ABC's Of Relationship Selling through Service 12th Edition by Charles Futrell - Test Bank

ABC’s Of Relationship Selling through Service 12th Edition by Charles Futrell – Test Bank

Instant Download – Complete Test Bank With Answers

Sample Questions Are Posted Below

Chapter 05 Sales Knowledge: Customers, Products, Technologies

True / False Questions

According to the Golden Rule of Personal Selling, most customers do not care how much a salesperson knows about a product until the salesperson shows honesty and caring.

Answer: True

Learning Objective: 05-01

Topic: The Golden Rule: Knowledge

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Placing the customer’s welfare before one’s own welfare is key to having a successful sales career according to the Golden Rule of Personal Selling. It is important to remember that people do not care how much you know until they know how much you care.

According to the text, salespeople who are product experts develop ethical, long-term relationships with customers.
Answer: False

Learning Objective: 05-01

Topic: The Golden Rule: Knowledge

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: It is important to remember that people do not care how much you know until they know how much you care. Ethical service builds customer relationships and is based on the truth.

Sales training is the effort put forth by an employer to provide the opportunity for the salesperson to receive job-related skills and knowledge that improve sales success.

Answer: True

Learning Objective: 05-01

Topic: Sources of Sales Knowledge

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Sales training is the effort an employer puts forth to provide the opportunity for the salesperson to receive job-related culture, skills, knowledge, and attitudes that result in improved performance in the selling environment. Successful companies thoroughly train new salespeople and maintain ongoing training programs for their experienced sales personnel.

Knowledge of selling is gained only through the company’s formal training program.
Answer: False

Learning Objective: 05-01

Topic: Sources of Sales Knowledge

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Like many professional careers, selling is a skill that is truly developed only through experience. Sales knowledge obtained through education, reading, formalized sales training, and word-of-mouth is helpful in enhancing overall sales ability, but actual experience is the critical source of sales knowledge.

Prospects want to do business with salespeople who know their business and the products they sell.
Answer: True

Learning Objective: 05-01

Topic: Knowledge Builds Relationships

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Prospects and customers want to do business with salespeople who know their business and the products they sell. When a prospect has confidence in the salesperson’s expertise, a sales presentation becomes more acceptable and believable to the prospect.

To reduce the amount of time that must be devoted to sales training, modern companies do not teach their salespeople about the company’s history.
Answer: False

Learning Objective: 05-02

Topic: Know Your Company

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Knowledge of your firm’s development since its origin provides you with promotional material and builds your confidence in the company. Firms such as IBM still provide personnel with information about the company’s history and development.

A successful salesperson focuses only on gaining knowledge about the specific product being sold because that is the only information that customers demand.
Answer: False

Learning Objective: 05-02

Topic: Know Your Company

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Salespeople need to know about the history, policies, and services of their employer in addition to understanding a specific product. Salespeople also need to be knowledgeable about competitors.

Monitoring advertising and sales promotion activities enables salespeople to include current data and prices into sales presentations.
Answer: True

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Keeping abreast of your company’s advertising and sales promotion activities is a must. By incorporating these data into your sales presentation, you can provide customers

with a world of information that they probably know little about and that can secure the sale.

Brenda Hernandez is a manager of a plant that processes recycled plastic to prepare them for sale to retail supermarkets. She recently saw an advertisement for a machine her company could buy to reduce the cost of reclaiming the recycled plastic by 20 percent. This ad is an example of trade advertising.
Answer: False

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: The ad for a machine is a type of industrial advertising that is aimed at individuals and organizations that purchase products for use in manufacturing.

In the area of sales promotions, the letters POP stand for priced-on-purchase.
Answer: False

Learning Objective: 05-03

Topic: Sales Promotion Generates Sales

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Point-of-purchase (POP) displays allow a product to be seen easily and purchased. A product POP display may include photographs, banners, drawings, coupons, counter displays, or floor stands.

Shelf-facing refers to the number of individual products placed side-by-side on the shelf.

Answer: True

Learning Objective: 05-03

Topic: Sales Promotion Generates Sales

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Shelf facings are the number of individual products placed beside each other on the shelf. Shelf positioning can stimulate sales.

A premium is an article of merchandise offered as an incentive to the user to sample a product or visit a store.
Answer: True

Learning Objective: 05-03

Topic: Sales Promotion Generates Sales

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: A premium is an article of merchandise offered as an incentive to the user to take some action. The premium may act as an incentive to buy, to sample the product, to come into the retail store, or to stir interest so the user requests further information

Premiums are used solely to get customers to come into the retailer’s store.
Answer: False

Learning Objective: 05-03

Topic: Sales Promotion Generates Sales

Blooms: Understand

AACSB:

Level of Difficulty: Medium

The three major categories of premiums are contests and sweepstakes, consumer premiums, and dealer premiums.
Answer: True

Learning Objective: 05-03

Topic: Sales Promotion Generates Sales

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Contests and sweepstakes, consumer premiums, and dealer premiums are the three types of premiums. Premiums encourage customers to sample products and visit retail stores.

Salespeople should familiarize themselves with the company’s price, discount, and credit policies so that they can use them as a competitive advantage.
Answer: True

Learning Objective: 05-03

Topic: What’s It Worth? Pricing Your Product

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Discount information becomes an important part of the sales presentation. It is important for salespeople to familiarize themselves with the company’s price, discount, and credit policies so that they can use them as a competitive advantage and enhance their professional image with the buyer.

Many companies offer customers various types of discounts, which are usually developed at the business unit level by the firm’s product managers.
Answer: False

Learning Objective: 05-03

Topic: What’s It Worth? Pricing Your Product

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Many companies offer customers various types of discounts from normal prices to entice them to buy. These discounts are usually developed at the corporate level by the firm’s marketing managers.

One method to obtain information on competitors is through advertisements.
Answer: True

Learning Objective: 05-03

Topic: Know Your Competition, Industry, and Economy

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Advertisements provide useful information about competitors. A salesperson learns about the features and prices of competing products for the purpose of making comparisons.

Computerization provides salespeople with more efficient account control and better time and territory management.
Answer: True

Learning Objective: 05-04

Topic: Personal Computers and Selling

Blooms: Remember

AACSB: Technology

Level of Difficulty: Easy

Explanation: The use of personal computers by salespeople enables them to monitor customer accounts and territories faster and more efficiently. Having a better awareness of each account’s status leaves more time for customer contacts.

A salesperson with contact management software has a map file for routing each day’s schedule.
Answer: False

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Remember

AACSB: Technology

Level of Difficulty: Easy

Explanation: Contact management software is a listing of all the customer contacts that a salesperson makes in the course of conducting business. This file is like an electronic Rolodex and should include such information as the contact’s name, title, company, address, phone number, fax number, and e-mail address.

According to the text, time is the most vulnerable asset a salesperson has to manage.
Answer: True

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: As a salesperson, the most vulnerable asset you have to manage is time. Improvement of time management directly increases productivity.

Electronic calendar management can result in improved time management.
Answer: True

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Remember

AACSB: Technology

Level of Difficulty: Easy

Explanation: As a salesperson, the most vulnerable asset you have to manage is time. Electronic calendar management, as a part of sales force automation, can make time management easier and less prone to errors or oversights.

Sales force automation systems are used for managing customer follow-up calls.

Answer: True

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: A sales force automation system reminds salespeople to send thank-you letters and schedule follow-up phone calls to customers. It also can notify the sales manager if these follow-ups are not completed.

A GIS is capable of revealing customer buying patterns.
Answer: True

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Remember

AACSB: Technology

Level of Difficulty: Easy

Explanation: A geographic information system (GIS) allows salespeople to view and manipulate customer and/or prospect information on an electronic map. Also, a GIS may reveal customer buying patterns that otherwise may not be apparent.

Today’s most popular sales force communication systems involve word processing, contact management, and spreadsheets.
Answer: False

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Remember Understand

AACSB: Technology

Level of Difficulty: Easy Medium

Explanation: Today’s most popular sales force automation systems involve word processing, e-mail, and faxes.

E-mails sent to customers can be written in a more casual format than business letters sent by conventional mail.

Answer: False

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Remember

AACSB: Technology

Level of Difficulty: Easy

Explanation: In creating an e-mail to customers, use the same professional writing skills you would in a business letter. Correct grammar, sentence structure, spelling, and content

are extremely important in building customer relationships.

Salespeople who use a mobile office are not as efficient as those who work out of a stable office.
Answer: False

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: In their mobile offices, salespeople can stay in constant contact with their customers even when driving between cities or states. In some ways, a mobile office offers more efficiency than a typical office situation.

The Internet and the World Wide Web are the same thing.
Answer: False

Learning Objective: 05-04

Topic: Sales: Internet and the World Wide Web

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: The Internet and the World Wide Web are often thought of as the same—they are not. The Internet refers to the physical infrastructure of the interconnected global computer network. The World Wide Web is a part of the Internet that houses “Web sites” that provide text, graphics, video, and audio information on millions of topics.

Increased worldwide interaction requires access and exchange of data on a global basis.
Answer: True

Learning Objective: 05-04

Topic: Global Technology Provides Service

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: When salespeople travel far from home, the need for the right information, at the right time, in the right place becomes critical. Increased worldwide interaction requires access and exchange of data on a global basis.

In sales, the need for netiquette mostly arises when using text messaging.
Answer: False

Learning Objective: 05-04

Topic: Technology Etiquette

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: Netiquette is the term used for etiquette on the Internet. In sales, the need for netiquette mostly arises when sending or distributing e-mail.

The rules of netiquette encourage you to use all capital letters in e-mail that needs to be communicated quickly.
Answer: False

Learning Objective: 05-04

Topic: Technology Etiquette

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: Using all capital letters in an e-mail is the equivalent of shouting at the receiver, so normal capitalization rules should be followed.

Etiquette rules for using the cell phone advise users to avoid cell yell.
Answer: True

Learning Objective: 05-0

Topic: Technology Etiquette

Blooms: Remember

AACSB: Technology

Level of Difficulty: Easy

Explanation: Yelling on a cell phone can be offensive to a customer and unnecessary. Most phones have sensitive microphones that can pick up even a whisper. There is no need to speak louder on your cell phone than you would on any other phone.

Net price is the standard price charged to customers.
Answer: False

Learning Objective: 05-02

Topic: App: Types of Prices

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: List price is the standard price charged to customers. Net price is the price after allowance for all discounts.

FOB shipping point means the buyer pays all shipping costs.
Answer: True

Learning Objective: 05-02

Topic: App: Types of Prices

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: FOB (free on board) means the buyer pays transportation charges on the goods. The title to goods passes to the customer when they are loaded on shipping vehicles.

Cumulative quantity discounts are price reductions received for buying a certain amount of a product over a stated period of time.
Answer: True

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Cumulative quantity discounts are discounts the customer receives for buying a certain amount of a product over a stated period, such as one year. These discounts reflect savings in manufacturing and marketing costs.

Sterling Industries offers customers cash discounts for paying their bills within 10 days. Assume a Sterling Industries customer purchases $10,000 worth of goods on October 1 and the cash discount is “2/10 net 30.” If the customer pays his bill on October 9, the amount due will be $9,000.
Answer: False

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Apply

AACSB:

Level of Difficulty: Hard

Explanation: Cash discounts are earned by buyers who pay bills within a stated period. The customer’s payment should be $9,800 because 2/10 net 30 translates into a 2 percent discount, or $200.

Markup is the dollar amount of money added to the product cost to determine its selling price.
Answer: True

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Markup is the dollar amount added to the product cost to determine its selling price. Markup often is expressed as a percentage and represents gross profit, not net profit.

Gross profit is the money that remains after paying the costs of marketing and operating the business.
Answer: False

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Gross profit is the money available to cover the costs of marketing the product, operating the business, and profit. Net profit is the money remaining after the costs of marketing and operating the business are paid.

Markup can only be derived from the product’s cost.
Answer: False

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: The percentage markup is based on either the product’s selling price or its cost.

Multiple Choice Questions

Which term refers to an employer’s effort to provide the opportunity for salespeople to learn about the job-related skills, knowledge, and attitudes that lead to sales success? A. Market positioning
B.Sales training
C. Sales enhancement
D. Market delegation
E. Job development

Answer: b

Learning Objective: 05-01

Topic: Sources of Sales Knowledge

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Which of the following statements about sales training is true?
A. Sales training ends when the salesperson actually begins the selling job.
B. An understanding of sales training is only gained through the company’s formal training program.
C. Sales training is irrelevant once a salesperson receives the designation of “master sales representative.”
D.Sales knowledge gained from sales training benefits not only the salesperson and the company but also the customer.
E. Periodic sales training is intended to keep salespeople humble and aware of their shortcomings.

Answer: d

Learning Objective: 05-01

Topic: Sources of Sales Knowledge

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Successful companies thoroughly train new salespeople and maintain ongoing training programs for their experienced sales personnel. Companies are interested in training primarily to increase sales volume, salesperson productivity, and profitability, and training is beneficial to all parties in a sales transaction.

Identify the correct statement about sales training.
A.Knowledge of selling is primarily developed through experience.
B. Most salespeople only go through about two weeks of sales training during their entire selling career.
C. Sales knowledge gained from sales training typically does not benefit the salesperson.
D. The only reason companies engage in sales training is to abide by federal government laws that require equity in positioning.
E. A salesperson has to undergo sales training only at the beginning of a sales career.

Answer: a

Learning Objective: 05-01

Topic: Sources of Sales Knowledge

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Experience is the main way to gain sales knowledge. Successful companies thoroughly train new salespeople and maintain ongoing training programs for their experienced sales personnel. Companies are interested in training primarily to increase sales volume, salesperson productivity, and profitability.

According to the text, salespeople need to have sales knowledge to:
A. comply with Green River Ordinances.
B.build the buyer’s confidence in the salesperson.
C. eliminate inequities in sales experience.
D. more efficiently manage inventory.
E. win their employers’ confidence.

Answer: b

Learning Objective: 05-01

Topic: Knowledge Builds Relationships

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Salespeople today must be knowledgeable to increase the salesperson’s self-confidence, to build the buyer’s confidence in the salesperson, and to build relationships through truly caring about the needs of others.

Salespeople need to have selling knowledge for all of the following EXCEPT:
A. increasing the individual salesperson’s self-confidence.
B. increasing sales.
C. building relationships with their customers.
D. building the buyer’s confidence in the individual salesperson.
E.increasing cognitive dissonance among customers.

Answer: e

Learning Objective: 05-01

Topic: Knowledge Builds Relationships

Blooms: Understand

AACSB:

Level of Difficulty: Medium

A salesperson selling ________ to ________ would most likely the most extensive product knowledge.
A. skis; consumers
B. jewelry; retailers
C. televisions; consumers
D. computers; small businesses
E. rocket components; engineers

Answer: e

Learning Objective: 05-02

Topic: Know Your Company

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: In general, consumer-goods salespeople require less information about the technical nature of their products; however, selling high-technology products to highly knowledgeable industrial buyers requires extensive knowledge.

Which of the following pieces of information would be LEAST important for a salesperson to know about the product she sells?
A. How the product performs
B. How well the product is selling in the marketplace
C. Specific features, advantages, and benefits of the product
D. Physical size and characteristics of the product
E.How to make the product

Answer: e

Learning Objective: 05-02

Topic: Know Your Product

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Salespeople need to be experts about the products they sell, which includes knowing performance and sales data as well as features and benefits. It is less important to know how a product is made.

A typical salesperson’s product knowledge should primarily include:
A.the product’s FAB.
B. the product’s SELL sequence.
C. the product’s AIDA sequence.
D. who invented the product.
E. how the product is made.

Answer: a

Learning Objective: 05-02

Topic: Know Your Product

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Salespeople primarily need to know the product’s features, advantages, and benefits. Understanding and communicating the FAB of the product will increase sales success.

To truly know resellers, a salesperson should know:
A. the financial history of each reseller.
B. when the reseller began operation.
C.what product lines the resellers stock.
D. the names of all the reseller’s employees.
E. the number of competitors the resellers have.

Answer: c

Learning Objective: 05-02

Topic: Know Your Resellers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: It is essential to understand the channel of distribution your company uses to move its products to the final consumer. Knowledge of each channel member (also called reseller) is vital and should include information regarding the product lines kept in stock.

Which information is the LEAST important for a salesperson to know about a channel member that sells the same products as the salesperson’s employer?
A. The channel member’s distribution policies
B. Product lines and assortments carried
C. The channel members’ pricing policies
D. Past purchases of the salesperson’s product
E.Details on inventory, storage, and distribution

Answer: e

Learning Objective: 05-02

Topic: Know Your Resellers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Salespeople should know the distribution and pricing policies of each channel member as well as the product lines carried. Information about past purchases would also be useful.

Why do some businesses require that new salespeople work on the company’s assembly line?
Develop empathy
B. Gain product knowledge
C. Analyze channel distribution
D. Monitor customer service facilities
E. Form relationships with co-workers

Answer: b

Learning Objective: 05-02

Topic: Know Your Product

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Many companies have their new salespeople work in the manufacturing plant or in the warehouse. This hands-on experience provides extensive product knowledge and may help in future selling.

In early 2003, billboards showing Polish actress Anna Przybylska urging Poles to vote to approve the nation’s membership in the European Union were seen all over Poland. These billboards and other marketing communications supported speeches given at public meetings that encouraged an affirmative vote for EU membership. This exemplified how:
A. sales promotions support personal selling.
B. other promotional elements are not as effective as personal selling.
C.advertising supports personal selling efforts.
D. advertising is more important than personal selling.
E. advertising supports publicity.

Answer: c

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: The EU most likely coordinated its promotional tools in its campaign. Billboards supported the personal selling efforts of those giving speeches to community groups.

Which type of advertising is undertaken by the manufacturer and directed toward the wholesaler or the retailer?
A. Direct-mail advertising
B. Retail advertising
C.Trade advertising
D. Industrial advertising
E. Cooperative advertising

Answer: c

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Trade advertising is undertaken by the manufacturer and directed toward the wholesaler or retailer. Such advertisements appear in trade magazines serving only the wholesaler or retailer

Which type of advertising is aimed at individuals and organizations who purchase products used for manufacturing other products?
A. Direct-mail advertising
B. Retail advertising
C. Trade advertising
D.Industrial advertising
E. Cooperative advertising

Answer: d

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Industrial advertising is aimed at individuals and organizations that purchase products used in manufacturing other products. Trade advertising is undertaken by the manufacturer and directed toward the wholesaler or retailer.

Proctor & Gamble wants to reach all users of the firm’s products, both industrial buyers and consumers The firm would most likely use _____ advertising because it has the greatest reach.
A. trade
B.national
C. relationship
D. retail
E. corporate

Answer: b

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: National advertising is advertising designed to reach all users of the product, whether consumers or industrial buyers. Trade ads are directed at wholesalers and retailers but not consumers.

Local supermarkets and department stores regularly advertise nationally distributed brand products. Which of the following advertisement types are they most likely to use?
A.Retail advertising
B. National advertising
C. Cooperative advertising
D. Trade advertising
E. Industrial advertising

Answer: a

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Retail advertising is used by a retailer to reach customers within its geographic trading area. Local supermarkets and department stores regularly advertise nationally distributed brand products.

Advertisements in a local newspaper for a locally owned garden center are examples of _____ advertising.
A. industrial
B. national
C. trade
D.retail
E. co-op

Answer: d

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Retail advertising is used by a retailer to reach customers within its geographic trading area. Trade ads are aimed at wholesalers.

Which of the following would most likely include a trial sample or request consumers to complete a questionnaire to receive a free product sample?
A. Trade advertising
B. Industrial advertising
C. Cooperative advertising
D. Retail advertising
E.Direct-mail advertising

Answer: e

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Direct-mail advertising is mailed directly to the consumer or industrial user; it is

an effective method of exposing these users to a product or it reminds them that the product is available to meet a specific need. Often, trial samples or coupons accompany direct-mail advertising.

Smith-Lockwood, a gift store, ran a half-page advertisement in a regional newspaper for Howard Miller brand clocks. Smith-Lockwood’s Howard Miller supplier reimbursed the store’s owner for the media cost. This is most likely an example of _____ advertising.
A. industrial
B. national
C. trade
D. institutional
E.co-op

Answer: e

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Cooperative, or co-op, advertising is advertising the retailer conducts with the cost paid for by the manufacturer or shared by the manufacturer and retailer. Industrial ads are aimed at groups that purchase products for manufacturing.

A veterinarian ran a local newspaper advertisement announcing it was the exclusive distributor of Hill brand gourmet pet food. The Hill salesperson reimbursed the veterinarian for the media cost. This is an example of _____ advertising.
A. industrial
B. national
C. trade
D. dual
E.co-op

Answer: e

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Understand

AACSB:

Level of Difficulty: Medium

In most cases national and retail advertising is aimed at:
A. manufacturers.
B. wholesalers.
C.final consumers.
D. trade specialists.
E. industrial users.

Answer: c

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Generally, national and retail advertising are aimed at the final consumers. Trade

and industrial advertising are aimed at other members in the channel of distribution and other manufacturers.

An advertisement for Carr cabinet doors that is directed at people in the woodworking industry ran in a publication called Custom Woodworking Business. The ad explained why Carr cabinet doors were the perfect finishing touch for all cabinets. This manufacturer used _____ advertising to reach potential users.
A.industrial
B. national
C. trade
D. retail
E. co-op

Answer: a

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Trade advertising is undertaken by the manufacturer and directed toward the wholesaler or retailer. Such advertisements appear in trade magazines serving only the wholesaler or retailer.

Companies do all of the following while advertising their products EXCEPT:
A. increase intermediary cooperation.
B. educate potential customers about products.
C. reduce buyers’ cognitive dissonance about a purchase.
D. develop leads for salespeople through mail-ins.
E. presell even before a salesperson’s call.

Answer: e

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Firms advertise to build cooperation with channel members, educate customers about products, reduce post-purchase cognitive dissonance, and develop leads. Ads may help create sales between a salesperson’s calls but not before.

Sheila Dunn is the author of a children’s book. A retail bookstore chain has agreed to advertise Sheila’s book aggressively with lots of countertop literature racks, posters, banners, and life-size images of the characters from her book. All of these are examples of:
A. trade sales promotion.
B.point-of-purchase displays.
C. shelf positioning.
D. shelf facing.
E. retailer premiums.

Answer: b

Learning Objective: 05-03

Topic: Sales Promotion Generates Sales

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Point-of-purchase (POP) displays allow a product to be seen easily and purchased. A product POP display may include photographs, banners, drawings, counter displays, or floor stands.

Which of the following is most likely an example of a trade sales promotion?
A. Free samples
B. Free merchandise
C.Consumer contests
D. Store coupons
E. Consumer demonstrations

Answer: b

Learning Objective: 05-03

Topic: Sales Promotion Generates Sales

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Trade sales promotion encourages resellers to purchase and aggressively sell a manufacturer’s products by offering incentives like sales contests, displays, special purchase prices, and free merchandise. Consumer sales promotion includes free samples, contests, coupons, and demonstrations to consumers.

Which of the following is most likely an example of a consumer sales promotion?
A. Free merchandise
B. Trade advertisements
C. Sales contests
D.Retail coupons
E. Shelf facings

Answer: d

Learning Objective: 05-03

Topic: Sales Promotion Generates Sales

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Consumer sales promotion includes free samples, consumer contests, coupons, and demonstrations to consumers. Trade sales promotion encourages resellers to purchase and aggressively sell a manufacturer’s products by offering incentives like sales contests, displays, special purchase prices, and free merchandise.

Shelf positioning refers to the:
A. number of individual products placed beside each on the shelf.
B. number of different product lines carried by an individual store.
C. number of individual point-of-purchase displays placed within a retail store.
D.physical placement of the product within the retail store.
E. physical placement of point-of-purchase displays within the retail store.

Answer: d

Learning Objective: 05-03

Topic: Sales Promotion Generates Sales

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Shelf positioning refers to the physical placement of the product within the retailer’s store. Shelf facings are the number of individual products placed beside each other on the shelf.

Shelf facings are defined as:
A. the number of individual products placed beside each on the shelf.
B. the number of individual point-of-purchase displays placed within a retail store.
C. the physical placement of the product within the retail store.
D. the actual potential inventory size of a retail outlet.
E.the number of individual products placed beside each other on the retailer’s shelf.

Answer: e

Learning Objective: 05-03

Topic: Sales Promotion Generates Sales

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Shelf facings are the number of individual products placed beside each other on the shelf. Shelf positioning refers to the physical placement of the product within the retailer’s store.

The major obstacle a salesperson faces when trying to get retailers to place new products on store shelves is:
A. retailers’ resistance to change.
B.limited shelf space.
C. negative publicity.
D. self-regulation.
E. determining product category.

Answer: b

Learning Objective: 05-03

Topic: Sales Promotion Generates Sales

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: The major obstacle faced when attempting to obtain shelf space for products is limited space. A retail store has a fixed amount of display space and thousands of products to stock. You compete for shelf space with other salespeople and with the retailer’s brands.

Manufacturers are LEAST likely to use premiums for:
A. getting prospects to request further information.
B.boosting the future sales of fast moving products.
C. getting customers to come into the retail store.
D. persuading prospects to sample the product.
E. introducing a new product.

Answer: b

Learning Objective: 05-03

Topic: Sales Promotion Generates Sales

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: A premium may act as an incentive to buy, to sample the product, to come into the retail store, or to stir interest so the user requests further information. Premiums serve a number of purposes: to promote consumer sampling of a new product, to introduce a new product, to encourage point-of-purchase displays, and to boost sales of slow products.

Kellogs cereal manufacturer recently offered miniature versions of a popular cartoon character in their cereal boxes. The term used for this marketing tool is:
A.premium.
B. reward.
C. bonus.
D. incentive.
E. discount.

Answer: a

Learning Objective: 05-03

Topic: Sales Promotion Generates Sales

Blooms: Understand

AACSB:

Level of Difficulty: Medium

The value or worth of a product that attracts the buyer to exchange money or something of value for the good or service is its:
A.price.
B. gross profit.
C. contribution margin.
D. markup.
E. net profit.

Answer: a

Learning Objective: 05-03

Topic: What’s It Worth? Pricing Your Product

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Price refers to the value or worth of a product that attracts the buyer to exchange money or something of value for the product. A product has some want-satisfying attributes for which the prospect is willing to exchange something of value.

Terrence sells office equipment and is asked by a prospect, “How does your product compare to the one I’m currently using?” To prepare for this question, Terrence should have:
A. planned a trial close.
B.examined the competition’s ads.
C. checked his firm’s code of ethics.
D. practiced question-avoidance techniques.
E. talked to former employees of his competitors.

Answer: b

Learning Objective: 05-03

Topic: Know Your Competition, Industry, and Economy

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: A salesperson needs to be prepared to discuss product features, advantages, and benefits in comparison to other products and confidently show why the salesperson’s product will fulfill the buyer’s needs better than competing products. One method to obtain information on competitors is through advertisements.

To make the most efficient use of their computers as a sales tool, salespeople should use their personal computers to:
A. play games while they wait for a customer.
B. make cold calls.
C. help them avoid using the wrong closing.
D.improve their personal productivity.
E. create personal blogs.

Answer: d

Learning Objective: 05-04

Topic: Personal Computers and Selling

Blooms: Remember

AACSB: Technology

Level of Difficulty: Easy

Explanation: Computers enable salespeople to be more productive on the job. A computer helps salespeople manage sales leads and create customer files.

A car salesperson was selling a used car to Larry Travis when Larry said, “I really like this car, but I am not going to buy any car without knowing its history.” The salesperson went to his computer, visited a Website called Car Fax and handed Travis a printout of the car’s history. This incident best exemplifies how:
A. a sales-oriented promotional method is effective.
B.changes in the technology have enhanced sales.
C. influential transactional selling methods can be.
D. a partnering relationship develops with consumers.
E. important contact management software is to salespeople. .

Answer: b

Learning Objective: 05-04

Topic: Global Technology Provides Service

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: Accessing information quickly can enhance sales. In this case, technology solved a sales problem and built the customer’s confidence in the salesperson and the product.

Which of the following statements about how computers impact the productivity of salespeople is incorrect?
A. Computers are at the heart of salespeople’s ability to provide top-quality customer service.
B. Computers are impacting salespeople in all aspects of their lives.
C. Computer technology is used to create better strategies.
D. Computer technology helps salespeople increase their productivity and effectiveness.
E.Computer technology cannot be used for order processing and customer service.

Answer: e

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: Computers are at the heart of salespeople’s ability to provide top-quality customer service by receiving and sending out information. Computers are impacting technology, advancing it at a rapid pace, and affecting people—including salespeople—in all aspects of their lives.

Sales force automation breaks down into three technologically broad areas of functionality. They are personal productivity, order processing and customer service, and:
A. sales presentation preparedness.
B. inventory control.
C. distribution management.
D. sales manager monitoring.
E.communications.

Answer: e

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: Sales force automation refers to three main areas: personal productivity, order processing and customer service, and communications.

Computers can help salespeople have an efficient time management system through the use of:
A. computer-based presentations.
B. contact management programs.
C.calendar management programs.
D. geographic information systems.
E. spreadsheet tools.

Answer: c

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Remember

AACSB: Technology

Level of Difficulty: Easy

Explanation: Improvement of time management directly increases productivity. Electronic calendar management, as a part of sales force automation, can make time management easier and less prone to errors or oversights.

_____ is the computerized listing of all the customers that a salesperson meets in the process of making sales.
A.Contact management system
B. Personal productivity
C. A salesperson diary
D. Spreadsheet organizer
E. Worksheet information system

Answer: a

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Remember

AACSB: Technology

Level of Difficulty: Easy

Explanation: Contact management software is a listing of all the customer contacts that a salesperson makes in the course of conducting business.

Todd, a sales representative for a textbook publisher, knows the name and direct line of each client’s administrative assistant. Which type of software most likely helps Todd keep track of this information?
A. GIS
B. POP
C. Inventory management
D. Contact management
E. Calendar management

Answer: d

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Remember

AACSB: Technology

Level of Difficulty: Easy

Explanation: Contact management software is a listing of all the customer contacts that a salesperson makes in the course of conducting business. Todd can add the names and numbers of each customer’s assistant, which will be beneficial for making sales calls.

Which of the following is NOT a feature associated with electronic calendar management?
A. Links scheduled events with accounts
B. Assigns relative priorities to items listed
C. Automatically checks for scheduling conflicts
D. Reduces time management errors
E.Includes information about date of last order

Answer: e

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: Order information would most likely be included in a contact management program. Electronic calendars can link events with contact information, prioritize events, and ensure that scheduling conflicts do not occur.

Which of the following would most likely remind a salesperson to send a thank-you letter to a sales prospect?
A. Geographic information system
B. Electronic Rolodex
C.Sales force automation system
D. Demographic information system
E. Global positioning system

Answer: c

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: A sales force automation system begins working as soon as the initial meeting

is entered into the system. A few simple commands tell it to remind you to send a thank-you letter and schedule a follow-up phone call.

A salesperson who used a(n) _____ would be able to track customer buying patterns.
A. spreadsheet
B. atlas
C. management information system
D. worksheet
E.geographic information system

Answer: e

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Remember

AACSB: Technology

Level of Difficulty: Easy

Explanation: A geographic information system (GIS) allows salespeople to view and manipulate customer and/or prospect information on an electronic map. A GIS can also reveal customer buying patterns that otherwise may not be apparent.

Which of the following would most likely be used by a salesperson to make a sales presentation that includes product video clips?
A. Outlook
B. Windows
C. Excel
D. PowerPoint
E. Internet Explorer

Answer: d

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Remember

AACSB: Technology

Level of Difficulty: Easy

Explanation: Computer-based presentations can be a powerful presentation tool. PowerPoint presentations with short product video clips provide a means of creating a customized dynamic video and sound discussion of the product.

Salespeople use geographic information systems to:
A. increase their sales quotas.
B. acquire instant knowledge.
C.create more efficient routing patterns.
D. send text messages to customers and prospects
E. stay in constant contact with their sales managers.

Answer: c

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Remember

AACSB: Technology

Level of Difficulty: Easy

Explanation: A geographic information system allows salespeople to view and manipulate customer and/or prospect information on an electronic map. Salespeople can plan sales calls geographically and efficiently.

A salesperson would most likely use an iPod to:
A. develop product knowledge and selling skills.
B. search the Internet for a competitor’s product data.
integrate video clips into PowerPoint presentations.
D. organize client contact information.
E. schedule customer meetings.

Answer: a

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: Podcasts on an iPod are an excellent way to train salespeople on product knowledge and selling skills. They can provide coaching and practical advice at a moment’s notice.

The Internet is best described as:
A.a global network of computers.
B. a service available only in the U.S.
C. totally different from the phone system.
D. synonymous with the World Wide Web.
E. an extension of a person’s personal computer.

Answer: a

Learning Objective: 05-04

Topic: Sales: Internet and the World Wide Web

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: The Internet, often referred to as the Net, is a global network of computers. Similar in some ways to the telephone system, it reaches every country in the world.

Which of the following refers to a small, fully functional computer that works as an extension of a desktop or laptop computer?
A. MP3
B. POS
C. GPS
D.PDA
E. GIS

Answer: d

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Remember

AACSB: Technology

Level of Difficulty: Easy

Explanation: The PDA is a tiny, fully functional computer that works as an extension of a desktop or laptop computer. A GPS is a radio-navigations system that provides users with directions and maps.

Surfing the Internet refers to:
A.exploring sites found on the Web.
B. creating links between Web sites.
C. participating in online chat rooms.
D. accessing the Internet on a PDA.
E. purchasing a license for Internet access.

Answer: a

Learning Objective: 05-04

Topic: Sales: Internet and the World Wide Web

Blooms: Remember

AACSB: Technology

Level of Difficulty: Easy

Explanation: Surfing the Internet is actually exploring the different sites found on the World Wide Web. Links are what give the Web its name, and all of the links together form a web of information that spans the globe.

Netiquette is most closely related to:
A. the 80/20 principle.
B. distributive justice.
C.the Golden Rule.
D. the iceberg principle.
E. procedural justice.

Answer: c

Learning Objective: 05-04

Topic: Technology Etiquette

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: Netiquette is the term used for etiquette on the Internet. No matter how quickly the Internet changes, netiquette is still based on the Golden Rule, or “do unto others as you would have done to you.”

Netiquette:
A. does not change because it is based on common sense.
B.is the term used for etiquette on the Internet.
C. is based on the principle, “Don’t put all of your eggs in one basket.”
D. advises e-mail senders to use flaming when implementing the AIDA process.
E. is based on the iceberg principle.

Answer: b

Learning Objective: 05-04

Topic: Technology Etiquette

Blooms: Remember

AACSB: Technology

Level of Difficulty: Easy

Explanation: Netiquette is the term used for etiquette on the Internet. Since the Internet changes so rapidly, netiquette does also.

According to some experts, what has been an effect of the increased use of e-mailing and text messaging?
A. More personal interactions
Less communication
C. More competition
D. Less productivity
E. More rudeness

Answer: e

Learning Objective: 05-04

Topic: Technology Etiquette

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: According to Mary Mitchell, author of The Complete Idiot’s Guide to Business Etiquette, people seem to express rudeness a lot more than they used to—especially online. In her opinion, one of the reasons for increased rudeness is that electronic communication has reduced the amount of human-to-human contact, which makes it easier to be rude.

When communicating with e-mail messages, you should never:
A. use friendly closings.
B. be too brief.
C. use salutations.
D.use all capital letters
E. include subject headings

Answer: d

Learning Objective: 05-04

Topic: Technology Etiquette

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: Brief messages that include friendly closings, salutations, and subject headings are considered appropriate. However, using all capital letters is equivalent to shouting.

Which of the following is appropriate when e-mailing customers?
A. Do not be afraid to send bad news via e-mail.
B. Use flaming when appropriate in e-mails.
C. If you want to make sure that a message is understood, write it in all capital letters.
D.Use dates, salutations, and friendly closes in e-mails.
E. Send the same message several times to make sure that it reaches the intended receiver(s).

Answer: d

Learning Objective: 05-04

Topic: Technology Etiquette

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: Bad news, flaming, all capital letters, and repeat messages are considered improper e-mail etiquette. Using dates and greetings is appropriate.

Which of the following is an appropriate guideline to follow when communicating with a cell phone?
A.Remember the person you are with should be the most important person for you to be communicating with
B. Speak louder into a cell phone than you would in other types of phones
C. Never ignore a cell phone call
D. Avoid text messaging in public areas
E. Always keep your phone in message mode

Answer: a

Learning Objective: 05-04

Topic: Technology Etiquette

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: Courteous salespeople focus on the people in front of them rather than the one on the telephone. If you are expecting important information from a colleague but need to be in a public area, switch your phone to message mode and ask them to send a text message to your phone.

Which of the following is NOT a guideline to follow when communicating with a cell phone?
A. Use text messaging to simplify your life
B. Use the caller ID feature as a screening method
C. Turn off the phone during meetings and sales calls
D. Return messages as soon as possible
E.Speak extra loudly into the phone

Answer: e

Learning Objective: 05-04

Topic: Technology Etiquette

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: Text messaging, caller ID, and voice mail are all tools that should be used for proper cell phone etiquette. It is inappropriate to engage and cell yell and unnecessary because cell phones have sensitive microphones

The only time a salesperson should use a speakerphone in an office setting is when he or she is:
A. inputting data into a laptop computer.
B.participating in a conference call.
C. part of a regional sales team.
D. talking to someone in an office.
E. getting ready to leave an office.

Answer: b

Learning Objective: 05-04

Topic: Technology Etiquette

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: It may be necessary to conduct a meeting over the telephone through a conference call. This should be the only reason a salesperson uses a speakerphone in an office setting. This prevents private information from being heard.

_____ is the standard amount charged to customers for a product.
A.List price
B. Transactional value
C. Net price
D. Contribution margin
E. Net worth

Answer: a

Learning Objective: 05-02

Topic: App: Types of Prices

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: List price is the standard price that is charged to customers. Net price is the price charged after discount allowances.

Cottage in a Teapot is a small retailer of decorative merchandise. The price charged by its suppliers after allowance for all discounts is the _____ price.
A. discretionary
B. zone
C. list
D.net
E. marginal

Answer: d

Learning Objective: 05-02

Topic: App: Types of Prices

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Net price is the price charged after discount allowances. List price is the standard price that is charged to customers.

A manufacturer that bases its charge to customers on the customer’s location or the customer’s distance from the shipping point is using a _____ price.
A. marginal
B. list
C.zone
D. net
E. FOB shipping point

Answer: c

Learning Objective: 05-02

Topic: App: Types of Prices

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Zone price is the price of a product based on the geographic location or zone of the customer. List price is the standard price that is charged to customers. Net price is the price charged after discount allowances.

A product is priced FOB destination, which means:
A. title of goods passes to customer when they are loaded on the shipping vehicles.
B.the buyer pays the shipping costs.
C. the seller pays the shipping costs.
D. the buyer and seller share the shipping costs equally.
E. freight over a basic fee is paid at the destination.

Answer: c

Learning Objective: 05-02

Topic: App: Types of Prices

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: FOB (free on board) destination means that the seller pays all shipping costs. With FOB shipping point, the buyer pays transportation charges on the goods.

Which of the following is a quantity discount that involves a one-time reduction in price?
A. Cash discount
B.Noncumulative quantity discount
C. Trade discount
D. Cumulative quantity discount
E. Consumer discount

Answer: b

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: A one-time price reduction is a noncumulative quantity discount. Cumulative quantity discounts are discounts the customer receives for buying a certain amount of a product over a stated period, such as one year.

If one case of Winston brand chocolate molds costs $10.00, but a single order for 10 cases costs a total of $94.00, it is MOST accurate to say that:
A. someone in the manufacturer’s book keeping department made an error.
B. the manufacturer offers a cash discount.
C. the manufacturer offers a cumulative quantity discount.
D.the manufacturer offers a noncumulative quantity discount.
E. the manufacturer offers a trade discount.

Answer: d

Learning Objective: 05-0

Topic: App: Discounts Lower the Price

Blooms: Apply

AACSB:

Level of Difficulty: Hard

Explanation: A one-time price reduction, such as 10 cases for $94, is a noncumulative quantity discount. Cumulative quantity discounts are discounts the customer receives for buying a certain amount of a product over a stated period, such as one year.

A salesperson tells a hardware retailer, “Buy 10 sprayers today and get one free.” The retailer is being offered a _____ discount.
A. trade
B. cash
C. noncumulative quantity
D. consumer
E. cumulative quantity

Answer: c

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Apply

AACSB:

Level of Difficulty: Hard

Explanation: A one-time price reduction, such as buy 10 and get one free, is a noncumulative quantity discount. Cumulative quantity discounts are discounts the customer receives for buying a certain amount of a product over a stated period, such as one year.

When the salesperson told the owner of Pet World, “If you purchase a minimum of 700 pounds of my company’s brand of dog treats over the next 12 months, you’ll receive a discount of 10 percent,” the pet storeowner knew she was getting a _____ discount.
A. trade
B. cash
C. noncumulative quantity
D. consumer
E.cumulative quantity

Answer: e

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Apply

AACSB:

Level of Difficulty: Hard

Explanation: Cumulative quantity discounts are discounts the customer receives for buying a certain amount of a product over a stated period, such as one year. A one-time price reduction is a noncumulative quantity discount.

The customer receives this type of discount for buying a certain amount of a product over a stated period of time.
A. Cash discount
B. Noncumulative quantity discount
C. Trade discount
D.Cumulative quantity discount
E. Consumer discount

Answer: d

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Which is the type of discount would most likely be given to a customer who pays bills within a stated period?
A.Cash discount
B. Noncumulative quantity discount
C. Trade discount
D. Cumulative quantity discount
E. Consumer discount

Answer: a

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Customers who pay bills within a set period of time may earn cash discounts. Consumer discounts are one-time price reductions the manufacturer passes on to channel members or directly to the consumer.

When the book salesperson told the bookstore manager, “3/15 net 60,” the manager knew that he was receiving a _____ discount.
A. trade
B.cash
C. noncumulative quantity
D. consumer
E. cumulative quantity

Answer: b

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Customers who pay bills within a set period of time may earn cash discounts, such as 3% off the bill if it is paid within 15 days. Consumer discounts are one-time price reductions the manufacturer passes on to channel members or directly to the consumer.

The Storage Bin Warehouse has reported a number of break-ins in the past few weeks. As a salesperson for No-Doubt Security Products, you believe your extensive line of alarm systems and locks could greatly benefit the retailer. You make an appointment with the Storage Bin manager for early next week. During your preparation for the sales call you learn the warehouse currently uses poor quality locks and has no security system. You plan to offer the manager a security package consisting of 150 Sure-Bolt locks at a price of $10 each and a new alarm system costing $5,000. The terms of the sale are 2/10 net 30. Assuming the Storage Bin manager purchases your suggested order and pays for it in one week, what would be the total cost?
A. $6,237
B.$6,370
C. $6,500
D. $6,630
E. $6,776

Answer: b

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Apply

AACSB:

Level of Difficulty: Hard

Explanation: Customers who pay bills within a set period of time may earn cash discounts. The total price for the 150 locks is $1,500, so the total bill is $6,500. By paying within 10 days, Storage Bin saves 2% of $6,500, which is $130. Therefore, the amount paid is $6,370 ($6,500 – 130).

Knight’s Catering Service receives a May 19^th invoice for $150 with terms of 3/10 net 30. If Knight’s pays the invoice on May 28, how much is due?
$120.00
B.$145.50
C. $147.00
D. $150.00
E. $153.00

Answer: b

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Apply

AACSB:

Level of Difficulty: Hard

Explanation: Customers who pay bills within a set period of time may earn cash discounts. Knight’s saves $4.50 by paying within 10 days ($150 x 3% = $4.50).

The Kentucky Grass Seed Company gives a 33 percent reduction off the retail list price of its best-selling grass seed mix to retailers. This practice is an example of a _____ discount.
A. cash
B.trade
C. cumulative quantity
D. noncumulative quantity
E. consumer

Answer: b

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Trade discounts occur when a manufacturer reduces prices to channel members to compensate them for the services they perform. The trade discount is usually stated as a percentage off the list retail price.

When the manufacturer reduces prices to channel members to compensate them for the services they perform, it is known as a:
A. cash discount.
B. noncumulative quantity discount.
C. cumulative quantity discount.
D. consumer discount.
E.trade discount.

Answer: e

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

While in the supermarket, you notice the label on a jar of Heinz pickle relish is marked, “30 cents off regular price.” This is an example of a _____ discount.
A. loyalty
B. cash
C. noncumulative quantity
D.consumer
E. trade

Answer: d

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Consumer discounts are one-time price reductions the manufacturer passes on to channel members or directly to the consumer. Cents-off product labels are price reductions passed directly to the consumer.

Which of the following is a one-time price reduction the manufacturer passes on to channel members or directly to customers?
A. Cash discounts
B. Noncumulative quantity discounts
C. Cumulative quantity discounts
D.Consumer discounts
E. Trade discounts

Answer: d

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

The _____ is the dollar amount added to the cost of a product to determine its selling price.
A.markup
B. profit factor
C. consumer add-on
D. gross profit
E. net profit

Answer: a

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Markup is the dollar amount added to the product cost to determine its selling price. Gross profit is the money available to cover the costs of marketing the product, operating the business, and profit. Net profit is the money remaining after the costs of marketing and operating the business are paid.

All of the following are true about markup EXCEPT that it is:
based on a product’s selling price or cost.
B. intended to allow wholesalers to profit.
C. usually expressed as a percentage.
D. representative of gross profit.
E.representative of net profit.

Answer: e

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Markup is the dollar amount added to the product cost to determine its selling price. Markup often is expressed as a percentage and represents gross profit, not net profit. It is based on either the product’s selling price or its costs.

_____ is the money available to a firm to cover the costs of marketing its products, operating the business, and profit.
A. Operating factor
B. Price factor
C. Final discount
D.Gross profit
E. Net profit

Answer: d

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

_____ is the money that remains after the costs of marketing and operating the business are paid.
A. Account receivable
B. Contribution margin
C. Consumer residual
D.Net profit
E. Dividend

Answer: d

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Net profit is the money remaining after the costs of marketing and operating the business are paid. Gross profit is the money available to cover the costs of marketing the product, operating the business, and profit.

Markup is:
A. the money available to cover only the costs of marketing the product.
B.based on the product’s selling price.
C. based on the product’s discount price.
D. often expressed as a fraction.
E. represented by net profit.

Answer: b

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Assume a product costs $3 and a retailer sells it for $6. What is the percentage markup on selling price and cost?
A. Markup on selling price = 33%; Markup on cost = 50%
B. Markup on selling price = 40%; Markup on cost = 66.6%
C.Markup on selling price = 50%; Markup on cost = 100%
D. Markup on selling price = 100%; Markup on cost = 100%
E. Markup on selling price = 120%; Markup on cost = 150%

Answer: c

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Apply

AACSB:

Level of Difficulty: Hard

Explanation: The percentage markup is based on either the product’s selling price or its cost. Percentage markup on selling price = amount added to cost/selling price = $3/$6 = 50%. Percentage markup on cost = amount added to cost/cost = $3/$3 = 100%.

It costs a company $6 to manufacture a product. It sells the product for $10 to a wholesaler who in turn sells it to a retailer for $12. A customer of the retailer buys it for $24. What was the markup on selling price for each member of this product’s channel of distribution?
A.Manufacturer’s markup = 40 percent; wholesaler’s markup = 16.67 percent; retailer’s markup = 50 percent
B. Manufacturer’s markup = 48 percent; wholesaler’s markup = 18 percent; retailer’s markup = 45 percent
C. Manufacturer’s markup = 60 percent; wholesaler’s markup = 20 percent; retailer’s markup = 100 percent
D. Manufacturer’s markup = 66.67 percent; wholesaler’s markup = 20 percent; retailer’s markup = 100 percent
E. Manufacturer’s markup = 60 percent; wholesaler’s markup = 23 percent; retailer’s markup = 40 percent

Answer: a

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Apply

AACSB:

Level of Difficulty: Hard

Explanation: Percentage markup on selling price = amount added to cost/selling price. $4/$10 = 40%; $2/$12 = 16.7%; $12/$24 = 50%

_____ is the additional sum of money expected from an investment over and above the original investment.
A. Return on sale
B. Net sale
C. Return allowance
D.Return on investment
E. Contribution margin

Answer: d

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Return on investment (ROI) refers to an additional sum of money expected from an investment over and above the original investment. ROI is often expressed as a percentage; however, salespeople can also use a dollar return on investment.

“Yo-to-go” is an entrepreneurial venture of a college student named Cathy Frank. She sells yogurts in cups and cones from a trailer at the beach during the tourist season. If Frank pays $500 for cartons of yogurts then sells it all for $1200, how much is her return on investment?
A. $500
B.$700
C. $1200
D. $1700
E. $1900

Answer: b

Learning Objective: 05-0

Topic: App: Discounts Lower the Price

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Return on investment (ROI) refers to an additional sum of money expected from an investment over and above the original investment. Frank makes $700 on a $500 investment.

A value analysis is defined as a:
A. listing of those products with the highest prices.
B.determination of the best product for the money.
C. listing of those products with the lowest prices.
D. way to save costs while using cheaper products.
E. way to save costs while using high-end products.

Answer: b

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: A value analysis determines the best product for the money. It recognizes that a high-priced product may sometimes be a better value than a lower-priced product.

There are numerous types of value analyses that a salesperson can develop for a prospect. One type that is frequently used is the:
A. retail cost versus wholesale cost.
B. average markup.
C.product cost versus true value.
D. selling cost versus selling price.
E. net profit.

Answer: c

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: A salesperson can develop numerous types of value analyses for a prospective buyer. Three types frequently used are (1) product cost versus true value, (2) unit cost, and (3) return on investment.

Cadwell, Inc., a regional business computer sales firm is attempting to sell a convenience store chain, Gas ‘N’ Go, a new computer-operated pump meter. Terry Williams, owner of the convenience stores, seems interested in Cadwell’s initial proposal but believes the price may be too high. The cost per computer is $1,000, but Cadwell could sell Williams 50 computers for $45,000 with terms of the sale being 2/10 net 30. Williams purchases 50 computers and pays for them five days after the purchase, so his _____ is $882.
A. cash discount
B.unit cost
C. gross profit
D. trade discount
E. breakeven cost

Answer: b

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: One method of presenting a product’s true value to a buyer is to break the product’s total costs into several smaller units, or the unit cost. In this case, the unit cost drops from $1,000 to $882.

Essay Questions

What is sales training? How long is the training period for the typical salesperson?

Answer: Sales training is the effort an employer puts forth to provide the opportunity for the salesperson to receive job-related culture, skills, knowledge, and attitudes that result in improved performance in the selling environment. Sales training is an ongoing process that should continue throughout a salesperson’s career.

Learning Objective: 05-01

Topic: Sources of Sales Knowledge

Blooms: Understand

AACSB:

Level of Difficulty: Medium

How does the typical salesperson obtain the knowledge needed to become a successful salesperson?

Answer: The text lists two ways. The first method is formal sales training that teaches information through preliminary training programs and sales meetings. With the second method, the salesperson learns by being on the job.

Learning Objective: 05-01

Topic: Sources of Sales Knowledge

Blooms: Understand

AACSB:

Level of Difficulty: Medium

List three reasons why it is important for a salesperson to have sales knowledge of his company, his buyer, and his market.

Answer: The three reasons why it is important for a salesperson to have selling knowledge of his company, his buyer, and his market is to (1) increase the salesperson’s self-confidence, (2) build the buyer’s confidence in the salesperson, and (3) build relationships.

Learning Objective: 05-01

Topic: Knowledge Builds Relationships

Blooms: Understand

AACSB:

Level of Difficulty: Medium

What is the difference between trade and industrial advertising?

Answer: Trade advertising is undertaken by the manufacturer and directed to wholesalers and retailers. Industrial advertising is aimed at individuals and organizations that purchase products used in the manufacturing of other products.

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Distinguish between consumer sales promotions and trade sales promotions.

Answer: Consumer sales promotions are aimed at consumers. Trade sales promotions are aimed at resellers and encourage them to purchase from manufacturers and aggressively sell to consumers.

Learning Objective: 05-03

Topic: Sales Promotion Generates Sales

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Distinguish between shelf positioning and shelf facings.

Answer: Shelf positioning refers to the physical placement of the product within the retailer’s store. Shelf facings are the number of individual products placed beside each other on the shelf.

Learning Objective: 05-03

Topic: Sales Promotion Generates Sales

Blooms: Understand

AACSB:

Level of Difficulty: Medium

How can a geographic information system (GIS) make a salesperson more efficient?

Answer: A GIS allows a salesperson to view and manipulate customer and/or prospect information on an electronic map. This is extremely useful when visiting an area for the first time. It allows salespeople to plan sales calls geographically and make the most efficient use of their time.

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

How does a mobile office benefit a salesperson?

Answer: In a mobile office salespeople can stay in constant contact with their customers even when driving between cities and states. When salespeople arrive at a prospect’s office and the prospect cannot see them immediately, those with a mobile office can go outside to work until they are ready to be seen. The mobile office reduces wasted time.

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Briefly distinguish between the Internet and the World Wide Web.

Answer: The Internet refers to the physical infrastructure of the interconnected global computer network. The Web is a part of the Internet that houses “Web sites.”

Learning Objective: 05-04

Topic: Sales: Internet and the World Wide Web

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

List four important guidelines for cell phone usage.

(1) The person you are with is the most important person to talk to. (2) Use text messaging to simplify your life. (3) Turn off your phone during meetings, sales calls and presentations. (4) Do not engage in cell yell.

Learning Objective: 05-01

Topic: Technology Etiquette

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Distinguish between FOB shipping point and FOB destination.

With FOB shipping point, the buyer pays transportation charges on the goods—the title to goods passes to the customer when they are loaded on shipping vehicles. With FOB destination, the seller pays all shipping costs.

Learning Objective: 05-02

Topic: App: Types of Prices

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Distinguish between gross profit and net profit.

Answer: Gross profit is the money available to cover the costs of marketing the product, operating the business, and profit. Net profit is the money remaining after the costs of marketing the product and operating the business are paid.

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

It costs Custom Design, Inc., $10 to make a brass and copper candleholder. It sells the candleholder to a wholesaler for $16. The wholesaler sells the candleholder to a gift shop for $20. The gift shop prices the candleholder at $45. What was the markup on selling price for each member of this product’s channel of distribution?

Answer: Manufacturer $16 – $10/$16 = 37.5 percent
Wholesaler $20 – $16/ $20 = 20 percent
Retailer $40 – $20/$40 = 50 percent

Learning Objective: 05-01

Topic: App: Discounts Lower the Price

Blooms: Apply

AACSB: Analytic

Level of Difficulty: Hard

Short Answer Questions

What kind of advertising would be found in Florist, a magazine with a mission “to inform, inspire, and educate retail florists”?

Answer: Trade advertising

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Remember

AACSB:

Level of Difficulty: Easy

What is the main obstacle faced by a hair product salesperson who is trying to convince a retailer to give a new shampoo good shelf positioning?

Answer: Limited retail store space

Learning Objective: 05-03

Topic: Sales Promotion Generates Sales

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Which computerized aid commonly used by salespeople can be described as an electronic Rolodex?

Answer: Contact management file

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Remember

AACSB: Technology

Level of Difficulty: Easy

List the three most popular sales force automation systems.

Answer: Word processing, e-mail, and faxes.

Learning Objective: 05-04

Topic: Knowledge of Technology Enhances Sales and Customer Service

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Is it good netiquette for an e-mail user to use flaming when communicating with customers? Briefly explain your answer.

Answer: No. Flaming is the equivalent of a verbal tongue lashing in public.

Learning Objective: 05-04

Topic: Technology Etiquette

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

What are the four types of discounts that buyers typically receive?

Answer: Cash, quantity, trade, and consumer.

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Understand

AACSB:

Level of Difficulty: Medium

When Rupert’s Sandwich Shop received an invoice from Cozzini for $2,550 worth of boneless hams and turkey breasts, it included the following phrase: 1/10 net 30. If the meat was purchased on September 17 and the shop owner wants to pay the bill on September 30, how much should the owner make the check out for?

Answer: He has to pay the full amount of $2,550, as he has missed the cash discount period of 10 days.

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Apply

AACSB:

Level of Difficulty: Hard

A salesperson can develop numerous types of value analyses for a prospective buyer. List three types of frequently used value analyses.

Answer: (1) Product cost versus true value, (2) unit cost, and (3) return on investment.

Difficulty: Medium
Learning Objective: 05-01

Topic: App: Organizations: Value and ROI

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Multiple Choice Questions
Clearwater Hampers is a small British company that sells luxury food and drink in various combinations in picnic hampers. Food and wine are seen as classic, fail-safe gifts in a market where gift-giving is increasingly tricky. Corporate customers, both in the United Kingdom and abroad, are important to the business. The firm’s products are also available in a number of retail establishments around the world. The leading salesperson for Clearwater Hampers is Peter Austin who has been with the company since it began operation in 1979. The firm’s owners were originally trout farmers who needed a source of income during the winter months and who diversified into selling fine liquors, cheeses, chocolates, and other luxury food items. The company uses a variety of promotions to make prospects aware of the company’s products.

A Clearwater Hampers ad in magazines targeted to retail store managers would be an example of:
A. retail advertising.
B. national advertising.
C. exclusive promotion.
D. intensive promotion.
E.trade advertising.

Answer: e

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Trade advertising is undertaken by the manufacturer and directed toward the wholesaler or retailer. Such advertisements appear in trade magazines serving only the wholesaler or retailer.

Clearwater Hampers spends money on advertising for all of the following reasons EXCEPT to:
A. increase overall sales.
B. inform prospects that a product is on the market.
develop leads for Austin and the rest of its sales force.
D.create cognitive dissonance about recent purchases.
E. educate customers about the company’s picnic hampers.
Answer: d

Learning Objective: 05-03

Topic: Advertising Aids Salespeople

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: The firm spends money on advertising to increase sales, inform consumers about a product, develop leads, and educate customers. Cognitive dissonance occurs when a person feels uncertainty about a recent purchase, so the firm would not want to encourage such thoughts.

As Austin sells Clearwater Hampers, he can use his laptop computer to do all of the following EXCEPT:
A.initiate trial closes.
B. generate expense reports.
C. check a shipment status.
D. track customer buying patterns.
E. create sales presentations.

Answer: a

Learning Objective: 05-04

Topic: Personal Computers and Selling

Blooms: Understand

AACSB: Technology

Level of Difficulty: Medium

Explanation: With a computer, Austin can create reports and sales presentations, monitor customer accounts and product shipments, and track the buying patterns of customers. During a presentation, Austin relies on his own experience and skill to know the best time to initiate a trial close.

Corporate buyers typically pay for the shipment of hampers to their various recipients, and retailers pay shipping costs for hampers shipped to stores from Clearwater Hampers. In other words, Clearwater Hampers uses:
A. net pricing.
B.FOB shipping point pricing.
C. uniform pricing.
D. zone shipment pricing.
E. FOB destination pricing.

Answer: b

Learning Objective: 05-02

Topic: App: Types of Prices

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: FOB (free on board) shipping point pricing means the buyer pays transportation charges on the goods. The title to goods passes to the customer when the items are loaded on shipping vehicles.

A New York-based retailer purchases picnic hampers for $75,000 on November 1 and is given a cash discount of 3/10 net 30. If the invoice is paid on November 6, the retailer will:
A. pay $75,000.
B. receive a trade discount of $2,250.
C. receive a quantity discount of $1,500.
D.receive a cash discount of $2,250.
E. pay $75,000 plus a penalty charge of $2,250.

Answer: d

Learning Objective: 05-02

Topic: App: Discounts Lower the Price

Blooms: Apply

AACSB: Analytic

Level of Difficulty: Hard

Explanation: Cash discounts are earned by buyers who pay bills within a stated period. In this case, 32/10 net 30 translates into a 3% discount if the bill is completely paid within 10 days of the sale. Three percent of $75,000 is $2,250.

ABC's Of Relationship Selling through Service 12th Edition by Charles Futrell - Test Bank

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