BADM 326 UPDATED ACTUAL EXAM QUESTIONS AND
DEFINITIVE ANSWERS ACTUAL 2026/27
Distribution channel discussion: Handleman and Lieberman
are middlemen who distribute cds/dvds/tapes and make high
margins of 60%. Distributors of other products make much
lower margins however
-the wholesalers in this example make the most
-retailers don't know how well a movie is going to do
-the wholesalers decide which dvds are going on the rack!
They know the market and make higher margins --> the
wholesalers have a lot of power
Distribution channel discussion: Automobile manufacturers
used to sell through new car dealers who made high margins
on new cars. Nowadays, auto dealers are promoting and
advertising used cars and a new channel of national car chains
has emerged. Why?
-every new car is the same regardless of where you buy it
-VERSUS, every used car is different --> less competition
w/other dealers! High margins!
Why do firms offer multiple products?
-diversify offerings
-attract consumers so they don't go to competitors
,Product mix:
Set of all products offered for sale
Product mix width
The number of product lines carried
Product mix length
Variety of sizes, colors, and models offered within each
product line
Multiple product problem considerations
-demand interrelationships (complementary: PS4 machine &
controllers; substitute relationships: brands of detergent)
-cost interrelationships (compete for the same resources,
economies of scale)
-nature of marketing strategy (segmentation issues)
Product line design: Railroad pricing in the 19th century France
example
-they make the rich sound scared of being in third class so
they stay in more expensive area
, -if they didn't have it, the second and third class may
cannibalize eachother!
Damaged goods: Intel example
-they created the SX chip by taking a DX processor and
disabling a component (it was inferior, but still more expensive
bc this extra work)
-they did this bc if the 486SX was fully functioning, no one
would buy the DX!
-create a product line with different quality to avoid
cannibalization
-damaging a superior good can be less expensive than
producing the low quality product directly
Damaged goods: IBM example
-IBM introduced a lower cost printer which was really just the
nicer printer that had chips in it to slow it down
Damaged goods: Sony example
-sony added code to some discs to create less space on it
-created an inferior product!
Price bundling
DEFINITIVE ANSWERS ACTUAL 2026/27
Distribution channel discussion: Handleman and Lieberman
are middlemen who distribute cds/dvds/tapes and make high
margins of 60%. Distributors of other products make much
lower margins however
-the wholesalers in this example make the most
-retailers don't know how well a movie is going to do
-the wholesalers decide which dvds are going on the rack!
They know the market and make higher margins --> the
wholesalers have a lot of power
Distribution channel discussion: Automobile manufacturers
used to sell through new car dealers who made high margins
on new cars. Nowadays, auto dealers are promoting and
advertising used cars and a new channel of national car chains
has emerged. Why?
-every new car is the same regardless of where you buy it
-VERSUS, every used car is different --> less competition
w/other dealers! High margins!
Why do firms offer multiple products?
-diversify offerings
-attract consumers so they don't go to competitors
,Product mix:
Set of all products offered for sale
Product mix width
The number of product lines carried
Product mix length
Variety of sizes, colors, and models offered within each
product line
Multiple product problem considerations
-demand interrelationships (complementary: PS4 machine &
controllers; substitute relationships: brands of detergent)
-cost interrelationships (compete for the same resources,
economies of scale)
-nature of marketing strategy (segmentation issues)
Product line design: Railroad pricing in the 19th century France
example
-they make the rich sound scared of being in third class so
they stay in more expensive area
, -if they didn't have it, the second and third class may
cannibalize eachother!
Damaged goods: Intel example
-they created the SX chip by taking a DX processor and
disabling a component (it was inferior, but still more expensive
bc this extra work)
-they did this bc if the 486SX was fully functioning, no one
would buy the DX!
-create a product line with different quality to avoid
cannibalization
-damaging a superior good can be less expensive than
producing the low quality product directly
Damaged goods: IBM example
-IBM introduced a lower cost printer which was really just the
nicer printer that had chips in it to slow it down
Damaged goods: Sony example
-sony added code to some discs to create less space on it
-created an inferior product!
Price bundling
