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1,341 terms

mkt capstone dr B

STUDY
PLAY
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.
B
Page Ref: 2
Objective: 1
Difficulty: Easy
________ goods constitute the bulk of most countries' production and marketing efforts.
A) Durable
B) Impulse
C) Physical
D) Luxury
E) Intangible
C
Page Ref: 3
Objective: 2
Difficulty: Easy
Car rental firms, hair dressers, and management consultants provide ________.
A) goods
B) experiences
C) events
D) services
E) information
D
Page Ref: 3
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
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
D
Page Ref: 3
Objective: 2
Difficulty: Moderate
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
A
Page Ref: 3
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
________ 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
C
Page Ref: 5
Objective: 3
Difficulty: Easy
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
B
Page Ref: 5
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
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
D
Page Ref: 6
Objective: 3
Difficulty: Moderate
A(n) ________ need is a need that the consumer explicitly verbalizes.
A) stated
B) affirmative
C) unsought
D) delight
E) secret
A
Page Ref: 5
Objective: 3
Difficulty: Moderate
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
B
Page Ref: 6
Objective: 3
Difficulty: 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
B
Page Ref: 6
Objective: 3
Difficulty: Easy
The 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
D
Page Ref: 6
Objective: 3
Difficulty: Moderate
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
E
Page Ref: 6
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
The 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
D
Page Ref: 7
Objective: 3
Difficulty: Easy
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
D
Page Ref: 7
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
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
E
Page Ref: 8
Objective: 4
Difficulty: Moderate
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) disintermediation
E) privatization
C
Page Ref: 8
Objective: 4
Difficulty: Easy
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) diversification
C) reduced competition
D) deregulation
E) privatization
A
Page Ref: 8
Objective: 4
Difficulty: Moderate
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
D
Page Ref: 8
Objective: 4
AACSB: Use of information technology
Difficulty: Moderate
Disintermediation 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
E
Page Ref: 8
Objective: 4
AACSB: Use of information technology
Difficulty: Moderate
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
D
Page Ref: 8
Objective: 4
AACSB: Use of information technology
Difficulty: Easy
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
C
Page Ref: 4
Objective: 4
Difficulty: Moderate
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
B
Page Ref: 9
Objective: 4
Difficulty: Moderate
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
A
Page Ref: 9
Objective: 4
Difficulty: Easy
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
B
Page Ref: 9
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
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
B
Page Ref: 9
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate

Page Ref: 9
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
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
D
Page Ref: 10
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
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
B
Page Ref: 9
Objective: 4
Difficulty: Easy
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
A
Page Ref: 10
Objective: 4
Difficulty: Moderate
What are the four broad components of holistic marketing?
A) relationship, internal, position, and performance marketing
B) integrated, internal, position, and performance marketing
C) relationship, integrated, internal, and performance marketing
D) integrated, relationship, social responsibility, and position marketing
E) relationship, social responsibility, internal, and performance marketing
C
Page Ref: 10
Objective: 4
Difficulty: Moderate
________ 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
D
Page Ref: 11
Objective: 4
Difficulty: Easy
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
C
Page Ref: 11
Objective: 4
Difficulty: Moderate
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
C
Page Ref: 11
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
Financial accountability and social responsibility marketing are elements of ________.
A) performance marketing
B) relationship marketing
C) internal marketing
D) social marketing
E) mass marketing
A
Page Ref: 12
Objective: 4
Difficulty: Moderate
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
C
Page Ref: 12
Objective: 4
AACSB: Reflective Thinking
Difficulty: Easy
48)
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
C
Page Ref: 13
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
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
E
Page Ref: 13
Objective: 4
Difficulty: Easy
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
D
Page Ref: 13
Objective: 4
AACSB: Multicultural and diversity understanding
Difficulty: Moderate


Difficulty: Moderate
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
A
Page Ref: 14
Objective: 4
Difficulty: Moderate
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
B
Page Ref: 14
Objective: 5
Difficulty: 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
D
Page Ref: 15
Objective: 5
Difficulty: Moderate
56)
Page Ref: 2
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
The U.S. economy today consists of a 70-30 services-to-goods mix.
TRUE
Page Ref: 3
Objective: 2
Difficulty: Moderate
Properties are tangible rights of ownership to either real property (real estate) or financial property (stocks and bonds).
FALSE
Page Ref: 3
Objective: 2
Difficulty: Easy
"Friends Don't Let Friends Drive Drunk," is an example of marketing information to an interested audience.
FALSE
Page Ref: 4
Objective: 2
AACSB: Reflective Thinking
Difficulty: Moderate
Shops and stores have a physical existence and as such are examples of marketspace.
FALSE
Page Ref: 4
Objective: 2
AACSB: Use of information technology
Difficulty: Easy
Wants are basic human requirements, such as food and shelter.
FALSE
Page Ref: 5
Objective: 3
Difficulty: Easy
Demands are wants for specific products backed by an ability to pay.
TRUE
Page Ref: 5
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
63)
Objective: 3
Difficulty: Easy
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.
FALSE
Page Ref: 7
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Regulation of industries has created greater competition and growth opportunities because the playing field has been leveled.
FALSE
Page Ref: 7-8
Objective: 4
AACSB: Reflective Thinking
Difficulty: Easy
Companies can facilitate and speed external communication among customers by creating online and offline "buzz" through brand advocates and user communities.
TRUE
Page Ref: 8
Objective: 4
Difficulty: Moderate
The selling concept holds that consumers will favor those products that offer the most quality, performance, or innovative features.
FALSE
Page Ref: 9
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
Relationship marketing aims to build mutually satisfying long-term relationships with key parties.
TRUE
Page Ref: 11
Objective: 4
Difficulty: Easy
One of the key themes of integrated marketing is that there are very few marketing activities that can effectively communicate and deliver value.
FALSE
Page Ref: 11
Objective: 4
AACSB: Reflective Thinking
Difficulty: Moderate
71)
Integrated marketing is the task of hiring, training, and motivating able employees who want to serve customers well.
FALSE
Page Ref: 11
Objective: 4
Difficulty: Easy
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.
TRUE
Page Ref: 12
Objective: 4
Difficulty: Moderate
Cause-related marketing involves donating a percentage of revenues to a specific cause based on the revenue occurring during the announced period of support.
TRUE
Page Ref: 13
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
Making gifts of money, goods, or time to help nonprofit organizations, groups, or individuals is known as corporate philanthropy.
TRUE
Page Ref: 13
Objective: 4
Difficulty: Easy
Marketers 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 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: 8
Objective: 4
AACSB: Use of information technology
Difficulty: Easy
80) 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: 12-13
Objective: 4
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.
B
Page Ref: 18
Objective: 1
Difficulty: Easy
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
D
Page Ref: 34
Objective: 1
AACSB: Reflective Thinking
Difficulty: Easy

4)
Page Ref: 18
Objective: 1
AACSB: Reflective Thinking
Difficulty: Easy
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
A
Page Ref: 19
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
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 ________.
A) market-sensing process
B) customer acquisition process
C) customer relationship management process
D) fulfillment management process
E) new-offering realization process
D
Page Ref: 19
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
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
A
Page Ref: 18
Objective: 1
Difficulty: Easy
8)
Page Ref: 18
Objective: 1
Difficulty: Easy
In the cycle of complete strategic planning, taking corrective action is a part of ________.
A) planning
B) implementation
C) controlling
D) organizing
E) analyzing
C
Page Ref: 21
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
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
C
Page Ref: 19
Objective: 1
Difficulty: Easy
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
C
Page Ref: 19
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
12)
Page Ref: 19
Objective: 1
AACSB: Reflective Thinking
Difficulty: Moderate
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.
A) market-sensing process
B) market research process
C) target marketing process
D) market pulse process
E) deployment process
A
Page Ref: 19
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
With respect to the core business processes, the ________ includes all the activities involved in developing, and launching high-quality products quickly and within budget.
A) market-sensing process
B) new-offering realization process
C) fulfillment management process
D) customer acquisition process
E) customer relationship management process
B
Page Ref: 19
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
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
B
Page Ref: 19
Objective: 1
AACSB: Reflective Thinking
Difficulty: Moderate

16) Page Ref: 19
Objective: 1
Difficulty: Easy
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
C
Page Ref: 19
Objective: 1
AACSB: Reflective Thinking
Difficulty: Easy
________ 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
A
Page Ref: 20
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
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
B
Page Ref: 20
Objective: 1
Difficulty: Easy
20)
Page Ref: 20
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
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
C
Page Ref: 18
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
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
A
Page Ref: 20
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
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
D
Page Ref: 20
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
24)
Page Ref: 20
Objective: 1
AACSB: Reflective Thinking
Difficulty: Moderate
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
B
Page Ref: 20
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
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
B
Page Ref: 20
Objective: 2
Difficulty: Moderate
27)
Page Ref: 20
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
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
E
Page Ref: 21
Objective: 2
Difficulty: Easy
A 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
C
Page Ref: 21
Objective: 2
AACSB: Reflective Thinking
Difficulty: Moderate
Which 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.
C
Page Ref: 21
Objective: 2
AACSB: Reflective Thinking
Difficulty: Easy

31)
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
C
Page Ref: 22
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
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
B
Page Ref: 22
Objective: 2
Difficulty: Easy
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
C
Page Ref: 22
Objective: 2
Difficulty: Easy
35)
Objective: 2
Difficulty: Moderate
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
D
Page Ref: 23
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
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
B
Page Ref: 23
Objective: 2
Difficulty: Moderate
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
D
Page Ref: 23
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
39)
Page Ref: 23
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
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
A
Page Ref: 23
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
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
B
Page Ref: 23
Objective: 2
Difficulty: Moderate
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
E
Page Ref: 23
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
43)
Page Ref: 24
Objective: 2
Difficulty: Easy
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
E
Page Ref: 27
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
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
B
Page Ref: 27
Objective: 2
AACSB: Reflective Thinking
Difficulty: Easy
46)
Page Ref: 27
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
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
C
Page Ref: 27
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
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
E
Page Ref: 27
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
49)
Page Ref: 27
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
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
E
Page Ref: 27
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
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
B
Page Ref: 27
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
52)
Page Ref: 27
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
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.
B
Page Ref: 28
Objective: 3
Difficulty: Moderate
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
C
Page Ref: 29
Objective: 3
Difficulty: Easy
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
E
Page Ref: 29
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
56)
Page Ref: 18
Objective: 1
AACSB: Reflective Thinking
Difficulty: Easy
The traditional view of marketing works best in economies with many different types of people, each with individual wants, perceptions, preferences, and buying criteria.
FALSE
Page Ref: 18
Objective: 1
Difficulty: Easy
The customer relationship management process involves all the activities related to receiving and approving orders, shipping the goods on time, and collecting payment.
FALSE
Page Ref: 19
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
The new-offering realization process involves all activities in defining target markets and prospecting for new customers.
FALSE
Page Ref: 19
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
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.
TRUE
Page Ref: 19
Objective: 1
Difficulty: Easy
Another name for a company's value delivery network is "distribution chain."
FALSE
Page Ref: 19
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Holistic marketing focuses on the integration of value exploration, value creation, and value delivery as a means to build long-term relationships with consumers.
TRUE
Page Ref: 20
Objective: 1
Difficulty: Easy

63)
Page Ref: 20
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Good 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.
FALSE
Page Ref: 21
Objective: 2
AACSB: Reflective Thinking
Difficulty: Moderate
An intensive growth strategy involving marketing current products to new markets is a market-development strategy.
TRUE
Page Ref: 23
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
A company seeking to expand the number of existing products sold to its current markets, would be using a "market-penetration strategy."
FALSE
Page Ref: 23
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
If 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.
FALSE
Page Ref: 23
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
An 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.
TRUE
Page Ref: 26
Objective: 2
Difficulty: Easy
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.
TRUE
Page Ref: 26
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
Partner relationship management is now considered as a core skill fundamental to the development and maintenance of strategic alliances.
TRUE
Page Ref: 27
Objective: 2
Difficulty: Easy
Firms directing the same strategy to the same target market constitute a strategic group.
TRUE
Page Ref: 27
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
A marketing plan should open with a situation analysis.
FALSE
Page Ref: 29
Objective: 3
Difficulty: Easy
Sales forecasts, expense forecasts, and break-even analysis are usually found in the section on financial projections in the marketing plan.
TRUE
Page Ref: 29
Objective: 3
Difficulty: Easy
The 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.
FALSE
Page Ref: 29
Objective: 3
Difficulty: Easy
76) T
Page Ref: 19
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
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: 27
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
Describe 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: 24
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
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: 25
Objective: 2
Difficulty: Moderate

Page Ref: 34
Objective: 1
Difficulty: Easy
The 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
C
Page Ref: 34
Objective: 2
Difficulty: Moderate
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
E
Page Ref: 34
Objective: 2
Difficulty: Moderate

4)
Page Ref: 34
Objective: 2
AACSB: Use of information technology
Difficulty: Moderate
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
C
Page Ref: 34
Objective: 2
AACSB: Use of information technology
Difficulty: Easy
The internal records system supplies results data, but the marketing intelligence system supplies ________ data.
A) internal
B) revenue
C) thematic
D) happenings
E) process
D
Page Ref: 34
Objective: 3
Difficulty: Easy
A ________ 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
D
Page Ref: 34
Objective: 3
Difficulty: Moderate
8)
Page Ref: 35
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
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.
B
Page Ref: 35
Objective: 3
Difficulty: Moderate
The 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
B
Page Ref: 43
Objective: 3
AACSB: Use of information technology
Difficulty: Easy
A ________ is "unpredictable, short-lived, and without social, economic, and political significance."
A) fad
B) fashion
C) trend
D) megatrend
E) style
A
Page Ref: 43
Objective: 4
Difficulty: Easy
12)
Page Ref: 43
Objective: 4
Difficulty: Easy
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.
E
Page Ref: 46
Objective: 4
Difficulty: Easy
14)
Page Ref: 47
Objective: 4
Difficulty: Moderate
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
C
Page Ref: 46
Objective: 4
Difficulty: Moderate
16)
Page Ref: 46
Objective: 4
Difficulty: Easy
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
C
Page Ref: 46
Objective: 4
Difficulty: Easy
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
A
Page Ref: 47
Objective: 4
Difficulty: Easy
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
D
Page Ref: 47
Objective: 4
AACSB: Dynamics of the global economy
Difficulty: Moderate
20)
Page Ref: 47
Objective: 4
Difficulty: Easy
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
C
Page Ref: 47
Objective: 4
Difficulty: Moderate
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
C
Page Ref: 48
Objective: 4
Difficulty: Moderate
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
B
Page Ref: 48
Objective: 4
AACSB: Reflective Thinking
Difficulty: Moderate

24)
Page Ref: 48
Objective: 4
Difficulty: Moderate
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
D
Page Ref: 48
Objective: 4
Difficulty: Moderate
Each 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
D
Page Ref: 48
Objective: 4
Difficulty: Easy
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
D
Page Ref: 49
Objective: 4
Difficulty: Easy
28)
Page Ref: 49
Objective: 4
AACSB: Analytic Skills
Difficulty: Difficult
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.
D
Page Ref: 49
Objective: 4
Difficulty: Moderate
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.
D
Page Ref: 49
Objective: 4
AACSB: Analytic Skills
Difficulty: Difficult

31)
Page Ref: 50
Objective: 4
Difficulty: Moderate
An 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
B
Page Ref: 50
Objective: 4
Difficulty: Easy
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
B
Page Ref: 40
Objective: 5
Difficulty: Easy
The ________ market is the part of the qualified available market the company decides to pursue.
A) potential
B) available
C) target
D) penetrated
E) reserve
C
Page Ref: 40
Objective: 5
Difficulty: Easy
35)
Page Ref: 40
Objective: 5
Difficulty: Easy
When 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
E
Page Ref: 40
Objective: 5
Difficulty: Easy
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
A
Page Ref: 40
Objective: 5
AACSB: Analytic Skills
Difficulty: Moderate
________ 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
C
Page Ref: 41
Objective: 5
Difficulty: Easy
39)
Page Ref: 41
Objective: 5
Difficulty: Moderate
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
C
Page Ref: 41
Objective: 5
Difficulty: Easy
Only 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
C
Page Ref: 41
Objective: 5
Difficulty: Easy
42)
A ________ is a conservative estimate of the expected volume of sales, primarily for making current purchasing, production, and cash flow decisions.
A) sales budget
B) company sales forecast
C) sales quota
D) company sales potential
E) market potential
A
Page Ref: 42
Objective: 5
Difficulty: Easy
________ is the limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment.
A) Sales budget
B) Company sales forecast
C) Sales quota
D) Company sales potential
E) Market potential
E
Page Ref: 41
Objective: 5
Difficulty: Easy
________ is the company's estimated share of market demand at alternative levels of company marketing effort in a given time period.
A) Sales budget
B) Market demand
C) Company demand
D) Company sales potential
E) Market potential
C
Page Ref: 42
Objective: 5
Difficulty: Easy
47)
A company's sales potential would be equal to market potential if ________.
A) the marketing expenditure of the company is reduced to zero
B) industry marketing expenditures approach infinity for a given marketing environment
C) the market is non expansible
D) market minimum is equal to market potential
E) the company gets 100 percent share of the market
E
Page Ref: 42
Objective: 5
Difficulty: Moderate
________ 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) Company demand
B) Market demand
C) Company sales potential
D) Sales quota
E) Total market potential
E
Page Ref: 88
Objective: 5
Difficulty: Easy
The ________ method of determining area market potential calls for identifying all the potential buyers in each market and estimating their potential purchases.
A) group-discussion
B) market-test
C) market-buildup
D) brand development index
E) multiple-factor index
C
Page Ref: 88
Objective: 5
Difficulty: Easy
51)
Page Ref: 43
Objective: 5
Difficulty: Easy
Which of the following organizations is likely to use the multiple-factor index method to estimate the market potential?
A) a firm that manufactures auto parts
B) a firm that provides facility management services to large offices
C) a company that provides Web site development services for small businesses
D) a company that manufactures diagnostic machines for hospitals
E) a firm that manufactures fashionable clothes for teenagers
E
Page Ref: 42-43
Objective: 5
AACSB: Analytic Skills
Difficulty: Moderate
Which of the following is true of the various elements of the multi-factor index method of estimating area market potentials?
A) Zip+4 code centers generally have stable boundaries and a population of about 4000.
B) The weights in the buying-power index are somewhat arbitrary.
C) Normally, the lower the BDI, the less room there is to grow the brand.
D) Census tracts are a little larger than neighborhoods.
E) This method is primarily used by business marketers.
B
Page Ref: 43
Objective: 5
Difficulty: Easy
Suppose Concrete Express, a cement manufacturing firm, finds that its sales have increased by 3 percent this year, while industry sales have increased by 5 percent. This implies that ________.
A) Concrete Express has acquired additional market share in relation to the cement industry
B) Concrete Express is losing its relative standing in the cement industry
C) other players in the industry are losing market share
D) the absolute market share of Concrete Express has declined
E) Concrete Express's position in relation to the industry has remain unchanged
B
Page Ref: 43
Objective: 5
AACSB: Analytic Skills
Difficulty: Moderate

55) Page Ref: 43
Objective: 5
Difficulty: Moderate
Few consumers actually delete cookies frequently. When customers do not delete cookies, they expect customized marketing appeals and deals.
TRUE
Page Ref: 35
Objective: 2
Difficulty: Moderate
If a company were pursuing a policy of networking externally to gather marketing intelligence, it might collect competitors' ads or look up news stories about competitors.
TRUE
Page Ref: 35
Objective: 3
Difficulty: Easy
One of the ways to find relevant online information on competitors' strengths and weaknesses might be to frequent distributor or sales agent feedback sites.
TRUE
Page Ref: 35
Objective: 3
Difficulty: Easy
A fad is more predictable and durable than a trend.
FALSE
Page Ref: 43
Objective: 3
Difficulty: Easy
Demographic developments are often unpredictable.
FALSE
Page Ref: 45-47
Objective: 4
Difficulty: Easy
There is a global trend toward an aging population.
TRUE
Page Ref: 46
Objective: 4
Difficulty: Easy
62)
Page Ref: 46
Objective: 4
Difficulty: Easy
Marketing strategies of firms should not consider the ethnic and racial diversity existing in their markets.
FALSE
Page Ref: 46
Objective: 4
Difficulty: Easy
Consumers belonging to the same ethnic group have identical tastes and preferences.
FALSE
Page Ref: 46
Objective: 4
Difficulty: Easy
The available purchasing power in an economy depends on current income, prices, savings, debt, and credit availability.
TRUE
Page Ref: 47
Objective: 4
Difficulty: Easy
Industrial economies provide limited marketing opportunities for luxurious goods.
FALSE
Page Ref: 47
Objective: 4
Difficulty: Easy
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.
TRUE
Page Ref: 48
Objective: 4
Difficulty: Easy
68)
Page Ref: 48
Objective: 4
Difficulty: Moderate
69)
Page Ref: 49
Objective: 4
Difficulty: Easy
Firms that can develop substitute materials for finite nonrenewable resources have an excellent opportunity.
TRUE
Page Ref: 49
Objective: 4
Difficulty: Easy
A growing portion of U.S. R&D expenditures goes to the development as opposed to the research side.
TRUE
Page Ref: 49
Objective: 4
Difficulty: Easy
Environmental laws imposed by the government may at times create new business opportunities.
TRUE
Page Ref: 49
Objective: 4
Difficulty: Easy
In order to estimate future demand, companies commonly prepare a company sales forecast first, followed by an industry forecast, and finally a macroeconomic forecast.
FALSE
Page Ref: 43
Objective: 5
Difficulty: Moderate
Forecasting is the art of anticipating what buyers are likely to do under a given set of conditions.
TRUE
Page Ref: 43
Objective: 5
Difficulty: Easy
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.
TRUE
Page Ref: 44
Objective: 5
Difficulty: Moderate
76)
Objective: 3
Difficulty: Moderate
What are the different income-distribution patterns? How does income distribution in the economies affect the marketing decision of the firms?
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.
The market would be very small in countries with type 1 or 2 income patterns and will be considerably large in the countries with income patterns 3 and 4. Countries which have a marked inequality in income distribution the companies tend to produce goods which are consumed by the mass as well as produce certain luxurious goods to cater to the richer section.
Page Ref: 47
Objective: 4
Difficulty: Moderate
Discuss the impact of tougher environmental regulations on businesses, citing examples whenever possible. Also, point out opportunities, if any, presented by these regulations.
Environmental regulations adversely affect certain industries. They increase the cost of production for a range of industries. For instance, steel manufacturing units and firms which generate electricity are required to install pollution control equipments. Automobile companies are required to develop and use cleaner technology in their vehicles. However, businesses can also achieve significant savings in their energy and gas bills by moving to environmentally friendly ways to heat or cool their offices and run their manufacturing facilities. A shift to paper-less communication can cut costs and pollution. Plus, new business opportunities are opening up in there "green" sectors as is evident in the companies that manufacture and sell emission-control equipment and sell services to help companies adopt environmentally-friendly practices.
Page Ref: 48-49
Objective: 4
Difficulty: Moderate
79)
Page Ref: 49
Objective: 4
Difficulty: Moderate
How does the marketing environment determine the position of the market demand function?
During economic prosperity the market demand function shifts up as every dollar spent in stimulating demand leads to a greater market demand. Whereas during recession the market demand function shifts downward as an equal increase in marketing expenditure leads to a smaller increase in market demand.
Page Ref: 41
Objective: 5
In the modern customer-oriented organizational chart, which of the following is considered to be at the top of the organizational pyramid?
A) sales
B) top management
C) front-line people
D) customers
E) middle management
D
Page Ref: 54
Objective: 1
Difficulty: Easy
________ is the difference between the prospective customer's evaluation of all the benefits and all the costs of an offering and the perceived alternatives.
A) Perceived usefulness
B) Failure avoidance rate
C) Total customer benefit
D) Customer-perceived value
E) Competitors' market share rate
D
Page Ref: 54
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
When a consumer considers a product or service, he or she will choose whichever product or service delivers the highest ________.
A) customer-perceived value
B) customer-perceived cost
C) customer profitability analysis
D) customer equity
E) customer lifetime value
A
Page Ref: 54
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
5)
Page Ref: 55
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
The bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering is called the ________.
A) activity-based cost
B) customer profitability analysis
C) total customer cost
D) product life-cycle cost
E) direct product profitability
C
Page Ref: 55
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Which of the following is true for customer-perceived value?
A) It is the perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a product.
B) It is the difference between the prospective customer's evaluation of all the benefits and all the costs of an offering and the perceived alternatives.
C) It is the perceived bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering.
D) It is the net present value of the stream of future profits expected over the customer's lifetime purchases.
E) It is the process of investigating the hierarchy of attributes consumers examine in choosing a brand if they use phased decision strategies.
B
Page Ref: 54-55
Objective: 1
Difficulty: Easy
8)
Page Ref: 55
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
________ can be defined as a deeply held commitment to rebuy or repatronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.
A) Value proposition
B) Loyalty
C) Satisfaction
D) Respect
E) Customer value
B
Page Ref: 55
Objective: 1
Difficulty: Easy
TBS Bikes has recently introduced a series of bikes called Surami. The core positioning of TBS Bikes is "speed." Surami is a five-gear bike and apart from speed, the company promises to include other features such as safety, good performance, and pollution control features. This describes the ________ of the bike.
A) total customer cost
B) customer-perceived value
C) value-delivery system
D) value proposition
E) total customer benefit
D
Page Ref: 55
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
11)
Page Ref: 55
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Sammy's is a fast food chain that offers burgers, sandwiches, and shakes. It focuses its marketing efforts on all the experiences the customers will have on the way to obtaining their food order and eating it. Hence, Sammy's is focusing its marketing efforts on its ________.
A) horizontal marketing system
B) cost versus benefit system
C) consumption system
D) marketing channel system
E) value delivery system
E
Page Ref: 55
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
Total customer satisfaction is measured based on the relationship of ________.
A) expected value and total customer benefit
B) perceived performance and expectation
C) advertised outcomes and real outcomes
D) past experience and present experience
E) customer attitude and salesperson's attitude
B
Page Ref: 56
Objective: 1
AACSB: Reflective Thinking
Difficulty: Easy
Which of the following is true for customer satisfaction?
A) Satisfaction is a deeply held commitment to rebuy or repatronize a preferred product despite situational influences.
B) Consumers often form more favorable perceptions of a product with a brand that is new.
C) The ultimate goal of a customer-centered firm is to create high customer satisfaction.
D) Only increased customer satisfaction can help a company increase its profits.
E) Greater customer satisfaction has also been linked to higher returns and lower risk in the stock market.
E
Page Ref: 56
Objective: 1
Difficulty: Easy
15)
Page Ref: 57
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
When two brands of the same basic product deliver their respective promised quality, they are delivering ________.
A) performance quality
B) conformance quality
C) unique quality
D) accuracy quality
E) customer support
B
Page Ref: 57
Objective: 1
Difficulty: Easy
Rade and Talion are competitors in the business of manufacturing wrist watches. While Rade promises to deliver design and quality to its customers, Talion promises to deliver durability and cost effectiveness. When both of these companies deliver their respective promised qualities, they are delivering ________.
A) performance quality
B) customer support
C) unique quality
D) accuracy quality
E) conformance quality
E
Page Ref: 57
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
The 80-20 rule reflects the idea that ________.
A) 20% of the company's profits are generated by the top 80% of customers
B) the top 20% of customers are highly satisfied and 80% of customers will recommend the company to a friend
C) 20% of customers are unprofitable, and 80% make up a company's profits
D) the top 20% of customers often generate 80% of the company's profits
E) any new product will be accepted by 20% of the customers immediately, but 80% of the customers will be up for grabs throughout the product's life cycle
D
Page Ref: 57
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy

19)
Page Ref: 58
Objective: 2
Difficulty: Easy
A ________ is a person, household, or company that over time yields a revenue stream that exceeds by an acceptable amount the company's cost stream of attracting, selling, and servicing that customer.
A) prospector
B) profitable customer
C) market challenger
D) market nicher
E) pioneer customer
B
Page Ref: 58
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
Customer profitability analysis (CPA) is best conducted with the tools of an accounting technique called ________.
A) input-output analysis
B) factor analysis
C) revenue-based costing
D) activity-based costing
E) future date costing
D
Page Ref: 59
Objective: 2
AACSB: Reflective Thinking
Difficulty: Easy
Which of the following is true for activity-based costing (ABC)?
A) ABC considers the real costs associated with each product.
B) With ABC, the company can estimate all costs coming from the customer, less revenue.
C) The tools of ABC can be used to conduct customer profitability analysis.
D) It identifies the costs of products and services based on the revenue they generate.
E) ABC allocates indirect costs in proportion to direct costs.
C
Page Ref: 59
Objective: 2
Difficulty: Easy
23)
Page Ref: 59
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
The aim of customer relationship management is to produce high customer ________.
A) integrity
B) loyalty
C) innovation
D) liability
E) equity
B
Page Ref: 60
Objective: 3
Difficulty: Easy
________ is the process of carefully managing detailed information about individual customers and all customer "touch points" to maximize loyalty.
A) Customer relationship management
B) Customer lifetime value
C) Customer profitability analysis
D) Customer satisfaction analysis
E) Customer-value delivery
A
Page Ref: 60
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
26)
Page Ref: 60
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
27) A
Page Ref: 60
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Rachel and Josh are on vacation in Hawaii. When they arrived at the hotel, they were offered chilled juice. Their check-in formalities were handled by the staff. When they entered their room, they saw that chocolates had been placed on the pillows and a flower arrangement on the table. The hotel's actions are an example of ________.
A) customer lifetime value
B) customer perceived value
C) customer value analysis
D) customer profitability analysis
E) a customer touch point
E
Page Ref: 60
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Another term for high customer ________ is customer churn.
A) retention
B) defection
C) value
D) perception
E) belief
B
Page Ref: 61
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
Customer relationship management enables companies to provide excellent real-time customer service through the effective use of _________.
A) reports from mystery shoppers
B) survey data from customers who have defected
C) market research
D) individual account informtion
E) demographic trend data
D
Page Ref: 60
Objective: 3
Difficulty: Easy
31)
Page Ref: 61
Objective: 3
Difficulty: Easy
Jack has shopped at VeggiesNmore. He was happy with the experience and thought that this could be an alternative to GreenFoods. However, he is also keen to try out other stores in the neighborhood. He is in the ________ stage of the marketing funnel as far as shopping at VeggiesNmore is concerned.
A) aware
B) open to trial
C) most often used
D) nonrejecter
E) regular user
D
Page Ref: 61
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Amy is in the "aware" stage of the marketing funnel when she says ________.
A) she can try shopping at VeggiesNmore while simultaneously exploring other stores in the neighborhood
B) she was informed about VeggiesNmore by her colleague at work
C) she regularly shops from VeggiesNmore
D) she shops from VeggiesNmore as far as the store is easily accessible
E) she was happy with the experience of shopping at VeggiesNmore
B
Page Ref: 61
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
LifeTime Insurance screens its customers and tries to get unprofitable customers to buy services from competitors. This is an example of ________.
A) trying to increase the retention rate for low-profit customers
B) terminating the relationship with low-profit customers
C) enhancing the growth potential of each customer through up-selling
D) increasing the longevity of the customer relationship
E) reducing the rate of customer defection
B
Page Ref: 61
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Many banks and phone companies now charge fees for once-free services to ensure minimum customer revenue levels. This helps the banks to ________.
A) reduce the rate of customer defection
B) make low-profit customers more profitable
C) enhance the growth potential for each customer through cross-selling
D) increase the longevity of the customer relationship
E) focus disproportionate effort on high-value customers
B
Page Ref: 61
Objective: 3
AACSB: Reflective Thinking
Difficulty: Easy
37)
Page Ref: 61
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Which of the following is an example of enhancing the growth potential of each customer through cross-selling?
A) In addition to bicycles, 2Wheels stocks biking gear such as helmets, bottles, jackets and other accessories.
B) 2Wheels has a club for its regular customers, organizing cycling events and parties for them.
C) Though 2Wheels previously offered free delivery, it now charges for deliveries made outside the city.
D) 2Wheels allows existing customers to upgrade to a newer model at less than the sticker price by trading in their older model.
E) 2Wheels encourages customers to send in their suggestions for product improvement.
A
Page Ref: 61
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Companies provide rewards to customers who buy often and in substantial amounts. These reward schemes are referred to as ________.
A) benefit programs
B) frequency programs
C) satisfaction programs
D) profitability programs
E) quality programs
B
Page Ref: 62
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
40)Page Ref: 62
Objective: 3
AACSB: Reflective Thinking
Difficulty: Easy
Club membership programs that are open to everyone who purchases a product or service ________.
A) are more powerful long-term loyalty builders than limited-membership clubs.
B) will not help a company attract customers from competitors
C) prevent those with only a fleeting interest in a company's products from joining
D) are useful for building a database of customers but are not very good as long-term loyalty builders
E) are useless unless there are fees and membership conditions
D
Page Ref: 62
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
Southwest Airlines offers a Rapid Rewards program that allows customers to count flights they have taken toward free future flights. This is an example of a(n) ________.
A) cross-selling program
B) value delivery system
C) club membership program
D) activity-based costing program
E) up-selling program
C
Page Ref: 62
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
A ________ is an organized collection of comprehensive information about individual customers or prospects that is current, accessible, and actionable for lead generation, lead qualification, sale of a product or service, or maintenance of customer relationships.
A) customer database
B) customer mailing list
C) customer-performance scorecard
D) customer profitability analysis
E) customer-value hierarchy
A
Page Ref: 62
Objective: 4
AACSB: Analytic Skills
Difficulty: Easy

44)
Page Ref: 62
Objective: 4
AACSB: Analytic Skills
Difficulty: Easy
Using the information in his company's ________ lets a telemarketer respond to customer inquiries more effectively because he or she can see a total picture of the customer relationship.
A) data warehouse
B) call back list
C) call rejection list
D) bibliographic database
E) customer-value hierarchy
A
Page Ref: 63
Objective: 4
Difficulty: Easy
Through ________, marketing statisticians can extract useful information about individuals, trends, and segments from the mass of data.
A) data governance
B) data modeling
C) data mining
D) data maintenance
E) data marketing
C
Page Ref: 63
Objective: 4
AACSB: Analytic Skills
Difficulty: Easy
Susan Lefferts' company advertises widely. Ms. Lefferts uses business reply cards attached to her company's magazine ads to build her company's database. In which of the following ways would Ms. Lefferts most likely use the database?
A) to deepen customer loyalty
B) to reactivate customer purchases
C) to avoid serious customer mistakes
D) to determine if up-selling is appropriate
E) to identify prospects
E
Page Ref: 63
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
48) Page Ref: 63
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
The skillful use of ________ has made catalog house Fingerhut one of the nation's largest direct-mail marketers.
A) everyday low prices
B) expanded home delivery options
C) database marketing
D) under-the-line promotions
E) retailer alliances
C
Page Ref: 144
Objective: 4
AACSB: Analytic Skills
Difficulty: Easy
Which of the following is true for customer relationship marketing?
A) Competitors can often hack into CRM systems.
B) Building and maintaining a customer database requires a large investment.
C) It is very difficult to find and train database employees.
D) Long-term results of such systems are still unproven.
E) Focusing too much on databases separates a company from its customers.
B
Page Ref: 63
Objective: 4
AACSB: Reflective Thinking
Difficulty: Easy
In which of the following cases is building a database worthwhile for the company?
A) Clare's creates personalized sculptures for special occasions.
B) Sales of Clarity soap have fallen over the past few months in all regions.
C) 2Wheels sells its most profitable products to repeat customers.
D) Uncle Jim's sells its range of snacks in stores throughout the country.
E) Ready-to-wear clothes brand Zeep targets the teen and tween market throughout the U.S.
C
Page Ref: 63
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
52)
Page Ref: 63
Objective: 4
Difficulty: Easy
Which of the following is most likely to use database marketing?
A) an airline
B) a candy bar manufacturer
C) a fast-food chain
D) a toothpaste manufacturer
E) a hair stylist
A
Page Ref: 63
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
Which of the following statements demonstrates behavioral loyalty towards a brand?
A) 2Wheels has very customer-friendly return policies for its products.
B) I always buy 2Wheels products when I'm looking for bike accessories.
C) Most of my friends agree that 2Wheels is the best place for durable biking gear.
D) 2Wheels has the friendliest customer service people I've ever met.
E) I think that 2Wheels products are the highest-quality products in their price range.
B
Page Ref: 63
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
Customer-perceived value is based on the difference between benefits the customer gets and
costs he or she assumes for different choices.
TRUE
Page Ref: 54
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Total customer cost consists of only the non-monetary costs in evaluating, obtaining, using, and disposing of the given market offering.
FALSE
Page Ref: 55
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
57)
Page Ref: 54
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
The value proposition is stated in the price of a product and readily recognized by the average consumer.
FALSE
Page Ref: 55
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
The value delivery system includes all the experiences the customer will have on the way to obtaining and using the offering.
TRUE
Page Ref: 55
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
The value proposition is also known as the core positioning of the offering.
FALSE
Page Ref: 55
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Loyalty is a person's feelings of pleasure or disappointment that result from comparing a product's perceived performance to expectations.
FALSE
Page Ref: 55
Objective: 1
AACSB: Reflective Thinking
Difficulty: Easy
Customer satisfaction is the only way by which a firm can increase its profitability.
FALSE
Page Ref: 55
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Consumers' expectations result exclusively from past buying experiences.
FALSE
Page Ref: 56
Objective: 1
Difficulty: Easy
Two products with very different performance qualities can have the same conformance quality if both products deliver their respective promised quality.
TRUE
Page Ref: 57
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
A profitable customer is a person, household, or company that over time yields a revenue stream that exceeds by an acceptable amount the company's cost stream of attracting, selling, and servicing the customer.
TRUE
Page Ref: 58
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
A customer's profitability is judged on the basis of the lifetime stream of revenue and cost, not the profit from a particular transaction.
TRUE
Page Ref: 58
Objective: 2
AACSB: Reflective Thinking
Difficulty: Easy
Unprofitable customers who defect to a competitor should be encouraged to do so.
TRUE
Page Ref: 59
Objective: 2
AACSB: Reflective Thinking
Difficulty: Easy
Activity-based costing tries to identify the real costs associated with serving each customer.
TRUE
Page Ref: 59
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
Activity-based costing does not consider indirect, variable and overhead costs.
FALSE
Page Ref: 59
Objective: 2
AACSB: Reflective Thinking
Difficulty: Easy
The aim of customer relationship management is to keep the costs of meeting and tracking consumers as low as possible.
FALSE
Page Ref: 60
Objective: 3
AACSB: Reflective Thinking
Difficulty: Easy
A customer touch point is the time when the customer makes a purchase.
FALSE
Page Ref: 60
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
Customer churn is how rapidly a store can move customers through its checkout facility or process.
FALSE
Page Ref: 61
Objective: 3
Difficulty: Easy
Explain customer-perceived value.
Customer-perceived value (CPV) is the difference between the prospective customer's evaluation of all the benefits and all the costs of an offering and the perceived alternatives. Total customer benefit is the perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a given market offering because of the product, service, people, and image. Total customer cost is the perceived bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering, including monetary, time, energy, and psychological costs.
Customer-perceived value is thus based on the difference between benefits the customer gets and costs he or she assumes for different choices. The marketer can increase the value of the customer offering by raising economic, functional, or emotional benefits and/or reducing one or more costs.
Page Ref: 54
Objective: 1
Difficulty: Easy
76) Cell phone manufacturer LZT has to choose between two options for sourcing parts: Japan-based Keiko Inc. and U.S.-based Global Tech. How can Keiko reduce the total customer cost for LZT?
Keiko can reduce the price or cost of ownership and maintenance, simplify the ordering and delivery process, or absorb some buyer risk by offering a warranty.
Page Ref: 55
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
Create a value proposition for cell phone manufacturer LZT.
Student answers may vary.
LZT's value proposition could include good quality, reliable battery life, excellent design and style.
Page Ref: 55
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
Give an example of two products that have different performance quality but are of equal conformance quality.
Student answers may vary.
Performance quality is the quality of the product's attributes. Conformance quality is the extent to which the product delivers the performance quality promised to consumers. A Sony Ericsson mobile cell phone provides higher performance quality than a Nokia. The Sony Ericsson mobile has more features and lasts longer than a Nokia mobile cell phone. Yet both would deliver the same conformance quality if both delivered their respective promised quality.
Page Ref: 57
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
Give an example of how a hotel can generate customer loyalty at a "customer touch point."
Student answers may vary.
An example of customer touch point would be when a hotel offers its guests something to drink upon arrival before they check in, or when the staff places chocolates on pillows and face towels twisted into the shape of animals on beds.
Page Ref: 60
Objective: 3
AACSB: Analytic Skills
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
A
Page Ref: 68
Objective: 1
AACSB: Multicultural and diversity understanding
Difficulty: Moderate
The relatively homogeneous and enduring divisions in a society, which are hierarchically ordered and whose members share similar values, interests, and behavior constitute ________.
A) a culture
B) a subculture
C) a social class
D) a family
E) a group
C
Page Ref: 68
Objective: 1
Difficulty: Easy
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) subculture
B) family
C) social class
D) reference groups
E) social networks
D
Page Ref: 68
Objective: 1
Difficulty: Easy
5)
Page Ref: 68
Objective: 1
Difficulty: Easy
Joe is a computer service technician. People in his neighborhood usually depend on his suggestions for purchasing any computer accessory or hardware, as they believe that he has access to far more information on computer technology than the average consumer. The neighbors are also aware that Joe has the required knowledge and background for understanding the technical properties of the products. Within this context, Joe can be called a(n) ________.
A) transactional leader
B) opinion leader
C) role model
D) gate-keeper
E) international marketer
B
Page Ref: 69
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
For a high-school student, Tim is highly concerned about environmental issues. He is a strong supporter of the garbage recycling and afforestation campaigns taken up by the environmental activists in his neighborhood. He wants to become a full time volunteer for their upcoming wildlife protection program and has even saved money to contribute to the cause. This group of environmental activists can be categorized under which of the following reference groups?
A) primary group
B) secondary group
C) aspirational group
D) dissociative group
E) cognitive group
C
Page Ref: 68
Social classes differ in media preferences, with upper-class consumers often preferring ________ and lower-class consumers often preferring television.
A) movies
B) radio
C) video or computer games
D) magazines and books
E) music downloads
D
Page Ref: 69
Objective: 1
Difficulty: Easy
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) procreation
C) immediacy
D) intimacy
E) reference
A
Page Ref: 69
Objective: 1
Difficulty: Moderate
The family in a buyers life consisting of parents and siblings is the ________.
A) family of procreation
B) family of influence
C) family of efficiency
D) family of orientation
E) purchasing family
D
Page Ref: 69
Objective: 1
Identify an economic circumstance that can greatly affect any product or brand choice.
A) retirement
B) values
C) lifestyle
D) borrowing power
E) relocation
D
Page Ref: 69-70
Objective: 1
Difficulty: Easy
________ refers to a set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli.
A) Image
B) Personality
C) Psychological transformation
D) Lifestyle
E) Acculturation
B
Page Ref: 70
Objective: 1
Difficulty: Easy
The Marlboro Man was depicted in the advertisements of Marlboro cigarettes as a rugged outdoor, tough cowboy type. This was done to establish what is called ________.
A) trademarking
B) a brand name
C) a brand personality
D) co-branding
E) a brand reference
C
Page Ref: 70
Consumers often choose and use brands that have a brand personality consistent with how they think others view them, also known as the ________.
A) actual self-concept
B) others' self-concept
C) ideal self-concept
D) dual self-concept
E) perceptual self-concept
B
Page Ref: 70
Objective: 1
Difficulty: Moderate
Consumers who are highly sensitive to how others see them and who choose brands whose personalities fit the consumption situation are called ________.
A) change agents
B) self motivators
C) self monitors
D) self adapters
E) opinion leaders
C
Page Ref: 70
Objective: 1
Difficulty: Moderate
Ford motors, uses the ad caption "Magnify the Adventure" to promote its latest SUV, the Ford Endeavour. The ad features the car traveling through an uneven, rocky terrain. Within the context of Jennifer Aaker's brand personality analysis, Ford Endeavour is most likely to be strong on which of the following traits?
A) sincerity
B) intelligence
C) imagination
D) sophistication
E) ruggedness
E
Page Ref: 70
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
Consumers who worry about the environment and want products to be produced in a sustainable way have been named ________.
A) "Green"
B) "Tree Huggers"
C) "LOHAS"
D) "Socialists"
E) "Mamas"
C
Page Ref: 70
Objective: 1
Difficulty: Easy
IKEA has achieved global recognition by offering consumers leading-edge Scandinavian furniture at affordable prices. IKEA is delivering value to consumers who are ________.
A) money constrained
B) time constrained
C) brand constrained
D) value constrained
E) self-concept constrained
A
Page Ref: 70
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
Marketers who target consumers on the basis of their ________ believe that they can influence purchase behavior by appealing to people's inner selves.
A) time famine
B) sophistication
C) money constrain
D) social class
E) core values
E
Page Ref: 70-71
________ 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 Maslow
B) Frederick Herzberg
C) Sigmund Freud
D) John Cacioppo
E) Karl Marx
C
Page Ref: 72
Objective: 2
Difficulty: Easy
Which of the following techniques was suggested by Freud to trace a person's motivations from the stated instrumental ones to the more terminal ones?
A) laddering
B) word association
C) role playing
D) casting
E) selective attention
A
Page Ref: 79
Objective: 2
Difficulty: Easy
Which of the following theories developed by Frederick Herzberg distinguishes dissatisfiers from satisfiers?
A) trait-role theory
B) psychological constraint theory
C) probability theory
D) leadership model
E) two-factor theory
E
Page Ref: 72
________ can work to the advantage of marketers with strong brands when consumers make neutral or ambiguous brand information more positive.
A) Selective attention
B) Selective distortion
C) Selective retention
D) Selective choice
E) Selective embellishment
B
Page Ref: 73
Objective: 2
Difficulty: Moderate
________ is the tendency to interpret information in a way that will fit our preconceptions.
A) Selective retention
B) Cognitive dissonance
C) Selective distortion
D) Subliminal perception
E) Selective embellishment
C
Page Ref: 73
Objective: 2
Difficulty: Moderate
________ teaches marketers that they can build demand for a product by associating it with strong drives, using motivating cues, and providing positive reinforcement.
A) Demand theory
B) Learning theory
C) Economic theory
D) Psychological theory
E) Demographic theory
B
Page Ref: 73
As Rita scans the yellow pages section of her phone book looking for a florist, she sees several other 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 initial search were most likely stored in which of the following types of memory?
A) Short-term memory
B) Long-term memory
C) Middle memory
D) Subconscious memory
E) Subliminal memory
A
Page Ref: 73-74
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
The associative network memory model views long-term memory as ________.
A) a subliminal perception
B) the interplay of drives
C) a strong internal stimulus impelling action
D) a temporary and limited repository of information
E) a set of nodes and links
E
Page Ref: 74
Objective: 2
Difficulty: Moderate
________ refers to the process in which information gets out of memory.
A) Memory encoding
B) Memory decoding
C) Memory classification
D) Memory retrieval
E) Memorization
A
Page Ref: 74
Cognitive psychologists believe that memory is ________, so that once information becomes stored in memory, its strength of association decays very slowly.
A) highly perceptual
B) somewhat collective
C) highly communicative
D) often reflective
E) extremely durable
E
Page Ref: 75
Objective: 2
Difficulty: Moderate
38)
Page Ref: 75-76
Objective: 3
Difficulty: Moderate
The buying process starts when the buyer recognizes a(n) ________.
A) product
B) advertisement for the product
C) salesperson from a previous visit
D) problem or need
E) internal cue
D
Page Ref: 75
Objective: 3
Difficulty: Easy
Brands that meet consumers' initial buying criteria are called the ________.
A) total set
B) awareness set
C) consideration set
D) choice set
E) decision set
C
Page Ref: 76
Objective: 3
Difficulty: Moderate
Maria considers buying a car for herself, after she notices the advantages derived by her best friend from his new car. Which of the following forms of stimulus has activated Maria's problem recognition process?
A) external stimuli
B) internal stimuli
C) peer stimuli
D) secondary stimuli
E) marketing induced stimuli
A
Page Ref: 75
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
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 set
B) awareness set
C) consideration set
D) choice set
E) decision set
D
Page Ref: 76
Objective: 3
Difficulty: Moderate
44)
Page Ref: 77
Objective: 3
Difficulty: Easy
A(n) ________ puts people into a frame of mind, such as, liking or disliking an object, moving toward or away from it.
A) attitude
B) belief
C) feeling
D) position
E) stance
A
Page Ref: 77
Objective: 3
Difficulty: Moderate
The expectancy-value model of attitude formation posits that consumers evaluate products and services by combining their ________.
A) needs
B) wants
C) desires
D) brand beliefs
E) consuming attitudes
D
Page Ref: 77
Objective: 3
Difficulty: Moderate
________ are rules of thumb or mental shortcuts in the decision process.
A) Attitudes
B) Beliefs
C) Heuristics
D) Discriminations
E) Biases
C
Page Ref: 80
Objective: 3
Difficulty: Moderate
48)
Page Ref: 77
Objective: 3
Difficulty: Moderate
49)
Page Ref: 77
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Ford believes its cars to be of higher quality than General Motor's but thinks that consumers wrongly believe the opposite. Ford might employ a(n) ________ strategy to change buyers' perceptions of its competition.
A) real repositioning
B) competitive depositioning
C) psychological repositioning
D) biased repositioning
E) attribute repositioning
B
Page Ref: 77
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
51)
Page Ref: 77
Objective: 3
Difficulty: Moderate
A key driver of sales frequency is the product ________ rate.
A) consumption
B) disposal
C) refusal
D) utility
E) option
A
Page Ref: 79
Objective: 3
Difficulty: Easy
A consumer tells another consumer, "Every time I eat at Big Bill's Steakhouse, I get poor service." Whether this is true or not, it is the consumer's perception. This is an example of consumers basing future predictions on the quickness and ease with which a particular example of an outcome comes to mind. This scenario would be an illustration of the ________ heuristic.
A) discrimination
B) differentiation
C) availability
D) screening
E) representativeness
C
Page Ref: 80
Objective: 4
AACSB: Analytic Skills
Difficulty: Difficult
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) Anchoring
D) Adjustment
E) Semantic
B
Page Ref: 80
Social class is the fundamental determinant of a person's wants and behavior.
FALSE
Page Ref: 68
Objective: 1
Difficulty: Easy
An example of a subculture would be a person's geographic region.
TRUE
Page Ref: 68
Objective: 1
Difficulty: Easy
Groups that have an indirect influence on a person's attitude or behavior can be a part of his/her reference groups.
TRUE
Page Ref: 68
Objective: 1
Difficulty: Moderate
Members within a social class tend to behave more alike compared to members from two different social classes.
TRUE
Page Ref: 68
Objective: 1
Difficulty: Easy
Secondary groups require continuous interaction to be effective and meaningful.
FALSE
Page Ref: 68
Objective: 1
Difficulty: Moderate
When Mark went to college he had a burning desire to join a social fraternity; for Mark, the fraternity would be a dissociative group.
FALSE
Page Ref: 68
Objective: 1
Marketers need to be aware of the status-symbol potential of brands because people usually choose products which reflect their role and their actual or desired status in a society.
TRUE
Page Ref: 69
Objective: 1
Difficulty: Easy
For an employee at an organization, annual appraisal can be considered as a critical life event that impacts his/her consumption behavior.
FALSE
Page Ref: 69
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Whereas economic circumstances can have a profound effect on consumption, occupation does not impact how people spend their money and what they buy.
FALSE
Page Ref: 69-70
Objective: 1
Difficulty: Easy
According to the research conducted by Jennifer Aaker, one of the five traits of a product's brand personality is its physical structure.
FALSE
Page Ref: 70
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
Brand personality is the specific mix of human traits that may be attributed to a particular brand.
TRUE
Page Ref: 70
Objective: 1
Difficulty: Easy
The five brand personality traits identified by Jennifer Aaker are consistently observed regardless of nationality or culture.
FALSE
Page Ref: 70
Selective attention is the tendency to interpret information in a way that will fit our preconceptions.
FALSE
Page Ref: 73
Objective: 2
Difficulty: Moderate
Brand associations consist of all brand-related thoughts, feelings, perceptions, images, experiences, beliefs, attitudes, and so on that become linked to the brand node.
TRUE
Page Ref: 74
Objective: 2
Difficulty: Easy
Every consumer has to pass through all five stages of the buying process when in a buying situation.
FALSE
Page Ref: 75
Objective: 3
Difficulty: Moderate
The expectancy-value model of attitude formation posits that consumers evaluate products and services by combining their brand beliefs according to importance.
TRUE
Page Ref: 77
Objective: 3
Difficulty: Moderate
Anchoring heuristic comes in to play when consumers base their predictions on the quickness and ease with which a particular example of an outcome comes to mind.
FALSE
Page Ref: 80
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
The prospect theory maintains that consumers frame decision alternatives in terms of gains and losses according to a value function.
TRUE
Page Ref: 80
Objective: 4
Difficulty: Moderate
76) Explain the differences between culture, subculture, and social class.
Answer: Culture is the fundamental determinant of a person's wants and behavior. Subcultures provide more specific identification and socialization of their members. Subcultures include nationalities, religions, racial groups, and geographic regions. Social class is a relatively homogeneous and enduring division in a society, that are hierarchically ordered and whose members share similar values, interests, and behaviors. pg68
People can emerge with different perceptions of the same object because of three perceptual processes. List and briefly characterize these processes.
The three processes are selective attention, selective distortion, and selective retention. Selective attention occurs because a person cannot possibly attend to all the stimuli that he or she is exposed to during an average day. Some will be screened out. Selective distortion is the tendency to interpret information in a way that will fit our perceptions. Selective retention occurs because people will fail to register much information to which they are exposed in memory, but will tend to retain information that supports their attitudes and beliefs.
Page Ref: 73
What are the five stages of the consumer buying process?
The five stages are problem recognition, information search, evaluation of alternatives, purchase decision, and postpurchase behavior.
Page Ref: 75-80
Objective: 3
Difficulty: Moderate
Through market research a consumer gathers information about the competing brands of a product and their features. The consumer then advances through four sets with respect to brands before a decision is reached. What are those four sets?
The four sets are: (1) the total set, (2) the awareness set, (3) the consideration set, and (4) the choice set.
Page Ref: 76
Objective: 3
Difficulty: Moderate
Heuristics can come into play when consumers forecast the likelihood of future outcomes or events. When would a consumer use an anchoring and adjustment heuristic?
Consumers will use this heuristic when the consumer arrives at an initial judgment and then makes adjustments of that first impression based on additional information.
Page Ref: 80
Objective: 4
Difficulty: Moderate1) Which of the following statements about market segmentation is true?
A) It involves changing the identity of a product, relative to the identity of competing products, in the collective minds of the target market.
B) It is a process of evaluating each segment's attractiveness and selecting one or more to enter.
C) It is a process of creating an image or identity of the product in the minds of the target market.
D) It is a process of identifying and profiling distinct groups of buyers who differ in their needs and wants.
E) It is the quality of how marketers go to market with the goal of optimizing their spending to achieve good results.
Answer: D
Establishing and communicating the distinctive benefit(s) of the company's market offering, for each target segment is called ________.
A) market research
B) market positioning
C) marketing effectiveness
D) market segmentation
E) market dominance
B
Page Ref: 107
Objective: 8
Difficulty: Easy
The process of selecting one or more market segments to enter is called ________.
A) market targeting
B) market dominance
C) market positioning
D) market segmentation
E) market research
A
Page Ref: 105-106
Objective: 8
Difficulty: Easy
Hilton Hotels customizes rooms and lobbies according to location. Northeastern hotels are sleeker and more cosmopolitan. Southwestern hotels are more rustic. This is an example of ________ segmentation.
A) demographic
B) behavioral
C) psychographic
D) geographic
E) cultural
D
Page Ref: 100
Objective: 8
AACSB: Analytic Skills
Difficulty: Moderate
When Nike attempts to get close to its customers at the local level by sponsoring local school teams and providing shoes, equipment, and clothing to many of them, Nike is using which of the following marketing formats?
A) differentiated marketing
B) affiliate marketing
C) guerrilla marketing
D) affinity marketing
E) grassroots marketing
E
Page Ref: 100
Objective: 8
AACSB: Analytic Skills
Difficulty: Moderate
Regardless of the type of segmentation scheme used, the key is adjusting the marketing program to recognize ________.
A) the level of disposable income earned by the target group
B) customer differences
C) the cost-benefit relationship of narrowing the target market
D) customer complaints
E) saturated markets
B
Page Ref: 100
If a marketing manager segments the market into culture-oriented, sports-oriented, or outdoor-oriented groups, he or she is segmenting on the basis of ________.
A) loyalty status
B) behavioral occasions
C) user status
D) psychographic lifestyle
E) readiness stage
D
Page Ref: 101
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy
Robert is the owner of an automobile manufacturing company. He calls for a board meeting and tells his directors that he wants to build a car that lets the users experience power and exhilaration. He tells them that the car must allow his users to soar from 0-60 mph in about 4 seconds. He also adds in that the price of the car must be affordable enough for any man making a good salary. In accordance with the given scenario, Robert is trying to segment the market on the basis of ________.
A) occupation
B) family size
C) benefits
D) nationality
E) user status
C
Page Ref: 100-101
Pampers divides its market demographically on the basis of ________ into prenatal, new baby, baby, toddler, and preschooler.
A) life stage
B) gender
C) age
D) income
E) social class
C
Page Ref: 101
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy
Newlyweds in the United States buy more in the first six months than an established household does in five years. Newlyweds are an example of a(n) ________ segment.
A) life stage
B) age
C) behavior
D) user status
E) income
A
Page Ref: 101-102
Objective: 8
AACSB: Analytic Skills
Difficulty: Moderate
Jose and Erika have just divorced. Which of the following demographic segmentation subsegment formats might be used by marketers to reach Jose or Erika?
A) life stage
B) benefits
C) age segment
D) personality type
E) social class
A
Page Ref: 101-102
Objective: 8
AACSB: Reflective Thinking
Difficulty: Easy
15)
Page Ref: 102
Objective: 8
Difficulty: Easy
Rock band Foo Fighters created a digital street team that sends targeted e-mail messages to members who receive exclusive news, previews, and opportunities to win prizes. The Foo Fighters are using ________ to reach Generation Y.
A) student ambassadors
B) unconventional sports
C) cool events
D) computer games
E) online buzz
E
Page Ref: 102
Objective: 8
AACSB: Reflective Thinking
Difficulty: Easy
If a marketing manager employs such marketing techniques as online buzz, student ambassadors, cool events, and street teams to reach target markets, the manager is most likely appealing to the ________ market.
A) Generation Z
B) Generation X
C) Generation Y
D) Silent generation
E) Baby boomers
C
Page Ref: 102
Objective: 8
AACSB: Communications
Difficulty: Easy
Which of the following statements about Gen Xers is true?
A) Gen Xers are more optimistic and team-oriented.
B) Gen Xers are selective, confident, and impatient.
C) Gen Xers highly socially conscious and concerned about environmental issues.
D) Gen Xers feel self-sufficiency and the ability to handle any circumstance are key.
E) Technology is a barrier for Gen Xers.
D
Page Ref: 102
Objective: 8
Difficulty: Easy

19)
Page Ref: 103
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy
Dennis requests his father to buy him a PlayStation® for his birthday. With respect to consumer decision roles, which role is Dennis currently playing?
A) initiator
B) influencer
C) decider
D) buyer
E) gatekeeper
A
Page Ref: 104
Objective: 8
AACSB: Analytic Skills
Difficulty: Moderate
The key to attracting potential users, or even possibly nonusers, is ________.
A) understanding the reasons they are not using
B) offering financial incentives for first-time use
C) increasing the usage rate of existing users
D) developing a new product that better meets their needs
E) increasing advertising expenditures
A
Page Ref: 104
Objective: 8
AACSB: Reflective Thinking
Difficulty: Easy
The sale of turkeys in the United States is highest in mid-to late November, as people buy turkeys to serve at Thanksgiving. Grocery stores who specifically advertise turkeys at this time of year are segmenting on the basis of ________.
A) benefits
B) user status
C) buyer-readiness stage
D) demographics
E) occasion
E
Page Ref: 104
Objective: 8
AACSB: Analytic Skills
Difficulty: Moderate
23)
Objective: 8
AACSB: Analytic Skills
Difficulty: Moderate
When Amy goes shopping for clothes, she goes into every store in the mall looking for the best deal. She
is very price conscious. On the basis of loyalty status, Amy can be described as ________.
A) a switcher
B) a split loyal
C) a shifting loyal
D) a hard-core loyal
E) an antiloyal
A
Page Ref: 104-105
Objective: 8
AACSB: Analytic Skills
Difficulty: Moderate
Mothers-to-be are potential users who will turn into heavy users of infant products and services. By targeting mothers-to-be as future heavy users, producers of these products and services are segmenting consumers on the basis of ________.
A) attitude
B) buyer-readiness stage
C) loyalty status
D) user status
E) benefits
D
Page Ref: 104
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy
Pete always buys Purina dog food for his dog because he believes that it is the best value for the nutritional content. Pete's loyalty status is best described as ________.
A) split loyal
B) shifting loyal
C) consistent loyal
D) hard-core loyal
E) switcher
D
Page Ref: 104-105
Objective: 8
AACSB: Analytic Skills
Difficulty: Moderate
A company can learn a great deal by analyzing the degrees of brand loyalty. For example, ________ can show the firm which brands are most competitive with its own.
A) hard-core loyals
B) split loyals
C) shifting loyals
D) switchers
E) antiloyals
B
Page Ref: 104-105
Objective: 8
AACSB: Reflective Thinking
Difficulty: Easy
A company can learn a great deal by analyzing the degrees of brand loyalty. For example, ________ can
help identify the products' strengths.
A) switchers
B) split loyals
C) antiloyals
D) shifting loyals
E) hard-core loyals
E
Page Ref: 104-105
Objective: 8
Difficulty: Easy
30
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy
A marketer is interested in segmenting a business market on ________ if the marketer intends to segment the market based on industries and geographical areas to serve.
A) demographic variables
B) situational factors
C) operating variables
D) purchasing approaches
E) personal characteristics
A
Page Ref: 106
Objective: 8
Difficulty: Easy
A marketer is interested in segmenting a business market based on urgency of delivery and the size of the order. Which of the following major segmentation variables would the marketer most likely use to assist with the task?
A) purchasing approaches
B) situational factors
C) operating variables
D) personal characteristics
E) demographic variables
B
Page Ref: 106
Objective: 8
Difficulty: Easy
A marketer is interested in segmenting a business market based on technology and customer capabilities. Which of the following major segmentation variables would the marketer most likely use to assist with the task?
A) demographic variables
B) purchasing approaches
C) situational factors
D) personal characteristics
E) operating variables
E
Page Ref: 106
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy

34) Page Ref: 106
Objective: 8
Difficulty: Easy
A marketer interested in segmenting a business market based on ________ intends to eventually segment the market based on power structure and nature of existing relationship.
A) situational factors
B) purchasing approaches
C) personal characteristics
D) operating variables
E) demographic variables
B
Page Ref: 106
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy
During which step of the segmentation process would the marketer group customers into segments based on similar needs and benefits sought by the customer in solving a particular consumption problem?
A) Step 2segment identification
B) Step 3segment attractiveness
C) Step 6segment "acid test"
D) Step 1needs-based segmentation
E) Step 7marketing-mix strategy
D
Page Ref: 107
Objective: 8
AACSB: Reflective Thinking
Difficulty: Easy
If an organization's marketing department wished to create "segment storyboards" to test the attractiveness of each segment's positioning strategy, this action would most likely occur in the ________ step of the segmentation process.
A) needs-based segmentation
B) segment identification
C) segment profitability
D) segment "acid test"
E) marketing-mix strategy
D
Page Ref: 107
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy
38)
Page Ref: 107
Objective: 8
Difficulty: Easy
In the ________ step of the market segmentation process, the marketer determines which demographics, lifestyles, and usage behaviors make each needs-based segment distinct and identifiable.
A) segment "acid test"
B) segment attractiveness
C) segment profitability
D) need-based segmentation
E) segment identification
E
Page Ref: 107
Objective: 8
Difficulty: Easy
According to the ________ criterion for useful market segments, a segment should be the largest possible homogenous group worth going after with a tailored marketing program.
A) measurable
B) substantial
C) accessible
D) differentiable
E) actionable
B
Page Ref: 106-107
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy
If your assignment was to create a value proposition and product-price positioning strategy for each segment, based on the segment's unique customer needs and characteristics, you would be in which of the following steps of the segmentation process?
A) needs-based segmentation
B) segment identification
C) segment attractiveness
D) segment positioning
E) segment "acid-test"
D
Page Ref: 107
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy
42)
Page Ref: 107
Objective: 8
AACSB: Reflective Thinking
Difficulty: Easy
To meet the ________ criterion of useful market segments, it must be possible to formulate effective programs for attracting and serving the segments.
A) measurable
B) substantial
C) accessible
D) differentiable
E) actionable
E
Page Ref: 107
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy
If married and unmarried women respond similarly to a sale on perfume, these hypothetical segments fail the ________ criterion for useful market segments.
A) measurable
B) substantial
C) accessible
D) differentiable
E) actionable
D
Page Ref: 107
Objective: 8
Difficulty: Easy
Which of the following statements is true about the five forces identified by Michael Porter, that
determine the intrinsic long-run attractiveness of a market or market segment?
A) A segment is unattractive if the company's suppliers are unable to raise prices or reduce quantity supplied.
B) A segment is unattractive if buyers possess strong or growing bargaining power.
C) A segment is attractive when there are actual or potential substitutes for the product.
D) A segment is attractive if it already contains numerous, strong, or aggressive competitors.
E) The most attractive segment is one in which entry barriers are low and exit barriers are high.
B
Page Ref: 107-108
Objective: 8
Difficulty: Moderate

46)
Page Ref: 109
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy
In ________ marketing, the firm operates in several market segments and designs different products for each segment.
A) individual
B) undifferentiated
C) differentiated
D) concentrated
E) niche
C
Page Ref: 109
Objective: 8
Difficulty: Easy
General Motors, a leading American multinational automaker, sells cars for every purpose, purse, and personality. This is an example of ________ marketing.
A) undifferentiated
B) differentiated
C) concentrated
D) niche
E) micro
B
Page Ref: 109
Objective: 8
AACSB: Analytic Skills
Difficulty: Moderate
Coca Cola's original marketing strategy that offered a single drink Coca Cola Classic in a single sized
bottle with the advertising theme "Coke is it" is an example of ________ marketing.
A) concentrated
B) niche
C) differentiated
D) micro
E) undifferentiated
E
Page Ref: 109
Objective: 8
AACSB: Analytic Skills
Difficulty: Moderate
50)
Page Ref: 110
Objective: 8
Difficulty: Easy
________ combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product service offering of their choice.
A) Consumptionism
B) Viral marketing
C) Virtual marketing
D) Regionalization
E) Customerization
E
Page Ref: 111
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy
Volkswagen concentrates on the small-car market and Porsche on the sports car market. These would be examples of what is called ________.
A) single-segment concentration
B) selective specialization
C) product specialization
D) market specialization
E) full market coverage
A
Page Ref: 110
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy
All of the following are benefits of following the ________ approach to target market selection: a strong knowledge of the segment's needs, a strong market presence, operating economies through specializing in production, distribution, and promotion.
A) single-segment concentration
B) selective specialization
C) product specialization
D) market specialization
E) full market coverage
A
Page Ref: 110
Objective: 8
AACSB: Reflective Thinking
Difficulty: Easy
Which of the following best represents the chief advantage of pursuing a selective specialization multisegment strategy?
A) It makes the company almost bulletproof to competitors' actions.
B) It diversifies the firm's risk.
C) It creates synergy between markets.
D) It is a low-cost strategy.
E) It treats all buyers the same and, therefore, lowers promotion costs.
B
Page Ref: 234
Objective: 8
AACSB: Reflective Thinking
Difficulty: Easy
A market segment consists of a group of consumers who share a similar set of needs and wants.
TRUE
Page Ref: 82
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy
Illustrations of personality segmentation would include culture-oriented, sports-centered, or outdoor-oriented subsegments.
FALSE
Page Ref: 101
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy
A local service company has decided to segment its market based on occupation; therefore, it has chosen a form of demographic segmentation for its approach.
TRUE
Page Ref: 100-103
Life stage defines a person's age.
FALSE
Page Ref: 101-102
Objective: 8
Difficulty: Easy
Members of the same generational cohort share the same major cultural, political, and economic experiences and have similar outlooks and values.
TRUE
Page Ref: 102
Objective: 8
AACSB: Reflective Thinking
Difficulty: Easy
Members of Generation Y are generally open to overt branding practices and a "hard sell," making product placements in computer and video games a popular way to reach this cohort.
FALSE
Page Ref: 102
Objective: 8
Difficulty: Easy
The norms, language nuances, buying habits, and business practices of multicultural markets need to be factored into the initial formulation of a marketing strategy, rather than added as an afterthought.
TRUE
Page Ref: 102
Objective: 8
Difficulty: Easy
Psychographics is the science of using psychology and demographics to better understand consumers.
TRUE
Page Ref: 103
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy
The main dimensions of the VALS segmentation framework are consumer motivation and consumer
resources.
TRUE
Page Ref: 103
Objective: 8
Difficulty: Easy
The last step in the seven-step marketing segmentation process would be to develop a marketing-mix strategy reflective of segment positioning strategies.
TRUE
Page Ref: 107
Objective: 8
Difficulty: Easy
To be useful, market segments must be measurable.
TRUE
Page Ref: 107
Objective: 8
AACSB: Reflective Thinking
Difficulty: Easy
The most attractive segment is one in which entry barriers are low and exit barriers are high.
FALSE
Page Ref: 109
Objective: 8
Difficulty: Easy
A segment is attractive when there are actual or potential substitutes for the product.
FALSE
Page Ref: 107
Objective: 8
Difficulty: Easy
A segment is unattractive if the company's suppliers are able to raise prices or reduce quantity supplied.
TRUE
Page Ref: 107-108
Objective: 8
Difficulty: Easy
An attractive niche consists of customers having a distinct set of needs.
TRUE
Page Ref: 110
A company is customerized when it is able to respond to individual customers by customizing its products, services, and messages on a one-to-one basis.
TRUE
Page Ref: 111
Objective: 8
AACSB: Analytic Skills
Difficulty: Easy
All attempts to target marketing to children, minorities, or other special segments are discriminatory and unethical.
FALSE
Page Ref: 111
Objective: 8
AACSB: Ethical Reasoning
Difficulty: Easy
Identify the four market segment groups based on brand loyalty status and list what a company can learn from analyzing the degrees of brand loyalty.
Marketers usually envision four groups based on brand loyalty status: (1) hard-core loyals, (2) split loyals, (3) shifting loyals, and (4) switchers. Hard-core loyals can help identify the products' strengths. Split loyals can show the firm which brands are most competitive with its own. By looking at customers who are shifting away from its brand, the company can learn about its marketing weaknesses and attempt to correct them.
Page Ref: 104-105
Objective: 8
AACSB: Reflective Thinking
Difficulty: Moderate
Briefly describe product specialization and market specialization.
With product specialization, the firm sells a certain product to several different market segments. A microscope manufacturer, for instance, sells to university, government, and commercial laboratories, making different instruments for each and building a strong reputation in the specific product area. The downside risk is that the product may be supplanted by an entirely new technology.
With market specialization, the firm concentrates on serving many needs of a particular customer group, such as by selling an assortment of products only to university laboratories. The firm gains a strong reputation among this customer group and becomes a channel for additional products its members can use. The downside risk is that the customer group may suffer budget cuts or shrink in size.
Page Ref: 109
Objective: 8
AACSB: Analytic Skills
Difficulty: Moderate
...
Characterize psychographic segmentation.
In psychographic segmentation, buyers are divided into different groups on the basis of psychological/personality traits, lifestyle, or values.
Page Ref: 103
Objective: 8
Difficulty: Easy
The American Marketing Association defines a ________ as "a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors."
A) copyright
B) trademark
C) slogan
D) brand
E) logo
D
Page Ref: 114
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Branding is ________.
A) all about creating unanimity between products
B) the process of performing market research and selling products or services to customers
C) endowing products and services with the power of a brand
D) the process of comparing competing brands available in the market
E) use of online interactive media to promote products and brands
C
Page Ref: 114
Objective: 1
Difficulty: Easy
Brand ________ is the added value endowed to products and services.
A) loyalty
B) equity
C) preference
D) identity
E) licensing
B
Page Ref: 115
Objective: 2
Difficulty: Easy

Page Ref: 115
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
Adam wants to buy a washing machine and is looking for something that is not too expensive. When he goes to make the purchase, he finds there are two options that meet his requirements. One is an IFB Bosch product, while the other is a newly imported South Korean brand. Adam is not very familiar with the latter and does not hesitate in choosing Bosch. This example implies that ________.
A) the imported brand will not survive the competition from Bosch
B) Bosch has a positive customer brand equity
C) the South Korean company has a low advertising budget
D) the imported brand is unreliable
E) the Bosch washing machine has better features than the imported brand
B
Page Ref: 115
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
When a consumer expresses thoughts, feelings, images, experiences, beliefs associated with the brand, the consumer is expressing ________.
A) brand knowledge
B) ethnocentric bias
C) self-serving bias
D) cognitive dissonance
E) brand identity
A
Page Ref: 115
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
Identify the four pillars of brand equity, according to brand asset valuator model.
A) relevance, performance, bonding, and advantage
B) presence, performance, advantage, and bonding
C) energized differentiation, relevance, esteem, and knowledge
D) brand salience, brand feelings, brand imagery, and brand performance
E) energized differentiation, esteem, brand feelings, and brand salience
C
Page Ref: 116
Objective: 2
Difficulty: Easy
Christian Louboutin is a footwear designer who launched his line of high-end women's shoes in France in 1991. Since 1992, his designs have incorporated the shiny, red-lacquered soles that have become his signature. These red-lacquered soles and high stilettos of Louboutin distinguish him from other designer shoe brands. In accordance with the brand asset valuator model, which of the following components of brand equity has Louboutin fulfilled in the given scenario?
A) energized differentiation
B) relevance
C) esteem
D) knowledge
E) advantage
A
Page Ref: 116
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
11) Christian Louboutin is a footwear designer who launched his line of high-end women's shoes in France in 1991. The brand caters to an elite clientele whose satisfaction with the brand has always been evident. Apart from being high-end, Louboutin footwear signifies power in elite social circles. Celebrities are often seen sporting "Loubs" at special occasions, such as movie premieres. This has resulted in people associating Louboutin footwear with class and power. In accordance with the brand asset valuator model, which of the following components of brand equity has Louboutin fulfilled in the given scenario?
A) knowledge
B) energized differentiation
C) esteem
D) advantage
E) presence
Answer: C
Page Ref: 116
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
According to the brand asset valuator model, which of the components of brand equity measures how aware and familiar consumers are with the brand?
A) esteem
B) energized differentiation
C) relevance
D) knowledge
E) presence
D
Page Ref: 115
Objective: 2
Difficulty: Easy
According to the brand asset valuator model, which of the components of brand equity measures the breadth of a brand's appeal?
A) differentiation
B) relevance
C) esteem
D) knowledge
E) value
B
Page Ref: 115
Objective: 2
Difficulty: Easy
14)
Page Ref: 116
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
According to brand asset valuator model, esteem and knowledge, the two pillars of brand equity together create ________, a "report card" on past performance and a current indicator of current value.
A) brand stature
B) brand parity
C) brand strength
D) brand personality
E) brand architecture
A
Page Ref: 116
Objective: 2
Difficulty: Easy
According to the brand asset valuator model, strong new brands show ________.
A) higher levels of esteem and knowledge than relevance, whereas both differentiation and energy are lower still
B) higher levels of differentiation and energy than relevance, whereas both esteem and knowledge are lower still
C) high knowledge—evidence of past performance—a lower level of esteem, and even lower relevance, energy, and differentiation
D) high levels on energy, differentiation, relevance, knowledge, and esteem
E) low levels on energy, differentiation, relevance, knowledge, and esteem
B
Page Ref: 115
Objective: 2
Difficulty: Moderate
17)
Page Ref: 115
Objective: 2
Difficulty: Moderate
According to brand asset valuator model, declining brands show ________.
A) higher levels of esteem and knowledge than relevance, whereas both differentiation and energy are
lower still
B) high relevance—appropriateness of brand's appeal—a lower level of energy and differentiation, and even lower knowledge
C) high levels on energy, differentiation, relevance, knowledge, and esteem
D) higher levels of differentiation and energy than relevance, whereas both esteem and knowledge are
lower still
E) high knowledge—evidence of past performance—a lower level of esteem, and even lower
relevance, energy, and differentiation
E
Page Ref: 115
Objective: 2
Difficulty: Moderate
According to Young and Rubicam's brand asset valuator, a brand's ________ measures how well the brand is regarded and respected.
A) differentiation
B) energy
C) relevance
D) esteem
E) knowledge
D
Page Ref: 116
Objective: 2
Difficulty: Easy
20)
Page Ref: 116
Objective: 2
Difficulty: Easy
Which of the following levels of the brand dynamics pyramid pertains to consumer's needs?
A) advantage
B) relevance
C) bonding
D) performance
E) presence
B
Page Ref: 116
Objective: 2
Difficulty: Easy
A consumer who expresses rational and emotional attachments to the brand to the exclusion of most
other brands has reached the ________ level in the brand dynamics pyramid.
A) advantage
B) relevance
C) presence
D) performance
E) bonding
E
Page Ref: 116
Objective: 2
Difficulty: Easy
According to the BRANDZ model of brand strength, brand building involves people progressing through a sequential series of steps. Which of these steps would address the question "Do I know about this brand?"
A) relevance
B) presence
C) performance
D) advantage
E) bonding
B
Page Ref: 116
Objective: 2
AACSB: Reflective Thinking
Difficulty: Easy
24)
Page Ref: 116
Objective: 2
Difficulty: Easy
According to the BRANDZ model of brand strength, brand building involves people progressing through a sequential series of steps. Which of these steps would address or answer the question "Can this brand deliver?"
A) performance
B) bonding
C) advantage
D) relevance
E) presence
A
Page Ref: 116
Objective: 2
Difficulty: Easy
According to the BRANDZ model of brand strength, brand building involves people progressing through a sequential series of steps. Which of these steps would address or answer the question "Does this brand offer me something?"
A) advantage
B) presence
C) relevance
D) bonding
E) performance
C
Page Ref: 116
Objective: 2
Difficulty: Easy
According to the BRANDZ model of brand strength, brand building involves people progressing through a sequential series of steps. Which of these steps convey the message "Nothing else beats this brand"?
A) bonding
B) relevance
C) advantage
D) performance
E) presence
A
Page Ref: 116
Objective: 2
Difficulty: Easy

28)
Page Ref: 248
Objective: 2
Difficulty: Easy
With respect to the brand building pyramid, at which of the following "building block levels" would we expect the consumer to develop an intense, active loyalty?
A) salience
B) imagery
C) feelings
D) judgments
E) resonance
E
Page Ref: 117
Objective: 2
AACSB: Reflective Thinking
Difficulty: Easy
With respect to the brand building pyramid, at which of the following "building block levels" would we expect the consumer to develop positive and accessible reactions?
A) resonance
B) salience
C) imagery
D) performance
E) feelings
E
Page Ref: 117
Objective: 2
Difficulty: Easy
Which of the following "building block levels" corresponds to the branding objectives of points-of-parity and difference?
A) performance and imagery
B) judgment and feelings
C) resonance and salience
D) imagery and judgment
E) salience and feelings
A
Page Ref: 117
Objective: 2
Difficulty: Easy
The brand name of New Zealand vodka 42BELOW refers to both a latitude that runs through New Zealand and the percentage of its alcohol content. From a marketing management perspective, which of
the brand equity drivers is most applicable in the given scenario?
A) the associations indirectly transferred to the brand by linking it to a place or thing
B) the product and all accompanying marketing activities and supporting marketing programs
C) the initial choices for the brand elements or identities making up the brand
D) the profitability associated with brand development
E) the service and all accompanying marketing activities and programs
A
Page Ref: 117
Objective: 3
Difficulty: Moderate
________ are devices that can be trademarked and serve to identify and differentiate the brand.
A) Brand elements
B) Brand value propositions
C) Brand perceptions
D) Brand images
E) Brand extensions
A
Page Ref: 118
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
If a brand element can be used to introduce new products in the same or different categories, the brand element is said to be ________.
A) memorable
B) meaningful
C) likeable
D) transferable
E) adaptable
D
Page Ref: 118
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
36)
Page Ref: 118
Objective: 3
Difficulty: Easy
A ________ can be defined as any information-bearing experience a customer or prospect has with the brand, the product category, or the market that relates to the marketer's product or service.
A) brand value
B) brand personality
C) brand trait
D) brand character
E) brand contact
E
Page Ref: 118
Objective: 3
Difficulty: Easy
The traditional "marketing-mix" concept and the notion of the "four Ps" may not adequately describe modern marketing programs. ________ is about mixing and matching marketing activities to maximize their individual and collective effects.
A) Personalized marketing
B) Mass customization
C) Globalized marketing
D) Relationship marketing
E) Integrated marketing
E
Page Ref: 118
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
Brand equity can be built by ________, which create(s) equity by linking the brand to other information in memory that conveys meaning to customers.
A) internal marketing
B) brand transferability
C) secondary associations
D) customer alignment
E) brand auditing
C
Page Ref: 118
Objective: 3
Difficulty: Easy

40)
Page Ref: 116
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
________ consists of activities and processes that help inform and inspire employees about brands.
A) Internal branding
B) Personal branding
C) Individual branding
D) External branding
E) Co-branding
A
Page Ref: 120
Objective: 3
Difficulty: Easy
AT&T's business campaign not only helped to change public perceptions of the company, it also signaled to employees that AT&T was determined to be a leader in telecommunication services. Which principle of internal branding does this example portray?
A) choosing the right moment to capture employees' attention and imagination
B) furnishing energizing and informative internal communication
C) bringing the brand alive for employees
D) linking internal and external marketing
E) understanding how brand communities work
D
Page Ref: 120
Objective: 3
Difficulty: Moderate
A ________ is a specialized group of consumers and employees whose identification and activities focus around the brand.
A) brand community
B) brand channel
C) brand association
D) brand personality
E) brand cluster
A
Page Ref: 120
Objective: 3
Difficulty: Easy
44)
Page Ref: 120
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
Apple's ipod shuffle is an example of ________.
A) a sub-brand
B) a parent brand
C) family brand
D) a brand mix
E) an umbrella brand
A
Page Ref: 122-123
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
When a firm uses an established brand to introduce a new product, it is called a ________.
A) brand harmonization
B) brand valuation
C) brand extension
D) brand positioning
E) brand parity
C
Page Ref: 123-123
Objective: 4
Difficulty: Easy
A parent brand that is associated with multiple products through brand extensions is also called a ________.
A) category brand
B) sub-brand
C) extension brand
D) family brand
E) line brand
D
Page Ref: 122
Objective: 4
AACSB: Analytic Skills
Difficulty: Easy
48)
Page Ref: 122
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
A ________ consists of all productsoriginal as well as line and category extensionssold under a particular brand.
A) brand line
B) cobrand
C) generic brand
D) licensed product
E) sub-brand
A
Page Ref: 122
Objective: 4
AACSB: Analytic Skills
Difficulty: Easy
A major advantage of a ________ strategy is that the company does not tie its reputation to the product.
A) blanket family name
B) licensing
C) separate family brand name
D) category extension
E) brand revitalization
C
Page Ref: 122
Objective: 4
AACSB: Reflective Thinking
Difficulty: Easy
Starbucks introduced ice creams in the same flavors as the frappucinos it sold in its coffee shops. This is an example of ________.
A) brand dilution
B) cobranding
C) brand variants
D) category extension
E) brand harmonization
D
Page Ref: 122
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
52)
Page Ref: 122
Objective: 4
Difficulty: Easy
A ________ is the set of all brands and brand lines a particular firm offers for sale to buyers in a particular category.
A) brand architecture
B) brand position
C) brand portfolio
D) brand extension
E) brand image
C
Page Ref: 123
Objective: 4
AACSB: Analytic Skills
Difficulty: Easy
________ brands are positioned with respect to competitors' brands so that more important (and more profitable) flagship brands can retain their desired positioning.
A) Flanker
B) Attacker
C) Defender
D) Cash cow
E) Simulation
A
Page Ref: 123
Objective: 4
AACSB: Analytic Skills
Difficulty: Easy
Two advantages of ________ are that they can facilitate new-product acceptance and provide positive feedback to the parent brand and company.
A) product licensing
B) brand extensions
C) brand architecture
D) brand audits
E) brand dilutions
B
Page Ref: 123-124
Objective: 4
Physical goods, services, and stores can be branded, but ideas and people cannot.
FALSE
Page Ref: 115
Objective: 1
Difficulty: Easy
Brand equity arises from unanimity in consumer response.
FALSE
Page Ref: 115
Objective: 2
Difficulty: Easy
According to the BrandZ model, "Bonded" consumers at the lower levels of the pyramid build stronger relationships with and spend more on the brand than those at the top.
FALSE
Page Ref: 115
Objective: 2
Difficulty: Easy
Under the BrandZ model of brand strength, customers who are bonded to the brand believe "nothing else beats it."
TRUE
Page Ref: 115
Objective: 2
AACSB: Reflective Thinking
Difficulty: Easy
One of the selection criteria for creating a successful brand element is that it should be protectable.
TRUE
Page Ref: 118
Objective: 3
AACSB: Reflective Thinking
Difficulty: Easy
To achieve integrated marketing, marketers need a variety of different marketing activities that consistently reinforce the brand promise.
TRUE
Page Ref: 118
The brand audit can be used to set strategic direction for the brand.
TRUE
Page Ref: 120
Objective: 3
AACSB: Reflective Thinking
Difficulty: Easy
Brand equity is essentially the same as brand valuation.
FALSE
Page Ref: 120
Objective: 3
Difficulty: Easy
When a parent brand covers a new product within a product category it currently serves, it is called a line extension.
TRUE
Page Ref: 122
Objective: 4
Difficulty: Easy
When Honda expanded its brand into such areas as automobiles, snowblowers, and marine engines, it was pursuing a strategy called line extension.
FALSE
Page Ref: 122
Objective: 4
AACSB: Analytic Skills
Difficulty: Easy
Flankers are brands that may be kept around despite dwindling sales because they manage to maintain their profitability with virtually no marketing support.
FALSE
Page Ref: 123
Objective: 4
Difficulty: Easy
The role of a relatively high-priced brand in the portfolio is often to attract customers to the brand franchise or to "build traffic."
FALSE
Intrabrand shifts in a company's sales are always undesirable.
FALSE
Page Ref: 124
Objective: 4
Difficulty: Easy
Marketers must judge each potential brand extension by how effectively it leverages existing brand equity from the parent brand, as well as how effectively, in turn, it contributes to the parent brand's equity.
TRUE
Page Ref: 124
Objective: 4
Difficulty: Easy
A successful extension cannot only contribute to the parent brand image but also enable a brand to be extended even farther.
TRUE
Page Ref: 124
Objective: 4
Difficulty: Easy
The most effective advertising strategy for an extension emphasizes the parent brand.
FALSE
Page Ref: 124
Objective: 4
AACSB: Analytic Skills
Difficulty: Easy
Both brand equity and customer equity emphasize the importance of customer loyalty and the notion that we create value by having as many customers as possible pay as high a price as possible.
TRUE
Page Ref: 124-125
Objective: 4
Difficulty: Easy
A credible brand signals a certain level of quality so that satisfied buyers can easily choose the
product again. Brand loyalty provides predictability and security of demand for the firm, and it
creates barriers to entry that make it difficult for other firms to enter the market. Loyalty also can
translate into customer willingness to pay a higher price.
Page Ref: 114
Objective: 1
Difficulty: Moderate
...
Describe the meaning and function of a brand audit.
To better understand the sources of brand equity and how they affect outcomes of interest, marketers often need to conduct brand audits. A brand audit is a consumer-focused exercise that involves a series of procedures to assess the health of the brand, uncover its sources of brand equity, and suggest ways to improve and leverage its equity. The brand audit can be used to set strategic direction for the brand. As the result of this strategic analysis, the marketer can develop a marketing program to maximize long-term brand equity. Marketers should conduct a brand audit whenever they consider important shifts in strategic direction.
Page Ref: 120
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Define brand equity.
Brand equity is the added value endowed to products and services. This value may be reflected in
how consumers think, feel, and act with respect to the brand, as well as the prices, market share, and profitability that the brand commands for the firm.
Page Ref: 115
________ is the act of designing the company's offering and image to occupy a distinctive place in the minds of the target market.
A) Positioning
B) Valuation
C) Pricing
D) Commercialization
E) Launching
A
Page Ref: 130
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
The goal of positioning is ________.
A) to locate the brand in the minds of consumers to maximize the potential benefit to the firm
B) to discover the different needs and groups existing in the marketplace
C) to target those customers marketers can satisfy in a superior way
D) to collect information about competitors that will directly influence the firms' strategy
E) to help the firm anticipate what the actions of its competitors will be
A
Page Ref: 130
Objective: 1
Difficulty: Moderate
The result of positioning is the successful creation of ________, which provides a cogent reason why the target market should buy the product.
A) an award-winning promotional campaign
B) a customer-focused value proposition
C) a demand channel
D) everyday low pricing
E) employee value proposition
B
Page Ref: 130
Objective: 1
AACSB: Reflective Thinking
Difficulty: Easy
5)
Page Ref: 130
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
Which of the following best describes BR Chicken's value proposition?
A) We sell chicken at most major malls.
B) We undertake home delivery services.
C) We target quality-conscious consumers of chicken.
D) We sell tender golden chicken at a moderate price.
E) We charge a 10% premium on our chicken.
D
Page Ref: 130
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
The ________ defines which other brands a brand competes with and therefore which brands should be the focus of competitive analysis.
A) consumer profitability analysis
B) competitor indexing
C) service blueprint
D) competitive frame of reference
E) cluster analysis
D
Page Ref: 130
Objective: 1
Difficulty: Easy
________ refers to the products or sets of products with which a brand competes and which function as close substitutes.
A) Consumer profitability analysis
B) Competitive frame of reference
C) Category membership
D) Value membership
E) Demand field
C
Page Ref: 130
A(n) ________ is a group of firms offering a product or class of products that are close substitutes for one another.
A) community
B) task force
C) industry
D) focus group
E) umbrella brand
C
Page Ref: 131
Objective: 1
Difficulty: Easy
11)
Page Ref: 131
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
________ are product associations that are not necessarily unique to the brand but may in fact be shared with other brands.
A) Points-of-parity
B) Points-of-difference
C) Points-of-inflection
D) Points-of-presence
E) Points-of-divergence
A
Page Ref: 131
Objective: 3
Difficulty: Easy
13)
Page Ref: 132
Objective: 3
Difficulty: Easy
Which of the following criteria relates to consumers seeing the brand association as personally relevant to them?
A) deliverability
B) authenticity
C) desirability
D) differentiability
E) feasibility
C
Page Ref: 132
Objective: 3
Difficulty: Easy
Which of the following criteria relates to the company having the internal resources and commitment to feasibly and profitably create and maintain the brand association in the minds of consumers?
A) differentiability
B) peculiarity
C) desirability
D) believability
E) deliverability
E
Page Ref: 132
Objective: 3
Difficulty: Easy
Which of the following criteria relates to consumers seeing the brand association as distinctive and superior to relevant competitors?
A) desirability
B) differentiability
C) believability
D) deliverability
E) deviance
B
Page Ref: 132
Objective: 3
Difficulty: Easy
17)
Page Ref: 132
Objective: 3
Difficulty: Easy
________ are attributes or benefits that consumers view as essential to a legitimate and credible offering within a certain product or service class.
A) Category points-of-difference
B) Conceptual points-of-parity
C) Competitive points-of-parity
D) Category points-of-parity
E) Competitive points-of-difference
D
Page Ref: 132
Objective: 3
Difficulty: Easy
Philip Morris bought Miller brewing and launched low-calorie beer at a time when consumers had the impression that low-calorie beer does not taste as good as normal beer. What does the company assure by stating that the beer tastes good?
A) points-of-difference
B) points-of-presence
C) points-of-parity
D) points-of-conflict
E) points-of-inflection
C
Page Ref: 132
Objective: 3
Difficulty: Moderate
Consumers might not consider a hand sanitizer truly a hand sanitizer unless they are gels designed to apply topically, contain alcohol that kills the germs present on the skin, and developed for use after washing hands or for those times when soap and water are not available. These service elements are considered ________.
A) competitive points-of-difference
B) competitive points-of-parity
C) category points-of-difference
D) category points-of-parity
E) conceptual points-of-parity
D
Page Ref: 132
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Nivea became the leader in the skin cream class on the "gentle", "protective" and "caring" platform. The company further moved into classes such as deodorants, shampoos and cosmetics. Attributes like gentle and caring were of no value unless consumers believed that its deodorant was strong enough, its shampoo would cleanse and its cosmetics would be colorful enough. This is an example of ________.
A) competitive points-of-parity
B) competitive points-of-difference
C) category points-of-parity
D) category points-of-difference
E) competitive points-of-presence
C
Page Ref: 132
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate

24)
Page Ref: 132
Objective: 3
Difficulty: Easy
As a marketing manager, which of the following would be the best purpose for your organization's competitive points-of-parity?
A) to point out competitors' points-of-difference
B) to emphasize competitors' points-of-difference
C) to rationalize competitors' perceived points-of-difference
D) to globalize competitors' perceived points-of-difference
E) to negate competitors' perceived points-of-difference
E
Page Ref: 132
Objective: 3
Difficulty: Moderate
A marketer that wants to anchor a point-of-difference for Doy soap on brand benefits might emphasize which of the following?
A) the soap is one-quarter cleansing cream
B) Doy products include bar soaps and shampoos
C) Doy soap helps users have softer skin
D) the soap brand has global presence
E) the brand has recently launched soap for men
C
Page Ref: 131
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Subway restaurants are positioned as offering healthy, great-tasting sandwiches. ________ allows the brand to create a point-of-parity (POP) on taste and a point-of-difference (POD) on health with respect to quick-serve restaurants such as McDonald's and Burger King and, at the same time, a POP on health and a POD on taste with respect to health food restaurants and cafés. This is an example of ________.
A) Category-based positioning
B) Need-based positioning
C) Noncomparitive positioning
D) Straddle positioning
E) Price-quality positioning
D
Page Ref: 132
Objective: 3
AACSB: Reflective Thinking
Difficulty: Moderate
28)
Page Ref: 132
Objective: 3
Difficulty: Moderate
Marketers typically focus on ________ in choosing the points-of-parity and points-of-difference
that make up their brand positioning.
A) brand equity
B) brand awareness
C) brand benefits
D) brand architecture
E) brand extensions
C
Page Ref: 132
Objective: 3
Difficulty: Easy
________ are visual representations of consumer perceptions and preferences.
A) procedural maps
B) brain maps
C) perceptual maps
D) procedural models
E) cognitive maps
C
Page Ref: 132
Objective: 3
Difficulty: Easy
Straddle positions ________.
A) help firms to analyze who their competitors are
B) allow brands to expand their market coverage and potential customer base
C) are a necessity while creating a firm's vision and mission statement
D) assist firms in collecting information on competitors that will directly influence their strategy
E) are ambiguous moral principles behind the operation and regulation of marketing
B
Page Ref: 132
Objective: 3
Difficulty: Moderate
32)
Page Ref: 133-134
Objective: 3
Difficulty: Easy
American Express'- "Worldclass Service, Personal Recognition," Mary Kay's - "Enriching women's lives," Hallmark's- "Caring Shared," and Starbucks'-"Rewarding Everyday Moments" are examples of ________.
A) brand mantras
B) brand parity
C) brand identity
D) brand architecture
E) brand extension
A
Page Ref: 133-134
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
________ are short, three- to five-word phrases that capture the irrefutable essence or spirit of the brand positioning and ensure that the company's own employees understand what the brand represents.
A) Brand mantras
B) Brand symbols
C) Brand logos
D) Brand alliances
E) Brand extensions
A
Page Ref: 133-134
Objective: 3
Difficulty: Easy
Points-of-parity are important while designing brand mantras for brands facing ________.
A) rapid growth
B) market saturation
C) slow and steady growth
D) rapid decline
E) stability in sales volume
A
Page Ref: 132-134
The typical approach to positioning is to inform consumers of a brand's category membership before stating its ________.
A) point-of-parity
B) point-of-difference
C) point-of-conflict
D) point-of-weakness
E) point-of-presence
B
Page Ref: 134
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
Industrial tools claiming to have durability, and antacids announcing their efficacy convey a brand's category membership by ________.
A) relying on the product descriptor
B) comparing to exemplars
C) announcing category benefits
D) communicating deliverability variables
E) identifying counter examples
C
Page Ref: 134
Objective: 3
Difficulty: Easy
A well-known car manufacturing company introduces a new hatchback model by describing its distinctive features and then stressing the speed and safety qualities of the car. Which of the following is the company using to convey its membership in the hatchback segment?
A) announcing category benefits
B) comparing to exemplars
C) relying on the product descriptor
D) using channel differentiation
E) maximizing negatively correlated attributes
A
Page Ref: 134
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
40)
Page Ref: 134
Objective: 3
Difficulty: Easy
SJC is a new retailer that targets the youth market. SJC needs to make an impression using advertising, and decides to use funny or irreverent ads to get its point across. Each ad features one of SJC's competitors and conveys an advantage SJC has over that competitor. Which of the following is the company using to convey its membership in the retail segment?
A) announcing category benefits
B) comparing to exemplars
C) relying on the product descriptor
D) using channel differentiation
E) maximizing negatively correlated attributes
B
Page Ref: 134
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
When Tommy Hilfiger was an unknown brand, advertising announced his membership as a great U.S. designer by associating him with Geoffrey Beene, Stanley Blacker, Calvin Klein, and Perry Ellis, who were recognized members of that category. Tommy Hilfiger conveyed the brand's category membership by ________.
A) relying on the product descriptor
B) focusing on reliability
C) comparing to exemplars
D) announcing category benefits
E) identifying counter examples
C
Page Ref: 134
Objective: 3
One common difficulty in creating a strong, competitive brand positioning is that many of the attributes or benefits that make up the points-of-parity and points-of-difference are ________.
A) negatively correlated
B) always correlated
C) directly proportional
D) never correlated
E) positively correlated
A
Page Ref: 134
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
________ is a company's ability to perform in one or more ways that competitors cannot or will not match.
A) Brand positioning
B) Market research
C) Competitive advantage
D) Competitor analysis
E) Competitive intelligence
C
Page Ref: 134
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
A ________ is one that a company can use as a springboard to new advantages.
A) sustainable advantage
B) leverageable advantage
C) realistic advantage
D) rational advantage
E) distinct advantage
B
Page Ref: 134
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
Singapore Airlines is well regarded in large part because of the excellence of its flight attendants. This is an example of ________ differentiation.
A) image
B) services
C) product
D) employee
E) channel
D
Page Ref: 135
Objective: 3
Difficulty: Easy
Which of the following types of differentiation refers to companies effectively designing their distribution medium's coverage, expertise, and performance to make buying the product easier and more enjoyable and rewarding?
A) service differentiation
B) channel differentiation
C) image differentiation
D) product differentiation
E) employee differentiation
B
Page Ref: 135
Objective: 3
Difficulty: Easy
Dayton, Ohio--based Iams found success selling premium pet food through regional veterinarians, breeders, and pet stores. This is an example of ________ differentiation.
A) service
B) employee
C) image
D) product
E) channel
E
Page Ref: 135
Objective: 3
Difficulty: Easy
Which of the following is an example of image differentiation?
A) Berry's has an intensive training program for its customer-facing staff, to ensure a consistent service standard.
B) The Swan Hotels use a distinctive signature fragrance in all outlets so that customers can associate the fragrance with the hotel.
C) JEK's sophisticated customer database allows the company to handle queries and product returns much faster than competitors.
D) RTZ shifted its products from supermarket aisles to exclusive stores as it realized that customers were willing to pay more in stores.
E) Hayley's found success by allowing buyers to customize the color and some features of its appliances before buying them.
B
Page Ref: 135
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Which of the following is an example of services differentiation?
A) Berry's has an intensive training program for its customer-facing staff, to ensure a consistent service standard.
B) The Swan Hotels use a distinctive signature fragrance in all outlets so that customers can associate the fragrance with the hotel.
C) JEK's sophisticated customer database allows the company to handle queries and product returns much faster than competitors.
D) RTZ shifted its products from supermarket aisles to exclusive stores as it realized that customers were willing to pay more in stores.
E) Hayley's found success by allowing buyers to customize the color and some features of its appliances before buying them.
C
Page Ref: 135
Objective: 3
A company which can differentiate itself by designing a better and faster delivery system that provides more effective and efficient solutions to consumers is most likely using ________ differentiation.
A) services
B) channel
C) image
D) product
E) employee
A
Page Ref: 135
Objective: 3
Difficulty: Easy
The ________ has the largest market share and usually shows the way to other firms in price changes, new-product introductions, distribution coverage, and promotional intensity.
A) market challenger
B) market entrant
C) market follower
D) market nicher
E) market leader
E
Page Ref: 299
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
When the total market expands, the ________ usually gains the most.
A) market challenger
B) market leader
C) market follower
D) market nicher
E) market entrant
B
Page Ref: 301
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
As the marketing manager of a company that manufactures floor tiles, Evans Smith is given a target to achieve 500 new customers by the end of summer. He decides to search the market for probable customers who might use the product but do not at present. Which of the following strategies is Evans pursuing to increase the market demand for his product?
A) market-penetration strategy
B) new-market segment strategy
C) geographical-expansion strategy
D) needs-assessment strategy
E) consolidation strategy
A
Page Ref: 301
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
When firms look for new users in groups that have never used the product before, the firm is using the ________ strategy.
A) new-market segment
B) market-penetration
C) geographical-expansion
D) product development
E) diversification
A
Page Ref: 301
Objective: 1
Difficulty: Easy
When Starbucks introduced its Tazzo Tea line to bring in new customers who had never gone to Starbucks because they don't drink coffee, Starbucks was employing a ________ strategy.
A) market-penetration
B) new-market segment
C) geographical-expansion
D) niche identification
E) blue-ocean
B
Page Ref: 301
Objective: 1
Difficulty: Easy
A market leader on the look out for more usage from existing customers should focus on increasing the frequency of consumption and ________.
A) decreasing the product price
B) the product line
C) the amount of consumption
D) decreasing production turnover time
E) diversifying into unrelated markets
C
Page Ref: 301
Objective: 1
Difficulty: Easy
Which of the following marketing strategies requires either identifying additional opportunities to use the brand in the same basic way or identifying completely new and different ways to use the brand?
A) increasing the amount of consumption
B) decreasing the level of consumption
C) increasing dedication to consumption
D) increasing product innovation
E) increasing frequency of consumption
E
Page Ref: 302
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Oliver, a company that produces different types of olive oil, launched a promotional campaign focusing on the alternative uses of olive oil. What strategy is the company implementing to expand its total market demand?
A) using the new-market segment strategy to attract new customers
B) improving the current level of product performance
C) advertising new and different applications of the brand
D) protecting its market share
E) using the market-penetration strategy to attract new customers
C
Page Ref: 302
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
Clorox runs ads stressing the many benefits of its bleach, such as how it eliminates kitchen odors, in order to generate additional opportunities to use the brand in the same basic way. This is an attempt to ________.
A) increase the amount of consumption
B) increase the level of consumption
C) increase the perception of consumption
D) increase the frequency of consumption
E) increase the emotional implications of consumption
D
Page Ref: 302
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Which of the following is the most constructive response a market leader can make when defending its market share?
A) maintain basic cost control
B) innovate continuously
C) provide desired benefits
D) meet challengers with a swift response
E) provide expected benefits
B
Page Ref: 302
Objective: 1
AACSB: Reflective Thinking
A(n) ________ marketer looks ahead to needs customers may have in the near future.
A) laidback
B) creative
C) inexperienced
D) responsive
E) anticipative
E
Page Ref: 302
Objective: 1
Difficulty: Easy
A(n) ________ marketer discovers solutions customers did not ask for but to which they
enthusiastically respond.
A) laidback
B) responsive
C) inexperienced
D) creative
E) anticipative
D
Page Ref: 302
Objective: 1
Difficulty: Easy
________ marketers are not just market-driven, they are proactive market-driving firms.
A) Creative
B) Responsive
C) Inexperienced
D) Laidback
E) Anticipative
A
Page Ref: 302
Objective: 1
Difficulty: Easy
Which of the following is true about proactive marketing?
A) A company needs creative anticipation to see the writing on the wall.
B) Proactive companies create new offers to serve unmet and unknown consumer needs.
C) Proactive companies refrain from practicing uncertainty management.
D) A company needs responsive anticipation to devise innovative solutions.
E) Companies are winners when they are extremely risk-averse.
B
Page Ref: 302-303
Objective: 1
Difficulty: Easy
________ defense involves occupying the most desirable market space in the minds of the consumers and making the brand almost impregnable.
A) Position
B) Flank
C) Preemptive
D) Mobile
E) Contraction
A
Page Ref: 303
Objective: 1
Difficulty: Easy
A marketing manager has planned a strategy that will require the organization to erect outposts to protect its weak front-running brands. In this ________ defense, the outposts will be central to the organization's new competitive strategy.
A) position
B) flank
C) preemptive
D) counteroffensive
E) mobile
B
Page Ref: 303
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
The defensive marketing strategy wherein a stream of new products are introduced by a firm and are announced in advance are referred to as ________ defense.
A) mobile
B) counteroffensive
C) preemptive
D) contraction
E) flank
C
Page Ref: 303
Objective: 1
Difficulty: Easy
If Microsoft announces plans for a new-product development, smaller firms may choose to concentrate their development efforts in other directions to avoid head-to-head competition. In this example, Microsoft is employing a ________ strategy.
A) preemptive defense
B) counteroffensive defense
C) mobile defense
D) flank defense
E) contraction defense
A
Page Ref: 303
Objective: 1
Difficulty: Easy
In a ________ defense strategy, the market leader can meet the attacker frontally and hit its flank, or launch a pincer movement so that its forced to pull back to defend itself.
A) position
B) counteroffensive
C) preemptive
D) contraction
E) flank
B
Page Ref: 303
Objective: 1
Difficulty: Easy
In ________, the market leader stretches its domain over new territories that can serve as future centers for defense and offense.
A) counteroffensive defense
B) flank defense
C) contraction defense
D) mobile defense
E) position defense
D
Page Ref: 303
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Market broadening and market diversification are likely tactics employed in ________ strategies.
A) position defense
B) flank defense
C) preemptive defense
D) counteroffensive defense
E) mobile defense
E
Page Ref: 303
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
When "petroleum" companies such as BP sought to recast themselves as "energy" companies, increasing their research into the oil, coal, nuclear, hydroelectric, and chemical industries, these companies were employing a ________ strategy.
A) preemptive defense
B) counteroffensive defense
C) mobile defense
D) flank defense
E) contraction defense
C
Page Ref: 303
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
In 2006, Sara Lee spun off products that accounted for a large percentage of the company's revenues, including its strong Hanes hosiery brand, so it could concentrate on its well-known food brands. In this example, Sara Lee is employing a ________ strategy.
A) preemptive defense
B) counteroffensive defense
C) mobile defense
D) flank defense
E) contraction defense
E
Page Ref: 304
Objective: 1
Difficulty: Easy
A firm that is willing to maintain its market share, and not attack the leader and other competitors in an aggressive bid for further market share, is known as a ________.
A) market challenger
B) market leader
C) market follower
D) market nicher
E) market entrant
C
Page Ref: 305
Objective: 2
Difficulty: Easy
For a market challenger, attacking ________ is a high risk but potentially high payoff strategy, which also allows it to distance itself from other challengers.
A) a firm of its own size
B) the market leader
C) a regional firm
D) an underfinanced firm
E) a poorly performing firm
B
Page Ref: 305
Epic Inc., a firm that produces chairs for offices, uses comparative advertising to inform the consumers that its products offer the same features and quality as the competitor's. This is an example of a(n) ________ attack.
A) guerilla
B) frontal
C) encirclement
D) bypass
E) flank
B
Page Ref: 306
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
The ________ can be used when the challenger spots areas where the opponent is underperforming.
A) encirclement attack
B) frontal attack
C) flank-geographic attack
D) backwards-flank attack
E) guerilla warfare
C
Page Ref: 306
Objective: 2
AACSB: Reflective Thinking
Difficulty: Easy
Pepsodent launched a new product that could whiten teeth, fight decay, and maintain fresh breath. Observing that Pepsodent did not focus on the dental sensitivity aspect, Colgate introduced a toothpaste which did all of the above and also protected sensitive teeth. This is an example of a(n) ________ attack.
A) frontal
B) flank
C) guerrilla
D) encirclement
E) bypass
B
Page Ref: 306
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
The ________ attack attempts to capture a significant share of the consumer market by launching a grand offensive on several fronts.
A) frontal
B) bypass
C) flank
D) encirclement
E) guerrilla
D
Page Ref: 306
Objective: 2
Difficulty: Easy
Sally Seabrook is an up-and-coming marketing manager for a large department store chain. Ms. Seabrook has distinguished herself with bold strategies such as launching attacks on her primary competitor from several fronts, including advertising, new store openings, and new distributor alliances. Which of the following market challenger attack strategies is Ms. Seabrook using to attack her competition?
A) frontal attack
B) bypass attack
C) guerrilla warfare
D) flank attack
E) encirclement attack
E
Page Ref: 306
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
The ________ attack offers the firm an opportunity to diversify into unrelated products, into new geographical markets, and leapfrogging into new technologies.
A) bypass
B) flank
C) frontal
D) guerrilla
E) encirclement
A
Page Ref: 306
A marketing manager has decided to "leapfrog" competition by moving into cutting-edge technologies. This indirect approach to attacking competition can be characterized as ________.
A) flank attack
B) encirclement attack
C) bypass attack
D) guerrilla warfare
E) frontal attack
C
Page Ref: 306
Objective: 2
Difficulty: Easy
Selective price cuts, intense promotional blitzes, and occasional legal action are commonplace in the strategic design of a(n) ________.
A) frontal attack
B) flank attack
C) bypass attack
D) encirclement attack
E) guerilla warfare
E
Page Ref: 306
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
In his article, "Innovative Imitation", Theodore Levitt argues that ________.
A) imitation is wrong and should be punished
B) product imitation might be as profitable as product innovation
C) innovation is not possible without substantial imitation
D) innovation cannot begin unless dissatisfaction with imitation occurs
E) imitation should be against the law because of the intellectual property decision involved
B
Page Ref: 307
Aron, a company manufacturing snack food and soft drinks, replicates its product taste and packaging from Lay's, a market leader in the snack food industry. Later, it sells these imitated products on the black market. This is an example of ________.
A) cloning
B) imitating
C) counterfeiting
D) adapting
E) innovating
C
Page Ref: 307
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
As a market follower strategy, the ________ emulates the leader's products, name, and packaging, with slight variations.
A) counterfeiter
B) cloner
C) imitator
D) adapter
E) innovator
B
Page Ref: 307
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
Amani, a company that manufactures cloth for suits, strives to be equal to Armani in product design, brand name, and product packaging. This is an example of ________.
A) innovating
B) adapting
C) imitating
D) cloning
E) counterfeiting
D
Page Ref: 307
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
105)
Page Ref: 307
Objective: 3
AACSB: Reflective Thinking
Difficulty: Easy
The ________ copies some things from the leader but differentiates on packaging, advertising, pricing, or location.
A) innovator
B) adapter
C) cloner
D) imitator
E) counterfeiter
D
Page Ref: 307
Objective: 3
Difficulty: Easy
As a(n) ________, BurgerJacks, a fast food chain selling low-price burgers, has differentiated on location by setting up base in the Middle East, a market which the current leader of the industry McDonalds has yet not exploited.
A) cloner
B) imitator
C) counterfeiter
D) adapter
E) innovator
B
Page Ref: 307
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
The TelePizza chain, which operates in Europe and Latin America, has copied Domino's service model but maintains differentiation in terms of location. TelePizza is an example of a(n) ________.
A) counterfeiter
B) adopter
C) cloner
D) imitator
E) adapter
D
Page Ref: 307
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
Redo is a market follower in the wristwatch industry. After noticing a shortfall in the market leader's product, Redo improves its product to suit consumer needs and becomes a challenger for the market leader. This is an example of a(n) ________.
A) counterfeiter
B) cloner
C) imitator
D) adapter
E) innovator
D
Page Ref: 307
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
An alternative to being a market follower in a large market is to be a leader in a small market. This type of competitor is called a ________.
A) marketing king
B) market nicher
C) segment king
D) guerilla marketer
E) strategic clone
B
Page Ref: 308
Objective: 3
Difficulty: Easy
A firm that serves small market segments that are not being served by bigger firms is known as a ________.
A) market challenger
B) market leader
C) market follower
D) market nicher
E) market entrant
D
Page Ref: 302
Objective: 3
AACSB: Analytic Skills
Which of the following is true about market-nichers?
A) They are market followers in small markets.
B) They tend to have high manufacturing costs.
C) Their return on investment exceeds that in larger markets.
D) A nicher achieves high volume as against a mass marketer that achieves high margin.
E) They usually experience long term losses.
C
Page Ref: 309
Objective: 3
Difficulty: Easy
The key idea in successful nichemanship is specialization. Which of the following specialists would most closely be identified with the characterization of being an organization that limits its selling to one customer?
A) end-user specialist
B) vertical-level specialist
C) customer-size specialist
D) specific-customer specialist
E) quality-price specialist
D
Page Ref: 309
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
Newman Inc. is a company that manufactures saddles specifically for horses that race in derbies in the U.S. and the UK. Within this context the firm is exhibiting the role of a ________ specialist.
A) vertical-level
B) customer-size
C) product-line
D) job-shop
E) service
C
Page Ref: 309
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
117)
Page Ref: 309
Objective: 3
Difficulty: Easy
A job-shop specialist ________.
A) sells only in a certain locality, region, or area of the world
B) customizes its products for individual customers
C) operates at the low- or high-quality ends of the market
D) offers one or more services not available from other firms
E) specializes in serving only one channel of distribution
B
Page Ref: 309
Objective: 3
Difficulty: Easy
A firm that is based in France designs jewelry and takes custom orders from around the world. They do not design more than 15 pieces of jewelry in a year and ensure that each design uses unique stones and is different from the other. Such nichemanship is an example of ________ specialist role.
A) customer-size
B) product
C) product-feature
D) job-shop
E) quality-price
D
Page Ref: 309
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
When a bank takes loan requests over the phone and hand-delivers the money to the customer, it becomes a ________ specialist.
A) geographic
B) job-shop
C) quality-price
D) channel
E) service
E
Page Ref: 309
Objective: 3
Campdell Soups is a newly established company that specializes in preparing healthy but tasty food for children under the age of 5. It is incurring huge production costs, nonexistent profits, and slow sales growth. The company is in the ________ phase of its life cycle.
A) stagnancy
B) introduction
C) maturity
D) decline
E) growth
B
Page Ref: 310
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
________ is a period of rapid market acceptance and substantial profit improvement.
A) Stagnancy
B) Introduction
C) Maturity
D) Decline
E) Growth
E
Page Ref: 310
Objective: 4
Difficulty: Easy
A dance school in the Bronx teaches professional hip-hop and salsa. It is experiencing an increase in student admissions, which is leading to substantial improvement in profits. The school is going through the ________ phase of its life cycle.
A) decline
B) stagnancy
C) growth
D) introduction
E) maturity
C
Page Ref: 310
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
125)
Page Ref: 310
Objective: 4
Difficulty: Easy
A music school in Boyles Height, LA, specializes in teaching the guitar and the violin. After a spurt in growth and a few successful years, the school is experiencing a slowdown in sales and stability in its profits due to an increase in competition. The school is in the ________ stage of its life cycle.
A) introduction
B) growth
C) decline
D) maturity
E) obsolescence
D
Page Ref: 310
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
During the ________ stage of a product's life cycle, sales show a downward drift and profits erode.
A) introduction
B) growth
C) decline
D) obsolescence
E) maturity
C
Page Ref: 310
Objective: 4
Difficulty: Easy
After a couple of years of successful business, an experimental theatre company based in Aurora is unable to sell tickets for its theatre shows. They have been using profits from previous shows to run the business. The company is in the ________ phase of its life cycle.
A) maturity
B) obsolescence
C) introduction
D) growth
E) decline
E
Page Ref: 310
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
129)
Page Ref: 313
Objective: 4
Difficulty: Easy
One of the ways to change the course of a brand is to modify the product. Under product modification, ________ adds size, weight, materials, supplements, and accessories that expand the product's performance, versatility, safety, or convenience.
A) feature improvement
B) quality improvement
C) style improvement
D) size improvement
E) technological improvement
A
Page Ref: 314
Objective: 4
Difficulty: Easy
An alternate way to increase sales volume is to expand the number of users. This can be done by ________.
A) having consumers use the product on more occasions
B) having consumers use more of the product on each occasion
C) having consumers use the product in new ways
D) remaining in the current market segment
E) attracting competitors' customers
E
Page Ref: 315
Objective: 4
Difficulty: Easy
An alternate way to increase sales volume is increase the usage rate among users. This can be done by ________.
A) converting nonusers
B) having consumers use less of the product on each occasion
C) having consumers use the product on more occasions
D) attracting competitors' customers
E) entering new market segments
C
Page Ref: 315
Objective: 4
Difficulty: Easy

133)
Page Ref: 317
Objective: 4
Difficulty: Easy
Which of the following strategies should be adopted by marketers during a recession?
A) increase investment on marketing existing products
B) focus on expanding the customer base and not on the retention of existing customers
C) focus primarily on price reductions and discounts
D) concentrate on communicating the brand value and product quality to consumers
E) stick to the budget allocations adopted during the preceding years
D
Page Ref: 318-319
Objective: 5
Difficulty: Easy
Benz & Frendz Corp., a manufacturer of high end consumer durables, experienced a sluggish sales growth in most of its product categories during three consecutive quarters of 2009. However, market analysis revealed that its competitors' sales had also slackened during this period. Analysts pointed out that when all firms are losing sales, it is extremely important to adopt strategies that are aimed at retaining customers. This led the firm to reduce operation costs while maintaining product quality. They also revamped their marketing strategy to focus on the values created by their products. Which of the following can be inferred from the strategies adopted by the firm?
A) The company was trying to protect its market share and continue to operate as a market leader.
B) The company was focusing on geographical expansion.
C) The company was aiming to capture a new market segment.
D) The company was marketing its products amidst an economic downturn.
E) The company was focusing on market penetration.
D
Page Ref: 318-320
Objective: 5
AACSB: Analytic Skills
Difficulty: Moderate
All marketing strategy is built on segmentation, targeting, and positioning.
TRUE
Page Ref: 130
Objective: 1
Difficulty: Easy
137) Positioning is the act of designing the company's offering and image to occupy a distinctive place in the minds of the target market.
Answer: TRUE
Page Ref: 130
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
The result of positioning is the successful creation of an employee-focused value proposition.
FALSE
Page Ref: 130
Objective: 1
Difficulty: Easy
The competitive frame of reference defines which other brands a brand competes with.
TRUE
Page Ref: 130
Objective: 1
Difficulty: Easy
Category membership is seen as the products which function as close substitutes of a brand.
TRUE
Page Ref: 130
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
A company is more likely to be hurt by current competitors than by emerging competitors or new technologies.
FALSE
Page Ref: 130
Objective: 2
Difficulty: Easy
Using the industry approach, competitors are defined as companies that satisfy the same customer need.
FALSE
Points-of-parity are attributes or benefits consumers strongly associate with a brand and believe that they could not find to the same extent with a competitive brand.
FALSE
Page Ref: 131
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
Category points-of-parity may change over time due to technological advances, legal developments, or consumer trends.
TRUE
Page Ref: 132
Objective: 3
AACSB: Reflective Thinking
Difficulty: Easy
Category points-of-parity are associations designed to overcome perceived weaknesses of the brand.
FALSE
Page Ref: 132
Objective: 3
Difficulty: Easy
A competitive point-of-parity negates competitors' perceived points-of-difference.
TRUE
Page Ref: 132
Objective: 3
Difficulty: Easy
Occasionally, a company will be able to straddle two frames of reference with one set of points-of-difference and points-of-parity.
TRUE
Page Ref: 132
Objective: 3
Difficulty: Easy
Perceptual maps provide quantitative portrayals of market situations and the way consumers view different products, services, and brands along various dimensions.
TRUE
The product descriptor that follows the brand name is often a concise means of conveying category origin.
TRUE
Page Ref: 134
Objective: 3
Difficulty: Easy
If Barry compares his organization's products to those of leaders in the field, then he is conveying category membership by "comparing to exemplars."
TRUE
Page Ref: 134
Objective: 3
Difficulty: Easy
A leverageable advantage is one that a company can use as a springboard to new advantages.
TRUE
Page Ref: 134
Objective: 3
Difficulty: Easy
A good positioning should contain points-of-difference and points-of-parity that have rational but not emotional components.
FALSE
Page Ref: 135
The market leader should look for new customers or more usage from existing customers.
TRUE
Page Ref: 301
Objective: 1
Difficulty: Easy
A market-penetration strategy is one where a company searches for new customers in a group that has never used a product before.
FALSE
Page Ref: 301
Increasing amount of consumption requires identifying additional opportunities to use the brand in the same basic way.
FALSE
Page Ref: 302
Objective: 1
Difficulty: Easy
A marketing program can communicate the appropriateness and advantages of using the brand.
TRUE
Page Ref: 302
Objective: 1
Difficulty: Easy
The most constructive response to protecting market share is continuous innovation.
TRUE
Page Ref: 302
Objective: 1
Difficulty: Easy
A responsive marketer looks ahead to needs customers may have in the near future.
FALSE
Page Ref: 302
Objective: 1
Difficulty: Easy
An anticipative marketer finds a stated need and fills it.
FALSE
Page Ref: 302
Objective: 1
Difficulty: Easy
A creative marketer discovers solutions customers did not ask for but to which they enthusiastically respond.
TRUE
Page Ref: 302
Objective: 1
Difficulty: Easy
Position defense means occupying the most desirable market space in consumers' minds, making the brand almost impregnable.
TRUE
Page Ref: 303
Objective: 1
Difficulty: Easy
In contraction defense, the leader stretches its domain over new territories through market broadening and market diversification.
FALSE
Page Ref: 303-304
Objective: 1
Difficulty: Easy
Market diversification shifts the company's focus to unrelated industries.
TRUE
Page Ref: 304
Objective: 1
Difficulty: Easy
Market challengers are companies that attack the leader and other competitors in an aggressive bid for further market share.
TRUE
Page Ref: 305
Objective: 2
Difficulty: Easy
Attacking the market leader proves successful and beneficial only when the leader is not serving the market well.
TRUE
Page Ref: 305
Objective: 2
Difficulty: Easy
A frontal attacking strategy is another name for identifying shifts that are causing gaps to develop, then rushing to fill the gaps.
FALSE
Page Ref: 306
Objective: 2
Difficulty: Easy
Encirclement attempts to capture a wide slice of territory by launching a grand offensive on several fronts.
TRUE
Page Ref: 306
Objective: 2
As a market-follower strategy, a counterfeiter emulates the leader's products, name, and packaging, with slight variations.
FALSE
Page Ref: 307
Objective: 3
Difficulty: Easy
As a market-follower strategy, an imitator duplicates the leader's product and packages and sells it on the black market or through disreputable dealers.
FALSE
Page Ref: 307
Objective: 3
Difficulty: Easy
As a market-follower strategy, an adapter takes the leader's products and adapts or improves them.
TRUE
Page Ref: 307
Objective: 3
Difficulty: Easy
Firms with low shares of the total market can become highly profitable through smart niching.
TRUE
Page Ref: 308
Objective: 3
Difficulty: Easy
An alternative to being a follower in a large market is to be a leader in a small market.
TRUE
Page Ref: 308
Objective: 3
Difficulty: Easy
The nicher achieves high sales volume, whereas the mass marketer achieves high margin.
FALSE
Page Ref: 308
Objective: 3
Difficulty: Easy
The growth stage of a product's life cycle is a period of rapid market acceptance and substantial profit improvement.
TRUE
Page Ref: 310
A fashion is a basic and distinctive mode of expression appearing in a field of human endeavor.
FALSE
Page Ref: 311
Objective: 4
Difficulty: Easy
Fads are fashions that come quickly into public view, are adopted with great zeal, peak early, and decline very fast.
TRUE
Page Ref: 311
Objective: 4
Difficulty: Easy
An inventor is the first to develop a working model while a product pioneer is the first to develop patents in a new-product category.
FALSE
Page Ref: 312
Objective: 4
Difficulty: Easy
Price, distribution, and communication are the nonproduct elements that marketers modify to increase product sales.
TRUE
Page Ref: 314
Objective: 4
Difficulty: Easy
An alternate way to increase sales volume is to expand the number of users by having them consume more of the product on each occasion.
FALSE
Page Ref: 315
Objective: 4
Difficulty: Easy
An alternate way to increase sales volume is to expand the number of users by converting nonusers.
TRUE
Page Ref: 315
Objective: 4
Difficulty: Easy
An alternate way to increase sales volume is to increase the usage rates among users by entering new market segments.
FALSE
Page Ref: 315
Objective: 4
Difficulty: Easy
The prime objective, during the introduction stage of a product life cycle, is to maximize market share.
FALSE
Page Ref: 317
Objective: 4
Difficulty: Easy
The product strategy during the maturity stage of the product life cycle should be to build more intensive distribution.
FALSE
Page Ref: 317
Objective: 4
Difficulty: Easy
During economic downturn, the potential value and profitability of some target consumers may change.
TRUE
Page Ref: 319
Objective: 5
Difficulty: Easy
Heavy focus on price reductions and discounts during recession allow firms to improve long-term brand equity and price integrity.
FALSE
Page Ref: 319
Objective: 5
Difficulty: Easy
With respect to positioning, explain points-of-parity and points-of-difference.
Points-of-difference (PODs) are attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe that they could not find to the same extent with a competitive brand. Points-of-parity (POPs), on the other hand, are associations that are not necessarily unique to the brand but may in fact be shared with other brands.
Page Ref: 131-133
Which three groups of customers can help expand a firm's market demand?
Every product class has the potential to attract buyers who are unaware of the product or are resisting it because of price or lack of certain features. A company can search for new users among three groups: those who might use it but do not (market-penetration strategy), those who have never used it (new-market segment strategy), or those who live elsewhere (geographical-expansion strategy).
Page Ref: 301
Objective: 1
Difficulty: Easy
Which three groups of marketers help satisfy a customer's needs?
In satisfying customer needs, one can draw a distinction between responsive marketing, anticipative marketing, and creative marketing. A responsive marketer finds a stated need and fills it. An anticipative marketer looks ahead to needs customers may have in the near future. A creative marketer discovers solutions customers did not ask for but to which they enthusiastically respond. Creative marketers are proactive market-driving firms, not just market-driven ones.
Page Ref: 302
Objective: 1
Difficulty: Easy
What is counteroffensive defense? Explain with an example.
In a counteroffensive, the market leader can meet the attacker frontally and hit its flank, or launch a pincer movement so it will have to pull back to defend itself. After FedEx watched UPS successfully invade its airborne delivery system, it invested heavily in ground delivery through a series of acquisitions to challenge UPS on its home turf.
Another common form of counteroffensive is the exercise of economic or political clout. The leader may try to crush a competitor by subsidizing lower prices for the vulnerable product with revenue from its more profitable products, or it may prematurely announce a product upgrade to prevent customers from buying the competitor's product. Or the leader may lobby legislators to take political action to inhibit the competition.
Page Ref: 303
Objective: 1
Difficulty: Easy
200) Characterize the four broad strategies often employed by market followers to meet their competitors.
These broad strategies include: (1) counterfeiter - the counterfeiter duplicates the leader's product and package and sells it on the black market or through disreputable dealers; (2) cloner - the cloner emulates the leader's products, name, and packaging, with slight variations; (3) imitator - the imitator copies some things from the leader but maintains differentiation in terms of packaging, advertising, pricing, or location; and (4) adapter - the adapter takes the leader's products and adapts or improves them.
Page Ref: 307
Objective: 2
Difficulty: Easy
What are end-user and vertical-level specialists?
The key idea in successful nichemanship is specialization. A firm that specializes in one type of end-use customer is an end-user specialist. For example, a value-added reseller (VAR) customizes computer hardware and software for specific customer segments and earns a price premium in the process.
A firm that specializes at some vertical level of the production-distribution value chain is a vertical-level specialist. A copper firm may concentrate on producing raw copper, copper components, or finished copper products.
Page Ref: 309
Objective: 3
Difficulty: Easy
...
What is fashion?
Fashion is one of the three special categories of product life cycles. A fashion is a currently accepted or popular style in a given field. Fashions pass through four stages: distinctiveness, emulation, mass fashion, and decline. The length of a fashion cycle is hard to predict. One view is that fashions end because they represent a purchase compromise, and consumers soon start looking for the missing attributes. Another explanation is that too many consumers adopt the fashion, thus turning others away. Still another is that the length of a particular fashion cycle depends on the extent to which the fashion meets a genuine need, is consistent with other trends in the society, satisfies societal norms and values, and keeps within technological limits as it develops.
Page Ref: 311
Objective: 4
Difficulty: Easy
• improve product quality and add new features and improved styling.
• add new models and flanker products (of different sizes, flavors, and so forth) to protect the
main product.
• enter new market segments.
• increase its distribution coverage and enter new distribution channels.
• shift from awareness and trial communications to preference and loyalty communications.
• lower prices to attract the next layer of price-sensitive buyers.
...
By spending money on product improvement, promotion, and distribution, the firm can capture
a dominant position. It can trade off maximum current profit for high market share and the hope
of even greater profits in the maturity stage.
Page Ref: 313
Objective: 4
Difficulty: Easy
...
Which are the three ways to change the course for a brand?
Three ways to change the course for a brand are market, product, and marketing program modifications.
Market modification: A company might try to expand the market for its mature brand by working with the two factors that make up sales volume: Volume = number of brand users * usage rate per user. This may also be matched by competitors.
..
Product modification: Managers also try to stimulate sales by improving quality, features, or style. Quality improvement increases functional performance by launching a "new and improved" product. Feature improvement adds size, weight, materials, supplements, and accessories that expand the product's performance, versatility, safety, or convenience. Style improvement increases the product's esthetic appeal. Any of these can attract consumer attention.
.
Marketing program modification: Finally, brand managers might also try to stimulate sales by modifying nonproduct elements - price, distribution, and communications in particular. They should assess the likely success of any changes in terms of effects on new and existing customers.
Page Ref: 314
...
Because different brands or sub-brands appeal to different economic segments, those that target the lower end of the socioeconomic spectrum may be particularly important during a recession. Value-driven companies such as McDonald's, Walmart, Costco, Aldi, Dell, E*TRADE, Southwest Airlines, and IKEA are likely to benefit most. Spam, the oft-maligned gelatinous 12-ounce rectangle of spiced ham and pork, found its sales soaring during the recession. Affordably priced and requiring no refrigeration, Spam is, its maker Hormel claims, "like meat with a pause button."
Page Ref: 320
Objective: 5
Difficulty: Easy
...
Define a brand mantra and provide an example of a brand mantra.
Student answers may vary.
A brand mantra is an articulation of the heart and soul of the brand and is closely related to other branding concepts like "brand essence" and "core brand promise." Brand mantras are short, three- to five-word phrases that capture the irrefutable essence or spirit of the brand positioning. American Express'- "world class Service, Personal Recognition," is an example of a brand mantra
Page Ref: 133
Define leverageable advantage with an example.
A leverageable advantage is one that a company can use as a springboard to new advantages, much as Microsoft has leveraged its operating system to Microsoft Office and then to networking applications. In general, a company that hopes to endure must be in the business of continuously inventing new advantages.
Page Ref: 134
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
How does a company differentiate its market offerings using employee differentiation? Provide an example of a company using employee differentiation.
Student answers may vary.
A company differentiating its market offerings using employee differentiation, does so by having better-trained personnel who provide superior customer service. Singapore Airlines is well regarded in large part because of its flight attendants.
Page Ref: 135
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
209) Describe the three strategies that are necessary for a market leader to accomplish to stay on top.
Answer: The three primary strategies that may be used by the market leader are: (1) expanding the total market by attracting new customers and by stimulating more usage of product; (2) defending market share; and (3) expanding market share.
Page Ref: 301
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Your marketing manager has asked you to develop a new customer strategy for your company. Additionally, you have been asked to develop, specifically, a market-penetration strategy to assist in gaining new customers. Describe a market-penetration strategy in this context.
The market-penetration strategy in this context would seek to get new customers from a group that might use the product but as yet do not.
Page Ref: 301
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Assume that your firm is a market leader in manufacturing detergent. How would the firm use position defense as a defensive marketing strategy to maintain its share?
Position defense means occupying the most desirable market space in consumers' minds, making the brand almost impregnable. Tide, as a popular laundry detergent, has become synonymous with washing machine detergent. (Student answers may vary.)
Page Ref: 303
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
If you were asked to develop a mobile defense for your products that are likely to come under attack from a market challenger, what would you suggest?
In mobile defense, the leader stretches its domain over new territories through market broadening and market diversification. Market broadening shifts the company's focus from the current product to the underlying generic need.
Page Ref: 303
Objective: 1
AACSB: Reflective Thinking
Difficulty: Easy
As a brand manager of a firm that manufactures denim jeans, how will you implement a preemptive defense marketing strategy to meet an anticipated competitive challenge?
A preemptive defense is a more aggressive maneuver that has as its purpose to attack before the enemy starts its offense. You can launch a preemptive defense by waging a guerrilla action across the market and keep everyone off balance. Another way to launch a preemptive defense is by introducing a stream of new products like denim jackets and skirts in various colours. (Student answers may vary.)
Page Ref: 303
Objective: 1
Who are the ideal opponents of a market challenger?
The opponents of a market challenger are: (1) the industry leader; (2) firms its own size that are not doing the job and are underfinanced; or (3) small local and regional firms.
Page Ref: 306
Objective: 2
AACSB: Reflective Thinking
Difficulty: Easy
Describe frontal attack as a general market-challenger attack strategy.
In a pure frontal attack, the attacker matches its opponent's product, advertising, price, and distribution. The principle of force says the side with the greater resources will win. A modified frontal attack, such as cutting price, can work if the market leader doesn't retaliate, and if the competitor convinces the market its product is equal to the leader's.
Page Ref: 306
Objective: 2
Difficulty: Easy
Assume that you are the marketing manager of a firm that manufactures athletic shoes. How will you launch an encirclement attack on your competitor?
Encirclement attempts to capture a wide slice of territory by launching a grand offensive on several fronts. It makes sense when the challenger commands superior resources. In an attack on your archrival, you can launch your product in all the major cities of the globe together and surprise your rival. (Student answers may vary.)
Page Ref: 306
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
The marketing manager of a firm that manufactures cotton cloth has chosen the bypass attack as a means of responding to an industry leader. How will the manager go about launching this type of attack?
The bypass attack is an indirect assault. The marketing manager can diversify into unrelated products like ready-made garments. The manager can also diversify into new geographical markets or adopt new technologies to manufacture its product. (Students answers may vary.)
Page Ref: 306
How can a firm choose a specific attack?
Any aspect of the marketing program can serve as the basis for attack, such as lower-priced or
discounted products, new or improved products and services, a wider variety of offerings, and innovative distribution strategies. A challenger's success depends on combining several, more specific, strategies to improve its position over time.
Page Ref: 306
Objective: 2
Difficulty: Easy
Describe a counterfeiter as a market-follower.
A counterfeiter duplicates the leader's product and package and sells it on the black market or through disreputable dealers. Music firms, Apple, and Rolex have been plagued by the counterfeiter problem, especially in Asia.
Page Ref: 307
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
If your company, which is a market follower, was labeled as an imitator, what would its primary strategies for meeting competition be?
The imitator copies some things from the leader but maintains differentiation in terms of packaging, advertising, pricing, or location. The leader does not mind the imitator as long as the imitator does not attack the leader aggressively.
Page Ref: 307
Objective: 3
AACSB: Reflective Thinking
Difficulty: Easy
Who is a market-nicher?
An alternative to being a follower in a large market is to be a leader in a small market or niche. Smaller firms normally avoid competing with larger firms by targeting small markets of little or no interest to the larger firms. But even large, profitable firms may choose to use niching strategies for some of their business units or companies.
Page Ref: 308
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
224)
What is a product-feature specialist?
A product-feature specialist specializes in producing a certain type of product or product feature. Zipcar's car-sharing services target people who live and work in seven major U.S. cities, frequently use public transportation, but still need a car a few times a month.
Page Ref: 309
Objective: 3
Difficulty: Easy
What are fads?
Fads are fashions that come quickly into public view, are adopted with great zeal, peak early, and
decline very fast. Their acceptance cycle is short, and they tend to attract only a limited following
who are searching for excitement or want to distinguish themselves from others. Fads fail to survive because they don't normally satisfy a strong need. The marketing winners are those who recognize fads early and leverage them into products with staying power.
Page Ref: 311
What is the criticism of the product life-cycle concept?
The product life-cycle theory has its share of critics, who claim life-cycle patterns are too variable in shape and duration to be generalized, and that marketers can seldom tell what stage their product is in. A product may appear mature when it has actually reached a plateau prior to another upsurge. Critics also charge that, rather than an inevitable course, the product life-cycle pattern is the self fulfilling result of marketing strategies, and that skillful marketing can in fact lead to continued growth.
Page Ref: 317
Objective: 4
A customer judges a product offering by three basic elements: product features and quality, services mix and quality, and ________.
A) performance
B) utility
C) tangibility
D) price
E) availability
D
Page Ref: 144
Objective: 1
Difficulty: Moderate
The five product levels constitute a ________. At each level more customer value is added.
A) product line
B) business model
C) customer value-hierarchy
D) value grid
E) demand chain
C
Page Ref: 144
Objective: 1
Difficulty: Moderate
When companies search for new ways to satisfy customers and distinguish their offering from others, they look at the ________ product, which encompasses all the possible augmentations and transformations of the product.
A) consumption
B) expected
C) potential
D) augmented
E) basic
C
Page Ref: 144
Objective: 1
Difficulty: Moderate
5) Marketers must see themselves as benefit providers. For example, when a shopper purchases new shoes, he/she expects the shoes to cover his/her feet and allow him/her to walk unobstructed. This is an example of what level in the consumer-value hierarchy?
A) pure tangible good
B) basic product
C) augmented product
D) potential product
E) generic product
Answer: B
Page Ref: 144
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
How a consumer shops for organic foods and how he or she uses and disposes of the product is part of the consumers' ________ that is important for marketers to consider.
A) value proposition
B) consumption system
C) value system
D) quality perception
E) value chain
B
Page Ref: 145
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Marketers have traditionally classified products on the basis of three characteristics: ________, tangibility, and use.
A) availability
B) affordability
C) aesthetics
D) durability
E) necessity
D
Page Ref: 145
Objective: 1
Difficulty: Easy
Which of the following are tangible goods that normally survive many uses?
A) generic goods
B) durable goods
C) core benefits
D) convenience goods
E) unsought goods
B
Page Ref: 145
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
9)
What types of goods are purchased frequently, immediately, and with minimum effort by the consumers?
A) specialty goods
B) shopping goods
C) unsought goods
D) durable goods
E) convenience goods
E
Page Ref: 145
Objective: 1
Difficulty: Moderate
11)
Page Ref: 145
Objective: 1
Difficulty: Easy
Industrial goods can be classified as ________, capital items, or suppliers and business services based on their relative cost and how they enter the production process.
A) service components
B) sub-assemblies
C) accessories
D) specialty goods
E) materials and parts
E
Page Ref: 145
Objective: 1
Difficulty: Easy
13)
Answer: D
Page Ref: 145
Objective: 1
Difficulty: Easy
Most products are established at one of four performance levels: low, average, high, or superior. For example, mountain bikes come in a variety of sizes and physical attributes. When a consumer purchases a mountain bike costing $1,000, she/he expects the bike to perform to specifications and to have high ________ meeting the promised specifications.
A) features
B) conformance quality
C) durability
D) performance quality
E) reliability
D
Page Ref: 146
Objective: 2
AACSB: Analytic Skills
Difficulty: Difficult
________ is the ability of a company to prepare on a large-scale basis individually designed products, services, programs, and communications.
A) Mass customization
B) Reverse engineering
C) Interoperability
D) Backward compatibility
E) Benchmarking
A
Page Ref: 146
Objective: 2
Difficulty: Moderate
________ is the level at which the product's primary characteristics operate.
A) Design
B) Conformance quality
C) Reparability
D) Performance quality
E) Durability
D
Page Ref: 146
Objective: 2
Difficulty: Moderate

17)
Page Ref: 146
Objective: 2
Difficulty: Moderate
Most products can be offered with varying ________ that can supplement its basic function.
A) degrees of reliability
B) conformance qualities
C) features
D) forms
E) designs
C
Page Ref: 146
Objective: 2
AACSB: Reflective Thinking
Difficulty: Easy
If the Ford GT is designed to accelerate to 50 miles per hour within 10 seconds, and every Ford GT coming off the assembly line does this, the model is said to have high ________.
A) reliability
B) conformance quality
C) durability
D) compatibility
E) interoperability
B
Page Ref: 146
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
________ describes the product's look and feel to the buyer; it has an advantage of creating distinctiveness that is difficult to copy.
A) Design
B) Style
C) Durability
D) Conformance
E) Reliability
B
Page Ref: 146
Objective: 2
Difficulty: Easy
21)
Page Ref: 146
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
When the physical product cannot be easily differentiated, the key to competitive success may lie in adding valued services and improving their quality. The main service differentiators are ordering ease, delivery, installation, ________, customer consulting, maintenance, and repair.
A) technology intensity
B) responsivity
C) ease of use
D) customer training
E) adaptability
D
Page Ref: 147
Objective: 2
Difficulty: Moderate
Delivery refers to how well the product or service is brought to the customer. It includes speed, ________, and care throughout the delivery process.
A) expedience
B) intensity
C) tangibility
D) performance
E) accuracy
E
Page Ref: 146
Objective: 2
Difficulty: Moderate
________ refers to educating the customer's employees to use the vendor's equipment properly and efficiently.
A) Customer training
B) Open innovation
C) Crowdsourcing
D) Co-development
E) Collaborative research
A
Page Ref: 147
Objective: 2
Difficulty: Easy
25)
Page Ref: 147
Objective: 2
Difficulty: Moderate
________ describes the service program for helping customers keep purchased products in good working order.
A) Returns
B) Ordering ease
C) Installation
D) Maintenance and repair
E) Delivery
D
Page Ref: 147
Objective: 2
In increasingly fast-paced markets, price and technology are not enough. ________ is the factor that will often give a company its competitive edge and is defined as the totality of features that affect how a product looks, feels, and functions in terms of customer requirements.
A) Conformance
B) Design
C) Performance
D) Reliability
E) Style
B
Page Ref: 147
Objective: 3
Difficulty: Moderate
A group of products within a product class that are closely related because they perform a similar function, are sold to the same customer groups, are marketed through the same outlets or channels, or fall within given price ranges is known as a ________.
A) product type
B) product class
C) need family
D) product variant
E) product line
E
Page Ref: 147
Objective: 4
Difficulty: Easy
A consumer products firm manufactures and sells over 200 different sizes and varieties of jams and jellies. We can say that this manufacturer's product mix has high ________.
A) consistency
B) depth
C) intensity
D) range
E) width
B
Page Ref: 147
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
The ________ of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way.
A) consistency
B) depth
C) width
D) length
E) composition
A
Page Ref: 147
Objective: 4
Difficulty: Moderate
The ________ of the product mix refers to the total number of items in the mix.
A) width
B) length
C) depth
D) breadth
E) range
B
Page Ref: 147
Objective: 4
Difficulty: Easy
35)
Page Ref: 148
Objective: 4
Difficulty: Moderate
The ________ of a product mix refers to how many variants are offered of each product in the line.
A) width
B) length
C) depth
D) consistency
E) height
C
Page Ref: 147
Objective: 4
Difficulty: Moderate
Which of the following is a benefit of product mapping?
A) studying market matrices
B) integrating target markets
C) identifying market segments
D) educating consumers
E) integrating target matrices
C
Page Ref: 148
Objective: 4
Difficulty: Moderate
What occurs when any company lengthens its product line beyond its current range?
A) market overreach
B) brand dilution
C) product adaptations
D) cannibalization
E) line stretching
E
Page Ref: 148
Objective: 4
Difficulty: Easy
39)
Page Ref: 148
Objective: 4
Difficulty: Moderate
Moving ________ carries risks. The new brand can cannibalize core brand sales and lower the core brand's quality image.
A) up-market
B) two ways
C) one way
D) down-market
E) out-market
D
Page Ref: 148
Objective: 4
Difficulty: Moderate
Companies may wish to implement a(n) ________ to achieve more growth, to realize higher margins, or simply to position themselves as full-line manufacturers.
A) up-market stretch
B) rebranding plan
C) outsourcing strategy
D) disintermediation policy
E) vertical integration strategy
A
Page Ref: 148
Objective: 4
Difficulty: Moderate
A manufacturer of hiking boots looks at data that indicate that their subsegment of the market called "serious hiker" is declining and is predicted to decline into the future. The firm decides to enter the "low-price" segment with its new items. This is an example of a firm's ________ to reach a new market.
A) down-market stretch
B) up-market stretch
C) two-way stretch
D) marketing research
E) disintermediation
A
Page Ref: 148
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
43)
Page Ref: 148
Objective: 4
Difficulty: Moderate
Price-setting logic must be modified when the product is part of a product mix. In that case, the firm searches for a set of prices that ________ profits on the total mix.
A) are ineffective on total
B) have no effect on total
C) maximizes
D) minimizes
E) capitalize upon
C
Page Ref: 148
Objective: 4
Difficulty: Moderate
Companies normally develop ________ rather than single products and require sellers to establish perceived quality differences between price steps within it.
A) product mix
B) captive products
C) product lines
D) optional products
E) average products
C
Page Ref: 150
Objective: 4
Difficulty: Moderate
Some service firms often engage in ________, consisting of a fixed fee plus a variable usage fee.
A) pure bundling
B) pure pricing
C) mixed pricing
D) captive pricing
E) two-part pricing
E
Page Ref: 150
Betty Crocker cake mixes using Hershey syrup in its cake mixes and "Lunchables" lunch combinations with Taco Bell tacos are examples of what special type of branding?
A) family branding
B) ingredient co-branding
C) co-branding
D) generic-branding
E) individual branding
B
Page Ref: 150
Objective: 5
AACSB: Analytic Skills
Difficulty: Moderate
The potential disadvantages of ________ are the risks and lack of control from becoming aligned with another brand in the consumers mind. Consumer expectations about the level of involvement and commitment are likely to be high, so unsatisfactory performance could be very negative for the brands involved.
A) co-branding
B) cannibalization
C) vertical integration
D) disintermediation
E) brand stretching
A
Page Ref: 150
Objective: 5
Difficulty: Moderate
We define packaging as all the activities of designing and producing the container for a product. This includes up to three levels of material: primary package, secondary package, and ________.
A) retailer package
B) design package
C) shipping package
D) consumer package
E) supplier package
C
Page Ref: 150-151
Objective: 6
Difficulty: Moderate
________ are formal statements of expected product performance by the manufacturer.
A) Insurance
B) Warranties
C) Bonds
D) Invoices
E) Balance sheets
B
Page Ref: 151
Objective: 6
Difficulty: Easy
Many sellers offer either general or specific guarantees. Guarantees reduce the buyer's ________ risk.
A) actual
B) perceived
C) real
D) implied
E) stated
B
Page Ref: 151
Objective: 6
Difficulty: Moderate
55)
Page Ref: 151
Objective: 6
Difficulty: Moderate
A product is anything that can be offered to a market to satisfy a want or need.
TRUE
Page Ref: 144
Objective: 1
Difficulty: Easy
The customer-value hierarchy consists of the basic product, core benefit, expected product, augmented product, and the consumption system.
FALSE
Page Ref: 144
Objective: 1
Difficulty: Moderate
Marketers have traditionally classified products on the basis of characteristics such as durability, tangibility, and use.
TRUE
Page Ref: 145
Objective: 1
Difficulty: Easy
Durable products normally require less personal selling and service and less seller guarantees than nondurable goods.
FALSE
Page Ref: 145
Objective: 1
Difficulty: Moderate
Capital items are long-lasting goods that facilitate developing or managing the finished products.
TRUE
Page Ref: 145
Objective: 1
Difficulty: Easy
To be branded, physical products need not be differentiated.
FALSE
Page Ref: 145
Firms should design the highest performance level possible for their products.
FALSE
Page Ref: 146
Objective: 2
Difficulty: Moderate
As a selling point, durability commands a particularly high pricing premium, especially for products that are subject to rapid technological obsolescence, as are personal computers and video cameras.
FALSE
Page Ref: 146
Objective: 2
Difficulty: Difficult
Customer training and customer consulting are two areas for service differentiation that manufacturers can use with their products.
TRUE
Page Ref: 146-147
Objective: 2
Difficulty: Easy
A product system is a group of diverse and unrelated items that does not function in a compatible manner and includes the product mix and product assortment.
FALSE
Page Ref: 147
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
The four product-mix dimensions (length, width, depth, consistency) permit the company to expand its business.
TRUE
Page Ref: 147
Objective: 4
Difficulty: Moderate
Companies in the "middle market" should never attempt to stretch their line in both directions.
FALSE
Page Ref: 148
Objective: 4
Difficulty: Moderate
Manufacturers of systems such as razors and ink jet printers use a system of pricing called "two-part pricing"one price for the disposable products and another for the "hardware."
FALSE
Page Ref: 150
Objective: 4
Difficulty: Difficult
A pricing system in which there is a "fixed" fee and then a variable "usage" fee is called bundling.
FALSE
Page Ref: 150
Objective: 4
Difficulty: Moderate
Pure bundling occurs when a firm offers goods both individually and in bundles.
FALSE
Page Ref: 150
Objective: 4
Difficulty: Easy
Co-branding is when two or more well-known existing brands are combined into a joint product and/or marketed together in some fashion.
TRUE
Page Ref: 149-150
Objective: 5
Packaging is all the activities of designing and producing the container for a product.
TRUE
Page Ref: 150
Objective: 6
Difficulty: Easy
76)
Page Ref: 147
Objective: 4
Difficulty: Moderate
Studying how consumers shop, how they use a particular product or service, and how they dispose of the product when consumed is important for marketers. This information forms the basis of product strategy. Define the consumption system and identify the two upcoming product strategies that are affected by this knowledge.
This is called the user's total consumption system, defined as the way the user performs the tasks of getting and using products and related services. This is important because it will contain information useful in the product-augmentation strategy and the potential product strategy.
Page Ref: 145
Objective: 1
Difficulty: Moderate
You have been asked to prepare a product-line analysis for your company's stable of products. Why is it important for product-line mangers to do a product-line analysis?
Product-line managers need to know the sales and profits of each item in their line in order to determine which items to build, maintain, harvest, or divest. They also need to understand each product line's market profile.
Page Ref: 148
Objective: 4
AACSB: Analytic Skills
Difficulty: Easy
Explain the concept of line stretching and the three uses for it.
Line stretching occurs when a company lengthens its product line beyond its current range. It includes down-market stretch (introduce a lower-priced line), up-market stretch (introduce an upscale line), or two-way stretch (introduce both an upscale line and a down-scale line).
Page Ref: 148
Objective: 4
Difficulty: Moderate
What are the situations in which guarantees are most effective?
Guarantees are most effective when either the company or the product is not well known, so a "money-back" guarantee in that case would reduce the buyer's perceived risk and provide them with confidence in purchasing the product. The second area is when the product/service is superior to competition in quality and performance.
Page Ref: 151
Objective: 6
1)
Page Ref: 181
Objective: 1
Difficulty: Easy
Many consumers are willing to pay $100 for a perfume that contains $10 worth of scent because the perfume is from a well-known brand. What kind of a pricing is the company depending on?
A) going-rate pricing
B) image pricing
C) market-skimming pricing
D) target pricing
E) markup pricing
B
Page Ref: 181
Objective: 1
Difficulty: Easy
What cues such as sale signs and prices that end in 9 are more influential ________.
A) when customers have substantial knowledge about prices
B) when customers purchase the particular item regularly
C) when product quality is standardized
D) when product designs vary over time
E) when prices do not vary from time to time
D
Page Ref: 182
Objective: 1
Difficulty: Moderate
Which of the following is the first step in setting a pricing policy?
A) selecting a pricing method
B) selecting the pricing objective
C) determining demand
D) estimating cost
E) analyzing competitors' costs, prices, and offers
B
Page Ref: 182
Objective: 2
Difficulty: Easy
5)
Page Ref: 182
Objective: 2
Difficulty: Easy
After estimating the demand and costs associated with alternative prices, a company has chosen to price its product in such a way that it gains the highest rate of return on its investment. The company is looking to ________.
A) maximize its market share
B) skim the market
C) become a product-quality leader
D) survive in the market
E) maximize its current profit
E
Page Ref: 182
Objective: 2
Difficulty: Easy
Companies who believe that a higher sales volume leads to lower unit costs and higher long-run profits are attempting to ________.
A) maximize their market share
B) skim the market
C) become a product-quality leader
D) merely survive in the market
E) maximize their current profits
A
When Apple introduced its iPhone, it was priced at $599. This allowed Apple to earn the maximum amount of revenue from the various segments of the market. Two months after the introduction, the price has come down to $399. What kind of a pricing did Apple adopt?
A) loss-leader pricing
B) market-penetration pricing
C) market-skimming pricing
D) target-return pricing
E) value pricing
C
Page Ref: 182
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
Market skimming pricing makes sense under all the following conditions, EXCEPT ________.
A) if a sufficient number of buyers have a high current demand
B) if the unit costs of producing a small volume are high enough to cancel the advantage of charging what the traffic will bear
C) if the high initial price does not attract more competitors to the market
D) if consumers are likely to delay buying the product until its price drops
E) if the high price communicates the image of a superior product
D
Page Ref: 182
Objective: 2
Difficulty: Easy
Companies that aim to ________ strive to be affordable luxuries.
A) survive in the market
B) partially recover their costs
C) maximize their market share
D) pursue value pricing
E) be product-quality leaders
E
Page Ref: 182
Objective: 2
Consumers are less price sensitive ________.
A) to high cost items
B) when they frequently change their buying habits
C) when there are more substitutes
D) when there are more competitors
E) when they do not readily notice higher prices
E
Page Ref: 183
Objective: 2
Difficulty: Moderate
15) Consumers are less price sensitive when ________.
A) price is only a small part of the total cost spent on the product over its lifetime
B) they perceive the higher prices to be unjustified
C) they change their buying habits regularly
D) there are many substitutes and competitors in the market
E) they are buying high-cost items
Answer: A
Page Ref: 183
Objective: 2
Difficulty: Moderate
If demand hardly changes with a small change in price, the demand is said to be ________.
A) strained
B) marginal
C) inelastic
D) flexible
E) unit elastic
C
Page Ref: 183-184
Objective: 2
A company must make payments each month for rent, heat, interest, and salaries. These are ________.
A) total costs
B) fixed costs
C) variable costs
D) opportunity costs
E) target costs
B
Page Ref: 184
Objective: 2
Difficulty: Easy
Costs that differ directly with the level of production are known as ________.
A) fixed costs
B) overhead costs
C) opportunity costs
D) target costs
E) variable costs
E
Page Ref: 184
Objective: 2
Difficulty: Easy
________ consist of the sum of the fixed and variable costs for any given level of production.
A) Total costs
B) Average costs
C) Opportunity costs
D) Learning costs
E) Target costs
A
Page Ref: 184
Objective: 2
The decline in the average cost of production with accumulated production experience is called the ________.
A) demand curve
B) supply chain
C) learning curve
D) value chain
E) indifference curve
C
Page Ref: 185
Objective: 2
Difficulty: Easy
Experience-curve pricing ________.
A) assumes competitors are weak followers
B) allows products to project a high quality image
C) is applicable only to manufacturing costs
D) focuses on reducing fixed costs
E) is generally risk-free
A
Page Ref: 185
Objective: 2
Difficulty: Moderate
Deducting the desired profit margin from the price at which a product will sell, given its appeal and competitors' prices, is known as ________.
A) overhead costing
B) target costing
C) activity based costing
D) benefit analysis
E) estimate costing
B
Page Ref: 185
Objective: 2
Difficulty: Easy
Despite its weaknesses, markup pricing remains popular for which of the following reasons?
A) Sellers can determine demand much more easily than they can estimate costs.
B) By tying the price to cost, the pricing task becomes more sophisticated.
C) When all firms in the industry use markup pricing, price competition flourishes.
D) Sellers take advantage of buyers when the latter's demand becomes acute.
E) Many people feel that cost-plus pricing is fairer to both buyers and sellers.
E
Page Ref: 187
Objective: 2
Difficulty: Moderate
A manufacturer has invested $750,000 in a new product and wants to set a price to earn a 15 percent ROI. The cost per unit is $18 and the company expects to sell 50,000 units in the first year. Calculate the company's target-return price for this product.
A) $20.25
B) $18.23
C) $18.10
D) $20.70
E) $25.50
A
Page Ref: 187
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
________ pricing takes into account a host of inputs, such as the buyer's image of the product performance, the channel deliverables, the warranty quality, customer support, and attributes such as the supplier's reputation, trustworthiness, and esteem.
A) Perceived-value
B) Value
C) Going-rate
D) Auction-type
E) Markup
A
Page Ref: 188
Objective: 2
Difficulty: Easy
29)
Page Ref: 188
Objective: 2
Difficulty: Moderate
________ pricing is a matter of reengineering the company's operations to become a low-cost producer without sacrificing quality.
A) Value
B) Going-rate
C) Auction-type
D) Markup
E) Perceived-value
A
Page Ref: 188
Objective: 2
Difficulty: Easy
Matt's retail store offers all its products at $2 less than its competitors throughout the year. The store never runs any promotional campaigns or offers any additional special discounts. Matt's retail store is following a(n) ________.
A) auction-type pricing policy
B) target-plus pricing policy
C) everyday low pricing policy
D) high-low pricing policy
E) going-rate pricing policy
C
Page Ref: 188
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
Every day low pricing is most suitable if ________.
A) consumers are willing to perform activities such as clip coupons to avail of discounts
B) consumers tend to associate price with quality
C) customers are insensitive to changes in price
D) the cost of conducting frequent sales and promotions is high
E) consumers have sufficient time to find the best prices
D
Page Ref: 189
Objective: 2
In a(n) ________, the buyer announces something he or she wants to buy, and potential sellers compete to offer the lowest price.
A) Dutch auction with one buyer and many sellers
B) English auction with one buyer and many sellers
C) English auction with one seller and many buyers
D) sealed-bid auction
E) ascending auction
A
Page Ref: 189
Objective: 2
Difficulty: Easy
________ let would-be suppliers submit only one bid; they cannot know the other bids.
A) Descending bid auctions
B) Sealed-bid auctions
C) English auctions
D) Dutch auctions
E) Reverse auctions
B
Page Ref: 189
A Japanese firm is ready to sell its recent technological innovation to the U.S. government. But it has asked for 80 percent in cash and the rest in mica. The Japanese firm is looking to enter into a(n) ________ with the U.S. government.
A) functional discount
B) compensation deal
C) buyback arrangement
D) offset agreement
E) barter deal
B
Page Ref: 191
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Armac Ltd. is a sluice-box manufacturer based in China. A sluice-box is used for gold prospecting. Armac is interested in selling a few of its machines to an American mining company, but it wants 95 percent of the machines' price in gold and the rest in ores recovered by using the machines. This is an example of a ________.
A) buyback arrangement
B) functional discount
C) barter deal
D) compensation deal
E) sealed bid
A
Page Ref: 191
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
4
________ are offered by a manufacturer to trade-channel members if they will perform certain functions, such as selling, storing, and record keeping.
A) Consumer promotions
B) Quantity discounts
C) Functional discounts
D) Seasonal discounts
E) Trade-in allowances
C
Page Ref: 192
Objective: 3
Difficulty: Easy
When hotels, motels, and airlines offer discounts in slow selling periods, they are said to be offering ________.
A) trade discounts
B) quantity discounts
C) functional discounts
D) seasonal discounts
E) trade-in allowances
D
Page Ref: 192
Objective: 3
Difficulty: Easy
________ are granted for turning in old item when buying a new one.
A) Promotional allowances
B) Quantity discounts
C) Functional discounts
D) Seasonal discounts
E) Trade-in allowances
E
Page Ref: 192
Objective: 3
Difficulty: Easy
44)
Page Ref: 192
Objective: 3
Difficulty: Easy
When supermarkets and department stores drop the price on well-known brands to stimulate store traffic, they are said to be following ________.
A) value pricing
B) loss-leader pricing
C) special event pricing
D) high-low pricing
E) everyday low pricing
B
Page Ref: 191
Objective: 3
Difficulty: Easy
When Alan bought his car, the bank gave him 24 months to repay his car loan. But when Alan made a request to increase the time frame to 36 months, the bank granted the extension. The bank was willing to offer Alan a ________.
A) longer payment term
B) warranty contract
C) service contract
D) special customer price
E) special event price
A
Page Ref: 192
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
In second-degree price discrimination, the seller charges ________.
A) less to buyers of larger volumes
B) different prices depending on the season, day, or hour
C) a separate price to each customer depending on the intensity of his or her demand
D) different prices for different versions of the same product
E) different prices for the same product depending on the channel through which it is sold
A
Page Ref: 192-193
Madame Tussaud's wax museum is a popular tourist attraction in London. The museum charges higher entry rates for tourists compared to locals. This form of price discrimination is known as ________.
A) customer-segment pricing
B) image pricing
C) location pricing
D) special customer pricing
E) special event pricing
A
Page Ref: 193
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
The price of tickets to the opera vary depending on where the person would like to be seated-in the gallery or in the stalls. This is an example of ________.
A) channel pricing
B) time pricing
C) image pricing
D) product-form pricing
E) location pricing
E
Page Ref: 193
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
The airline and hospitality industries use ________, by which they offer discounted but limited early purchases, higher-priced late purchases, and the lowest rates on unsold inventory just before it expires.
A) special-customer pricing
B) yield pricing
C) cash rebates
D) location pricing
E) customer-segment pricing
B
Page Ref: 193
Objective: 3
Difficulty: Easy
For price discrimination to work ________.
A) the market must be segmentable and the segments must show similar intensities of demand
B) members in the lower-price segment must be able to resell the product to the higher-price segment
C) competitors must be able to undersell the firm in the higher-price segment
D) the practice must not breed customer resentment and ill will
E) the extra revenue derived from price discrimination must not exceed the cost of segmenting and policing the market
D
Page Ref: 193
Objective: 3
Difficulty: Moderate
When a company maintains its price but removes or prices separately one or more elements that were part of the former offer, such as free delivery or installation, it is known as ________.
A) escalating
B) differentiation
C) unbundling
D) reverse discounting
E) delayed quotation pricing
C
Page Ref: 194
Objective: 5
Purchase decisions are based on how consumers perceive prices and what they consider the current actual price to be-not the marketer's stated price.
TRUE
Page Ref: 181
Objective: 1
Difficulty: Easy
Customers usually have a lower price threshold below which prices signal inferior or unacceptable
quality, as well as an upper price threshold above which prices are prohibitive and the product appears not worth the money.
TRUE
Page Ref: 181
Objective: 1
Difficulty: Easy
Although consumers may have fairly good knowledge of the range of prices involved, very few can accurately recall specific prices of products.
TRUE
Page Ref: 181
Objective: 1
Difficulty: Easy
When examining products, consumers compare an observed price to an internal reference price they remember or an external frame of reference.
TRUE
Page Ref: 187
Objective: 1
Difficulty: Easy
Companies strive to maximize their current profits if they are plagued with overcapacity, intense competition, or changing consumer wants.
FALSE
Page Ref: 182
Objective: 2
Difficulty: Easy
In the case of prestige goods, the demand curve sometimes slopes upward.
TRUE
Page Ref: 183
Objective: 2
Difficulty: Easy
Companies prefer customers who are less price sensitive.
TRUE
Page Ref: 183
Objective: 2
Difficulty: Easy
Price elasticity depends upon the magnitude and direction of the contemplated price change.
TRUE
Page Ref: 184
Objective: 2
Difficulty: Easy
Total costs consist of the sum of the fixed and variable costs for any given level of production.
TRUE
Page Ref: 184
Objective: 2
Difficulty: Easy
The key to effectively using perceived-value pricing is to deliver value that is on par with your competitors.
FALSE
Page Ref: 188
Objective: 2
Difficulty: Easy
Value pricing requires a company to reengineer its operations to become a low-cost producer.
TRUE
Page Ref: 188
Objective: 2
Difficulty: Easy
In a compensation deal, the seller sells a plant, equipment, or technology to another country and agrees
to accept as partial payment products manufactured with the supplied equipment.
FALSE
Page Ref: 191
Objective: 3
Difficulty: Easy
Trade-in allowances reward dealers for participating in advertising and sales support programs.
FALSE
Page Ref: 192
Objective: 3
Difficulty: Easy
In first-degree price discrimination, the seller charges less to buyers of larger volumes.
FALSE
Page Ref: 192
Objective: 3
Difficulty: Easy
When firms charge different prices to different customer groups for the same product or service, it is a case of second-degree price discrimination.
FALSE
Page Ref: 192-193
When Sony introduced the world's first high-definition television to the Japanese market in 1990, it was priced at $43,000. This helped Sony to scoop the maximum amount of revenue from the various segments of the market. The price dropped steadily through the years—a 28-inch Sony HDTV cost just over $6,000 in 1993, but a 40-inch Sony HDTV cost only $600 in 2010. What pricing strategy did Sony use here?
Sony used market-skimming pricing. This is a favorite for companies unveiling a new technology. Companies using this introduce their product at a high price and slowly drop the price over time.
Page Ref: 182
Objective: 2
Difficulty: Moderate
________ are sets of interdependent organizations participating in the process of making a product or service available for use or consumption.
A) Marketing channels
B) Interstitials
C) Communication channels
D) Sales territories
E) Marketing terrains
A
Page Ref: 198
Objective: 1
Difficulty: Easy
Which of the following entities in the marketing channel is a merchant?
A) wholesalers
B) brokers
C) sales agents
D) warehouses
E) advertising agencies
A
Page Ref: 203
Objective: 1
Difficulty: Easy
A(n) ________ is a facilitator who assists in the distribution process.
A) advertising agency
B) sales agent
C) manufacturer's representative
D) broker
E) wholesaler
A
Page Ref: 203
Objective: 1
Difficulty: Easy
A manufacturer uses the company's sales force and trade promotions to carry, promote, and sell products to end users. Which of the following strategies is this manufacturer using?
A) personalization strategy
B) tailoring strategy
C) push strategy
D) pull strategy
E) consumer promotion strategy
C
Page Ref: 198
Objective: 1
Difficulty: Easy
5)
Page Ref: 198
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
When is a pull strategy appropriate?
A) when there is low brand loyalty
B) when consumers are able to perceive differences between brands
C) when brand choice is made in the store
D) when it is a low involvement purchase
E) when the product is an impulse item
B
Page Ref: 198
Objective: 1
Difficulty: Easy
Using the push strategy is most appropriate when ________.
A) consumers are able to perceive differences between brands
B) the product being sold is an impulse item
C) there is high brand loyalty for the product
D) the product is a high involvement purchase
E) consumers choose the brand before they go to the store
B
Page Ref: 198
Objective: 1
Difficulty: Moderate
A firm uses its sales force to sell to large accounts and outbound telemarketing to sell to medium-sized accounts. The firm is using ________ marketing.
A) hybrid
B) pull
C) personalized
D) vertical
E) internal
A
Page Ref: 198-199
Objective: 1
Difficulty: Easy
9)
Page Ref: 199
Objective: 1
Difficulty: Easy
Which of the following is the most accurate description of a value network?
A) A system of partnerships and alliances that a firm creates to source, augment, and deliver its offerings.
B) A system of organizations and resources involved in moving a product from supplier to customer.
C) An arrangement whereby an organization transforms inputs into finished goods.
D) A network that allows an organization take the finished products to the end-users.
E) A communication network that allows an organization to transfer information to end-customers.
A
Page Ref: 199
Objective: 1
Difficulty: Moderate
Companies should first think of the target market and then design the supply chain backward from that point. This strategy is called ________.
A) demand chain planning
B) resource planning
C) external channel planning
D) materials planning
E) strategic business planning
A
Page Ref: 199
Objective: 1
Difficulty: Easy
Producers often shift some functions to intermediaries. Which of the following is the most significant benefit of doing this?
A) It increases customer loyalty.
B) It provides the producer with greater control over operations.
C) It reduces the amount of direct customer interaction.
D) It lowers the producer's costs and prices.
E) It ensures greater information security.
D
Page Ref: 199
Objective: 2
Difficulty: Easy

13)
Page Ref: 200
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
Which of the following entities is present in a zero-level marketing channel?
A) consumers
B) retailers
C) brokers
D) jobbers
E) wholesalers
A
Page Ref: 200
Objective: 2
Difficulty: Easy
A direct marketing channel is a ________.
A) one-level channel
B) two-level channel
C) zero-level channel
D) three-level channel
E) reverse-flow channel
C
Page Ref: 200
Objective: 2
Difficulty: Easy
Which of the following activities is a reverse-flow channel of marketing?
A) raw materials movement
B) product recycling
C) materials ordering
D) finished goods storage
E) customer order placement
B
Page Ref: 200
Objective: 2
Difficulty: Moderate

17)
Page Ref: 202
Objective: 3
Difficulty: Easy
As a service output produced by marketing channels, product variety refers to the ________.
A) units the channel permits a customer to purchase at once
B) assortment provided by the marketing channel
C) add-on services provided by the channel
D) ability of a product to provide incremental value
E) degree to which the channel makes it easy for customers to purchase a product
B
Page Ref: 202
Objective: 3
Difficulty: Moderate
Which of the following terms refers to the add-on services, such as credit, delivery, installation, and repairs, provided by a marketing channel?
A) service backup
B) product accessories
C) external products
D) product variety
E) service extensions
A
Page Ref: 202
Objective: 3
Difficulty: Easy
Atburex is a furniture manufacturing company in the United States. The company provides a sixty day credit period and EMI options to customers and also offers on-site delivery and installation. These special benefits refer to which of the following service outputs?
A) good service backup
B) large product variety
C) spatial convenience
D) large lot size
E) short waiting time
A
Page Ref: 202
Objective: 3
Armon Apparels designs, manufactures, and distributes athletic apparel and accessories for men and women. The company has only nine distributors across the United States. These distributors control a nationwide network of 600 retailers. The company does not sell its products through other channels. This is an example of ________ distribution.
A) selective
B) intensive
C) exclusive
D) internal
E) passive
A
Page Ref: 203
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Exclusive dealing arrangements are mainly used by companies looking for an edge in markets increasingly driven by ________.
A) price
B) efficiency
C) product variety
D) add-on services
E) spatial convenience
A
Page Ref: 203
Objective: 3
Difficulty: Easy
An intensive distribution strategy serves well for ________.
A) premium cars
B) commercial trucks
C) private label products
D) industrial equipment
E) newspapers
E
Page Ref: 203
Objective: 3
Difficulty: Easy
25)
Page Ref: 203
Objective: 3
Difficulty: Easy
Electrobar, a European manufacturer of industrial kitchenware, sells to industrial canteens, restaurants, hotels, and so forth. The company provides a one-year warranty on all products and also allows customers to pay in installments-they pay fifty percent on delivery and the rest as equal installments. This refers to which element in the "trade-relations mix"?
A) price policy
B) conditions of sale
C) distributors' territorial rights
D) exclusive dealings
E) mutual services and responsibilities
B
Page Ref: 203
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Which of the following channels is associated with the lowest cost per transaction?
A) Internet
B) telemarketing
C) retail stores
D) distributor
E) sales force
A
Page Ref: 204
Objective: 3
Difficulty: Easy
Which marketing channel is associated with the highest value added per sale?
A) retail stores
B) sales force
C) distributors
D) Internet
E) telemarketing
B
Page Ref: 204
Objective: 3
A producer must modify its channel design and arrangements if ________.
A) consumer buying patterns change
B) the competition in the market stabilizes
C) the product is in the growth stage of its life cycle
D) the market size remains unchanged for a particular period
E) the firm's profits stabilize
A
Page Ref: 205
Objective: 4
Difficulty: Easy
What is the major difference between a conventional marketing channel and a vertical marketing system (VMS)?
A) Elements in a conventional marketing channel act as separate businesses whereas the elements in a VMS act as a unified system.
B) A VMS has many intermediaries whereas a conventional marketing channel has a limited number of intermediaries.
C) A VMS is characterized by an independent producer whereas a conventional marketing channel is characterized by multiple producers.
D) A conventional marketing channel has elements such as retailers and wholesalers whereas these elements are not present in a VMS.
E) Producers have complete control over the other members in a conventional marketing channel whereas this control is minimal in a VMS.
A
Page Ref: 206-207
Objective: 5
Difficulty: Moderate

33)
Page Ref: 206-207
Objective: 5
Difficulty: Easy
A(n) ________ vertical marketing system combines successive stages of production and distribution under single ownership.
A) corporate
B) administered
C) contractual
D) regulatory
E) controlled
A
Page Ref: 207
Objective: 5
Difficulty: Easy
Rotter Garder Inc. is a large-scale paint manufacturer and is known for its wide range of decorative paint products and industrial coatings. In addition to making paints, the company also owns and operates the retail stores which sell its products. This is an example of a(n) ________ vertical marketing system.
A) administered
B) contractual
C) referent
D) corporate
E) regulated
D
Page Ref: 207
Objective: 5
AACSB: Analytic Skills
Difficulty: Moderate
An administered VMS coordinates successive stages of production and distribution through ________.
A) an automated central control unit
B) single ownership
C) the combined efforts of all its members
D) the establishment of contractual obligations
E) the size and power of one of the members
E
Page Ref: 207
Objective: 5
Difficulty: Moderate
37) Page Ref: 207
Objective: 5
Difficulty: Easy
A group of small sellers take the initiative and organize a new business entity to carry on wholesaling and possibly some production. This initiative is called a(n) ________.
A) retailer cooperative
B) franchise organization
C) area-based cartel
D) sponsored voluntary chain
E) alternate selling channel
A
Page Ref: 207
Objective: 5
Difficulty: Easy
In a retailer cooperative, ________.
A) profits are equally divided among members
B) members plan their advertising jointly
C) nonmembers cannot buy through the co-op
D) members rely on distribution programming
E) members standardize their selling practices
B
Page Ref: 207
In a ________ marketing system, two or more unrelated companies put together resources or programs to exploit an emerging marketing opportunity.
A) reverse flow
B) vertical
C) horizontal
D) lateral
E) forward flow
C
Page Ref: 207
Objective: 5
Difficulty: Easy
Which of the following is a major advantage of adding more channels for selling?
A) It helps the company increase its market coverage.
B) It helps the company reduce its fixed costs.
C) It reduces the likelihood of channel conflict.
D) It is the best strategy for selling low-involvement consumer products.
E) It results in economies of scale.
A
Page Ref: 207
Objective: 5
Difficulty: Moderate
________ channel conflict occurs between channel members at the same level.
A) Horizontal
B) Vertical
C) Multichannel
D) Administrative
E) Contractual
A
Page Ref: 208
Objective: 5
Difficulty: Easy
45) Page Ref: 208
Objective: 5
Difficulty: Easy
A manufacturer wants to achieve rapid market penetration through a low-price policy. However, its dealers prefer to work with high margins and pursue short-run profitability. The major reason for this conflict is ________.
A) goal incompatibility
B) unclear roles
C) ambiguous rights
D) differences in perception
E) dependence on the manufacturer
A
Page Ref: 208
Objective: 5
Difficulty: Easy
General Motors' executives work for a short time in some dealerships, and some dealership owners work in GM's dealer policy department. This strategy helps the company avoid conflicts with its dealers. This is an example of the ________ strategy.
A) employee exchange
B) dual compensation
C) joint membership
D) co-optation
E) diplomacy
A
Page Ref: 208
Co-optation is an effort by one organization to win the support of the leaders of another by ________.
A) including them in advisory councils
B) engaging in mediation and arbitration
C) encouraging joint memberships in trade associations
D) encouraging employee exchanges
E) offering strategic justifications
A
Page Ref: 208
Objective: 5
Difficulty: Moderate
Which of the following channel conflict resolution techniques is used only if everything else proves ineffective?
A) legal recourse
B) mediation
C) arbitration
D) co-option
E) superordinate goals
A
Page Ref: 208
Objective: 5
Difficulty: Easy
A large retail chain in the United States decides to expand its operations by adding an online site for e-commerce. This is called a(n) ________ company.
A) B2B
B) brick-and-mortar
C) m-commerce
D) pure-click
E) brick-and-click
E
Page Ref: 210
Objective: 6
AACSB: Use of information technology
Difficulty: Easy
52)
Page Ref: 210
Objective: 6
AACSB: Analytic Skills
Difficulty: Moderate
Exxon Consulting, works as an agent on behalf of business consumers to collect information on various industrial products. When faced with buying decisions, businesses can approach Exxon to obtain detailed information on the various options available to them. The company earns revenue by selling such information to various customers. Marten Consulting can be called a(n) ________.
A) infomediary
B) market maker
C) customer community
D) third party arbitrator
E) informant
A
Page Ref: 209-210
Objective: 6
AACSB: Analytic Skills
Difficulty: Moderate
Consumer surveys suggest that one of the most significant inhibitors of online shopping is the absence of ________.
A) pleasurable experiences
B) competitive prices
C) adequate technical information
D) after-sales service
E) facilities to compare offerings
A
Page Ref: 209
Objective: 6
AACSB: Use of information technology
Difficulty: Easy
Marketing channels are the set of pathways a product or service follows after production, culminating in purchase and consumption by the final end user.
TRUE
Page Ref: 198
Objective: 1
Difficulty: Easy
Sales agents and brokers are called facilitators in a marketing channel.
FALSE
Page Ref: 203
Objective: 1
Difficulty: Easy
A pull strategy is particularly appropriate when there is low brand loyalty in a category, brand choice is made in the store, the product is an impulse item, and product benefits are well understood.
FALSE
Page Ref: 198
Objective: 1
Difficulty: Easy
Companies should first think of the target market and then design the supply chain backward from that point. This strategy is called demand chain planning.
TRUE
Page Ref: 199
Objective: 1
Difficulty: Easy
A marketing channel overcomes the time, place, and possession gaps that separate goods and services from those who need or want them.
TRUE
Page Ref: 199
Objective: 2
Difficulty: Easy
A zero-level marketing channel typically uses a wholesaler and a retailer.
FALSE
Page Ref: 200
Objective: 2
Difficulty: Easy
63)
Page Ref: 200
Objective: 2
Difficulty: Easy
Lot size refers to the total number of units a channel can transmit from the manufacturer's place to the service outlet.
FALSE
Page Ref: 202
Objective: 3
Difficulty: Easy
Add-on services such as credit, delivery, installation, and repairs provided by the marketing channel are referred to as service backup.
TRUE
Page Ref: 202
Objective: 3
Difficulty: Easy
Intensive distribution relies on only some of the intermediaries willing to carry a particular product.
FALSE
Page Ref: 203
Objective: 3
Difficulty: Easy
Distributors' territorial rights define the terms under which the producer will enfranchise other distributors.
TRUE
Page Ref: 203
Objective: 3
Difficulty: Easy
Channel power is the ability to alter channel members' behavior so they take actions they would not have taken otherwise.
TRUE
Page Ref: 205
Objective: 4
Difficulty: Easy
The first step in global channel planning is to get close to customers.
TRUE
Page Ref: 206
Objective: 4
Difficulty: Easy
A conventional marketing channel includes the producer, wholesalers, and retailers acting as a unified system.
FALSE
Page Ref: 206
Objective: 5
Difficulty: Easy
Vertical marketing systems achieve economies through size, bargaining power, and elimination of duplicated services.
TRUE
Page Ref: 206-207
Objective: 5
Difficulty: Easy
Retailer cooperatives allow nonmember retailers to buy through them and share the profits.
FALSE
Page Ref: 207
Objective: 5
Difficulty: Easy
Unrelated companies put together resources or programs in horizontal marketing systems.
TRUE
Page Ref: 207
Objective: 5
Difficulty: Easy
What is a vertical marketing system (VMS)? What are the various types of VMSs?
A vertical marketing system includes the producer, wholesaler(s), and retailer(s) acting as a unified system. One channel member, the channel captain, owns or franchises the others or has so much power that they all cooperate. There are three types of VMSs: corporate, administered, and contractual.
A corporate VMS combines successive stages of production and distribution under single ownership.
An administered VMS coordinates successive stages of production and distribution through the size and power of one of the members. Manufacturers of dominant brands can secure strong trade cooperation and support from resellers.
A contractual VMS consists of independent firms at different levels of production and distribution, integrating their programs on a contractual basis to obtain more economies or sales impact than they could achieve alone.
Page Ref: 206-207
Objective: 5
Orion Airlines is an American airline that provides domestic and international air transport services. Explain the five service outputs provided by marketing channels with reference to Orion.
Lot size - Customers may be allowed to book as many tickets as they want, subject to availability.
Waiting and delivery time - This would refer to the average time customers take to book their tickets.
Spatial convenience - This refers to the ease of booking tickets. The location of Orion's retail ticketing outlets and whether the company offers online ticket booking services would be classified under spatial convenience.
Product variety - This refers to the assortment provided by the marketing channel in terms of travel destinations, holiday packages, hotel bookings, car rental services, and the like.
Service backup - This refers to the add-on services provided by the channel such as credit, discounts, delivery, refunds, and so on.
Page Ref: 202
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
UltraMotion Pictures produces and distributes music and television entertainment in the United States. The company distributes music in partnership with a large music retailer, Fromen Tunes. Fromen executives often work for a short time with UltraMotion and some of the UltraMotion executives work at the retail outlets to study Fromen's operations. This strategy minimizes the conflicts between partners. What strategy is being used here? Briefly explain.
This strategy of managing channel conflict is called an employee exchange which involves the exchange of persons between two or more channel levels. Thus, participants can grow to appreciate each other's point of view.
Page Ref: 208
Objective: 5
AACSB: Analytic Skills
Difficulty: Moderate
________ includes all the activities in selling goods or services directly to final consumers for personal,
nonbusiness use.
A) Wholesaling
B) Retailing
C) Procurement
D) Promoting
E) Warehousing
B
Page Ref: 215
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Discount stores that try to keep prices as low as possible are more likely to function using ________ operations.
A) limited service
B) self-selection
C) full-service
D) self-service
E) limited selection
D
Page Ref: 215
Objective: 1
Difficulty: Easy
Reynold's is a grocery chain that has always catered to mid-market customers. However, the owner, Mal, has noticed that an influx of new residents are buying mostly the lower-cost products and products on discount. To attract customers, Mal decides to make a gradual switch to the discount store format, but to do this, he will have to cut costs wherever possible. Which of the following types of service should Mal avoid in order to lower costs?
A) limited service
B) self-selection
C) full-service
D) self-service
E) limited selection
C
Page Ref: 216
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
In the ________ type of retailing, customers usually find their own goods, although they can ask salespeople for assistance.
A) self-service
B) self-selection
C) full service
D) limited service
E) limited-selection
B
Page Ref: 216
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Which of the following is true for self-service retailing?
A) These retailers carry more shopping goods and services such as credit and merchandise-return privileges.
B) This service model is favored by discount stores and customers who want to save money.
C) It results in high staffing costs compared to other forms of retailing.
D) Salespeople are ready to assist in every phase of the "locate-compare-select" process.
E) Customers need more information and assistance than in other forms of retailing.
B
Page Ref: 215
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Bill and Josh are considering opening a retail store. They have identified their target market and location and are finalizing the details of the merchandise they will carry. Since the neighborhood is rundown and the customers in the area are very price-conscious, Bill and Josh want to offer goods from well-known brands, but at lower rates than the full retail prices of the products. They choose to stock excess production from manufacturers or goods that have remained unsold at other retailers. This is a description of a(n) ________ retailer.
A) off-price
B) specialty
C) discount
D) department
E) catalog
A
Page Ref: 215
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
H&A is a retail chain that specializes in selling goods at very low prices. To achieve this, it stocks a very narrow assortment of basic necessities and offers customers a "no-frills" shopping experience. H&A is an example of a(n) ________ store.
A) off-price
B) specialty
C) hard-discount
D) superstore
E) convenience
C
Page Ref: 215
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy

10)
Page Ref: 215
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
A factory outlet is an example of a(n) ________ retailer.
A) off-price
B) specialty
C) discount
D) department
E) catalog
A
Page Ref: 215
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Which of the following is an example of direct marketing?
A) E&OE sells its herbal skincare products exclusively through its stand-alone stores.
B) TCJ is a telemarketing firm that sells products from a number of different suppliers.
C) Jayne's sells most of its products to customers through home sales parties.
D) J3 is a storeless retailer that organizes the retail activity of the employees of four firms.
E) Reynold's tries to minimize its staff costs by installing vending machines in its stores.
B
Page Ref: 216
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Telemarketing is a type of ________.
A) direct selling
B) network marketing
C) multilevel selling
D) close-range marketing
E) direct marketing
E
Page Ref: 216
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Which of the following is true of store retailers?
A) A hard-discount store offers a wider merchandise mix than discount stores at higher prices.
B) A discount store offers leftover goods, overruns, irregular merchandise sold at less than retail.
C) A specialty store generally stocks a very narrow product line.
D) An extreme value store generally has a broad selection of high-markup, brand-name goods.
E) A catalog showroom is a large, low-cost, low-margin, high-volume, self-service store.
C
Page Ref: 215
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
A(n) ________ is a storeless retailer serving a specific clientele-usually employees of large organizations-who are authorized to buy from a list of retailers that have agreed to give discounts in return for inclusion on the list.
A) direct-selling vendor
B) direct marketing vendor
C) buying service
D) automatic vendor
E) corporate retailer
C
Page Ref: 216
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
An independent retailer using a central buying organization and joint promotion efforts with other retailers is part of a ________.
A) corporate chain store
B) voluntary chain
C) retailer cooperative
D) merchandising conglomerate
E) franchise organization
C
Page Ref: 216
Objective: 1
Difficulty: Easy
18)
Page Ref: 216
Objective: 1
Difficulty: Easy
A ________ is a wholesaler-sponsored group of independent retailers engaged in bulk buying and common merchandising.
A) retailer cooperative
B) voluntary chain
C) consumer cooperative
D) merchandising conglomerate
E) franchise organization
B
Page Ref: 216
Objective: 1
Difficulty: Easy
Staples is a giant retailer that concentrates on selling office supplies. Staples is an example of a(n) ________.
A) ambush marketer
B) supercenter
C) megamarketer
D) category killer
E) guerilla marketer
D
Page Ref: 215
Objective: 3
Difficulty: Easy
Which of the following is true for direct product profitability analysis?
A) It is highly correlated with the gross margin on a product.
B) It is negligible compared to the gross margin on a product.
C) It bears little relation to the gross margin on a product.
D) It is significantly lower than the gross margin on a product.
E) It is exactly the same as the gross margin on a product.
C
Page Ref: 217
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
A store selling expensive artwork and luxury goods typically falls into the ________ group with respect to margins and volume.
A) mixed markup, high-volume
B) low-volume, mixed markup
C) low-volume, low-markup
D) high-volume, low-markup
E) high-markup, low-volume
E
Page Ref: 215
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
Most retailers will put low prices on some items in order to increase traffic to the store. These low-priced products are known as ________.
A) loss leaders
B) price ceilings
C) price skimmers
D) price floors
E) cold calls
A
Page Ref: 217
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
Which of the following is a prepurchase service offered by retailers?
A) accepting orders over the telephone
B) shipping the product
C) delivery to the customer's doorstep
D) general information
E) interior decoration of the retail outlet
A
Page Ref: 217
Objective: 2
Which of the following is an ancillary service offered by retailers?
A) accepting orders over the telephone
B) advertising and window displays
C) delivery to the customer's doorstep
D) general information
E) alterations and tailoring
D
Page Ref: 217
Objective: 2
Difficulty: Easy
In your neighborhood there is a small men's store that has a limited selection of clothing, but the selection that is carried is of very high quality and price. Services include free alterations and tailoring, personalized record keeping, and free dry cleaning. The inside of the store has deep leather chairs and couches and thick pile carpet. Upon entering the store, a customer feels "special and rich." In terms of differentiation, what is this retailer trying to communicate by its decorations and service level?
A) differentiation based on services mix and atmosphere
B) differentiation based on prepurchase services
C) differentiation based on postpurchase services and atmosphere
D) differentiation based on ancillary services and atmosphere
E) differentiation based on prepurchase and postpurchase services
A
Page Ref: 217
Objective: 2
AACSB: Reflective Thinking
Difficulty: Easy
Which of the following is the strongest differentiator for brick-and-mortar stores who want to emphasize their superiority over online retailers?
A) product quality
B) the shopping experience
C) product range
D) pricing
E) the retailer's reputation
B
Page Ref: 218
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
30)
Page Ref: 219
Objective: 4
AACSB: Analytic Skills
Difficulty: Easy
Though it is sold only in Wal-Mart stores, Wal-Mart's Ol'Roy dog food has surpassed Nestlé's Purina brand as the top-selling dog food. Ol'Roy is an example of a ________.
A) generic product
B) national brand
C) franchise
D) copy-cat brand
E) private label
E
Page Ref: 219
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
________ are unbranded, plainly packaged, less expensive versions of common products such as spaghetti, paper towels, and canned peaches.
A) Common carriers
B) Shills
C) Generics
D) Private labels
E) Marques
C
Page Ref: 219
Objective: 4
AACSB: Analytic Skills
Difficulty: Easy
In addition to its store brands and nationally well-known brands of detergents, Reynold's also carries much cheaper varieties of detergents that are not advertised and have little-known names. They are often manufactured from lower-quality ingredients and save on packaging and advertising costs. These are known as ________.
A) Common carriers
B) Shills
C) Generics
D) Private labels
E) Marques
C
Page Ref: 219
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
________ includes all the activities in selling goods or services to those who buy for resale or business use.
A) Retailing
B) Wholesaling
C) Procurement
D) Promoting
E) Warehousing
B
Page Ref: 219
Objective: 1
Difficulty: Easy
________ are independently owned businesses that take title to the merchandise they handle. They are full-service and limited-service jobbers, distributors, and mill supply houses.
A) Brokers
B) Agents
C) Merchant wholesalers
D) Specialized wholesalers
E) Retailers' branches
C
Page Ref: 201
Objective: 1
Difficulty: Easy
________ serve bulk industries such as coal, lumber, and heavy equipment, assuming title and risk from the time an order is accepted to its delivery.
A) Producers' cooperatives
B) Cash and carry wholesalers
C) Truck wholesalers
D) Drop shippers
E) Rack jobbers
D
Page Ref: 221
Objective: 1
Difficulty: Easy
38)
Page Ref: 221
Objective: 1
Difficulty: Easy
Agricultural assemblers, petroleum bulk plants and terminals, and auction companies are examples of ________.
A) full-service wholesalers
B) specialized wholesalers
C) limited-service wholesalers
D) merchant wholesalers
E) brokers
B
Page Ref: 221
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Which of the following is true of brokers?
A) Brokers represent buyers or sellers on a semipermanent basis.
B) Most brokers are small businesses with a few skilled salespeople.
C) Brokers bring buyers and sellers together and assist in negotiation.
D) Selling brokers have contractual authority to sell a manufacturer's entire output.
E) Purchasing brokers make purchases for buyers and often receive, inspect, warehouse, and ship merchandise.
C
Page Ref: 221
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
________ refers to buying large carload lots and dividing them into smaller units before shipping them out to consumers.
A) Bulk breaking
B) Containerization
C) Wholesaling
D) Warehousing
E) Broking
A
Page Ref: 220
Objective: 1
________ costs for a manufacturer consist of setup costs and running costs.
A) Inventory-carrying
B) Containerization
C) Wholesaling
D) Order-processing
E) Transportation
D
Page Ref: 223-224
Objective: 2
Difficulty: Easy
As inventory draws down, management must know at what stock level to request additional stock. This stock level is called the ________.
A) reorder point
B) least fixed point
C) point of divergence
D) inflection point
E) critical point
A
Page Ref: 223
Objective: 2
Difficulty: Easy
A stock order point of 10 means ordering the product ________.
A) every 10 days
B) when stock falls to 10 units
C) every 10 units
D) when stock falls to 9 units
E) in batches of 10 items
B
Page Ref: 223
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
E&OE is trying to minimize its inventory costs, which are extremely high. The company has realized that it can achieve this by maintaining a near-zero inventory and producing only once a product is ordered. Which of the following will be true for E&OE?
A) Short production runs will be more expensive than longer ones.
B) Setup and order-processing costs will be high.
C) The order point will be high.
D) Order-processing costs will be lower than the inventory-carrying costs.
E) E&OE can reduce the average cost per unit by producing a long run.
D
Page Ref: 224
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
Beyond the optimal order quantity, total cost per unit increases because ________.
A) inventory-carrying cost per unit increases
B) inventory-carrying cost per unit decreases
C) order-processing cost per unit increases
D) order-processing cost per unit increases though inventory cost decreases
E) inventory-processing cost per unit falls slowly
A
Page Ref: 224
Objective: 2
AACSB: Communications
Difficulty: Easy
Companies are reducing their inventory costs by treating inventory items differently, positioning them according to risk and opportunity. High-risk, low-opportunity items are known as ________.
A) nuisance items
B) bottleneck items
C) variable items
D) critical items
E) commodities
B
Page Ref: 224
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
50)
Page Ref: 224
Objective: 2
Difficulty: Easy
An item described as low-risk and low-opportunity is a ________.
A) nuisance item
B) bottleneck item
C) variable item
D) critical item
E) commodities
A
Page Ref: 224
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
________ consists of putting goods in boxes or trailers that are easy to transfer between two transportation modes.
A) Containerization
B) Haulage
C) Inventory carrying
D) Order processing
E) Warehousing
A
Page Ref: 224
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
Which of the following is an example of a private carrier?
A) MET is a transporter that operates only in the Chicago area and charges fixed prices.
B) BCL is a family firm that owns only three trucks, but takes small orders for transport.
C) VTV owns a fleet of trucks and transports goods for any client for a fee.
D) COM is a shipping firm that transports goods by road and rail across the U.S.
E) BEL Inc. manufactures parts for automobiles and transports its products to customers itself.
E
Page Ref: 225
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
54)
Page Ref: 224
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
If the shipper owns its own truck or air fleet, it becomes a ________.
A) containerized carrier
B) private carrier
C) contract carrier
D) common carrier
E) diversified carrier
B
Page Ref: 225
Objective: 2
Difficulty: Easy
Retailing includes all the activities involved in selling goods or services directly to final consumers.
TRUE
Page Ref: 215
Objective: 1
AACSB: Analytic Skills
Difficulty: Easy
Full-service retailers generally have the lowest costs of all retail types.
FALSE
Page Ref: 216
Objective: 1
Difficulty: Easy
Discount stores usually stock leftover goods, overruns, and irregular merchandise, sold at less than retail.
FALSE
Page Ref: 215
Objective: 1
AACSB: Reflective Thinking
Difficulty: Easy
"Pop-up" stores let retailers promote brands to seasonal shoppers for a limited time.
TRUE
Page Ref: 216
Objective: 3
Difficulty: Easy
Department stores only face competition from other department stores as other retailing forms are not a threat to their sales and profitability.
FALSE
Page Ref: 216
Objective: 3
AACSB: Reflective Thinking
Difficulty: Easy
Firms are increasingly recognizing the importance of influencing consumers at the point of purchase.
TRUE
Page Ref: 216
Objective: 3
AACSB: Analytic Skills
Difficulty: Easy
Retailers can target their customers more effectively by using only a single channel to reach them.
FALSE
Page Ref: 217
Objective: 2
Difficulty: Easy
Featuring exclusive national brands that are not available at competing retailers is a way of generating consumer interest in a retailer.
TRUE
Page Ref: 220
Objective: 2
AACSB: Reflective Thinking
Difficulty: Easy
The gross margin on a product bears a direct relation to the direct product profit.
FALSE
Page Ref: 217
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
Low prices on some items serve as traffic builders or loss leaders for retailers.
TRUE
Page Ref: 217
Objective: 2
Difficulty: Easy
Postpurchase services include shipping and delivery, gift wrapping, adjustments and returns.
TRUE
Page Ref: 217
Objective: 2
Difficulty: Easy
Private label or store brands are also known as generics.
FALSE
Page Ref: 219
Objective: 4
AACSB: Analytic Skills
Difficulty: Easy
The lower price of generics is made possible by lower-cost labeling and packaging and minimal advertising, and sometimes lower-quality ingredients.
TRUE
Page Ref: 219
Objective: 4
AACSB: Analytic Skills
Difficulty: Easy
Wholesaling includes all the activities in selling goods or services to those who buy for resale or
business use.
TRUE
Page Ref: 219
Objective: 1
Difficulty: Easy
Most companies today are trying to increase the order-to-payment cycle.
FALSE
Page Ref: 223
Objective: 2
AACSB: Use of information technology
Difficulty: Easy
Inventory cost increases at an accelerating rate as the customer-service level approaches 100 percent.
TRUE
Page Ref: 224
Objective: 2
AACSB: Reflective Thinking
Difficulty: Easy
The order-processing cost per unit increases with the number of units ordered because the order costs are spread over more units.
FALSE
Page Ref: 223-224
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
List and explain the four service levels offered by retailers.
Retailers meet widely different consumer preferences for service levels and specific services. The four levels of service usually offered by retailers are: (1) self-service, (2) self-selection, (3) limited service, and (4) full service.
Self-service: Self-service is the cornerstone of all discount operations. Many customers are willing to carry out their own "locate-compare-select" process to save money.
Self-selection: Customers find their own goods, although they can ask for assistance.
Limited service: These retailers carry more shopping goods and services such as credit and merchandise-return privileges. Customers need more information and assistance.
Full service: Salespeople are ready to assist in every phase of the "locate-compare-select" process. Customers who like to be waited on prefer this type of store. The high staffing cost, along with the higher proportion of specialty goods and slower-moving items and the many services, result in high-cost retailing.
Page Ref: 215-216
Objective: 1
AACSB: Analytic Skills
Difficulty: Eas
Imagine that you are in charge of creating a distinctive store atmosphere at a clothing retailer. What can you do to make your store stand out in the customer experience?
Student answers may vary.
Answers can include the use of fragrances, music, store design and layout, and activities.
Page Ref: 217
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
Reynold's, a supermarket chain, carries the K-Nine range of dog food manufactured by JGB. However, the chain does not interact directly with JGB, but obtains stocks from wholesalers. It has been suggested that Reynold's save costs by sourcing products directly from JGB. However, Mal, the CEO of the Reynold's, insists that wholesalers are the most hassle-free option for Reynold's. What can Mal say to justify this?
Student answers may vary.
Mal can justify this using any or all of the following reasons:
Wholesalers are able to select items and build the assortments Reynold's needs, saving Reynold's considerable work.
Wholesalers achieve savings for Reynold's by buying large carload lots and breaking the bulk into smaller units.
Wholesalers hold inventories, thereby reducing inventory costs and risks for Reynold's, who needn't hold the inventory for itself.
Wholesalers finance Reynold's by granting credit.
Wholesalers supply information regarding competitors' activities, new products, price developments, and so on.
Page Ref: 220-221
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
Which of the following elements of the marketing communications mix refers to any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor via print, broadcast, network, electronic, and display media?
A) advertising
B) personal selling
C) sales promotion
D) direct marketing
E) public relations
A
Page Ref: 228
Objective: 1
Difficulty: Easy
Which of the following elements of the marketing communications mix involves a variety of short-term incentives to encourage trial or purchase of a product or service?
A) advertising
B) direct marketing
C) public relations
D) personal selling
E) sales promotion
E
Page Ref: 228
Objective: 1
Difficulty: Easy
Which of the following is an example of a business and sales force promotion?
A) advertising allowance
B) free samples
C) contests for sales reps
D) display allowance
E) discount coupons
C
Page Ref: 237
Objective: 1
Difficulty: Easy
Which of the following elements of the marketing communications mix includes a variety of programs directed internally to employees of the company or externally to consumers, other firms, the government, and media to promote or protect a company's image or its individual product communications?
A) direct marketing
B) public relations and publicity
C) personal selling
D) advertising
E) sales promotion
B
Page Ref: 229
Objective: 1
Difficulty: Easy
Which of the following elements of the marketing communication mix involves use of mail, telephone, fax, e-mail, or Internet to communicate with or solicit response or dialogue from specific customers and prospects?
A) advertising
B) personal selling
C) direct marketing
D) public relations
E) sales promotion
C
Page Ref: 229
Objective: 1
Difficulty: Easy
________ is an element of the marketing communications mix that involves online activities and programs designed to engage customers or prospects and directly or indirectly raise awareness, improve image, or elicit sales of products and services.
A) Personal selling
B) Direct marketing
C) Sales promotion
D) Interactive marketing
E) Public relations
D
Page Ref: 229
Objective: 1
Difficulty: Easy
9)
Page Ref: 229
Objective: 1
Which of the following elements of the marketing communications mix involves face-to-face interaction with one or more prospective purchasers for the purpose of making presentations, answering questions, and procuring orders?
A) advertising
B) sales promotion
C) word of mouth marketing
D) public relations
E) personal selling
E
Page Ref: 229
Objective: 1
Difficulty: Easy
Which of the following is an example of an advertising platform?
A) posters and leaflets
B) company magazines
C) fairs and trade shows
D) sales presentations
E) continuity programs
A
Page Ref: 230
Objective: 1
Difficulty: Easy
Which of the following is an example of an events and experiences platform?
A) fairs and trade shows
B) continuity programs
C) factory tours
D) sales presentations
E) community relations
C
Page Ref: 230
Objective: 1
Difficulty: Easy
13)
Page Ref: 230
Objective: 1
Difficulty: Easy
Which of the following is an example of an interactive marketing communication platform?
A) product demonstrations
B) factory tours
C) company museums
D) TV shopping
E) community relations
D
Page Ref: 230
Objective: 1
Difficulty: Easy
Which of the following is an example of a word of mouth marketing communication platform?
A) chat rooms
B) billboards
C) factory tours
D) incentive programs
E) trade shows
A
Page Ref: 230
Objective: 1
Difficulty: Easy
Which of the following is an example of a personal selling communication platform?
A) sales presentations
B) company blogs
C) telemarketing
D) TV shopping
E) press kits
A
Page Ref: 230
Objective: 1
Difficulty: Easy
17)
Page Ref: 230
Objective: 2
Difficulty: Easy
Which of the following represents one of the major tools for effective communication in the macromodel of the communications process?
A) feedback
B) noise
C) receiver
D) message
E) sender
D
Page Ref: 230
Objective: 2
Difficulty: Easy
Which of the following is the correct order of stages that a buyer is assumed to pass through, by the four classic response hierarchy models?
A) cognitive stage-affective stage-behavioral stage
B) affective stage-cognitive stage-behavioral stage
C) behavioral stage-affective stage-cognitive stage
D) cognitive stage-behavioral stage-affective stage
E) affective stage-behavioral stage-cognitive stage
A
Page Ref: 230
Objective: 2
Difficulty: Moderate
LCH is a leading electronics company that produces and markets its own brand of desktop and laptop computers, for both individual consumers and businesses. Which of the following sequences of consumer responses is relevant as a marketing communications model for LCH's products?
A) learn-do-feel
B) feel-learn-do
C) do-feel-learn
D) feel-do-learn
E) do-learn-feel
C
Page Ref: 230-231
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
Which of the following steps in the innovation-adoption model of marketing communications corresponds to the cognitive stage that a buyer passes through?
A) interest
B) evaluation
C) trial
D) awareness
E) adoption
D
Page Ref: 231
Objective: 2
Difficulty: Easy
According to the hierarchy-of-effects model, which of the following corresponds to the affective stage that a buyer passes through?
A) attention
B) exposure
C) reception
D) adoption
E) conviction
E
Page Ref: 231
Objective: 2
Difficulty: Easy
Which of the following sequences accurately represents the hierarchy-of-effects model of marketing communications?
A) attention-interest-desire-action
B) awareness-interest-evaluation-trial-adoption
C) awareness-knowledge-liking-preference-conviction-purchase
D) exposure-reception-cognitive response-attitude-intention-behavior
E) knowledge-persuasion-decision-implementation-confirmation
C
Page Ref: 231
Objective: 2
Difficulty: Moderate
25)
Page Ref: 232
Objective: 3
Difficulty: Easy\
Marketing communication strategy can be decided by conducting an image analysis by profiling the target audience in terms of ________.
A) brand knowledge
B) purchase patterns
C) demographic characteristics
D) income levels
E) psychographic characteristics
A
Page Ref: 233
Objective: 3
Difficulty: Moderate
Which of the following is the marketing communications objective for a new-to-the-world product, such as electric cars?
A) enhancing brand awareness
B) developing brand attitude
C) increasing brand purchase intention
D) encouraging repeat purchases
E) establishing category need
E
Page Ref: 233
Objective: 3
Difficulty: Moderate
28)
Page Ref: 233
Objective: 3
One of the possible objectives of marketing communications is helping consumers evaluate a brand's perceived ability to meet a currently relevant need. Which of the following relevant brand needs is most likely emphasized by an advertisement for a luxury car?
A) problem removal
B) sensory gratification
C) normal depletion
D) intellectual stimulation
E) problem avoidance
B
Page Ref: 233
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Creative strategies refer to _______.
A) the way marketers translate their messages into a specific communication
B) the amount of creative content in a communications message
C) the degree of innovation involved in the marketing of a product
D) the novelty of a marketing communication
E) the type of medium used to deliver a marketing communication
A
Page Ref: 233
Objective: 3
Difficulty: Easy
A(n) ________ appeal is a creative strategy that elaborates on product or service attributes or benefits.
A) aesthetic
B) informational
C) bandwagon
D) emotional
E) transformational
B
Page Ref: 233
Objective: 3
Difficulty: Easy
3
Which of the following ads depict a transformational appeal?
A) Thompson Water Seal can withstand intense rain, snow, and heat
B) DIRECTV offers better HD options than cable or other satellite operators
C) NBA phenomenon LeBron James pitching Nike, Sprite, and McDonald's
D) Pringles advertised "Once You Pop, the Fun Don't Stop" for years
E) Excedrin stops the toughest headache pain
D
Page Ref: 234
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
________ is one of the sources of a spokesperson's credibility that refers to the specialized knowledge that he or she possesses to claim.
A) Trustworthiness
B) Expertise
C) Acquaintance
D) Likability
E) Professionalism
B
Page Ref: 234
Objective: 3
Difficulty: Easy
________ is a source of a spokesperson's credibility that describes how objective and honest the spokesperson is perceived to be.
A) Likability
B) Expertise
C) Experience
D) Trustworthiness
E) Compassion
D
Page Ref: 234
Objective: 3
Difficulty: Easy
37)
Objective: 3
Difficulty: Easy
Which of the following marketing communications principles implies that communicators can use their good image to reduce some negative feelings toward a brand but in the process might lose some esteem with the audience?
A) principle of closure
B) principle of duality
C) principle of delegation
D) principle of congruity
E) principle of neutrality
D
Page Ref: 234
Objective: 3
Difficulty: Easy
Which of the following personal communication channels consist of company salespeople contacting buyers in the target market?
A) expert channels
B) social channels
C) advocate channels
D) independent channels
E) informal channels
C
Page Ref: 234
Objective: 3
Difficulty: Easy
Which of the following personal communications channels consist of family members, neighbors, friends, and associates talking to target buyers?
A) expert channels
B) advocate channels
C) social channels
D) formal channels
E) sponsored channels
C
Page Ref: 234
Objective: 3
Difficulty: Easy

41)
Page Ref: 234
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Personal influence in marketing communications carries great weight when ________.
A) the product being marketed is a convenience item
B) the purchase of the product is considered to be safe and risk-free
C) the product suggests something about the user's status or taste
D) the product being marketed is purchased on a frequent basis
E) the product or service in question is used without being recommended by others
C
Page Ref: 235
Objective: 3
Difficulty: Moderate
Which of the following is a form of mass communications channel?
A) interactive marketing
B) personal selling
C) public relations
D) word of mouth marketing
E) sales presentations
C
Page Ref: 235
Objective: 3
Difficulty: Easy
Which of the following statements is true of the two-step approach to mass communications?
A) The influence of mass media on public opinion is more direct, powerful, and automatic than marketers have supposed.
B) Communications through mass media bypasses opinion leaders and reaches the individual buyers.
C) The two-step flow supports the notion that consumption styles are primarily influenced by a "trickle-down" or "trickle-up" effect from mass media.
D) According to the two-step flow, people interact primarily within their own social groups and acquire ideas from opinion leaders in their groups.
E) Two-step communication suggests that mass communicators should direct messages to groups of buyers who interpret the message and act accordingly.
D
Page Ref: 235
Objective: 3
Difficulty: Moderate
45)
Page Ref: 236
Objective: 3
Difficulty: Easy
Kelly is the chief marketing officer of Boyd Pharmaceuticals. She is meeting with Trent, the chief financial officer to decide on the company's marketing communications budget. After extensive discussions, they decide that the size of the budget will be calculated as a fraction of the overall turnover. What method did Kelly and Trent use to arrive at the marketing communications budget?
A) affordable method
B) objective-and-task method
C) competitive-parity method
D) activity-based method
E) percentage-of-sales method
E
Page Ref: 236
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Which of the following is an advantage of using the percentage-of-sales method to determine the marketing communications budget?
A) The percentage-of-sales method encourages stability when competing firms spend approximately the same portion of their sales on communications.
B) The percentage-of-sales method views sales as the determiner of communications rather than as the result.
C) The percentage-of-sales method leads to a budget set by market opportunities rather than the availability of funds.
D) The percentage-of-sales method encourages experimentation with countercyclical communication or aggressive spending.
E) The percentage-of-sales method encourages building the communication budget by determining what each product and territory deserves.
A
Page Ref: 236
Objective: 3
Difficulty: Moderate
48)
Page Ref: 236
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Kelly is the chief marketing officer of Boyd Pharmaceuticals. She is meeting with Trent, the chief financial officer to decide on the company's marketing communications budget. They decide to trust in the prevailing collective wisdom of the industry as a whole, and not wanting to instigate a communications war, settle on spending only as much as their nearest market rival does on marketing communications. What method did Kelly and Trent use to arrive at the marketing communications budget?
A) objective-and-task method
B) affordable method
C) competitive-parity method
D) activity-based method
E) percentage-of-sales method
C
Page Ref: 236
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Which of the following statements correctly reflects a characteristic of public relations as a marketing communications tool?
A) Public relations can reach prospects who prefer to avoid mass media and targeted promotions.
B) They incorporate some concession, inducement, or contribution that gives value to the consumer.
C) Given their live, real-time quality, public relations tools are more actively engaging for consumers.
D) Public relations communications can be prepared to appeal to the addressed individual.
E) Public relations tools create an immediate and interactive episode between two or more persons.
A
Page Ref: 237
Objective: 4
Difficulty: Moderate
Which of the following marketing communications tools is most effective at influencing customers at the conviction stage of buyer readiness?
A) advertising
B) publicity
C) sales promotion
D) personal selling
E) events and experiences
D
Page Ref: 237
Objective: 4
Difficulty: Easy
Advertising and publicity tools play the most important roles in influencing buying decisions at the ________ stage of buyer readiness.
A) comprehension
B) conviction
C) ordering
D) reordering
E) awareness-building
E
Page Ref: 237
Objective: 4
Difficulty: Easy

56)
Page Ref: 228
Objective: 1
Difficulty: Easy
Personal selling refers to people-to-people oral, written, or electronic communications that relate to the merits or experiences of purchasing or using products or services.
FALSE
Page Ref: 229
Objective: 1
Difficulty: Easy
All the response hierarchy models assume that a buyer passes through affective, cognitive, and behavioral stages, in that order.
FALSE
Page Ref: 230
Objective: 2
Difficulty: Easy
Though the target audience can be profiled in terms of demographic, psychographic, or behavioral segments, it is often useful to do so in terms of usage and loyalty.
TRUE
Page Ref: 232
Objective: 3
Difficulty: Easy
The marketing communications objective of "brand attitude" refers to helping consumers evaluate the brand's perceived ability to meet a currently relevant need.
TRUE
Page Ref: 233
Objective: 3
Difficulty: Easy
Volkswagen's famed "Drivers Wanted" advertising campaign aimed at attracting active, youthful people uses a transformational appeal as its creative strategy.
TRUE
Page Ref: 234
Objective: 3
Difficulty: Easy
Motivational or "borrowed interest" devices—such as the presence of cute babies, frisky puppies, popular music, or provocative sex appeals—are often employed to attract attention and raise involvement with an ad.
TRUE
Page Ref: 234
Objective: 3
Difficulty: Easy
Celebrities are likely to be effective when they are credible or personify a key product attribute.
TRUE
Page Ref: 234
Objective: 3
Difficulty: Easy
The most highly credible source would score high on at least two of the three dimensions—expertise, trustworthiness, and likability.
FALSE
Page Ref: 234
Objective: 3
Difficulty: Moderate
The principle of congruity implies that communicators can use their good image to reduce some negative feelings toward a brand but in the process might lose some esteem with the audience.
TRUE
Page Ref: 234
Objective: 3
Difficulty: Moderate
Personal communications channels derive their effectiveness from individualized presentation and feedback and include direct and interactive marketing, word of mouth marketing, and personal selling.
TRUE
Page Ref: 234
Objective: 3
Difficulty: Easy
Personal influence carries especially great weight when products are inexpensive, risk-free, or purchased frequently.
FALSE
Page Ref: 235
Objective: 3
Difficulty: Easy
69)
Page Ref: 235
Objective: 3
Difficulty: Easy
Two-step communication suggests that mass communicators should direct messages specifically to opinion leaders and let them carry the message to others.
TRUE
Page Ref: 235
Objective: 3
Difficulty: Easy
The affordable method accounts for the role of promotion as an investment and the immediate impact of promotion on sales volume.
FALSE
Page Ref: 236
Objective: 3
Difficulty: Moderate
The percentage-of-sales budgeting method encourages management to think of the relationship among communication cost, selling price, and profit per unit.
TRUE
Page Ref: 236
Objective: 3
Difficulty: Easy
Public relations is incapable of reaching prospects who prefer to avoid mass media and targeted promotions.
FALSE
Page Ref: 237
Objective: 4
Difficulty: Easy
In the growth stage of a product's life cycle, demand has its own momentum through word of mouth and interactive marketing.
TRUE
Page Ref: 238
Objective: 4
Difficulty: Easy
Media coordination can occur across and within media types, but marketers should combine personal and nonpersonal communications channels through multiple-vehicle, multiple-stage campaigns to achieve maximum impact and increase message reach and impact.
TRUE
Page Ref: 239
Objective: 5
Difficulty: Moderate
76)
What are the steps involved in developing effective marketing communications?
Objective: 3
Difficulty: Easy
78)
Page Ref: 237-238
Objective: 4
Difficulty: Moderat
What is integrated marketing communications? What is its significance in the current marketing environment?
Many companies still rely on only one or two communication tools. This practice persists in spite of the fragmenting of mass markets into a multitude of minimarkets, each requiring its own approach; the proliferation of new types of media; and the growing sophistication of consumers. The wide range of communication tools, messages, and audiences makes it imperative that companies move toward integrated marketing communications. Companies must adopt a "360-degree view" of consumers to fully understand all the different ways that communications can affect consumer behavior in their daily lives.
The American Marketing Association defines integrated marketing communications (IMC) as "a planning process designed to assure that all brand contacts received by a customer or prospect for a product, service, or organization are relevant to that person and consistent over time." This planning process evaluates the strategic roles of a variety of communications disciplines—for example, general advertising, direct response, sales promotion, and public relations—and skillfully combines these disciplines to provide clarity, consistency, and maximum impact through the seamless integration of messages.
Page Ref: 238
Objective: 5
Difficulty: Moderate
80) How is coordination of media achieved through integrated marketing communications?
Media coordination can occur across and within media types, but marketers should combine personal and nonpersonal communications channels through multiple-vehicle, multiple-stage campaigns to achieve maximum impact and increase message reach and impact.
Promotions can be more effective when combined with advertising, for example. The awareness and attitudes created by advertising campaigns can increase the success of more direct sales pitches. Advertising can convey the positioning of a brand and benefit from online display advertising or search engine marketing that offers a stronger call to action.
...
Many companies are coordinating their online and offline communications activities. Web addresses in ads (especially print ads) and on packages allow people to more fully explore a company's products, find store locations, and get more product or service information. Even if consumers don't order online, marketers can use Web sites in ways that drive them into stores to buy.
Page Ref: 239
Objective: 5
Difficulty: Moderate
...
A(n) ________ is a specific communications task and achievement level to be accomplished with a specific audience in a specific period of time.
A) advertising medium
B) advertising objective
C) advertising channel
D) advertising budget
E) advertising copy
B
Page Ref: 244
Objective: 1
Difficulty: Easy
________ aims to create brand awareness and knowledge of new products or new features of existing products.
A) Informative advertising
B) Corporate advertising
C) Reinforcement advertising
D) Persuasive advertising
E) Reminder advertising
A
Page Ref: 244
Objective: 1
Difficulty: Easy
________ aims to create liking, preference, conviction, and purchase of a product or service.
A) Corporate advertising
B) Reminder advertising
C) Persuasive advertising
D) Reinforcement advertising
E) Informational advertising
C
Page Ref: 244
Objective: 1
Difficulty: Easy
Comparative advertising works best when ________.
A) it elicits cognitive and behavioral motivations simultaneously
B) the firm is trying to minimize brand dilution
C) consumers are processing advertising in a detailed, analytical mode
D) it elicits affective motivation, followed by cognitive motivation
E) the advertising message uses negative fear appeals
C
Page Ref: 244
Objective: 1
Difficulty: Moderate
5)
Page Ref: 244
Objective: 1
Difficulty: Easy
Which of the following statements is true of the factors that affect an advertising budget?
A) High-market-share brands usually require proportionately high advertising expenditure as a percentage of sales to maintain share.
B) Brands in less-differentiated or commodity-like product classes require very less advertising to establish a unique image.
C) New products typically merit large advertising budgets to build awareness and to gain consumer trial.
D) In a market with few competitors and moderate advertising spending, a brand must advertise more heavily to be heard.
E) Established brands usually are supported with high advertising budgets, measured as a ratio to sales.
C
Page Ref: 244
Objective: 1
Difficulty: Moderate
Which of the following is generally acknowledged as the most powerful advertising medium and reaches a broad spectrum of consumers at low cost per exposure?
A) television
B) radio
C) newspapers
D) magazines
E) billboards
A
Page Ref: 245
Objective: 1
Difficulty: Easy
________ refers to simple exaggerations in advertisements that are not meant to be believed and that are permitted by law.
A) Puffery
B) Boosterism
C) Astroturfing
D) Doublethink
E) Subliminal advertising
A
Page Ref: 245
Objective: 1
Difficulty: Easy
9)
Page Ref: 245
Objective: 1
Difficulty: Moderate
The number of different persons or households exposed to a particular media schedule at least once during a specified time period is known as ________.
A) range
B) impact
C) intensity
D) reach
E) frequency
D
Page Ref: 245
Objective: 1
Difficulty: Easy
11)
Page Ref: 245
Objective: 1
Difficulty: Easy
The qualitative value of an exposure through a given medium is known as ________.
A) frequency
B) reach
C) amplitude
D) impact
E) range
D
Page Ref: 245
Objective: 1
Difficulty: Easy
13)
Page Ref: 246
Objective: 1
Difficulty: Moderate
Under which of the following conditions is the frequency the most important factor in media selection?
A) when introducing flanker brands
B) when launching infrequently purchased brands
C) when going into undefined target markets
D) when there is high consumer resistance to the product
E) when there is modest competition to the brand in the market
D
Page Ref: 246
Objective: 1
Difficulty: Moderate
Which of the following is an advantage of using newspapers as an advertising medium?
A) long lifespan
B) high reproduction quality
C) huge "pass-along" audience
D) high level of targeting
E) good local market coverage
E
Page Ref: 246
Objective: 1
Difficulty: Moderate
Which of the following is a disadvantage of using newspapers as an advertising medium?
A) lack of flexibility
B) high costs of advertisement space
C) poor reproduction quality
D) low believability
E) absence of local market coverage
C
Page Ref: 246
Objective: 1
Difficulty: Moderate
17)
Page Ref: 246
Objective: 1
Difficulty: Moderate
Which of the following is an advantage of using radio as an advertising medium?
A) higher attention than television
B) standardized rate structures
C) long duration of ad exposure
D) high quality reproduction
E) high geographic selectivity
E
Page Ref: 246
Objective: 1
Difficulty: Moderate
Which of the following is a disadvantage of using Yellow Pages as an advertising medium?
A) high competition
B) poor local market coverage
C) low believability
D) lack of adequate reach
E) high total costs
A
Page Ref: 513
Objective: 1
Difficulty: Moderate
Which of the following is a disadvantage of using the Internet as an advertising medium?
A) limited audience selectivity
B) increasing clutter
C) lack of interactive possibilities
D) relatively high costs involved
E) fleeting ad exposure time
B
Page Ref: 246
Objective: 1
Difficulty: Easy
21)
Page Ref: 246
Objective: 1
Difficulty: Moderate
Pepe Homes manufactures a range of bathroom accessories and fittings that include bath-tubs, shower stalls, etc. While deciding on an effective advertising media vehicle for its planned advertising campaign, the marketing department decides that its advertising objectives would be best achieved if they used a medium that would portray their brand as prestigious and a symbol of luxury. To this effect, the medium should offer the marketers a high degree of audience selectivity and high-quality reproduction. Which of the following advertising media would best serve the advertising purposes of Pepe Homes?
A) outdoor media
B) radio
C) magazines
D) television
E) newspapers
C
Page Ref: 246
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
Which of the following advertising practices involves advertisers paying filmmakers to have their products make cameo appearances in movies and television shows?
A) brand extension
B) flyposting
C) co-branding
D) product placement
E) ambush marketing
D
Page Ref: 246
Objective: 1
Difficulty: Moderate
In which of the following types of advertising timing patterns do exposures appear evenly throughout a given period?
A) concentration
B) pulsing
C) flighting
D) continuity
E) frequency capping
D
Page Ref: 248
Objective: 1
Difficulty: Easy

25)
Page Ref: 248
Objective: 1
Difficulty: Easy
Advertisements for which of the following products categories would merit a continuous advertising timing pattern the most?
A) air conditioners
B) life insurance
C) breakfast cereal
D) automobiles
E) holiday package tours
C
Page Ref: 248
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
________ is an advertising timing pattern that calls for advertising during a period, followed by a period with no advertising, followed by a second period of advertising activity.
A) Pulsing
B) Continuity
C) Flighting
D) Concentration
E) Frequency capping
C
Page Ref: 248
Objective: 1
Difficulty: Easy
Flighting as an advertising timing pattern is most useful when ________.
A) purchase cycle is rather frequent
B) substantial advertising budget is available
C) items are seasonal
D) tightly defined buyer categories exist
E) there are expanding market situations
C
Page Ref: 248
Objective: 1
Difficulty: Moderate
29)
Page Ref: 248
Objective: 1
Difficulty: Easy
________ seeks to determine whether an ad is communicating effectively.
A) Copy testing
B) Flighting
C) Pulsing
D) Frequency capping
E) Square inch analysis
A
Page Ref: 249
Objective: 1
Difficulty: Easy
________ represents the proportion of company advertising of a product to all advertising of that product.
A) Share of wallet
B) Share of mind
C) Share of voice
D) Share of market
E) Share of cost
C
Page Ref: 249
Objective: 1
Difficulty: Easy
Which of the following elements of the marketing communications mix consists of a collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade?
A) advertising
B) public relations
C) sales promotion
D) events and experiences
E) personal selling
C
Page Ref: 249
Sales promotion expenditures increased as a percentage of budget expenditure for a number of years, although its growth has recently slowed. Which of the following is a factor that has contributed to the growth of sales promotion expenditures?
A) many brands have come to be seen as dissimilar
B) the efficiency of advertising as a promotion has improved
C) the trade demands more deals from manufacturers
D) consumers have become less price-oriented
E) the number of brands in the market has decreased
C
Page Ref: 250
Objective: 2
Difficulty: Moderate
Which of the following is a sales promotion tool that is consumer franchise building in nature?
A) price-off packs
B) contests and sweepstakes
C) consumer refund offers
D) trade allowances
E) frequency awards
E
Page Ref: 251
Objective: 2
Difficulty: Moderate
Which of the following is a sales promotion tool that typically does not build brand image?
A) consumer refund offers
B) free samples
C) premiums related to the product
D) frequency awards
E) coupons that include a selling message
A
Page Ref: 251
Objective: 2
Difficulty: Moderate
________ are certificates that entitle the bearer to a stated saving on the purchase of a specific product.
A) Samples
B) Coupons
C) Rebates
D) Price packs
E) Premiums
B
Page Ref: 251
Objective: 2
Difficulty: Easy
________ are consumer promotion tools that provide a price reduction after purchase rather than at the retail shop.
A) Rebates
B) Cents-off deals
C) Price packs
D) Coupons
E) Premiums
A
Page Ref: 251
Objective: 2
Difficulty: Easy
________ are consumer promotion offers to consumers of savings off the regular price of a product, flagged on the label or package.
A) Coupons
B) Rebates
C) Price packs
D) Premiums
E) Samples
C
Page Ref: 251
Objective: 2
Difficulty: Easy
41)
Page Ref: 251
Objective: 2
Difficulty: Moderate
Which of the following consumer promotion tools involves using one brand to advertise another noncompeting brand?
A) tie-in promotion
B) frequency programs
C) specialty advertising
D) cross-promotion
E) patronage awards
D
Page Ref: 251
Objective: 2
Difficulty: Easy
A ________ is a salesforce promotion tool that aims at inducing the sales force or dealers to increase their sales results over a stated period, with prizes (money, trips, gifts, or points) going to those who succeed.
A) trade show
B) frequency program
C) sales contest
D) sweepstake
E) patronage award
C
Page Ref: 252
Objective: 2
Difficulty: Easy
________ is the time necessary to prepare a promotional program prior to launching it.
A) Sell-in time
B) Link time
C) Setup time
D) Lead time
E) Hold time
D
Page Ref: 252
Objective: 2
Difficulty: Easy
45)
Page Ref: 253
Objective: 3
Difficulty: Easy
Rolex calls itself the "Official Timekeeper" of the Wimbledon and Australian Open lawn tennis championships, by virtue of its sponsorships of the marquee events. What is the most likely objective for Rolex's sponsorship deal with these events?
A) to permit merchandising or promotional opportunities
B) to express commitment to the community or on social issues
C) to create experiences and evoke feelings
D) to identify with a particular target market or lifestyle
E) to increase salience of company or product name
E
Page Ref: 253
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
Mountain Dew is a brand known for sponsorships of adventure events such as snowboarding and skateboarding competitions. What is the most likely objective of Mountain Dew's sponsorship of these events?
A) to enhance corporate image
B) to express commitment to the community or on social issues
C) to entertain key clients or reward key employees
D) to create perceptions of key brand image associations
E) to become part of a personally relevant moment in consumers' lives
D
Page Ref: 253
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
48
Page Ref: 253
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Which of the following factors forms the basis of assessing sponsorship activities through supply-side methods?
A) consumers' brand knowledge
B) impact on sponsor's bottom line
C) extent of media coverage
D) brand exposure reported by consumers
E) sales pattern of sponsored products
C
Page Ref: 254
Objective: 3
Difficulty: Moderate
Which of the following parameters forms the basis for measuring sponsorship effectiveness using demand-side methods?
A) impact on market share of sponsor
B) amount of time a brand is clearly visible on a television screen
C) amount of relevant newsprint mentioning the sponsor
D) influence on consumers' brand knowledge of the sponsor
E) net impact on the sponsor's bottom line
D
Page Ref: 254
Which of the following functions of public relations departments involves presenting news and information about the organization in the most positive light?
A) corporate communications
B) product publicity
C) lobbying
D) counseling
E) press relations
E
Page Ref: 255
________ refers to the task of securing editorial space—as opposed to paid space—in print and broadcast media to promote or "hype" a product, service, idea, place, person, or organization.
A) Advertising
B) Media planning
C) Communication design
D) Publicity
E) Copy testing
D
Page Ref: 255
Objective: 4
An advertising objective is a specific communications task and achievement level to be accomplished with a specific audience in a specific period of time.
TRUE
Page Ref: 244
Objective: 1
Difficulty: Easy
Reinforcement advertising aims to stimulate repeat purchase of products and services.
FALSE
Page Ref: 244
Objective: 1
Difficulty: Easy
Puffery refers to simple exaggerations in advertisements that are not meant to be believed and are considered illegal.
FALSE
Page Ref: 245
Objective: 1
Difficulty: Moderate
The rationale behind place advertising is that marketers are better off reaching people where they work, play, and shop.
TRUE
Page Ref: 246
Objective: 1
Difficulty: Easy
The macroscheduling decision calls for allocating advertising expenditures within a short period to obtain maximum impact.
FALSE
Page Ref: 247-248
Objective: 1
Difficulty: Moderate
The forgetting rate is the rate at which the buyer forgets the brand; the higher the forgetting rate, the more continuous the advertising should be.
TRUE
Page Ref: 246
Objective: 1
Difficulty: Easy
62)
Page Ref: 248
Objective: 1
Difficulty: Easy
An advertiser makes "local buys" when it buys TV time in just a few markets or in regional editions of magazines.
FALSE
Page Ref: 248
Objective: 1
Sales promotions often attract brand switchers, who are primarily looking for low price, good value, or premiums.
TRUE
Page Ref: 250
Objective: 2
Difficulty: Easy
The historical approach correlates past sales to past advertising expenditures using advanced statistical techniques.
TRUE
Page Ref: 249
Objective: 2
Difficulty: Easy
Examples of manufacturer promotions include price cuts and feature advertising.
FALSE
Page Ref: 251
Objective: 2
Difficulty: Easy
Sales promotion tools that typically are not brand building include price-off packs, contests and sweepstakes, consumer refund offers, and trade allowances.
TRUE
Page Ref: 251
Objective: 2
Difficulty: Moderate
An ideal event is also unique but not encumbered with many sponsors, lends itself to ancillary marketing activities, and reflects or enhances the sponsor's brand or corporate image.
TRUE
The supply-side measurement method focuses on potential exposure to the brand by assessing the extent of media coverage, and the demand-side method focuses on exposure reported by consumers.
TRUE
Page Ref: 254
Objective: 3
Difficulty: Easy
The public relations function of lobbying involves advising management about public issues, and company positions and image during good times and bad.
FALSE
Page Ref: 255
Objective: 4
Difficulty: Easy
MPR can build credibility by placing stories in the media to bring attention to a product, service, person, organization, or idea.
FALSE
Page Ref: 256
Objective: 4
Difficulty: Moderate
MPR's contribution to a company's bottom line is the easiest to measure among all the available promotion tools.
FALSE
Page Ref: 256
Objective: 4
Difficulty: Moderate
What are the four types of advertising timing patterns available to marketers when launching a new product?
In launching a new product, the advertiser must choose among continuity, concentration, flighting, and pulsing.
Continuity means exposures appear evenly throughout a given period. Generally, advertisers use continuous advertising in expanding market situations, with frequently purchased items, and in tightly defined buyer categories.
...
Concentration calls for spending all the advertising dollars in a single period. This makes sense for products with one selling season or related holiday.
...
Flighting calls for advertising during a period, followed by a period with no advertising, followed by a second period of advertising activity. It is useful when funding is limited, the purchase cycle is relatively infrequent, or items are seasonal.
...
Pulsing is continuous advertising at low-weight levels, reinforced periodically by waves of heavier activity. It draws on the strength of continuous advertising and flights to create a compromise scheduling strategy. Those who favor pulsing believe the audience will learn the message more thoroughly, and at a lower cost to the firm.
Page Ref: 248
Objective: 1
What challenges do marketers face in managing trade promotions?
The growing power of large retailers has increased their ability to demand trade promotion at the expense of consumer promotion and advertising. The company's sales force and its brand managers are often at odds over trade promotion. The sales force says local retailers will not keep the company's products on the shelf unless they receive more trade promotion money, whereas brand managers want to spend their limited funds on consumer promotion and advertising.
Manufacturers face several challenges in managing trade promotions. First, they often find it difficult to police retailers to make sure they are doing what they agreed to do. Manufacturers increasingly insist on proof of performance before paying any allowances. Second, some retailers are doing forward buying—that is, buying a greater quantity during the deal period than they can immediately sell. Retailers might respond to a 10 percent-off-case allowance by buying a 12-week or longer supply. The manufacturer must then schedule more production than planned and bear the costs of extra work shifts and overtime. Third, some retailers are diverting, buying more cases than needed in a region where the manufacturer offers a deal and shipping the surplus to their stores in nondeal regions. Manufacturers handle forward buying and diverting by limiting the amount they will sell at a discount, or by producing and delivering less than the full order in an effort to smooth production. Ultimately, many manufacturers feel trade promotion has become a nightmare. It contains layers of deals, is complex to administer, and often leads to lost revenues.
Page Ref: 252
Objective: 2
Difficulty: Moderate
...
Describe the methods used to measure sponsorship activities.
It's a challenge to measure the success of events. The supply-side measurement method focuses on potential exposure to the brand by assessing the extent of media coverage, and the demand-side method focuses on exposure reported by consumers.
Supply-side methods approximate the amount of time or space devoted to media coverage of an event, for example, the number of seconds the brand is clearly visible on a television screen or the column inches of press clippings that mention it. These potential "impressions" translate into a value equivalent to the dollar cost of actually advertising in the particular media vehicle. Although supply-side exposure methods provide quantifiable measures, equating media coverage with advertising exposure ignores the content of the respective communications. The advertiser uses media space and time to communicate a strategically designed message. Media coverage and telecasts only expose the brand and don't necessarily embellish its meaning in any direct way. Although some public relations professionals maintain that positive editorial coverage can be worth 5 to 10 times the equivalent advertising value, sponsorship rarely provides such favorable treatment.
...
The demand-side method identifies the effect sponsorship has on consumers' brand knowledge. Marketers can survey event spectators to measure recall of the event as well as resulting attitudes and intentions toward the sponsor.
Page Ref: 254
Objective: 3
Difficulty: Moderate
MPR goes beyond simple publicity and plays an important role in the following tasks:
Launching new products: The amazing commercial success of toys such as LeapFrog, Beanie Babies, and even the latest kids' craze, Silly Bandz, owes a great deal to strong publicity.
...
The catalog you receive from a large apparel store, displaying their new summer collection, is an example of ________ marketing.
A) buzz
B) direct
C) virtual
D) word of mouth
E) interactive
B
Page Ref: 261
Objective: 1
Difficulty: Easy
A salesperson sends e-mails to persuade prospects to buy the products of his company. This is a type of ________ marketing.
A) buzz
B) virtual
C) word of mouth
D) direct
E) viral
D
Page Ref: 261
Objective: 1
Difficulty: Easy
OrdOnline, a pure click company offering online auctioning, decides to launch a promotional program to increase its sales. The company identifies customers who have made at least three purchases and spent at least $150 in the past six months and offers discount coupons to these customers. Which of the following strategies is used here for targeting the customers?
A) viral marketing
B) objective screening
C) internal targeting
D) catalog marketing
E) RFM formula targeting
E
Page Ref: 262
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
Which of the following is a factor considered when a customer is evaluated based on RFM formula?
A) the amount of time passed after the customer's last visit
B) the product categories purchased by the customer
C) the mode of payment used by the customer
D) the location from which the customer has bought goods
E) the type of feedback provided by the customer
A
Page Ref: 262
Objective: 1
Difficulty: Easy
Which of the following is an element of an offer strategy?
A) the medium used for delivery
B) the number of customers in the locality
C) the vision of the company
D) the skills required for production
E) the details of customer order received
A
Page Ref: 262
Objective: 1
Difficulty: Easy
The practice of using call centers, where employees receive calls from customers and provide service by taking orders and answering queries, is called ________.
A) customer response marketing
B) guerilla marketing
C) rective marketing
D) internal marketing
E) inbound telemarketing
E
Page Ref: 262
Objective: 1
Difficulty: Easy

8)
Page Ref: 262
Objective: 1
Difficulty: Easy
The management of Raleigh Bicycles observes that the company's selling costs are affected by the increased number of visits that the salespeople make to meet dealers. The company decides to reduce its personal selling costs by making sales calls to dealers via the telephone. This marketing strategy used by Raleigh is an example of ________.
A) inbound telemarketing
B) search marketing
C) internal marketing
D) outbound telemarketing
E) paid-search marketing
D
Page Ref: 262
Objective: 1
AACSB: Analytic Skills
Difficulty: Moderate
The Internet provides marketers and consumers with opportunities for much greater interaction and ________ than other marketing channels.
A) control
B) data security
C) high involvement selling
D) order conversion
E) individualization
E
Page Ref: 263
Objective: 2
Difficulty: Easy
Which of the following is an example of contextual ad placement?
A) advertisements that appear when a consumer types in the term "baby" in Google
B) dynamic advertisements of an automobile company appear in a newspaper's Web site
C) descriptive listings of products and services in an online shopping Web site
D) "buy now" tags that appear near the product description in a company's Web site
E) advertisement of a new movie that appears at the background of a news Web page
A
Page Ref: 263
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
12)
Page Ref: 263
Objective: 2
Difficulty: Easy
Which of the following is a disadvantage of using Web for interactive marketing?
A) Consumers can effectively screen out most messages.
B) An average customer spends very little time on the Internet.
C) Internet selling and advertising is costlier than other advertising media.
D) It is unable to create long-term marketing assets.
E) Online marketing limits the possibilities of personalization.
A
Page Ref: 263
Objective: 2
Difficulty: Easy
Companies design ________ to embody or express their purpose, history, products, and vision and that are attractive on first viewing and interesting enough to encourage repeat visits.
A) Web sites
B) microblogs
C) banner ads
D) operating programs
E) social network pages
A
Page Ref: 263
Objective: 2
Difficulty: Easy
Individual Web pages or clusters of pages that function as supplements to a primary Web site are called ________.
A) banners
B) pop-ups
C) interstitials
D) microsite
E) home pages
D
Page Ref: 263
Objective: 2
Difficulty: Easy
16)
Page Ref: 264
Objective: 2
Difficulty: Easy
Small Web pages of DTH Bank appear in the Web site of an online property brokerage firm. The pages provide tips to home buyers and publishes its new home loan offerings. These Web pages are examples of ________.
A) microsites
B) online banners
C) interstitials
D) paid advices
E) display advertisements
A
Page Ref: 263
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
You are visiting FIFA's Web site to know the schedule of the football World cup. On the top of the Web page showing the schedule, a small picture displays the official mascot and the text "Buy tickets for the World Cup now." This static exhibit provides the link to the official ticket booking Web site. Identify the type of advertisement used here.
A) pay-per-click ad
B) floating ad
C) wallpaper ad
D) superstitial
E) banner ad
E
Page Ref: 264
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
In ________, marketers bid in a continuous auction on search terms that serve as a proxy for the consumer's product or consumption interests.
A) paid searches
B) pop-up advertising
C) display advertising
D) banner marketing
E) micro-advertising
A
Page Ref: 264
Objective: 2
Difficulty: Easy
20)
Page Ref: 264
Objective: 2
Difficulty: Easy
________ are advertisements, often with video or animation, which pop up between changes on a Web site.
A) Interstitials
B) Pay-per click ads
C) Podcasts
D) Wallpaper ads
E) Floating ads
A
Page Ref: 264
Objective: 2
Difficulty: Easy
You are browsing through an entertainment Web site. When you click on one of the links, the screen turns grey and displays the advertisement of an automobile manufacturer. Clicking on the advertisement leads to the automobile manufacturer's Web site. This advertisement is an example of a(n) ________.
A) interstitial
B) superstitial
C) floating ad
D) pay-per-click ad
E) wallpaper ad
A
Page Ref: 264
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
Which of the following is a disadvantage of using e-mails in marketing?
A) Non-technical products cannot be promoted using e-mails.
B) E-mails are not a cost-effctive alternative.
C) Customers can filter the e-mails and many won't reach them.
D) E-mails cannot be used for prospecting.
E) Customer feedback cannot be sought when using e-mails.
C
Page Ref: 264
Objective: 2
Difficulty: Easy

24)
Page Ref: 264
Objective: 2
Difficulty: Easy
Which of the following is a valid observation about word of mouth advertisements?
A) It is the one form of advertisement that cannot be controlled by companies becasue it occurs naturally.
B) Social media can be used as a tool to generate positive word of mouth.
C) Word of mouth strategy will be less effective for smaller organziations.
D) Attempts to manage word of mouth would lead to negative consequences.
E) Organic word of mouth is always positive whereas facilitated word of mouth is negative.
B
Page Ref: 265
Objective: 3
Difficulty: Easy
All the PR benefits a firm receives without having directly paid for anything is called ________ media.
A) earned
B) open
C) passive
D) inherent
E) internal
A
Page Ref: 265
Objective: 3
Difficulty: Easy
Inception, a recent Hollywood blockbuster, had created a lot of interest among the viewers even before its release due to the credentials of its makers. The movie was discussed in social network pages and discussion forums. The discussions increased after its release and it helped the movie do good business. Which of the following most closely describes the type of marketing discussed in this example?
A) personalized marketing
B) direct marketing
C) interactive marketing
D) word of mouth marketing
E) technology marketing
D
Page Ref: 265
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Albert Hawkins is a famous writer. He has authored more than fifteen books in Spanish. He publishes his thoughts online and updates the pages periodically. This online account has generated much public interest in Spain and has many readers. Hawkins's online journal is an example of a(n) ________.
A) blog
B) interstitial
C) online magazine
D) buzz spot
E) microsite
A
Page Ref: 265
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Identify a social network that majorly targets career-minded professionals.
A) LinkedIn
B) Facebook
C) MySpace
D) Twitter
E) Orkut
A
Page Ref: 265
Objective: 3
Difficulty: Easy
Which of the following is an example of marketing through social media?
A) a leading brand of sports shoes sponsors the soccer world cup
B) a software company organizes a cancer awareness camp free for all
C) a new department store in your neighborhood that relies on people to spread the word
D) a newspaper article talks about the pollution control processes put in place by a steel manufacturing giant
E) a leading car manufacturer advertises the new model on facebook
E
Page Ref: 265
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
32)
Page Ref: 266
Objective: 3
Difficulty: Easy
________ is another form of word of mouth that encourages consumers to pass along company-developed products and services or audio, video, or written information to others online.
A) Buzz marketing
B) Viral marketing
C) Guerrilla marketing
D) Motivational marketing
E) Internal marketing
B
Page Ref: 266
Objective: 3
Difficulty: Easy
Apple created a lot of publicity before the release of its tablet computer, iPad. The product was discussed in online communities and social networks. Many booked the product in advance, ensuring good initial revenues for Apple. The company published periodic updates of the product creating huge expectation in the minds of customers. This pre-launch publicity can be viewed as ________ marketing.
A) buzz
B) stealth
C) ambush
D) undercover
E) direct
A
Page Ref: 266
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
35)
Page Ref: 266
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Aldoor, a smart phone manufacturer, understands that word of mouth marketing is an important aspect in the success of a product. It promotes discussions about the product both online and offline. Certain loyalists, who have good knowledge about smart phones, act as key participants in such discussions. They help others sort out the problems and provide suggestions to those who want to buy smart phones. These individuals can be called ________.
A) intuiters
B) buzzers
C) bridges
D) connectors
E) mavens
E
Page Ref: 267
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
Andrew is a post graduate student in Oxford University. He is also a member of the group of engineering professionals. The membership was issued to him when he worked as an engineer before joining the school. Andrew is called a(n) ________ connecting the oxford student community and group of engineering professionals.
A) bridge
B) maven
C) buzzer
D) intuiter
E) external
A
Page Ref: 266
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
38)
Page Ref: 266
Objective: 3
Difficulty: Easy
According to communication researchers, the society consists of ________, small groups whose members interact frequently.
A) intuiters
B) buzzers
C) cliques
D) informants
E) campaigners
C
Page Ref: 266
Objective: 3
Difficulty: Easy
People who know and communicate with a great number of other people are called ________.
A) buzzers
B) connectors
C) informants
D) stickers
E) bridges
B
Page Ref: 267
Objective: 3
Difficulty: Easy
Which of the following softwares allow Internet firms to monitor when customers blog, comment, post, share, link, upload, friend, stream, write on a wall, or update a profile?
A) cookies
B) caches
C) bridges
D) cliques
E) buzzers
A
Page Ref: 267
Objective: 3
Difficulty: Easy
42)
Page Ref: 267
Objective: 4
Difficulty: Easy
A salesperson performing over the counter sales in a medical store can be referred to as a(n) ________.
A) order taker
B) demand creator
C) solution vendor
D) phisher
E) missionary
A
Page Ref: 267
Objective: 4
Difficulty: Easy
Alduro Chemicals, a manufacturer of detergents, delivers chemicals used for commercial washing to various hoteliers in the United States. Most of the company's revenue comes from routine orders from its existing customers and the company uses unskilled salespeople to collect requirements from its customers. These unskilled customers are known as ________.
A) demand creators
B) deliverers
C) missionaries
D) order takers
E) solution vendors
D
Page Ref: 267
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
Gordron Inc. manufactures and markets medical equipment. To ensure that its salespeople are knowledgeable enough to answer all product queries, the company hires only those individuals who have a good understanding of both the medicine profession and the mechanics of the equipment used. Which of the following is the most accurate classification of Gordron's salesforce?
A) technicians
B) demand creators
C) deliverers
D) order takers
E) missionaries
A
Page Ref: 267
Objective: 4
AACSB: Analytic Skills
Difficulty: Moderate
A salesperson who relies on creative methods for selling a company's tangible or intangible offerings is called a(n) ________.
A) demand creator
B) deliverer
C) order taker
D) missionary
E) solution vendor
A
Page Ref: 267
Objective: 4
Difficulty: Easy
________ consists of manufacturers' reps, sales agents, and brokers who earn a commission based on sales.
A) Virtual salesforce
B) Domestic salesforce
C) Contingent salesforce
D) Contractual salesforce
E) Decentralized salesforce
D
Page Ref: 270
Objective: 4
Difficulty: Easy
Part-time paid employees who work exclusively for the company are a part of the ________ salesforce.
A) direct
B) virtual
C) contractual
D) implicit
E) brokered
A
Page Ref: 270
Objective: 4
Difficulty: Easy
50)
Page Ref: 271
Objective: 4
Difficulty: Easy
Identify the first step in the workload approach to establish sales force size.
A) grouping customers into size classes according to annual sales volume
B) establishing desirable call frequencies for each customer class
C) determining the total workload for the country in terms of sales calls per year
D) determining the average number of calls a sales representative can make per year
E) calculating the total number of sales reps needed
A
Page Ref: 270
Objective: 4
Difficulty: Easy
Today's customers expect a salesperson to have extensive product knowledge, to be efficient and reliable, and to provide ideas to improve the customer's operations. These demands are forcing companies to make higher investments in ________.
A) sales training
B) internal selling
C) management controls
D) advertising
E) sales promotions
A
Page Ref: 271-272
Objective: 5
Difficulty: Easy
Which of the following is the first step in the process of personal selling?
A) prospecting and qualifying
B) sales preapproach
C) sales presentation
D) unearthing objections
E) demonstrating advantages
A
Page Ref: 268
Objective: 5
Difficulty: Easy
54)
Page Ref: 268
Objective: 5
Difficulty: Easy
In which of the following stages of personal selling does a salesperson tell the product story to the buyer?
A) preapproach
B) prospecting
C) presentation
D) closing
E) objection handling
C
Page Ref: 268
Objective: 5
Difficulty: Easy
Catalog marketing and telemarketing are examples of indirect marketing.
FALSE
Page Ref: 261
Objective: 1
Difficulty: Easy
One of the shortcomings of direct marketing is that the firms cannot easily measure its response.
FALSE
Page Ref: 262
Objective: 1
Difficulty: Easy
58)
Page Ref: 262
Objective: 1
Difficulty: Easy
Microsites are versions of Web sites designed for access from mobile devices.
FALSE
Page Ref: 263
Objective: 2
Difficulty: Easy
60)
Page Ref: 264
Objective: 2
Difficulty: Easy
Interstitials are advertisements that pop up between changes on a Web site.
TRUE
Page Ref: 264
Objective: 2
Difficulty: Easy
Earned media refers to the various paid advertising channels used by companies to obtain visibility on the Internet.
FALSE
Page Ref: 265
Objective: 3
Difficulty: Easy
An important characteristic of online communities and forums is the two-way information flow.
TRUE
Page Ref: 265
Objective: 3
Difficulty: Easy
Blogs cannot be used for word of mouth advertising as they are not updated on a regular basis.
FALSE
Page Ref: 265
Objective: 3
Difficulty: Easy
Viral and buzz campaigns are performed with minimal involvement of consumers and prospects.
FALSE
Page Ref: 266
Objective: 3
Difficulty: Easy
A clique is a small group whose members interact frequently.
TRUE
Page Ref: 266
Objective: 3
Difficulty: Easy
Proxies and cookies can be used by firms to monitor customers when they are blogging, commenting, or posting in social networks.
TRUE
Page Ref: 267
Objective: 3
Difficulty: Easy
A salesperson calling on supermarkets to take repeat orders is called an order taker.
TRUE
Page Ref: 267
Objective: 4
Difficulty: Easy
A contractual sales force consists of part-time employees who work exclusively for the company.
FALSE
Page Ref: 270
Objective: 4
Difficulty: Easy
A company that sells one product line to one end-using industry with customers in many locations would use product or market structure for its salesforce.
FALSE
Page Ref: 270
Objective: 4
Difficulty: Easy
The first step in the workload approach for designing salesforce size is to establish desirable call frequencies for each customer class.
TRUE
Page Ref: 270
Objective: 4
Difficulty: Easy
The fixed amount in a salesperson's salary is majorly designed to stimulate and reward efforts from salespeople.
FALSE
Page Ref: 270
Objective: 4
Difficulty: Easy
Sales representatives who are paid mostly in commissions require more supervision than other salespeople.
FALSE
Page Ref: 273
Objective: 5
Difficulty: Easy
Most direct marketers apply the RFM formula to select customers. Explain this formula and how it is used to select customers.
Most direct marketers apply the RFM (recency, frequency, monetary amount) formula to select customers according to how much time has passed since their last purchase, how many times they have purchased, and how much they have spent since becoming a customer. Suppose a company is offering leather jackets. It might make this offer to the most attractive customers, those who made their last purchase between 30 and 60 days ago, who make three to six purchases a year, and who have spent at least $100 since becoming customers. Points are established for varying RFM levels; the more points, the more attractive the customer.
Page Ref: 262
Objective: 1
Difficulty: Easy
What is the major difference between earned media and paid media?
Paid media results from press coverage of company-generated advertising, publicity, or other promotional efforts. Earned media is all the PR benefits a firm receives without having directly paid for anything, all the news stories, blogs, social network conversations that deal with a brand.
Page Ref: 265
Objective: 3
Difficulty: Easy
Which type of questions allow salespeople to understand facts or explore the buyer's present state of affairs?
Situation questions ask about facts or explore the buyer's present situation.
Page Ref: 268
Objective: 5
Difficulty: Easy
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) product
B) production
C) selling
D) marketing
E) social responsibility
Answer: C
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) event
B) property
C) service
D) place
E) idea
Answer: D
Page Ref: 3
Objective: 2
AACSB: Analytic Skills
Difficulty: Moderate
D
When companies measure the number of people who are willing and able to buy their products, they are measuring ________.
A) demand
B) price elasticity
C) real needs
D) standard of living
E) disposable income
Answer: A
Page Ref: 5
Objective: 3
Difficulty: Moderate
A
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: A
Page Ref: 6
Objective: 3
Difficulty: Moderate
A
If a marketer uses warehouses, transportation companies, banks, and insurance companies to facilitate transactions with potential buyers, the marketer is using a ________.
A) service channel
B) distribution channel
C) communication channel
D) relationship channel
E) standardized channel
Answer: A
Page Ref: 6
Objective: 3
Difficulty: Moderate
A
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 chain
E) marketing chain
Answer: C
Page Ref: 7
Objective: 3
Difficulty: Easy
C
In an attempt to create greater competition and growth opportunities, countries often ________.
A) increase trade barriers
B) protect industries
C) deregulate industries
D) encourage intermediation
E) reduce privatization
Answer: C
Page Ref: 7-8
Objective: 4
AACSB: Multicultural and diversity understanding
Difficulty: Moderate
C
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 transformation
D) e-collaboration
E) new-market synchronization
Answer: A
Page Ref: 8
A
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: B
B
Which of the following categories of goods and services is most likely to require an aggressive use of the selling concept?
A) shopping goods
B) unsought goods
C) necessary goods
D) luxury goods
E) complementary goods
Answer: B
Page Ref: 9
Objective: 4
AACSB: Analytic Skills
B
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) product
B) production
C) selling
D) marketing
E) social responsibility
Answer: C
C
________ 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: B
Page Ref: 10
B
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: C
Page Ref: 11
Objective: 4
Difficulty: Moderate
C
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 concept
B) integrated marketing concept
C) social responsibility marketing concept
D) production concept
E) relationship marketing concept
Answer: C
Page Ref: 12
Objective: 4
AACSB: Analytic Skills
Difficulty: Easy
C
Which of the following reflects the "people" component of the marketing mix?
A) the creativity, discipline, and structure brought to marketing management
B) the development of new products by the marketers
C) the firm's consumer-directed activities
D) the right set of processes to guide activities and programs within the firm
E) the internal marketing of the firm
Answer: E
E
A short definition of marketing is "meeting needs profitably."
Answer: TRUE
T
The customer value triad consists of a combination of quality, durability, and price.
Answer: FALSE
Page Ref: 6
Objective: 3
AACSB: Analytic Skills
Difficulty: Moderate
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: TRUE
Page Ref: 6
T
Proponents of holistic marketing consider internal marketing to be as important as marketing to consumers.
Answer: TRUE
Page Ref: 11
Objective: 4
AACSB: Reflective Thinking
Difficulty: Moderate
T
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.

Page Ref: 12
Objective: 4
AACSB: Ethical Reasonin
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.
Apex Corporation is one of the best in its industry in terms of costs and performance. Many companies in its industry will probably consider Apex as a ________.
A) pioneer
B) benchmark
C) target for acquisition
D) future supplier
E) sounding board for ideas
Answer: B
B
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) developing
B) positioning
C) communicating
D) reversing
E) researching
Answer: C
C
The fullfilment management process includes all the activities in ________.
A) gathering and acting upon information about the market
B) researching, developing, and launching new high-quality offerings quickly and within budget standards
C) defining target markets and prospecting for new customers
D) building deeper understanding, relationships, and offerings to individual customers
E) receiving and approving orders, shipping the goods on time, and collecting payment
Answer: E
E
Another way to describe a supply chain, where companies partner with specific suppliers and distributors to ensure a smooth functioning of the system, is to call it a ________.
A) teamwork group
B) horizontal integration
C) domestic power center
D) value exploration
E) value delivery network
Answer: E
E
Holistic marketers achieve profitable growth by expanding customer share, ________, and capturing customer lifetime value.
A) undermining competitive competencies
B) building customer loyalty
C) creating customer needs
D) renewing a customer base
E) cannibalizing products
Answer: B
B
During Jill's market research study, many customers indicated that traditional oven mitts made it very difficult to hold baking dishes, resulting in frequent spills. Jill brought her findings to the research department, and her company leveraged its engineering and design competencies to develop a new hand-held hot-pad that allows for significantly greater dexterity in handling hot cooking implements, while protecting the cook from burns. This is an example of the ________ element of the holistic marketing framework.
A) integrated marketing
B) value creation
C) negative demand
D) value networking
E) value focus
Answer: B
B
Which of the following plans would most likely include 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
Answer: A
A
The ________ is the number of channel levels, from raw materials to final product and distribution, in which a company will participate.
A) industry sphere
B) vertical sphere
C) product/application sphere
D) competence sphere
E) market segment sphere
Answer: B
Page Ref: 22
Objective: 2
AACSB: Analytic Skills
Difficulty: Easy
B
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."
A) strategic business unit
B) subsidiary unit
C) merged unit
D) niche market unit
E) specialized business unit
Answer: A
Page Ref: 22
A
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 a(n) ________ strategy first because it is easier to improve an existing business than to build a new one.
A) market-penetration
B) market-development
C) diversification
D) product-development
E) exclusive
Answer: A
A
The first step in the business unit strategic-planning process deals with which of the following?
A) formulate goals
B) define business mission
C) implement strategies
D) execute programs
E) conduct SWOT analysis
Answer: B
B
After analyzing their company's strengths and weaknesses, top managers at Loan Bright decided that they would serve individual loan officers who typically only wanted to purchase small sets of homebuyer data, rather than bigger institutional clients. To meet the needs of this segment, Loan Bright simplified its sales contract, restructured its advertising efforts to focus on Google ads, and created a separate customer-service department. Loan Bright's strategy is best described as a(n) ________ strategy.
A) overall cost leadership
B) focus
C) differentiation
D) diversification
E) promotional
Answer: B
B
Abbott Laboratories warehouses and delivers 3M's medical and surgical products to hospitals across the United States. The best description of this form of alliance would be a(n) ________.
A) product alliance
B) logistics alliance
C) pricing collaboration
D) indirect collaboration
E) promotional alliance
Answer: B
B
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 ________.
A) value managed partnership
B) decentralized partnership
C) centralized partnership
D) partner relationship management
E) intensive growth management
Answer: D
D
The marketing plan is the central instrument for directing and coordinating the marketing effort.
Answer: TRUE
T
A firm employing a focus strategy concentrates on achieving superior performance in an important customer benefit area valued by a large part of the market.
Answer: FALSE
F
What questions would typically be asked during a market opportunity analysis (MOA)?
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 possess 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?
Page Ref: 26
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.
A) external records and documents
B) databases found on the Internet
C) consultant reports
D) internal company records
E) secondary data from government sources such as the Better Business Bureau
Answer: D
D
By equipping its sales force with handheld devices with bar-code readers and Internet connections to speed inventory assessment, TaylorMade allows sales executives to have significantly more time to interact with their consumers. This is an example of the use of technology in improving ________.
A) sales information systems
B) payroll systems
C) cookies
D) cohort segmentation
E) competitive intelligence gathering
Answer: A
A
A company can take several steps to improve the quality of its marketing intelligence. Which of the following best describes the practice used by McDonald's when it sent pseudo customers to assess stores' internal speed standards?
A) training and motivating the sales force to spot and report new developments
B) motivating intermediaries to pass along important intelligence
C) networking externally
D) purchasing information from outside research firms and vendors
E) using the sales information system to get accurate sales reports
Answer: B
B
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.
A) fad
B) fashion
C) trend
D) megatrend
E) style
Answer: C
C
A growing population does not mean growing markets unless ________.
A) the people are under a democratic system of government
B) there is common ownership of all resources
C) people have sufficient purchasing power
D) there is adequate governmental intervention in the market
E) the government has a budget surplus
Answer: C
C
________ refer to groups of individuals who are born during the same time period and travel through life together.
A) Cohorts
B) Populations
C) Clans
D) Societies
E) Ethnic groups
Answer: A
A
Which of the following economies provide limited opportunities to international marketers to develop product sales?
A) capitalist economies
B) subsistence economies
C) raw-materials-exporting economies
D) industrializing economies
E) industrialized economies
Answer: B
B
________ beliefs and values are passed from parents to children and reinforced by social institutions—schools, churches, businesses, and governments; they are very difficult to change.
A) Transient
B) Secondary
C) Protected
D) Core
E) Variable
Answer: D
D
Prestige LLC, a small company that manufactures specialty cereals and energy bars, wants to launch a "green marketing" program in response to heightened consumer awareness about environmental issues. What should the company do to maximize the program's chances of being successful?
A) demonstrate that the products will benefit both customers and the society in the long-term
B) emphasize benefits to the consumer rather than environmental benefits
C) focus on the efforts and costs incurred by the company to bring these "green" products to consumers
D) engage in "greenwashing" to highlight the environmental benefits of the product
E) explain the rules and regulations laid out by governmental agencies to protect the environment
Answer: A
A
An unintended effect of business legislation is ________.
A) restricting fair competition in the market
B) encouraging unbridled business behavior
C) reducing the social cost of producing a particular commodity
D) exposing consumers to unfair trade practices
E) slowing economic growth
Answer: E
E
The ________ market is the set of consumers who are buying the company's product.
A) potential
B) available
C) target
D) penetrated
E) reserve
Answer: D
D
With an increase in marketing expenditure, market demand ________.
A) continues to increase at an increasing rate
B) initially increases and then declines
C) increases first at an increasing rate, then at a decreasing rate
D) decreases first and then spikes
E) continues to increase at a decreasing rate.
Answer: C
C
During recession, the market demand curve which is a function of marketing expenditure ________.
A) shifts upward
B) becomes vertical
C) remains unaffected
D) shifts downward
E) slopes downward
Answer: D
Page Ref: 41
Objective: 5
D
________ is the sales limit approached by company demand as company marketing effort increases relative to that of competitors.
A) Sales budget
B) Market demand
C) Company demand
D) Company sales potential
E) Market potential
Answer: D
Page Ref: 42
Objective: 5
Difficulty: Easy
D
An efficient method of estimating area market potentials makes use of the ________, developed by the U.S. Bureau of the Census in conjunction with the Canadian and Mexican governments. It classifies all manufacturing into 20 major industry sectors and further breaks each sector into a six-digit, hierarchical structure.
A) Thomson Reuters Business Classification
B) Global Industrial Classification Standard
C) North American Product Classification System
D) Industry Classification Benchmark
E) North American Industry Classification System
Answer: E
E
For which of the following categories of products will demand forecasting be easiest?
A) commodities which are in the initial stage of their product life cycles
B) products which have many close substitutes in the market
C) goods which are produced in an oligopoly market
D) products whose sales fluctuate widely
E) products whose consumers are highly sensitive to change in price
Answer: C
C
The basis of cohort segmentation is that the experiences of key defining moments during the time when an individual becomes an adult can influence his or her values, preferences, and buying behaviors for the rest of his or her life.
Answer: TRUE
T
Secondary beliefs and values are passed on from parents to children and reinforced by major social institutions, making them very difficult to change by marketers.
Answer: FALSE
F
What are the various steps a company can take to improve the quality of its marketing intelligence function?
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.
Page Ref: 35
Why do the companies need to search for practical means to harness renewable sources of energy like wind and water?
Answer: Prolonged exploitation of the conventional sources of energy like oil has led to an acute shortage of these resources resulting their prices to increase over time. Firms face substantial cost increase as these resources are depleted, hence they need to search for means to harness the infinite renewable resources.
Which of the following is true for the modern company organization chart?
A) Frontline employees are less important than top management.
B) Customers are at the top of the pyramid.
C) Top management is at the top of the pyramid.
D) Customers are less important than middle management.
E) Frontline employees are at the top of the pyramid.
Answer: B
B
________ is the perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a given market offering.
A) Total customer cost
B) Total customer benefit
C) Total benefits of ownership
D) Value proposition
E) Value delivery system
Answer: B
B
Cell phone manufacturer LZT has to choose between two options for sourcing parts: Japan-based Keiko Inc. and U.S.-based Global Tech. How can Keiko reduce the total customer cost for LZT?
A) absorbing some risk by offering a warranty
B) improving the functional aspects of the products
C) augmenting the psychological benefits of the products
D) training service personnel to improve their skills
E) investing in brand building for the products
Answer: A
A
A company's ________ includes all the experiences the customer will have on the way to obtaining and using the offering.
A) value proposition
B) value delivery system
C) customer-value analysis
D) total customer benefit
E) total customer cost
Answer: B
B
A profitable customer ________.
A) yields a cost stream that exceeds by an acceptable amount his revenue stream
B) yields a revenue stream that exceeds the company's cost stream
C) yields a cost stream that exceeds the company's revenue stream
D) yields a revenue stream that exceeds by an acceptable amount his cost stream
E) yields a revenue stream that equals the company's cost stream
Answer: B
B
________ describes the net present value of the stream of future profits expected over the customer's lifetime purchases.
A) Activity-based costing
B) Customer lifetime value
C) Customer value analysis
D) Customer-perceived value
E) Customer profitability analysis
Answer: B
B
A customer ________ is any occasion on which a customer encounters the brand and product—from actual experience to personal or mass communications to casual observation.
A) touch point
B) point of order
C) point of difference
D) pivot point
E) point of parity
Answer: A
A
customer touch point for Abacus Airlines would be an item such as ________.
A) ease of access to the airport
B) a mechanic's ability to service the airplanes
C) the reservations desk
D) the value of air travel versus surface transportation
E) competency of a travel agent
Answer: C
...
Which of the following can a company do to reduce defection?
A) Attract new customers to try out the company's products.
B) Increase customer lifetime value by increasing the non-monetary costs of products.
C) Enhance the growth potential of existing customers through cross-selling and upselling.
D) Distinguish the causes of customer attrition and identify those that can be managed better.
E) Make low-profit customers more profitable or terminate the relationship.
Answer: D
D
Sapphire Toys actually sells more than toys. It also sells branded clothing, music CDs, and books for children. This expansion of dealership sales offerings is an attempt to increase the value of the customer base by ________.
A) reducing the rate of customer defection
B) increasing the longevity of the customer relationship
C) enhancing the growth potential of each customer through cross-selling
D) making low-profit customers more profitable
E) terminating low-profit customers
Answer: C
C
Which of the following is an example of focusing disproportionate effort on high-profit customers?
A) In addition to bicycles, 2Wheels sells biking gear such as helmets, bottles, jackets and other accessories.
B) 2Wheels has a club for its regular customers, organizing cycling events and parties for them.
C) Though 2Wheels previously offered free delivery, it now charges for deliveries made outside the city.
D) 2Wheels allows existing customers to upgrade to a newer model at less than the sticker price by trading in their older model.
E) 2Wheels encourages customers to send in their suggestions for product improvement.
Answer: B
B
Which of the following gains the most benefit from introducing a frequency program?
A) the first company to introduce a frequency program in an industry
B) the fast follower, the second to introduce a program in an industry
C) the industry sales leader
D) the niche player in the industry
E) the low-cost leader in the industry
Answer: A
A
The process of building, maintaining, and using customer databases and other databases for the purpose of contacting, transacting, and building customer relationships is called ________.
A) data warehousing
B) data mining
C) database marketing
D) participatory marketing
E) permission marketing
Answer: C
C
Phil Langston has just ordered a number of expensive executive gifts that he will be sending as an appreciation token to a select few customers from his client database. In which of the following ways is Mr. Langston most likely using his database?
A) to identify prospects
B) to decide which customers should receive a new sales offer
C) to deepen customer loyalty
D) to avoid serious customer mistakes
E) to beat the competition to a sale
Answer: C
C
In which of the following cases is building a database worthwhile for the company?
A) where the product is a one-in-a-lifetime purchase
B) where customers show little loyalty to a brand
C) where the company has a long relationship with its customers
D) where the unit sale is very small
E) where the cost of gathering the information is high
Answer: C
C
Conformance quality and performance quality are identical in the marketing sense.
Answer: FALSE
F
Customer lifetime value describes the net present value of the stream of future profits expected over the customer's lifetime purchases.
Answer: TRUE
T
________ 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 marketing
B) Mind mapping
C) Consumer activism
D) Consumer behavior
E) Product differentiation
Answer: D
D
A(n) ________ group is one whose values or behavior an individual rejects.
A) aspirational
B) disassociative
C) membership
D) primary
E) procreational
Answer: B
B
Marriage, childbirth, and divorce constitute the ________ that shape the consumption pattern of individuals.
A) psychological life cycle
B) product life cycle
C) social status
D) postpuberty cycles
E) critical life events
Answer: E
E
Consumers often choose and use brands that have a brand personality consistent with how they see themselves, also known as the ________.
A) actual self-concept
B) ideal self-concept
C) others' self-concept
D) prohibitive self-concept
E) suggestive self-concept
Answer: A
A
________ portrays the "whole person" interacting with his or her environment.
A) Attitude
B) Personality
C) Lifestyle
D) Self-concept
E) Subculture
Answer: C
C
The starting point for understanding consumer behavior is the ________ model in which marketing and environmental stimuli enter the consumer's consciousness, and a set of psychological processes combine with certain consumer characteristics to result in decision processes and purchase decisions.
A) self-reliance
B) self-perception
C) psychogenic
D) stimulus-response
E) projective
Answer: D
D
________ is the process by which we select, organize, and interpret information inputs to create a meaningful picture of the world.
A) Consumption
B) Perception
C) Acculturation
D) Assimilation
E) Cognitive dissonance
Answer: B
B
Anne is a frequent purchaser of Yoplait strawberry yogurt. For once, she decides to try a different flavored yogurt. Instead of trying out the flavors offered by competing brands, Anne selects a different flavor offered by Yoplait. Here, her past experience with the brand prompts her to make the choice. Anne's behavior can be best described as ________.
A) fallacy of proposition
B) associative networking
C) generalization
D) heuristic thinking
E) self-actualization
Answer: C
C
Amtex electronics, a consumer products brand, advertises its products inside supermarkets and retail stores frequently to promote the process of ________ and stimulate purchase.
A) memory verification
B) memory retrieval
C) memory decoding
D) memory formation
E) memory augmentation
Answer: B
B
The milder information search state where a person simply becomes more receptive to information about a product is called ________.
A) active information search
B) information search
C) heightened attention
D) purchase decision
E) dynamic information search
Answer: C
C
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 attention
B) short-term memory processing
C) subliminal processing of information
D) long-term memory processing
E) active information search
Answer: E
E
A(n) ________ is a descriptive thought that a person holds about something.
A) attitude
B) belief
C) desire
D) feeling
E) emotion
Answer: B
B
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 other 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
B
A mobile phone manufacturing company observes that the main reason for an abrupt fall in their sales volume is the unconventional design of their phones that consumers found inconvenient and unattractive. The findings prompt the company to adopt a new strategy. They redesigned the product models keeping the requirements of the end-user in mind. According to the expectancy value-model, the company's strategy can be termed as ________.
A) psychological repositioning
B) real repositioning
C) competitive depositioning
D) physiological depositioning
E) prescriptive method
Answer: B
B
When a marketer tries to alter a consumer's beliefs about a company's brand to get the consumer to rethink a purchase decision, the marketer is using ________.
A) psychological repositioning
B) competitive depositioning
C) positioning
D) repositioning
E) biased positioning
Answer: A
A
________ refers to the manner in which consumers code, categorize, and evaluate financial outcomes of choices.
A) Cost accounting
B) Financial accounting
C) Behavioral accounting
D) Mental accounting
E) Factual accounting
Answer: D
D
A person's position in a group is defined in terms of role and status.
Answer: TRUE
T
According to Maslow's hierarchy of needs model, recognition, self-esteem, and status would constitute a person's social needs.
Answer: FALSE
F
A ________ consists of a group of customers who share a similar set of needs and wants.
A) vertical marketing system
B) market basket
C) market share
D) market segment
E) market level
Answer: D
D
If a marketer decides to segment a market based on neighborhoods, the marketer will have chosen the ________ method of segmentation.
A) demographic
B) psychographic
C) geographic
D) cultural
E) behavioral
Answer: C
C
If a marketing researcher uses such names (categories) as Blue Blood Estates, Winner's Circle, Hometown Retired, or Shotguns and Pickups, when doing segmentation research, the marketing researcher is using ________ clusters.
A) PRIZM
B) behavioral
C) psychographic
D) demographic
E) VALS
Answer: A
A
Which of the following statements about Gen Yers is true?
A) They are selective, confident, and impatient.
B) They are more likely to associate retirement with "the beginning of the end."
C) They are more pragmatic and individualistic.
D) They were born between 1964 and 1978.
E) They were the first generation to find surpassing their parents' standard of living a serious challenge
Answer: A
A
________ is the science of using psychology and demographics to better understand consumers.
A) Psychographics
B) Interactionism
C) Clustering
D) Demographic transition
E) Customerization
Answer: A
A
Linda was buying all her groceries from Home Needs supermarket for the past 5 years. She recently
came across The Convenience Store, another supermarket just a few miles away from her place and started buying her groceries from them. Linda can be best described as ________.
A) a split loyal
B) an antiloyal
C) a shifting loyal
D) a hard-core loyal
E) a switcher
Answer: C
Page Ref: 104-105
C
If a buyer is loyal to two or three different brands of soap, this buyer's loyalty status can be described as being among the ________.
A) switchers
B) shifting loyals
C) split loyals
D) hard-core loyals
E) antiloyals
Answer: C
C
If a marketer is seeking to segment a business market, which of the following variables is generally felt to be the most important?
A) personal characteristics
B) demographic variables
C) situational factors
D) operating variables
E) purchasing approaches
Answer: B
Page Ref: 105
B
A marketer is interested in segmenting a business market on ________ if the marketer intends to eventually segment the market based on loyalty and attitudes toward risk.
A) situational factors
B) purchasing approaches
C) personal characteristics
D) operating variables
E) demographic variables
Answer: C
C
In the ________ step of the market segmentation process, the marketer evaluates the segment using criteria such as market growth and market access.
A) need-based segmentation
B) segment identification
C) segment attractiveness
D) segment profitability
E) segment "acid test"
Answer: C
C
In evaluating different market segments, the firm must look at two factors: the segment's overall attractiveness and ________.
A) the company's objectives and resources
B) the effectiveness of the suppliers
C) the flexibility of legal rules governing the business
D) the socio-economic infrastructure
E) the global nature of the product
Answer: A
A
In ________ marketing, the firm ignores segment differences and goes after the whole market with one offer.
A) niche
B) mass
C) guerrilla
D) segmented
E) differentiated
Answer: B
B
Marketers usually identify niches by ________.
A) dividing a segment into subsegments
B) conducting VALS tests
C) allowing consumers to gravitate toward product brands
D) examining the demographics section of the handbook of marketing
E) producing products that can be used in a variety of ways
Answer: A
A
When a symphony orchestra targets people who have broad cultural interests, rather than only those who regularly attend concerts, the orchestra is targeting ________.
A) market mavens
B) strategic segments
C) supersegments
D) occasion segments
E) psychodemographic segments
Answer: C
C
Demographic variables are popular because they are often associated with consumer needs and wants and they are easy to measure.
Answer: TRUE
T
Situational factor segmentation variables in the business marketplace include urgency, specific application, and size of order.
Answer: TRUE
T
Briefly describe the steps in the segmentation process.
Answer: The seven steps in the segmentation process include:
1) Needs-Based Segmentation- Group customers into segments based on similar needs and benefits sought by customers in solving a particular consumption problem.
2) Segment Identification- For each needs-based segment, determine which demographics, lifestyles, and usage behaviors make the segment distinct and identifiable (actionable).
3) Segment Attractiveness- Using predetermined segment attractiveness criteria (such as market growth, competitive intensity, and market access), determine the overall attractiveness of each segment.
4) Segment Profitability- Determine segment profitability.
5) Segment Positioning- For each segment, create a "value proposition" and product-price positioning strategy based on that segment's unique customer needs and characteristics.
6) Segment "Acid Test"- Create "segment storyboard" to test the attractiveness of each segment's positioning strategy.
7) Marketing-Mix Strategy- Expand segment positioning strategy to include all aspects of the marketing mix: product, price, promotion, and place.
Give an example of how a company might target products to children in an ethical way.
Answer: The public is concerned when marketers take unfair advantage of vulnerable groups, such as children. However, not all attempts to target children draw criticism. Socially responsible marketing calls for targeting that serves not only the company's interests, but also the interests of those targeted. For example, Colgate Junior toothpaste has special features designed to get children to brush longer and more often.
Page Ref: 111
Objective: 8
AACSB: Ethical Reasoning
The first step in the strategic brand management process is ________.
A) measuring consumer brand loyalty
B) identifying and establishing brand positioning
C) planning and implementing brand marketing
D) measuring and interpreting brand performance
E) growing and sustaining brand value
Answer: B
B
5) ________ is the differential effect that brand knowledge has on consumer response to the marketing of that brand.
A) Mission-driven brand equity
B) Customer-based brand equity
C) Product-driven brand equity
D) Service-driven brand equity
E) Function-based brand equity
Answer: B
B
When a marketer expresses his or her vision of what the brand must be and do for consumers, they are expressing what is called ________.
A) a brand promise
B) a brand personality
C) a brand identity
D) a brand position
E) a brand revitalization
Answer: A
A
According to brand asset valuator model, energized differentiation and relevance, the two pillars of brand equity combine to determine what is called brand ________.
A) position
B) image
C) depth
D) knowledge
E) strength
Answer: E
E
According to brand asset valuator model, leadership brands show ________.
A) high levels of energy, differentiation, relevance, knowledge, and esteem
B) higher levels of esteem and knowledge than relevance, whereas both differentiation and energy are
lower still
C) higher levels of differentiation and energy than relevance, whereas both esteem and knowledge are lower still
D) low levels on energy, differentiation, relevance, knowledge, and esteem
E) high knowledge—evidence of past performance—a lower level of esteem, and even lower relevance, energy, and differentiation
Answer: A
A
If a consumer, trying to decide between alternatives, believes that a particular brand delivers acceptable product performance and can be short listed, she is in the ________ level of the brand dynamics pyramid.
A) presence
B) relevance
C) performance
D) advantage
E) bonding
Answer: C
C
According to the BRANDZ model of brand strength, brand building involves people progressing through a sequential series of steps. Which of these steps would address or answer the question "Does this brand offer something better than the others?"
A) performance
B) presence
C) advantage
D) bonding
E) relevance
Answer: C
C
With respect to the "six brand building blocks," ________ signifies how well the product or service meets customers' functional needs.
A) brand judgment
B) brand imagery
C) brand salience
D) brand performance
E) brand resonance
Answer: D
D
With respect to the brand building pyramid, the branding objective of developing deep, broad brand awareness corresponds to which of the following "building block levels"?
A) resonance
B) imagery
C) performance
D) salience
E) judgment
Answer: D
D
If consumers can easily recall and recognize a brand element, the brand element is said to be ________.
A) meaningful
B) protectable
C) adaptable
D) transferable
E) memorable
Answer: E
E
Mark feels that Shell delivers on its promises to supply the best gasoline possible to the public. His experiences with Shell have always been good resulting in positive brand contact. Mark is most likely experiencing ________.
A) brand alliance
B) brand essence
C) brand harmonization
D) brand parity
E) brand bonding
Answer: E
E
________ is the job of estimating the total financial worth of the brand.
A) Brand tracking
B) Brand auditing
C) Brand equity
D) Brand valuation
E) Brand harmonization
Answer: D
D
The introduction of diet coke by the Coca Cola Company is an example of ________.
A) line extension
B) brand harmonization
C) category extension
D) brand dilution
E) co-branding
Answer: A
A
A ________ is a set of all brand lines that a particular seller makes.
A) brand platform
B) brand image
C) cobrand
D) brand extension
E) brand mix
Answer: E
E
Consumers may evaluate identical products differently depending on how they are branded.
Answer: TRUE
T
A brand community can be a constant source of inspiration and feedback for product improvements or innovations.
Answer: TRUE
T
Brand extensions can reduce the costs of introductory launch campaigns and make it easier to convince retailers to stock and promote a new product.
Answer: TRUE
T
What valuable functions can brands perform for a firm?
Answer: Brands perform a number of valuable functions for firms. First, they simplify product handling or tracing. Brands help to organize inventory and accounting records. A brand also offers the firm legal protection for unique features or aspects of the product. The brand name can be protected through registered trademarks; manufacturing processes can be protected through patents; and packaging can be protected through copyrights and proprietary designs. These intellectual property rights ensure that the firm can safely invest in the brand and reap the benefits of a valuable asset.
All marketing strategy is built on STPsegmentation, targeting, and ________.
A) positioning
B) product
C) planning
D) promotion
E) performance
Answer: A
A
Which of the following best describes a car company's value proposition?
A) We charge a 20% premium on our cars.
B) We target safety-conscious upscale families.
C) We sell the safest, most durable wagon.
D) We are the market leader in the small car category.
E) We focus on expanding in faster-growing markets.
Answer: C
C
Which of the following terms is most closely associated with the statement: "attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe that they could not find to the same extent with a competitive brand"?
A) points-of-inflection
B) points-of-difference
C) points-of-parity
D) points-of-value
E) points-of-presence
Answer: B
B
The three criteria that determine whether a brand association can truly function as a point-of-difference are ________.
A) comparability, authenticity, deliverability
B) desirability, peculiarity, deliverability
C) deviance, peculiarity, deformity
D) desirability, deliverability, and differentiability
E) differentiability, authenticity, desirability
Answer: D
D
The brand must demonstrate ________, for it to function as a true point-of-difference.
A) clear superiority on an attribute or benefit
B) clear profitability to the company
C) clear similarity to the attributes of other brands
D) technological advances for an attribute or benefit
E) exploitation of competitors' weakness
Answer: A
Page Ref: 131
Objective: 3
Difficulty: Moderate
A
The two basic forms of points-of-parity are ________ and ________.
A) conceptual points-of-parity; competitive points-of-parity
B) strategic points-of-parity; conceptual points-of-parity
C) category points-of-parity; deliverable points-of-parity
D) competitive points-of-parity; peculiar points-of-parity
E) category points-of-parity; competitive points-of-parity
Answer: E
E
Philip Morris bought Miller brewing and launched low-calorie beer at a time when consumers had the impression that low-calorie beer does not taste as good as normal beer. What did the company try to build when they conveyed the fact that the beer contained one third less calories and hence it is less filling?
A) points-of-difference
B) points-of-conflict
C) points-of-parity
D) points-of-presence
E) points-of-inflection
Answer: A
A
________ are associations designed to overcome perceived weaknesses of the brand.
A) Conceptual points-of-parity
B) Category points-of-difference
C) Competitive points-of-parity
D) Competitive points-of-difference
E) Category points-of-parity
Answer: C
C
BMW positioned itself as the only automobile that offered both luxury and performance. At that time, consumers saw U.S. luxury cars as lacking performance. It was able to achieve a point-of-difference on performance and a point-of-parity on luxury with respect to U.S. luxury cars like Cadillac. This is an example of ________.
A) straddle positioning
B) category-based positioning
C) need-based positioning
D) noncomparitive positioning
E) price-quality positioning
Answer: A
A
Which of the following statements about brand mantras is true?
A) They guide only major decisions; they have no influence on mundane decisions.
B) Their influence does not extend beyond tactical concerns.
C) They must economically communicate what the brand is and avoid communicating what it is not.
D) They can provide guidance about what ad campaigns to run and where and how to sell the brand.
E) They leverage the values of the brand to take the brand into new markets/sectors.
Answer: D
D
Tums claims to have the most acid-reducing components of any antacid. In what way is the brand's category membership being conveyed?
A) comparing to exemplars
B) relying on the product descriptor
C) announcing category benefits
D) focusing on reliability
E) persuasion based on believability
Answer: C
C
Which of the following ways to conveying a brand's category membership relates to well-known,
noteworthy brands in a category helping a brand specify its category membership?
A) comparing to exemplars
B) communicating deliverability variables
C) identifying counter examples
D) announcing category benefits
E) relying on the product descriptor
Answer: A
A
Ford Motor Co. invested more than $1 billion on a radical new 2004 model called the X-Trainer, which combined the attributes of an SUV, a minivan, and a station wagon. To communicate its unique position—and to avoid association with its Explorer and Country Squire models—the vehicle, eventually called Freestyle, was designated a "sports wagon." According to the given scenario, Ford Motor Co. conveyed their brand's category membership by ________.
A) announcing category benefits
B) identifying counter examples
C) relying on the product descriptor
D) focusing on reliability
E) comparing to exemplars
Answer: C
C
Which of the following types of differentiation relates to companies having better-trained personnel
who provide superior customer service?
A) channel differentiation
B) services differentiation
C) employee differentiation
D) image differentiation
E) product differentiation
Answer: C
C
Which of the following is an example of channel differentiation?
A) Berry's has an intensive training program for its customer-facing employees, to ensure a consistent service standard.
B) The Swan Hotels use a distinctive signature fragrance in all outlets so that customers can associate the fragrance with the hotel.
C) JEK's sophisticated customer database allows the company to handle queries and product returns much faster than competitors.
D) RTZ shifted its products from supermarket aisles to exclusive stores as it realized that customers were willing to pay more in stores.
E) Hayley's found success by allowing buyers to customize the color and some features of its appliances before buying them.
Answer: D
D
Which of the following is an example of channel differentiation?
A) Berry's has an intensive training program for its customer-facing employees, to ensure a consistent service standard.
B) The Swan Hotels use a distinctive signature fragrance in all outlets so that customers can associate the fragrance with the hotel.
C) JEK's sophisticated customer database allows the company to handle queries and product returns much faster than competitors.
D) RTZ shifted its products from supermarket aisles to exclusive stores as it realized that customers were willing to pay more in stores.
E) Hayley's found success by allowing buyers to customize the color and some features of its appliances before buying them.
Answer: D
D
When a firm looks for new users in groups that might use the product but do not, the firm is using the ________ strategy.
A) new-market segment
B) market-penetration
C) geographical-expansion
D) product development
E) diversification
Answer: B
B
Trendz Inc. is a leading brand of fashion clothing and accessories based in Houston. After gaining a strong foothold in the U.S., the company wants to foray into foreign markets. The management at Trends knows that people residing in other countries are likely to have different tastes and preferences, so they may have to redesign some of their offerings. Which of the following strategies is Trendz using?
A) market-penetration strategy
B) outsourcing strategy
C) geographic-expansion strategy
D) product differentiation strategy
E) ethnocentric strategy
Answer: C
C
When food product companies advertise recipes that use their branded products in entirely different ways, they are increasing the ________ of the brand.
A) amount of consumption
B) level of consumption
C) dedication to consumption
D) frequency of consumption
E) awareness consumption
Answer: D
D
To satisfy customers, a(n) ________ marketer finds a stated need and fills it.
A) creative
B) responsive
C) anticipative
D) laidback
E) inexperienced
Answer: B
B
Sony is an unusual market leader. It gives its customers new products that they have never asked for (e.g., Walkmans, VCRs, video cameras, CDs). This makes Sony a(n) ________ firm.
A) market-driven
B) market-driving
C) operations-driven
D) vision-driven
E) virtually-driven
Answer: B
B
________ is an aggressive maneuver where the firm attacks first, perhaps with guerrilla action across the market and keeping everyone off balance.
A) Position defense
B) Flank defense
C) Contraction defense
D) Preemptive defense
E) Lateral defense
Answer: D
D
After Olay entered and took over the Indian market with its anti-aging lotion, Ponds decided to defend its home turf by investing heavily in a similar product, but that which used only natural ingredients. This is an example of a ________.
A) position defense
B) flank defense
C) counteroffensive defense
D) contraction defense
E) mobile defense
Answer: C
C
When large companies can no longer defend all their territory, they launch a ________ defense where they give up weaker markets and reassign resources to stronger ones.
A) contraction
B) preemptive
C) flank
D) mobile
E) position
Answer: A
A
In a pure ________ attack, the attacker matches its opponent's product, advertising, price, and distribution.
A) guerilla
B) bypass
C) encirclement
D) frontal
E) flank
Answer: D
D
A(n) ________ is another name for identifying shifts in market segments that are causing gaps to develop, then rushing in to fill the gaps and developing them into strong segments.
A) frontal attack strategy
B) flanking strategy
C) encircling strategy
D) counteroffensive strategy
E) bypass strategy
Answer: B
B
Appy Juices, a company that manufactures bottled water, diversified into soft drinks before any of its opponents could launch a diversified product. This would be an example of a(n) ________ attack.
A) flank
B) bypass
C) guerrilla
D) encirclement
E) frontal
Answer: B
B
As a market follower strategy, the ________ duplicates the leader's product and packages and sells it on the black market or through disreputable dealers.
A) innovator
B) cloner
C) imitator
D) adapter
E) counterfeiter
Answer: E
E
Tasteeos, Fruit Rings, and Corn Flakes sell for nearly $1 a box less than leading cereal brands. Which market follower strategy is being employed by the cereal manufacturer?
A) counterfeiter
B) cloner
C) imitator
D) adapter
E) reverse innovator
Answer: B
B
As a market follower, the ________ may choose to sell to different markets, but often it grows into a future challenger.
A) imitator
B) adapter
C) cloner
D) counterfeiter
E) innovator
Answer:B
B
The market leader strategy ensures high sales volume, whereas the market nicher strategy allows firms to achieve ________.
A) high margin
B) low margin
C) high promotability
D) medium pricing
E) lower demand
Answer: A
A
A market nicher is considered to be a(n) ________ specialist if the firm specializes in producing a certain type of product or product feature such as, Rent-a-Wreck, that rents only "beat-up" cars.
A) end-user
B) vertical-level
C) customer-size
D) channel
E) product-feature
Answer: E
E
________ is the period of slow sales growth and nonexistent profits.
A) Growth
B) Decline
C) Maturity
D) Introduction
E) Stagnancy
Answer: D
D
________ is a slowdown in sales growth because the product has achieved acceptance by most potential buyers.
A) Obsolescence
B) Introduction
C) Growth
D) Decline
E) Maturity
Answer: E
E
According to Peter Golder and Gerald Tellis, a(n) ________ is the first to develop a working model of the product.
A) developer
B) creative pioneer
C) market pioneer
D) product pioneer
E) inventor
Answer: D
D
________ is a distribution strategy that can be effectively used during the growth stage of the product life cycle.
A) Building product awareness
B) Phasing out unprofitable outlets
C) Building selective distribution
D) Building intensive distribution
E) Stressing on brand differences
Answer: D
D
To analyze its competitors, a company needs to gather information about both the real and the perceived strengths and weaknesses of each competitor.
Answer: TRUE
T
Associations that make up points-of-difference are based exclusively on product features.
Answer: FALSE
F
Brand mantras must communicate both what a brand is and what it is not.
Answer: TRUE
T
When the total market expands, the dominant firm usually gains the most.
Answer: TRUE
T
One way to increase the frequency of consumption of a product by consumers is by introducing it in larger package sizes.
Answer: FALSE
F
In counteroffensive marketing, the market leader can meet the attacker frontally and hit its flank, or launch a pincer movement so that it is forced to pull back to defend itself.
Answer: TRUE
T
Guerrilla attacks consist of small, intermittent attacks, conventional and unconventional, including selective price cuts, intense promotional blitzes, and occasional legal action.
Answer: TRUE
T
During the maturity stage of a product life cycle, profits stabilize or decline because of increased competition.
Answer: TRUE
T
An alternate way to increase sales volume is to increase the usage rates among users by having consumers use the product in new ways.
Answer: TRUE
T
Describe three methods by which a brand can communicate category membership.
Answer: There are three main ways to convey a brand's category membership:
1. Announcing category benefits. To reassure consumers that a brand will deliver on the fundamental reason for using a category, marketers frequently use benefits to announce category membership.
2. Comparing to exemplars. Well-known, noteworthy brands in a category can also help a
brand specify its category membership.
3. Relying on the product descriptor. The product descriptor that follows the brand name is often a concise means of conveying category origin.
Explain how luxury brands can benefit during an economic recession from having lower-priced brands or sub-brands in their portfolio?
Answer: They can review product portfolios and brand architecture to confirm that brands and sub-brands are clearly differentiated, targeted, and supported based on their prospects. Luxury brands can benefit from lower-priced brands or sub-brands in their portfolios.
The cost of buying higher market share through acquisition may far exceed its revenue value. Which are the four factors a company should consider before doing so?
Answer: The four factors to be considered before buying higher market share are: the possibility of provoking antitrust action, economic cost, the danger of pursuing the wrong marketing activities, and the effect of increased market share on actual and perceived quality.
What is a guerilla attack?
Answer: Guerrilla attacks consist of small, intermittent attacks, conventional and unconventional, including selective price cuts, intense promotional blitzes, and occasional legal action, to harass the opponent and eventually secure permanent footholds. A guerrilla campaign can be expensive, although less so than a frontal, encirclement, or flank attack, but it typically must be backed by a stronger attack to beat the opponent.
The market nicher is a specialist. Characterize the end-user specialist role that can be assumed by the market nicher.
Answer: When the firm assumes the end-user specialist role, it specializes in one type of end-use customer. For example, a value-added reseller (VAR) customizes computer hardware and software for specific customer segments and earns a price premium in the process.
A ________ is anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.
A) function
B) product
C) benefit
D) process
E) structure
Answer: B
B
Marketers must see themselves as benefit providers. For example, when a shopper purchases new shoes, he/she expects the shoes to cover his/her feet and allow him/her to walk unobstructed. This is an example of what level in the consumer-value hierarchy?
A) pure tangible good
B) basic product
C) augmented product
D) potential product
E) generic product
Answer: B
B
Because ________ are purchased frequently, marketers should make them available in many locations, charge only a small markup, and advertise heavily to induce trial and build preference.
A) nondurable goods
B) durable goods
C) services
D) unsought goods
E) specialty goods
Answer: A
A
Products such as insurance, cemetery plots, and smoke detectors are examples of ________ that are products that the consumer does not know about or does not normally think of buying.
A) specialty goods
B) unsought goods
C) heterogeneous shopping goods
D) homogeneous shopping goods
E) convenience goods
Answer: B
B
Buyers expect products to have high ________, which is the degree to which all the produced units are identical and meet the promised specifications.
A) durability
B) compatibility
C) conformance quality
D) form
E) performance quality
Answer: C
C
________ is a measure of the probability that a product will not malfunction or fail within a specified time period.
A) Reparability
B) Durability
C) Reliability
D) Specialty
E) Compatibility
Answer: C
C
Differentiating on ________ is important for companies with complex products and becomes an especially good selling point when targeting technology novices.
A) delivery
B) ordering ease
C) ease of installation
D) customer consulting
E) reparability
Answer: C
C
Smith & Adams Poultry has recently upgraded its transactional model such that its customers (restaurants and hotels) can communicate with its central supply system to indicate purchase volumes, dates, and receive confirmation, through their computer terminals. This is an example of a company differentiating itself versus competition in terms of ________.
A) customer relationships
B) customer training
C) installation
D) delivery ease
E) ordering ease
Answer: E
E
Realizing that although household products is a huge category, taking up an entire supermarket aisle or more, it is an incredibly boring one, the founders of Method Products designed a sleek, uncluttered dish soap container that also carried functional advantages, such as ease of dispensing soap and cleaning. Method is competing in the crowded market for household products on the basis of superior ________.
A) design
B) durability
C) conformance
D) reliability
E) performance quality
Answer: A
A
Happy Home Products produces detergents, toothpaste, bar soap, disposable diapers, and paper products. This company has a product ________ of five lines.
A) type
B) length
C) class
D) mix
E) width
Answer: E
Page Ref: 147
Objective: 4
E
In offering a product line, companies normally develop a ________ and modules that can be added to meet different customer requirements.
A) convenience item
B) flagship product
C) staple item
D) potential product
E) basic platform
Answer: E
E
A company positioned in the "middle" market introduces a lower-priced product line. What type of line-stretching is this?
A) home stretch
B) up-market stretch
C) down-market stretch
D) maintenance stretch
E) two-way stretch
Answer: C
C
A product line can also be lengthened by adding more items within the present range. There are several motives for line filling. Which of the following is one of them?
A) responding to senior management wishes
B) responding to consumer wishes
C) reaching for incremental profits
D) reaching for incremental capacity
E) responding to sales-force demands
Answer: C
C
In ________, the seller offers goods both individually and in bundles and often charges less for the "bundle" than for the individual products.
A) pirating pricing
B) captive pricing
C) two-part pricing
D) pure bundling
E) mixed bundling
Answer: E
E
McDonald's restaurants inside Wal-Marts and Starbucks inside Super Targets are examples of ________, whose main advantages are that the products can or may be convincingly positioned by virtue of the associated brands.
A) cooperative marketing
B) cross-promotion
C) retail co-branding
D) ingredient branding
E) feature promotion
Answer: C
C
________ is a special case of co-branding involving creating brand equity for materials, components, or parts that are necessarily contained within other branded products.
A) Cross-branding
B) Ingredient branding
C) Equity branding
D) Family branding
E) Generic branding
Answer: B
B
Guarantees are most effective in two situations. The first is when the company or products are not well known and the second is when the product's quality is ________ to competition.
A) not known
B) different
C) inferior
D) equivalent
E) superior
Answer: E
E
To avoid "feature fatigue," companies must be careful to prioritize those features that are included and find unobtrusive ways to provide information about how consumers can use and benefit from the feature.
Answer: TRUE
T
In the rapidly changing market of today's world, product lines must be continuously updated or modernized.
Answer: TRUE
T
Ingredient branding can take on a form called "self-branding" in which the company advertises its own branded ingredients.
Answer: TRUE
T
Explain the concepts of product-mix width, length, depth, and consistency.
Answer: The width of a product mix refers to how many different product lines the company carries. The length of a product mix refers to the total number of items in the mix. The depth of a product mix refers to how many variants are offered of each product in the line and is determined by dividing the total number of items by the number of lines. The consistency of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way.
When consumers examine products, they often compare an observed price to an internal price they remember. This is known as a(n) ________ price.
A) markup
B) reference
C) market-skimming
D) accumulated
E) target
Answer: B
B
After determining its pricing objectives, what is the next logical step a firm should take in setting its pricing policy?
A) It should analyze its competitors' costs, prices, and offers.
B) It should select its pricing method.
C) It should select its final price.
D) It should determine the demand for its product.
E) It should estimate the cost of its product.
Answer: D
D
A company that is looking to maximize its market share would do well to follow ________ pricing.
A) markup
B) market-penetration
C) market-skimming
D) survival
E) target-return
Answer: B
B
When a company introduces a product at a very high price and then gradually drops the price over time, it is pursuing a ________ strategy.
A) market-penetration pricing
B) market-skimming pricing
C) value-pricing
D) switching cost
E) loss-leader pricing
Answer: B
B
Starbucks, Aveda, and BMW have been able to position themselves within their categories by combining quality, luxury, and premium prices with an intensely loyal customer base. These companies are employing a ________ strategy.
A) market-skimming
B) market-penetration
C) survival
D) market share maximization
E) product-quality leadership
Answer: E
E
Costs that do not vary with production levels or sales revenue are known as ________.
A) overhead costs
B) variable costs
C) average costs
D) opportunity costs
E) total costs
Answer: A
A
________ is the cost per unit at that level of production.
A) Target cost
B) Average cost
C) Marginal cost
D) Opportunity cost
E) Fixed cost
Answer: B
B
Which of the following is the most elementary pricing method?
A) value pricing
B) going-rate pricing
C) markup pricing
D) target-return pricing
E) perceived-value pricing
Answer: C
C
The key to perceived-value pricing is to ________.
A) reengineer the company's operations
B) deliver more unique value than competitors
C) adopt subtle marketing tactics compared to competitors
D) deliver more value but at a lower cost
E) invest heavily in advertising in order to convey superior value
Answer: B
B
In ________, the firm bases its price largely on competitor's prices.
A) going-rate pricing
B) auction-type pricing
C) markup pricing
D) target-return pricing
E) perceived-value pricing
Answer: A
A
In which of the following auctions does the auctioneer first announce a high price for a product and then slowly decreases the price until a bidder accepts?
A) a Dutch auction with one buyer and many sellers
B) an English auction with one seller and many buyers
C) an ascending bid auction
D) a sealed-bid auction
E) a Dutch auction with one seller and many buyers
Answer: E
E
In which of the following forms of countertrade do buyers and sellers directly exchange goods, when no money and no third party is involved?
A) buyback arrangements
B) offsets
C) barter
D) sealed bids
E) compensation deals
Answer: C
C
ROC Engineering, a Chinese shipbuilding company, agrees to build a fleet of submarines for the Sri Lankan navy, for which it will be paid in the local Sri Lankan currency. As per the agreement, ROC must also spend a substantial amount of the money it generates through this deal within the country. In accordance with the contract, ROC buys Sri Lankan tea at a reduced rate. This is an example of which of the following forms of countertrade?
A) descending bid
B) offset
C) barter
D) compensation deal
E) buyback arrangement
Answer: B
B
________ reward dealers for participating in advertising and sales support programmes.
A) Functional discounts
B) Trade discounts
C) Promotional allowances
D) Rebates
E) Quantity discounts
Answer: C
C
In ________, the seller charges different amounts to different classes of buyers.
A) perceived value pricing
B) third-degree price discrimination
C) first-degree price discrimination
D) second-degree price discrimination
E) psychological discounting
Answer: B
B
When museums charge a lower admission fee to students and senior citizens, then this form of price discrimination is known as ________.
A) location pricing
B) channel pricing
C) customer-segment pricing
D) special-customer pricing
E) loss-leader pricing
Answer: C
C
When hotels drop their rates on the weekends, then this form of price discrimination is known as ________.
A) channel pricing
B) image pricing
C) product-form pricing
D) time pricing
E) location pricing
Answer: D
D
Price is one of the two elements of the marketing mix that produces revenue.
Answer: FALSE
F
Many consumers use price as an indicator of quality and value.
Answer: TRUE
T
A firm is said to be following a market-skimming pricing strategy, if it introduces a product into the market at a high price and slowly drops the price over time.
Answer: TRUE
T
A quantity discount is a price reduction given to those who pay their bills promptly.
Answer: FALSE
F
Escalator clauses are found in contracts for major industrial projects, such as aircraft construction and bridge building.
Answer: TRUE
T
Spike Inc. is a sportswear manufacturer that recently launched its new line of customizable running shoes. The shoes come with a digital component that allows them to adapt to the runner's biomechanics. To promote this new product, Spike launches an advertising campaign and also ropes in a famous athlete to endorse the product. This is an example of a ________.
A) trade promotion
B) reverse flow
C) push strategy
D) pull strategy
E) backward flow
Answer: D
A
A computer manufacturing company allows customers to place orders online which they can later pick up from a convenient retail location. Which of the following terms best represents this practice?
A) channel integration
B) mass customization
C) online personalization
D) push strategy
E) internal marketing
Answer: A
A
Which of the following is an example of a zero-level channel?
A) A company takes online orders from customers and ships the products to them.
B) An organization uses a combination of direct salespeople and sales agencies to increase sales.
C) A company sells its products through wholesalers and retailers.
D) A company sells its products through chains of supermarkets and other large sellers.
E) A large company forms alliances with smaller companies to increase sales coverage.
Answer: A
A
Toyota has an advantage over Lexus due to the fact that there are more Toyota dealers, which helps customers save on transportation and search costs in buying and repairing an automobile. Which of the following service outputs relates to this competitive advantage?
A) spatial convenience
B) service backup
C) lot size
D) waiting time
E) delivery time
Answer: A
A
Which of the following allows a firm to maintain control over the service level and obtain more dedicated and knowledgeable selling?
A) selective distribution
B) intensive distribution
C) push strategy
D) exclusive distribution
E) pull strategy
Answer: D
D
Which of the following covers payment terms and producer guarantees?
A) conditions of sale
B) pricing policies
C) exclusive dealings
D) mutual services
E) territorial rights
Answer: A
A
A manufacturer is using legitimate power when it ________.
A) requests a behavior that is warranted under the selling contract
B) threatens to withdraw a resource or terminate a relationship
C) offers intermediaries an extra benefit for performing specific acts or functions
D) makes the intermediaries sell more of a particular product by offering rewards
E) sells more products by making use of its reputation in the market
Answer: A
A
A new firm typically starts as a local operation selling in a fairly circumscribed market by ________.
A) finding and developing new intermediaries
B) using a few existing intermediaries
C) forming partnerships with the market leader
D) creating a special channel
E) forming partnerships with other firms
Answer: B
B
A(n) ________ includes the producer, wholesaler(s), and retailer(s) acting as a unified system.
A) parallel marketing channel
B) vertical marketing system
C) extensive marketing channel
D) internal marketing system
E) conventional marketing channel
Answer: B
B
A(n) ________ VMS consists of independent firms at different levels of production and distribution, integrating their programs on a contractual basis to obtain more economies or sales impact than they could achieve alone.
A) administered
B) contractual
C) corporate
D) regulated
E) referent
Answer: B
B
A group of small grocery shops forms a new business entity to buy products directly from manufacturers. The group buys products in bulk which are then distributed among members. This helps the shops obtain better profit margins. Which of the following types of vertical marketing systems can be observed here?
A) contractual
B) corporate
C) administered
D) controlled
E) regulatory
Answer: A
A
A franchise organization is an example of a(n) ________ vertical marketing system.
A) corporate
B) administered
C) contractual
D) regulatory
E) controlled
Answer: C
C
A franchisee owner is unsatisfied because the manufacturer provides more benefits to a wholesaler. This conflict is an example of a(n) ________ conflict.
A) horizontal
B) vertical
C) intermediate
D) multichannel
E) parallel
Answer: D
D
RX Corp. is a large manufacturer of electronic goods and sells its products through distributors and retailers. In order to keep pace with the growing use of the Internet, the company decides to start selling online. The company faces stiff opposition from its retailers as they believe that this will significantly reduce their profits. The company attempts to eliminate this resistance by offering its retailers commissions for processing and delivering orders received via the Web. This is an example of which of the following conflict resolution strategies?
A) dual compensation
B) joint membership
C) arbitration
D) co-option
E) strategic pricing
Answer:A
A
JSE Securities Exchange is the largest stock exchange in Africa. The JSE provides a market where securities can be traded freely under a regulated procedure. The company acts as an intermediary between the traders. JSE is an example of a(n) ________.
A) internal broker
B) infomediary
C) customer community
D) market maker
E) third party arbitrator
Answer: D
D
Which of the following is a major threat facing the brick-and-mortar manufacturers when they add an e-commerce channel?
A) It creates the possibility of a backlash from the existing intermediaries.
B) It increases the likelihood of product cannibalization.
C) Successful implementation leads to a significant increase in operational costs.
D) It significantly increases the resource requirements of the organization.
E) E-commerce channels often have low potential for attracting customers.
Answer: A
A
Marketing channel functions such as storage and movement and communications constitute a backward flow of activities.
Answer: FALSE
F
The flow of materials to refurbish products for resale constitutes a reverse flow.
Answer: TRUE
T
After a company has chosen a channel system, it must select, train, motivate, and evaluate individual intermediaries for each channel.
Answer: TRUE
T
Brick-and-click companies are those that have launched a Web site without any previous existence as a firm.
Answer: FALSE
F
Differentiate between pure-click companies and brick-and-click companies.
Answer: Pure-click companies are those that have launched a Web site without any previous existence as a firm, while brick-and-click companies are existing companies that have added an online site for information or e-commerce.
There are several kinds of pure-click companies: search engines, Internet service providers (ISPs), commerce sites, transaction sites, content sites, and enabler sites. Brick-and-click companies are formed by adding an e-commerce channel to an existing business.
In ________ retailing, salespeople are ready to assist in every phase of the "locate-compare-select" process.
A) self-service
B) self-selection
C) full-service
D) limited service
E) limited-selection
Answer: C
C
Which of the following is an example of a limited service retailer?
A) Customers at TAB pick out the products they want and pay at the checkout counter.
B) Salespeople at Eli are always on hand to offer shoppers advice and assistance in choosing products.
C) Mina's allows customers to check out their own purchases in order to reduce the staff count.
D) As CLO's offers a number of merchandise-return privileges, customers need information and assistance while shopping.
E) Alison's stocks a number of specialty products and the store's salespeople generally help shoppers with all their needs.
Answer: D
D
E&OE produces and markets its own brand of skincare products using herbal remedies and natural ingredients through standalone stores as well as an online portal. E&OE is a(n) ________ retailer.
A) off-price
B) specialty
C) discount
D) department
E) extreme value
Answer: B
B
Electronic shopping is a type of ________.
A) direct selling
B) network marketing
C) multilevel selling
D) corporate selling
E) direct marketing
Answer: E
E
A ________ is a retail firm owned by its customers. Members contribute money to open their
own store, vote on its policies, elect a group to manage it, and receive dividends.
A) retailer cooperative
B) voluntary chain
C) consumer cooperative
D) merchandising conglomerate
E) franchise organization
Answer: C
C
Mass merchandisers and discount stores typically fall into the ________ group with respect to margins and volume.
A) mixed markup, high-volume
B) low-volume, mixed markup
C) low-volume, low-markup
D) high-volume, low-markup
E) high-markup, low-volume
Answer:D
D
Which of the following is a postpurchase service offered by retailers?
A) accepting orders over the telephone
B) advertising and window displays
C) delivery to the customer's doorstep
D) general information
E) interior decoration of the retail outlet
Answer: C
C
A brand developed by a retailer and/or wholesaler that is available only in selected retail outlets is called a ________ brand.
A) generic
B) franchisee
C) marque
D) national
E) private-label
Answer: E
E
Because shelf space is scarce, many supermarkets now charge a ________ for accepting a new brand, to cover the cost of listing and stocking it.
A) retainer
B) slotting fee
C) residual fee
D) contingent fee
E) royalty
Answer: B
B
________ sell and deliver a limited line of semiperishable goods to supermarkets, grocery stores, hospitals, restaurants, and hotels.
A) Producers' cooperatives
B) Cash and carry wholesalers
C) Truck wholesalers
D) Drop shippers
E) Rack jobbers
Answer: C
C
The elapsed time between an order's receipt, delivery, and payment is called the ________.
A) variable-costs-to-payment cycle
B) product-to-payment cycle
C) inventory-to-sale cycle
D) order-to-inventory cycle
E) order-to-payment cycle
Answer: E
E
E&OE is trying to minimize its inventory costs, which are extremely high. The company has realized that it can achieve this by maintaining a near-zero inventory and producing more only once a product is ordered. Which of the following is true for E&OE?
A) Inventory costs are lower than order-processing costs.
B) Running costs are higher than inventory-carrying costs.
C) Setup costs for the products are low.
D) Order-processing costs are high.
E) Order-processing costs are lower than setup costs.
Answer: C
C
HCN recently introduced a product that the distributor considers a "bottleneck" item. What is the risk/opportunity relationship for bottleneck items?
A) low risk, mediocre opportunity
B) low risk, high opportunity
C) low risk, low opportunity
D) high risk, mediocre opportunity
E) high risk, low opportunity
Answer: E
E
The trucking firm hired by your transportation manager provides a trucking service between the city of Sacramento and the surrounding towns on a regular schedule and at fixed prices. The trucking firm saves transportation costs by transporting the goods using trains as well as trucks, instead of trucks alone. Your transportation manager has hired a(n) ________.
A) airship carrier
B) airtruck carrier
C) trainship carrier
D) fishyback carrier
E) piggyback carrier
Answer: E
E
A superstore is a storeless retailer serving a specific clientele who are entitled to buy from a list of retailers that have agreed to give discounts in return for membership.
Answer: FALSE
F
Some high-volume products may have such high handling costs that they are less profitable and deserve less shelf space than low-volume products.
Answer: TRUE
T
More stocking locations mean goods can be delivered to customers more quickly, and warehousing and inventory costs are lower.
Answer: FALSE
F
Differentiate between brokers and agents.
Answer: Brokers and agents both perform wholesaling functions. They facilitate buying and selling, on commission of 2 percent to 6 percent of the selling price and generally specialize by product line or customer type. Brokers bring buyers and sellers together and assist in negotiation; they are paid by the party hiring them—food brokers, real estate brokers, insurance brokers. Agents represent buyers or sellers on a more permanent basis. Most manufacturers' agents are small businesses with a few skilled salespeople: Selling agents have contractual authority to sell a manufacturer's entire output; purchasing agents make purchases for buyers and often receive, inspect, warehouse, and ship merchandise; commission merchants take physical possession of products and negotiate sales.
________ refers to the means by which firms attempt to inform, persuade, and remind consumers—directly or indirectly—about the products and brands they sell.
A) Human resource development
B) Marketing communications
C) Financial management
D) Operations management
E) Planning
Answer: B
B
________ refer to the marketing communications element that involves company-sponsored activities and programs designed to create daily or special brand-related interactions with consumers.
A) Publicity campaigns
B) Trade promotions
C) Advertisements
D) Public relations
E) Events and experiences
Answer: E
E
________ is an element of the marketing communications mix that involves people-to-people oral, written, or electronic communications that relate to the merits or experiences of purchasing or using products or services.
A) Personal selling
B) Sales promotion
C) Word of mouth marketing
D) Public relations
E) Advertising
Answer: C
C
Which of the following is an example of a public relations and publicity communication platform?
A) lobbying
B) company museums
C) street activities
D) company blogs
E) incentive programs
Answer: A
A
Which of the following factors found in the macromodel of the communications process refers to random and competing messages that may interfere with the intended communication?
A) negative feedback
B) noise
C) attenuation
D) phase lag
E) selective distortion
Answer: B
B
When planning communications for a detergent brand, which of the following sequences of buyer responses should the marketer choose on which to base the communications model?
A) feel-do-learn
B) do-feel-learn
C) feel-learn-do
D) learn-do-feel
E) learn-feel-do
Answer: D
D
Which is the first step to be performed by a marketer in developing effective marketing communications?
A) identifying a target audience
B) determining the objectives
C) establishing the budget
D) deciding on the media mix
E) selecting the communication channels
Answer: A
A
One of the possible objectives of marketing communications is helping consumers evaluate a brand's perceived ability to meet a currently relevant need. Which of the following is a negatively oriented relevant brand need?
A) normal depletion
B) sensory gratification
C) social approval
D) intellectual stimulation
E) value enhancement
Answer: A
A
One of the possible objectives of marketing communications is helping consumers evaluate a brand's perceived ability to meet a currently relevant need. Which of the following is a positively oriented relevant brand need?
A) problem removal
B) social approval
C) normal depletion
D) problem avoidance
E) incomplete satisfaction
Answer: B
B
A(n) ________ appeal is a creative strategy that elaborates on a nonproduct-related benefit or image.
A) logical
B) transformational
C) reasonable
D) informational
E) rational
Answer: B
B
Which of the following sources of a spokesperson's credibility describes his or her attractiveness?
A) expertise
B) trustworthiness
C) likability
D) integrity
E) experience
Answer: C
Page Ref: 234
C