Marketing Management Questions and Answers

Answer: A

In a sellers' market, manufacturers and dealers dominate.

A sellers' market exists when demand exceeds supply, as in shortages or under a protected, licensed economy. Buyers compete for limited goods, so producers and their dealers can dictate prices, terms, quality and delivery, and need make little effort to understand or satisfy customers.

Consumers dominate in the opposite situation, a buyers' market, where supply exceeds demand and sellers compete for customers. Competitors are by definition weak in a sellers' market, since everything produced can be sold. Banks and insurance companies are providers of services, not the parties that dominate a product market.

Answer: D

The one that is not a personal factor is social group.

In Kotler's model of consumer behaviour, the influences on buying are grouped into cultural, social, personal and psychological factors. Personal factors are the buyer's own characteristics: age and stage in the life cycle, occupation, economic circumstances, lifestyle, and personality and self-concept.

Occupation, lifestyle and age therefore are personal factors. Groups, such as reference groups, family, and roles and status, are social factors, because they act on the buyer through other people. That makes social group the odd one out.

Answer: C

Green products are those which try to protect the environment.

A green product is designed to reduce harm to the environment over its life cycle: it may use recycled or renewable materials, consume less energy or water, avoid toxic substances, use minimal or biodegradable packaging, or be easy to recycle. Examples include energy-efficient appliances, organic foods and recycled paper.

The word 'green' refers to environmental concern, not to the colour of the packaging or of the raw materials, so the first two options take it literally. Products harmful to the environment are the very opposite of green products.

Answer: A

The key's answer is variety seeking buying behaviour.

In Kotler's classification, buying behaviour depends on the buyer's involvement and on the differences between brands. Fruits and vegetables are bought frequently, cheaply and with little involvement, so the buyer does not deliberate; on such everyday purchases buyers often switch between items, vendors and varieties for a change rather than out of dissatisfaction, which is the pattern the key labels variety seeking. The textbook name for routine low-involvement purchases, habitual buying, is not among the options.

Complex decision-making applies to expensive, infrequent, high-involvement purchases such as a car or a house. Brand loyal buying presupposes branded goods, which loose fruits and vegetables usually are not. 'Special' is not a recognised type of buying behaviour.

Answer: A

Toilet soaps call for an intensive distribution strategy.

Intensive distribution places a product in as many outlets as possible: grocery stores, chemists, supermarkets and roadside shops. It suits convenience goods such as soap, toothpaste and soft drinks, which are low-priced, bought often and with little effort, so a buyer will simply pick another brand if the usual one is not available.

Selective distribution uses a limited number of chosen outlets, suitable for shopping goods such as appliances and clothing. Exclusive distribution gives one dealer sole rights in an area, as for luxury cars. Inclusive distribution is not a standard strategy. For a mass-consumed product like toilet soap, maximum availability matters most.

Answer: B

The functions of physical supply are transportation and storage.

Marketing functions are classed as functions of exchange (buying, assembling, selling), functions of physical supply (transportation and storage, sometimes with warehousing) and facilitating functions (standardisation, grading, packaging, financing, risk bearing, market information).

So buying, assembling and selling are exchange functions, standardisation, grading, packaging and labelling are facilitating functions, and the last option wrongly mixes grading into physical supply.

Answer: B

The method is market based pricing.

Market or demand based pricing sets price by what customers in the market are willing to pay, not by the cost of the product. It assumes that sales and profits depend on demand, and so are independent of costs.

Break-even pricing is cost based, fixing the price at which revenue covers fixed and variable cost. Competition oriented pricing follows rivals' prices, and affordability based pricing targets what a low-income buyer can pay; neither rests on the demand assumption in the stem.

Answer: C

The method is diversionary pricing.

In diversionary pricing a service firm advertises a low price for a basic service to draw customers in, and recovers its margin by charging high prices for every additional service, as when a garage offers a cheap basic service but charges heavily for extras.

Differential pricing charges different prices to different segments or at different times; discount pricing reduces the price for prompt payment, volume or off-season use; and high price maintenance pricing keeps a high price to signal quality.

Answer: D

It is referent power.

In channel management, referent power exists when channel members identify with a manufacturer and are proud to be associated with it, so they cooperate willingly. Highly respected market leaders enjoy it.

Reward power rests on offering benefits such as higher margins, coercive power on the threat of penalties such as withdrawing supplies, and expert power on specialised knowledge the members value. None of these arises from respect and pride in the association.

Answer: C

The process is memory encoding.

In consumer behaviour, encoding is how and where information gets into memory: incoming information is interpreted and stored, linked to associations already held about a brand. The richer the processing, the stronger the trace.

Memory retrieval is the reverse process, how information is got out of memory. 'Memory reconstructive' and 'memory decoding' are not the terms for how information enters memory.