THEUNIVERSITYOF

NEWSOUTHWALES

AustralianSchoolofBusiness

SchoolofMarketing
MARK1012: Marketing Fundamentals
Final Examination Session 1, 2012
Instructions: (Please read these instructions carefully)
This examination paper consists of THREE sections: Section A (Fill in the gaps); Section

B (Short essay questions) and Section C (Multiple choice questions). It has FOURTEEN
printed pages excluding this page.
Printing is double sided, so check each page carefully.
You have two [2] hours to complete this examination plus 10 mins reading time.
Read all the questions carefully and answer all questions as instructed.
Questions must be answered in ink.
Write all your MULTIPLE CHOICE answers (SECTION C) in the Generalised Answer
Sheet provided. Note that there are 50 (FIFTY) Multiple Choice Questions.
Print your full name and Student number {z } on the first page of each book and sign
Use of UNSW approved calculators is permitted. No other material is to be taken into the
examination room.
This paper accounts for 40% of your overall course grade (However, it is marked out of
50).
You may NOT retain this paper.

SECTION A: FILL IN THE GAPS

(10x1 = 10 marks)

(Please write your answer in the gaps provided in each statement)

1. Marketingreferstotheactivitiesundertakentocreateandexchangeproductsand
valueswithothers.Amarketingorganisationsvaluepropositionisthesetofbenefits
orvaluesitpromisestodelivertoconsumerstosatisfytheirneeds

2. Starsrefertohighgrowth,highsharebusinessesorproductswhichgenerallyturninto
cashcowswhichrefertolowgrowth,highsharebusinessesorproducts.
3. Suppliersarefirmsandindividualswhoprovidetheresourcesneededbythecompany
anditscompetitorstoproducegoodsandservice.PublicsareAnygroupthathasan
actualorpotentialinterestin,orimpacton,anorganisationsabilitytoachieveits
objectives
4. Perceptionistheprocessbywhichpeopleselect,organiseandinterpretinformation
toformameaningfulpictureoftheworldwhilelearningdescribeschangesinan
individualsbehaviourarisingfromexperience

5.

Thebusinessmarketernormallydealswithfarfewerbuyersthantheconsumer
market.Thedemandforbusinessgoodsisultimatelyderivedfromthedemandfor
consumergoods.

6.

Indifferentiatedmarketing,anorganisationdesignsseparateoffersforeachofthe
identifiedtargetmarkets;inconcentratedmarketingthecompanygoesafteralarge
shareofoneorafewsubmarkets.

7. Stretchingoccurswhenacompanylengthensitslinebeyonditscurrentrange,
downwardsorupwards.Fillingistheprocesswherebyaproductlinecanalsobe
lengthenedbyaddingmoreitemswithinthecurrentrange.

8.

Inthecontextofservicemarketing,thefactorofintangibilityindicatesthatservices
lackaphysicalelement;whilethefactorofperishabilityindicatesthatwhen
consideringservices,thereisnostoredinventory.

9.

Duetocontinuedtechnologicaldevelopments,productlifecycles(PLCs)aregetting

shorter.Firmsmusthavea"pipeline"ofnewproductstoreplaceexisting
productsastheybecomeobsolete.

10. Inpushstrategymanufacturerspromotetheproducttowholesalers;
wholesalerspromoteittoretailers;andfinallytheretailerspromoteitto
consumers;pullstrategyontheotherhand,callsforspendingaloton
advertisingandconsumerpromotiontobuildupconsumerdemand.
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SECTION B: SHORT ESSAY QUESTIONS

(20 marks)

(Please answer in the space provided below each question)

Question B1
What are the advantages of having marketing intermediaries?
Explain how marketing channels add value.

a. Severaladvantagesleadsupplierstouseintermediaries:
Discrepancyofassortment:Transformtheassortmentofproductsmadebyproducers
intotheassortmentwantedbyconsumers.
Contractualefficiency:Intermediariesareofgreatefficiencyinmakinggoodsavailable
totargetmarketsand
Divisionoflabour:canofferaproducerorsuppliermorethanitcanachieveonits
own.
Discrepancyofquantity:Viamarketingchannels,largevolumesofproductsare
brokendownintosmallquantitiesandbroadassortmentsofmanybrandsandproduct
ranges.
Spatialandtemporaldiscrepancy:Manybrandsandproductrangesarebrought
togetherfromthesupplierstomeetthedemandsofusers.Thus,intermediariesplaya
criticalroleincoordinatingsupplyanddemand.

b.Intheprocessofmovinggoodsfromproducersandsupplierstoconsumers,
marketingchannelmembersperformeightkeyfunctionsincluding:
(i)information, (2)promotion,

(3)contact,(4)matching,

(5)negotiation, (6)physicaldistribution,(7)financing (8)risktaking

Channelmembersaddvaluebydischargingthesekeyfunctionssatisfactorysothat
goodsreachtargetconsumersinthemostefficientandeffectivemanner.

(Theanswerpresentedintheearliersolutionsetisalsocorrect)

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Question B2
Compare and contrast market-skimming and market-penetration pricing
strategies. Support your answer with suitable examples?

Manycompaniesthatinventnewproductssethighinitialpricestoskimrevenueslayerby
layerfromthemarket,astrategycalledmarketskimmingpricing(orpriceskimming).

Marketskimmingmakessenseonlyundercertainconditions.

First,theproductsqualityandimagemustsupportitshigherpriceandenoughbuyersmust
wanttheproductatthatprice.

Secondly,thecostsofproducingasmallervolumecannotbesohighthattheycancelthe
advantageofchargingmore.

Finally,competitorsshouldnotbeabletoenterthemarketeasilyandundercutthehighprice.

Examples:

B2Cskimmingexamples:newtechnologyelectronics,suchasHDTV,iPhone,etc.
B2Bskimmingexamples:premiumservices(suchasinventorymanagement)tokeycustomers
thatarewillingtopaythepremiumforsuchservices.

Ratherthansettingahighinitialpricetoskimoffsmallbutprofitablemarketsegments,
somecompaniesusemarketpenetrationpricing.

Theysetalowinitialpriceinordertopenetratethemarketquicklyanddeeplytoattracta
largenumberofbuyersquicklyandwinalargemarketshare.Thehighsalesvolumeresultsin
fallingcosts,allowingthecompaniestocuttheirpricesevenfurther.

Severalconditionsmustbemetforthislowpricestrategytowork.

First,themarketmustbehighlypricesensitivesothatalowpriceproducesmoremarket
growth.

Secondly,productionanddistributioncostsmustfallassalesvolumeincreases.

Finally,thelowpricemusthelpkeepoutthecompetition,andthepenetrationpricemust
maintainitslowpricepositionotherwise,thepriceadvantagemaybeonlytemporary.

Examples:
B2Cexample:alowcostretailer(suchasWalMart),whointroducesnewproductcategoriesto
theircustomers,orentersanewgeographicmarket.
B2Bexamples:anewlightingmanufacturerwhoofferstheirproductstohardwarestoresat
competitivepricestogainimmediateaccesstoacustomerbase.

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Question B3
Diamond Machine Technology makes a tool for sharpening the blades of pruning sheers
and glass clippers. The company has invested $250,000 in developing this sharpener.
This tool which is about the size of a piece of chewing gum costs $3 to make. Fixed costs
for the sharpener is $10,000. The company expects to sell 100,000 sharpeners this year.
Diamond Machine's markup on sales is 30 percent, and it wants to earn a 20 percent
ROI.
Calculate both its (i) markup price and its (ii) target-return price as well as its (iii)
breakeven volume at both prices.
Which price should Diamond Manufacturing use?

Answer:
(1) $3 (variable costs) + $10,000 (fixed costs) /100,000 (unit sales) = $3.10 unit cost
$3.10 (unit cost) [1 - .30] = $4.43 (markup price)
(2) [$3.10 (unit cost) + $50,000 (desired return on invested capital) ]/100,000 (unit sales)
= $3.60(target-return price)
(3) Break even with markup price = $10,000 (fixed costs) /[$4.43 - $3 (variable costs) ]
= 6,994 units
(4) Break even with target-return price = $10,000/($3.60 - $3) = 16,667 units
(5) the company chose the markup price, it would have both the desired ROI and mark-up
on sales.

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SECTION C: (50 Multiple choice questions)

(50 x 0.4 = 20 marks)

Answer ALL questions by marking the relevant answer in pencil on the Generalised
Answer Sheet supplied. There is no negative marking.
Please supply the most appropriate answer.
1) In many instances, marketing managers try to ensure that there is a sense of excitement (or
enjoyment) associated with a market offering and the marketing communication used. The
following factor is a key to creating excitement:
A) experiential involvement.
B) emotional involvement.
C) interactivity.
D) All of the above.
E) None of the above.

2) Telemarketers probably most often employ the ________ concept.

A) production
B) selling
C) marketing
D) customer
E) societal
3) The set of actual and potential buyers of a product comprise a(n): ______; the basic unit of
measurement for exchange is a(n) ______
A) market; transaction
B) transaction group; payment
C) exchange group; offering
D) product selection set; price
E) exchange; transaction
4) Statement_______belowisnotaconditionforanexchangetotakeplace.
A)twopartieseachpossessingsomethingofvaluetotheother.
B)theabilitytoacceptorrejecttheoffer.
C)theabilitytocommunicateanddeliver.
D)eachpartywantingtodealwiththeother.
E)theexistenceofamonetarysystem
5) Relationships marketing:
A) is not advisable for small scale marketers.
B) is a metaphor for the intimacy with which some sales people handle their clients.
C) is about developing long term profitable transactions with select clients.
D) should not really be encouraged.
E) is too expensive for smaller organisations.
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6) Thecustomersevaluationofthebenefitsandcostsofaproductrelativetoits
competitorsisknownas:

A)amarketoffering.
B)naturaldesire.
C)customer perceivedvalue.
D)relationshipmarketing.
E)customersatisfaction.

7) If a major part of the market dislikes the products on offer and may even pay a price to
avoid it, this market is in a state of:
A) demarketing.
B) irregular demand.
C) full demand.
D) unwholesome demand.
E) negative demand.

8) Setting the goals for performance in terms of market share, return on investment, and
pretax profits all fell under which section of the marketing plan?
A) The executive summary
B) The current marketing situation
C) Threats and opportunities
D) Objectives and issues
E) Marketing strategies

9) The current marketing situation consists of an analysis of the:

A) market, competitor, strategic, distribution, and macroenvironment situation.
B) market, competitor, product, distribution, and macroenvironment situation.
C) market, company, strategic, distribution, and macroenvironment situation.
D) market, competitor, product, distribution, and microenvironment situation.
E) All of the above.

10) The SWOT analysis is the tool often used to conduct an analysis of the
macroenvironment. What part(s) of the SWOT acronym are relevant to the
macroenvironment?
A) SW
B) OT
C) SWOT
D) ST
E) OW

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Read the MINICASE A (MCA) below and answer questions 11 - 14.

MINICASE A [MCA]: The marketing manager of a national brand of flavoured milks is
considering her micro and macroenvironment in order to complete the situation analysis for this
years marketing plan. She notes some key points. Small traders are not consistently affording
appropriate fridge space to flavoured milks. Energy drinks are continuing to hold favour in the
teen market. Young adults aged 18-25 are more conservative than their slightly older cohort 25-35.
UHT or long life milk has progressed to the point where taste tests show little noticeable difference.

11) The fridge space problem referred to in MC-A represents a:

A) microenvironment threat.
B) macroenvironment threat.
C) microenvironment weakness.
D) macroenvironment weakness.
E) A and B above.
12) The product concerned is considered in some states an Australian icon. Given this, which
of the key points listed has the clearest strategic implications?
A) Small traders are not consistently affording appropriate fridge space to flavoured
milks.
B) Energy drinks are continuing to hold favour in the teen market.
C) Young adults aged 18-25 are more conservative than their slightly older
cohort 25-35.
D) UHT or long life milk has progressed to the point where taste tests show little
noticeable difference.
E) None of A, B, C, or D above
13) What would be the most logical strategic implications for the prominence of energy
drinks in the teen market?
A) Reduce the resource allocation aimed at marketing toward this group.
B) Promote the brand as being high in energy.
C) Identify opinion leaders amongst this group and provide them with free product.
D) Identify favoured celebrities and have them endorse the product.
E) All are feasible.
14) Having long life milk means the product can stay longer in the fridge before having to be
replaced. The main benefit of this is to the firm which can reduce production and distribution
costs. This benefit has been derived through changes in the:
A) political environment.
B) technological environment.
C) distribution environment.
D) physical environment.
E) economic environment.

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Read the MINICASE B (MCB) below and answer questions 15 - 19.

MINICASE B [MCB]: At a business park in the north of Melbourne the manger reflect on the
mornings meeting with her leading organisations, trying to understand their success. She notes the
following. Lenny is consistently noting and looking for information that may help his marketing
management decisions. Mendel is conducting a pricing study for his product portfolio. Phillipa is
trawling the internet to try and solve a marketing problem she has. Simone is running focus groups
with retirees to try and understand what motivates their holiday decisions. Peter says he doesn't
bother with research because he has experienced staff that he can always rely on to help make
decisions.

15) Whichoftheseindividualsisclearlyengaginginmarketingintelligence?

A)Lenny
B)Mendel
C)Phillipa
D)Simone
E)Peter

16) Lennys research referred to in MCB above is likely to have been driven by the:
A) taxation department.
B) accounting department.
C) board room.
D) marketing department.
E) production department.
17) In MCB above, Phillipa is collecting:
A) primary data.
B) secondary data
C) short-term data.
D) electronic data.
E) focused group data.
18)Forherresearchactivities(inMCB),Simoneswillneed:
A) eight to twelve people for this primary data collection process.
B) eight to twelve for this secondary data collection process.
C) ten to twenty people for this secondary data collection process.
D) ten to twenty people for this primary data collection process.
E) two to three highly committed individuals who will concentrate on the issue.
19) Based on MCB above, Peter is using:
A)
B)
C)
D)
E)

no research at all to make decisions.

external records to make decisions.
internal records to make decisions.
intuition to make decisions.
all of these.

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Read the MINICASE C (MCC) below and answer questions 20 23.

MINICASE C [MCC]: In 1991, Emma was trying to figure out a way to make some extra cash. Her
husband was a student, and they had two small children. She was already selling Emma's Country
Kitchen gourmet cocoa mixes at local fairs and craft shows when she came up with the idea for
flavoured creamers for coffee. She developed nine different flavours of creamers including
raspberry mocha and cherry vanilla. Response to the creamers was so good she decided to rent a
small manufacturing facility. Her continued success brought her to the attention of some national
retailers who were interested in carrying her product. National exposure on the Optus shopping
channel gave the business a big boost in customer awareness.

20) A consumer who was aware of Emma's Country Kitchen flavoured creamers, but who did
not know where or how to purchase the item, its cost, or its contents and was stimulated to
seek information about the product, would be in the ________ stage of the new product
adoption process.
A) interest
B) trial
C) diffusion
D) adoption
E) evaluation
21) Assume that at this time most adopters of Emma's Country Kitchen flavoured creamers
fall into the category of early majority. These would be people who:
A) are typically opinion leaders.
B) are tradition bound.
C) adopt new products and ideas before the average person.
D) adopt new products early before most people are even aware of their existence.
E) are suspicious of change but know that it is necessary.
22) Emma and her husband are convinced their creamers have a taste superior to any other
similar products currently on the market. They want consumers to see the same high level of
________ that they see.
A) compatibility
B) communicability
C) divisibility
D) complexity
E) relative advantage
23) One of the important factors that would influence a consumer's purchase of Emma's
flavoured creamers is the ability to sample the flavours at home. As a result Emma and her
husband developed a sample pack which contained one ounce of each of the creamer
flavours. This gave the new product a high level of:
A) relative advantage.
B) communicability.
C) complexity.
D) divisibility.
E) compatibility.

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Read the MINICASE D (MCD) below and answer questions 24 - 26.

MINICASE D [MCD]: Pork is a tougher meat than most consumers realise. Naturally it is much
tougher than any poultry. Pork producers are interested in products that will tenderise pork. One of
the problems faced with quantifying how tender a piece of pork is defining the word tender.
Electromyography is one of the techniques currently used to objectively measure tenderness. It
involves attaching electrodes to jaw muscles and measuring on a metre the amount of work the
individual expends chewing. One new method commercial meat producers use for tenderising pork
is called Hydrodyne. With this method, the vacuum-packed meat is placed in a large vat of water.
Shock waves created by a dynamite blast are sent through the meat, which makes it more tender.

24) The sale of both the Electromyography machine and the Hydrodyne system depend on
how much pork consumers eat though the total demand for these products is not affected by
their prices. This means that demand for the Electromyography machine and the Hydrodyne
system is:
A) derived and inelastic.
B) reciprocal and elastic.
C) inelastic and fluctuating.
D) inelastic and reciprocal.
E) elastic and derived.

25) Based on MCD above, what type of buying situation would most likely exist for a pork
producer buying dynamite for its three-year-old Hydrodyne system?
A) New task
B) Straight rebuy
C) Reciprocal buy
D) Functional rebuy
E) Modified buy

26) According to MCD above which of the following is an example of an organisational

factor that could affect the purchase of a Hydrodyne system?
A) A government ruling that the Hydrodyne adversely affects the shelf life of pork.
B) A significant growth in the number of people who are vegetarians.
C) A local ordinance against the explosion of dynamite within the city limits.
D) A tripling of the price of dynamite.
E) A move by its largest customer to centralise its purchasing decisions.

Read the MINICASE E (MCE) below and answer questions 27 - 31.

MINICASE E [MCE]:Peter has just decided on the segment to target for his companies new.
He has made a check list to help finalise his decision; (1) He has determined that the ideal
segment profile is measurable within New Zealand, (2) he has determined where they live and
shops as well as what media they are exposed to, (3) he knows that, if this markets potential is
realised, it would more than triple his current sales, and (4) he has the resources and
connections to get the product to this market. (Questions are on the next page.)

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27) In MC E above, the first item on Peter's checklist represents the market segments is:
A) potential.
B) growth.
C) measurability.
D) identification.
E) all of the above.
28) The second item on Peter's checklist represents the market segments:
A) identification
B) behavioural intentions
C) lifestyle
D) accessibility
E) obtainability
29) The third item on Peter's checklist represents the market segments:
A) profitability
B) volume
C) sustainability
D) potential
E) substantiality
30) The fourth item on Peter's checklist as stated in MCE above represents the market
segments:
A) accessibility.
B) actionability.
C) approachability.
D) marketing requirements.
E) all of the above.
31) Refer to MC E above. Peter has identified an unmet need in this segment. Given his
evaluations thus far he should now:
A) confirm the segment and proceed with setting his objectives.
B) identify the segment's profile with relevant criteria.
C) brand the product in a meaningful way for the segment.
D) implement his marketing mix.
E) develop a perceptual map.

Read the MINICASE G (MCG) below and answer questions 32 - 35.

MINICASE G [MCG]: Arabella Quality Meats (AQM) is a star in the processed meat industry.
With sales in more than 140 nations, AQM had almost $4.6 billion in sales last year. It owns
and operates meat-processing plants in 40 different nations. AQM's business strategy includes
product innovation, acquisitions and mergers, and market leadership in a number of different
categories. Its growth strategies support an annual 6 percent growth in sales.
(continued to next page)

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Brands in the Arabella Quality product line are Belle's, Emmas Home Cookin, Sunnydale
Farms, Sarahs Cookies, Quick & Tasty and Cordy's Kosher Foods. An AQM executive claims
that they work very hard at Arabella Quality on brand equity. We have to make sure our
new ideas are not only profitable and achieve big volume for our [retail] customers, but also
that they are consistent with the quality of the brand and there is a good fit."
Some of AQM's recent new products that seems to have a good fit with the company's other
products was Quick & Tasty. Quick & Tasty is described as a lunch combination. It features
two small sandwiches, chips, and dessert. The lunch combination was developed and marketed
by Emmas Home Cookin, a company that prior to the introduction of this product had just
made cakes.

32) Refer to AQM Case in MCG above. Given what you have read about AQM, you would
think that its executives want you to classify the AQM products as:
A) homogeneous shopping products.
B) specialty products.
C) convenience products.
D) staples.
E) impulse products.
33) Refer to MCG above. If you look at AQM as strictly a meat processing company, which
of the following statements would best describe the company?
A) AQM has a narrow, but deep product mix.
B) AQM has a long and deep product mix.
C) AQM's product mix lacks consistency.
D) AQM has a narrow and shallow product mix.
E) AQM has a wide, yet shallow product mix.
34) Refer to MC-G above. One basis for maintaining AQM's brand equity would be to:
A) offer innovative new products on a continual basis.
B) make community involvement an important part of AQM's strategic plan.
C) curb the entrepreneurial spirits of its decentralised strategic business units.
D) make sure customers have a strong perception of brand quality.
E) use selective distribution.
35) Refer to MCG above. When Sunnydale Farms, a manufacturer of various kinds of
sausages, introduced a new line of sausages made with turkey meat under the Sunnydale
Farms brand, it was an example of a ________ strategy.
A) co-branding
B) brand licensing
C) line extension
D) multibranding
E) brand extension

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Read the MINICASE H (MCH) below and answer questions 36 - 41.

MINICASE H: [MCH]: At Consolidated Diversified, five product managers were reviewing where
their products were in the product life cycle [PLC]. Lola's product had seen a fall off in sales and a
drop in profits. Boris's product had seen a slow down in sales growth and a levelling off of profits.
Louis's product was gaining rapid market acceptance and increasing profits dramatically. John's
product had not shown a profit and needs heavy promotion support. Sonia's product had high costs
but no sales to date.
The advertising department at Consolidated Diversified was setting the advertising budget for a
new consumer packaged goods product. Team feelings were that this would be a high-budget
product. Blake knew that this product was likely to be a market leader and argued that
expenditures would have to be high. Hazel realised that Blake's plan meant that they would need
many repetitions to put the product's image across. Sabrina was aware that the competition offered
similar products and the advertising would have to work hard to set the product apart. Atom knew it
was expensive to launch new products to gain consumer trial. And Tikki was sure that they would
have to spend heavily to be heard above the noise of an already crowded market.

36) Which of the following is (are) correct?

A) Sonia's product is most likely in the product development stage, while Lolas
product is in the decline stage of the PLC.
B) John's product is most likely in the introductory stage of the PLC.
C) Louis's product is most likely in the growth stage of the PLC.
D) Boris's product is most likely in the Maturity stage of the PLC.
E) All of the above statements A, B, C, and D are correct.
37) Based on MCH, Blake is focusing on which of the following factors used in setting the
advertising budget?
A) Stage in the product life cycle
B) Market share
C) Competition and clutter
D) Advertising frequency
E) Product differentiation
38) According to MCH, Hazel's concerns address which factor to be considered when setting
the advertising budget?
A) Stage in the product life cycle
B) Market share
C) Competition and clutter
D) Advertising frequency
E) Product differentiation
39) In MCH. Sabrina is weighing which of the following factors when setting the advertising
budget?
A) Stage in the product life cycle
B) Market share
C) Competition and clutter
D) Advertising frequency
E) Product differentiation
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40) Refer to MCH. Atom is emphasising which factor to be considered when setting the
advertising budget?
A) Stage in the product life cycle
B) Market share
C) Competition and clutter
D) Advertising frequency
E) Product differentiation
41) Refer to Mini-Case H above. Tikki is considering which of the following factors used
when setting the advertising budget?
A) Stage in the product life cycle
B) Market share
C) Competition and clutter
D) Advertising frequency
E) Product differentiation
42) Which of the following functions do members of the marketing channel typically perform
as they move merchandise from one level to the next?
A) The creation of form utility.
B) Activities-based cost accounting.
C) Risk taking.
D) Lengthening the channel so as to provide more specialised service.
E) Eliminating unnecessary channel functions.
43) A zero-level channel:
A) may also be called a backward channel.
B) is the same as a direct marketing channel.
C) has only one intermediary between producer and consumer.
D) has three members.
E) refers to intensive distribution channels where there are an indeterminate number
of channel members.
44) The goal of channels in the service sector is to make the service:
A) available and accessible.
B) affordable, differentiated, and easy to find.
C) risk free, readily available, and differentiated.
D) differentiated, targeted, and affordable.
E) affordable and accessible.
45) Thethreedegreesofdistributiondensityare_________________.

A)intensive,extensive,andselective.
B)extensive,concentrated,andselective.
C)intensive,exclusive,andselective.
D)extensive,pervasive,andconcentrated.
E)concentrated,exclusive,andintensive.
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46) The ________ combines successive stages of production and distribution under single
ownership.
A) horizontal marketing system
B) conventional marketing system
C) multichannel marketing system
D) corporate vertical marketing system
E) contractual vertical marketing system
47) When a producer has a conflict with its wholesalers, the producer is experiencing
________ conflict.
A) horizontal channel
B) multichannel
C) direct channel
D) vertical channel
E) single channel
48) A computer manufacturer sells its machines through retail outlets and catalogues. The
retailers aren't happy about the catalogue sales because they claim the direct marketing sales
are adversely affecting their in-store sales. This is an example of ________ conflict.
A) horizontal channel
B) direct channel
C) multichannel
D) vertical channel
E) single channel
49) Virgin Blue Airlines has set its ticket prices lower than anyone else's prices. It operates in
a market that is highly price sensitive and one in which low prices stimulate market growth.
Its costs have fallen as it has become more efficient at providing airplane service to its
customers. Virgin Blue is using a ________ pricing strategy.
A) market-skimming pricing
B) product quality leadership
C) maximum current revenue
D) market-penetration pricing
E) maximum sales growth
50) Demand is likely to be price elastic if:
A) there are many alternatives and direct substitutes for the product.
B) buyers do not readily notice price changes.
C) buyers are slow to change their purchasing habits.
D) buyers think a higher price is justified by quality differences.
E) the buyers can use normal inflation to explain the price increase.
END OF EXAM

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