AFM 131: Sample Midterm #2
Question 1
0 / 1 point
According to Seth Godin, in the video, "Sliced Bread and Other Marketing delights", which situation best
represents a problem faced by mass marketers?
A)
The cost of advertising is very high given the number of customers mass marketers are selling
their product to.
B)
Today, consumers typically know exactly what they want so advertising can be a waste of time.
C)
Knowing which segment of the market they should focus their attention on.
D)
When dealing with a need, consumers want instant satisfaction, which reduces the likelihood
they will fully understand the attributes of competing products.
Correct Answer: D
Question 2
0 / 1 point
A comparison of the marketing concept and customer relationship management indicates that customer
relationship management:
A)
and the marketing concept are identical.
B)
attempts to improve profits by keeping quality high, while the marketing concept attempts to
improve profits by a careful design of the promotional mix.
C)
turns the marketing concept upside down. The marketing concept emphasized that marketing
was the most important function performed by a firm, but customer relationship management views
marketing to be the least important function.
D)
extends the marketing concept by calling for the firm to learn more about its customers so that
it not only satisfies them, but exceeds their expectations over time.
Correct Answer: D
Question 3
0 / 1 point
H2 O'Yeah has designed a water purification device that is drastically different and far superior to any
product currently on the market. Although consumer response was positive to the idea of the new
product, management wants to find out more before committing to full scale production. The next step
H2 O'Yeah's marketing department is likely to take is to:
A)
locate a low cost production site.
B)
seek a joint venture with a larger competitor.
C)
test market prototypes of the product among potential users.
D)
develop an advertising campaign to persuade consumers of the value of the new water purifier
system.
Correct Answer: C
Question 4
0 / 1 point
If you want to determine how the current economic climate will impact the buying habits of your
retailers, which form of research would give you the best quality of information?
A)
B)
C)
D)
A survey of your retailers.
Articles in Canadian Business margazine on the current economic condition.
Data from Statistics Canada on consumer spending.
Review of Data bases at your local library.
Correct Answer: A
Question 5
0 / 1 point
Which of the following statements is most accurate about the marketing environment?
A)
The most dramatic global change affecting marketing efforts of most firms is the rise of the Euro
as a dominant world currency.
B)
While the Internet has had a significant impact on the global reach of marketing, it has had little
impact on the competitive environment most firms face.
C)
The most important technological changes in the marketing environment have been the growth
of consumer databases and the evolution of the Internet.
D)
Extensive research indicates that economic and competitive trends are the only environmental
factors that have a lasting impact on a firm's marketing success.
Correct Answer: C
Question 6
0 / 1 point
Which of the following represents an example of demographic segmentation?
A)
A firm producing recreational equipment divides its market into groups by region of the country,
designing different products for people in different parts of the country.
B)
An automobile manufacturer offers different types of cars designed to appeal to different age
groups and income levels.
C)
A motion picture company divides its market according to the attitudes and interests of its
customers, marketing some films to people who enjoy action movies and targeting other movies to
people who prefer romantic comedies.
D)
A company that produces food products has designed a special line of easy to prepare
microwavable meals that are low in low fat and high in fiber to attract people interested in the health
benefits of the foods they eat.
Correct Answer: B
Question 7
0 / 1 point
Which statement best illustrates the development of a niche market?
A)
B)
C)
D)
Offering a limited number of options of your product, to minimize manufacturing costs.
A machine shop that manufactures and installs equipment in automotive manufacturing plants.
A locally owned print shop offering personalized customer service.
Identifying the buying habits of the 'baby-boomer' generation.
Correct Answer: C
Question 8
0 / 1 point
If part of your Customer Relationship Management system, had you gather data on the order size of
each of your customers, you could use this data to?
A)
B)
C)
D)
Schedule production throughout the year.
Determine which is the most cost effective means to ship orders to each of your customers.
Determine which customers you were prepared to grant credit to.
Better manage your cash flows.
Correct Answer: B
Question 9
0 / 1 point
Joan purchased new appliances for her kitchen. She is having second thoughts about whether she got
the best products for the best price. What factor has influenced her decision-making process?
A)
B)
C)
D)
culture
subculture
learning
cognitive dissonance
Correct Answer: D
Question 10
0 / 1 point
After years of selling in the consumer market, Dave accepted a job as a salesperson for a firm that
markets its products in the B2B market. As he considers his new responsibilities, it's likely that he will:
A)
find little difference between buyers in the consumer market and those in the business-tobusiness market.
B)
discover that decision making in the B2B requires salespeople to be little more than order
takers.
C)
learn that industrial buyers generally require more personal service than buyers in the consumer
market.
D)
find that B2B buyers tend to purchase more on impulse than consumer buyers.
Correct Answer: C
Question 11
0 / 1 point
How would you apply Malcolm Gladwell's perspective as seen in, "What We Learn From Spaghetti
Sauce", in your bike business?
A)
B)
C)
D)
Survey bike riders to identify what new features they want in a bike.
Provide multiple models of each line of bike, to address their varying needs.
Carry only one model of bike to avoid confusion in the market.
Use secondary data in answering any research question.
Correct Answer: B
Question 12
0 / 1 point
Borden, Inc. offers pasta, dairy items, and adhesives. These different types of products are referred to as
Borden's:
A)
B)
C)
D)
product line.
product mix.
product differentiation.
product life cycle.
Correct : B
Question 13
0 / 1 point
What is the benefit of product differentiation in the market?
A)
B)
C)
D)
Warranties are not required for periods of longer than one year.
Little money has to be spent on advertising.
Your product has no competition.
Your product is identified as the 'norm' or 'standard' or 'default' by consumers.
Correct Answer: D
Question 14
0 / 1 point
Business sponsorship of events, such as the Molson Indy car races or Bell Canadian Open golf
tournament, is intended to increase:
A)
B)
C)
D)
brand awareness.
the quality of the event.
the promotional budget.
the availability of knockoff brands.
Correct : A
Question 15
0 / 1 point
Jian has entered into a contract with the federal government to design a computer simulation model for
training helicopter pilots. The contract calls for the final price to be set at a fixed percentage profit over
and above her cost of production. This seems to represent a:
A)
B)
C)
D)
cost-based pricing strategy.
supply and demand formula.
demand-based pricing.
price leadership.
Correct Answer: A
Question 16
0 / 1 point
Given a relatively small spread in retail prices between you and your competitors, what should you do?
A)
Develop a personal relationship with media representatives in your community.
B)
Use personal selling to promote your product.
C)
Ensure consumers know your price in relation to each of your competitors.
D)
Focus your advertising campaign on the benefits of your product and/or the service you will
provide.
Correct Answer: D
Question 17
0 / 1 point
As a result of using retailers to sell your bikes, in Mike's Bikes, what are you able to do?
A)
B)
C)
D)
Eliminate the need to advertise to end consumers.
Have little concern for what end consumers want in a bike.
Save on shipping costs through fewer, larger order sizes.
Set a retail selling price at any level with little impact on your sales.
Correct Answer: C
Question 18
0 / 1 point
Which of the following statements about kiosks and carts is the most accurate?
A)
Kiosks and carts are popular with mall owners because their sales are exempt from sales taxes.
B)
Mall owners often want kiosks and carts to be located along their walkways because they create
a marketplace atmosphere.
C)
Kiosks and carts have struggled in recent years because of their high overhead costs.
D)
Most mall owners would like to eliminate kiosks and carts from their walkways, but are barred
by law from doing so.
Correct Answer: B
Question 19
0 / 1 point
Which is the most correct example of an advertising message in the decline stage of a product's life
cycle?
A)
B)
C)
D)
Delay purchasing of your product until the new model/version is available for sale.
Why a consumer would want to buy your product.
What the product can be used for.
The benefits from the continued use of your product.
Correct Answer: D
Question 20
0 / 1 point
Bonnie faces the challenge of developing the promotion mix for a new business. Given the uniqueness
of the new products and a very limited budget, Bonnie confronts a creditability problem. She realizes
that the promotional messages of an unknown firm may be met with skepticism. Bonnie should
consider:
A)
B)
C)
D)
publicity to help create a positive image for her firm and their products.
the extensive use of persuasive advertising.
emphasizing personal selling rather than public relations.
changing jobs because this situation is hopeless.
Correct Answer: A
Question 21
0 / 1 point
One of the realities that businesses have to deal with if they choose to increase their research and
development expenditures is they,
A)
will lose their competitive edge.
B)
have to spend money on research and development before they earn money from the sale of
new products or services.
C)
have to choose which of the new products or services to sell given that all their research and
development efforts will result in marketable products or services.
D)
will end up new products or services that are marketable only locally.
Correct Answer: B
Question 22
0 / 1 point
Which of the following statements best describes the distinction between production management and
operations management? Production management involves:
A)
the activities managers perform to help create services while operations management involves
the activities managers perform to produce goods.
B)
the activities managers perform to obtain physical resources while operations management
involves the activities managers perform to obtain the financial resources.
C)
the activities managers perform to help create goods while operations management is a broader
term that involves the activities involved in producing services as well as goods.
D)
the activities managers perform to help create intangible products while operations
management involves the activities managers perform to produce tangible products.
Correct Answer: C
Question 23
0 / 1 point
Which of the following statements best reflects the approach provincial and local governments take to
influence the location decisions of businesses? Provincial and local governments:
A)
no longer pursue new businesses because they have found that attempts to attract businesses
are usually too expensive to justify the results.
B)
work primarily through the federal government and the Small Business Administration to obtain
financial assistance for firms seeking to locate in their area.
C)
try to avoid competition with other areas, because such competition usually backfires and
creates ill-will.
D)
often engage in fierce competition to attract businesses, including the offer of tax cuts, less red
tape, investment in research and improved transportation routes.
Correct Answer: D
Question 24
0 / 1 point
At Stevens Manufacturing workers are organized in teams that combine their efforts to produce
complex units of a final product. Stevens is using a facility layout known as a (n):
A)
B)
C)
D)
modular layout.
consolidated process layout.
assembly team layout.
continuous flow layout.
Correct Answer: A
Question 25
0 / 1 point
When managing quality in a business, the main idea is to find potential problems with your product or
service before they happen because,
A)
B)
C)
D)
ISO requires this of a business.
costs to deal with poor quality are often higher than the costs of preventing quality problems.
you cannot sell any product unless it meets certain quality standards.
governments require this of a business.
Correct Answer: B
Question 26
0 / 1 point
Recent developments in industries as diverse as fast foods, banking, and grocery stores suggest that:
A)
the only effective way to improve productivity in most service industries is by relying more
heavily on computers.
B)
many service industries are finding ways to improve productivity.
C)
government figures probably overstate any changes in productivity in the service sector.
D)
the fact that services are typically labor intensive, means that it is virtually impossible to
improve productivity without decreasing customer satisfaction.
Correct Answer: B
Question 27
0 / 1 point
MegaMachines obtains computer components from a variety of suppliers and puts them together
according to customer specifications to create custom-made computers. This process is an example of:
A)
B)
C)
D)
an assembly process.
process manufacturing.
synthetic production.
continuous production.
Correct Answer: A
Question 28
0 / 1 point
Which point is most correct when considering the implementation of a Just-In-Time inventory control
process?
A)
B)
C)
D)
Having an adequate supply of inventory insures the ability to fill customer orders.
The most important issue with suppliers is negotiating the lowest possible cost.
You have no time to spot check any incoming orders from suppliers.
Filling customer orders on a timely basis requires accuracy in planning for production.
Correct Answer: D
Question 29
0 / 1 point
Edwin Rivera is a production manager who believes his firm uses more of virtually all types of resources
than is necessary to produce its products. He would like to find a way to cut back on labor, and reduce
the firm's investment in tools and space as well. It seems that Edwin would like to adopt:
A)
B)
mass production.
marginal cost management.
C)
D)
lean manufacturing.
the maximum production method.
Correct Answer: C
Question 30
0 / 1 point
When safeguarding the "Cash" asset of a company, which statement is correct?
A)
Procedures only need to be put in place to insure any cash on the premises of a business is not
stolen.
B)
The most significant 'Cash' asset of a business is what is in the company's bank account(s).
C)
A bank reconciliation updates the balance of the bank account from the last month to the
current date.
D)
Cash is less of a problem in terms of theft than expensive pieces of equipment.
Correct Answer: B
Question 31
0 / 1 point
As a management consultant, Lamont knows that regardless of how good a firm's product might be, the
firm has little chance of success without a(n):
A)
B)
C)
D)
financial plan.
outside consultant.
auditor.
warranty.
Correct Answer: A
Question 32
0 / 1 point
The ______________ budget is generally the most detailed and used budget that a firm prepares.
A)
B)
C)
D)
cash
operating
capital
payables
Correct Answer: B
Question 33
0 / 1 point
Why will the payment of a dividend in Mike's Bikes increase the shareholder value?
A)
B)
C)
Net profits continue to grow in your company.
Shareholders are receiving a return for their investment in the company.
Shareholders will sell their shares in your company.
D)
There will be fewer shareholders in your company.
Correct Answer: B
Question 34
0 / 1 point
The concept of the time value of money indicates that:
A)
the value of a dollar decreases over time as prices increase.
B)
the prices of goods and services will fluctuate over time due to inflation and higher costs of
production.
C)
monetary systems tend to become more sophisticated over time.
D)
a dollar received today is worth more than a dollar received a year from today.
Correct Answer: D
Question 35
0 / 1 point
Clark, president of Cycles Go Go, worries that cash flows may be insufficient to pay his current operating
expenses. While he anticipates a surplus of cash inflows as warm weather approaches, he needs to
borrow funds now to meet his immediate obligations. Clark can best resolve his cash flow concerns by
obtaining _____________________ financing.
A)
B)
C)
D)
intermediate
contingency
short-term
long-term
Correct Answer: C
Question 36
0 / 1 point
Jackson Plumbing, a medium sized company, wants to guarantee that it can obtain short-term funds to
meet unexpected future cash needs. Which of the following strategies would best meet the financing
needs of Jackson Plumbing? Financial managers at Jackson Plumbing should:
A)
issue commercial paper as needed.
B)
request that the firm's board of directors approve an issue of additional shares of common
stock.
C)
arrange with the firm's commercial bank a revolving credit agreement.
D)
eliminate credit sales to improve their cash inflows and reduce the firm's investment in accounts
receivable.
Correct Answer: C
Question 37
0 / 1 point
Which of these statements about corporate bonds is correct?
A)
B)
C)
D)
Bonds provide equity financing
Issuing new bonds dilutes the existing ownership in a firm.
Interest paid to bondholders represents a tax deductible business expense.
Debenture bonds require assets pledged as collateral.
Correct Answer: C
Question 38
0 / 1 point
After enjoying the increased sales and profits of several popular products, Braggs and Stritton plans to
expand their production facilities. The firm, a well-known producer of lawn care products, prefers
financing this project with a funding source that avoids interest and dividend payments as well as
underwriting costs. Which of the following best meets the needs of Braggs and Stritton?
A)
B)
C)
D)
venture capital
retained earnings
debenture bonds
common stock
Correct Answer: B