Q1 RESOURCE ALLOCATION

Q1 RESOURCE ALLOCATION  PRINCIPLE CONCEPTUAL

Economists would most likely recommend that marketing managers allocate the firm’s marketing resources to the markets and products in which:

1. the firm has had the most experience with a product.
2. an SBU is considered a cash cow.
3. there is the greatest current market share and the fastest, growing industry rate.
4. the excess of incremental revenues over incremental costs is greatest.
5. total revenue equals total cost.

Q2 SALES RESPONSE FUNCTION CONCEPTUAL

The relationship of annual marketing effort to annual sales revenue is assumed to be an S-shaped curve because the sales response function shows:

1. that when demand diminishes, production costs rise.
2. an additional $1 of marketing effort results in a far greater increase in sales revenue in the mid-range than at either end.
3. the point at which total revenue and total cost are equal.
4. decreasing costs as a result of marketing economies of scale.
5. increasing costs as a result of the attempt to gain additional market share.

Q3 SALES RESPONSE  FUNCTION CONCEPTUAL

The S-shaped curve of a sales response function is due to:

1. rising production costs and diminishing demand.
2. reduced cost and increasing marginal returns.
3. initially increasing and then diminishing marginal returns of additional marketing expenditures.
4. decreasing costs as a result of marketing economies of scale.
5. increasing costs associated with attaining additional market share.