Mktg 490 Fall 07 Exam Pool

MARKETING PLANNING FUNDAMENTALS EXAM POOL ITEMS

*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***

Marketing Management, 14Chapter 3: Collecting Information and Forecasting DemandISBN: 9780132102926 Author: Philip Kotler, Kevin Lane Kellercopyright © 2012 Pearson Education

Collecting Information and Forecasting Demand

The severe economic recession that began in 2008 led many firms to cut their prices and use sales to try to

retain customers.

Andy Kropa/Redux Pictures

In This Chapter, We Will Address the Following Questions

1.

What are the components of a modern marketing information system?

2.

What are useful internal records for such a system?

3.

What makes up a marketing intelligence system?

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***4.

What are some influential macroenvironment developments?

5.

How can companies accurately measure and forecast demand?

Making marketing decisions in a fast-changing world is both an art and a science. To provide context, insight, and inspiration for marketing decision making, companies must possess comprehensive, up-to-date information about macro trends, as well as about micro effects particular to their business. Holistic marketers recognize that the marketing environment is constantly presenting new opportunities and threats, and they understand the importance of continuously monitoring, forecasting, and adapting to that environment.

The severe credit crunch and economic slowdown of 2008–2009 brought profound changes in consumer behavior as shoppers cut and reallocated spending. Sales of discretionary purchases like toys, apparel, jewelry, and home furnishings dropped. Sales of luxury brands like Mercedes—driven for years by free-spending baby boomers—declined by a staggering one-third. Meanwhile, brands that offered simple, affordable solutions prospered. General Mills’s revenues from such favorites as Cheerios, Wheaties, Progresso soup, and Hamburger Helper rose. Consumers also changed how and where they shopped, and sales of low-priced private label brands soared. Virtually all marketers were asking themselves whether a new age of prudence and frugality had emerged and, if so, what would be the appropriate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***response.

sidenoteFirms are adjusting the way they do business for more reasons than just the economy. Virtually every industry has been touched by dramatic shifts in the technological, demographic, social-cultural, natural, and political-legal environments. In this chapter, we consider how firms can develop processes to identify and track important macroenvironment trends. We also outline how marketers can develop good sales forecasts. Chapter 4 will review how they conduct more customized research on specific marketing problems.

Components of a Modern Marketing Information SystemThe major responsibility for identifying significant marketplace changes falls to the company’s marketers. Marketers have two advantages for the task: disciplined methods for collecting information, and time spent interacting with customers and observing competitors and other outside groups. Some firms have marketing information systems that provide rich detail about buyer wants, preferences, and behavior.

DuPont

DuPont commissioned marketing studies to uncover personal pillow behavior for its Dacron Polyester unit,

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***which supplies filling to pillow makers and sells its own Comforel brand. One challenge is that people don’t give up their old pillows: 37 percent of one sample described their relationship with their pillow as being like that of “an old married couple,” and an additional 13 percent said their pillow was like a “childhood friend.” Respondents fell into distinct groups in terms of pillow behavior: stackers (23 percent), plumpers (20 percent), rollers or folders (16 percent), cuddlers (16 percent), and smashers, who pound their pillows into a more comfy shape (10 percent). Women were more likely to plump, men to fold. The prevalence of stackers led the company to sell more pillows packaged as pairs, as well as to market different levels of softness or firmness.1

Marketers also have extensive information about how consumption patterns vary across and within countries. On a per capita basis, for example, the Swiss consume the most chocolate, the Czechs the most beer, the Portuguese the most wine, and the Greeks the most cigarettes. Table 3.1 summarizes these and other comparisons across countries. Consider regional differences within the United States: Seattle’s residents buy more toothbrushes per person than in any other U.S. city, people in Salt Lake City eat more candy bars, New Orleans residents use more ketchup, and people in Miami drink more prune juice.2

Table 3.1 A Global Profile of Extremes

Highest fertility rate Niger 6.88 children per womanHighest education expenditure as percent of GDP

Kiribati

Highest number of mobile phone subscribers

China

Largest number of airports United States 14,951 airportsHighest military expenditure as percent Oman 11.40% of GDP

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of GDPLargest refugee population Pakistan 21,075,000 peopleHighest divorce rate Aruba 4.4 divorces per 1,000

Highest color TV ownership per 100 households

United Arab Emirates

Mobile telephone subscribers per capita Lithuania 138.1 subscribers per 100

Highest cinema attendance India 1,473,400,000 cinema visitsBiggest beer drinkers per capita Czech Republic 81.9 litres per capitaBiggest wine drinkers per capita Portugal 33.1 litres per capitaHighest number of smokers per capita Greece 8.2 cigarettes per person

Highest GDP per person LuxembourgLargest aid donors as % of GDP SwedenMost economically dependent on agriculture

Liberia

Highest population in workforce Cayman IslandsHighest percent of women in workforce BelarusMost crowded road networks Qatar 283.6 vehicle per km of

Most deaths in road accidents South Africa 31 killed per 100,000

Most tourist arrivals FranceHighest life expectancy AndorraHighest diabetes rate United Arab

Emirates19.5% of population aged

Source:CIA World Fact Book, https://www.cia.gov/library/publications/the-world-factbook/geos/xx.html, accessed July 24, 2009; The Economist’s Pocket World in Figures, 2009 edition, www.economist.com.

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A well-researched and well-executed marketing campaign for the state of

Michigan increased tourism and state tax revenue.

Courtesy of The Michigan Economic Development Corporation

Companies with superior information can choose their markets better, develop better offerings, and execute better marketing planning. The Michigan Economic Development Corporation (MEDC) studied the demographic information of its visitors and those of competing Midwestern cities to create a new marketing message and tourism campaign. The information helped MEDC attract 3.8 million new trips to Michigan, $805 million in new visitor spending, and $56 million in incremental state tax revenue over the period 2004–

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***2008.3

Every firm must organize and distribute a continuous flow of information to its marketing managers. A marketing information system (MIS) consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. It relies on internal company records, marketing intelligence activities, and marketing research. We’ll discuss the first two components here, and the third one in the next chapter.

The company’s marketing information system should be a mixture of what managers think they need, what they really need, and what is economically feasible. An internal MIS committee can interview a cross-section of marketing managers to discover their information needs.

Table 3.2 displays some useful questions to ask them.

Table 3.2 Information Needs Probes

1.

What decisions do you regularly make?

2.

What information do you need to make these decisions?

3.

What information do you regularly get?

4.

What special studies do you periodically request?

5.

What information would you want that you are not getting now?

6.

What information would you want daily? Weekly? Monthly? Yearly?

7.

What online or offline newsletters, briefings, blogs, reports, or magazines would you like to see on a regular basis?

8.

What topics would you like to be kept informed of?

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9.

What data analysis and reporting programs would you want?

10.

What are the four most helpful improvements that could be made in the present marketing information system?

Internal RecordsTo spot important opportunities and potential problems, marketing managers rely on internal reports of orders, sales, prices, costs, inventory levels, receivables, and payables.

The Order-to-Payment CycleThe heart of the internal records system is the order-to-payment cycle. Sales representatives, dealers, and customers send orders to the firm. The sales department prepares invoices, transmits copies to various departments, and back-orders out-of-stock items. Shipped items generate shipping and billing documents that go to various departments. Because customers favor firms that can promise timely delivery, companies need to perform these steps quickly and accurately. Many use the Internet and extranets to improve the speed, accuracy, and efficiency of the order-to-payment cycle.

Fossil Group

Fossil Group Australia designs and distributes accessories and apparel globally. Its account executives lacked the latest information about pricing and inventory while taking wholesale orders. High demand items were often out of stock, creating problem for retailers. After

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***the firm deployed a mobile sales solution that connected account executives with current inventory data, the number of sales tied up in back orders fell 80 percent. The company can now provide retailers with actual inventory levels and ship orders in hours instead of days.4

Sales Information SystemsMarketing managers need timely and accurate reports on current sales. Walmart operates a sales and inventory data warehouse that captures data on every item for every customer, every store, every day and refreshes it every hour. Consider the experience of Panasonic.

Panasonic

Panasonic makes digital cameras, plasma televisions, and other consumer electronics. After missing revenue goals, the company decided to adopt a vendor-managed inventory solution. Inventory distribution then came in line with consumption, and availability of products to customers jumped from 70 percent to 95 percent. The average weeks that product supply sat in Panasonic’s channels went from 25 weeks to just 5 weeks within a year, and unit sales of the targeted plasma television rose from 20,000 to approximately 100,000. Best Buy, the initial retailer covered by the vendor-managed inventory model, has since elevated Panasonic from a Tier 3 Supplier to a Tier 1 “Go-To” Brand for plasma televisions.5

Panasonic’s new vendor-managed inventory system met with

marketplace success, including from retailers.

Bloomberg/Getty Images, Inc.

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Companies that make good use of “cookies,” records

of Web site usage stored on personal browsers, are smart users of targeted marketing. Many consumers are happy to cooperate: A recent survey showed that 49 percent of individuals agreed cookies are important to them when using the Internet. Not only do they not delete cookies, but they also expect customized marketing appeals and deals once they accept them.

Companies must carefully interpret the sales data, however, so as not to draw the wrong conclusions. Michael Dell gave this illustration: “If you have three yellow Mustangs sitting on a dealer’s lot and a customer wants a red one, the salesman may be really good at figuring out how to sell the yellow Mustang. So the yellow Mustang gets sold, and a signal gets sent back to the factory that, hey, people want yellow Mustangs.”6

Databases, Data Warehousing, and Data MiningCompanies organize their information into customer, product, and salesperson databases—and then combine their data. The customer database will contain every customer’s name, address, past transactions, and sometimes even demographics and psychographics (activities, interests, and opinions). Instead of sending a mass “carpet bombing” mailing of a new offer to every customer in its database, a company will rank its customers according to factors such as purchase recency, frequency, and monetary value (RFM) and send the offer to only the highest-scoring customers. Besides saving on mailing expenses, such manipulation of data can often achieve a double-digit response rate.

Companies make these data easily accessible to their decision makers. Analysts can “mine” the data and garner fresh insights into neglected customer segments, recent customer trends, and other useful information.

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Managers can cross-tabulate customer information with product and salesperson information to yield still-deeper insights. Using in-house technology, Wells Fargo can track and analyze every bank transaction made by its 10 million retail customers—whether at ATMs, at bank branches, or online. When it combines transaction data with personal information provided by customers, Wells Fargo can come up with targeted offerings to coincide with a customer’s life-changing event. As a result, compared with the industry average of 2.2 products per customer, Wells Fargo sells 4 products.7 Best Buy is also taking advantage of these new rich databases.

Best Buy

Best Buy has assembled a 15-plus terabyte database with seven years of data on 75 million households. It captures information about every interaction—from phone calls and mouse clicks to delivery and rebate-check addresses—and then deploys sophisticated algorithms to classify over three-quarters of its customers, or more than 100 million individuals, into profiled categories such as “Buzz” (the young technology buff), “Jill” (the suburban soccer mom), “Barry” (the wealthy professional guy), and “Ray” (the family man). The firm also applies a customer lifetime value model that measures transaction-level profitability and factors in customer behaviors that increase or decrease the value of the relationship. Knowing so much about consumers allows Best Buy to employ precision marketing and customer-triggered incentive programs with positive response rates.8

Best Buy uses a massive database to develop profiles with which to classify

its customers.

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Bloomberg/Getty Images, Inc.

Marketing IntelligenceThe Marketing Intelligence SystemA marketing intelligence system is a set of procedures and sources that managers use to obtain everyday information about developments in the marketing environment. The internal records system supplies results data, but the marketing intelligence system supplies happenings data. Marketing managers collect marketing intelligence in a variety of different ways, such as by reading books, newspapers, and trade publications; talking to customers, suppliers, and distributors; monitoring social media on the Internet; and meeting with other company managers.

Before the Internet, sometimes you just had to go out in the field, literally, and watch the competition. This is what oil and gas entrepreneur T. Boone Pickens did. Describing how he learned about a rival’s drilling activity, Pickens recalls, “We would have someone who would watch [the rival’s] drilling floor from a half mile away with field glasses. Our competitor didn’t like it but there wasn’t anything they could do about it. Our spotters would watch the joints and drill pipe. They would count them; each [drill] joint was 30 feet long. By adding up all the joints, you would be able to tally the depth of the well.” Pickens knew that the deeper the well, the more costly it would be for his rival to get the oil or gas up to the surface, and this information provided him with an immediate competitive advantage.9

Marketing intelligence gathering must be legal and ethical. In 2006, the private intelligence firm Diligence paid auditor KPMG $1.7 million for having illegally infiltrated it to acquire an audit of a Bermuda-based

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***investment firm for a Russian conglomerate. Diligence’s cofounder posed as a British intelligence officer and convinced a member of the audit team to share confidential documents.10

A company can take eight possible actions to improve the quantity and quality of its marketing intelligence. After describing the first seven, we devote special attention to the eighth, collecting marketing intelligence on the Internet.

• Train and motivate the sales force to spot and report new developments.The company must “sell” its sales force on their importance as intelligence gatherers. Grace Performance Chemicals, a division of W. R. Grace, supplies materials and chemicals to the construction and packaging industries. Its sales reps were instructed to observe the innovative ways customers used its products in order to suggest possible new products. Some were using Grace waterproofing materials to soundproof their cars and patch boots and tents. Seven new-product ideas emerged, worth millions in sales.11

• Motivate distributors, retailers, and other intermediaries to pass along important intelligence.Marketing intermediaries are often closer to the customer and competition and can offer helpful insights. ConAgra has initiated a study with some of its retailers such as Safeway, Kroger, and Walmart to study how and why people buy its foods. Finding that shoppers who bought their Orville Redenbacher and Act II brands of popcorn tended to also buy Coke, ConAgra worked with the retailers to develop in-store displays for both products. Combining retailers’ data with its own qualitative insights, ConAgra learned that many

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***mothers switched to time-saving meals and snacks when school started. It launched its “Seasons of Mom” campaign to help grocers adjust to seasonal shifts in household needs.12

• Hire external experts to collect intelligence.Many companies hire specialists to gather marketing intelligence.13 Service providers and retailers send mystery shoppers to their stores to assess cleanliness of facilities, product quality, and the way employees treat customers. Health care facilities’ use of mystery patients has led to improved estimates of wait times, better explanations of medical procedures, and less-stressful programming on the waiting room TV.14

• Network internally and externally.The firm can purchase competitors’ products, attend open houses and trade shows, read competitors’ published reports, attend stockholders’ meetings, talk to employees, collect competitors’ ads, consult with suppliers, and look up news stories about competitors.

• Set up a customer advisory panel.Members of advisory panels might include the company’s largest, most outspoken, most sophisticated, or most representative customers. For example, GlaxoSmithKline sponsors an online community devoted to weight loss and says it is learning far more than it could have gleamed from focus groups on topics from packaging its weight-loss pill to where to place in-store marketing.15

• Take advantage of government-related data resources.The U.S. Census Bureau provides an in-depth look at the population swings, demographic groups, regional migrations, and changing family structure of the estimated 304,059,724 people in the United States (as of July 1, 2008). Census

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***marketer Nielsen Claritas cross-references census figures with consumer surveys and its own grassroots research for clients such as The Weather Channel, BMW, and Sovereign Bank. Partnering with “list houses” that provide customer phone and address information, Nielsen Claritas can help firms select and purchase mailing lists with specific clusters.16

• Purchase information from outside research firms and vendors.Well-known data suppliers include firms such as the A.C. Nielsen Company and Information Resources Inc. They collect information about product sales in a variety of categories and consumer exposure to various media. They also gather consumer-panel data much more cheaply than marketers manage on their own. Biz360 and its online content partners, for example, provide real-time coverage and analysis of news media and consumer opinion information from over 70,000 traditional and social media sources (print, broadcast, Web sites, blogs, and message boards).17

Collecting Marketing Intelligence on the InternetThanks to the explosion of outlets available on the Internet, online customer review boards, discussion forums, chat rooms, and blogs can distribute one customer’s experiences or evaluation to other potential buyers and, of course, to marketers seeking information about the consumers and the competition. There are five main ways marketers can research competitors’ product strengths and weaknesses online.18

• Independent customer goods and service review forums.Independent forums include Web sites such as Epinions.com, RateItAll.com, ConsumerReview.com, and Bizrate.com.

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Bizrate.com collects millions of consumer reviews of stores and products each year from two sources: its 1.3 million volunteer members, and feedback from stores that allow Bizrate.com to collect it directly from their customers as they make purchases.

• Distributor or sales agent feedback sites.Feedback sites offer positive and negative product or service reviews, but the stores or distributors have built the sites themselves. Amazon.com offers an interactive feedback opportunity through which buyers, readers, editors, and others can review all products on the site, especially books. Elance.com is an online professional services provider that allows contractors to describe their experience and level of satisfaction with subcontractors.

• Combo sites offering customer reviews and expert opinions.Combination sites are concentrated in financial services and high-tech products that require professional knowledge. ZDNet.com, an online advisor on technology products, offers customer comments and evaluations based on ease of use, features, and stability, along with expert reviews. The advantage is that a product supplier can compare experts’ opinions with those of consumers.

• Customer complaint sites.Customer complaint forums are designed mainly for dissatisfied customers. PlanetFeedback.com allows customers to voice unfavorable experiences with specific companies. Another site, Complaints.com, lets customers vent their frustrations with particular firms or offerings.

• Public blogs.Tens of millions of blogs and social networks exist online, offering personal opinions, reviews, ratings, and recommendations on virtually

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***any topic—and their numbers continue to grow. Firms such as Nielsen’s BuzzMetrics and Scout Labs analyze blogs and social networks to provide insights into consumer sentiment.

Communicating and Acting on Marketing IntelligenceIn some companies, the staff scans the Internet and major publications, abstracts relevant news, and disseminates a news bulletin to marketing managers. The competitive intelligence function works best when it is closely coordinated with the decision-making process.19

Ticket broker StubHub monitors online activity so that when confusion

arose over a rainout at a New York Yankees game, for instance, it was

able to respond quickly.

Getty Images, Inc.

Given the speed of the Internet, it is important to act quickly on information gleaned online. Here are two companies that benefited from a proactive approach to online information:20

• When ticket broker StubHub detected a sudden surge of negative sentiment about its brand after confusion arose about refunds for a rain-delayed Yankees–Red Sox game, it jumped in to offer appropriate discounts and credits. The director of customer service observed, “This [episode] is a canary in a coal mine for us.”

• When Coke’s monitoring software spotted a Twitter post that went to 10,000 followers from an upset consumer who couldn’t redeem a prize from a MyCoke rewards program, Coke quickly posted an apology on his Twitter profile and offered to help resolve the situation. After the consumer got the

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***prize, he changed his Twitter avatar to a photo of himself holding a Coke bottle.

Analyzing the MacroenvironmentSuccessful companies recognize and respond profitably to unmet needs and trends.

Needs and TrendsEnterprising individuals and companies manage to create new solutions to unmet needs. Dockers was created to meet the needs of baby boomers who could no longer fit into their jeans and wanted a physically and psychologically comfortable pair of pants. Let’s distinguish among fads, trends, and megatrends.

• A fad is “unpredictable, short-lived, and without social, economic, and political significance.” A company can cash in on a fad such as Crocs clogs, Elmo TMX dolls, and Pokémon gifts and toys, but getting it right requires luck and good timing.21

• A direction or sequence of events with momentum and durability, a trend is more predictable and durable than a fad; trends reveal the shape of the future and can provide strategic direction. A trend toward health and nutrition awareness has brought increased government regulation and negative publicity for firms seen as peddling unhealthy food. Macaroni Grill revamped its menu to include more low-calorie and low-fat offerings after a wave of bad press: The Today Show called its chicken and artichoke sandwich “the calorie equivalent of 16 Fudgesicles,” and in its annual list of unhealthy restaurant dishes, Men’s Health declared its 1,630 calorie dessert ravioli the “worst dessert in America.”22

• A megatrend is a “large social, economic, political, and technological change [that] is slow to form, and

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***once in place, influences us for some time—between seven and ten years, or longer.”23

• To help marketers spot cultural shifts that might bring new opportunities or threats, several firms offer social-cultural forecasts. The Yankelovich Monitor interviews 2,500 people nationally each year and has tracked 35 social value and lifestyle trends since 1971, such as “anti-bigness,” “mysticism,” “living for today,” “away from possessions,” and “sensuousness.” A new market opportunity doesn’t guarantee success, of course, even if the new product is technically feasible. Market research is necessary to determine an opportunity’s profit potential.

Identifying the Major ForcesThe end of the first decade of the new century brought a series of new challenges: the steep decline of the stock market, which affected savings, investment, and retirement funds; increasing unemployment; corporate scandals; stronger indications of global warming and other signs of deterioration in the national environment; and of course, the rise of terrorism. These dramatic events were accompanied by the continuation of many existing trends that have already profoundly influenced the global landscape.24

Firms must monitor six major forces in the broad environment: demographic, economic, social-cultural, natural, technological, and political-legal. We’ll describe them separately, but remember that their interactions will lead to new opportunities and threats. For example, explosive population growth (demographic) leads to more resource depletion and pollution (natural), which leads consumers to call for more laws (political-legal), which stimulate new technological solutions and products (technological) that, if they are affordable

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***(economic), may actually change attitudes and behavior (social-cultural).

The Demographic EnvironmentDemographic developments often move at a fairly predictable pace. The main one marketers monitor is population, including the size and growth rate of population in cities, regions, and nations; age distribution and ethnic mix; educational levels; household patterns; and regional characteristics and movements.

Worldwide Population GrowthWorld population growth is explosive: Earth’s population totaled 6.8 billion in 2010 and will exceed 9 billion by 2040.25 Table 3.3 offers an interesting perspective.26

Table 3.3 The World as a Village

If the world were a village of 100 people:• 61 villagers would be Asian (of that, 20 would be Chinese and 17 would be Indian), 14 would

be African, 11 would be European, 8 would be Latin or South American, 5 would be North American, and only one of the villagers would be from Australia, Oceania, or Antarctica.

• At least 18 villagers would be unable to read or write but 33 would have cellular phones and 16 would be online on the Internet.

• 18 villagers would be under 10 years of age and 11 would be over 60 years old. There would be an equal number of males and females.

• There would be 18 cars in the village.• 63 villagers would have inadequate sanitation.• 32 villagers would be Christians, 20 would be Muslims, 14 would be Hindus, 6 would be

Buddhists, 16 would be non-religious, and the remaining 12 would be members of other religions.

• 30 villagers would be unemployed or underemployed, while of those 70 who would work, 28 would work in agriculture (primary sector), 14 would work in industry (secondary sector), and the remaining 28 would work in the service sector (tertiary sector).

• 53 villagers would live on less than two U.S. dollars a day. One villager would have AIDS, 26 villagers would smoke, and 14 villagers would be obese.

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• By the end of a year, one villager would die and two new villagers would be born so the population would climb to 101.Source: David J. Smith and Shelagh Armstrong, If the

World Were a Village: A Book About the World’s People, 2nd ed. (Tonawanda, NY: Kids Can Press, 2002).

Population growth is highest in countries and communities that can least afford it. Developing regions of the world currently account for 84 percent of the world population and are growing at 1 percent to 2 percent per year; the population in developed countries is growing at only 0.3 percent.27 In developing countries, modern medicine is lowering the death rate, but the birthrate remains fairly stable.

A growing population does not mean growing markets unless there is sufficient purchasing power. Care and education of children can raise the standard of living but are nearly impossible to accomplish in most developing countries. Nonetheless, companies that carefully analyze these markets can find major opportunities. Sometimes the lessons from developing markets are helping businesses in developed markets. See “Marketing Insight: Finding Gold at the Bottom of the Pyramid.”

Population Age MixMexico has a very young population and rapid population growth. At the other extreme is Italy, with one of the world’s oldest populations. Milk, diapers, school supplies, and toys will be more important products in Mexico than in Italy.

There is a global trend toward an aging population. In 1950, there were only 131 million people 65 and older; in 1995, their number had almost tripled to 371 million. By 2050, one of ten people worldwide will be 65 or older. In the United States, boomers—those born between 1946 and 1964—represent a market of some 36 million,

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***about 12 percent of the population. By 2011, the 65-and-over population will be growing faster than the population as a whole in each of the 50 states.28

Marketers generally divide the population into six age groups: preschool children, school-age children, teens, young adults age 20 to 40, middle-aged adults 40 to 65, and older adults 65 and older. Some marketers focus on cohorts, groups of individuals born during the same time period who travel through life together. The defining moments they experience as they come of age and become adults (roughly ages 17 through 24) can stay with them for a lifetime and influence their values, preferences, and buying behaviors.

Marketing Insight: Finding Gold at the Bottom of the Pyramid

Business writer C.K. Prahalad believes much innovation can come from developments in emerging markets such as China and India. He estimates there are 5 billion unserved and underserved people at the so-called “bottom of the pyramid.” One study showed that 4 billion people live on $2 or less a day. Firms operating in those markets have had to learn how to do more with less.

In Bangalore, India, Narayana Hrudayalaya Hospital charges a flat fee of $1,500 for heart bypass surgery that costs 50 times as much in the United States. The hospital has low labor and operating expenses and an assembly-line view of care that has specialists focus on their own area. The approach works—the hospital’s mortality rates are half those of U.S. hospitals. Narayana also operates on hundreds of infants for free and profitably insures 2.5 million poor Indians against serious illness for 11 cents a month.

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Overseas firms are also finding creative solutions in developing countries. In Brazil, India, Eastern Europe, and other markets, Microsoft launched its pay-as-you-go FlexGo program, which allows users to prepay to use a fully loaded PC only for as long as wanted or needed without having to pay the full price the PC would normally command. When the payment runs out, the PC stops operating and the user prepays again to restart it.

Other firms find “reverse innovation” advantages by developing products in countries like China and India and then distributing them globally. After GE successfully introduced a $1,000 handheld electrocardiogram device for rural India and a portable, PC-based ultrasound machine for rural China, it began to sell them in the United States. Nestlé repositioned its low-fat Maggi brand dried noodles—a popular, low-priced meal for rural Pakistan and India—as a budget-friendly health food in Australia and New Zealand.

Photographer: Morad Bouchakour. Courtesy of General Electric Company

Sources: C.K. Prahalad, The Fortune at the Bottom of the Pyramid (Upper Saddle River, NJ: Wharton School Publishing, 2010); Bill Breen, “C.K. Prahalad: Pyramid Schemer,” Fast Company, March 2007, p. 79; Pete Engardio, “Business Prophet: How C.K. Prahalad Is Changing the Way CEOs Think,” BusinessWeek, January 23, 2006, pp. 68–73; Reena Jane, “Inspiration from Emerging Economies,” BusinessWeek, March 23 and 30, 2009, pp. 38–41; Jeffrey R. Immelt, Vijay Govindarajan, and Chris Trimble, “How GE Is Disrupting Itself,” Harvard Business Review, October 2009, pp. 56–65; Peter J. Williamson and Ming Zeng, “Value-for-Money Strategies for Recessionary Times,” Harvard Business Review, March 2009, pp. 66–74.

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Ethnic and Other MarketsEthnic and racial diversity varies across countries. At one extreme is Japan, where almost everyone is Japanese; at the other is the United States, where nearly 25 million people—more than 9 percent of the population—were born in another country. As of the 2000 census, the U.S. population was 72 percent White, 13 percent African American, and 11 percent Hispanic. The Hispanic population has been growing fast and is expected to make up 18.9 percent of the population by 2020; its largest subgroups are of Mexican (5.4 percent), Puerto Rican (1.1 percent), and Cuban (0.4 percent) descent. Asian Americans constituted 3.8 percent of the U.S. population; Chinese are the largest group, followed by Filipinos, Japanese, Asian Indians, and Koreans, in that order.

The growth of the Hispanic population represents a major shift in the nation’s center of gravity. Hispanics made up half of all new workers in the past decade and will account for 25 percent of workers in two generations. Despite lagging family incomes, their disposable income has grown twice as fast as the rest of the population and could reach $1.2 trillion by 2012. From the food U.S. consumers eat, to the clothing, music, and cars they buy, Hispanics are having a huge impact.

Companies are scrambling to refine their products and marketing to reach this fastest-growing and most influential consumer group:29 Research by Hispanic media giant Univision suggests 70 percent of Spanish-language viewers are more likely to buy a product when it’s advertised in Spanish. Fisher-Price, recognizing that many Hispanic mothers did not grow up with its brand, shifted away from appeals to their heritage. Instead, its ads emphasize the joy of mother and child playing

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***together with Fisher-Price toys.30

Several food, clothing, and furniture companies have directed products and promotions to one or more ethnic groups.31 Yet marketers must not overgeneralize. Within each ethnic group are consumers quite different from each other.32 For instance, a 2005 Yankelovich Monitor Multicultural Marketing study separated the African American market into six sociobehavioral segments: Emulators, Seekers, Reachers, Attainers, Elites, and Conservers. The largest and perhaps most influential are the Reachers (24 percent) and Attainers (27 percent), with very different needs. Reachers, around 40, are slowly working toward the American dream. Often single parents caring for elderly relatives, they have a median income of $28,000 and seek the greatest value for their money. Attainers have a more defined sense of self and solid plans for the future. Their median income is $55,000, and they want ideas and information to improve their quality of life.33

Diversity goes beyond ethnic and racial markets. More than 51 million U.S. consumers have disabilities, and they constitute a market for home delivery companies, such as Peapod, and for various drugstore chains.

Educational GroupsThe population in any society falls into five educational groups: illiterates, high school dropouts, high school diplomas, college degrees, and professional degrees. Over two-thirds of the world’s 785 million illiterate adults are found in only eight countries (India, China, Bangladesh, Pakistan, Nigeria, Ethiopia, Indonesia, and Egypt); of all illiterate adults in the world, two-thirds are women.34 The United States has one of the world’s highest percentages of college-educated citizens: 54 percent of those 25 years or older have had “some

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***college or more,” 28 percent have bachelor’s degrees, and 10 percent have advanced degrees. The large number of educated people in the United States drives strong demand for high-quality books, magazines, and travel, and creates a high supply of skills.

Household PatternsThe traditional household consists of a husband, wife, and children (and sometimes grandparents). Yet by 2010, only one in five U.S. households will consist of a married couple with children under 18. Other households are single live-alones (27 percent), single-parent families (8 percent), childless married couples and empty nesters (32 percent), living with nonrelatives only (5 percent), and other family structures (8 percent).35

More people are divorcing or separating, choosing not to marry, marrying later, or marrying without intending to have children. Each group has distinctive needs and buying habits. The single, separated, widowed, and divorced may need smaller apartments; inexpensive and smaller appliances, furniture, and furnishings; and smaller-size food packages.36

Nontraditional households are growing more rapidly than traditional households. Academics and marketing experts estimate that the gay and lesbian population ranges between 4 percent and 8 percent of the total U.S. population, higher in urban areas.37 Even so-called traditional households have experienced change. Boomer dads marry later than their fathers or grandfathers did, shop more, and are much more active in raising their kids. To appeal to them, the maker of the high-concept Bugaboo stroller designed a model with a sleek look and dirt bike–style tires. Dyson, the high-end vacuum company, is appealing to dads’ inner geek by focusing on the machine’s revolutionary technology.

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Before Dyson entered the U.S. market, men weren’t even on the radar for vacuum cleaner sales. Now they make up 40 percent of Dyson’s customers.38

The Economic EnvironmentThe available purchasing power in an economy depends on current income, prices, savings, debt, and credit availability. As the recent economic downturn vividly demonstrated, trends affecting purchasing power can have a strong impact on business, especially for companies whose products are geared to high-income and price-sensitive consumers.

Consumer PsychologyDid new consumer spending patterns during the 2008–2009 recession reflect short-term, temporary adjustments or long-term, permanent changes?39 Some experts believed the recession had fundamentally shaken consumers’ faith in the economy and their personal financial situations. “Mindless” spending would be out; willingness to comparison shop, haggle, and use discounts would become the norm. Others maintained tighter spending reflected a mere economic constraint and not a fundamental behavioral change. Thus, consumers’ aspirations would stay the same, and spending would resume when the economy improves.

Identifying the more likely long-term scenario—especially with the coveted 18- to 34-year-old age group—would help to direct how marketers spend their money. After six months of research and development in the baby boomer market, Starwood launched a “style at a steal” initiative to offer affordable but stylish hotel alternatives to its high-end W, Sheraton, and Westin chains. Targeting an audience seeking both thrift and luxury, it introduced two new low-cost chains: Aloft, designed to reflect the urban cool of loft apartments,

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***and Element, suites with every “element” of modern daily lives, including healthy food choices and spa-like bathrooms.40

Starwood’s Aloft hotel chain blends urban chic with affordable prices.

Starwood Hotels & Resorts

Income DistributionThere are four types of industrial structures: subsistence economies like Papua New Guinea, with few opportunities for marketers; raw-material-exporting economies like Democratic Republic of Congo (copper) and Saudi Arabia (oil), with good markets for equipment, tools, supplies, and luxury goods for the rich; industrializing economies like India, Egypt, and the Philippines, where a new rich class and a growing middle class demand new types of goods; and industrial economies like Western Europe, with rich markets for all sorts of goods.

Marketers often distinguish countries using five income-distribution patterns: (1) very low incomes; (2) mostly low incomes; (3) very low, very high incomes; (4) low, medium, high incomes; and (5) mostly medium incomes. Consider the market for the Lamborghini, an automobile costing more than $150,000. The market would be very small in countries with type 1 or 2 income patterns. One of the largest single markets for Lamborghinis is Portugal (income pattern 3)—one of the poorer countries in Western Europe, but with enough wealthy families to afford expensive cars.

Income, Savings, Debt, and CreditConsumer expenditures are affected by income levels, savings rates, debt practices, and credit availability. U.S. consumers have a high debt-to-income ratio, which

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***slows expenditures on housing and large-ticket items. When credit became scarcer in the recession, especially to lower-income borrowers, consumer borrowing dropped for the first time in two decades. The financial meltdown that led to this contraction was due to overly liberal credit policies that allowed consumers to buy homes and other items they could really not afford. Marketers wanted every possible sale, banks wanted to earn interest on loans, and near financial ruin resulted.

An economic issue of increasing importance is the migration of manufacturers and service jobs offshore. From India, Infosys provides outsourcing services for Cisco, Nordstrom, Microsoft, and others. The 25,000 employees the fast-growing $4 billion company hires every year receive technical, team, and communication training in Infosys’s $120 million facility outside Bangalore.41

The Sociocultural EnvironmentFrom our sociocultural environment we absorb, almost unconsciously, a world view that defines our relationships to ourselves, others, organizations, society, nature, and the universe.

• Views of ourselves.In the United States during the 1960s and 1970s, “pleasure seekers” sought fun, change, and escape. Others sought “self-realization.” Today, some are adopting more conservative behaviors and ambitions (see Table 3.4 for favorite consumer leisure-time activities and how they have changed, or not, in recent years).Table 3.4 Favorite Leisure-Time Activities

• • 1 • 2

• Reading • % • %

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• 2 • 3

• TV watching • 2 • 2

• Spending time with family/kids

• 1 • 2

• Going to movies • 8 • 8• Fishing • 1 • 7

• Computer activities • 2 • 7• Gardening • 9 • 5• Renting movies • 5 • 5• Walking • 8 • 6• Exercise (aerobics,

weights)• 2 • 8

• Source: Harris Interactive, “Spontaneous, Unaided Responses to: ‘What Are Your Two or Three Most Favorite Leisure-Time Activities?’” http://www.harrisinteractive.com/harris_poll/index.asp?PID=980. Base: All Adults.

• Views of others.People are concerned about the homeless, crime and victims, and other social problems. At the same time, they seek those like themselves for long-lasting relationships, suggesting a growing market for social-support products and services such as health clubs, cruises, and religious activity as well as “social surrogates” like television, video games, and social networking sites.

• Views of organizations.After a wave of layoffs and corporate scandals, organizational loyalty has declined.42 Companies need new ways to win back consumer and employee confidence. They need to ensure they are good corporate citizens and that

30

http://www.harrisinteractive.com/harris_poll/index.asp?PID=980

http://www.harrisinteractive.com/harris_poll/index.asp?PID=980


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***their consumer messages are honest.43

• Views of society.Some people defend society (preservers), some run it (makers), some take what they can from it (takers), some want to change it (changers), some are looking for something deeper (seekers), and still others want to leave it (escapers).44 Consumption patterns often reflect these social attitudes. Makers are high achievers who eat, dress, and live well. Changers usually live more frugally, drive smaller cars, and wear simpler clothes. Escapers and seekers are a major market for movies, music, surfing, and camping.

• Views of nature.Business has responded to increased awareness of nature’s fragility and finiteness by producing wider varieties of camping, hiking, boating, and fishing gear such as boots, tents, backpacks, and accessories.

• Views of the universe.Most U.S. citizens are monotheistic, although religious conviction and practice have waned through the years or been redirected into an interest in evangelical movements or Eastern religions, mysticism, the occult, and the human potential movement.

Other cultural characteristics of interest to marketers are the high persistence of core cultural values and the existence of subcultures. Let’s look at both.

High Persistence of Core Cultural ValuesMost people in the United States still believe in working, getting married, giving to charity, and being honest. Core beliefs and values are passed from parents to children and reinforced by social institutions—schools, churches, businesses, and governments. Secondary beliefs and values are more open to change. Believing in

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***the institution of marriage is a core belief; believing people should marry early is a secondary belief.

Marketers have some chance of changing secondary values, but little chance of changing core values. The nonprofit organization Mothers Against Drunk Drivers (MADD) does not try to stop the sale of alcohol but promotes lower legal blood-alcohol levels for driving and limited operating hours for businesses that sell alcohol.

Although core values are fairly persistent, cultural swings do take place. In the 1960s, hippies, the Beatles, Elvis Presley, and other cultural phenomena had a major impact on hairstyles, clothing, sexual norms, and life goals. Today’s young people are influenced by new heroes and activities: the alternative rock band Green Day, the NBA’s LeBron James, and snowboarder and skateboarder Shaun White.

Ben Baker/Redux Pictures

Young people may be influenced by a diverse range of heroes, from

basketball player LeBron James to punk-rock band Green Day.

Peter DaSilva/The New York Times/Redux Pictures

Existence of SubculturesEach society contains subcultures, groups with shared values, beliefs, preferences, and behaviors emerging from their special life experiences or circumstances. Marketers have always loved teenagers because they are trendsetters in fashion, music, entertainment, ideas, and attitudes. Attract someone as a teen, and you will likely keep the person as a customer later in life. Frito-Lay, which draws 15 percent of its sales from teens,

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***noted a rise in chip snacking by grownups. “We think it’s because we brought them in as teenagers,” said Frito-Lay’s marketing director.45

The Natural EnvironmentIn Western Europe, “green” parties have pressed for public action to reduce industrial pollution. In the United States, experts have documented ecological deterioration, and watchdog groups such as the Sierra Club and Friends of the Earth carry these concerns into political and social action.

Environmental regulations hit certain industries hard. Steel companies and public utilities have invested billions of dollars in pollution-control equipment and environmentally friendly fuels, making hybrid cars, low-flow toilets and showers, organic foods, and green office buildings everyday realities. Opportunities await those who can reconcile prosperity with environmental protection. Consider these solutions to concerns about air quality:46

• Nearly a quarter of the carbon dioxide that makes up about 80 percent of all greenhouse gases comes from electrical power plants. Dublin-based Airtricity operates wind farms in the United States and the United Kingdom that offer cheaper and greener electricity.

• Transportation is second only to electricity generation as a contributor to global warming, accounting for roughly a fifth of carbon emissions. Vancouver-based Westport Innovations developed a conversion technology—high-pressure direct injection—that allows diesel engines to run on cleaner-burning liquid natural gas, reducing greenhouse emissions by a fourth.Actor and environmental activist Ed Begley Jr. examines a solar oven.Reed Saxon/AP Wide World Photos

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***• Due to millions of rural cooking fires, parts of Southern

Asia suffer extremely poor air quality. A person cooking over an open wood or kerosene fire inhales the equivalent of two packs of cigarettes a day. Illinois-based Sun Ovens International makes family-sized and institutional solar ovens that use mirrors to redirect the sun’s rays into an insulated box. Used in 130 countries, the oven both saves money and reduces greenhouse gas emissions.

Corporate environmentalism recognizes the need to integrate environmental issues into the firm’s strategic plans. Trends in the natural environment for marketers to be aware of include the shortage of raw materials, especially water; the increased cost of energy; increased pollution levels; and the changing role of governments. (See also “Marketing Insight: The Green Marketing Revolution.”)47

• The earth’s raw materials consist of the infinite, the finite renewable, and the finite nonrenewable. Firms whose products require finite nonrenewable resources—oil, coal, platinum, zinc, silver—face substantial cost increases as depletion approaches. Firms that can develop substitute materials have an excellent opportunity.

• One finite nonrenewable resource, oil, has created serious problems for the world economy. As oil prices soar, companies search for practical means to harness solar, nuclear, wind, and other alternative energies.

• Some industrial activity will inevitably damage the natural environment, creating a large market for pollution-control solutions such as scrubbers, recycling centers, and landfill systems as well as for alternative ways to produce and package goods.

• Many poor nations are doing little about pollution, lacking the funds or the political will. It is in the

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***richer nations’ interest to help them control their pollution, but even richer nations today lack the necessary funds.

The Technological EnvironmentIt is the essence of market capitalism to be dynamic and tolerate the creative destructiveness of technology as the price of progress. Transistors hurt the vacuum-tube industry, and autos hurt the railroads. Television hurt the newspapers, and the Internet hurt them both.

When old industries fight or ignore new technologies, their businesses decline. Tower Records had ample warning that its music retail business would be hurt by Internet downloads of music (as well as the growing number of discount music retailers). Its failure to respond led to the liquidation of all its domestic physical stores in 2006.

Marketing Insight: The Green Marketing Revolution

Consumers’ environmental concerns are real. Gallup polls reveal the percentage of U.S. adults who believe global warming will pose a serious threat during their lifetime has increased from 25 percent in 1998 to 40 percent in 2008. A Mediamark Research & Intelligence study in 2008 found that almost two-thirds of U.S. men and women stated that “preserving the environment as a guiding principle in your life” was “very important.” A Washington Post/ABC News/Stanford University poll in 2007 found that 94 percent of respondents were “willing” to “personally change some of the things you do in order to improve the environment,” with 50 percent saying they were “very willing.”

Converting this concern into concerted consumer action on the environment, however, will be a longer-term

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***process. A 2008 TNS survey found that only 26 percent of Americans said they were “actively seeking environmentally friendly products.” A 2008 Gallup poll found that only 28 percent of respondents claimed to have made “major changes” in their own shopping and living habits over the past five years to protect the environment. Other research reported that consumers were more concerned with closer to home environmental issues such as water pollution in rivers and lakes than broader issues such as global warming. As is often the case, behavioral change is following attitudinal change for consumers.

Nevertheless, as research by GfK Roper Consulting shows, consumer expectations as to corporate behavior with the environment have significantly changed, and in many cases these expectations are higher than the demands they place on themselves. Consumers vary, however, in their environmental sensitivity and can be categorized into five groups based on their degree of commitment (see Figure 3.1). Interestingly, although some marketers assume that younger people are more concerned about the environment than older consumers, some research suggests that older consumers actually take their eco-responsibilities more seriously.

Figure 3.1 Consumer Environmental Segments

• Genuine Greens (15%):This segment is the most likely to think and act green. Some may be true environmental activists, but most probably fall more under the category of strong advocates. This group sees few barriers to behaving green and may be open to partnering with marketers on environmental initiatives.

• Not Me Greens (18%):This segment expresses very pro-green attitudes, but its behaviors are only moderate, perhaps because these people perceive lots of barriers to living green. There may be a sense among this group that the issue is too big for them to handle, and they may need encouragement to take action.

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***• Go-with-the-Flow Greens (17%):This group engages in some green behaviors—

mostly the “easy” ones such as recycling. But being green is not a priority for them, and they seem to take the path of least resistance. This group may only take action when it’s convenient for them.

• Dream Greens (13%):This segment cares a great deal about the environment, but doesn’t seem to have the knowledge or resources to take action. This group may offer the greatest opportunity to act green if given the chance.

• Business First Greens (23%):This segment’s perspective is that the environment is not a huge concern and that business and industry is doing its part to help. This may explain why they don’t feel the need to take action themselves—even as they cite lots of barriers to doing so.

• Mean Greens (13%):This group claims to be knowledgeable about environmental issues, but does not express pro-green attitudes or behaviors. Indeed, it is practically hostile toward pro-environmental ideas. This segment has chosen to reject prevailing notions about environmental protection and may even be viewed as a potential threat to green initiatives.

Source: GfK Roper Green Gauge® 2007, GfK Roper Consulting, New York, NY.

In the past, the “green marketing” programs launched by companies around specific products were not always entirely successful for several possible reasons. Consumers might have thought that the product was inferior because it was green, or that it was not even really green to begin with. Those green products that were successful, however, persuaded consumers that they were acting in their own and society’s long-run interest at the same time. Some examples were organic foods that were seen as healthier, tastier, and safer, and energy-efficient appliances that were seen as costing less to run.

There are some expert recommendations as to how to avoid “green marketing myopia” by focusing on consumer value positioning, calibration of consumer knowledge, and the credibility of product claims. One

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***challenge with green marketing is the difficulty consumers have in understanding the environmental benefits of products, leading to many accusations of “greenwashing” where products are not nearly as green and environmentally beneficial as their marketing might suggest.

Although there have been green products emphasizing their natural benefits for years—Tom’s of Maine, Burt’s Bees, Stonyfield Farm, and Seventh Generation to name just a few—products offering environmental benefits are becoming more mainstream. Part of the success of Clorox Green Works cleaning products and household cleaning products, launched in January 2008, was that it found the sweet spot of a target market wanting to take smaller steps toward a greener lifestyle and matched that with a green product with a very modest price premium and sold through a grassroots marketing program.

Environmental concerns are affecting how virtually every major company does their business: Walt Disney Corp. has pledged to reduce its solid waste by 2013, conserve millions of gallons of water, invest in renewable energy, and become completely carbon neutral (reaching 50 percent of that goal by 2012); Best Buy has expanded its recycling program for electronics; Caterpillar announced plans to reduce the GHG emissions of its entire product line by 20 percent by 2020; and Whole Foods, a leader among national supermarket chains in selling certified “organic food” already, cofounded a partnership to reduce emissions from grocery refrigerators and offsets 100 percent of its electricity use with renewable energy via wind-energy credits.

Toyota, HP, IKEA, Procter & Gamble, and Walmart have all been linked to high-profile environmental and

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***sustainability programs. Some other marketers, fearing harsh scrutiny or unrealistic expectations, keep a lower profile. Even though Nike uses recycled sneakers in its soles of new shoes, they chose not to publicize that fact so that they can keep their focus on performance and winning. The rules of the game in green marketing are changing rapidly as both consumers and companies respond to problems and proposed solutions to the significant environmental problems that exist.

Clorox’s Green Works has been a huge market hit by combining environmental benefits with

affordability.

Michelle Pemberton/Indianapolis Star/Rapport Press/Newscom

Sources: Jerry Adler, “Going Green,” Newsweek, July 17, 2006, pp. 43–52; Jacquelyn A. Ottman, Edwin R. Stafford, and Cathy L. Hartman, “Avoiding Green Marketing Myopia,” Environment (June 2006): 22–36; Jill Meredith Ginsberg and Paul N. Bloom, “Choosing the Right Green Marketing Strategy,” MIT Sloan Management Review (Fall 2004): 79–84; Jacquelyn Ottman, Green Marketing: Opportunity for Innovation, 2nd ed. (New York: BookSurge Publishing, 2004); Mark Dolliver, “Deflating a Myth,” Brandweek, May 12, 2008, pp. 30–31; “Winner: Corporate Sustainability, Walt Disney Worldwide,” Travel and Leisure, November 2009, p. 106; “The Greenest Big Companies in America, Newsweek, September 28, 2009, pp. 34–53; Sarah Mahoney, “Best Buy Connects Green with Thrift,” Media Post News: Marketing Daily, January 28, 2009; Reena Jana, “Nike Quietly Goes Green,” BusinessWeek, June 11, 2009.

Major new technologies stimulate the economy’s

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***growth rate. Unfortunately, between innovations, an economy can stagnate. Minor innovations fill the gap—new supermarket products such as frozen waffles, body washes, and energy bars might pop up—but while lower risk, they can also divert research effort away from major breakthroughs.

Innovation’s long-run consequences are not always foreseeable. The contraceptive pill reduced family size and thus increased discretionary incomes, also raising spending on vacation travel, durable goods, and luxury items. Cell phones, video games, and the Internet are reducing attention to traditional media, as well as face-to-face social interaction as people listen to music or watch a movie on their cell phones.

Marketers should monitor the following technology trends: the accelerating pace of change, unlimited opportunities for innovation, varying R&D budgets, and increased regulation of technological change.

Accelerating Pace of ChangeMore ideas than ever are in the works, and the time between idea and implementation is shrinking. So is the time between introduction and peak production. Apple ramped up in seven years to sell a staggering 220 million iPods worldwide by September 2009.

Unlimited Opportunities for InnovationSome of the most exciting work today is taking place in biotechnology, computers, microelectronics, telecommunications, robotics, and designer materials. Researchers are working on AIDS vaccines, safer contraceptives, and nonfattening foods. They are developing new classes of antibiotics to fight ultra-resistant infections, superheating furnaces to reduce trash to raw materials, and building miniature water-treatment plants for remote locations.48

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Varying R&D BudgetsA growing portion of U.S. R&D expenditures goes to the development as opposed to the research side, raising concerns about whether the United States can maintain its lead in basic science. Many companies put their money into copying competitors’ products and making minor feature and style improvements. Even basic research companies such as Dow Chemical, Bell Laboratories, and Pfizer are proceeding cautiously, and more consortiums than single companies are directing research efforts toward major breakthroughs.

Increased Regulation of Technological ChangeGovernment has expanded its agencies’ powers to investigate and ban potentially unsafe products. In the United States, the Food and Drug Administration (FDA) must approve all drugs before they can be sold. Safety and health regulations have increased for food, automobiles, clothing, electrical appliances, and construction.

The Political-Legal EnvironmentThe political and legal environment consists of laws, government agencies, and pressure groups that influence various organizations and individuals. Sometimes these laws create new business opportunities. Mandatory recycling laws have boosted the recycling industry and launched dozens of new companies making new products from recycled materials. Two major trends are the increase in business legislation and the growth of special-interest groups.

Text messaging is profoundly changing how consumers choose to

communicate.

Blend Images/Alamy Images

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Increase in Business LegislationBusiness legislation is intended to protect companies from unfair competition, protect consumers from unfair business practices, protect society from unbridled business behavior, and charge businesses with the social costs of their products or production processes. Each new law may also have the unintended effect of sapping initiative and slowing growth.

The European Commission has established new laws covering competitive behavior, product standards, product liability, and commercial transactions for the 27 member nations of the European Union. The United States has many consumer protection laws covering competition, product safety and liability, fair trade and credit practices, and packaging and labeling, but many countries’ laws are stronger.49 Norway bans several forms of sales promotion—trading stamps, contests, and premiums—as inappropriate or unfair. Thailand requires food processors selling national brands to market low-price brands also, so low-income consumers can find economy brands. In India, food companies need special approval to launch duplicate brands, such as another cola drink or brand of rice. As more transactions take place in cyberspace, marketers must establish new ways to do business ethically.

Growth of Special-Interest GroupsPolitical action committees (PACs) lobby government officials and pressure business executives to respect the rights of consumers, women, senior citizens, minorities, and gays and lesbians. Insurance companies directly or indirectly affect the design of smoke detectors; scientific groups affect the design of spray products. Many companies have established public affairs departments to deal with these groups and issues. The consumerist movement organized citizens and government to

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***strengthen the rights and powers of buyers in relationship to sellers. Consumerists have won the right to know the real cost of a loan, the true cost per standard unit of competing brands (unit pricing), the basic ingredients and true benefits of a product, and the nutritional quality and freshness of food.

Privacy issues and identity theft will remain public policy hot buttons as long as consumers are willing to swap personal information for customized products—from marketers they trust.50 Consumers worry they will be robbed or cheated; that private information will be used against them; that they will be bombarded by solicitations; and that children will be targeted.51 Wise companies establish consumer affairs departments to formulate policies and resolve complaints.

Forecasting and Demand MeasurementUnderstanding the marketing environment and conducting marketing research (described in Chapter 4) can help to identify marketing opportunities. The company must then measure and forecast the size, growth, and profit potential of each new opportunity. Sales forecasts prepared by marketing are used by finance to raise cash for investment and operations; by manufacturing to establish capacity and output; by purchasing to acquire the right amount of supplies; and by human resources to hire the needed workers. If the forecast is off the mark, the company will face excess or inadequate inventory. Since it’s based on estimates of demand, managers need to define what they mean by market demand. Although DuPont’s Performance Materials group knows DuPont Tyvek has 70 percent of the $100 million market for air-barrier membranes, they see greater opportunity with more products and services to tap into the entire $7 billion U.S. home construction market.52

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The Measures of Market DemandCompanies can prepare as many as 90 different types of demand estimates for six different product levels, five space levels, and three time periods (see Figure 3.2). Each demand measure serves a specific purpose. A company might forecast short-run demand to order raw materials, plan production, and borrow cash. It might forecast regional demand to decide whether to set up regional distribution.

Figure 3.2 Ninety Types of Demand Measurement (6 × 5 × 3)

There are many productive ways to break down the market:

• The potential market is the set of consumers with a sufficient level of interest in a market offer. However, their interest is not enough to define a market unless they also have sufficient income and access to the product.

• The available market is the set of consumers who have interest, income, and access to a particular offer. The company or government may restrict sales to certain groups; a particular state might ban motorcycle sales to anyone under 21 years of age. Eligible adults constitute the qualified available market—the set of consumers who have interest, income, access, and qualifications for the market offer.

• The target market is the part of the qualified available market the company decides to pursue. The company might concentrate its marketing and distribution effort on the East Coast.

• The penetrated market is the set of consumers who are buying the company’s product.

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***These definitions are a useful tool for market planning.

If the company isn’t satisfied with its current sales, it can try to attract a larger percentage of buyers from its target market. It can lower the qualifications for potential buyers. It can expand its available market by opening distribution elsewhere or lowering its price, or it can reposition itself in the minds of its customers.

A Vocabulary for Demand MeasurementThe major concepts in demand measurement are market demand and company demand. Within each, we distinguish among a demand function, a sales forecast, and a potential.

Market DemandThe marketer’s first step in evaluating marketing opportunities is to estimate total market demand. Market demand for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program.

Market demand is not a fixed number, but rather a function of the stated conditions. For this reason, we call it the market demand function. Its dependence on underlying conditions is illustrated in Figure 3.3(a). The horizontal axis shows different possible levels of industry marketing expenditure in a given time period. The vertical axis shows the resulting demand level. The curve represents the estimated market demand associated with varying levels of marketing expenditure.

Figure 3.3 Market Demand Functions

Some base sales—called the market minimum and

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***labeled Q1 in the figure—would take place without any demand-stimulating expenditures. Higher marketing expenditures would yield higher levels of demand, first at an increasing rate, then at a decreasing rate. Take fruit juices. Given the indirect competition they face from other types of beverages, we would expect increased marketing expenditures to help fruit juice products stand out and increase demand and sales. Marketing expenditures beyond a certain level would not stimulate much further demand, suggesting an upper limit called the market potential and labeled Q2 in the figure.

The distance between the market minimum and the market potential shows the overall marketing sensitivity of demand. We can think of two extreme types of markets, the expansible and the nonexpansible. An expansible market, such as the market for racquetball playing, is very much affected in size by the level of industry marketing expenditures. In terms of Figure 3.3(a), the distance between Q1 and Q2 is relatively large. A nonexpansible market—for example, the market for weekly trash or garbage removal—is not much affected by the level of marketing expenditures; the distance between Q1 and Q2 is relatively small. Organizations selling in a nonexpansible market must accept the market’s size—the level of primary demand for the product class—and direct their efforts toward winning a larger market share for their product, that is, a higher level of selective demand for their product.

It pays to compare the current and potential levels of market demand. The result is the market-penetration index. A low index indicates substantial growth potential for all the firms. A high index suggests it will be expensive to attract the few remaining prospects. Generally, price competition increases and margins fall

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***when the market-penetration index is already high.

Comparing current and potential market shares yields a firm’s share-penetration index. If this index is low, the company can greatly expand its share. Holding it back could be low brand awareness, low availability, benefit deficiencies, or high price. A firm should calculate the share-penetration increases from removing each factor, to see which investments produce the greatest improvement.53

Remember the market demand function is not a picture of market demand over time. Rather, it shows alternative current forecasts of market demand associated with possible levels of industry marketing effort.

Market ForecastOnly one level of industry marketing expenditure will actually occur. The market demand corresponding to this level is called the market forecast.

Market PotentialThe market forecast shows expected market demand, not maximum market demand. For the latter, we need to visualize the level of market demand resulting from a very high level of industry marketing expenditure, where further increases in marketing effort would have little effect. Market potential is the limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment.

The phrase “for a given market environment” is crucial. Consider the market potential for automobiles. It’s higher during prosperity than during a recession. The dependence of market potential on the environment is illustrated in Figure 3.3(b). Market analysts distinguish between the position of the market demand function and

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***movement along it. Companies cannot do anything about the position of the market demand function, which is determined by the marketing environment. However, they influence their particular location on the function when they decide how much to spend on marketing.

Companies interested in market potential have a special interest in the product-penetration percentage, the percentage of ownership or use of a product or service in a population. Companies assume that the lower the product-penetration percentage, the higher the market potential, although this also assumes everyone will eventually be in the market for every product.

Company DemandCompany demand is the company’s estimated share of market demand at alternative levels of company marketing effort in a given time period. It depends on how the company’s products, services, prices, and communications are perceived relative to the competitors’. Other things equal, the company’s market share depends on the relative scale and effectiveness of its market expenditures. Marketing model builders have developed sales response functions to measure how a company’s sales are affected by its marketing expenditure level, marketing mix, and marketing effectiveness.54

Company Sales ForecastOnce marketers have estimated company demand, their next task is to choose a level of marketing effort. The company sales forecast is the expected level of company sales based on a chosen marketing plan and an assumed marketing environment.

We represent the company sales forecast graphically with sales on the vertical axis and marketing effort on

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***the horizontal axis, as in Figure 3.3. We often hear that the company should develop its marketing plan on the basis of its sales forecast. This forecast-to-plan sequence is valid if forecast means an estimate of national economic activity, or if company demand is nonexpansible. The sequence is not valid, however, where market demand is expansible or where forecast means an estimate of company sales. The company sales forecast does not establish a basis for deciding what to spend on marketing. On the contrary, the sales forecast is the result of an assumed marketing expenditure plan.

Two other concepts are important here. A sales quota is the sales goal set for a product line, company division, or sales representative. It is primarily a managerial device for defining and stimulating sales effort, often set slightly higher than estimated sales to stretch the sales force’s effort.

A sales budget is a conservative estimate of the expected volume of sales, primarily for making current purchasing, production, and cash flow decisions. It’s based on the need to avoid excessive risk and is generally set slightly lower than the sales forecast.

Company Sales PotentialCompany sales potential is the sales limit approached by company demand as company marketing effort increases relative to that of competitors. The absolute limit of company demand is, of course, the market potential. The two would be equal if the company got 100 percent of the market. In most cases, company sales potential is less than the market potential, even when company marketing expenditures increase considerably. Each competitor has a hard core of loyal buyers unresponsive to other companies’ efforts to woo

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***them.

Estimating Current DemandWe are now ready to examine practical methods for estimating current market demand. Marketing executives want to estimate total market potential, area market potential, and total industry sales and market shares.

Total Market PotentialTotal market potential is the maximum sales available to all firms in an industry during a given period, under a given level of industry marketing effort and environmental conditions. A common way to estimate total market potential is to multiply the potential number of buyers by the average quantity each purchases, times the price.

If 100 million people buy books each year, and the average book buyer buys three books a year at an average price of $20 each, then the total market potential for books is $6 billion (100 million × 3 × $20). The most difficult component to estimate is the number of buyers. We can always start with the total population in the nation, say, 261 million people. Next we eliminate groups that obviously would not buy the product. Assume illiterate people and children under 12 don’t buy books and constitute 20 percent of the population. This means 80 percent of the population, or 209 million people, are in the potentials pool. Further research might tell us that people of low income and low education don’t buy books, and they constitute over 30 percent of the potentials pool. Eliminating them, we arrive at a prospect pool of approximately 146.3 million book buyers. We use this number to calculate total market potential.

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***A variation on this method is the chain-ratio method,

which multiplies a base number by several adjusting percentages. Suppose a brewery is interested in estimating the market potential for a new light beer especially designed to accompany food. It can make an estimate with the following calculation:

Demand for

the new light beer

×Populati

on ×

Average percentag

e of personal

discretionary income per capita spent on

food

×

Average percenta

ge of amount spent on food that is spent

on beverage

s

×

Average percenta

ge of amount spent on beverages that is spent on alcoholic beverage

s

×

Average percenta

ge of amount spent on alcoholic beverages that is spent on

beer

Area Market PotentialBecause companies must allocate their marketing budget optimally among their best territories, they need to estimate the market potential of different cities, states, and nations. Two major methods are the market-buildup method, used primarily by business marketers, and the multiple-factor index method, used primarily by consumer marketers.

Market-Buildup MethodThe market-buildup method calls for identifying all the potential buyers in each market and estimating their potential purchases. It produces accurate results if we have a list of all potential buyers and a good estimate of what each will buy. Unfortunately, this information is not always easy to gather.

Consider a machine-tool company that wants to estimate the area market potential for its wood lathe in the Boston area. Its first step is to identify all potential buyers of wood lathes in the area, primarily manufacturing establishments that shape or ream wood

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***as part of their operations. The company could compile a list from a directory of all manufacturing establishments in the area. Then it could estimate the number of lathes each industry might purchase, based on the number of lathes per thousand employees or per $1 million of sales in that industry.

An efficient method of estimating area market potentials makes use of the North American Industry Classification System (NAICS), developed by the U.S. Bureau of the Census in conjunction with the Canadian and Mexican governments.55 The NAICS classifies all manufacturing into 20 major industry sectors and further breaks each sector into a six-digit, hierarchical structure as follows.

51 Industry sector (information)513 Industry subsector (broadcasting and telecommunications)5133 Industry group (telecommunications)51332 Industry (wireless telecommunications carriers, except

satellite)513321

National industry (U.S. paging)

For each six-digit NAICS number, a company can purchase CD-ROMs of business directories that provide complete company profiles of millions of establishments, subclassified by location, number of employees, annual sales, and net worth.

To use the NAICS, the lathe manufacturer must first determine the six-digit NAICS codes that represent products whose manufacturers are likely to require lathe machines. To get a full picture of all six-digit NAICS industries that might use lathes, the company can (1) determine past customers’ NAICS codes; (2) go through the NAICS manual and check off all the six-digit industries that might have an interest in lathes; (3) mail questionnaires to a wide range of companies inquiring about their interest in wood lathes.

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***The company’s next task is to determine an

appropriate base for estimating the number of lathes each industry will use. Suppose customer industry sales are the most appropriate base. Once the company estimates the rate of lathe ownership relative to the customer industry’s sales, it can compute the market potential.

Multiple-Factor Index MethodLike business marketers, consumer companies also need to estimate area market potentials, but since their customers are too numerous to list they commonly use a straightforward index. A drug manufacturer might assume the market potential for drugs is directly related to population size. If the state of Virginia has 2.55 percent of the U.S. population, Virginia might be a market for 2.55 percent of total drugs sold.

A single factor is rarely a complete indicator of sales opportunity. Regional drug sales are also influenced by per capita income and the number of physicians per 10,000 people. Thus, it makes sense to develop a multiple-factor index and assign each factor a specific weight. Suppose Virginia has 2.00 percent of U.S. disposable personal income, 1.96 percent of U.S. retail sales, and 2.28 percent of U.S. population, and the respective weights are 0.5, 0.3, and 0.2. The buying-power index for Virginia is then 2.04 [0.5(2.00) + 0.3(1.96) + 0.2(2.28)]. Thus 2.04 percent of the nation’s drug sales (not 2.28 percent) might be expected to take place in Virginia.

The weights in the buying-power index are somewhat arbitrary, and companies can assign others if appropriate. A manufacturer might adjust the market potential for additional factors, such as competitors’ presence, local promotional costs, seasonal factors, and

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***market idiosyncrasies.

Many companies compute area indexes to allocate marketing resources. Suppose the drug company is reviewing the six cities listed in Table 3.5. The first two columns show its percentage of U.S. brand and category sales in these six cities. Column 3 shows the brand development index (BDI), the index of brand sales to category sales. Seattle has a BDI of 114 because the brand is relatively more developed than the category in Seattle. Portland’s BDI is 65, which means the brand is relatively underdeveloped there.

Table 3.5 Calculating the Brand Development Index (BDI)

(a) Percent of U.S.

Brand(b) Percent of U.S.

Category BDITerritory Sales Sales

(a ÷ b) × 100

Seattle 3.09 2.71 114Portland

6.74 10.41 65

Boston 3.49 3.85 91Toledo .97 .81 120Chicago 1.13 .81 140Baltimore

3.12 3.00 104

Normally, the lower the BDI, the higher the market opportunity, in that there is room to grow the brand. Other marketers would argue instead that marketing funds should go into the brand’s strongest markets, where it might be important to reinforce loyalty or more easily capture additional brand share. Investment decisions should be based on the potential to grow brand sales. Feeling it was underperforming in a high-potential market, Anheuser-Busch targeted the growing Hispanic population in Texas with a number of special

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***marketing activities. Cross-promotions with Budweiser and Clamato tomato clam cocktail (to mix the popular Michiladas drink), sponsorship of the Esta Noche Toca concert series, and support of Latin music acts with three-on-three soccer tournaments helped drive higher sales.56

After the company decides on the city-by-city allocation of its budget, it can refine each city allocation down to census tracts or zip+4 code centers. Census tracts are small, locally defined statistical areas in metropolitan areas and some other counties. They generally have stable boundaries and a population of about 4,000. Zip+4 code centers (designed by the U.S. Post Office) are a little larger than neighborhoods. Data on population size, median family income, and other characteristics are available for these geographical units. Using other sources such as loyalty card data, Mediabrands’s Geomentum targets “hyper-local” sectors of zip codes, city blocks, or even individual households with ad messages delivered via interactive TV, zoned editions of newspapers, Yellow Pages, outdoor media, and local Internet searches.57

Industry Sales and Market SharesBesides estimating total potential and area potential, a company needs to know the actual industry sales taking place in its market. This means identifying competitors and estimating their sales.

The industry trade association will often collect and publish total industry sales, although it usually does not list individual company sales separately. With this information, however, each company can evaluate its own performance against the industry’s. If a company’s sales are increasing by 5 percent a year and industry sales are increasing by 10 percent, the company is

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***losing its relative standing in the industry.

Another way to estimate sales is to buy reports from a marketing research firm that audits total sales and brand sales. Nielsen Media Research audits retail sales in various supermarket and drugstore product categories. A company can purchase this information and compare its performance to the total industry or any competitor to see whether it is gaining or losing share, overall or brand by brand. Because distributors typically will not supply information about how much of competitors’ products they are selling, business-to-business marketers operate with less knowledge of their market share results.

Estimating Future DemandThe few products or services that lend themselves to easy forecasting generally enjoy an absolute level or a fairly constant trend, and competition that is either nonexistent (public utilities) or stable (pure oligopolies). In most markets, in contrast, good forecasting is a key factor in success.

Companies commonly prepare a macroeconomic forecast first, followed by an industry forecast, followed by a company sales forecast. The macroeconomic forecast projects inflation, unemployment, interest rates, consumer spending, business investment, government expenditures, net exports, and other variables. The end result is a forecast of gross domestic product (GDP), which the firm uses, along with other environmental indicators, to forecast industry sales. The company derives its sales forecast by assuming it will win a certain market share.

How do firms develop their forecasts? They may create their own or buy forecasts from outside sources such as marketing research firms, which interview customers,

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***distributors, and other knowledgeable parties. Specialized forecasting firms produce long-range forecasts of particular macroenvironmental components, such as population, natural resources, and technology. Examples are IHS Global Insight (a merger of Data Resources and Wharton Econometric Forecasting Associates), Forrester Research, and the Gartner Group. Futurist research firms produce speculative scenarios; three such firms are the Institute for the Future, Hudson Institute, and the Futures Group.

All forecasts are built on one of three information bases: what people say, what people do, or what people have done. Using what people say requires surveying buyers’ intentions, composites of sales force opinions, and expert opinion. Building a forecast on what people do means putting the product into a test market to measure buyer response. To use the final basis—what people have done—firms analyze records of past buying behavior or use time-series analysis or statistical demand analysis.

Survey of Buyers’ IntentionsForecasting is the art of anticipating what buyers are likely to do under a given set of conditions. For major consumer durables such as appliances, research organizations conduct periodic surveys of consumer buying intentions, ask questions like Do you intend to buy an automobile within the next six months?and put the answers on a purchase probability scale:

0.00 0.20 0.40 0.60 0.80No chance

Slight possibility

Fair possibility

Good possibility

High possibility

Surveys also inquire into consumers’ present and future personal finances and expectations about the economy. They combine bits of information into a

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***consumer confidence measure (Conference Board) or a consumer sentiment measure (Survey Research Center of the University of Michigan).

For business buying, research firms can carry out buyer-intention surveys for plant, equipment, and materials, usually falling within a 10 percent margin of error. These surveys are useful in estimating demand for industrial products, consumer durables, product purchases where advanced planning is required, and new products. Their value increases to the extent that buyers are few, the cost of reaching them is low, and they have clear intentions they willingly disclose and implement.

Composite of Sales Force OpinionsWhen buyer interviewing is impractical, the company may ask its sales representatives to estimate their future sales. Few companies use these estimates without making some adjustments, however. Sales representatives might be pessimistic or optimistic, they might not know how their company’s marketing plans will influence future sales in their territory, and they might deliberately underestimate demand so the company will set a low sales quota. To encourage better estimating, the company could offer incentives or assistance, such as information about marketing plans or past forecasts compared to actual sales.

Sales force forecasts yield a number of benefits. Sales reps might have better insight into developing trends than any other group, and forecasting might give them greater confidence in their sales quotas and more incentive to achieve them. A “grassroots” forecasting procedure provides detailed estimates broken down by product, territory, customer, and sales rep.

Expert Opinion

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Companies can also obtain forecasts from experts, including dealers, distributors, suppliers, marketing consultants, and trade associations. Dealer estimates are subject to the same strengths and weaknesses as sales force estimates. Many companies buy economic and industry forecasts from well-known economic-forecasting firms that have more data available and more forecasting expertise.

Occasionally, companies will invite a group of experts to prepare a forecast. The experts exchange views and produce an estimate as a group (group-discussion method) or individually, in which case another analyst might combine them into a single estimate (pooling of individual estimates). Further rounds of estimating and refining follow (the Delphi method).58

Past-Sales AnalysisFirms can develop sales forecasts on the basis of past sales. Time-series analysis breaks past time series into four components (trend, cycle, seasonal, and erratic) and projects them into the future. Exponential smoothing projects the next period’s sales by combining an average of past sales and the most recent sales, giving more weight to the latter. Statistical demand analysis measures the impact of a set of causal factors (such as income, marketing expenditures, and price) on the sales level. Finally, econometric analysis builds sets of equations that describe a system and statistically derives the different parameters that make up the equations statistically.

Market-Test MethodWhen buyers don’t plan their purchases carefully, or experts are unavailable or unreliable, a direct-market test can help forecast new-product sales or established product sales in a new distribution channel or territory.

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***(We discuss market testing in detail in Chapter 20.)

Summary1. To carry out their analysis, planning,

implementation, and control responsibilities, marketing managers need a marketing information system (MIS). The role of the MIS is to assess the managers’ information needs, develop the needed information, and distribute that information in a timely manner.

2. An MIS has three components: (a) an internal records system, which includes information on the order-to-payment cycle and sales information systems; (b) a marketing intelligence system, a set of procedures and sources used by managers to obtain everyday information about pertinent developments in the marketing environment; and (c) a marketing research system that allows for the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation.

3. Marketers find many opportunities by identifying trends (directions or sequences of events that have some momentum and durability) and megatrends (major social, economic, political, and technological changes that have long-lasting influence).

4. Within the rapidly changing global picture, marketers must monitor six major environmental forces: demographic, economic, social-cultural, natural, technological, and political-legal.

5. In the demographic environment, marketers must be aware of worldwide population growth; changing mixes of age, ethnic composition, and educational levels; the rise of nontraditional families; and large geographic shifts in population.

6. In the economic arena, marketers need to focus on

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***income distribution and levels of savings, debt, and credit availability.

7. In the social-cultural arena, marketers must understand people’s views of themselves, others, organizations, society, nature, and the universe. They must market products that correspond to society’s core and secondary values and address the needs of different subcultures within a society.

8. In the natural environment, marketers need to be aware of the public’s increased concern about the health of the environment. Many marketers are now embracing sustainability and green marketing programs that provide better environmental solutions as a result.

9. In the technological arena, marketers should take account of the accelerating pace of technological change, opportunities for innovation, varying R&D budgets, and the increased governmental regulation brought about by technological change.

10. In the political-legal environment, marketers must work within the many laws regulating business practices and with various special-interest groups.

11. There are two types of demand: market demand and company demand. To estimate current demand, companies attempt to determine total market potential, area market potential, industry sales, and market share. To estimate future demand, companies survey buyers’ intentions, solicit their sales force’s input, gather expert opinions, analyze past sales, or engage in market testing. Mathematical models, advanced statistical techniques, and computerized data collection procedures are essential to all types of demand and sales forecasting.

ApplicationsMarketing Debate

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Is Consumer Behavior More a Function of a Person’s Age or Generation?One of the widely debated issues in developing marketing programs that target certain age groups is how much consumers change over time. Some marketers maintain that age differences are critical and that the needs and wants of a 25-year-old in 2010 are not that different from those of a 25-year-old in 1980. Others argue that cohort and generation effects are critical, and that marketing programs must therefore suit the times.

Take a position: Age differences are fundamentally more important than cohort effectsversusCohort effects can dominate age differences.

Marketing DiscussionAge TargetingWhat brands and products do you feel successfully “speak to you” and effectively target your age group? Why? Which ones do not? What could they do better?

Marketing Excellence: >>Microsoft

James M. Phelps, Jr./Shutterstock

Microsoft is the world’s most successful software company. The company was founded by Bill Gates and Paul Allen in 1975 with the original mission of having “a computer on every desk and in every home, running Microsoft software.” Since then, Microsoft has grown to become the third most valuable brand in the world through strategic marketing and aggressive growth tactics.

Microsoft’s first significant success occurred in the early 1980s with the creation of the DOS operating system for

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***IBM computers. The company used this initial success with IBM to sell software to other manufacturers, quickly making Microsoft a major player in the industry. Initial advertising efforts focused on communicating the company’s range of products from DOS to the launch of Excel and Windows—all under a unified “Microsoft” look.

Microsoft went public in 1986 and grew tremendously over the next decade as the Windows operating system and Microsoft Office took off. In 1990, Microsoft launched a completely revamped version of its operating system and named it Windows 3.0. Windows 3.0 offered an improved set of Windows icons and applications like File Manager and Program Manager that are still used today. It was an instant success; Microsoft sold more than 10 million copies of the software within two years—a phenomenon in those days. In addition, Windows 3.0 became the first operating system to be preinstalled on certain PCs, marking a major milestone in the industry and for Microsoft.

Throughout the 1990s, Microsoft’s communication efforts convinced businesses that its software was not only the best choice for business but also that it needed to be upgraded frequently. Microsoft spent millions of dollars in magazine advertising and received endorsements from the top computer magazines in the industry, making Microsoft Windows and Office the must-have software of its time. Microsoft successfully launched Windows 95 in 1995 and Windows 98 in 1998, using the slogan, “Where Do You Want to Go Today?” The slogan didn’t push individual products but rather the company itself, which could help empower companies and consumers alike.

During the late 1990s, Microsoft entered the notorious “browser wars” as companies struggled to find their

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***place during the Internet boom. In 1995, Netscape launched its Navigator browser over the Internet. Realizing what a good product Netscape had, Microsoft launched the first version of its own browser, Internet Explorer, later that same year. By 1997, Netscape held a 72 percent share and Explorer an 18 percent share. Five years later, however, Netscape’s share had fallen to 4 percent.

During those five years, Microsoft took three major steps to overtake the competition. First, it bundled Internet Explorer with its Office product, which included Excel, Word, and PowerPoint. Automatically, consumers who wanted MS Office became Explorer users as well. Second, Microsoft partnered with AOL, which opened the doors to 5 million new consumers almost overnight. And, finally, Microsoft used its deep pockets to ensure that Internet Explorer was available free, essentially “cutting off Netscape’s air supply.” These efforts, however, were not without controversy. Microsoft faced antitrust charges in 1998 and numerous lawsuits based on its marketing tactics, and some perceived that it was monopolizing the industry.

Charges aside, the company’s stock took off, peaking in 1999 at $60 per share. Microsoft released Windows 2000 in 2000 and Windows XP in 2001. It also launched Xbox in 2001, marking the company’s entrance into the multibillion-dollar gaming industry.

Over the next several years, Microsoft’s stock price dipped by over $40 a share as consumers waited for the next operating system and Apple made a significant comeback with several new Mac computers, the iPod, the iPhone, and iTunes. Microsoft launched the Vista operating system in 2007 to great expectations; however, it was plagued with bugs and problems.

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***As the recession worsened in 2008, the company found itself in a bind. Its brand image was tarnished from years of Apple’s successful “Get a Mac” campaign, a series of commercials that featured a smart, creative, easygoing Mac character alongside a geeky, virus-prone, uptight PC character. In addition, consumers and analysts continued to slam Vista for its poor performance.

In response, Microsoft created a campaign entitled “Windows. Life Without Walls” to help turn its image around. The company focused on how cost effective computers with its software were, a message that resonated well in the recession. It launched a series of commercials boasting “I’m a PC” that began with a Microsoft employee (looking very similar to the PC character from the Apple ads) stating, “Hello, I’m a PC and I’ve been made into a stereotype.” The commercials, which highlighted a wide variety of individuals who prided themselves on being PC owners, helped improve employee morale and customer loyalty.

Microsoft opened a handful of retail stores—similar to Apple stores—in 2009. “The purpose of opening these stores is to create deeper engagement with consumers and continue to learn firsthand about what they want and how they buy,” Microsoft said in a statement.

Today, the company offers a wide range of software and home entertainment products. In the ongoing browser wars, Internet Explorer holds a 66 percent market share compared to Firefox’s 22 percent and Safari’s 8 percent. In 2009, Microsoft launched a new search engine called Bing, which challenges Google’s dominant position in the marketplace and claims to give better search results. Microsoft’s most profitable products continue to be Microsoft Windows and Microsoft Office, which bring in approximately 90 percent of the company’s $60 billion in

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***revenue.

Questions

1.

Evaluate Microsoft’s strategy in good and poor economic times.

2.

Discuss the pros and cons of Microsoft’s most recent “I’m a PC” campaign. Is Microsoft doing a good thing by acknowledging Apple’s campaign in its own marketing message? Why or why not?

Sources: Burt Helm, “Best Global Brands,” BusinessWeek, September 18, 2008; Stuart Elliot, “Microsoft Takes a User-Friendly Approach to Selling Its Image in a New Global Campaign,” New York Times, November 11, 1994; “Todd Bishop, “The Rest of the Motto,” Seattle Post Intelligencer, September 23, 2004; Devin Leonard, “Hey PC, Who Taught You to Fight Back?” New York Times, August 30, 2009; Suzanne Vranica and Robert A. Guth, “Microsoft Enlists Jerry Seinfeld in Its Ad Battle Against Apple,” Wall Street Journal, August 21, 2008, p. A1; Stuart Elliott, “Echoing the Campaign of a Rival, Microsoft Aims to Redefine ‘I’m a PC,’” New York Times, September 18, 2008, p. C4; John Furguson, “From Cola Wars to Computer Wars—Microsoft Misses Again,” BN Branding, April 4, 2009.

Marketing Excellence: >>Walmart

Chris Howes/Wild Places Photography/Alamy Images

Walmart, the giant chain of discount stores, is the second largest company in the world, with over $400 billion in revenue and 2.1 million associates (or employees). The phenomenal success story began in 1962 when Sam Walton opened up his first discount store in Rogers, Arkansas. He sold the same products as his competitors but kept prices lower by reducing his

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***profit margin. His customers quickly caught on and the company took off almost immediately. Walton’s EDLP (Every Day Low Price) strategy remains the foundation of Walmart’s success today. Through the company’s economies of scale, Walmart is able to offer customers top brand-name products for the lowest price.

Walmart expanded throughout the United States in the 1970s and 1980s by acquiring some of its competitors and opening new stores. The first Walmart Supercenter—a discount store with food outlets, an optical center, photo lab, hair salon, among other amenities—opened in 1988. By 1990, Walmart had become the nation’s number one retailer, with $32 billion in revenue and stores in 33 states. The company’s international expansion began with a store outside Mexico City in 1991 and has grown to over 3,800 international locations, some under a different brand name.

Walmart thrives on three basic beliefs and values: “Respect for the Individual,” “Service to Our Customers,” and “Striving for Excellence.” Sam Walton’s original 10-foot rule—“I promise that whenever I come within 10 feet of a customer, I will look him in the eye, greet him, and ask if I can help him.”—still governs today, embodied by the “greeters” at the front door. In addition, Walmart embraces the communities in which it enters in order to develop strong local relationships and build its brand image in the area. The company donates significant amounts of money to local charities through its “Good Works” program, hires local individuals, and purchases food from local farmers.

Walmart’s marketing strategy has evolved over the years. Early marketing efforts were based on word of mouth, positive PR, and aggressive store expansion. In 1992, Walmart introduced its well-known tagline,

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***“Always Low Prices. Always,” which effectively communicated the company’s core brand promise and resonated with millions. In 1996, Walmart launched its price rollback campaign featuring the familiar yellow smiley face as the star of the campaign. The smiley face happily slashed prices in Walmart’s television commercials and appeared on store signage as well as employees’ aprons and buttons. The campaign helped Walmart’s stock soar 1173 percent in the 1990s.

Walmart hit a few bumps in the road as it entered the 21st century, and critics protested its entry into small communities. In one study at Iowa State University, researchers found that within 10 years of a new Walmart store opening, up to one-half of the small stores in that town can disappear. Walmart also faced multiple lawsuits from employees who complained about poor work conditions, exposure to health hazards, and pay below minimum wage, which left employees with families below the poverty line. In some cases, employees said Walmart failed to pay for overtime and prevented them from taking rest or lunch breaks. Another lawsuit claimed the company discriminated against women in awarding pay and promotions. These problems led to a very high turnover rate in the 2000s. According to one Walmart survey, 70 percent of employees left the company within the first year of employment due to lack of recognition and inadequate pay.

From 2000 to 2005, Walmart’s stock price fell 27 percent and remained low from 2005 to 2007. Negative backlash, combined with Target’s reemergence on the retail scene, contributed to the decline. Target revamped its stores, merchandise, and marketing strategy to appeal to a more aspirational discount buyer and stole some of Walmart’s top-tier customers. Target stores

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***were nicely lit, offering wider aisles and better-displayed merchandise. Target’s television commercials featured attractive models and trendy clothes from high-end designers such as Isaac Mizrahi and Liz Lange. One analyst stated, “Target tends to have more upscale customers who don’t feel the effects of gasoline prices and other economic factors as much as Walmart’s core customers might.” From 2003 to 2007, Target outperformed Walmart in same-store sales growth by 1.7 percent and profit growth by 5.7 percent. During this time, Walmart also lost the exclusive rights to use the smiley face in its marketing campaign.

For all these—and other—reasons, Walmart decided it was time for a new direction and launched a series of new initiatives to help improve sales and its image. First, it introduced a highly successful $4 generic drug campaign, a program eventually copied by Target. Walmart also launched several environmentally friendly initiatives such as constructing new buildings from recycled materials, cutting transportation costs and energy usage, and encouraging customers to buy more green products.

In 2007, Walmart introduced a new marketing campaign and tagline, “Save Money. Live Better.” Television commercials highlighted the company’s positive impact on decreased energy costs, increased 401(k) (retirement) savings, good employee health care coverage, and increased family savings. One commercial stated, “In today’s economy, nobody’s more committed to helping family budgets go further than Walmart. Walmart saves the average family about $3,100 a year, no matter where they shop.”

Walmart also used the new campaign and aggressive price cuts to attract new consumers affected by the

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***recession. It slashed prices on popular toys and electronics during the holidays and implemented a massive store remodeling effort called Project Impact. As a result, stores became cleaner, aisles less cluttered, and merchandise easier to reach—all to help improve the overall shopping experience and steal customers from Target.

Walmart’s tactics worked: Same-store sales rose and its stock price improved during the recession. Analysts explained that Walmart’s product mix—45 percent consumables (food, beauty, health items)—is a better strategy in a poor economy than Target’s product mix—20 percent consumables and 40 percent home and apparel products. One analyst said, “Walmart sells what you need to have as opposed to what you want to have.”

Stephen Quinn, Walmart’s CMO, stated, “We are fortunate that this recession came along. It played to our positioning really well. But our own insecurity is that all the credit would go to the external environment and none of the work we all did. The kinds of things we were working on anyway when this environment came along are the same things we need to do to keep these so-called new customers and I think continued to build loyalty with our existing base.”

Today, Walmart has stores in 16 international markets and serves more than 200 million customers a week through its variety of discount stores. These include Walmart Supercenters, Discount Stores, Neighborhood Markets, and Sam’s Club warehouses.

Questions

1.

Evaluate Walmart’s new marketing campaign and tagline. Did the company make the right decision to drop “Always Low Prices. Always.” as a tagline? Why or why not?

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***2.

Walmart does very well when the economy turns sour. How can it protect itself when the economy is on the rise? Explain.

Sources: Dave Goldiner, “Exxon Tops Wal-Mart on 2009 Fortune 500 List,” New York Daily News, April 20, 2009; “Wal-Mart Seeks Smiley Face Fights,” BBC News, August 5, 2006; David Ng, “Wal-Mart vs. Target,” Forbes, December 13, 2004; Michael Barbaro, “A New Weapon for Wal-Mart: A War Room,” New York Times, November 1, 2005; Kenneth E. Stone, “Impact of the Wal-Mart Phenomenon on Rural Communities,” Increasing Understanding of Public Problems and Policies (Chicago: Farm Foundation, 1997), pp. 189–200; Suzanne Kapner, “Wal-mart Enters the Ad Age,” CNNMoney.com, August 17, 2008; Jack Neff, “Why Walmart Is Getting Serious About Marketing,” Advertising Age, June 8, 2009; Sean Gregory, “Walmart’s Project Impact: A Move to Crush Competition,” Time, September 9, 2009; “Store Wars: When Wal-Mart Comes to Town,” PBS, February 24, 2007; Sean Gregory, “Wal-Mart vs. Target: No Contest in the Recession,” Time, March 14, 2009.

Question 1

2 out of 2 points

Disintermediation via the Internet has resulted in ________.Answer

Selected Answer: greater consumer buying power

Question 2

2 out of 2 points

Managers of ________ businesses concentrate on achieving high manufacturing efficiency, low costs, and mass distribution.

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Answer

Selected Answer: production-oriented

Question 3

2 out of 2 points

The ________ process consists of analyzing marketing opportunities, selecting target markets, designing marketing strategies, developing marketing programs, and managing the marketing effort.Answer

Selected Answer: marketing planning

Question 4

2 out of 2 points

Which of the following statements about marketing is true? Answer

Selected Answer:

It can help create jobs in the economy by increasing demand for goods and services.

Question 5

2 out of 2 points

________ activities include those the company undertakes to make the product accessible and available to target customers. Answer

Selected Answer: Channel

Question 6

2 out of 2 points

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A(n) ________ need is a need that the consumer explicitly verbalizes. Answer

Selected Answer: stated

Question 7

2 out of 2 points

Which of the following holds that consumers prefer products that are widely available and inexpensive?Answer

Selected Answer: the production concept

Question 8

2 out of 2 points

Rising promotion costs and shrinking profit margins are the result of ________. Answer

Selected Answer: heightened competition

Question 9

2 out of 2 points

The ultimate outcome of relationship marketing is a unique company asset called the ________, consisting of the company and its supporting stakeholders.Answer

Selected Answer: marketing network

Question 10

2 out of 2 points

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If a marketer uses warehouses, transportation companies, banks, and insurance companies to facilitate transactions with potential buyers, the marketer is using a ________. Answer

Selected Answer: service channel

Question 11

0 out of 2 points

If you were the CEO of a company that was looking to implement strategies to fill a perceived strategic-planning gap, you would most likely explore ________ strategy first because it is easier to improve an existing business than to build a new one. Answer

Selected Answer: market-development

Question 12

2 out of 2 points

To keep their strategic alliances thriving, corporations have begun to develop organizational structures to support them and have come to view the ability to form and manage strategic alliances as core skills. This is called ________.Answer

Selected Answer: partner relationship management

Question 13

2 out of 2 points

The ________ is the number of channel levels, from raw materials to final product and distribution, in which a company will participate. Answer

Selected Answer:

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vertical sphere

Question 14

2 out of 2 points

A characteristic of a ________ is that it can be a single business or collection of related businesses that can be planned separately from the rest of the company.Answer

Selected Answer: strategic business unit

Question 15

2 out of 2 points

Which of the following can be considered a primary activity in the value chain process?Answer

Selected Answer: inbound logistics

Question 16

2 out of 2 points

With respect to the core business processes, the ________ includes all the activities involved in developing, and launching high-quality products quickly and within budget. Answer

Selected Answer: new-offering realization process

Question 17

2 out of 2 points

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Core competencies tend to refer to areas of special technical and production expertise, whereas ________ tend to describe excellence in broader business processes. Answer

Selected Answer: distinctive capabilities

Question 18

2 out of 2 points

The first step in the business unit strategic-planning process deals with which of the following? Answer

Selected Answer: define business mission

Question 19

2 out of 2 points

Juan Garcia plans the daily promotional releases about his company's products and services. He can be described as a(n) ________ planner.Answer

Selected Answer: tactical

Question 20

2 out of 2 points

Michael Porter's value chain would identify which of the following as a support activity?Answer

Selected Answer: procurement

Question 21

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***0 out of 2 points

According to the 2000 Census, which of the following is the largest group in the United States?Answer

Selected Answer: Chinese Americans

Question 22

2 out of 2 points

A ________ is a direction or sequence of events that has some momentum and durability; it reveals the shape of the future and can provide strategic direction.Answer

Selected Answer: trend

Question 23

2 out of 2 points

Which of the following is likely to occur during economic downturns?Answer

Selected Answer: The purchasing power of the people declines

Question 24

2 out of 2 points

A ________ is "unpredictable, short-lived, and without social, economic, and political significance." Answer

Selected Answer: fad

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER *** Question 25

2 out of 2 points

A ________ is a set of procedures and sources managers use to obtain everyday information about developments in the marketing environment. Answer

Selected Answer: marketing intelligence system

Question 26

2 out of 2 points

The company's marketing information system should be a mix of what managers think they need, what managers really need, and ________. Answer

Selected Answer: what is economically feasible

Question 27

2 out of 2 points

________ measures the impact of a set of causal factors (such as income, marketing expenditures, and price) on the sales level.Answer

Selected Answer: Statistical demand analysis

Question 28

2 out of 2 points

Which of the following is the second largest contributor to global warming, accounting for roughly a fifth of carbon emissions?Answer

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Selected Answer: transportation

Question 29

2 out of 2 points

An unintended effect of business legislation is ________. Answer

Selected Answer: slowing economic growth

Question 30

2 out of 2 points

As the manager of an organization that is attempting to build a Marketing Information System (MIS), you have been informed that a MIS is built upon three fundamental information sources. The sources are ________, marketing intelligence activities, and marketing research. Answer

Selected Answer: internal company records

Question 31

2 out of 2 points

A company would like to study the impact of advertising expenditure on sales and sales revenue. This is an example of ________ research.Answer

Selected Answer: causal

Question 32

2 out of 2 points

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Which of the following is true of qualitative research?Answer

Selected Answer: It is indirect in nature, so consumers may be less guarded.

Question 33

2 out of 2 points

________ allow respondents to answer in their own words and often reveal more about how people think. Answer

Selected Answer: Open-end questions

Question 34

2 out of 2 points

The marketing research process begins by ________. Answer

Selected Answer:

defining the problem, the decision alternatives, and research objectives

Question 35

2 out of 2 points

________ approach uses concepts and tools from anthropology and other social science disciplines to provide deep cultural understanding of how people live and work.Answer

Selected Answer: Ethnographic research

Question 36

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***2 out of 2 points

If a marketing researcher wishes to reach those people who would not give personal interviews or whose responses might be biased or distorted by interviewers, he or she should use ________.Answer

Selected Answer: mail questionnaires

Question 37

2 out of 2 points

Why do firms employ more than one persona to gather information about the target consumers?Answer

Selected Answer:

Any target market may have a range of consumers who vary along a number of key dimensions.

Question 38

2 out of 2 points

The goal of ethnographic research is to ________.Answer

Selected Answer:

immerse the researcher into consumers' lives to uncover unarticulated desires that might not surface in any other form of research

Question 39

0 out of 2 points

When the marketers of a mobile phone manufacturing company want to determine the impact of individual media such as television and online display ads on sales as well as that of trade activities like every day low price, off-shelf display and so on, they usually use ________.

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Answer

Selected Answer: marketing metrics

Question 40

2 out of 2 points

________ is designed to capture cause-and-effect relationships by eliminating competing explanations of the observed findings.Answer

Selected Answer: Experimental research

Question 41

2 out of 2 points

A profitable customer ________.Answer

Selected Answer: yields a revenue stream that exceeds the company's cost stream

Question 42

0 out of 2 points

Club membership programs that are open to everyone who purchases a product or service ________.Answer

Selected Answer:

are more powerful long-term loyalty builders than limited-membership clubs.

Question 43

2 out of 2 points

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When two brands of the same basic product deliver their respective promised quality, they are delivering ________.Answer

Selected Answer: conformance quality

Question 44

2 out of 2 points

Field Grocery wants to learn the strengths and weaknesses in customer service at all the Field Grocery stores. Which of the following methods can it use for this?Answer

Selected Answer: mystery shoppers

Question 45

2 out of 2 points

The process of building, maintaining, and using customer databases and other databases for the purpose of contacting, transacting, and building customer relationships is called ________. Answer

Selected Answer: database marketing

Question 46

2 out of 2 points

Some customers inevitably become inactive or drop out. The challenge for marketers is to reactivate them through ________ strategies.Answer

Selected Answer: win-back

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2 out of 2 points

A customer touch point for Abacus Airlines would be an item such as ________.Answer

Selected Answer: the reservations desk

Question 48

2 out of 2 points

In the modern customer-oriented organizational chart, which of the following is considered to be at the top of the organizational pyramid? Answer

Selected Answer: customers

Question 49

2 out of 2 points

Customer relationship management enables companies to provide excellent real-time customer service through the effective use of ________. Answer

Selected Answer: individual account information

Question 50

2 out of 2 points

________ is based on the premise that marketers can no longer use "interruption marketing" via mass media campaigns.Answer

Selected Answer:

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Permission marketing

Marketing Management, 14e (Kotler/Keller)Chapter 1 Defining Marketing for the 21st Century

1) Which of the following statements about marketing is true? A) It is of little importance when products are standardized.B) It can help create jobs in the economy by increasing demand for goods and services.C) It helps to build a loyal customer base but has no impact on a firm's intangible assets.D) It is more important for bigger organizations than smaller ones.E) It is seldom used by nonprofit organizations.Answer: BPage Ref: 4Objective: 1Difficulty: Easy

2) ________ is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. A) Marketing management B) Knowledge managementC) Operations managementD) Strategic managementE) Distribution managementAnswer: APage Ref: 5Objective: 2Difficulty: Easy

3) Identify the correct statement about marketing management.A) It is primarily concerned with the systematic gathering, recording, and analysis of data about issues related to marketing products and services.B) It focuses mostly on monitoring the profitability of a company's products and services.C) It focuses solely on attaining an organization's sales goals in an efficient manner. D) It is defined as the field that deals with planning and managing a business at the highest level of corporate hierarchy.E) It occurs when at least one party to a potential exchange thinks about the means of achieving desired responses from other parties.Answer: EPage Ref: 5Objective: 2Difficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***4) A social definition of marketing says ________. A) effective marketing requires companies to remove intermediaries to achieve a closer connection with direct consumers B) a company should focus exclusively on achieving high production efficiency, low costs, and mass distribution to facilitate the broadest possible access to the company's products C) marketing is the process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others D) marketing is the process of extracting the maximum value from consumers to facilitate corporate growth E) marketing is the process of aggressive selling and promotion to encourage the purchase of products that might otherwise be unsought by the consumer Answer: CPage Ref: 5Objective: 2Difficulty: Easy

5) ________ goods constitute the bulk of most countries' production and marketing efforts. A) Durable B) Impulse C) Physical D) LuxuryE) Intangible Answer: CPage Ref: 5Objective: 2Difficulty: Easy

6) As economies advance, a growing proportion of their activities focuses on the production of ________. A) productsB) events C) experiences D) luxury goodsE) services Answer: EPage Ref: 5Objective: 2Difficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***7) Car rental firms, hair dressers, and management consultants provide ________. A) goods B) experiences C) eventsD) services E) information Answer: DPage Ref: 5Objective: 2AACSB: Analytic skillsDifficulty: Easy

8) The Soccer World Cup is promoted aggressively to both companies and fans. This is an example of marketing a(n) ________.A) idea B) placeC) luxury itemD) eventE) serviceAnswer: DPage Ref: 5Objective: 2Difficulty: Moderate

9) The "Malaysia, Truly Asia" ad campaign that showcased Malaysia's beautiful landscape and its multicultural society in order to attract tourists is an example of ________ marketing.A) eventB) propertyC) serviceD) placeE) ideaAnswer: DPage Ref: 6Objective: 2AACSB: Analytic skillsDifficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***10) In Walt Disney's Magic Kingdom, customers can visit a fairy kingdom, a pirate ship, or even a haunted house. Disney is marketing a(n) ________.A) experience B) serviceC) event D) organizationE) goodAnswer: APage Ref: 6Objective: 2AACSB: Analytic skillsDifficulty: Easy

11) Janet is very upset that she can't get tickets to the Rolling Stones concert because they are sold out. Which of the following demand states applies to Janet's situation? A) nonexistent demand B) latent demand C) full demand D) unwholesome demand E) overfull demand Answer: EPage Ref: 8Objective: 2AACSB: Analytic skillsDifficulty: Moderate

12) Sales of woollen clothing usually increase during the winter season and decline thereafter. This is an example of ________ demand.A) irregular B) declining C) impulse D) latent E) negative Answer: APage Ref: 8Objective: 2AACSB: Analytic skillsDifficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***13) Julia is worried about the rising pollution levels in her city. She doesn't mind paying extra for goods and services that use sustainable processes to help control pollution. This is an example of ________ for pollution. A) declining demand B) nonexistent demand C) latent demand D) negative demand E) unwholesome demand Answer: DPage Ref: 8Objective: 2AACSB: Analytic skillsDifficulty: Moderate

14) People in emerging countries today are becoming increasingly health conscious and are seeking healthy food choices. As a result, demand for health foods is rising steadily, creating an opportunity for marketers to exploit this ________ market.A) demographicB) businessC) needD) geographicE) serviceAnswer: CPage Ref: 8Objective: 2AACSB: Analytic skillsDifficulty: Moderate

15) When consumers share a strong need that cannot be satisfied by an existing product, it is called ________. A) negative demand B) latent demand C) declining demand D) irregular demand E) nonexistent demand Answer: BPage Ref: 8Objective: 2Difficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***16) When demand is ________, it implies that more customers would like to buy the product than can be satisfied. A) latent B) irregularC) overfullD) fullE) negativeAnswer: CPage Ref: 8Objective: 2Difficulty: Easy

17) In the case of ________, consumers dislike the product and may even pay a price to avoid it. A) nonexistent demand B) overfull demand C) irregular demand D) negative demand E) declining demand Answer: DPage Ref: 8Objective: 2Difficulty: Easy

18) Organizations catering to the ________ need to price their offerings carefully because these markets usually have limited purchasing power.A) business marketB) global marketC) nonprofit marketD) consumer marketE) exclusive marketAnswer: CPage Ref: 9Objective: 2Difficulty: Easy

19) Which of the following is true of business markets?A) Buyers are usually not skilled at comparing competitive product offerings.B) Buyers have limited purchasing power.C) Property rights, language, culture, and local laws are the most important concerns.D) Products sold in such markets are usually highly standardized.E) Business buyers buy goods to make or resell a product to others at a profit.Answer: EPage Ref: 9Objective: 2Difficulty: Moderate

90


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***20) A ________ is a cluster of complementary products and services that are closely related in the minds of consumers but are spread across a diverse set of industries. A) metamarket B) vertically integrated marketC) horizontally integrated marketD) marketspaceE) synchronized marketAnswer: APage Ref: 9Objective: 2Difficulty: Moderate

21) Consider the real estate industry. The ________ for this industry includes construction companies, financing institutions, paint manufacturers, interior decorators, furniture manufacturers, and plumbing industries.A) marketspaceB) latent marketC) need marketD) metamarketE) geographic marketAnswer: DPage Ref: 9Objective: 2AACSB: Analytic skillsDifficulty: Moderate

22) Automobile manufacturers, new car and used car dealers, financing companies, and insurance companies are all part of the automobile ________. A) marketplace B) marketspace C) metamediary D) marketportal E) metamarket Answer: EPage Ref: 9Objective: 2Difficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***23) ________ are basic human requirements, while ________ are the ways in which those requirements are satisfied. A) Wants; needs B) Demands; wants C) Needs; wants D) Needs; demands E) Demands; needs Answer: CPage Ref: 9-10Objective: 3Difficulty: Easy

24) When Frank buys his own house, he would like to have a home theater system and a jacuzzi. He plans to save enough money in the next three years so that he can fulfill his wish. Frank's desire for the home theater and the jacuzzi is an example of a(n) ________.A) needB) wantC) demandD) unstated needE) latent demandAnswer: BPage Ref: 9-10Objective: 3AACSB: Analytic skillsDifficulty: Moderate

25) When companies measure the number of people who are willing and able to buy their products, they are measuring ________.A) demandB) price elasticityC) real needsD) standard of livingE) disposable incomeAnswer: APage Ref: 10Objective: 3Difficulty: Moderate

92


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***26) A(n) ________ need is one that the consumer is reluctant or unwilling to explicitly verbalize. A) secondaryB) unstated C) delight D) secret E) stated Answer: DPage Ref: 10Objective: 3Difficulty: Moderate

27) A(n) ________ need is a need that the consumer explicitly verbalizes. A) stated B) affirmativeC) unsoughtD) delightE) secret Answer: APage Ref: 10Objective: 3Difficulty: Moderate

28) The identification and profiling of distinct groups of buyers who might prefer or require varying product and service mixes is known as ________. A) segmentation B) integration C) disintermediation D) cross-sellingE) customizationAnswer: APage Ref: 10Objective: 3Difficulty: Moderate

29) Companies address needs by putting forth a ________, a set of benefits that they offer to customers to satisfy their needs. A) brand B) value proposition C) dealD) marketing planE) demand Answer: BPage Ref: 10Objective: 3Difficulty: Moderate

93


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***30) During market segmentation analysis, the marketer identifies which segments present the greatest opportunity. These segments are called ________. A) target markets B) capital markets C) tertiary markets D) demographic markets E) developing markets Answer: APage Ref: 10Objective: 3Difficulty: Moderate

31) ________ reflects a customer's judgment of a product's performance in relation to his or her expectations. A) Brand equityB) Satisfaction C) Value D) PerceptionE) Brand imageAnswer: BPage Ref: 10Objective: 3Difficulty: Easy

32) The value of an offering is described as ________. A) the price consumers are charged for a product B) the cost of manufacturing a productC) the degree to which consumer demand for a product is positive D) the sum of the tangible and intangible benefits and costs to customers E) the intangible benefits gained from a productAnswer: DPage Ref: 10Objective: 3Difficulty: Moderate

94


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***33) When Volvo runs ads suggesting that its cars are the safest that money can buy, it is trying to ________. A) segment the marketB) provide a serviceC) enter new a new marketD) develop brand loyaltyE) position its productAnswer: EPage Ref: 10Objective: 3AACSB: Analytic skillsDifficulty: Moderate

34) If a marketer uses warehouses, transportation companies, banks, and insurance companies to facilitate transactions with potential buyers, the marketer is using a ________. A) service channelB) distribution channelC) communication channelD) relationship channelE) standardized channelAnswer: APage Ref: 11Objective: 3Difficulty: Moderate

35) The ________ is the channel stretching from raw materials to components to final products that are carried to final buyers. A) communication channel B) distribution channel C) supply chain D) service chainE) marketing chainAnswer: CPage Ref: 11Objective: 3Difficulty: Easy

95


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***36) The actual and potential rival offerings and substitutes that a buyer might consider are referred to as the ________.A) supply chain B) global marketC) value proposition D) competition E) marketing environment Answer: DPage Ref: 11Objective: 3Difficulty: Easy

37) The ________ includes the actors involved in producing, distributing, and promoting an offering. The main actors are the company, suppliers, distributors, dealers, and the target customers. A) economic environment B) management environment C) strategic environment D) task environment E) tactical environment Answer: DPage Ref: 11Objective: 3AACSB: Analytic skillsDifficulty: Moderate

38) In an attempt to create greater competition and growth opportunities, countries often ________.A) increase trade barriersB) protect industriesC) deregulate industriesD) encourage intermediationE) reduce privatizationAnswer: CPage Ref: 12Objective: 4AACSB: Multicultural diversityDifficulty: Moderate

96


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***39) Rising promotion costs and shrinking profit margins are the result of ________. A) new and improved technology B) disintermediationC) industry convergenceD) privatization E) heightened competition Answer: EPage Ref: 12Objective: 4AACSB: Reflective thinkingDifficulty: Moderate

40) Industry boundaries are blurring rapidly as companies identify new opportunities at the intersection of two or more industries. This is called ________. A) globalization B) customization C) industry convergence D) disintermediationE) privatizationAnswer: CPage Ref: 12Objective: 4Difficulty: Easy

41) The success of online purchasing resulted in ________ in the delivery of products and services by intervening in the traditional flow of goods through distribution channels.A) disintermediation B) diversificationC) reduced competitionD) deregulationE) privatizationAnswer: APage Ref: 13Objective: 4AACSB: Reflective thinkingDifficulty: Moderate

97


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***42) In response to threats from such companies as AOL, Amazon.com, Yahoo!, eBay, E*TRADE, and dozens of others, established manufacturers and retailers became "brick-and-click" oriented by adding online services to their existing offerings. This process is known as ________. A) reintermediation B) disintermediation C) retail transformationD) e-collaboration E) new-market synchronization Answer: APage Ref: 13Objective: 4Difficulty: Moderate

43) When eBay and Amazon.com cut out the majority of middlemen that normally would participate in the exchange process, it is an example of ________. A) deregulationB) reverse auctioningC) reintermediation D) disintermediation E) diversificationAnswer: DPage Ref: 13Objective: 4AACSB: Use of ITDifficulty: Moderate

44) Disintermediation via the Internet has resulted in ________.A) higher prices B) stronger brand loyaltyC) greater emphasis on personal selling D) well-established brand names E) greater consumer buying powerAnswer: EPage Ref: 13Objective: 4AACSB: Use of ITDifficulty: Moderate

98


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***45) Each of the following is true about the Internet's impact on the way business is conducted today, EXCEPT one. Identify the exception. A) It has facilitated high-speed communication among employees.B) It has empowered consumers with easy access to information.C) It can be used as a powerful sales channel.D) It has facilitated mass marketing but not the sale of customized products.E) It enables marketers to use social media to advertise their products.Answer: DPage Ref: 14-15Objective: 4AACSB: Use of ITDifficulty: Easy

46) The ________ process consists of analyzing marketing opportunities, selecting target markets, designing marketing strategies, developing marketing programs, and managing the marketing effort.A) marketing planning B) strategic planning C) market research D) opportunity analysis E) operational managementAnswer: APage Ref: 15Objective: 4Difficulty: Moderate

47) Kotler and Casoline suggested eight factors that marketers must keep in mind in order to deal with risk and uncertainty. Which of the following statements are they most likely to agree with when the environment is uncertain?A) Companies should be prepared to implement ad hoc strategies whenever required.B) Companies should push aggressively for the market share of their competitors.C) Companies should focus less on their core segments, and more on new target markets.D) Companies should not increase marketing budgets in times of uncertainty.E) Companies should focus and improve their marginal brands.Answer: BPage Ref: 16Objective: 4Difficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***48) What are customer touch points?A) all aspects of the offering that directly affect consumer preferencesB) all needs and wants of customersC) all direct or indirect interactions between the customer and the companyD) all interactions between customers and competitorsE) all factors that affect buying behaviorAnswer: CPage Ref: 17Objective: 4Difficulty: Moderate

49) Which of the following holds that consumers prefer products that are widely available and inexpensive?A) the product conceptB) the production conceptC) the selling conceptD) the performance conceptE) the marketing conceptAnswer: BPage Ref: 18Objective: 4Difficulty: Moderate

50) Managers of ________ businesses concentrate on achieving high manufacturing efficiency, low costs, and mass distribution.A) selling-orientedB) product-orientedC) production-orientedD) marketing-orientedE) consumer-orientedAnswer: CPage Ref: 18Objective: 4AACSB: Reflective thinkingDifficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***51) The ________ concept holds that consumers will favor offerings with the best quality, performance, or innovative features. A) product B) marketing C) production D) selling E) holistic marketing Answer: APage Ref: 18Objective: 4Difficulty: Easy

52) Which of the following categories of goods and services is most likely to require an aggressive use of the selling concept?A) shopping goodsB) unsought goodsC) necessary goodsD) luxury goods E) complementary goodsAnswer: BPage Ref: 18Objective: 4AACSB: Analytic skillsDifficulty: Moderate

53) As a major steel manufacturer, SteelMakers Inc. focuses on having the most efficient manufacturing processes in place. The company believes that its competitive edge lies in its ability to offer the best prices. They also maintain an excellent distribution network that ensures wide availability of their products. SteelMakers has a ________.A) selling orientation B) production orientation C) product orientation D) marketing orientation E) social orientation Answer: BPage Ref: 18Objective: 4AACSB: Analytic skillsDifficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***54) Webmax Inc. produced and marketed cameras. After considerable research and development, they developed a new digital camera that had an array of new features. Webmax was so sure about the new offering that they even reduced their marketing budget. What sort of orientation does Webmax have toward the marketplace?A) production orientationB) product orientationC) selling orientationD) marketing orientation E) holistic marketing orientationAnswer: BPage Ref: 18Objective: 4AACSB: Analytic skillsDifficulty: Moderate

55) Rick Johnson trains his company's sales force to go after the consumer. He repeatedly asks his team to bear in mind the essential fact that it is the sales team's responsibility to rouse the consumer's interest and make him feel that he needs the product. A true salesman is one who can convert an indifferent consumer walking into the store into a new customer. Johnson believes in the ________ concept.A) productB) productionC) sellingD) marketingE) social responsibilityAnswer: CPage Ref: 18Objective: 4AACSB: Analytic skillsDifficulty: Moderate

56) Marketers at Johnny Inc. believe in putting their customers ahead of everything else. Their products are carefully designed to meet customer requirements and the entire focus is on achieving customer satisfaction. Johnny Inc., follows the ________ concept in doing business.A) productionB) product C) selling D) marketingE) social responsibility Answer: DPage Ref: 18Objective: 4AACSB: Analytic skillsDifficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***57) The ________ concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization's products. A) production B) selling C) marketing D) product E) holistic marketing Answer: BPage Ref: 18Objective: 4Difficulty: Easy

58) Identify the concept that emerged in the mid-1950s as a customer-centered, sense-and-respond philosophy.A) the product conceptB) the production conceptC) the selling conceptD) the marketing conceptE) the holistic marketing conceptAnswer: DPage Ref: 18Objective: 4Difficulty: Moderate

59) The marketing concept holds that ________.A) a firm should find the right products for its customers, and not the right customers for its productsB) customers who are coaxed into buying a product will most likely buy it againC) a new product will not be successful unless it is priced, distributed, and sold properlyD) consumers and businesses, if left alone, won't buy enough of the organization's productsE) a better product will by itself lead people to buy it without much effort from the sellersAnswer: APage Ref: 18Objective: 4Difficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***60) ________ is based on the development, design, and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies.A) Niche marketing B) Holistic marketing C) Relationship marketing D) Supply chain marketing E) Demand-centered marketing Answer: BPage Ref: 18Objective: 4AACSB: Reflective thinkingDifficulty: Moderate

61) Which of the following is considered as a "sin" in the marketing discipline?A) focusing too much on new opportunitiesB) targeting a competitor's market shareC) prioritizing customer relationships over everything elseD) using technology in an inefficient mannerE) increasing the marketing budget in times of uncertainty and riskAnswer: DPage Ref: 19Objective: 4Difficulty: Moderate

62) What are the four broad components of holistic marketing?A) relationship, internal, position, and performance marketingB) integrated, internal, position, and performance marketingC) relationship, integrated, internal, and performance marketingD) integrated, relationship, social responsibility, and position marketingE) relationship, social responsibility, internal, and performance marketingAnswer: CPage Ref: 19Objective: 4Difficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***63) ________ marketing aims to build mutually satisfying long-term collaboration with key constituents, such as customers, employees, suppliers, distributors, and other marketing partners, in order to earn and retain their business.A) Integrated B) Demand-based C) Direct D) Relationship E) InternalAnswer: DPage Ref: 20Objective: 4Difficulty: Easy

64) Tracy's is a chain of hair dressing salons for women. They use the television, magazines, radio, and newspapers to advertise their services. The owners ensure that all communication channels deliver a common message to prospective customers. Tracy's believes in ________.A) internal marketing B) integrated marketing C) socially responsible marketing D) global marketing E) relationship marketing Answer: BPage Ref: 20Objective: 4AACSB: Analytic skillsDifficulty: Moderate

65) The ultimate outcome of relationship marketing is a unique company asset called the ________, consisting of the company and its supporting stakeholders.A) brandB) supply chainC) marketing network D) value propositionE) service channelAnswer: CPage Ref: 20Objective: 4Difficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***66) Which of the following is most consistent with the integrated marketing approach?A) A good product will sell itself.B) If left alone, consumers are inclined to purchase only inexpensive products.C) All communication to consumers must deliver a consistent message irrespective of the medium.D) In order to succeed, the main focus should be on having an efficient production process in place.E) Online marketing is less important than traditional marketing efforts.Answer: CPage Ref: 20-21Objective: 4Difficulty: Moderate

67) Which aspect of holistic marketing motivates employees and ensures that everyone in the organization embraces appropriate marketing principles, especially senior management?A) relationship marketingB) integrated marketingC) internal marketing D) network marketingE) performance marketingAnswer: CPage Ref: 21Objective: 4AACSB: Analytic skillsDifficulty: Moderate

68) Financial accountability and social responsibility marketing are elements of ________.A) performance marketingB) relationship marketingC) internal marketingD) social marketingE) mass marketing Answer: APage Ref: 22Objective: 4Difficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***69) Companies are recognizing that much of their market value comes from ________, particularly their brands, customer base, employees, distributor and supplier relations, and intellectual capital. A) variable assets B) value propositionsC) intangible assets D) market offeringsE) industry convergenceAnswer: CPage Ref: 22Objective: 4AACSB: Reflective thinkingDifficulty: Easy

70) Holistic marketing incorporates ________, an understanding of broader concerns in the ethical, environmental, legal, and social context of marketing activities. A) internal marketingB) cultural marketing C) social responsibility marketing D) relationship marketing E) integrated marketingAnswer: CPage Ref: 22Objective: 4Difficulty: Easy

71) The ________ holds that the organization's task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer's and the society's well-being.A) selling conceptB) integrated marketing conceptC) social responsibility marketing concept D) production conceptE) relationship marketing conceptAnswer: CPage Ref: 22Objective: 4AACSB: Analytic skillsDifficulty: Easy

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***72) Joanna owns a chain of fast-food joints. As the chain became more and more successful, she decided to contribute a share of her profits each year to support cancer research. This is an example of ________.A) corporate community involvementB) environmental marketing C) cause-related marketing D) benefit marketing E) responsible marketing Answer: CPage Ref: 24Objective: 4AACSB: Analytic skillsDifficulty: Moderate

73) McCarthy classified marketing activities into the four Ps of the marketing mix. These four Ps stand for ________. A) product, positioning, place, and price B) product, production, price, and place C) promotion, place, positioning, and price D) place, promotion, production, and positioning E) product, price, promotion, and place Answer: EPage Ref: 25Objective: 4Difficulty: Easy

74) Incorporating the holistic view of marketing, the four Ps of the marketing mix can be updated to ________.A) product, positioning, people, and price B) people, processes, place, and promotionC) product, processes, price, and peopleD) people, processes, programs, and performanceE) product, price, promotion, and peopleAnswer: DPage Ref: 25Objective: 4AACSB: Multicultural diversityDifficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***75) Which of the following reflects the "people" component of the marketing mix?A) the creativity, discipline, and structure brought to marketing managementB) the development of new products by the marketersC) the firm's consumer-directed activitiesD) the right set of processes to guide activities and programs within the firmE) the internal marketing of the firmAnswer: EPage Ref: 25Objective: 4AACSB: Reflective thinkingDifficulty: Moderate

76) Which of the four new Ps encompasses the old four Ps as well as a range of other marketing activities that might not fit well into the old view of marketing?A) programsB) processesC) promotionD) peopleE) performanceAnswer: APage Ref: 25Objective: 4Difficulty: Moderate

77) At the heart of any marketing program is the firm's ________, its tangible offering to the market.A) strategyB) product C) brandD) valueE) peopleAnswer: BPage Ref: 27Objective: 5Difficulty: Easy

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***78) ________ activities include those the company undertakes to make the product accessible and available to target customers. A) Line extensionB) Segmentation C) Marketing research D) Channel E) New-product development Answer: DPage Ref: 27Objective: 5Difficulty: Moderate

79) A marketer's only concern is how best to create demand for a new product produced by his company. Improving product design is not his responsibility.Answer: FALSEPage Ref: 4Objective: 1Difficulty: Easy

80) A short definition of marketing is "meeting needs profitably." Answer: TRUEPage Ref: 5Objective: 2AACSB: Analytic skillsDifficulty: Easy

81) Services constitute the bulk of most countries' production and marketing efforts.Answer: FALSEPage Ref: 5Objective: 2AACSB: Analytic skillsDifficulty: Moderate

82) The U.S. economy today consists of a 70-30 services-to-goods mix. Answer: TRUEPage Ref: 5Objective: 2Difficulty: Moderate

83) Place marketers include economic development specialists, real estate agents, commercial banks, local business associations, and advertising and public relations agencies. Answer: TRUEPage Ref: 6Objective: 2Difficulty: Easy

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***84) Properties are tangible rights of ownership to either real property (real estate) or financial property (stocks and bonds). Answer: FALSEPage Ref: 6Objective: 2Difficulty: Easy

85) "Friends Don't Let Friends Drive Drunk," is an example of marketing information to an interested audience. Answer: FALSEPage Ref: 7Objective: 2AACSB: Reflective thinkingDifficulty: Moderate

86) Unwholesome demand occurs when consumers' purchases vary on a seasonal, monthly, weekly, daily, or even hourly basis. Answer: FALSEPage Ref: 8Objective: 2AACSB: Analytic skillsDifficulty: Moderate

87) When consumers share a strong need that cannot be satisfied by an existing product, they are exhibiting latent demand. Answer: TRUEPage Ref: 8Objective: 2Difficulty: Moderate

88) Advertising is the most important element in business marketing.Answer: FALSEPage Ref: 9Objective: 2AACSB: Multicultural diversityDifficulty: Moderate

89) Companies selling their goods to nonprofit organizations often charge a premium over their normal prices because these organizations are largely indifferent to price. Answer: FALSEPage Ref: 9Objective: 2AACSB: Reflective thinkingDifficulty: Easy

90) Shops and stores have a physical existence and as such are examples of marketspace.

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Answer: FALSEPage Ref: 9Objective: 2AACSB: Use of ITDifficulty: Easy

91) Wants are basic human requirements, such as food and shelter. Answer: FALSEPage Ref: 9-10Objective: 3Difficulty: Easy

92) Demands are wants for specific products backed by an ability to pay. Answer: TRUEPage Ref: 10Objective: 3AACSB: Analytic skillsDifficulty: Easy

93) Contrary to popular belief, marketers do not create needs.Answer: TRUEPage Ref: 10Objective: 3Difficulty: Easy

94) The customer value triad consists of a combination of quality, durability, and price. Answer: FALSEPage Ref: 10Objective: 3AACSB: Analytic skillsDifficulty: Moderate

95) A distribution channel includes distributors, wholesalers, retailers, and agents that display, sell, or deliver the physical product or service(s) to the buyer or user. Answer: TRUEPage Ref: 11Objective: 3Difficulty: Easy

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***96) The task environment of a firm consists of demographic, economic, natural, and technological environments, as well as the political-legal system and the social-cultural arena. Answer: FALSEPage Ref: 11Objective: 3AACSB: Analytic skillsDifficulty: Moderate

97) Regulation of industries has created greater competition and growth opportunities because the playing field has been leveled. Answer: FALSEPage Ref: 12Objective: 4AACSB: Reflective thinkingDifficulty: Easy

98) Industry boundaries are blurring at an incredible rate as companies are recognizing that new opportunities lie at the intersection of two or more industries. Answer: TRUEPage Ref: 12Objective: 4Difficulty: Easy

99) The overabundance of information available on the Internet has made it more difficult for consumers to compare product features and prices. Answer: FALSEPage Ref: 13Objective: 4AACSB: Reflective thinkingDifficulty: Easy

100) Companies can facilitate and speed external communication among customers by creating online and off-line "buzz" through brand advocates and user communities. Answer: TRUEPage Ref: 14Objective: 4Difficulty: Moderate

101) The proliferation of targeted media and communication channels has allowed marketers to become much more aware of their target consumers' preferences and to customize both products and messages for individual consumers. Answer: TRUEPage Ref: 15Objective: 4Difficulty: Easy

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***102) The production concept is one of the newest concepts in business. Answer: FALSEPage Ref: 18Objective: 4Difficulty: Easy

103) The selling concept holds that consumers will favor those products that offer the most quality, performance, or innovative features. Answer: FALSEPage Ref: 18Objective: 4AACSB: Analytic skillsDifficulty: Moderate

104) The selling concept holds that consumers will prefer products that are ethical, environmentally responsible, legal, and social in the context of marketing activities and programs. Answer: FALSEPage Ref: 18Objective: 4AACSB: Analytic skillsDifficulty: Moderate

105) The marketing concept stresses on finding the right customers for the company's products. Answer: FALSEPage Ref: 18Objective: 4AACSB: Analytic skillsDifficulty: Moderate

106) The selling concept is based on the development, design, and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies. Answer: FALSEPage Ref: 18Objective: 4AACSB: Analytic skillsDifficulty: Moderate

107) Relationship marketing aims to build mutually satisfying long-term relationships with key parties. Answer: TRUEPage Ref: 20Objective: 4Difficulty: Easy

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108) Attracting a new customer costs far more than retaining an existing one. Answer: TRUEPage Ref: 20Objective: 4AACSB: Analytic skillsDifficulty: Easy

109) One of the key themes of integrated marketing is that there are very few marketing activities that can effectively communicate and deliver value. Answer: FALSEPage Ref: 20Objective: 4AACSB: Reflective thinkingDifficulty: Moderate

110) Proponents of holistic marketing consider internal marketing to be as important as marketing to consumers.Answer: TRUEPage Ref: 21Objective: 4AACSB: Reflective thinkingDifficulty: Moderate

111) Integrated marketing is the task of hiring, training, and motivating able employees who want to serve customers well.Answer: FALSEPage Ref: 21Objective: 4Difficulty: Easy

112) Performance marketing requires understanding the financial and non-financial returns to business and society from marketing activities and programs. Answer: TRUEPage Ref: 22Objective: 4Difficulty: Easy

113) Performance marketing involves reviewing metrics assessing market share, customer loss rate, customer satisfaction, and product quality in the evaluation of the effectiveness of marketing activities. Answer: TRUEPage Ref: 22Objective: 4Difficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***114) The social responsibility marketing concept holds that the organization's task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer's and the society's well-being. Answer: TRUEPage Ref: 22Objective: 4Difficulty: Easy

115) Adapting and conducting business practices that protect the environment and human and animal rights is specifically a part of corporate social marketing.Answer: FALSEPage Ref: 24Objective: 4Difficulty: Moderate

116) Cause-related marketing involves donating a percentage of revenues to a specific cause based on the revenue occurring during the announced period of support. Answer: TRUEPage Ref: 24Objective: 4AACSB: Analytic skillsDifficulty: Moderate

117) Making gifts of money, goods, or time to help nonprofit organizations, groups, or individuals is known as corporate philanthropy. Answer: TRUEPage Ref: 24Objective: 4Difficulty: Easy

118) The marketing-mix component called "people" reflects all the creativity, discipline, and structure brought to marketing management.Answer: FALSEPage Ref: 25Objective: 4Difficulty: Easy

119) A firm's tangible offering to the market includes product quality, design, features, and packaging.Answer: TRUEPage Ref: 27Objective: 5AACSB: Reflective thinkingDifficulty: Easy

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***120) Marketing has been described as being both an "art" and a "science." Discuss the differences and similarities between these two marketing thrusts. Provide your theoretical response and a "real-life" example where you have seen both processes work effectively at creating customer value and loyalty. Answer: The student should demonstrate his or her understanding that the marketer must use data to understand customer needs and translate this understanding into properly designed products and services. This requires application of state-of-the art tools and techniques. It is also an art as marketers try to find creative solutions to consumer needs.Page Ref: 3-4Objective: 2AACSB: Reflective thinkingDifficulty: Moderate

121) Marketers are involved in marketing 10 types of entities. List and briefly characterize these entities. Answer: The types of entities that are marketed are (1) goods—physical goods, (2) services—hotels and car rental services, (3) events—time-based events such as trade shows, (4) experiences—Walt Disney's Magic Kingdom, (5) persons—celebrity marketing, (6) places—cities, states, regions, and even whole nations, (7) properties—intangible rights of ownership of either real property or financial property, (8) organizations—corporate identity, (9) information—information produced and marketed as a product, and (10) ideas—marketing the basic idea of a market offering. Page Ref: 5-7Objective: 2AACSB: Analytic skillsDifficulty: Moderate

122) Marketers should be skilled in stimulating demand for a company's products. Just as production and logistics professionals are responsible for supply management, marketers are responsible for demand management. Marketing managers seek to influence the level, timing, and composition of demand to meet the organization's objectives. List and briefly characterize the eight different demand states. Answer: The eight different demand states are (1) negative demand—consumers dislike the product and may even pay a price to avoid it, (2) nonexistent demand—consumers may be unaware or uninterested in the product, (3) latent demand—consumers may share a strong need that cannot be satisfied by an existing product, (4) declining demand—consumers begin to buy the product less frequently or not at all, (5) irregular demand—consumer purchases vary on a seasonal, monthly, weekly, daily, or even hourly basis, (6) full demand—consumers are adequately buying all products in the market, (7) overfull demand—more consumers would like to buy the product than can be satisfied, and (8) unwholesome demand—consumers may be attracted to products that have undesirable social consequences. Page Ref: 8Objective: 2AACSB: Analytic skillsDifficulty: Easy

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***123) Consumers often have many needs that are not readily obvious. Just observing their behavior inside a retail store is not enough to get a true understanding of their "needs." List and briefly describe the five types of needs that most consumers have. Answer: Suppose a customer wants to buy a car. The five types of customer needs with respect to this example are (1) stated needs—the customer wants an inexpensive car, (2) real needs—the customer wants a car whose operating cost, not its initial price, is low, (3) unstated needs—the customer expects good service from the dealer, (4) delight needs—the customer would like the dealer to include an onboard navigation system, and (5) secret needs—the customer wants to be seen by friends as a savvy consumer. Page Ref: 10Objective: 3AACSB: Analytic skillsDifficulty: Easy

124) Distinguish between the concepts of value and satisfaction. Answer: The offering will be successful if it delivers value and satisfaction to the target buyer. The buyer chooses between different offerings on the basis of his or her perception about which product will deliver the most value. Value reflects the perceived tangible and intangible benefits and costs to customers. Value can be seen as primarily a combination of quality, service, and price (called the customer-value triad). Satisfaction reflects a person's comparative judgments resulting from a product's perceived performance (or outcome) in relation to his or her expectations.Page Ref: 10Objective: 3AACSB: Reflective thinkingDifficulty: Easy

125) Assume that you have been given the task of assisting a company in designing its marketing planning process. What components should be in such a process? Answer: The marketing planning process consists of analyzing marketing opportunities, selecting target markets, designing strategies, developing marketing programs, and managing the marketing effort. Page Ref: 15-16Objective: 4AACSB: Analytic skillsDifficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***126) The competing concepts under which organizations have conducted marketing activities include: the production concept, product concept, selling concept, marketing concept, and holistic marketing concept. Evaluate the advantages and disadvantages of each concept. Which concept do you believe is the most effective? Why? Answer: Although students will be expected to research each concept, they should conclude the most effective concept is the holistic marketing concept, where companies need to have a more complete, cohesive approach that goes beyond traditional applications of the marketing concept. Page Ref: 17-19Objective: 4AACSB: Reflective thinkingDifficulty: Moderate

127) Define internal marketing and its role in the company. Outline how various departments within the company can demonstrate a customer focus. Answer: Internal marketing is the task of hiring, training, and motivating able employees who want to serve customers well. Internal marketing must take place on two levels. At one level, the various marketing functions must work together. At the second level, other departments must embrace marketing and a "think customer" attitude.Page Ref: 21-23Objective: 4AACSB: Reflective thinkingDifficulty: Easy

128) According to Starbucks Chairman Howard Schultz, "Consumers now commonly engage in a cultural audit of [product and service] providers. People want to know your value and ethics demonstrated by how you treat employees, the community in which you operate." Discuss the concept of social responsibility marketing and how it impacts both companies and consumers. Answer: The social responsibility marketing concept holds that the organization's task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfaction more effectively and efficiently than competitors in a way that preserves or enhances the consumer's and society's long-term well-being. Many companies actively engaged in corporate social responsibility campaigns to both motivate employees and attract consumers. As goods become more commoditized, and as consumers grow more socially conscious, some companies are adding social responsibility as a way to differentiate themselves from competitors, build consumer preference, and achieve notable sales and profit gains. They believe customers will increasingly look for signs of good corporate citizenship. Page Ref: 22, 24Objective: 4AACSB: Ethical understanding and reasoning abilitiesDifficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***129) Identify and define the traditional four Ps. Also identify the new four Ps and the reason for developing the new interpretation.Answer: The traditional four Ps are: Product (product variety, quality, design, features, brand name, packaging, sizes, services, warranties, returns), Price (list price, discounts, allowances, payment period, credit terms), Promotion (sales promotion, advertising, sales force, public relations, direct marketing), and Place (channels, coverage, assortments, locations, inventory, transportation). However, given the breadth, complexity, and richness of marketing, as exemplified by holistic marketing, these 4 Ps are not the whole story anymore. Updating them to reflect the holistic marketing concept, researchers in this field arrived at a more representative set that encompasses modern marketing realities: people, processes, programs, and performance. Page Ref: 25-26Objective: 4AACSB: Analytic skillsDifficulty: Moderate

130) Discuss the eight demand states with respect to bifocal lenses for glasses. Answer: Student answers may vary, but a possible answer includes the following: (1) negative demand—many people don't want to admit they need bifocals, (2) nonexistent demand—when bifocal lenses were first introduced, people didn't know they existed, (3) latent demand—before they were introduced, many people thought such a product would be nice, but didn't think it would ever exist, (4) declining demand—this will occur when something better and more convenient is invented, (5) irregular demand—the consumer perceives a need for eye care devices only periodically, possibly when they begin to have trouble with their vision, (6) full demand—the manufacturers of the lenses are making all they possibly can, (7) overfull demand—the manufacturers of the lenses can't make enough and inventories are low, and (8) unwholesome demand—seeking alternatives that can lead to undesirable consequences.Page Ref: 8Objective: 2AACSB: Analytic skillsDifficulty: Moderate

131) New terms are now being used to describe where marketing is done. Using the automobile market, describe automotive buying behavior for a: (1) marketplace, (2) marketspace, and (3) metamarket. Answer: Responses to this question should include a reference to the following: (1) marketplace—shopping for an automobile at a dealer, (2) marketspace—shopping for an automobile via the Internet, eBay, or even designing your own car via a manufacturer's Web site, and (3) metamarket—(a cluster of complementary products and services that are closely related in the customer's mind but are spread across a diverse set of industries) that might include insurance companies, the racing industry, the travel industry, the customization industry, etc. Page Ref: 9Objective: 2AACSB: Analytic skills

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Difficulty: Moderate

132) Ford knows that to reach its target markets three kinds of marketing channels may be used. What are these three marketing channels and how might Ford use each of them? Answer: The three marketing channels are communication, distribution, and service channels. Ford uses advertising to position its products and convey a certain message to consumers (communication channel). The delivery of cars to end consumers would require a distribution channel, such as a car dealership, and the company can have tie-ups with insurance companies to provide car insurance (service channel).Page Ref: 11Objective: 3AACSB: Analytic skillsDifficulty: Moderate

133) The marketplace isn't what it used to be. List and briefly discuss the new behaviors, opportunities, and challenges that await the marketer in the 21st century. Answer: Responses to this question should include: (1) changing technology, (2) globalization, (3) deregulation, (4) privatization, (5) customer resistance, (6) heightened competition, (7) industry convergence, (8) retail transformation, (9) disintermediation, (10) network information technology, (11) consumer buying power, (12) consumer information, (13) consumer participation, and (14) consumer resistance.Page Ref: 12-13Objective: 4AACSB: Reflective thinkingDifficulty: Moderate

134) Discuss the concept of disintermediation and provide an example.Answer: Disintermediation grew out of the rush to embrace the dot-coms and e-commerce. Essentially, the dot-coms removed many of the traditional intermediaries by encouraging consumers to deal directly with the company via the Internet. "Brick-and-click" businesses eventually brought some of the intermediaries back through a process called reintermediation. Page Ref: 13Objective: 4AACSB: Use of ITDifficulty: Easy

135) The digital revolution has placed a whole new set of capabilities in the hands of consumers and businesses. Describe the advantages that you as a consumer have today that your parents or grandparents didn't have. Answer: Responses to this question should include: (1) a substantial increase in buying power, (2) a greater variety of available goods and services, (3) a great amount of information about practically anything, (4) greater ease in interacting and placing and receiving orders, and (5) an increased ability to compare products and services. Page Ref: 14-15Objective: 4

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***AACSB: Analytic skillsDifficulty: Easy136) The Internet has given today's companies a new set of capabilities. Among those capabilities is the ability to operate a new information channel. Describe how information can be used by the marketer in this new channel. Answer: Companies can operate a powerful new information and sales channel, the Internet, with augmented geographical reach to inform and promote their businesses and products worldwide. By establishing one or more Web sites, a company can list its products and services, its history, its business philosophy, its job opportunities, and other information of interest to visitors. This provides consumers with a direct access to the company. Almost all Web sites include a "contact us" section that enables consumers to put forth their queries and interact with the company directly. This in turn allows marketers to be aware of people's opinions and preferences.Page Ref: 14-15Objective: 4AACSB: Analytic skillsDifficulty: Easy

137) Discuss how companies can use the Internet to build their brands. Give an example of a company that has done so. Answer: Online marketing activities can be used to build brands by increasing consumer exposure to the brand and creating an interactive experience between the customer and the brand, giving consumers access not only to company-created information but also consumer-generated content. For example, Carnival Connections, an online cruise-booking site, made it easy for cruise fans to compare notes on cruise destinations and onboard entertainment. Page Ref: 14-15Objective: 4AACSB: Analytic skillsDifficulty: Moderate

138) Arthur Jones has decided to start a business. He wants to manufacture lawn mowers and believes in the production concept. If this approach is taken, what will be Mr. Jones' primary areas of concentration as he builds his business? Answer: This orientation holds that consumers will prefer products that are widely available and inexpensive. Managers of production-oriented businesses concentrate on high production efficiency, low costs, and mass distribution. Jones will also want an efficient production process in place. This approach is also used when a company wants to expand the market. Students may use these facts as they design their answer. Page Ref: 18Objective: 4AACSB: Analytic skillsDifficulty: Easy

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***139) Increasingly, a key goal of marketing is to develop deep, enduring relationships with all entities that directly or indirectly affect the success of the firm. Discuss the merits of relationship marketing. From your experience as a consumer, describe the relationship marketing efforts undertaken by a company of your choice. Answer: Students should understand that the relationship between any supplier and customer is not just in the mechanics of the transaction, but more importantly how the customer is treated during the transaction. The better the relationship, the more the likelihood of the customer remaining loyal. They should pick a company that has served them well and made them feel special each and every time. Page Ref: 20Objective: 4AACSB: Analytic skillsDifficulty: Moderate

140) What would be the marketing network elements for a motorcycle company such as Harley-Davidson? Answer: A marketing network consists of the company and its supporting stakeholders. These stakeholders for Harley-Davidson are its customers, employees, suppliers, distributors, retailers, repair services, ad agencies, lobby groups, and motorcycle support clubs. The operating principle is simple: Build an effective network of relationships with key stakeholders, and profits will follow. Page Ref: 20Objective: 4AACSB: Analytic skillsDifficulty: Moderate

141) Your firm is in the process of moving from focusing on a financial scorecard as the basis for running and evaluating the organization to a marketing scorecard approach. What is a marketing scorecard approach and what might be some of its components? Answer: Top management is going beyond sales revenue alone to examine the marketing scorecard. Today, the shift to the marketing scorecard attempts to interpret what is happening to market share, customer loss rate, customer satisfaction, product quality, and other measures. Managers know changes in marketing indicators predict changes in financial results. Page Ref: 22Objective: 4AACSB: Reflective thinkingDifficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***142) William Burns owns an extremely profitable sea-side resort. In order to increase his resort's brand value, Burns is considering cause-marketing. Give a few examples of how he may achieve this goal.Answer: Cause marketing is promoting social issues through efforts such as sponsorships, licensing agreements, and advertising. The hotel can sponsor events addressing social issues. As it is a sea-side resort, it can support and sponger efforts to protect marine life, preserve the natural environment, and prevent water pollution. (Answers can vary.)Page Ref: 24Objective: 4AACSB: Analytic skillsDifficulty: Moderate

143) You have been given the assignment of justifying cause-related marketing to your board of directors. What would be your primary argument in favor of such a proposal? Answer: Companies see cause-related marketing as an opportunity to enhance their corporate reputation, raise brand awareness, increase customer loyalty, build sales, and increase press coverage. They believe customers will increasingly look for signs of good corporate citizenship that go beyond supplying rational and emotional benefits. This should be the main line of argument in support of any cause-related marketing effort.Page Ref: 24Objective: 4AACSB: Analytic skillsDifficulty: Moderate

144) Linda Evans has been given the task of developing the product element of her company's marketing mix. List the components that will likely be included in this element of the marketing mix. Answer: Product variety, quality, design, features, brand name, packaging, sizes, services, warranties, and returns are the key elements of the product portion of the marketing mix. Page Ref: 25Objective: 4AACSB: Analytic skillsDifficulty: Moderate

Chapter 2: Developing Marketing Strategies and Plans

GENERAL CONCEPT QUESTIONS

Multiple Choice

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1. A key ingredient of the marketing management process is insightful, ________ marketing strategies and plans that can guide marketing activities. a. creativeb. measurablec. macrod. microe. niche

Answer: a Page: 35 Level of difficulty: Medium

2. According to a chapter story about H&M clothing stores, H&M is able to put products out quickly and inexpensively by all of the following EXCEPT ________.a. having few middlemen and owning no factoriesb. buying large volumesc. having extensive experience in the clothing industry d. having a great knowledge of which goods should be bought from which markets e. having total control of its distribution channel from the time the goods are

produced until the time they are soldAnswer: e Page: 36 Level of difficulty: Hard

3. The task of any business is to deliver ________ at a profit. a. customer needs b. productsc. customer valued. products and servicese. improved quality

Answer: c Page: 36 Level of difficulty: Medium

4. In a hypercompetitive economy such as ours, a company can win only by fine-tuning the value delivery process and choosing, providing, and ________ superior value.a. communicatingb. selecting target markets withc. composingd. developinge. researching


5. The traditional view of marketing is that the firm makes something and then ________ it.a. marketsb. sellsc. distributesd. prices e. services

Answer: b Page: 36 Level of difficulty: Easy

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6. Today, the “mass-market” is actually splintering into numerous ________, each with its own wants, perceptions, preferences, and buying criteria.a. micromarketsb. market targetsc. macromarketsd. customer cliquese. demographic units


7. The first phase of the value creation and delivery sequence is ________ that represents the “homework” marketing must do before any product exists.a. choosing the valueb. market researchc. target marketingd. service consideratione. projective thinking


8. The last step in the value creation and delivery sequence is ________ the value where the sales force, sales promotion, advertising, and other communication tools announce and promote the product.a. developingb. distributingc. communicatingd. reversinge. researching


9. The Japanese have refined the value delivery process to include a component that emphasizes ________. a. zero servicingb. zero customer feedback timec. zero promotiond. zero dependency on intermediariese. zero marketing costs

Answer: b Page: 38 Level of difficulty: Medium

10. The ________ is a tool for identifying ways to create more customer value.a. value chainb. customer surveyc. brand loyalty indexd. promotion channele. supplier database

Answer: a Page: 38 Level of difficulty: Easy

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***11. The ________ identifies nine strategically relevant activities that create value and

cost in a specific business.a. value propositionb. value chainc. mission statementd. annual reporte. manager’s log


12. The ________ in the value chain cover the sequence of bringing materials into the business (inbound logistics), converting them into final products (operations), shipping out final products (outbound logistics), marketing them (marketing and sales), and servicing them (service).a. operations processb. manufacturing processc. primary activitiesd. secondary activitiese. tertiary activities


13. Procurement, technology development, human resource management, and firm infrastructure are handled in certain specialized departments and are called ________. a. materials handlingb. support activitiesc. inventory activitiesd. primary activitiese. benchmark activities

Answer: b Page: 38 Level of difficulty: Hard

14. The firm should estimate its competitors’ costs and performances as ________ against which to

compare its own costs and performance.

a. competitionb. standardsc. challengesd. benchmarkse. moveable standards

Answer: d Page: 38 Level of difficulty: Easy15. The firm’s success depends not only on how well each department performs its work,

but also on how well the various departmental activities are coordinated to conduct ________.a. core strategiesb. satellite businessesc. core valuesd. core business processes

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***e. core technologies

Answer: d Page: 38 Level of difficulty: Medium

16. With respect to core business processes, all the activities involved in gathering

market intelligence, disseminating it within the organization, and acting on the

information is referred to as the ________.

a. market sensing processb. market research processc. target marketing processd. market pulse processe. deployment process


17. With respect to the core business processes, all the activities involved in

researching, developing, and launching new high-quality offerings quickly and within

budget are referred to as the ________.

a. new product processb. new offering realization processc. product development processd. product launch processe. return on investment process


18. With respect to the core business processes, the ________ is considered to be all the activities involved in defining target markets and prospecting for new customers.a. customer acquisition processb. customer relationship management processc. fulfillment management processd. customer prospecting processe. customer equity process


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***19. A good way to describe the ________ would be discuss all the activities involved

in building deeper understanding, relationships, and offerings to individual customers.

a. customer acquisition processb. customer relationship management processc. customer prospecting processd. customer fulfillment management processe. customer equity process


20. Another way to describe a value delivery network (partnering with specific suppliers and distributors) is to call it a ________.

a. teamwork groupb. cabalc. domestic power centerd. link to relationshipse. supply chain

Answer: e Page: 39 Level of difficulty: Easy

21. The key to utilizing organizational core competencies is to ________ that make up the essence of the business.

a. make the competencies pay for themselvesb. own all intermediaries who come in contact with your goods and servicesc. own and nurture the resources and competenciesd. emphasize global promotions e. segment workforces

Answer: c Page: 39 Level of difficulty: Hard

22. We can say that a ________ has three characteristics: (1) It is a source of competitive advantage in that it makes a significant contribution to perceived customer benefits, (2) it has applications in a wide variety of markets, and (3) it is difficult for competitors to imitate.

a. core competencyb. business strategyc. core technologyd. strategic business unite. winning strategy


23. Core competencies tend to refer to areas of special technical and production expertise, where ________ tend to describe excellence in broader business processes.a. process benchmarksb. distinctive capabilitiesc. core business valuesd. value statementse. mission statements


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***24. George Day sees market-driven organizations as excelling in three distinctive

capabilities: ________, customer linking, and channel bonding.a. target marketingb. market research c. fulfilling customer needsd. market sensinge. customer service relationships


25. Competitors find it hard to imitate companies such as Southwest Airlines, Dell, or IKEA because they are unable to copy their ________.a. product innovationsb. distribution strategyc. pricing policiesd. activity systemse. logistics system

Answer: d Page: 40 Level of difficulty: Hard

26. One conception of holistic marketing views it as “integrating the value exploration, ________, and value delivery activities with the purpose of building long-term, mutually satisfying relationships and co-prosperity among key stakeholders.”a. value creationb. value propositionc. value managementd. value researche. value chain

Answer: a Page: 40 Level of difficulty: Hard

27. Holistic marketers achieve profitable growth by expanding customer share, ________, and capturing customer lifetime value.a. undermining competitive competencies b. building customer loyaltyc. milking the market for product desiresd. renewing a customer basee. inspecting all market share data


28. The holistic marketing framework is designed to address three key management questions. Which of the following is one of those questions?a. Value claims—how does the company deal with value erosion?b. Value proposition—how can value propositions be made profitable?c. Value chain—are there weak links in the company’s value chaind. Value network—how can a company effectively network?e. Value exploration—how can a company identify new value opportunities?

Answer: e Page: 41 Level of difficulty: Hard

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***29. The customer’s ________ reflects existing and latent needs and includes dimensions

such as the need for participation, stability, freedom, and change.a. competence spaceb. resource spacec. emotional spaced. relationship spacee. cognitive space

Answer: e Page: 41 Level of difficulty: Medium

30. The company’s ________ can be described in terms of breadth—broad versus focused scope of business; and depth—physical versus knowledge-based capabilities. a. business missionb. core strategyc. cognitive spaced. competency spacee. resource space


31. The collaborator’s ________ involves horizontal partnerships, where companies choose partners based on their ability to exploit related market opportunities, and vertical partnerships, where companies choose partners based on their ability to serve their value creation.a. resource spaceb. competency spacec. cognitive spaced. rational spacee. service space


32. Business realignment may be necessary to maximize core competencies. Which of the following would be one of the steps in this realignment process? a. Reviewing all macro relationships.b. Reviewing global outreach projections.c. Redefining the business concept (the “big idea”).d. Reviewing successes from e-commerce (if any).e. Revamping the ethics statement.


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***33. ________ allows the company to discover who its customers are, how they behave,

and what they need or want. It also enables the company to respond appropriately, coherently, and quickly to different customer opportunities.a. Network managementb. Strategic managementc. Marketing managementd. Customer relationship managemente. Total quality management


34. To respond effectively and provide value delivery, the company requires ________ to integrate major business processes (e.g., order processing, general ledger, payroll, and production) within a single family of software modules. a. human resource managementb. internal auditing managementc. internal resource managementd. strategic managemente. marketing management

Answer: c Page: 41 Level of difficulty: Hard 35. With respect to value delivery, ________ allows the company to handle complex

relationships with its trading partners to source, process, and deliver products.a. a value matrix b. a global distribution policyc. a business development strategyd. business partnership managemente. total quality management


36. Successful marketing requires having capabilities such as understanding ________, creating customer value, delivering customer value, capturing customer value, and sustaining customer value.a. customer loyaltyb. customer perksc. customer retentiond. customer valuee. customer benefits

Answer: d Page: 41 Level of difficulty: Easy

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***37. According to a McKinsey research study, which of the following is one of the main

challenges that marketing must face in the twenty-first century? a. The threat of ethics-based lawsuits.b. Doing more with less.c. Hostile takeover attempts.d. Increasing control by big government.e. Being independent of the distribution process.


38. Strategic planning in the twenty-first century calls for action in three key areas. Which of these key areas deals specifically with devising a long-term game plan for achieving long-run objectives? a. Creating a viable business opportunity.b. Producing a strategic fit.c. Developing an investment portfolio.d. Expanding core competencies.e. Establishing a strategy.


39. Most large companies consist of four organizational levels: the ________, the division level, the business unit level, and the product level.a. board of director levelb. major stakeholder levelc. management team leveld. corporate levele. strategic level


40. The ________ is the central instrument for directing and coordinating the marketing effort. a. strategic planb. marketing planc. tactical pland. customer value statemente. corporate mission


41. The ________ lays out the target markets and the value proposition that will be offered, based on an analysis of the best market opportunities.

a. organizational planb. strategic marketing planc. corporate tactical pland. corporate missione. customer value statement


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***42. In which of the following plans would we most likely find directions for

implementing and addressing daily challenges and opportunities in product features, promotion, merchandising, pricing, sales channels, and service areas.a. The tactical marketing plan.b. The target marketing plan.c. The deployment plan.d. The product launch plan.e. The product development plan.


43. If you wanted to find out more about target markets and the organization’s value proposition, which of the following types of plans would most likely contain information that might be useful to you in your quest?a. The marketing plan.b. The organizational plan.c. The strategic marketing plan.d. The tactical marketing plan.e. The marketing mix plan.


44. The ________ process consists of corporate, division, business, and product planning. a. implementingb. controllingc. innovationd. planninge. competitive


45. All corporate headquarters undertake four planning activities, the first of which is ________.a. defining the corporate missionb. establishing strategic business units and assigning resources (SBUs)c. assigning resources to each SBUd. assessing growth opportunitiese. understanding target markets


46. A clear, thoughtful mission statement provides employees with a shared sense of purpose, direction, and ________. a. profitabilityb. target market feasibilityc. opportunityd. continuous improvemente. quality products


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***47. Mission statements are at their best when they reflect a ________.

a. marketb. strengthc. competencyd. visione. value


48. Which of the following terms matches to the phrase “it is a single business or collection of related businesses that can be planned separately from the rest of the company”?

a. Strategic business unit.b. Diverse business unit.c. Growth business unit.d. Niche market unit.e. Specialized business unit.


49. Market-penetration, product-development, and market-development strategies would all be examples of ________ strategies. a. concentricb. conglomeratec. horizontald. intensive growthe. integrative growth


50. A(n) ________ is when a company might seek new businesses that have no relationship to its current technology, products, or markets.a. concentric strategyb. conglomerate strategyc. horizontal strategyd. intensive growth strategye. integrative strategy


51. Which of the following terms most closely matches to “the shared experiences, stories, beliefs, and norms that characterize an organization”? a. Organizational dynamics.b. A business mission.c. An ethical/value statement.d. Customer relationships.e. Corporate culture.


52. The first step in the business unit strategic-planning process deals with which of the following?

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***a. Goal formulation.b. Business mission.c. Strategy formulation.d. Program formulation.e. SWOT analysis.


53. When a business gets to know market segments intimately and pursues either cost leadership or differentiation within the target segment it is referred to as a ________. a. defined strategyb. focused strategyc. value-added strategyd. competitive advantage strategye. customer-focused strategy


54. If a firm pursues a ________ strategy, it must be good at engineering, purchasing, manufacturing, and physical distribution. a. differentiation b. overall cost leadershipc. focusd. domestic customer relationship e. market share


55. To keep their strategic alliances thriving, corporations have begun to develop organizational structures to support them and have come to view the ability to form and manage partnerships as core skills. This is called ________. a. value managed partnershipb. synergistic partnershipc. centralized partnershipd. partner relationship managemente. win-win relationship management


56. Traditionally, most businesses focused on stockholders. Today, the focus is on what are called ________.

a. stakeholdersb. partnersc. regulatorsd. consumer triadse. supply-chain relationships

Answer: a Page: 58 Level of difficulty: Easy57. A ________ is a written document that summarizes what the marketer has learned

about the marketplace and indicates how the firm plans to reach its marketing objectives.a. strategic plan

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***b. marketing planc. sales pland. target market plane. competitive analysis plan


58. Which of the following permits senior management to grasp the marketing plan’s major thrust? a. The situation analysis.b. The marketing strategy.c. The executive summary and table of contents.d. Financial projections.e. Implementation and controls.


59. Most marketing plans cover ________.

a. one yearb. two yearsc. three yearsd. four yearse. five years


60. The most frequently cited shortcomings of current marketing plans, according to marketing executives, are lack of realism, insufficient competitive analysis, and a ________ focus. a. long-termb. profitc. short-rund. producte. price

Answer: c Page: 60 Level of difficulty: Easy

True/False

61. The traditional view of marketing is that the firm makes something and then sells it. Answer: True Page: 36 Level of difficulty: Easy

62. The traditional view of marketing begins with a first step called strategic marketing.Answer: False Page: 36 Level of difficulty: Hard

63. The formula, segmentation, targeting, and positioning (STP) is the essence of strategic marketing.

Answer: True Page: 37 Level of difficulty: Medium

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64. The Japanese have extended the value delivery process by adding the concept of zero

promotions after five years.

Answer: False Page: 38 Level of difficulty: Medium

65. The customer relationship management process is all the activities involved in receiving and approving orders, shipping the goods on time, and collecting payment.

Answer: False Page: 38 Level of difficulty: Hard

66. A principle of the value chain is that every firm is a synthesis of activities performed to design, produce, market, deliver, and support its product.

Answer: True Page: 38 Level of difficulty: Easy

67. Another name for a company’s value delivery network is “the intermediary team.”


68. A core competency is usually common among competitors in a given industry. Answer: False Page: 39 Level of difficulty: Medium

69. Holistic marketing focuses on the integration of value exploration, value creation, and value delivery as a means to build long-term relationships with consumers.


70. If a manager asks “How can my company identify new value opportunities?,” he or she is examining a management question identified as being value creation.


71. According to McKinsey research, a recommendation to managers and CEOs who are concerned about marketing performance was that marketers must test and develop programs more quickly as they enhance planning processes and research approaches.


72. The marketing plan is the central instrument for directing and coordinating the marketing effort.


73. A mission statement has as its primary focus the product and how to make it.


74. One of the characteristics of a good mission statement is that it has an expansive number of goals for doing business.


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***75. A good illustration of a market definition of the business a company is in would be “We sell gasoline.”


76. If a company sought to expand the number of existing products sold to its current markets, it would use an integrative growth strategy labeled as “market-penetration strategy.”

Answer: True Page: 48 Level of difficulty: Hard

77. If a company sought to grow via a strategy that required the company to seek new businesses that have no relationship to its current technology, products, or markets, the company would be using a diversification strategy called a conglomerate strategy.


78. Scenario analysis can be used to assist companies in appraising how well their corporate culture might match (or not match) potential business partners or acquisitions.


79. Once an organization has established a business mission in its business unit strategic-planning process, it may proceed to the second step of the planning process called goal formulation.


80. Good illustrations of microenvironment actors in the strategic planning process would be demographics, technology, and the social-cultural arena.


81. To evaluate opportunities, companies can use Market Opportunity Analysis (MOA) to determine the attractiveness and probability of success.


82. An environmental threat is a challenge posed by an unfavorable trend or development that would lead, in the absence of defensive marketing action, to lower sales or profit.


83. Once a SWOT analysis has been completed, the strategic planner is ready to proceed to the goal formulation stage of the strategic planning process model.


84. In applying MBO (management by objectives) all objectives are treated as being equally important—objective discrimination is not allowed.


85. For an MBO (management by objectives) system to work, one of the four criteria that the unit’s objectives must meet is that objectives must be stated quantitatively whenever possible.


86. A strategy is a game plan for achieving what the business unit wants to achieve. Answer: True Page: 56 Level of difficulty: Easy

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87. Firms choosing a generic strategy centering on focus must be good at engineering, purchasing, manufacturing, and physical distribution.


88. One of the four major categories of strategic alliance involves sharing personnel (e.g., human resource alliance) to staff alliance member marketing departments.


89. Partner Relationship Management (PRM) can be thought of as a corporation’s development of structures that support strategic alliances and treats the formation and management of partnerships as a core skill.


90. Companies normally measure their profit performance using ROI; however, this approach suffers because profits are arbitrarily measured and subject to manipulation.


91. A marketing vision statement is a written document that summarizes what the marketer has learned about the marketplace and indicates how the firm plans to reach its marketing objectives.


92. Marketing plans are becoming more production-oriented because of the high costs of doing business in today’s economy.


93. The marketing plan should open with a situation analysis.

Answer: False Page: 60 Level of difficulty: Easy

94. When a manager reaches the marketing strategy section of a marketing plan, he or she will define the mission and marketing and financial objectives.


95. One of the key questions to ask in evaluating a marketing plan is whether the plan is simple or not.


96. Such areas as sales forecasts, expense forecasts, and breakeven analysis are usually found in the financial projections section of the marketing plan.


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***97. Return on investment (ROI) shows how many units must be sold monthly to offset

the monthly fixed costs and average per-unit variable costs. Answer: False Page: 61 Level of difficulty: Medium

98. Most marketing plans conclude with a section that indicates how the plan will be implemented.


99. During the marketing strategy section of the marketing plan, goals and budgets are spelled out for each month or quarter so management can review each period’s results and take corrective action as needed.


100. A good illustration of a marketing objective would to “decrease customer acquisition costs by 1.5 percent per quarter.”


Essay

101.There are two views of the value delivery process that may be followed by organizations seeking to gain business from consumers. Briefly, summarize each of those views.

Suggested Answer: The traditional view of marketing is that the firm makes something and then sells it. In this view, marketing takes place in the second half of this process (see Figure 2.1 for additional details). Companies that subscribe to this view have the best chance of succeeding in economies marked by goods shortages where consumers are not fussy about the quality, features, or style. If abundant choices are present, this view does not work well. Another view emphasizes the organization’s role in the value delivery process. Strategic and tactical marketing are used to choose the value, provide the value, and communicate the value to consumers and channel partners. Marketing is moved to the first part of the delivery process. Pages: 36–37 Level of difficulty: Medium

102. The firm’s success depends not only on how well each department performs its work, but also on how well the various departmental activities are coordinated to conduct core business processes. List and briefly describe the five core business processes outlined in the text.

Suggested Answer: The core business processes include (1) the market sensing process—all the activities involved in gathering market intelligence, disseminating it within the organization, and acting on the information; (s) the new offering realization process—all the activities involved in researching, developing, and launching new high-quality offerings quickly and within budget; (3) the customer acquisition process—all the activities involved in defining target markets and prospecting for new customers; (4) the customer relationship

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***management process—all the activities involved in building deeper understanding, relationships, and offerings to individual customers, and (5) the fulfillment management process—all the activities involved in receiving and approving orders, shipping the goods on time, and collecting payment.Page: 38 Level of difficulty: Hard

103. A successful company nurtures its resources and competencies. A core competency has three characteristics. Describe those characteristics.

Suggested Answer: Core competency characteristics are: (1) it is a source of competitive advantage in that it makes a significant contribution to perceived customer benefits; (2) it has applications in a wide variety of markets; and, (3) it is difficult for competitors to imitate.Pages: 39 Level of difficulty: Medium

104. A holistic marketing orientation can provide insight into the process of capturing customer value. In this vain, the holistic marketing framework is designed to address three key management questions. Describe and illustrate each of these key management questions.

Suggested Answer: The three management questions are: (1) value exploration—how can a company identify new value opportunities? (2) value creation—how can a company efficiently create more promising new value offerings? and (3) value delivery—how can a company use its capabilities and infrastructure to deliver the new value offerings more efficiently? Page: 41 Level of difficulty: Hard

105. Marketing faces a number of challenges in the twenty-first century. Based on an

extensive 2002 research study, McKinsey (a noted consulting firm) identified three main challenges as reflected by differences in opinion between chief executive officers (CEOs) and their most senior marketing executives or chief marketing officers (CMOs). What were those challenges and which of the challenges do you think is most important? Why?

Suggested Answer: The three challenges are: (1) doing more with less, (2) driving new business development, and (3) becoming a full business partner. Answers will vary in what students perceive to be the most important challenge.

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***However, be sure that any answer chosen is supported by materials found in this section of the chapter.

Page: 42 Level of difficulty: Hard

106. Indicate the differences and similarities between the following terms: marketing plan, strategic marketing plan, and tactical marketing plan.

Suggested Answer: The marketing plan is the central instrument for directing and coordinating the marketing effort. The marketing plan operates at two levels: strategic and tactical. The strategic marketing plan lays out the target markets and the value proposition that will be offered, based on an analysis of the best market opportunities. The tactical marketing plan specifies the marketing tactics, including product features, promotion, merchandising, pricing sales, channels, and service.

Page: 43 Level of difficulty: Medium

107. Good mission statements are essential to being a success in business. Describe the three major characteristics that good mission statements should have.

Suggested Answer: Major characteristics include: (1) they focus on a limited number of goals; (2) mission statements stress the company’s major policies and values; and (3) they define the major competitive spheres within which the company will operate (e.g., industry, products and applications, competence, market segment, vertical, and geographical). Pages: 44–45 Level of difficulty: Easy

108. Assessing growth opportunities involves planning new businesses, downsizing, or terminating older businesses. The company’s plans for existing businesses allow it to project total sales and profits. If there is a gap between future desired sales and projected sales, corporate management will have to develop or acquire new businesses to fill it. Identify and describe the three strategies that can be used to fill the strategic gap.

Suggested Answer: The first option is to identify opportunities to achieve further growth with current businesses (intensive growth opportunities). The second is to identify opportunities to build or acquire businesses that are related to current businesses that are unrelated to current businesses (integrative growth opportunities). The third is to identify opportunities to add attractive businesses that are unrelated to current businesses (diversification growth opportunities).Page: 47 Level of difficulty: Hard

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109. Assume that you are directed to prepare short brief explaining the steps of the Business Unit Strategic-Planning Process. Your task is to construct such a brief by carefully outlining the steps of the aforementioned process.

Suggested Answer: Refer to Figure 2.7 in the chapter for assistance. Students should be able to describe (in order) the business mission, SWOT analysis, goal formulation, strategy formulation, program formulation, implementation, and feedback and control. The descriptions do not need to be long; however, they do need to be consistent with the text material. Answers will vary but consistency should be a learning goal.


110. As a marketing manager for a large steel company you have been assigned the task of educating a group of new managers on how to prepare a marketing plan. Though few of these managers will actually ever have to prepare such a plan because of their functional roles in the organization, it is still very useful that each new manager know how to construct a marketing plan. Prepare a brief summary of the contents of the marketing plan for the new managers. You may keep your discussion general or make it specific to the steel industry.

Suggested Answer: The contents of a marketing plan include (1) an executive summary and table of contents, (2) a situation analysis, (3) marketing strategy, (4) financial projections, and (5) implementation controls. Descriptions of the content steps may vary but should be in keeping with the general outline of this section of the chapter. See text material for further information.Pages: 60–61

Level of difficulty: Hard

APPLICATION QUESTIONS

Multiple Choice

111. If a manager were following the traditional view of marketing wherein the firm makes something and then sells it, all of the following would part of the “sell the product” process sequence EXCEPT ________. a. priceb. advertise/promotec. design product

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***d. distributee. service


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***112. As indicated in the text, critics of Nike and its shoe products often complain that ________.

a. Nike has too many professional athletes endorsing their productsb. Nike has an unfair advantage in product designc. Nike has unfair leverage with distributorsd. Nike shoes cost almost nothing to make yet cost the consumer so muche. Nike does not support ecological causes


113. According to the Japanese view of the value delivery process, the company should receive the required parts and supplies continuously through just-in-time arrangements with suppliers. This concept would be most appropriately called ________.

a. zero customer feedback timeb. zero product improvement timec. zero purchasing timed. zero setup timee. zero defect


114. Apex Corporation is known in its industry being “best of class” in terms of costs and performance. Many companies will probably use Apex Corporation as a ________.

a. targetb. benchmarkc. competitor to beatd. future suppliere. sounding board for ideas


115. James Franks has been put in charge of gathering marketing intelligence, disseminating it within his organization, and eventually directing action on the information. Which of the following core business processes most closely matches with the task that Mr. Franks has been given?

a. The market sensing process.b. The new offering realization process.c. The customer acquisition process.d. The customer relationship management process.e. The fulfillment management process.


146


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***116. Netflix, the pioneer online DVD rental service, has what is called ________

because they are excellent in broad business processes. a. core competencyb. distinctive capabilitiesc. market savvyd. business touche. intuitive synergy


117. George Day sees ________ organizations as excelling in three distinctive capabilities: market sensing, customer linking, and channel bonding. a. production-drivenb. globally-drivenc. human resource-drivend. engineering-drivene. market-driven


118. Holistic marketers achieve profitable growth by expanding ________, building customer loyalty, and capturing customer lifetime value. a. design skillsb. customer sharec. promotion venuesd. database resourcese. competitive space share


119. In the past Kodak was not necessarily known for embracing technology that did not come from Kodak engineers and designers. However, as Kodak addresses the digital revolution taking over the photographic industry, it wants customers to see it as a leader in digital photography and is moving away from its connection to print-only photography. This would be an example of which of the following value-creation steps?

a. Redefining the big idea.b. Reshaping the business scope.c. Repositioning the company’s brand identity.d. Redoing its corporate logo.e. Researching its competitors.


147


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***120. According to a McKinsey report, CEOs need and expect all areas of their

organizations to be more efficient. Which of the following statements would be the best illustration of this need and expectation?

a. Doing more with more. b. Doing less with less. c. Doing less with more. d. Doing more with less. e. Doing about the same with more.


121. According to a recent McKinsey report regarding characteristics that help to position marketers as

business development leaders, ________ illustrates one of those characteristics.

a. “never bite off more than you can chew” b. “if it ain’t broke, don’t fix it” c. “always pursue Internet opportunities” d. “strike while the iron is hot” e. “identify profitable unmet needs before brainstorming creative solutions”


122. According to Collins and Porras’ Built to Last, ________ is characterized as a visionary company—acknowledged as the industry leader and widely admired because they set ambitious goals, communicated them to their employees, and embraced a high purpose beyond making money.

a. General Electric b. Delta Airlines c. Farmer’s Insurance d. Wells Fargo e. McDonald’s


123. Juan Garcia is seen as a ________ planner because he plans the daily promotional releases about his company’s products and services. a. strategic b. selectivec. tacticald. nichee. organizational


148


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***124. Sony’s former president, Akio Morita, wanted everyone to have access to

“personal portable sound,” so his company created the Walkman and portable CD player. Which of the following planning aids most likely assisted Mr. Morita with his vision? a. The mission statement. b. A SWOT analysis.c. Knowledge of customers. d. A database.e. An executive summary to a formal marketing plan.


125.Which of the following most closely matches a correct market-oriented definition of a business?

a. Missouri-Pacific Railroad—we run a railroad.b. Xerox—we make copying equipment.c. Standard Oil—we sell gasoline.d. Encyclopedia Britannica—we distribute information.e. Columbia Pictures—we make movies.


126. If you were the CEO of a company that was looking to implement strategies to fill a perceived strategic-planning gap, you would most likely explore ________ growth first because it would be easier to improve an existing business rather than building a new one. a. intensiveb. integrativec. diversificationd. conglomeratee. concentric


127.If you were the marketing manager of an organization that had chosen growth via current products sold to new markets, your organization would have chosen a ________ strategy.

a. market-penetrationb. market-development c. product-developmentd. diversificatione. concentric


149


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***128. ________ describes the way people in an organization are dressed, how they talk

to one another, and the way they greet their customers. a. Strategic orientationb. Competitive positioningc. Distinctive advantaged. HR training strategye. Corporate culture


129. Once an organization establishes its business mission, conducts a SWOT analysis, and goes through a goal formulation process, it is ready to go through a step called ________ to continue with a strategic-planning process. a. program formulationb. strategy formulationc. implementationd. functional analysise. feedback and control


130. McDonald’s has often teamed up with Disney to offer products related to current Disney films as part of its meals for children. The best description of this form of alliance would a ________ alliance. a. product allianceb. logistics alliancec. pricing collaboration d. servicee. promotional


Short Answer

131.If you were the marketing manager for small regional toy manufacturer who embraced strategic marketing application to your value creation and delivery sequence process, you would use three processes or acts to choose the value of your offer. Name those three processes.

Suggested Answer: The three processes would be (1) customer segmentation, (2) market selection/focus, and (3) value positioning. Page: 36 Level of difficulty: Medium

132. In the example of Gymboree, we learn that they are a 530-store chain that sells children’s clothing to upscale parents. Because there are not enough parents making more than $65,000 year to support more stores, Gymboree has created Janie and Jack, a chain selling upscale baby gifts. Hot Topic, a chain that sells rock-band inspired clothes for teens, recently launched Torrid to give plus-size

150


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***teens the same fashion options. Instead of emphasizing making and selling, this company sees itself as part of a value delivery process. The value delivery process consists of three parts. What are those parts and what is their function?

Suggested Answer: The first phase, choosing the value, represents the “homework” marketing must do before any product exists. The second phase, providing the value, is where product features, prices, and distribution are selected. The third phase, communicating the value, utilizes the sales force, sales promotion, advertising, and other communication tools to announce and promote the product. Page: 37 Level of difficulty: Medium

133. Define value chain. What does a value chain do?

Suggested Answer: A value chain is a tool for identifying ways to create more customer value. According to this model, every firm is a synthesis of activities performed to produce, market, deliver, and support its product. Page: 38 Level of difficulty: Easy

134. If an organization was very strong at defining target markets and prospecting for new customers, which of the core business processes would this organization have mastered?

Suggested Answer: The core business process of customer acquisition. Page: 38 Level of difficulty: Medium

135. In a holistic marketing framework with respect to customer focus, what would be components that would match to value exploration, value creation, and value delivery?

Suggested Answer: With respect to customer focus, the value exploration would be “cognitive space”, value creation would be “customer benefits”, and value delivery would be “customer relationship management. For additional information, refer to Figure 2.3. Page: 40 Level of difficulty: Medium

136. What three spaces are discussed when a holistic marketing organization goes through a value exploration?

Suggested Answer: The spaces would be cognitive space (customer focus), competency space (core competencies), and resource space (collaborative network).

151



Pages: 40–41 Level of difficulty: Hard

152


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***137. In the central role of strategic planning, only a handful of companies stand out as

master marketers—Procter & Gamble, Southwest Airlines, Nike, Disney, Nordstrom, Wal-Mart, and McDonald’s to name a few. From a consumers perspective why do you think they stand out? Explain.

Suggested Answer: Students should explain that these companies focus on the customer and are organized to respond effectively to changing customer needs. They all have well-staffed marketing departments, and all their other departments—manufacturing, finance, research and development, personnel, purchasing—also accept the concept that the customer is king.Pages: 41–42 Level of difficulty: Medium

138. All corporate headquarters undertake four planning activities. What are those activities?

Suggested Answer: The activities are (1) defining the corporate mission, (2) establishing strategic business units, (3) assigning resources to each SBU, and (4) assessing growth opportunities. Page: 44 Level of difficulty: Hard

139. Porsche makes only expensive cars and Gerber serves primarily the baby market. Which of the major competitive spheres within which a company will operate matches most closely to the examples above?

Suggested Answer: Several competitive spheres are mentioned (e.g., industry, products and applications, competence, market segment, vertical, and geographical). The sphere most appropriate in this case is market segment. Page: 45 Level of difficulty: Hard

140. Ansoft’s product-market expansion grid shows three intensive growth strategies that can be used to assist a marketing manager in finding creative ways to close a perceived strategic gap. Characterize each of the cells of Ansoft’s grid.

Suggested Answer: The three cells are: (1) market-penetration strategy—current products sold to current markets, (2) market-development strategy—current products sold to new markets, and (3) product-development strategy—new products sold to current markets. Page: 48 Level of difficulty: Medium

141. If a company decides to acquire one of its suppliers to gain more control or generate profit, it would have chosen which form of integrative growth strategy?

Suggested Answer: The company would have selected a backward integration strategy. Page: 49 Level of difficulty: Medium

153


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***142. When Yahoo! began to flounder in the 2001, CEO Terry Semel imposed a more

conservative, buttoned-down atmosphere on the freewheeling Internet startup. At the new Yahoo!, spontaneity is out and order is in. What term is most closely applied to the organizational change phenomenon described above? Be sure to explain what the term means with respect to the example provided.

Suggested Answer: The correct term would be corporate or organizational culture. Corporate culture has been defined as “the shared experiences, stories, beliefs, and norms that characterize an organization.” Page: 50 Level of difficulty: Medium

143. Describe what happens in scenario analysis and explain why firms such as Royal Dutch/Shell Group use the technique.

Suggested Answer: Scenario analysis consists of developing plausible representations of a firm’s possible future that make different assumptions about forces driving the market and include different uncertainties. Answers may vary on why to use the concept but answers should be mindful of the definition above. Page: 51 Level of difficulty: Medium

144. Explain what happens in a SWOT analysis during the strategic planning process.

Suggested Answer: SWOT (strengths, weaknesses, opportunities, and threats) monitors the external and internal environment by examining key macroeconomic and microeconomic forces and actors that have an impact on the organization’s business and industry. See chapter for additional details on the SWOTs analysis format. Page: 52 Level of difficulty: Medium

145. What questions would typically be asked during a market opportunity analysis (MOA)?

Suggested Answer: Questions would typically be: (1) Can the benefits involved in the opportunity be articulated convincingly to a defined target market(s)? (2) Can the target market(s) be located and reached with cost-effective media and trade channels? (3) Does the company posses or have access to the critical capabilities and resources needed to deliver the customer benefits? (4) Can the company deliver the benefits better than any actual or potential competitors? And (5) Will the financial rate of return meet or exceed the company’s required threshold for investment?


154


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***146. For an MBO system to work, the business unit attempting to implement the

process must meet four criteria. What are those criteria?

Suggested Answer: The criteria are (1) they must be arranged hierarchically, from the most to the least important, (2) objectives should be stated quantitatively whenever possible, (3) goals must be realistic, and (4) objectives must be consistent.Pages: 54–55 Level of difficulty: Hard

147. Which of Michael Porter’s generic strategies would be most appropriate for an organization that concentrates on achieving superior performance in an important customer benefit area valued by a large part of the market? Quality leadership would be one example of the end result of such a strategy.

Suggested Answer: The strategy that would be most appropriate would be that of differentiation.

Page: 56 Level of difficulty: Medium

148. When H&R Block and Hyatt Legal Services combined their efforts (two service businesses), they also joined marketing forces to create a strong alliance. Which of the alliance forms cited in the text most closely matches the H&R Block and Hyatt Legal Services alliance? Explain.

Suggested Answer: This alliance is called a product or service alliance where one company licenses another to produce its product, or two companies jointly market their complementary products, or a new product. Page: 57 Level of difficulty: Medium

149. Characterize a marketing plan.

Suggested Answer: A marketing plan is a written document that summarizes what the marketer has learned about the marketplace and indicates how the firm plans to reach its marketing objectives. It contains tactical guidelines for the marketing programs and financial allocations over the planning period. Page: 60 Level of difficulty: Easy

150. During which stage of the marketing plan will the marketing manager establish the product line’s positioning?

Suggested Answer: The stage where product line positioning will be addressed is the marketing strategy stage. Page: 60 Level of difficulty: Medium

Marketing Management, 14e (Kotler/Keller)Chapter 4 Conducting Marketing Research

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1) ________ provide diagnostic information about how and why we observe certain effects in the marketplace, and what that means to marketers. A) Marketing insights B) Marketing metrics C) Marketing channelsD) Marketing information systemsE) Marketing-mix models Answer: APage Ref: 97Objective: 1Difficulty: Easy

2) ________ is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company. A) Marketing communicationsB) Internal marketingC) Marketing research D) Market segmentationE) Marketing planningAnswer: CPage Ref: 98Objective: 1Difficulty: Easy

3) Anne, a beautician by profession, owns a salon in the small town of Franklin, New Jersey. Every weekend, she makes it a point to visit the other salons in Franklin to find out about the beauty services they offer to customers. Anne is attempting to conduct market research by _______.A) studying customer behaviorB) forming alliances with competing firmsC) using experimental research techniquesD) checking out rivalsE) tapping into marketing partner expertiseAnswer: DPage Ref: 98Objective: 1AACSB: Analytic skillsDifficulty: Moderate

156


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***4) Which of the following types of marketing research firms gathers consumer and trade information and then sells it for a fee (e.g., Nielsen Media Research)? A) custom marketing research firmsB) syndicated-service research firmsC) specialty-line marketing research firmsD) generic marketing research firmsE) focused marketing research firmsAnswer: BPage Ref: 99Objective: 1Difficulty: Easy

5) Amity Inc., is a firm which collects and processes household data and sells it to other firms which produce consumer durables. Amity is an example of a ________.A) custom marketing research firmB) specialty-line marketing research firmC) syndicated-service research firmD) generic marketing research firmE) focused marketing research firmAnswer: CPage Ref: 99Objective: 1AACSB: Analytic skillsDifficulty: Moderate

6) A field-service firm is a ________. A) custom marketing research firm B) syndicated-service research firm C) specialty-line marketing research firm D) consumer marketing research firm E) social marketing research firm Answer: CPage Ref: 99Objective: 1Difficulty: Moderate

157


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***7) You are the marketing research director of a medium-sized manufacturing firm and you would like to engage an outside marketing research firm to conduct field interviews. Which of the following options categories of marketing research firms should you use?A) syndicated-service research firmsB) custom marketing research firmsC) global research management firmsD) specialty-line marketing research firmsE) brand management specialty research firmsAnswer: DPage Ref: 99Objective: 1AACSB: Analytic skillsDifficulty: Moderate

8) The marketing research process begins by ________. A) developing a research plan B) defining the problem, the decision alternatives, and research objectives C) analyzing the internal environment D) reading marketing research journals E) contacting a professional research consultant Answer: BPage Ref: 99Objective: 1Difficulty: Easy

9) Which of the following is considered to be the last step in the marketing research process? A) presenting findingsB) analyzing informationC) controlling the environment D) arriving at a decision E) drafting the report Answer: DPage Ref: 99Objective: 1Difficulty: Easy

10) If the goal of marketing research is to shed light on the real nature of a problem and to suggest possible solutions or new ideas, the research is said to be ________.A) descriptiveB) quantitativeC) primary D) secondaryE) exploratoryAnswer: EPage Ref: 100

158


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Objective: 1Difficulty: Easy11) Unistar Inc., is an FMCG company that produces a wide range of offerings such as grocery items and personal care products. If Unistar wants to estimate the demand for its new line of body moisturizers, which are all priced at $18, it should opt for ________ research.A) descriptive B) exploratory C) prescriptive D) causalE) qualitative Answer: APage Ref: 100Objective: 1AACSB: Analytic skillsDifficulty: Moderate

12) A company would like to study the impact of advertising expenditure on sales and sales revenue. This is an example of ________ research.A) prescriptiveB) causalC) secondaryD) exploratoryE) qualitativeAnswer: BPage Ref: 100Objective: 1AACSB: Analytic skillsDifficulty: Moderate

13) The marketing manager needs to know the cost of the research project before approving it. During which stage of the marketing research process would such a consideration most likely take place?A) Step 1defining the problem B) Step 4analyzing the information C) Step 5drafting the report D) Step 2developing the research plan E) Step 3collecting information Answer: DPage Ref: 100Objective: 1Difficulty: Moderate

159


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***14) Designing a research plan calls for decisions on all of the following EXCEPT ________. A) research objectives B) data sources C) research approaches D) research instruments E) sampling plans Answer: APage Ref: 100Objective: 1Difficulty: Easy

15) ________ are data that were collected for another purpose and already exist. A) Primary data B) Secondary data C) Primitive data D) Cross-sectional data E) Ordinate data Answer: BPage Ref: 100Objective: 1Difficulty: Easy

16) Before Sandra opened her florist shop she read all she could about the floral industry. She also consulted several published research reports to understand growth patterns in the local area with particular interest in the location of florists throughout the city. This ________ helped her to decide on the location of her store. A) primary data B) secondary dataC) primitive data D) tertiary information E) licensed information Answer: BPage Ref: 100Objective: 1AACSB: Analytic skillsDifficulty: Moderate

160


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***17) Primary data can be collected in several ways. Installing CCTV cameras in a retail store whereby consumers' actions can be recorded is an example of ________.A) focus group researchB) survey researchC) observational researchD) behavioral researchE) experimental researchAnswer: CPage Ref: 101Objective: 1AACSB: Analytic skillsDifficulty: Moderate

18) ________ approach uses concepts and tools from anthropology and other social science disciplines to provide deep cultural understanding of how people live and work.A) Cognitive researchB) Inductive researchC) Archaeological researchD) Ethnographic researchE) Deductive researchAnswer: DPage Ref: 101Objective: 1Difficulty: Easy

19) The goal of ethnographic research is to ________.A) capture cause-and-effect relationships by eliminating competing explanations of the observed findingsB) understand consumers' behavior by observing a sample groups discussing various topics of interest at lengthC) study demographic variables such as age, gender, income, education, and so on, in relation to consumer buying patternsD) analyze customers' purchasing behavior through catalog purchases and customer databasesE) immerse the researcher into consumers' lives to uncover unarticulated desires that might not surface in any other form of researchAnswer: EPage Ref: 101Objective: 1Difficulty: Moderate

161


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***20) A(n) ________ is a gathering of 6 to 10 people carefully selected by researchers based on certain demographic, psychographic, or other considerations and brought together to discuss various topics of interest at length.A) target groupB) pilot groupC) focus groupD) customer baseE) ethnographic groupAnswer: CPage Ref: 101-102Objective: 1Difficulty: Easy

21) As the marketing manager of Cominform Pvt. Ltd., a manufacturer of health drinks, you have selected 10 individuals who match the profile of your target customer, to participate in a discussion on changing lifestyle trends related to health. You have also hired a skilled moderator to facilitate the discussion and ensure that everyone participates and stays focused on the topic. The moderator provides questions and probes based on the "script" prepared by you. The discussions are also recorded for further analysis. Which of the following methods of acquiring primary data is being used in this case?A) observational researchB) surveysC) behavioral dataD) experimentsE) focus groupsAnswer: EPage Ref: 101-102Objective: 1AACSB: Analytic skillsDifficulty: Moderate

22) Why must the researchers avoid generalizing from focus-group participants to the whole market?A) Participants' responses are not reliable.B) Most of the participants are likely to be ignorant about the topic of discussion.C) The size of the group is too small and the sample is not drawn randomly.D) Most of the participants are likely to exhibit similar tastes and preferences.E) The participants usually come from diverse backgrounds.Answer: CPage Ref: 102Objective: 1Difficulty: Moderate

162


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***23) Which of the following is used to assess people's knowledge, beliefs, preferences, and satisfaction and to measure these magnitudes in the general population?A) observational researchB) descriptive researchC) quantitative researchD) survey researchE) experimental researchAnswer: DPage Ref: 103Objective: 1Difficulty: Easy

24) The most scientifically valid research is ________ research. A) observation B) focus-group C) survey D) behavioral E) experimental Answer: EPage Ref: 103Objective: 1Difficulty: Easy

25) ________ is designed to capture cause-and-effect relationships by eliminating competing explanations of the observed findings.A) Experimental researchB) Behavioral researchC) Observational researchD) Focus group researchE) Descriptive researchAnswer: APage Ref: 103Objective: 1Difficulty: Easy

26) Which of the following rules must be kept in mind while framing a questionnaire?A) Use broad and loosely defined words in the questions.B) Avoid using response bands.C) Ensure that fixed responses overlap.D) Frame hypothetical questions.E) Allow for the answer "other" in fixed-response questions.Answer: EPage Ref: 104Objective: 1Difficulty: Moderate

163


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***27) Because of its flexibility, ________ are the most common technique of collecting primary data.A) questionnairesB) telephonic interviewsC) behavioral research studiesD) experimental designsE) focus groupsAnswer: APage Ref: 104Objective: 1Difficulty: Easy

28) ________ allow respondents to answer in their own words and often reveal more about how people think. A) Open-end questionsB) Dichotomous questionsC) Likert scale questionsD) Multiple choice questionsE) Semantic differential questionsAnswer: APage Ref: 104Objective: 1Difficulty: Easy

29) Which of the following is true of qualitative research?A) It is a structured measurement approach that permits a range of possible responses.B) It is indirect in nature, so consumers may be less guarded.C) It requires large sample sizes.D) Its results can be easily generalized to broader populations.E) It generally results in similar results and conclusions across researchers.Answer: BPage Ref: 104Objective: 1Difficulty: Moderate

30) A scale that connects two bipolar words is called a ________.A) dichotomous question B) multiple-choice question C) Likert scale D) semantic differential E) word associationAnswer: DPage Ref: 105Objective: 1Difficulty: Moderate

164


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***31) A question that respondents can answer in an almost unlimited number of ways is called a ________.A) structured questionB) closed-end questionC) completely unstructured question D) dichotomous questionE) multiple choice questionAnswer: CPage Ref: 105Objective: 1Difficulty: Easy

32) "Truancy should be checked in schools: 1) Strongly disagree, 2) Disagree, 3) Neither agree nor disagree, 4) Agree, 5) Strongly agree." This is an example of a ________.A) Likert scale B) semantic differential C) multiple choice questionD) Thematic Appreciation Test (TAT) E) dichotomous question Answer: APage Ref: 105Objective: 1AACSB: Analytic skillsDifficulty: Moderate

33) An item in a questionnaire states that "most politicians cannot be trusted." Respondents are required to provide their answers by choosing any one of the following options: 1) Strongly disagree, 2) Disagree, 3) Neither agree nor disagree, 4) Agree, 5) Strongly agree. This is an example of a ________.A) semantic differential B) word association questionC) Thematic Appreciation Test (TAT) D) Likert scale E) dichotomous question Answer: DPage Ref: 105Objective: 1AACSB: Analytic skillsDifficulty: Moderate

165


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***34) If a marketing researcher chooses to use word associations, the researcher is using ________.A) closed-end questionsB) Likert scale questionsC) open-end questionsD) rating scale questionsE) semantic differential questionsAnswer: CPage Ref: 105Objective: 1Difficulty: Moderate

35) In which of the following types of tests is a picture presented and respondents are asked to make up a story about what they think is happening or may happen in the picture? A) visual perception testB) Rorschach Ink-blot TestC) story completion testD) Thematic Apperception Test E) Renfrew Action Picture Test Answer: DPage Ref: 105Objective: 1Difficulty: Moderate

36) The question "What is your opinion of the measures taken by the government to control inflation?" is an example of a ________ question. A) semantic differential B) word association C) completely unstructured D) story completion E) dichotomousAnswer: CPage Ref: 105Objective: 1AACSB: Analytic skillsDifficulty: Moderate

37) In which of the following qualitative method are subjects asked to complete an incomplete stimulus?A) word association B) projective techniquesC) visualization D) brand personification E) laddering Answer: B

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Page Ref: 106Objective: 1Difficulty: Moderate

38) ________ requires people to create a collage from magazine photos or drawings to depict their perceptions.A) Brand personificationB) Projective techniqueC) VisualizationD) LadderingE) Metaphor Elicitation TechniqueAnswer: CPage Ref: 106Objective: 1Difficulty: Moderate

39) The primary purpose of ________ is to identify the range of possible brand associations in consumers' minds.A) experimental researchB) deshboardingC) ladderingD) semantic differentialsE) word associationsAnswer: EPage Ref: 106Objective: 1Difficulty: Easy

40) With respect to the sampling plan, three decisions must be made: (1) the sampling unit—who is to be surveyed; (2) sample size—how many people should be surveyed; and (3) ________. A) sample cost—how much does sampling costB) surveyor skill—who should conduct the surveyC) sample security—how should the sample data be protectedD) sampling procedure—how should respondents be chosenE) sample supervisor—who leads the sampling effort Answer: DPage Ref: 107Objective: 1Difficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***41) During a focus-group session, one set of participants indicated that Dell computers reminded them of a surfer, Apple computers of a mad scientist, and IBM was equated to Ebenezer Scrooge from Charles Dickens's tale, "A Christmas Carol". Which of the following qualitative research approaches relates to the approach described above? A) projective techniques B) visualization C) brand personification D) laddering E) brand architectureAnswer: CPage Ref: 107Objective: 1AACSB: Analytic skillsDifficulty: Difficult

42) According to the concept of ________, a series of increasingly more specific "why" questions can reveal consumer motivation and consumers' deeper, more abstract goals.A) word associationB) projectionC) visualizingD) brand personificationE) ladderingAnswer: EPage Ref: 107Objective: 1Difficulty: Easy

43) ________ measure the interest or emotions aroused by exposure to a specific ad or picture. A) TachistoscopesB) PolygraphsC) GalvanometersD) AudiometersE) GPS systemsAnswer: CPage Ref: 107Objective: 1Difficulty: Easy

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***44) ________ flash an ad to a subject with an exposure interval that may range from less than one hundredth of a second to several seconds. A) TachistoscopesB) AudiometersC) PolygraphsD) GPS systemsE) GalvanometersAnswer: APage Ref: 107Objective: 1Difficulty: Easy

45) ________ attached to television sets in participating homes now record when the set is on and to which channel it is tuned.A) TachistoscopesB) PolygraphsC) GPS systemsD) AudiometersE) GalvanometersAnswer: DPage Ref: 107Objective: 1Difficulty: Easy

46) Which of the following statements about telephonic interview is true?A) It usually takes a long time to gather information through telephonic interviews.B) The interviewer is unable to clarify questions if respondents do not understand them.C) The response rate for telephonic interviews has been typically lower than for mailed questionnaires.D) The U.S. government generally encourages telemarketing by firms.E) Telephone interviewing in the U.S. is getting more difficult because of consumers' growing antipathy toward telemarketers.Answer: EPage Ref: 108Objective: 1Difficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***47) If a marketing researcher wishes to reach those people who would not give personal interviews or whose responses might be biased or distorted by interviewers, he or she should use ________.A) mail questionnairesB) telephonic interviewsC) online interviews D) focus groupsE) observational researchAnswer: APage Ref: 108Objective: 1Difficulty: Easy

48) Which of the following is considered to be the most versatile of all the contact methods?A) mail questionnaires B) telephone interviewsC) personal interviewsD) online interviewsE) field trialsAnswer: CPage Ref: 109Objective: 1Difficulty: Easy

49) In ________ interviews, researchers stop people at a shopping mall or busy street corner and request an interview on the spot. A) interceptB) arrangedC) groupD) structuredE) behavioralAnswer: APage Ref: 109Objective: 1Difficulty: Easy

50) Which of the following is an advantage of personal interviews?A) It is a relatively inexpensive method of gathering information.B) The possibility of interviewer bias is minimized. C) Participants can choose to respond at their own convenience.D) It facilitates anonymous responses.E) Interviewers can record additional observation about the respondent such as body language.Answer: EPage Ref: 109

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Objective: 1Difficulty: Moderate

51) Which of the following is one of the key disadvantages of online market research? A) Online research is expensive. B) Online research is time consuming. C) People tend to be dishonest online. D) Online research lacks versatility. E) Samples can be small and skewed. Answer: EPage Ref: 110Objective: 1Difficulty: Easy

52) Which of the following is an advantage of online research?A) Samples are generally representative of the target population.B) Members of online panels and communities tend to have low turnover.C) Online research is relatively free of technological problems and inconsistencies.D) People tend to be honest and thoughtful online.E) Online research is slow but gather detailed information.Answer: DPage Ref: 110Objective: 1Difficulty: Moderate

53) The ________ phase of marketing research is generally the most expensive and the most prone to error. A) contactB) research planning C) questionnaire design D) interview design E) data collection Answer: EPage Ref: 101Objective: 1Difficulty: Easy

54) After collecting the relevant information, the next step in the marketing research process is to ________.A) develop the research planB) define the problem and research objectivesC) present the project reportD) make the final decisionE) analyze the acquired data Answer: EPage Ref: 111

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Objective: 1Difficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***55) After computing averages and measures of dispersion for the major variables and applying advanced statistical techniques and decision models in the hope of discovering additional findings from the gathered information, the researchers ________.A) define the problem, the decision alternatives, and the research objectivesB) present findings relevant to the major marketing decisions facing managementC) evaluate the costs associated with data collectedD) analyze the appropriateness of the data sources usedE) develop the research planAnswer: BPage Ref: 111Objective: 1Difficulty: Moderate

56) Why do firms employ more than one persona to gather information about the target consumers?A) Within a group, consumers usually exhibit similar tastes and preferences.B) The distribution of income and wealth are more or less equal across different customer segments.C) Although customers have uniques, essentially their basic needs and requirements are the same.D) Any target market may have a range of consumers who vary along a number of key dimensions.E) The firms want to provide consumers with a greater number of product choices.Answer: DPage Ref: 112Objective: 1Difficulty: Moderate

57) A ________ has been defined as a coordinated collection of data, systems, tools, and techniques with supporting software and hardware by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action. A) marketing metricB) marketing channel system C) marketing decision support system D) marketing research system E) database management system Answer: CPage Ref: 112Objective: 1Difficulty: Easy

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***58) All of the following are considered to be among the seven characteristics of good marketing research EXCEPT ________. A) the scientific method B) research creativity C) multiple methods D) ethical marketing E) independence of models and data Answer: EPage Ref: 113Objective: 1Difficulty: Moderate

59) ________ are a structured way to disseminate the insights gleaned from the two complementary approaches to measuring marketing productivity within the organization.A) Marketing metricsB) Marketing decision support systemsC) Marketing dashboardsD) Marketing segmentsE) Marketing mix modelsAnswer: CPage Ref: 114Objective: 2Difficulty: Easy

60) Two complimentary approaches to measure marketing productivity are ________ and marketing-mix modeling. A) quality ratios B) salesperson satisfaction ratesC) marketing metricsD) retailer satisfaction indicesE) customer feedback surveysAnswer: CPage Ref: 114Objective: 2Difficulty: Easy

61) Which of the following refers to the set of measures that help firms to quantify, compare, and interpret their marketing performance? A) marketing diagnostics B) marketing information systemsC) marketing simulationD) marketing intelligence E) marketing metrics Answer: EPage Ref: 114Objective: 2

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Difficulty: Easy62) London Business School's Tim Ambler believes the evaluation of marketing performance can be split into two parts: ________. A) long-term results and changes in brand equity B) short-term results and changes in brand equity C) long-term results and changes in consumer perceptions D) short-term results and changes in profitability E) changes in market share and changes in profitability Answer: BPage Ref: 115Objective: 2Difficulty: Easy

63) Which of the following is an external marketing metric that companies need to monitor? A) resource adequacyB) staffing or skill levels C) active innovation support D) market shareE) relative employee satisfaction Answer: DPage Ref: 115Objective: 2Difficulty: Moderate

64) Which of the following is an internal marketing metric that companies need to monitor?A) market shareB) consumer satisfactionC) relative perceived qualityD) total number of customersE) relative employee satisfactionAnswer: EPage Ref: 115Objective: 2Difficulty: Moderate

65) ________ analyze(s) data from a variety of sources, such as retailer scanner data, company shipment data, pricing, media, and promotion spending data, to understand more precisely the effects of specific marketing activities.A) Marketing metricsB) Marketing-mix modelsC) Marketing forecastingD) Marketing intelligence databasesE) Marketing decision systemsAnswer: B

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Page Ref: 116Objective: 3Difficulty: Easy

66) When the marketers of a mobile phone manufacturing company want to determine the impact of individual media such as television and online display ads on sales as well as that of trade activities like every day low price, off-shelf display and so on, they usually use ________.A) marketing metricsB) market segmentation strategiesC) market capitalization techniquesD) market basket analysisE) marketing-mix modelsAnswer: EPage Ref: 116Objective: 3AACSB: Analytic skillsDifficulty: Difficult

67) A ________ records how well the company is doing year after year based on measures such as the average perception of the company's product quality relative to its chief competitor.A) customer-performance scorecard B) stakeholder-performance scorecard C) marketing balanced scorecard D) vendor scorecard E) generic scorecard Answer: APage Ref: 116-117Objective: 3Difficulty: Easy

68) If a company actively tracks the satisfaction of its suppliers, banks, and distributors, it is using what is called a ________. A) customer-performance scorecard B) stakeholder-performance scorecard C) marketing balanced scorecard D) vendor scorecard E) generic scorecard Answer: BPage Ref: 116Objective: 3Difficulty: Easy

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***69) According to marketing consultant Pat LaPointe, the ________ measurement pathway of the marketing dashboard reflects how prospects become consumers.A) customer metrics B) unit metrics C) cash-flow metrics D) brand metrics E) productivity metrics Answer: APage Ref: 117Objective: 3Difficulty: Easy

70) According to marketing consultant Pat LaPointe, the ________ measurement pathway of the marketing dashboard focuses on how well marketing expenditures are achieving short-term returns.A) customer metrics B) unit metrics C) cash-flow metrics D) brand metrics E) productivity metrics Answer: CPage Ref: 118Objective: 3Difficulty: Easy

71) Good marketing insights often form the basis of successful marketing programs.Answer: TRUEPage Ref: 97Objective: 1Difficulty: Easy

72) Most large companies prefer to use external marketing research consultants rather than employ their own marketing research department. Answer: FALSEPage Ref: 98Objective: 1Difficulty: Easy

73) When the companies engage students to design and carry out projects, the payoff to the students is experience and visibility; the payoff to the companies is a fresh sets of eyes to solve problems at a fraction of what consultants would charge.Answer: TRUEPage Ref: 98Objective: 1Difficulty: Easy

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***74) A good example of a syndicated-service research firm is Nielsen Media Research. Answer: TRUEPage Ref: 99Objective: 1Difficulty: Easy

75) Custom marketing research firms sell field interviewing services to other firms. Answer: FALSEPage Ref: 99Objective: 1Difficulty: Easy

76) After developing the research plan, the marketing researcher should define the problem and research objectives. Answer: FALSEPage Ref: 99Objective: 1Difficulty: Easy

77) The goal of exploratory research is to shed light on the real nature of the problem and to suggest possible solutions or new ideas.Answer: TRUEPage Ref: 100Objective: 1Difficulty: Easy

78) The purpose of causal research is to test a cause-and-effect relationship.Answer: TRUEPage Ref: 100Objective: 1Difficulty: Easy

79) James collected primary data when he distributed a survey to dorm residents to discover their attitudes and opinions on campus life. Answer: TRUEPage Ref: 100Objective: 1AACSB: Analytic skillsDifficulty: Moderate

80) Secondary data are data freshly gathered for a specific purpose or for a specific research project.Answer: FALSEPage Ref: 100Objective: 1Difficulty: Easy

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81) The goal of ethnographic research is to immerse the researcher into consumers' lives to uncover unarticulated desires that might not surface in any other form of research.Answer: TRUEPage Ref: 101Objective: 1Difficulty: Easy

82) Researchers should generalize findings from focus-group participants to the whole market. Answer: FALSEPage Ref: 102Objective: 1Difficulty: Moderate

83) Keeping a survey short and simple and contacting customers no more than once a month are two keys to drawing people into the data collection effort.Answer: TRUEPage Ref: 103Objective: 1Difficulty: Easy

84) A good example of collecting behavioral data would be when a store uses scanners to read bar codes on products selected by consumers. Answer: TRUEPage Ref: 103Objective: 1AACSB: Analytic skillsDifficulty: Moderate

85) Behavioral research is the most scientifically valid research.Answer: FALSEPage Ref: 103Objective: 1Difficulty: Easy

86) Experiments call for selecting matched groups of subjects, subjecting them to different treatments, controlling extraneous variables, and checking whether observed response differences are statistically significant.Answer: TRUEPage Ref: 103Objective: 1Difficulty: Easy

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***87) Owing to its greater flexibility, a questionnaire is by far the most common instrument used to collect primary data.Answer: TRUEPage Ref: 104Objective: 1Difficulty: Easy

88) Qualitative research techniques are relatively structured measurement approaches that permit limited possible responses.Answer: FALSEPage Ref: 104Objective: 1Difficulty: Moderate

89) A questionnaire should contain sophisticated and uncommon words.Answer: FALSEPage Ref: 104Objective: 1Difficulty: Easy

90) If a marketing researcher decides to use a Likert scale, the researcher has chosen a technique wherein the respondent reviews a statement that shows the amount of agreement/disagreement with some product, service, or concept. Answer: TRUEPage Ref: 105Objective: 1Difficulty: Moderate

91) A dichotomous question is a question with three or more answers. Answer: FALSEPage Ref: 105Objective: 1Difficulty: Easy

92) A scale that describes the respondent's intention to buy a particular product is called a rating scale.Answer: FALSEPage Ref: 105Objective: 1Difficulty: Easy

93) Visualization requires people to create a collage from magazine photos or drawings to depict their perceptions.Answer: TRUEPage Ref: 106Objective: 1

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Difficulty: Easy94) Once they have determined the sampling unit, marketers must develop a sampling frame so that a small section in the target population has a greater chance of being sampled.Answer: FALSEPage Ref: 107Objective: 1Difficulty: Moderate

95) Samples of less than 1% of a population can often provide good reliability, with a credible sampling procedure. Answer: TRUEPage Ref: 107Objective: 1Difficulty: Moderate

96) Probability sampling allows confidence limits to be calculated for sampling error and makes the sampling more representative. Answer: TRUEPage Ref: 107Objective: 1Difficulty: Moderate

97) The response rate is usually very high for mail questionnaires.Answer: FALSEPage Ref: 108Objective: 1Difficulty: Easy

98) If a marketing researcher is looking for a contact method that can gather information quickly and allow the interviewer to clarify questions if necessary, he or she will choose the telephone interview method. Answer: TRUEPage Ref: 108Objective: 1Difficulty: Moderate

99) A good illustration of what is called the arranged interview occurs when interviewers stop people in a shopping mall or on a busy street and solicit information necessary to their research effort. Answer: FALSEPage Ref: 109Objective: 1Difficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***100) Online surveys are fast because the survey can automatically direct respondents to applicable questions and transmit results immediately.Answer: TRUEPage Ref: 110Objective: 1Difficulty: Easy

101) One of the characteristics of good marketing research is that it uses multiple methods to increase confidence in the results. Answer: TRUEPage Ref: 113Objective: 1Difficulty: Easy

102) Marketing researchers should have a healthy skepticism toward glib assumptions made by managers about how a market works. Answer: TRUEPage Ref: 113Objective: 1Difficulty: Easy

103) Marketing expenses and investments as inputs can be quantified only in the long run, whereas the resulting outputs such as broader brand awareness, enhanced brand image, greater customer loyalty, and improved new product prospects manifest themselves in the short run.Answer: FALSEPage Ref: 114Objective: 2Difficulty: Moderate

104) Marketing-mix modeling is used to estimate causal relationships and measure how marketing activity affects outcomes. Answer: TRUEPage Ref: 114Objective: 3Difficulty: Moderate

105) Marketing accountability means that marketers must more precisely estimate the effects of different marketing investments.Answer: TRUEPage Ref: 116Objective: 3Difficulty: Easy

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***106) Especially popular with such companies as Procter & Gamble, marketing-mix modeling is used to allocate or reallocate expenditures. Answer: TRUEPage Ref: 116Objective: 3Difficulty: Moderate

107) Marketing-mix modeling focuses on baseline sales or long term effects instead of incremental growth.Answer: FALSEPage Ref: 116Objective: 3Difficulty: Easy

108) Management can assemble a summary set of relevant internal and external measures in a marketing dashboard for synthesis and interpretation.Answer: TRUEPage Ref: 116Objective: 3Difficulty: Easy

109) A stakeholder-performance scorecard tracks the satisfaction with the company and its products and services among such entities as suppliers, banks, and stockholders. Answer: TRUEPage Ref: 116Objective: 3Difficulty: Easy

110) Discuss the different ways which can be adopted by small manufacturing firms to conduct market research.Answer: The small firms can adopt the following ways to conduct market research:1) They can engage students or professors to design and carry out projects. 2) They can collect considerable information at very little cost by examining competitors' Web sites, monitoring chat rooms, and accessing published data. 3) The owners of small business firms can routinely visit competitors to learn about changes they have made. 4) By tapping into marketing partner expertise. Page Ref: 98Objective: 1Difficulty: Easy

111) What are the six steps involved in the marketing research process? Answer: The six steps are: (1) define the problem and research objectives, (2) develop the research plan, (3) collect the information, (4) analyze the information, (5) present the findings, and (6) make the decision. Page Ref: 99Objective: 1

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Difficulty: Easy112) List the challenges faced to conduct a good focus group discussion.Answer: There are many challenges to conducting a good focus group. Some researchers believe consumers have been so bombarded with ads, they unconsciously parrot back what they've already heard instead of what they really think. There's always a concern that participants are just trying to maintain their self-image and public persona or have a need to identify with the other members of the group. Participants also may not be willing to acknowledge in public—or may not even recognize—their behavior patterns and motivations. And the "loudmouth or know-it-all" problem often crops up when one highly opinionated person drowns out the rest of the group.Page Ref: 102Objective: 1Difficulty: Difficult

113) What are the relative advantages of online and in-person focus groups?Answer: An area of increasing interest is online focus groups. These may cost less than a fourth of a traditional, in-person focus group. Online focus groups also offer the advantages of being less intrusive, allowing geographically diverse subjects to participate, and yielding fast results. They are useful at collecting reactions to focused topics such as a specific new product concept.Proponents of in-person focus groups, on the other hand, maintain that in-person focus groups allow marketers to be immersed in the research process, get a close-up look to people's emotional and physical reactions, and ensure that sensitive materials are not leaked. Marketers can also make spontaneous adjustments to the flow of discussion and delve deeply into more complex topics, such as alternative creative concepts for a new ad campaign.Page Ref: 102Objective: 1Difficulty: Difficult

114) Give an account of experimental research.Answer: Experimental research is designed to capture cause-and-effect relationships by eliminating competing explanations of the observed findings. If the experiment is well designed and executed, research and marketing managers can have confidence in the conclusions. Experiments call for selecting matched groups of subjects, subjecting them to different treatments, controlling extraneous variables, and checking whether observed response differences are statistically significant.Page Ref: 103Objective: 1Difficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***115) Explain what qualitative research is and why it might be useful to marketers. What are its major drawbacks?Answer: Qualitative research techniques are relatively unstructured measurement approaches to permit a range of possible responses, and they are a creative means of ascertaining consumer perceptions that may otherwise be difficult to uncover. Because of the freedom it affords both researchers in their probes and consumers in their responses, qualitative research can often be an especially useful first step in exploring consumers' brand and product perceptions. It is indirect in nature, so consumers may be less guarded and reveal more about themselves in the process.Qualitative research does have its drawbacks. Marketers must temper the in-depth insights that emerge with the fact that the samples are often very small and may not necessarily generalize to broader populations. And different researchers examining the same qualitative results may draw very different conclusions.Page Ref: 96Objective: 1AACSB: Reflective thinkingDifficulty: Moderate

116) Give an account of the different technological devices that have been developed to provide insight into the consumers' behavior to the researchers.Answer: There has been much interest in recent years in various technological devices. Galvanometers can measure the interest or emotions aroused by exposure to a specific ad or picture. The tachistoscope flashes an ad to a subject with an exposure interval that may range from less than one hundredth of a second to several seconds. After each exposure, the respondent describes everything he or she recalls. Eye cameras study respondents' eye movements to see where their eyes land first, how long they linger on a given item, and so on.Page Ref: 107Objective: 1Difficulty: Moderate

117) What is the chief advantage of using each of the following contact methods: mail questionnaire, telephone interview, and personal interview? Answer: The chief advantage of each contact method mentioned is (1) mail questionnairethe best way to reach people who would not give personal interviews or whose responses might be biased or distorted by the interviews, (2) telephone interviewsthe best method for gathering information quickly and the interviewer is also able to clarify questions if respondents do not understand them, and (3) personal interviewthe most versatile method because they can ask more questions and record additional observations about the respondent. Page Ref: 108-109Objective: 1Difficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***118) Give reasons to justify that online research is versatile.Answer: Increased broadband penetration offers online research even more flexibility and capabilities. For instance, virtual reality software lets visitors inspect 3-D models of products such as cameras, cars, and medical equipment and manipulate product characteristics. Even at the basic tactile level, online surveys can make answering a questionnaire easier and more fun than paper-and-pencil versions. Online community blogs allow customer participants to interact with each other.Page Ref: 110Objective: 1Difficulty: Moderate

119) What are the major shortcomings of marketing-mix modeling?Answer: The major shortcomings of marketing-mix modeling are- 1) Although marketing-mix modeling helps to isolate effects, it is less effective at assessing how different marketing elements work in combination. 2) Marketing-mix modeling focuses on incremental growth instead of baseline sales or long term effects. 3) The integration of important metrics such as customer satisfaction, awareness, and brand equity into marketing-mix modeling is limited. 4) Marketing-mix modeling generally fails to incorporate metrics related to competitors, the trade, or the sales force.Page Ref: 116Objective: 3Difficulty: Moderate

120) Mars Group is a market research firm which sells field interviewing services to a software development firm. Can Mars Group be categorized as a custom market research firm? Give reasons to support your answer.Answer: No, Mars group is a specialty-line marketing research firm as it sells field interviewing services, whereas a custom marketing research is hired to carry out specific projects. Page Ref: 99Objective: 1AACSB: Analytic skillsDifficulty: Moderate

121) As a marketing researcher of Matrix Private Limited you have been asked to forecast the demand for your new range of body wash if a discount of 10 percent is offered on each unit sold. Identify the research category into which this market research falls.Answer: Here the researcher needs to study the effect of the discount on the demand for body wash. The objective of this research is to establish the cause and effect relationship between the discount and the demand for body wash. Therefore, this can be categorized as causal research.Page Ref: 100Objective: 1Difficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***122) Highspeed Motors is planning to introduce its new sports bike into the market. It collects data on prices, designs, features, and performance of sports bikes manufactured by other companies from their respective Web sites. What type of data is being used by Highspeed motors in this case?Answer: Highspeed Motors is using secondary data for its research.Page Ref: 100Objective: 1AACSB: Analytic skillsDifficulty: Moderate

123) Ryan has been appointed by Target Internationals, a hardware manufacturing firm, as a marketing researcher and has been asked to conduct a marketing research to produce new insights of consumer attitude on its vacuum tubes. Ryan begins with the research process by defining the problem, the decision alternatives, and research objectives. Mention the next step that Ryan will follow to continue with the research.Answer: After defining the problem, the decision alternatives, and research objectives, the researcher develops the most efficient plan for gathering the needed information, and will estimate the cost of conducting the research.Page Ref: 100Objective: 1AACSB: Analytic skillsDifficulty: Moderate

124) Axis Centre a departmental store has installed CCTV cameras to record consumer actions. Which research approach has been adopted by Axis and why?Answer: Axis has adopted observational research approach to gather fresh data by observing the consumers' actions in the store. Page Ref: 101Objective: 1AACSB: Analytic skillsDifficulty: Moderate

125) As a marketing manager of Kids Care, a manufacturer of baby soaps, Tim plans to analyze customer attitudes by using the focus group research approach. How will he conduct the research in this case?Answer: Student answers will vary. Tim selects 8 first time mothers who can adequately represent the users you want to target. He also appoints a skilled moderator to facilitate the discussion among these women to ensure everyone participates and stays on track. The moderator provides questions based on the "script" prepared by Tim. The discussions are recorded for further analysis.Page Ref: 101-102Objective: 1AACSB: Analytic skillsDifficulty: Moderate

187


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***126) Copra, a manufacturer of cigarettes, conducts a survey before launching its new range of herbal cigarettes. What is the basic purpose of undertaking such a survey by Copra?Answer: Copra undertakes the survey to assess people's knowledge, beliefs, preferences, and satisfaction and to measure these magnitudes in the general population.Page Ref: 103Objective: 1AACSB: Analytic skillsDifficulty: Moderate

127) Greenfoods, a manufacturer of ready-to-eat foods, conducts over 60,000 customer surveys each month through its retail outlets. What risk is Greenfoods likely to face by putting out so many surveys each month?Answer: By putting out so many surveys each month, Greenfoods may run the risk of creating "survey burnout" and seeing response rates drop sharply.Page Ref: 103Objective: 1AACSB: Analytic skillsDifficulty: Difficult

128) As a marketing researcher of a firm, you have planned to conduct behavioral research to develop marketing insight. What procedure would you follow in this case?Answer: In order to conduct behavioral research, the marketing researchers need to develop consumer insight by analyzing store scanning data, catalog purchases, and customer databases.Page Ref: 103Objective: 1AACSB: Analytic skillsDifficulty: Moderate

129) A questionnaire used in a survey contains a question such as: "Retail-R-Us offers the best everyday prices" and the responses that the respondents can opt for are: "Strongly Disagree", "Disagree", "No opinion", "Agree", "Strongly Agree". Identify and define the type of closed-end question that has been exemplified in this case.Answer: The question mentioned above is a Likert Scale question. A Likert Scale is a statement with which the respondent shows the amount of agreement or disagreement.Page Ref: 105Objective: 1AACSB: Analytic skillsDifficulty: Moderate

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***130) Suppose, as a marketing manager of a firm, you have planned to conduct a market research using qualitative measures. For the purpose of developing consumer insight you have distributed among the respondents a picture of a man and woman in a coffee shop, and have asked the respondents to make up a story about what is happening in the picture. Identify and define the type of question used in this case.Answer: The marketing manager has used Thematic Apperception Test in this case. In Thematic Apperception Test, a picture is presented and respondents are asked to make up a story about what they think is happening or may happen in the picture.Page Ref: 105Objective: 1AACSB: Analytic skillsDifficulty: Moderate

131) The Bledsoe Marketing Research group has been hired to administer a series of questions to shoppers in a local mall. If questions on the survey questionnaire have only two possible responses (such as "yes/no" ), what type of questions are these? Answer: Questions of this type are closed-end questions that are dichotomous in nature. Page Ref: 105Objective: 1AACSB: Analytic skillsDifficulty: Moderate

132) As a marketing researcher, if you plan to conduct your research using qualitative measures like brand personification, what are you likely to ask the respondents in order to elicit their impression on your brand? Answer: Student answers may vary. When the marketing researcher uses the brand personification approach to get inside consumers' minds and find out what they think or feel about brands and products, he is likely to ask the respondents what kind of person they think of when the brand is mentioned. Page Ref: 107Objective: 1AACSB: Analytic skillsDifficulty: Moderate

133) Jane is a marketing researcher of a cellular service providing firm. She is conducting a market research before the firm decides to launch its 3G services. After deciding on the research approach and instruments, what is the next step that Jane should follow? What are the three things that she is required to consider in this step?Answer: After deciding on the research approach and instruments, Jane must design a sampling plan.In order to design the plan, Jane has to decide upon the sampling unit (whom she should survey?), the sample size (how many people should she survey?), sampling procedure (how should she choose the respondents?).Page Ref: 107Objective: 1AACSB: Analytic skills

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Difficulty: Difficult134) A marketing research firm has instructed its research associates to collect primary data by stopping people at a shopping mall or busy street corner and request an interview on the spot. Which contact method is being used by the researchers in this case? What probable risk may the researchers face while using this method?Answer: The researchers are using intercept interviewing method for collecting primary data in this case.The researchers run the risk of including nonprobability samples while using this method.Page Ref: 109Objective: 1Difficulty: Moderate

135) Aromas is a popular brand of cosmetic products. During the last quarter, the company suffered a drop in sales of some of its more popular offerings. In an attempt to find out the problem, Aromas designed an online questionnaire for its existing customers, who can fill out the questionnaire and also leave their comments and suggestions for improvement. What are the problems that Aromas is likely to face by using this method of contacting its customers?Answer: Student answers will vary. Aromas is using online contact method to gather customer feedback. The major problems of using this method are- 1) samples may be small and skewed, 2) online panels and communities can suffer from excessive turnover, 3) such online market research can suffer from technological problems and inconsistencies. Page Ref: 110Objective: 1AACSB: Analytic skillsDifficulty: Difficult

136) As a marketing controller of a company, you have been asked to create a stakeholder-performance scorecard that tracks the satisfaction of various constituencies who have a critical interest and impact your company's performance. List four constituencies that might be included. Answer: The stakeholder-performance scorecard could track the satisfaction of employees, suppliers, banks, distributors, retailers, and stockholders. Page Ref: 116Objective: 3AACSB: Analytic skillsDifficulty: Moderate

137) As a marketing controller of a company you have been asked to develop a customer-performance scorecard for your company's toy division. List three measures you might include. Answer: The three measures that might be included are-(1) percentage of new customers to average number of customers; (2) percentage of lost customers to average number of customers; (3) percentage of win-back customers to average number of customers. Answers may vary.

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Page Ref: 117Objective: 3AACSB: Analytic skillsDifficulty: Difficult

Question 11 out of 1 points

In response to the U.S. income distribution trend toward ________, Levi-Strauss introduced premium Levi's Capital E line to upscale retailers and the economy Levi Strauss Signature line to mass-market retailers.Answer

Selected Answer:

low and high incomes


Today, corporations need to make sure that they are good corporate citizens and that their consumer messages are honest in order to positively align themselves with consumers' ________.Answer

Selected Answer:

views of organizations


Novamalt Inc., a manufacturer of health drinks, plans to introduce its new range of woman health drinks into the market. It involves a specialized marketing research firm to forecast the sales of this product. The research firm analyzes past buying behavior of customers and uses time-series analysis for making the sales forecasts. Which of the following information bases is being used by the research firm in this scenario?Answer

Selected Answer:

what people have done


________ is the sales limit approached by company demand as company marketing effort increases relative to that of competitors.Answer

Selected Answer:

Company sales potential

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1 out of 1 points

A company's sales potential would be equal to market potential if ________.Answer

Selected Answer:

the company gets 100 percent share of the market


The sales forecasting method of ________ builds sets of equations that describe a system and statistically derives the different parameters that make up the equations statistically.Answer

Selected Answer:

econometric analysis


When a company acquires consumer-panel data from firms like A.C. Nielsen Company and Information Resources Inc., which of the following steps to improve the quality of a company marketing intelligence system is the company resorting to?Answer

Selected Answer:

purchasing information from outside research firms and vendors


By 2010, projections indicate that the largest category of households will be composed of ________.Answer

Selected Answer:

childless married couples and empty nesters


________ measures the impact of a set of causal factors (such as income, marketing expenditures, and price) on the sales level.Answer

Selected Answer:

Statistical demand analysis

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1 out of 1 points

Companies can practice targeted marketing by using ________-records of Web site usage stored on personal browsers.Answer

Selected Answer:

cookies

Multiple Choice

1. The major responsibility for identifying significant marketplace changes falls to the ________.

1. U.S. Department of Labor2. company’s marketers3. American Marketing Association4. industry lobby groups found in Washington D.C.5. marketing research industry

Answer: b Page: 66 Difficulty: Easy

2. All of the following questions EXCEPT one would be considered to be forms of information needs probes. Which one?

1. What decisions do you regularly make?2. What information do you need to make decisions?3. What data analysis programs would you want?4. What magazines and trade reports would you like to see on a regular

basis?5. What products would be most closely matched to consumer needs?

Answer: e Page: 67 Difficulty: Medium AACSB: Analytic Skills

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***3. ________ consists of people, equipment, and procedures to gather, sort, analyze,

evaluate, and distribute needed, timely, and accurate information to marketing decision makers.

1. A marketing information system2. A marketing research system3. A marketing intelligence system4. A promotional campaign5. A marketing database

Answer: a Page: 67 Difficulty: Medium AACSB: Analytic Skills

4. The company’s marketing information system should be a cross between what managers think they need, what managers really need, and ________.

1. what the marketing research department is able to do2. what consumers are willing to share3. what the competition is doing4. what is acceptable industry practice5. what is economically feasible

Answer: e Page: 67 Difficulty: Medium AACSB: Reflective Thinking

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5. The heart of the internal records system is the ________.1. database2. asset acquisition process3. order-to-payment cycle4. service consideration5. information liquidity ratio

Answer: c Page: 67 Difficulty: Hard

6. When a marketer “mines” his or her company’s database, fresh insights can be gained into neglected customer segments, ________, and other useful information.

1. recent customer trends2. long-term competitive trends3. possible new inventions4. possible new technologies5. new primary data possibilities


7. The internal records system supplies results data, but the marketing intelligence system supplies ________ data.

1. concurrent2. secondary3. research4. happenings5. premium

Answer: d Page: 69 Difficulty: Medium AACSB: Reflective Thinking

8. A ________ is a set of procedures and sources managers use to obtain everyday information about developments in the marketing environment.

1. marketing research system2. marketing information system3. product management system4. marketing intelligence system5. vertical system

195


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Answer: d Page: 69 Difficulty: Medium AACSB: Use of IT

9. A company can take several steps to improve the quality of its marketing intelligence. If the company purchases competitive products for study, attends open houses and trade shows, and reads competitors’ published reports and stockholder information, the company is using ________ to improve the quality of its marketing intelligence.

1. sales-force surrogates2. intermediaries3. external networks4. advisory panels5. customer feedback systems

Answer: c Page: 69 Difficulty: Hard AACSB: Analytic Skills

196



10. All of the following would be considered to be steps to improve the quality of marketing intelligence in a company EXCEPT ________.

1. training and motivating the sales force to spot and report new developments

2. using guerrilla tactics such as going through a competitor’s trash3. motivating intermediaries to pass along important information4. networking externally5. purchasing information from outside suppliers

Answer: b Pages: 69–71 Difficulty: Easy AACSB: Ethical Reasoning

11. The 2000 U.S. census provides an in-depth look at the population swings, demographic groups, regional migrations, and changing family structure of 281+ million people. Which of the following steps to improve the quality of a company marketing intelligence system would be most closely associated with this illustration?

1. A company can purchase information from outside suppliers.2. A company can take advantage of government data sources.3. A company can use online customer feedback systems to collect data.4. A company can network externally.5. A company can use its sales force to collect and report data.

Answer: b Pages: 70–71 Difficulty: Easy AACSB: Reflective Thinking

12. One of the difficulties of using chat rooms and blogs to collect competitive intelligence is that ________.

1. their unstructured nature makes it difficult for marketers to find relevant messages

2. people are generally unwilling to share their perspective on products and services without being paid for them

3. they constitute a very expensive form of market research4. it is difficult to access chat rooms and blogs because of privacy issues5. All of the above are difficulties experienced when using chat rooms and

blogs to collect competitive intelligence.

Answer: a Page: 71 Difficulty: Medium AACSB: Use of IT

197


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***13. There are several ways marketers can find relevant online information on

competitors’ products and weaknesses, summary comments, and overall performance rating of a product, service, or supplier. ________ is(are) a type of site that is concentrated in financial services and high-tech products that require professional knowledge.

1. Independent customer goods and service reviews2. Distributor or sales agent feedback sites3. Combo sites offering customer reviews and expert opinions4. Customer complaint sites5. Shopping bot service sites

Answer: c Page: 72 Difficulty: Hard AACSB: Use of IT

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14. A ________ is “unpredictable, short-lived, and without social, economic, and political significance.”

1. fad2. fashion3. trend4. megatrend5. style

Answer: a Page: 72 Difficulty: Medium

15.A ________ is a direction or sequence of events that has some momentum and durability; the shape of the future is revealed and many opportunities are provided.

1. fad2. fashion3. trend4. megatrend5. style

Answer: c Page: 72 Difficulty: Hard AACSB: Analytic Skills

16.________ have been described as “large social, economic, political and technological changes [that] are slow to form, and once in place, they influence us for some time—between seven and ten years, or longer.

1. Fads2. Fashions3. Trends4. Megatrends5. Styles

Answer: d Page: 73 Difficulty: Medium

17.The beginning of the new century brought a series of new challenges. All of the following would be considered to be among those challenges EXCEPT ________.

1. a deterioration of innovative ideas2. the steep decline of the stock market3. increasing unemployment4. corporate scandals

199


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***5. the rise of terrorism

Answer: a Page: 74 Difficulty: Medium AACSB: Reflective Thinking

18.With the rapidly changing global picture, the firm must monitor six major forces. All of the following would be among those forces EXCEPT ________.

1. demographic2. economic3. social-cultural4. natural5. promotional

Answer: e Page: 74 Difficulty: Easy AACSB: Analytic Skills

200



19.The main demographic force that marketers monitor is ________.1. suppliers2. competitors3. communication (such as advertising)4. government reports dealing with birth rates5. population

Answer: e Page: 75 Difficulty: Easy AACSB: Reflective Thinking

20. A significant fact about population growth and population shifts is that in 2005, ________.

1. the youth market exceeded that of the adult market2. people over the age of 60 outnumbered those under five years of age3. baby boomers were eclipsed by Gen X young adults4. most age group segments were about equal5. N Generation young adults surpassed the baby boomers as the largest age

segment

Answer: b Page: 76 Difficulty: Hard

21. The ________ regions of the world currently account for 76% of the world population and are growing almost four times faster than the populations of ________ regions.

1. industrialized; service-based2. less-developed; more developed3. Western; Eastern4. wealthier; poorer5. Democratic; Socialist

Answer: b Pages: 75–76 Difficulty: Easy AACSB: Analytic Skills

22. ________ are groups of individuals who are born during the same time period and travel through life together.

1. Cohorts2. Populations3. Demographics4. Societies5. Markets

201


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Answer: a Page: 76 Difficulty: Medium AACSB: Analytic Skills

23. More than any other group, the ________ cohort accepts cultural diversity and puts personal life ahead of work life.

1. World War II2. postwar3. leading-edge baby boomer4. trailing-edge baby boomer5. Generation X

Answer: e Page: 76 Difficulty: Medium

202



24. Although still a work in progress, the ________ cohort is more idealistic and social-cause oriented, without the cynical, what’s-in-it-for-me mindset of other cohorts.

1. N Generation2. postwar3. leading-edge baby boomer4. Depression5. Generation X


25. According to the 2000 census, the U.S. population of 276.2 million was 72% white and ________ % African American. The remainder consisted of Hispanic Americans and other minorities.

1. 202. 183. 154. 135. 11

Answer: d Page: 77 Difficulty: Hard AACSB: Multicultural/Diversity

26. Frequently noted as a megatrend, the increasing percentage of _____ in the total population represents a major shift in cultural center of gravity in the United States.

1. African Americans2. European Americans3. Asian Americans4. Hispanic Americans5. Middle Eastern Americans

Answer: d Page: 77 Difficulty: Medium AACSB: Multicultural/Diversity

27. Diversity goes beyond ethnic and racial markets. More than ________ million Americans have disabilities, and they constitute a market for home delivery companies (and others).

1. 502. 40

203


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***3. 304. 205. 10

Answer: a Page: 78 Difficulty: Hard

28. Two-thirds of all illiterate adults are ________.1. Chinese2. middle-class3. women4. living in industrialized countries5. none of the above

Answer: c Page: 78 Difficulty: Medium AACSB: Multicultural/Diversity

204



29. The ________ household consists of a husband, wife, and children (and sometimes grandparents).

1. “traditional”2. “extended”3. “diversity”4. “modern”5. “revised”


30. By 2010, projections indicate that the largest category of households will be composed of ________.

1. childless married couples and empty nesters2. single-parent families3. single live-alones4. singles living with nonrelatives5. married couples with children

Answer: a Page: 78 Difficulty: Hard AACSB: Multicultural/Diversity

31. The 21st century saw ________ markets grow more rapidly again due to a higher birth rate, a lower death rate, and rapid growth from foreign immigration.

1. suburban2. urban3. rural4. coastal5. secondary

Answer: b Page: 78 Difficulty: Medium AACSB: Analytic Skills

32. The movement by the U.S. population to the ________ has lessened the demand for warm clothing and home heating equipment and increased demand for air conditioning.

1. Sunbelt2. Pacific Northwest3. Northeast4. Mid-Coastal areas5. Heartland

205


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Answer: a Page: 79 Difficulty: Easy AACSB: Analytic Skills

33. Almost one in ________ people over the age of five (120 million) moved at least one time between 1995 and 2000, according to a Census 2000 brief, with an emphasis away from the Midwest and Northeast.

1. two2. three3. four4. five5. ten


206



34. In which of the following economies would we expect to find the fewest opportunities for marketers?

1. Industrializing economies2. Land-locked economies3. Raw-material-exporting economies4. Industrial economies5. Subsistence economies

Answer: e Page: 79 Difficulty: Easy AACSB: Multicultural/Diversity

35. According to information presented in the text, which of the following countries is surprisingly a very good market for Lamborghini automobiles (costing more than $150,000) because of the number of wealthy families that can afford expensive cars.

1. Greece2. Switzerland3. Holland4. Russia5. Portugal

Answer: e Page: 79 Difficulty: Hard AACSB: Multicultural/Diversity

36. Over the past three decades in the United States, the rich have grown richer and the middle class has ________.

1. stayed about the same2. shrunk3. increased slightly4. matched the rich in terms of relative growth5. been ignored because of problems with the poorer classes

Answer: b Page: 79 Difficulty: Medium

37. Consumer expenditures are affected by ________.1. savings2. debt3. credit availability4. all of the above5. none of the above

207


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Answer: d Page: 80 Difficulty: Medium AACSB: Analytic Skills

38. Which of the following groups is most vulnerable to recent income distribution trends in the United States?

1. Makers of high-end sports cars2. Large discount chains3. Pharmaceutical firms4. Conventional retailers offering medium-priced goods5. Expensive and exclusive restaurants

Answer: d Page: 80 Difficulty: Hard AACSB: Reflective Thinking

208



39. ________ shapes the beliefs, values, and norms that largely define tastes and preferences.

1. Marketing2. The mass media3. Government4. Production innovation and engineering5. Society

Answer: e Page: 80 Difficulty: Medium AACSB: Reflective Thinking

40. According to the information found in the social-cultural environment, with respect to views of others, ________ are considered to be things that allow people who are alone to feel they are not (e.g., television, home video games, and Internet chat rooms).

1. social surrogates2. subliminal fantasies3. relationship avoidance4. primary products5. secondary products

Answer: a Page: 81 Difficulty: Medium AACSB: Reflective Thinking

41.Today, corporations need to make sure that they are good corporate citizens and that their consumer messages are honest in order to positively align themselves with consumers’ ________.

1. views of others2. views of organizations3. views of themselves4. views of the universe5. views of society

Answer: b Page: 81 Difficulty: Easy AACSB: Reflective Thinking

42. People vary in their attitudes toward their society. ________ usually live more frugally, drive smaller cars, and wear simpler clothing.

1. Makers2. Escapers3. Seekers

209


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***4. Changers5. Developers

Answer: d Page: 81 Difficulty: Hard

43. People vary in their attitudes toward society and react accordingly. ________ are a major market for movies, music, surfing, and camping.

1. Makers2. Preservers3. Escapers4. Changers5. Developers

Answer: c Page: 81 Difficulty: Easy

210



44. All of the following have been cited by the text as being among Americans’ core values EXCEPT ________.

1. belief in work2. belief in getting married3. belief in giving to charity4. belief in being honest5. belief in sexual permissiveness

Answer: e Page: 81 Difficulty: Easy AACSB: Reflective Thinking

45. Which of the following would be the best illustration of a secondary belief or value?

1. Belief in work2. Belief in giving to charity3. Belief in getting married4. Belief in getting married early5. Belief in being honest

Answer: d Page: 81 Difficulty: Medium AACSB: Analytic Skills

46. Each society contains ________, groups with shared values emerging from their special life experiences or circumstances.

1. demographic segments2. cliques3. consumer bundles4. subcultures5. behavioral niches


47.Marketers are particularly interested in the consumption of ________, as developing brand loyalty in this age group is likely to lead to the highest consumer lifetime value.

1. infants2. young children3. teens4. parents

211


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***5. retirees

Answer: c Pages: 81–82 Difficulty: Hard AACSB: Analytic Skills

48.Which of the following would be the best illustration of a subculture?1. A softball team2. A university alumni association3. Teenagers4. A Boy Scout troop5. Frequent flyers

Answer: c Page: 81 Difficulty: Medium

212



49. Although core values are fairly persistent, cultural swings do take place. ________ caused such a swing in the 1960s.

1. Ford Motor Company2. George McGovern3. G.I. Joe action characters4. The infomercial5. The Beatles

Answer: e Page: 81 Difficulty: Medium

50. Marketers need to be aware of threats and opportunities associated with four trends in the natural environment, including all of the following EXCEPT ________.

1. the shortage of raw materials2. the increased cost of energy3. near 90% corporate support for “green causes”4. increased pollution levels5. the changing role of governments

Answer: c Page: 82 Difficulty: Easy

51. With respect to the shortage of raw materials, air and water are classified as ________ resources. However, as we know, problems are beginning to plague both our air and water quality.

1. infinite2. near finite3. finite renewable4. finite nonrenewable5. absolute


52. Firms making products that require ________face substantial cost increases as these become increasingly scarce.

1. infinite2. near finite3. finite renewable4. finite nonrenewable

213


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***5. absolute

Answer: d Page: 82 Difficulty: Easy AACSB: Analytic Skills

53. ________ is the recognition for the importance of environmental issues facing the firm and the integration of those issues into the firm’s strategic plans.

1. Nonrenewable resource2. Corporate environmentalism3. Multicultural awareness4. Bipartisanism5. Secondary belief


214



54. “Green marketing myopia” is a term used to describe the tendency to ________.1. completely ignore environmental issues2. regard environmental issues as too abstract to provide customer value3. balance environmental concerns with other forms of customer value4. overly focus on a product’s greenness5. none of the above

Answer: d Page: 83 Difficulty: Hard

55. From a branding perspective, “green marketing” programs have not been entirely successful. ________ must be overcome for “green marketing” programs to be more successful.

1. Perceived inferior quality and lack of credibility2. High cost3. Poor promotions4. Resistance by the youth segment in the marketplace5. Lack of support by governmental agencies and concerns


56.The largest consumer environmental segment is the True Blue Greens, who are characterized by ________.

1. a strong knowledge of environmental issues and a higher likelihood to engage in environmentally conscious behavior

2. the belief that their individual behavior cannot improve environmental conditions

3. their belief that environmental indifference is mainstream4. a lack of time or inclination to behave entirely green5. the purchase of environmentally conscious products, but only if

those products meet their needs


57.The marketer should monitor the following trends in technology, EXCEPT ________, if progress is to be made in business.

1. the pace of change2. the difficulties found in sharing information

215


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***3. the opportunities for innovation4. varying R&D budgets5. increased regulation

Answer: b Page: 85 Difficulty: Hard AACSB: Use of IT

58.The ________ environment consists of laws, government agencies, and pressure groups that influence and limit various organizations and individuals.

1. natural2. technological3. social-cultural4. economic5. political-legal

Answer: e Page: 86 Difficulty: Easy AACSB: Analytic Skills

216



59.The purpose of ________ legislation is to protect companies from unfair competition, to protect consumers from unfair business practices, and to protect the interests of society from unbridled business behavior.

1. business2. consumer3. bipartisan4. activist5. global

Answer: a Page: 86 Difficulty: Easy AACSB: Analytic Skills

60. An important force affecting business is the ________—a movement of citizens and government organized to strengthen the rights and powers of buyers in relation to sellers.

1. lobbyist movement2. consumerist movement3. environmental movement4. self-rights movement5. ethical reform movement


True/False

61. Today, most firms are rather sophisticated about gathering information.

Answer: False Page: 67 Difficulty: Medium

61. Companies with superior information enjoy a competitive advantage.

Answer: True Page: 67 Difficulty: Easy AACSB: Reflective Thinking

217


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***61. A marketing information system is developed from internal company records,

marketing intelligence, and promotional models supplied by the marketing department.

Answer: False Page: 67 Difficulty: Medium AACSB: Use of IT

61. The heart of the internal records system is the bar code.

Answer: False Page: 67 Difficulty: Medium AACSB: Reflective Thinking

61. Few consumers actually delete cookies frequently. When customers accept cookies, they expect customized marketing appeals and deals.

Answer: True Page: 68 Difficulty: Hard AACSB: Use of IT

61. Sales data are always unambiguous and clearly interpreted.

Answer: False Page: 68 Difficulty: Hard AACSB: Reflective Thinking

61. According to principles found in database construction and usage, a “carpet bombing” mailing of a new offer is usually the most successful strategy.

Answer: False Page: 68 Difficulty: Medium AACSB: Use of IT

218



61. If a company were pursuing a policy of networking externally, it might collect competitors’ ads or look up news stories about competitors.

Answer: True Page: 69 Difficulty: Medium AACSB: Analytic Skills

61. Competitive intelligence gathering is inherently illegal and unethical.

Answer: False Page: 70 Difficulty: Easy AACSB: Ethical Reasoning

61. One of the ways to find relevant online information on competitors’ strengths and weaknesses might be to frequent distributor or sales agent feedback sites.

Answer: True Page: 72 Difficulty: Medium

61. A style is unpredictable, short-lived, and without social or economic significance.

Answer: False Page: 72 Difficulty: Medium AACSB: Analytic Skills

61. A megatrend has been described as being what follows all fads that stay on the market at least one year.


61. One of the 10 significant megatrends that will impact marketing efforts in the future is increasing scrutiny on the role and behavior of big business.


61.Microenvironmental forces have been labeled as being “uncontrollable.”


219



61.Population growth is highest in countries and communities that can least afford it.

Answer: True Page: 75 Difficulty: Medium AACSB: Multicultural/Diversity

61.A growing population always means a growing market.


61.The basis of cohort segmentation is that the occurrence of key defining moments while a person comes of age imprints core values that remain largely intact throughout life.


61.Japan has one of the world’s oldest populations.

Answer: True Page: 76 Difficulty: Medium AACSB: Multicultural/Diversity

61.According to the 2000 census, Latinos make up the largest minority in the United States with 13% of the total population.


61. In marketing to ethnic groups, African Americans should be treated as a uniform group because of their shared heritage and homogeneous consumption patterns.

Answer: False Page: 77 Difficulty: Easy AACSB: Analytic Skills

220



61. The United States has one of the highest percentages of college-educated citizens, which spells a high demand for quality books, magazines, and travel.


61.According to studies of minority markets, the disabled market is 10 times more likely to be in a professional job, almost twice as likely to own a vacation home, 8 times more likely to own a notebook computer, and twice as likely to own individual stocks as compared to the general population.

Answer: False Page: 78 Difficulty: Medium AACSB: Multicultural/Diversity

61.The available purchasing power in an economy depends on current income, prices, savings, debt, and credit availability.

Answer: True Page: 79 Difficulty: Easy AACSB: Analytic Skills

61. Egypt is a good example of a raw-material-exporting economy.

Answer: False Page: 79 Difficulty: Hard AACSB: Multicultural/Diversity

61.Markets with a segment of very wealthy consumers, but high income disparity, present few opportunities to marketers.


61.Over the past three decades in the United States, income disparity has grown while the middle class has shrunk.


221



61.High debt-to-income ratios among U.S. consumers can slow down their expenditures on housing and large-ticket items.

Answer: True Page: 80 Difficulty: Hard AACSB: Analytic Skills

61. If a single person has a home entertainment system that is rich in television capabilities and home video games, he or she may be using such a system as a “social surrogate.”

Answer: True Page: 81 Difficulty: Hard

61. In recent years, because of a tough job market, there has been an increasing amount of organizational loyalty among most employees.


61.With respect to views of society, changers tend to be high achievers who live lavishly.


61. Secondary beliefs and values are passed on from parents to children and reinforced by major social institutions, making them very difficult to change.


222



61. Most Americans still hold the importance of marriage as a core belief.

Answer: True Page: 81 Difficulty: Easy

61. Firms making products that require increasingly scarce finite nonrenewable resources face substantial cost increases.


61. Consumers are consistently in favor of environmental safety and the majority show their concern by purchasing recycled and environmentally safe products.


61. Most wealthy nations are doing little about pollution, largely because they lack the funds or the political will.


61. Every new technology is a force for “creative destruction.”


61. A growing portion of U.S. R&D expenditure is going into the development side of R&D, raising concerns about whether the United States can maintain its lead in basic science.

Answer: True Page: 85 Difficulty: Hard AACSB: Reflective Thinking

61. Legislation affecting business has increased steadily over the years.

223


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Answer: True Page: 86 Difficulty: Easy

61. One of the major trends in the political-legal environment is the trend toward the growth of special-interest groups.


61. Today, customers are still willing to swap personal information for customized products from firms.


Essay

101. Describe a marketing information system (MIS). From what sources is the MIS developed?

Suggested Answer: A marketing information system (MIS) consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. A marketing information system is developed from internal company records, marketing intelligence activities, and marketing research.

Page: 67 Difficulty: Medium AACSB: Use of IT

224



101. Describe the order-to-payment cycle and why it is important to internal records keeping.

Suggested Answer: The heart of the internal records system is the order-to-payments cycle. Sales representatives, dealers, and customers send orders to the firm. The sales department prepares invoices and transmits copies to various departments. Out-of-stock items are back ordered. Shipped items are accompanied by shipping and billing documents that are sent to various departments. Today’s companies must perform these steps quickly and accurately.

Page: 67 Difficulty: Medium AACSB: Reflective Thinking

101. What are the various steps a company can take to improve the quality of its marketing intelligence function?

Suggested Answer: The steps are: (1) A company can train and motivate the sales force to spot and report new developments; (2) a company can motivate distributors, retailers, and other intermediaries to pass along important intelligence; (3) a company can network externally; (4) a company can set up a customer advisory panel; (5) a company can take advantage of government data resources; (6) a company can purchase information from outside suppliers; and (7) a company can use online customer feedback systems to collect competitive intelligence.

Pages: 69–71 Difficulty: Hard AACSB: Analytic Skills

101. List and briefly describe the five main ways marketers can find relevant online information on competitors’ strengths and weaknesses, summary comments, and overall performance rating of a product, service, or supplier.

Suggested Answer: The five ways are: (1) independent customer goods and service review forums; (2) distributor or sales agent feedback sites; (3) combo sites offering customer reviews and expert opinions; (4) customer complaint sites; and (5) public blogs.

225


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Page: 72 Difficulty: Hard AACSB: Use of IT

226



101. What is a “megatrend”? Briefly describe five megatrends shaping the consumer landscape.

Suggested Answer: A megatrend is a large, social, economic, political, and technological change that is slow to form, and once in place, influences us for some time (e.g., between 7 and 10 years or longer). The 10 trends (students discuss 5) discussed in the text are (1) centers of economic activity will shift, both globally and regionally; (2) public-sector activities will balloon, making productivity gains essential; (3)the consumer landscape will change and expand significantly; (4) technological connectivity will transform the way people live and interact; (5) the battlefield for talent will shift; (6) the role and behavior of big business will come under increasingly sharp scrutiny; (7) demand for natural resources will grow, as will the strain on the environment; (8) new global industry structures are emerging; (9) management will go from art to science; and (10) ubiquitous access to information is changing the economics of knowledge.

Page: 73 Difficulty: Hard AACSB: Reflective Thinking

101. What is the main demographic force monitored by marketers? Why?

Suggested Answer: The main demographic force monitored by marketers is population. The reason for its importance is because people make up markets. Marketers are keenly interested in the size and growth rate of population in cities, regions, and nations; age distribution and ethnic mix; educational levels; household patterns; and regional characteristics and movements.


101. How are household patterns anticipated to change over the next few years?

Suggested Answer: By 2010, only one in five U.S. households will consist of married couples with children under the age of 18, the “traditional household.” More people are divorcing or separating, choosing not to marry, marrying later, or marrying without the intention to have children. By 2010, childless married couples and empty nesters will constitute the largest household group, followed

227


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***by single live-alones. Nontraditional households are currently growing more rapidly than traditional ones.


101. People absorb, almost unconsciously, a worldview that defines their relationships. List and describe the “views” that assist or retard this relationship development process.

Suggested Answer: The views are: (1) views of themselves; (2) views of others; (3) views of organizations; (4) views of society; (5) views of nature; and (6) views of the universe. Students should characterize each based on materials presented in the text.

Pages: 80–81 Difficulty: Hard AACSB: Reflective Thinking

101. Describe the differences between a core belief and a secondary belief. List the primary core beliefs of Americans as revealed by the text.

Suggested Answer: The people living in a particular society hold many core beliefs and values that tend to persist. Most Americans still believe in work, in getting married, in giving to charity, and in being honest. Core beliefs and values are passed on from parents to children and are reinforced by major social institutions. Secondary beliefs and values are more open to change. Believing in the institution of marriage is a core belief; believing that people ought to get married early is a secondary belief. Marketers have some chance of changing secondary beliefs. There is little chance to change core beliefs or values.

Page: 81 Difficulty: Medium AACSB: Analytic Skills

101. Many marketers have tried and failed with “green marketing” programs. Identify and briefly describe the two main problems with such campaigns.

228


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Suggested Answer: Although many companies have launched “green marketing”

programs, they have not been entirely successful from a branding perspective. Two main problems are that (1) consumers may believe the product is of inferior quality as a result of being green and (2) they may feel the product is not really that green to begin with.

Page: 83 Difficulty: Medium AACSB: Analytic Skills

APPLICATION QUESTIONS

Multiple Choice

101. DuPont commissioned marketing studies to uncover personal pillow behavior for its Dacron Polyester unit that supplies filling to pillow makers and sells its own Comforel brand. Which of the following was revealed by research to be the primary challenge faced by DuPont in expanding sales in the pillow industry?

1. Price2. People not wanting to give up their old pillows3. The smell associated with polyester4. The lack of a favorable reputation in the industry5. Competition from China


229



101. As the manager of an organization that is attempting to build a MIS, you have been informed that a MIS is built upon three fundamental information sources. The sources are ________, marketing intelligence activities, and marketing research.

1. external records and documents2. databases found on the Internet3. consultant reports4. internal company records5. secondary data from government sources such as the Better Business

Bureau

Answer: d Page: 67 Difficulty: Hard AACSB: Use of IT

101. The ________ is the process that starts with sales representatives, dealers, and customers sending orders to the firm, ends with item shipment and bill payment, and includes the preparation of invoices and the back-order of out-of-stock items.

1. sales information cycle2. order-to-payment cycle3. demographic trend4. marketing information system5. marketing intelligence


101. By equipping its sales force with handheld devices with bar-code readers and Internet connections to speed inventory assessment, TaylorMade’s sales reps have significantly more time to interact with their consumers. This is an example of the use of technology in improving ________.

1. sales information systems2. order-to-payment cycles3. cookies4. cohort segmentation5. competitive intelligence gathering

Answer: a Page: 68 Difficulty: Medium AACSB: Use of IT

230


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***101. Marketing managers tend to us internal records systems to supply

________ data, whereas marketing intelligence system are used to supply happenings data.

1. demand2. logistical3. psychographic4. results5. primary

Answer: d Page: 69 Difficulty: Hard AACSB: Reflective Thinking

231



101. Which of the following best describes the practice used by McDonald’s when it hired mystery shoppers to assess stores’ internal speed standards?

1. Training and motivating the sales force to spot and report new developments

2. Motivating intermediaries to pass along important intelligence3. Networking externally4. Setting up an advisory panel5. Taking advantage of government data sources


101. Many business schools have _____ made up of alumni and recruiters who provide valuable feedback on the curriculum.

1. government data sources2. advisory panels3. trends4. order-to-payment cycles5. green marketing initiatives


101. Elance.com is a service provider that allows contractors to describe their level of satisfaction with subcontractors. This is an example of a(n) ________.

1. independent customer goods and service review forum2. public blog3. customer complaint site4. combo site offering customer reviews and expert opinions5. distributor or sales agent feedback site

Answer: e Page: 72 Difficulty: Hard AACSB: Use of IT

101. Examples of ________ that were considered to be successful for toy retailers were Beanie Babies, Furbies, and Tickle Me Elmo dolls.

1. trends2. fashions3. fads

232


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***4. megatrends5. styles

Answer: c Page: 72 Difficulty: Medium

101. According to information provided in the text, ________ is an example of a country with a very young and rapidly expanding population where products such as milk, diapers, school supplies, and toys would be important.

1. Japan2. France3. Spain4. Mexico5. the United Kingdom

Answer: d Page: 76 Difficulty: Hard AACSB: Multicultural/Diversity

101. ________ shows a spirit of entrepreneurship unmatched by any cohort.

1. Baby boomers2. War babies3. Generation Z4. Generation X5. N Generation

Answer: d Page: 76 Difficulty: Hard AACSB: Analytic Skills

101. ________ made up half of all new workers in the past decade and will make up 25% of all workers in the United States within two generations.

1. Asian Americans2. African Americans3. Hispanic Americans4. European Americans5. Native Americans

Answer: c Page: 77 Difficulty: Medium AACSB: Multicultural/Diversity

233


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***101. Within the African American market, the largest and perhaps most

influential socio-behavioral subsegments are ________.1. the Reachers and the Attainers2. the Seekers and the Conservers3. the Elites and the Attainers4. the Emulators and the Reachers5. the Conservers and the Emulators

Answer: a Page: 77 Difficulty: Hard AACSB: Multicultural/Diversity

101. By 2010, only ________ of U.S. households will consist of married couples with children under the age of 18.

1. 50%2. 40%3. 30%4. 20%5. 10%

Answer: d Page: 78 Difficulty: Hard AACSB: Analytic Skills

101. Marketers look at where consumers are gathering to gain insights into consumption trends. The movement to ________ states has lessened the demand for warm clothing and increased the demand for air conditioning.

1. Northeast2. Sunbelt3. Midwest4. West Coast5. Mountain

Answer: b Page: 79 Difficulty: Easy AACSB: Analytic Skills

101. In response to the U.S. income distribution trend toward ________, Levi-Strauss introduced premium Levi’s Capital E line to upscale retailers and the less-expensive Levi Strauss Signature line to mass-market retailers.

1. very low incomes2. mostly low incomes3. very low and very high incomes4. mostly medium incomes5. low and high incomes, with a shrinking middle income segment

234


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Answer: e Pages: 79–80 Difficulty: Hard AACSB: Analytic Skills

101. William rose rapidly in his organization and was the youngest CEO in the company’s history. William would be characterized as a ________.

1. preserver2. maker3. taker4. seeker5. reaper

Answer: b Page: 81 Difficulty: Medium AACSB: Reflective Thinking

101. Frito-Lay has seen a rise in chip snacking by grown-ups and believes it is a result of more directed marketing efforts toward ________, who continued to snack on Frito-Lay products into adulthood.

1. infants2. young children3. parents4. teens5. none of the above


101. The Toyota Prius, with its 55 miles per gallon fuel efficiency, was designed in response to consumption trends as they related to the ________ environment.

1. demographic2. political-legal3. natural4. economic5. social

Answer: c Page: 82 Difficulty: Easy AACSB: Reflective Thinking

235



101. ________ lobby government officials and pressure business executives to pay more attention to consumers’ rights, women’s rights, senior citizens’ rights, minority rights, and gay rights.

1. Political action committees (PACs)2. Universities and colleges3. The Better Business Bureau4. The U.S. Chamber of Commerce5. Manufacturing trade associations (MTAs)

Answer: a Page: 86 Difficulty: Easy AACSB: Analytic Skills

Which of the following statements about

marketing is true?

B) It can help create jobs in the economy by

increasing demand for goods and services.

BPage Ref: 2 Objective: 1Difficulty: Easy

236



________ goods constitute the bulk of most

countries' production and marketing

efforts.

A) Durable

B) Impulse

C) Physical

D) Luxury

E) Intangible

CPage Ref: 3Objective: 2Difficulty: EasyCar rental firms, hair dressers, and

management consultants provide ________.

A) goods

B) experiences

C) events

D) services

E) information

DPage Ref: 3Objective: 2AACSB: Analytic SkillsDifficulty: Easy

237


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***The Soccer World Cup is promoted

aggressively to both companies and fans.

This is an example of marketing a(n)

________.

A) idea

B) place

C) luxury item

D) event

E) service

DPage Ref: 3Objective: 2Difficulty: Moderate

238



In Walt Disney's Magic Kingdom, customers

can visit a fairy kingdom, a pirate ship, or

even a haunted house. Disney is marketing

a(n) ________.

A) experience

B) service

C) event

D) organization

E) good

APage Ref: 3Objective: 2AACSB: Analytic SkillsDifficulty: Easy

239



________ are basic human requirements, while

________ are the ways in which those

requirements are satisfied.

A) Wants; needs

B) Demands; wants

C) Needs; wants

D) Needs; demands

E) Demands; needs

CPage Ref: 5Objective: 3Difficulty: Easy

240



When Frank buys his own house, he would

like to have a home theater system and a

jacuzzi. He plans to save enough money in

the next three years so that he can fulfill his

wish. Frank's desire for the home theater

and the jacuzzi is an example of a(n) ________.

A) need

B) want

C) demand

D) unstated need

E) latent demand

BPage Ref: 5Objective: 3AACSB: Analytic SkillsDifficulty: Moderate

241



A(n) ________ need is one that the consumer

is reluctant or unwilling to explicitly

verbalize.

A) secondary

B) unstated

C) delight

D) secret

E) state

DPage Ref: 6Objective: 3Difficulty: ModerateA(n) ________ need is a need that the

consumer explicitly verbalizes.

A) stated

B) affirmative

C) unsought

D) delight

E) secret

APage Ref: 5Objective: 3Difficulty: Moderate

242



Companies address needs by putting forth a

________, a set of benefits that they offer to

customers to satisfy their needs.

A) brand

B) value proposition

C) deal

D) marketing plan

E) demand

BPage Ref: 6Objective: 3Difficulty: Moderate________ reflects a customer's judgment of a

product's performance in relation to his or

her expectations.

A) Brand equity

B) Satisfaction

C) Value

D) Perception

E) Brand image

BPage Ref: 6

243


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Objective: 3Difficulty: EasyThe value of an offering is described as

________.

A) the price consumers are charged for a

product

B) the cost of manufacturing a product

C) the degree to which consumer demand

for a product is positive

D) the sum of the tangible and intangible

benefits and costs to customers

E) the intangible benefits gained from a

product


244



When Volvo runs ads suggesting that its cars

are the safest that money can buy, it is

trying to ________.

A) segment the market

B) provide a service

C) enter into a new market

D) develop brand loyalty

E) position its product

EPage Ref: 6Objective: 3AACSB: Analytic SkillsDifficulty: ModerateThe actual and potential rival offerings and

substitutes that a buyer might consider are

referred to as the ________.

A) supply chain

B) global market

C) value proposition

D) competition

E) marketing environment

DPage Ref: 7

245


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Objective: 3Difficulty: EasyThe ________ includes the actors involved in

producing, distributing, and promoting an

offering. The main actors are the company,

suppliers, distributors, dealers, and the

target customers.

A) economic environment

B) management environment

C) strategic environment

D) task environment

E) tactical environment

DPage Ref: 7Objective: 3AACSB: Analytic SkillsDifficulty: Moderate

246



Rising promotion costs and shrinking profit

margins are the result of ________.

A) new and improved technology

B) disintermediation

C) industry convergence

D) privatization

E) heightened competition

EPage Ref: 8Objective: 4Difficulty: ModerateIndustry boundaries are blurring rapidly as

companies identify new opportunities at the

intersection of two or more industries. This

is called ________.

A) globalization

B) customization

C) industry convergence

D) disintermediation

E) privatization

CPage Ref: 8

247


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Objective: 4Difficulty: EasyThe success of online purchasing resulted in

________ in the delivery of products and

services by intervening in the traditional

flow of goods through distribution channels.

A) disintermediation

B) diversification

C) reduced competition

D) deregulation

E) privatization


248



When eBay and Amazon.com cut out the

majority of middlemen that normally would

participate in the exchange process, it is an

example of ________.

A) deregulation

B) reverse auctioning

C) reintermediation

D) disintermediation

E) diversification

DPage Ref: 8Objective: 4AACSB: Use of information technologyDifficulty: ModerateDisintermediation via the Internet has

resulted in ________.

A) higher prices

B) stronger brand loyalty

C) greater emphasis on personal selling

D) well-established brand names

E) greater consumer buying power

EPage Ref: 8

249


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Objective: 4AACSB: Use of information technologyDifficulty: ModerateEach of the following is true about the

Internet's impact on the way business is

conducted today, EXCEPT one. Identify the

exception.

A) It has facilitated high-speed

communication among employees.

B) It has empowered consumers with easy

access to information.

C) It can be used as a powerful sales

channel.

D) It has facilitated mass marketing but not

the sale of customized products.

E) It enables marketers to use social media

to advertise their products

DPage Ref: 8Objective: 4AACSB: Use of information technologyDifficulty: Easy

250



What are customer touch points?

A) all aspects of the offering that directly

affect consumer preferences

B) all needs and wants of customers

C) all direct or indirect interactions between

the customer and the company

D) all interactions between customers and

competitors

E) all factors that affect buying behavior

CPage Ref: 4Objective: 4Difficulty: Moderate

251



Which of the following holds that consumers

prefer products that are widely available and

inexpensive?

A) the product concept

B) the production concept

C) the selling concept

D) the performance concept

E) the marketing concept

BPage Ref: 9Objective: 4Difficulty: ModerateThe ________ concept holds that consumers

will favor offerings with the best quality,

performance, or innovative features.

A) product

B) marketing

C) production

D) selling

E) holistic marketing

APage Ref: 9

252


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Objective: 4Difficulty: EasyAs a major steel manufacturer, SteelMakers

Inc. focuses on having the most efficient

manufacturing processes in place. The

company believes that its competitive edge

lies in its ability to offer the best prices.

They also maintain an excellent distribution

network that ensures wide availability of

their products. SteelMakers has a ________.

A) selling orientation

B) production orientation

C) product orientation

D) marketing orientation

E) social orientation


253



Webmax Inc. produced and marketed

cameras. After considerable research and

development, they developed a new digital

camera that had an array of new features.

Webmax was so sure about the new offering

that they even reduced their marketing

budget. What sort of orientation does

Webmax have toward the marketplace?

A) production orientation

B) product orientation

C) selling orientation

D) marketing orientation

E) holistic marketing orientation


Page Ref: 9Objective: 4AACSB: Analytic SkillsDifficulty: Moderate

254



Marketers at Johnny Inc. believe in putting

their customers ahead of everything else.

Their products are carefully designed to

meet customer requirements and the entire

focus is on achieving customer satisfaction.

Johnny Inc. follows the ________ concept in

doing business.

A) production

B) product

C) selling

D) marketing

E) social responsibility


255



The ________ concept holds that consumers

and businesses, if left alone, will ordinarily

not buy enough of the organization's

products.

A) production

B) selling

C) marketing

D) product

E) holistic marketing

BPage Ref: 9Objective: 4Difficulty: Easy

256



The marketing concept holds that ________.

A) a firm should find the right products for

its customers, and not the right customers

for its products

B) customers who are coaxed into buying a

product will most likely buy it again

C) a new product will not be successful

unless it is priced, distributed, and sold

properly

D) consumers and businesses, if left alone,

won't buy enough of the organization's

products

E) a better product will by itself lead people

to buy it without much effort from the

sellers


257



What are the four broad components of

holistic marketing?

A) relationship, internal, position, and

performance marketing

B) integrated, internal, position, and


C) relationship, integrated, internal, and


D) integrated, relationship, social

responsibility, and position marketing

E) relationship, social responsibility,

internal, and performance marketing


258



________ marketing aims to build mutually

satisfying long-term collaboration with key

constituents, such as customers, employees,

suppliers, distributors, and other marketing

partners, in order to earn and retain their

business.

A) Integrated

B) Demand-based

C) Direct

D) Relationship

E) Internal

DPage Ref: 11Objective: 4Difficulty: Easy

259



The ultimate outcome of relationship

marketing is a unique company asset called

the ________, consisting of the company and

its supporting stakeholders.

A) brand

B) supply chain

C) marketing network

D) value proposition

E) service channel


260



Which aspect of holistic marketing

motivates employees and ensures that

everyone in the organization embraces

appropriate marketing principles, especially

senior management?

A) relationship marketing

B) integrated marketing

C) internal marketing

D) network marketing

E) performance marketing

CPage Ref: 11Objective: 4AACSB: Analytic SkillsDifficulty: Moderate

261



Financial accountability and social

responsibility marketing are elements of

________.

A) performance marketing

B) relationship marketing

C) internal marketing

D) social marketing

E) mass marketing


262



Companies are recognizing that much of

their market value comes from ________,

particularly their brands, customer base,

employees, distributor and supplier

relations, and intellectual capital.

A) variable assets

B) value propositions

C) intangible assets

D) market offerings

E) industry convergence

CPage Ref: 12Objective: 4AACSB: Reflective ThinkingDifficulty: Easy48)

263



Joanna owns a chain of fast-food joints. As

the chain became more and more successful,

she decided to contribute a share of her

profits each year to support cancer research.

This is an example of ________.

A) corporate community involvement

B) environmental marketing

C) cause-related marketing

D) benefit marketing

E) responsible marketing


264



McCarthy classified marketing activities into

the four Ps of the marketing mix. These four

Ps stand for ________.

A) product, positioning, place, and price

B) product, production, price, and place

C) promotion, place, positioning, and price

D) place, promotion, production, and

positioning

E) product, price, promotion, and place

EPage Ref: 13Objective: 4Difficulty: Easy

265



Incorporating the holistic view of marketing,

the four Ps of the marketing mix can be

updated to ________.

A) product, positioning, people, and price

B) people, processes, place, and promotion

C) product, processes, price, and people

D) people, processes, programs, and

performance

E) product, price, promotion, and people

DPage Ref: 13Objective: 4AACSB: Multicultural and diversity understandingDifficulty: Moderate

Difficulty: Moderate

266



Which of the four new Ps encompasses the

old four Ps as well as a range of other

marketing activities that might not fit well

into the old view of marketing?

A) programs

B) processes

C) promotion

D) people

E) performance


267



At the heart of any marketing program is the

firm's ________, its tangible offering to the

market.

A) strategy

B) product

C) brand

D) value

E) people

BPage Ref: 14Objective: 5Difficulty: Easy________ activities include those the company

undertakes to make the product accessible

and available to target customers.

A) Line extension

B) Segmentation

C) Marketing research

D) Channel

E) New-product development

DPage Ref: 15Objective: 5

268


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Difficulty: Moderate56) Page Ref: 2Objective: 2AACSB: Analytic SkillsDifficulty: EasyThe U.S. economy today consists of a 70-30

services-to-goods mix.

TRUEPage Ref: 3Objective: 2Difficulty: ModerateProperties are tangible rights of ownership

to either real property (real estate) or

financial property (stocks and bonds).

FALSEPage Ref: 3Objective: 2Difficulty: Easy"Friends Don't Let Friends Drive Drunk," is

an example of marketing information to an

interested audience.

FALSEPage Ref: 4Objective: 2AACSB: Reflective ThinkingDifficulty: Moderate

269



Shops and stores have a physical existence

and as such are examples of marketspace.

FALSEPage Ref: 4Objective: 2AACSB: Use of information technologyDifficulty: EasyWants are basic human requirements, such

as food and shelter.

FALSEPage Ref: 5Objective: 3Difficulty: EasyDemands are wants for specific products

backed by an ability to pay.

TRUEPage Ref: 5Objective: 3AACSB: Analytic SkillsDifficulty: Easy63) Objective: 3Difficulty: Easy

270



The task environment of a firm consists of

demographic, economic, natural, and

technological environments, as well as the

political-legal system and the social-cultural

arena.

FALSEPage Ref: 7Objective: 3AACSB: Analytic SkillsDifficulty: ModerateRegulation of industries has created greater

competition and growth opportunities

because the playing field has been leveled.

FALSEPage Ref: 7-8Objective: 4AACSB: Reflective ThinkingDifficulty: EasyCompanies can facilitate and speed external

communication among customers by

creating online and offline "buzz" through

brand advocates and user communities.

TRUEPage Ref: 8Objective: 4Difficulty: Moderate

271



The selling concept holds that consumers

will favor those products that offer the most

quality, performance, or innovative features.

FALSEPage Ref: 9Objective: 4AACSB: Analytic SkillsDifficulty: ModerateRelationship marketing aims to build

mutually satisfying long-term relationships

with key parties.

TRUEPage Ref: 11Objective: 4Difficulty: EasyOne of the key themes of integrated

marketing is that there are very few

marketing activities that can effectively

communicate and deliver value.

FALSEPage Ref: 11Objective: 4AACSB: Reflective ThinkingDifficulty: Moderate71)

272



Integrated marketing is the task of hiring,

training, and motivating able employees who

want to serve customers well.

FALSEPage Ref: 11Objective: 4Difficulty: EasyPerformance marketing involves reviewing

metrics assessing market share, customer

loss rate, customer satisfaction, and product

quality in the evaluation of the effectiveness

of marketing activities.

TRUEPage Ref: 12Objective: 4Difficulty: ModerateCause-related marketing involves donating a

percentage of revenues to a specific cause

based on the revenue occurring during the

announced period of support.

TRUEPage Ref: 13Objective: 4AACSB: Analytic SkillsDifficulty: Moderate

273



Making gifts of money, goods, or time to

help nonprofit organizations, groups, or

individuals is known as corporate

philanthropy.

TRUEPage Ref: 13Objective: 4Difficulty: EasyMarketers are involved in marketing 10

types of entities. List and briefly

characterize these entities.

The types of entities that are marketed are (1) goods-physical goods, (2) services-hotels and car rental services, (3) events-time-based events such as trade shows, (4) experiences-Walt Disney's Magic Kingdom, (5) persons-celebrity marketing, (6) places-cities, states, regions, and even whole nations, (7) properties-intangible rights of ownership of either real property or financial property, (8) organizations-corporate identity, (9) information-information produced and marketed as a product, and (10) ideas-marketing the basic idea of a market offering.Identify and define the traditional four Ps.

Also identify the new four Ps and the reason

for developing the new interpretation.

The traditional four Ps are: Product (product variety, quality, design, features, brand name, packaging, sizes, services, warranties, returns), Price (list price, discounts, allowances, payment period, credit terms), Promotion (sales promotion, advertising, sales force, public relations, direct marketing), and Place (channels, coverage, assortments, locations, inventory, transportation). However, given the breadth, complexity, and

274


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***richness of marketing, as exemplified by holistic marketing, these 4 Ps are not the whole story any more. Updating them to reflect the holistic marketing concept, researchers in this field arrived at a more representative set that encompasses modern marketing realities: people, processes, programs, and performance.Discuss the concept of disintermediation

and provide an example.

Disintermediation grew out of the rush to embrace the dot-coms and e-commerce. Essentially, the dot-coms removed many of the traditional intermediaries by encouraging consumers to deal directly with the company via the Internet. "Brick-and-click" businesses eventually brought some of the intermediaries back through a process called reintermediation. Page Ref: 8Objective: 4AACSB: Use of information technologyDifficulty: Easy80) You have been given the assignment of justifying cause-related marketing to your board of directors. What would be your primary argument in favor of such a proposal? Answer: Companies see cause-related marketing as an opportunity to enhance their corporate reputation, raise brand awareness, increase customer loyalty, build sales, and increase press coverage. They believe customers will increasingly look for signs of good corporate citizenship that go beyond supplying rational and emotional benefits. This should be the main line of argument in support of any cause-related marketing effort.Page Ref: 12-13Objective: 4

275



What is the traditional view of marketing?

A) Firms should just focus on production

because if the products are good then they

will automatically sell.

B) Firms should just focus on production

and selling because marketing occurs as a

part of the selling process.

C) Firms should have a proper marketing

team that can increase consumers'

awareness of their products and rouse their

interest in them.

D) Firms should price their products as low

as possible so that marketing them becomes

easy.

E) Firms should remember that promotion is

the most important of the four Ps.


276



Value delivery process can be divided into

three phases, out of which "choosing the

value" implies ________, which is the essence

of strategic marketing.

A) segmentation, developing, and delivering

B) targeting, positioning, and

communicating

C) targeting, positioning, and delivering

D) segmentation, targeting, and positioning

E) researching, developing, and delivering

DPage Ref: 34Objective: 1AACSB: Reflective ThinkingDifficulty: Easy

4)Page Ref: 18Objective: 1AACSB: Reflective ThinkingDifficulty: Easy

277



James Frank has been put in charge of

gathering marketing intelligence,

disseminating it within his organization, and

eventually directing action on the

information. Mr. Frank's task is best

described as part of the ________.

A) market-sensing process

B) new-offering realization process

C) customer acquisition process

D) customer relationship management

process

E) fulfillment management process

APage Ref: 19Objective: 1AACSB: Analytic SkillsDifficulty: Moderate

278



When a customer places an order at

BookBox.com, the company processes the

customer's payment information, sends the

order to the nearest warehouse, and ships

the order via FedEx. This is best described

as the ________.


B) customer acquisition process

C) customer relationship management

process

D) fulfillment management process

E) new-offering realization process


279



The first phase of the value creation and

delivery sequence is ________ that represents

the "homework" marketing must do before

any product exists.

A) choosing the value

B) providing the value

C) communicating the value

D) considering the value

E) acquiring the value

APage Ref: 18Objective: 1Difficulty: Easy8) Page Ref: 18Objective: 1Difficulty: Easy

280



In the cycle of complete strategic planning,

taking corrective action is a part of ________.

A) planning

B) implementation

C) controlling

D) organizing

E) analyzing


281



The ________ in the value chain cover the

sequence of bringing materials into the

business (inbound logistics), converting

them into final products (operations),

shipping out final products (outbound

logistics), marketing them (marketing and

sales), and servicing them (service).

A) operations processes

B) manufacturing processes

C) primary activities

D) secondary activities

E) tertiary activities


282



Micheal Porter's value chain would identify

which of the following as a support activity?

A) shipping out final products

B) marketing products

C) procurement

D) servicing products

E) operations

CPage Ref: 19Objective: 1AACSB: Analytic SkillsDifficulty: Easy12) Page Ref: 19Objective: 1AACSB: Reflective ThinkingDifficulty: Moderate

283



With respect to core business processes, the

________ includes all the activities involved in

gathering external information,

disseminating it within the organization, and

acting on the information.


B) market research process

C) target marketing process

D) market pulse process

E) deployment process

APage Ref: 19Objective: 1AACSB: Analytic SkillsDifficulty: Easy

284



With respect to the core business processes,

the ________ includes all the activities

involved in developing, and launching high-

quality products quickly and within budget.


B) new-offering realization process

C) fulfillment management process

D) customer acquisition process

E) customer relationship management

process

BPage Ref: 19Objective: 1AACSB: Analytic SkillsDifficulty: Easy

285



Activities involved in building deeper

understanding of existing consumers and

what the product offerings mean to them

would be a part of ________.

A) customer acquisition process

B) customer relationship management

process

C) customer prospecting process

D) customer integrating management

process

E) customer equity process

BPage Ref: 19Objective: 1AACSB: Reflective ThinkingDifficulty: Moderate

16) Page Ref: 19Objective: 1Difficulty: Easy

286



The key to utilizing organizational core

competencies is to ________ that make up the

essence of the business.

A) force organizational departments to

justify the budgetary components

B) vertically integrate and own all

intermediaries

C) own and nurture the resources and

competencies

D) emphasize global promotions

E) segment the workforces

CPage Ref: 19Objective: 1AACSB: Reflective ThinkingDifficulty: Easy

287



________ has three characteristics: (1) it is a

source of competitive advantage in that it

makes a significant contribution to

perceived customer benefits; (2) it has

applications in a wide variety of markets;

and (3) it is difficult for competitors to

imitate.

A) Core competency

B) Market sensing process

C) Corporate social responsibility

D) Strategic business unit

E) Philanthropy


288



Core competencies tend to refer to areas of

special technical and production expertise,

whereas ________ tend to describe excellence

in broader business processes.

A) process benchmarks

B) distinctive capabilities

C) distributive capabilities

D) facultative benchmarks

E) concentric capabilities

BPage Ref: 20Objective: 1Difficulty: Easy20) Page Ref: 20Objective: 1AACSB: Analytic SkillsDifficulty: Easy

289



As Kodak addresses the digital revolution

taking over the photographic industry, it

wants customers to see it as a leader in

digital photography. Thus, it is moving away

from the production of film roll cameras.

This would be an example of which of the

following value creation steps?

A) abandoning current product lines

B) changing the corporate vision

C) repositioning the company's brand

identity

D) redoing the corporate logo

E) realigning core competencies


290



Of the four organizational levels, the

corporate level is likely to make which of the

following decisions?

A) entering a new market

B) resource allocation for each product

C) strategic plan for individual business

units

D) choosing specific suppliers for each

business unit

E) marketing plan for each product


291



Most large companies consist of four

organizational levels: the corporate level,

the ________, the business unit level, and the

product level.

A) board of director level

B) major stakeholder level

C) management team level

D) division level

E) strategic level

DPage Ref: 20Objective: 2AACSB: Analytic SkillsDifficulty: Easy24) Page Ref: 20Objective: 1AACSB: Reflective ThinkingDifficulty: Moderate

292



The marketing plan, the central instrument

for directing and coordinating the

marketing effort, operates at ________ levels.

A) functional and operational

B) strategic and tactical

C) corporate and operational

D) customer and expenditure

E) corporate and division

BPage Ref: 20Objective: 2AACSB: Analytic SkillsDifficulty: Easy

293



The ________ lays out the target markets and

the value proposition that will be offered,

based on an analysis of the best market

opportunities.

A) organizational plan

B) strategic marketing plan

C) corporate tactical plan

D) corporate mission

E) customer-value statement

BPage Ref: 20Objective: 2Difficulty: Moderate27) Page Ref: 20Objective: 2AACSB: Analytic SkillsDifficulty: Easy

294



Which of the following is NOT one of the

four planning activities undertaken by all

corporate headquarters?

A) defining the corporate mission

B) establishing strategic business units

C) assigning resources to each SBU

D) assessing growth opportunities

E) deciding sales channels

EPage Ref: 21Objective: 2Difficulty: EasyA clear, thoughtful mission statement

provides employees with a shared sense of

purpose, direction, and ________.

A) profitability

B) target market feasibility

C) opportunity

D) continuous improvement

E) quality products

CPage Ref: 21Objective: 2

295


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***AACSB: Reflective ThinkingDifficulty: ModerateWhich of the following is one of the five

major characteristics of good mission

statements?

A) They focus on a large number of goals.

B) They expand the range of individual

employee discretion.

C) They define the major competitive

spheres within which the company will

operate.

D) They take a short-term view.

E) They are long and comprehensive to

ensure that all critical concepts are

included.

CPage Ref: 21Objective: 2AACSB: Reflective ThinkingDifficulty: Easy

31)

296



Gerber primarily serves the baby food

market. In choosing to focus on this market,

Gerber is defining its competitive sphere on

the basis of ________.

A) vertical segmentation

B) backward integration

C) market segmentation

D) diversification

E) differentiation

CPage Ref: 22Objective: 2AACSB: Analytic SkillsDifficulty: Easy

297



While viewing businesses in terms of

customer needs can suggest additional

growth opportunities, a ________ tends to

focus on selling a product or service to a

current market.

A) strategic market definition

B) target market definition

C) cognitive definition

D) product definition

E) tactical definition


298



What are hollow corporations?

A) companies that market their products

through franchisees

B) companies that have liabilities exceeding

their assets

C) companies that outsource all production

to suppliers

D) companies that do not have any physical

presence and only operate online

E) companies that are horizontally

integrated

CPage Ref: 22Objective: 2Difficulty: Easy35) Objective: 2Difficulty: Moderate

299



Market-penetration, product-development,

and market-development strategies would

all be examples of ________ strategies.

A) concentric growth

B) conglomerate

C) horizontal

D) intensive growth

E) integrative growth


300



Which of the following is an example of

growth by diversification?

A) a company introducing its existing

products in a new market

B) a company introducing new product

category in a new market

C) a company increases its product line in an

existing market

D) a company introducing a new product

category in an existing market

E) a company integrates backward to cut

costs

BPage Ref: 23Objective: 2Difficulty: Moderate

301



A company that seeks to increase its sales

and profits through backward, forward, or

horizontal integration within the industry is

said to be employing a(n) ________ strategy.

A) diversification growth

B) intensive growth

C) target growth

D) integrative growth

E) conglomerate growth

DPage Ref: 23Objective: 2AACSB: Analytic SkillsDifficulty: Moderate39) Page Ref: 23Objective: 2AACSB: Analytic SkillsDifficulty: Moderate

302



Once Starbucks had established its presence

in thousands of cities internationally, the

company sought to increase the number of

purchases by existing customers with a

________ strategy that led to new in-store

merchandise, including compilation CDs and

high-speed wireless access.

A) product-development

B) market-penetration

C) diversification

D) market-development

E) conglomerate


303



A(n) ________ is when a company might seek

new businesses that have no relationship to

its current technology, products, or

markets.

A) concentric strategy

B) conglomerate strategy

C) horizontal strategy

D) intensive growth strategy

E) integrative strategy


304



Which of the following terms can be defined

as "the shared experiences, stories, beliefs,

and norms that characterize an

organization"?

A) organizational dynamics

B) a business mission

C) an ethical/value statement

D) customer relationships

E) corporate culture

EPage Ref: 23Objective: 2AACSB: Analytic SkillsDifficulty: Easy43) Page Ref: 24Objective: 2Difficulty: Easy

305



Through its cutting-edge point-of-sale

inventory management technology and

highly efficient shipping practices, Wal-Mart

is able to keep its inventory expenditure

extremely low and to pass these savings on

to consumers in the form of low prices. Wal-

Mart's strategy is best described as ________.

A) a focused approach

B) integrative growth

C) differentiation

D) market development

E) overall cost leadership

EPage Ref: 27Objective: 2AACSB: Analytic SkillsDifficulty: Moderate

306



When a firm aims to underprice competitors

and win market share, it is using a(n)

________ strategy that requires relatively less

marketing skills as compared to other

strategies.

A) product differentiation

B) overall cost leadership

C) focus

D) domestic customer relationship

E) price skimming

BPage Ref: 27Objective: 2AACSB: Reflective ThinkingDifficulty: Easy46)Page Ref: 27Objective: 2AACSB: Analytic SkillsDifficulty: Moderate

307



Unlike its competitors in the online air

travel industry, Travelocity provides its

customers with a greater variety of services

such as cruise reservations, package tours,

hotel bookings, and car rentals. This is an

example of a(n) ________ strategy.

A) overall cost leadership

B) focus

C) differentiation

D) diversification

E) promotional


308



McDonald's has often teamed up with Disney

to offer products related to current Disney

films as part of its meals for children. The

best description of this form of alliance

would be a ________.

A) product alliance

B) logistics alliance

C) pricing collaboration

D) network alliance

E) promotional alliance

EPage Ref: 27Objective: 2AACSB: Analytic SkillsDifficulty: Easy49) Page Ref: 27Objective: 2AACSB: Analytic SkillsDifficulty: Moderate

309



MasterCard and Visa may team up with

university alumni associations to offer

affinity credit cards that typically display an

iconic image associated with the university

on the card itself and may include an

incremental donation program associated

with purchases made using the card. The

best description of this form of alliance

would be called a ________.

A) product alliance

B) logistics alliance

C) pricing collaboration

D) network alliance

E) promotional alliance

EPage Ref: 27Objective: 2AACSB: Analytic SkillsDifficulty: Moderate

310



When one company licenses another to

produce its offerings, or two companies

jointly market their complementary

offerings, it is called a ________.

A) pricing collaboration

B) product or service alliance

C) promotional alliance

D) logistics collaboration

E) total quality management

BPage Ref: 27Objective: 2AACSB: Analytic SkillsDifficulty: Easy52) Page Ref: 27Objective: 2AACSB: Analytic SkillsDifficulty: Easy

311



Which of the following statements is true of

marketing plans?

A) They can be independently developed

without worrying about other functional

areas.

B) They provide direction and focus for a

brand, product, or company.

C) They are usually profit-oriented.

D) They are of limited use to non-profit

organizations.

E) They are typically five-year plans and they

lay out the strategies required to achieve

targets in those five years.


312



Which of the following elements of a

marketing plan permits senior management

to grasp the plan's major thrust?

A) the situation analysis

B) the marketing strategy

C) the executive summary

D) the financial projections

E) the short-term targets


313



The ________ is the last section of the

marketing plan and spells out the goals and

budget for each month or quarter, so

management can review each period's

results and take action as needed.

A) executive summary

B) situation analysis

C) marketing strategy

D) financial projections

E) implementation and controls

EPage Ref: 29Objective: 3AACSB: Analytic SkillsDifficulty: Easy56) Page Ref: 18Objective: 1AACSB: Reflective ThinkingDifficulty: Easy

314



The traditional view of marketing works best

in economies with many different types of

people, each with individual wants,

perceptions, preferences, and buying

criteria.

FALSEPage Ref: 18Objective: 1Difficulty: EasyThe customer relationship management

process involves all the activities related to

receiving and approving orders, shipping the

goods on time, and collecting payment.

FALSEPage Ref: 19Objective: 1AACSB: Analytic SkillsDifficulty: EasyThe new-offering realization process involves

all activities in defining target markets and

prospecting for new customers.

FALSEPage Ref: 19Objective: 1AACSB: Analytic SkillsDifficulty: Moderate

315



A principle of the value chain is that every

firm is a synthesis of activities performed to

design, produce, market, deliver, and

support its product.

TRUEPage Ref: 19Objective: 1Difficulty: EasyAnother name for a company's value delivery

network is "distribution chain."

FALSEPage Ref: 19Objective: 1AACSB: Analytic SkillsDifficulty: EasyHolistic marketing focuses on the

integration of value exploration, value

creation, and value delivery as a means to

build long-term relationships with

consumers.

TRUEPage Ref: 20Objective: 1Difficulty: Easy

63) Page Ref: 20Objective: 1

316


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***AACSB: Analytic SkillsDifficulty: EasyGood mission statements should be long and

clear, should emphasize on a wide range of

goals, and stress on the company's major

policies and values.

FALSEPage Ref: 21Objective: 2AACSB: Reflective ThinkingDifficulty: ModerateAn intensive growth strategy involving

marketing current products to new markets

is a market-development strategy.

TRUEPage Ref: 23Objective: 2AACSB: Analytic SkillsDifficulty: ModerateA company seeking to expand the number of

existing products sold to its current

markets, would be using a "market-

penetration strategy."

FALSEPage Ref: 23Objective: 2

317


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***AACSB: Analytic SkillsDifficulty: ModerateIf a company sought to grow by starting new

businesses that have no relation to its

current technology, products, or markets,

the company would be using a market

penetration strategy.

FALSEPage Ref: 23Objective: 2AACSB: Analytic SkillsDifficulty: ModerateAn environmental threat is a challenge

posed by an unfavorable trend or

development that, in the absence of

defensive marketing action, would lead to

lower sales or profit.

TRUEPage Ref: 26Objective: 2Difficulty: Easy

318



Once a SWOT analysis has been completed,

the strategic planner is ready to proceed to

the goal formulation stage of the strategic-

planning process model.

TRUEPage Ref: 26Objective: 2AACSB: Analytic SkillsDifficulty: EasyPartner relationship management is now

considered as a core skill fundamental to the

development and maintenance of strategic

alliances.

TRUEPage Ref: 27Objective: 2Difficulty: EasyFirms directing the same strategy to the

same target market constitute a strategic

group.

TRUEPage Ref: 27Objective: 2AACSB: Analytic SkillsDifficulty: Moderate

319



A marketing plan should open with a

situation analysis.

FALSEPage Ref: 29Objective: 3Difficulty: EasySales forecasts, expense forecasts, and

break-even analysis are usually found in the

section on financial projections in the

marketing plan.

TRUEPage Ref: 29Objective: 3Difficulty: EasyThe marketing strategy section of the

marketing plan spells out goals and budgets

for each month or quarter so the

management can review each period's

results and take corrective action as needed.

FALSEPage Ref: 29Objective: 3Difficulty: Easy76) TPage Ref: 19Objective: 1AACSB: Analytic SkillsDifficulty: Moderate

320


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Identify and give examples of the four major

categories of strategic alliances.

The four major categories of strategic alliances include (1) product or service alliances, where one company licenses its product, or two companies jointly market their complementary products or a new product; (2) promotional alliances, where one company agrees to carry a promotion for another company's product or service; (3) logistics alliances, where one company offers logistical services for another company's product; and (4) pricing collaboration, where one or more companies join in an agreement on coordinated pricing. Student examples may vary.Page Ref: 27Objective: 2AACSB: Analytic SkillsDifficulty: ModerateDescribe what happens in scenario analysis

and explain why firms such as Royal

Dutch/Shell Group use the technique.

Scenario analysis consists of developing plausible representations of a firm's possible future that make different assumptions about forces driving the market and include different uncertainties. Answers may vary on why to use the concept but answers should be mindful of the definition given. Students should try to anticipate the problems that are likely to aggravate in the energy industry and how scenario analysis may help the companies to anticipate the future and be prepared to adjust their processes accordingly.Page Ref: 24Objective: 2AACSB: Analytic SkillsDifficulty: Moderate

321



Explain what happens in a SWOT analysis

during the strategic planning process.

SWOT (strengths, weaknesses, opportunities, and threats) monitors the external and internal environment by examining key macroeconomic and microeconomic forces and actors that have an impact on the organization's business and industry. Page Ref: 25Objective: 2Difficulty: Moderate

Page Ref: 34Objective: 1Difficulty: EasyThe heart of the internal records system is

the ________.

A) pay-roll system

B) purchase order cycle

C) order-to-payment cycle

D) expense cycle

E) human resources system


322



The ________ begins with sales

representatives and dealers sending orders

to the firms and is followed by the sales

department preparing invoices, and finally

generating shipping and billing documents

which are then sent to various departments.

A) payroll system

B) market research process

C) human resources system

D) expense cycle

E) order-to-payment cycle

EPage Ref: 34Objective: 2Difficulty: Moderate

4) Page Ref: 34Objective: 2AACSB: Use of information technologyDifficulty: Moderate

323



Companies can practice targeted marketing

by using ________-records of Web site usage

stored on personal browsers.

A) plug-ins

B) black swans

C) cookies

D) trolls

E) honey-pots

CPage Ref: 34Objective: 2AACSB: Use of information technologyDifficulty: EasyThe internal records system supplies results

data, but the marketing intelligence system

supplies ________ data.

A) internal

B) revenue

C) thematic

D) happenings

E) process

DPage Ref: 34

324


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Objective: 3Difficulty: EasyA ________ is a set of procedures and sources

managers use to obtain everyday

information about developments in the

marketing environment.

A) data warehousing system

B) viral marketing campaign

C) product management system

D) marketing intelligence system

E) sales information system

DPage Ref: 34Objective: 3Difficulty: Moderate8) Page Ref: 35Objective: 3AACSB: Analytic SkillsDifficulty: Moderate

325



When gathering marketing intelligence,

companies often use the 2000 U.S. census,

which provides an in-depth look at the

population swings, demographic groups,

regional migrations, and changing family

structure of 281+ million people. Which of

the following steps to improve the quality of

a company marketing intelligence system

would be most closely associated with this

illustration?

A) A company can purchase information

from outside suppliers.

B) A company can take advantage of

government data sources.

C) A company can use online customer

feedback systems to collect data.

D) A company can network externally.

E) A company can use its sales force to

collect and report data.

326


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***BPage Ref: 35Objective: 3Difficulty: ModerateThe sites which offer positive or negative

product or service reviews and are built by

the retailers of a particular product or

service are called ________.

A) combo sites

B) distributor or sales agent feedback sites

C) public blogs

D) independent service review forums

E) customer complaint sites

BPage Ref: 43Objective: 3AACSB: Use of information technologyDifficulty: Easy

327



A ________ is "unpredictable, short-lived, and

without social, economic, and political

significance."

A) fad

B) fashion

C) trend

D) megatrend

E) style

APage Ref: 43Objective: 4Difficulty: Easy12) Page Ref: 43Objective: 4Difficulty: Easy

328



Which of the following is true about trends

in worldwide population growth?

A) Birthrates are on the rise in developed

countries.

B) Overall, the world population growth is

declining.

C) Birthrates are on the rise in developing

countries.

D) Death rates are rising in developing

countries.

E) Population growth is highest in

developing countries.

EPage Ref: 46Objective: 4Difficulty: Easy14) Page Ref: 47Objective: 4Difficulty: Moderate

329



Firms find "reverse innovation" advantage by

________.

A) introducing a commodity in a developed

country and then distributing it globally

B) introducing a commodity in a developing

country and then distributing it in other

developing countries

C) introducing a commodity in a developing

country and then distributing it globally

D) introducing a commodity in a developed

country and then distributing it in

developing countries

E) introducing a commodity in a developed

country and then distributing it in other

developed countries

CPage Ref: 46Objective: 4Difficulty: Moderate16) Page Ref: 46Objective: 4Difficulty: Easy

330



The three largest subgroups of the

Hispanics in the U.S. are ________, ________,

and ________.

A) Puerto Rican; Mexican; Chilean

B) Salvadoran; Cuban; Dominican

C) Mexican; Puerto Rican; Cuban

D) Brazilian; Mexican; Cuban

E) Salvadoran; Dominican; Columbian


331



The traditional household consists of

________.

A) a husband, wife, and children (and

sometimes grandparents)

B) a group of related persons living together

C) two or more families living together

D) a man and a woman living together

(whether married or not)

E) related or unrelated persons who share

living arrangements

APage Ref: 47Objective: 4Difficulty: Easy

332



Which of the following is likely to occur

during economic downturns?

A) People tend to spend more on luxury

goods

B) Consumption of necessary goods decline

C) Long term credit is available at

concessional rates of interest

D) The purchasing power of the people

declines

E) The level of investment in the economy

rises

DPage Ref: 47Objective: 4AACSB: Dynamics of the global economyDifficulty: Moderate20) Page Ref: 47Objective: 4Difficulty: Easy

333



In the U.S., consumer expenditures on

homes and big ticket items tend to slacken

during recessions because ________.

A) the consumers generally have a low debt-

to-income ratio

B) of steady supply of loanable funds in the

economy during recession

C) the consumers have a high debt-to-

income ratio

D) consumer borrowing increases during

recession

E) of stringent credit policies adopted by the

Fed before the onset of recession


334



Which of the following elements of

sociocultural environment can be associated

with the growing demand for "social

surrogates" like social networking sites,

television, etc.?

A) views of ourselves

B) views of organizations

C) views of others

D) views of nature

E) views of the universe


335



Today, corporations need to make sure that

they are good corporate citizens and that

their consumer messages are honest in

order to positively align themselves with

consumers' ________.

A) views of others

B) views of organizations

C) views of themselves

D) views of the universe

E) views of society

BPage Ref: 48Objective: 4AACSB: Reflective ThinkingDifficulty: Moderate

24) Page Ref: 48Objective: 4Difficulty: Moderate

336



Which of the following would be the best

illustration of a secondary belief or value?

A) belief in work

B) belief in giving to charity

C) belief in getting married

D) belief in getting married early

E) belief in being honest

DPage Ref: 48Objective: 4Difficulty: ModerateEach society contains ________, groups with

shared values emerging from their special

life experiences or circumstances.

A) stakeholders

B) cliques

C) consumer bundles

D) subcultures

E) behavioral niches

DPage Ref: 48Objective: 4Difficulty: Easy

337



Firms whose products require ________

resources—oil, coal, platinum, zinc, silver—

face substantial cost increases as depletion

approaches.

A) infinite

B) near finite

C) finite renewable

D) finite nonrenewable

E) perishable

DPage Ref: 49Objective: 4Difficulty: Easy28) Page Ref: 49Objective: 4AACSB: Analytic SkillsDifficulty: Difficult

338



Which of the following is true about the

technology trends that marketers should

monitor?

A) A growing portion of U.S. R&D

expenditures are going toward the research

side as opposed to the development side.

B) Today, the time between idea and

implementation is expanding.

C) More single companies rather than

consortiums are directing research efforts

toward major breakthroughs.

D) The pace of change is accelerating today.

E) The government has decreased regulation

of technological change.


339



Mandatory recycling laws have boosted the

recycling industry and launched dozens of

new companies making new products from

recycled materials. Which of the following

most closely resembles the situation

discussed above?

A) Government makes reforestation

mandatory for lumbering firms leading to a

rise in timber production.

B) Government restricts industries from

purchasing farmland thereby increasing

agricultural produce.

C) Government subsidizes export of beef to

promote production of beef cattle.

D) Government pollution control norms

increase the production of pollution control

equipments.

E) Government restricts unfair trade

practices to promote international trade.

340


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***DPage Ref: 49Objective: 4AACSB: Analytic SkillsDifficulty: Difficult

31) Page Ref: 50Objective: 4Difficulty: ModerateAn important force affecting business is the

________ movement, a movement of citizens

and government organized to strengthen the

rights and powers of buyers in relation to

sellers.

A) human rights

B) consumerist

C) environmental

D) self-determination

E) materialistic


341



The ________ market is the set of consumers

with an adequate interest, income, and

access to a particular offer.

A) potential

B) available

C) target

D) penetrated

E) reserve

BPage Ref: 40Objective: 5Difficulty: EasyThe ________ market is the part of the

qualified available market the company

decides to pursue.

A) potential

B) available

C) target

D) penetrated

E) reserve

CPage Ref: 40Objective: 5

342


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Difficulty: Easy35) Page Ref: 40Objective: 5Difficulty: EasyWhen the government of any country

restricts the sale of a particular commodity

to certain groups—for example, restricting

sales of alcohol to individuals above the age

of 21—the eligible consumers who have

income, interest, access and qualification

constitute the ________.

A) accessible market

B) target market

C) potential market

D) qualified potential market

E) qualified available market

EPage Ref: 40Objective: 5Difficulty: Easy

343



Jeanine would like to own a Mercedes but is

unable to afford one at this time. Jeanine is

part of the ________ for this product.

A) potential market

B) available market

C) target market

D) projected market

E) penetrated market


344



________ for a product is the total volume that

would be bought by a defined customer

group in a defined geographical area in a

defined time period in a defined marketing

environment under a defined marketing

program.

A) Company demand

B) Area market potential

C) Market demand

D) Company sales potential

E) Total market potential

CPage Ref: 41Objective: 5Difficulty: Easy39) Page Ref: 41Objective: 5Difficulty: Moderate

345



The base sales of an organization that takes

place even without any demand-stimulating

expenditures is called ________.

A) primary demand

B) market potential

C) market minimum

D) optimum demand

E) market demand

CPage Ref: 41Objective: 5Difficulty: EasyOnly one level of industry marketing

expenditure will actually occur. The market

demand corresponding to this level is called

the ________.

A) market minimum

B) market share

C) market forecast

D) market potential

E) company demand

346


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***Chapter 1: Defining Marketing for the 21st Century


Multiple Choice

1. Good marketing is no accident, but a result of careful planning and ________.a. executionb. sellingc. strategiesd. tacticse. research


2. Marketing is both an “art” and a “science”—there is constant tension between the formulated side of marketing and the ________ side.a. creativeb. sellingc. managementd. forecastinge. behavior


3. The most formal definition of marketing is ________. a. meeting needs profitablyb. identifying and meeting human and social needsc. the 4Ps (Product, Price, Place, Promotion)d. an organizational function and a set of processes for creating, communicating, and delivering,

value to customers, and for managing customer relationships in ways that benefit the organization and its stake holders.

e. improving the quality of life for consumersAnswer: d Page: 6 Level of difficulty: Medium

4. Marketing management is ________.a. managing the marketing processb. monitoring the profitability of the companies products and servicesc. selecting target marketsd. developing marketing strategies to move the company forwarde. the art and science of choosing target markets and getting, keeping, and growing customers

through creating, delivering, and communicating superior customer valueAnswer: e Page: 6 Level of difficulty: Easy

347


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***5. A transaction involves ________.

a. at least two partiesb. each party has something that might be of value to the other partyc. each party is capable of communication and deliveryd. each party is free to accept or reject the exchange offere. all of the above

Answer: e Pages: 6–7 Level of difficulty: Medium

6. ________ goods constitute the bulk of most countries’ production and marketing efforts.a. Durableb. Impulsec. Physicald. Servicee. Event


7. ________ can be produced and marketed as a product.a. Informationb. Celebritiesc. Durable goodsd. Organizationse. Properties


8. Charles Revson of Revlon observed: “In the factory, we make cosmetics; in the store, ________.”a. we make profitsb. we challenge competitorsc. we implement adsd. we sell hopee. we sell quality


9. A ________ is someone seeking a response (attention, a purchase, a vote, a donation) from another party, called the ________.a. salesperson, customerb. fund raiser, contributorc. politician, voterd. marketer, prospecte. celebrity, audience


348


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***10. In ________—consumers may share a strong need that cannot be satisfied by an existing product.

a. negative demandb. latent demandc. declining demandd. irregular demande. non-existent demand


11. In ________—more customers would like to buy the product than can be satisfied.a. latent demandb. irregular demandc. overfull demandd. excessivee. negative demand


12. Marketers often use the term ________ to cover various groupings of customers.a. people b. buying powerc. demographic segment d. social class position e. market


13. Companies selling mass consumer goods and services such as soft drinks, cosmetics, air travel, and athletic shoes and equipment spend a great deal of time trying to establish a superior brand image in markets called ________. a. business marketsb. global marketsc. consumer marketsd. nonprofit and governmental marketse. service markets


14. In business markets, advertising can play a role, but a stronger role may be played by the sales force, ________, and the company’s reputation for reliability and quality.a. brand imageb. distributionc. promotiond. pricee. performance


349


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***15. Global marketers must decide ________.

a. which countries to enterb. how to enter each country (as an exporter, licenser, joint venture partner, contract manufacturer, or

solo manufacturer)c. how to adapt their product and service features to each countryd. how to price their products in different countriese. all of the above

Answer: e Pages: 11–12 Level of difficulty: Medium

16. Mohan Sawhney has proposed the concept of ________ to describe a cluster of complementary products and services that are closely related in the minds of consumers but are spread across a diverse set of industries.a. metamarketb. vertical integrationc. horizontal integrationd. betamarkete. synchronized marketing


17. The ________ promises to lead to more accurate levels of production, more targeted communications, and more relevant pricing.a. Age of Globalizationb. Age of Deregulationc. Industrial Aged. Information Agee. Production Age


18. Many countries have ________ industries to create greater competition and growth opportunities.a. open-marketb. deregulatedc. regulatedd. scientifically segmented e. created mass market


19. Customers are showing greater price sensitivity in their search for ________.a. the right productb. the right servicec. the right stored. valuee. relationships


350


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***20. Rising promotion costs and shrinking profit margins are the result of ________.

a. changing technologyb. globalizationc. deregulationd. privatizatione. heightened competition


21. Industry boundaries are blurring at an incredible rate as companies are recognizing that new opportunities lie at the intersection of two or more industries—this is called ________.a. globalizationb. customizationc. industry convergenced. heightened competitione. acquisition


22. In response to giant retailers and category killers, entrepreneurial retailers are building entertainment into stores with coffee bars, lectures, demonstrations, and performances. They are marketing a(n) ________ rather than a product assortment.a. experienceb. customer valuec. customer delightd. total service solutione. intangible benefit(s)


23. In response to threats from such companies as AOL, Amazon, Yahoo, eBay, E’TRADE, and dozens of others, established manufacturers and retailers became “brick-and-click” oriented by adding online services to their existing offerings. This process became known as ________. a. reintermediationb. disintermediationc. e-commerced. e-collaboratione. new market synchronization


351


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***24. Many brick-and-click competitors became stronger contenders in the marketplace than the pure-click

firms because they had a larger pool of resources to work with and ________.a. better pricesb. greater valuec. well-established brand namesd. one-on-one communicationse. direct selling capability


25. The ________ is practiced most aggressively with unsought goods, goods that buyers normally do not think of buying, such as insurance, encyclopedias, and funeral plots.a. marketing conceptb. selling conceptc. production conceptd. product concepte. holistic marketing concept


26. The ________ concept holds that consumers will favor those products that offer the most quality, performance, or innovative features.a. productb. marketingc. productiond. selling e. holistic marketing


27. The ________ concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization’s products.a. productionb. sellingc. marketingd. producte. holistic marketing


28. Several scholars have found that companies who embrace the marketing concept achieve superior performance. This was first demonstrated for companies practicing a ________—understanding and meeting customers’ expressed needs.a. reactive market orientationb. proactive marketing orientationc. total market orientationd. impulsive market orientatione. holistic market orientation

Answer: a Page: 16 Level of difficulty: Medium29. According to Theodore Levitt, who drew a perceptive contrast between the selling and marketing

concepts, ________ is preoccupied with the need to convert products into cash.a. marketingb. sellingc. direct marketingd. holistic marketing e. service marketing


30. In the course of converting to a marketing orientation, a company faces three hurdles—________.

352


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***a. organized resistance, slow learning, and fast forgettingb. management, customer reaction, competitive responsec. decreased profits, increased R&D, additional distributiond. forecasted demand, increased sales expense, increased inventory costse. customer focus, profitability, slow learning


31. Companies that practice both a reactive and proactive marketing orientation are implementing a ________ and are likely to be the most successful.a. total market orientationb. external focusc. customer focusd. competitive, customer focuse. confrontation process


32. Marketers argue for a ________ in which all functions work together to respond to, serve, and satisfy the customer.a. cross-functional team orientationb. collaboration modelc. customer orientationd. management-driven organizatione. total quality model


33. ________ can be seen as the development, design, and implementation of marketing programs, processes, and activities that recognizes the breadth and interdependencies of their effects. a. Niche marketingb. Holistic marketingc. Relationship marketingd. Supply-chain marketinge. Demand-centered marketing

Answer: b Page: 17 Level of difficulty: Medium34. ________ marketing has the aim of building mutually satisfying long-term relations with key parties

such as customers, suppliers, distributors, and other marketing partners in order to earn and retain their business.a. Holistic b. Demand-based c. Direct d. Relationshipe. Synthetic

Answer: d Pages: 17–18 Level of difficulty: Easy

35. Companies who form a ________ collect information on each customer’s past transactions, demographics, psychographics, and media and distribution preferences.a. sales networkb. holistic unionc. marketing networkd. supply-chain networke. integrated network


36. The ability of a company to deal with customers one at a time has become practical as a result of advances in ________, computers, the Internet, and database marketing software. a. improved communication flow

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***b. information technologyc. just-in-time manufacturingd. factory customizatione. customer-centered strategies


37. One traditional depiction of marketing activities is in terms of the marketing mix or four Ps. The four Ps are characterized as being ________.a. product, positioning, place, and priceb. product, production, price, and placec. promotion, place, positioning, and priced. place, promotion, production, and positioning e. product, price, promotion, and place


354


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***38. The four Ps represent the sellers’ view of the marketing tools available for influencing buyers. From a

buyer’s point of view, each marketing tool is designed to deliver a customer benefit. Robert Lauterborn suggested that the sellers’ four Ps correspond to the customers’ four Cs. The four Cs are ________.a. customer focus, cost, convenience, and communicationb. customer solution, customer cost, convenience, and communicationc. convenience, control, competition, and costd. competition, cost, convenience, and communicatione. category control, cost, concept development, and competition

Answer: b Pages: 19–20 Level of difficulty: Medium

39. Holistic marketing incorporates ________, ensuring that everyone in the organization embraces appropriate marketing principles, especially senior management.a. profit objectivesb. share of customerc. internal marketingd. the marketing mixe. strategic planning


40. Marketing is not a department so much as a ________.a. company orientationb. philosophyc. functiond. branch of managemente. branch of economics


41. Holistic marketing incorporates ________ and understanding broader concerns and the ethical, environmental, legal, and social context of marketing activities and programs. a. safe product designb. cultural marketingc. social responsibility marketingd. cross-functional teamse. direct sales policies


355


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***42. The ________ holds that the organization’s task is to determine the needs, wants, and interests of

target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well-being.a. customer-centered businessb. focused business modelc. societal marketing conceptd. ethically responsible marketing managere. production-centered business


43. Companies see ________ as an opportunity to enhance their corporate reputation, raise brand awareness, increase customer loyalty, build sales, and increase press coverage.a. cause-related marketingb. brand marketingc. equity marketingd. direct marketinge. recognition marketing


44. When a customer has a(n) ________ need he/she wants a car whose operating cost, not its initial price, is low. a. stated b. real c. unstated d. delight e. secret


45. When a customer has a(n) ________ need the customer wants to be seen by friends as a savvy consumer.a. real b. unstated c. delightd. secrete. stated


356


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***46. During market segmentation analysis, the marketer identifies which segments present the greatest

opportunity. These segments are called ________.a. target marketsb. primary marketsc. tertiary marketsd. demographic marketse. focused markets


47. For each target market, the firm develops a ________. The offering is positioned in the minds of the target buyers as delivering some central benefit(s).a. value offeringb. niche offeringc. market offeringd. segment offeringe. social offering


48. ________ reflects the perceived tangible and intangible benefits and costs to customers. a. Loyaltyb. Satisfactionc. Valued. Expectationse. Comparison shopping


49. If a marketer decides to use warehouses, transportation companies, banks, and insurance companies to facilitate transactions with potential buyers, the marketer is using what is called a ________.a. service channelb. distribution channelc. brand channeld. relationship channele. intermediary channel


50. ________ includes all the actual and potential rival offerings and substitutes that a buyer might consider.a. Competitionb. The product offeringc. A value propositiond. The supply chaine. The marketing environment


51. The ________ includes the immediate actors involved in producing, distributing, and promoting the offering. The main actors are the company, suppliers, distributors, dealers, and the target customers.a. operations environmentb. management environmentc. strategic environmentd. task environmente. tactical environment


52. The ________ process consists of analyzing marketing opportunities; selecting target markets; designing marketing strategies; developing marketing programs; and managing the marketing effort.

357


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***a. marketing planningb. strategic planningc. market researchd. opportunity analysise. share of customer


53. David Packard of Hewlett-Packard once said, “Marketing is far too important to leave to ________.”a. the advertising boysb. uninformed managersc. novicesd. the CEOe. the marketing department


54. Some companies are now switching from being solely product-centered (with product managers and product divisions to manage them) to being more ________ centered. a. competencyb. strategyc. marketingd. customer-segmente. sales


358


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***55. Companies are recognizing that much of their market value comes from ________, particularly their

brands, customer base, employees, distributor and supplier relations, and intellectual capital.a. variable assets b. the value propositionc. intangible assetsd. tangible assetse. customer preferences


56. ________ can increasingly be conducted electronically, with buyer and seller seeing each other on their computer screens in real time.a. Public relationsb. E-commercec. Advertisingd. Personal sellinge. Mass marketing


57. Top management is going beyond sales revenue alone to examine the marketing scorecard to interpret what is happening to ________.a. market shareb. customer loss ratec. customer satisfactiond. product qualitye. all of the above


58. At the heart of any marketing program is the ________—the firm’s tangible offering to the market.a. service offer b. productc. sales support teamd. packaginge. auxiliary offer


59. ________ activities are the means by which firms attempt to inform, persuade, and remind consumers—directly or indirectly—about the brands they sell. a. Consumer behavior b. Market segmentationc. Marketing research d. Marketing communicatione. New product development

Answer: d Page: 30 Level of activity: Medium

60. Marketing evaluation and ________ processes are necessary to understand the efficiency and effectiveness of marketing activities and how both could be improved. a. controlb. analysisc. measurementd. feedbacke. consumer behavior


359



Chapter 3: Gathering Information and Scanning the Environment


Multiple Choice

1. The major responsibility for identifying significant marketplace changes falls to the ________. a. U.S. Department of Laborb. company’s marketersc. American Marketing Associationd. industry lobby groups found in Washington, D.C.e. marketing research industry


2. Marketers have extensive information about how consumption patterns vary across countries. On a per capita basis within Western Europe, the ________ smoke the most cigarettes. a. Swissb. Greeksc. Irish d. Austrianse. French


3. All of the following questions EXCEPT ________, would be considered to be forms of information needs probes. a. What decisions do you regularly make?b. What information do you need to make decisions?c. What data analysis programs would you want?d. What magazines and trade reports would you like to see on a regular basis?e. What products would be most closely matched to consumer needs?


360


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***4. ________ consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and

distribute needed, timely, and accurate information to marketing decision makers.a. A marketing information systemb. A marketing research systemc. A marketing intelligence systemd. A promotional campaigne. A marketing database


5. The company’s marketing information system should be a cross between what managers think they need, what managers really need, and ________.a. what the marketing research department is able to dob. what consumers are willing to sharec. what the competition is doingd. what is acceptable industry practice e. what is economically feasible


6. Marketing managers rely on internal reports. By analyzing this information, they can spot ________. a. micro-marketsb. opportunities and problemsc. macro-marketsd. competitive strategiese. consumer demographic units


7. The heart of the internal records system is the ________. a. databaseb. asset acquisition processc. order-to-payment cycle d. service consideratione. information liquidity ratio


8. When a marketer “mines” his or her company’s database, fresh insights can be gained into neglected customer segments, ________, and other useful information. a. recent customer trendsb. long-term competitive trendsc. possible new inventionsd. possible new technologiese. new primary data possibilities


9. The internal records system supplies results data, but the marketing intelligence system supplies ________ data. a. concurrentb. secondary c. researchd. happeningse. premium


10. A ________ is a set of procedures and sources managers use to obtain everyday information about developments in the marketing environment. a. marketing research system

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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***b. marketing information systemc. product management systemd. marketing intelligence systeme. vertical system


11. A company can take several steps to improve the quality of its marketing intelligence. If the company purchases competitive products for study, attends open houses and trade shows, and reads competitors’ published reports and stockholder information, the company is using ________ to improve the quality of its marketing intelligence. a. sales force surrogatesb. intermediariesc. external networks d. advisory panelse. customer feedback systems

Answer: c Pages: 74–75 Level of difficulty: Hard

12. All of the following would be considered to be steps to improve the quality of marketing intelligence in a company EXCEPT ________. a. a company can train and motivate the sales force to spot and report new developmentsb. a company can use guerrilla tactics such as going through a competitor’s trashc. a company can motivate intermediaries to pass along important informationd. a company can network externallye. a company can purchase information from outside suppliers

Answer: b Pages: 74–76 Level of difficulty: Easy

362


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***13. The 2000 U.S. census provides an in-depth look at the population swings, demographic groups,

regional migrations, and changing family structure of 281+ million people. Which of the following steps to improve the quality of company marketing intelligence system would be most closely associated the above illustration? a. A company can purchase information from outside suppliers.b. A company can take advantage of government data sources.c. A company can use online customer feedback systems to collect data.d. A company can network externally.e. A company can use its sales force to collect and report data.


14. There are four main ways that marketers can find relevant online information on competitors’ products and weaknesses, and summary comments and overall performance rating of a product, service, or supplier. ________ is(are) a type of site that is concentrated in financial services and high-tech products that require professional knowledge. a. Independent customer goods and service reviewsb. Distributor or sales agent feedback sitesc. Combo-sites offering customer reviews and expert opinionsd. Customer complaint sitese. Shopping bot service sites


15. A ________ is “unpredictable, short-lived, and without social, economic, and political significance.”a. fadb. fashionc. trendd. megatrende. style


16. A ________ is a direction or sequence of events that has some momentum and durability; the

shape of the future is revealed and many opportunities are provided.

a. fadb. fashionc. trendd. megatrende. style


363


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***17. ________ have been described as “large social, economic, political and technological changes

[that] are slow to form, and once in place, they influence us for some time—between seven and ten

years, or longer.

a. Fadsb. Fashionsc. Trendsd. Megatrendse. Styles


18. Which of the following minority groups in the United States has been associated with one of the ten megatrends shaping the consumer landscape? a. African Americansb. Asian Americansc. European Americansd. Hispanic Americanse. Middle Eastern Americans


19. The beginning of the new century brought a series of new challenges. All of the following would

be considered to be among those challenges EXCEPT ________.

a. a deterioration of innovative ideasb. steep decline of the stock marketc. increasing unemploymentd. corporate scandals e. the rise of terrorism


20. With the rapidly changing global picture, the firm must monitor six major forces. All of the following would be among those forces EXCEPT ________.

a. demographicb. economicc. social-culturald. naturale. promotional


21. The main demographic force that marketers monitor is(are) ________.

a. suppliersb. competitorsc. communication (such as advertising)d. government reports dealing with birth rates e. population


22. The population explosion has been a source of major concern. Unchecked population growth and consumption could eventually result in all of the following EXCEPT ________.

364


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***a. insufficient food supplyb. depletion of key mineralsc. overcrowdingd. restrictions on competitione. pollution


23. One impact of explosive population growth is illustrated by the case of China. The Chinese government passed regulations limiting families to one child. One consequence of these regulations is that ________. a. the children are so fussed over and spoiled that they become “little emperors”b. school enrollments are droppingc. the fledgling automotive business in China will not have customers in a few yearsd. open rebellion is being preachede. “child-oriented businesses” have few customers


24. A significant fact about population growth and population shifts is that in 2004 or 2005, ________.a. the youth market will exceed that of the adult marketb. people over the age of 60 will outnumber those under five years of age c. baby boomers will be eclipsed by Gen X young adultsd. most age group segments will be about equale. Gen Y young adults will surpass the baby boomers as the largest age segment


25. Which of the following age groups is thought to control three-quarters of the country’s wealth? a. 0–20 age segmentb. 60+ age segmentc. 20–30 age segmentd. 30–40 age segmente. 40+ age segment


365


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***26. At one time the United States was called a “melting pot” society because of the number of different

cultures that were integrated into the U.S. culture. Today, the United States is described as a ________ society because many ethnic groups are maintaining their ethnic differences, neighborhoods, and cultures. a. “boiling pot”b. “salad bowl”c. “banana split”d. “doubled up”e. “non-communicative”


27. According to the 2000 census, the U.S. population of 276.2 million was 72 percent white and ________ percent African American. The remainder consisted of Hispanic Americans and other minorities. a. 20 b. 18c. 15d. 13e. 11


28. Diversity goes beyond ethnic and racial markets. More than ________ million Americans have disabilities, and they constitute a market for home delivery companies (and others). a. 50 b. 40c. 30d. 20e. 10


29. Which of the following countries is known for having 99 percent of its population literate? a. Englandb. Germanyc. Franced. United Statese. Japan


366


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***30. The ________ household consists of a husband, wife, and children (and sometimes grandparents).

a. “traditional”b. “extended”c. “diversity”d. “modern”e. “revised”


31. Married couple households—the dominant cohort since the formulation of the United States—has slipped from nearly 80 percent in the 1950s to around ________ percent today. a. 70b. 60c. 50d. 40e. 35


32. The twenty-first century saw ________ markets grow more rapidly again due to a higher birth rate, a lower death rate, and rapid growth from foreign immigration. a. suburbanb. urbanc. rurald. coastale. secondary


33. The movement by population to the ________ has lessened the demand for warm clothing and home heating equipment and increased demand for air conditioning. a. Grainbeltb. Pacific Northwestc. Sunbeltd. Mid-Coastal arease. Heartland


367


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***34. Marketers look at where consumers are gathering. Almost one in ________ people over the age of five

(120 million) moved at least one time between 1995 and 2000, according to a Census 2000 brief. a. twob. threec. four d. fivee. ten


35. In which of the following economies would we expect to find few opportunities for marketers?

a. Industrializing economies.b. Land-locked economies.c. Raw-material-exporting economies.d. Industrial economies.e. Subsistence economies.

Answer: e Page: 86 Level of difficulty: Easy36. According to information presented in the text, which of the following countries is surprisingly a very

good market for Lamborghini automobiles (costing more than $150,000) because of the number of wealthy families that can afford expensive cars. a. Greeceb. Switzerlandc. Hollandd. Russiae. Portugal


37. Over the past three decades in the United States, the rich have grown richer and the middle class has ________. a. stayed about the sameb. shrunkc. increased slightlyd. matched the rich in terms of relative growthe. been ignored because of problems with the poorer classes


38. ________ shapes the beliefs, values, and norms that largely define the tastes and preferences. a. Marketingb. The mass mediac. Governmentd. Production innovation and engineeringe. Society


39. If a consumer lives the lifestyle of a “pleasure seeker” or goes on a “self-realization” quest, he or she is expressing what is called ________. a. views of othersb. views of societyc. views of themselvesd. views of organizationse. views of the universe

Answer: c Pages: 87–88 Level of difficulty: Easy

368


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***40. According to the information found in the social-cultural environment, with respect to views of others,

________ are considered to be things that allow people who are alone to feel they are not (e.g., television, home video games, and chat rooms on the Internet). a. social surrogatesb. subliminal fantasiesc. relationship avoidanced. primary productse. secondary products


41. Today, corporations need to make sure that they are good corporate citizens and that their consumer messages are honest. Such a view would be consistent with which of the following views?

a. Views of others.b. Views of organizations.c. Views of themselves.d. Views of the universe.e. Views of society.


42. People vary in their attitudes toward their society. ________ usually live more frugally, drive smaller cars, and wear simpler clothing. a. Makersb. Escapersc. Seekersd. Changerse. Developers


369


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***43. People vary in their attitudes toward society and react accordingly. ________ are a major market for

movies, music, surfing, and camping. a. Makersb. Preservers c. Escapersd. Changers e. Developers


44. All of the following have been cited by the text as being among Americans’ core values EXCEPT ________. a. they believe in workb. they believe in getting marriedc. they believe in giving to charityd. they believe in being honeste. they believe in sexual permissiveness


45. Which of the following would be the best illustration of a secondary belief or value? a. Belief in work.b. Belief in giving to charity.c. Belief in getting married.d. Belief in getting married early.e. Belief in being honest.


46. Which of the following is by far the most popular American leisure activity in that it is preferred by 59 percent of adults who participate in such activities? a. Gardening.b. Walking for exercise.c. Swimming.d. Photography. e. Jogging or running.


47. Each society contains ________, groups with shared values emerging from their special life experiences or circumstances. a. demographic segmentsb. cliquesc. consumer bundlesd. subculturese. behavioral niches


370


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***48. Which of the following would be the best illustration of a subculture?

a. A softball team.b. A university alumni association.c. Teenagers.d. A Boy Scout troop.e. Frequent flyers.


49. All of the following EXCEPT ________ have been found to influence young people today and cause a shift of secondary cores values for this group. a. U2’s Bono.b. Elvis Presley.c. The NBA’s LeBron James.d. Golf’s Tiger Woods.e. Skateboarder Tony Hawk.


50. Although core values are fairly persistent, cultural swings do take place. ________ caused such a swing in the 1960s. a. Ford Motor Companyb. George McGovernc. G.I. Joe action charactersd. The infomerciale. The Beatles


51. Marketers need to be aware of threats and opportunities associated with four trends in the natural environment. All of the following are among those trends EXCEPT ________. a. the shortage of raw materialsb. the increased cost of energyc. near 90 percent corporate support for “green causes”d. increased pollution levelse. the changing role of governments


52. With respect to the shortage of raw materials, air and water are classified as ________ resources. However, as we know, problems are beginning to plague both our air and water quality. a. infiniteb. near finitec. finite renewabled. finite nonrenewable e. absolute


371


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***53. One finite nonrenewable resource, ________, has created serious problems for the world economy.

Because of anticipated shortages, investment and commodity markets have had wild swings. a. waterb. airc. sugard. coffeee. oil


54. From a branding perspective, “green marketing” programs have not been entirely successful. ________ has been cited as one of the obstacles that must be overcome for “green marketing” programs to be more successful. a. Overexposure and lack of credibility b. High costc. Poor promotionsd. Resistance by the youth segment in the marketplace e. Lack of support by governmental agencies and concerns


55. Which of the following countries is noted for their “green movement” and support within its government for environmental quality enhancement? a. Mexicob. Chinac. Germanyd. Englande. Italy


56. The marketer should monitor the following trends in technology, EXCEPT ________, if progress is to be made in business.

a. the pace of changeb. the difficulties found in sharing informationc. the opportunities for innovationd. varying R&D budgetse. increased regulation


57. According to some industry analysts and inventors, ________ will eventually eclipse the PC as our most important technological device. a. iPodb. HDTVc. holographic televisiond. the mobile phonee. solar-powered car

Answer: d Page: 92 Level of difficulty: Medium58. All of the following will most likely be among the advantages for a society that embraces

telecommuting as an employment/communication alternative EXCEPT ________. a. reduction of auto pollutionb. bringing the family closer togetherc. increased bonuses and compensation perksd. creating more home-centered shoppinge. entertainment centered on the home environment


372


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***59. ________ legislation has as its purposes to protect companies from unfair competition, to protect consumers from unfair business practices, and to protect the interests of society from unbridled business behavior.

a. Businessb. Consumerc. Bi-partisand. Activiste. Global


60. An important force affecting business is the ________—a movement of citizens and government organized to strengthen the rights and powers of buyers in relation to sellers. a. lobbyist movementb. consumerist movementc. environmental movementd. self-rights movemente. ethical reform movement


373



Chapter 21: Tapping into Global Markets


Multiple Choice

1. Red Bull has gained ________ of the worldwide energy drink market by skillfully connecting with global youth.

a. 70 percentb. 80 percentc. 60 percentd. 50 percente. 90 percent


2. Red Bull built buzz about the product through its ________.a. “buzz marketing program” b. “in program”c. “marketing program” d. “seeding program” e. “advertising campaign”


3. A global industry is defined as ________.a. an industry in which the strategic positions of competitors are fundamentally

affected by their overall global positionsb. an industry that operates in more than one country and captures R&D, marketing,

and other financial advantages in its costs and reputation.c. an industry that operates in more than one country and has a strategic position in

many countriesd. a firm that operates in more than one country and has a sales and marketing staff

in those countries e. an industry that has strategic positions in many countries but is not affected by

competitionAnswer: a Page: 668 Level of difficulty: Medium

374


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***4. A global firm is one that ________.

a. where the strategic positions of competitors are fundamentally affected by their overall global positions

b. operates in more than one country and captures R&D, marketing, and other financial advantages in its costs and reputation

c. operates in more than one country and has a sales and marketing staff in those countries

d. operates in more than one country and has a sales and marketing staff in those countries developing

e. has strategic positions in many countries but is not affected by competition researching


5. International trade in 2003 accounted for over ________ of U.S. GDP up from 11 percent in 1970. a. one-third b. one-eighth c. one-halfd. one-quartere. 18 percent


6. Global firms plan, operate, and ________ their activities on a worldwide basis.a. produceb. coordinate c. distribute d. price e. service


7. The major decisions in international marketing include which of the following steps?a. Deciding whether to go abroad.b. Deciding which markets to enter.c. Deciding how to enter the market.d. Deciding on the marketing program.e. All of the above.


8. The internationalization process has four stages. These stages are ________.a. no regular export activitiesb. export via independent representatives (agents)c. establishment of one or more sales subsidiariesd. establishment of production facilities abroade. all are part of the internationalization process


375


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***9. Most firms work with an ________ and enter a nearby or similar country.

a. independent agent b. contractual export department c. import/export departmentd. franchiseee. management contract


10. A “waterfall” approach to international marketing is defined as ________.a. countries that are gradually entered sequentiallyb. countries in which the demand for the product is greatest is entered firstc. countries in which the demand for the product is greatest is entered lastd. countries in which the supply of raw material is greatest is entered firste. countries are entered based upon ease of entry


11. A “sprinkler” approach to international marketing is defined as ________.a. countries that are entered when timing is right b. countries that are gradually entered sequentially c. countries in which the supply of raw material is greatest is entered firstd. countries in which the demand for the product is greatest is entered first e. many countries are entered simultaneously within a limited period of time


12. The developed nations and the prosperous parts of developing nations account for less than ________ of the world’s population. a. 10 percentb. 15 percentc. 20 percent d. 25 percente. 30 percent


13. Marketers must change their conventional marketing to sell their products to developing countries. One of the changes that marketers can make is to ________.a. reduce the price of the product but increase the packaging size b. reduce the size but keep the pricing the samec. reduce the price of the product d. reduce the size and price of the packaging e. increase the price and the packaging size because these countries have never seen

the product beforeAnswer: d Page: 671 Level of difficulty: Medium

376


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***14. Factors that influence the “attractiveness” of a country to enter include which of the

following?a. product, geography, income and population, political climate, and other factorsb. product, geography, income, climate, and source of incomec. population, incomes, competition, and political climated. incomes, profit potentials, competition, and climatee. incomes, families, competition, and cultural differences


15. Regional economic integration is defined as ________.a. agreements between individual firms for the sake of commerceb. trading agreements between individual countriesc. trading agreements between individual firmsd. trading agreements between countries and firmse. trading agreements between blocs of countries


16. The European Union founded in 1957 added ________ in May 2004 bringing its total membership to

25 countries.

a. 10 countriesb. 5 countriesc. 20 countriesd. 6 countriese. 4 countries


17. NAFTA established a free trade zone between what three countries? a. Canada, Mexico, and South Americab. Canada, Mexico, and Peruc. Mexico, South America, and the United Statesd. Canada, Mexico, and the United Statese. Canada, Mexico, and Japan


18. MERCOSUL is a free trade zone linking which of the following South American

countries?

a. Mexico, Japan, Brazil, and Paraguay b. Mexico, Brazil, and Paraguayc. Brazil, Argentina, and Paraguayd. Canada, Brazil, and Paraguaye. Brazil, Argentina, Paraguay, and Uruguay


377


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***19. The five modes of entry into foreign markets generally flow by increasing

commitment, risk, control, and profit potential as follows ________.

a. indirect exporting, direct exporting, licensing, joint ventures, and direct investment b. direct investment, joint ventures, licensing, direct exporting, and indirect

exporting. c. direct investment, joint ventures, and licensing d. direct investment, joint ventures, licensing, and indirect exportinge. none of the above


20. In choosing which countries to invest in, companies sometimes choose psychic proximity to their own country. Psychic proximity can best be defined as ________.a. countries close to the “host” country in which the company feels comfortable with

the language, laws, and culture b. countries that “mimic” the host country in terms of language and culturec. countries that the host country’s management team have visited d. countries close to the “host” country in which the company feels that they can

infiltrate quickly and profitable e. countries close to the “host” country in which the company can easily transport

their products Answer: a Page: 674 Level of difficulty: Medium

21. The normal way to get involved in an international market is through exporting.

Occasional exporting is defined as ________.

a. when the company carries on exporting activities on the behalf of others b. when the company makes a commitment to expand into particular markets c. when the company works through independent agents d. when the company hires domestic-based agents to negotiate foreign purchasese. a passive level of involvement in which the company exports its products from

time to time Answer: e Page: 674 Level of difficulty: Medium

22. Active exporting takes place when the company ________ to expand into a particular market.

a. forms a “skunk” group b. forms an export department c. hires an agent d. makes an efforte. makes a commitment


378


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***23. Domestic-based export merchants ________.

a. buy the manufacturer’s products and then sell them abroadb. buy the manufacturer’s products then sell them in the host country c. buy the manufacturer’s products then fine agents and customers in foreign

countries d. seek and negotiate foreign purchases e. carry on exporting activities on behalf of several producers


24. Domestic based export agents perform a valuable service for the companies seeking to enter foreign markets. The primary function of these agents is to ________.

a. carry on exporting activities on behalf of several producers b. buy the manufacturer’s products and then sell them abroadc. buy the manufacturer’s products then sell them in the host country d. seek and negotiate foreign purchases and are paid a commission on those sales e. export products to foreign countries


25. Company’s prefer to enter a country that ranks high on market attractiveness, low in market risks and ________.a. in which it would possesses a competitive advantageb. turn a quick profitc. able to dominate its foreign competitors through superior product design and

performance d. gain a dominate market share within one year of exporting e. increase its foreign market share by 50 percent in one year


26. Indirect export has two advantages for the firm. First in involves less investment for the firm and secondly it ________.a. involves less paperwork b. involves less intrusion by the government c. involves less riskd. involves less people to manage the processe. involves less products and product lines


27. A company can carry on direct exporting in several ways. These include domestic- based export department or division, overseas sales branch or subsidiary, traveling export sales representatives, and ________.a. foreign-based distributors or agentsb. marketing departments based in the foreign countryc. export merchants in foreign countriesd. export management companiese. none of the above


379


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***28. According to the text, Shaper Image receives more than ________ of its online

business form overseas customers. a. 15 percentb. 30 percent c. 25 percent d. 40 percent e. 10 percent


29. “Going abroad” using the Internet has its challenges. One of the challenges that a global marketer may run up against when using the Web are ________.a. cultural restrictions b. language barriersc. pricing proceduresd. monetary exchangese. logistical limitations


30. Licensing is a simple way to become involved in international marketing. In licensing, the licensor issues a license to a foreign company to use a process, trademark, patent, or trade secret for a(n) ________.a. limited period of time b. fee or royalty c. exchange of information or propriety information d. exchange for access to the market placee. exchange for “their” process, trademark, patent, or secret


31. Companies such as Marriott and Hyatt sell a variation of the licensing agreement called ________ to the owners of foreign hotels to manage these businesses for them in foreign countries.a. contract manufacturingb. management contracts c. franchising d. hotel management licensing e. none of the above


380


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***32. In ________, the firm hires local manufacturers to produce the product. This gives

the company less control over the manufacturing process and loss of profits of the manufacturing efficiencies. a. contract manufacturing b. management contracts c. licensing d. franchising e. none of the above


33. A company can enter a foreign market through ________, which is a complete form of licensing in which the company offers a complete brand concept and operating system designed to ensure that the ________ operates according to the requirements of the licensor. a. contract manufactures/licensor b. contract management/firmc. management contracts/firmd. joint venture/firm e. franchising/franchisor


34. The definition of a joint venture company is one ________.a. in which foreign inventors join with local investors where they share ownerships

and control b. in which two people or more own the firm jointly c. where foreign investors join with others to own the firm d. where ownership by local and distant investors in share ownership of a franchisee. where ownership is by investors of foreign firms


35. A joint venture may be necessary or desirable for economic or political reasons. Additionally, a foreign firm might lack the ________, or managerial resources to undertake the venture alone. a. resource, competency b. financial, physical c. financial, willingnessd. political, financiale. political, competency


381


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***36. In an adapted marketing mix, the producers’ ________ the marketing program to

each target market. a. reduce the importance of each element of the marketing program to adjust for cost

differential between countries b. decide on which element of the marketing mix to change/country/target market

prior to entering the country c. adapt the communications message to the host country d. change only one element of the marketing mix/country e. adjust


37. International companies must decide on how much to adapt their marketing strategy to local conditions. At one extreme are companies that use a globally standardized marketing mix worldwide. A standardized marketing mix includes ________.a. a concentric strategy which includes the product, integrated marketing

communications mix, and distribution strategyb. standardization of the product, communication, and distribution channels

promising lowest costs. c. changes only to the product keeping distribution channels and marketing

communications consistent across countries d. changing only the distribution channels to accommodate the host countrye. changes only to the product and communication message


38. The ultimate form of foreign involvement is direct ownership of foreign-based assembly or manufacturing facilities. One of the advantages of direct ownership can include economies of scale, creating jobs in the host country, developing deeper relations with local suppliers etcetera and the firm ________.a. retains full control over its investment b. reviews global outreach projectionsc. redefines the business conceptd. reviews the successes from e-commerce e. receives no disadvantages to direct investment


39. Hofstede identifies four cultural dimensions that can differentiate countries. These are individualism versus collectivism, high versus low power distances, masculine versus feminine, and ________.a. customer relationship management versus power distances b. strategic management versus marketing managementc. weak versus strong uncertainty avoidance d. total quality management versus JIT deliveries e. marketing management versus customer relationships


382


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***40. Straight extension of the product means ________.

a. introducing the product to the foreign market without any changes to the product. b. introducing the product to the foreign market without major changes to the

product c. introducing the product to the foreign market with major changes to the product d. introducing the product to the foreign market with no major marketing programe. not introducing the product to the foreign market until changes have been made

Answer: a Page: 678 Level of difficulty: Medium 41. An advantage of global marketing is that it can lower marketing costs, has economies

of scale in production and distribution, can produce consistency in brand image, has the ability to leverage good ideas quickly and efficiently, and ________. a. is easier to adapt to foreign countriesb. allows for the same message to be used worldwidec. allows for individual countries to add their specific needs to the messaged. is easier for corporations to evaluate the marketing messagee. allows for uniformity of marketing practices


42. Product adaptation involves ________.a. altering the product to meet local conditions or preferences b. altering the product to meet minimum acceptable standardsc. changing the product periodicallyd. upgrading the product on a periodic basise. changing the product to meet competition


43. A firm can successful introduce four versions of its products into a foreign country or a firm may select one of these for inclusion. These versions include ________. a. customer version, regional version, and city version b. customer version, country version, and retailer versionc. regional version, country version, city version, and retailer version d. customer version, regional version, city version, and retailer versione. regional version, country version, city version, and market versions

Answer: c Pages: 680–681 Level of difficulty: Easy

44. Product invention consists of creating something new. Backward invention is reintroducing earlier product forms that are well adapted to a foreign country’s needs. Forward invention is ________.a. creating a new product to meet a need in another country b. creating a new product to meet the need in the host country c. understanding the differences between host and foreign country marketsd. increasing the control over the development of new products e. inventing something that yet has a “market”


383


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***45. Companies can run the same marketing communications programs as used in the

home market or change them for each local market, a process called ________.a. product communications b. brand communications c. dual adaptation d. marketing communicationse. communication adaptation


46. Many multinationals are plagued by the gray market problem. The gray market consists of ________.a. the marketing of products to older consumers b. branded products diverted from normal distribution channels in the country of

product originc. branded products diverted from one country to another d. products being repackaged from the intended country to a diverted countrye. products not having full warranties by the manufacturer


47. If a company adapts or changes both the product and the communications, the company engages in a process called ________.a. straight extension b. marketing communication c. product adaptation d. dual adaptation e. full adaptation


48. The use of media requires international adaptation because media availability varies from country to country. Norway, Belgium, and France do not allow cigarettes and alcohol to be advertised on TB. Austria and Italy regulate TV advertising ________.

a. between the hours of 9 p.m. and 6 a.m.

b. to childrenc. for those under the age of majorityd. regarding content and clarity e. using women in advertising


384


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***49. A Gucci bag sells for $120 in Italy and $240 in the United States. This is an example

of when a firm tries to sell its products abroad. This phenomenon is called a ________.a. strategic marketing pricing problemb. market pricing problemc. tactical pricing problemd. price escalation probleme. transfer pricing problem


50. A firm that charges a price to another unit in the company sets the ________ price for goods that it ships to its foreign subsidiaries.

a. original priceb. transfer price c. margin price d. break-even price e. customer value price


51. The cost escalation problem exists for multinationals and varies from country to country; the question is: How to set prices in different countries? Companies have three choices. One is to set a uniform price everywhere, two is to set a market-based price in each country, and three is to ________. a. set a final “cost plus” price in each country b. set a cost-based price in each country c. let the market dictate price/country d. vary the price/market/country on a daily basis to reflect consumer demand e. set the transfer price at marginal costs = marginal revenue


52. In 2000 Stelco a Canadian steelmaker, successfully fought dumping changes against steelmakers in Brazil and other countries. “Dumping” is defined or occurs when ________.a. a company charges either less than its costs or less than it charges in its home

market b. the company charges less that its costs but more than it charges in its home

market c. the company’s pricing plans are below current domestic prices d. a company must increase its prices/product prior to importing the producte. a company unloads an excess supply of the product at the best possible prices to

the consumer Answer: a Page: 684 Level of difficulty: Easy

385


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***53. The “whole channel concept for international marketing” includes the following

steps________. a. seller to seller’s international marketing headquarters to channels between nations

to channels within foreign nations to final buyers b. seller to marketing headquarters to channels within foreign markets to final buyersc. sellers to channels between nations to final buyersd. sellers to channels within foreign nations to final buyers e. sellers to international markets to channels within foreign nations to final buyers


54. In an increasingly connected, highly competitive global marketplace, government officials, and marketers are concerned with how attitudes and beliefs about their country affect consumer and business decision-making. ________is(are) the mental associations and beliefs triggered by a country. a. Corporate ownership of the firm b. Materials used in manufacturing c. Brand names and trademarks d. Country-of-origin perceptions e. Competitive positions in the marketplace


55. A company has several options when its products are competitively priced but their place of origin turns consumers off. The company can consider ________.a. re-packaging the product to disguise the country of origin b. co-brandingc. reducing their country of origin mentions in their advertisingd. re-branding the product to disguise the country of origin e. co-production with a foreign company that has a better name.


56. Most brands are adapted to some extent to reflect significant differences in ________, ________, competitive forces, and the legal and political environment. a. consumer behavior, brand developmentb. business mission, brand development c. strategy and consumer behavior d. programs and marketing communications e. political and social mores differences


386


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***57. Disadvantages to global marketing include differences in consumer needs, wants, and

usage patterns for products; difference in consumer response to marketing-mix elements; differences in brand and product development and the competitive environment; and ________. a. differences in marketing institutionsb. differences in language and consumer expectations c. differences in product performance d. differences in management’s reaction to the marketplace e. none of the above


58. Marketers must also adapt sales promotion techniques to different markets. Several European countries have laws preventing or limiting sales promotion tools such as discounts. In Germany, Lands’ End could not advertise its ________.

a. woman’s bathing suits b. sale price c. close-out specials d. end-of-the-season salee. money-back guarantee


59. Companies can manage their international marketing activities in three ways. These include, through export departments, international divisions, ________. a. or a global organization b. or from a fixed corporate headquarters c. or through a strong marketing department in the “host” country d. and through local marketing efforts e. none of the above Answer: a Page: 688 Level of difficulty: Medium

60. Bartlett and Ghoshal have identified three organizational strategies for international firms. These are: (1) a global strategy treats the world as a single market; (2) a multinational strategy treats the world as a portfolio of national opportunities; and (3) ________.

a. a local strategy standardizes all of the local elementsb. the marketing strategy identifies those elements assigned to a country and uses

those elements plus corporate’s contribution in the marketing plan c. a “glocal” strategy standardizes certain core elements and localizes other elements d. assumes that there are no “local” or multinational differences in formulating the

marketing mix e. none of the above

Answer: c Pages: 689–690 Level of difficulty: Hard

387



Chapter 6: Analyzing Consumer Markets


Multiple Choice

61. Marketers are always looking for emerging trends that suggest new marketing opportunities. One such trend is the “metrosexual.” Which of the following items would the metrosexual most likely have some interest for? a. An IBM computer.b. Tickets to WWF wrestling.c. Saxophone lessons.d. An all-over body spray by Axe.e. Cowboy boots made from elephant hide.


2. ________ is the study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants.a. Target marketingb. Psychographic segmentationc. Psychologyd. Consumer behaviorf. Product differentiation


3. The fundamental determinant of a person’s wants and behavior is the person’s ________. a. psycheb. national originc. cultured. peer groupe. family tree


4. A child growing up in the United States is exposed to all of the following values EXCEPT ________.a. achievement and successb. activityc. efficiency and practicality

388


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***d. the importance of the group in daily lifee. freedom


389


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***5. Which of the following would be the best illustration of a subculture?

a. A religion.b. A group of close friends.c. Your university.d. A fraternity or sorority. e. Your occupation.


6. With respect to facts about the American consumer, which of the following consumer electronics is owned by the vast majority of consuming households with a 93 percent reporting ownership?

a. A personal computer.b. TiVo DVR.c. A cellular phone.d. A microwave oven. e. A VCR.


7. ________ is defined as being relatively homogeneous and enduring divisions in a society, which are hierarchically ordered and whose members share similar values, interests, and behavior. a. Cultureb. Subculturec. Social classd. The familye. A group


8. Social classes show distinct product and brand preferences in all the following areas EXCEPT ________.

a. clothingb. home furnishingsc. leisure activitiesd. automobilese. fast food


9. A person’s ________ consist(s) of all the groups that have a direct (face-to-face) or indirect influence on his/her attitudes or behavior. a. cultureb. subculturec. psychographicsd. reference groupse. demographics


10. A(n) ________ group is one whose values or behavior an individual rejects.

390


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***a. aspirational b. disassociativec. membershipd. primarye. procreational


11. If a direct mail marketer wished to direct promotional efforts toward the family of ________, efforts need to be directed toward parents and siblings of the family members. a. orientation b. procreationc. immediacyd. intimacye. reference


12. Expected to account for a quarter of the U.S. population by 2050, ________ are the fastest growing minority.a. African Americansb. Asian Americansc. Hispanic Americansd. European Americanse. Arabic Americans


13. The dominant cohort, with respect to families, for the next fifty years may very well be the ________ cohort. a. married-couple householdb. single adultsc. single seniorsd. married seniorse. married-couples with parents living with them


14. Husbands and wives display different decision-making roles in most families. The trend for

dominant decision making in families is for ________ to be responsible for most of the decisions.

a. the husbandb. the wifec. joint decision making (both husband and wife)d. holistic decision makinge. child-oriented decision making


391


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***15. The Disney Channel has become the company’s cash cow for its ability to reach the

underserved ________ market—8- to 14-year-olds. a. teenb. twixtc. mid-d. tweene. young adult


16. People choose products that reflect and communicate their role and actual or desired ________ in society. a. groupb. statusc. attitudesd. beliefse. feelings


17. Consumption may be shaped by ________ (such as marriage, childbirth, or divorce). a. the psychological life cycleb. the product life cyclec. the life/death life cycled. post-puberty cyclese. critical life events or transitions


18. Product choice is greatly affected by economic circumstances. All of the following would be among those circumstances EXCEPT ________. a. spendable incomeb. savings and assetsc. debtsd. occupatione. borrowing power


19. ________ is a set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli. a. Imageb. Personalityc. Beliefsd. Hereditye. Culture


392


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***20. When the Marlboro Man was depicted in advertising as a rugged outdoor, tough

cowboy type, this was done to establish what is called a ________. a. trademarkb. brand namec. brand personalityd. psychological approach to advertising e. brand reference


21. ________ portrays the “whole person” interacting with his or her environment. a. Attitudeb. Reference groupc. Lifestyled. Culturee. Subculture


22. Consumers today are experiencing a time famine because of their busy lifestyles. One way to avoid the difficulties of time famine, which is of particular interest to marketers, is ________. a. to set fewer goalsb. to multitaskc. to give in to personal burdensd. to report frustration to managemente. to develop a callous attitude toward marketers


23. With respect to understanding consumer behavior, there are four key psychological processes. All of the following would be among those processes EXCEPT ________. a. motivationb. perceptionc. learningd. self-reliancee. memory


24. A ________ when it is aroused to a sufficient level of intensity. a. need becomes a motiveb. motive becomes a needc. desire becomes a realityd. unfulfilled demand becomes a crisise. personal demand exceeds the ability to rationally reject


393


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***25. ________ assumed that the psychological forces shaping people’s behavior are

largely unconscious, and that a person cannot fully understand his or her own motivations. a. Abraham Maslowb. Frederick Herzbergc. Sigmund Freudd. John Cacioppoe. Karl Marx


26. Frederick Herzberg developed a ________ that distinguishes dissatisfiers and satisfiers. a. trait-role theoryb. psychological constraint theoryc. probability scaled. leadership modele. two-factor theory


27. At the top of Maslow’s hierarchy of needs (shown as a pyramid in the text) are ________ needs. a. esteem b. self-actualization c. social d. safetye. physiological


28. It has been estimated that the average person is exposed to over ________ ads or brand communications a day. a. 1,500b. 1,300c. 1,000d. 800e. 500


29. ________ is the tendency to interpret information in a way that will fit our preconceptions. a. Selective retentionb. Cognitive dissonance c. Selective distortiond. Subliminal perceptione. Discrimination


394


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***30. A cigarette ad has a picture of a young man laying on his back and dreamily looking

at clouds in the sky. Though not readily obvious to the casual reader, there is a message in the clouds that says “r-e-l-a-x.” This would be an example of which of the following? a. Selective distortionb. Cognitive dissonancec. Selective retentiond. Subliminal perceptione. Short-term memory


31. A ________ is a strong internal stimulus impelling action. a. cueb. drivec. reinforcementd. discriminatione. belief


32. ________ teaches marketers that they can build demand for a product by associating it with strong drives, using motivating cues, and providing positive reinforcementa. Demand theoryb. Learning theoryc. Economic theoryd. Psychological theorye. Demographic theory


33. As Rita scans the yellow pages section of her phone book looking for a florist, she sees several others products and services advertised. Though interesting on first glance, she quickly returns to her primary task of finding a florist. The items that distracted her from her search were most likely stored in which of the following types of memory? a. Short-term memoryb. Long-term memoryc. Middle memoryd. Subconscious memorye. Subliminal memory


395


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***34. Brand associations consist of all the brand-related thoughts, feelings, perceptions,

images, experiences, beliefs, attitudes, and so on that become linked to the brand ________. a. stimulusb. linkc. connectiond. personalitye. node


35. In general, the more attention placed on the meaning of information during ________, the stronger the resulting associations in memory will be. a. encodingb. decodingc. classificationd. retrievale. memorization


36. Repeated exposures to information provide greater opportunity for processing and thus the potential for ________. a. more profitsb. more salesc. stronger associationsd. increased brand personalitye. more one-to-one relationships


37. Cognitive psychologists believe that memory is ________, so that once information becomes stored in memory, its strength of association decays very slowly. a. very limitedb. somewhat limitedc. fluidd. often reflectivee. extremely durable


38. The five-stage model of the consumer buying process includes all of the following stages EXCEPT ________. a. problem recognitionb. information searchc. social interactiond. purchase decisione. influencer


396


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***39. The buying process starts when the buyer recognizes a _________. a. product b. an advertisement for the product c. a salesperson from a previous visit d. problem or need e. an internal cueAnswer: d Page: 191 Level of difficulty: Medium

40. Which of the following is considered to be a more advanced form of information search wherein the person might phone friends or go online to secure information about a product or service? a. Heightened attentionb. Short-term memory processingc. Subliminal processing of informationd. Long-term memory processinge. Active information search

Answer: e Pages: 191–192 Level of difficulty: Hard

41. Of key interest to marketers are the major informational sources to which the consumer will turn and the relative importance of each. Which of the following would be considered to be an experiential information source? a. Consumer-rating organizations.b. The mass media.c. Acquaintances.d. Web sites.e. Using the product itself.


42. Which of the following is considered to be biggest single source of consumer information from a commercial source (over 40 percent of car buyers use this source to gather information)? a. The U.S. Chamber of Commerceb. J.D. Power & Associates c. Consumer Reportsd. The Better Business Bureaue. Underwriter’s Laboratory


43. Brands that meet consumers’ initial buying criteria are called the ________. a. total setb. awareness setc. consideration setd. choice sete. decision set


397


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***44. With respect to consumer decision making, the ________ is the set of strong

contenders from which one will be chosen as a supplier of a good or service. a. total setb. awareness set c. consideration setd. choice sete. decision set


45. A(n) ________ is a descriptive thought that a person holds about something. a. attitudeb. belief c. desired. feelinge. emotion


46. A(n) ________ puts people into a frame of mind: liking or disliking an object, moving toward or away from it. a. attitudeb. beliefc. feelingd. positione. stance


47. The expectancy-value model of attitude formation posits that consumers evaluate products and services by combining their ________. a. needsb. wantsc. desiresd. brand beliefse. consuming attitudes


48. All of the following would be considered to be strategies for approaching consumers who had rejected your company’s model of a product for another competitive brand EXCEPT ________. a. redesign your company’s productb. alter beliefs about your company’s brandc. covertly alter the qualitative data about your productd. alter beliefs about competitors’ brandse. call attention to neglected attributes

Answer: c Pages: 195–196 Level of difficulty: Medium

398


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***49. Customer value analysis reveals the company’s strengths and weaknesses relative to

various competitors. Which of the following would be considered to be the first step in this process? a. Monitor customer values over time.b. Assess the quantitative importance of the different attributes.c. Assess the company and competitors’ performances on customer values.d. Identify the major attributes customers value.e. Examine customer ratings of the company and competitors.


50. With respect to consumer purchase intention, all of the following would be among the sub-decisions made by consumers EXCEPT ________. a. emotional valueb. brandc. dealerd. timinge. payment method

Answer: a Pages: 196–197 Level of difficulty: Medium

51. With the ________ heuristic, the consumer sets a minimum acceptable cutoff level for each attribute and chooses the first alternative that meets the minimum standard for all attributes. a. conjunctiveb. lexicographicc. elimination-by-aspectsd. primarye. secondary

Answer: a Pages: 197 Level of difficulty: Hard

52. Even if consumers form brand evaluations, two general factors can intervene between the purchase intention and the purchase decision. One of these is unanticipated situational factors. What is the second factor? a. Amount of purchasing power.b. Attitudes of others.c. Short-term memory capabilities. d. Ability to return merchandise.e. The self-concept.

Answer: b Pages: 197 Level of difficulty: Medium

53. ________ risk occurs if the product fails to perform up to expectations. a. Physical b. Financial c. Social d. Psychological e. Functional


399


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***54. If performance meets consumer expectations, the consumer is ________.

a. delightedb. satisfiedc. disappointedd. surprisede. overwhelmed


55. A key driver of sales frequency is the ________ rate. a. product consumptionb. disposalc. refusald. utility e. option


56. The level of engagement and active processing undertaken by the consumer in responding to a marketing stimulus is called ________. a. elaboration likelihoodb. consumer disengagementc. consumer involvementd. variety-seekinge. low-involvement


57. If a consumer is persuaded to buy a product by a message that requires little thought and is based on an association with a brand’s positive consumption experiences from the past, the consumer used a ________ to arrive at this purchase decision. a. central routeb. peripheral routec. behavioral routed. subjective routee. objective route


58. With the ________, predictions of usage are based on quickness and ease of use.a. availability heuristicb. representative heuristicc. anchoring heuristicd. adjustment heuristice. semantic heuristic


400


*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***59. Ben always reaches for the bright blue and yellow box of Ritz crackers when he

visits the snack food aisle in the grocery store. He rarely even reads the box or checks the price. Which of the following heuristics is most likely being used by Ben? a. Availability b. Representative c. Anchoringd. Adjustmente. Semantic


60. ________ refers to the manner by which consumers code, categorize, and evaluate financial outcomes of choices. a. Cost accounting

b. Financial accountingc. Behavioral accountingd. Mental accountinge. Factual accounting


401



Chapter 7: Analyzing Business Markets


Multiple Choice

1. To create and capture value, sellers need to understand business organizations’ needs, resources, policies, and ________.g. demandsh. protocolsi. strategiesj. buying proceduresk. personnel policies


62. Webster and Wind define ________ as the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers.a. marketing channelsb. organizational buyingc. demand-oriented buyingd. purchasinge. inventory control


63. The ________ consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others.a. business marketb. consumer marketc. e-commerce marketd. global markete. supplier market


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***64. Business markets have several characteristics that contrast sharply with those of

consumer markets. All of the following would be among those characteristics EXCEPT ________. a. fewer, larger buyersb. close supplier-customer relationshipc. professional purchasingd. inverted demande. multiple sales calls

Answer: d Pages: 210–211 Level of difficulty: Hard

65. All of the following would be among the major industries that make up the business market EXCEPT ________. a. agriculture, forestry, and fisheriesb. manufacturingc. constructiond. banking, finance, and insurancee. the Internet

Answer: e Page: 210 Level of difficulty: hard

66. Trained purchasing agents, who must follow their organization’s ________, often purchase business goods.a. cultureb. past purchasing historyc. purchasing policies, constraints, and requirementsd. needse. financial budgets


67. Ultimately, the amount of steel sold to General Motors depends on the consumer’s demand for GM cars and trucks. From the standpoint of the steel manufacturer, which of the following demand forms is most pertinent? a. Derived demandb. Inelastic demandc. Geographic demandd. Relational demande. Static demand


68. The demand for business goods is ultimately derived from the demand for ________.a. raw materialsb. consumer goodsc. electronicsd. business solutionse. e-commerce


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***69. The business buyer faces many decisions in making a purchase. The number of

decisions depends on the buying situation. All of the following examples are appropriate to the preceding EXCEPT ________. a. complexity of the problem being solvedb. newness of the buying requirementc. number of people involvedd. applicability of situation to mission statemente. time required


70. The purchasing department buys office supplies on a routine basis. This type of purchase is classified as a ________. a. straight rebuyb. modified rebuyc. new taskd. secondary purchasee. preordained purchase


71. There are a series of guidelines for selling to small businesses. Which of the following should not be among those guidelines? a. Don’t waste their time.b. Do keep it simple.c. Do use the Internet.d. Don’t forget about direct contact.e. Do lump small and midsize businesses together for efficiency sake.


72. The business buyer makes the fewest decisions in the ________. a. modified rebuyb. regular buyc. straight rebuyd. new rebuye. new task buy


73. Many business buyers prefer to buy a total solution to a problem from one seller. ________ is the correct term for this process. a. Channel consolidationb. Systems buyingc. Vertical buyingd. Horizontal buyinge. Supply buying


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***74. Xerox offers a ________ approach to prospective clients when it offers a complete

turnkey procedure, operation, and management of the client’s information and communication need. a. supply buyingb. primary buyingc. systems buyingd. co-op buying systeme. direct buying


75. If Ampex Support Systems is the single supplier for a local manufacturing company’s MRO (maintenance, repair, operating) supplies and needs, Ampex Support Systems would then be considered as providing ________ for the manufacturer. a. systems buying b. purchasing supportc. turnkey logisticsd. decision supporte. systems contracting


76. ________ is a key industrial marketing strategy in bidding to build large-scale industrial products (e.g., dams, pipelines, et cetera). a. Systems contractingb. Systems buyingc. Systems sellingd. Solutions buyinge. Turnkey logistics


77. ________ is composed of all those individuals and groups who participate in the purchasing decision-making process, who share some common goals and the risks arising from their decisions.a. The buying centerb. The marketing sales teamc. Strategic managementd. Engineering supporte. The logistics center


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***78. In the purchasing decision process, the ________ are those who request that

something be purchased. They may be users or others in the organization.a. usersb. initiatorsc. influencers d. deciderse. approvers


79. In the purchasing decision process, the ________ are those who have the power to prevent sellers or information from reaching members of the buying center. a. gatekeepersb. buyersc. initiatorsd. approverse. deciders


80. The typical buying center has a minimum of ________ members. a. 2–3b. 3–4c. 4–5d. 5–6e. 10


81. Webster cautions that ultimately, ________ make purchasing decisions. a. only senior managers b. individuals, not organizationsc. organizations, not individualsd. third partiese. systems contractors


82. Small sellers concentrate their marketing efforts on reaching ________. a. approversb. initiatorsc. key buying influencersd. userse. the purchasing staff


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***83. To the ________ price is everything and transactional selling is used.

a. solution-oriented customersb. income-oriented customersc. gold-standard customersd. strategic-value customerse. price-oriented customers


84. The strategic-value customers want a fairly permanent sole-supplier relationship with your company. Which of the following would be the best selling format to use with the strategic-value customer? a. Transactional sellingb. Consultative sellingc. Quality sellingd. Enterprise sellinge. Indirect demand selling


85. Some customers are willing to handle price-oriented buyers by setting a lower price, but establishing restrictive conditions. All of the following would be among those conditions EXCEPT ________. a. limiting the quantity that can be purchasedb. no refundsc. no adjustmentsd. no servicese. no customer advertising


86. If a supplier signs an agreement with a customer that states $350,000 in savings will be earned by the customer over the next 18 months in an exchange for a ten-fold increase in the customer’s share of supplies ordered by the customer, the two parties will have participated in what is called ________. a. solution selling b. consultative selling c. risk and gain sharingd. strategic alignment e. demand shifting


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***87. W.W. Grainger employees work at large customer facilities to reduce materials-

management costs. Which of the following forms of solution selling is W.W. Grainger using? a. Solutions to partnerships. b. Solutions to alter corporate culture. c. Solutions to enhance customer revenues.d. Solutions to decrease customer risks.e. Solutions to reduce customer costs.


88. In principle, business buyers seek to ________ in relation a market offering’s costs. a. spread risks b. obtain the highest benefit package c. maintain everyday-low-pricesd. outsource as much as is possible e. eliminate partners’ shares in profits as much as possible


89. In the past, what position did purchasing departments hold in the management hierarchy of most organizations? a. A high level because of their role in managing the company’s costs.b. A moderate level because of their spotty record on controlling costs.c. A low level despite the fact that they manage more than half of the company’s

costs.d. A secretive position. e. There has been no determination of this position.


90. The new, more strategically-oriented purchasing departments have a mission. Which of the following most accurately describes that mission? a. Make the most profit possible and remain independent of entanglements. b. Approach every purchasing opportunity as means to create interdependency.c. Seek the best value from fewer and better suppliers.d. Outsource the supply function.e. Abandon all strategies except for systems selling and buying.


91. When the purchaser’s focus is short term and tactical and they are rewarded on their ability to obtain the lowest price from suppliers for the given level of quality and availability, this is referred to as ________.a. procurement orientationb. supply chain management orientationc. buying orientationd. sellers orientatione. market orientation


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***92. When buyers simultaneously seek quality improvements and cost reductions and they

develop collaborative relationships with major suppliers and seek savings through better management of acquisition, conversion, and disposal costs, this is referred to as ________.a. sellers orientationb. supply chain management orientationc. market orientationd. procurement orientatione. buying orientation


93. When the purchasing role is further broadened to become a more strategic, value-adding operation, this is referred to as ________.a. supply chain management orientationb. buying orientationc. sellers orientationd. procurement orientatione. routine orientation


94. Peter Kraljic distinguished four product-related purchasing processes. Which of the following matches to products that have high value and cost to the customer but involve little risk of supply because many companies make them? a. Strategic productsb. Bottleneck productsc. Leverage productsd. Routine productse. Commodity products


95. The products that have high value and cost to the customer and also involve high risk (e.g., mainframe computers) are called ________.a. strategic productsb. bottleneck productsc. leverage productsd. routine productse. commodity products


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***96. Most purchasing professionals describe their jobs as more ________, technical, team-

oriented, and involving more responsibility than ever before. a. riskyb. strategicc. ethically difficultd. Web-basede. human-based


97. Robinson and Associates have identified eight stages and called them buyphases. This model is called the ________ framework. a. buygridb. buying/selling c. seller-centeredd. commerciale. buy-analysis


98. The first step (buyphase) in the straight rebuy buyclass is ________. a. problem recognitionb. general need descriptionc. product specificationd. supplier searche. proposal solicitation


99. A new task buyclass decision begins with which of the following buyphases? a. Problem recognitionb. General need descriptionc. Product specificationd. Supplier searche. Proposal solicitation


100. Business marketers can stimulate problem recognition by ________. a. trade directoriesb. direct mail, telemarketing, and calling on prospectsc. encouraging the Better Business Bureau to release statisticsd. consumer advertisinge. requesting testimonials from existing customers


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***101. When Hewlett-Packard sells such complex products as a network computer

system, it is engaging in what it calls the ________ concept because it offers information and specific solutions to unique problems. a. “product specification”b. “price de-escalation” c. “systems selling”d. “trusted advisor” e. “strategic alliance”


102. U.S. businesses spent about ________ on online transactions with other businesses in 2002 as compared to consumer online purchases of $71 billion during the same time period. a. $650 billionb. $500 billionc. $482 billiond. $225 billione. $53 billion


103. With respect to e-procurement, Web sites are organized around two types of e-hubs: ________. a. vertical and horizontal hubsb. vertical and functional hubsc. functional hubs and organizational hubsd. supplier and user hubse. manufacturer and supplier hubs

Answer: b Page: 222 Level of difficulty: Hard 104. With respect to e-procurement, Coca-Cola, Sara Lee, Kraft, PepsiCo, Gillette,

P&G, and several other companies joined forces to form a ________ called Transora to use their combined leverage to obtain lower prices for raw materials. a. manufacturer’s co-opb. supplier’s co-opc. middleman groupd. buying alliancee. cabal


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***105. Business-to-business cyberbuying is flourishing on the Internet. So far, most of

the products that businesses are buying electronically are ________, and travel and entertainment services. a. promotion services such as advertisingb. HR services (e.g., employee recruitment)c. MRO materials (maintenance, repair, and operations)d. food servicese. marketing research services


106. Moving into e-procurement has many benefits. Which of the following would not be among those benefits? a. Aggregating purchasing across multiple departments gains larger volume

discounts.b. Aggregating purchasing across multiple departments gains centrally negotiated

volume discounts.c. There is less buying of substandard goods from outside the approved list of

suppliers.d. A smaller purchasing staff is required.e. Purchasing gains a significant leverage with top management because of its

management team.Answer: e Page: 224 Level of difficulty: Hard

107. With respect to e-procurement commitment, in 2003 ________ was named number one in BtoB magazine’s annual ranking of the top B-to-B Web sites because of its ability to generate sales (about 55 percent of the company’s total sales) and commitment to the process. a. Coca-Colab. Dell Computersc. Hewlett-Packardd. Cadillace. Boeing


108. In the proposal solicitation process, ________ should be marketing documents that describe value and benefits in customer terms. a. written proposalsb. oral proposalsc. e-proposalsd. alliance proposalse. global proposals


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***109. Xerox qualifies only suppliers who meet the ISO 9000 quality standards, but to

win the company’s top award—certification status—a supplier must first complete ________. a. government certificationb. an extensive ethics statement evaluationc. the Xerox Multinational Supplier Quality Surveyd. a company training and indoctrination periode. a Malcolm Baldridge National Quality Award entry form and then enter


110. All of the following are considered to be methods of assessing customer value EXCEPT ________. a. direct survey questionsb. exit interviewing c. focus-group value assessmentd. conjoint analysise. benchmarks


111. According to purchasing professionals, which of the following is considered to be the major responsibility of the purchasing agent in supplier negotiations? a. Forming networks for future business.b. Assuring quality conformance.c. Being fair with all parties.d. To use a team approach in negotiations.e. Negotiating price.


112. If an industrial buyer leases heavy equipment like machinery and trucks rather than purchasing them, the lessee gains several advantages. Which of the following would NOT be among those advantages? a. Higher quality products.b. Conserving capital.c. Getting the latest products.d. Receiving better service.e. Some tax advantages.


113. “OTIFNE” is a term that summarizes three desirable outcomes of a B-to-B transaction: OT—deliver on time; IF—in full; and, NE—________. a. no errorb. no emergenciesc. non-experimentald. new entrepreneurse. need equipment


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***114. Corporate credibility depends on three factors: corporate expertise, corporate

trustworthiness, and ________. a. corporate manpowerb. corporate mission statementc. corporate likeabilityd. corporate governancee. corporate management structure


115. Cannon and Perreault found that buyer-suppler relationships differed according to four factors. Which of the following would NOT be among those factors? a. Importance of supply.b. Complexity of supply.c. Availability of alternatives.d. Supply market dynamism.e. Demand market conservatism.


116. According to Cannon and Perreault, buyer-supplier relationships fall into eight different categories. Which of the following relationships is characterized as being one that has much trust and commitment leading to a true partnership? a. Mutually adaptiveb. Collaborativec. Basic buying and sellingd. Customer supplye. Cooperative systems


117. In the ________ category of Cannon and Perreault’s buyer-supplier relationship categorization, although bonded by a close, cooperative relationship, the seller adapts to meet the customer’s needs without expecting much adaptation or change on the part of the customer in exchange. a. contractual transactionb. cooperative systemc. collaboratived. mutually adaptivee. customer is king


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*** ACTUAL EXAM = 100 ITEMS @ 20 ITEMS/EACH CHAPTER ***118. Vertical coordination can facilitate stronger customer-seller ties but at the same

time may increase the risk to consumer’s and supplier’s ________ (e.g., those expenditures tailored to a particular company and value chain partner). a. logistics channelb. independent operationsc. specific investmentsd. leverage abilitye. liquidity situation


119. The ________ market consists of schools, hospitals, nursing homes, prisons, and other institutions that must provide goods and services to people in their care. a. verticalb. nonprofitc. spotd. secondary businesse. institutional


120. With purchases of $200 billion annually in goods and services, ________ is the largest customer in the world. a. Wal-Martb. Graingerc. the State of Californiad. the U.S. governmente. Latin America


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