Use This Information for Question That Refer to the Yummy

question 110

Multiple Choice

Use this information for question that refer to the Yummy Ice Cream case. Kelly Stich, marketing manager for Yummy Ice Cream Products, is thinking about some of her products and her promotion plans for the coming year.
Yummy Ice Cream Products is introducing a new ice cream treat called PlanetSavers. This treat uses ice cream produced with environmentally friendly processes that save energy and protect the ozone. Yummy plans to send articles to magazines, local newspapers, and environmental groups that explain the environmentally safer treat. The product also has a unique texture and different flavor.
Stich wants to use counter cards and in-store signs to let people know about Cherry Walrus, the company's new flavor. She is also developing sales training materials that will teach ice cream scoopers in Yummy's ice cream stores to promote the product. Right after Cherry Walrus is introduced each store will also hand out coupons that are good for one day only.
Yummy Mondaes is a product that has been around for 25 years. It is Yummy's take on the classic ice cream sundae, but white-brownie and coffee-flavored crumbles are added to make it extra special. The company sells this product in one and two quart containers through major grocery store chains. It relies on personal selling and price discounts to retailers to move more of the product. The company does very little consumer promotion for this product.
Yummy Fudge on a Stick is a new product of fudge-flavored ice cream on a stick. Yummy plans to sell it through retail grocery stores also and is launching an aggressive advertising program that will use television, radio, newspaper, magazines, and the Internet. Most of its promotion will be directed at consumers.
Two years ago the company introduced Yummy Fruit on a Stick, an all-natural frozen fruit product on a stick. The product category has been popular, continues to grow, and is in the market growth stage of the product life cycle.
To get the most out of its promotion spending, Yummy should probably develop its budget by:

• A) allocating some fixed percentage of net sales.
• B) matching expenditures with competitors.
• C) allocating money to the needs of new products first, then use any leftover money for other products.
• D) using the "task method."
• E) spending all available funds.

Understand the effect of income changes on the demand for goods and services.

Distinguish between the concepts of price elasticity, income elasticity, and cross elasticity of demand.

Recognize how the proportion of a budget devoted to a product affects its price elasticity of demand.

Identify the relationship between the elasticity of demand and the nature of goods (necessities vs. luxury goods).

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Definitions:

Independence

The state of being self-sufficient and not reliant on external support or being influenced by others in decisions or actions.

Group Cohesiveness

The extent to which members of a group support and validate one another while working to achieve a common goal.

Formal Dress

A style of clothing that adheres to specific cultural or social codes, often worn for ceremonies, formal events, or professional settings.

Pressure

The force applied perpendicular to the surface of an object per unit area over which that force is distributed.