MARKETING PRACTICE EXAM.docx

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22 Apr 2012
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MARKETING PRACTICE EXAM- POST MIDTERM
If I order a new MacBook laptop, the company will charge me $1,499 for a machine in black, but only $1,349
for an identically configured one in white. What is this type of pricing called?
Answer
Illegal.
Price discrimination.
Staggered line pricing.
Family brand pricing.
Why are loss leaders kept at the back of a grocery store?
Answer
When Bubble McHenry's exciting line of Pez dispensers offered two lines of dispensers at $1.99 and $3.99 the
best selling one was the $1.99 model. When they introduced a Deluxo-Pez (battery-driven) at $7.99, the best
selling model in the line became the $3.99 model, not the $1.99 model? What is the most plausible reason for
this?
Answer
The demand curve of the $1.99 model is moving left to right.
The demand curve of the $7.99 model is flattening.
The customer is having a perceptual change in what they perceive as "value".
The price differentiation model is being enforced.
Transfer pricing is important to international companies. A company would deal with transfer pricing by doing
the following when they are shipping products from a low tax country to a high tax country. You must identify
both the right action and right reason.
Answer
They would price the goods high to maximize the profits in the selling country and minimize them in the
buying country.
They would price the goods low in the selling country to minimize the profits in the selling country and
minimize the input costs in the buying country.
They would price the goods at cost in the selling country to eliminate any potential costs and change
the costs on the books when they arrived in the buying country to lower taxes there.
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They would price the goods low in the selling country to maximize profits in the high-tax country and
minimize taxes in the low tax country.
Your fixed costs stay the same but your contribution margin per product has gone down. What does this imply?
Answer
There is a greater risk that new competitors will enter the market.
A price increase is not likely to be profitable.
A price reduction will likely be profitable.
A price reduction is not likely to be profitable.
1 points
Packaging is deemed to be a particularly effective way of building brand equity because:
Answer
it is bright and attention getting.
it keeps the product from being damaged.
it interacts / engages the customer just before a purchase is made.
it can use different types of material and allow customers to have a tactile interaction with the product.
Facebook introduced a long-anticipated service called Places that could help the company tap local and small-
business advertisers and sharpen its competition with Google. The app allows users to tell friends where they
are and lets users see where their friends are. The primary marketing benefit for this is
Answer
Location gives marketers a great way to target customers by reaching people at the point of decision
before they have to clip a coupon or perform a search.
Location allows users to assemble together for group shopping whereby they will be more prone to
purchase under group social pressures.
It allows users to be given turn-by-turn directions to the store of their choice so that they are quicker
able to find the store and have less stress and thus are more shopping prone.
They can set up a Facebook profit model where they charge people for showing them where their
friends are.
1 points
By the mid-1990s, a new brand of factory, specializing in fakes, began copying authentic Nike, Puma and
Reebok shoes. Counterfeiters played a low-budget game of industrial espionage, bribing employees at the
licensed factories to lift samples or copy blueprints. Shoes were even chucked over a factory wall, according to
a worker at one of Nike's Putian (China) factories. In September 2007, police officers in New York City seized
291,699 pairs of fake Nikes from two warehouses in Brooklyn. What is the major negative consequence of
counterfeiting for a brand manufacturers?
Answer
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It increases sales, lowers confidence in the brand.
It lowers sales and potentially diminishes the value of the brand.
It serves as a pressure on them to further innovate and differentiate their brand further.
It allows them to move more effectively into lower end models of their branded products as people
might think they are counterfeit anyway.
1 points
The iPod Touch and iPhone are proving to be rapidly developing platforms for game development. The major
game developers like Ubisoft and EA are struggling to develop a strategy to combat this move into their
market by Apple. The games listed for phones on the iTunes website are usually around $5 each, while games
for competitive game devices, Nintendo DS and the Sony PSP systems, approach $40 each. The iPhone
gaming function is rated as 19/100 on importance when weighed against other functions available on the
iPhone and iPod Touch, such as phone service, GPS, and e-mail. The DS and PSP are almost purely
dedicated gaming units. If Ubisoft and EA go ahead and develop a simpler application of their gaming
technology for the iPhone, what is their biggest risk?
Answer
They may cannibalize their major product among light and moderate users.
They may be forced to drastically reduce the price on their major product.
They may have to develop a completely different distribution network.
They may have to develop completely different promotional channels.
1 points
Americans are losing their taste for high fructose corn syrup due even though it is cheaper than sugar. This
change in taste is due to concerns about obesity and the high price of sugar due to tariffs imposed on them as
they come into the United States. These two factors can be classified as:
Answer
Environmental; socio-cultural.
Product life-cycle decline; Schumpeterian growth.
Socio-cultural; economic.
Product life maturity; Keynesian spin-off.
1 points
Television content providers want to provide different types of advertisements that more specifically match the
profile of the cable subscriber. Such profiling and targeting is a form of _____________ using technology but
might have some people concerned about ____________ .
Answer
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