Chap. 3 Review Questions Answers
A new U.S. automobile company, Specialty Motors, was established in 2004. In 2008, a recession caused disposable income to
decline, and the annual amount of dollars spent by consumers for automobiles dropped drastically. Specialty Motors faced the
problem of trying to determine whether the economy would turn toward prosperity or toward depression. No matter what
happened, Specialty Motors was also worried about an impending global steel shortage, which would make a big dif ference in
its future marketing plans. The economy might recover from the recession, but the automobile makers might be forced to ask
consumers to curtail consumption just when the hope of a better year was finally in sight. All in all, the future looked d ismal for
Specialty Motors.
Although all types of competition will affect Specialty Motors' marketing performance, it will be most concerned about _________
competitors.
a)
total budget
b)
generic
c)
Japanese
d)
product
e)
brand
Ans: E
In what type of competitive structure is Specialty Motors operating?
a)
Monopoly
b)
Oligopoly
c)
Monopolistic competition
d)
Perfect competition
e)
Monopsony
Ans: C
When Specialty Motors is operating during a recessionary period, its promotion efforts should stress
a)
low cost.
b)
value and utility.
c)
the styling of its cars.
d)
the status of owning a new car.
e)
the variety of colors from which to select.
Ans: B
Total disposable income is at a minimum during which of the following?
a)
Stagflation
b)
Recession
c)
Recovery
d)
Depression
e)
Inflation
Ans: D
The income a consumer would use to purchase a Specialty Motors automobile is considered ___________ income.
a)
discretionary
b)
buying power
c)
disposition
d)
consumer spending
e)
comprehensive spending
Ans: A
Use the following to answer questions below:
Meyers’ Sporting Goods, a national chain, has been doing business with Soljur Sports, a manufacturer of skateboards, for
several years. Recently, it came to the attention of Meyers' financial director that the average cost per Soljur Sports skateboard
had substantially increased over that of the previous year.
A corporate attorney was notified and began to look into the situation. The attorney found that S oljur Sports was selling a
similar number of skateboards to a competitive chain for $10 less per skateboard. The attorney for Meyers’ Sporting Goods
immediately filed a complaint with the Federal Trade Commission.
If the Federal Trade Commission believes that Soljur Sporting Goods is acting in violation of the law, the first move for the FTC is to
a)
issue a cease-and-desist order.
b)
issue a complaint stating that the business is in violation of the law.
c)
seek a monetary penalty.
d)
issue negative publicity about the company.
e)
contact the sporting goods manufacturers association
Ans: b
A regular customer of Meyers’ Sporting Goods feels that some of its advertisements are deceptive. He responded to an ad for sale
skateboards one hour after the store opened and found that none were left. Where should he file a complaint?
a)
Federal Advertising Commission
b)
National Advertising Review Board
c)
Consumer Product Safety Commission
d)
Better Business Bureau
e)
Office of Consumer Affairs
Ans: d
Suppose that a customer has a complaint against Meyers’ Sporting Goods Stores. He files a complaint with the Better Business
Bureau. What action could the BBB take against Meyers if the complaint was substantiated and Meyers did not change the
offending practice?
a)
Issue a cease-and-desist order.
b)
Seek a $10,000 monetary penalty.
c)
Issue a warning to consumers through the local newspaper.
d)
Order Meyers to make restitution.
e)
Seek a $5,000 monetary penalty.
Ans: c
Use the following to answer questions below:
Hershey Foods was founded in the nineteenth century by Milton Hershey, who had a strong ethical value system —always show
integrity, be honest, and respect others. Hershey felt it was important to provide high -quality goods and services of real value at
competitive prices that provide an adequate return on investment. He also founded the Milton Hershey School, operating today
as a cost-free, private home and school dedicated to helping children with social needs and limited resources. The company
also focuses on environmental issues, such as reducing waste by 360,000 pounds annually by redesigning Hershey's Syrup caps.
Hershey Foods has an ethics compliance program that includes a code of ethics and training, guidelines for handling legal and
ethical issues, an 800 number for assistance with ethical issues, and support from supervisors and human resource managers in
dealing with ethical issues.
Milton Hershey contributed resources to the community to improve the overall quality of life for consumers, employees, and the
community in general. This reflected his ____________ responsibility.
a)
philanthropic
b)
ethical
c)
legal
d)
economic
e)
shareholder
Ans: a
The fact that the Hershey company has recently reduced its waste by 360,000 pounds through a packaging redesign is evidence of its
focus on
a)
a philanthropic culture.
b)
an ethical culture.
c)
social responsibility.
d)
the legal climate.
e)
the economic environment.
Ans: c
Hershey and its employees benefit in many ways from having a formal code of ethics and compliance program. Which of the
following is not one of the benefits of having a formal code of ethics?
A) Codes help employees determine what is acceptable conduct within the company.
B) Codes of conduct can reduce opportunities for unethical practices.
C) Codes of conduct can outline the punishment for acting unethically.
D) Codes of conduct can help employees know where to turn when unethical actions occur.
E) Codes of conduct help employees make decisions based on how their peers and superiors behave.
Ans: E
Use the following to answer questions below:
WhiteWave Foods, producer of brands such as Silk Soymilk, specializes in manufacturing innovative and nutritious food
products. Silk Soymilk was first launched in 1996, and is committed to the health of its customers, as well as the health of the
planet. At Silk, they have offset all of their energy consumption with wind power, preventing over 16,000 tons of greenhouse
gasses from entering the atmosphere each year. Silk Soymilk is made from a mixture of organic and natural, non-genetically
modified soy beans, reducing the amount of pesticides in the air, soil, and water. Since 2002 they have been sponsoring the
FarmAid concert, whose mission is to is to keep family farmers on their land and ensure a safe, healthy food supply for all
Americans.
Silk Soymilk's sponsorship of the FarmAid concert is best thought of as an example of its
a)
consumerism effort.
b)
ethical responsibility.
c)
green marketing strategy.
d)
strategic philanthropy.
e)
environmental strategy.
Ans: D
Silk Soymilk’s use of organic, non genetically modified soybeans in its product is an example of
a)
green marketing.
b)
social consciousness.
c)
ethical responsibility.
d)
cause-related marketing.
e)
corporate benevolence.
Ans: A
The use of windpower to offset energy consumption by Silk Soymilk's parent company demonstrates its commitment to
a)
consumerism.
b)
ethical marketing.
c)
social responsibility.
d)
philanthropic strategy.
e)
environmental marketing.
Ans: C
Silk Soymilk's parent company, WhiteWave Foods, is currently operating at the _____ level of the social responsibility pyramid.
a)
economic
b)
philanthropic
c)
ethical
d)
legal
e)
cause-related
Ans: b