PRINCIPLES OF MARKETING 4) When a company sets a high price for a

new product with the intention of reducing

ANSWER SCHEME the price in the future, it is using the
________ pricing strategy.
CHAPTER 11 AND 12 A) market-skimming
B) cost-plus
C) market-segmentation
D) market-penetration
TUTORIAL 9: CHAPTER 11
E) competitive
PRICING STRATEGIES:
5) Midnight Magic, a perfume
ADDITIONAL CONSIDERATION
manufacturing company, plans to release a
ANSWER SCHEME new fragrance during the holiday season at
$99 per bottle. The company intends to
1) Companies set not a single price, but a bring the price down to $49 within six
pricing ________ that covers different months of its release to attract buyers who
items in its line and changes over time as couldn't afford the initial price. Which of
products move through their life cycles. the following pricing strategies is
A) by-product Midnight Magic using?
B) structure A) market-penetration pricing
C) loop B) market-skimming pricing
D) cycle C) competitive pricing
E) bundle D) cost-plus pricing
Answer: B E) product-line pricing
Answer: B
2) Companies facing the challenge of
setting prices for the first time can choose 6) Which of the following is true of price
between two broad strategies: market- skimming?
penetration pricing and ________ pricing. A) It is effective in situations in which
A) comparative competitors are able to undercut prices
B) competitive easily.
C) market-skimming B) It can be profitably used when the
D) market-segmentation product's quality and image support its
E) cost-plus price.
Answer: C C) It involves underpricing products so
that companies make larger sales.
3) A market-skimming pricing strategy D) It is ineffective in situations in which
should NOT be used for a new product competitors are unable to enter the market
when ________. easily.
A) the product's quality and image support E) It leads to a situation in which the
its higher price company completes more, though less
B) enough buyers want the products at that profitable, sales.
price Answer: B
C) competitors are unable to enter the
market 7) Companies that set a low price for a
D) competitors can undercut prices easily new product in order to attract a large
E) producing a smaller number of goods is number of buyers and a large market share
feasible are using the ________ strategy.
Answer: D A) market-skimming pricing
B) market-penetration pricing
C) cost-plus pricing
D) inclusive pricing
E) exclusive pricing
Answer: B
8) A market-penetration pricing policy
should LEAST likely be used for a new
product when ________.
A) the market is highly price sensitive
B) production and distribution costs fall as
sales volume increases
C) the product's quality and image support
a high price
D) a high price helps keep out the
competition
E) there are few or no competitors in the
market
Answer: C
9) Which of the following is true of
market-penetration pricing?
A) It should be used when the product's
quality and image support a high price.
B) It involves setting a high price for a
new product to appeal to the elite in
society.
C) It results in drawing in large numbers
of buyers quickly, winning a large market
share.
D) It is best used in conjunction with a
market-skimming pricing strategy.
E) It results in the company making fewer
and less profitable sales.
Answer: C
10) In a bid to attract more customers in a
market that has several competitors,
Barrymore's Bakery slashed the prices of
all its products by 50 percent. Managers at
the firm reasoned that lower prices would
draw in even more customers, making up
for the reduction in price several times
over. Which of the following pricing
strategies are they using?
A) market-skimming pricing
B) market-penetration pricing
C) captive-product pricing
D) cash discount pricing
E) by-product pricing
Answer: B
11) Whizz Corp. wishes to introduce a new
hybrid car into mature markets in
developed countries with the goal of
gaining mass-market share quickly. Which
of the following pricing strategies would
help the firm meet its goal?
A) market-skimming pricing
B) market-penetration pricing
C) market-segmentation pricing
D) cost-plus pricing
E) captive-product pricing
Answer: B
12) Electrowhip, a company that
manufacturers blenders and electric
whisks, has decided to use a market
penetration pricing strategy. Which of the
following, if true, proves their decision to
be a wise one?
A) Electrowhip's competitors utilize social
media for marketing their products.
B) Electrowhip sells products whose
image and quality support high prices.
C) Electrowhip operates in a market with
many competitors.
D) Electrowhip does not operate in a price
sensitive market.
E) Electrowhip's products are intended to
appeal to the elite in society.
Answer: C
13) For a market penetration-price strategy
to succeed, which of the following is
LEAST likely to be true?
A) Production costs decrease as sales
volume increases.
B) A low price triggers market growth.
C) Distribution costs decrease as sales
volume increases.
D) Low prices must inhibit competition
from entering the market.
E) The strategy can be changed quickly, to
a higher-priced position, with no negative
impact.
Answer: E
Refer to the scenario below to answer the
following question(s).
Champion, Inc. is a manufacturer of lunch
boxes, school bags, and school stationery.
Charles Payton, the CEO of Champion,
hopes to sell the products at a low price to
penetrate the market quickly.
14) Which of the following best supports a
market-penetration strategy for Champion?
A) Production costs increase as sales
volume increases.
B) It is very difficult for competitors to
enter the market.
C) The cost of producing a smaller volume
is negligible.
D) The quality of the products supports
high initial prices.
E) The market for the products is highly
price sensitive.
Answer: E
15) Pricing strategies tend to change and
evolve as the average product passes
through its life cycle.
Answer: TRUE
16) For market skimming to be successful,
the costs of producing a smaller volume
cannot be so high that they cancel the
advantage of charging more.
Answer: TRUE
17) When The Candy Store sets a low
initial price in order to get its "foot in the
door" and to quickly attract a large number
of buyers, the company is using market-
skimming pricing.
Answer: FALSE
18) After entering a market by using
market-penetration pricing, a company can
easily raise its price and maintain its
market share.
Answer: FALSE
19) Which of the following product mix
pricing strategies involves setting prices
across an entire product range based on
cost differences between the products,
customer evaluations of different features,
and competitors' prices?
A) by-product pricing
B) product bundle pricing
C) optional product pricing
D) captive product pricing
E) product line pricing
Answer: E
20) Go Zone plans to introduce four tablet
models over the next year. These models
range from basic readers at $99 per unit, to
more sophisticated tablets at $399 per unit.
The more features a model has, the more
expensive it is. What pricing strategy is
Tone Zone using for its range of tablets?
A) product line pricing
B) product bundle pricing
C) captive product pricing
D) by-product pricing
E) optional product pricing
Answer: A
21) Which of the following is true of
product line pricing?
A) The price steps take cost differences
between products in the line into account.
B) The pricing strategy cannot be used by
companies in developed countries.
C) The price steps do not account for the
prices of similar products from
competitors.
D) The pricing strategy involves
overpricing products so that they appeal to
the elite.
E) The customer's perception of the value
of different features is considered
irrelevant.
Answer: A
22) Which of the following companies
uses product line pricing?
A) Photo Genie, which sells inexpensive
cameras that run only on their own
expensive batteries
B) Mobile Point, which launched a range
of cell phone models, each priced
according to its features
C) Penguin's Parlor, which offers
customers a 20-percent discount on their
birthdays and certain holidays
D) Green Thumb, which gives away free
watering cans with the purchase of certain
potted plants
E) Panizza, whose combo meals are priced
lower than the individual components sold
together
Answer: B
23) Which of the following product mix
pricing strategies involves pricing
additional or accessory products sold along
with the main product?
A) inclusive product pricing
B) exclusive product pricing
C) by-product pricing
D) product bundle pricing
E) optional-product pricing
Answer: E
24) Which of the following is true of
optional-product pricing?
A) It involves capitalizing on low value
by-products.
B) It involves pricing products that can be
added to the base product.
C) It is used to price a company's main
product.
D) It involves setting geographically
specific prices.
E) It is used to price products that must be
used with the company's main product.
Answer: B
25) Which of the following product mix
pricing strategies involves pricing products
that can only be used with the main
product?
A) by-product pricing
B) product bundle pricing
C) captive product pricing
D) product line pricing
E) optional product pricing
Answer: C
26) Multiprint, a printer manufacturing
firm, sells ink cartridges for each of its
specific models. Only Multiprint cartridges
are compatible with Multiprint printers,
and no two models share the same
specifications. What type of pricing does
Multiprint use?
A) product line pricing
B) captive product pricing
C) optional product pricing
D) by-product pricing
E) product bundle pricing
Answer: B
27) Which of the following product mix
pricing strategies did Polaroid use when it
set the general price range of its cameras
low and the markup on its film high?
A) product-segmented pricing
B) by-product pricing
C) customer-segmented pricing
D) captive product pricing
E) product bundling pricing
Answer: D
28) In the case of services, captive product
pricing is called ________ pricing.
A) by-product
B) optional product
C) two-part
D) bundle
E) segmented
Answer: C
29) Which of the following companies
uses captive product pricing?
A) Photo Genie, which sells inexpensive
cameras that run only on their own
expensive batteries
B) Go Zone, which launched a range of
tablet models, each priced according to its
features
C) Penguin's Parlor, which offers
customers a 20-percent discount on their
birthdays
D) Sportsprint, which prices sports
equipment according to customer
evaluations
E) Burger Den, whose combo meals are
priced lower than its individual
components sold together 34) Which of the following product mix
Answer: A pricing strategies involves pricing multiple
products to be sold together?
30) When amusement parks charge A) product line pricing
customers for admission and later for food B) product bundle pricing
and beverages, they are following a C) optional product pricing
________ pricing strategy. D) by-product pricing
A) by-product E) captive product pricing
B) product line Answer: B
C) penetration
D) skimming 35) Which of the following is true of
E) two-part product bundle pricing?
Answer: E A) It promotes the sale of products that
consumers might not otherwise buy.
31) Beach Heaven uses two-part pricing B) It is used to set prices across an entire
for its holiday resort charges. Because this product range based on customer
is a service, the price is broken into a fixed evaluations.
fee for the room plus a(n) ________ usage C) It forces customers to buy product parts
rate for activities, including kite-sailing that are only compatible with the main
and child care. product.
A) fixed D) It results in companies making fewer—
B) variable though more profitable—sales.
C) standard E) It involves pricing the main product low
D) market and setting high markups on the supplies.
E) optional Answer: A
Answer: B
36) Which of the following companies
32) Using ________ pricing, companies uses product bundle pricing?
are able to turn their trash into cash, A) Photo Genie, which sells inexpensive
allowing them to make the price of their cameras that run only on their own,
main product more competitive. expensive, batteries
A) product bundle B) Go Zone, which launched a range of
B) optional product tablet models, each priced according to its
C) captive product features
D) by-product C) Penguin's Parlor, which offers
E) product line customers a 20 percent discount on their
Answer: D birthdays
D) Green Thumb, which gives away free
33) A lumber mill takes in logs, turns them watering cans with the purchase of certain
into 2 x 4's and other sizes needed for potted plants
building construction. Wood chips created E) Panizza, whose combo meals are priced
in the milling process are a(n) ________ lower than its individual components sold
that can be sold. together
A) bundled product Answer: E
B) captive product
C) by-product Refer to the scenario below to answer the
D) optional product following question(s).
E) primary product
Answer: C Champion, Inc. is a manufacturer of lunch
boxes, school bags, and school stationery.
Charles Payton, the CEO of Champion,
hopes to sell the products at a low price to
penetrate the market quickly.
37) Noticing that themed envelopes aren't
selling well, Charles Payton decides to
offer customers a special "letter writing"
kit. He prices the kit—which comprises
letter paper, matching envelopes, and
pens—at $5, even though the combined
prices of the individual items is $8. Which
of the following pricing strategies is he
using?
A) optional product pricing
B) product bundle pricing
C) by-product pricing
D) dynamic pricing
E) captive product pricing
Answer: B
38) Pricing across a product mix is
difficult because various products have
related demand and costs, and products
face different degrees of competition.
Answer: TRUE
39) In product line pricing, price steps
should account for differences in customer
perceptions of the value of different
features.
Answer: TRUE
40) Thinking Cap Corp. prices its various
cap designs at different price levels,
ranging from $2.05 to $5.95. This is an
example of optional product pricing.
Answer: FALSE
41) Print-Fast Printers prices its printer
cartridges at a premium, since customers
must buy Print-Fast cartridges to work
with their Print-Fast printer. Print-Fast
uses optional-product pricing.
Answer: FALSE
42) In addition to its customary services,
On the Spot, a moving company, also sells
the boxes and padding that are used when
moving household furniture. This is an
example of customer-segmented pricing.
Answer: FALSE
43) When a manufacturer seeks a market
for by-products and accepts a price that
covers more than the cost of storing and
delivering those by-products, the
manufacturer is able to reduce the main
product's price to make it more
competitive.
Answer: TRUE
44) Some industries commonly use two-
part pricing, breaking the price down into a
fixed fee and a fixed usage rate.
Answer: FALSE
45) When using product bundle pricing,
sellers combine several of their products
and offer the bundle at an increased price
for increased profit.
Answer: FALSE
46) Which of the following is a price
adjustment strategy?
A) product bundle pricing
B) by-product pricing
C) product line pricing
D) optional product pricing
E) discount and allowance pricing
Answer: E
47) Which of the following price
adjustment strategies involves reducing
prices to reward customer responses such
as volume purchases, paying early, or
participating in sales-support programs?
A) product bundle pricing
B) captive product pricing
C) product line pricing
D) dynamic pricing
E) discount and allowance pricing
Answer: E
48) A(n) ________ is a straight reduction
in price on purchases during a stated
period of time or of larger quantities.
A) allowance
B) free sample
C) discount
D) tax credit
E) quota Answer: B
Answer: C
53) A seller offers a ________ to trade-
49) Solar Tanning Salon prices tanning channel members who perform certain
sessions at $25 per visit. It also offers functions, such as selling, storing, and
seasonal passes for $175 that allow the record keeping.
customer to visit the salon multiple times A) functional discount
in a year. This is an example of a B) storage allowance
________. C) cash discount
A) sample D) promotional allowance
B) promotional allowance E) quantity discount
C) product bundle
D) discount 54) The discount offered by Glamor Gifts
E) product line to customers who bought Valentine-
Answer: D themed merchandise the week following
Valentine's Day is an example of a
50) Which of the following price ________.
adjustment strategies offers a price A) functional discount
reduction to buyers who pay their bills B) seasonal discount
promptly? C) trade discount
A) cash discount D) cash discount
B) season discount E) time-based discount
C) quantity discount Answer: B
D) trade discount
E) functional discount 55) A(n) ________ refers to promotional
Answer: A money paid by manufacturers to retailers
in return for an agreement to feature the
51) Leicestershire Renovations has a manufacturer's products in some way.
history of problems with customers who A) allowance
do not pay their bills on time. B) sample
Leicestershire Renovations wants to C) discount
improve its cash situation, reduce bad D) tax credit
debts, and reduce credit-collection costs. E) tax exemption
Which of the following forms of pricing Answer: A
would most likely help the firm achieve its
goal? 56) ________ allowances are price
A) by-product pricing reductions given for turning in an old item
B) zone pricing when buying a new one.
C) cash discounts A) Promotional
D) product bundling B) Trade-in
E) quantity discounts C) Depreciation
Answer: C D) Segmented
E) Functional
52) A quantity discount is a price Answer: B
reduction for buyers who ________.
A) buy merchandise out of season 57) Trade-in allowances are most
B) buy merchandise in bulk commonly used in the ________ industry.
C) pay their bills on time A) real estate
D) buy discontinued products B) automobile
E) return old items while buying new ones C) dairy products
D) financial services D) cost-plus
E) health care E) reference
Answer: B Answer: A

58) Shoe Trends, a company that 62) The New Age Gallery has three
manufactures formal shoes for men and admission prices for students, adults, and
women, offers to give its customers $10 seniors, even though all three groups are
for an old pair of shoes when they buy a entitled to the same services. This form of
new pair. In essence, they're reducing the pricing is called ________ pricing.
price of the new shoes by $10. What is this A) psychological
type of price adjustment called? B) product form
C) customer-segment
A) functional discount D) captive product
B) captive product pricing E) by-product
C) seasonal discount Answer: C
D) trade-in allowance
E) by-product pricing 63) Under ________ pricing, different
Answer: D versions of the product are priced
differently but not according to differences
59) ________ allowances are payments or in their costs.
price reductions that reward dealers for A) product form
participating in advertising and sales B) optional product
support programs. C) captive product
A) Promotional D) by-product
B) Trade-in E) seasonal
C) Segmented Answer: A
D) Functional
E) Dynamic 64) Sparkling Valley, a luxury resort,
Answer: A prices cottages facing the lake higher than
cottages that do not, even though the
60) In return for participating in Honda cottages and services offered are identical
advertising and sales support programs, in every other aspect. This form of pricing
Honda dealerships are rewarded with is called ________ pricing.
payments or price reductions, which are A) location-based
known as ________. B) time-based
A) seasonal discounts C) by-product
B) functional allowances D) seasonal
C) cash discounts E) captive product
D) promotional allowances Answer: A
E) trade-in allowances
Answer: D 65) When theaters vary seat prices due to
audience preferences for seats in coveted
61) By definition, ________ pricing is rows, they use ________ pricing.
used when a firm sells a product or service A) customer-segment
at two or more prices, even though the B) location-based
difference in price is not based on C) time-based
differences in cost. D) product line
A) segmented E) captive product
B) variable Answer: B
C) flexible
66) When a firm varies its price by the
season, it is using ________ pricing.
A) product form
B) customer-segment
C) location-based
D) time-based
E) value-added
Answer: D
67) Segmented pricing is only effective
when ________.
A) the segments show similar degrees of
demand
B) the cost of segmenting does not exceed
the revenue obtained from the price
difference
C) the segmented prices do not reflect real
differences in customers' perceived value
D) the customers of different socio-
economic classes are treated according to
their rank
E) companies make their services and
products accessible exclusively to wealthy
patrons
Answer: B
68) A movie theater offers a reduced price
for an afternoon showing of a film. This
type of pricing is ________ pricing.
A) location-based
B) customer-segmented
C) cost-based
D) product form
E) time-based
Answer: E
69) Which of the following is a price
adjustment strategy that considers how a
customer's perception of a product is
influenced by its price?
A) captive product pricing
B) psychological pricing
C) by-product pricing
D) promotional pricing
E) international pricing
Answer: B
70) Consumers are less likely to use price
to judge the quality of a product when they
________.
A) have never tried the product before
B) have little knowledge of the brand
C) have experience with the product
D) are shopping for luxury items
E) cannot physically examine the product
Answer: C
71) Which term refers to prices that buyers
carry in their minds and check with when
they look at a given product?
A) product line prices
B) reference prices
C) location-based prices
D) product form prices
E) time-based prices
Answer: B
72) Which of the following is NOT a cue
to consumers about whether a price is high
or low?
A) price-matching guarantees
B) prices of surrounding, similar products
C) signs such as "Clearance"
D) "Coming Soon!" signs
E) location in the store, especially at the
entry
Answer: D
73) ________ are formed by noting current
prices, remembering past prices, or
assessing the buying situation.
A) Product line prices
B) Seasonal prices
C) Reference prices
D) Time-based prices
E) Product bundle prices
Answer: C
74) La Belle released a cut glass bottle of
perfume at $299 per item, even though its
major competitor prices its signature scent
at $99 per item. La Belle reasons that
customers in search of luxury goods will
prefer its product because they are likelier
to believe that high price indicates superior
quality. What price adjustment strategy is
evident in its reasoning?
A) seasonal pricing
B) time-based pricing
C) captive product pricing
D) psychological pricing
E) location-based pricing
Answer: D
75) A supermarket places its store brand of
blackberry jam priced at $5 per jar in the
fruit preserves aisle, alongside the jam jars
of a better known brand—whose products
are priced at $8 apiece. Store managers
reason that customers are more likely to
choose the store brand instead of the
better-known brand when they realize the
price difference. What price adjustment
strategy is evident in the supermarket's
reasoning?
A) by-product pricing
B) product bundle pricing
C) captive product pricing
D) psychological pricing
E) seasonal pricing
Answer: D
76) What type of pricing is being used
when a company temporarily prices its
product below the list price or even below
cost to create buying excitement and
urgency?
A) segmented pricing
B) international pricing
C) reference pricing
D) promotional pricing
E) basing-point pricing
Answer: D
77) Hearth & Home, a store which sells
household products, has announced a one-
week sale on its new carpet line. This is an
example of ________.
A) promotional pricing
B) seasonal pricing
C) by-product pricing
D) product bundle pricing
E) time-based pricing
Answer: A
78) Which of the following is true of
promotional pricing?
A) It leads to 'deal-prone' customers who
buy products only during sales.
B) It fortifies the brand's image in the eyes
of customers if relied upon extensively.
C) It simplifies shopping for customers if
used simultaneously by multiple stores.
D) It makes balancing short-term sales
incentives against long-term brand
building unnecessary.
E) It is extremely beneficial for the brand's
profitability if practiced repeatedly.
Answer: A
79) Low-interest financing and longer
warranties are both examples of ________
pricing.
A) segmented
B) promotional
C) product bundling
D) captive product
E) product form
Answer: B
80) Which of the following is an adverse
effect of using promotional pricing?
A) It makes shopping stressful if used by
multiple stores simultaneously.
B) It erodes the value of competing brands
in the eyes of customers.
C) It gives pricing secrets away to
competitors.
D) It creates "deal-immune" customers if
used often.
E) It delays the company's focus on short-
term strategies.
Answer: A
81) Which of the following involves
adjusting prices to account for the physical
location of customers?
A) location-based pricing
B) geographical pricing
C) domestic pricing
D) interior pricing
E) captive pricing
Answer: B
82) Which of the following is a
geographical pricing strategy?
A) basing-point pricing
B) segmented pricing
C) dynamic pricing
D) Internet pricing
E) location-based pricing
Answer: A
83) Under which type of geographic
pricing strategy does each customer take
responsibility for the freight charges for
the product from the factory to its
destination?
A) zone pricing
B) basing-point pricing
C) uniform-delivered pricing
D) dynamic pricing
E) FOB-origin pricing
Answer: E
84) Which of the following is true of FOB-
origin pricing?
A) It is a strategy in which the company
charges the same price plus freight to all
customers.
B) It is a costly option for customers who
are located near the company.
C) It charges all customers the freight cost
from a base city to the customer location.
D) It is an expensive alternative for
customers in distant locations.
E) It is a strategy in which the seller
absorbs all or part of the freight charges.
Answer: D
85) Which form of geographic pricing is a
company using when it charges the same
rate to ship a product anywhere in the
United States?
A) uniform-delivered pricing
B) psychological pricing
C) zone pricing
D) FOB-origin pricing
E) basing-point pricing
Answer: A
86) If Detroit DLX charges the same price
for the delivery of its product to customers
located in the states near the Great Lakes,
but a different price to customers
elsewhere, the company is using
________.
A) psychological pricing
B) promotional pricing
C) zone pricing
D) reference pricing
E) uniform-delivered pricing
Answer: C
87) Motorzone offers replacement parts for
old Volkswagen Beetles. The company
calculates shipping charges based on
shipping parts from Boston, even though
some parts actually ship from St. Louis.
Motorzone most likely practices ________
pricing.
A) FOB-origin
B) basing-point
C) zone
D) uniform-delivered
E) freight-absorption
Answer: B
88) ________ is a pricing strategy in
which the company sets up two or more
clearly identified geographic regions
within which all customers pay the same
total price.
A) Freight-absorption pricing
B) Zone pricing
C) Uniform-delivered pricing
D) FOB-origin pricing
E) Basing-point pricing
Answer: B
89) In which of the following geographic
pricing strategies would customers located
close to the company pay the same amount
as customers in distant locations?
A) uniform-delivered pricing
B) zone pricing
C) FOB-origin pricing
D) location-based pricing
E) reference pricing
Answer: A
90) With which pricing strategy does the
seller take responsibility for part or all of
the actual freight charges in order to
acquire the desired business?
A) FOB origin pricing
B) freight-absorption pricing
C) basing-point pricing
D) location-based pricing
E) uniform-delivered pricing
Answer: B 95) Which of the following likely does
NOT play into products being offered for
91) Freight-absorption pricing is used for different prices in different countries?
________. A) additional costs of operations
A) penetrating international markets B) product commonality
B) generating customer buzz about new C) physical distribution
products D) shipping and insurance
C) holding on to increasingly competitive E) exchange-rate fluctuations
markets Answer: B
D) generating quick profits to offset input
costs 96) Which of the following is true of the
E) maintaining quality service records bottom of the pyramid?
Answer: C A) It is a market segment that has been
tapped into and depleted.
92) The Internet offers ________, where B) It consists of people who have easy
the price can easily be adjusted to meet access to luxury goods.
changes in demand. C) It comprises people who have easy
A) captive pricing access to the basic amenities of life.
B) dynamic pricing D) It is considered a source of fresh
C) basing-point pricing growth opportunities.
D) price bundling E) It is a market segment that has
E) cost-plus pricing insignificant purchasing power.
Answer: B Answer: D

93) Big Mike's Health Food Store sells
nutritional energy foods. The price of the
products sold varies according to
individual customer accounts and
situations. For example, long-time
customers receive discounts. This strategy
is an example of ________.
A) time-based pricing
B) seasonal pricing
C) dynamic pricing
D) promotional pricing
E) penetration pricing
Answer: C
94) Stores can combat the current
consumer practice of ________, in which
consumers visit stores and then check
online for price comparisons.
A) discounting
B) conferencing
C) using Instagram to share purchases
D) showrooming
E) auctioning
Answer: D
97) Consumers who have no past
experience with a product are more likely
to judge it by its price.
Answer: TRUE
98) A seasonal discount is a price
reduction to buyers who buy merchandise
while the products are in season.
Answer: FALSE
99) Online flash sales are used to create
buying urgency and make buyers feel
lucky to have gotten in on the deal.
Answer: TRUE
100) If used infrequently, price promotions
create "deal-prone" customers who wait
until brands go on sale before buying
them.
Answer: FALSE
101) Constantly reduced prices can erode a
brand's value in the eyes of customers.
Answer: TRUE
102) In segmented pricing, the difference
in prices is based on differences in costs.
Answer: FALSE
103) For segmented pricing to be an
effective strategy, prices should reflect real
differences in customers' perceived value.
Answer: TRUE
104) Sellers cannot influence or use
consumers' reference prices when setting
their product prices.
Answer: FALSE
105) Customers located close to a firm are
less likely to benefit from FOB-origin
pricing than customers located farther
away.
Answer: FALSE
106) The uniform-delivered pricing
strategy means that goods sold are placed
free on board a carrier with the customer
paying the freight from the factory to the
destination.
Answer: FALSE
107) Dynamic pricing is least prevalent
online.
Answer: FALSE
108) Marketing a product internationally
rarely requires a product to be priced
differently depending on the country.
Answer: FALSE
109) The "bottom of the pyramid" refers to
________.
A) the world's poorest consumers
B) the middle classes of Brazil, Russia,
India, and China
C) a market with little or no purchasing
power
D) people with easy access to luxury
goods
E) the middle class of high-income
countries
Answer: A
110) Which of the following factors would
most likely lead to a company initiating a
price cut?
A) over-demand
B) weakened economy
C) poor competition
D) cost inflation
E) weak price competition
Answer: B
111) Which of the following is used in an
attempt to dominate the market through a
pricing strategy?
A) price increase
B) match competitors' pricing
C) price cuts
D) quantity discounts
E) custom prices
Answer: C
112) Which of the following would most
likely lead to a company initiating a price
increase?
A) weakened economy
B) possession of outdated merchandise
C) excess capacity
D) over-demand
E) possession of defective merchandise
Answer: D
113) Reasons for a price increase include
all of the following EXCEPT ________.
A) a desire to improve profits
B) cost inflation
C) when the alternative is rationing of the
product
D) decreasing gross margins
E) increasing supply of product
Answer: E
114) Ways to avoid accusations of price
gouging include ________.
A) bundling products together
B) matching competitors' pricing
C) communications to customers
explaining why prices are being increased
D) passing along increased costs
E) increase quality of the product
Answer: C
115) Which of the following is true of
price changes?
A) Over-demand leads to companies
initiating price cuts.
B) Changes in price do not affect a brand's
image.
C) Customer reaction to price changes is
not as important as competitor reaction.
D) A drop in price can adversely affect
how consumers view the brand.
E) Excess capacity is a factor that causes
increases in price.
Answer: D
116) Competitors are most likely to react
to a price change when ________.
A) a large number of competitors are
involved
B) the product is uniform
C) the buyers are not well informed about
product features
D) buyers are not well informed about
price differences
E) the products are not uniform
Answer: B
117) Questions a company should consider
if a competitor initiates a price change
include all of the following EXCEPT
________.
A) "Are other competitors going to
respond?"
B) "What will happen to the company's
market share if it does not respond?"
C) "Is the price change temporary or
permanent?"
D) "Why did the competitor change the
price?"
E) "How can we improve our product?"
Answer: E
118) When a competitor cuts its price, a
company should ________ if it believes it
will not lose much market share or would
lose too much profit by cutting its own
prices.
A) reduce its production costs
B) reduce its marketing costs
C) maintain its current prices and profit
margin
D) increase its marketing budget to raise
the perceived value of the product
E) increase its production costs to improve
the quality of the product
Answer: C
119) When faced with a competitor who
has cut its product's price, which of the
following is the most cost-effective way
for a company to maintain its own price
but raise the perceived value of its offer?
A) by improving the quality of the product
B) by introducing a higher-priced premium
brand
C) by altering the company's marketing
communications
D) by bundling the offer with add-ons
E) by distributing the product through less
costly channels
Answer: C
120) In response to price cuts from
competitors, a cereal company with several
more expensive and higher quality cereals
introduced a lower-priced option to its
product line. This is an example of which
of the following responses to a
competitor's price cut?
A) raising the perceived value of a product
B) improving product quality
C) accepting a reduced market share
D) launching a "fighter brand"
E) using high-low pricing
Answer: D
121) Excess capacity leads to companies
initiating an increase in price.
Answer: FALSE
122) Companies need to respond to a
competitor's price change if its own market
share and profits will decrease because of
the change.
Answer: TRUE
123) Launching a fighter brand is an
effective way to deal with a situation in
which the market segment being lost is
price sensitive and will not respond to
arguments of higher quality.
Answer: TRUE
124) Which of the following is true of
public policies and pricing?
A) The government imposes no limits on
intrastate pricing issues.
B) The Robinson-Patman Act governs
interstate commerce.
C) Companies have free rein when it
comes to setting prices.
D) The Sherman Act governs intrastate
commerce.
E) The Clayton Act encourages the
formation of monopolies.
Answer: B
125) Which of the following is NOT true
of public policies and pricing?
A) Companies are free to charge whatever
prices they wish.
B) Federal, state, and local laws govern the
rules of fair play in pricing.
C) Deceptive pricing is not permitted.
D) Companies must consider broader
societal pricing concerns.
E) Regulations exist to control predatory
pricing.
Answer: A
126) The Sherman, Clayton, and
Robinson-Patman Acts are all federal laws
that were enacted to curb the formation of
________.
A) monopolies
B) global partnerships
C) competitive markets
D) internal markets
E) intrastate partnerships
Answer: A
127) When sellers set prices after talking
to competitors and engaging in collusion,
they are involved in ________.
A) interstate commerce
B) comparative pricing
C) price fixing
D) skimming pricing
E) price bundling
Answer: C
128) A number of top fashion-modeling
agencies would most likely be charged
with ________ for jointly determining
what commissions they charge for models.
A) prestige pricing
B) competitive pricing
C) price bundling
D) dynamic pricing
E) price fixing
Answer: E
129) Federal legislation on price fixing
requires that sellers set their prices
________.
A) based on their fixed and variable costs
B) without communication from
competitors
C) to achieve a specific profit margin
D) without the intention of cutting into
competitors' profits
E) consistently throughout a region
Answer: B
130) If a large retailer sold numerous items
below cost with the intention of punishing
small competitors and gaining higher long-
run profits by putting those competitors
out of business, the retailer would be
guilty of ________.
A) price collusion
B) price fixing
C) predatory pricing
D) competitive pricing
E) penetration pricing
Answer: C
131) Savings for You, a discount retail
chain, is highly competitive. When
entering a new market, Savings for You
often cuts prices so deeply that it sells
below costs, effectively pushing smaller
companies with less purchasing power out
of the market. Savings for You is most
likely guilty of ________.
A) market skimming
B) price fixing
C) deceptive pricing
D) price collusion
E) predatory pricing
Answer: E
132) Which of the following would be
considered predatory pricing?
A) a company that prices its products
below cost to get rid of a surplus
B) a company that prices below cost to
drive out competitors
C) a company that offers a volume
discount
D) a company that offers the suggested
retail price on the manufacturer's package
E) a company that offers real-time pricing
online
Answer: B

133) The ________ seeks to prevent unfair

price discrimination by ensuring that
sellers offer the same price terms to
customers at a given price level.
A) FTC's "Guides against Deceptive
Pricing"
B) Robinson-Patman Act
C) Sherman Act
D) Clayton Act
E) Automobile Information Disclosure Act
Answer: B

134) Price discrimination is legal when a

________.
A) manufacturer and reseller have agreed
upon a specified retail price for a product
B) manufacturer sells to retailers in
different markets
C) seller can prove its costs are different
when selling to different retailers
D) seller advertises prices that are not
actually available to consumers
E) seller has not communicated with
competitors before announcing prices
Answer: C

135) Price discrimination may be used to

match competition as long as the strategy
is temporary, localized, and ________.
A) defensive
B) offensive
C) publicized
D) private
E) uniform across channels
Answer: A
136) Mark's Markers, a manufacturer of
white board markers, has required its
dealers to charge a specified retail price for
its markers. Mark's is most likely guilty of
________.
A) captive pricing
B) retail price maintenance
C) price discrimination
D) competitive pricing
E) unfair price skimming
Answer: B
137) ________ occurs when a seller states
price savings that are not actually available
to consumers.
A) Comparative pricing
B) Scanner fraud
C) Deceptive pricing
D) Market skimming
E) Price collusion
Answer: C
138) While comparison pricing claims are
legal if they are truthful, the FTC warns
sellers not to advertise a) factory or
wholesale prices unless such prices are
what they claim to be, b) comparable value
prices on imperfect goods, or c) ________.
A) a sale unless the products are available
in sufficient quantity to meet expected
demand
B) in a way which confuses potential
buyers of the product
C) a description of a product unless all
versions of the product are offered with the
same pricing terms
D) a price reduction unless it is a savings
from the usual retail price
E) if only a limited quantity are available
at the reduced price
Answer: D
139) Failure to enter the current price into
a retailer's system may result in charges of
________.
A) predatory pricing
B) scanner fraud
C) retail maintenance pricing
D) discriminatory pricing
E) price fixing
Answer: B
140) Reasons sellers go beyond what is
required by pricing regulations include all
of the following EXCEPT that ________.
A) it is good business to treat customers
fairly
B) customers that fully understand prices
and pricing terms are happy customers
C) word-of-mouth from dissatisfied
customers spreads rapidly
D) building strong and lasting
relationships is key to business success
E) it improves profitability to earn
additional revenue due to customer
confusion
Answer: E
141) Price discrimination is permissible if
the seller manufactures different qualities
of the same product for different retailers
and can prove that the price difference is
proportional.
Answer: TRUE
142) The widespread use of scanner-based
computer checkouts has eradicated
complaints of retailers overcharging their
customers.
Answer: FALSE
143) While regulations exist to prohibit
deceptive pricing practices, in reality, most
reputable sellers do the minimum required
to meet the regulations.
Answer: FALSE
 TUTORIAL 10: CHAPTER 12
MARKETING CHANNELS:
DELIVERING CUSTOMER VALUE
ANSWER SCHEME
1) Producing a product or service and
making it available to buyers requires
building relationships not only with
customers but also with key suppliers and
resellers in the company's ________.
A) upstream partnerships
B) marketing channels
C) inventory providers
D) supply chain
E) downstream partnerships
Answer: D
2) The sets of firms that supply companies
with the raw materials, components, parts,
information, finances, and expertise
needed to create products or services are
known as ________.
A) retailers
B) upstream partners
C) distributors
D) downstream partners
E) distribution channels
Answer: B
3) Which of the following terms refers to
the wholesalers and retailers that form a
vital link between the firm and its
customers?
A) factory-supply networks
B) downstream partners
C) resource banks
D) upstream partners
E) supply channels
Answer: B
4) The term supply chain is considered
limited because it ________.
A) ignores the make-and-sell aspect of the
market
B) suggests that planning begins with raw
materials and factory capacity
C) takes a step-by-step, linear view of
purchase-production-consumption
activities
D) takes a sense-and-respond view of the
market
E) suggests that planning starts with
identifying the needs of target customers
Answer: B
5) The term demand chain is considered
limited because it ________.
A) advocates a make-and-sell view of the
market that relies on a responsive supply
network
B) suggests that planning starts with raw
materials, productive inputs, and factory
capacity
C) takes a step-by-step, linear view of
purchase-production-consumption
activities
D) ignores the evolution of the global
marketplace
E) overlooks the needs of target customers
Answer: C
6) A view of the market that specifies that
planning starts by identifying the needs of
target customers, to which the company
responds by organizing a chain of
resources and activities with the goal of
creating customer value is a(n) ________
view.
A) make-and-sell
B) identify-and-target
C) purchase-produce-and-consume
D) market-and-profit
E) sense-and-respond
Answer: E
7) A ________ is made up of the
company, suppliers, distributors, and
customers who partner to improve the
performance of the entire system.
A) value delivery network
B) horizontal channel
C) consumer base
D) product delivery network
E) product line
Answer: A

8) ________ play an important role in
matching supply and demand by providing
consumers with a broad assortment of
products in small quantities.
A) Virtual banks
B) Intermediaries
C) Price consultants
D) Uniform-delivery networks
E) Upstream partners
Answer: B
9) Which of the following questions is
NOT of major concern regarding
marketing channels?
A) What role do physical distribution and
supply chain management plan in
attracting and satisfying customers?
B) What impact do marketing channels
have on the profitability of the firm and its
partners?
C) How do channel firms interact and
organize to do the work of the channel?
D) What problems do companies face in
designing and managing their channels?
E) What is the nature of marketing
channels, and why are they important?
Answer: B
10) A ________ is a set of interdependent
organizations that help make a product or
service available for use or consumption
by the consumer or business user.
A) product line
B) product delivery network
C) marketing channel
D) consumer base
E) resource bank
Answer: C
11) Which of the following is most likely
true of marketing channel decisions?
A) They often involve long-term
commitments to other firms.
B) They have minimal influence on the
prices of products offered to customers.
C) They increase the amount of time a
company spends connecting with
customers.
D) They increase the amount of effort a
company puts in to distribute goods.
E) They are easily altered, replaced, or
discarded.
Answer: A
12) Distribution channel decisions
frequently require long-term commitments
between firms. A primary reason is that
________.
A) advertising is not easy to change
B) old products are difficult to discard and
new products are difficult to introduce
C) when they set up distribution through
franchisees, independent dealers, or large
retailers, they cannot readily replace these
channels with company-owned stores or
Internet sites if conditions change
D) changing the manufacturing
requirements is expensive and takes
significant time
E) management does not want to be
constantly changing the method of selling
and distributing its products
Answer: C
13) ________ play an important role in
efficiently making products available to
target markets in the needed varieties and
quantities.
A) Virtual banks
B) Intermediaries
C) Price consultants
D) Uniform-delivery networks
E) Upstream partners
Answer: B
14) From the economic system's point of
view, the role of ________ is to transform
the assortments of products made by
producers into the assortments wanted by
consumers.
A) upstream partners
B) marketing intermediaries
C) third-party logistics
D) price consultants
E) factory supervisors
Answer: B
15) A ________ is a layer of 19) A marketing channel that consists of
intermediaries that performs some work in one or more intermediaries is known as
bringing the product and its ownership a(n) ________ marketing channel.
closer to the final buyer. A) cyclic
A) product platform B) upstream
B) channel level C) looped
C) resource bank D) direct
D) contact center E) indirect
E) customer franchise Answer: E
Answer: B
20) Plasticine Palace supplies its products
16) In a(n) ________ channel, the same exclusively to Arts & Crafts, a chain of
member both produces and distributes a stationery stores across the country. The
product or service to consumers. chain then makes the plasticine available
A) tiered to end consumers. This is an example of
B) direct ________.
C) platform A) a direct marketing channel
D) vertical B) intensive distribution
E) exclusive C) an indirect marketing channel
Answer: B D) disintermediation
E) extensive distribution
17) Which of the following companies Answer: C
uses a direct marketing channel?
A) Fishhooks, a factory that manufactures 21) Which of the following is an example
fishing equipment that it ships to hobby of an indirect marketing channel?
stores worldwide A) June Bride, which sells bridal gowns
B) Germfight, a factory that manufactures via its click-to-order online catalogs
dental products that it distributes only to B) Farmer Brown, who delivers fresh milk
select department stores from his dairy to customers every morning
C) Apple Blossoms, a company that sells C) Wine & Dine, which sells its picnic
its cosmetics exclusively through Ray's baskets to select novelty stores across the
Retail Store country
D) Holly Wreaths, a store that sells D) Lifebelt Insurance, which sells life
Christmas ornaments to customers via its insurance through its door-to-door
online click-to-order catalogs salespeople
E) Showdown, a clothing store that stocks E) Rhonda's Rental, which rents cars to
merchandise from different international people for the day
brands Answer: C
Answer: D 22) Which of the following is a type of
flow that connects all institutions in a
18) At its most basic form, a marketing marketing channel?
channel consists of the producer and the A) payment flow
________. B) ownership flow
A) retailer C) physical flow
B) sales agent D) promotion flow
C) competitor E) information flow
D) processor Answer: A
E) consumer
Answer: E

22) The greater the number of channel
levels in a marketing channel, the
________.
A) less distance between producer and
end-consumer
B) greater the channel complexity
C) less time it takes for products to reach
end-consumers
D) greater the control producers have over
the distribution of their products
E) greater the control producers have over
the demand of their products
Answer: B
23) Which of the following is a
conventional consumer marketing
channel?
A) producer to business distributor to end
consumer
B) producer to wholesaler to retailer to end
consumer
C) producer to end consumer to business
customer
D) producer to retailer
E) producer to business distributor to
business customer
Answer: B
24) Which of the following is an indirect
business marketing channel?
A) producer to retailer to business
distributor
B) producer to wholesaler to retailer to end
consumer
C) producer to end-consumer to business
distributor
D) producer to retailer
E) producer to business distributor to
business customer
Answer: E
Refer to the scenario below to answer the
following question(s).
Giant Beanstalks is a company based in
Maryland that processes and cans
vegetables. It has contracts with several
large farms in Riverdale, 80 miles away
from the factory, that agree to sell their
produce to Giant Beanstalks. The
company's products are available to the
public only through Greenleaf, a grocery
chain with 38 stores in the country.
25) Which of the following is Giant
Beanstalks' upstream partner?
A) the management of Greenleaf
B) the farmers of Riverdale
C) the trucks that carry Giant Beanstalks'
products to Greenleaf
D) the end-consumers who buy the canned
vegetables from Greenleaf
E) the logistics division of Giant Beanstalk
Answer: B
26) Downstream marketing channel
partners, such as wholesalers and retailers,
form a vital link between the firm and its
customers.
Answer: TRUE
27) A company's channel decisions
directly affect the prices of its products.
Answer: TRUE
28) Producers use intermediaries because
they create greater efficiency in making
goods available to target markets.
Answer: TRUE
29) The role of marketing intermediaries is
to transform the assortments of products
made by retailers into the assortments
wanted by producers.
Answer: FALSE
30) Each layer of marketing intermediaries
that performs some work in bringing the
product and its ownership closer to the
final buyer is a channel level.
Answer: TRUE
31) It is more efficient for a company to
keep the marketing channel functions—
such as information gathering, promotion,
contacting customers and matching their
needs, negotiation, and physical
distribution—in-house as they are most
skilled at those functions.
Answer: FALSE affect the company's image or profits.
32) The number of products supplied Answer: B
indicates the length of a channel.
Answer: FALSE 37) Conflict that occurs among firms at the
same level of the marketing channel is
33) In a direct marketing channel, the known as ________ conflict.
producer sells directly to the A) multitiered
intermediaries, who in turn sell directly to B) horizontal
the customers. C) vertical
Answer: FALSE D) prolonged
E) financial
34) ________ are complex behavioral Answer: B
systems in which people and companies
interact to accomplish individual, 38) Conflict that occurs between different
company, and channel goals. levels of the same marketing channel is
A) Customer relationship management known as ________ conflict.
systems A) horizontal
B) Distribution channels B) vertical
C) Partner relationship systems C) multitiered
D) Consumer bases D) equilateral
E) Buying centers E) communal
Answer: B Answer: B

35) Which of the following does NOT 39) Managers at the Imperial Hotel-
apply to channel systems? Chicago complained that the chain's
A) Some channel systems consist of only overall image was hurt because Imperial
informal interactions among loosely Hotel-Dallas was overcharging guests and
organized firms. providing poor service. The Imperial Hotel
B) Channel systems do not stand still; they was experiencing ________ conflict.
evolve. A) equilateral
C) Some channel systems are formal B) vertical
interactions guided by strong C) multitiered
organizational structures. D) communal
D) Intermediaries play interchangeable E) horizontal
roles in the system. Answer: E
E) Different types of intermediaries
develop and emerge. 40) The management of two Panizza
Answer: D restaurants has an ongoing disagreement
over the discount rate given to students
36) Which of the following is true of from the local high school. This is an
channel members? example of ________ conflict.
A) They act independent of each other. A) intensive
B) They play specialized roles in the B) selective
channel. C) exclusive
C) They are not accountable to other D) horizontal
channel members. E) vertical
D) They play generalized and Answer: D
interchangeable roles in the distribution
process.
E) Their competence and cooperation don't
 Answer: B
41) When KFC came into conflict with its 45) A(n) ________ marketing system
franchisees over the brand's Unthink KFC consists of producers, wholesalers, and
repositioning, which emphasized grilled retailers acting as a unified system.
chicken over its traditional Kentucky fried A) horizontal
chicken, KFC experienced ________ B) communal
conflict. C) multitiered
A) equilateral D) vertical
B) horizontal E) equilateral
C) multitiered Answer: D
D) communal
E) vertical 46) Which of the following is true of
Answer: E vertical marketing systems?
A) Producers, wholesalers, and retailers
42) Conflict in the channel can be healthy act as a unified system.
because ________. B) Channel members have no control over
A) it can disrupt channel effectiveness each other.
B) normal give-and-take simply is normal C) Channel conflict is governed by
C) the channel could become passive and informal mechanisms.
non-innovative D) The system is dominated by the
D) it can cause harm to channel consumer.
relationships E) Channel members work independently
E) the respective rights of the channel with no cooperation from other members.
partners take priority Answer: A
Answer: C
47) Which of the following is a major type
43) A(n) ________ consists of one or more of vertical marketing system?
independent producers, wholesalers, and A) corporate
retailers, each seeking to maximize its own B) conventional
profits, sometimes even at the expense of C) multilevel
the system as a whole. D) intrinsic
A) multitiered supply chain E) extrinsic
B) conventional distribution channel Answer: A
C) intrinsic market matrix
D) resource bank 48) A ________ VMS integrates
E) product platform successive stages of production and
Answer: B distribution under single ownership.
A) contractual
44) Which of the following is true of B) contingency
conventional distribution channels? C) corporate
A) Channel members have complete D) conventional
control over each other. E) communal
B) Channel members seek to maximize Answer: C
their own profits.
C) Channel conflict is governed by formal 49) A ________ VMS consists of
mechanisms. independent firms at different levels of
D) Channel members are assigned roles production and distribution who join
according to a clearly defined framework. together through formal agreements to
E) Channel members work exclusively for obtain more economies or sales impact
the good of the organization. than each could achieve alone.
A) corporate
B) contingency 53) In a(n) ________, leadership is
C) contractual assumed not through common ownership
D) communal or contractual ties but through the size and
E) conventional power of one or a few dominant channel
Answer: C members.
A) horizontal marketing system
50) The ________ organization is the most B) administered VMS
common type of contractual relationship. C) corporate VMS
A) franchise D) contractual VMS
B) horizontal E) conventional VMS
C) conventional Answer: B
D) multi-national
E) entrepreneurial 54) ________ VMS is a vertical marketing
Answer: A system that coordinates successive stages
of production and distribution through the
51) Ford and its network of independent size and power of one of the parties.
franchised dealers is an example of a A) Contingent
________. B) Aligned
A) manufacturer-sponsored retailer C) Corporate
franchise system D) Contractual
B) manufacturer-sponsored wholesaler E) Administered
franchise system Answer: E
C) service-firm-sponsored retailer
franchise system 55) In a(n) ________, two or more
D) service-firm-sponsored equity strategic companies at one level join together to
alliance follow a new marketing opportunity.
E) manufacturer-and-service-sponsored A) administered vertical marketing system
joint venture B) horizontal marketing system
Answer: A C) corporate vertical marketing system
D) hybrid distribution system
52) Fire Up makes fireproof clothing E) conventional marketing system
material and it licenses select stores around Answer: B
the world to use its material to make
finished products with the Fire Up logo. 56) Which of the following is most likely a
Which of the following types of manufacturer-sponsored retailer franchise
franchising is evident here? system?
A) manufacturer-sponsored retailer A) international fast food chains like
franchise system McDonald's and Pizza Hut
B) manufacturer-sponsored wholesaler B) Starbucks outlets operating within
franchise system Target stores
C) service-firm-sponsored retailer C) Toyota and its network of independent
franchise system franchised dealers
D) service-firm-sponsored equity strategic D) licensed bottlers that bottle and sell soft
alliance drinks to retailers
E) manufacturer-and-service-sponsored E) hotel chains like the Ritz Carlton and
joint venture Shangri-La
Answer: B Answer: C

57) When McDonald's offers its products
inside of a Walmart store, it is using a(n)
________.
A) conventional marketing system
B) corporate VMS
C) contractual VMS
D) administered VMS
E) horizontal marketing system
Answer: E
58) A(n) ________ system involves a
single firm setting up two or more
marketing channels to reach one or more
customer segments.
A) conventional distribution
B) corporate vertical marketing
C) horizontal marketing
D) administered vertical marketing
E) multichannel distribution
Answer: E
59) Atlas Imports and Exports sells
products directly to consumers via the
Atlas Web site, and through local retailers
as well. Which of the following is evident
here?
A) corporate vertical marketing system
B) horizontal marketing system
C) multichannel distribution system
D) administered vertical marketing system
E) conventional distribution channel
Answer: C
60) Movie Giants offers DVD rentals
through its Web site. It also offers DVD
rentals via Star City stores. This is an
example of a(n)________ distribution
system.
A) conventional
B) inclusive
C) intensive
D) extensive
E) multichannel
Answer: E
61) Which of the following is an
advantage of adding new channels in a
multichannel distribution system?
A) limiting market complexity
B) reducing control over the system
C) expanding sales and market coverage
D) decreasing marketing needs and costs
E) minimizing mass customization of
products
Answer: C
62) Which of the following is a
disadvantage of adding new channels in a
multichannel distribution system?
A) decreasing complexity of markets
B) decreasing control over the system
C) reducing opportunities for franchising
D) lowering sales and market coverage
E) minimizing publicity needs
Answer: B
63) ________ occurs when product or
service producers cut out intermediaries
and go directly to final buyers or when
radically new types of channel
intermediaries displace traditional ones.
A) Extensive distribution
B) Multichannelization
C) Disintermediation
D) Inclusive distribution
E) Cross merchandising
Answer: C
64) The Bookworm began delivering
books directly to customers through mail
instead of selling through brick-and-mortar
companies. This is an example of
________.
A) indirect marketing
B) disintermediation
C) franchising
D) exclusive distribution
E) intensive distribution
Answer: B
65) Which of the following is true of
changes in the organization of distribution
channels?
A) Developing new channels seldom
causes conflict with a company's
established channels.
B) To remain competitive, product and
service producers must use fewer
marketing channels.
C) The growth of the Internet threatens
many brick-and-mortar companies with
disintermediation.
D) Companies have fewer channel options
today than they did in the past due to
economic problems.
E) Advances in technology have decreased
the number of channels available to
entrepreneurial firms.
Answer: C
66) A marketing channel works most
effectively when each channel member
performs the tasks it does best.
Answer: TRUE
67) Horizontal conflicts are conflicts
between different levels of the same
channel.
Answer: FALSE
68) Vertical conflict occurs among firms at
the same level of the channel.
Answer: FALSE
69) A conventional distribution channel
consists of one or more independent
producers, wholesalers, and retailers; each
seeking to maximize its own profits,
perhaps even at the expense of the system
as a whole.
Answer: TRUE
70) A non-corporate VMS integrates
successive stages of production and
distribution under single ownership.
Answer: FALSE
71) In a vertical marketing system, two or
more companies at one level join together
to take advantage of a new marketing
opportunity.
Answer: FALSE
72) Disintermediation occurs when
radically new types of channel
intermediaries displace traditional ones.
Answer: TRUE
73) Which of the following should be a
manufacturer's first step when designing
an effective marketing channel?
A) set channel objectives
B) analyze consumer needs
C) identify channel alternatives
D) evaluate channel alternatives
E) establish strategic alliances
Answer: B
74) Which of the following is NOT a step
in designing an effective marketing
channel?
A) evaluating the channel alternatives
B) identifying major channel alternatives
C) analyzing consumer needs
D) determining pricing policy for channel
members
E) setting channel objectives
Answer: D
75) In designing the marketing channel, a
company must balance customer needs and
wants with ________.
A) the need to make a profit
B) the requirement to find channel
members to fill all the steps
C) the firm's position in the customers'
minds
D) the desire to be "the best" in all service
areas
E) the firm's resources and skills to
provide all the desired services
Answer: E
76) The company's channel objectives are
influenced by all of the following
EXCEPT ________.
A) the company's marketing intermediaries
B) the company's competitors
C) the age of the company
D) the nature of the company
E) the company's products
Answer: C
77) Which of the following is an
environmental factor that affects channel
objectives and design?
A) economic conditions
B) factory staffing
C) organizational objectives 82) For which product would a company
D) interpersonal influences use an exclusive distribution strategy?
E) individual motives A) luxury cars
Answer: A B) newspapers
C) chewing gum
78) ________ distribution is a strategy in D) dairy products
which producers of convenience products E) soft drinks
and common raw materials stock their Answer: A
products in as many outlets as possible.
A) Direct 83) Ocean Spray sells its air fresheners
B) Intensive only through Ray's Drugs. This is an
C) Inclusive example of ________ distribution.
D) Exclusive A) exclusive
E) Selective B) selective
Answer: B C) intensive
D) indirect
79) For which of the following products E) corporate
would the intensive distribution strategy Answer: A
most likely be used?
A) high-end cameras 84) ________ distribution involves the use
B) luxury cars of more than one but fewer than all of the
C) lawn mowers intermediaries who are willing to carry a
D) soft drinks company's products.
E) furniture A) Exclusive
Answer: D B) Selective
C) Intensive
80) Whitelight sells its toothpastes in D) Indirect
many convenience stores across the E) Corporate
country. This is an example of ________ Answer: B
distribution.
A) exclusive 85) Craftsman Furniture Company offers
B) selective its bedroom and living room furniture
C) hybrid through independent and smaller chain
D) intensive furniture stores, not through every store
E) normal that sells furniture. It uses ________
Answer: D distribution.
A) intensive
81) With which of the following strategies B) direct
would a company give only a limited C) corporate
number of dealers the right to distribute its D) selective
products in their territories? E) exclusive
A) exclusive distribution Answer: D
B) extensive distribution
C) moderate distribution 86) Which of the following is true of the
D) primary distribution exclusive distribution strategy?
E) intensive distribution A) It makes products available to
Answer: A everybody, everywhere.
B) It is used primarily for convenience
items.
C) It helps promote a brand's luxury
image.
D) It gives producers no control over their
products.
E) It enlists all of the intermediaries
willing to carry a company's products.
Answer: C
87) When the seller allows only certain
outlets to carry its products, this strategy is
called ________.
A) exclusive distribution
B) subjective dealing
C) selective distribution
D) exclusive pricing
E) disintermediation
Answer: A
Refer to the scenario below to answer the
following question(s).
Giant Beanstalks is a company based in
Maryland that processes and cans
vegetables. It has contracts with several
large farms in Riverdale, 80 miles away
from the factory, that agree to sell their
produce to Giant Beanstalks. The
company's products are available to the
public only through Greenleaf, a grocery
chain with 38 stores in the country.
88) What distribution strategy does Giant
Beanstalks use?
A) inclusive distribution
B) exclusive distribution
C) selective distribution
D) intensive distribution
E) extensive distribution
Answer: B
89) Which of the following is NOT a
criterion a company will use to evaluate
the major channel alternatives?
A) adaptability
B) control
C) commitment
D) sales and costs
E) likability
Answer: E
90) Why do firms have difficulty accessing
potential market areas in developing
countries, such as China and India?
A) inadequate distribution systems
B) anti-globalization efforts
C) highly centralized rural markets
D) limited manpower
E) high operating costs
Answer: A
91) Multichannel marketing occurs when a
single firm sets up two or more marketing
channels to reach one or more customer
segments.
Answer: TRUE
92) Marketing channel design calls for
analyzing consumer needs, setting channel
objectives, identifying major channel
alternatives, and evaluating those
alternatives.
Answer: TRUE
93) Producers of convenience products and
common raw materials typically seek
exclusive distribution, a strategy in which
they stock their products in as many
outlets as possible.
Answer: FALSE
94) Under the strategy of intensive
distribution, the producer gives only a
limited number of dealers the exclusive
right to distribute its products in their
territories.
Answer: FALSE
95) The producer informs each channel
member what its responsibilities are, and
what the terms of business are.
Answer: FALSE
96) ________ management calls for
selecting, managing, and motivating
individual channel members and
evaluating their performance over time.
A) Inventory
B) Marketing channel
C) Brand image
D) Customer experience
E) Brand content
Answer: B
97) To help recruit, train, organize,
manage, motivate, and evaluate
relationships with channel partners,
companies are now installing integrated
high-tech ________ systems.
A) advertiser funded programming
B) customer segmentation network
C) brand content management
D) partnership relationship management
E) closed loop marketing
Answer: D
98) Producers motivate channel members
using all of the following EXCEPT
________.
A) using strict rules to force compliance
with contract terms
B) partner relationship management
C) working to sell through the
intermediaries
D) persuading the intermediaries that they
are first-line customers
E) convincing channel members that each
will enjoy greater success working
together with a common goal
Answer: A
99) When a seller requires its dealers to
abstain from handling competitors'
products, it is called ________.
A) subjective distribution
B) exclusive dealing
C) selective distribution
D) exclusive pricing
E) disintermediation
Answer: B
100) A strategy of exclusive dealing is
most likely considered legal if ________.
A) the industry is newly developed
B) both parties have large territories
C) competition is not substantially
lessened
D) the dealer agrees to promote the
competitor's products
E) the dealer receives a steady source of
supply and support
Answer: C
101) Which of the following involves the
producer agreeing not to sell to other
dealers in a given area, or the buyer
agreeing to sell only in its own region?
A) closed loop marketing
B) uniform-delivery pricing
C) exclusive territorial agreement
D) cross merchandising
E) nationalized marketing
Answer: C
102) Producers of strong brands
sometimes sell to dealers only on the
condition that dealers take some or all of
the rest of a product line. This practice is
known as ________.
A) product line franchising
B) selective dealing
C) cross merchandising
D) full-line forcing
E) disintermediation
Answer: D
103) Marketing channel management calls
for selecting, managing, and motivating
individual channel members and
evaluating their performance over time.
Answer: TRUE
104) As a part of intensive distribution,
dealers are expected to refrain from selling
the products of the producers' competitors.
Answer: FALSE
105) When a producer uses exclusive
dealing and the use of exclusive territorial
agreements to keep a dealer from selling
outside its territory, it is completely legal.
Answer: FALSE
106) Smart Shoppers, an online store that
delivers its products to homes in and
around California, recently switched its
entire fleet to biodiesel trucks that run on
used cooking oil rather than gas. Smart
Shoppers has most likely developed a(n)
________.
A) vertical marketing channel
B) green supply chain 111) ________ logistics refers to moving
C) multitiered marketing channel products and materials from the suppliers
D) intermodal transportation system to the factory.
E) hybrid distribution system A) Outbound
Answer: B B) Diverse
C) Inbound
107) ________ involves planning, D) Reverse
implementing, and controlling the physical E) Customer-centered
flow of goods, services, and related Answer: C
information from points of origin to points
of consumption to meet customer 112) Reusing, recycling, refurbishing, or
requirements at a profit. disposing of broken, unwanted, or excess
A) Advertising products returned by consumers or
B) Product positioning resellers is known as ________.
C) Mass customization A) cross merchandising
D) Marketing logistics B) reverse logistics
E) Branding C) disintermediation
Answer: D D) diverse logistics
E) inbound logistics
108) Marketing logistics includes all of the Answer: B
following EXCEPT ________.
A) reverse logistics 113) ________ management refers to the
B) inbound logistics management of upstream and downstream
C) outbound logistics value-added flows of materials, final
D) customer-centered logistics goods, and related information among
E) producer-centered logistics suppliers, the company, resellers, and final
Answer: E consumers.
A) Cross
109) ________ logistics starts with the B) Price
marketplace and works backward to the C) Supply chain
factory or even to sources of supply. D) Product cycle
A) Outbound E) Customer
B) Customer-centered Answer: C
C) Upstream
D) Reverse 114) Which of the following is NOT a
E) Inbound major logistics function?
Answer: B A) inventory management
B) product designing
110) ________ logistics involves moving C) warehousing
products from the factory to resellers and D) transportation
ultimately to customers. E) packaging
A) Customer-centered Answer: B
B) Reverse
C) Upstream 115) Logistics has grown in importance
D) Outbound for all of the following reasons EXCEPT
E) Inbound that ________.
Answer: D A) companies that become channel
members want to continue to grow and
expand.
B) companies can gain a powerful
competitive advantage by using improved 119) Which of the following is true of
logistics to give customers better service or using trucks as a transportation mode?
lower prices. A) Transportation via trucks is costlier
C) improved logistics can yield than by rail or air.
tremendous cost savings to both a B) Trucks are a specialized means of
company and its customers. shipping petroleum, natural gas, and
D) more than almost any other marketing chemicals from sources to markets.
function, logistics affects the environment C) Trucks provide in-transit services such
and a firm's environmental sustainability as the diversion of shipped goods to other
efforts. destinations en route.
E) the explosion in product variety has D) Trucks are highly flexible in their
created a need for improved logistics routing and time schedules.
management. E) Trucks are the slowest mode of
Answer: A transportation and most affected by the
weather.
116) Major logistics functions are logistics Answer: D
information management, inventory
management, transportation, and 120) Which of the following is true of
________. transporting goods via railroads?
A) advertising A) Railroads are ideal for the
B) product design transportation of digital technology.
C) financial projections B) Railroads are a specialized means of
D) warehousing shipping petroleum, natural gas, and
E) customer sales chemicals from sources to markets.
Answer: D C) Railroads are a cost-effective way to
ship large amounts of bulk products over
117) ________ are large and highly long distances.
automated warehouses designed to receive D) Railroads are the most flexible mode of
goods from various plants and suppliers, transportation in their routing and time
take orders, fill them efficiently, and schedules.
deliver goods to customers as quickly as E) Railroads are the slowest mode of
possible. transportation and are the most affected by
A) Loading docks the weather.
B) Open warehouses Answer: C
C) Distribution centers
D) Shipping platforms 121) Which of the following is true of
E) Product platforms shipping goods via water transportation?
Answer: C A) Water transportation is an efficient way
to ship perishable merchandise over long
118) ________ or smart tag technology distances.
helps companies locate a product's exact B) Water carriers are highly flexible in
position within its supply chain. their routing and time schedules.
A) RFID C) Water transportation provides in-transit
B) PRM services, such as the processing of goods
C) VMS en route.
D) BCODE D) Water transportation is ideal when time
E) 3PL is short and speed is needed.
Answer: A E) Water transportation is the slowest
mode of transportation and the most
affected by the weather.
Answer: E 126) Which of the following is the most
effective way for a company to ship bulky,
122) ________ are a specialized means of non-perishable products if its key
shipping petroleum, natural gas, and requirement is low price?
chemicals from sources to markets. A) pipelines
A) Air tunnels B) air transport
B) Rail flatcars C) trucks
C) Steam ships D) water carriers
D) Pipelines E) piggyback
E) Airlines Answer: D
Answer: D
127) Heart of Midnight sells blue orchids
123) Which of the following is true about to major florists around the world. Their
using air carriers as a transportation mode key requirement is speed. Which of the
when shipping products? following modes of transport will help
A) Air carriers are the most cost-effective them?
way to ship non-perishable goods over A) rail transport
short distances. B) air carriers
B) Air carriers are the slowest and least C) trucks
reliable modes of transport. D) piggybacks
C) Air carriers provide in-transit services E) water transport
such as the processing of goods en route. Answer: B
D) Air carriers are ideal when time is short
and speed is needed. 128) Using ________, retailers can share
E) Air carriers are a specialized means of real-time data on sales and current
shipping chemicals from sources to inventory levels with suppliers.
markets. A) automated storage and retrieval systems
Answer: D (ASRS)
B) vendor-managed inventory (VMI)
124) In intermodal transportation, which of systems
the following describes the use of both rail C) transportation management systems
and trucks for transportation? (TMS)
A) fishyback D) warehouse management systems
B) drawbar (WMS)
C) trainship E) distribution center management systems
D) piggyback (DCMS)
E) airtruck Answer: B
Answer: D
129) ________ management is the
125) In intermodal transportation, which of logistics concept that emphasizes
the following describes the use of both teamwork—both inside the company and
water and trucks for transportation? among all the marketing channel
A) fishyback organizations—to maximize the
B) drawbar performance of the entire distribution
C) trainship system.
D) piggyback A) Logistics inventory
E) airtruck B) Integrated logistics
Answer: A C) Logistics information
D) Independent logistics
E) Group logistics
Answer: B 132) What distribution strategy does
Kimberly's Crown use?
Refer to the scenario below to answer the A) exclusive
following question(s). B) intensive
C) selective
Giant Beanstalks is a company based in D) inclusive
Maryland that processes and cans E) extensive
vegetables. It has contracts with several Answer: C
large farms in Riverdale, 80 miles away
from the factory, that agree to sell their 133) When one of the stores complains
produce to Giant Beanstalks. The that the jewelry they're being given is
company's products are available to the inferior to the jewelry Kimberly sells to
public only through Greenleaf, a grocery other stores, Kimberly experiences
chain with 38 stores in the country. ________ conflict.
A) horizontal
130) Roland is the logistics manager of B) multitiered
Giant Beanstalks. Which of the following C) vertical
is NOT an area of responsibility for him? D) intensive
A) the transportation of the canned E) subjective
vegetables to Greenleaf Answer: C
B) the storage of the unprocessed
vegetables 134) Kimberly decides to alter its
C) the advertising of the final product distribution strategy so that its jewelry is
D) product inventory management accessible to the public only through one
E) the packaging of the final product distributor. The strategy they're
Answer: C considering is known as ________
distribution.
131) Which of the following modes of A) elusive
transport should Roland choose to B) extensive
transport the unprocessed vegetables from C) exclusive
Riverdale's farms to the Giant Beanstalks' D) selective
factory quickly and with minimum cost? E) elective
A) air carrier Answer: C
B) pipeline
C) truck 135) What mode of transport should
D) oil tanks Kimberly use to ship its goods over long
E) air tunnels distances as quickly as possible?
Answer: C A) flatcars
B) water transport
Refer to the scenario below to answer the C) air transport
following question(s). D) trucks
E) railroads
Kimberly's Crown sells and designs Answer: C
jewelry. Despite the jewelry's popularity,
products are available only through a few 136) Marketing logistics involves
shopping stores across the country. planning, implementing, and controlling
the physical flow of goods, services, and
related information from points of origin
to points of consumption to meet customer
requirements at a profit.
Answer: TRUE

137) Reverse logistics refers to the moving

of products and materials from suppliers to
the factory.
Answer: FALSE

138) Environmental sustainability is an

important factor in supplier selection and
performance evaluation, as designing
sustainable supply chains has become the
right thing to do.
Answer: TRUE

139) In contrast to distribution centers,

storage warehouses are designed to move
goods rather than just house them.
Answer: FALSE

140) Air carriers transport digital products

from producer to customer via satellite,
cable, phone wire, or wireless signal.
Answer: FALSE

141) Intermodal transportation refers to the

combination of two or more modes of
transportation.
Answer: TRUE

142) Electronic data interchange is the

digital exchange of data between
organizations, which primarily is
transmitted via the Internet.
Answer: TRUE