Ch13 Small Business Marketing Price and Complete Test Bank - Small Business Competitive Advantage 7e Test Bank by Timothy S. Hatten. DOCX document preview.
Test Bank
Chapter 13: Small Business Marketing: Price and Promotion
Multiple Choice
1. ______ represents what the consumer considers a product to be worth.
a. Price
b. Value
c. Supply
d. Demand
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 13.1: The Economics of Pricing
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
2. Which of the following is one of the most flexible components of the marketing mix?
a. product
b. promotion
c. place
d. price
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 13.1: The Economics of Pricing
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
3. The value of a product depends on the benefits received compared to the ______.
a. quality of the product
b. quantity purchased of the product
c. monetary cost
d. raw materials used to produce the product
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 13.1: The Economics of Pricing
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
4. Establishing the ______ for goods and services at appropriate levels of production is a critical component of the marketing mix.
a. right advertising angle
b. correct sales force
c. best management team
d. right price
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 13.1: The Economics of Pricing
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
5. People purchase premium products despite the higher costs because ______.
a. they perceive greater benefits and increased quality
b. they perceive increased quality and fewer benefits
c. they perceive greater benefits with a decrease in quality
d. they perceive higher status and higher quality
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 13.1: The Economics of Pricing
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
6. Consumers typically do not want the cheapest product available, they want the ______.
a. best product for the highest price
b. most reasonable product at the highest price
c. most reasonable product at the lowest price
d. best product for the most reasonable price
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 13.1: The Economics of Pricing
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
7. The “right” price, as determined by the small business owner, is a range between what the market will bear and what the product ______.
a. value is perceived to be
b. costs
c. is worth
d. image is perceived to be
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 13.1: The Economics of Pricing
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
8. The number of competitors and their proximity influences what a small business owner can charge because the competition represents ______.
a. substitute choices to the customer
b. a better product for the consumer
c. better quality as perceived by the consumer
d. less expensive products
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Competition
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
9. Small business owners can compete with large chains like Walmart and Amazon by focusing on ______.
a. lower prices
b. wider selection
c. flexibility
d. convenience
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Competition
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
10. The success of Walmart is directly related to its ______.
a. prices
b. advertising
c. high shrinkage
d. economy of scale advantages
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Competition
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
11. The number of units of a product people would be willing to purchase at differing price levels is known as ______.
a. the demand curve
b. the supply curve
c. the product curve
d. the price curve
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Customer Demand
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
12. Products for which customers are price sensitive are said to be ______.
a. price elastic
b. price inelastic
c. price volatile
d. price subjective
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Customer Demand
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
13. The effect that price changes have on sales is known as ______.
a. the demand curve
b. the supply curve
c. the price elasticity
d. the price curve
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a Product.
REF: Cognitive Domain: Knowledge
Answer Location: Customer Demand
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
14. Products for which customers are not sensitive to price changes are said to be ______.
a. price elastic
b. price inelastic
c. price volatile
d. price subjective
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Customer Demand
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
15. Restaurants, personal computers, and airline travel all tend to have a demand that is ______.
a. price elastic
b. price inelastic
c. price volatile
d. price subjective
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Customer Demand
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
16. If the price of the product falls by five percent and the volume of sales increases by eight percent, the demand for the product is ______.
a. price elastic
b. price inelastic
c. price volatile
d. price subjective
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Customer Demand
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
17. Health care, food products, and a Ferrari tend to have a demand which is ______.
a. price elastic
b. price inelastic
c. price volatile
d. price subjective
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Customer Demand
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
18. If the price of a product increases by 10 percent and sales volume falls by 1 percent, demand for the product is ______.
a. price elastic
b. price inelastic
c. price volatile
d. price subjective
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Customer Demand
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
19. While shopping at the supermarket, Selina was dismayed to find that the price of orange juice was now 50% more than what she was used to paying. As a result, Selina purchased grapefruit juice, which was closer to what she usually pays. Based on this example, orange juice is ______.
a. a necessity
b. a luxury good
c. inelastic
d. elastic
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Customer Demand
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
20. Total costs fall into two general categories: ______.
a. tangible costs and intangible costs
b. fixed costs and variable costs
c. production costs and service costs
d. singular costs and dual costs
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Costs
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
21. Costs that do not change with the number of sales made are called ______.
a. fixed costs
b. variable costs
c. the breakeven point
d. asset costs
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Costs
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
22. Costs like rent, property taxes, and utilities are generally ______.
a. fixed costs
b. variable costs
c. the breakeven point
d. asset costs
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Costs
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
23. Costs that change in direct proportion to sales are known as ______.
a. fixed costs
b. variable costs
c. the breakeven point
d. asset costs
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Costs
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
24. Sales commissions, raw materials, and labor costs are generally ______.
a. fixed costs
b. variable costs
c. a breakeven point
d. a demand curve
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Costs
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
25. The point at which total cost equals total revenue and the business is neither making nor losing money is known as ______.
a. the profit area
b. the loss area
c. the breakeven point
d. the profit point
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Costs
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
26. How many units of a product must be sold in order for the business to break even if total fixed costs are $500, the product is selling for $14, and the average variable cost is $8?
a. 100.3 units
b. 84.3 units
c. 63.3 units
d. 38.3 units
KEY: Learning Objective: 13.2: Explain what breakeven analysis is and why it is important for pricing in a small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 13.2: Breakeven Analysis
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
27. How many units of a product would have to be sold if total fixed costs are $300, desired profit for the product is $2,000, the price at which the product is selling is $15, and the average variable cost is $8?
a. 329 units
b. 288 units
c. 243 units
d. 153 units
KEY: Learning Objective: 13.2: Explain what breakeven analysis is and why it is important for pricing in a small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 13.2: Breakeven Analysis
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
28. What would be the breakeven point in dollars if total fixed costs were $300, the average variable costs were $9, and the price per unit was $18?
a. $16
b. $33
c. $400
d. $600
KEY: Learning Objective: 13.2: Explain what breakeven analysis is and why it is important for pricing in a small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 13.2: Breakeven Analysis
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
29. What the competition charges and what consumers are willing to pay sets the price ______ while costs of producing the product establish the price ______.
a. ceiling; floor
b. floor; ceiling
c. demand curve; supply curve
d. fixed costs; variable costs
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 13.3: Price-Setting Techniques
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
30. Which of the following is not a consideration in establishing the “right” price for a product or service?
a. competition
b. consumer demand
c. your gut
d. costs
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 13.3: Price-Setting Techniques
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
31. To accomplish the goals of increasing sales, increasing store traffic, and discouraging competition, which of the following is an appropriate strategy?
a. penetration pricing
b. price skimming
c. psychological pricing
d. price lining
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
32. Setting the price of a new product below what is expected in order to gain faster market share is known as ______.
a. penetration pricing
b. price skimming
c. psychological pricing
d. price lining
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
33. To accomplish the goals of maximizing short- or long-run profits and to quickly recover development costs, which of the following is an appropriate strategy?
a. penetration pricing
b. price skimming
c. psychological pricing
d. price lining
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
34. Setting the price of a new product higher than expected in order to recover development costs is known as ______.
a. penetration pricing
b. price skimming
c. psychological pricing
d. price lining
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
35. Home electronics such as personal computers, cellular phones, and VCRs are often introduced using which of the following strategies?
a. penetration pricing
b. price skimming
c. psychological pricing
d. price lining
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
36. With an inelastic product, since there are not usually many substitutes, a/an ______ strategy can be used, setting the prices higher.
a. skimming
b. penetration
c. odd
d. reference
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
37. At Sally’s Sun Boutique, items are always priced at $4.98 or $8.99 rather than $5.00 or $9.00. This is an example of what type of pricing tactic?
a. price lining
b. prestige pricing
c. reference pricing
d. odd pricing
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Reflective thinking
38. ______ is common in retail goods for which consumers have an idea of what the price “should be” and have a “usual” price in mind for that item.
a. Price lining
b. Prestige pricing
c. Reference pricing
d. Odd pricing
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
39. At Marco’s Men’s Store, all ties are priced at one of three different price points: $16.95, $24.95, and $33.95. This is an example of what type of pricing tactic?
a. price lining
b. prestige pricing
c. reference pricing
d. odd pricing
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Reflective thinking
40. When the goals of a business are stabilizing market prices, establishing market position, building an image, and developing a reputation, which of the following strategies should be used?
a. penetration pricing
b. price skimming
c. psychological pricing
d. price lining
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
41. Setting the price of a product in a way that will alter its perception to customers is known as ______.
a. penetration pricing
b. price skimming
c. psychological pricing
d. price lining
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
42. People often equate quality with price. This belief has led to which of the following pricing strategies?
a. prestige pricing
b. odd pricing
c. reference pricing
d. price lining
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
43. Grouping product prices into ranges such as low-, medium-, and high-priced items is known as which of the following?
a. prestige pricing
b. odd pricing
c. reference pricing
d. price lining
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
44. The amount that is added to the overall cost of a product when setting the final selling price to ensure a profit is known as which of the following?
a. markup
b. the specified percentage
c. net income
d. gross margin
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
45. If a business knows how many units will be sold and what the fixed costs and the variable costs will be, ______ allows the selling price to be set to produce a given rate of return.
a. cost-plus pricing
b. target-return pricing
c. penetration pricing
d. reference pricing
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
46. Overpricing a product or service to make consumers curious is an example of what type of pricing tactic?
a. target-return pricing
b. creativity in pricing
c. cost-plus pricing
d. reference pricing
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
47. The two basic categories of credit include ______.
a. business credit and industry credit
b. industry credit and personal credit
c. consumer credit and business credit
d. trade credit and consumer credit
KEY: Learning Objective: 13.4: Explain factors affecting small businesses getting paid.
REF: Cognitive Domain: Knowledge
Answer Location: Extending Credit to Your Customers
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
48. Credit extended to customers for the purchase of products is known as which of the following?
a. trade credit
b. consumer credit
c. insufficient credit
d. extensive credit
KEY: Learning Objective: 13.4: Explain factors affecting small businesses getting paid.
REF: Cognitive Domain: Knowledge
Answer Location: Extending Credit to Your Customers
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
49. Credit extended from one business to another business is known as which of the following?
a. trade credit
b. consumer credit
c. courtesy credit
d. extensive credit
KEY: Learning Objective: 13.4: Explain factors affecting small businesses getting paid.
REF: Cognitive Domain: Knowledge
Answer Location: Extending Credit to Your Customers
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
50. The type of credit where the consumer takes possession of the goods and the business then bills the consumer is known as a/an ______.
a. open charge account
b. installment account
c. line of credit
d. debit card
KEY: Learning Objective: 13.4: Explain factors affecting small businesses getting paid.
REF: Cognitive Domain: Knowledge
Answer Location: Extending Credit to Your Customers
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
51. The type of credit frequently offered to customers who are purchasing big-ticket items like cars and boats where the customer makes a down payment and then monthly payments is known as a/an ______.
a. open charge account
b. installment account
c. line of credit
d. debit card
KEY: Learning Objective: 13.4: Explain factors affecting small businesses getting paid.
REF: Cognitive Domain: Knowledge
Answer Location: Extending Credit to Your Customers
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
52. The type of credit that operates like a revolving credit account where customers can purchase goods up to a certain dollar limit without a new credit check for each purchase is known as a/an ______.
a. open charge account
b. installment account
c. line of credit
d. debit card
KEY: Learning Objective: 13.4: Explain factors affecting small businesses getting paid.
REF: Cognitive Domain: Knowledge
Answer Location: Extending Credit to Your Customers
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
53. Trade credit can take the form of all but which of the following?
a. consignment goods
b. seasonal dating
c. extended payment periods
d. reference payment periods
KEY: Learning Objective: 13.4: Explain factors affecting small businesses getting paid.
REF: Cognitive Domain: Knowledge
Answer Location: Extending Credit to Your Customers
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
54. Small businesses can easily fall into the mindset of being concerned about ______ now, and working on improving ______ later.
a. expenses; income
b. sales; profit margins
c. sales; expenses
d. profit margins; sales
KEY: Learning Objective: 13.4: Explain factors affecting small businesses getting paid.
REF: Cognitive Domain: Knowledge
Answer Location: Extending Credit to Your Customers
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
55. Which of the following is a good example of outdoor media?
a. newspapers
b. radio
c. television
d. billboards
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
56. The ______ of the target market should affect the choice of advertising media that are used.
a. income
b. habits
c. age
d. gender
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
57. ______ is a way to bring attention to a product or business by publishing or broadcasting a message to the public through various media.
a. Word-of-mouth
b. Personal selling
c. Advertising
d. Negotiating
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
58. Advantages of ______ advertising are that it is flexible, timely, covers local markets well, is believable, is relatively inexpensive, and can use inserts and coupons.
a. magazine
b. newspaper
c. yellow pages
d. Internet
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
59. Advantages of ______ advertising are that it can be targeted to a specific audience, it comes at a relatively low cost, and there are short lead times so ads can be developed quickly.
a. radio
b. magazine
c. television
d. direct mail
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
60. ______ advertisements discuss the existence of the business, the competitive advantage, or the product features and benefits.
a. Informational
b. Persuasion
c. Reminder
d. Perception changing
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
61. ______ advertisements get customers to take immediate action, such as buying the product.
a. Informational
b. Persuasion
c. Reminder
d. Perception changing
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
62. Creating goodwill rather than making immediate sales is known as ______.
a. foolish advertising
b. goodwill advertising
c. institutional advertising
d. reverse psychology advertising
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
63. Advantages of ______ advertising are that it results in high, repeated exposure at low cost and with limited competition.
a. Internet
b. magazine
c. outdoor
d. direct mail
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
64. Abe’s Advertising Company is currently working on a TV ad campaign which includes a classic song to position the product. Advertisers hope that the music will bring about a sense of nostalgia among potential customers. Which advertising strategy is Abe’s using?
a. testimonial
b. humor
c. comparative message
d. slice-of-life message
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
65. ______ are a common advertising strategy that uses an authority to present the message.
a. Slice-of-life messages
b. Fantasy messages
c. Comparative messages
d. Testimonial messages
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
66. Using coded or dated coupons can let the researcher compare different media. This is known as ______.
a. split ads
b. in-store opinions
c. telephone surveys
d. response tracking
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
67. Which of the following is not a technique for measuring advertising effectiveness?
a. response tracking
b. split ads
c. telephone surveys
d. testimonials
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
68. Which of the following is a common problem among self-produced small business advertising?
a. cost of the ad
b. content of the ad
c. trying to cram too much into the ad
d. quality of the message
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
69. ______ can help by conducting preliminary studies, developing an advertising plan, creating advertisements, selecting the appropriate media, evaluating the effectiveness of the advertising, and conducting ad follow-up.
a. Advertising agencies
b. Media agencies
c. Art and graphic design services
d. Broadcast agencies
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
70. Winston, a television satellite company manager, decides to drop a brief questionnaire in the monthly bill sent out to all satellite customers, in an effort to find out if they are satisfied with the level of service from the company and to learn how they found out about the service. This is an example of which tool for measuring advertising effectiveness?
a. response tracking
b. split ads
c. in-store opinions
d. statement questionnaires
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
71. ______ can help coordinate media mixes in order to reach markets.
a. Advertising agencies
b. Media agencies
c. Art and graphic design services
d. Broadcast agencies
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
72. The biggest drawback to personal selling is ______.
a. time
b. cost
c. poor customer service
d. lack of knowledge
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Personal Selling
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
73. ______ are a good place to get ads produced since their services usually cost less than advertising agencies.
a. Radio and television studios, newspaper offices, and magazine offices
b. Media agencies
c. Art and graphic design agencies
d. Custom ad agencies
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
74. The steps in the personal-selling process, in order, are which of the following?
a. approach, pre-approach, questioning, demonstration, handling objections, closing the deal, suggestion selling, and follow-up
b. pre-approach, approach, questioning, demonstration, handling objections, closing the deal, suggestion selling, and follow-up
c. demonstration, pre-approach, approach, questioning, handling objections, closing the deal, suggestion selling, and follow-up
d. questioning, demonstration, approach, pre-approach, handling objections, closing the deal, suggestion selling, and follow-up
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Personal Selling
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
75. The first step in the personal-selling process is ______.
a. questioning
b. approach
c. pre-approach
d. demonstration
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Personal Selling
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
76. ______ is an aspect of PR consisting of any message about an organization that is communicated through the mass media that does not require payment.
a. Public relations
b. Advertising
c. Personal selling
d. Promotion
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Public Relations
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
77. Which of the following is not a public relations activity?
a. lobbying
b. event sponsorship
c. an employee picnic
d. press releases
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Public Relations
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
78. ______ is any activity that stimulates sales and is not strictly advertising or personal selling.
a. Promotional mix
b. Sales promotion
c. Advertising
d. Personal selling
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Sales Promotions
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
79. When used with advertising and personal selling, ______ can give a short-term boost to sales.
a. promotional mix
b. media reporting
c. sales specials
d. sales promotions
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Sales Promotions
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
NARRBEGIN: 13-1
Scenario 13-1. Merle is considering purchasing a new lawn mower. He wants a mower that is self-propelled, has a higher horsepower rating, and a high level of quality instilled in the workmanship. Merle begins his search by looking in the yellow pages of the local phone book. Several small lawn mower dealers are listed along with several big-name wholesalers such as Walmart. Merle is not sure where to begin.
NARREND
80. In Scenario 13-1, if Merle knew about the components of the marketing mix, he would realize that ______ is one of the most flexible components.
a. the product
b. the promotion
c. the place
d. the price
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 13.1: The Economics of Pricing
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 13-1
81. In Scenario 13-1, Merle, being a normal consumer of lawn mowers, will look for which of the following?
a. the highest quality lawn mower with the highest price
b. the least expensive lawn mower available with the lowest level of quality
c. the lowest level of quality lawn mower with the highest price
d. the highest quality lawn mower with the most reasonable price
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 13.1: The Economics of Pricing
Difficulty Level: Easy
TOP: AACSB Standard: Reflective thinking
NAR: 13-1
82. In Scenario 13-1, the “right” price that Merle will pay will be in a range between what the market will bear and what the product ______.
a. is selling for
b. costs to make
c. is worth
d. name brand is perceived to be
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 13.1: The Economics of Pricing
Difficulty Level: Easy
TOP: AACSB Standard: Reflective thinking
NAR: 13-1
83. In Scenario 13-1, Merle may purchase an extremely high quality, high price lawn mower such as a Toro despite its high price because he ______.
a. may perceive increased quality and decreased benefits
b. may perceive increased benefits with decreased quality
c. may perceive increased personal status and increased quality
d. may perceive increased benefits and increased quality
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 13.1: The Economics of Pricing
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 13-1
84. In Scenario 13-1, if Merle saw that the price of lawn mowers had risen by 10 percent, but the overall sales volume of lawn mowers at local dealerships had fallen by only 1 percent, Merle could say that the demand for lawn mowers is ______.
a. price volatile
b. price inelastic
c. price elastic
d. price subjective
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Comprehension
Answer Location: Customer Demand
Difficulty Level: Easy
TOP: AACSB Standard: Reflective thinking
NAR: 13-1
NARRBEGIN: 13-2
Scenario 13-2. Benjamin has been running his kennel service for one year. So far, business has been good and all expenses have been met each month, leaving a small profit. He has a large building capable of handling a total of 35 dogs. Each pen has fresh water supplied through pipes, an automated feeder, and a heating/cooling unit that keeps each pen at a comfortable 68 degrees. Benjamin rents each pen at a price of $30 per day. His total fixed costs each month are $500. Average variable costs are $12.
NARREND
85. In Scenario 13-2, based on the numbers above, what is Benjamin’s breakeven point?
a. 26 pen rentals each month
b. 28 pen rentals each month
c. 30 pen rentals each month
d. 32 pen rentals each month
KEY: Learning Objective: 13.2: Explain what breakeven analysis is and why it is important for pricing in a small business.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 13.2: Breakeven Analysis
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 13-2
86. In Scenario 13-2, if Benjamin’s fixed costs were to rise to $600 per month while all other variables remained the same, what would Benjamin’s new breakeven point be?
a. 30 pen rentals each month
b. 32 pen rentals each month
c. 34 pen rentals each month
d. 36 pen rentals each month
KEY: Learning Objective: 13.2: Explain what breakeven analysis is and why it is important for pricing in a small business.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 13.2: Breakeven Analysis
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 13-2
87. In Scenario 13-2, if Benjamin would like a monthly profit of $2,000, using the original numbers, calculate his target return in pen rentals.
a. 136 pen rentals each month
b. 139 pen rentals each month
c. 142 pen rentals each month
d. 145 pen rentals each month
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Comprehension
Answer Location: Internal-Oriented Pricing Strategies
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 13-2
88. In Scenario 13-2, if Benjamin’s fixed costs were to rise to $600 per month while all other variables remained the same, what would Benjamin’s target return in pen rentals be, using a monthly profit target of $2,000?
a. 140 pen rentals each month
b. 145 pen rentals each month
c. 150 pen rentals each month
d. 155 pen rentals each month
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Comprehension
Answer Location: Internal-Oriented Pricing Strategies
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 13-2
89. In Scenario 13-2, Benjamin would like to determine his breakeven point in dollars instead of pen rentals. When he calculated this using the original data, his breakeven point would be ______.
a. $834
b. $956
c. $1,012
d. $1,248
KEY: Learning Objective: 13.2: Explain what breakeven analysis is and why it is important for pricing in a small business.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 13.2: Breakeven Analysis
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 13-2
True/False
1. Establishing the right price for a good or service at an appropriate level of production is a critical component of the marketing mix.
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Competition
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
2. Product is one of the most flexible components of the marketing mix.
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 13.1: The Economics of Pricing
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
3. When considering a product, consumers typically look for the cheapest product available.
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 13.1: The Economics of Pricing
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
4. The closer the proximity of the competition, the more influence the competition will have on the price of the small business owner’s product.
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Competition
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
5. To survive in an industry dominated by giants, a small business should compete by offering lower prices.
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Competition
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
6. Restaurants and personal computers tend to be price inelastic.
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Customer Demand
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
7. The right price is a range of possible prices.
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Competition
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
8. Sales commissions, materials, and labor tend to be fixed costs.
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Costs
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
9. Expenses like rent, property taxes, and utilities are variable costs.
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Costs
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
10. The breakeven point is that point where total revenues are greater than total costs.
KEY: Learning Objective: 13.2: Explain what breakeven analysis is and why it is important for pricing in a small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 13.2: Breakeven Analysis
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
11. Necessary and luxury goods both tend to be price inelastic.
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Knowledge
Answer Location: Costs
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
12. On a breakeven point graph, the fixed-costs line runs vertically.
KEY: Learning Objective: 13.2: Explain what breakeven analysis is and why it is important for pricing in a small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 13.2: Breakeven Analysis
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
13. The usefulness of breakeven analysis depends on the quality of data used in the calculations.
KEY: Learning Objective: 13.2: Explain what breakeven analysis is and why it is important for pricing in a small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 13.2: Breakeven Analysis
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
14. Setting prices higher than expected in order to recover developmental costs is known as penetration pricing.
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
15. Home electronics are often introduced using a skimming pricing strategy.
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
16. Jewelry, perfume, beer, and law firm services all use prestige pricing as a pricing strategy.
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
17. Psychological pricing tactics include prestige pricing, odd pricing, and reference pricing.
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
18. Another name for markup pricing is target-return pricing.
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
19. Most businesses base markup on selling price.
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Knowledge
Answer Location: Customer-Oriented Pricing Strategies
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
20. The trend today is toward consumers carrying more cash and using credit and debit cards less frequently.
KEY: Learning Objective: 13.4: Explain factors affecting small businesses getting paid.
REF: Cognitive Domain: Knowledge
Answer Location: Extending Credit to Your Customers
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
21. Open charge accounts can hinder the cash flow of a business and eventually cause the business to fail.
KEY: Learning Objective: 13.4: Explain factors affecting small businesses getting paid.
REF: Cognitive Domain: Knowledge
Answer Location: Extending Credit to Your Customers
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
22. Many new businesses can take advantage of trade credit even when no other form of financing is available.
KEY: Learning Objective: 13.4: Explain factors affecting small businesses getting paid.
REF: Cognitive Domain: Knowledge
Answer Location: Extending Credit to Your Customers
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
23. The use of credit and debit cards is decreasing while the usage of cash and checks is increasing.
KEY: Learning Objective: 13.4: Explain factors affecting small businesses getting paid.
REF: Cognitive Domain: Knowledge
Answer Location: Extending Credit to Your Customers
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
24. Customers, not businesses, have to pay a percentage of each sale to the credit card company handling the sale.
KEY: Learning Objective: 13.4: Explain factors affecting small businesses getting paid.
REF: Cognitive Domain: Knowledge
Answer Location: Extending Credit to Your Customers
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
25. The longer a credit account goes uncollected, the less likely the small business owner will receive the money owed to him/her.
KEY: Learning Objective: 13.4: Explain factors affecting small businesses getting paid.
REF: Cognitive Domain: Knowledge
Answer Location: Extending Credit to Your Customers
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
26. Spending large amounts of money automatically results in better advertising.
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
27. Limitations of television advertising are that it comes at a high cost, there is short exposure time, and there is a high volume of competitive ads that increase clutter and decrease impact.
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
28. A limitation of magazine advertising is that there is a great deal of uncertainty of the number and types of people reached.
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
29. To measure the effectiveness of advertising, companies may choose to code two different ads to see which produces a greater response, a technique that is referred to as split advertising.
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Advertising
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
30. Personal selling involves a personal presentation by the salesperson for the purpose of making sales and building relationships with customers.
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Personal Selling
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
31. Time is the biggest drawback to personal selling.
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Personal Selling
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
32. Public relations involve promotional activities designed to build and sustain goodwill between a business and its customers, employees, suppliers, investors, government agencies, and the general public.
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Public Relations
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
33. Publicity consists of any messages concerning a company that are communicated through mass media and are paid for by the company.
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Public Relations
Difficulty Level: Easy41
TOP: AACSB Standard: Analytical thinking
34. The last step in the personal selling process is closing the deal.
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Knowledge
Answer Location: Personal Selling
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
Short Answer
1. Explain the three primary considerations in setting the price for a product.
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 13.3: Price-Setting Techniques
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
2. Describe at least three areas that are good places to start when thinking about what differentiates a product from the competition.
KEY: Learning Objective: 13.1: Identify the three main considerations in setting a price for a product.
REF: Cognitive Domain: Comprehension
Answer Location: Competition
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
3. Explain the importance of the breakeven point for small business and the difference between fixed and variable costs.
KEY: Learning Objective: 13.2: Explain what breakeven analysis is and why it is important for pricing in a small business.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 13.2: Breakeven Analysis
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
4. Compare and contrast customer-oriented pricing strategies and internal-oriented pricing strategies.
KEY: Learning Objective: 13.3: Present examples of customer-oriented and internal-oriented pricing.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 13.3: Price-Setting Techniques
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
5. Explain how and why small businesses extend credit.
KEY: Learning Objective: 13.4: Explain factors affecting small businesses getting paid.
REF: Cognitive Domain: Comprehension
Answer Location: Extending Credit to Your Customers
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
6. Discuss the four major tools that are available when developing a promotional mix.
KEY: Learning Objective: 13.5: Describe the advertising, personal selling, public relations, and sales-promotion tools that a small business owner uses to compile a promotional mix.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 13.5: Promotion
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
7. Explain the importance of having a collection system for extended credit.
KEY: Learning Objective: 13.4: Explain factors affecting small businesses getting paid.
REF: Cognitive Domain: Comprehension
Answer Location: Extending Credit to Your Customers
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
Document Information
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Small Business Competitive Advantage 7e Test Bank
By Timothy S. Hatten
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