Question

Determine whether each of the following statements is TRUE or FALSE and write a short explanation for your answer

1. It is a good practice to have loss leaders at the very front of the store so that more customers can see them quickly and get attracted to them.
2. One of the objectives of a promotion strategy is to impede the success of new market entrants in gaining a significant market share.
3. One advantage of intensive distribution is that the firm does not need to spend resources on establishing a sophisticated distribution channel.
4. Stock-out-cost refers to the cost incurred when a marketer has more inventory in stock than they can carry.
5. The cost of switching to different brands is one of the reasons driving consumer loyalty towards a specific product.

Answer 1

Q.1 It is a good practice to have loss leaders at the very front of the store so that more customers can see them quickly and get attracted to them.

Answer: This statement is TRUE.

Explanation

loss leaders is a type pricing practice, where goods and services are sold or advertise below the market price of the products. The basic purpose is that, once consumers into the store, they are likely to purchase other products also. Therefore, It is a good practice to have loss leaders at the very front of the store so that more customers can see them quickly and get attracted to them.

Q.2 One of the objectives of a promotion strategy is to impede the success of new market entrants in gaining a significant market share.

Answer: This statement is FALSE.

Explanation

A promotion strategy not impede the success of new market entrants in gaining a significant market share. Rather, new market entrants set their objective to increase market share. one of the most important objective of a promotion strategy is to expand market share.

Q.3 One advantage of intensive distribution is that the firm does not need to spend resources on establishing a sophisticated distribution channel.

Answer: This statement is TRUE.

Explanation

Intensive distribution strategies helps the manufacturer to make hassle free availability of its products in the market. one of the most important advantage of intensive distribution is that the firm does not need to spend resources on establishing a sophisticated distribution channel.  Intensive distribution strategies covers wide area of the market.

Q.4 Stock-out-cost refers to the cost incurred when a marketer has more inventory in stock than they can carry.

Answer: This statement is FALSE.

Explanation

Stock-out-cost refers to the cost incurred when a marketer has Shortage of  inventory in stock than they can carry. Therefore, the statement, Stock-out-cost refers to the cost incurred when a marketer has more inventory in stock than they can carry, is false.

Q.5 The cost of switching to different brands is one of the reasons driving consumer loyalty towards a specific product.

Answer: This statement is TRUE.

Explanation

The cost of switching is the cost when an consumer switching to different brand or product. The cost of switching are in terms of time and  money spend during making switching decision. Therefore, due to the cost of switching to different brands is one of the reasons driving consumer loyalty towards a specific product.