Final exam pool items (Chs. 9, 11, 12, 13, 14, 15 & 17 not 18)
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- Consumer Buying Habits
- Specialty Cakes
- American Girl Doll
| Continental Lite
In the mid-1990s, Continental Airlines chose to compete head-on with Southwest Airlines by launching Continental Lite, an alternative low-fare commercial airline passenger operation. Top executives at Continental had expected its no-frills operation to break even within a year of its inception, but the airline fell short of the goal. A source close to the company explained it by saying, "Its costs were too high, and its revenues were too low." Some observers criticized Continental's marketing efforts. When the no-frills service was first launched, it lacked a distinct name or identity, missing its chance to make a splash. Then Continental tried to sell three "brands" at once--Lite, a new premium service, and its more traditional long-haul domestic flights. As one rival expressed it, "You cannot be all things to all people." 111. Refer to Continental Lite. The statement that Continental Lite had problems because "Its costs were too high, and its revenues were too low," suggests that the airline had no _____ left over after paying for airline activities.
ANS: C Profit is what is left over after paying for company activities. PTS: 1 REF: 255 OBJ: 17-1 TOP: AACSB Reflective Thinking | TB&E Model Strategy 112. Refer to Continental Lite. Continental Lite's pricing objectives were based on gaining as much market share as possible from Southwest Airlines. This suggests that Continental Lite had _____ pricing objectives.
ANS: A Sales-oriented pricing objectives are based on either market share or dollar or unit sales. PTS: 1 REF: 257 OBJ: 17-2 TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy 113. Refer to Continental Lite. The airline industry's demand curve slopes downward and to the right. This curve indicates the quantity demanded is increased as:
ANS: D The lower the price, the more travel will be demanded. PTS: 1 REF: 258 OBJ: 17-3 TOP: AACSB Reflective Thinking | TB&E Model Strategy 114. Refer to Continental Lite. Consumers who traveled on Continental Lite or Southwest were very sensitive to price changes. This suggests:
ANS: C Demand changes with price changes. PTS: 1 REF: 259 OBJ: 17-3 TOP: AACSB Reflective Thinking | TB&E Model Strategy Consumer Buying Habits In a sluggish economy, consumers will buy even the most modest of products with the same discretion once shown only to big-ticket items, like computers, air fares, and designer clothes. The results are a growing popularity of cheaper private-label products and the likelihood that price wars among consumer goods could lead to the same kind of consolidation that occurred in the airline and electronics industries. Moreover, analysts say changing buying habits will force premium brand marketers to lower their prices to protect their positions. These companies may also upgrade products to distinguish them from private labels and promote their brands more aggressively than ever. One analyst says that consumers are forcing product innovation. Products have to be sold on merit. As a result, there will be fewer brands of significance, but the significant brands will be stronger. Brand loyalty is believed to exist only when, or if, value is provided. How do the significant brands compete? One analyst says that a combination of sensible pricing and innovation with a strong brand name can stabilize market share. Reformulated or repackaged products are typical examples of innovative attempts to solidify market share. 115. Refer to Consumer Buying Habits. In the past, Procter & Gamble set prices on significant brands such as Pampers so that total revenue was as large as possible relative to total costs. This represents a _____ approach.
ANS: A Profit maximization means setting prices so that total revenue is as large as possible relative to total costs. PTS: 1 REF: 262 OBJ: 17-2 TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy 116. Refer to Consumer Buying Habits. One analyst said that the big brands can compete by combining sensible pricing and innovation with a strong brand name. This is done to stabilize market share. This is an example of _____ pricing.
ANS: B Sales-oriented pricing objectives are based upon market share. PTS: 1 REF: 256 OBJ: 17-2 TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy 117. Refer to Consumer Buying Habits. Changing consumer buying habits will force premium brand marketers to lower their prices to protect their positions (maintain the same revenue). This suggests that demand for premium products is:
ANS: E If the price goes down and revenue remains the same, elasticity is unitary. PTS: 1 REF: 260 OBJ: 17-3 TOP: AACSB Reflective Thinking | TB&E Model Strategy 118. Refer to Consumer Buying Habits. To compete against the private labels, the significant brands can upgrade products to distinguish them from private labels and advertise their brands more aggressively than ever. Most of the ads will feature cents-off coupons. This pricing strategy clearly involves manipulation of:
ANS: A Price is used here as a promotional tool to increase consumer interest. PTS: 1 REF: 265 OBJ: 17-6 TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Promotion 119. Refer to Consumer Buying Habits. Assume a product has a strong brand name, a reasonable price, and good quality. Which of the following strategies should NOT be implemented?
ANS: C With a strong brand name, further lowering of price is unnecessary. PTS: 1 REF: 268 OBJ: 17-6 TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Product Specialty Cakes Imagine you're planning an after-symphony fund-raising party, and you need a life-size grand piano cake. Or, you are a developer proposing a new shopping center to a group of investors, and you want to serve a cake shaped like an architectural rendition of the center. Is this impossible? No, you just need to contact Cecilia Villaveces Cakes. She actually built a life-size grand piano for a gala in Macon, Georgia. You can expect to pay anywhere from $75 to $10,000 for one of Cecilia's artistic creations, depending on complexity of design and size. She uses only the best ingredients, and no two cakes are ever quite alike. 120. Refer to Specialty Cakes. Although many factors determine the prices charged by Cecilia Villaveces Cakes, the two primary determinants are:
ANS: C If there were reduced demand, than Cecilia would have to lower prices. Also, she must charge for the time, energy, and resources that go into each cake. PTS: 1 REF: 258 OBJ: 17-3 TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy 121. Refer to Specialty Cakes. Many party planners in the Southeast will only use Cecilia Villaveces Cakes at their parties--no matter what the price is. They know that Cecilia's cakes can make a party a success. Moreover, the cakes are what people remember most about the parties. From this description, you should assume Cecilia Villaveces Cakes have a(n):
ANS: D Price increases do not decrease demand for cakes. PTS: 1 REF: 259 OBJ: 17-3 TOP: AACSB Reflective Thinking | TB&E Model Strategy 122. Refer to Specialty Cakes. Which of the following is the BEST example of a fixed cost for Cecilia Villaveces Cakes?
ANS: E Delivery costs, electricity consumption, and use of part-time employees will vary according to the job. PTS: 1 REF: 262 OBJ: 17-5 TOP: AACSB Reflective Thinking | TB&E Model Strategy 123. Refer to Specialty Cakes. Which of the following is the BEST example of a variable cost for Cecilia Villaveces Cakes?
ANS: B Only the consumption of flour and sugar would vary from cake to cake. PTS: 1 REF: 262 OBJ: 17-5 TOP: AACSB Reflective Thinking | TB&E Model Strategy 124. Refer to Specialty Cakes. To set the price of her cakes, Cecilia simply doubles her costs, which often include several hours of labor and expensive raw materials. This method of price setting is called:
ANS: C The practice of marking prices up 100 percent is called keystoning. PTS: 1 REF: 262 OBJ: 17-5 TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy 125. Refer to Specialty Cakes. There are many occasions for which people may need to buy a cake, but most people do not have the time or interest to learn about cakes and their bakers. These people who do not know about the quality of the Cecilia Villaveces Cakes might choose them because they:
ANS: A Most consumers equate price and quality. PTS: 1 REF: 268-269 OBJ: 17-6 TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Product American Girl Doll The American Girl catalog began as a concept to introduce today's girls to girls who lived in the past. Each historically accurate doll is carefully crafted and dressed and has books to describe her life. For example, Kristen is an 1854 pioneer girl who is growing up in Minnesota. Her story begins with her long sea voyage from Sweden. The basic doll dressed in a calico dress and striped apron plus the hardcover story of how she got to Minnesota costs $90. Six more hardback books of Kristen's life are available for $74.95. Kristen's nightgown costs $20, and a matching one for the doll owner is an additional $38. Buy both together and the price is only $50. A hand-painted wooden bed and trunk for Kristen are available for $213. Shipping costs vary with the price of the merchandise ordered. 126. Refer to the American Girl Doll. What is the revenue to American Girl if it sells 20 basic Kristen doll and books?
ANS: D Revenue equals price times number of items sold. PTS: 1 REF: 255 OBJ: 17-1 TYPE: App TOP: AACSB Reflective Thinking | TB&E Model Pricing | TB&E Model Strategy 127. Refer to the American Girl Doll. American Girl is the primary seller of historically accurate dolls with accompanying books in a market where there is very little competition. It has no cash flow problems and is not interested in maximizing its sales. From this information, you should know American Girl has _____ pricing objectives. Directory: ~ecarter2 ~ecarter2 -> SP14 mktg 490 case analysis – product/brand strategy – samsung electronics ~ecarter2 -> The menu of mktg 490 cases [Dr. Carter] ~ecarter2 -> Real-world Download 3.11 Mb. Share with your friends:
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