Which of the following products would most likely be purchased with discretionary income?

Exam-2

Multiple Choice

There are 55 questions. You will get credit for a maximum of 50 correct responses. Total points = 200 ( 50 x4)

Identify the letter of the choice that best completes the statement or answers the question. If you feel that a particular question is confusing, please give an explanation why you think so and indicate the "your" correct answer on the first page of the exam. No credit will be given if a written explanation is not provided.

Write the test no: given on thetop right hand corner of this sheet on your Scantron. Without a test no your Scantron will be returned ungraded.

����������������� 1.�� What technique are organizational consumers using when they seek answers to such questions as: "Can another supplier perform a function more efficiently?" and "Would a more reliable supplier of a component lower annual operating costs?"

a.

Profit-based planning

d.

Competitive analysis

b.

Value analysis

e.

None of the choices are correct

c.

Vendor analysis

����������������� 2.�� An advantage of an organizational customer's dealing with many suppliers (instead of buying exclusively from just one supplier) is that

a.

quantity discounts are maximized.

b.

there is lesser price and service competition.

c.

shipments from suppliers are better coordinated.

d.

communications between the organization's customers and its suppliers is enhanced.

e.

none of the choices are correct

����������������� 3.�� A marketing analyst concludes that each 1 percent increase in gasoline consumption in the country is linked to a 13 percent increase in the number new autos sold. Which concept in industrial marketing does this link most clearly represents?

a.

The accelerator principle

d.

The domino effect

b.

Second-level demand

e.

The gasoline effect

c.

Reciprocity

����������������� 4.�� End-use analysis typically done in industrial marketing reveals that 60 percent of a firm's sales are made to retail stores (sales, which are predicted to have a 3 percent annual growth rate) and 40 percent are made direct to contractors (sales, which are predicted to have a 5 percent annual growth rate). The company's overall sales forecast would indicate a sales increase of

a.

3.2 percent.

d.

4.0 percent.

b.

3.5 percent.

e.

None of the choices are correct

c.

3.9 percent.

����������������� 5.�� In which situation would a retailer leastlikely charge a manufacturer a slotting fee for a product?

a.

The retailer is a major independent grocery store.

b.

The manufacturer's product has the lowest market share in the region.

c.

The manufacturer has few��������������������������� �����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������brands established in the market.

d.

The manufacturer supplies the product as a private-label merchandise to the retailer.

e.

None of the choices are correct

����������������� 6.�� A ____ firm is a worldwide player with the greatest geographic business scope.

a.

multinational

c.

global

b.

international

d.

glocal

����������������� 7.�� A company may prolong a product's life cycle through international marketing by exporting a product

a.

that is in the mature stage in its home market to a foreign market with high growth prospects.

b.

with high growth in the firm's home market to a foreign market with high growth prospects.

c.

to a country with a high standard of living.

d.

to a country with a high population growth rate.

����������������� 8.�� A country's per-capita Gross Domestic Product (GDP) figure may be misleading since

a.

it does not reflect a population's size.

b.

it does not reflect a country's trade deficit.

c.

it does not reflect a country's stage of industrialization.

d.

a few very wealthy residents may boost the computation of per-capita GDP.

����������������� 9.�� Which of these organizational formats represents a company's lowest level of commitment to international marketing?

a.

Joint venture

c.

Exporting

b.

Contract manufacturing

d.

Direct ownership

����������������� 10.Which international product planning strategy is most time consuming and requires the highest capital investment?

a.

Straight extension

c.

Backward invention

b.

Product adaptation

d.

Forward invention

����������������� 11.High overlap in media circulation exists among many European countries. Which international promotion planning strategy best takes advantage of this overlap?

a.

Standardized

c.

Mixed

b.

Nonstandardized

d.

Global

����������������� 12.The major difference between international and multinational marketing is that multinational marketing is more prone to

a.

allocate resources without regard to national boundaries.

b.

operate only in its home country.

c.

use standardized marketing plans.

d.

utilize exporting.

����������������� 13.Low labor costs, preferential climate conditions, and high-quality mineral deposits are examples of

a.

conditions in less-developed countries.

c.

a country's marketing mix.

b.

conditions in industrialized countries.

d.

a country's comparative advantage.

����������������� 14.What concept is best illustrated when developing countries exchange raw materials (extracted and semi-processed with low-priced labor) for high-technology products from industrialized countries?

a.

The balance of trade

c.

Comparative advantage

b.

The product life cycle

d.

Nationalism

����������������� 15.A U.S. firm decides to sell a lot of discontinued computer products abroad (rather than sell these products to a discount retailer in the United States) because the manufacturer

a.

does not want to spoil the domestic market for full-price computers.

b.

seeks to earn monies on the basis of currency exchange rate shifts.

c.

is concerned about legislation relating to dumping.

d.

wishes to expand its sales abroad to take advantage of sales opportunities.

����������������� 16.A strong U.S. dollar should have a negative effect on exports from US to other countries, because:

a.

it reduces U.S. companies' price-earnings ratios.

b.

it increases a foreign investor's tax rate.

c.

U.S. exports are less costly, while imports of foreign goods are more costly.

d.

U.S. importsbecome uncertain.

e.

None of the choices are correct

����������������� 17.The market for swimming pools is primarily an industrial good (or for an organization consumer market)in a developing country. It is primarily a consumer good in a(n)

a.

industrialized country.

c.

developing country.

b.

post-developing country.

d.

less-developed country.

����������������� 18.In the short-run, consumer-goods manufacturers will generate their greatest sales in ____ countries; their long-run sales potential will probably be greater in ____ countries.

a.

developing, less-developed

d.

less-developed, industrialized

b.

industrialized, less-developed

e.

developing, industrialized

c.

less-developed, developing

����������������� 19.A U.S.-based firm consolidates all foreign sales and profits in its profit-and-loss statement-the sales are made in a foreign currency but reported in U.S. dollars in the firm's profit-and-loss statement. An important subsidiary exists in a foreign country where the currency has just been devalued, relative to the U.S. dollar, by 10 percent. What effect will the currency devaluation have on the reporting of the subsidiary's sales (in U.S. dollars)?

a.

Sales will be reduced by 30 percent.

b.

Sales will be not be affected.

c.

Sales will be reduced by 70 percent.

d.

Sales will be increased by 10 percent.

e.

None of the choices are correct

����������������� 20.A less-developed nation wants to stimulate foreign investment, to reduce its unemployment, and to encourage its manufacturing industries to grow. Which form of trade restriction best accomplishes these multiple objectives?

a.

Ban on imports

d.

Tariffs

b.

Quotas

e.

Local content laws

c.

Embargoes

����������������� 21.Which approach to international marketing is most appealing to a firm that plans to exploit economies of scale?

a.

Standardized approach

d.

Joint venture

b.

Nonstandardized approach

e.

Global approach

c.

Mixed approach

����������������� 22.����������������������� A firm's marketing strategy is LEAST likely to be standardized when a firm employs which of the following international marketing strategies?

a.

backward expansion

d.

forward expansion

b.

Centralized approach

e.

none of the choices are correct

c.

Straight-extension

����������������� 23.A measure of a region's wealth that is less affected by very high incomes of a small segment of the population than GDP per capita is

a.

mean discretionary income.

d.

median income.

b.

mean disposable income.

e.

mandatory income

c.

the Buying Power Index.

����������������� 24.A marketing manager is seeking to forecast sales of a luxury product in the United States. What income measure is best suited to estimate sales?

a.

GDP per capita

d.

Per-capita income

b.

Disposable income

e.

Median Income

c.

Discretionary income

����������������� 25.A retailer can best reduce cognitive dissonance through

a.

determining customer satisfaction through consumer surveys.

b.

charging low prices through providing low levels of customer service.

c.

lowering purchase costs through mail order sales.

d.

providing aftercare or after purchase support and help to consumers.

e.

None of the choices really reduces cognitive dissonance

����������������� 26.By establishing consumer demographic profiles, a firm can

a.

see the interaction of lifestyles and demographics.

b.

can understand competitor's behavior.

c.

determine precisely the effect of price on consumer buying behavior.

d.

measure opportunities in less-developed and developing countries.

e.

none of the choices are correct

����������������� 27.A maker of low-salt food items in Unites Statesis considering distributing its products in regions with high concentrations of senior citizens (defined by the company as over 70 years old). In developing its advertising strategy, the firm should keep in mind that these regions are most likely to have

a.

high proportions of married persons (with both spouses alive).

b.

high disposable incomes.

c.

large proportions of professionals.

d.

more females than males.

e.

more children than adults

����������������� 28.The consumer price index for apparel was 100 in a given year; five years later it was 150. This means that an article of clothing that initially sold for $30 would cost ____ five years later.

a.

$24

d.

$69

b.

$39

e.

none of the choices are correct

c.

$61

����������������� 29.If a consumer's actual earnings increase by 3 percent but the consumer price index (CPI) rises by 2 percent, that consumer is facing a(n)

a.

increase in discretionary income.

d.

constant real income.

b.

decline in disposable income.

e.

increase in real income

c.

falling CPI.

����������������� 30.Which of the following statements concerning disposable or discretionary income is correct?

a.

Disposable income is one's take-home pay

b.

Disposable income is generally used to predict purchases of luxuries.

c.

Unlike discretionary income, disposable income reflects the applicable inflation rate.

d.

Discretionary income reflects one's take-home pay.

����������������� 31.The major difference between a family and a household is based upon

a.

the size of the unit.

b.

whether the members of the unit are related or unrelated.

c.

whether the head of the household unit is male or female.

d.

whether the female head of household is working on a full-time basis.

����������������� 32.Which statement about the difference between exploratory and conclusive research is correct?

a.

Exploratory research is generally more structured than conclusive research.

b.

Exploratory research generally follows conclusive research.

c.

Qualitative research techniques such as in-depth probing and focus groups are less likely to be used with exploratory than conclusive research.

d.

Exploratory research is more likely than conclusive research to evaluate the impact of alternative marketing strategies.

e.

None of the choices are correct

����������������� 33.Which of these is the best example of a precise research issue (problem) for a company?

a.

Why are sales rising at a greater rate than competitors'?

b.

Is the sales force effective?

c.

What percent of the population live in nearby areas?

d.

Why have profits not met expectations?

e.

What percent of the target market can recall the advertisement of the brand on TV?

����������������� 34.Which of the following is NOT an example of secondary data?

a.

Commercial research reports listing the circulation and costs of various advertising media

b.

A commercial data base used to review recent published journal articles in an exploratory research study

c.

Data provided by a consultancy company from a previous study

d.

Federal government Census of Retail Trade data used in a site location study for a major supermarket chain

e.

All the choices are examples of secondary data

����������������� 35.Several market research firms have reorganized the latest Census of Population onto disks that are compatible with major spreadsheet programs. In this manner, marketers could more easily perform computations involving spreadsheets, illustrate data using graphics, and more easily store and retrieve important data on education, population size, and age distribution. This illustrates the role of

a.

single-source data.

d.

external secondary data.

b.

internal secondary data

e.

primary data

c.

customer data-base marketing

����������������� 36.An independent market research firm has been hired to conduct a study in conjunction with a trademark infringement case. It is most important that the research firm be able to defend its findings and research methodology in its court testimony. What type of sampling approach should the firm use?

a.

Convenience sample

d.

A sample of respondents

b.

Mail survey to friendly respondents

e.

None of the choices are correct

c.

Nonprobability sample

����������������� 37.A retailer evaluating a proposed location for a new store did a telephone study on a sample of households living in the same zip-code as the proposed store and found that while the people are very likely to shop between 9 A.M. and 5 P.M. on weekdays, they were very unlikely to do so on weekends. What type of primary data collection did the retailer use?

a.

Experiment

d.

Survey

b.

Simulation

e.

None of the choices are correct

c.

Observation

����������������� 38.Unlike experimentation, in observation,

a.

actual situations are commonly used.

b.

multiple factors are systematically varied.

c.

follow-up surveys are used as part of the research project.

d.

none of the choices are correct.

����������������� 39.A supermarket offers in-store display for a brand of Diapersin half of its stores; the other half do not feature any promotion. On the basis of a detailed analytic study analyzing the difference in sales across stores, the supermarket observed that "in-store display increased sales of Diapers at least 10 percent in every store offering promotions; in some instances, the increase was as high as 30 percent." What technique was used?

a.

Examination

d.

Observation

b.

Simulation

e.

None of the choices are correct

c.

Survey

����������������� 40.The greatest strength of observation is you

a.

get a record of customer attitudes.

b.

get an idea of who influenced the consumer.

c.

can determine consumer motivations.

d.

get a record of what happened.

e.

learn why it happened.

����������������� 41.The major weakness of the observation method of gathering data is

a.

you can never be sure the subjects are people.

b.

the subjects almost always spot the observer.

c.

you can't be sure why people did what they did.

d.

observers could miss most important events.

e.

the inability to use mechanical or electronic devices.

����������������� 42.Cognitive dissonance

a.

occurs because each alternative generally has some goodpoints.

b.

occurs during the evaluation of alternative stage when the buyer cannot make up his mind.

c.

occurs at the start of the decision-making process. This is what leads the buyer to seek solutions to problems.

d.

occurs in all activities

e.

occurs after a purchase decision or purchase has been made.

����������������� 43.Which of these cases does notillustrate the action from a consumer as a result of perceived risk in a purchase decision?

a.

Bob searches for more information on the Internet about the car he is intending to buy

b.

Bill signs up for a CPA review course before enrolling for CPA exam.

c.

Biff buys a pack of sleep inducers before checking into a hotel room.

d.

Bruce thinks Ford trucks are prone to roll overs and hence considers anti-roll options for his next Ford truck.

e.

Duke has used the same snowblower for 22 years. He says he sure got his money's worth out of it.

����������������� 44.Any sale to a wholesaler, retailer, or an organization

a.

is considered sold into a final consumermarket.

b.

would be considered sold into the organizational consumer market.

c.

can be construed as both an industrial and final consumer sale, depending on how the product is used.

d.

has little impact on marketing until it is converted to a consumer product.

e.

would not be considered a sale; this is a transference of title until the goods are made ready for sale to the public.

����������������� 45.Demand for a product that depends on the demand for another product is called

a.

derived demand.

b.

deceptive demand.

c.

fluctuating demand.

d.

inefficient demand.

e.

secondary demand.

����������������� 46.Which of these is not a characteristic of the organizational consumermarket ?

a.

Organizational consumer markets tend to be more geographically concentrated than do final consumer markets.

b.

Organizational consumer markets tend to have far fewer customers to service than dofinal consumer goods market.

c.

Organizational consumers are more likely than final consumers to buy products they need from longerdistribution channels.

d.

Organizational consumers are more likely to be "expert buyers" than are buyers of final consumer goods.

e.

Organizational consumers are likely to form committees to evaluate the offerings of various marketers if the purchase decision warrants this.

����������������� 47.Which of the following entities would be correctly classified as an organizational consumer for marketing purposes?

a.

US Army

d.

All of the choices are correct

b.

Red Cross Society

e.

CSUS

c.

General Motors

����������������� 48.According to the marketing vice-president of a regional soda manufacturer, "we need to better understand the reason(s) for the comparatively slow growth of our bottled water brand relative to our major competitors." This executive should focus on which stage of the marketing research process?

a.

Generation of primary data

c.

Issue (problem) definition

b.

Examination of secondary data

d.

Data analysis

����������������� 49.The major difference between primary and secondary data involves whether the data are

a.

analyzed by the user or another organization (such as a market research firm or governmental agency).

b.

collected by the user or another organization (such as a market research firm or governmental agency).

c.

collected specifically for the research project in question.

d.

collected for a fee or collected gratis (free).

����������������� 50.A firm seeks to reduce the impact of interviewer bias in its survey of recent electronics buyers. The best method to use is

a.

a personal interview.

c.

a mail questionnaire.

b.

a telephone interview.

d.

simulation.

����������������� 51.In the reading "COAXING MEANING OUT OF RAW DATA: Software can now find patterns never seen before," some of the uses of datamining are as follows:

a.

Phone companies can identify early those customers who might be considering jumping to a rival

d.

To pinpoint customers who willrespond to introductory offers from companies

b.

Helps companies like Wal-Mart to predict demand for individual items in specific stores

e.

All of the choices are correct

c.

Telephone companies, credit-card issuers, and insurers are mining their dataforpatterns within thousands of customer transactions to identify fraud

����������������� 52.Gillette company is well known for producing shaving products. All the shaving products require significant amount of plastic as a raw material. This company venturing into producing and marketing other products requiring plastic as a raw material is an illustration of:

a.

Economies of scope

c.

Exploit raw material suppliers

b.

Utilizing good marketing mix

d.

None of the choices are correct

����������������� 53.Consumer price index is measured usually by:

a.

The cost of buying a "basket of goods and services"

d.

The exchange rate of US dollar

b.

The cost of living

e.

None of the choices are correct

c.

The cost of buying food

����������������� 54.A fine watch manufacturer that markets watches costing from $3,000 to $25,000+ wants to determine the percentage of an area's households that would purchase its products. The firm plans to determine the number of authorized watch dealers in each territory based upon this calculation. This manufacturer should study the average household's

a.

disposable income.

c.

per-capita income.

b.

discretionary income.

d.

real income.

����������������� 55.An advertising agency has developed a campaign for an exercise machine that stresses youthfulness, fitness, and health. The campaign is focusing on which of these concepts?

a.

Social performance

c.

Social class

b.

Reference group influence

d.

Culture

Exam-2

Answer Section

MULTIPLE CHOICE

����������� 1.��� C

����������� 2.��� E

����������� 3.��� A

����������� 4.��� E

����������� 5.��� D

����������� 6.��� C

����������� 7.��� A

����������� 8.��� D

����������� 9.��� C

����������� 10.D

����������� 11.A

����������� 12.A

����������� 13.D

����������� 14.C

����������� 15.A

����������� 16.E

����������� 17.A

����������� 18.B

����������� 19.E

����������� 20.E

����������� 21.A

����������� 22.D

����������� 23.D

����������� 24.C

����������� 25.D

����������� 26.E

����������� 27.D

����������� 28.E

����������� 29.E

����������� 30.A

����������� 31.B

����������� 32.E

����������� 33.E

����������� 34.E

����������� 35.D

����������� 36.E

����������� 37.D

����������� 38.A

����������� 39.E

����������� 40.D

����������� 41.C

����������� 42.E

����������� 43.E

����������� 44.B

����������� 45.A

����������� 46.C

����������� 47.D

����������� 48.C

����������� 49.C

����������� 50.C

����������� 51.E

����������� 52.A

����������� 53.A

����������� 54.B

����������� 55.D

What is discretionary income quizlet?

Discretionary income is the amount of an individual's income that is left for spending, investing, or saving after paying taxes and paying for personal necessities, such as food, shelter, and clothing. Discretionary income includes money spent on luxury items, vacations, and nonessential goods and services.

Why is consumers discretionary income important to the sports and entertainment industry?

Discretionary income is the amount of money people have available to spend after paying for necessities. Sports and entertainment events are not considered necessities and as a result require the spending of discretionary income.

Which of the following utilities involves making products?

Place utility involves making products or services available in locations that allow consumers to easily access them.

When income is high in comparison to the cost of living people have more discretionary income?

When income is high relative to the cost of living, people have more discretionary income. That means they have more money to spend on nonessential items (in other words, on wants rather than needs).

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