MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

1) The first comprehensive plan you need in contemplating any new venture is called:
A) A financial projection report
B) A feasibility study
C) A profit-loss statement
D) A business plan
Answer: B

2) A typical feasibility study includes all of the following areas, except:

A) International trade regulations
B) The concept for your venture
C) The technical feasibility of your idea
D) The supply situation
Answer: A

3) A fully developed concept includes all of the following, except:

A) Proprietary aspects
B) Distribution plans
C) A description of the proposed pricing strategy
D) A prototype
Answer: D

4) A microprocessor used to control a single-person car is an example of a product that is:

A) A new invention
B) Highly innovative
C) Slightly innovative
D) Moderately innovative
Answer: D

5) Cloud computing is an example of a product that is:

A) Moderately innovative
B) Slightly innovative
C) A new invention
D) Highly innovative
Answer: D

6) Wireless technologies are generally considered to be:

A) Highly innovative
B) New inventions
C) Moderately innovative
D) Copycatting
Answer: B

7) Which part of the feasibility study contains information about the nature of your competition?
A) Technical feasibility
B) Marketing plan
C) Market assessment
D) Profit assessment
Answer: C

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 8) Which part of the feasibility study contains information about the distribution channels for your product?
A) Technical feasibility
B) Market assessment
C) Profit assessment
D) Marketing plan
Answer: D

9) ________ is the level of return or compensation that you might expect for assuming the risks associated with
investing in this business.
A) Risk analysis
B) Return on investment
C) Capital appreciation
D) Profit potential
Answer: D

10) Other firms and businesses in your community and across the country are considered to be part of the:
A) B2C market
B) government market
C) industrial market
D) institutional market
Answer: C

11) Organizations such as hospitals, personal care homes, schools, and universities, are considered part of:
A) The industrial market
B) The B2C market
C) The government market
D) The institutional market
Answer: D

12) This process of breaking down large, heterogeneous consumer or industrial markets into more homogeneous
groups is known as:
A) Market diversification
B) Market augmentation
C) Market segmentation
D) Market differentiation
Answer: C

13) A condo developer has determined that his target market consists of financially independent, unattached
singles between the ages of 40-50. He has segmented the market based on ________ factors.
A) Demographic
B) Sociological
C) Psychographic
D) Geographic
Answer: A

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14) ________ data comprise information that others have put together relating to your industry and/or your
customers.
A) External
B) Secondary
C) Internal
D) Primary
Answer: B

15) One key source of demographic data on the Canadian market is:
A) Industry Canada
B) Canadian Industry Statistics
C) The CRA (Canada Revenue Agency)
D) CANSIM
Answer: D

16) Perhaps the best way to get the most current and useful information regarding your potential market is
through:
A) Secondary data
B) Trade publications
C) Primary data
D) Statistics Canada
Answer: C

17) All of the following are likely uses for your prototype, except:
A) Show the idea to prospective buyers
B) You can get photographs and other promotional material.
C) Sell the prototype to the highest bidder
D) Put out publicity releases
Answer: C

18) Other companies which offer products similar to yours are called:
A) Parallel competitors
B) Rival competitors
C) Indirect competitors
D) Direct competitors
Answer: D

19) A SWOT analysis represents:

A) Strengths, weaknesses, opportunities, threats
B) Strategy, weaknesses, opportunities, tactics
C) Strategy, weakness, obstacles, threats
D) Strengths, weaknesses, obstacles, tactics
Answer: A

20) Which of the following competitive strategies creates a meaningful difference between your products and those
of the competition, which creates a higher level of perceived customer benefits?
A) Focus on a Market Niche
B) Differentiation advantage
C) Cost advantage
D) Marketing advantage
Answer: B

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21) Which of the following competitive strategies identifies a position in the market that has been overlooked by
your competitors?
A) Focus on a Market Niche
B) Differentiation advantage
C) Cost advantage
D) Marketing advantage
Answer: A

22) The ________ approach utilizes published statistics and weights them by an index that may be some factor such
as the percentage of the population within your designated geographic area.
A) Narrow-focus
B) Top-down
C) Broad-based
D) Statistic-specific
Answer: B

23) For your business plan, sales estimates for your first year of operation should be ________, while the estimates
for subsequent years can be ________.
A) Quarterly; semi-annually
B) Quarterly; annually
C) Monthly; quarterly
D) Monthly; semi-annually
Answer: C

24) All of the following are external factors which might affect your sales, except:
A) Changes in the retail mix
B) Political activities and events
C) Level of your promotional effort
D) Seasonal changes
Answer: C

25) All of the following are internal factors which might affect your sales, except:
A) the distribution channels you decide to use
B) your ability to manage inventory levels effectively
C) fashion trends and cycles
D) level of your promotional effort
Answer: C

26) Selecting a location is most critical for which of the following businesses?
A) Public Utilities Commission
B) An automobile manufacturing plant
C) Hakim Optical
D) Municipal waste and recycling site
Answer: C

27) The principal ingredients of a marketing program include all of the following, except:
A) Person
B) Pricing
C) Place
D) Productivity
Answer: D

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28) All of the following are forms of non store retailing, except:
A) Fairs and exhibitions
B) The Internet
C) Bricks and Mortars
D) Vending machines
Answer: C

29) Using cost-based pricing, what is the percentage markup on an item costing $1.00 and selling for $5.00?
A) 25%
B) 45%
C) 80%
D) 55%
Answer: C

30) What is the percentage markup on an item costing $1.50 and selling for $3.00?
A) 75%
B) 50%
C) 25%
D) Cannot be determined.
Answer: B

31) Items such as specialty products or jewellery, for example, typically have markups in the range of:
A) 20-30%
B) 5-10%
C) 50-60%
D) 35-45%
Answer: C

32) Items such as food products and other staple products typically have markups in the range of:
A) 15-25%
B) 5-10%
C) 50-60%
D) 35-45%
Answer: A

33) ________ are commonly provided to customers who buy more than some minimum quantity or dollar value of
products or services from you.
A) Cash discounts
B) Cumulative discounts
C) Quantity discounts
D) Loyalty discounts
Answer: C

34) ________ permit customers to deduct a percentage amount from the net cost of their purchases if payment is
made in cash at the time of purchase or full payment is made within a specified number of days.
A) Noncumulative discounts
B) Quantity discounts
C) Quality discounts
D) Cash discounts
Answer: D

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35) ________ gives you a method of moving inventories that you may otherwise have to carry over to the following
year.
A) Seasonal discounts
B) Quantity discounts
C) Quality discounts
D) Cash discounts
Answer: A

36) Which of the following promotional activities has the highest cost per audience member?
A) Public Relations
B) Advertising
C) Personal Selling
D) Sales Promotion
Answer: C

37) Which of the following promotional activities offers the greatest ability to focus on the target customer?
A) Public Relations
B) Advertising
C) Sales Promotion
D) Personal Selling
Answer: D

38) Which of the following promotional activities has the highest level of credibility?
A) Public Relations
B) Sales Promotion
C) Personal Selling
D) Advertising
Answer: A

39) Which of the following promotional activities is weakest in terms of the ability to deliver a complicated message?
A) Sales Promotion
B) Advertising
C) Public Relations
D) Personal Selling
Answer: A

40) Which of the following promotional activities is weakest in terms of the ability to focus on the target customer?
A) Advertising
B) Sales Promotion
C) Personal Selling
D) Public Relations
Answer: A

41) Which of the following promotional activities offers the greatest capacity to interchange with the audience?
A) Advertising
B) Personal Selling
C) Public Relations
D) Sales Promotion
Answer: B

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42) Free product samples and contests are activities related to:
A) Public relations
B) Sales promotion
C) Advertising
D) Personal selling
Answer: B

43) In the model for small business growth, the key issue in the inception stage is:
A) Finding growth opportunities
B) Obtaining customers
C) Expansion into new products or markets
D) Increasing competition
Answer: B

44) In the model for small business growth, the key issue in the maturity stage is:
A) Obtaining customers
B) Expansion into new products or markets
C) Finding growth opportunities
D) Increasing competition
Answer: C

45) In the model for small business growth, the key issue in the survival stage is:
A) Increasing competition
B) Expansion into new products or markets
C) Finding growth opportunities
D) Obtaining customers
Answer: A

46) In the model for small business growth, product and market research in the inception stage is:
A) Innovative
B) Little
C) Non-existent
D) Moderate
Answer: C

47) In the model for small business growth, product and market research in the survival stage is:
A) Little
B) Innovative
C) Non-existent
D) Moderate
Answer: A

48) The first plan you will write for your new venture is the business plan, once that is complete, you will then
conduct a feasibility study.
A) True
B) False
Answer: B

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49) Examples of psychographic factors include the desire for status, the pursuit of fun, and the desire to be
environmentally conscious.
A) True
B) False
Answer: A

50) The market research process involves two basic steps: gather information and then interpret it.
A) True
B) False
Answer: B

51) Secondary data is far less expensive for a firm to collect than is primary data.
A) True
B) False
Answer: A

52) Survey research is the most widely used method of primary data collection.
A) True
B) False
Answer: A

53) When it comes to the "one-store test" to test your product, you are safe to assume that the single location will be
representative of the marketplace in general.
A) True
B) False
Answer: B

54) A cost advantage competitive strategy involves a significantly lower cost compared to the competition which
permits reasonable profit margins while offering lower prices.
A) True
B) False
Answer: A

55) The bottom-up approach involves aggregating information from the customer level to the total market level.
A) True
B) False
Answer: A

56) Merchant wholesalers are further classified as full-service, limited-function, drop shippers, truck wholesalers,
and rack jobbers.
A) True
B) False
Answer: A

57) A discount expressed as "2/10 net 30" means the customer can take a 2 percent cash discount for making
payment within 10 days. Otherwise, the customer must increase the invoice total by 2 percent and pay that
amount in 30 days.
A) True
B) False
Answer: B

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 58) A personal sales person's primary function is informing customers about the nature of the offering and the
value and benefits of using the product or service.
A) True
B) False
Answer: B

ESSAY. Write your answer in the space provided or on a separate sheet of paper.

59) Discuss the relationship between the level of risk of a new venture and the expected return for that risk for new
inventions, moderately or slightly innovative ideas, and copycat products?
Answer: In general, the following relationships hold:

1. New inventions are extremely risky and difficult to evaluate, but if they are accepted in the
marketplace they can provide enormous profits.
2. For moderately innovative and slightly innovative ideas, the risks are lower and evaluation is less
difficult, but profit potential tends to be more limited.
3. In the "copycat" category, risks are often very high and profit potential tends to be quite low. Such
businesses usually show no growth, or very slow growth, and there is little opportunity for profit beyond
basic wages.

60) What are the most important technical requirements to consider when developing a working prototype?
Answer: ∙ Functional design of the product and the attractiveness of its appearance
∙ Flexibility of the product in permitting ready modification of its external features to meet customer

requirements or competitive pressures

∙ Durability of the materials from which the product is made
∙ Expected product reliability under normal operating circumstances
∙ Safety of the product under normal operating conditions
∙ Expected rate of obsolescence
∙ Ease and cost of maintenance
∙ Ease and cost of processing or manufacture
∙ Ease of handling and use by the customer

61) Describe market segmentation based on geographic location.

Answer: Geographic location refers to part of a city or town, county, province, region, or country. If you are selling
farm equipment, geographic location is obviously a major factor in segmenting your target markets since
your customers will be located in particular rural areas. Climate is a commonly used geographic
segmentation variable that affects industries such as sporting equipment, lawn and garden equipment,
snowblowers and snowmobiles, and heating and air-conditioning equipment. If this is a factor in your
business, you need to identify the geographic area where your market is located and identify the specific
boundaries within which you will do business.

62) Compare and contrast observational methods to questioning methods as a form of primary data collection.
Answer: This is the gathering of primary data by observing people and their actions in particular situations. It
may entail such approaches as observing the behaviour of shoppers in a store as they go about
purchasing a range of different products, counting traffic flows through a mall or past a particular
location, or observing patterns in traffic flows around a store or other facility. Questioning methods
include both the use of surveys and experimentation that involves contact with respondents. Survey
research involves the systematic collection of data from a sample of respondents to better understand or
explain some aspect of their behaviour. This data collection can occur by personal contact, through the
mail, by telephone, or on the Internet. In addition, the information may be gathered from people
individually as in an individual interview or in a group such as a focus group.

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63) Describe the primary issues faced by manufacturing firms in the selection of a location for their facilities.
Answer: Manufacturers are principally concerned about locating their plant where their operations will be most
efficient. This means considering such issues as:

∙ General proximity to primary market areas

∙ Access to required raw materials and supplies
∙ Availability of a suitable labour force
∙ Accessibility and relative cost of transportation and storage facilities
∙ Availability and relative cost of power, water, and fuel supplies
∙ Financial incentives and other inducements available from municipal, provincial, or federal government

agencies
The importance of each of these factors in the location decision will depend on the nature of your
manufacturing business and your own preferences and requirements.

64) Discuss the disadvantages associated with running a home-based business.

Answer: It takes a lot of self-discipline to sustain a regular work schedule and resist distractions from family,
friends, television, and other sources. Suppliers and prospective customers may not take you as seriously.
The space available in your home may not be appropriate for your business, and you may not have
access to facilities and equipment such as boardrooms and copy machines that you need to conduct your
business effectively. If your house is in a typical residential area, operating a business from your home
will probably contravene local zoning bylaws. You can feel lonely and very alone without anyone to talk
to or banter ideas around with.

65) What are some of the common complaints faced by the owners of home-based business from neighbours and
others in the community?
Answer: Activities that may lead to complaints are posting a large sign on the front lawn; constant noise; a steady
stream of customers, suppliers, or others in and out of your home; or the clutter of parked vehicles in
your yard or on the street.

66) Describe three different kinds of discounts provided by businesses to their customers.
Answer: The three types of discounts presented in the text are cash, quantity, and seasonal. Cash discounts are
based on the typical terms of trade within an industry and permit customers to deduct a certain
percentage amount from the net cost of their purchases if payment is made in cash at the time of
purchase or full payment is made within a specified number of days. Seasonal discounts of 10 percent, 15
percent, 20 percent, or more on your normal base price may be offered to your customers if their
purchases are made during your slow or off-season. Quantity discounts are commonly provided to
customers who buy more than some minimum quantity or dollar value of products or services from you.

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