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SOLUTIONTOPASTEXAM

SECTIONA:FILLINTHEGAPS

(9x2=18marks)

1)Companieswithmanydifferentproductsorbrandsoftencreatea_______managementorganisation;
whilecompaniesthatselloneproductlinetomanydifferenttypesofmarketswithdifferentneedsand
preferences,tendtoprefera_______managementorganisation.

Answer:product,market

2)Whileresellersaremarketing_________helpanorganisationtopromote,sellanddistributeitsgoods
tofinalbuyers,themarketingserviceagenciesarethe__________agenciesthathelptheorganisationto
targetandpromoteitsproductstotherightmarkets.

Answer:intermediaries,facilitating

3)Studiesinvolvingasmallnumberofindividuals,suchasfocusgroupsorindepthoneononeinterviews,
areknownas_________research.Studiesinvolvingalotofpeopleandutilisingstatisticaltoolsand
techniquesareknownas_________research.

Answer:qualitative,quantitative

4)Thedemandforbusinessgoodsisultimately__________fromthedemandforconsumergoods.When
demandis__________,thisindicatesthatdemandisnotaffectedgreatlybypricechanges.

Answer:derived,inelastic

5)__________segmentationdividesamarketintogroupsbasedonsocialclass,lifestyleorpersonality
characteristics.__________segmentation,ontheotherhand,dividesamarketintogroupsaccordingto
occasionswhenbuyersgettheideatobuy,makeapurchaseoruseaproduct.

Answer:Psychographic,behavioural

6)__________productsarecomparedonsuchbasesassuitability,quality,price,andstyle;whereas
____________haveuniquecharacteristicsoridentificationwithbuyersandare
specificallysoughtbytheconsumer.

Answer:shopping,specialty

7)Innewproductadoption,___________helpgettheproductexposure:butare
nottypicalconsumer;thetypicalconsumersareknownasthe_____________________.

Answer:Innovators,EarlyMajority.

8) In ________ strategy the producer promotes the product to wholesalers, the wholesalers promote to
retailersandtheretailerspromotetoconsumers;_________strategy,ontheotherhand,callsforspending
alotonadvertisingandconsumerpromotiontobuildupconsumerdemand.

Answer:push,pull.

9)Salespromotionisa_________termincentivetoencouragepurchaseofaproductorservice;
_________sellingistheinterpersonalarmofthepromotionmix,usedparticularlyincomplexselling
situationssuchasbusinesstobusinessmarketing.

Answer:short,personal

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SECTIONB:SHORTESSAYQUESTIONS(2x10.5=21marks)

QuestionB1a:Afarmersellsstrawberriesgrownonhis/herfarmdirectlytoconsumers.Whatis
thischannelcalled?Listthreeadvantagesofthischannel.

Answer:
Thischanneliscalledthedirectchannel.Thisisthesimplestchannelofdistribution.
Threemajoradvantagesthatthefarmerenjoysusingthischannelare:
1) thefarmerwillbeabletodirectlyservethecustomer;
2) thefarmermayalsobeabletosellthestrawberriesatalowerpricethanifanintermediary
wasinvolved;and
3) thefarmerhascontroloftheproductandthesaleinmakingsurethattheberriesaresold
whentheyarestillfresh.

QuestionB1b:Whatpricingobjectiveswouldyourecommendaretailerofprestigeproductsset?
Why?

Answer:
The company might set image enhancement objectives knowing that consumers make quality
inferences based on price. The image enhancement function of pricing is particularly important
withprestigeproductsthathaveahighpriceandappealtostatusconsciousconsumers.People
are often willing to pay a premium price for a luxury product like a watch because they believe
thatitmakesastatementabouttheirownworth.

Question B2: Discuss two ways explaining how distribution channels create efficiencies and
provideanexampleofeach.

Answer:
Breakingbulkiswhenwholesalersandretailerspurchaselargequantitiesofgoodsfrom
manufacturersbutsellonlyoneorafewatatimetomanydifferentcustomers.Supermarkets
purchasecasesofcannedpeasandthenbreakbulkallowingconsumerstopurchaseonecanof
peasatatime.
Creatingassortmentsreducesthenumberoftransactionsbyprovidingavarietyofproductsinone
locationsothatcustomerscanconvenientlybuymanydifferentitemsfromoneselleratonetime.
Supermarketsprovidetheircustomerswithalargerangeofitemsinonespot.

(Studentsmayalsotalkaboutprovidinginformation,promotion,contact,negotiating,financing,
risktaking)

OR

Marketingchannelmemberscanaddvaluebyfulfillingthreesetsofimportantfunctionsnamely:
1. specializationanddivisionoflabour(providingeconomiesofscale,aidingproducerswho
lackresourcestomarketdirectlyandbuildinggoodrelationshipswithcustomers);
2. overcomingdiscrepancies(ofquantity,assortment,oftimeandsace);and
3. providingcontractualefficiency(reducingnumberofcontactsandtherebyreducingcosts)

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Question B3: A company has developed an innovative product. What pricing strategies are
available to this company? Explain one of the available strategies mentioning the conditions
thatmustbemetforthestrategytowork.

Answer: There are two alternatives available to the company, namely MarketSkimming Pricing
andMarketpenetrationPricingstrategy.
Marketskimmingpricing(orpriceskimming)issettinghighinitialpricestoskimrevenueslayer
bylayerfromthemarket.

Marketskimmingmakessenseundercertainconditions.

1. Theproductsqualityandimagemustsupportitshigherpriceandenoughbuyersmustwant
theproductatthatprice.
2. Thecostsofproducingasmallervolumecannotbesohighthattheycanceltheadvantageof
chargingmore.
3. Competitorsshouldnotbeabletoenterthemarketeasilyandundercutthehighprice.

Marketpenetrationpricingissettingalowinitialpriceinordertopenetratethemarketquickly
anddeeplytoattractalargenumberofbuyersquicklyandwinalargemarketshare.

Severalconditionsmustbemetforthisstrategytowork.

1.
Themarketmustbehighlypricesensitivesothatalowpriceproducesmore
marketgrowth.
2.
Productionanddistributioncostsmustfallassalesvolumeincreases.
3.
Thelowpricemusthelpkeepoutthecompetition,andthepenetrationprice
mustmaintainitslowpriceposition.

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SECTIONC:(53Multiplechoicequestions)*(61marks)
AnswerALLquestionsbymarkingtherelevantanswerinpencilontheGeneralisedAnswerSheet
supplied.

*Eachofquestions2,7,15,17,20,21,33and47(8questions)isworth2marks;eachoftheremaining45
questionsisworth1mark.Thereisnonegativemarking.

ReadtheMiniCaseAbelowandanswerQuestions14
Threefriendsdiscusstheirbusinessesoveraregularmorningcoffeecatchup.Johnreportsthathehas
recentlyplaceanadvertisementinWomen'sDaywherehethinkshiscustomerswillbemostexposedtoit.
Louiscommentswarilythatsheistiredaftertrawlingthrough600suggestionsforimprovementslipsto
helpherdecideoninstoreservicelevels.Evelynannouncesthathehasturnedtousingrecycledpackaging
becausereportsshowitwillbenefithiscommunity,eventhoughhiscustomerhavenotexpressedadesire
forthis.Soniaconcedesthathehashadtodistributeemailstokeyclientstellingthemnottoplaceorders
untilfurthernoticeforhispremiumcoffeebeansbecauseseverefrostsinAfricahadreducedsupply.

1)RefertoMiniCaseA.Whichofthefriendsisengaginginmarketing?
A)Louisonly.
B)Johnonly.
C)JohnandLouis.
D)Evelyn,Louis,John.
E)Allofthem.

2)RefertoMiniCaseA.WhileSonia'sactionsrepresent____________Evelynsactionsrepresent
______________
A)demarketing;thesocietalmarketingconcept
B)crisisresolution;goodpublicrelations,
C)responsetocustomerneeds;theproductconcept
D)societalmarketing;themarketingconcept
E)demandmanagement;socialwork

3)RefertoMiniCaseA.WhichofthefollowingcommentsaboutLouisisclosesttothetruth?
A)Sheshouldn'twasteheretimewithtwominutesurveys.
B)Sheneedstoinvestmoneyinprofessionalmarketresearchservices.
C)Sheisoveranalysingasmalldecision.
D)Sheisengaginginmarketingmanagement.
E)Sheisengagingfullyintheproductconcept.

4)RefertoMiniCaseA.GivenJohn'scommentheneedsto:
A)monitorthesuccessofhispromotionandthenlooktomoreprestigiousmagazinesthatcan
conferqualityonhisproduct.
B)monitorthesuccessofhispromotion.
C)focuslessonpromotionasitreallyisaminorpartofthebroadermarketingmanagement
process.
D)engageinmarketingmanagement.

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E)startthinkinglikeamarketer.
5)Theprocessofmatchinganorganisationsgoalsandcapabilitieswithchangingmarketopportunitiesis
knownas:
A)strategy.
B)strategicmatching.
C)strategicfit.
D)strategiclinkage.
E)planning.

ReadtheMiniCaseBbelowandanswerQuestions68
Lennyisputtingtogetheraplanwhichcoversallofthefunctionsofhisbusiness.Borisiswritinghisplan
specificallytoacquireandmaintaincustomers.Lola,theCEOofalargeMNChasjustfinalisedthe
objectivesforherportfolioofbusinesses.SoniaworksforLolaandhasbeengiventheautonomytowritea
missionstatementandsetmarketingobjectivesfortheteamhemanages.

6)RefertoMiniCaseB.Giventheevidence,Soniaislikelytomanagea:
A)grocerystore.
B)salesteam.
C)SBU.
D)BUS.
E)strategicentity.

7)RefertoMiniCaseB.Lennyiscurrentlyinvolvedinwritinga________;whileBorisiswritinga_________
A)businessplan;marketingplan
B)marketingplan;businessplan
C)strategicplan;marketingplan
D)functionalplan;businessplan
E)buildingplan;strategicplan

8)RefertoMiniCaseB.Lolaisdevelopingher:
A)managementstrategy.
B)corporatestrategy.
C)marketingstrategy.
D)businessplanstrategy.
E)portfoliostrategy.

ReadMiniCaseCboxedbelowandanswerQuestions913

MiniCaseC:Themarketingmanagerofanationalbrandofflavouredmilksisconsideringhermicroand
macroenvironmentinordertocompletethesituationanalysisforthisyearsmarketingplan.Shenotes
somekeypoints.Smalltradersarenotconsistentlyaffordingappropriatefridgespacetoflavouredmilks.
Energydrinksarecontinuingtoholdfavourintheteenmarket.Youngadultsaged1825aremore
conservativethantheirslightlyoldercohort2535.UHTorlonglifemilkhasprogressedtothepointwhere
tastetestsshowlittlenoticeabledifference.

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9)ReferMiniCaseC.TheSWOTanalysisisthetooloftenusedtoconductananalysisofthe
macroenvironment.Whatpart(s)oftheSWOTacronymarerelevanttothemacroenvironment?
A)SW
B)ST
C)SWOT
D)OT
E)OW

10)InMiniCaseCabove,thefridgespaceproblemrepresentsa:
A)microenvironmentweakness.
B)macroenvironmentweakness.
C)Technologicalenvironment.
D)macroenvironmentthreat.
E)microenvironmentthreat.

11)RefertoMiniCaseC.TheproductconcernedisconsideredinsomestatesanAustralianicon.Giventhis,
whichofthekeypointslistedhasthecleareststrategicimplications?
A)Smalltradersarenotconsistentlyaffordingappropriatefridgespacetoflavouredmilks.
B)Energydrinksarecontinuingtoholdfavourintheteenmarket.
C)Youngadultsaged1825aremoreconservativethantheirslightlyoldercohort2535.
D)UHTorlonglifemilkhasprogressedtothepointwheretastetestsshowlittlenoticeable
difference.
E)StatementsBandCabove

12)RefertoMiniCaseC.Whatwouldbethemostlogicalstrategicimplicationsfortheprominenceof
energydrinksintheteenmarket?
A)Reducetheresourceallocationaimedatmarketingtowardthisgroup.
B)Promotethebrandasbeinghighinenergy.
C)Identifyopinionleadersamongstthisgroupandprovidethemwithfreeproduct.
D)Identifyfavouredcelebritiesandhavethemendorsetheproduct.
E)Allarefeasible.

13)RefertoMiniCaseC.Havinglonglifemilkmeanstheproductcanstaylongerinthefridgebefore
havingtobereplaced.Themainbenefitofthisistothefirmwhichcanreduceproductionanddistribution
costs.Thisbenefithasbeenderivedthroughchangesinthe:
A)Technologicalenvironment.
B)economicenvironment.
C)distributionenvironment.
D)physicalenvironment.
E)politicalenvironment.

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ReadMiniCaseDboxedbelowandanswerQuestions1416

MiniCaseD:InthemarketingresearchdepartmentatConsolidatedDiversified,Borisspendshistime
trackingdownrelevantcensusdata.Soniaoftengatherspreliminaryinformationpriortoafullscale
project.Johnrunsstatisticaltestsonthedatacollected.Louismeetswithselectedconsumerstodiscuss
aspectsofthecompany'soffers.Evelynisthechiefanalystwhodrawsconclusionsforthedepartment's
reports.

14)AccordingtoMiniCaseD,Evelynisinvolvedinwhichstepofthemarketingresearchprocess?
A)Definingtheproblemandresearchobjectives
B)Developingtheresearchplan
C)Implementingtheresearchplan
D)Interpretingandreportingthefindings
E)Alloftheabove.

15)AccordingtoMiniCaseD,Louisconducts_________whileSoniaismostlikelyinvolvedin
___________.
A)observationalresearch;experimentalresearch
B)focusgroupinterviewing;exploratoryresearch
C)telephoneinterviewing;samplingresearch
D)experimentalresearch;descriptiveresearch
E)samplingresearch;statisticalresearch

16)AccordingtoMiniCaseD,Johnsworkwithstatisticsisprobablyusedinwhichofthefollowingareasof
marketingresearch?
A)Focusgroupinterviewing
B)Sampling
C)Developingstructuredsurveys
D)Exploratoryresearch
E)Alloftheabove.

ReadtheMiniCaseEintheboxbelowandanswerQuestions1723
MiniCaseE:Samlovesbasketballandhepurchasesbasketballbootsthathehasseeninadvertisements
featuringLeBronJamesandShaquilleO'Neil.Sarahbuysthesametoothpastethatherparentsbuy.
Andrewislookingtopurchasedentalinsuranceforhisfamily.Peterdeliberatelydoesnotwearvisible
brandsthoughhisclothesaretypicallyexpensivelabels.

17)RefertoMiniCaseE.Sam'spurchasedecisionhasbeenaffectedbyhis_________;whileAndrew's
purchaseisprobablyinfluencedby_______
A)lifestyle;householdtype.
B)membershipgroup;psychographics
C)family,hisdentalhygiene
D)naivety,referencegroup
E)aspirationalgroup;hisfamilylifecyclestage

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18)RefertoMiniCaseE.Sarahissatisfying________needswhenpurchasingthisbrandtoothpaste.
A)physiological
B)psychological
C)belonging
D)grocery
E)social

19)RefertoMiniCaseE.Whichofthefollowingfactorsthatinfluenceconsumerbehaviourwouldbest
explainPeter?
A)Learningandoccupation
B)Consumerlifestyleandperception
C)Cultureandhouseholdtype
D)Socialclassandselfconcept
E)Marketingmix

ReadtheMiniCaseFintheboxbelowandanswerQuestions2022
MiniCaseF:Peterhasjustdecidedonthesegmenttotargetforhiscompaniesnew.Hehasmadeacheck
listtohelpfinalisehisdecision;(1)Hehasdeterminedthattheidealsegmentprofileismeasurablewithin
NewZealand,(2)hehasdeterminedwheretheyliveandshopsaswellaswhatmediatheyareexposedto,
(3)heknowsthat,ifthismarketspotentialisrealised,itwouldmorethantriplehiscurrentsales,and(4)he
hastheresourcesandconnectionstogettheproducttothismarket.

20)RefertoMiniCaseF.ThefirstandseconditemonPeter'schecklistrepresentthemarketsegments
_________and__________,respectively.
A)potential,identification
B)growth,behaviouralintentions
C)measurability,accessability
D)identification,lifestyle
E)accessibility,measurability

21)RefertoMiniCaseF.ThethirdandthefourthitemsonPeter'schecklistrepresentsthemarket
segments:
A)profitability,approachability
B)volume,accessibility
C)sustainability,marketingrequirements
D)potential,measurability
E)substantiality,actionability.

22)RefertoMiniCaseF.Peterhasidentifiedanunmetneedinthissegment.Givenhisevaluationsthusfar
heshouldnow:
A)confirmthesegmentandproceedwithsettinghisobjectives.
B)identifythesegment'sprofilewithrelevantcriteria.
C)brandtheproductinameaningfulwayforthesegment.
D)implementhismarketingmix.
E)alloftheabove.

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23)Theretailpriceofaproductispartofits:
A)coredimension.
B)actualdimension.
C)augmenteddimension.
D)pricepromotiondimension.
E)Alloftheabove.

24)Ronaldwilldrive500kmtobuyanitemforhisElvisPresleymemorabiliacollection.Itishardtofind
itemsassociatedwithPresleybecausetherearesomanycollectorsofhismemorabilia.Intermsofthe
consumergoodsclassification,Presleymemorabiliaisanexampleofa________good.
A)convenience
B)nondurable
C)specialty
D)heterogeneousshopping
E)homogeneousshopping

25)Productlinelength:
A)tendstoshortenovertime.
B)isdeterminedbyproductclassification.
C)referstothetotalnumberofproductsmanufacturedbyacompany.
D)isshapedbycompanyobjectives.
E)isoftenclassifiedintermsofconvenience,shopping,andspecialtygoods.

26)TheWexnerCompanyproducesfourmodelsofmiddlequalitydesks.Wexner'ssalesforcereported
thatseveralaccountshadaskedforalowerpriceddeskandsomeaccountsalsoneededatopoftheline
desk.IfWexneraddslowerandhigherqualitydeskstoitsproductline,itwillhaveengagedina(n)
________strategy.
A)downwardstretch
B)upwardstretch
C)linemodernisation
D)twowaystretch
E)linefilling

27)Iftheproductmanagerforoneoftheworld'slargestlingeriemanufacturersfounditsPlaytexbraswere
sellingwellanditsBalibrasweresellingslowly,theproductmanagermighttryline________toincrease
salesfortheslowerendoftheproductline.
A)harvesting
B)featuring
C)augmentation
D)modernisation
E)filling

28)Themostenduringmeaningsofabrandareits:
A)values,benefits,attributes,andpersonality.
B)attributesandbenefits.
C)personality,attributes,andbenefits.
D)values,culture,andpersonality.
E)attributes,benefits,andvalues.

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29)Brandequity:
A)istiedcloselytospecificproductlines.
B)mayactuallyhinderthelaunchingofbrandextensions.
C)reducestheamountofproductmanagementeffortacompanyneedstoexpend.
D)iscloselyrelatedtothenumberofcustomerswhoaredevotedtothebrand.
E)willbedestroyedwhentheproduct'smanufacturerlaunchesapremiumpricingstrategy.

30)ThefactthatLouispaidonly$10toseethe11:30amshowingofthenewStarWarsmoviewhilethose
thatsawthe7pmshowpaid$16isanexampleofastrategyfordealingwiththe________characteristicof
services.
A)intangibility
B)variability
C)inconsistency
D)inseparability
E)perishability

31)Whichofthefollowingis(are)nottrueabouttheproductlifecycleconcept?
A)asoundtheorythatdescribesindustrysalesandprofitsforaproductideaacrossproduct
markets.
B)areliablepredictorofaproductssalesgrowthratesandprofitability
C)bothAandBareuntrueabouttheproductlifecycle
D)ausefultoolforpredictingprofitoverthelifeofaproductandameansofsettingmarketing
budgets
E)usuallybroadlycorrectindescribingsalestrendsovertime

32)Thetrendtoshorterproductlifecyclesmeansthat
A)globalmarketingmaybetheonlywaytoachieveaprofitbeforetheproductbecomes
obsolete
B)manufacturerswillinnovatemorebecausetheycanexpecttoseequickerprofits
C)costsofgettingaproductupandrunningaredecreasing
D)patentprotectionisofferingadequateprotectiontoinnovators
E)evenasmallmarketcanbeprofitableforaninnovator

33)Acurrentlyacceptedorpopularstyleisa(n)________,whileanideathatisfashionableonlywitha
certaingroupofenthusiastsisa(n)_________.
A) fad,fashion
B) fashion,fad
C) craze,trend
D) assortment,craze
E) craze,fashion

34)Whenafirmattemptstoevaluateanewproductanditsmarketingprograminasettingthat
approximatesthefuturecompetitiveenvironment,thefirmengagesin:
A)businessanalysis.
B)concepttesting.
C)strategicmarketing
D)testmarketing.
E)alloftheabove.

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35)__________is/are partofeffectivemarketing communicationsbecause they makestatementsabout


thenatureoftheproductandtheimageitintendstoconvey.
A)Thepackageinwhichtheproductcomes
B)Thepriceoftheproduct
C)Thetypeofretailoutletwheretheproductisavailable
D)AandB
E)A,B,andC

36)ThehierarchyofeffectsincludeallofthefollowingEXCEPT__________.
A) demand
B) knowledge
C) awareness
D) purchase
E) loyalty

37)Whichofthefollowingstatementsaboutthepercentageofsalesmethodofbudgetingistrue?
A) Thismethodimpliesthatsalesareanoutcomeofproduction.
B) Thepercentageofsalesmethodistheleastusedbottomupmethodforbudgeting.
C) Thismethodimpliesthatsalescausepromotionaloutlays.
D) Firmsusingthismethodareinclinedtospendmoreonpromotionwhenrevenuedecreases.
E) The percentageofsales method is the only topdown budgeting method used to determine
promotionalbudgets.

38)Asmallcarmanufacturerislaunchinganadvertisingcampaign,foritsnewmodel,whichwillrunfor
eightweeks.Inweeksthreetosixthenew30secondtelevisionadsarerun,intermittentlywithshortened
15secondversions.Thefocusoftheadsisonthetargetmarketsdesiredfeatures,classicdesignandsafety.
Atthisstagethecompanyislikelytobetryingtoachievewhichobjectives(s)?
A)AwarenessandKnowledge
B)LikingandPreference
C)PreferenceandConviction
D)ConvictionandPurchase
E)Purchase

39)Everyadvertisementandeveryadvertisingcampaignshould_____________.
A) haveabalancedmixofaestheticandemotionalappeals
B) featureanattractivepersonalitysuchassportingheroesandfamousfilm/TVpersonalities
C) considerpossiblecompetitorresponseandbroadbasedobjectivessuchasoverallpromotionof
theproduct.
D) pursuespecific,clearlydefinedobjectivesbasedontheorganisationsoverall
marketingandpromotionstrategy
E) A,BandCabove

40)Publicrelationsisusedto___________
A) lobbygovernmentsinattemptstogetthemtoenactfavourablelegislation
B) repairdamagetoacorporationsimage,e.g.afterproducttamperingextortionattempts
C) talkupshareprices
D) communicatewithshareholders
E) alltheabove

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41)Whenmightasalespromotionleadtolongtermadoptionofabrand?
A) Whenthepromotionisextremelyenticing.
B) Whenthesalespromotionisusedasanextensionofimageadvertising.
C)Whendemandisinelasticfortheproduct.
D)Whendemandiselasticfortheproduct.
E)Whenthesalepromotionissupportedbyonlinemarketing.

42)Logisticsisamatterof:
A)tradeoffsbetweencostareassuchastransportversusproductionlotquantitycosts.
B)ensuringthatleastcostphysicaldistributionisachieved.
C)makingincreasedsalesandthentransportingthematoptimalcosts.
D)reducingthenumberofwarehousescompaniesuse.
E)alloftheabove.

43)Effectivemarketinglogisticsnetworkmanagementcan:
A)providecostadvantages.
B)providedeliverytimeadvantages.
C)lowerpricestothefinalcustomer.
D)improveprofitsforsuppliersandmanufacturers.
E)Alloftheabove.

44)Whichofthefollowingfunctionsdomembersofthemarketingchanneltypicallyperformastheymove
merchandisefromoneleveltothenext?
A)Thecreationofformutility.
B)Activitiesbasedcostaccounting.
C)Risktaking.
D)Lengtheningthechannelsoastoprovidemorespecialisedservice.
E)Eliminatingunnecessarychannelfunctions.

45)Whichofthefollowingmarketingchannelsislikelytorepresenttheconsumermarketingchannel
behindDymock'sonlinebookstore?
A)Manufacturertoconsumer.
B)Wholesalertoconsumer.
C)Retailertoconsumer.
D)Manufacturertoretailertoconsumer.
E)Noneofthese.

46)Twoormoreunrelatedcompaniesatonechannelleveljointogethertopursueanewmarketing
opportunityin:
A)verticalmarketing.
B)anadministeredVMN.
C)homogeneousmarketing.
D)horizontalmarketing.
E)partnershipmarketing.

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47)IBMhaslongbeenperceivedastheleaderincomputertechnology.Assuch,formanyyearsIBM
computerswereavailableonlyfromselected,authorizedIBMretailers.Currently,IBMhaschangedits
distributionstrategy.ConsumerscannowpurchaseIBMcomputersatseveralwellknowndepartmentand
discountstores,includingWalMartandKMart,locatedthroughoutthecountry.Initially,IBMemployed
__________distributionandmadeitsproductsavailableonlythroughasingleretailoutletinspecific
locations.Currently,ascomputershavebecomemoreofashoppinggood,IBMisusing__________
distribution,asitseekstobroadenthedegreeofitsdistributionandmakeitscomputersavailablein
severalretailoutletsinspecificareas.
A)intensive;exclusive
B)exclusive;intensive
C)intensive;selective
D)selective;exclusive
E)exclusive;selective

48)Whendemandis__________,increasesinpriceresultinincreasesintotalrevenueswhiledecreasesin
priceresultindecreasesintotalrevenue.
A) inelastic
B) supplydriven
C) flexible
D) elastic
E) synergistic

ReadtheMiniCaseGintheboxbelowandanswerquestionsNo.49
Usethespacebelowtheboxforcomputationpurposes.

MiniCaseG:DiamondMachineTechnology[DMT]makesatoolforsharpeningthebladesofpruning
sheersandglassclippers.Thecompanyhasinvested$250,000indevelopingthissharpener.Thistoolwhich
isaboutthesizeofapieceofchewinggumcosts$3tomake.Fixedcostsforthesharpeneris$10,000.The
companyexpectstosell100,000sharpenersthisyear.DiamondMachine'smarkuponsalesis30percent,
anditwantstoearna20percentROI.Calculatebothitsmarkuppriceanditstargetreturnpriceaswellas
itsbreakevenvolumeatbothprices.WhichpriceshouldDiamondManufacturinguse?

Spaceforcomputation:
(1) $3(variablecosts)+[$10,000(fixedcosts)/100,000(unitsales)]=$3.10unitcost
(2) $3.10(unitcost)[1.30]=$4.43(markupprice)
(3) $3.10(unitcost)+[$50,000(desiredreturnoninvestedcapital)]/100,000(unitsales)=
$3.60(targetreturnprice)
(4) Breakevenwithmarkupprice=$10,000(fixedcosts)/[$4.43$3(variablecosts)]=6,994units
(5) Breakevenwithtargetreturnprice=$10,000/($3.60$3)=16,667units
(6) thecompanychosethetargetreturnprice,itwouldhaveboththedesiredROIandmarkupon
sales.

49)Unitcostofthesharpeneris:
A) $5.60
B) $5.50
C) $3.10
D) $3.00

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E) $2.60
50)Markuppriceforthesharpeneris:
A) $8.00
B) $4.43
C) $4.31
D) $3.71
E) $2.38

51)Thesharpenerstargetreturnpriceis:
A)$9.60
B)$5.32
C)$5.17
D)$3.72
E)$3.60

52)ThesharpenersBreakevenunitswithmarkuppriceis:

A) 181818units
B) 41958units
C) 16667units
D) 6994units
E) 5869units

53)ThesharpenersBreakevenunitswithtargetreturnpriceis:
A) 181818units
B) 41958units
C) 16667units
D) 6994units
E) 5869units

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