesting may be employed in the decline stage of a product’s life to:

a. maintain primary demand for a product category.

b. get as many new customers as possible.

c. maintain the ability to meet customers' requests.

d. eliminate production and distribution costs.

e. reposition the product.

The growth of e-mail has:

a. led to a significant increase in the amount of faxing because communication is easier.

b. led to a significant decrease in the amount of faxing.

c. not affected faxing.

d. led to a significant increase in the amount of faxing because people don't trust just e-mail

and want a hard copy fax.

e. discouraged all forms of written communication.

Generally, the average length of time it takes for a product category to move from the introduction stage

of its product life cycle to the decline stage is:

a. 18 months.

b. 5-10 years.

c. 20 years.

d. 30 years.

e. unpredictable.

There is no exact time that a product takes to move through its life cycle. As a rule:

a. fad products have the longest lifecycle.

b. consumer products have shorter life cycles than business products.

c. packaged goods have a shorter life cycle than fads.

d. installations have a shorter life cycle than consumer products.

e. intangibility shortens the product life cycle.

Which of the following is a NOT a type of product life cycle?

a. revolutionary

b. low learning

c. fashion

d. high learning

e. fad

An extended introduction stage of the product life cycle occurs for which type of product?

a. high learning

b. low learning

c. fashion

d. fad

e. revolutionary

Interactive television with video on-demand capabilities will change how people watch television and

how consumers access the Internet. What type of a product life cycle would be associated

with this product?

a. revolutionary

b. high learning

c. low learning

d. fashion

e. fad

An alternative product life cycle that results from products that are easily imitated by competitors,

consumers who readily understand their benefits, and for which the appropriate marketing

strategy is to gain strong distributor outlets is characteristic of __________ products.

a. high learning

b. low learning

c. fashion

d. fad

e. substitute

Imagine Eveready has developed solar rechargeable batteries that cost only slightly more to produce

than regular batteries (less than the rechargeable batteries currently available) and can be

recharged by sunlight up to 5 times, after which they are meant to be discarded. Unfortunately,

the production process cannot be patented, and competitors could arrive within a few months.

Which of the following is the best description of the product life cycle of this product?

a. rapid growth followed by rapid decline

b. long, level beginning, and rapid ascent

c. moderately slow introduction, followed by modest growth, gradually leveling off

d. high introductory sales, with rapid decline

e. high initial sales followed by slow decline

Products that are introduced, decline, and then seem to return are characteristic of the __________ type

of product life cycle.

a. high learning

b. low learning

c. fashion

d. fad

e. revolutionary

Which of the following products is the best example of a product that might experience an introduction,

a decline, and a reintroduction as part of its normal product life cycle?

a. cat food

b. veterinarian services

c. cake mixes

d. fishnet hose

e. paperclips

Which type of product has experiences rapid sales on introduction and then an equally rapid decline of

the product life cycle?

a. high learning products

b. low learning products

c. fashion products

d. fad products

e. abnormal products

Some singers sing a great song that shoots to the top of the chart. The singers go on tour and have

sold-out concerts everywhere they appear. Just as quickly (particularly if they are unable to

follow their first hit song with a second one), they are singing to half-filled concerts and then

to smaller clubs, and eventually no one wants to hear them perform. Such one-hit singers are

most likely categorized as __________ products.

a. high learning

b. low learning

c. fashion

d. fad

e. revolutionary

With diffusion of innovation,

a. once a product enters the market, very similar products will enter within a very short period

of time.

b. one new product will produce ancillary product invention (e.g., video cassettes created a

market for cassette holders).

c. not all consumers accept a new product at the same time because adoption of a product

spreads slowly throughout the population.

d. product changes by one competitor lead to similar product changes by another competitor.

e. unique efforts are made to create primary demand.

The life cycle of a product depends on sales to customers. The shapes of life-cycle curves indicate

that most sales occur after the product has been on the market for some time. The concept

that some people are attracted to a product early while others buy it only after they see their

friends with the product is called the:

a. dissociation of sensibility.

b. timed profiling.

c. categories of adopters.

d. diffusion of innovation.

e. derivation of markets.

All of the following are categories of consumers based on when they purchase a new product, the

information sources they use, and their risk-taking orientation EXCEPT:

a. initiators.

b. early adopters.

c. early majority.

d. late majority.

e. laggards.

The largest numbers of product adopters with respect to the diffusion of innovation are found among:

a. early adopters and laggards.

b. early majority and late majority.

c. late majority laggards.

d. innovators and early majority.

e. innovators and early adopters.

As product adopters, innovators typically:

a. fear debt and use neighbors and friends as information sources.

b. are skeptical and have below average social status.

c. act with deliberation and use many informal social contacts.

d. are leaders in social standing and have slightly above average education when compared

to the other adopter classes.

e. are venturesome, better educated than other product adopters, and use multiple information

sources.

As product adopters, early adopters typically:






e. are venturesome, better educated than other product adopters, and use multiple information.

As product adopters, members of the early majority typically:







As product adopters, members of the late majority typically:







As product adopters, laggards typically:







When the personal computer was first introduced, industry analysts predicted that very few would be

sold. However, a short time after the product was made available, consumers who were young,

highly educated, adventuresome, and who were well informed began buying personal

computers. While those buyers were relatively few in number, the marketers of computers

were encouraged because other, less adventuresome consumers would likely adopt personal

computers later. According to the product adoption classification, those first buyers of

personal computers were:

a. early adopters.

b. early majority.

c. innovators.

d. product leaders.

e. diffusion leaders.

Imagine Post Cereal introduces a cereal bar just like the ones Kellogg's and Quaker already have on the

market. Post has decided to promote the bars using ads without coupons and to price the bars

at about the same price as the other brands. Post Cereal bars will also be distributed to the

same stores as the Kellogg's and Quaker products. Which of the following barriers to new

product adoption will most likely prevent the Post Cereal bars from being a successful product?

a. value barrier

b. psychological barrier

c. economic barrier

d. usage barrier

e. social barrier

A new exercise video contends that with one day of fasting and one one-hour period of intense

cardiovascular exercise, the average individual can lose five pounds a week and be in peak

health within six months of starting the program. __________ barriers will doom the new

product to failure because the product's claims are not consistent with what consumers do and

how they think.

a. Psychological

b. Physical

c. Risk

d. Value

e. Usage

When McDonald’s began doing business in India, it had to change the meat in some of its meals from

beef, considered sacred by many in India, to lamb and other meats. __________ barriers

would have doomed McDonald’s in India had they not changed their recipes because many

Indian consumers would have refused to eat sandwiches made from an animal they consider to

be sacred.

a. Psychological

b. Physical

c. Risk

d. Value

e. Usage

Even an experienced and well trained hiker would not think of crossing Death Valley, where

temperatures easily top 120 degrees, without plenty of water as part of their supplies.

__________ barriers would doom any hiking trip across that area without the assurance that

plenty of water would be available for the hiker.

a. Psychological

b. Physical

c. Risk

d. Value

e. Usage

Why would the manufacturer of a new all-natural-ingredient shampoo and conditioner put free samples

of the product in Sunday newspapers?

a. to simulate laggard usage of the product

b. to encourage product adoption

c. to control innovation diffusion

d. to avoid any possibility of litigation

e. to circumvent the typical adoption cycle

__________ is a strategy that involves altering a product's characteristic such as its quality, performance,

or appearance to try to increase and extend the product’s sales.

a. Market modification

b. Product modification

c. Product repositioning

d. Market-product strategy

e. Diversification

Twenty years ago, the Mississippi Gulf Coast was a nice place to vacation with a white sandy beach,

golfing opportunities, resort hotels, and good seafood restaurants. With the addition of

casinos, the Gulf Coast improved its odds of being a tourist destination for more travelers.

This is an example of:

a. a market-product strategy.

b. diversification.

c. market modification.

d. product modification.

e. harvesting.

Alka-Seltzer was made originally as a hangover remedy that cured the headache and settled the stomach.

Today, you can purchase Original Alka-Seltzer, Extra Strength Alka-Seltzer, Alka-Seltzer

Morning Relief (for morning headaches and fatigue), and Alka-Seltzer Heartburn Relief. To

extend the product's sales to new markets, the makers of Alka-Seltzer have used:


b. diversification.



e. harvesting.

DiGiorno rising crust pizza has been available in the freezer sections of supermarkets for quite awhile.

The product's recent introduction of a DiGiorno cheese stuffed crust is an example of

__________ and should attract new buyers.


b. diversification.



e. harvesting.

___________ is a strategy used when a company tries to find new customers, increase a product’s use

among existing customers, or create new use situations.

a. Market modification

b. Product modification

c. Product repositioning

d. Market-product strategy

e. Diversification

When Coca-Cola promoted Coke as a morning beverage when you didn't want coffee, it was using:

a. product modification.

b. repositioning the product.


d. market-product extension.

e. diversification.

Tums, which has long been used for reducing heartburn, is now being promoted as a source of calcium

for the prevention of osteoporosis. Its manufacturer is using which of the following market

modification strategies?

a. finding new users

b. creating new use situations

c. increasing use by existing customers

d. modifying the product characteristics

e. doing none of the above

Finding new uses for an existing product has been a major strategy in extending the life of Arm &

Hammer Baking Soda. The product (unchanged from its original formula) is now being

promoted as a dentifrice; a deodorizer for cat litter, carpeting, and refrigerators; and a fire

extinguisher. Arm & Hammer is:

a. finding new users through a product modification strategy.

b. creating new use situations through a market modification strategy.

c. increasing use by existing customers through a product modification strategy.

d. modifying the product characteristics.

e. demarketing the product.

Major American car manufacturers are offering buying incentives to newly graduated college students

who traditionally have little or no credit. Car manufacturers are using which of the following

market modification strategies?




d. modifying the product

e. reacting to competitors' position

The Upjohn Company first targeted men for its Rogaine topical solution, a drug to restore hair growth,

but later marketed this product to women. The Upjohn Company is using which of the

following market modification strategies?




d. modifying the product

e. reacting to competitors' position

Consumer advocates believe the practice of downsizing by consumer products firms has resulted in:

a. lower product prices for consumers because of lower labor, raw material and packaging

costs due to the recession and lower inflation in the United States.

b. a greener environment due to the reduction in the amount of packaging used for

promotional purposes (e.g. eliminating of the glossy cardboard that promoted the musical

artist and contained the CD and its plastic protective box), thereby reducing the amount of

waste disposed in landfills.

c. fewer products and less product variability offered due to the corporate restructuring taking

place worldwide.

d. keeping prices from rising beyond the psychological barriers consumers have developed

for products.

e. a subtle, yet deceptive practice of taking advantage of consumers' buying habits by offering

less product content in the same or larger package while maintaining or increasing the price.

Changing the place a product occupies in a consumer's mind relative to competitive products is called:

a. market modification.

b. product modification.

c. product repositioning.

d. product development.

e. differentiation.

All of the following are factors that trigger product repositioning as a marketing action EXCEPT:

a. changing the value offered to consumers relative to competitive products by adding or

deleting features.

b. catching a rising trend due to changes in consumer preferences relative to competitive

products.

c. reaching a new market due to sluggish sales in the currently targeted market.

d. reacting to a competitor's entrenched product position that is adversely affecting the firm's

sales and market share.

e. copying competitors' sales promotion strategies to increase the trial and repeat purchase

behavior of consumers relative to the firm's product.

Sealy, the largest manufacturer of mattresses in the U.S., recently set out to redefine its place in the

bedrooms of America. No longer was it going to be associated as a mattress company.

Henceforth, the name Sealy was going to be known as the world's leading "sleep wellness

provider." This is an example of:

a. reverse marketing.

b. demarketing.

c. repositioning.

d. resegmenting.

e. reverse targeting.

New Coke was repositioned as a slightly sweeter, less filling soft drink because the Coca-Cola Company

discovered that its 1984 market share in supermarkets was 2 percent behind Pepsi. This

product repositioning strategy was:

a. a reaction to a competitor's position.

b. to reach a new market.

c. to catch a rising trend.

d. to change the value offered.

e. to change its target audience.

Harry & David is a catalog retailer. At its inception, the company sold fruit baskets and popularized

the “Fruit of the Month” concept. Since then the company has abandoned this restric tive

definition of itself, expanded its product mix, and used its promotion to explain that it is the

source of the perfect gift for every occasion. Harry & David used a __________ strategy.

a. reinvention

b. restoration

c. reconfiguration

d. realignment

e. repositioning

Snickers candy bar was repositioned from a candy bar to a snack food through commercials that showed

busy people satisfying their hunger with a Snickers bar. Mars, Inc. used this strategy with its

Snickers bar to:

a. react to a competitor's position.

b. reach a new market.

c. catch a rising trend.

d. change the value offered.

e. do none of the above.

For many years, Kellogg's Frosted Flakes, a ready-to-eat breakfast cereal, was perceived as a cereal for

children. Tony the Tiger, a cartoon character, extolled Frosted Flakes, and advertisements

depicted children enjoying the product in competitive situations. Recently, in response to

declining sales of the Frosted Flakes, the cereal-maker has adopted a new series of

advertisements that show adults admitting they enjoy Frosted Flakes, too. Kellogg's is

attempting to:

a. develop alternative product selection factors.

b. reposition its product.

c. complete the product life cycle of Frosted Flakes.

d. introduce new uncontrollable elements into the marketing mix.

e. introduce a new product.

Pretzels were first introduced as a salty snack. Later the product was repositioned as a low-fat snack

to:

a. respond to a competitor's head-on positioning strategy.

b. reach a new market.

c. catch a rising trend.

d. change the value offered.

e. change its target audience.

An aging baby boomer population has led to increased interest in developing and marketing products

to satisfy the need of this potentially large market. As a result, moisturizing creams like Oil

of Olay are now positioned as “age-defying” creams. This is an example of which of the four

factors that may trigger a repositioning action?

a. reacting to a competitor's position

b. reaching a new market

c. catching a rising trend

d. changing the value offered

e. product modification

Which of the following product repositioning strategies requires a change in the physical product?

a. increasing use


c. finding new users

d. reacting to a competitor’s position

e. changing the value offered

Trading up involves adding value to a product (or line) through:

a. adding product features but reducing the price.

b. adding product features and using higher quality product materials.

c. reducing product features and using lower quality product materials.

d. decreasing the number of features and quality and lowering the price of a product.

e. downsizing.

Kmart stores hoped to add perceived value to the store's merchandise by adding the Martha Stewart

product line, which is perceived as being of a higher quality. This product line addition was

an example of:

a. top-down marketing.

b. trading up.

c. bottom-up marketing.

d. trading down.

e. game-playing.

The strategy of trading down involves:

a. adding product features and using lower quality product materials.

b. adding product features and using higher quality product materials.

c. reducing product features and using lower quality product materials.

d. reducing the number of features, quality, or price of a product.

e. seeking a less price sensitive target market.

__________ refers to reducing the content of packages without changing package size and maintaining

or increasing the package price.

a. Top-down marketing

b. Trading up

c. Bottom-up marketing

d. Game-playing

e. Downsizing

Downsizing is reducing the:

a. quality of materials used in a product line.

b. product's price for a smaller package.

c. content of a package without changing its size while maintaining or increasing the package

price.

d. number of product features offered to consumers.

e. number of brands offered and the total number of products manufactured.

Since the creation of the Hershey candy bar over 100 years ago, the price of chocolate has fluctuated,

but the price of the candy bar has slowly risen. In fact, when the price of chocolate had

dramatic price fluctuations over a three-year period, the price of a Hershey's candy bar remained

the same. When the price of chocolate was very high, Hershey's was able to maintain its

profits by making the bars smaller. Hershey's engaged in:

a. top-down marketing.

b. trading up.

c. bottom-up marketing.

d. game-playing.

e. downsizing.

The decision an organization makes to use a name, phrase, design, symbol, or combination of these to

identify its products and distinguish them from those of competitors is called:

a. product identification.

b. branding.

c. trademarking.

d. copyrighting.

e. licensing.

A ___________ is any word, device (design, sound, shape, or color), or combination of these used to

distinguish a seller's goods or services.

a. copyright

b. trade name

c. brand mark

d. brand name

e. generic brand

A brand name is:

a. any word, device (design, sound, shape or color), or combination of these used to

distinguish a seller's goods or services.

b. the part of a brand name that can be spoken.

c. the part of a brand that is a symbol or design and cannot be spoken.

d. the commercial, legal name under which a company does business.

e. legal identification of a company's exclusive rights to use a brand name, brand mark, or

trade name.

The stylized blue and white waves in an oval shape that appear on every package of Ocean Spray brand

products is an example of a:

a. copyright.

b. trade name.

c. service market.

d. brand name.

e. generic brand.

__________ is a set of human characteristics associated with a brand name.

a. Brand personality

b. A brand mannerism

c. A symbolic brand

d. Brand personification

e. Product personification

When consumers think of Harley-Davidson, the image of a masculine, non-conformist is the likely

associated with that brand name. With the Vespa motorscooters, the image is more likely to

be a brainy environmentalist that wears polyester and socks that don't match. Both Vespa and

Harley-Davidson:

a. have brand personalities.

b. have created brand mannerisms.

c. are symbolic brands.

d. use brand personification.

e. use product personification.

The primary benefit of branding for consumers is branding makes:

a. products higher in quality.

b. products lower in price.

c. consumers more efficient shoppers.

d. products higher in value.

e. advertising unnecessary.

Brand equity is:

a. the resources invested to create a name, phrase, design, symbol, or combination of these to

identify a firm's products and distinguish them from those of its competitors.

b. adding customer value to the product brand through additional features or higher-quality

materials, or reducing its price.

c. increasing the content contained within the brand's package without changing its size or

increasing its price.

d. the net present value of the royalties the firm receives as a result of licensing its brand to

other firms to manufacture and/or market.

e. the added value a given brand name gives to a product beyond the functional benefits

provided.

Which of the following is true about the process of creating brand equity?

a. Marketers have to develop positive brand awareness and an association of the brand in

consumers’ minds with a product class or need to give the brand an identity.

b. A marketer must establish a brand’s meaning in the minds of consumers.

c. A marketer must get consumers to develop proper responses to a brand’s identity and

meaning.

d. A deep psychological bond characterizes consumer—brand connection and the personal

identification consumers have with the brand.

e. All of the above are true about the process of creating brand equity.



consumers’ minds with a product class or need to give the brand an identity.

b. A marketer must establish a brand’s colors in the minds of consumers.

c. A marketer must get consumers to develop proper responses to a brand’s distribution

strategy.

d. A deep physical bond characterizes consumer—brand connection.




consumers’ minds with a product color.

b. A marketer must establish a brand’s meaning in the minds of consumers.


strategy.

d. A deep physical bond characterizes consumer—brand.





b. A marketer must establish a brand’s meaning in the minds of competitors.

c. A marketer must get consumers to develop proper responses to a brand’s identity and

meaning.

d. A deep physical bond characterizes consumer—brand connection.





b. A marketer must establish a brand’s meaning in the minds of competitors.


strategy.

d. A deep psychological bond characterizes consumer—brand connection and the personal

identification consumers have with the brand.


Which of the following is true about the value of brand equity?

a. Brand equity is an intangible asset.

b. Brand equity has an economic value to the manufacturer.

c. Brand equity can increase in value when effectively managed.

d. Brand equity can lose value when ineffectively managed.

e. All of the above are true about the value of brand equity.


a. Brand equity is an intangible asset.

b. Brand equity does not have an economic value to the manufacturer.

c. Brand equity will not increase in value when effectively managed.

d. Brand equity will not decrease in value when ineffectively managed.



a. Brand equity is a tangible asset.

b. Brand equity has an economic value to the manufacturer.

c. Brand equity will not increase in value when effectively managed.

d. Brand equity will not lose value when ineffectively managed.




b. Brand equity has no economic value to the manufacturer.

c. Brand equity can increase in value when effectively managed.

d. Brand equity cannot lose value when ineffectively managed.




b. Brand equity has no economic value to the manufacturer.

c. Brand equity cannot increase in value when effectively managed.

d. Brand equity can lose value when ineffectively managed.


All of the following are criteria for selecting a good brand name EXCEPT:

a. suggests product features.

b. suggests product benefits.

c. fits the company or product image.

d. is memorable, distinctive, and positive.

e. is simple.

Which of the following are criteria for selecting a good brand name?

a. should have no legal or regulatory restrictions

b. suggests product benefits

c. fits the company or product image

d. is memorable, distinctive, and positive

e. All of the above are criteria for selecting a good brand name.


a. should have no legal or regulatory restrictions

b. suggests product features

c. fits the consumer’s image

d. blends with the culture



a. should be complex so it stands out

b. suggests product benefits







c. fits the company or product image







d. is memorable, distinctive, and positive


Imagine the President of Black Stoves, Inc. is thinking about developing a new brand name for the

company's line of wood stoves with catalytic converters. The stove because of its design also

conserves wood because it burns slowly. The brand name he is considering is The Fast One.

Why is this brand name choice NOT the best one?

a. The name should be distinctive and memorable.

b. The name should fit the company image.

c. The name should have no legal restrictions.

d. The name should be simple.

e. The name should suggest the product benefits.

Use the five criteria for selecting a good brand name to determine which of the following is the best

choice.

a. Spam canned meat

b. Ken's salad dressing

c. Formula 409 cleaner

d. Match Light charcoal

e. Bayer aspirin

With __________, the producer dictates the brand name using either a multiproduct or multibrand

approach.

a. retailer branding

b. intermediary

c. licensing

d. manufacturer branding

e. co-branding

Manufacturer branding is:

a. a statement indicating the liability of the manufacturer for product deficiencies.

b. a branding strategy in which the producer dictates the brand name, using either a

multiproduct or multibrand approach.

c. a branding strategy in which a company uses one name for all of its products. It is often

referred to as a blanket or family branding strategy.

d. a branding strategy in which manufacturers produce products but sell them under the brand

name of a wholesaler or retailer, also called private labeling or reseller branding.

e. a contractual agreement whereby a company allows someone else to use its brand name

and usually requires the product be made to its specifications.

With manufacturer branding the producer dictates the brand name using either a:

a. regional or national approach.

b. domestic or international strategy.

c. multiproduct or multibrand approach.

d. competitor-focused or consumer-oriented approach.

e. tactical or strategic objective.

Multiproduct branding is:

a. a statement indicating the liability of the manufacturer for product deficiencies.

b. a strategy where products are given no identifying names other than a description of their

contents.

c. a branding strategy in which a company uses one name for all of its products.


name of a wholesaler or retailer, also called private labeling or reseller branding.


and usually requires that the product be made to its specifications.

A branding strategy in which a company uses one name for all of its products (often referred to as a

blanket or family branding strategy) is called:

a. co-branding.

b. generic branding.

c. reseller branding.

d. mixed branding.

e. multiproduct branding.

All products sold by the Tabasco Company are sold using the Tabasco brand. This is an example of:

a. multiproduct licensing.

b. multibranding.

c. co-branding.

d. generic branding.


Every product manufactured by the SlimFast Company carries the Slim-Fast brand name. The

SlimFast Company uses:

a. multibranding.

b. single branding.

c. co-branding.

d. blanket branding.

e. agent licensing.

Every product manufactured by the Gap carries the Gap brand name. The Gap uses:

a. multibranding.

b. single branding.

c. co-branding.

d. blanket branding.

e. agent licensing.

Every product manufactured by Ben & Jerry’s carries the Ben & Jerry’s brand name. Ben & Jerry’s

uses:

a. multibranding.

b. single branding.

c. co-branding.

d. family branding.

e. agent licensing.

When a company uses line extension it is:

a. manufacturing a product under a new brand name that consumers will view as an entirely

new product line.

b. using a current brand name to enter a new market segment in its product class.

c. speeding up the movement of a product category through its PLC.

d. contracting with another firm to manufacture modified versions of the original products.

e. applying the current brand name to enter a completely different product class.

Bayer aspirin is sold in the original strength, in a safety-coated version, in an extra-strength version,

and in a version designed especially for women. The manufacturer of Bayer aspirin is using:

a. channel extension

b. subbranding

c. line extension

d. co-branding

e. multibranding

Which of the following statements about line extensions is true?

a. A line extension strategy typically leads to increased advertising costs.

b. There are no risks associated with a line extension strategy.

c. When the Clorox Company joins with Kroger supermarkets to advertise Clorox products,

it is an example of a line extension.

d. A line extension is used with multiproduct branding.

e. A line extension is used with multibranding.


a. A line extension strategy typically leads to decreased advertising costs.

b. There are no risks associated with a line extension strategy.



d. A line extension is used with reseller branding.



a. A line extension strategy typically leads to increased advertising costs.

b. There are risks associated with a line extension strategy.



d. A line extension is used with reseller branding.


Combining a family brand with a new brand is called:

a. subbranding.

b. multiproduct branding.

c. mixed branding.

d. generic branding.

e. family branding.

Brand extensions require:

a. manufacturing a product under a new name that consumers will view as an entirely new

product line.

b. manufacturing a new product with the same brand name for a new market segment in the

same product class so consumers will view it as a logical addition to the original product

line.

c. manufacturing accessory products such as Barbie clothes for Barbie Dolls.

d. licensing another firm to manufacture modified versions of the original products.

e. applying the current brand name to enter a completely different product class.

Gerber had tremendous brand equity with its baby food. The use of a __________ strategy to use the

Gerber name on a bibs, plastic baby bottles, and pacifiers seemed logical.

a. brand extension

b. family branding

c. co-branding

d. blanket branding

e. mixed branding

Multibranding is:

a. a branding strategy that involves giving each product a distinct name.

b. a branding strategy that uses different brand names for the same product across multiple

countries.

c. a branding strategy in which a company uses one name for multiple products.


name of a wholesaler or retailer.



Mars, Inc. sells Snickers, Milky Way, Twix, Skittles, Dove, Starburst, M&Ms, and Three Musketeer

candy. This variety of names is typical of a __________ strategy

a. co-branding

b. multibranding

c. multiproduct

d. mixed brand

e. private branding

A manufacturer's branding strategy in which a distinct name is given to each of its products is called:

a. multibranding.


c. cobranding.

d. mixed branding.


Seiko makes watches. It markets its higher quality watches under the Sieko or Lasalle name, and its

lower-priced watches are sold under the Pulsar brand. Seiko uses a __________ strategy.

a. multibranding

b. generic branding

c. multiproduct branding

d. trademarked branding

e. private branding

A company uses __________ when it manufactures products but sells them under the brand name of a

wholesaler or retailer.

a. manufacturer branding

b. private branding

c. generic branding

d. proprietary rights

e. riparian rights

Private branding is:

a. a branding strategy that involves giving each product a distinct name.

b. a strategy where products are given no identifying names other than a description of its

contents.

c. a branding strategy in which a company uses one name for all of its products.

d. a branding strategy in which manufacturers produce products that are sold under the brand

name of a wholesaler or retailer.



Thirty-six percent of sales at supermarkets in the United Kingdom carry the stores' own brand names.

Eighteen percent of all supermarket sales in France and Germany carry the stores' own brand

names; and in the US, 14 percent do. These supermarkets are using a __________ strategy to

sell consumer food.

a. private branding

b. generic branding

c. multibranding

d. co-branding

e. multiproduct branding

Which of the following statements about Pez is true?

a. Pez comes from the German word for peppermint, pfefferminz.

b. Pez was successfully sold in Europe as an adult breath mint.

c. Pez was originally packaged in a headless dispenser.

d. Pez first appeared in the United States in 1953.

e. All of the above statements about Pez are true.

Mixed branding is a branding strategy:

a. that involves giving each product a distinct name.

b. that uses different brand names for the same product across multiple countries.

c. in which a company uses one name for all of its products.

d. in which a company markets products under their own name and that of a reseller.

e. in which a company follows both manufacturer and generic branding approaches for

products in its mix.

A branding strategy in which a company markets products under its own name and that of a reseller is

called:

a. multibranding.


c. private branding.

d. mixed branding.


Packaging is:

a. any box, bottle, jar, can, carton or bag that can be used for transporting durable or

nondurable goods.

b. any container in which a product is offered for sale and on which information is

communicated.

c. that part of a product that is not consumed.

d. any container used for storage of consumer or industrial goods.

e. accurately described by none of the above.

A label:

a. is an integral part of the package.

b. typically identifies the product or brand.

c. is typically an expensive part of the marketing strategy for a product.

d. provides important benefits for manufacturers, retailers, and consumers.

e. is accurately described by all of the above.

Which of the following can be conveyed through packaging?

a. communication benefits

b. storage benefits

c. perceptual benefits

d. protection benefits

e. all of the above

Which of the following statements about packaging is true?

a. Packaging can have brand equity benefits for the company.

b. Consumer protection is an important function of packaging.

c. Packaging can give the idea of status, economy, and product quality.

d. Packaging can be used to extend shelf life.

e. All of the above statements about packaging are true.

Which of the following statements does NOT describe a benefit associated with packaging?

a. Packaging provides consumers with valuable and necessary information about directions

regarding product usage and its composition.

b. Packaging extends a product's shelf life.

c. Packaging is an inexpensive product strategy to implement.

d. Packaging potentially increases product sales.

e. Packaging connotes product benefits or enhances psychographic attributes of the product.

Packages create customer value by providing:

a. legal disclaimers.

b. psychographic attributes about the product.

c. communication, functional, and perceptual benefits.

d. environmental impact statements.

e. all of the above.

Directions on how to use a product and the composition of a product that appear on packaging are what

kind of benefits?


b. storage benefits


d. protection benefits

e. all of the above

Packaging that provides convenience, protection, or storage offers what kind of benefits?


b. functional benefits


d. physiological benefits

e. all of the above types of benefits

The ideas of status, economy, and product quality that packaging creates in the consumer's mind relates

to what kind of benefits?


b. functional benefits


d. physical benefits

e. all of the above types of benefit

A package can connote:

a. status, economy, and product quality.

b. economy, barter price, and distribution strategy.

c. all of the elements of the marketing mix.

d. product quality, company size, and industry growth rate.

e. consumerism, environmentalism, and industry ethical standards.

How does General Mills Gold Medal flour brand provide functional benefits through its packaging?

a. By including company contact information on the bag

b. By including the Betty Crocker seal of approval on the bag

c. By using a fancier, gold-embellished label than the one currently used

d. By using a resealable plastic bag instead of a paper bag

e. All of the above would provide functional benefits through packaging.

How does General Mills Gold Medal flour brand provide perceptual benefits through its packaging?






How does General Mills Gold Medal flour brand provide communication benefits through its packaging?






The concepts of the product part of the marketing mix usually apply well to service with three

exceptions. They are:

a. exclusivity, branding, and capacity management

b. exclusivity, pricing, and branding

c. branding, capacity management, and promotion

d. capacity management, pricing, and promotion

e. pricing, promotion, and place

When designing the product element of the marketing mix for services marketing managers should give

special attention to:

a. exclusivity, advertising, and capacity management.

b. exclusivity, branding, and capacity management.

c. advertising, packaging, and exclusivity.

d. capacity management, packaging and advertising.

e. brand name, packaging, and exclusivity.

A patent gives a manufacturer of goods exclusive rights for 17 years. A major difference between

goods and services is that:

The use of brand names is especially important for services because of which unique characteristic of

services?

a. inventory costs

b. inseparability

c. inconsistency

d. invisibility

e. intangibility

Cracker Barrel is a leader in the market of family restaurants located alongside major highways. Its

marketing mix includes a down-home atmosphere, a shop through which customers pass on the

way to and from the restaurant, a menu of American home cooking, and a friendly staff.

Which aspect of the product component of the marketing mix will be particularly helpful to

travelers looking for a place to eat lunch?

a. capacity management

b. pricing strategy

c. brand name and identifying logo

d. exclusivity

e. all of the above

Andrea Arena is the owner of 2 Places at 1 Time, a concierge company. She and her staff of 60 perform

everyday services such as walking the dog, picking up cleaning, waiting for the repairman, and

going to the post office for people who are too busy to perform these simple acts themselves.

This is a strong service brand name because it suggests:

a. the company has international experience.

b. the benefits provided by the service.

c. the company is employee-owned.

d. the company is a nonprofit organization.

e. the service concept is patented.

Integrating the service component of the marketing mix with efforts to influence consumer demand is

called:

a. off-peak pricing.

b. idle production capacity.

c. gap analysis.

d. capacity management.

e. inventory management.

An airport limousine service will meet people at their homes and deliver them to or bring them home

from their local airport. Because demand is much higher before 9 a.m. and after 5 p.m. during

weekdays, it must be concerned with:

a. exclusivity.

b. image management.

c. branding.

d. inconsistency.

e. capacity management.

A patient must be in a hospital to "buy" an appendectomy, and a guest must be in a hotel to "buy" an

accommodation. To make the product/service component of the marketing mix available to

the consumer, the service component of the mix must be integrated with efforts to influence

consumer demand. What is this called?

a. allocation of resources

b. timing

c. capacity management

d. customized service

e. facilities analysis

Pricing plays two essential roles in the managing of services. They are:

a. profit and capacity management.

b. profit and indicator of customer value.

c. influencing consumer perceptions and profit management.

d. influencing consumer perceptions and capacity management.

e. capacity management and cost recovery.

Which unique characteristic of service has the most influence on pricing?

a. inventory costs

b. inseparability

c. inconsistency

d. invisibility

e. intangibility

Many service businesses use off-peak pricing, which consists of charging different prices during

different times of the day or days of the week to reflect:

a. variations in costs of delivering service.

b. variations in demand for the service.

c. deviations from standard profit policies.

d. holidays and other special promotional events.

e. government regulations that may apply.

Setting prices during different times of the day or days of the week to reflect variations in demand for

the service is called:


b. idle production capacity pricing.

c. customer contact audit pricing.

d. differential value pricing.

e. capacity inventory pricing.

The headline in a newspaper advertisement for American Airlines proclaimed, "Florida: $199 Round

Trip!" A closer examination of the advertisement revealed the special low price airfare

applied only to specific travel dates. That is, the $199 price applied to tickets to Florida during

the months of July and August. If a consumer wished to travel to Florida during the peak

travel times of October through May, the price of the ticket was $499. The airline was

engaging in __________ by offering lower prices for tickets during less desirable travel times.

a. price gouging

b. price differentiation

c. off-peak pricing

d. bait-and-switch pricing

e. package pricing

Commuters in New York often have often installed devices on their cars that can be read automatically

as they approach a tollbooth. This saves time, improves traffic flow, and means drivers don't

need to keep suitable change in the car. It also offers New York authorities the opportunity to

manage traffic flow by charging different toll amounts for different times of day. Commuters

in New York are experiencing:

a. price gouging.

b. competitive pricing.

c. off-peak pricing.

d. internal marketing.

e. external marketing.

Place or distribution is extremely important to the managing services because of which unique

characteristic of services?

a. inventory costs

b. inconsistency

c. inseparability

d. intangibility

e. invisibility

Historically in services marketing, little attention has been paid to:

a. product.

b. price.

c. place (distribution).

d. positioning.

e. promotion.

Which of the 4 P's is a variable that health care providers could employ to reach their market segments?

a. promotion

b. distribution

c. pricing

d. product

e. all of the above

Which of the following should be communicated to consumers when promoting services?

a. courteous service

b. availability

c. location

d. quality

e. all of the above

Which component of the promotional mix is particularly important for nonprofit services?

a. advertising

b. sales promotion

c. personal selling

d. publicity

e. packaging

A publicity tool frequently used by nonprofit services, which uses free space or time donated by the

media is called a(n):

a. promotion.

b. advertisement.

c. public service announcement.

d. free standing insert.

e. publicity stunt.

Many nonprofit organizations have used what are called PSAs in their media planning. What does the

abbreviation PSA stand for?

a. public service announcement

b. publicity savings allocation

c. publicly served audience

d. pluralistic society allotment

e. promotional service allocation

Nonprofit services cannot control who sees a public service announcement or when the message is

given because:

a. PSAs tie up too large a percentage of the service's advertising budget.

b. PSAs are traditionally boring and not well designed.

c. timing and location of the PSA are under the control of the medium, not the organization.

d. PSAs have a very limited reach or scope.

e. PSAs are a form of two-way communication.

BMW's strategy is to keep its products in the:

a. introduction and growth stages.

b. growth and maturity stages.

c. introduction stage.

d. growth stage.

e. growth and maturity stages.

Which of the following statements about BMW is true?

a. BMW cars typically have a product life cycle of seven years.

b. BMW has a trademark naming system for its cars.

c. Pierce Bronson drove a BMW in the James Bond film, Goldeneye.

d. BMW's website is an integrated part of the overall marketing strategy for BMW.

e. All of the above statements about BMW are true.

1. James Gilmore and Joseph Pine explain, "The more contrived the world seems, the more

we all demand what is real." In terms of marketing, this simply means

A. consumers cannot really tell the difference between illusion and reality.

B. reality aside, give customers what they think they want.

C. good marketing can make even the impossible—possible.

D. what we want and what we can have are two totally different things.

E. consumers want engaging, personal, memorable, and authentic offerings.

2. The focuses on performing services that provide a unique experience.

A. intangibility economy

B. experience economy

C. virtual economy

D. magic of marketing

E. authentic economy

3. Consumers are no longer content with affordable, high quality purchases; they want .

A. offerings that reflect their self-image

B. consistent quality

C. to be treated as special one-of-a-kind buyers

D. total customer satisfaction

E. to feel as if they are in control of the entire purchasing process

4. There are several ways of providing consumers authentic offerings: (1) ; (2) provide

personal interaction rather than automation; (3) create a social process that allows consumers

to share their interests; and (4) manage any dimension of their reputation that might influence

perceptions of authenticity.

A. allow for adaptability at every customer contact point

B. back up claims with scientific research, market research, or governmental documentation

C. facilitate customer customization

D. do thorough research at each stage of the new-service development process

E. obtain personal endorsements from celebrity spokespeople and other opinion leaders

5. There are several ways of providing consumers authentic offerings: (1) facilitate

customization; (2) ; (3) create a social process that allows consumers to share their interests;

and (4) manage any dimension of their reputation that might influence perceptions of

authenticity.



C. do thorough research at each stage of the new-service development process

D. provide personal interaction rather than automation



customization; (2) provide personal interaction rather than automation; (3) ; and (4) manage

any dimension of their reputation that might influence perceptions of authenticity.



C. do thorough research at each stage of the new-service development process

D. obtain personal endorsements from celebrity spokespeople and other opinion leaders

E. create a social process that allows consumers to share their interests


customization; (2) provide personal interaction rather than automation; (3) create a social

process that allows consumers to share their interests; and (4) .



C. manage any dimension of a firm's reputation that might influence perceptions of

authenticity

D. do thorough research at each stage of the new-service development process


8. One way to provide consumers authentic offerings is to provide personal interaction.

Which of the following actions provides the best example of this approach?

A. Geico advertises that its insurance specialists are available 24/7 (24 hours per day, 7 days

per week).

B. iPods allow customers to create personalized playlists.

C. YouTube, Twitter, and Facebook create a forum for expressing personal experiences.

D. Cirque du Soleil combines the original elements of street performance, the circus, and live

theater.

E. Bloomingdales provides dressing rooms with huge electronic mirrors.

9. Services refer to

A. ideas that consist of a bundle of tangible and intangible attributes that satisfies consumers'

needs and is received in exchange for money or something else of value.

B. intangible activities or benefits that an organization provides to satisfy consumers' needs in

exchange for money or something else of value.

C. philanthropic activities performed in without expectations of monetary remuneration.

D. any intangible activity that provides a benefit to a consumer that he or she could not have

obtained or performed on his or her own.

E. any tangible activity that provides a benefit to a consumer that he or she could not have

obtained or performed on his or her own.

10. Intangible activities or benefits that an organization provides to satisfy consumers' need in

exchange for money or something else of value are referred to as .

A. virtual experiences

B. intangible benefits

C. intangible goods

D. product concepts

E. services

11. Intangible items such as airline trips, financial advice, or telephone calls that an

organization provides to consumers are referred to as

A. production goods.

B. support products.

C. services.

D. goods.

E. benefits.

12. Which of the following statements about services is MOST accurate?

A. Although a major contributor to the GDP nationally, services play only a minor role in

GDP on a global scale.

B Whether tangible or not, the marketing of services is exactly the same as the marketing of

products or ideas since they both satisfy customer needs.

C. Almost 35% of all jobs created in the United States are in the services sector.

D. In the U.S., more than 47% of the GDP comes from services.

E There is much more in common with the marketing of services and business products than

there is between the marketing of services and consumer products.

13. Which of the following statements about services is MOST accurate?

A Whether tangible or not, the marketing of services is exactly the same as the marketing of

products or ideas since they both satisfy customer needs.

B. Although a major contributor to the GDP nationally, services play only a minor role in


C. Services represent a large export business; it is one of the few areas where the United

States has a trade surplus.

D. Very few jobs in the United States are in the services sector.

E There is much more in common with the marketing of services and business products than

there is

14. between the marketing of services and consumer products.

As shown in Figure 12-1 above, which of the following statements is MOST accurate?

A. Services are a smaller part of the gross domestic product than are goods.

B. In 2010, goods represent a larger part of the gross domestic product than services.

C. In 1995, services were worth almost $1 billion.

D. Until 1980, goods and services contributed almost equally to the gross domestic product

(GDP).

E. In 2010, goods were 50 percent of the GDP.

15. There are four unique elements to services—intangibility, inconsistency, inseparability,

and inventory— which are referred to as the .

A. service mix

B. four I's of services

C. service matrix

D. span of services

E. service continuum

16. The four I's of services consist of

A. intangibility, inconsistency, inseparability, and innovation.

B. intangibility, inconsistency, inseparability, and impression.

C. intangibility, inconsistency, inseparability, and inventory.

D. intangibility, inventory, innovation, and impression.

E. intangibility, inconsistency, innovation, and impression.

17. The four I's of services consist of

A. inflexibility, intangibility, inconsistency, and inseparability.

B. intangibility, inconsistency, inseparability, and inventory.

C. incompatibility, inconsistency, inseparability, and inventory.

D. invisibility, inconsistency, inseparability, and intangibility.

E. inflexibility, incongruity, inconsistency, and inventory.

18. The intangibility element of a service refers to the fact that it

A. has value that can only be determined by using subjective criteria.

B. can't be held, seen, or touched before the purchase decision.

C. cannot be described, only experienced.

D. can maintain or accumulate inventory.

E. can be objectively evaluated.

19. Because services tend to be a(n) rather than an object, they are much more difficult for

consumers to evaluate.

A. opportunity

B. performance

C. adventure

D. risk

E. decision

20. To help consumers assess and compare services, marketers try to make them or show the

benefits of using the service.

A. tangible

B. intangible

C. consistent

D. timely

E. measurable

21. To help consumers assess and compare services, marketers try to make them tangible or .

A. temporal

B. consistent

C. adaptable

D. measurable

E. show the benefits of using the service

22. The Singapore Airlines ad in the textbook shows a traveler in the airline's new seats and

also emphasizes food and other amenities to overcome the of its service.

A. incongruity

B. inconsistency

C. inventory costs

D. inseparability

E. intangibility

23. Sarah has a backache due to overexertion. She believes a massage would loosen her back

muscles and make her feel better. She is concerned because a massage, unlike a pair of shoes,

cannot be held, touched, or seen before she buys it. Which characteristic of services is she

concerned about?

A. incongruity

B. inconsistency

C. inventory costs

D. inseparability

E. intangibility

24. Before moving out of their apartment, Brad and Kim Westgate decided to have their

carpets cleaned by ServiceMaster, a company specializing in professional carpet cleaning.

The carpet cleaners arrived at Brad and Kim's apartment, unpacked their equipment, cleaned

the carpets, packed up their tools, and drove away in their bright yellow van. The service

provided by ServiceMaster could not be held, touched, or seen before the purchase decision.

This scenario illustrates the of services.

A. inconsistency

B. inseparability

C. inventory costs

D. intangibility

E. interdependence

25. Consumers have more difficulty evaluating services than they do products; the difficulty

results from the

A. intangibility of services.

B. incongruity of services.

C. inseparability of services.

D. inflexibility of services.

E. interdependence of services.

26. To help consumers assess and compare its airline service, Frontier Airlines uses

personable animal characters in its advertising to announce and describe benefits, such as

leather seats and "stretch" seating, to help deal with the

A. intangibility of the service.

B. incongruity of the service.

C. inseparability of the service.

D. inflexibility of the service.

E. interdependence of the service.

27. The brochure for Spa Sydell has photographs of people enjoying the various spa

amenities. By seeing the pictures of what is available at the spa, a customer has a better idea

of what she is buying. Spa Sydell uses a brochure to help customers deal with the that is

associated with using the service.

A. incongruity

B. inconsistency

C. inventory costs

D. inseparability

E. intangibility

28. Services depend on the people who provide them. As a result, their quality varies with

each person's capabilities and day-to-day job performance. This element of services is

referred to as .

A. variation

B. differentiation

C. evaluation

D. inconsistency

E. intangibility

29. Developing, pricing, promoting, and delivering services is challenging because the

quality of a service is often

A. inseparable.

B. inconsistent.

C. inventoried.

D. tied to a product.

E. independent of the quality delivered.

30. Developing, pricing, promoting, and delivering services are challenging because the

quality of the service is often inconsistent. Organizations attempt to reduce this inconsistency

by

A. paying higher incentives to employees to encourage satisfactory performance.

B. reducing incentives available to employees because of poor performance.

C. reducing the customer contact points in the service delivery process.

D. providing standardization and training.

E. exercising better hiring practices.

31. Inconsistency of services refers to the fact that

A. there is no regulation of service industries in terms of basic standards of quality.

B. the quality of service provided by a firm is often inconsistent with its image.

C. the performance of one employee may vary from the performance of another employee

even though the same firm employs both.

D. training and standardization of service delivery procedures cannot be accomplished.

E. services have a varying degree of durability.

32. Organizations attempt to reduce the inconsistency of service delivery through

A. higher incentives to employees for satisfactory performance.

B. pay reductions for poor employee performance.

C. the reduction of customer contact points in the service delivery process.

D. standardization and training.

E. employing technology.

33. Students from Berry College attended a performance at nearby Shorter College and were

extremely impressed with the dance troupe that was the opening act. As soon as the students

returned to Berry, they made arrangements for the entertainers to appear on their campus. On

the day of the concert, the venue was packed with students, but the quality of the performance

was much poorer than they had seen at the Shorter campus. The Berry students'

disappointment was the direct result of which characteristic of services?

A. inconsistency

B. impressionability

C. intangibility

D. invisibility

E. uniqueness of the service

34. Andrea Arenas is the owner of 2 Places at 1 Time, a concierge company. She and her

staff of 60 perform everyday services, such as walking the dog, picking up cleaning, waiting

for the repairman, and going to the post office, for people who are too busy to perform these

simple acts. One way she tries to ensure of services for her regular customers is to make sure

that the same well-trained person is always assigned to work for them.

A. tangibility

B. consistency

C. congruity

D. flexibility

E. compatibility

35. Betty Smith operates a wedding preparation service that aids brides-to-be in the planning

of their weddings. To maintain a quality image and a standardized offering, Betty provides

extensive training for each of her employees. What unique aspect of services is Betty trying

to address?

A. impressionability

B. intangibility

C. inconsistency

D. inseparability

E. uniqueness of the service

36. Don graduated high school and takes his mom to dinner after the ceremony. At the

restaurant, the server fills their water glasses, checks on their table, and takes care of their

requests. Don notes that the last time he was at this same restaurant, the experience was much

worse. This scenario illustrates the of services.

A. impressionability

B. intangibility

C. inseparability

D. uniqueness of the service

E. inconsistency

37. Inseparability in services means consumers

A. see little variation from one service provider in an industry to another.

B. are unable to differentiate price from quality.

C. cannot evaluate a service until it is being used.

D. cannot separate the service from the deliverer of the service.

E. cannot separate themselves from the deliverer of the service.


staff of 60 perform everyday services, such as walking the dog, picking up cleaning, waiting

for the repairman, and going to the post office, for people who are too busy to perform these

simple acts. She is such a caring person and so well liked that her customers recommend her

instead of her business to people who are looking for someone to perform similar services.

Their inability to see the distinction between Arenas and her 2

Places at 1 Time concierge service is an example of which unique characteristic of services?

A. intangibility


C. incongruity

D. inseparability

E. inflexibility

39. When Thelma got her drive-thru order at the fast-food restaurant, she thought Louise, the

employee who took her money and gave her order, was cold and unfriendly. The food tasted

good but was overshadowed by Louise's demeanor. Every time she has the opportunity,

Thelma says something derogatory about the restaurant because she does not distinguish the

service deliverer (Louise, the employee who prepared her food and gave it to her) from the

service (the fast-food restaurant). Thelma is having a problem with which unique


A. intangibility


C. incongruity

D. inseparability

E. inflexibility

40. When banks are closed, they can offer value to their customers through automatic teller

machines (ATMs). This self-service technology also comes with a down side since the ATMs

are perceived as being less .

A. convenient

B. reliable

C. personal

D. safe

E. accurate

41. Although many people love the self-service technology that allows Redbox to provide

DVDs 24 hours a day, many people missed the personal interaction and recommendations

from their local clerks from Blockbuster or an independent video store. Redbox confronted

this issue by creating a "Redblog" where customers could share their opinions, feelings, and

experiences. This is an example of confronting the

A. inventory aspects of services.

B. inseparability aspects of services.

C. inconsistency aspects of services.

D. intangibility aspects of services.

E. impressionability aspects of services.

42. Why are inventory of services different from that of goods?

A. time is less important to customers of services than customers of goods

B. many times, the service provider is unavailable when there is a demand for the service

C. there are costs associated with the handling of service inventory

D. service inventory can be reduced through a straight salary compensation system

E. with goods, many items are perishable

43. A situation that occurs when a service provider is available but there is no demand is

referred to as

A. off-peak pricing.

B. idle production capacity.

C. static demand.

D. capacity management.

E. excess inventory.

44. Idle production capacity refers to

A. the minimum number of customers that a service provider can serve and still remain

profitable.

B. the maximum number of customers that a service provider must serve in order to remain

profitable.

C the ability of a service provider to redirect its efforts so even when there is no primary

demand, employees are still able to meet selective demand.

D. a situation that occurs when a service provider is available but there is no demand for the

service.

E a situation that occurs when the primary demand for a service exceeds that number of

service deliverers available to meet that demand.

45. Idle production capacity refers to

A.a situation where the demand for exceeds the availability of service providers and as a

result, no services can be offered.

B. when the supply of service providers exceeds the primary demand for the service.

C. a situation where a service provider is available but there is no demand for the service.

D. integrating the service component of the marketing mix with efforts to influence consumer

demand.

E. the potential profits of one service provider serving multiple clients at the same time.

46. The emergency room staff in Houston's largest hospital is surprised and pleased when a

four-day Fourth of July weekend brings in few accident victims for treatment. They know

from experience that such public holidays usually have high rates of accidents. For the

hospital's business office, the lower demand for the emergency room services means

A. a break in the service continuum.

B. its services are no longer tangible.

C. its services can be separated from the staff.

D. the hospital has idle production capacity.

E. an opportunity for gap analysis.


staff of 60 perform everyday services such as walking the dog, picking up cleaning, waiting

for the repairman, and going to the post office for people who are too busy to perform these

simple acts. She has often been hired by major corporations to perform services for their

harried executives, and now many of her major clients are providing perks like her service to

their employees. Her staff is overworked and she is hiring more employees to fill demand.

Arenas is not experiencing ; in fact, all of her employees are providing the maximum level of

services to customers.

A. off-peak pricing

B. idle production capacity

C. static demand

D. capacity marketing

E. capacity inventory

48. Western Airlines operates five flights daily between Chicago and Phoenix during the

winter. One flight leaves Phoenix at 12:10 PM. The plane, a Boeing 737, has a capacity of

120 passengers. During the past month, the flight has averaged only 24 passengers, a load

factor of 20 percent. Once the plane takes off, the other 96 seats generate no sales and profits

to the airline for that flight. What unique aspect of services does this situation describe?

A. incongruity

B. intangibility

C. inconsistency

D. inseparability

E. idle production capacity

49. Many retailers hire additional sales help during the holiday season. This is an example of

how service companies deal with .

A. shrinkage

B. seasonal absenteeism

C. economic recessions

D. derived demand

E. inventory carrying costs

50. The cost of a service is the cost of paying the person used to provide the service along

with any needed equipment.

A. intangibility

B. inconsistency

C. inseparability

D. inventory

E. hidden

51. Inventory carrying costs can be reduced by

A. using a straight salary compensation plan.

B. hiring additional full-time personnel.

C. allowing personnel to work overtime.

D. increasing the hours worked per week.

E. using a commission compensation system.

52. The inventory costs of services include

A. equipment and training costs.

B. management and material costs.

C. service delivery and spoilage costs.

D. salary of service provider and equipment costs.

E. salary of service provider and training costs.

53. Which of the organizations listed below has the lowest inventory carrying cost?

A. restaurant

B. automobile repair

C. amusement parks

D. employment agencies

E. animal hospital

54. Which of the organizations listed below has the lowest inventory carrying cost?

A. railroad

B. hotel

C. long-term care facility

D. amusement park

E. insurance companies

55. The inventory carrying costs of airlines is high because they

A. use a straight salary compensation plan for the large numbers of flight attendants.

B. high-salaried pilots and very expensive equipment.

C. allow baggage personnel to work overtime.

D. decrease the number of workdays per week, but increase the hours per day.

E. use a commission compensation system for their reservationists.

56. The inventory carrying costs of real estate agencies are low because they

A. use a straight salary compensation plan.

B. have employees who work on commission need little inexpensive equipment.

C. allow personnel to work any hours a day and any number of days per week.

D. decrease the number of workdays per week, but increase the hours per day.

E. are responsible for their own training, transportation, and supplies.

57. The highest inventory carrying costs would most likely be for which of the following

services?

A. real estate agencies

B. dry cleaners

C. auto repair centers

D. amusement parks

E. hospitals

58. The range of offerings from the tangible to the intangible or product-dominant to service-

dominant is referred to as the

A. service continuum.

B. product continuum.

C. tangibility line.

D. inseparability span.

E. customer contact audit.

59. The range of offerings from the tangible to the intangible or product-dominant to service-


A. product continuum.

B. service continuum.

C. tangibility line.

D. inseparability span.

E. customer contact audit.

60. According to the service continuum shown in Figure 12-3 above, which of the following

offerings has the highest level of intangibility?

A. tailored suit

B. advertising agency

C. tutoring service

D. fast-food restaurant

E. salt

61. According to the service continuum shown in Figure 12-3 above, which of the offerings

has an almost perfect balance of tangible and intangible attributes?

A. tailored suit

B. tutoring service

C. dog food

D. fast-food restaurant

E. movie theater

62. Services can be classified by

A. their method of delivery.

B. their use of idle capacity time.

C. the nature of their ownership.

D. their location on perceptual maps.

E. organizational reach.

63. Services can be classified according to whether they are , they are profit or nonprofit

organizations, or they are government sponsored.

A. national or global

B. use independent contractors

C. privately owned or publicly owned

D. delivered by people or equipment

E. owned by individuals or corporations

64. Services can be classified according to whether they are delivered by people or

equipment, they are , or they are government sponsored.

A. national or global

B. use independent contractors


D. owned by individuals or corporations

E. for profit or nonprofit organizations

65. Services can be classified according to whether they are delivered by people or

equipment, whether they are for profit or nonprofit organizations, and whether they are .

A. government sponsored

B. a national organization or a global organization


D. performed by independent contractors

E. owned by individuals or corporations

66. The categories for people-based services include .

A. volunteers, skilled operators, and professionals

B. unskilled labor, skilled labor, and professionals

C. those operated by skilled operators, unskilled labor and skilled labor

D. those operated by relatively unskilled operators, those operated by skilled operators, and

unskilled labor

E. automated, those operated by skilled operators, and professionals

67. Which of the following is the best example of a people-based service?

A. movie theaters

B. airlines

C. advertising agency

D. vending machines

E. taxis

68. Which of the following is the best example of a people-based service?

A. a lawyer

B. movie theaters

C. airlines

D. vending machines

E. taxis

69. What do a security guard, a plumber, and a management consultant share in common?

A. They are all tangible services.

B. They are all people-based services.

C. They do not have problems with idle production capacity.

D. They are all equipment-based services.

E. They never use off-peak pricing.

70. The categories for equipment-based services include .

A. unskilled labor, skilled labor, and professionals

B. volunteers, unskilled and skilled operators, and professionals

C. those operated by relatively unskilled operators, those operated by skilled operators, and

unskilled labor

D. those operated by skilled operators, unskilled labor, and professionals

E. automated, those operated by relatively unskilled operators, and those operated by skilled

operators

71. The categories for equipment-based services include

A. unskilled labor, those operated by relatively unskilled operators, and automated (self-

serve).

B. professionals, those operated by relatively unskilled operators, and automated (self-serve).

C. automated (self-serve), those operated by relatively unskilled operators, and those operated

by skilled operators.

D. unskilled labor, skilled labor, and professionals.

E. those operated by skilled operators, unskilled labor, and professionals.

72. Equipment-based services do not have the marketing concerns of

A. intangibility.

B. inseparability.

C. inventory.

D. inconsistency.

E. immeasurability.

73. Equipment-based services do not have the marketing concerns of inconsistency because

have been removed from the provision of the service.

A. product liability

B. people

C. learning requirements

D. automation

E. accessories

74. Which of the following is the best example of an equipment-based service?

A. lawn care

B. doctors

C. taxis

D. lawyers

E. janitorial services

75. What do an automated carwash, a limousine service, and an airline have in common?



C. None of them has problems with idle production capacity.

D. They are all equipment-based services.

E. They never use off-peak pricing.

76. What do a dry cleaning service, an automated carwash, and a taxi service have in

common?



C. None of them has problems with idle production capacity.

D. They never use off-peak pricing.

E. They are all equipment-based services.

77. Equipment-based services like ATMs, online brokerage firms, and automated car washes,

do not have the marketing concerns of

A. inconsistency.

B. intangibility.

C. inseparability.

D. inventory.

E. deliverability.

78. For nonprofit organizations, excesses in revenue over expenses are

A. taxed at one-half the rate for profit organizations.

B. distributed equally to all of the organization's shareholders.

C. returned to the organization's treasury for continuation of the service.

D. taxed at a reduced rate if the revenue is to be used in keeping with the organization's core

mission.

E. not taxed at all unless it is a religious organization.

79. A nonprofit organization may pay taxes if

A. excess revenues exceed 18 percent of the budget.

B. the organization is not considered to be religious institution.

C. revenue is received from overseas subsidiaries.

D. revenue-generating holdings are not directly related to the organization's core mission.

E. money is spent on research and development, then it is taxed at a significantly lower rate.

80. Recently, many nonprofit organizations such as the American Red Cross

A. were eager to use marketing practices.

B. thought that marketing would limit the profitability of the nonprofit organization.

C. could not afford marketing activities.

D. thought that marketing activities would create excess demand.

E. have increased their use of marketing practices.

81. The American Red Cross uses marketing to help achieve its goals. As a service, it can be

classified as

A. a nonprofit organization.

B. people-based.

C. equipment-based.

D. a business firm.

E. a governmental agency.

82. Sterile Feral, Inc. is a nonprofit organization that catches wild or stray cats, and then

neuters, vaccinates, and releases them back into the wild. In recent years, nonprofit

organizations such as Sterile Feral have turned to marketing to help

A. receive additional government funding.

B. expand its business to stray dogs.

C. maintain its nonprofit status.

D. achieve organizational goals.

E. compete with other similar organizations.

83. The Susan G. Komen for the Cure has used , in addition to its familiar walks and races, to

raise more than $1.5 billion for breast cancer research.

A. social marketing

B. private donations

C. sales promotion campaigns

D. green marketing programs

E. sharing of resources

84. The American Red Cross uses social marketing tools such as Facebook, Twitter, and e-

mail to increase donations. The campaign raised more than $32 million in response to the

Haiti earthquake.

A. All for one and 1% for All

B. Text-to-Donate

C. In for a Penny

D. It All Makes Cents

E. Time for Change

85. The first step a nonprofit organization should take to engage people with social media is

to.

A. set specific measurable goals

B. understand what motivates people to take up causes

C. create a simple and realistic operating budget

D. create a well-defined organizational hierarchy

E. develop a unique selling proposition

86. What do the United States Post Service, the U.S. Park Service, and a local fire department

have in common?

A. They are all privately owned companies.

B. They do not fit on the service continuum.

C. They are all government-sponsored service providers.

D. They never experience idle production capacity.

E. Capacity management is not an issue for these organizations.

87. What do the United States Post Service, a state health department, and a local fire

department have in common?

A. They are all government-sponsored service providers.

B. They never experience idle production capacity.

C. They do not fit on the goods-services continuum.

D. They do not have service encounters.

E. They do not have capacity management problems.

88. According to Figure 12-5 above, purchases labeled "A" would most likely be evaluated

on properties.

A. value

B. search

C. credence

D. experience

E. quality

89. According to Figure 12-5 above, purchases labeled "B" would most likely be evaluated

on properties.

A. value

B. search

C. credence

D. experience

E. expenditure

90. According to Figure 12-5 above, purchases labeled "C" would most likely be evaluated

on properties.

A. value

B. search

C. credence

D. experience

E. expenditure

91. According to Figure 12-5 above, which statement is MOST accurate?

A. Legal services are high in search credence properties, but medical services are high in

experience properties.

B. Haircuts are high in experience properties, but barbershops are high is search properties.

C. Jewelry is high in search properties, although diamonds are high in credence properties.

D. Television repair is more difficult to evaluate than restaurant meals.

E. Child care is equally high in search, experience, and credence properties because the

decision is so important.

92. Characteristics of tangible goods, such as color, size, and style are considered properties.

A. search

B. form

C. experience

D. credence

E. brand

93. Which of the following is high in search properties?

A. clothing

B. TV repair

C. legal services

D. auto repair

E. medical diagnosis

94. One of the primary differences between tangible goods and services involves a

consumer's ability to make prepurchase evaluations. For example, consumers can easily

evaluate shoes, jewelry, and skis before making a purchase. On the other hand, consumers

can evaluate services such as restaurants, ski instructors, and tanning salons only during or

after their purchase. Indeed, tangible products have properties, whereas services have

properties.

A. consistent; inconsistent

B. search; experience

C. inconsistent; consistent

D. experience; search

E. gap; encounter

95. Which of the following is high in experience properties?

A. clothing

B. a vacation

C. legal services

D. auto repair

E. a medical diagnosis

96. Services such as restaurants and child care are evaluated on properties.

A. search

B. form

C. experience

D. credence

E. performance


staff of 60 perform everyday services such as walking the dog, picking up cleaning, waiting

for the repairman, and going to the post office for people who are too busy to perform these

simple acts. She is often hired by major corporations to perform services for their harried

executives and their spouses. Her clients can evaluate the services that 2 Places at 1 Time

provide

A. only before they are purchased or consumed.

B. only after they are purchased or consumed.

C. only at the same time as they are purchased or consumed.

D. before, during, and/or after they are purchased or consumed.

E. only during consumption or after they are purchased.

98. Sarah has a backache due to overexertion. She believes a massage would loosen her back

muscles and make her feel better. She is concerned because a massage, unlike a pair of shoes,

cannot be felt before she buys it. Sarah realizes massages have properties.

A. search

B. form

C. experience

D. credence

E. performance

99. When Theresa Martinez relocated from the East to the Midwest, she needed to find a

bank with offices in her new state. Several banks offered banking products (checking and

savings accounts, loans, certificates of deposit) and other financial products (mutual funds,

insurance) that were available from her former bank. After selecting U.S. Bank, Theresa later

needed some help with her accounts and went to visit her personal banker. She was very

impressed with the banker's attitude and willingness to explain certain items to her in terms

she could understand. The service Theresa received from the U.S. Bank banker exhibited

properties.

A. credence

B. expertise

C. experience

D. search

E. customer relationship

100. Services provided by specialized professionals such as medical diagnoses and legal

services have certain properties or characteristics that the consumer may find impossible to

evaluate even after purchase and consumption. What are these properties called?

A. customer contact properties

B. credence properties

C. capacity properties

D. contract properties

E. relationship properties

101. Which of the following are high in credence properties?

A. clothing

B. vacation

C. jewelry

D. houses

E. medical diagnoses

102. Services performed by surgeons or lawyers are primarily evaluated on properties.

A. search

B. form

C. indirect

D. credence

E. experience

103. To reduce the uncertainty created by properties, service consumers turn to personal

sources of information such as opinion leaders, early adopters, and reference group members

during the purchase decision process.

A. search

B. credence

C. experience

D. expertise

E. quality

104. Sarah has a toothache. She believes it may be due to her not having regular dental

checkups in the past. She now wants to find a dentist, but does not have one that she has used

in the past. Because dentistry has properties, Sarah plans to ask her friends for a

recommendation for a dentist they like to be sure that she finds a good one.

A. search

B. form

C. experience

D. credence

E. performance

105. Fred White has just accepted a sales position with the ABC Health Maintenance

Organization, a major provider of health care services. He had been selling medical supplies

for some time and found that he understood how customers bought medical supplies. Which

of the following is likely to be a characteristic of the health care services that Fred offers?

A. Customers are engaged in a low involvement purchase process.

B. The quality of services can be predetermined in a similar manner to tangible products.

C. The buyer does not participate in the delivery of the service.

D.A consumer may not have the ability to judge the quality of medical care service even after

the service has been provided.

E The service provider should concentrate on the problem recognition stage of the purchase

decision process in the marketing of health care services.

106. The type of analysis that compares the differences between consumers' expectations

about a service and their experience with it based on dimensions of service quality is referred

to as

A. customer relationship management.

B. service encounter differential.

C. gap analysis.

D. a customer contact audit.

E. a service audit.

107.The two basic components of a customer's evaluation of a service are

A. expectations and customer contact.

B. expectations and experience.

C. intangibility and inconsistency.

D. experience and credence.

E. inconsistency and inseparability.

108.How a person establishes expectations for a service not yet experienced is influenced by ,

personal needs, past experiences, and promotional activities.

A. the economy

B. consumer income

C. word-of-mouth communications

D. competitive trends

E. how the organization delivers its service

109.How a person establishes expectations for a service not yet experienced is influenced by

word of mouth communications, , past experiences, and promotional activities.

A. personal needs

B. the economy

C. consumer income

D. competitive trends



word of mouth communications, personal needs, , and promotional activities.

A. how the organization delivers its service

B. past experiences

C. competitive trends

D. the economy

E. consumer income


word of mouth communications, personal needs, past experiences, and .

A. the economy

B. consumer income

C. competitive trends

D. promotional activities


112.A son can establish expectations for a service he or she has not yet experienced through

word-of- mouth communications, personal needs, past experiences, and promotional

activities. However, the actual experience(s) are determined by

A. the way the organization actually delivers its service.

B. the positive reinforcement from friends, family, and peers after the service was provided.

C. repeat encounters with the same service provider.

D. psychological feelings of well-being.

E. a formal post-purchase evaluation or questionnaire.

113.Many restaurants now ask consumers to evaluate their experience on a short

questionnaire when they pay their bill. This assessment of consumer expectations and the

actual experience they had is called a .

A. gap analysis

B. service encounter survey

C. customer profile analysis

D. customer contact audit

E. service audit

114.There are five key dimensions of service quality:

A. reliability, responsiveness, competence, courtesy, and empathy.

B. knowledge, responsiveness, respect, diligence, and honesty.

C. honesty, respect, empathy, reliability, and diligence.

D. reliability, competence, alacrity, fairness, and product knowledge.

E. reliability, tangibility, responsiveness, assurance, and empathy.

115.As a dimension of service quality, the ability to perform the promised service dependably

and accurately is referred to as .

A. reliability

B. responsiveness

C. competence

D. courtesy

E. empathy

116.As a dimension of service quality, the appearance of physical facilities, equipment,

personnel, and communication materials as a dimension of service quality is referred to as .

A. communication

B. responsiveness

C. competence

D. tangibility (tangibles)

E. empathy

117.As a dimension of service quality, the willingness to help customers and provide prompt

service is referred to as .

A. reliability

B. responsiveness

C. competence

D. assurance

E. empathy

118.As a dimension of service quality, the knowledge and courtesy of employees, and their

ability to convey trust and confidence is referred to as .

A. reliability

B. responsiveness

C. competence

D. assurance

E. empathy

119.As a dimension of service quality, the caring, individualized attention provided to

customers as a dimension of service quality is referred to as .

A. reliability

B. responsiveness

C. competence

D. assurance

E. empathy

120.The dimension of service quality called is the ability to perform the promised service

dependably and accurately.

A. reliability

B. assurance

C. accuracy

D. responsiveness

E. empathy

121.The dimension of service quality called is the appearance of physical facilities,

equipment, personnel, and communication materials.

A. assurance

B. reliability

C. responsiveness

D. empathy

E. tangibility (tangibles)

122.The dimension of service quality called is willingness to help customers and provide

prompt service.

A. assurance

B. reliability

C. responsiveness

D. empathy

E. sympathy

123.The dimension of service quality called is knowledge and courtesy of employees and

their ability to convey trust and confidence.

A. assurance

B. sympathy

C. empathy

D. responsiveness

E. reliability

124.The dimension of service quality called is caring, and individualized attention provided

to customers.

A. assurance

B. reliability

C. responsiveness

D. empathy

E. sympathy

125.Sandy needs to have her car repaired. She is a member of the American Automobile

Association (AAA) and knows that they evaluate car repair shops. Furthermore, the shop she

is considering displays the AAA seal of approval. It also is clean and organized. She believes

this is a good way to predict the quality of the service she will receive. Sandy bases her

opinion of car repair shops on the basis of which service quality dimension?

A. assurance

B. tangibility (tangibles)

C. reliability

D. responsiveness

E. empathy

126.Sterile Feral, Inc. is a nonprofit organization that catches wild or stray cats, and then

neuters, vaccinates, and releases them back into the wild. Veterinarians are particularly

impressed with how dependably the organization is able to perform its promised service.

With which service quality dimension are veterinarians most impressed?

A. assurance

B. tangibility

C. reliability

D. credibility

E. empathy

127.Arnett is looking for a new Web portal to use to access information that interests him on

the Internet. The one he currently uses is too slow when loading web pages because each

page is cluttered with ads and videos. In terms of the service quality dimensions, Arnett is

unhappy with which dimension of this service?

A. assurance

B. tangibility

C. reliability

D. responsiveness

E. empathy

128.Sterile Feral, Inc. is a nonprofit organization that catches wild or stray cats, and then

neuters, vaccinates, and releases them back into the wild. The personnel of the nonprofit

organization are caring people who love animals and try to do what they can to meet the

needs of each cat they care for. The caring nature of the personnel relates to which service

quality dimension?

A. assurance

B. tangibility

C. reliability

D. credibility

E. empathy

129. According to Figure 12-6 above, "A" represents which dimension of service quality?

A. reliability

B. tangibility (tangibles)

C. responsiveness

D. assurance

E. empathy

130. According to Figure 12-6 above, "B" represents which dimension of service quality?

A. reliability

B. assurance

C. empathy


E. responsiveness

131. According to Figure 12-6 above, "C" represents which dimension of service quality?

A. reliability

B. empathy

C. tangibility (tangibles)

D. assurance

E. responsiveness

132. According to Figure 12-6 above, "D" represents which dimension of service quality?

A. reliability

B. empathy

C. assurance


E. responsiveness

133. According to Figure 12-6 above, "E" represents which dimension of service quality?

A. reliability

B. empathy

C. tangibility (tangibles)

D. assurance

E. responsiveness

134.Another name for the steps in the service delivery process is .

A. service interactions

B. access points

C. path-analysis

D. service encounters

E. wheel of services

135.A tomer contact audit refers to

A. the initial contact between a service provider and the ultimate consumer.

B. a flowchart of the points of interaction between a consumer and a service provider.

C. a method of consumer evaluation of service quality and consistency.

D. an estimation of demand based on service forecasting techniques.

E. is a systematic assessment of a service provider's objectives, strategies, and performance in

terms of social responsibility.

136.A wchart of the points of interaction between a customer and a service provider is

referred to as

A. a service continuum.

B. gap analysis.

C. a customer contact audit.

D. a customer contact continuum.

E. a service audit.

137.Recent research suggests that and sincerity of the interactions affect the success of the

relationships.

A. reliability

B. authenticity

C. responsiveness

D. tangibles

E. friendliness

138.Ron had a craving for sushi so he searched yellowpages.com for the name of a restaurant

in his vicinity that serves this type of food. When he arrived at his destination, he was

impressed with the menu posted outside the door and decided to go in. He was greeted with a

smile by a hostess and then immediately seated at a well-appointed table where he was given

a warm cloth for his hands. The food was beautifully presented, the rice was the perfect

texture and temperature, and the fish was fresh and delicious. Halfway thought the meal, he

excused himself to go to the restroom. It was clean, but unfortunately was out of paper

towels. He returned to his table, finished his meal, and paid his check. The hostess said

goodbye and asked him to return. The first point in his customer contact audit was .

A. searching yellowpages.com

B. reading the menu on the door

C. being greeted by the hostess

D. being seated at his table

E. receiving his meal

139.Ron had a craving for sushi so he searched yellowpages.com for the name of a restaurant


impressed with the menu posted outside the door and decided to go in. He was greeted with a

smile by a hostess and then immediately seated at a well-appointed table where he was given

a warm cloth for his hands. A waiter beautifully presented the food, the rice was the perfect

texture and temperature, and the fish was fresh and delicious. Halfway thought the meal, he

excused himself to go to the restroom. It was clean, but unfortunately was out of paper

towels. He returned to his table, finished his meal, and paid his check. The hostess said

goodbye and asked him to return. Which of the following statements about this scenario is

MOST accurate?

A Reading the menu posted outside the door was Ron's first point of interaction in the

customer contact audit because if he hadn't liked the selections, he wouldn't have gone into

the restaurant.

B Being greeted by the hostess was the first point of interaction in the customer contact audit

because it was the first encounter with the actual service provider—the restaurant.

C The first point of interaction in the customer contact audit wasn't written, it was implied.

The real first point in the customer contact audit should have been between Ron and the

waiter, not Ron and the hostess.

D The lack of paper towels in the restroom was the first point of interaction in the customer

contact audit because it was the first time his expectations weren't met.

E The yellowpages.com ad, the menu on the door, the hostess's greeting, the waiter, the

quality and presentation of food, and even the restroom were all important points of a contact.

140.Which of the following is a point in the customer contact audit for a health club?

A. participating in the health club's exercise class

B. the customer's diet

C. too much traffic on the way to the club

D. a willingness to exercise

E. meeting an attractive gym member

141.Which of the following statements about service failures is MOST accurate?

A. Only 5-10% of dissatisfied customers choose to complain to the company.

B. Once customers complain, they expect all of their demands to be met.

C. Only 20% of consumers will give a company a second chance if they are not fully satisfied

during the first encounter.

D. People are twice as likely to share good service experiences as bad experiences.

E Monitoring social media websites such as YouTube, Twitter, and Facebook are a waste of

time since the complaints presented are usually isolated instances and are not indicative of the

actual service delivered.

142.Most public relations experts agree that it is best for a company to comments about it on

the Internet.

A. ignore

B. argue with

C. respond to

D. blog about

E. consider

143.Which of the following statements about relationship marketing is most accurate?

A. The number of encounters in a service experience should always be the same.

B. The service encounter represents an opportunity to develop social bonds with customers.

C. An after-holiday sale is a good incentive to create a loyal customer relationship.

D. The purpose of relationship marketing is to benefit the customer, not the organization.

E. A major customer benefit of relationship marketing is a reduction in the price that is paid

for services rendered.

144.Relationship marketing provides several benefits for service customers, including: (1) ;

(2) customized service delivery; (3) reduced stress due to a repetitive purchase process; and

(4) an absence of switching costs.

A. the continuity of a single provider

B. no need for comparison shopping

C. discounted switching costs

D. implied warranties

E. strict government quality performance guidelines

145.Relationship marketing provides several benefits for service customers, including: (1) the

continuity of a single provider; (2) customized service delivery; (3) ; and (4) an absence of

switching costs.

A. no need for comparison shopping

B. reduced stress due to a repetitive purchase process


D. implied warranties


146.Relationship marketing provides several benefits for service customers, including: (1) the

continuity of a single provider; (2) customized service delivery; (3) reduced stress due to a

repetitive purchase process; and (4) .

A. no need for comparison shopping

B. implied warranties


D. an absence of switching costs


147.Recent surveys of consumers have indicated that while customers of many services are

interested in being "relationship customers," they require that the relationship be balanced in

terms of

A. honesty, a lack of prejudice, and empathy.

B. loyalty, benefits, and respect for privacy.

C. loyalty, honesty, and integrity.

D. financial benefits, product benefits, and preferential treatment.

E. financial benefits, product benefits, and personal benefits.

148.An expanded marketing mix for services that includes the four Ps (product, price,

promotion, and place or distribution) as well as people, physical environment, and process, is

referred to as the .

A. seven Ps of services

B. service matrix

C. service continuum

D. service encounters

E. the service mix

149.While there are 4 Ps of marketing, there are Ps of services.

A. 3

B. 5

C. 6

D. 7

E. 8

150.All of the following comprise the seven (7) Ps of services marketing EXCEPT:

A. product.

B. process.

C. profitability.

D. people.

E. physical environment.

151.The use of brand names is especially important for services because of which unique


A. inventory costs

B. inseparability

C. inconsistency

D. invisibility

E. intangibility

152.Which of the following statements regarding service branding is MOST accurate?

A. Because services are intangible and more difficult to describe, brand names and logos are

of critical importance.

B. Because the classification of services is so complex, it is far more difficult to find a brand

name that hasn't already been taken.

C Services must include the word "service" in all their brand names to assure that customers

understand they are not purchasing a product.

D Service firms with a well-established brand reputation and service firms without a brand

reputation both find it easy to introduce new services.

E. Service logos and brands must designated by the "®" symbol while consumer products are

designated by the "SM" symbol.

153.Which of the following statements regarding service branding is MOST accurate?

A.Because the classification of services is so complex, it is far more difficult to find a brand

name that hasn't already been taken.

B Services must include the word "service" in all their brand names to assure that customers

understand they are not purchasing a product.

C Service firms with a well-established brand reputation will also find it easier to introduce

new services than firms without a brand reputation.

D. Many consumers are suspicious of companies that offer too many services under the same

brand name.

E Many service organizations, such as banks, hotels, and restaurants do not rely heavily on

branding because of the extent to which they are people-dominated services.

154.The FedEx brand suggests the possibility that it is government sanctioned and fast. This

perception is important because of which unique characteristic of services?

A. inventory costs

B. inseparability

C. inconsistency

D. invisibility

E. intangibility

155.Which of the following is the most important aspect conveyed by the FedEx brand?

A. its international experience

B. differentiation and an image of quality

C. the ownership of the company

D. the nonprofit aspect of the company

E. the patent for its service

156.Tuition, charges, fares, and rates are all

A. names given to the tangible portion of the price of a service.

B. names that are interchangeable when identifying the price of a service.

C. names given to the intangible portion of the price of a service.

D. names given to the price of services.

E. terms used in services to imply a higher quality product than the terms "cost" or "price."

157.Tuition, charges, fares, and rates are all

A. euphemisms for the name "price" to the price factor in services.

B. names given to the price of services.

C. names given to the intangible portion of the price of a service.

D. names that are interchangeable when identifying the price of a service.

E. terms used in services to imply a higher quality product than the terms "cost" or "price."

158.Because of the intangible nature of services, consumers often perceive price as a possible

indicator of of the service.

A. the profit or ROI

B. the customer value

C. the quality

D. the target market

E. the cost

159.When customers buy services, they also consider nonmonetary costs, such as the and

efforts required to consume the service.

A. emotional; physical

B. mental; physical

C. psychological; intellectual

D. physical; moral

E. physical; ethical

160.One tool available for services when trying to balance demand is .

A. off-peak pricing

B. product lay-away

C. credit incentives

D. container sales

E. product rationing

161.Service providers use tools such as , which consists of charging different prices for

different times of the day or during different days of the week to reflect the variations in

demand for their services.

A. scale pricing

B. capacity pricing

C. down-time pricing

D. off-peak pricing

E. fraction pricing

162.Many service businesses use off-peak pricing to reflect variations in

A. costs of delivering service.

B. demand for the service.

C. profitability based on time of day or week.

D. promotional events.

E. government regulations.

163.Charging different prices during different times of the day or during different days of the

week to reflect variations in demand for a service is referred to as

A. capacity pricing.

B. idle production pricing.

C. customer contact pricing.

D. derived demand pricing.

E. off-peak pricing.

164.The less-expensive matinee movie pricing offered on shows prior to 4:00 PM is an

example of

A. price lining.

B. price differentiation.

C. off-peak pricing.

D. bait-and-switch pricing.

E. idle production pricing.

165.Commuters in New York often have often installed radio frequency identification (RFID)

devices on their cars that can be read automatically as they approach a tollbooth. This saves

time, improves traffic flow, and means drivers don't need to keep exact change in their cars. It

also offers New York authorities the opportunity to manage traffic flow by charging different

toll amounts for different times of day. Commuters in New York are experiencing

A. price gouging.

B. off-peak pricing.

C. flow management pricing.

D. price differentiation.

E. idle production pricing.

166.A or factor in developing a service marketing strategy is because of the inseparability of

services from the producer.

A. product

B. price

C. promotion

D. place

E. process

167.Which of the following statements regarding the place element of services is MOST

accurate?

A.Place has little impact on the marketing of services because there are so many

intermediaries from which a consumer may choose.

B. The distribution site and the service provider are the intangible components of the service.

C. Place is especially important factor because of the inconstancy between the service and the

service provider.

D. Until recently, customers generally had to go to the service provider's physical location to

purchase the service.

E Technology is an effective way to bring services to the customer, but only if the consumer

is a new user; otherwise, the disadvantages outweigh the benefits.

168.A licity tool frequently used by nonprofit services, which uses free space or time donated

by the media is referred to as a(n)

A. promotion.

B. advertisement.

C. public service announcement.

D. press release.

E. cooperative advertisement.

169.Many nonprofit organizations have used PSAs in their media planning. What does the

acronym "PSA" stand for?

A. public stakeholder announcement

B. public sustainability announcement

C. public service announcement

D. public service annunciation

E. promotional service announcement

170.The notion that a service organization must focus on its employees before successful

programs can be directed at customers is referred to as

A. internal analysis.

B. internal marketing.

C. external marketing.

D. stakeholder marketing.

E. employee marketing.

171.The concept of internal marketing is based on the notion that a service organization must

focus on its before successful programs can be directed at customers.

A. competitors

B. prospects

C. shareholders

D. employees

E. suppliers

172.Edinberry's, a restaurant located in south Texas, offers a variety of foods and

entertainment opportunities to its customers. The restaurant is famous for its fine steaks,

spicy chili, and outstanding customer service. In order to maintain the restaurant's reputation

for putting its customers first, the marketing manager at Edinberry's has developed marketing

activities that are directed at the waiters and waitresses. These marketing activities are an

example of and are designed to help the restaurant employees to maintain an exceptional

customer experience.

A. internal marketing

B. external marketing

C. service marketing

D. stakeholder marketing

E. employee marketing

173.The process of managing the entire customer experience with the company is referred to

as

A. services marketing.

B. internal marketing.

C. customer experience management.

D. relationship marketing.

E. gap analysis.

174.The customer experience management (CEM) process should

A. allow for spontaneity and not be too rigid or planned.

B. be unique to each individual customer's experience.

C. stress the similarities in style, function, and form of their service relative to the top

competitors in the industry.

D. differentiate a service from other service offerings.

E. be performed by someone outside the firm to guarantee objectivity.

175.The appearance of the environment in which the service is delivered and where the firm

and customer interact can influence the customer's of the service.

A. repeat usage

B. evaluation

C. exploitation

D. utilization

E. perception

176.The buildings, landscaping, vehicles, furnishings, signage, brochures, and equipment

comprise which of the seven Ps of services marketing?

A. process

B. place

C. physical environment

D. productivity

E. product

177.Service companies can manage their physical environment to influence customers'

perceptions is through

A. service delivery management.

B. relationship management.

C. customer experience management.

D. exposure management.

E. impression management.

178.The actual procedures, mechanisms, and flow of activities by which a service is created

and delivered is referred to as .

A. a process

B. a procedure

C. productivity

D. a protocol

E. a plan

179.In the seven Ps of services, the term "process" refers to

A. the patented steps of service encounters that distinguish one service provider from another.

B. licensed procedures that have met ISO 9000 guidelines for safety.

C. the procedures, mechanisms, and flow of activities by which the service is created and

delivered.

D. a protocol for behaviors and activities for people-based rather than technology-based

services.

E. the decisions consumers' make during the purchase of services.

180.In the seven Ps of services marketing, the term "process" involves not only "what" gets

created but also

A. "if" it gets created at all.

B. "how" it gets created.

C. "when" it gets created.

D. for "whom" it gets created.

E. "why" it gets created.

181.A is very important to the process aspect of services because it helps identify steps that

will ultimately lead to better service creation and delivery processes.

A. customer contact audit

B. internal marketing review

C. tangibility gap analysis

D. service continuum

E. consumer experience audit

182.Integrating the service component of the marketing mix with efforts to influence

consumer demand is referred to as .

A. customer management

B. internal marketing

C. product management

D. capacity management

E. eight Ps of services marketing

183.Capacity management refers to

A. integrating the service component of the marketing mix with efforts to influence consumer

demand.

B. when the service provider is available but there is no demand.

C charging different prices during different times of the day or during different days of the

week to reflect variations in demand for the service.

D. the practice of changing prices for services in real time in response to supply and demand

conditions.

E.the operating cost per hour per employee or technology subtracted from the revenue

generated by each full-time employee equivalent.

184.Airlines feature load factor as a(n) measure on their marketing dashboards.

A. productivity

B. price differentiation

C. tangibility

D. capacity management

E. profitability

185.Airlines feature load factor as a capacity management measure on their marketing

dashboards, along with two other measures; namely the operating expense per available seat

flown one mile and , which is the revenue generated by each seat flown one mile.

A. profit per passenger

B. average price per passenger

C. internal ROI

D. unit variable sales

E. yield

186.Airline load factor refers to

A. the percentage of paying customer seats flown one mile plus frequent flyer redemption

seats flown one mile.

B. the percentage of empty seats on a plane compared to its total capacity.

C. the percentage of available seats flown one mile occupied by a paying customer.

D. the percentage of seats that are overbooked on any given flight to prevent profit shortfalls

for "no shows."

E the total of all paid seats plus all luggage overcharges and all purchased beverages, meals,

and other amenities or additional services, per flight.

187. The percentage of available seats flown one mile occupied by a paying customer is

shown in the capacity management marketing dashboard above as .

A. 9.83%

B. 82.1%

C. 8.28%

D. 18.11%

E. 1.55%

188. The revenue generated by each seat flown one mile is shown in the capacity

management marketing dashboard above as

A. 9.83 cents.

B. 82.1 cents.

C. 8.28 cents.

D. 18.11 cents.

E. 7.99 cents.

189. The marketing dashboard for JetBlue Airways shown in the capacity management

marketing dashboard above indicates that JetBlue posted a(n) profit/loss per available seat

flown one mile.

A. 9.83 cent profit

B. 1.55 cent profit

C. 1.27 cent profit

D. 0.21 cent loss

E. 8.28 cent loss

190. Assuming the information shown in the JetBlue capacity management marketing

dashboard above will not change in the near future, what actions would recommend that

JetBlue take?

A. Proceed as in the past; JetBlue is clearly profitable.

B. Use advertising to let consumers know how JetBlue currently meets their needs.

C. Change the flight schedules to accommodate travelers' needs and advertise these changes.

D. Keep the flight schedule as it is and reduce the price per flight.

E. There is not enough information in the marketing dashboard to suggest an action to take.

191.Changes in the services industry in the future will primarily be driven by two factors.

They are technological development and

A. reverse marketing.

B. sustainable development.

C. global development.

D. global service branding.

E. the elimination of ethnocentricity.

192.The key elements of future services include , convergence, and personalization.

A. automation

B. transglobalization

C. mobility

D. divergence

E. convenience

193.The key elements of future services include , mobility, and personalization.

A. automation


C. convenience

D. divergence

E. convergence

194.The key elements of future services include , mobility, and convergence.

A. automation


C. cooperation

D. personalization

E. convenience

195.Mobility as a future aspect of services refers to

A. the ability of networking technology to be incorporated into portable digital devices.

B. the ability to transport goods almost anywhere in the world within 24 hours.

C. the ability to transfer entire operations including a firm's technology from one location to

the next within a matter of days.

D. the ability of consumers to purchase any service from any service provider anywhere in

the world.

E. the ability of service providers to move their operations to any location in the world.

196.The trend toward sustainability and "green" business practices has expanded to include

many services as they strive to

A. comply with FDA rules.

B. increase their energy use.

C. reduce their capacity.

D. create a competitive advantage.

E. minimize consumer involvement.

197.The Philadelphia Phillies are marketing what "product?"

A. a baseball game

B. popular players

C. a fun experience

D. a winning team

E. competitive spirit

198.The Philadelphia Phillies best type of advertising is/are

A. TV ads.

B. personal selling.

C. coupons.

D. word of mouth.

E. contests.

199.The Phillies segment their fans primarily upon what basis?

A. location

B. interests

C. promotion

D. age

E. income

200.Which of the following statements regarding the Phillies special promotions nights is

most accurate?

A. Although they foster good will in the community, there is little change in attendance.

B Regular and diehard fans tend to stay away because they are too distracted by children who

are only there for the "free gifts" (bats, balls, bobble head dolls, etc.).

C Attendance remains steady but people tend to spend more money during special event days

because there is a greater sense of fun and excitement.

D. Game attendance can increase by 30 to 35 percent during special event days.

E. Game attendance increases by 25 percent with the bump in attendance usually lasting

throughout the entire month.

201.An additional benefit of a Phillies special promotions night is that it not only does boosts

overall attendance, it

A. generates first-time visits from fans who have never attended a Major League Baseball

game.

B. generates premiums (wristbands, caps, bats, etc.) from new companies interested in

offering a promotion to gain positive exposure.

C. helps regulate local traffic since people arrive early to be sure they get the free gift.

D helps keep children quiet during the game since they're playing with their free gift and not

bothering their parents or other game attendees.

E. creates a heightened sense of excitement and anticipation for the game.

202.The Phillies "special promotions days" fall into three distinct categories:

A. theme nights, event days, and premium gift days.

B. team-oriented, fan-oriented, and family-oriented.

C. revenue generating, market share building, and goodwill generating.

D. ticket discounts, trip giveaways, and contests.

E. televised games, community outreach, and loyal fan promotions.

203.The Philadelphia Phillies offer different promotions to meet the needs of specific

segments. Offering discounts on dinners would most likely be targeted towards .

A. diehard baseball fans

B. ball team members, their families, and friends

C. married families with children

D. 20- and 30-somethings

E. seniors 60 years and older

204.The Philadelphia Phillies uses the Phanatic to help the fans evaluate their experience,

since a ball game experience is

A. intangible.

B. tangible.

C. inventory.

D. inconsistent.

E. imperfect.

205.The Phillie Phanatic had his own book signing at Barnes and Noble in Exton, PA, for the

children's book series The Phillie Phanatic's Happiest Memories, The Phillie Phanatic's

Moving Day, The Phillie Phanatic's Phantastic Journey, and Happy Birthday Phillie

Phanatic. If the baseball team were trying to get people to the game, why would they host an

activity away from the stadium?

A. They are trying to build future attendees but they don't want younger children bothering

people during the games.

B. They need to generate revenue during the months when the stadium is closed.

C. It generates team spirit, adds to non-ticket revenues, and cultivates fans for the future.

D. Phillie Phanatic is used to reduce hostility towards the team when they have a losing

season.

E. The new stadium was built significantly smaller and cannot hold as many activities on the

premises.

James Gilmore and Joseph Pine explain, “The more contrived the world seems, the more we

all demand what is real.” In terms of marketing, this simply means

a. consumers cannot really tell the difference between illusion and reality.

b. reality aside, give customers what they think they want.

c. good marketing can make even the impossible—possible.

d. what we want and what we can have are two totally different things.

e. consumers want engaging, personal, memorable, and authentic offerings.

The __________ focuses on performing services that provide a unique experience.

a. intangibility economy

b. experience economy

c. virtual economy

d. magic of marketing

e. authentic economy

Consumers are no longer content with affordable, high quality purchases; they want

__________.

a. offerings that reflect their self-image

b. consistent quality

c. to be treated as special one-of-a-kind buyers

d. total customer satisfaction

e. to feel as if they are in control of the entire purchasing process

There are several ways of providing consumers authentic offerings: (1) __________; (2) provide

personal interaction rather than automation; (3) create a social process that allows

consumers to share their interests; and (4) manage any dimension of their reputation that

might influence perceptions of authenticity.

a. allow for adaptability at every customer contact point

b. back up claims with scientific research, market research, or governmental documentation

c. facilitate customer customization

d. do thorough research at each stage of the new-service development process

e. obtain personal endorsements from celebrity spokespeople and other opinion leaders

There are several ways of providing consumers authentic offerings: (1) facilitate

customization; (2) __________; (3) create a social process that allows consumers to share their

interests; and (4) manage any dimension of their reputation that might influence perceptions

of authenticity.



c. do thorough research at each stage of the new-service development process

d. provide personal interaction rather than automation



customization; (2) provide personal interaction rather than automation; (3) __________; and

(4) manage any dimension of their reputation that might influence perceptions of

authenticity.



c. do thorough research at each stage of the new-service development process

d. obtain personal endorsements from celebrity spokespeople and other opinion leaders

e. create a social process that allows consumers to share their interests


customization; (2) provide personal interaction rather than automation; (3) create a social

process that allows consumers to share their interests; and (4) __________ .



c. manage any dimension of a firm’s reputation that might influence perceptions of

authenticity

d. do thorough research at each stage of the new-service development process


One way to provide consumers authentic offerings is to provide personal interaction.

Which of the following actions provides the best example of this approach?

a. Geico advertises that its insurance specialists are available 24/7 (24 hours per day, 7

days per week).

b. iPods allow customers to create personalized playlists.

c. YouTube, Twitter, and Facebook create a forum for expressing personal experiences.

d. Cirque du Soleil combines the original elements of street performance, the circus, and

live theater.

e. Bloomingdales provides dressing rooms with huge electronic mirrors.

Services refer to

a. ideas that consist of a bundle of tangible and intangible attributes that satisfies

consumers’ needs and is received in exchange for money or something else of value.

b. intangible activities or benefits that an organization provides to satisfy consumers’ needs

in exchange for money or something else of value.

c. philanthropic activities performed in without expectations of monetary remuneration.

d. any intangible activity that provides a benefit to a consumer that he or she could not

have obtained or performed on his or her own.

e. any tangible activity that provides a benefit to a consumer that he or she could not

have obtained or performed on his or her own.

Intangible activities or benefits that an organization provides to satisfy consumers’ need in

exchange for money or something else of value are referred to as __________.

a. virtual experiences

b. intangible benefits

c. intangible goods

d. product concepts

e. services

Intangible items such as airline trips, financial advice, or telephone calls that an organization

provides to consumers are referred to as

a. production goods.

b. support products.

c. services.

d. goods.

e. benefits.

Which of the following statements about services is MOST accurate?

a. Although a major contributor to the GDP nationally, services play only a minor role in


b. Whether tangible or not, the marketing of services is exactly the same as the marketing

of products or ideas since they both satisfy customer needs.

c. Almost 35% of all jobs created in the United States are in the services sector.

d. In the U.S., more than 47% of the GDP comes from services.

e. There is much more in common with the marketing of services and business products

than there is between the marketing of services and consumer products .

Which of the following statements about services is MOST accurate?

a. Whether tangible or not, the marketing of services is exactly the same as the marketing

of products or ideas since they both satisfy customer needs.

b. Although a major contributor to the GDP nationally, services play only a minor role in


c. Services represent a large export business; it is one of the few areas where the United

States has a trade surplus.

d. Very few jobs in the United States are in the services sector.

e. There is much more in common with the marketing of services and business products

than there is between the marketing of services and consumer products .

As shown in Figure 12-1 above, which of the following statements is MOST accurate?

a. Services are a smaller part of the gross domestic product than are goods.

b. In 2010, goods represent a larger part of the gross domestic product than services.

c. In 1995, services were worth almost $1 billion.

d. Until 1980, goods and services contributed almost equally to the gross domestic product

(GDP).

e. In 2010, goods were 50 percent of the GDP.

There are four unique elements to services—intangibility, inconsistency, inseparability, and

inventory—which are referred to as the __________.

a. service mix

b. four I’s of services

c. service matrix

d. span of services

e. service continuum

The four I’s of services consist of

a. intangibility, inconsistency, inseparability, and innovation.

b. intangibility, inconsistency, inseparability, and impression.

c. intangibility, inconsistency, inseparability, and inventory.

d. intangibility, inventory, innovation, and impression.

e. intangibility, inconsistency, innovation, and impression.

The four I’s of services consist of

a. inflexibility, intangibility, inconsistency, and inseparability.

b. intangibility, inconsistency, inseparability, and inventory.

c. incompatibility, inconsistency, inseparability, and inventory.

d. invisibility, inconsistency, inseparability, and intangibility.

e. inflexibility, incongruity, inconsistency, and inventory.

The intangibility element of a service refers to the fact that it

a. has value that can only be determined by using subjective criteria.

b. can’t be held, seen, or touched before the purchase decision.

c. cannot be described, only experienced.

d. can maintain or accumulate inventory.

e. can be objectively evaluated.

Because services tend to be a(n) __________ rather than an object, they are much more

difficult for consumers to evaluate.

a. opportunity

b. performance

c. adventure

d. risk

e. decision

To help consumers assess and compare services, marketers try to make them __________ or

show the benefits of using the service.

a. tangible

b. intangible

c. consistent

d. timely

e. measurable

To help consumers assess and compare services, marketers try to make them tangible or

__________.

a. temporal

b. consistent

c. adaptable

d. measurable

e. show the benefits of using the service

The Singapore Airlines ad in the textbook shows a traveler in the airline’s new seats and

also emphasizes food and other amenities to overcome the __________ of its service.

a. incongruity

b. inconsistency

c. inventory costs

d. inseparability

e. intangibility

Sarah has a backache due to overexertion. She believes a massage would loosen her back

muscles and make her feel better. She is concerned because a massage, unlike a pair of

shoes, cannot be held, touched, or seen before she buys it. Which characteristic of services

is she concerned about?

a. incongruity

b. inconsistency

c. inventory costs

d. inseparability

e. intangibility

Before moving out of their apartment, Brad and Kim Westgate decided to have their carpets

cleaned by ServiceMaster, a company specializing in professional carpet cleaning. The

carpet cleaners arrived at Brad and Kim’s apartment, unpacked their equipment, cleaned the

carpets, packed up their tools, and drove away in their bright yellow van. The service

provided by ServiceMaster could not be held, touched, or seen before the purchase decision.

This scenario illustrates the __________ of services.

a. inconsistency

b. inseparability

c. inventory costs

d. intangibility

e. interdependence

Consumers have more difficulty evaluating services than they do products; the difficulty

results from the

a. intangibility of services.

b. incongruity of services.

c. inseparability of services.

d. inflexibility of services.

e. interdependence of services.

To help consumers assess and compare its airline service, Frontier Airlines uses personable

animal characters in its advertising to announce and describe benefits, such as leather seats

and “stretch” seating, to help deal with the

a. intangibility of the service.

b. incongruity of the service.

c. inseparability of the service.

d. inflexibility of the service.

e. interdependence of the service.

The brochure for Spa Sydell has photographs of people enjoying the various spa amenities.

By seeing the pictures of what is available at the spa, a customer has a better idea of what

she is buying. Spa Sydell uses a brochure to help customers deal with the __________ that

is associated with using the service.

a. incongruity

b. inconsistency

c. inventory costs

d. inseparability

e. intangibility

Services depend on the people who provide them. As a result, their quality varies with

each person’s capabilities and day-to-day job performance. This element of services is

referred to as __________.

a. variation

b. differentiation

c. evaluation

d. inconsistency

e. intangibility

Developing, pricing, promoting, and delivering services is challenging because the quality

of a service is often

a. inseparable.

b. inconsistent.

c. inventoried.

d. tied to a product.

e. independent of the quality delivered.

Developing, pricing, promoting, and delivering services are challenging because the quality

of the service is often inconsistent. Organizations attempt to reduce this inconsistency by

a. paying higher incentives to employees to encourage satisfactory performance.

b. reducing incentives available to employees because of poor performance.

c. reducing the customer contact points in the service delivery process.

d. providing standardization and training.

e. exercising better hiring practices.

Inconsistency of services refers to the fact that

a. there is no regulation of service industries in terms of basic standards of quality.

b. the quality of service provided by a firm is often inconsistent with its image.

c. the performance of one employee may vary from the performance of another employee

even though the same firm employs both.

d. training and standardization of service delivery procedures cannot be accomplished.

e. services have a varying degree of durability.

Organizations attempt to reduce the inconsistency of service delivery through

a. higher incentives to employees for satisfactory performance.

b. pay reductions for poor employee performance.

c. the reduction of customer contact points in the service delivery process.

d. standardization and training.

e. employing technology.

Students from Berry College attended a performance at nearby Shorter College and were

extremely impressed with the dance troupe that was the opening act. As soon as the

students returned to Berry, they made arrangements for the entertainers to appear on their

campus. On the day of the concert, the venue was packed with students, but the quality

of the performance was much poorer than they had seen at the Shorter campus. The Berry

students’ disappointment was the direct result of which characteristic of services?

a. inconsistency

b. impressionability

c. intangibility

d. invisibility

e. uniqueness of the service

Andrea Arenas is the owner of 2 Places at 1 Time, a concierge company. She and her staff

of 60 perform everyday services, such as walking the dog, picking up cleaning, waiting for

the repairman, and going to the post office, for people who are too busy to perform these

simple acts. One way she tries to ensure ___________ of services for her regular customers

is to make sure that the same well-trained person is always assigned to work for them.

a. tangibility

b. consistency

c. congruity

d. flexibility

e. tangibility

Betty Smith operates a wedding preparation service that aids brides-to-be in the planning

of their weddings. To maintain a quality image and a standardized offering, Betty provides

extensive training for each of her employees. What unique aspect of services is Betty trying

to address?

a. impressionability

b. intangibility

c. inconsistency

d. inseparability

e. uniqueness of the service

Don graduated high school and takes his mom to dinner after the ceremony. At the

restaurant, the server fills their water glasses, checks on their table, and takes care of their

requests. Don notes that the last time he was at this same restaurant, the experience was

much worse. This scenario illustrates the ___________ of services.

a. impressionability

b. intangibility

c. inseparability

d. uniqueness of the service

e. inconsistency

Inseparability in services means consumers

a. see little variation from one service provider in an industry to another.

b. are unable to differentiate price from quality.

c. cannot evaluate a service until it is being used.

d. cannot separate the service from the deliverer of the service.

e. cannot separate themselves from the deliverer of the service.


of 60 perform everyday services, such as walking the dog, picking up cleaning, waiting for

the repairman, and going to the post office, for people who are too busy to perform these

simple acts. She is such a caring person and so well liked that her customers recommend

her instead of her business to people who are looking for someone to perform similar

services. Their inability to see the distinction between Arenas and her 2 Places at 1 Time

concierge service is an example of which unique characteristic of services?

a. intangibility


c. incongruity

d. inseparability

e. inflexibility

When Thelma got her drive-thru order at the fast-food restaurant, she thought Louise, the

employee who took her money and gave her order, was cold and unfriendly. The food

tasted good but was overshadowed by Louise’s demeanor. Every time she has the

opportunity, Thelma says something derogatory about the restaurant because she does not

distinguish the service deliverer (Louise, the employee who prepared her food and gave it

to her) from the service (the fast-food restaurant). Thelma is having a problem with which

unique characteristic of services?

a. intangibility


c. incongruity

d. inseparability

e. inflexibility

When banks are closed, they can offer value to their customers through automatic teller

machines (ATMs). This self-service technology also comes with a down side since the ATMs

are perceived as being less __________.

a. convenient

b. reliable

c. personal

d. safe

e. accurate

Although many people love the self-service technology that allows Redbox to provide DVDs

24 hours a day, many people missed the personal interaction and recommendations from

their local clerks from Blockbuster or an independent video store. Redbox confronted this

issue by creating a “Redblog” where customers could share their opinions, feelings, and

experiences. This is an example of confronting the

a. inventory aspects of services.

b. inseparability aspects of services.

c. inconsistency aspects of services.

d. intangibility aspects of services.

e. impressionability aspects of services.

Why are inventory of services different from that of goods?

a. time is less important to customers of services than customers of goods

b. many times, the service provider is unavailable when there is a demand for the service

c. there are costs associated with the handling of service inventory

d. service inventory can be reduced through a straight salary compensation system

e. with goods, many items are perishable

A situation that occurs when a service provider is available but there is no demand is

referred to as


b. idle production capacity.

c. static demand.

d. capacity management.

e. excess inventory.

Idle production capacity refers to

a. the minimum number of customers that a service provider can serve and still remain

profitable.

b. the maximum number of customers that a service provider must serve in order to

remain profitable.

c. the ability of a service provider to redirect its efforts so even when there is no primary

demand, employees are still able to meet selective demand.

d. a situation that occurs when a service provider is available but there is no demand for

the service.

e. a situation that occurs when the primary demand for a service exceeds that number of

service deliverers available to meet that demand.

Idle production capacity refers to

a. a situation where the demand for exceeds the availability of service providers and as a

result, no services can be offered.

b. when the supply of service providers exceeds the primary demand for the service.

c. a situation where a service provider is available but there is no demand for the service.

d. integrating the service component of the marketing mix with efforts to influence

consumer demand.

e. the potential profits of one service provider serving multiple clients at the same time.

The emergency room staff in Houston’s largest hospital is surprised and pleased when a

four-day Fourth of July weekend brings in few accident victims for treatment. They know

from experience that such public holidays usually have high rates of accidents. For the

hospital’s business office, the lower demand for the emergency room services means

a. a break in the service continuum.

b. its services are no longer tangible.

c. its services can be separated from the staff.

d. the hospital has idle production capacity.

e. an opportunity for gap analysis.


of 60 perform everyday services such as walking the dog, picking up cleaning, waiting for

the repairman, and going to the post office for people who are too busy to perform these

simple acts. She has often been hired by major corporations to perform services for their

harried executives, and now many of her major clients are providing perks like her service

to their employees. Her staff is overworked and she is hiring more employees to fill

demand. Arenas is not experiencing __________; in fact, all of her employees are providing

the maximum level of services to customers.

a. off-peak pricing

b. idle production capacity

c. static demand

d. capacity marketing

e. capacity inventory

Western Airlines operates five flights daily between Chicago and Phoenix during the winter.

One flight leaves Phoenix at 12:10 PM. The plane, a Boeing 737, has a capacity of 120

passengers. During the past month, the flight has averaged only 24 passengers, a load

factor of 20 percent. Once the plane takes off, the other 96 seats generate no sales and

profits to the airline for that flight. What unique aspect of services does this situation

describe?

a. incongruity

b. intangibility

c. inconsistency

d. inseparability

e. idle production capacity

Many retailers hire additional sales help during the holiday season. This is an example of

how service companies deal with __________.

a. shrinkage

b. seasonal absenteeism

c. economic recessions

d. derived demand

e. inventory carrying costs

The __________ cost of a service is the cost of paying the person used to provide the service

along with any needed equipment.

a. intangibility

b. inconsistency

c. inseparability

d. inventory

e. hidden

Inventory carrying costs can be reduced by

a. using a straight salary compensation plan.

b. hiring additional full-time personnel.

c. allowing personnel to work overtime.

d. increasing the hours worked per week.

e. using a commission compensation system.

The inventory costs of services include

a. equipment and training costs.

b. management and material costs.

c. service delivery and spoilage costs.

d. salary of service provider and equipment costs.

e. salary of service provider and training costs.

Which of the organizations listed below has the lowest inventory carrying cost?

a. restaurant

b. automobile repair

c. amusement parks

d. employment agencies

e. animal hospital

Which of the organizations listed below has the lowest inventory carrying cost?

a. railroad

b. hotel

c. long-term care facility

d. amusement park

e. insurance companies

The inventory carrying costs of airlines is high because they

a. use a straight salary compensation plan for the large numbers of flight attendants.

b. high-salaried pilots and very expensive equipment.

c. allow baggage personnel to work overtime.

d. decrease the number of workdays per week, but increase the hours per day.

e. use a commission compensation system for their reservationists.

The inventory carrying costs of real estate agencies are low because they

a. use a straight salary compensation plan.

b. have employees who work on commission need little inexpensive equipment.

c. allow personnel to work any hours a day and any number of days per week.

d. decrease the number of workdays per week, but increase the hours per day.

e. are responsible for their own training, transportation, and supplies.

The highest inventory carrying costs would most likely be for which of the following services?

a. real estate agencies

b. dry cleaners

c. auto repair centers

d. amusement parks

e. hospitals

The range of offerings from the tangible to the intangible or product-dominant to service-


a. service continuum.

b. product continuum.

c. tangibility line.

d. inseparability span.

e. customer contact audit.

The range of offerings from the tangible to the intangible or product-dominant to service-


a. product continuum.

b. service continuum.

c. tangibility line.

d. inseparability span.

e. customer contact audit.

According to the service continuum shown in Figure 12-3 above, which of the following

offerings has the highest level of intangibility?

a. tailored suit

b. advertising agency

c. tutoring service

d. fast-food restaurant

e. salt

According to the service continuum shown in Figure 12-3 above, which of the offerings has

an almost perfect balance of tangible and intangible attributes?

a. tailored suit

b. tutoring service

c. dog food

d. fast-food restaurant

e. movie theater

Services can be classified by

a. their method of delivery.

b. their use of idle capacity time.

c. the nature of their ownership.

d. their location on perceptual maps.

e. organizational reach.

Services can be classified according to whether they are __________, they are profit or

nonprofit organizations, or they are government sponsored.

a. national or global

b. use independent contractors

c. privately owned or publicly owned

d. delivered by people or equipment

e. owned by individuals or corporations

Services can be classified according to whether they are delivered by people or equipment,

they are __________, or they are government sponsored.

a. national or global

b. use independent contractors


d. owned by individuals or corporations

e. for profit or nonprofit organizations

Services can be classified according to whether they are delivered by people or equipment,

whether they are for profit or nonprofit organizations, and whether they are __________.

a. government sponsored

b. a national organization or a global organization


d. performed by independent contractors

e. owned by individuals or corporations

The categories for people-based services include __________.

a. volunteers, skilled operators, and professionals

b. unskilled labor, skilled labor, and professionals

c. those operated by skilled operators, unskilled labor and skilled labor

d. those operated by relatively unskilled operators, those operated by skilled operators,

and unskilled labor

e. automated, those operated by skilled operators, and professionals

Which of the following is the best example of a people-based service?

a. movie theaters

b. airlines

c. advertising agency

d. vending machines

e. taxis

Which of the following is the best example of a people-based service?

a. a lawyer

b. movie theaters

c. airlines

d. vending machines

e. taxis

What do a security guard, a plumber, and a management consultant share in common?

a. They are all tangible services.

b. They are all people-based services.

c. They do not have problems with idle production capacity.

d. They are all equipment-based services.

e. They never use off-peak pricing.

The categories for equipment-based services include __________.

a. unskilled labor, skilled labor, and professionals

b. volunteers, unskilled and skilled operators, and professionals

c. those operated by relatively unskilled operators, those operated by skilled operators,

and unskilled labor

d. those operated by skilled operators, unskilled labor, and professionals

e. automated, those operated by relatively unskilled operators, and those operated by

skilled operators

The categories for equipment-based services include

a. unskilled labor, those operated by relatively unskilled operators, and automated (self-

serve).

b. professionals, those operated by relatively unskilled operators, and automated (self-

serve).

c. automated (self-serve), those operated by relatively unskilled operators, and those

operated by skilled operators.

d. unskilled labor, skilled labor, and professionals.

e. those operated by skilled operators, unskilled labor, and professionals.

Equipment-based services do not have the marketing concerns of

a. intangibility.

b. inseparability.

c. inventory.

d. inconsistency.

e. immeasurability.

Equipment-based services do not have the marketing concerns of inconsistency because

__________ have been removed from the provision of the service.

a. product liability

b. people

c. learning requirements

d. automation

e. accessories

Which of the following is the best example of an equipment-based service?

a. lawn care

b. doctors

c. taxis

d. lawyers

e. janitorial services

What do an automated carwash, a limousine service, and an airline have in common?



c. None of them has problems with idle production capacity.

d. They are all equipment-based services.

e. They never use off-peak pricing.

What do a dry cleaning service, an automated carwash, and a taxi service have in common?



c. None of them has problems with idle production capacity.

d. They never use off-peak pricing.

e. They are all equipment-based services.

Equipment-based services like ATMs, online brokerage firms, and automated car washes, do

not have the marketing concerns of

a. inconsistency.

b. intangibility.

c. inseparability

d. inventory.

e. deliverability.

For nonprofit organizations, excesses in revenue over expenses are

a. taxed at one-half the rate for profit organizations.

b. distributed equally to all of the organization’s shareholders.

c. returned to the organization’s treasury for continuation of the service.

d. taxed at a reduced rate if the revenue is to be used in keeping with the organization’s

core mission.

e. not taxed at all unless it is a religious organization.

A nonprofit organization may pay taxes if

a. excess revenues exceed 18 percent of the budget.

b. the organization is not considered to be religious institution.

c. revenue is received from overseas subsidiaries.

d. revenue-generating holdings are not directly related to the organization’s core mission.

e. money is spent on research and development, then it is taxed at a significantly lower

rate.

Recently, many nonprofit organizations such as the American Red Cross

a. were eager to use marketing practices.

b. thought that marketing would limit the profitability of the nonprofit organization.

c. could not afford marketing activities.

d. thought that marketing activities would create excess demand.

e. have increased their use of marketing practices.

The American Red Cross uses marketing to help achieve its goals. As a service, it can be

classified as

a. a nonprofit organization.

b. people-based.

c. equipment-based.

d. a business firm.

e. a governmental agency.

Sterile Feral, Inc. is a nonprofit organization that catches wild or stray cats, and then neuters,

vaccinates, and releases them back into the wild. In recent years, nonprofit organizations

such as Sterile Feral have turned to marketing to help

a. receive additional government funding.

b. expand its business to stray dogs.

c. maintain its nonprofit status.

d. achieve organizational goals.

e. compete with other similar organizations.

The Susan G. Komen for the Cure has used __________, in addition to its familiar walks and

races, to raise more than $1.5 billion for breast cancer research.

a. social marketing

b. private donations

c. sales promotion campaigns

d. green marketing programs

e. sharing of resources

The American Red Cross uses social marketing tools such as Facebook, Twitter, and e-mail

to increase donations. The __________ campaign raised more than $32 million in response

to the Haiti earthquake.

a. All for one and 1% for All

b. Text-to-Donate

c. In for a Penny

d. It All Makes Cents

e. Time for Change

The first step a nonprofit organization should take to engage people with social media is

to __________.

a. set specific measurable goals

b. understand what motivates people to take up causes

c. create a simple and realistic operating budget

d. create a well-defined organizational hierarchy

e. develop a unique selling proposition

What do the United States Post Service, the U.S. Park Service, and a local fire department

have in common?

a. They are all privately owned companies.

b. They do not fit on the service continuum.

c. They are all government-sponsored service providers.

d. They never experience idle production capacity.

e. Capacity management is not an issue for these organizations.

What do the United States Post Service, a state health department, and a local fire

department have in common?

a. They are all government-sponsored service providers.

b. They never experience idle production capacity.

c. They do not fit on the goods-services continuum.

d. They do not have service encounters.

e. They do not have capacity management problems.

According to Figure 12-5 above, purchases labeled “A” would most likely be evaluated on

__________ properties.

a. value

b. search

c. credence

d. experience

e. quality

According to Figure 12-5 above, purchases labeled “B” would most likely be evaluated on


a. value

b. search

c. credence

d. experience

e. expenditure

According to Figure 12-5 above, purchases labeled “C” would most likely be evaluated on


a. value

b. search

c. credence

d. experience

e. expenditure

According to Figure 12-5 above, which statement is MOST accurate?

a. Legal services are high in search credence properties, but medical services are high in

experience properties.

b. Haircuts are high in experience properties, but barbershops are high is search properties.

c. Jewelry is high in search properties, although diamonds are high in credence properties.

d. Television repair is more difficult to evaluate than restaurant meals.

e. Child care is equally high in search, experience, and credence properties because the

decision is so important.

Characteristics of tangible goods, such as color, size, and style are considered __________

properties.

a. search

b. form

c. experience

d. credence

e. brand

Which of the following is high in search properties?

a. clothing

b. TV repair

c. legal services

d. auto repair

e. medical diagnosis

One of the primary differences between tangible goods and services involves a consumer’s

ability to make prepurchase evaluations. For example, consumers can easily evaluate shoes,

jewelry, and skis before making a purchase. On the other hand, consumers can evaluate

services such as restaurants, ski instructors, and tanning salons only during or after their

purchase. Indeed, tangible products have __________ properties, whereas services have


a. consistent; inconsistent

b. search; experience

c. inconsistent; consistent

d. experience; search

e. gap; encounter

Which of the following is high in experience properties?

a. clothing

b. a vacation

c. legal services

d. auto repair

e. a medical diagnosis

Services such as restaurants and child care are evaluated on __________ properties.

a. search

b. form

c. experience

d. credence

e. performance


of 60 perform everyday services such as walking the dog, picking up cleaning, waiting for

the repairman, and going to the post office for people who are too busy to perform these

simple acts. She is often hired by major corporations to perform services for their harried

executives and their spouses. Her clients can evaluate the services that 2 Places at 1 Time

provide

a. only before they are purchased or consumed.

b. only after they are purchased or consumed.

c. only at the same time as they are purchased or consumed.

d. before, during, and/or after they are purchased or consumed.

e. only during consumption or after they are purchased.

Sarah has a backache due to overexertion. She believes a massage would loosen her back

muscles and make her feel better. She is concerned because a massage, unlike a pair of

shoes, cannot be felt before she buys it. Sarah realizes massages have __________ properties.

a. search

b. form

c. experience

d. credence

e. performance

When Theresa Martinez relocated from the East to the Midwest, she needed to find a bank

with offices in her new state. Several banks offered banking products (checking and savings

accounts, loans, certificates of deposit) and other financial products (mutual funds, insurance)

that were available from her former bank. After selecting U.S. Bank, Theresa later needed

some help with her accounts and went to visit her personal banker. She was very impressed

with the banker ’s attitude and willingness to explain certain items to her in terms she could

understand. The service Theresa received from the U.S. Bank banker exhibited __________

properties.

a. credence

b. expertise

c. experience

d. search

e. customer relationship

Services provided by specialized professionals such as medical diagnoses and legal services

have certain properties or characteristics that the consumer may find impossible to evaluate

even after purchase and consumption. What are these properties called?

a. customer contact properties

b. credence properties

c. capacity properties

d. contract properties

e. relationship properties

Which of the following are high in credence properties?

a. clothing

b. vacation

c. jewelry

d. houses

e. medical diagnoses

Services performed by surgeons or lawyers are primarily evaluated on __________ properties.

a. search

b. form

c. indirect

d. credence

e. experience

To reduce the uncertainty created by __________ properties, service consumers turn to

personal sources of information such as opinion leaders, early adopters, and reference group

members during the purchase decision process.

a. search

b. credence

c. experience

d. expertise

e. quality

Sarah has a toothache. She believes it may be due to her not having regular dental

checkups in the past. She now wants to find a dentist, but does not have one that she has

used in the past. Because dentistry has __________ properties, Sarah plans to ask her friends

for a recommendation for a dentist they like to be sure that she finds a good one.

a. search

b. form

c. experience

d. credence

e. performance

Fred White has just accepted a sales position with the ABC Health Maintenance Organization,

a major provider of health care services. He had been selling medical supplies for some

time and found that he understood how customers bought medical supplies. Which of the

following is likely to be a characteristic of the health care services that Fred offers?

a. Customers are engaged in a low involvement purchase process .

b. The quality of services can be predetermined in a similar manner to tangible products.

c. The buyer does not participate in the delivery of the service.

d. A consumer may not have the ability to judge the quality of medical care service even

after the service has been provided.

e. The service provider should concentrate on the problem recognition stage of the

purchase decision process in the marketing of health care services.

The type of analysis that compares the differences between consumers’ expecta tions about

a service and their experience with it based on dimensions of service quality is referred to

as

a. customer relationship management.

b. service encounter differential.

c. gap analysis.

d. a customer contact audit.

e. a service audit.

The two basic components of a customer’s evaluation of a service are

a. expectations and customer contact.

b. expectations and experience.

c. intangibility and inconsistency.

d. experience and credence.

e. inconsistency and inseparability.

How a person establishes expectations for a service not yet experienced is influenced by

__________, personal needs, past experiences, and promotional activities.

a. the economy

b. consumer income

c. word-of-mouth communications

d. competitive trends

e. how the organization delivers its service


word of mouth communications, __________, past experiences, and promotional activities.

a. personal needs

b. the economy

c. consumer income

d. competitive trends



word of mouth communications, personal needs, __________, and promotional activities.

a. how the organization delivers its service

b. past experiences

c. competitive trends

d. the economy

e. consumer income


word of mouth communications, personal needs, past experiences, and __________.

a. the economy

b. consumer income

c. competitive trends

d. promotional activities


A person can establish expectations for a service he or she has not yet experienced through

word-of-mouth communications, personal needs, past experiences, and promotional

activities. However, the actual experience(s) are determined by

a. the way the organization actually delivers its service.

b. the positive reinforcement from friends, family, and peers after the service was provided.

c. repeat encounters with the same service provider.

d. psychological feelings of well-being.

e. a formal post-purchase evaluation or questionnaire.

Many restaurants now ask consumers to evaluate their experience on a short ques tionnaire

when they pay their bill. This assessment of consumer expectations and the actual

experience they had is called a __________.

a. gap analysis

b. service encounter survey

c. customer profile analysis

d. customer contact audit

e. service audit

There are five key dimensions of service quality:

a. reliability, responsiveness, competence, courtesy, and empathy.

b. knowledge, responsiveness, respect, diligence, and honesty.

c. honesty, respect, empathy, reliability, and diligence.

d. reliability, competence, alacrity, fairness, and product knowledge.

e. reliability, tangibility, responsiveness, assurance, and empathy.

As a dimension of service quality, the ability to perform the promised service dependably

and accurately is referred to as __________.

a. reliability

b. responsiveness

c. competence

d. courtesy

e. empathy

As a dimension of service quality, the appearance of physical facilities, equipment, personnel,

and communication materials as a dimension of service quality is referred to as _________ _.

a. communication

b. responsiveness

c. competence

d. tangibility (tangibles)

e. empathy

As a dimension of service quality, the willingness to help customers and provide prompt

service is referred to as __________.

a. reliability

b. responsiveness

c. competence

d. assurance

e. empathy

As a dimension of service quality, the knowledge and courtesy of employees, and their

ability to convey trust and confidence is referred to as __________.

a. reliability

b. responsiveness

c. competence

d. assurance

e. empathy

As a dimension of service quality, the caring, individualized attention provided to customers

as a dimension of service quality is referred to as __________.

a. reliability

b. responsiveness

c. competence

d. assurance

e. empathy

The dimension of service quality called __________ is the ability to perform the promised

service dependably and accurately.

a. reliability

b. assurance

c. accuracy

d. responsiveness

e. empathy

The dimension of service quality called __________ is the appearance of physical facilities,

equipment, personnel, and communication materials.

a. assurance

b. reliability

c. responsiveness

d. empathy

e. tangibility (tangibles)

The dimension of service quality called __________ is willingness to help customers and

provide prompt service.

a. assurance

b. reliability

c. responsiveness

d. empathy

e. sympathy

The dimension of service quality called __________ is knowledge and courtesy of employees

and their ability to convey trust and confidence.

a. assurance

b. sympathy

c. empathy

d. responsiveness

e. reliability

The dimension of service quality called __________ is caring, and individualized attention

provided to customers.

a. assurance

b. reliability

c. responsiveness

d. empathy

e. sympathy

Sandy needs to have her car repaired. She is a member of the American Automobile

Association (AAA) and knows that they evaluate car repair shops. Furthermore, the shop

she is considering displays the AAA seal of approval. It also is clean and organized. She

believes this is a good way to predict the quality of the service she will receive. Sandy

bases her opinion of car repair shops on the basis of which service quality dimension?

a. assurance

b. tangibility (tangibles)

c. reliability

d. responsiveness

e. empathy


vaccinates, and releases them back into the wild. Veterinarians are particularly impressed

with how dependably the organization is able to perform its promised service. With which

service quality dimension are veterinarians most impressed?

a. assurance

b. tangibility

c. reliability

d. credibility

e. empathy

Arnett is looking for a new Web portal to use to access information that interests him on

the Internet. The one he currently uses is too slow when loading web pages because each

page is cluttered with ads and videos. In terms of the service quality dimensions, Arnett is

unhappy with which dimension of this service?

a. assurance

b. tangibility

c. reliability

d. responsiveness

e. empathy


vaccinates, and releases them back into the wild. The personnel of the nonprofit

organization are caring people who love animals and try to do what they can to meet the

needs of each cat they care for. The caring nature of the personnel relates to which service

quality dimension?

a. assurance

b. tangibility

c. reliability

d. credibility

e. empathy

According to Figure 12-6 above, “A” represents which dimension of service quality?

a. reliability

b. tangibility (tangibles)

c. responsiveness

d. assurance

e. empathy

According to Figure 12-6 above, “B” represents which dimension of service quality?

a. reliability

b. assurance

c. empathy


e. responsiveness

According to Figure 12-6 above, “C” represents which dimension of service quality?

a. reliability

b. empathy

c. tangibility (tangibles)

d. assurance

e. responsiveness

According to Figure 12-6 above, “D” represents which dimension of service quality?

a. reliability

b. empathy

c. assurance


e. responsiveness

According to Figure 12-6 above, “E” represents which dimension of service quality?

a. reliability

b. empathy

c. tangibility (tangibles)

d. assurance

e. responsiveness

Another name for the steps in the service delivery process is __________.

a. service interactions

b. access points

c. path-analysis

d. service encounters

e. wheel of services

A customer contact audit refers to

a. the initial contact between a service provider and the ultimate consumer.

b. a flowchart of the points of interaction between a consumer and a service provider.

c. a method of consumer evaluation of service quality and consistency.

d. an estimation of demand based on service forecasting techniques.

e. is a systematic assessment of a service provider ’s objectives, strategies, and performance

in terms of social responsibility.

A flowchart of the points of interaction between a customer and a service provider is

referred to as

a. a service continuum.

b. gap analysis.

c. a customer contact audit.

d. a customer contact continuum.

e. a service audit.

Recent research suggests that __________ and sincerity of the interactions affect the success

of the relationships.

a. reliability

b. authenticity

c. responsiveness

d. tangibles

e. friendliness

Ron had a craving for sushi so he searched yellowpages.com for the name of a restaurant


impressed with the menu posted outside the door and decided to go in. He was greeted

with a smile by a hostess and then immediately seated at a well-appointed table where he

was given a warm cloth for his hands. The food was beautifully presented, the rice was

the perfect texture and temperature, and the fish was fresh and delicious. Halfway thought

the meal, he excused himself to go to the restroom. It was clean, but unfortunately was

out of paper towels. He returned to his table, finished his meal, and paid his check . The

hostess said goodbye and asked him to return. The first point in his customer contact

audit was __________.

a. searching yellowpages.com

b. reading the menu on the door

c. being greeted by the hostess

d. being seated at his table

e. receiving his meal

Ron had a craving for sushi so he searched yellowpages.com for the name of a restaurant


impressed with the menu posted outside the door and decided to go in. He was greeted

with a smile by a hostess and then immediately seated at a well-appointed table where he

was given a warm cloth for his hands. A waiter beautifully presented the food, the rice

was the perfect texture and temperature, and the fish was fresh and delicious. Halfway

thought the meal, he excused himself to go to the restroom. It was clean, but unfortunately

was out of paper towels. He returned to his table, finished his meal, and paid his check .

The hostess said goodbye and asked him to return. Which of the following statements

about this scenario is MOST accurate?

a. Reading the menu posted outside the door was Ron’s first point of interaction in the

customer contact audit because if he hadn’t liked the selections, he wouldn’t have gone

into the restaurant.

b. Being greeted by the hostess was the first point of interaction in the customer contact

audit because it was the first encounter with the actual service provider—the restaurant.

c. The first point of interaction in the customer contact audit wasn’t written, it was implied.

The real first point in the customer contact audit should have been between Ron and

the waiter, not Ron and the hostess.

d. The lack of paper towels in the restroom was the first point of interaction in the

customer contact audit because it was the first time his expectations weren’t met.

e. The yellowpages.com ad, the menu on the door, the hostess’s greeting, the waiter, the

quality and presentation of food, and even the restroom were all important points of a

contact.

Which of the following is a point in the customer contact audit for a health club?

a. participating in the health club’s exercise class

b. the customer’s diet

c. too much traffic on the way to the club

d. a willingness to exercise

e. meeting an attractive gym member

Which of the following statements about service failures is MOST accurate?

a. Only 5-10% of dissatisfied customers choose to complain to the company.

b. Once customers complain, they expect all of their demands to be met.

c. Only 20% of consumers will give a company a second chance if they are not fully

satisfied during the first encounter.

d. People are twice as likely to share good service experiences as bad experiences.

e. Monitoring social media websites such as YouTube, Twitter, and Facebook are a waste

of time since the complaints presented are usually isolated instances and are not

indicative of the actual service delivered.

Most public relations experts agree that it is best for a company to ___________ comments

about it on the Internet.

a. ignore

b. argue with

c. respond to

d. blog about

e. consider

Which of the following statements about relationship marketing is most accurate?

a. The number of encounters in a service experience should always be the same.

b. The service encounter represents an opportunity to develop social bonds with

customers.

c. An after-holiday sale is a good incentive to create a loyal customer relationship.

d. The purpose of relationship marketing is to benefit the customer, not the organization.

e. A major customer benefit of relationship marketing is a reduction in the price that is

paid for services rendered.

Relationship marketing provides several benefits for service customers, including: (1)

__________; (2) customized service delivery; (3) reduced stress due to a repetitive purchase

process; and (4) an absence of switching costs.

a. the continuity of a single provider

b. no need for comparison shopping

c. discounted switching costs

d. implied warranties

e. strict government quality performance guidelines

Relationship marketing provides several benefits for service customers, including: (1) the

continuity of a single provider ; (2) customized service delivery; (3) __________; and (4) an

absence of switching costs.

a. no need for comparison shopping

b. reduced stress due to a repetitive purchase process


d. implied warranties


Relationship marketing provides several benefits for service customers, including: (1) the

continuity of a single provider ; (2) customized service delivery; (3) reduced stress due to a

repetitive purchase process; and (4) __________.

a. no need for comparison shopping

b. implied warranties


d. an absence of switching costs


Recent surveys of consumers have indicated that while customers of many services are

interested in being “relationship customers,” they require that the relationship be balanced

in terms of

a. honesty, a lack of prejudice, and empathy.

b. loyalty, benefits, and respect for privacy.

c. loyalty, honesty, and integrity.

d. financial benefits, product benefits, and preferential treatment.

e. financial benefits, product benefits, and personal benefits.

An expanded marketing mix for services that includes the four Ps (product, price, promotion,

and place or distribution) as well as people, physical environment, and process, is referred

to as the __________.

a. seven Ps of services

b. service matrix

c. service continuum

d. service encounters

e. the service mix

While there are 4 Ps of marketing, there are __________ Ps of services.

a. 3

b. 5

c. 6

d. 7

e. 8

All of the following comprise the seven (7) Ps of services marketing EXCEPT:

a. product.

b. process.

c. profitability.

d. people.

e. physical environment.

The use of brand names is especially important for services because of which unique


a. inventory costs

b. inseparability

c. inconsistency

d. invisibility

e. intangibility

Which of the following statements regarding service branding is MOST accurate?

a. Because services are intangible and more difficult to describe, brand names and logos

are of critical importance.

b. Because the classification of services is so complex, it is far more difficult to find a brand

name that hasn’t already been taken.

c. Services must include the word “service” in all their brand names to assure that

customers understand they are not purchasing a product.

d. Service firms with a well-established brand reputation and service firms without a brand

reputation both find it easy to introduce new services.

e. Service logos and brands must designated by the “®” symbol while consumer products

are designated by the “SM” symbol.

Which of the following statements regarding service branding is MOST accurate?

a. Because the classification of services is so complex, it is far more difficult to find a brand

name that hasn’t already been taken.

b. Services must include the word “service” in all their brand names to assure that

customers understand they are not purchasing a product.

c. Service firms with a well-established brand reputation will also find it easier to introduce

new services than firms without a brand reputation.

d. Many consumers are suspicious of companies that offer too many services under the

same brand name.

e. Many service organizations, such as banks, hotels, and restaurants do not rely heavily

on branding because of the extent to which they are people-dominated services.

The FedEx brand suggests the possibility that it is government sanctioned and fast. This

perception is important because of which unique characteristic of services?

a. inventory costs

b. inseparability

c. inconsistency

d. invisibility

e. intangibility

Which of the following is the most important aspect conveyed by the FedEx brand?

a. its international experience

b. differentiation and an image of quality

c. the ownership of the company

d. the nonprofit aspect of the company

e. the patent for its service

Tuition, charges, fares, and rates are all

a. names given to the tangible portion of the price of a service.

b. names that are interchangeable when identifying the price of a service.

c. names given to the intangible portion of the price of a service.

d. names given to the price of services.

e. terms used in services to imply a higher quality product than the terms “cost” or “price.”

Tuition, charges, fares, and rates are all

a. euphemisms for the name “price” to the price factor in services.

b. names given to the price of services.

c. names given to the intangible portion of the price of a service.

d. names that are interchangeable when identifying the price of a service.

e. terms used in services to imply a higher quality product than the terms “cost” or “price.”

Because of the intangible nature of services, consumers often perceive price as a possible

indicator of __________ of the service.

a. the profit or ROI

b. the customer value

c. the quality

d. the target market

e. the cost

When customers buy services, they also consider nonmonetary costs, such as the __________

and __________ efforts required to consume the service.

a. emotional; physical

b. mental; physical

c. psychological; intellectual

d. physical; moral

e. physical; ethical

One tool available for services when trying to balance demand is __________.

a. off-peak pricing

b. product lay-away

c. credit incentives

d. container sales

e. product rationing

Service providers use tools such as __________, which consists of charging different prices for

different times of the day or during different days of the week to reflect the variations in

demand for their services.

a. scale pricing

b. capacity pricing

c. down-time pricing

d. off-peak pricing

e. fraction pricing

Many service businesses use off-peak pricing to reflect variations in

a. costs of delivering service.

b. demand for the service.

c. profitability based on time of day or week.

d. promotional events.

e. government regulations.

Charging different prices during different times of the day or during different days of the

week to reflect variations in demand for a service is referred to as

a. capacity pricing.

b. idle production pricing.

c. customer contact pricing.

d. derived demand pricing.

e. off-peak pricing.

The less-expensive matinee movie pricing offered on shows prior to 4:00 PM is an example

of

a. price lining.

b. price differentiation.

c. off-peak pricing.

d. bait-and-switch pricing.

e. idle production pricing.

Commuters in New York often have often installed radio frequency identification (RFID)

devices on their cars that can be read automatically as they approach a tollbooth. This

saves time, improves traffic flow, and means drivers don’t need to keep exact change in

their cars. It also offers New York authorities the opportunity to manage traffic flow by

charging different toll amounts for different times of day. Commuters in New York are

experiencing

a. price gouging.

b. off-peak pricing.

c. flow management pricing.

d. price differentiation.

e. idle production pricing.

A major factor in developing a service marketing strategy is __________because of the

inseparability of services from the producer.

a. product

b. price

c. promotion

d. place

e. process

Which of the following statements regarding the place element of services is MOST accurate?

a. Place has little impact on the marketing of services because there are so many

intermediaries from which a consumer may choose.

b. The distribution site and the service provider are the intangible components of the

service.

c. Place is especially important factor because of the inconstancy between the service and

the service provider.

d. Until recently, customers generally had to go to the service provider ’s physical location

to purchase the service.

e. Technology is an effective way to bring services to the customer, but only if the

consumer is a new user ; otherwise, the disadvantages outweigh the benefits.

A publicity tool frequently used by nonprofit services, which uses free space or time donated

by the media is referred to as a(n)

a. promotion.

b. advertisement.

c. public service announcement.

d. press release.

e. cooperative advertisement.

Many nonprofit organizations have used PSAs in their media planning. What does the

acronym “PSA” stand for?

a. public stakeholder announcement

b. public sustainability announcement

c. public service announcement

d. public service annunciation

e. promotional service announcement

The notion that a service organization must focus on its employees before successful

programs can be directed at customers is referred to as

a. internal analysis.

b. internal marketing.

c. external marketing.

d. stakeholder marketing.

e. employee marketing.

The concept of internal marketing is based on the notion that a service organization must

focus on its __________ before successful programs can be directed at customers.

a. competitors

b. prospects

c. shareholders

d. employees

e. suppliers

Edinberry’s, a restaurant located in south Texas, offers a variety of foods and entertainment

opportunities to its customers. The restaurant is famous for its fine steaks, spicy chili, and

outstanding customer service. In order to maintain the restaurant’s reputation for putting

its customers first, the marketing manager at Edinberry’s has developed marketing activities

that are directed at the waiters and waitresses. These marketing activities are an example

of __________ and are designed to help the restaurant employees to maintain an exceptional

customer experience.

a. internal marketing

b. external marketing

c. service marketing

d. stakeholder marketing

e. employee marketing

The process of managing the entire customer experience with the company is referred to

as

a. services marketing.

b. internal marketing.

c. customer experience management.

d. relationship marketing.

e. gap analysis.

The customer experience management (CEM) process should

a. allow for spontaneity and not be too rigid or planned.

b. be unique to each individual customer’s experience.

c. stress the similarities in style, function, and form of their service relative to the top

competitors in the industry.

d. differentiate a service from other service offerings.

e. be performed by someone outside the firm to guarantee objectivity.

The appearance of the environment in which the service is delivered and where the firm

and customer interact can influence the customer’s __________ of the service .

a. repeat usage

b. evaluation

c. exploitation

d. utilization

e. perception

The buildings, landscaping, vehicles, furnishings, signage, brochures, and equipment

comprise which of the seven Ps of services marketing?

a. process

b. place

c. physical environment

d. productivity

e. product

Service companies can manage their physical environment to influence customers’

perceptions is through

a. service delivery management.

b. relationship management.

c. customer experience management.

d. exposure management.

e. impression management.

The actual procedures, mechanisms, and flow of activities by which a service is created and

delivered is referred to as __________.

a. a process

b. a procedure

c. productivity

d. a protocol

e. a plan

In the seven Ps of services, the term “process” refers to

a. the patented steps of service encounters that distinguish one service provider from

another.

b. licensed procedures that have met ISO 9000 guidelines for safety.

c. the procedures, mechanisms, and flow of activities by which the service is created and

delivered.

d. a protocol for behaviors and activities for people-based rather than technology-based

services.

e. the decisions consumers’ make during the purchase of services.

In the seven Ps of services marketing, the term “process” involves not only “what” gets

created but also

a. “if” it gets created at all.

b. “how” it gets created.

c. “when” it gets created.

d. for “whom” it gets created.

e. “why” it gets created.

A __________ is very important to the process aspect of services because it helps identify

steps that will ultimately lead to better service creation and delivery processes.

a. customer contact audit

b. internal marketing review

c. tangibility gap analysis

d. service continuum

e. consumer experience audit

Integrating the service component of the marketing mix with efforts to influence consumer

demand is referred to as __________.

a. customer management

b. internal marketing

c. product management

d. capacity management

e. eight Ps of services marketing

Capacity management refers to

a. integrating the service component of the marketing mix with efforts to influence

consumer demand.

b. when the service provider is available but there is no demand.

c. charging different prices during different times of the day or during different days of

the week to reflect variations in demand for the service.

d. the practice of changing prices for services in real time in response to supply and

demand conditions.

e. the operating cost per hour per employee or technology subtracted from the revenue

generated by each full-time employee equivalent.

Airlines feature load factor as a(n) __________ measure on their marketing dashboards.

a. productivity

b. price differentiation

c. tangibility

d. capacity management

e. profitability

Airlines feature load factor as a capacity management measure on their marketing

dashboards, along with two other measures; namely the operating expense per available

seat flown one mile and __________, which is the revenue generated by each seat flown one

mile.

a. profit per passenger

b. average price per passenger

c. internal ROI

d. unit variable sales

e. yield

Airline load factor refers to

a. the percentage of paying customer seats flown one mile plus frequent flyer redemption

seats flown one mile.

b. the percentage of empty seats on a plane compared to its total capacity.

c. the percentage of available seats flown one mile occupied by a paying customer.

d. the percentage of seats that are overbooked on any given flight to prevent profit

shortfalls for “no shows.”

e. the total of all paid seats plus all luggage overcharges and all purchased beverages,

meals, and other amenities or additional services, per flight.

The percentage of available seats flown one mile occupied by a paying customer is shown

in the capacity management marketing dashboard above as __________.

a. 9.83%

b. 82.1%

c. 8.28%

d. 18.11%

e. 1.55%

The revenue generated by each seat flown one mile is shown in the capacity management

marketing dashboard above as

a. 9.83 cents.

b. 82.1 cents.

c. 8.28 cents.

d. 18.11 cents.

e. 7.99 cents.

The marketing dashboard for JetBlue Airways shown in the capacity management marketing

dashboard above indicates that JetBlue posted a(n) __________ profit/loss per available seat

flown one mile.

a. 9.83 cent profit

b. 1.55 cent profit

c. 1.27 cent profit

d. 0.21 cent loss

e. 8.28 cent loss

Assuming the information shown in the JetBlue capacity management marketing dashboard

above will not change in the near future, what actions would recommend that JetBlue take?

a. Proceed as in the past; JetBlue is clearly profitable.

b. Use advertising to let consumers know how JetBlue currently meets their needs.

c. Change the flight schedules to accommodate travelers’ needs and advertise these

changes.

d. Keep the flight schedule as it is and reduce the price per flight.

e. There is not enough information in the marketing dashboard to suggest an action to

take.

Changes in the services industry in the future will primarily be driven by two factors. They

are technological development and

a. reverse marketing.

b. sustainable development.

c. global development.

d. global service branding.

e. the elimination of ethnocentricity.

The key elements of future services include __________, convergence, and personalization.

a. automation

b. transglobalization

c. mobility

d. divergence

e. convenience

The key elements of future services include __________, mobility, and personalization.

a. automation


c. convenience

d. divergence

e. convergence

The key elements of future services include __________, mobility, and convergence.

a. automation


c. cooperation

d. personalization

e. convenience

Mobility as a future aspect of services refers to

a. the ability of networking technology to be incorporated into portable digital devices.

b. the ability to transport goods almost anywhere in the world within 24 hours.

c. the ability to transfer entire operations including a firm’s technology from one location

to the next within a matter of days.

d. the ability of consumers to purchase any service from any service provider anywhere in

the world.

e. the ability of service providers to move their operations to any location in the world.

The trend toward sustainability and “green” business practices has expanded to include

many services as they strive to

a. comply with FDA rules.

b. increase their energy use.

c. reduce their capacity.

d. create a competitive advantage.

e. minimize consumer involvement.

The Philadelphia Phillies are marketing what “product?”

a. a baseball game

b. popular players

c. a fun experience

d. a winning team

e. competitive spirit

The Philadelphia Phillies best type of advertising is/are

a. TV ads.

b. personal selling.

c. coupons.

d. word of mouth.

e. contests.

The Phillies segment their fans primarily upon what basis?

a. location

b. interests

c. promotion

d. age

e. income

Which of the following statements regarding the Phillies special promotions nights is most

accurate?

a. Although they foster good will in the community, there is little change in attendance.

b. Regular and diehard fans tend to stay away because they are too distracted by children

who are only there for the “free gifts” (bats, balls, bobble head dolls, etc.).

c. Attendance remains steady but people tend to spend more money during special event

days because there is a greater sense of fun and excitement.

d. Game attendance can increase by 30 to 35 percent during special event days.

e. Game attendance increases by 25 percent with the bump in attendance usually lasting

throughout the entire month.

An additional benefit of a Phillies special promotions night is that it not only does boosts

overall attendance, it

a. generates first-time visits from fans who have never attended a Major League Baseball

game.

b. generates premiums (wristbands, caps, bats, etc.) from new companies interested in

offering a promotion to gain positive exposure.

c. helps regulate local traffic since people arrive early to be sure they get the free gift.

d. helps keep children quiet during the game since they're playing with their free gift and

not bothering their parents or other game attendees.

e. creates a heightened sense of excitement and anticipation for the game.

The Phillies “special promotions days” fall into three distinct categories:

a. theme nights, event days, and premium gift days.

b. team-oriented, fan-oriented, and family-oriented.

c. revenue generating, market share building, and goodwill generating.

d. ticket discounts, trip giveaways, and contests.

e. televised games, community outreach, and loyal fan promotions.

The Philadelphia Phillies offer different promotions to meet the needs of specific segments.

Offering discounts on dinners would most likely be targeted towards __________.

a. diehard baseball fans

b. ball team members, their families, and friends

c. married families with children

d. 20- and 30-somethings

e. seniors 60 years and older

The Philadelphia Phillies uses the Phanatic to help the fans evaluate their experience, since

a ball game experience is

a. intangible.

b. tangible.

c. inventory.

d. inconsistent.

e. imperfect.

The Phillie Phanatic had his own book signing at Barnes and Noble in Exton, PA, for the

children’s book series The Phillie Phanatic’s Happiest Memories , The Phillie Phanatic’s

Moving Day, The Phillie Phanatic’s Phantastic Journey, and Happy Birthday Phillie Phanatic.

If the baseball team were trying to get people to the game, why would they host an activity

away from the stadium?

a. They are trying to build future attendees but they don’t want younger children bothering

people during the games.

b. They need to generate revenue during the months when the stadium is closed.

c. It generates team spirit, adds to non-ticket revenues, and cultivates fans for the future.

d. Phillie Phanatic is used to reduce hostility towards the team when they have a losing

season.

e. The new stadium was built significantly smaller and cannot hold as many activities on

the premises.

1. Which of the following statements about StubHub is most accurate?

A. Amazon.com recently purchased StubHub for $213 million dollars.

B. StubHub makes money from both the buyer and the seller of the tickets sold on its Web

site.

C. StubHub had plans to enter the European market, but EU regulations made the plan

unfeasible.

D.

StubHub and Ticket Master have a non-binding agreement to cater to separate market

segments (sports vs. concert) to avoid undo competition.

E. StubHub has difficulty selling tickets in some states because ticket scalping is illegal.

2. With over half of tickets to major events sold online, StubHub's Web site can help generate

extra ticket sales for the original sponsors. This is why

A. The NFL recently purchased StubHub for $213 million dollars.

B. StubHub now has formal relationships not only with professional sports leagues, but also

with many sports programs of major universities.

C. StubHub has to pay licensing fees to all major sports teams whose tickets are sold on their

site.

D. StubHub has expanded their mission from being "a sports ticket marketplace" to the "hub

of all entertainment experiences."

E. StubHub pays a surtax on any ticket it sells if the games are not already sold out at the

stadium(s).

3. The money or other considerations (including other products and services) exchanged for

the ownership or use of a product or service is referred to as _________.

A. fee

B. value

C. remuneration

D. price

E. exchange rate

4. Price refers to

A. the value assigned to the exchange of products and services for other products and

services.

B. the value judgment made by both the buyer and seller regarding an item's worth.

C. the money or other considerations (including other products and services) exchanged for

the ownership or use of a product or service.

D. the value assessed for the benefits of using a product or service.

E. the highest monetary value a customer is willing to pay for a product or service.

5. From a marketing viewpoint, __________ is money or other considerations (including

other products and services) exchanged for the ownership or use of a product or service.

A. value

B. price

C. barter

D. currency

E. a tariff

6. Attorneys' fees, entrance fees, train fares, and organization dues are all examples of

A. premiums.

B. barter.

C. mediums of exchange.

D. price.

E. outlays.

7. Which of the following is a particular type of price?

A. operating costs

B. liquidity

C. value

D. college tuition

E. stockholders' equity

8. The practice of exchanging products and services for other products and services rather

than for money is referred to as _________.

A. barter

B. reciprocal pricing

C. virtual pricing

D. balance of payments

E. value-pricing

9. Barter refers to

A. a reciprocity agreement stipulating that if company "A" purchase services from company

"B," then company "B" must purchase similar services from company "A."

B. a tying agreement stipulating that if company "A" purchases a product from company "B,"

it must also purchase its services.

C. the practice of exchanging products and services for other products and services rather

than for money.

D. the practice of exchanging services for products of equal or greater value.

E. the practice of exchanging products and services for other services rather than for money.

10. Barter is the practice of exchanging products and services for other products and services

rather than for

__________.

A. value

B. ideas

C. money

D. promises

E. tariffs

11. The use of "special fees" and "surcharges" is driven by consumers' zeal for __________

and the ease of making price comparisons on the Internet.

A. high prices

B. low prices

C. quality

D. value

E. warranties

12. The use of "special fees" and "surcharges" is driven by consumers' zeal for low prices and

_________.

A. value, the idea of getting "more" for their money

B. the ease of making price comparisons on the Internet

C. the need for extra accessories

D. avoiding state sales taxes from Internet purchases

E. a dislike of price haggling or negotiating

13. The price equation formula is final price equals list price minus incentives and allowances

plus

A. profits.

B. commissions.

C. trade-ins.

D. extra fees.

E. taxes.

14. The price equation formula is final price equals __________ minus incentives and

allowances plus extra fees.

A. salaries

B. profits

C. trade-ins

D. list price

E. taxes

15. The price equation formula is final price equals list price minus __________ plus extra

fees.

A. profits

B. commissions

C. trade-ins

D. incentives and allowances

E. taxes

16. A company that manages apartments decides to buy 15 new dishwashers at a list price of

$550 each as replacements for old dishwashers in a small apartment complex it owns.

Because the company is buying more than 10 dishwashers, it is eligible for a $150 per unit

quantity discount. Financing charges total $20 per unit. The company gets $10 per

dishwasher for the 15 dishwashers traded in. What is the final price the company will pay for

each dishwasher?

A. $390

B. $400

C. $410

D. $530

E. $560

17. Tara is enrolled for spring semester at college. The tuition is $6,000 but she has a

scholarship for $1,000 as well as a work-study grant of $1,500. The health fees and student

activity fees are $150 for the semester. What is the final price that Tara will pay for the spring

semester?

A. $2,500

B. $2,650

C. $3,650

D. $5,150

E. $6,150

18. The final price a buyer pays can take different names, depending on what is purchased,

and can change depending on _________.

A. the price equation

B. the equity factor

C. the barter formula

D. price enhancements

E. demand factors

19. The ratio of perceived benefits to price is referred to as

A. the price-quality relationship.

B. prestige pricing.

C. value-added pricing.

D. value.

E. value analysis.

20. The ratio of _________ to price is referred to as value.

A. perceived benefits

B. prestige value

C. costs

D. perceived quality

E. profits

21. The ratio of perceived benefits to __________ is referred to as value.

A. price

B. prestige

C. perceived quality

D. profits

E. perceived costs

22. To increase value, marketers have the option of

A. decreasing benefits.

B. decreasing benefits and increasing price.

C. decreasing price and increasing benefits.

D. decreasing price and decreasing benefits.

E. do nothing and let the perceived value of the item increase as it matures in its life cycle.

23. To increase value, marketers may _________.

A. decrease benefits

B. increase price

C. increase advertising

D. decrease price and increase benefits

E. do nothing and let the perceived value of the item increase as it matures in its life cycle

24. To increase value marketers may _________, decrease price, or do both.

A. decrease benefits

B. increase benefits

C. increase price

D. increase advertising

E. do nothing and let the perceived value of the item increase as it matures in the life cycle.

25. Value-pricing refers to

A. the ratio of perceived benefits to price.

B. the practice of simultaneously increasing product and service benefits and maintaining or

decreasing price.

C. is the money or other considerations exchanged for the ownership or use of a product or

service.

D. the ratio of price to perceived benefits.

E. list price minus incentives and allowances plus extra fees.

26. The practice of simultaneously increasing product and service benefits and maintaining or

decreasing price is referred to as _________.

A. value-pricing

B. customer-value pricing

C. competitive pricing

D. cost pricing

E. demand pricing

27. Creative marketers engage in _________, which is the practice of simultaneously

increasing product and service benefits and maintaining or decreasing price.

A. revenue sharing

B. customer-value pricing

C. demand pricing

D. value-pricing

E. cost pricing

28. Creative marketers engage in value-pricing, which is the practice of simultaneously

_________ and maintaining or decreasing price.

A. decreasing product and service benefits

B. decreasing profit

C. analyzing benefits

D. decreasing cost

E. increasing product and service benefits

29. Creative marketers engage in value-pricing, which is the practice of simultaneously

increasing product and service benefits and _________.

A. increasing costs

B. increasing price

C. advertising more

D. decreasing costs

E. maintaining or decreasing price

30. A major grocery chain pays its baggers a regular hourly wage. The baggers not only pack

the groceries, they will take customers' groceries to their car, regardless of the weather. The

baggers are not permitted to accept tips, even if they are offered. This would be an example

of

A. pricing enhancement

B. societal pricing

C. revenue sharing

D. value-pricing

E. cost-pricing

31. Many convenience stores now have mail slots where customers can pay their utility bills.

The utility companies handle all the processing while the customers get the benefit of not

having to use postage. The convenience store owner gets the advantage of the extra foot

traffic. This is an example of

A. societal pricing

B. revenue sharing

C. barter

D. value-pricing

E. cost-pricing

32. Many cosmetology schools allow their advanced students to style hair for "real world"

clients for a reduced fee. The students benefit from the experience, the clients get a less

expensive haircut, and the school is able to provide students with additional training without

costing it anything; in fact, they even profit from it. This is an example of

A. societal pricing

B. revenue sharing

C. barter

D. value-pricing

E. cost-assist pricing

33. Most consumers realize that the quality of diamonds varies, and most believe the higher

the price of the diamond, the higher its quality. This is an example of price influencing the

perception of overall quality, and __________ to consumers.

A. acceptable cost

B. perceptual investment

C. barter potential

D. return on investment

E. value

34. Which of the following statements is most accurate?

A. For some products, price influences the perception of overall quality, and ultimately value,

to consumers.

B. A consumer's view of a product's value is always tied to quality.

C. A consumer's view of value is a function of their education and upbringing.

D. Price plays only a small part in a consumer's value of a product or service.

E. Price plays a large role in assessing value but play a very minor role in assessing quality.

35. When Pizza Hut announced it was going to add 25 percent more toppings to its Meat

Lover's line of pizzas without increasing their prices, what consumer motivation was it

appealing to?

A. cost

B. appearance

C. tangibles

D. value

E. quality

Figure 13-1

36. As shown in Figure 13-1 above, McDonald's is most likely using which type of pricing

strategy?

A. predatory pricing

B. value pricing

C. loss-leader pricing

D. odd-even pricing

E. barter

37. A "reference value" involves the judgment by a consumer of the worth and desirability of

a product or service _________.

A. relative to the amount of time and energy a consumer puts into the purchase process.

B. based upon the value assigned to similar items used by the consumer's peers.

C. that results from performing a careful break-even analysis.

D. relative to substitutes that satisfy the same need.

E. based upon the differential between customers' "needs" and their "wants."

38. A buying situation can involve comparing the costs and benefits of substitute items—such

as real sugar to the sugar substitute Splenda which, although more expensive than sugar, is

purchased by many consumers because it contains no calories. This situation involves the

consumer considering

A. a marginal analysis.

B. a profit equation.

C. a break-even analysis.

D. price elasticity of demand.

E. a reference value.

39. Reference value involves comparing the costs and benefits of _________.

A. substitute items

B. items of equal or greater value

C. products with which a consumer is familiar and items the consumer has not seen or used

before

D. items from one particular distributor

E. intangible items

40. The __________ calculation = (Unit price × Quantity sold) - Total cost.

A. total revenue

B. profit

C. variable cost

D. net present value

E. break-even point

41. A firm's profit equation demonstrates that profit equals _________.

A. Total cost + Total revenue

B. Total revenue - Total cost

C. Marginal revenue - Marginal cost

D. Price × Quantity

E. Total revenue + Total cost

42. The formula, Total revenue - Total cost, or [(Unit price × Quantity sold) - (Fixed cost +

Variable cost)] represents _________.

A. the profit equation

B. the value equation

C. the sales ratio

D. average revenue

E. the break-even point

Figure 13-2

43. Figure 13-2 above represents the six steps in the price-setting process. "A" represents the

step at which a firm would

A. raise initial capital.

B. identify pricing objectives and constraints.

C. scan competitors for prices of similar products or services.

D. select the appropriate pricing formula.

E. establish the price range.

44. Figure 13-2 above represents the six steps in setting price. "B" represents the step at

which a firm would

A. estimate demand and revenue.



D. select the appropriate pricing formula.

E. determine cost, volume, and profit relationships.

45. Figure 13-2 above represents the six steps in setting price. "C" represents the step at

which a firm would




D. determine cost, volume, and profit relationships.


46. Figure 13-2 above represents the six steps in setting price. "D" represents the step at

which a firm would


B. select an approximate price level.




47. Figure 13-2 above represents the six steps in setting price. "E" represents the step at

which a firm would

A. set list or quoted price.





48. Figure 13-2 above represents the six steps in setting price. "F" represents the step at

which a firm would

A. set list or quoted price.



D. make special adjustments to list or quoted price.


49. Figure 13-2 above represents the six steps in setting price. Which letter represents the step

where a firm would estimate price elasticity?

A. "A"

B. "B"

C. "C"

D. "D"

E. "E"


where a firm would conduct a break-even analysis?

A. "A"

B. "B"

C. "C"

D. "D"

E. "E"


where a firm would estimate dollar and unit sales revenues?

A. "A"

B. "B"

C. "C"

D. "D"

E. "E"


where a firm would assess the constraints on the demand for the product class and brand?

A. "A"

B. "B"

C. "C"

D. "D"

E. "E"


where a firm would identify pricing objectives such as profit, market share, and survival?

A. "A"

B. "B"

C. "C"

D. "D"

E. "E"


where a firm would estimate demand?

A. "A"

B. "B"

C. "C"

D. "D"

E. "E"


where a firm would estimate costs and perform a marginal analysis to assess profitability?

A. "A"

B. "B"

C. "C"

D. "D"

E. "E"

56. According to Nandan Nilekani, CEO of Infosys, there are a number of fundamental

changes in world business, which includes outsourcing, broadband connectivity, lower priced

computers, and

A. the natural evolution of a more computer literate society.

B. multi- lingual search engines.

C. virtual time translation of multi-lingual transmissions.

D. the explosion of software and search engines.

E. the absence of governmental authority or regulation of Internet commerce.

57. With over 300 million customers, __________ is the world's cell phone market and is

adding 5 million new customers a year.

A. China

B. India

C. Russia

D. the European Union

E. the United States

58. Which of the following are examples of elements involved in Step 1 of the price-setting

process: identify pricing objectives?

A. profit, market share, and survival

B. estimation of demand, sales revenue, and price elasticity

C. cost estimation, marginal analysis, and break-even analysis

D. demand for the product class and brand, newness of the product, and competition

E. market segmentation targeting, and positioning

59. Which of the following would be an example of an objective in Step 1 of the price-setting

process?

A. "We need to set an initial price of $259 dollars per unit."

B. "We need to obtain a ten percent market share."

C. "We need to find the least expensive distributor."

D. "We need to make allowances for large quantity orders."

E. "We need to increase the price during the holiday shopping season."


process?

A. "We need to set an initial price of $259 dollars per unit."

B. "We need to find the least expensive distributor."

C. "We need to set profits at $1.2 million."


E. "We need to increase the price during the holiday shopping season."


process?

A. "We need to forget profits right now; just make sure we break even."

B. "We need to find the least expensive distributor."

C. "We need to make allowances for large quantity orders."

D. "We need to increase the price during the holiday shopping season."

E. "We need to hire a professional accountant."

62. Which of the following would be an example of a constraint in Step 1 of the price-setting

process?

A. "Remember, no one even knows what this new product can do."

B. "We can rely on our reputation for our other products in the line."

C. "Experts are predicting a surge in global demand."


E. "We should increase the price during the holiday shopping season."

63. Which of the following would be an example of a constraint in Step 1 of the price-setting

process?

A. "We can rely on our reputation for our other products in the line."

B. "Experts are predicting a surge in global demand."

C. "We need to make allowances for large quantity orders."

D. "We should increase the price during the holiday shopping season."

E. "We're going to face some stiff competition."

64. Which of the following represent elements of Step 2 of the price-setting process?






65. Objectives like profit, market share, and survival as well as constraints such demand for

product class and brand, newness, costs, and competition are issues that would be addressed

during __________ of the price-setting process.

A. Step 1

B. Step 2

C. Step 3

D. Step 4

E. Step 5

66. Estimating demand, sales revenue, and price elasticity are issues that would be addressed

during __________ of the price-setting process.

A. Step 1

B. Step 2

C. Step 3

D. Step 4

E. Step 5

67. Estimating cost, conducting a marginal analysis, and performing a break-even analysis

are issues that would be addressed during __________ of the price-setting process.

A. Step 1

B. Step 2

C. Step 3

D. Step 4

E. Step 5

68. Selecting an approximate price level would occur during __________ of the price-setting

process.

A. Step 2

B. Step 3

C. Step 4

D. Step 5

E. Step 6

69. Setting list or quoted prices would occur during __________ of the price-setting process.

A. Step 2

B. Step 3

C. Step 4

D. Step 5

E. Step 6

70. Making special adjustments to the list or quoted price would occur during __________ of

the pricesetting process.

A. Step 2

B. Step 3

C. Step 4

D. Step 5

E. Step 6

71. Which of the following statements would most likely be spoken during Step 2 of the

price-setting process?

A. "It's important to offer discounts to seniors."

B. "We have to try to achieve an 8% profit share."

C. "The starting price should be $4.99 and we can raise the price again in six months."

D. "But, if we increase the price even by one dollar, how many customers will we lose?"

E. "We should probably price the extra large version somewhere between $600 and $650."

72. Which of the following are examples of elements of Step 3 in the price-setting process?






73. Which of the following statements would most likely be spoken during Step 3 in the

price-setting process?

A. "In order to break-even, we will need to sell at least 500,000 units."

B. "We have to try to achieve an 8% profit share."

C. "The starting price should be $4.99 and we can raise the price again in six months."

D. "But, if we increase the price even by one dollar, how many customers will we lose?"

E. "We should probably price the extra large version somewhere between $600 and $650."

74. Specifying the role of price in an organization's marketing and strategic plans is referred

to as

A. a pricing plan.

B. profit mission.

C. pricing constraints.

D. pricing objectives.

E. the list or quoted price.

75. Pricing objectives refer to

A. reconciling the prices charged by an organization to the values set forth in its business

mission.

B. taking specific steps to capitalize on an organization's internal strengths as they apply to

price.

C. taking specific steps to compensate for an organization's weaknesses as they apply to

price.

D. specifying the role of price in an organization's marketing and strategic plans.

E. subjectively setting intrinsic values to all products and services offered by an organization.

76. Which of the following statements regarding pricing objectives is most accurate?

A. Pricing objectives should never change.

B. Pricing objectives may change depending upon the relative market share of competitors.

C. Pricing objectives are established exclusively by the marketing department.

D. Pricing objectives may change depending on the financial position of the company.

E. Pricing objectives are extremely sensitive to even the slightest change in the local

economy.

77. Three different objectives relate to a firm's profit, which have different implications for

pricing strategy. The three profit-oriented objectives include managing for long-run profits,

maximizing current profit objectives, and _________.

A. achieving a target return

B. accumulating profits

C. reinvesting profits

D. redistributing profits

E. maximizing gross margin


pricing strategy. The three profit-oriented objectives include _________, maximizing current

profits, and target return.

A. accumulating profits

B. reinvesting profits

C. redistributing profits

D. maximizing gross margin

E. managing for long-run profits


pricing strategy. The three profit-oriented objectives include _________, managing for long-

run profits, and target return.

A. accumulating profits

B. reinvesting profits

C. redistributing profits

D. maximizing gross margin

E. maximizing current profits

80. Managing for long-run profits implies that a company

A. will give up immediate profit in exchange for achieving a higher market share in hopes of

penetrating competitive markets.

B. will maintain a given price range to ensure there is no loss of customers over time, even if

the profit margin declines.

C. all profits will be invested in bonds or other certificates of deposit in order to counteract

any drastic economic changes in the future.

D. all profits will be reinvested into market research or product research rather than returned

to shareholders.

E. all products, product lines, or divisions that cannot maintain their pricing goals will be

dropped.

81. A maximizing current profit objective implies that a company chooses

A. to set targets whose performance can be measured quickly.

B. to give up immediate profit in exchange for achieving a higher market share in hopes of


C. to set a profit goal that is often determined by its board of directors.

D. to reduce investment in any further market or product research.

E. to set prices based on return on sales.

82. A target return profit objective implies that a company chooses

A. to set targets that whose performance can be measured quickly.

B. to give up immediate profit in exchange for achieving a higher market share in hopes of


C. to set a profit goal that is often determined by its board of directors.

D. to reduce investment in any further market or product research.

E. to set prices based on return on sales.

83. A firm's profit objective is often measured in terms of ROI. The acronym ROI stands for

_________.

A. risk opportunity investment

B. regulated organizational incentives

C. return on investment

D. regulated organizational investments

E. replenishment of organizational inventories

84. A firm's profit objective is often measured in terms of ROA. The acronym ROA stands

for _________.

A. risk opportunity assessment

B. regulated organizational acquisitions

C. return on assets

D. regulated organizational activities

E. risk opportunity analysis

85. While pricing objectives frequently reflect corporate goals, pricing constraints often relate

to

A. stockholder demands.

B. political ideology.

C. conditions existing in the marketplace.

D. an organization's code of ethics.

E. the financial realities within the organization itself.

86. Given that a firm's profit is high enough for it to remain in business, an objective may be

to _________, which will in turn lead to increases in market share and profit.

A. increase the commitment to social responsibility

B. decrease unit volume while maintaining price

C. increase dollar sales revenue

D. increase research and development funding for new product line extensions

E. continue with previous policies that seem to be working

87. Which of the following statements regarding sales goals is most accurate?

A. For marketing managers, sales revenue or unit sales are more easily addressed than profit

goals.

B. Cutting prices for a single product in a product line to raise unit sales often results in an

increase in sales for related products in the line as well.

C. Very often cutting prices results in a decrease in market share.

D. Setting unit volume sales as a pricing objective results in price wars with competitors, so

the practice is limited to industries with as few competitors as possible.

E. An advantage of increasing unit volume sales is that it always results in an increase in

profits.

88. The ratio of the firm's sales revenues or unit sales to those of the industry (competitors

plus the firm itself) is referred to as

A. target return on sales.

B. industry profit.

C. unit volume.

D. market share.

E. profit.

89. Market share is the ratio of the _________ to those of the industry.

A. target return on sales

B. marginal profit of the firm

C. marketing expenses of the firm

D. firm's sales revenues or unit sales

E. profits of the firm

90. Netflix used to charge $14.99 per month for its movie rental service. However, when

Blockbuster introduced the same service at $13.99, Netflix then dropped its price to $13.99.

Netflix most likely made this price reduction in an attempt to

A. maintain market share.

B. decrease revenue but increase profit.

C. increase profit by decreasing revenue.

D. decrease market share.

E. increase efficiency.

91. If the CEO of the Clorox Company were to say, "We want to control 60 percent of the

bleach market within the next five years," he would have set a __________ pricing objective.

A. profit

B. sales

C. unit volume

D. market share

E. social responsibility

92. Companies often pursue a market share objective when _________.

A. industry sales are flat or declining

B. profits are increasing

C. industry sales are beginning to rise

D. there is a sudden increase in production costs

E. stockholders are seeking higher dividends

93. Which of the following statements regarding a market share pricing objective is most

accurate?

A. A market share objective is often difficult for product managers since stockholders are

looking for immediate dividends (return of profits) and obtaining market share usually takes

time.

B. Although increased market share is a primary goal of some firms, others see it as a means

to other ends such as increased sales or profits.

C. Selecting market share as a pricing objective is particularly effective if industry sales are

rising.

D. An advantage of market share as a pricing objective is that it is particularly insensitive to

competitors' actions.

E. Ironically, a market share objective is realized by raising prices in order to increase

consumer confidence during the decline stage of a product's life cycle.

94. Unit volume as a pricing objective refers to

A. the quantity or products to be produced or sold.

B. the ratio of price per unit to unit variable cost.

C. the ratio of production costs to the minimum sales price that would still generate profit.

D. the total quantity of product sold by a firm relative to the total quantity of product sold by

all firms in the industry.

E. the number of units that need to be sold in order to avoid inventory carrying costs.

95. A negative aspect of selecting unit volume as a pricing objective is that

A. production can often not keep up with demand.

B. there are increased carrying costs with extensive inventories.

C. if price reductions are used to achieve volume objectives, it can sometimes come at the

expense of profits.

D. it can create competition between divisions within the organization itself causing conflicts

over the allocation of resources.

E. it always positively correlates with a sales revenue objective.

96. Some specialty-toy retailers pursue a __________ pricing objective to generate cash to

ward off bankruptcy.

A. market share

B. survival

C. sales revenue

D. single product line

E. profit

97. For years a local "greasy spoon" diner had customers lining up around the building for

breakfast. When the city announced that it was building an off ramp from the highway that

would conceivably double his customer traffic, he was delighted. Having saved enough in

previous years, he was certain it could hold him over through the three month construction.

Unfortunately, construction delays continued for an additional six months and the work is

still going in progress. The best pricing objective at this point would most likely be

_________.

A. profit

B. market share

C. unit volume

D. survival

E. social responsibility

98. Factors that limit the range of prices a firm may set are referred to as _________.

A. pricing restraints

B. pricing constraints

C. demand factors

D. pricing barriers

E. pricing restrictions

99. Pricing constraints refer to

A. barriers that must be overcome in order to set pricing objectives.

B. competitive pricing advantages one firm has over another.

C. different pricing strategies for each of the firm's products.

D. factors that limit the range of prices a firm may set.

E. barriers to entry a firm faces when launching a new product.

100.Which term describes factors that limit the range of prices a firm may set?

A. price fixings

B. pricing constraints

C. price elasticities

D. pricing demands

E. pricing margins

101.Factors that limit the range of prices a firm may set are referred to as

A. pricing objectives.

B. pricing restraints.

C. pricing constraints.

D. pricing elasticity.

E. the pricing environment.

102.Which of the following statements about consumer demand as a pricing constraint is

most accurate?

A. The number of potential buyers for the product class has little effect on the price a seller

can charge.

B. The number of potential buyers for the product affects the price a seller can charge but

only if the product is a luxury item.

C. The number of potential buyers for the product affects the price a seller can charge but

only if the product is a necessity item.

D. The number of potential buyers for the brand affects the price a seller can charge in the

growth stage of a product life cycle, but not in the introductory stage.

E. Whether the item is a luxury or a necessity affects the price a seller can charge.

103.Which of the following statements about the product life cycle as a pricing constraint is

most accurate?

A. The newer a product is, the higher the price that can usually be charged.

B. The later in the product life cycle the product is, the higher the price that can usually be

charged.

C. Once a product is considered nostalgic, the price will continue to rise indefinitely.

D. Fads will generally have only two price points - high and low- but the value of those price

points will remain basically the same.

E. Prices should not be changed until a product reaches the maturity stage.

104.Which of the following statements regarding pricing objectives is most accurate?

A. Generally, the greater the demand for a product, the higher the price that can be set.

B. At the corporate level, when setting pricing objectives and constraints, a firm must

disregard current conditions in the marketplace because they are too temporal for long-term

planning.

C. Pricing objectives must always be set, but they are rarely achieved; they provide a

framework rather than actual expectations.

D. It is possible to create pricing objectives with the greatest range possible in order to

anticipate any and all changes in the marketing environment.

E. Even if a firm is trying to satisfy its obligations to its customers and society in general is it

should never forego making a profit.

105.The newer a product and the earlier it is in its life cycle,

A. the lower the price the firm must charge.

B. the more competition it has.

C. the higher is the price that can usually be charged.

D. the lower the production costs are.

E. the lower the unit variable cost is.

106.Occasionally, prices may rise later in the product's life cycle. This is often due to

A. new competitors entering the market.

B. nostalgia and fad factors.

C. production economies of scale.

D. a decrease in the price of raw materials.

E. the type of competitive market shifts from pure monopoly to pure competition.

107.At one point, people were willing to pay hundreds of dollars on eBay for a Beanie Baby

toy that originally cost a fraction of that amount. Today, those same Beanie Babies can be

found at garage sales all over the country for a less than a dollar apiece. This is most likely

due to

A. a product becoming a fad and then losing its fad appeal.

B. faulty craftsmanship in later production batches.

C. a sharp downturn in the economy.

D. the new, more nostalgic fad of bobble-head dolls.

E. too many counterfeit Beanie Babies entering the country.

108.Which of the following statements regarding pricing objectives is most accurate?

A. When a product is in the introductory stage of the product life cycle, there is very little

latitude in setting the initial price since consumers still don't know what the product can

really do.

B. A company has more latitude in setting an initial price if the product is in the introductory

stage of its life cycle and is the only product in the line.

C. The greater the number of products in a company's product line, the less the product

features of similar products can affect price.

D. The newest addition to a company's product line should always have the highest price in

order to maintain the value of existing brands.

E. To avoid cannibalization, the newest product addition to a company's product line should

never have a price lower than the other offerings in the line.

109.An analysis of a prospective product shows that it is expected to grow by at least 10

percent each year over the next 5 years, and then enter the maturity phase of its product life

cycle. This type of analysis would provide useful information in which step of the price-

setting process?

A. identifying pricing objectives and constraints

B. determining cost, volume, and profit relationships

C. estimating demand and revenue

D. selecting an appropriate (approximate) price lining strategy

E. making special adjustments to list or quoted price

110.George and Alice Renfro decided to start a family business in 1990. Its product:

chowchow, a southern regional food. To determine how they would price the chowchow, the

Renfros had to: (1) examine the demand for the product (e.g., would people rather eat home-

made or store-bought?); (2) the costs of the jars for and bottling of the chowchow; and (3)

and how much it would cost to distribute the product to area grocery stores. For the Renfros,

Step 1 of their price-setting process consists of

A. identifying pricing constraints.

B. estimating break-even points and revenue points.

C. setting the list price.

D. selecting an approximate price level.

E. determining cost, volume, and profit relationships.

111.Pricing constraints refer to

A. the controllable elements in a firm's marketing mix that allow it to charge the highest price

possible.

B. formulas used in establishing break-even points, price elasticity of demand, and marginal

analysis of revenues and costs.

C. factors that limit the range of prices a firm may set.

D. factors that expand the range of prices a firm may set.

E. virtual boundaries used when setting the initial price on a new product.

112.Which of the following statements is most accurate?

A. Nonprofit organizations are exempt from having to cover the costs of producing and/or

marketing their products.

B. Socially responsible corporations should have the pricing objective of covering all costs of

producing and marketing their products, but they should not price their products to earn a

profit.

C. Regardless of a company's objectives, a firm must cover all the costs of producing and

marketing product or the firm will fail.

D. Price elasticity of demand makes it virtually impossible for companies to cover all their

marketing and production costs at all times.

E. Marketing and production costs are the most difficult and expensive aspect of pricing

because they draw so much capital away from other departments in the organization.

113.A study of four supermarket chains found the average annual cost of these price changes

was $105,887, which represents 0.70 percent of revenues and an astounding __________

percent of net margins.

A. 10.0

B. 23.6

C. 35.2

D. 38.9

E. 43.0

114.Which of the following statements regarding price changes is most accurate?

A. Product prices should change monthly, whereas services prices should change quarterly.

B. Changing a product's price too frequently creates antagonism among consumers, yet

changing prices too infrequently makes them feel the company is not improving its product or

service sufficiently.

C. Supermarkets should change their prices every week since customers are expecting new

prices in the weekly flyers they receive in the mail.

D. Companies selling products over the Internet can instantly change their prices whenever

the need arises.

E. Internet price changes are regulated by the Internet Fair Practices Act to protect

consumers against price gouging.

115.Which of the following statements regarding the seller's price is most accurate?

A. Internet price changes are regulated by the Internet Fair Practices Act to protect

consumers against price gouging.

B. The seller's price is constrained by the type of market within which it competes.

C. Price changes cannot be regulated in a monopoly.

D. The type of market has little or no impact on a firm in monopolistic competitive

environment.

E. Competitive environments should affect a firm's pricing objectives, but not its actual

product prices.

116.Which pricing constraint does the following statement demonstrate: "Most public utilities

must petition regulatory commissions in order to obtain a rate increase."

A. demand for the product, class, or brand

B. newness of product in the life cycle

C. costs of production

D. type of competitive market

E. single product versus a product line

117.Economists have identified four types of competitive markets:

A. capitalistic, monopolistic, socialist, and communist

B. pure monopoly, monopolistic competition, oligopoly, and pure competition

C. free market, restrained market, government-regulated, and command economy

D. market economy, command economy, traditional economy, and controlled economy

E. open market, consumer-dominated market, service market, and product market

118.Economists have identified four types of competitive markets: pure monopoly,

monopolistic competition, oligopoly, and _________.

A. government-dominated

B. pure competition

C. capitalist

D. socialist

E. communist

119.Economists have identified four types of competitive markets: pure monopoly, pure

competition, oligopoly, and _________.

A. capitalism

B. monopolistic competition

C. socialism

D. consumer-dominated

E. government-dominated

120.Economists have identified four types of competitive markets: pure monopoly,

monopolistic competition, pure competition, and _________.

A. capitalism

B. socialism

C. consumer-dominated

D. oligopoly

E. government-dominated

121.Economists have identified four types of competitive markets: oligopoly, monopolistic

competition, pure competition, and _________.

A. capitalism

B. socialism

C. consumer-dominated

D. government-dominated

E. pure monopoly

122.List the following competitive markets from most competitive to least competitive.

A. monopolistic competition, pure monopoly, pure competition, and oligopoly

B. pure competition, monopolistic competition, oligopoly, and pure monopoly

C. pure competition, monopolistic competition, pure monopoly, and oligopoly

D. pure monopoly, monopolistic competition, pure competition, and oligopoly

E. pure monopoly, oligopoly, monopolistic competition, and pure competition

123.List the following competitive markets from least competitive to most competitive.

A. monopolistic competition, pure monopoly, pure competition, and oligopoly.

B. pure competition, monopolistic competition, oligopoly, and pure monopoly.

C. pure competition, monopolistic competition, pure monopoly, and oligopo ly.

D. pure monopoly, monopolistic competition, pure competition, and oligopoly.

E. pure monopoly, oligopoly, monopolistic competition, and pure competition.

124.The type of competition dramatically influences the range of price competition and, in

turn,

A. the nature of product differentiation and extent of on-hand inventory.

B. the nature of product differentiation and extent of advertising.

C. the degree of involvement with each of the organization's stakeholders.

D. the degree of involvement with both retailers and wholesalers.

E. the relationship between product lines and product classes.

125.The competitive market situation in which many sellers follow the market price for

identical, commodity products is referred to as

A. pure monopoly.

B. oligopoly.

C. monopolistic competition.

D. pure competition.

E. oligopolistic competition.

126.Pure competition is the competitive situation where

A. many sellers follow market price for identical, commodity products.

B. one seller sets the price for a unique product.

C. few sellers are sensitive to one another's prices.

D. many sellers compete on non-price factors.

E. one or few sellers compete solely on nonprice factors.

127.If competitive market circumstances are such that there is almost no price competitio n,

no product differentiation, and the only advertising informs prospects that the product is

available, then _________ competitive market must exist in this industry.

A. a pure monopoly

B. an oligopoly

C. monopolistic competition

D. pure competition

E. monopolistic oligopoly

128.The marketplace sets the price for wheat, so farmers who are trying to sell their wheat

crops don't have to create a pricing strategy. The wheat is sold in a(n) __________ type of

competitive market.

A. oligopoly

B. pure monopoly

C. pure competition

D. monopolistic competition


Figure 13-3

129.In Figure 13-3 above, column "A" represents which type of competitive market?

A. pure monopoly

B. oligopoly


D. pure competition


130.In Figure 13-3 above, column "B" represents which type of competitive market?

A. pure monopoly

B. oligopoly


D. pure competition


131.In Figure 13-3 above, column "C" represents which type of competitive market?

A. pure monopoly

B. oligopoly


D. pure competition


132.In Figure 13-3 above, column "D" represents which type of competitive market?

A. pure monopoly

B. oligopoly


D. pure competition


133.Using Figure 13-3 above, how much price competition is likely for bushels of wheat?

A. There is a range of prices at which to sell.

B. The market sets the price so there is no price competition.

C. There is a price leader in the farming industry that sets the price.

D. Since there is only one seller, that firm sets the price.

E. Price is regulated by the government.

134.Using Figure 13-3 above, how much price competition is likely for small coffee shops?

A. There is almost none; the market sets the price.

B. There is some competition within a range of prices.

C. There is generally a price leader that sets the price.

D. Starbucks sets the price and all other coffee shops follow its lead.

E. Price is set by the seller, but regulated by the government.

135.Microsoft, Sony, and Nintendo are the three principal firms in the video game market.

Using Figure 13-3 above, how much price competition is most likely for video game makers?

A. There is almost none; the market sets the price.

B. There is some competition within a range of prices.

C. There is generally a price leader that sets the price.

D. Each firm is aware of each other's prices and may adjust them based on the prices of the

other two firms.

E. Price is set by the seller but regulated by the government.

136.The competitive market situation in which one seller sets the price for a unique product is

referred to as

A. pure monopoly.

B. oligopoly.



E. monopolistic oligopoly.

137.Pure monopoly is the competitive market situation where






138.If competitive market circumstances are such that there is no price competition, no

product differentiation, and the purpose of advertising is to increase demand for the product

class, then __________ must exist in the industry.

A. a pure monopoly

B. an oligopoly


D. pure competition

E. oligopolistic competition

139.Florida Power & Light, an electric power company, is the only source of electricity for

consumers in most parts of the Florida panhandle. As a(n) _________, the company receives

approval from the state utility commission for the rates it can charge.

A. free enterprise firm

B. pure monopoly

C. oligopoly

D. monopolistic competitor

E. competitor in a pure competition

140.The marketing director for a(n) __________ is most likely to believe the following

statement, "The purpose of advertising is to increase demand for the product class."

A. pure monopoly

B. oligopoly

C. monopolistic competitor

D. pure competitor

E. competitive oligopoly

141.The competitive market situation in which the few sellers are sensitive to one another's

prices is referred to as

A. pure monopoly.

B. oligopoly.



E. oligopolistic competition.

142.An oligopoly is a competitive market situation where






143.Go to any Kroger supermarket and walk to the cereal aisle. You will notice four major

brands— Kellogg's, Quaker, General Mills, and Post—seem to occupy most of the shelf

space. These cereals are all priced about the same. There is a good deal of product

differentiation as the result of licensing agreements with movie studios (Disney,

DreamWorks, etc.) and through the use of different health claims. The cereal industry is an

example of what type of competitive market?

A. a pure monopoly.

B. an oligopoly.




144.If competitive market circumstances are such that there are few sellers who are sensitive

to each other's prices, and the purpose of advertising is to inform but avoid price competition,

then __________ must exist in the industry.

A. a pure monopoly

B. an oligopoly


D. pure competition

E. oligopolistic competition

145.The competitive market situation in which many sellers compete on non-price factors is

referred to as

A. a pure monopoly.

B. an oligopoly.




146.In which type of industry would a marketing director be most likely to say, "We have to

let the customer know that our product is the only one that comes with its own tracking

device."

A. pure monopoly

B. oligopoly


D. pure competition


147.There are over 100 companies that manufacture natural and artificial flavorings used to

enhance the taste of food before it is sold to consumers. Many of these manufacturers are

regional operations. Many differentiate themselves in their advertising from the competition

by specializing in one or two types of foods for which they provide flavorings. Some use

their distribution strategies as a means of differentiating themselves from their competition.

This industry is most likely an example of

A. pure monopoly.

B. oligopoly.


D. bilateral monopoly.


148.Small regional producers selling grocery products have a special problem because they

need to set prices at which both they and their channel members can profit while

A. still maintaining local customer loyalty.

B. trying to go head-to-head or steal market share from nationally recognized brands.

C. competing with other brands to gain valuable space on supermarket shelves.

D. keeping other regional businesses from entering the market.

E. avoiding cannibalization if they sell their product both in stores and online.

149.A manufacturing company that introduces a product must know or anticipate what

specific price its __________ currently charge or may charge in the future.

A. banks

B. suppliers

C. unions

D. present and potential competitors

E. regulators

150.Basic to setting a product's price is the extent of _________. This information is used in

estimating the revenues the firm expects to receive.

A. management's commitment to the product relative to other products in the line

B. curiosity or interest potential consumers expressed during market testing

C. customer demand for it

D. the firm's promotional budget

E. distribution requirements

151.Marketing executives must translate estimates of customer demand into estimates of

A. personnel requirements.

B. advertising expenditures.

C. ancillary product support.

D. revenues the firm expects to receive.

E. minimum distribution requirements.

152.Demand curve refers to a graph that relates

A. the quantity sold and price, which shows the maximum number of units that will be sold at

a given price.

B. the quantity sold and price, which shows the minimum number of units that must be sold

to break even.

C. the quantity sold and price, which shows the minimum number of units that must be sold

in order to make a profit.

D. total production costs to various price points in order to determine how many units must

be sold in order to realize a predetermined profit.

E. total product costs to advertising expenditures in order to determine how to spend the least

amount of money while creating the greatest customer demand.

153.The horizontal axis of a demand curve graph represents _________.

A. market growth rate

B. relative market share

C. price per unit

D. potential profit in dollars

E. quantity demanded

154.A demand curve graph typically appears as

A. a parabola with the apex representing the highest price that can be charged without losing

customers.

B. an inverted parabola with the lowest point representing the lowest price that can be

charged and still meet the company's profit objectives.

C. a diagonal line going from top left to bottom right demonstrating that as price goes down,

demand goes up.

D. a diagonal line going from lower left to upper right demonstrating that as prices go up,

demand goes up proportionately.

E. two intersecting lines that identify the point at which supply and demand are exactly the

same.

155.The maximum quantity of products consumers will buy at given price is shown by

A. a demand curve.

B. a price constraint.

C. a break-even point.

D. price lining.

E. a marginal revenue curve.

156.Which of the following statements about the factors that influence demand is true?

A. As the availability of close substitutes increases, the demand for a product increases.

B. As real consumer income increases, demand for a product increases.

C. As the price of close substitutes increases, demand for a product declines.

D. Changing consumer tastes have little impact on demand for a product.

E. As real consumer income decreases, demand for a product increases.

157.Factors that determine consumers' willingness and ability to pay for products and

services are referred to as

A. the "misery index."

B. demand factors.

C. gross national product.

D. elasticity factors.

E. macro environmental factors.

158.All of the following are demand factors EXCEPT:

A. the price of similar products.

B. consumer tastes.

C. the number of distribution outlets carrying the product.

D. consumer income.

E. the availability of similar products.

159.When estimating demand, price is not the only factor to be considered. Three other

elements include consumer tastes, price and availability of similar products, and

A. consumer income.

B. consumer psychographics.

C. current economic stressors.

D. current political agendas.

E. green substitutes.

160.While consumer tastes and price and availability of similar products determine what

consumers want to buy, consumer income determines

A. where they buy.

B. the degree of brand loyalty.

C. the degree of repeat buys.

D. what they can buy.

E. their desire to buy.

161.Campbell Soup spent seven years and $55 million on a super secret project to produce a

line of Intelligent Quisine (IQ) food products "scientifically proven to lower high levels of

cholesterol, blood sugar, and blood pressure." They were responding to the needs and desires

expressed by consumers. However, after 15 months in an Ohio test market, Campbell Soup

yanked the entire IQ line because

A. Progresso Soups got to the stores first with a similar product and dominated the shelf

space.

B. the product's claims were exaggerated and not backed up with scientific data.

C. the price was too low, leaving the consumer believing that Campbell's sacrificed taste for

nutrition.

D. the product was priced too high and there was too little product variety.

E. a downturn in the economy shifted people's desire from a healthy lifestyle to a desire for

home and comfort. The new soups were too different from the product they remembered as

children.

162. There are a lot of skateboards on the market, but the BMW Streetcarver is the only one

with stabilizers and wheel design based on BMW's automobiles. This technology gives the

BMW Streetcarver better control at high speeds and around sharp turns than any other brand.

The skateboard is priced at $495, which leaves many consumers (especially young males)

who might want to buy the Streetcarver unable to afford it. This inability to pay for the high-

priced BMW-made skateboard shows the effect of __________ on sales.

A. demand factors

B. macroeconomic environmental factors

C. barter factors

D. supply factors

E. exchange parameters

163.Mrs. Renfro's, Inc., is a company that sells 25 different relishes in 45 different states.

Mrs. Renfro's chipotle corn salsa is so popular that the company cannot make enough to keep

its resellers stocked. Its price of $4.50 for a jar seems just right to consumers who savor its

hot and spicy taste. The popularity of hot and spicy food is an example of a(n) __________

that Mrs. Renfro's has taken advantage of to make its product a success.

A. barter factor

B. demand factor

C. supply factor

D. consumer index

E. macroeconomic environmental factor

Figure 13-4

164.Figure 13-4 above shows that when the price moves from $2.00 to $1.50 per unit along

the demand curve D1, the quantity demanded

A. increases from 3.0 to 4.5 million units per year.

B. decreases from 4.5 to 3.0 million units per year.

C. stays the same.

D. increases from 3.0 to 7.5 million units per year.

E. decreases from 7.5 to 3.0 million units per year.

165.Figure 13-4 above shows that when the quantity demanded moves from 3.0 to 4.5 million

units along the demand curve D1, the profit

A. increases from $1.50 to $2.00 per unit.

B. decreases from $2.00 to $1.50 per unit.

C. stays the same per unit.

D. increases from $0.50 to $1.50 per unit.

E. Figure 13-4 does not indicate what happens to profit when the quantity demanded changes.

Figure 13-5

166.Figure 13-5 above shows that when the quantity demanded moves from 3.0 to 6 million

units along the demand curve D1, the profit

A. increases from $1.50 to $2.00 per unit.

B. decreases from $2.00 to $1.50 per unit.

C. stays the same per unit.

D. increases from $0.50 to $1.50 per unit.

E. Figure 13-5 does not indicate what happens to profit when the quantity demanded moves.

167.In Figure 13-5 above, the demand curve shifts from D1 to D2, which most likely

represents

A. an increase in demand that did not require a decrease in price.

B. an increase in demand that required an increase in price.

C. no change in price and no change in demand.

D. no change in demand or price but a greater profit due to economies of scale.

E. increases from $0.50 to $1.50 per unit.

168.Which of the following statements most likely would account for the shift in the demand

curve from D1 to D2 shown in Figure 13-5 above?

A. The firm increased its prices and consumers perceived the value of the product to be

greater.

B. There were more product substitutes available in the marketplace.

C. Competitors in the market lowered their prices.

D. A downward economic shift caused a proportionate change in consumer income.

E. The firm's price remained the same but changes occurred in consumer tastes.

169.A shift of the demand curve from D1 to D2 in Figure 13-5 above indicates

A. more units are demanded at a given price.

B. fewer units are demanded at a given price.

C. the price has decreased.

D. the price has increased.

E. There is not enough information given to indicate what happened.

170.Which of the following illustrates movement along the demand curve?

A. Prices remain the same, but there is a significant increase in demand.

B. Prices remain the same, but there is a significant decrease in demand.

C. As the price is raised, the quantity demanded increases, assuming all else stays the same.

D. As the price is lowered, the quantity demanded increases, assuming all else stays the same.

E. Movement along the curve rather than a shift of the curve indicates that some significant

event has taken place outside the organization that has affected demand.

171.Which of the following illustrates a shift in the demand curve?

A. When prices remain the same, there is an increase or decrease in demand.

B. When prices remain the same, there is a significant decrease in demand.

C. As the price is raised, the quantity demanded increases, assuming all else stays the same.

D. As the price is lowered, the quantity demanded decreases, assuming all else stays the

same.

E. Movement along the curve indicates that some significant event has taken place outside

the organization that has affected demand.

172.The total money received from the sale of a product is referred to as _________.

A. profit

B. total revenue

C. average revenue

D. marginal revenue

E. derived demand

173.Total revenue refers to

A. the profit made from selling a product or service.

B. the net gain in revenue if the unit price is lowered but sales increase.

C. the least number of units sold to cover product, distribution, and promotional costs.

D. the amount by which marginal costs exceed fixed costs.

E. the total money received from the sale of a product.

174.At a price of $3.00 each, SHAPE magazine sells 1.25 million copies of its magazine

targeted to young women seeking a healthier lifestyle. If the price per issue is increased to

$3.25, only 1 million copies would be sold. Fixed costs are $1 million and unit variable costs

are $0.50 per magazine. From the information provided here, what is SHAPE magazine's total

revenue obtained at the lower price?

A. $3,750,000

B. $3,250,000

C. $3,000,000

D. $2,125,000

E. $1,750,000

175.Forever Quilting is a small company that makes quilting kits priced at $120 each. There

is no quantity discount. The costs of the materials that go into each kit are $45. It costs $5 in

labor to assemble a kit. The company has monthly expenses of $1,000 for rent and insurance,

$200 for heat and electricity, $500 for advertising, and $4,500 for the monthly salary of its

owner. Last month the company sold 150 kits. Forever Quilting's total revenue for the month

was

A. $4,300.

B. $6,200.

C. $7,500.

D. $10,500.

E. $18,000.

176.The average amount of money received for selling one unit of a product, or simply the

price of that unit, is referred to as _________.

A. profit

B. total revenue

C. unit variable revenue

D. marginal revenue

E. average revenue

177.Average revenue is

A. the typical or average sales generated for all items within an industry.

B. the average amount of revenue necessary for a business to remain profitable.

C. total revenue divided by the quantity sold.

D. the difference between the highest and lowest price charged for a given item within a

specific firm.

E. the difference between the highest and lowest price charged for a given item within a

specific industry.

178.Ampro-Mag is a small company that makes materials for safely controlling hazardous

spills of all kinds.

It sells these items as a neutralizing kit that priced at $100 each. The costs of the materials

that go into each kit are $25. It costs $5 in labor to assemble a kit. The company has monthly

expenses of $1,000 for rent and insurance, $200 for heat and electricity, $300 for advertising

in trade journals, and $3,000 for the monthly salary of its owner. Ampro-Mag's average

revenue per unit is

A. $30.

B. $70.

C. $100.

D. $130.

E. $4,500.

179.At a price of $4.00 each, SHAPE magazine sells 1.25 million copies of its magazine

targeted to young women seeking a healthier lifestyle. If the price per issue is increased to

$4.50 each, only 1 million copies will be sold. Fixed costs are $1 million and unit variable

costs are $0.50 per magazine. Calculate the average revenue for SHAPE magazine at the

higher price.

A. $0.50

B. $1.25

C. $4.00

D. $4.50

E. $8.50

180.The change in total revenue that results from producing and marketing one additional

unit of a product is referred to as _________.

A. break-even revenue

B. marginal cost

C. elasticity of demand

D. unit variable cost

E. marginal revenue

181.Marginal revenue refers to

A. the additional money required to produce one additional unit.

B. the least number of units sold to cover product, distribution, and promotional costs.

C. the amount by which marginal costs exceed variable costs.

D. the change in total revenue that results from producing and marketing one additional unit

of the product.

E. the net gain in revenue if unit prices are lowered but sales increase.

182.For any downward-sloping, straight- line demand curve, the marginal revenue curve

always

A. is the additional money required to make one additional unit.

B. falls at a rate half as fast as the demand curve.

C. falls at a rate twice as fast as the demand curve.

D. remains the same since there is a one-to-one relationship.

E. reacts as the direct inverse of the original line.

183.Forever Quilting is a company that designs and distributes quilting kits. The kits are

priced at $120 each. The costs of the materials that go into each kit are $45. It costs $5 in

labor to assemble a kit. The company has monthly expenses of $1,000 for rent and insurance,

$200 for heat and electricity, $500 for advertising in quilting magazines, and $3,500 for the

monthly salary of its owner. Forever Quilting's marginal revenue is

A. $50.

B. $70.

C. $120.

D. $3,500.

E. $5,200.

184.The change in total revenue obtained by selling one additional unit is referred to as

A. demand revenue.

B. median revenue.

C. average revenue.

D. marginal revenue.

E. marginal cost.

Figure 13-6

185.Figure 13-6 above shows that to maximize revenue, Newsweek should price its magazine

at

A. $2.50

B. $2.00

C. $1.50

D. $1.00

E. $0.50

186.Figure 13-6 above shows that the average revenue at point C is

A. $3.00

B. $2.50

C. $2.00

D. $1.50

E. $1.00

187.According to Figure 13-6 above, what is the price of Newsweek when marginal revenue

is $0?

A. $0

B. $0.50

C. $1.00

D. $1.50

E. $2.00

188.According to Figure 13-6 above, when the price of Newsweek is $1.00 per issue, how

many magazines will it sell?

A. 1,500,000

B. 3,000,000

C. 4,500,000

D. 6,000,000

E. 7,500,000

189.According to Figure 13-6 above, if Newsweek raises its price from $2.00 per issue to

$2.50 per issue, what happens to total revenue?

A. total revenue goes up

B. total revenue goes down

C. total revenue stays the same

D. total revenue is not related to the price

E. it is impossible to tell from the information given in the figure

190.All things being equal, if a firm finds the demand for one of its products is inelastic, it

can increase its total revenues by

A. raising its price.

B. lowering its price.

C. increasing fixed costs only.

D. increasing variable costs only.

E. increasing both fixed and variable costs.

191.The percentage change in quantity demanded relative to the percentage change in price is

referred to as

A. price elasticity of supply.

B. price elasticity of demand.

C. average demand.

D. marginal revenue.

E. derived demand.

192.Which of the following statements about price elasticity of demand is most accurate?

A. Price elasticity with unitary demand is less than 1.

B. The more substitutes a product has, the less likely it is to be price elastic.

C. Unitary demand represents the relationship between the cash outlay necessary to purchase

a product relative to a person's disposable income.

D. With inelastic demand, reducing price will result in a decrease of total revenue.

E. With inelastic demand, reducing price will result in an increase in total revenue, although

not necessarily an increase in profit.

193.Which of the following statements about price elasticity of demand is most accurate?

A. Price elasticity with inelastic demand is less than 1.

B. The more substitutes a product has, the less likely it is to be price elastic.


a product relative to a person's disposable income.

D. With inelastic demand, reducing price will result in an increase of total revenue.



194.Which of the following statements about price elasticity of demand most accurate?

A. Price elasticity with inelastic demand must always be greater than 1.

B. The more substitutes a product has, the more likely it is to be price elastic.


a product, relative to a person's disposable income.

D. With inelastic demand, reducing price will result in an increase of total revenue.



195.In a snack vending machine, consumers can choose one of up to of 20 choices. These

snacks are

A. more likely to be price elastic.

B. an ideal example of unitary demand.

C. likely to have a price elasticity equal to 1.

D. likely to have a price elasticity less than 1.

E. more likely to be price inelastic.

196.At a price of $2.00 each, SHAPE magazine sells 1 million copies of its magazine targeted

to young women seeking a healthier lifestyle. If the price per issue is increased to $2.50, only

800,000 copies would be sold. From the information provided here, the price elasticity of

demand for SHAPE magazine in this price range can be described as

A. inelastic demand.

B. elastic demand.

C. unitary demand.

D. null elasticity.

E. subsidized elasticity.

197.Recently, much of the western U.S. experienced a drought condition and water usage

was restricted in Denver. Yet even though most people used less water, the price of water did

not drop. When the drought was declared over, the water company raised water prices.

However, the residents of Denver did not use less water. Here, water is

A. price inelastic.

B. price elastic.

C. price sensitive.

D. price insensitive.

E. unitary elastic.

198.Demand for a product is likely to be more price elastic if

A. it is considered a necessity.

B. it has many substitutes.

C. it has few substitutes.

D. it requires a small cash outlay.

E. none of the above is true.

199.Several companies produce latex gloves that are used in a variety of different industries.

If one of the glove manufacturers decreases its price by just a few percentage points, it will

result in a significant increase in quantity demanded. The demand for latex gloves is

A. synergistic.

B. elastic.

C. inelastic.

D. unitary.

E. entropic.

200.Elastic demand exists when

A. a small percentage decrease in price produces a smaller percentage increase in quantity

demanded and total revenue falls.

B. a small percentage decrease in price produces a larger percentage increase in quantity

demanded and total revenue increases.

C. an increase in price causes a larger increase in quantity demanded and total revenue falls

to zero.

D. the quantity demanded remains the same regardless of level of price and total revenue is

unchanged.

E. a small percentage decrease in price produces a smaller percentage decrease in quantity


201.Inelastic demand exists when

A. a small percentage decrease in price produces a smaller percentage increase in quantity


B. a small percentage increase in price produces a smaller percentage increase in quantity


C. an increase in price causes a larger increase in quantity demanded and total revenue falls

to zero.

D. the quantity demanded remains the same regardless of level of price and total revenue is

unchanged.

E. a small percentage decrease in price produces a smaller percentage decrease in quantity


202.A book on how to invest in collectibles spends several weeks on The New York Times

bestseller list. The paperback book was originally released for $9.99. A reduction of the price

to $9.79 had no effect on total revenue, which remained the same. This is due to the book

having

A. inelastic demand.

B. elastic demand.

C. unitary demand.

D. null elasticity.

E. subsidized elasticity.

203.Which of the following statements about unitary demand is most accurate?

A. Products for which there are a lot of substitutes traditionally have unitary demand.

B. Products such as life-saving drugs tend to have unitary demand.

C. Products with unitary demand will have price elasticity equal to 1.

D. Products with unitary demand have a price elasticity that is greater than one.

E. High-end consumer products like jets, yachts, and summer homes usually have unitary

demand.

204.Market analysts for a large cereal company estimated that the price elasticity of demand

for presweetened cereal is 1.97, but that the entire market for ready-to-eat cereals exhibits a

price elasticity of demand of 0.36. Marketers collect this type of information in which step of

the price-setting process?

A. identifying pricing objectives and constraints

B. estimating the break-even point

C. estimating demand and revenue

D. selecting an approximate price level

E. making special adjustments to list or quoted price

205.Price elasticity of demand is determined by a number of factors, such as the availability

of substitutes, the necessity of the product or service, the cash outlay of purchase relative to a

person's disposable income, and

A. whether the item is a luxury product or service.

B. the stage of the product or service in its product life cycle.

C. the degree of carrying costs for the manufacturer or distributor.

D. the financial resources of the organization itself.

E. the ability of the organization to meet sudden increases in demand.

206.Price elasticity of demand is determined by a number of factors, such as whether the item

is a luxury product or service, the necessity of the product or service, the cash outlay of

purchase relative to a person's disposable income, and

A. the stage of the product or service in its product life cycle.

B. the degree of carrying costs for the manufacturer or distributor.

C. the availability of substitutes.



207.Price elasticity of demand is determined by a number of factors such as whether the item

is a luxury product or service, the availability of substitutes, the cash outlay of purchase

relative to a person's disposable income, and



C. the necessity of the product or service.



208.Price elasticity of demand is determined by a number of factors such as whether the item

is a luxury product or service, the availability of substitutes, the necessity of the product or

service, and



C. the financial resources of the organization itself.

D. the cash outlay of purchase relative to a person's disposable income.


209.Ace Shoe Co. has fixed costs of $6 million and unit variable costs of $5 per pair.

Suppose a consultant tells Ace it can sell 700,000 pairs of shoes, thus earning a profit of $2.5

million. What potential error is the consultant making?

A. assuming that fixed costs are independent of price

B. assuming that units sold is independent of price

C. assuming that some fixed costs are variable

D. assuming that some variable costs are fixed

E. assuming that variable costs are independent of price

210.The total expense incurred by a firm in producing and marketing a product, which equals

the sum of fixed cost and variable cost, is referred to as

A. overhead cost.

B. total cost.

C. unit cost.

D. average cost.

E. marginal cost.

211.Total cost refers to

A. the sum of the expenses of the firm that are stable and do not change with the quantity of a

product that is produced and sold.

B. the total expense incurred by a firm in producing and marketing a product, which equals

the sum of fixed cost and variable cost.

C. the change in expenses that results from producing and marketing one additional unit of a

product.

D. the average amount of money received for selling one unit of a product or simply the price

of that unit.

E. the sum of the expenses of the firm that vary directly with the quantity of a product that is

produced and sold.

212.Fixed cost refers to

A. the sum of the expenses of the firm that vary directly with the quantity of a product that is

produced and sold.

B. the total expense incurred by a firm in producing and marketing a product, which equals


C. the sum of the expenses of the firm that are stable and do not change with the quantity of a



of that unit.

E. the total expenses of the firm that vary indirectly with the quantity of a product that is

produced and sold.

213.The sum of the expenses of a firm that is stable and does not change with the quantity of

the product that is produced and sold is referred to as

A. total cost.

B. fixed cost.

C. variable cost.

D. marginal cost.

E. overhead cost.

214.Rents, executive salaries, and insurance are typical examples of

A. variable costs.

B. fixed costs.

C. unit costs.

D. marginal costs.

E. total costs.

215.Which of the following would be an example of a fixed cost for a company that makes

carbon monoxide monitoring systems for employees to wear that work in hazardous areas?

A. the lithium batteries that are used in each monitor

B. the chest harness which the employee must use to wear the monitor

C. the rent for the company's offices

D. the free training videos that are sent to each new customer

E. the stainless steel, water-resistant cases in which the monitors sit

216.Which of the following is a typical example of a fixed cost?

A. taxes

B. building rental expense

C. raw materials

D. sales commissions

E. hourly wages

217.Variable cost refers to the

A. sum of the expenses of the firm that are stable and do not change with the quantity of a


B. sum of the expenses of the firm that vary directly with the quantity of a product that is

produced and sold.

C. total expense incurred by a firm in producing and marketing a product, which equals the

sum of fixed cost and variable cost.

D. average amount of money received for selling one unit of a product or simply the price of

that unit.

E. change in total cost that results from producing and marketing one additional unit of a

product.

218.The sum of the expenses of the firm that vary directly with the quantity of the product

that is produced and sold is referred to as

A. fixed cost.

B. total cost.

C. marginal cost.

D. unit cost.

E. variable cost.

219.Unit variable cost refers to variable cost expressed

A. as the sum of all units sold.

B. as a percentage of total sales.

C. on a per unit basis for a product.

D. as a percentage of fixed costs.

E. as a percentage of total costs.

220.Forever Quilting is a small company that makes quilting kits priced at $120. The costs of

the materials that go into each kit are $45. It costs $5 in labor to assemble a kit. The company

has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for

advertising, and $4,500 for the monthly salary of its owner. Forever Quilting's unit variable

cost for its kits is

A. $5.

B. $45.

C. $50.

D. $120.

E. $170.

221.Marginal cost refers to

A. the sum of the expenses of the firm that are stable and do not change with the quantity of a


B. the sum of the expenses of the firm that vary directly with the quantity of a product that is

produced and sold.

C. the total expense incurred by a firm in producing and marketing a product, which equals



of that unit.

E. the change in total cost that results from producing and marketing one additional unit of

product.

222.The change in total cost that results from producing and marketing one additional unit of

product is referred to as

A. fixed cost.

B. total cost.

C. marginal cost.

D. variable cost.

E. unit cost.

223.Marginal cost is the change in total cost that results from

A. reducing the total number of units produced.

B. increasing the number of units produced by one percent.

C. increasing the number of products in a product line.

D. producing and marketing one additional unit of a product.

E. the percentage change that results from changing a product feature or service benefit to

reduce costs.

224.Despite having a good idea and good products, one reason Webvan failed was due to

A. setting prices too high, especially for a dot.com business where people seek out bargains.

B. setting prices too low to cover the costs of inventory, warehouses, and fulfillment on low-

margin goods.

C. not spending enough on promotion to generate consumer awareness of its services.

D. a sudden downturn in consumer income.

E. miscommunication between management, suppliers, and distributors.

225.Despite having a good idea and good products, one reason Pets.com failed was due to


B. setting prices too low to cover the costs of inventory, warehouses, and fulfillment, on low-

margin goods.

C. executing an advertising campaign that was too far removed from the company's mission.

D. spending too much on promotion on Super Bowl TV ads.

E. a sudden downturn in consumer income.

226.Despite having a good idea and good products, one reason Pets.com failed was due to


B. setting prices too low to cover the costs of inventory, warehouses, and fulfillment, on low-

margin goods.

C. executing an advertising campaign that was too far removed from the company's mission.

D. believing that people would forego shopping at traditional pet stores like PetSmart and

Petco.

E. a sudden downturn in consumer income.

227.An ironic "upside" to Pets.com's failure was

A. its entire inventory was purchased by PetSmart, their primary competitor.

B. its sock puppet became the "spokespuppet" for BarNone, a financial services firm.

C. its Web site and brand name were purchased by Petco for over a million dollars.

D. it sold its assets on eBay and was able to reimburse shareholders for their losses.

E. it sold the rights to its "failure" story to a textbook publisher to help other young

entrepreneurs from making the same mistakes.

228.While hundreds of dot-coms failed, many travel dot-coms still seem to be thriving. One

reason for their success may be attributed to

A. finding customer segments (students, senior citizens) whose last-minute flexibility enables

them to reserve hotel rooms or airline seats that would otherwise go unsold.

B. the fact that during good economic times, people travel for fun and during bad economic

times, they travel to escape reality even if they can't afford it.

C. overcoming consumer skepticism almost a decade ago when timeshares became more

reliable, thus reducing consumer inhibitions about purchasing travel products online.

D. the limited number of clever travel domain names, so it was "first come first serve." With

fewer competitors, travel dot-coms have been able to survive and thrive.

E. the ability to access airline and hotel customer databases before Internet privacy laws were

enacted.



A. the fact that during good economic times, people travel for fun and during bad economic


B. overcoming consumer skepticism almost a decade ago when timeshares became more


C. the limited number of clever travel domain names, so it was "first come first serve." With


D. the ability to access airline and hotel customer databases before Internet privacy laws were

enacted.

E. reaching key customer segments that would actually pay higher prices for hotel rooms or

airline tickets.







C. the limited number of clever travel domain names, so it was "first come first serve." With


D. the ability to access airline and hotel customer databases before Internet privacy laws were

enacted.

E. being able to conduct almost all operations electronically without the warehousing and

order fulfillment problems of their brick-and-mortar dot-com cousins.







C. being able to conduct almost all operations electronically without the warehousing and

order fulfillment problems of their brick-and-mortar dot-com cousins.

D. the limited number of clever travel domain names, so it was "first come first serve." With


E. the ability to access airline and hotel customer databases before Internet privacy laws were

enacted.

232.What idea is described as a continuing, concise trade-off of incremental costs against

incremental revenues?

A. break-even analysis

B. marginal analysis

C. demand analysis

D. cost-benefit analysis

E. situation analysis

233.A continuing, concise trade-off of incremental costs against incremental revenues is

referred to as


B. demand analysis

C. marginal analysis

D. cost-benefit analysis

E. situation analysis

234.The break-even point for a large grain farming operation was calculated to be 2 million

bushels of corn. Break-even analysis would take place during which step of the price-setting

process?

A. identify pricing objectives and constraints

B. determine cost, volume, and profit relationships

C. estimate demand and revenue

D. select an approximate price level

E. make special adjustments to list or quoted price

235.The quantity at which total revenue and total cost are equal is referred to as

A. break-even point.

B. tipping point.

C. profitability point.

D. incremental return on investment.

E. sustainability.

236.Break-even analysis refers to

A. a process that investigates the difference between marginal revenue and marginal cost.

B. a method of determining just how much a consumer is willing to pay for a product or

service.

C. a technique that analyzes the relationship between total revenue and total cost to determine

profitability at various levels of output.

D. the process of determining the quantity of product consumers will buy relative to the

quantity produced by the firm.

E. the graph that shows the maximum number of products consumers will buy at a given

price.

237.A technique that analyzes the relationship between total revenue and total cost to

determine profitability at various levels of output is referred to as _________.


B. marginal analysis

C. sensitivity analysis

D. market analysis

E. tipping point analysis

238.The owner of a small restaurant that sells take-out fried chicken and biscuits pays $2,500

in rent each month, $500 in utilities, $750 interest on his loan, insurance premium of $200,

and advertising on local buses $250 a month. A bucket of take-out chicken is priced at $9.50.

Unit variable costs for the bucket of chicken are $5.50. How many small buckets of chicken

does the restaurant need to sell to break-even each month?

A. 442 buckets

B. 764 buckets

C. 1,050 buckets

D. 3,150 buckets

E. 4,200 buckets

239.Each month, the owner of a carwash pays $2,500 in rent, $500 in utilities, $750 interest

on the business loan, an insurance premium of $200, and advertising on local bus routes of

$250 a month. A full-service car wash is priced at $10.50. Unit variable costs for the carwash

are $7.50. At what level of revenue will the carwash break-even?

A. $4,200.00

B. $10,500.00

C. $14,700.00

D. $30,000.00

E. $39,900.00

240.You have been asked to calculate the break-even point for a new line of souvenir T-

shirts. The selling price will be $25 per shirt. The labor costs is $5 per shirt. The

administrative costs of operating the company are estimated to be $60,000 annually and the

sales and marketing expenses are $20,000 a year. Additionally, the cost of materials will be

$10 per shirt. What is the break-even quantity?

A. 2,000 shirts

B. 3,200 shirts

C. 5,334 shirts

D. 8,000 shirts

E. 16,000 shirts

241.Tim Marlow, the owner of The Clock Works, wanted to know how many clocks he must

sell in order to cover his fixed cost at a given price. Tim knew that he had a fixed cost of

$20,000 for equipment, taxes, and a bank loan. He also had a unit variable cost of $20 per

clock for labor, and materials. If the price Tim charges for each of his clocks is $40, what is

his break-even point quantity?

A. 100 clocks

B. 334 clocks

C. 500 clocks

D. 1,000 clocks

E. 10,000 clocks

242.A recently graduated business student decided to open a small Internet café serving a

variety of unusual non-alcoholic beverages from around the world. He carefully used all the

pricing formulas he learned in school and set a goal to break even the first six months and

make a moderate profit for the next six months at which time he would review his pricing

strategies. Within a week after opening, every seat was filled and he had to replenish his

beverage orders several times. At his six month review, he was devastated to find that despite

huge sales, he had actually lost money. He realized it wasn't his "math" that was wrong; he

forgot to include monthly expenses such as toilet paper, paper towels, hand soap, and trash

removal fees in his calculations. These costs should have appeared as __________ in his

break-even analysis.

A. fixed costs

B. marginal costs

C. variable costs

D. overhead costs

E. sunk costs

243.Ampro-Mag is a small company that makes materials for safely controlling hazardous

spills of all kinds. It sells these items as a neutralizing kit priced at $100. The costs of the

materials that go into each kit are $45. It costs $5 in labor to assemble a kit. The company has

monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for

advertising in trade journals, and $3,500 for the monthly salary of its owner. What is Ampro-

Mag's monthly break-even point in terms of number of neutralizing kits sold?

A. 40 kits

B. 52 kits

C. 104 kits

D. 116 kits

E. 520 kits

244.Jane Westerlund owns a picture-framing shop, The Caplow Co. The average price she

receives for a picture she frames for a customer is $120. This price must cover her costs for a

typical framed picture, which consists of $5 for glass, $2 for matting, $13 for the frame, and

$30 for the labor involved. She must also cover monthly expenses of $1,000 for rent and

insurance, $200 for heat and electricity, $500 for advertising, and $3,500 for her salary.

Westerlund is considering buying an automatic matte-cutting machine in order to reduce the

number of hours of direct labor required to produce a framed picture. In considering this

purchase, she should recognize this purchase will _____ Caplow's variable cost and _____

Caplow's fixed cost.

A. decrease; increase

B. decrease; decrease

C. increase; decrease

D. increase; increase

E. have no effect on; have no effect on

245.Ace Shoe Company sells heel replacement kits for men's shoes. It has fixed costs of $9

million and unit variable costs of $5 per pair. Ace is considering a switch from manual labor

to an automated process. New equipment would cost an additional $4 million per year while

lowering variable costs by $3 per shoe repair kit. How many kits would Ace have to sell at

$17 per pair to make $2 million in profits in the next year with the automated process?

A. 117,648 kits

B. 428,572 kits

C. 705,883 kits

D. 916,667 kits

E. 1,000,000 kits

246.A graphic presentation of the break-even analysis that shows when total revenue and

total cost intersect to identify profit or loss for a given quantity sold is referred to as a(n)

_________.

A. Gantt chart

B. demand curve

C. ROI analysis

D. cross-tabulation

E. break-even chart

247.A break-even chart refers to a graphic presentation

A. that shows the maximum number of units that will be sold at a certain price.

B. of a break-even analysis that shows when total revenue and total cost intersect to identify

profit or loss for a given quantity sold.

C. that relates variable costs in terms of product or service substitutes in order to determine

which items or services would least affect total revenues.

D. that relates profits and revenues versus total costs in order to determine the time frame in

which a company could achieve profitability.

E. in the form of a scatter graph used to identify specific activities or items that are creating

the greatest return on investment.

Figure 13-7

248.Figure 13-7 above shows that by selling 200 pictures, the firm will

A. break even.

B. incur a loss.

C. earn a profit.

D. have no fixed costs.

E. have no variable costs.

249.According to Figure 13-7 above, how much profit will the firm make if it sells 400

pictures?

A. $48,000

B. $35,000

C. $20,000

D. $32,000

E. $0

250.Figure 13-7 above shows that by selling 800 pictures, the firm will

A. break even.

B. incur a loss.

C. earn a profit.

D. have no fixed costs.

E. have no variable costs.

251.Figure 13-7 above is drawn to show that variable costs are smaller than fixed costs when

the firm sells

A. 400 pictures

B. 900 pictures.

C. 1,000 pictures.

D. 1,200 pictures.

E. There is not enough information to determine this.

252.You are president of a manufacturer of small electronic appliances. You want to reduce

your break-even quantity. All things being equal, you can do this by

A. increasing the quantity sold, while keeping price unchanged.

B. reducing marginal revenue.

C. reducing unit variable cost.

D. increasing fixed cost.

E. increasing total cost.






Assuming there is no change in price nor the quantity demanded, if Westerlund wants to

increase her advertising expenses to a total of $1,000 (a $500 increase), this would cause the

total cost line to __________ and the break-even quantity to _________.

A. decrease; stay the same

B. decrease; increase

C. increase; increase

D. stay the same; increase

E. stay the same; decrease






Assuming there is no change in the quantity demanded, if Jane Westerlund slightly increased

the average price charged for a framed picture, this would cause the total revenue line to

__________ and the break-even quantity to ___________ in a break-even chart.

A. increase; increase

B. increase; decrease

C. decrease; decrease

D. decrease; increase

E. stay the same; increase


million and unit variable costs of $5 per pair. Ace would like to earn a profit of $2 million;

how many pairs must they sell at a price of $15?

A. 100,000 kits

B. 400,000 kits

C. 600,000 kits

D. 800,000 kits

E. 1,400,000 kits


million and unit variable costs of $5 per pair. Suppose a consultant tells Ace it can sell

750,000 heel repair kits, what price must it charge to achieve a profit of $2.5 million?

A. $5.00

B. $8.33

C. $11.33

D. $16.33

E. $20.00

257.A primary reason for Washburn's success is

A. underselling competitors by mass producing fine quality guitars.

B. developing product lines at different price points for different market segments.

C. offering significant price breaks to well-known performers in exchange for product

endorsements.

D. selling traditional American "rock n' roll" guitars in global markets.

E. setting up free music programs and donating low price-point guitars to students in schools

that have lost their music programs due to budget constraints.

258.Washburn Guitars markets its guitars to four distinct market segments. The firm's one-of-

kind custom instruments are targeted at

A. first-time buyers.

B. professional musicians.

C. stars and famous musicians.

D. large institutional buys such as high school and collegiate band programs.

E. intermediate skill players who may become professional musicians.

259.Washburn Guitars markets its guitars to four distinct market segments. The firm's batch-

custom products instruments are targeted at




D. large institutional buys such as band programs.


260.Washburn Guitars markets its guitars to four distinct market segments. The firm's mass

customization instruments are targeted at




D. large institutional buys such as band programs.


261.Washburn Guitars markets its guitars to four distinct market segments. The firm's mass-

produced instruments are targeted at




D. guitar collectors and music aficionados.


262.The executive vice president of Washburn Guitars has set a sales target of 2,000 units for

a new line of guitars. This type of objective is most closely related to a(n) ________ pricing

objective.

A. profit

B. target return

C. unit volume

D. market share

E. survival

263.The average price Washburn charges for a guitar is $349. This price must cover its

variable costs of $25 for direct materials and $120 in direct labor. It must also cover fixed

expenses of $38,000. Assuming everything else stays the same, the company's planned move

to Nashville, Tennessee, will reduce its fixed costs by $4,800. This would cause total costs to

__________ and the break-even quantity to _________.

A. decrease; stay the same

B. decrease; increase

C. increase; increase

D. stay the same; increase

E. decrease; decrease

264.To reduce the price sensitivity for some of its products, Washburn

A. uses multiple suppliers for its raw materials.

B. offers three months of free music lessons with the purchase of each guitar.

C. uses endorsements by internationally known musicians who play Washburn signature

guitars.

D. offers a lifetime, unconditional warranty on all its instruments regardless of the price of its

guitars.

E. sponsors free music programs and special Washburn guitar camps for children.

Date post:	22-Jan-2018
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