Free Principles of Marketing CLEP Practice Test

The Loss Leader pricing strategy often involves selling at below cost. The idea is to attract customers to the business via a bargain who may then purchase other products/services. Selling other items that generate high profits makes up for the Loss Leader pricing.

Single-variable segmentation is rarely useful, because in most cases, the resulting market segment is too broad and is not going to be homogeneous. For example, using just one variable such as gender, to split up the total toy market is too broad--toys that appeal to toddlers will not appeal to teens--the market segment is still too diverse to be considered a target market.

Cognitive dissonance often occurs shortly after the purchase of an expensive product. The buyer continues to evaluate alternatives after making the purchase, and remains uncertain and less than fully satisfied about his decision.

The answer is 50%. Take the markup (60 - 40 = 20) and divide it by the cost (20 / 40). You divide it by the cost because you are calculating markup as a percentage of the cost. If you divide it by the selling price (20 / 60) you get 33.3%, so when the markup based on cost is 50%, the markup based on price is 33.3%.

Whereas the diffusion process tracks an innovation as it spreads throughout a social system, the adoption process is concerned with the individual's decision making process.

The Maturity stage is marked by a peaking of sales and then a decline. The difference between maturity and growth stages is that in the growth stage, profits peak and begin to decline as more money is spent due to heavier competition, while in the maturity stage, sales peak and begin to decline.

Demand for this company's product is inelastic. On the other hand, if there was a significant drop in sales, then demand would be elastic. When demand is elastic, a small change in price can mean a noticeable change in sales.

A Pull policy is intended to "pull" the goods down through the channel by creating demand at the consumer level. The consumers want to get the products at retail stores, so retail stores go to the wholesalers, who in turn go to the producers to buy the product. This is in contrast to the producer "pushing" the product down the channel.

Drop shippers, sometimes called Desk Jobbers, forward orders to manufacturers and then arrange for shipments of items to be delivered directly from producers to customers.

Closing the Sale, often simply called "Closing." If unsure if it's time to close the deal, a salesperson will often try a trial close, which involves asking questions that assume the prospect will buy the product. For example, asking about financial terms, delivery arrangements, etc., allow the prospect to indicate indirectly that he is ready to buy the product.