UNIVERSITY OF TORONTO Faculty of Arts and Science & Rotman School of Management
PRINCIPLES OF MARKETING MGT252H1F - L0101, L0201, L0301, L0401 Professors Claire Tsai and Nina Mazar
Final Exam
Duration - 2 hours / Questions - 62 No Aids Allowed _____________________________________________________________________________________________________
This is a closed book, closed notes final exam. Point allocation is indicated in parentheses. The total is 100 points. Use a pencil to answer Part I on a multiple choice scantron sheet. Answer Parts II and III using examination booklets.
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Part I: MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Use the scantron sheet. 1 Point per Question. Total Points: 50. 1) Working with a reporter to try and get a favourable article about your company published in a newspaper is a form of ________. A) public relations B) personal selling C) advertising D) sales promotion E) direct marketing 2) Some analysts see ________ as the major enduring asset of a company, outlasting the company’s specific products and facilities. A) staples B) convenience products C) unsought products D) specialty products E) brands 3) ________ from the manufacturer or service provider is the set of firms that supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service. A) Unidirectional B) Downstream C) Bilateral D) Upstream E) Separated 4) Under ________, the market consists of many buyers and sellers trading in a uniform commodity such as wheat, copper, or financial securities. A) anti-trust agreements B) monopolistic competition C) an oligopoly D) pure monopoly E) pure competition 5) When Revlon recognized a woman buying lipstick is buying more than just lip colour, she is buying hope, what product level did Revlon recognize? A) the existence of a core product B) the existence of image products C) the existence of an actual product D) the existence of convenience products E) the existence of an augmented product 6) A product in the early maturity or decline stage may require ________ advertising. A) persuasive B) cooperative C) comparative D) informative
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E) reminder
7) Asking for a customerʹs order takes place during ________. A) presentation and demonstration B) closing C) preapproach D) prospecting E) handling objections Part I: MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Use the scantron sheet. 8) In terms of the communication process, putting thought into symbolic form is called ________. 1 Point per Question. Total Points: 50. A) sending B) encoding C) decoding D) message E) receiving 9) Queenʹs University ordering another carton of letterhead is an example of: A) new task B) straight rebuy C) return buying D) habitual rebuy E) modified rebuy 10) Using a newspaper to distribute coupons valid on items purchased on Canada Day is an example of ________. A) sales promotion B) personal selling C) publicity D) advertising E) public relations 11) Advertisers are increasingly shifting larger portions of their budgets to media that cost less and target more effectively. All of the following benefit greatly from this shift, except ________. A) cable television B) digital satellite television systems C) outdoor advertising D) network television E) B and C 12) An increase in competition, attracted by the opportunities for profit, is typical of which stage in the product life cycle? A) product development B) growth C) decline D) introduction E) maturity 13) Market coverage, inventory assortment and location are all part of the ________ component of the marketing strategy: A) price B) promotion C) product D) place E) target market 14) These stores usually carry more specialty goods for which customers like to be ʺwaited on.ʺ They have much higher operating costs, which are passed along to the customer. A) i d d t t 3
A) independent stores B) full-service stores C) nonstore retailers D) self-service stores E) category killer stores 15) When two Burger King restaurants have a disagreement over who should be able to sell in quantity at a discount to local athletic teams, they are in a ________ conflict. A) vertical B) horizontal C) generalized D) no-win E) problematic 16) JB Auto Detailing’s customers have noticed that the quality of services depends on who provides them as well as when, where, and how they are provided. What have the customers noticed? A) Service inseparability B) Service intangibility C) Service variability D) Service volatility E) Service perishability 17) When a producer directs its marketing activities towards channel members in order to induce them to carry the product and promote it to final consumers, they are using which type of strategy? A) pull strategy B) push strategy C) induction strategy D) product-mix strategy E) none of the above 18) What do we call a detailed version of a new idea stated in meaningful consumer terms? A) product idea B) product concept C) product image D) product definition E) product proposal 19) Nintendo created a 13 minute music video representation of its newest game and sent it out to video game players. They sold over six million units in 45 days. This is an example of ________. A) online marketing B) direct mail marketing C) direct response TV D) telemarketing E) kiosk marketing 20) The Body Shop determines the needs, wants, and interests of its target markets and offers consumers products without conducting animal testing. The Body Shop is practicing: A) the target market mix. B) the societal marketing concept. C) ethical marketing. D) green marketing. E) the selling orientation.
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21) A car dealer complains to the manufacturer that another dealer of the same car is selling outside its assigned territory. This is called ________. A) vertical conflict B) customer-service conflict C) parallel conflict D) dealer-franchise conflict E) horizontal conflict 22) ________ are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. A) Unsought products B) Industrial products C) Augmented products D) Shopping products E) Specialty products 23) The salesperson was unprepared for the sales call. He had not learned as much as possible about the organization before making the appointment for later that day. What step had the sales person omitted? A) qualifying B) prospecting C) closing D) preapproach E) approach 24) Advertising appeals should have three characteristics. Which is NOT one of these characteristics? A) They should be distinctive. B) They must be believable. C) They should be meaningful. D) They all must show lifestyle. E) A and C 25) Garyʹs worked for several small manufacturers, yet he demonstrated their products to retailers in his territory as if they were all his own. He knew the retailers well, and he appreciated their company. They looked to him as an authority and a friend. When Gary took an order he sent it to the manufacturer who delivered the goods directly to his customer. He then received a commission cheque in the mail. Boy, he loved being self -employed! Gary is a ________. A) broker B) truck wholesaler C) commission merchant D) manufacturerʹs Agent E) drop shipper 26) Determining whether to collect information by mail, telephone, or personal interview is decided at which step in the marketing research process? A) evaluating the research B) interpreting the findings C) developing the research plan D) implementing the research plan E) defining the problem
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27) The Body Shop is a store that carries a narrow product line with a deep assortment of products. It is a A) convenience store B) department store C) mass merchandiser D) supermarket E) specialty store 28) To encourage dealer acceptance, Ramsay Wholesaler Grocer offered each retail client a 5% price reduction in return for advertising their food products in the grocery store fliers. Ramsay was using a ________. A) allowance B) quantity discount C) promotional discount D) trade-in discount E) cash discount 29) A phone call from a prospective customer asking about the product pictured in an ad is an example of ________. A) noise B) counter-message C) feedback D) media E) response 30) Which type of product might require a more direct marketing channel to avoid delays and too much handling? A) perishable products B) higher-priced products C) products in the growth stage D) products in their maturity or decline stage E) lower-priced products 31) What is one reason that markup pricing is not practical? A) By tying the price to cost, sellers simplify pricing. B) This method ignores demand. C) When all firms in the industry use this pricing method, prices tend to be similar. D) Sellers earn a fair return on their investment. E) Consumers know they are being overcharged. 32) If your objective is to create consumer awareness toward your product, you will use ________ ads. A) informative B) persuasive C) comparative D) cooperative E) reminder 33) The elderly grandmother chatted with her grand-daughter about the Rollerblades her grand-daughter wanted as a birthday present. The grandmother had never heard of Rollerblades and stated she personally had no use for them. For the grandmother Rollerblades are: A) available products B) unsought products C) specialty products D) convenience products E) shopping products
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34) The frozen cake business had become so complex over the years that the company decided it needed to reorganize its selling efforts. Which approach is most appropriate for large complex accounts? A) territorial sales B) outside sales C) telemarketing D) team selling E) inside sales selling 35) Mercedes emphasizes engineering design, performance, quality and safety in its ads. Mercedes is using a(n) ________ in these advertisements. A) personal B) rational appeal C) legal appeal D) emotional appeal E) moral appeal 36) Hallmark advertises its greeting cards only before major holidays. This is an example of ________. A) pulsing scheduling B) continuity scheduling C) media planning D) creative timing E) seasonal advertising 37) Messages that advocate humour claim that they attract more attention and create more liking and belief in the sponsor. This is called a(n) ________ appeal. A) structural B) moral C) entertaining D) emotional E) rational 38) In choosing a transportation mode for a product, shippers must balance the considerations of speed, dependability, cost, and ________. A) fulfillment B) weight C) customer choice D) distance E) availability 39) Which of the following may be true about shoppers who prefer to shop at “lifestyle centres”? A) They prefer inexpensive atmospheres. B) They prefer upscale stores. C) They prefer out-of-the-way locations. D) All of the above. E) None of the above. 40) The retailer added a standard markup of 40% to the cost of the product. What type of pricing is the retailer using? A) break-even analysis B) consumer demand pricing C) perceived-value pricing D) cost-plus pricing E) target profit pricing
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41) The marketer wants to understand how the stimuli are changed into responses inside the consumerʹs ________, which has two parts. First, the buyerʹs characteristics influence how he or she perceives and reacts to the stimuli. Second, the buyerʹs decision process itself affects the buyerʹs behaviour. B) black box C) psyche D) culture E) lifestyle A) belief 42) Teri went to the store to buy a Super Suzie doll for her three year old daughter. When she arrived, the dolls were sold out. She was surprised because she arrived early after the store opened. A more expensive doll was available in the place of Super Suzie. Teri suspects that the store is committing ________ pricing. A) resale price maintenance B) bait-and-switch C) cost-plus D) deceptive E) discrimatory 43) Lyall Electric, Inc., maintains a sales force for its small appliance customers and a separate sales force for its automotive customers. Lyall Electric utilizes a ________ structure. A) complex salesforce B) territorial salesforce C) product salesforce D) retail salesforce E) customer salesforce 44) Fred is able to help negotiate the purchase process, while uniting buyers and sellers. They greatly value his expertise, and he doesnʹt have to buy the products in order to resell them. Fred is a ________. A) commission merchant B) drop shipper C) broker D) truck wholesaler E) manufacturerʹs Agent 45) When Clorox was conducting a test market on a detergent with bleach, it alerted P&G to this new product. They in turn formulated their own detergent with bleach and eventually knocked Cloroxʹs product out of the market. This situation is an example of: A) poor concept testing B) poor positioning by Clorox C) a poor business analysis D) a disadvantage of test markets E) the volatility of consumer markets 46) As marketing manager of Swiss Chalets, a mountain and lakeside resort, you discover that consumers position products and services ________. A) generally after consulting friends who use them B) based on nearby competitors’ positions C) with or without the help of marketers D) rather reluctantly E) after marketers put marketing mixes in place
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47) When the Twin Six Cafe provides gourmet menu options to its customers, as well as impeccable service–which even allows the customer to hand-select his or her own cut of meat–________ is/are evident. A) only an augmented product B) only an actual product C) a core benefit, an actual product, and an augmented product D) both a core benefit and an actual product E) only a core benefit 48) Black and Decker uses a new product development approach where cross -functional teams of individuals from different company divisions are established. This is called: A) commercial product development B) sequential product development C) simultaneous product development D) international product development E) lead-country product development 49) When Kao Company in Japan evaluates a new product idea against criteria such as whether the product benefits the company, consumers or society it is: A) brainstorming on new product ideas B) screening new product ideas C) using the green matrix to develop its business D) at the introductory stage in the product life cycle E) developing new concepts by involving representatives from the company, consumers and society in general 50) ConAgra joined with Kelloggʹs to offer their brand name ʺHealthy Choice,ʺ as a nutritious cereal made by Kelloggʹs. This product is called: A) a multibrand B) a line extension C) a private label brand D) a co-brand E) a licensed brand Part II: SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. Use the examination booklet. 3 Points per Question. Total Points: 24. 51) Explain briefly the market-skimming pricing strategy, then name and explain two different situations in which marketers will use this strategy. 52) Explain intermodal transportation. 53) Why might a marketer of laundry detergent be interested in viewing a perceptual positioning map? 54) Some products remain in the maturity stage of the PLC for long periods of time, whereas others pass through quickly. List and explain briefly three possible conditions that may allow a product to remain in the maturity stage for a long period of time. 55) Why might a company need to hire both an inside and an outside sales force?
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56) A marketer’s fixed costs are $200,000, the variable cost is $8, and the expected unit sales are 10,000. If they want to earn a 30 percent markup on sales, what is the marketer’s markup price? 57) Explain why typical husband-dominant or wife-dominant products of the 1970s may no longer be regarded as such. 58) -T) Students from Prof. Claire Tsai’s class only - L0101, L0401- must answer this question: Imagine the following scenario: A manager, in an effort to test whether a proposed incentive program would increase productivity, applied the program to a group of workers who had the lowest productivity. A month later, their productivity indeed increased. The manager concluded that the program did increase workersʹ productivity. What is a viable alternative explanation for this result? -M) Students from Prof. Nina Mazar’s class only - L0201, L0301- must answer this question: How might the BCG matrix represent a product life cycle? Part III: ESSAY. Write your answer in the examination booklet. Total Points: 26. 59) Name the three kinds of appeals for message content, give an example for when you may use each of them, and explain why. (5 Points) 60) Jenny is trying to develop a television advertising campaign for her product. She is selling vitamins with all natural ingredients. Her main target market is couples over the age of 45. Explain the idea behind each of the following message execution styles and how it could be used to meet Jennyʹs needs. Indicate which one you would use if you were Jenny, and explain why. (10 Points) 1) Slice of life 2) Fantasy 3) Mood or Image 4) Scientific evidence 5) Personality symbol 61) When would price cuts and price increases be necessary? (5 points)
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62) -T) Students from Prof. Claire Tsai’s class only - L0101, L0401- must answer this question (6 points): (a) Explain the concept of ʺanchoring and adjustment.ʺ In particular, explain why an anchor can be irrelevant and why the adjustment is often insufficient to offset the effects of the irrelevant anchor. (b) Use two examples to illustrate how one can benefit from applying ʺanchoring and adjustmentʺ in pricing decisions. -M) Students from Prof. Nina Mazar’s class only - L0201, L0301- must answer this question (6 points): People care a lot about price fairness. Coca-Cola experienced this when press releases announced that the company was planning to introduce a new type of vending machine that would make use of dynamic pricing. (a) Explain briefly what is dynamic pricing and how did Coca-Cola Company want to implement dynamic pricing (2 points). (b) What were consumersʹ reactions and why (2 points). (c) Name and explain one condition under which you think Coca -Cola would have proceeded with its plan (2 points).
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Answer Key Testname: COMBINED_FINAL_4
1) A 2) E 3) D 4) E 5) A 6) E 7) B 8) B 9) B 10) A 11) D 12) B 13) D 14) B 15) B 16) C 17) B 18) B 19) B 20) B 21) E 22) E 23) D 24) D 25) D 26) C 27) E 28) A 29) C 30) A 31) B 32) A 33) B 34) D 35) B 36) E 37) D 38) E 39) B 40) D 41) B 42) B 43) C 44) C 45) D 46) C 47) C 48) C 49) B 50) D 12
Answer Key Testname: COMBINED_FINAL_4
51) Such pricing works when the product’s quality and image support the higher price. In addition, such pricing is used when products pass through the life cycle quickly and the marketer, consequently, must recoup research and development costs early. 52) Intermodal transportation combines two or more modes of transportation, such as truck and train, truck and plane, train and water. 53) Perceptual positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions. Laundry detergent, for example, may be placed on a perceptual map based on price and cleaning power; this allows a marketer to view how consumers perceive their product with respect to others’ products along those dimensions. 54) Whether a new technology will soon replace the current one, whether the competitive environment is especially fierce, and whether the product can be modified slightly from time to time in order to keep up with changing consumer tastes may prolong the maturity stage. 55) For example, larger accounts may require special nurturing; therefore, an outside sales force can call on those customers. Smaller accounts may be able to be taken care of by an inside sales force. 56) The markup price is $40. 57) More single-parent families and more dual-income families have changed the traditional buying roles over time. 58) 59) 1) Rational - a rational argument may be good for advertising a computer because individuals may buy based solely on features and price. 2) Emotional - trying to raise money for a childrenʹs charity is more effective when the campaign focuses on children who have special kinds of needs. 3) Moral - a moral argument may help when promoting environmentally friendly behaviour (such as water conservation, not littering, recycling, composting, etc.) 60) 1) Slice of life: this approach shows typical use of the product within the target market. This would show a mature couple taking the vitamins, looking healthy and happy. 2) Fantasy: this approach would use some daydreaming or fantastic outcome of taking the vitamins: such as a great game of golf, or a happy marriage. 3) Mood or Image: this approach does not state product claims, but is uses visual cues to communicate values such as love, beauty, peace, serenity. This could be done by showing the product package, but having no voices. Just happy couples in romantic, sun-splashed locations, or happy romantic embraces. 4) Scientific evidence: This approach uses scientific data to show that one brand is superior to others. This would work, but only if Jenny has such data, since making such claims without supporting documentation is a violation of The Competition Act. If Jenny has such data, she could do a product comparison using the facts. 5) Personality symbol: This approach creates a character that is supposed to be a personification of the product. This is hard to do with a vitamin, but perhaps an animal character could be used (like Tony the Tiger). It would be humorous and it may give the couples the idea that the vitamins were linked with animal vitality. I would choose the slice of life. I would choose this because the target market can identify with it, and it isnʹt as provocative, or sensitive as some of the others could be, particularly the fantasy, mood/image and personality symbol approaches. The scientific evidence approach would be great, especially to focus on the natural aspects of the vitamins. But Jenny may not have such information available at this time to support such an approach.
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Answer Key Testname: COMBINED_FINAL_4
61) Price cuts may be necessary when there is excess capacity. Another reason is that market share may be falling in the face of strong price competition. A company may also cut prices in a drive to dominate the market through lower costs. A major factor in price increases is cost inflation. Rising costs squeeze profit margins and lead companies to pass cost increases along to customers. Another factor leading to price increases is over-demand. When a company cannot supply all its customers’ needs, it can raise its prices, ration products to customers, or both. 62)
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