Study Guide for Exam #2, Marketing Management 345, The Catholic University of America


EXAM #2 study guide, spring 2013

Chapter 12—Services and Nonprofit Organization Marketing


1. A barber shop is an example of a service business.

2. Services tend to exhibit more search qualities than do tangible goods.

3. Services are considered inseparable because most services cannot be felt or touched in the same way most goods can be sensed.

4. Greta, the owner of House Mouse Cleaning Services, must be physically present when she cleans a house or office. The need for her presence as the service is performed is an example of the intangibility of services.

5. Heterogeneity of services means the quality of a service may not be consistent.

6. Hotels will often offer deep discounts on weekends and during the off-season; for the same reason, airlines will adopt a similar pricing strategy during off-peak hours. These services cannot be stored, warehoused, or inventoried because they are perishable.

7. Responsiveness is the service quality component most valued by customers.

8. Karen has a gluten allergy, which means she is unable to eat certain foods. The chef at her favorite restaurant understands Karen’s situation and is always happy to modify his recipes for her when she dines there. The chef is providing assurance to Karen.

9. The gap model of service quality identifies five gaps that can cause problems in service delivery and influence customer evaluations of service quality.

10. The only type of service processing required for a comedian entertaining at a local club is information processing.

11. The core service is the most basic benefit the consumer is buying.

12. Most service organizations market only one specific service

13. Vera is designing a promotional strategy for a company that provides premium boarding services for pampered animals. Her promotions should use personal information sources and stress the tangible cues associated with the service.

14. Revenue-oriented pricing focuses on maximizing the surplus of income over costs.

15. Many businesses have found that it is more expensive to hang on to the customers they have than to focus only on attracting new ones.

16. Chesapeake Energy Corporation was recognized by Fortune Magazine as one of the top companies to work for. Fortune mentioned that Chesapeake Energy provides its employees many perks, including the opportunity to take free scuba-diving lessons in Chesapeake’s on-site Olympic-size pool. This example illustrates relationship marketing in action.

17. U.S. service firms such as financial institutions and construction, engineering, and insurance companies will have a difficult time expanding to global markets because competing foreign firms possess many competitive advantages.

18. A nonprofit organization is an organization that exists to achieve some goal other than the usual business goals of profit, market share, or return on investment.

19. Nonprofit organizations do not charge prices for the services they provide.

20. Nonprofit managers do not need to worry about developing marketing strategies.

21. One marketing issue unique to nonprofit organizations is that these organizations must often target those who are apathetic about or strongly opposed to receiving their services.

22. Nonprofit organizations may or may not require special facilities for distribution of their services.

23. The advertising budgets of most nonprofits are too small to pay for the running of public service advertisements to promote their programs, activities, or services.

Chapter 13—Marketing Channels


1. A marketing channel is a set of interdependent organizations that ease the transfer of ownership as products move from producer to business user or consumer.

2. As products move through the marketing channel, channel members provide specialization and division of labor, overcome discrepancies, and provide contact efficiency.

3. A consumer stopped by the convenience store to buy a bag of charcoal briquettes. She only needs one bag, but the manufacturer produces millions of bags. For consumers, the convenience store overcomes a discrepancy of dimensions.

4. The Beistle Company manufactures Halloween decorations year-round, but customer demand is concentrated only during the month of October. By maintaining inventories of the Beistle Company’s products, marketing channels overcome this spatial discrepancy.

5. Consider a scenario in which there are five manufacturers, no intermediaries, and four consumers. Twenty transactions would be required for each consumer to receive products from each manufacturer. The introduction of one intermediary reduces the required number of transactions to four and demonstrates the idea of contact efficiency.

6. A merchant wholesaler is an institution that buys goods from manufacturers and resells them to businesses, government agencies, and other wholesalers or retailers.

7. Carl represents a manufacturer of floor coverings and gets paid a commission for finding buyers and linking them up with the manufacturer. Carl is an example of a merchant wholesaler.

8. The three basic functions a channel intermediary provides are transactional, logistical, and facilitating functions.

9. Transactional functions include contacting potential customers and assuming the risk of owning inventory.

10. Tammy Bowles makes handmade, wooden children’s toys, which she sells online to end users. Tammy does not use channel intermediaries, which means she uses a direct channel.

11. The direct channel is used more often in consumer markets than in business-to-business markets.

12. LoneStar Bar & Grill is a small chain of restaurants that feature marinated steaks. The marinade is so popular that LoneStar sells it at its restaurants and Kroger supermarkets. This is an example of intensive distribution.

13. Metallurgical Designs makes gold and silver charms for necklaces and bracelets. It markets its charms to a few retailers in any one region and promotes them intensively to those retailers. This is an example of intensive distribution.

14. Shopping goods are usually distributed selectively. Consumers are willing to look around for them but may not be willing to search or travel extensively to acquire the product.

15. Exclusive distribution increases direct competition among retailers.

16. At one end of the channel relationship continuum is the “Arm’s-length” relationship.

17. Highly integrated channel relationships are the preferred relationship because there is no large outlay of assets required to keep the channel members all working toward the same results.

18. Integrated channel relationships tend to be more flexible than cooperative relationships.

19. An international consumer products manufacturer requires all of its suppliers to provide the lowest possible cost and to adhere to a just-in-time inventory system. Wholesalers and manufacturers generally yield to the authority of this large manufacturer. This consumer products manufacturer exercises channel power.

20. Reciprocal conflict occurs among channel members on the same level, such as two or more different wholesalers or two or more different retailers that handle the same manufacturer’s brands.

21. Many regard vertical conflict as healthy competition.

22. Because distribution creates the same problems whether it is in Ethiopia, Indonesia, or Venezuela, you will find that channel structures and types around the world are very similar to those in the United States.

23. Gray marketing channels assist brand name manufacturers in marketing their products more efficiently.

24. Unlike marketers of physical products, marketers of services do not tend to address the question of logistics since services do not require a distribution strategy.

25. When discussing the distribution of services, you will often hear channel members discussing the need to minimize wait times.

26. The Internet is quickly becoming an alternative channel for delivering services.

Chapter 14—Supply Chain Management


1. Supply chain management is completely producer driven.

2. Companies that use supply chain management techniques typically also use a push promotional strategy.

3. Supply chain management is a key means of differentiation for a firm and a critical component in marketing and corporate strategy.

4. Management practices that reflect a highly coordinated effort between supply chain partners are said to be “integrated.”

5. Supplier integration occurs when multiple firms in a supply chain coordinate their activities and processes so that they are seamlessly linked to one another in an effort to satisfy the customer.

6. The demand management process seeks to align supply and demand throughout the supply chain by anticipating customer requirements at each level of creating demand-related plans of action prior to actual customer purchasing behavior.

7. The goals of the manufacturing flow management process are centered on generating, filing, delivering, and providing on-the-spot service for customer orders.

8. RFID tags are not one of the components of a logistics information system.

9. EDI is often used to replace paper documents with electronic documents containing the same information.

10. Managing inventory from the supplier to the manufacturer is called distribution resource planning (DRP).

11. The goal of a materials-handling system is to handle products as infrequently as possible

12. The six criteria important in selecting a transportation mode are relative cost, transit time, reliability, capability, accessibility, and traceability.

13. Water transportation is by far the most expensive mode of transportation, but it is also the most reliable.

14. Traceability with respect to transporting modes refers to the relative ease with which a shipment can be located and transferred.

15. Both water transportation costs and reliability are low when compared with any other transportation mode.

16. Another name for outsourcing is contract logistics.

17. Digital distribution is a distribution technique that includes any kind of product or service that can be distributed electronically.

18. Manufacturers who require suppliers to meet certain environmental standards are implementing green supply chain management.

19. Manufacturers who require suppliers to meet certain environmental standards are implementing green supply chain management.

20. One of the most critical global supply issues for importers of any size is coping with the legalities of trade in other countries.

Chapter 15—Retailing


1. Retailing can be defined as all the activities directly related to the sale of goods and services to the ultimate consumer for personal, nonbusiness use.

2. Independent retailer shops are stores owned and operated as a group by a single organization.

3. A retailing establishment that sells a wide variety of shopping and specialty goods, including apparel, cosmetics, housewares, and electronics, would be classified as a department store.

4. Traditional department stores and specialty stores are more likely to charge the full “suggested retail price” for goods than are factory outlets.

5. Emily has just opened a health food store that sells organic foods, herbal supplements, and environmentally friendly products. Because it will be a specialty store, she should have a broad product assortment with moderately low prices.

6. Supermarkets are self-service retailers that specialize in food and food products, although many now carry nonfood items as well.

7. Jennifer owns a greeting card store where she also sells women’s purses, Crocs shoes for the whole family, Jibbitz charms, cell phone skins, Sandy Lion stickers, Yankee candles, Godiva chocolates, Precious Memories figurines, beaded jewelry, and stuffed animals. Jennifer uses multibrand merchandising.

8. Flash Foods is the name of a chain of small stores that carry high-turnover products such as lip balm, milk, soda, beer, bread, and aspirin. Flash Foods stores are open all day every day and would best be classified as convenience stores.

9. Supercenters are more than just larger versions of traditional “markets.” In addition to foodstuffs, supercenters have pharmacies, dry cleaners, portrait studies, photo finishing, hair salons, and restaurants.

10. Specialty discount stores are often called category killers because they dominate the competition in their narrow merchandise segment.

11. Specialty discount stores differ from other discount stores. While most other discounters offer a predictable assortment of merchandise, the styles and brands offered at specialty discount stores change frequently because they buy only what is currently available at a good deal.

12. Factory outlet stores are generally the same as warehouse clubs, except that a factory outlet store carries only the merchandise of the manufacturer that owns it.

13. Marketers who use nonstore retailing no longer have to worry about the “place” element of the four Ps.

14. Direct retailers’ sales have skyrocketed over the past few decades as women have entered the workforce.

15. The person who called Alisa last night and tried to sell her double-paned windows for her home was using outbound telemarketing.

16. Electronic retailing includes the 24-hour, shop-at-home television networks and online retailing.

17. The two types of franchising are target market franchising and geographic franchising.

18. It is commonplace for a franchisee to pay money to the franchisor for the cost of advertising.

19. The six Ps of the retailing mix are product, place, price, promotion, personnel, and planning.

20. Pick of the Litter has just purchased a sizable plot of land on which it will build a store building with a large parking lot. Across the street is a collection of specialty shops and a furniture store. Pick of the Litter will be part of a strip shopping center.

21. Every October through December, Hickory Farms opens a temporary store in many malls to sell products during the Christmas season without the long-term commitment of a more expensive retail lease. This is an example of a pop-up shop.

22. A store’s atmosphere is the overall impression conveyed by a store’s physical layout, decor, and surroundings.

23. Color can be used by retailers to create a mood or focus customer attention on a particular product.

24. Providing great customer service is one of the most challenging elements in the retail mix because customer expectations for service are so varied.

25. Interactivity in the retail environment is not feasible in terms of its costs.

26. M-commerce is a type of managed commerce in which both buyer and seller end the transaction with a win–win feeling.

27. M-commerce involves consumers using wireless mobile devices to connect to the Internet and shop.

Chapter 16—Integrated Marketing Communications


1. Promotion is communication by marketers that informs, persuades, and reminds potential buyers of a product in order to influence their opinion or elicit a response.

2. Black & Mild FT are the only cigars on the market made with “a skillful blend of premium pipe tobaccos and a filter tip for extra smoothness.” This feature creates a competitive advantage for the product.

3. A U.S. manager is working with some Indonesians who do not speak English. In attempting to exchange information, they are using symbols to assign meanings to the facts the manager hopes to convey. This is an example of communication.

4. Nature Valley uses popular magazines, radio, and cable television to promote its brand of trail mix. Nature Valley uses mass communication.

5. One way of conveying a message that the receiver will hear properly is to use abstract words and pictures.

6. NutriFoods is concerned that its advertising messages are not getting through to the target market as intended. Its radio ads contain music that its target market does not like, and its spokesperson has a very nasal voice that sounds as though he has a perpetual cold. These are examples of noise in the communications process.

7. Marketers targeting consumers in foreign countries must worry about the translation and possible miscommunication of their promotional messages by other cultures.

8. If Charles Schwab Mutual Funds Investment Broker were to study its promotional strategies by looking at sales trends and market research, it would be using direct feedback to evaluate its promotional strategies.

9. Informative promotion is used to keep the product and brand name in the public’s mind.

10. All promotions are designed to inform, persuade, or remind the target audience.

11. Maddie’s Beverage Company has recently introduced Wateroos, eight-ounce servings of water in juice-style containers with straws, to encourage children to drink more water. Since this product is in the introductory stage of the product life cycle and as yet has no direct competition, Maddie’s promotional objective should be persuasion.

12. It’s been a few years since odor-free paint hit the market, and a paint manufacturer estimates the paint to be in the growth stage of its product life cycle. With all the competition in the industry today, the manufacturer should use promotions that persuade buyers of odor-free paint to purchase its brand over all others.

13. The promotional mix is the combination of promotional tools used to reach the target market and fulfill the organization’s overall goals.

14. Advertising is any form of impersonal, one-way mass communication in which the sponsor or company is identified.

15. Benedick and Taapo are arguing about newspaper publicity. Benedick says favorable publicity is free––hence the phrase, “free publicity.” Taapo says that publicity is not free because costs were incurred in developing the public relations materials used by the newspapers. Benedick has a more accurate grasp of the definition of publicity.

16. Publicity is free.

17. Sales promotion consists of all marketing activities that stimulate consumer buying and dealer effectiveness.

18. Communication via telephone is not considered personal selling because it is not face-to-face.

19. AIDA is an acronym for attention, interest, desire, and action.

20. A person buying a Valentine’s Day gift for a significant other is more likely to go through all of the steps in the AIDA process than a person buying a gift certificate for his or her mail carrier.

21. The AIDA concept can be used to explain how all promotions influence purchase decisions.

22. In terms of the AIDA process, public relations has its greatest impact in gaining attention and interest for a company, good, or service.

23. Allyson Brown is trying to develop a promotional mix for her firm’s new product, a sophisticated modular sunporch designed for use all year. She reasons that because her product is complex and carries high financial risks for consumers, the mix should concentrate on personal selling.

24. From the consumer’s point of view, a company’s communications are already integrated, no matter how the company itself defines them.

25. One of the reasons for the growing popularity of integrated marketing communications is the proliferation of thousands of new media choices.

26. All promotion, especially advertising, is reduced as a product enters the decline stage. However, personal selling and sales promotion efforts might be maintained, especially at the retail level.

27. Lansky sells 60 different knife and garden tool sharpeners. It uses aggressive personal selling and sales promotions to encourage intermediaries to carry and sell its sharpener. Lansky is using a push strategy.

28. Marketers typically use either a push or a pull strategy exclusively.

Chapter 17—Advertising and Public Relations


1. Spending on advertising varies by industry.

2. The advertising response function is a phenomenon in which spending for advertising and sales promotion increases sales or market share up to a certain level but then produces diminishing results.

3. The goal of advertising is to change people’s values.

4. A small high-tech company has just launched a new writing pen that has a memory, much like a small computer. The advertising campaign focuses on the innovativeness of the new product. This is an example of pioneering advertising.

5. On Subway napkins, nutritional information for their 6-inch subs is compared to McDonald’s Big Mac and Burger King Whopper. This is an example of competitive advertising.

6. The goal of competitive advertising is to influence demand for a specific brand.

7. The DAGMAR approach is one method of setting advertising objectives.

8. A print ad depicts a picture of a frozen dessert accompanied by information about the dessert: “two servings, only 300 calories per serving, no cholesterol, and 100 percent of the RDA of vitamins and minerals.” This is an example of an advertisement selling the product’s benefits.

9. An appeal to vanity and egotism is the reason celebrity spokespeople are used so often in advertising.

10. An insurance company’s advertisement poses the question, “Will your family survive if you die uninsured?” This is an example of a health appeal.

11. There are many snack foods for children, but only Nature’s Path makes an organic snack designed for a child’s palate. The product’s unique selling proposition is that it is completely organic.

12. A commercial for McDonald’s shows kids having fun with their Happy Meals.. This is an example of a demonstration executional style for advertising.

13. Humorous executional styles are more often used in radio and television advertising than in print or magazine advertising.

14. The primary advantage of newspaper advertising is demographic selectivity.

15. Magazine ads have a much shorter life span and pass-along rate than radio ads.

16. The manufacturer of the George Foreman grill has produced a 30-minute sales pitch in the form of a talk and demonstration show to be aired on local cable television channels. This is an example of an infomercial.

17. One of the most popular approaches for Internet advertising is search engine ads.

18. Advergaming is an Internet advertising format where companies put ad messages in Web-based or video games to advertise or promote products.

19. Mobile advertising may be one of the most promising tactics for contacting consumers when they are thinking about a specific product.

20. Nature’s Path makes EnviroKids brand organic cereals, rice bars, and cookies. It is determining whether to put its advertisements in newspapers or on television. Its primary concern is with how many people in its target market will be exposed to its ads. In other words, the company is concerned about frequency.

21. Publicity consists of programs developed by a company to capitalize on the factors that will enhance the firm’s image and minimize those that generate negative images.

22. An example of product placement is when the judges on American Idol are shown sipping Coca-Cola during the broadcast.

23. The sponsorship of NASCAR is an example of a public relations activity.

24. Cause-related marketing is when two competing companies come together to support a cause, such as breast cancer research.

25. Companies increasingly are using the Internet in their public relations strategies.

26. Crisis management should begin before a crisis occurs.

Chapter 18—Sales Promotion and Personal Selling


1. Sales promotion offers an incentive to buy.

2. Marketers find it much easier to evaluate the effectiveness of advertising than the effectiveness of sales promotions.

3. The objectives of a promotion depend on the general behavior of target consumers.

4. Loyalty marketing programs are targeted to people who consistently buy the least expensive brand.

5. Research shows that coupons tend to increase the amount of a product bought.

6. Manufacturers prefer coupons over rebates, because most customers who are eligible for rebates actually collect them.

7. When cosmetics company Estée Lauder gives customers a bag of small-sized cosmetics with the purchase of a full-priced item, this is an example of a premium offer.

8. Sweepstakes are promotions in which participants use some skill or ability to compete for prizes. Winning a contest, on the other hand, depends on chance or luck.

9. Point-of-purchase promotions are seldom used as a sales promotion tool because most purchase decisions are made before consumers ever enter a store.

10. Point-of-purchase promotions are another name for the Web pop-ups that try to lure potential customers to other sites.

11. A trade allowance is a price reduction offered by retailers to customers who are buying homogeneous shopping goods.

12. Hewlett-Packard offered $25 to individual Office Depot salespeople for each HP LaserJet printer they sold. The $25 is push money.

13. Trade shows are an excellent place to introduce new products to the marketplace.

14. Manufacturers use trade promotions because they generate excitement among consumers.

15. Personal selling becomes a more important promotional tool as product value and complexity and increase.

16. Dave is in charge of finding sponsors for the 2011 Riverbend Festival. He is meeting with marketing representatives from Wrangler jeans and First Tennessee National Bank, attempting to convince them to sponsor the event. Dave is engaged in personal selling.

17. With relationship selling, the objective is to build long-term branded relationships with customers, not just to sell products.

18. Relationship selling is more typical with selling situations for consumer goods.

19. With relationship selling, the salesperson would spend most of his or her contact time with the prospect talking about the product because the salesperson does not want to waste the customer’s time.

20. The first step in the selling process is approaching the customer and probing needs.

21. Tara is a salesperson with several satisfied customers. She asks her customers to recommend her to their business associates. Tara is using cold calling to generate leads.

22. To qualify a sales lead, a salesperson must identify the person in an organization who has the authority to buy the product and must close the sale with that individual.

23. Before approaching the customer, a salesperson should learn as much as possible about the prospect’s organization and its buyer.

24. If a potential customer has objections after the salesperson has made a presentation, that is an indication that the salesperson has done a poor job.

25. Jayson typically negotiates the price with prospective customers because he knows price is the most effective negotiating tool when closing a sale.

26. The final selling duty for most successful salespeople is closing the sale.

27. In relationship selling, salespeople focus more time on generating leads than on qualifying leads.


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