Principles of Marketing (MKTG230) Spring 2018 Final Exam

THIS EXAM IS DUE NO LATER THAN MONDAY, MAY 14 AT 9:00 AM. IT NEEDS TO BE
EMAILED (eve.rapp@salem.edu). LATE EXAMS WILL BE PENALIZED. (Note: Save this exam to
your computer, type in the answers to each of the questions, and then email as an attachment). I will
confirm that I’ve received your exam (no later than Monday at 9:00 am).

THE TEXTBOOK USED IN THIS CLASS AND YOUR CLASS NOTES ARE THE ONLY MATERIALS
THAT CAN BE USED FOR THIS EXAM. THE INTERNET AND HELP FROM OTHERS ARE NOT
ALLOWED (and are considered honor code violations). TURN IN THIS TOP SHEET WITH YOUR
EXAM. THIS EXAM COVERS INFORMATION AND DISCUSSIONS ON THE FOLLOWING
CHAPTERS: 7, 8, 9, 10, 11, 12, 13, 14 (per the detailed course schedule).

NAME____Haley Spurlin_____________

Place an X by the following statements and type the honor code below. By doing so, you agree that you
have complied with the following statements in the process of working on this final exam:

___X___ I have consulted with no one other than Dr. Rapp regarding any part of this exam.

___X___ I have not referred to the internet for any part of this exam.

___X___ I have not referred to any printed/written material other than the Principles of Marketing text by
Armstrong and Kotler and my handwritten notes.

Type the honor code below:

I acknowledge that I will be held accountable for my decisions and behavior, and I will accept the
consequences of my actions.

1
I. Answer the following in the space below each question ( YOU’LL NEED TO EXPAND THE AREAS FOR SOME
QUESTIONS). Think about our class discussions and what you’ve read in the textbook when answering each of the
questions. Be sure to include the appropriate concepts from the textbook, and/or notes from class lectures, along with
examples from the mini-cases in each of your answers. (Be sure to read each of the questions carefully and provide the
required information.)

1. Review the mini-case on Trader Joe’s (from the textbook) and answer the following questions (Total: 15 pts):

i) Review the Store Differentiation and Positioning part of the Retailer Marketing Strategy. Define and then discuss
Trader Joe’s Differentiation and Positioning, including their Product and Service Assortment. Be sure to include
information from the textbook and examples from the mini-case to justify your answer (10 pts).

 Store Differentiation and Positioning: Store Differentiation is when a retailer differentiates the market offering
to create superior customer value. Store positioning is arranging for a market offering to occupy a clear,
distinctive, and desirable place relative to competition in the minds of target customers. Retailers must define and
profile their markets in order to make decisions about product assortment, services, pricing, etc. Successful
retailers define their target markets and position themselves strongly
 Trader Joe’s positions itself strongly with its “cheap gourmet” value proposition and “festive, vacation-like
atmosphere that makes shopping fun” (Armstrong and Kotler 265). Trader Joe’s differentiates itself from its
competitors by describing itself as “an ‘island paradise’ where ‘value, adventure, and tasty treasures are
discovered, every day’” (Armstrong and Kotler 265). Trader Joe’s has a limited assortment of products, but those
products are so much different than anything that can be found in competing stores, and that is what makes Trader
Joe’s so successful.

ii) Review the Distribution/Place part of the Retailer Marketing Strategy. Define and then discuss Trader Joe’s
Distribution/Place strategies. Be sure to include information from the textbook and examples from the mini-case to
justify your answer (5 pts).

 Distribution/Place: The Distribution/Place is the place that a retailer is located, and it is the key to its success. It
is important for retailers to select locations that are accessible to the target market in areas that are consistent with
the retailer’s positioning.
 Trader Joe’s “typically locates its stores in low-rent, out-of-the-way locations, such as suburban strip malls”
(Armstrong and Kotler 265). This limited space helps Trader Joe’s reduce its facility and inventory costs.

2. This question also uses the mini-case on Trader Joe’s. First, list the three major pricing strategies and define each
one. Second, list the one pricing strategy that most applies to Trader Joe’s (be sure to clearly state the specific pricing
strategy). Explain why you’ve chosen this pricing strategy and provide information from the textbook and examples
from the mini-case to justify your choice. (10 pts)

 Three Major Pricing Strategies:

o 1. Customer Value-Based Pricing: This pricing strategy uses buyers’ perceptions of value as the key to
pricing and price is considered along with all other marketing mix variables before the marketing
program is set.
o 2. Cost-Based Pricing: This pricing strategy involves setting prices based on the costs of producing,
distributing, and selling the product plus a fair rate of return for the company’s effort and risk.
o 3. Competition-Based Pricing: This pricing strategy involves setting prices based on competitors’
strategies, costs, prices, and market offerings, and consumers will base their judgements of a product’s
value on the prices that competitors charge for similar products.
 Trader Joe’s uses the good-value pricing strategy. They offer the right combination of quality and good service at a
fair price. The case said that “A special store atmosphere, exclusive gourmet products, helpful and attentive
associates – this all sounds like a recipe for high prices. Not so at Trader Joe’s…Trader Joe’s amazes customers
with its relatively frugal prices” (Armstrong and Kotler 265-266). This is the exact formula of the good-value
pricing strategy.

2
3. Review the mini-case on Chick-fil-A and answer the following questions:
i) List all the promotional tools in an Integrated Marketing Communication (IMC) strategy and briefly define each one.
ii) List ALL the promotional tools that are included in this mini-case and provide examples from the mini-case to justify
each of the promotional tools you’ve included. (20 pts)

 Promotional Tools in an IMC

o Advertising: Advertising can reach masses of geographically dispersed buyers at a low cost per exposure,
and it enables the seller to repeat a message multiple times. Advertising is very expressive as it allows a
company to dramatize its products through the artful use of visuals, print, sound, and color.
o Personal Selling: Personal Selling is the most effective tool at certain stages of the buying process,
particularly in building up buyers’ preferences, convictions, and actions, and involves personal interaction
between two or more people, so each person can observe the other’s needs and characteristics and make
quick adjustments.
o Sales Promotion: Sales Promotion includes a wide assortment of tools—coupons, contests, discounts,
premiums, and others—all of which have many unique qualities, and they attract consumer attention,
offer strong incentives to purchase, and can be used to dramatize product offers and boost sagging sales.
o Public Relations: Public Relations is very believable—news stories, features, sponsorships, and events
seem more real and believable to readers than ads do. PR can also reach many prospects who avoid
salespeople and advertisements—the message gets to buyers as “news” rather than as a sales-directed
communication.
o Direct and Digital: The many forms of direct and digital marketing—from direct mail, catalogs, and
telephone marketing to online, mobile, and social media—all share some distinctive characteristics.
Direct marketing is more targeted, immediate and personalized, and interactive.
 The promotional tools that Chick-fil-a uses include: Public relations (CEO camping out and signing t-shirts at new
store openings); Sales Promotion (coupons, contests, cow calendar, cow day); Direct and digital marketing
(Facebook, YouTube, Pinterest, Twitter, etc.); and Advertising (Billboards) (Armstrong and Kotler 367-368).

3
II. Read the following multiple-choice questions and TYPE THE CORRECT LETTER IN THE SPACE
PROVIDED (1 point each) (25 points in total)

_E_ 1. Which of the following statements about brand equity is correct?

a. A powerful brand has high brand equity.
b. Brand equity is the differential effect that knowing the brand name has on customer response to the product and its
marketing.
c. A brand has positive brand equity when consumers react more favorably to it than to a generic or unbranded version of
the same product.
d. A brand with high brand equity is a very valuable asset.
e. All of the above

_C_ 2. As we discussed in class, channel members add value by bridging the major gaps of ________ that separate goods
and services from those who would use them.
a) time, place, and assistance b) place, possession, and form c) time, place, and possession
d) place, time, and distribution e) place, need, and distribution

_E_ 3. Which of the following statements about product life strategies is correct?
a) The introduction stage is a period of slow sales growth as the product is introduced into the marketplace.
b) The PLC concept can describe a product class, a product form, or a brand.
c) During the growth stage, early adopter will continue to buy and later buyers will start following their lead.
d) Sales decline for many reasons, including technological advances, shifts in consumer tastes, and increased competition.
e) All of the above

_E_ 4. As we discussed in class, Ohio released a press release explaining the launch of its latest ad campaign targeting the
state's deadly opioid epidemic. This press release is an example of which of the following promotional strategies?
a) personal selling b) public relations c) sales promotion d) direct marketing e) advertising

_C_ 5. In our class discussion on the Southwest Airlines mini-case, in the textbook, we discussed that Southwest Airlines
communicated with customers by:
a) sending direct mail b) using cutting-edge digital tools c) providing coupons via email
d) all of the above e) a) and b)

_E_ 6. As we discussed in class, and in the textbook, Direct Marketing:

a. can irritate consumers b. includes face-to-face selling c. offers sellers greater flexibility
d. can move customers through the buying process e. All of the above

_A_ 7. Which of the following statements is true of consumer promotions?

a) It includes a wide range of tools like samples, coupons, contests, and so on.
b) It persuades resellers to carry a brand.
c) Display allowances are a type of consumer promotion tool.
d) It is primarily used to generate business leads, stimulate purchases, reward customers, and motivate salespeople.
e) Conventions and trade shows are a part of consumer promotions.

_D_ 8. As we discussed in class, and according to information in the textbook, if we were to begin selling shirts made from
the new material called bilLogic (shape-changing fabric per the article distributed in class), which of the following would
be the most logical choice for a wholesaler?
A) Commission Merchants B) Drop shippers C) Rack jobbers D) Manufacturers’ agents E) Brokers

_E_ 9. When the manufacturer of Kellogg’s mini-wheat cereal offers a free toy figure inside every box, it is using which of
the following promotional tools?
A) rebates B) coupons C) price pack D) samples E) premiums

_C_ 10. Which of the following statements is true of retailers?

a) Since most retail forms are fixed, successful retailers can sell the same products as their competitors.
b) The formation of vertical marketing systems suggests that retailers are getting smaller and more locally owned.
c) Successful retailers target only large groups of customers whose demographic chacteristics are similar.
d) Since new retail forms are always emerging, successful retailers must keep adapting.
e) All of the above.

4
_A_ 11. An advantage of printed catalogs over digital catalogs is that printed catalogs provide:
a) a stronger emotional connection with customers
b) an ability to offer an unlimited amount of merchandise
c) ease in matching prices instantly in response to changes in demand
d) efficiencies in production, printing, and mailing costs
e) All of the above

_E_ 12. Which of the following is true of viral marketing?

a) It is a system that allows a supplier to access a customer's inventory levels online.
b) It refers to problems that occur with viruses in the online marketing process.
c) It is another term for invasions of online privacy.
d) It is an automated system that manages the sales and marketing functions.
e) It is the Internet version of word-of-mouth marketing.

_E_ 13. Which of the following statements is correct in terms of levels of products and services?
a. Consumers see products as complex bundles of attributes that satisfy their needs.
b. As we discussed in class, there are a number of reasons why consumers might buy a particular car, including for image
and/or for reliability. These would be considered the core customer value.
c. If a car dealer offered Caitlyn an extended warranty or after-sale service when she bought her car, this would be
considered part of the augmented product.
d. Quality level, design, and brand name are all part of the actual product.
e. All of the above

_C_ 14. Price discrimination is legal under which of the following conditions?
a) when a manufacturer and reseller have agreed upon a specified retail price for a product
b) when a manufacturer sells to retailers in different markets
c) if a seller can prove its costs per unit are different when selling to different retailers
d) if a seller advertises prices that are not actually available to consumers
e) if a seller has not communicated with competitors before announcing prices

_B_ 15. Finding the best brand name:

a) is relatively easy b) should suggest something about the product’s benefits and qualities
c) is primarily a scientific process d) is rarely trademarked e) all of the above

_D_ 16. Integrated marketing communications require a company's mass-market advertisements, Web site, e-mail, and
personal selling communications to:
a) focus on the primary objectives of new technology b) hire independent communications directors for each
c) provide separate marketing objectives for each d) have a clear, consistent, and compelling message
e) All of the above

_C_ 17. Exclusive dealing is legal as long as it does not ________ or tend to create a monopoly, and as long as both parties
enter into the agreement ________.
a) substantially lessen competition; coercively b) restrict trade; for a cause c) substantially lessen competition; voluntarily
d) interfere with competitors; forcefully e) create a smaller market; permanently

_C_ 18. Which of the following statements about search advertising is correct?
a) In search advertising, consumers pay to click through to sites.
b) Coca-Cola started with search ads but found that email marketing was more effective with its customers.
c) Search-related ads accounted for nearly half of all online advertising spending last year.
d) Online advertising has been struggling in recent years as consumers switch to mobile apps.
e) All of the above

_A_ 19. One common form of internet fraud is _______________ , which is a type of identity theft that used deceptive
emails and fraudulent online sites to fool users into divulging their personal data..
a) phishing b) internet fraud c) privacy gauging d) online security e) investment scams

_B_ 20. As we discussed in class, which of the following pricing strategies is the Post Office using when it sells stamps,
which allow customers to mail letters anywhere in the U.S. for the same price?

5
a) dynamic pricing b) uniform pricing c) zone pricing d) location-based pricing e) segmented pricing

_C_ 21. Which of the following is an effect of the advancement of technology on the new marketing communications
model?
a) Fragmented markets have assimilated into a few mass markets.
b) Marketers have to go through more intermediaries to connect with consumers.
c) Consumers rely less on marketer-supplied information than before.
d) Marketers have increasingly moved towards mass-marketing techniques.
e) Marketers tend to supply less information to consumers than before.

_A_ 22. Which of the following is an effect of technology on marketing channels?

a) Traditional intermediaries are being replaced by online marketers.
b) Disintermediation is benefitting traditional intermediaries.
c) Multichannel distribution systems are decreasing due to disintermediation.
d) It’s had the greatest effect on exclusive distribution, since luxury brands prefer to sell online.
e) All of the above

_E_ 23. Per the textbook, which of the following statements about the new product development process is correct?
a) Companies can obtain good new product ideas from distributors, suppliers, and even competitors.
b) The most important source of new products ideas are customers.
c) The idea behind crowdsourcing is to invite broad communities into the new product innovation process.
d) Test marketing is the stage at which the product and its proposed marketing program are introduced into realistic
marketing setting.
e) All of the above

_E_ 24. What have been the responses to direct marketing excesses and abuses?
a) The federal government has considered numerous legislative actions to regulate how online, social media, and mobile
operators obtain and use consumer information.
b) Congress is drafting legislation that would give consumers more control over how online information is used.
c) The Federal Trade Commission (FTC) is taking a more active role in policing online privacy.
d) Many companies have responded to consumer privacy and security concerns with actions of their own.
e) All of the above.

_A_ 25. As we discussed in class, also in the textbook, the purpose of branded web communities is to:
a) present brand content that engages consumers and creates customer-brand community.
b) send highly targeted, tightly personalized, relationship-building messages to customers.
c) allow visitors to post their thoughts and other content on narrowly defined topics.
d) seed online content and create viral messages.
e) All of the above

III. For the following questions, fill in the correct answer in the blanks provided. These questions are each worth 2
pts. (30 points in total) (Note: you can expand the space provided if necessary)

1. The _slice of life_ style of advertising shows ordinary people clearly using a product in a normal setting.

2. As we discussed in class, when Dove combines shampoo, conditioner and body lotion together to sell at a
special price, it is using a __value-added__ pricing strategy.

3. Marketers use __sales promotion__ when they want to attract consumer attention, offer strong incentives to
purchase, boost sagging sales, and/or dramatize product offers.

4. Blogs are online journals where people and companies post their thoughts and other content, usually
related to narrowly defined topics.

5. _Telemarketing_ uses the telephone to sell directly to consumers and business customers.

6. As we discussed in class, when Apple charges a high price when it introduces a new product, with the
6
intention of reducing the price in the future, it was following a market-skimming pricing__ strategy.

7. Manufacturers are using a(n) __selective__ distribution strategy when they use more than one but fewer than
all of the intermediaries who are willing to carry a company’s products.

8. Costs that do not vary with production or sales level are referred to as __fixed__costs.

9. Because of its size and power, which allows it to exert strong influence on its suppliers, Wal-Mart follows
a(n) Administered VMS type of marketing system.

10. __Reminder__ advertising is important for mature products—it helps to maintain customer relationships and
keep consumers thinking about the product.

11. The service characteristic __service variability__means the services depends on who provides them as well
as when, where, and how they are provided.

12. Per our discussion in class, and in the textbook, a/n everyday low pricing__pricing strategy maintains a
constant price and does not offer discounts. Wal-Mart uses this pricing strategy.

13. A product line__ is a group of products that are closely related because they function in a similar manner,
are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price
ranges.

14. Supermarkets are the most frequently visited type of retail store; however, they’re facing slow
sales growth.

15. Reference prices are prices that buyers carry in their minds and refer to when they look at a given
product.

Thanks for an enjoyable class this semester! Have a great summer.