Principles of Marketing, 17e, Global Edition (Kotler/Armstrong)
Chapter 1 Marketing: Creating Customer Value and Engagement
1) Which of the following is NOT an accurate description of modern marketing?
A) Marketing is the creation of value for customers.
B) Marketing involves managing profitable customer relationships.
C) Marketing emphasizes selling and advertising exclusively.
D) Marketing involves satisfying customers' needs.
E) Marketing is building value-laden exchange relationships with customers.
2) According to management guru Peter Drucker, "The aim of marketing is to
A) maximize profits of the company
B) emphasize customer wants and not customer needs
C) make selling unnecessary
D) fulfill unrealistic customer expectations
E) sell products
."
3) Marketing is defined as a social and managerial process by which individuals and
organizations obtain what they need and want through
.
A) research and development
B) innovation and creativity
C) manufacturing efficiencies
D) value creation and exchange
E) sales and revenue creation
4) According to the five-step model of the marketing process, which of the following is the
final step in creating value for customers?
A) designing a customer-driven marketing strategy
B) understanding the marketplace and customer needs
C) constructing an integrated marketing program that delivers superior value
D) building profitable relationships and creating customer delight
E) capturing value from customers to create profit and customer equity
5) According to the five-step model of the marketing process, a company should
before designing a customer-driven marketing strategy.
A) determine how to deliver superior value to customers
B) build profitable relationships with customers
C) use customer relationship management to create full partnerships with key customers
D) understand the marketplace and customer needs and wants
E) construct an integrated marketing program
6) Marketing is managing profitable customer relationships.
TRUE
7)
are human needs that are shaped by culture and individual personality.
A) Necessities
B) Wants
C) Demands
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D) Values
E) Exchanges
8) When backed by buying power, wants become
A) social needs
B) demands
C) physical needs
D) self-esteem needs
E) exchanges
9) Needs include all of the following EXCEPT
A) food
B) knowledge
C) affection
D) the newest iphone
E) belonging
.
.
10) Greg Williams now has the buying power to purchase the desktop computer that he has
wanted for the last six months. Greg's want now has become a(n)
.
A) need
B) necessity
C) demand
D) exchange
E) transaction
11) A
is some combination of products, services, information, or experiences
provided to consumers to satisfy a need or want.
A) market offering
B) value proposition
C) brand positioning
D) market segment
E) market mix
12) Which of the following terms refers to sellers being preoccupied with their own products
and losing sight of underlying consumer needs?
A) vendor lock-in
B) social loafing
C) value proposition
D) marketing myopia
E) conspicuous consumption
13) When marketers set low expectations for a market offering, they run the risk of
.
A) disappointing loyal customers
B) having to use an outside-in rather than an inside-out perspective
C) failing to attract enough customers
D) failing to understand their customers' needs
E) incorrectly identifying a target market
14)
is the act of obtaining a desired object from someone by offering something in
return.
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A) Valuation
B) Exchange
C) Market offering
D) Confiscation
E) Donation
15) A(n)
A) market
B) control group
C) subsidiary
D) focus group
E) audience
is the set of actual and potential buyers of a product or service.
16) Consumer research, product development, communication, distribution, pricing, and
activities.
service are all core
A) positioning
B) marketing
C) outsourcing
D) production
E) logistics
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17) When are sellers most effective?
A) when they focus more on their specific products and services
B) when they focus more on the price of their products and services
C) when they focus more on the benefits and experiences produced by their products and
services
D) when they focus more on where their products and services can be purchased
E) when they focus more on cost to produce the product or service
Refer to the scenario below to answer the following question(s).
Carol Veldt, owner of Seagull Terrace, watched her investment grow from a small, seaside
motel to a thriving year-round resort in just a few years. Atop a cliff overlooking the Maine
coast, Seagull Terrace had attracted thousands of visitors during summer, but then faced a
tremendous downturn in business during winter. "But, given the established industries in the
nearby towns, very little year-round competition, and our close proximity to Portland," Carol
added, "I couldn't understand why seasonality had to hit Seagull Terrace so hard!"
So Carol spent her first winter devising a new marketing plan. She put together a promotional
package designed to attract business travelers year-round. Carol's plan also involved a seasonal
promotional gimmick—to be implemented from early winter to late spring—that would attract
the same numbers as the large summer crowd. Her idea worked! During her second winter,
Carol greeted numerous business travelers—both satisfied repeat guests as well as new guests
who had been snagged by her promotional appeals.
"We still have a long way to go," Carol admitted. "Our delicatessen offers entrees that are a part
of the local cuisine, but we'd like to expand that. We provide health club privileges off-site, but
we'd like to eventually provide our own. These are goals I hope to achieve in a few years. Our
first project, however, included a renovation of our guest rooms and I'm quite proud of the
results." Carol then added, "Actually there are so many possibilities. With an indoor pool area, I
will eventually offer weekend getaways throughout winter."
18) Seagull Terrace offers its customers good accommodations, local delicacies, and amazing
seaside views. The overall experience provided at the motel is a part of its
.
A) market offering
B) target market
C) market segment
D) product positioning
E) marketing mix
19) Human needs are shaped by culture and individual personality.
FALSE
20) The difference between human needs and wants is that needs are not created by marketers.
21) When backed by buying power, needs become wants.
FALSE
22) Market offerings are limited to physical
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products.FALSE
23) An experience such as a vacation can be defined as a market offering.
TRUE
24) When sellers focus on existing needs and lose sight of underlying customer wants, they
suffer from marketing myopia.
25) A market is the set of actual and potential buyers of a product or service.
TRUE
26) How do suppliers help companies like Walmart maintain consistently low prices?
27) What should sellers consider if they wish to avoid marketing myopia?
28) Briefly compare and contrast the concepts of needs, wants, and demands and provide
examples to illustrate your answer. How do these three concepts relate to marketing practices?
29) You are a manufacturer of tents, sleeping bags, and outdoor cooking equipment. How
might you go about creating brand experiences for your customers?
30) Explain how and why marketers go beyond selling a product or service to create brand
experiences.
31) The art and science of choosing target markets and building profitable relationships with
them is called
.
A) marketing management
B) positioning
C) marketing mix
D) market offering
E) differentiation
32) Selecting which segments of a population to serve is called
.
A) market segmentation
B) positioning
C) customization
D) target marketing
E) differentiation
33) Dividing the market into various groups of customers that a company may serve is called
.
A) market segmentation
B) positioning
C) customization
D) target marketing
E) differentiation
34) Cathy's Clothes is a small yet successful retail chain that sells women's clothing and
accessories with a focus on buyers who have relatively modest means. For this specific
purpose, the firm has rolled out several marketing initiatives aimed at women of a specific
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demographic. This is an example of
A) ambush marketing
B) social marketing
C) societal marketing
D) target marketing
E) cause marketing
.
35) An organic farmer has identified three distinct groups that might be interested in his
products: vegetarians, health-conscious individuals, and people identified as trendsetters who
try out new products in the market before others. These three groups are examples of
.
A) marketing mixes
B) market segments
C) value propositions
D) market offerings
E) marketing intermediaries
36) Which of the following refers to a set of benefits that a company promises to deliver to
customers to satisfy their needs?
A) customer lock-in
B) a cartel
C) marketing mix
D) value proposition
E) market segmentation
37) Which of the following customer questions is answered by a company's value proposition?
A) "Why should I buy your brand rather than a competitor's?"
B) "What is your company's estimated customer equity?"
C) "What are the costs involved in the production of your brand?"
D) "What is the budget allocated by your company for research and development?"
E) "What is the financial stability of your company?"
38) Which of the following marketing management orientations focuses primarily on
improving efficiencies along the supply chain?
A) production concept
B) product concept
C) selling concept
D) marketing concept
E) societal marketing concept
39) Which of the following marketing management concepts is most likely to lead to marketing
myopia?
A) customer-driven marketing concept
B) customer-driving marketing concept
C) societal marketing concept
D) marketing concept
E) product concept
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40) Which of the following statements is true of the production concept?
A) It considers customer focus and value to be the paths to sales and profits.
B) It follows the customer-centered sense-and-respond philosophy.
C) It takes an outside-in perspective.
D) It calls for sustainable marketing.
E) It leads to companies focusing too narrowly on their own operations.
41) The
concept is aligned with the philosophy of continuous product improvement
and the belief that customers will choose products that offer the most in quality, performance,
and innovative features.
A) product
B) production
C) societal marketing
D) marketing
E) selling
42) Which of the following is the aim of the product concept?
A) improve the marketing of a firm's best products
B) market only those products with high customer appeal
C) focus on the target market and make products that meet those customers' demands
D) focus on making continuous product improvements
E) ensure that product promotion has the highest priority
43) Henry Ford's philosophy was to perfect the Model T so that its cost could be reduced
further for increased consumer affordability. This reflects the
concept.
A) product
B) production
C) selling
D) marketing
E) societal marketing
44) Railroads were once operated based on the thinking that users wanted trains that would
offer the most in quality, performance, and innovative features. The railroad managing
companies overlooked the fact that there could be other modes of transportation. This reflects
the
concept.
A) product
B) production
C) selling
D) marketing
E) societal marketing
45) Which of the following statements is true of the selling concept?
A) It requires minimum promotion efforts.
B) It creates long-term, profitable customer relationships.
C) It takes an outside-in perspective.
D) It is typically practiced with unsought goods.
E) It follows the customer-centered sense-and-respond philosophy.
46) Which of the following marketing orientations calls for aggressive promotional efforts and
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focuses on creating transactions rather than long-term customer relationships?
A) the marketing concept
B) the production concept
C) the product concept
D) the selling concept
E) the societal marketing concept
47) Jolene's firm markets preplanning services for a mortician. She finds that most of her target
market avoids discussing future funeral needs. She convinces people to invest in the firm's
services through her large-scale promotional efforts. Jolene's firm most likely practices the
.
A) production concept
B) marketing concept
C) selling concept
D) product concept
E) societal marketing concept
48) The selling concept is typically practiced
.
A) to balance consumers' wants, company's requirements, and the society's long-run interests
B) with products that offer the most in terms of quality, performance, and innovative features
C) when the company focuses on building long-term customer relationships
D) with goods that buyers normally do not think of buying
E) by customer-driven companies
49) Which of the following marketing orientations holds that achieving organizational goals
depends on knowing the needs and wants of target markets and delivering the desired
satisfactions better than competitors do?
A) the product concept
B) the production concept
C) the selling concept
D) the marketing concept
E) the societal marketing concept
50) Which of the following uses a customer-centered "sense-and-respond" philosophy rather
than a product-centered "make-and-sell" philosophy?
A) market segmentation
B) the production concept
C) the marketing concept
D) the inside-out perspective
E) marketing myopia
51) A firm that uses the selling concept takes a(n)
approach.
A) outside-in
B) niche marketing
C) inside-out
D) societal marketing
E) customer-driven
52) The marketing concept takes a(n)
. It starts with a well-defined market, focuses
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on customer needs, and integrates all the marketing activities that affect customers.
A) outside-in perspective
B) product-centered make-and-sell philosophy
C) inside-out perspective
D) consumer-generated marketing approach
E) telling-and-selling approach
53) Which of the following is a characteristic of customer-driven marketing?
A) Companies understand customer needs even better than customers themselves do.
B) Customers are unaware of their needs.
C) Products are created that meet both existing and latent needs, now and in the future.
D) Customers know what they want.
E) Customers don't know what is possible.
54)
marketing is practiced by an organization that understands and anticipates
customer needs even better than customers themselves do and creates products and services to
meet current and future needs.
A) Customer-driven
B) Customer-driving
C) Affinity
D) Societal
E) Ambush
55) When customers don't know what they want or don't even know what's possible, the most
effective marketing strategy is
marketing.
A) customer-driven
B) customer-driving
C) societal
D) ambush
E) affinity
56) The societal marketing concept seeks to establish a balance between
.
A) customer lifetime value and customer equity
B) an inside-out perspective and an outside-in perspective
C) consumer short-run wants and consumer long-run welfare
D) marketing mixes and market offerings
E) customer-driven marketing and customer-driving marketing
57)
refers to socially and environmentally responsible marketing that meets the
needs of consumers and businesses while also preserving or enhancing the ability of future
generations to meet their needs.
A) Ambush marketing
B) Evangelism marketing
C) Sustainable marketing
D) Database marketing
E) Affinity marketing
58) Some fast-food restaurants offer tasty and convenient food at affordable prices, but in doing
so they contribute to a national obesity epidemic and environmental problems. These fast-food
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restaurants overlook the
A) marketing concept
B) product concept
C) production concept
D) societal marketing concept
E) selling concept
philosophy.
59) The set of marketing tools a firm uses to implement its marketing strategy is called the
.
A) promotion mix
B) product mix
C) marketing mix
D) market offering
E) marketing effort
60) Which of the following is the most likely result of a marketing strategy that attempts to
serve all potential customers?
A) All customers will be delighted.
B) Customer-perceived value will increase.
C) All customers will directly turn into customer evangelists.
D) Not all customers will be satisfied.
E) Customers will not show interest in any other company's products.
61) Which of the following statements reflects the marketing concept?
A) Focus on making continuous product improvements.
B) Undertake a large-scale selling and promotion effort.
C) Emphasize an inside-out perspective.
D) Consider customer focus and value as the paths to sales and profits.
E) Focus on a product-centered make-and-sell philosophy.
62) Bead Beautiful is a jewelry brand targeted at preteen girls. What needs do NOT fit with this
audience, as the marketing team develops a value proposition for Bead Beautiful?
A) variety of colors in products
B) price
C) quality of materials
D) mature designs
E) ease of availability
63) When demand for athletic shoes produced by Nike and endorsed by Michael Jordan is high,
Nike limits how many pairs of shoes are manufactured. This action maintains strong demand by
limiting supply. This decision contradicts the philosophy of which marketing concept?
A) marketing concept
B) product concept
C) production concept
D) societal marketing concept
E) selling concept
64) At a local farmers' market, Molly Malone sells mussels while shouting to passersby, "Fresh
seafood, get your fresh seafood here!" What kind of perspective is Molly taking?
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A) customer-driving
B) inside-out
C) customer-driven
D) outside-in
E) niche marketing
65) Market segmentation is the process of seeking fewer customers and reduced demand for
profit maximization only. FALSE
66) The selling concept holds that consumers will not buy enough of the firm's products unless
the firm undertakes a large-scale selling and promotion effort. TRUE
67) An organization's department follows a customer-centered sense-and-respond philosophy.
The department is most likely practicing the product concept. FALSE
68) The production concept and the product concept are marketing management orientations
that are more likely to lead to marketing myopia.
69) The societal marketing concept calls on marketers to balance consumer wants and desires,
company profits, and society's interests. TRUE
70) Fast Food, Inc. views marketing as the process of finding and retaining profitable
customers by providing them with the food they want. Fast Food, Inc. practices societal
marketing. FALSE
71) Healthy Veggies, LLC, believes that marketing is a tool to use in finding customers and
keeping them by providing vegetables that are grown using chemical-free farming techniques
and selling through small family-owned stores. Healthy Veggies, LLC, practices societal
marketing. TRUE
72) The marketing mix refers to the set of marketing tools the firm uses to implement its
marketing strategy. TRUE
73) Company X, a manufacturer of office supplies, follows the selling concept. Explain
how the firm may lose sight of customer relationships with this marketing orientation.
74) Explain why electronics and pharmaceuticals manufacturers use customer-driving
marketing.
75) Compare the selling and marketing concepts, listing the key components of each
philosophy.
76) Briefly explain the societal marketing concept. Give an example of an organization that has
effectively used the societal marketing concept.
77) In which of the following situations has a company most actively embraced customermanaged relationships?
A) American Airlines awards frequent flyer points to returning customers.
B) Paige Premium Denim jeans provide superior quality and perfect fit.
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C) iRobot invites enthusiastic Roomba owners to develop and share their own uses for the
company's robotic vacuum cleaner.
D) Best Buy distinguishes between its best customers and its less profitable customers, stocking
merchandise to appeal to each group.
E) Toyota develops a marketing presence on social networks and other online communities.
78) Which of the following statements is true about creating customer loyalty and retention?
A) Losing a customer means losing the entire stream of purchases that the customer would
make over a lifetime of patronage.
B) Customer delight creates a rational preference and not an emotional relationship with the
brand.
C) The aim of customer relationship management is to focus solely on customer delight.
D) Losing a customer hardly makes a difference to a company's sales.
79) FedEx offers its customers fast and reliable package delivery. When FedEx customers
weigh these benefits against the monetary cost of using FedEx along with other costs of using
the service, they are acting upon
.
A) brand loyalty
B) customer equity
C) customer-perceived value
D) customer lifetime value
E) a societal marketing campaign
80) Customer satisfaction is a goal that companies strive to earn. Companies can achieve
customer delight by
.
A) regularly putting products on sale
B) promising only what they can deliver and then delivering more than they promise
C) offering promotional deals such as "buy one and get one free"
D) creating contests with exciting prizes
E) using celebrities to advertise the products
81) Building and maintaining profitable customer relationships by delivering superior customer
value and satisfaction is called
.
A) customer lifetime value
B) customer-perceived value
C) customer relationship management
D) partner relationship management
E) customer equity
82) Which of the following marketing strategies should marketing managers focus on to
manage detailed information about individual customers and carefully manage customer
touchpoints to maximize customer loyalty?
A) customer divestment
B) customer-managed relationships
C) the societal marketing concept
D) partner relationship management
E) customer relationship management
83)
is determined by a customer's evaluation of the benefits and costs of a market
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offering relative to those of competing offers.
A) Customer-perceived value
B) Customer lifetime value
C) Share of customer
D) Customer-managed relationship
E) Brand value proposition
84) Customer equity refers to
.
A) a firm's current sales
B) the share a firm earns of a customer's purchasing in their product categories
C) the amount a customer is spending each year on certain products
D) the total combined customer lifetime value of all of the company's current and potential
customers
E) a firm's market share
85) It is most accurate to say that when customers purchase products they act on
as
they judge values and costs.
A) objective value
B) perceived value
C) customer lifetime value
D) company image
E) society's interests
86) The primary key to delivering customer satisfaction is to match product performance with
.
A) the performance of competitive products
B) competitive prices
C) aggressive advertising
D) limited customer services
E) customer expectations
87) Which of the following terms refers to customers who make repeat purchases and tell
others about their positive experiences with a product or service?
A) barnacles
B) customer evangelists
C) butterflies
D) surrogate customers
E) market mavens
88) Sally recently purchased Brand X lotion. In comparing her perception of how the lotion
made her skin feel and look to her expectations about Brand X lotion, Sally was measuring her
level of
.
A) share of customer
B) customer satisfaction
C) customer equity
D) customer-perceived value
E) customer lifetime value
89) Which of the following strategies would a company most likely use to increase customer
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satisfaction?
A) decreasing the variety of offered services
B) divesting
C) lowering prices
D) "firing" unprofitable customers
E) limiting customer experiences with a brand
90) Hank is an assistant marketing director for a firm in a market with many low-margin
customers. What type of relationship with these customers would be the most profitable for
him?
A) full partnerships
B) basic relationships
C) causal relationships
D) club marketing programs
E) inverse relationships
91) A room upgrade offered by a hotel to a guest who often stays in the hotel is an example of
.
A) a frequency marketing program
B) a basic relationship
C) a club marketing program
D) partner relationship management
E) sustainable marketing
92) A gym equipment manufacturer encourages customers to become members of the firm's
Web site. Membership provides customers with exercise tips as well as discounts on gym
equipment and workout apparel. This is an example of
.
A) a frequency marketing program
B) a basic customer relationship
C) a club marketing program
D) the selling concept
E) consumer-generated marketing
93) The marketing world is most likely embracing
because consumers wield greater
power now with many platforms for airing and sharing their brand views with other consumers.
A) partner relationship management
B) supply chain management
C) customer-managed relationships
D) market segmentation
E) consumer ethnocentrism
94) Greater consumer control means that companies can no longer rely on
.
A) promoting brand-consumer interaction
B) marketing by intrusion
C) creating market offerings and messages that involve consumers
D) developing marketing concepts with an outside-in perspective
E) marketing by attraction
95) Kao Corp., a deodorant manufacturer, invited teenage girls to make an ad that would
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encourage other girls to buy the product. This program is an example of
A) societal marketing
B) the production concept
C) the selling concept
D) partner relationship management
E) consumer-generated marketing
.
96) Elisandra, a marketing manager at a regional chain restaurant, has decided to organize a
contest calling for customers to create commercials for the restaurant. Winning entries will be
posted on the organization's home page. Elisandra's plan is an example of
.
A) consumer-generated marketing
B) partner relationship management
C) customer lifetime value
D) community development around a brand
E) customer divestment
97) Through
, companies today are strengthening their connections with all partners,
from providers of raw materials and components to those involved in the delivery of final
goods and services.
A) supply chain management
B) direct marketing
C) customer relationship marketing
D) customized marketing
E) inventory management
98) The final step in the marketing process is
.
A) capturing value from customers
B) creating customer delight
C) creating customer lifetime value
D) understanding the marketplace
E) designing a customer-driven marketing strategy
99) "Losing a customer once means losing the entire stream of possible purchases that the
customer would make over an extended period of patronage." This statement specifically
indicates loss in terms of
.
A) customer-perceived value
B) marketing offerings
C) partner relationship management
D) customer lifetime value
E) value proposition
100) At Gina's retail stores, the posted policy reads, "Without our customers, we don't exist."
Gina and her staff aim to delight each customer, and they are quick to offer discounts or extra
services whenever a customer is anything less than satisfied. Gina and her staff strive to make
every customer a repeat customer. It is most accurate to say that instead of focusing on each
individual transaction, Gina and her staff put a priority on
.
A) managing partner relationships
B) selling new products
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C) attracting "butterflies"
D) converting "barnacles" to "strangers"
E) capturing customer lifetime value
101) The portion of the customer's purchasing that a company gets in its product categories is
known as
.
A) customer-perceived value
B) share of customer
C) customer insight
D) consumption function
E) induced consumption
102) Apart from retaining good customers, most marketers want to constantly increase their
"share of customer." What does this mean in marketing terms?
A) Marketers want to increase their market share.
B) Marketers want to increase the share they get of the customer's purchasing in their product
categories.
C) Marketers want to diversify their operations and customize their products to cater to the
entire market.
D) Marketers want to continuously increase their customers' levels of satisfaction.
E) Marketers want to turn satisfied customers into delighted customers.
103)
is one of the best ways to increase share of customer.
A) Targeting new customers
B) Using bait and switch
C) Cross-selling
D) Divesting
E) Partnership marketing
104) Keith, a clothing store owner, offers product suggestions to customers based on their
current purchases. Which of the following is Keith trying to increase?
A) shared value
B) share of customer
C) social responsibility
D) customer-generated marketing
E) customer loyalty
105) Which of the following refers to the total combined customer lifetime value of all of the
company's current and potential customers?
A) share of customer
B) marketing mix
C) customer equity
D) target market
E) customer-perceived value
106) In the context of customer relationship groups, a potentially profitable and short-term
customer is referred to as a
.
A) true friend
B) butterfly
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C) stranger
D) barnacle
E) market maven
107) Customers can be classified into four relationship groups based on their profitability and
projected loyalty. Which customer type is associated with high profitability and long-term
loyalty?
A) barnacles
B) strangers
C) butterflies
D) true friends
E) cash cows
108) A company should not always target all possible customers. Which kind of customer is
not the most valuable to a company, but, can over time, contribute to the firm's success?
A) butterflies
B) shooting stars
C) barnacles
D) true friends
E) strangers
109) A financial services firm has several loyal customers who conduct business with them
exclusively. However, the company has noticed that this customer group is the least profitable
for the company, and in some cases, it increases their losses when engaging in business with
this group. Which of the following customer groups is being referred to in this scenario?
A) butterflies
B) true friends
C) strangers
D) barnacles
E) cash cows
110) Digital technology allows companies to reach out to customers in numerous ways. Which
of the following is NOT the purpose of a company reaching out using digital and social media?
A) solving consumer problems
B) building customer relationships
C) helping customers shop
D) providing product information
E) working with suppliers
111) A seller pursues a basic relationship with what kind of customers?
A) many customers regardless of profitability
B) many high-margin customers
C) many low-margin customers
D) a few high-margin customers
E) a few low-margin customers
112) A seller pursues a full partnership with what kind of customers?
A) many customers regardless of profitability
B) many high-margin customers
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C) many low-margin customers
D) a few high-margin customers
E) a few low-margin customers
113) A marketer wants to increase its "share of customer." It can do this by offering a greater
variety to customers, or by
.
A) decreasing prices
B) increasing discounts and coupons
C) sending samples directly to customers
D) introducing customers to "brand evangelists"
E) creating programs to cross-sell and up-sell to market more products and service to existing
customers
Refer to the scenario below to answer the following question(s).
Carol Veldt, owner of Seagull Terrace, watched her investment grow from a small, seaside
motel to a thriving year-round resort in just a few years. Atop a cliff overlooking the Maine
coast, Seagull Terrace had attracted thousands of visitors during summer, but then faced a
tremendous downturn in business during winter. "But, given the established industries in the
nearby towns, very little year-round competition, and our close proximity to Portland," Carol
added, "I couldn't understand why seasonality had to hit Seagull Terrace so hard!"
So Carol spent her first winter devising a new marketing plan. She put together a promotional
package designed to attract business travelers year-round. Carol's plan also involved a seasonal
promotional gimmick—to be implemented from early winter to late spring—that would attract
the same numbers as the large summer crowd. Her idea worked! During her second winter,
Carol greeted numerous business travelers—both satisfied repeat guests as well as new guests
who had been snagged by her promotional appeals.
"We still have a long way to go," Carol admitted. "Our delicatessen offers entrees that are a part
of the local cuisine, but we'd like to expand that. We provide health club privileges off-site, but
we'd like to eventually provide our own. These are goals I hope to achieve in a few years. Our
first project, however, included a renovation of our guest rooms and I'm quite proud of the
results." Carol then added, "Actually there are so many possibilities. With an indoor pool area, I
will eventually offer weekend getaways throughout winter."
114) Carol Veldt's plan also involves a seasonal promotional gimmick that she wants to
promote aggressively. This is an example of the
concept.
A) selling
B) marketing
C) product
D) production
E) societal marketing
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115) Renovations of the guest rooms at the Seagull Terrace and plans to add an indoor pool
area are examples of the
concept.
A) selling
B) marketing
C) product
D) production
E) societal marketing
116) Carol Veldt has decided to ask selected guests to participate in an extensive survey about
their experience at Seagull Terrace and about their requirements in terms of amenities and
cuisines. By implementing the suggestions she receives from guests, Carol would be following
the concept.
A) production
B) product
C) selling
D) marketing
E) societal marketing
117) For most marketers, customer relationship management is exclusively a matter of
customer data management.
118) Customer-perceived value is defined as the customer's evaluation of the difference
between all the benefits and all the costs of a market offering relative to those of competing
offers. TRUE
119) The meaning of value is perceived identically by all consumers.
FALSE
120) Customer-managed relationships are marketing relationships that are controlled by
customers; therefore, they are of no significance to marketers.
121) Large-scale marketing approaches that foster two-way customer relationships are made
possible by new communication technologies.
122) In consumer-generated marketing, marketers play a bigger role in shaping consumers'
brand experiences and those of others.
123) To increase its "share of customer," a firm concentrates on retaining as many customers as
possible over its lifetime.
124) A company can create customer delight by meeting customer expectations through
offering good products that do what is promised.
125) Many companies now use customer profitability analysis to identify and weed out
unprofitable customers.
126) Explain what marketers can expect from individuals in the customer relationship group
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classified as "butterflies."
127) Describe and compare the four types of customers classified by their potential profitability
to an organization. Explain how an organization should manage each type of customer.
128) Explain how storing customer information in a database might better prepare carmaker
Kia in customer relationship management.
129) Alex works in the marketing department of an international company. How can Alex use
modern technologies to conduct market research and better serve his company's customers?
130) How can a marketer increase its "share of customer"?
131) Define customer relationship management and explain its associated tools and levels of
relationships.
132) Explain why the aim of customer relationship management is to create not just customer
satisfaction, but also customer delight.
133) Define customer equity and explain how a company can increase it.
134) Marketers use mobile channels for several purposes. Which of the following is LEAST
likely to be one of those purposes?
A) Enrich the brand experience.
B) Send billing statement.
C) Stimulate immediate buying.
D) Make shopping easier.
E) Boost sampling.
135) Marketers set up company and brand Web sites that provide information and promote the
company's products. Social media is a significant part of today's marketing strategy. Which of
these tools is NOT part of the growth in digital technology?
A) blogs
B) e-mail
C) telemarketing calls
D) mobile apps
E) videos
136) Following the change in consumer values and consumption patterns after the Great
Recession, marketers have changed their marketing strategies to emphasize the
of
their products.
A) image
B) value
C) durability
D) safety
E) uniqueness
137) Which of the following actions should a marketer take in response to the new economy?
A) Offer selected discounts.
B) Cut marketing budgets.
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C) Hold the line on prices.
D) Cut costs.
E) Discontinue products.
138) Government agencies design
to encourage energy conservation and discourage
smoking, excessive drinking, and drug use.
A) club marketing programs
B) social marketing campaigns
C) consumer-generated marketing campaigns
D) ambush marketing campaigns
E) frequency marketing programs
139) As part of the rapid globalization of today's economy, companies are selling more
domestically produced goods in international markets and
.
A) taking a local view of their industry
B) purchasing more supplies abroad
C) reducing competition within their industry
D) downplaying concerns for social responsibility
E) competing solely in traditional marketplaces
140) Iceco Inc., an ice cream manufacturing company, encourages all stakeholders, including
the top management and all employees, to consider individual and community welfare in their
day-to-day decisions. This action undertaken by Iceco reflects
.
A) environmentalism
B) social responsibility
C) the selling concept
D) partner relationship management
E) marketing myopia
141) Marketing in the non-profit sector is applied in all but which of these ways?
A) to enhance their images
B) to attract memberships
C) to publicize the organization's supporters
D) to design social marketing campaigns for specific causes
E) to encourage donor support
142) A church targeting different demographic groups to increase attendance is an example of
.
A) affinity marketing
B) not-for-profit marketing
C) societal marketing
D) evangelism marketing
E) affiliate marketing
143) Your state's department of education has budgeted a significant amount of money for a
radio, print, television, and online advertising campaign emphasizing the long-term benefits,
both educationally and professionally, of reading every day. This is an example of a(n)
campaign.
A) ambush marketing
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B) social marketing
C) inbound marketing
D) consumer-generated marketing
E) affiliate marketing
144) Many organizations use multiple social media, such as Facebook, Twitter, Instagram, and
YouTube. What is the primary reason a company would use multiple social media?
A) entice customers to one of the social media sites
B) present a carefully integrated message to fans and customers
C) improve its "hit" count
D) appeal to new customers
E) increase its prices because it is more well-known
145) Many company and brand Web sites also serve as online brand communities, where
customers can congregate and exchange brand-related interests and information.
146) The Internet of Things is a new product created by multiple companies working together.
147) Organizations choose to use only a few of the available online and social media. Using
multiple social media results in confused fans.
148) Social media sites with small audiences, such as Birdpost.com, can be as effective in
creating customer engagement as sites with large audiences, such as Pinterest.
149) Companies that do not target individual consumers do not benefit from using social media
tools to appeal to their business customers.
150) Explain how the growth of digital technology has transformed the way in which companies
conduct business today.
151) How are local retailers affected by global competition?
152) Discuss the challenges and advantages of new communication technologies for marketers
as they work to build relationships with their customers.
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Principles of Marketing, 17e (Kotler/Armstrong)
Chapter 2 Company and Marketing Strategy: Partnering to Build Customer Engagement,
Value, and Relationships
1)
is the process of developing and maintaining a crucial fit between the
organization's goals and capabilities and its changing marketing opportunities.
A) Benchmarking
B) SWOT analysis
C) Market segmentation
D) Strategic planning
E) Diversification
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Easy
2) Which of the following is true with regard to strategic planning?
A) At the corporate level, the company starts the strategic planning process by determining
what portfolio of businesses and products is best for the company.
B) A strategic plan deals with a company's short-term goals.
C) The focus of strategic planning is to define a game plan for long-run survival and growth.
D) The strategic plan is a statement of an organization's purpose.
E) Strategic planning involves identifying segments of consumers with identical preferences.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Moderate
3) Which of the following is the first step in strategic planning?
A) setting short-term goals
B) developing the business portfolio
C) defining the organizational mission
D) formulating the key marketing strategies
E) identifying the organization's weaknesses and the threats it faces
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Easy
1
4) Which of the following is NOT a step in the strategic planning process?
A) defining the company mission
B) setting company objectives and goals
C) designing the business portfolio
D) planning marketing and other functional strategies
E) evaluating members of the company's value chain
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Easy
5) A
documents an organization's purpose—what it wants to accomplish in the larger
environment.
A) vision statement
B) mission statement
C) business portfolio
D) value proposition
E) product strategy
F)
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Easy
6) Mission statements should
and be defined in terms of
.
A) be technology oriented; meeting the self-actualization needs of customers
B) be product oriented; satisfying the esteem needs of customers
C) embody the company's short-term plans; current opportunities
D) be market oriented; satisfying basic customer needs
E) address sales and profits; the net return on investments
F)
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Moderate
7) A mission statement serves as a
.
A) statement of the organization's net profits
B) plan for short-term sustainability
C) statement of the organization's purpose
D) statement of the organization's current liabilities
E) reward plan for the organization's highly skilled employees
F)
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Easy
2
8) Which of the following is NOT a market-oriented business definition?
A) "We empower customers to realize their dreams."
B) "We make high-quality consumer food products."
C) "We sell success and status."
D) "We create the Hilton experience."
E) "We bring innovation to every home."
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Moderate
9) Companies that define their missions in terms of products or technologies are considered
myopic primarily because
.
A) products and technologies result in low returns on investment
B) consumer preferences with regard to products and technology are difficult to predict
C) consumer preferences for different product categories vary from time to time
D) products and technologies eventually become outdated
E) most consumers are not comfortable using sophisticated technology during the buying
process
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Moderate
10) Mission statements should be defined in terms of
.
A) the advantages a company's products provide
B) satisfying basic customer needs
C) the value a company's products provide
D) the profitability of a company's products
E) the variety they offer to a customer
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Moderate
3
11) Orion Inc. operates in many industries, including pharmaceuticals and food products. The
company's goal is to create "abundant and affordable food for all and a healthy environment."
This represents Orion's
.
A) marketing plan
B) product mix
C) business portfolio
D) marketing mix
E) mission statement
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Moderate
12) A company's broad mission leads it to develop all of the following EXCEPT
A) budget objectives
B) business objectives
C) sales objectives
D) marketing objectives
E) customer engagement objectives
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Moderate
.
13) Which of the following companies has a product-oriented business definition?
A) A luxury hotel, whose business definition is: "We sell out-of-the-world experiences to our
guests."
B) A real estate company, whose business definition is: "We sell dreams."
C) A cosmetic company, whose business definition is: "We offer hope and self-expression."
D) A shoe manufacturer, whose business definition is: "We manufacture affordable and longlasting shoes for all."
E) A high-technology company, whose business definition is: "We sell inspirations."
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Moderate
4
14) Which of the following companies has a market-oriented business definition?
A) An electronics company, whose business definition is: "We produce microchips."
B) A hotel, whose business definition is: "We rent rooms."
C) An apparel company, whose business definition is: "We make and sell women's clothing."
D) A cosmetic company, whose business definition is: "We sell hope and self-esteem."
E) A pizzeria, whose business definition is: "We sell the world's most delicious thin-crust
pizzas."
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Moderate
15) Which of the following is NOT an example of product-oriented mission statements?
A) "We are an online library."
B) "We run theme parks."
C) "We sell athletic shoes."
D) "We sell memorable experiences."
E) "We rent hotel rooms."
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Moderate
16) Which of the following is a market-oriented mission statement?
A) "We empower customers to achieve their dreams."
B) "We sell jumbo burgers."
C) "We are an online library."
D) "We are a low-cost airline."
E) "We make porcelain figurines."
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Moderate
5
17) Mission statements should be
.
A) meaningful and specific yet motivating
B) technology oriented
C) written solely for public relations purposes
D) focused on increasing sales or profits
E) strictly product oriented
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Easy
18) A company's broad mission leads to
.
A) increasing profits and more customers
B) increasing sales and decreasing costs
C) a higher share price
D) a hierarchy of objectives, including business objective and marketing objectives
E) increased market share and increasing profitability
F)
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Moderate
19) The purpose of strategic planning is to find ways in which your company can best use its
strengths to take advantage of attractive opportunities in the environment.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Easy
20) A company's mission statement provides the depth needed for all segments of the company
to reach their goals.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Moderate
21) A mission statement is a document embodying an organization's short-term goals.
22)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Easy
6
23) A clear mission statement acts as an "invisible hand" that guides people in the organization.
24)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Easy
25) Mission statements should be market oriented.
26)
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Easy
27) "At Joe's Diner, we serve great burgers" is a product-oriented business definition.
28)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Easy
29) "At Trader Joe's, our mission is to provide all our customers the best food and beverage
values to be found anywhere, and the information to make informed buying decisions." This is
a product-oriented business definition.
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Moderate
30) A company's mission could appropriately be stated as "making more sales or profits."
31)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Easy
32) How does strategic planning benefit companies?
Answer: Strategic planning sets the stage for all other planning in the firm. The strategic plan
involves adapting the firm to take advantage of opportunities in its constantly changing
environment.
AACSB: Analytical thinking; Reflective thinking
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Moderate
7
33) Why should mission statements be market oriented instead of product or technology
oriented?
Answer: Mission statements should be market oriented and defined in terms of satisfying basic
customer needs. Products and technologies eventually become outdated, but basic market needs
may last forever.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Easy
34) Define strategic planning. Discuss the steps involved.
Answer: The process of developing and maintaining a strategic fit between the organization's
goals and capabilities and its marketing opportunities is called strategic planning. At the
corporate level, the company starts the strategic planning process by defining its overall
purpose and mission. This mission is then turned into detailed supporting objectives that guide
the entire company. Next, headquarters decides what portfolio of businesses and products is
best for the company and how much support to give each one. In turn, each business and
product develops detailed marketing and other departmental plans that support the companywide plan. Thus, marketing planning occurs at the business-unit, product, and market levels. It
supports company strategic planning with more detailed plans for specific marketing
opportunities.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 2.1: Explain company-wide strategic planning and its four steps.
Difficulty: Moderate
35) The collection of businesses and products that make up a company is called its
.
A) strategic business unit
B) supply chain
C) strategic plan
D) business portfolio
E) internal value chain
F)
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
8
36) Which of the following is the first step of business portfolio planning?
A) shaping the future portfolio by developing strategies for growth and downsizing
B) determining which businesses should receive more, less, or no investment
C) identifying internal strengths and weaknesses
D) identifying future opportunities
E) determining short-term goals
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
37) The major activity in strategic planning is
, whereby management evaluates the
products and businesses that make up the company.
A) SWOT analysis
B) benchmarking
C) business portfolio analysis
D) breakeven analysis
E) prospecting
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
38) The best business portfolio is the one that
.
A) provides the greatest opportunity for increasing profits
B) best fits the company's strengths and weaknesses to opportunities in the environment
C) ensures that the company will realize increased share of market
D) allows the company to decrease its overall costs
E) entices customers to purchase even more products from the company
F)
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
39) Which of the following best describes a strategic business unit?
A) the internal value chain of a company
B) the supply chain of a company
C) the key businesses that make up a company
D) the key channel intermediaries of a service company
E) the key competitors of a company
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
9
40) During portfolio analysis, a company
after identifying the key businesses that
make up the company.
A) formulates a short-term marketing plan
B) assesses the attractiveness of its various SBUs
C) assesses its strengths and weaknesses
D) performs a SWOT analysis
E) assesses the effectiveness of its various channel intermediaries
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
41) Which of the following is NOT something a company must determine when analyzing its
current business portfolio?
A) which businesses should receive more investment
B) which businesses should receive less investment
C) which businesses should receive no investment
D) which businesses should be sold or closed
E) which businesses shape the future portfolio
F)
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Moderate
42) Most standard portfolio analysis methods evaluate SBUs on the
.
A) potential for niche or global marketing
B) degree of product differentiation
C) strength of the market or industry position
D) accessibility to rural markets
E) number of successful business acquisitions
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
10
43) According to the Boston Consulting Group approach,
provides a measure of
market attractiveness.
A) product attribute
B) product design
C) market penetration
D) market growth rate
E) market segmentation
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
44) According to the Boston Consulting Group approach,
serves as a measure of
company strength in the market.
A) relative market share
B) product development
C) market diversification
D) product attribute
E) market segmentation
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
45) Which of the following is true of the BCG matrix approach?
A) It is inexpensive to implement.
B) It does not have any limitations.
C) It considers market growth rate to be a measure of market attractiveness.
D) It describes consumer motivations and needs.
E) It does not consider relative market share to be a measure of company strength in the
market.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
11
46) Within a company, who is most likely to perform strategic planning?
A) the president and vice presidents
B) the accounting and finance departments
C) the marketing and sales departments
D) cross-functional teams of divisional managers close to their markets
E) the manufacturing and production departments
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Moderate
47) The key businesses of Kimberley and Price consist of a division that produces and sells
breakfast cereals and another that manufactures gardening tools. Each of these businesses is
called a
.
A) market segment
B) strategic business unit
C) question mark
D) prospect
E) product portfolio
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Moderate
48)
are a type of SBU that often require heavy investments to finance their rapid
growth.
A) Cash cows
B) Question marks
C) Stars
D) Dogs
E) Bears
F) Skill:
Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
12
49)
are low-growth, high-share businesses/products that need less investment to hold
their market share.
A) Stars
B) Cash cows
C) Question marks
D) Dogs
E) Bears
F) Skill:
Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
50) Which of the following is true with regard to cash cows?
A) They are high-growth, high-share businesses or products.
B) They can be used to help finance the company's question marks and stars.
C) They require significant cash to maintain market share.
D) They are low-share businesses and products.
E) They do not promise to be large sources of cash.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
51)
are low-share business units in high-growth markets that require a lot of cash to
hold their share.
A) Stars
B) Dogs
C) Question marks
D) Cash cows
E) Bears
F) Skill:
Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
13
52) The pharmaceuticals division of Omni Healthcare holds low market share in a high-growth
market. According to the BCG matrix, the pharmaceuticals division of Omni can be classified
as a
.
A) star
B) bear
C) question mark
D) cash cow
E) dog
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Challenging
53) By harvesting its SBU, a company would most likely be
.
A) milking the SBU's short-term cash flow regardless of the long-term effect
B) selling the SBU or phasing it out and using the resources elsewhere
C) investing just enough to hold the SBU's current market share
D) investing more in the business unit to build its share
E) diversifying the company's product line
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
54) A company can
an SBU by selling it or phasing it out and using the resources
elsewhere.
A) divest
B) promote
C) expand
D) harvest
E) hold
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
14
55) Modern strategic planning
.
A) exclusively consists of a company's short-term goals
B) is decentralized
C) does not involve cross-functional teams
D) does not take the overall mission of the company into consideration
E) is highly centralized
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
56) The BCG matrix approach is problematic in that it
.
A) focuses on planning for the future at the cost of ignoring the present
B) focuses solely on current businesses and provides little scope for future planning
C) tends to undermine the importance of market growth rate as a measure of market
attractiveness
D) tends to undermine the importance of relative market share as a measure of company
strength in the market
E) fails to classify SBUs
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
57) Which of the following is a portfolio-planning tool for identifying company growth
opportunities through market penetration, market development, product development, or
diversification?
A) BCG matrix
B) analysis of variance
C) product/market expansion grid
D) Harris matrix
E) SWOT analysis
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
15
58) Phoenix, a popular coffee shop chain in North America, recently opened 400 stores to cater
to its rapidly increasing number of patrons. This exemplifies
.
A) product differentiation
B) product development
C) diversification
D) market penetration
E) market segmentation
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
59) Which of the following is true with regard to the product/expansion grid?
A) It classifies SBUs into four distinct categories.
B) It is a useful device for identifying growth opportunities.
C) It helps companies analyze their internal strengths and weaknesses.
D) It functions on the premise that firms should downsize to regain market share.
E) It is a useful device for segregating customers into distinct categories.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
60) Making more sales to current customers without changing a firm's products is known as
.
A) market segmentation
B) market penetration
C) product diversification
D) product development
E) prospecting
F) Skill:
Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
16
61) Lark Inc., an American electronics company, is currently reviewing new geographical
markets to sell its highly popular televisions. By 2020, it plans to open new stores across all the
major South Asian cities. Lark is most likely following a
strategy.
A) local marketing
B) market development
C) diversification
D) product adaptation
E) product development
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Moderate
62) The managers of Arrow, an American retail chain, are currently reviewing new
demographic markets to sell the firm's current products. This is an example of
.
A) market penetration
B) product development
C) mass marketing
D) market development
E) product adaptation
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
63) The managers of Alfredo's Pizza, a popular pizzeria in New York City, have been
increasingly encouraging senior citizens to visit the pizzeria's numerous outlets spread across
the city. Anticipating a rise in the population of senior citizens in the area, the management of
Alfredo's Pizza is seeking to tap into this promising segment that consists of retired, affluent
consumers. In this instance, the managers of Alfredo's Pizza are anticipating company growth
through
.
A) market development
B) product development
C) mass customization
D) niche marketing
E) product differentiation
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Moderate
17
64) FencePro, a local company, has developed an entirely new mounting system for chain link
fences. After acquiring a distributor, FencePro now has the ability to market its products
nationwide. FencePro is most likely following a
strategy.
A) market penetration
B) market development
C) downsizing
D) product adaptation
E) product development
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Moderate
65) Amor, a successful brand of women's clothing, recently introduced a line of fitness
equipment. This is an example of
.
A) mass customization
B) niche marketing
C) diversification
D) prospecting
E) product adaptation
F)
AACSB: Application of knowledge; Analytical thinking
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Moderate
66) Sunny Brews is a coffeehouse chain based in Boston. It recently introduced Eva, a mild
roast, which became immensely popular. This exemplifies
.
A) benchmarking
B) diversification
C) mass customization
D) product development
E) downsizing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Moderate
18
67) A women's apparel manufacturer in California recently acquired a Houston-based company
that manufactures office furniture. This is an example of
.
A) product development
B) market development
C) market penetration
D) diversification
E) product differentiation
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
68) Cleats, Unlimited developed a new style of soccer shoe. This is an example of
.
A) product development
B) market development
C) market penetration
D) diversification
E) product differentiation
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
69) Companies may want to downsize their business portfolios for all but which of the
following reasons?
A) The firm may have grown too fast.
B) The firm may have entered areas where it lacks experience.
C) The customers may have purchased all they need.
D) The market environment might change.
E) The products might simply age.
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
19
70) Elmo Corp., a manufacturer of personal computers and printers, recently established an
office furniture exporting business. This is an example of
.
A) niche marketing
B) local marketing
C) diversification
D) product adaptation
E) downsizing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Moderate
20
Refer to the scenario below to answer the following question(s).
Fun-Spot Fun Park began as a small amusement park in 1985. With nothing more than a merrygo-round, a slide, pony rides, and an ice cream stand, Fun-Spot grew into a popular family
attraction with 20 rides, a restaurant, and an outdoor performing arts theater.
"My wife, Gail, and I didn't know what we were getting into," commented Ron Hart, the owner.
"We just knew that weekenders coming to the lakes in our rural area represented an untapped
market."
Today, thousands of visitors flock to Fun-Spot: families, children of all ages, and even senior
citizens who enjoy strolling through the gardens and the arbors. "There's something here for
everyone," Gail Hart said with a smile. "Dozens of companies hold annual company picnics
here. We have welcomed class field trips. And we even had one wedding here at the park!"
"Here's the funny thing," Ron chimed in. "We really don't know why we've been so successful.
There is nothing else like Fun-Spot Fun Park in the area. We were just lucky." "I think it's the
ambience of the park that has brought so many visitors," Gail added. "We provide a 'total
package' of entertainment. Plus, we try to change our rides and various attractions from time to
time for variety."
Ron and Gail Hart admitted that making every visitor happy is a priority. "That has always been
our philosophy," they said. "Like the park's motto at the entrance reads, 'We're here to make you
happy!' And we've always been able to deliver on that because we've never allowed ourselves
to grow too big too quickly."
71) Fun-Spot's mission is
.
A) product oriented
B) technology oriented
C) market oriented
D) design oriented
E) narrowly focused on profits
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Moderate
21
72) Fun-Spot Fun Park represents a high-growth, high-share business. According to the BCG
matrix, it can be classified as a
.
A) star
B) question mark
C) bear
D) cat
E) dog
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
73) Ron and Gail plan to lower Fun-Spot's prices in an effort to encourage customers to stay
longer, visit more often, and spend more money during each visit. What type of strategy are
Ron and Gail planning?
A) market penetration
B) market development
C) product development
D) product adaptation
E) diversification
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Moderate
74) Ron and Gail, owners of Fun-Spot, strive to provide new offerings and entertainment
options for their visitors. This type of strategy can be best described as
.
A) market penetration
B) market development
C) product development
D) niche marketing
E) diversification
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Moderate
75) The major activity in strategic planning is business portfolio analysis, whereby
management evaluates the products and businesses that make up the company.
76)
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
77) The major activity in strategic planning is product innovation.
22
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
78) On the BCG matrix, "question marks" are high-growth, high-share businesses or products.
79)
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Moderate
80) Market penetration involves offering modified or new products to current markets.
81)
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
82) Market development involves company growth by identifying and developing new market
segments for current company products.
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
83) An American airline company started a grocery chain in Australia. This is an example of
product development.
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Moderate
84) Company growth through diversification involves offering modified or new products to the
company's current markets.
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
85) What is a strategic business unit (SBU)?
n SBU can be a company division, a product line within a division, or sometimes asingle product
or brand.
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
23
86) What are stars according to the BCG growth-share matrix?
Answer: Stars are high-growth, high-share businesses or products. They often need heavy
24
investments to finance their rapid growth.
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
87) What type of strategy should a company use to manage its cash cows?
Answer: Since cash cows are low-growth, high-share businesses or products, and require less
investment, a company should finance other SBUs with the help of cash cows.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Moderate
88) Define market penetration.
Answer: Market penetration refers to company growth by increasing sales of current products
to current market segments without changing the product.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
89) What is a business portfolio? What are the steps involved in business portfolio planning?
90) business portfolio is the collection of businesses and products that make up a company.
Business portfolio planning involves two steps. First, the company must analyze its current
business portfolio and determine which businesses should receive more, less, or no investment.
Second, it must shape the future portfolio by developing strategies for growth and downsizing.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Moderate
25
91) What is a growth-share matrix? Discuss the BCG growth-share matrix.
Answer: The growth-share matrix is a portfolio-planning method that evaluates a company's
SBUs in terms of market growth rate and relative market share. Using the now-classic Boston
Consulting Group (BCG) approach, a company classifies all its SBUs according to the growthshare matrix. On the vertical axis, market growth rate provides a measure of market
attractiveness. On the horizontal axis, relative market share serves as a measure of company
strength in the market. The growth-share matrix defines four types of SBUs:
1. Stars are high-growth, high-share businesses or products. They often need heavy investments
to finance their rapid growth. Eventually their growth will slow down, and they will turn into
cash cows.
2. Cash cows are low-growth, high-share businesses or products. These established and
successful SBUs need less investment to hold their market share. Thus, they produce a lot of
the cash that the company uses to pay its bills and support other SBUs that need investment.
3. Question marks are low-share business units in high-growth markets. They require a lot of
cash to hold their share, let alone increase it. Management has to think hard about which
question marks it should try to build into stars and which should be phased out.
4. Dogs are low-growth, low-share businesses and products. They may generate enough cash to
maintain themselves but do not promise to be large sources of cash.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Easy
92) What are some of the problems associated with matrix approaches?
Answer: The BCG and other formal methods revolutionized strategic planning. However, such
centralized approaches have limitations: They can be difficult, time-consuming, and costly to
implement. Management may find it difficult to define SBUs and measure market share and
growth. In addition, these approaches focus on classifying current businesses but provide little
advice for future planning.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.2: Discuss how to design business portfolios and develop growth strategies.
Difficulty: Moderate
93) Marketing plays a key role in the company's strategic planning in all of these ways
EXCEPT
.
A) providing input to identify attractive market opportunities
B) designing new products from scratch
C) creating customer value and building profitable relationships with customer groups
D) designing strategies for reaching a unit's objective
E) providing a guiding philosophy
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with
its partners to create and deliver customer value.
Difficulty: Easy
26
94) Each department in a company that carries out value-creating activities can be thought of as
a link in the company's
.
A) channel of intermediaries
B) external value stream
C) demand chain
D) internal value chain
E) supplier chain
F) Skill:
Concept
Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with
its partners to create and deliver customer value.
Difficulty: Easy
95) RedFin manufactures diving equipment that is highly regarded by customers worldwide.
Each department in RedFin contributes to its success and can be thought of as a(n)
.
A) link in the company's internal value chain
B) separate organization
C) independent subsidiary of the company
D) separate market segment
E) SBU
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with
its partners to create and deliver customer value.
Difficulty: Moderate
96) The network made up of the company, its suppliers, its distributors, and, ultimately, its
customers who partner with each other to improve the performance of the entire system is
known as the
.
A) business portfolio
B) supply chain
C) marketing mix
D) value delivery network
E) internal value chain
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with
its partners to create and deliver customer value.
Difficulty: Easy
27
97) Customer engagement and value are the key ingredients in the marketer's formula for
success.
Skill: Concept
Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with
its partners to create and deliver customer value.
Difficulty: Easy
98) Each department in a company can be thought of as a link in the company's internal value
chain.
Skill: Concept
Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with
its partners to create and deliver customer value.
Difficulty: Easy
99) Since companies want to work together to attract customers, marketers do not need to
practice partner relationship management.
Skill: Concept
Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with
its partners to create and deliver customer value.
Difficulty: Easy
100) What factors determine the success of a company's value chain?
company's value chain is only as strong as its weakest link. Success depends onhow well
each department performs its work of adding customer value and on how the company
coordinates the activities of various departments.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with
its partners to create and deliver customer value.
Difficulty: Moderate
101) What are the various components of the value delivery network of a company?
Answer: The value delivery network is made up of the company, its suppliers, its distributors,
and, ultimately, its customers who partner with each other to improve the performance of the
entire system.
Skill: Concept
Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with
its partners to create and deliver customer value.
Difficulty: Easy
28
102) What is a value delivery network?
value delivery network refers to the network of a company, its suppliers, itsdistributors, and,
ultimately, its customers who partner with each other to improve the performance of the
entire system.
More companies today are partnering with other members of the supply chain—suppliers,
distributors, and, ultimately, customers—to improve the performance of the customer value
delivery network. Competition no longer takes place only between individual competitors.
Rather, it takes place between the entire value delivery networks created by these competitors.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 2.3: Explain marketing's role in strategic planning and how marketing works with
its partners to create and deliver customer value.
Difficulty: Easy
103)
The marketing logic by
which a company hopes to create customer value and achieveprofitable customer
relationships is referred to as the
.
A) price
B) marketing implementation
C) value chain
D) marketing strategy
E) downsizing
F) Skill:
Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
104) Which of the following is an element of the marketing mix?
A) place
B) education
C) needs
D) wants
E) esteem
F) Skill:
Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
29
105) Which of the following is NOT part of a company's decision about which customers it
willserve and how?
A) differentiation
B) targeting
C) budgeting
D) segmentation
E) positioning
F) Skill:
Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
106) Which of the following is NOT an element of the marketing mix?
A) place
B) purchase
C) product
D) price
E) promotion
F) Skill:
Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
107)
Customers can be grouped and served in
various ways based on several factors. Theseinclude all of the following EXCEPT
factors.
A) psychographic
B) behavioral
C) technological
D) demographic
E) geographic
F) Skill:
Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
30
108)
Market segmentation
can be best described as the process of
.
A) assigning specific human attributes to a given brand
B) dividing a market into distinct groups of buyers who have different needs, characteristics, or
behaviors, and who might require separate marketing programs
C) evaluating each market segment's attractiveness and selecting one or more segments to enter
D) turning marketing plans into marketing actions to accomplish strategic marketing objectives
E) maintaining a strategic fit between organizational goals and changing marketing
opportunities
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Moderate
109) Teenagers are expected to respond in a similar way to a set of marketing efforts. In other
words, this group represents a
.
A) channel intermediary
B) line extension
C) market segment
D) product attribute
E) brand personality
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Moderate
110) Each company must divide up the total market, choose the best segments, and design
strategies for profitably serving chosen segments. This process involves market segmentation,
, differentiation, and positioning.
A) market targeting
B) marketing implementation
C) supply-chain analysis
D) price discrimination
E) market diversification
F)
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
31
111) Which of the following refers to the process of dividing a market into distinct groups of
buyers with different needs, characteristics, or behaviors?
A) market diversification
B) market segmentation
C) downsizing
D) customer relationship management
E) prospecting
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
112) Rob has been asked by his manager to identify a group of potential customers who would
respond in a similar way to a given set of marketing efforts. In this instance, Rob has been
asked to identify a
.
A) new product
B) market segment
C) marketing intermediary
D) brand
E) product line
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Moderate
113) The process of evaluating each market segment's attractiveness and selecting one or more
segments to enter is known as
.
A) market segmentation
B) diversification
C) market targeting
D) prospecting
E) downsizing
F) Skill:
Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
32
114) Paul Robinson has identified a group of potential customers who seem to respond in a
similar way to a series of magazine and radio advertisements for his company's product. Paul
has identified a
.
A) target market
B) market segment
C) niche market
D) product attribute
E) product design
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
115) Which of the following is true with regard to a market segment?
A) A market segment consists of consumers with dissimilar needs and preferences.
B) A market segment consists of consumers who respond in a similar way to a given set of
marketing efforts.
C) Very few markets have segments.
D) Dividing the market into segments decreases the efficiency of the selling process.
E) Dividing the market into segments reduces composite demand.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
116) The process of arranging for a product to occupy a clear, distinctive, and desirable place
relative to competing products in the minds of target consumers is known as
.
A) market segmentation
B) differentiation
C) target marketing
D) market targeting
E) positioning
F) Skill:
Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
33
117) Crocus, a gift store, specializes in serving customer segments that major competitors
overlook and ignore. Which of the following best describes Crocus?
A) market follower
B) market challenger
C) early adopter
D) market nicher
E) laggard
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Moderate
118) Arrow is "a different kind of company, manufacturing a different kind of a car"; the
RoadPro is "like nothing else." Statements such as these reflect a firm's
.
A) portfolio
B) marketing segment
C) positioning
D) marketing mix
E) mission statement
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Moderate
119) Alpha Motors offers "Green automobiles for a greener world." This refers to the
of Alpha automobiles.
A) brand resonance
B) position
C) brand equity
D) pleasure value
E) added value
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Moderate
34
120) Arranging for a product to occupy a clear, distinctive, and desirable place relative to
competing products in the minds of target consumers is known as
.
A) positioning
B) segmenting
C) diversifying
D) prospecting
E) satisficing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
121) Effective positioning begins with
.
A) pricing
B) diversification
C) differentiation
D) promotion
E) segmentation
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
122) Which of the following Ps in the marketing mix describes the goods-and-services
combination the company offers to the target market?
A) price
B) promotion
C) product
D) place
E) package
F) Skill:
Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
35
123) In the marketing mix, design, packaging, services, and variety can be categorized under
.
A) product
B) price
C) promotion
D) place
E) position
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
124) In the context of a company's marketing mix,
includes company activities that
make the product available to target consumers.
A) position
B) place
C) price
D) promotion
E) branding
F) Skill:
Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
125) In the marketing mix, place includes
.
A) logistics
B) discounts
C) sales promotion
D) advertising
E) packaging
F) Skill:
Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
36
126)
refers to activities that communicate the merits of the product and persuade
target customers to buy it.
A) Position
B) Promotion
C) Pricing
D) Segmentation
E) Prospecting
F) Skill:
Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Moderate
127) To succeed in today's competitive marketplace, companies must be product-centered.
128)
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
129) Dividing a market into distinct groups of buyers who have different needs, characteristics,
or behaviors, and who might require separate products or marketing programs is known as
market diversification.
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
130) A market segment consists of consumers who respond in different ways to a given set of
marketing efforts.
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Moderate
131) A product's position is the place it occupies relative to competitors' products in consumers'
minds.
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
37
132) The marketing mix consists of people, property, planning, and position.
133)
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Moderate
134) Product refers to the goods-and-services combination that a company offers to its target
market.
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
135) One valid criticism of the four Ps concept of the marketing mix is that services are not
considered.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
136) The four Cs concept adopts the buyer's view of the market.
137)
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
138) What are the components of a company's marketing mix?
company designs an integrated marketing mix made up of factors under its control
—product, price, place, and promotion (the four Ps).
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Easy
139) What does a market segment consist of?
market segment consists of consumers who respond in a similar way to a given setof
marketing efforts.
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
38
Difficulty: Moderate
140) What does market targeting involve?
39
Answer: Market targeting involves evaluating each market segment's attractiveness and
selecting one or more segments to enter.
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Moderate
141) What is a marketing strategy? How do marketing strategies help firms?
Answer: Marketing strategy refers to the marketing logic by which the company hopes to
create this customer value and achieve these profitable relationships. A company decides which
customers it will serve (segmentation and targeting) and how (differentiation and positioning).
It identifies the total market and then divides it into smaller segments, selects the most
promising segments, and focuses on serving and satisfying the customers in these segments.
Guided by marketing strategy, a company designs an integrated marketing mix made up of
factors under its control—product, price, place, and promotion (the four Ps). To find the best
marketing strategy and mix, the company engages in marketing analysis, planning,
implementation, and control. Through these activities, the company watches and adapts to the
actors and forces in the marketing environment.
AACSB: Application of knowledge; Analytical thinking
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Moderate
142) Distinguish between market segmentation and market targeting.
Answer: The process of dividing a market into distinct groups of buyers who have different
needs, characteristics, or behaviors, and who might require separate products or marketing
programs, is called market segmentation. On the other hand, market targeting involves
evaluating each market segment's attractiveness and selecting one or more segments to enter. A
company should target segments in which it can profitably generate the greatest customer value
and sustain it over time.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.4: Describe the elements of a customer value-driven marketing strategy and
mix and the forces that influence it.
Difficulty: Moderate
40
Refer to the scenario below to answer the following question(s).
Fun-Spot Fun Park began as a small amusement park in 1985. With nothing more than a merrygo-round, a slide, pony rides, and an ice cream stand, Fun-Spot grew into a popular family
attraction with 20 rides, a restaurant, and an outdoor performing arts theater.
"My wife, Gail, and I didn't know what we were getting into," commented Ron Hart, the owner.
"We just knew that weekenders coming to the lakes in our rural area represented an untapped
market."
Today, thousands of visitors flock to Fun-Spot: families, children of all ages, and even senior
citizens who enjoy strolling through the gardens and the arbors. "There's something here for
everyone," Gail Hart said with a smile. "Dozens of companies hold annual company picnics
here. We have welcomed class field trips. And we even had one wedding here at the park!"
"Here's the funny thing," Ron chimed in. "We really don't know why we've been so successful.
There is nothing else like Fun-Spot Fun Park in the area. We were just lucky." "I think it's the
ambience of the park that has brought so many visitors," Gail added. "We provide a 'total
package' of entertainment. Plus, we try to change our rides and various attractions from time to
time for variety."
Ron and Gail Hart admitted that making every visitor happy is a priority. "That has always been
our philosophy," they said. "Like the park's motto at the entrance reads, 'We're here to make you
happy!' And we've always been able to deliver on that because we've never allowed ourselves
to grow too big too quickly."
143) Which of the following would be classified as an opportunity in a SWOT analysis of FunSpot?
A) A rival amusement park announces plans to open three new rides next season.
B) A new luxury hotel is being constructed in the area, with the aim of attracting more highspending families on vacation.
C) Ron and Gail have paid off the mortgage on Fun-Spot, significantly reducing their monthly
expenses.
D) Fun-Spot employees tend to be enthusiastic and young, projecting an image of fun and
vitality.
E) Fun-Spot plans to further diversify its offerings by beginning a two-week summer camp for
elementary school students.
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Moderate
41
144) Which of the following is true with regard to a SWOT analysis?
A) It classifies SBUs into four distinct categories.
B) It measures customer response to a new product.
C) It evaluates the company's overall strengths.
D) It evaluates the growth potential of a market segment.
E) It ignores the threats faced by a company while assessing its situation in the market.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
145)
analysis is an overall evaluation of the company's strengths, weaknesses,
opportunities, and threats.
A) Porter's five forces
B) A breakeven
C) A regression
D) A SWOT
E) A cluster
F) Skill:
Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
146) In a SWOT analysis, which of the following would be considered a strength?
A) industry trends
B) technological shifts
C) environmental demands
D) performance challenges
E) internal capabilities
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
42
147) In a SWOT analysis,
include favorable trends in the external environment.
A) strengths
B) challenges
C) weaknesses
D) opportunities
E) threats
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
148) Harris Brown, the marketing manager at a small retail chain, wants to assess his firm's
strengths, opportunities, weaknesses, and threats. Which of the following would be best suited
for his purpose?
A) SWOT analysis
B) cluster analysis
C) portfolio analysis
D) regression analysis
E) Porter's five forces analysis
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Moderate
149) Which of the following functions is NOT part of managing the marketing process?
A) planning
B) control
C) budgeting
D) implementation
E) organization
F) Skill:
Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
43
150)
provides a complete analysis of the company's situation.
A) A SWOT analysis
B) A marketing audit
C) Regression analysis
D) Return on marketing investment
E) Marketing budget evaluation
F)
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
151) Marketing
addresses the what and why of marketing activities, while marketing
addresses the who, where, when, and how.
A) analysis; planning
B) planning; implementation
C) implementation; planning
D) organization; implementation
E) control; planning
F)
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
152) Omega Inc. makes lightweight sunglasses with 100-percent UV protection for people who
love to hunt, hike, and ride bikes. The company's long-term plans include the development of
lenses that, in addition to protecting users from UV rays, would help reduce lens spotting
through effective water-sheeting methods. This new feature would be valuable to people who
fish. Given the rising popularity of recreational fishing in the United States, Omega products
clearly have a huge market potential. In terms of a SWOT analysis, Omega has recognized a
market
.
A) weakness
B) strength
C) threat
D) opportunity
E) challenge
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Moderate
153) The main section of the marketing plan most likely presents a detailed
44
analysis
of the current marketing situation.
A) breakeven
B) SBU
C) SWOT
D) regression
E) cluster
F) Skill:
Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
154) A marketing plan begins with a(n)
, which presents a brief summary of the main
goals and recommendations of the plan for management review.
A) budget
B) opportunity analysis
C) threat analysis
D) executive summary
E) action program
F)
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
155) Many managers think that "doing things right," or
, is as important as, or even
more important than, "doing the right things."
A) strategy
B) planning
C) positioning
D) implementation
E) targeting
F)
AACSB: Analytical thinking; Ethical understanding and reasoning
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Moderate
45
156) The most common form of marketing organization is the
organization. Under
this organization, an operational specialist heads different marketing activities.
A) geographic
B) product management
C) functional
D) customer management
E) market
F) Skill:
Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
157) Berman Electronics, a chain of appliance stores in North America, caters to a wide range
of customers. It has a marketing organization in which different operational specialists head
different marketing activities. Berman Electronics is a(n)
.
A) customer management organization
B) niche marketer
C) early adopter
D) functional organization
E) laggard
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Challenging
158)
refer(s) to meaningful sets of marketing performance measures in a single
display used to monitor strategic marketing performance.
A) Field automation systems
B) Market segments
C) Market share
D) Marketing dashboards
E) Line extensions
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
46
159) Emerson Studios has designed its marketing organization along the lines of a
organization in which operational specialists head different marketing activities.
A) geographic
B) product
C) functional
D) customer
E) market
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Moderate
160) Ravenshaw Corp. assigns its sales and marketing people to specific countries, regions, and
districts. Ravenshaw Corp. is most likely an example of a
.
A) geographic organization
B) product organization
C) functional organization
D) niche marketer
E) mass marketer
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
161) Which of the following is true with regard to geographic organization?
A) It is the most common form of marketing organization.
B) Different marketing activities are headed by a functional specialist.
C) It requires salespeople to have international experience.
D) It reduces the overall efficiency of salespeople.
E) It allows salespeople to work with a minimum of travel time and cost.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
47
162) Which of the following is a major advantage of the market organization?
A) The company is organized around the needs of specific customer segments.
B) The company exploits bleeding-edge technologies to keep ahead in the market.
C) The company has a flat organizational structure.
D) The company allows its salespeople to settle into a specific territory.
E) The company caters to a single, small market segment.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
163) More and more, companies are shifting their brand management focus from brand
profitability toward
.
A) technology management
B) product management
C) customer management
D) functional management
E) geographic management
F)
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Moderate
164)
refers to measuring and evaluating the results of marketing strategies and plans
and taking corrective action to ensure that the objectives are achieved.
A) Marketing control
B) Marketing implementation
C) Satisficing
D) Prospecting
E) Benchmarking
F)
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
48
165) Marketing control involves four steps including all the following EXCEPT
.
A) setting specific marketing goals
B) measuring the marketing plan's performance in the marketplace
C) evaluating the causes of any differences between expected and actual performance
D) increasing the staffing in the planning department
E) taking corrective action to close the gaps between goals and performance
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
166) All of the following steps pertain to the marketing control process EXCEPT
.
A) setting goals
B) measuring performance
C) taking corrective action
D) defining the company's mission
E) evaluating the causes of gaps between expected and actual performance
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
167) The purpose of
is to ensure that the company achieves the sales, profits, and
other goals set out in its annual marketing plan.
A) benchmarking
B) operating control
C) strategic control
D) SWOT analysis
E) a marketing audit
F)
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
49
168)
involves looking at whether a company's key action plans are well-matched to
its opportunities.
A) Operating control
B) Benchmarking
C) Strategic control
D) Regression analysis
E) Portfolio analysis
F)
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
169)
measures the profits generated by investments in marketing activities.
A) A SWOT analysis
B) A marketing audit
C) Regression analysis
D) Return on marketing investment
E) Marketing budget evaluation
F)
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
170) A SWOT analysis allows a marketer to evaluate the company's overall strengths,
weaknesses, opportunities and threats.
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
171) The four marketing management functions are analysis, planning, implementation, and
control.
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
50
172) Benchmarking refers to the process that turns marketing plans into marketing actions to
accomplish strategic marketing objectives.
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Moderate
173) Operating control involves checking ongoing performance against the annual plan and
taking corrective action when necessary.
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
174) Return on marketing investment refers to the net return from a marketing investment
divided by the costs of the marketing investment.
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Moderate
175) What is SWOT analysis?
Answer: SWOT analysis is an overall evaluation of the company's strengths (S), weaknesses
(W), opportunities (O), and threats (T).
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
176) What is the main purpose of the executive summary in a marketing plan?
Answer: The executive summary presents a brief summary of the main goals and
recommendations of the plan for management review, helping top management find the plan's
major points quickly.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Moderate
177) What is the difference between marketing planning and marketing implementation?
51
Answer: Whereas marketing planning addresses the what and why of marketing activities,
implementation addresses the who, where, when, and how.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Moderate
178) Define marketing planning. What are the contents of a marketing plan?
Answer: Marketing planning involves choosing marketing strategies that will help the
company attain its overall strategic objectives. A detailed marketing plan is needed for each
business, product, or brand.
The major contents of a marketing plan are:
1. Executive summary
2. Current marketing situation
3. Threats and opportunities analysis
4. Objectives and issues
5. Marketing strategy
6. Action programs
7. Budgets
8. Controls
AACSB: Written and oral communication
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Moderate
52
179) Describe the most common forms of marketing organizations.
Answer: Modern marketing departments can be arranged in several ways.
1. The most common form of marketing organization is the functional organization. Under this
organization, different marketing activities are headed by a functional specialist—a sales
manager, an advertising manager, a marketing research manager, a customer service manager,
or a new product manager.
2. A company that sells across the country or internationally often uses a geographic
organization. Its sales and marketing people are assigned to specific countries, regions, and
districts. Geographic organization allows salespeople to settle into a territory, get to know their
customers, and work with a minimum of travel time and cost.
3. Companies with many very different products or brands often create a product management
organization. Using this approach, a product manager develops and implements a complete
strategy and marketing program for a specific product or brand.
4. For companies that sell one product line to many different types of markets and customers
who have different needs and preferences, a market or customer management organization
might be best. A market management organization is similar to the product management
organization.
Large companies that produce many different products flowing into many different geographic
and customer markets usually employ some combination of the functional, geographic, product,
and market organization forms.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Moderate
180) What does marketing ROI measure?
Answer: Marketing ROI measures the profits generated by investments in marketing activities.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Easy
53
181) How do marketers measure return on marketing investment? Why is this figure difficult to
assess?
Answer: Marketing ROI (return on investment) is the net return from a marketing investment
divided by the costs of the marketing investment. It measures the profits generated by
investments in marketing activities. Marketing ROI can be difficult to measure. In measuring
financial ROI, both the "R" and the "I" are uniformly measured in dollars. As of yet, however,
there is no consistent definition of marketing ROI. For instance, returns like advertising and
brand-building impact aren't easily put into dollar returns.
Increasingly, however, beyond standard performance measures, marketers are using customercentered measures of marketing impact, such as customer acquisition, customer retention,
customer lifetime value, and customer equity. These measures capture not only current
marketing performance but also future performance resulting from stronger customer
relationships.
AACSB: Application of knowledge; Analytical thinking
Skill: Concept
Objective: LO 2.5: List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing marketing return on
investment.
Difficulty: Moderate
54
Principles of Marketing, 17e (Kotler/Armstrong)
Chapter 3 Analyzing the Marketing Environment
1) Dan has been directed to study the forces close to a company that affect its ability to serve its
customers, such as the company, suppliers, marketing intermediaries, customer markets,
competitors, and publics. In this instance, Dan has been directed to study the
of the
company.
A) macroenvironment
B) microenvironment
C) technological environment
D) demographic environment
E) political environment
2) Which of the following terms is used to describe the actors and forces outside marketing that
affect marketing management's ability to build and maintain successful relationships with target
customers?
A) marketing environment
B) marketing orientation
C) strategic planning
D) target markets
E) marketing mix
3) Which of the following is a component of a firm's microenvironment?
A) customer demographics
B) economic recessions
C) population shifts
D) marketing intermediaries
E) technological changes
4) Sam has been directed to study the demographic, economic, political, and cultural forces that
affect an organization. In this instance, Sam has been directed to study the
of the
organization.
A) macroenvironment
B) microenvironment
C) internal environment
D) marketing mix
E) marketing intermediaries
5) The interrelated departments within a company that influence marketing decisions form the
environment.
A) cultural
B) economic
C) company
D) political
E) technological
6) Which is NOT part of the company environment that influences marketing decisions?
A) accounting
B) engineering
55
C) manufacturing
D) sales
E) retailers
7)
provide the resources needed by a company to produce its goods and services.
A) Retailers
B) Marketing services agencies
C) Resellers
D) Suppliers
E) Financial intermediaries
8) Sparex Inc. is a manufacturer of metal bolts that are used by Boilex Inc. to manufacture
heavy machineries. In this instance, Sparex acts as a
.
A) financial intermediary
B) supplier
C) retailer
D) customer
E) local public
9) Jonathan works for a firm that assists companies in promoting, distributing, and selling their
products to end consumers. The firm Jonathan works for is a
.
A) licensor
B) supplier
C) marketing intermediary
D) local public
E) general public
10)
help companies stock and move goods from their points of origin to their
destinations.
A) Retailers
B) Physical distribution firms
C) Marketing services agencies
D) Resellers
E) Suppliers
11)
include banks, credit companies, insurance companies, and other businesses that
help insure against the risks associated with the buying and selling of goods.
A) Financial intermediaries
B) Physical distribution firms
C) Resellers
D) Marketing services agencies
E) Wholesalers
12) Maria works for Sigma Inc., a firm that helps companies target and promote their products
to the right markets. Sigma is most likely a
.
A) financial intermediary
B) physical distribution firm
C) marketing services agency
D) reseller
E) wholesaler
56
13) LandPort Transportation and Omega Warehousing help companies move and stock goods
from their manufacturing plants to their destinations. These two businesses are examples of
.
A) resellers
B) marketing services agencies
C) financial intermediaries
D) physical distribution firms
E) wholesalers
14) Boxes, Inc. sells products to end users or to other companies that will sell to end users.
Boxes, Inc. is a
.
A) reseller
B) marketing services agencies
C) financial intermediaries
D) physical distribution firms
E) wholesalers
15) Which of the following groups influences the company's ability to obtain funds?
A) financial publics
B) local publics
C) general publics
D) citizen-action publics
E) internal publics
16) Which of the following is true with regard to media publics?
A) The primary function of this group is to protect the interests of minority groups.
B) This group carries news, features, and editorial opinion.
C) The primary function of this group is to critique the marketing decisions of companies.
D) This group includes neighborhood residents and community organizations.
E) This group directly influences the company's ability to obtain funds.
17) Companies can succeed against their competitors by all of the following EXCEPT
.
A) providing greater customer value and satisfaction
B) better meeting the needs of target customers
C) positioning their offerings strongly against competitors' offerings in the minds of consumers
D) considering their own size and position compared to the competition
E) providing the same product as the competition
18) A company's marketing decisions may be questioned by consumer organizations,
environmental groups, minority groups, and others. These organizations and groups are also
known as
.
A) media publics
B) marketing intermediaries
C) customers
D) citizen-action publics
E) internal publics
57
19) A consumer organization in Ohio has challenged the marketing decision of a local firm
alleging it to be against the larger social interest. In this instance, the firm is challenged by a(n)
public.
A) internal
B) general
C) government
D) citizen-action
E) media
20) Which group includes neighborhood residents and community organizations?
A) local publics
B) government publics
C) internal publics
D) citizen-action publics
E) media publics
21) Cape Sky Inc., an international insurance and financial services company, is the primary
sponsor of the annual New York City Marathon, which is attended by over one million fans and
watched by approximately 300 million viewers worldwide. The Cape Sky logo and name are
displayed throughout the racecourse. Cape Sky most likely sponsors this event in order to
appeal to which of the following types of publics?
A) financial publics
B) citizen-action publics
C) government publics
D) general publics
E) internal publics
22) Workers, managers, and members of the board are examples of
publics.
A) general
B) internal
C) local
D) citizen-action
E) media
23) Price & Malone Corp., a company based in Houston, caters to a market of individuals and
households that buy goods and services for personal consumption. Price & Malone caters to a
market.
A) business
B) reseller
C) government
D) consumer
E) wholesale
24)
markets buy goods and services for further processing.
A) Business
B) Reseller
C) Wholesale
D) Consumer
E) Retail
58
25) Government markets consist of government agencies that buy goods and services
.
A) to produce public services
B) to resell at a profit
C) for further processing
D) for personal consumption
E) that are generally of poor quality
26) Rachel works for a furniture company in Ireland. She is responsible for buying and selling
goods at a profit to small retailers. Rachel most likely operates in a
market.
A) business
B) reseller
C) wholesale
D) consumer
E) retail
27) Sparks Inc. has a growing
market in the United States consisting of individuals
and households that buy Sparks' products for personal use.
A) consumer
B) government
C) business
D) international
E) financial
Refer to the scenario below to answer the following question(s).
Casey Brickly opened The Landing, a convenience store on the north shore of Witmer Lake, in
1962. With a sandwich counter on one side and a bait shop and grocery on the other, The
Landing was an immediate hit with weekend lake visitors and local residents alike. In the
summer, boaters parked at the piers and bought all their fishing needs, such as rods and reels,
bait, snacks, and soft drinks at The Landing. Even during the winter months, snowmobilers and
ice fishermen were lured to The Landing for snacks and hot coffee or hot chocolate.
As time passed, the business changed and grew tremendously. What was formerly a weekend
tourist area gradually became a full-fledged residential area. Many of the houses, which were
built as cottages in the 1950s and 1960s, were remodeled into residential homes. By the end of
the 1970s, the days of small motorboats and 10 mile-per-hour speed limits were gone; skiing
and fast speedboats became the rage. Through it all, The Landing continued to attract flocks of
patrons.
In the 1980s, however, Casey started to realize that the grocery area in The Landing could not
compete with larger local retailers. He eventually enlarged the sandwich counter, transforming
the bait shop and grocery into a restaurant with a full menu typical of any diner. "Getting rid of
the bait shop was hard to do," Casey admitted. "I still had a summer crowd that relied on us for
their fishing needs, but we couldn't survive a whole year on four months of profit."
In the early 2000s, the atmosphere of Witmer Lake and the neighboring lakes became upscale.
"I could see that people were spending more on their speed boats than what they had originally
paid for their cottages!" Casey exclaimed. Many of the cottages were inherited by children and
59
grandchildren of the original owners. Once again, the scene started to change as many of the
lake houses were used only as weekend lake homes. Unlike the previous generation, a vast
number of the current owners could afford to live closer to their jobs while maintaining lake
homes. "At this point, business wasn't growing," Casey said.
As local competition continued to increase, Casey converted the diner of The Landing into a
bar with a lounge area. "The change might have been too drastic," Casey said, "but it was the
only way we could maintain a strong, year-round business in spite of the population shifts and
competitive forces."
28) Which of the following microenvironment actors has had the most influence on The
Landing?
A) competitors
B) suppliers
C) marketing intermediaries
D) resellers
E) citizen-action publics
29) The microenvironment consists of larger societal forces that affect a company, such as
demographic, economic, political, and cultural forces.
30) The macroenvironment consists of the factors close to the company that affect its ability to
serve its customers, such as suppliers, customer markets, competitors, and publics.
31) Marketing success requires building relationships with other company departments,
suppliers, marketing intermediaries, competitors, various publics, and customers, which
combine to make up the company's value delivery network.
32) A company's marketing environment excludes the forces outside the marketing department
that affect marketing management's ability to build and maintain successful relationships with
target customers.
33) Marketing services agencies are the marketing research firms, advertising agencies, media
firms, and marketing consulting firms that help the company target and promote its products to
the right markets.
60
34) Local publics include consumer organizations, environmental groups, minority groups, and
others.
35) The aim of the entire value delivery network is to serve target customers and create strong
relationships with them.
36) Business markets buy goods and services for further processing or for use in their
production processes.
37) Trudie Jones works for a distribution channel firm that helps several electronics companies
find customers or make sales to them. Trudie works for a reseller.
38) A business's suppliers are the most important actors in the company's microenvironment.
39) Companies that watch variables such as income, cost of living, and interest rates, are more
likely to be negatively affected by an economic change such as a recession or boom.
40) Government agencies such as the Food and Drug Administration and the Consumer Product
Safety Commission investigate and ban potentially unsafe products. Regulations created by
these and other agencies result in higher research costs and longer times between new product
ideas and their introduction.
41) A trend has been people's growing mastery over nature through technology and the belief
that nature is bountiful, but also the realization that it is finite and fragile.
42) Marketing management can control environmental forces. A reactive approach is, therefore,
the most beneficial approach to the marketing environment.
43) How have large retailers such as Walmart changed the dynamics of partnering with
resellers?
44) Who are the major players in a company's microenvironment? Explain the role that each
actor plays.
45) What are marketing intermediaries and what are the various types?
46) What is a "public" in terms of the marketing environment? In a short essay, briefly describe
the different types of publics that marketers must consider and explain how marketing might
communicate with these publics.
47) The marketing team of 7 Star Inc., a company manufacturing smartphones, is currently
studying the size, density, location, age, and occupation of its target market. Which of the
following environments is being studied in this scenario?
A) demographic environment
B) political environment
C) economic environment
D) technological environment
E) cultural environment
48) The single most important demographic trend in the United States is the
61
.
A) changing age structure of the population
B) mobility of families
C) changing family structure of the population
D) increasing number of professional jobs
E) increasing birth rate
49) Among the generational groups in U.S population, the
are still the wealthiest
generation in U.S. history.
A) baby boomers
B) Generation Xers
C) Millennials
D) echo boomers
E) Silent Generation
50) Which of the following is true of the baby boomers?
A) They tend to see themselves as far older than they actually are.
B) They represent a rapidly shrinking market for new housing and home remodeling.
C) They are long past their peak earning and spending years.
D) They control an estimated 70 percent of the United States' disposable income.
E) They have utter fluency and comfort with digital technology.
51) Which of the following is true of Gen Xers?
A) They are considerably larger than the boomer generation.
B) They were the first to grow up in the Internet era.
C) They are less educated than the baby boomers.
D) They are more materialistic than the Millennials.
E) They rarely research a product before purchasing it.
52) Which of the following generations is the most educated to date?
A) Lost Generation
B) Baby boomers
C) Millennials
D) Generation X
E) Silent Generation
53) Mary Adams is helping her company develop a marketing program for a new product line.
The program is designed to appeal most to less materialistic consumer groups who are likely to
prize experience, not acquisition. The marketing program is most likely designed to appeal to
which of the following demographic groups?
A) Generation X
B) Millennials
C) Echo Boomers
D) Silent Generation
E) Lost Generation
54) Which of the following is true of the Millennials?
A) They are the children of baby boomers and were born between 1977 and 2000.
B) They control an estimated 70 percent of the disposable income in the United States.
C) They have reached their peak earning and spending years.
D) They were the first to grow up in the Internet era.
62
E) They are less immersed in technology than Gen Xers.
55) Which of the following generational groups is most comfortable with digital technology
and embraces that technology?
A) Generation X
B) Millennials
C) Baby Boomers
D) Silent Generation
E) Lost Generation
56) Wholesome Soups, a maker of organic soups, is starting a new marketing campaign
emphasizing the ease of preparing and eating Wholesome Soups. Print, television, and Internet
ads feature college students enjoying Wholesome Soups in between classes and during study
breaks. Wholesome Soups' new marketing campaign is most likely aimed at which of the
following?
A) Baby Boomers
B) Gen Zers
C) Gen Xers
D) Millennials
E) the SOHO market
57) Marketers target Generation Z because they
.
A) listen to their parents and follow their examples
B) dislike technology
C) spend an estimated $44 billion annually of their own money
D) prefer shopping in brick-and-mortar stores with actual products
E) have long attention spans and are easily targeted
58) Gen Zers are highly mobile, connected, and social. They base their purchases on
A) input from their friends
B) text messages
C) social media ratings
D) product research on their own
E) their parents' opinions
59) Marketers can group people in a number of ways, including by birth date. However, the
following combination of groups has proven to be more effective:
.
A) income, lifestyle, life stage
B) profession, common values they seek in products they buy, lifestyle
C) lifestyle, life stage, common values they seek in products they buy
D) place of residence, life stage, lifestyle
E) race or nationality, lifestyle, common values they seek in products they buy
60) Which of the following is a trend that depicts the increasingly nontraditional nature of
today's American families?
A) the low percentage of working women in the workforce
B) the low percentage of married couples with children
C) the sharply declining number of dual-income families
D) the sharply declining number of stay-at-home dads
E) the decreasing reliance on convenience foods and services
63
.
64
61) In the context of geographical shifts in population, the migration towardhas resulted in a rapid
increase in the number of people who telecommute.
A) urban
B) remote
C) rural
D) metropolitan
E) micropolitan
areas
62) Over the past two decades, the U.S. population has shifted toward the
A) Northern
B) Northeast
C) Sunbelt
D) Midwest
E) Corn belt
states.
63) Which of the following has lost population in the past two decades?
A) California
B) Florida
C) the Western states
D) the Northeast states
E) the Southern states
64) In the 1950s, Americans made a massive exit
.
A) from the South to the Northeast
B) from the West to the Midwest
C) to foreign countries
D) from the cities to the suburbs
E) from the coastal towns to the cities
65) An increasing number of American workers currently work from their homes or remote
offices and conduct their business by phone or the Internet. This trend has created a
A) booming real estate market in the big cities
B) booming SOHO market
C) decline in the demand for convenience foods
D) decline in the demand for financial services
E) steady increase in global enterprises
66) Which of the following demographic trends is the most likely cause for a rapid increase in
telecommuting?
A) the migration toward micropolitan and suburban areas
B) the migration from rural to metropolitan areas
C) the increasing number of traditional households
D) the growing percentage of married couples who do not have children
E) the declining number of manufacturing workers in today's workforce
67) Micropolitan areas are
.
A) likely to have a higher crime rate than metropolitan areas
B) less likely to attract telecommuters
C) likely to offer the same advantages as metropolitan areas
65
.
D) less likely to offer market expansion opportunities
E) generally unattractive to niche marketers
68) In the United States, job growth currently is the weakest for
A) white collar workers
B) manufacturing workers
C) salespeople
D) telecommuters
E) professional workers
69) Currently, in the United States, job growth is the strongest for
A) blue collar workers
B) manufacturing workers
C) professional workers
D) construction workers
E) sanitation workers
.
.
70) Which of the following is an accurate statement about the diversity of the American
population?
A) African Americans represent the largest non-white segment of the population.
B) More than 20 percent of the people living in the United States were born in another country.
C) By 2050, the Asian population is estimated to remain at 4.7 percent.
D) By 2060, Hispanics are estimated to be 28 percent of the population.
E) The United States has become more of a "melting pot" than a "salad bowl."
71) By 2060,
will be an estimated 14 percent of the U.S. population.
A) African Americans
B) Asians
C) Hispanics
D) Native Americans
E) Native Hawaiians
72) Which of the following situations is expected to enhance the use of targeted advertising
messages by marketers?
A) increase in derived demand in the market
B) increase in ethnic populations
C) rising global inflation rates
D) inadequate quality control
E) low advertising budgets
73) With an expected increase in ethnic diversity within the American population, marketers are
most likely to place a greater emphasis on
.
A) geographic segmentation
B) targeted advertising messages
C) mass marketing
D) "do well by doing good" missions
E) corporate giving
66
74) Soon-Yi Park's chain of travel agencies has identified the lesbian, gay, bisexual, and
transgender community as a growing market that spends an increasing percentage of its income
on travel. Which of the following would be the LEAST effective component of a marketing
plan for Soon-Yi to take advantage of this opportunity?
A) develop a presence on LGBT-oriented social networking sites
B) position his agency as focused on specialized experiences
C) implement a mass marketing campaign
D) place specially targeted ads in gay-themed publications
E) advertise on LOGO, the cable television network aimed at gays and lesbians and their
friends and family
75) Which of the following is true with regard to the diversity segment of U.S. adults with
disabilities?
A) Most individuals with disabilities are active consumers.
B) The market represented by U.S. adults with disabilities is smaller than that represented by
African Americans or Hispanics.
C) The diversity segment, U.S. adults with disabilities, is a rather unattractive segment for the
tourism industry.
D) The annual spending power of U.S. adults with disabilities is less than $100 billion.
E) Most companies are reluctant to reach out to consumers with disabilities.
76) The economic environment consists of economic factors that affect
A) cultural patterns of communities
B) entrepreneurial orientation of a population
C) the quality of technological innovation
D) consumer purchasing power
E) the natural environment
77) Consumers' spending patterns since the Great Recession include
A) spending freely, without caution
B) buying less and looking for greater value in what they buy
C) amassing record levels of debt
D) experiencing rapid increases in housing values
E) participating in a booming stock market
.
.
78) Which of the following is an accurate statement about the income distribution of the
American population?
A) The top 20 percent of earners achieves 68 percent of the country's adjusted gross income.
B) The bottom 40 percent of earners captures just 11 percent of total income.
C) The top 5 percent of American earners captures 18 percent of all income.
D) The distribution of income allows most companies to target earners of all income levels.
E) Changes in income and interest rates minimally impact spending patterns.
79) A value marketer is most likely to
.
A) offer consumers superior quality of goods and services at a very high price
B) offer consumers only those products that are associated with status and prestige
C) offer consumers low quality goods and services at very low prices
D) offer consumers a balanced combination of product quality at a fair price
E) deny discounts to consumers to increase profits
67
80) Which of the following statements about income distribution in the United States is NOT
true?
A) Over the past several decades, the rich have grown richer.
B) Over the past several decades, the middle class has grown faster than other classes.
C) Over the past several decades, the poor have remained poor.
D) The top 20 percent of earners capture over 50 percent of all income.
E) The top five percent of American earners get nearly 22 percent of the country's adjusted
gross income.
Refer to the scenario below to answer the following question(s).
Casey Brickly opened The Landing, a convenience store on the north shore of Witmer Lake, in
1962. With a sandwich counter on one side and a bait shop and grocery on the other, The
Landing was an immediate hit with weekend lake visitors and local residents alike. In the
summer, boaters parked at the piers and bought all their fishing needs, such as rods and reels,
bait, snacks, and soft drinks at The Landing. Even during the winter months, snowmobilers and
ice fishermen were lured to The Landing for snacks and hot coffee or hot chocolate.
As time passed, the business changed and grew tremendously. What was formerly a weekend
tourist area gradually became a full-fledged residential area. Many of the houses, which were
built as cottages in the 1950s and 1960s, were remodeled into residential homes. By the end of
the 1970s, the days of small motorboats and 10 mile-per-hour speed limits were gone; skiing
and fast speedboats became the rage. Through it all, The Landing continued to attract flocks of
patrons.
In the 1980s, however, Casey started to realize that the grocery area in The Landing could not
compete with larger local retailers. He eventually enlarged the sandwich counter, transforming
the bait shop and grocery into a restaurant with a full menu typical of any diner. "Getting rid of
the bait shop was hard to do," Casey admitted. "I still had a summer crowd that relied on us for
their fishing needs, but we couldn't survive a whole year on four months of profit."
In the early 2000s, the atmosphere of Witmer Lake and the neighboring lakes became upscale.
"I could see that people were spending more on their speed boats than what they had originally
paid for their cottages!" Casey exclaimed. Many of the cottages were inherited by children and
grandchildren of the original owners. Once again, the scene started to change as many of the
lake houses were used only as weekend lake homes. Unlike the previous generation, a vast
number of the current owners could afford to live closer to their jobs while maintaining lake
homes. "At this point, business wasn't growing," Casey said.
As local competition continued to increase, Casey converted the diner of The Landing into a
bar with a lounge area. "The change might have been too drastic," Casey said, "but it was the
only way we could maintain a strong, year-round business in spite of the population shifts and
competitive forces."
81) Which of the following is the macroenvironmental force that has had the greatest effect on
The Landing?
A) the demographic environment
B) the technological environment
C) marketing intermediaries
D) the political environment
68
E) citizen-action publics
82) Which of the following generational groups is most likely to represent the present owners
of cottages surrounding Witmer Lake?
A) Baby Boomers
B) Echo Boomers
C) Gen Xers
D) Lost Generation
E) Millennials
83) The demographic environment is of major interest to marketers because it involves people,
and people make up markets.
84) The single most important demographic trend in the United States that marketers should
understand is the changing family structure of the population.
85) As baby boomers reach their peak earning and spending years, they become lucrative
markets for financial services, travel, and entertainment.
86) Millennials comprise the most financially affluent group in America today.
87) The Gen Xers are increasingly displacing the lifestyles, culture, and values of the baby
boomers.
88) Millennials represent a larger demographic segment than the baby boomers or Gen Xers.
89) Marketers must increasingly consider the special needs of traditional households because
this segment of the population is growing more rapidly than nontraditional households.
90) The American workforce today is less white-collar than in the late twentieth century.
91) Companies in several industries have recognized the buying power of the LGBT segment of
the U.S. population and have begun explicitly targeting these consumers with gay-specific ads
and marketing efforts.
92) Prior to the Great Recession of 2008/2009, American consumer spending was careful and
restrained.
93) What are two potential drawbacks of creating separate products and marketing programs for
each generation?
94) Briefly explain why, until 2008, Americans amassed record amounts of debt and why the
free-spending trend has ended.
95) Why do marketers find baby boomers attractive?
Answer: Today's baby boomers account for about 26 percent of the U.S. population but control
an estimated 70 percent of the nation's disposable income.
96) How can marketers reach the Millennials effectively?
97) How can marketers reach the Generation Zers effectively?
69
98) What structure can an American family have now, as the traditional family has changed?
99) Why do population shifts interest marketers?
100) In terms of ethnic and racial makeup, why is the United States today more accurately
characterized as a "salad bowl" than a "melting pot"?
101) What is demography? Why is the demographic environment of major interest to
marketers? Discuss the changing age structure of the U.S. population.
102) Explain the impact of the baby boomers, Generation Xers, Millennials, and Generation
Zers on today's marketing strategies.
103) The physical environment affecting marketing activities is referred to as the
environment.
A) economic
B) natural
C) cultural
D) political
E) social
104) The environmental sustainability movement encourages companies to
A) actively resist social change
B) operate freely in the black market
C) go beyond government regulations
D) institute deregulation
E) curb organizational anarchy
.
105) As a consequence of the concern for the natural environment, many companies are
developing strategies and practices that support
.
A) government intervention
B) environmental sustainability
C) deregulation
D) mass marketing
E) rapid exploitation of natural resources
106) A firm dumping chemical wastes in the local lake is
.
A) actively resisting social change
B) contributing to organizational anarchy
C) engaging in a "do well by doing good" mission
D) adopting a proactive stance toward the marketing environment
E) contributing to increased pollution
107) New technologies most likely lead to
.
A) economic imbalance in society
B) reduced exports
C) trade deficits
D) an increased demand for unskilled labor
E) new markets and opportunities
108) Many firms today use RFID technology to
.
A) identify new target markets
B) analyze threats and opportunities in the macroenvironment
70
C) move toward environmental sustainability
D) track products through various points in the distribution channel
E) track patterns of online consumer behavior
109) Many companies use RFID product labels on their goods, which exemplifies the
environment in business.
A) natural
B) political
C) economic
D) demographic
E) technological
110) Which of the following is most likely a result of regulations set up by the Food and Drug
Administration and the Consumer Product Safety Commission?
A) The time between new product ideas and their introduction to the market has decreased.
B) Annual spending on research and development has decreased.
C) Research costs for companies have risen.
D) Product innovation has significantly declined.
E) Marketers have grown increasingly apathetic toward meeting safety standards.
111) Trends in the natural environment include all of the following EXCEPT
A) increased government intervention
B) the development of an environmental sustainability movement
C) increased pollution
D) decreased costs of product development
E) shortages of raw materials
.
112) Which of the following is a true statement about the benefits of RFID technology?
A) It allows firms to track products and customers at various points in the distribution channel.
B) The chips are used to track shipments but not individual items.
C) The chips do not risk invading people's privacy.
D) Sharing of data decreases the buying experience for consumers.
E) The technology will be available for the foreseeable future, allowing companies to fully
invest in its capabilities.
113) Regulations force companies to be responsible. However, most companies want to be
responsible. Impacts of government regulations include all of the following EXCEPT
.
A) informing the public that products are safe
B) higher research costs
C) increased sales because they have been found to be safe
D) penalties to companies that fail to meet the regulations
E) longer times between new product ideas and their introduction
Refer to the scenario below to answer the following question(s).
Casey Brickly opened The Landing, a convenience store on the north shore of Witmer Lake, in
1962. With a sandwich counter on one side and a bait shop and grocery on the other, The
Landing was an immediate hit with weekend lake visitors and local residents alike. In the
summer, boaters parked at the piers and bought all their fishing needs, such as rods and reels,
bait, snacks, and soft drinks at The Landing. Even during the winter months, snowmobilers and
71
ice fishermen were lured to The Landing for snacks and hot coffee or hot chocolate.
As time passed, the business changed and grew tremendously. What was formerly a weekend
tourist area gradually became a full-fledged residential area. Many of the houses, which were
built as cottages in the 1950s and 1960s, were remodeled into residential homes. By the end of
the 1970s, the days of small motorboats and 10 mile-per-hour speed limits were gone; skiing
and fast speedboats became the rage. Through it all, The Landing continued to attract flocks of
patrons.
In the 1980s, however, Casey started to realize that the grocery area in The Landing could not
compete with larger local retailers. He eventually enlarged the sandwich counter, transforming
the bait shop and grocery into a restaurant with a full menu typical of any diner. "Getting rid of
the bait shop was hard to do," Casey admitted. "I still had a summer crowd that relied on us for
their fishing needs, but we couldn't survive a whole year on four months of profit."
In the early 2000s, the atmosphere of Witmer Lake and the neighboring lakes became upscale.
"I could see that people were spending more on their speed boats than what they had originally
paid for their cottages!" Casey exclaimed. Many of the cottages were inherited by children and
grandchildren of the original owners. Once again, the scene started to change as many of the
lake houses were used only as weekend lake homes. Unlike the previous generation, a vast
number of the current owners could afford to live closer to their jobs while maintaining lake
homes. "At this point, business wasn't growing," Casey said.
As local competition continued to increase, Casey converted the diner of The Landing into a
bar with a lounge area. "The change might have been too drastic," Casey said, "but it was the
only way we could maintain a strong, year-round business in spite of the population shifts and
competitive forces."
114) Which of the following is the macroenvironmental force that benefitted The Landing the
most?
A) the legal environment
B) the natural environment
C) the economic environment
D) the political environment
E) the technological environment
115) Environmental sustainability concerns have declined steadily over the past three decades.
116) The technological environment is predominantly static.
117) The introduction of new technologies is equally beneficial to all industries.
118) How can marketers benefit from developing solutions to environmental problems, such as
pollution and raw material shortages?
119) What are the major trends in today's natural environment? How do these trends affect
companies?
120) Why is the technological environment such a dramatic force in today's market?
121) The
prohibits monopolies and activities (price-fixing, predatory pricing) that
restrain trade or competition in interstate commerce.
72
A) Sherman Antitrust Act
B) Lanham Trademark Act
C) Fair Packaging and Labeling Act
D) CAN-SPAM Act
E) Magnuson-Moss Warranty Act
122) The
limits the number of commercials aired during children's programs.
A) Children's Online Privacy Protection Act
B) Child Protection Act
C) Fair Packaging and Labeling Act
D) Children's Television Act
E) Consumer Product Safety Act
123) The
environment consists of laws, government agencies, and pressure groups
that influence or limit various organizations and individuals in a given society.
A) socio-legal
B) cultural
C) political
D) technological
E) economic
124) Governments develop public policy to
A) encourage deregulation
B) identify demographic patterns
C) identify cultural patterns
D) guide commerce
E) protect marketers
.
125) Laws in the United States and many other countries have many business-oriented laws
covering issues such as competition, environmental protection, pricing, packaging and labeling,
product safety, truth in advertising, consumer privacy, and
.
A) land ownership
B) taxation
C) fair-trade practices
D) education
E) interdepartmental communication
126) Business legislation is enacted to protect
A) consumers from unfair business practices
B) businesses from unfair attacks by consumers
C) consumers from competition by businesses
D) businesses from achieving unfairly high profits
E) society from profitable business activity
.
127) Laws are passed to define and prevent unfair competition primarily because
A) business executives tend to favor pure monopolies
B) businesses sometimes try to neutralize threatening firms
C) governments in free market economies tend to nationalize ailing firms
D) private lobbying hurts the interests of national and state governments
73
.
E) most multinational entities in advanced economies are averse to invest in emerging markets
128) Funco Inc., a toy manufacturer, sold plastic racing cars that were manufactured with toxic
materials, which threatened the health of several children. Which purpose of government
regulation to protect consumers is involved?
A) misleading customers in their advertising
B) deceiving consumers through their packaging
C) making shoddy products
D) deceiving consumers through their pricing
E) invading consumer privacy
129) A company or association's
is designed to help guide responses to complex
social responsibility issues.
A) code of ethics
B) marketing plan
C) non-disclosure policy
D) privacy policy
E) non-compete clause
130) The boom in Internet marketing has created a new set of social and ethical issues. Critics
worry most about
.
A) accessibility
B) puffery in advertising
C) online privacy issues
D) sustainability
E) issues pertaining to efficiency
131) Cause-related marketing has become a primary form of
.
A) quality control
B) corporate fraud protection
C) corporate giving
D) legislative lobbying
E) price discrimination
132) A regional supermarket chain runs print, radio, and television advertisements announcing
that 1 percent of its sales is donated to local after-school programs for underprivileged youth.
This is an example of
.
A) cause-related marketing
B) generational marketing
C) sustainable marketing
D) market segmentation
E) product differentiation
133) The
environment consists of institutions and other forces that affect a society's
basic values, perceptions, preferences, and behaviors.
A) social
B) cultural
C) political
D) physical
E) natural
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134) Marketers should understand that people's core beliefs and values tend to be
.
A) fixed
B) highly flexible
C) similar around the world
D) constantly and rapidly changing
E) easily influenced by secondary beliefs
135) Babita Singh, a 51-year-old schoolteacher from Los Angeles, believes that people should
choose a profession they like, which is an example of Babita's
.
A) secondary belief
B) core belief
C) core value
D) work ethic
E) moral code
136) A pastor from Kansas believes that adultery is immoral. This refers to the pastor's
.
A) secondary belief
B) acquired belief
C) social identity
D) core belief
E) cultural orientation
137) Mercury Inc., an American multinational corporation, is currently planning to enter the
promising consumer goods market in India. The firm will most likely discover that
beliefs and values are more open to change in India.
A) inherited
B) secondary
C) primary
D) core
E) traditional
138) A society's
are expressed in how people view themselves and others,
organizations, society, nature, and the universe.
A) social codes
B) cultural values
C) demographics
D) public policies
E) norms
139) Which of the following is most likely true with regard to people's views of organizations
in contemporary America?
A) In the American workplace, there has been an overall increase in organizational loyalty.
B) Most Americans are confident in their employers and are unlikely to switch jobs as
frequently as in the past.
C) The past two decades have seen a sharp decrease in confidence in and loyalty toward
America's business organizations.
D) Most U.S. workers view work as a source of personal satisfaction and organizational pride.
E) In the last decade, corporate scandals and layoffs had little impact on people's confidence in
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U.S. firms.
140) People vary in their attitudes toward their society—while
defend it, malcontents
want to leave it.
A) reformers
B) patriots
C) activists
D) environmentalists
E) historical revisionists
141) Which of the following is a potential downside to using patriotic themes in marketing
programs?
A) Consumers rarely respond to patriotic marketing messages in a favorable manner.
B) A consumer's societal orientation has no visible impact on product consumption.
C) Patriotism could be viewed as an attempt to cash in on the nation's emotions.
D) Patriotic Americans may have less disposable income than reformers.
E) Mass marketing has limited appeal among patriotic Millennials.
142) Consumers in the "lifestyles of health and sustainability" market are more likely to seek
.
A) alternative medicine
B) perfumes made from animal products
C) clothing made of fur
D) leather goods
E) foods high in saturated fat
143) The fact that people are dropping out of organized religion doesn't mean that they are
abandoning their faith. Some futurists have noted a renewed interest in
, perhaps as a
part of a broader search for a new inner purpose.
A) interacting with nature
B) the fine arts
C) charitable giving
D) spirituality
E) materialism
144) Josie's FarmFresh creates sustainable, all-natural food products. These products are most
likely to become popular with which group?
A) SOHO
B) environmentally conscious
C) LGBT
D) business
E) Millennials'
145) The popularity of cause-related marketing as a form of corporate giving is rapidly
declining.
146) Secondary beliefs and values are less open to change than core beliefs and values.
147) Explain the controversy surrounding cause-related marketing.
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148) Why is government regulation necessary to protect consumers from unfair business
practices?
149) How do socially responsible firms positively impact consumers and the environment?
150) What is the difference between core beliefs and secondary beliefs? Give an example of
each.
151) What are the different ways in which the major cultural values of a society are expressed?
152) Why is it important for marketers to understand cultural swings?
153) Discuss why business legislation is enacted. Provide examples.
154) What is cause-related marketing? Illustrate with examples.
155) How do people's views of nature affect marketers?
156) Rather than assuming that strategic options are bounded by the current environment, firms
adopting a(n)
to the marketing environment develop strategies to change the
environment.
A) environmental stance
B) proactive stance
C) reactive stance
D) relativist approach
E) no-compromise approach
157) Companies that take a proactive stance toward the marketing environment are most likely
to .
A) develop strategies to change the environment in their favor
B) passively accept the marketing environment
C) resist organizational change
D) discourage innovation
E) consider technological advances more disruptive than beneficial
158) Katrina Mendoza is a senior manager in a manufacturing firm that hires lobbyists to
influence legislation that affects the manufacturing industry. Katrina's firm takes a(n)
stance toward the marketing environment.
A) reactive
B) proactive
C) adversarial
D) passive
E) altruistic
159) Which of the following is most likely influenced by marketers?
A) population shifts
B) core cultural values
C) income distribution
D) ethnic diversity
E) media
160) Companies and their products often create
.
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A) new consumers
B) new technologies
C) new industries and their structures
D) new advertising campaigns
E) new manufacturing methods
161) When a company hires lobbyists to influence legislation affecting its industry, it is taking a
defensive stance toward the marketing environment.
162) In reacting to the marketing environment, what strategies do firms adopt in order to shift
from a reactive to a more proactive stance?
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Principles of Marketing, 17e (Kotler/Armstrong)
Chapter 4 Managing Marketing Information to Gain Customer Insights
1) With the recent explosion of information technologies,
.
A) most marketing managers are overloaded with data and often overwhelmed by it
B) most marketing managers are concerned solely about the duplication of content
C) companies have ceased to feel the need for marketing information systems
D) companies have ceased to maintain internal databases
E) it has become more difficult and expensive to obtain primary data
2) The real value of marketing information lies in how it is used
A) in determining selling prices for products
B) in analyzing budgets
C) in creating advertising campaigns
D) in the customer insights that it provides
E) in introducing a new product to the marketplace
.
3) Brad works with a reputable retailer and leads a team that collects market information from a
wide variety of sources ranging from marketing research studies to monitoring online
conversations where consumers discuss Brad's firm or its products. Brad's team uses this
information to arrive at a better understanding of consumers' behavior and their buying
motives. This, in turn, allows Brad's firm to successfully generate more value for consumers.
Brad leads the
team.
A) product development
B) strategy implementation
C) human resource
D) customer relationship management
E) customer insights
4) The term big data refers to the
generated by today's sophisticated information
generation, collection, storage, and analysis technologies.
A) large reports
B) huge and complex data sets
C) information requests
D) social media contacts
E) e-mail messages
5) Challenges of managing big data include
.
A) determining what information to request
B) investing in appropriate technology
C) hiring enough software engineers
D) properly routing the information after gathering it
E) accessing and sifting through so much data
6) A(n)
consists of people and procedures dedicated to assessing information needs,
developing the needed information, and helping decision makers use the information to
generate and validate actionable customer and market insights.
A) enterprise planning system
B) enterprise information system
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C) marketing information system
D) corporate performance management system
E) geographic information system
7) An MIS is used to
.
A) generate product interest
B) develop marketing plans
C) identify demographic trends
D) assess information needs
E) test hypotheses about cause-and-effect relationships
8) An MIS user should most likely be able to
A) implement new technology
B) increase order requests
C) develop customer insights
D) analyze employee turnover
E) establish short-term objectives
.
9) The market researchers at HoneyCamp Foods gather daily sales data and sort it by product
line and region. With the help of sophisticated tools and techniques, they develop the data
needed by marketing managers to evaluate the market share of the company's different products
and also to gain valuable market insights. This mix of people and procedures at HoneyCamp
Foods that generate actionable marketing insights represents a(n)
.
A) enterprise planning system
B) product mix
C) strategic planning system
D) marketing information system
E) business portfolio
10) With the recent explosion of information technologies, companies are finding it difficult to
generate marketing information in great quantities.
11) The real value of marketing research lies in the customer insights that it provides.
12) With current technology systems, marketers find it simple to access and sift through the
data that is gathered.
13) A management information system assesses information needs, develops needed
information, and helps decision makers use the information.
14) What do marketers gain from gathering and analyzing information about customers and the
needs and motivations of those customers?
15) What is the function of a marketing information system (MIS)?
16) Briefly explain the functions of a customer insights team.
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17) A good marketing information system balances the information users
against what they
and what is
to offer.
A) request; want; affordable
B) demand; should request; time-efficient
C) want; are unaware of; the newest technology
D) would like; need; feasible
E) don't need; can afford; available
18) Costs are involved in obtaining,
A) analyzing
B) interviewing
C) conducting
D) designing
E) reporting
to have
, storing, and delivering information.
19) Kei, a senior marketing manager of a pizzeria in North Florida, is currently researching
electronic collections of consumer information within the company network to arrive at crucial
marketing decisions. In this instance, Kei is using
.
A) ethnographic research
B) internal databases
C) descriptive research
D) data warehouses
E) causal research
20) Information in a company's database can come from many sources. An advantage of
harnessing such information is to
.
A) eliminate employee turnover
B) achieve a high degree of employee empowerment
C) gain competitive advantage
D) gain access to mass markets
E) eliminate resource dependency
21) Which of the following is an advantage of using an internal database?
A) Data always remains current in internal databases.
B) Highly sophisticated equipment and techniques are not required for maintaining internal
databases.
C) Internal databases can be accessed more quickly and cheaply than other information sources.
D) Internal databases require less maintenance efforts.
E) Information obtained from internal databases is almost always sufficient for making
marketing decisions.
22) Which of the following is a disadvantage of using information from internal databases?
A) Obtaining information from internal databases is both time-consuming as well as expensive.
B) It is not possible to verify information obtained from internal databases.
C) Using information from internal databases leads to biased research findings.
D) Internal information may be incomplete or in the wrong form for making marketing
decisions.
E) Internal databases do not support highly sophisticated technologies that make it difficult to
store large volumes of data.
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23) Problems with internal databases include all of the following EXCEPT that
A) data ages quickly
B) the data is in the wrong form for making marketing decisions
C) managing and mining mountains of information requires sophisticated equipment
D) keeping a database current requires major effort
E) information can be accessed more cheaply
.
24)
is the systematic collection and analysis of publicly available information about
consumers, competitors, and developments in the marketing environment.
A) Data warehousing
B) Competitive marketing intelligence
C) SWOT analysis
D) Ethnographic research
E) Customer relationship management
25) The marketing department of a reputable firm wants to improve strategic decision making,
track the actions of other players in the market, and provide early warning of opportunities and
threats. Which of the following would help the firm achieve its objectives?
A) ethnographic research
B) strategic planning
C) data warehousing
D) competitive marketing intelligence
E) customer relationship management
26) Which of the following statements is true regarding competitive marketing intelligence?
A) The advantage of using competitive marketing intelligence is negligible.
B) The goal of competitive marketing intelligence is to improve recruiting efforts.
C) Competitive marketing intelligence relies upon costly internal databases.
D) Competitive marketing intelligence relies upon publicly available information.
E) Companies using competitive marketing intelligence routinely ignore consumers' online
chatter.
27) Which of the following is NOT a method of gathering good marketing intelligence?
A) sending out teams of trained observers to mingle with customers
B) interviewing competitors' employees to learn as much "inside information" as possible
C) setting up digital centers that monitor brand-related online consumer and marketplace
activity
D) purchasing merchandise from competing sites to analyze and compare their assortment,
speed, and service quality
E) searching specific competitor names, events, or trends to see what comes up
28) Which of the following refers to a marketing intelligence technique?
A) interviewing customers randomly
B) increasing the annual budget for R&D
C) investing heavily in primary research
D) implementing product diversification
E) benchmarking competitors' products
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29) Firms use competitive marketing intelligence to
.
A) create and sustain market monopolies
B) counter the adverse effects of organizational anarchy
C) perpetuate organizational learning
D) gain early warnings of competitor moves and strategies
E) strengthen weak ties with industry competitors
Refer to the scenario below to answer the following question(s).
Jason West, owner of A1 Cleaning, started his enterprise in 2001. Jason's primary focus had
been on office cleaning for large corporations. But in recent months, Jason has seen a decline in
demand for his office cleaning services. Surprisingly, the competitive environment appeared
relatively stable with no new competitors. However, Jason knew that office cleaning was a
high-frequency service that is usually performed daily; therefore, competitors must have been
doing something to attract his customers. Building a competitive advantage seemed to be the
only option to offset competition. But as Jason pondered over his dilemma, he realized that
prior to building his competitive advantage he needed to better understand how customers
assessed service quality and what they look for in a superior cleaning service.
Jason developed a research plan. First, he gathered information about his competitors, primarily
through pamphlets and Web sites, as well as through a few phone calls in order to find out
exactly what the competitors offered in their cleaning packages. In addition, Jason obtained
from the Chamber of Commerce an updated list of local corporations. He planned on sending
written questionnaires to them.
Though the list of corporations contained 141 local company names, Jason chose to survey 75
of them. To better understand customer service expectations between both small and large
corporations, Jason divided his surveys into two categories. The survey questions were
designed to extract specific data from respondents with regard to service quality expectations in
correlation to service frequency and price.
Jason awaited the results. Though his primary focus had been on large corporations, he was
flexible and would aim his efforts differently if needed.
30) In this scenario, which of the following is representative of competitive marketing
intelligence?
A) formulating a research plan
B) collecting data about competitors
C) sending mail questionnaires to focus groups
D) creating competitive advantage
E) consolidating core competencies
31) The goal of competitive marketing intelligence is to evaluate and prevent high employee
turnover.
32) External databases are electronic collections of consumer and market information obtained
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from data sources within a company's network.
33) Internal databases usually can be accessed more quickly and cheaply than other information
sources.
34) Data ages quickly.
35) Internal information is almost always sufficient for making marketing decisions.
36) Competitive marketing intelligence is the systematic collection and analysis of
publicly available information about consumers, competitors, and developments in the
marketplace.
37) Competitor intelligence can be collected from people inside the company, such as
executives, engineers, purchasing agents, and the sales force, as well as customers.
38) Marketers can obtain information from internal data and from competitive marketing
intelligence. Compare and contrast the two sources of information.
39) What is the most important characteristic of a good MIS?
40)
is the systematic design, collection, analysis, and reporting of data relevant to a
specific marketing situation facing an organization.
A) Product marketing
B) Strategic planning
C) Marketing research
D) Market segmentation
E) Causal research
41) Which of the following is true with regard to marketing research?
A) The marketing research process depends primarily on sophisticated internal databases.
B) The marketing research process requires assessing macroeconomic forces.
C) Marketing research gives marketers insights into customer motivations.
D) Marketing research eliminates the need for a SWOT analysis.
E) Marketing research is a simple two-step process.
42) Which of the following is the first step in the marketing research process?
A) developing a marketing information system
B) defining the problem and objectives of the study
C) developing the research plan
D) implementing the research plan
E) interpreting and reporting the findings
43) Which of the following is the final step of the marketing research process?
A) developing the research plan
B) implementing the research plan
C) interpreting and reporting the findings
D) selecting a research agency
E) defining the research objectives
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44) The objective of causal research is to
.
A) test hypotheses about cause-and-effect relationships
B) gather preliminary information that will help suggest hypotheses
C) describe things, such as the market potential for a product
D) assign a cause to a seemingly random event
E) predict the effect of a random event on unrelated entities
45) In
research, the objective is to gather preliminary information that will help
define the problem and suggest hypotheses.
A) exploratory
B) statistical
C) causal
D) analytic
E) descriptive
46) The goal of
research is to describe things, such as the market potential for a
product or the demographics and attitudes of consumers who buy the product.
A) exploratory
B) statistical
C) causal
D) analytic
E) descriptive
47) Akira Takano, a marketing manager, is about to test the hypothesis that the sale of a
particular product will increase exponentially if there is a $5 drop in the selling price of the
product. Akira is involved in
research.
A) exploratory
B) descriptive
C) causal
D) constructive
E) ethnographic
48) Which of the following types of research would be best suited for understanding the
attitudes of consumers who buy a particular brand of soft drink?
A) internal research
B) descriptive research
C) causal research
D) exploratory research
E) demographic research
49) Beth Williams works for a marketing research company in Chicago. Her current research
involves finding the market potential for a client's new line of sports apparel. Given her
objective, which of the following types of research is the most suitable for Beth?
A) causal research
B) constructive research
C) statistical research
D) descriptive research
E) exploratory research
50) The research plan
.
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A) provides comprehensive marketing intelligence about competitors
B) outlines sources of existing data and spells out the specific research approaches
C) does not include sampling plans
D) does not include contact methods
E) precedes the definition of research objectives
51) The research plan should be presented in a written proposal. The proposal should include
all of the following EXCEPT
.
A) the predicted results
B) research objectives
C) how the results will help management's decision making
D) estimated research costs
E) the information to be obtained
52) Secondary data consist of
.
A) information collected for the specific purpose at hand
B) data that does not age
C) information that already exists somewhere, having been collected for another purpose
D) information collected from conducting personal, in-depth interviews
E) data that is unreliable and unsuitable for the purpose of making marketing decisions
53) Primary data consist of
.
A) data that does not age
B) data obtained from the public domain
C) information collected for the specific purpose at hand
D) information that already exists somewhere, having been collected for another purpose
E) information that is the least expensive and the easiest to obtain
54) Information collected from Internet search engines is an example of
A) primary
B) secondary
C) binary
D) low-level
E) disposable
55) Commercial online databases are rich sources for obtaining
A) primary data
B) secondary data
C) customer insights
D) low-level data
E) binary data
56) Which of the following is a valid source of secondary data?
A) personal letters and correspondence
B) Internet search engines
C) ethnographic research
D) direct surveys
E) interviews
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data.
.
57) Which of the following is true with regard to gathering secondary data?
A) Gathering secondary data involves costly fees to government agencies.
B) Commercial online databases contain primary rather than secondary data.
C) Internet search engines can be useful sources of relevant secondary data.
D) It is illegal for firms to purchase secondary data from outside suppliers.
E) Secondary data eliminates the need for primary data in most cases.
58) Which of the following is true about secondary data?
A) It is always current and, unlike primary data, it does not have to be updated.
B) Unlike primary data, it can be obtained by using direct surveys and questionnaires by the
company.
C) It cannot provide extra information a company is looking for.
D) It can be obtained more quickly and at a lower cost than primary data.
E) It requires more effort compared to gathering primary data.
59) Which of the following is a disadvantage of using secondary data?
A) Secondary data is generally not appropriate for consumer products.
B) Collecting secondary data is time consuming.
C) Few sources exist for secondary data.
D) Gathering secondary data is costly.
E) Relevant secondary data can be difficult to locate.
60) Designing a plan for primary data collection requires decisions on all of the following
EXCEPT
.
A) research instruments
B) contact methods
C) sampling plan
D) research results
E) research approaches
61) A company sent a trained observer to watch and interact with consumers in their natural
environments in order to gain deeper insights on consumer needs. This is an example of
.
A) viral marketing
B) survey research
C) ethnographic research
D) experimental research
E) niche marketing
62)
involves gathering primary data by closely examining relevant people, actions,
and situations.
A) Observational research
B) Survey research
C) Telephone interviewing
D) Causal research
E) Group interviewing
63)
, a form of observational research, involves sending observers to watch and
interact with consumers in their natural environments.
A) Group interviewing
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B) Ethnographic research
C) Survey research
D) Experimental research
E) Causal research
64) Which of the following is true with regard to mail questionnaires?
A) The response rate of mail questionnaires is often very low.
B) Mail questionnaires are highly flexible.
C) The researcher has maximum control over the mail questionnaire sample.
D) Mail questionnaires are unsuitable for collecting large amounts of information about
respondents.
E) Respondents always provide honest answers to personal questions on mail questionnaires.
65) Which of the following is true of ethnographic research?
A) It is a type of experimental research that involves evaluating group responses.
B) It involves sending observers to watch and interact with consumers in their natural
environments.
C) It is a traditional quantitative research approach.
D) Information used in this mode of research is mainly derived from secondary data sources.
E) It is a form of survey research.
66) Observation is best suited for
research.
A) exploratory
B) constructive
C) experimental
D) descriptive
E) survey
67) While looking for ideas on how to craft a user-friendly dishwasher, the designers of a
dishwasher-manufacturing company spent 10 days observing people as they used their
dishwashers in their homes. In this instance, the designers were conducting
.
A) survey research
B) experimental research
C) quantitative marketing research
D) ethnographic research
E) causal research
68)
involves gathering primary data by asking people questions about their
knowledge, attitudes, preferences, or buying behavior. It is the most widely used method for
primary data collection.
A) Experimental research
B) Causal research
C) Ethnographic research
D) Survey research
E) Exploratory research
69) Which of the following is true about survey research?
A) It involves sending observers to watch and interact with consumers in their natural
environments.
B) It is best suited for gathering causal information.
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C) It involves selecting matched groups of subjects, giving them different treatments,
controlling related factors, and checking for differences in group responses.
D) The level of flexibility in survey research is lower than most other research methodologies.
E) Survey research is the most widely used method for primary data collection.
70) Juanita Petino, a nutritionist, decided to test the effects of two breakfast cereals, Kinglo and
Loopy, on different consumer groups. For the purpose of her study, she divided 20 volunteers
into two groups and asked the members of one group to have Kinglo cereal and the members of
the other group to have Loopy cereal for breakfast. She decided to compare the responses of the
volunteers after a week to gain deeper insights into consumer attitude. In this instance, Juanita
is using
.
A) niche marketing
B) experimental research
C) product differentiation
D) ethnographic research
E) viral marketing
71) Which of the following is most likely an advantage of survey research?
A) The flexibility of survey research is high; it can be used to obtain many different kinds of
information in many different situations.
B) Survey research allows researchers to observe respondents closely in their natural
environments.
C) The chances of getting dishonest feedback are almost negligible with survey research.
D) The attitudes and motives of the customers can be easily determined through survey
research.
E) The data gathered in survey research is impartial and free from bias as the surveys are done
in-person to evaluate consumer behavior.
72)
refers to gathering primary data by selecting matched groups of subjects, giving
them different treatments, controlling related factors, and checking for differences in group
responses.
A) Experimental research
B) Constructive research
C) Observational research
D) Survey research
E) Descriptive research
73) Experimental research is best suited for gathering
A) exploratory
B) causal
C) random
D) unstructured
E) descriptive
information.
74) Kinger Burgers came out with a new hamburger and, before including it on its main menu,
released it in two different cities with two different prices. The marketers at Kinger Burgers
then analyzed the different levels of purchase made at these two different places, planning to
use the information to help them set a nationwide price for the new offering. This is an example
of .
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A) ethnographic research
B) descriptive research
C) DIY research
D) experimental research
E) survey research
75) Maria Ramirez is conducting research to determine consumers' personal grooming habits.
Because of the personal nature of many of the survey questions, Maria wants to select the
contact method that is most likely to encourage respondents to answer honestly and that will
allow her to easily collect large amounts of data. Which of the following is best suited to meet
Maria's requirements?
A) mail questionnaires
B) telephone interviews
C) individual interviews
D) focus group interviews
E) immersion group discussions
76) Which of the following contact methods is the most cost-effective?
A) telephone interviews
B) individual interviews
C) in-depth interviews
D) online surveys
E) group interviews
77) Loft Industries sells roof trusses to contractors and builders and is currently looking for
honest feedback on its services. However, in the past, most of its efforts to procure feedback
from customers did not yield any meaningful data. According to the marketing managers of
Loft Industries, feedback was more polite than honest. Which of the following contact methods
should Loft Industries most likely use to maximize its chances of receiving honest and
impersonal feedback?
A) online focus groups
B) telephone interviews
C) mail questionnaires
D) group interviews
E) personal interviews
78) Which of the following is an advantage of telephone interviews?
A) They are more cost-effective than mail questionnaires.
B) Interviewer bias is absent.
C) The quantity of data collected is greater compared to personal interviewing.
D) The speed with which data is collected is high.
E) Response rates tend to be higher than those of mail questionnaires.
79) Which form of marketing research involves talking with people in their homes or offices,
on the street, or in shopping malls?
A) individual interviewing
B) focus-group interviewing
C) telephone interviewing
D) mail questionnaires
E) observational research
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80)
consists of inviting 6 to 10 people to meet with a trained moderator to talk about
a product, service, or organization.
A) Telephone interviewing
B) Individual interviewing
C) A mail questionnaire
D) An online survey
E) Focus group interviewing
81) Redrunners Inc., a manufacturer of sports merchandise, is gathering customer opinions
about the firm's new sports shoe line. A team of researchers in the company invited eight
regular customers to talk about the new line of shoes, asking why they chose to buy the shoe
and what they disliked most about its design. A moderator was present to monitor the
discussion. Which of the following types of contact methods is Redrunners using?
A) individual interviewing
B) mail questionnaire
C) group interviewing
D) mass survey
E) mall intercept
82) Happy Pets, a company manufacturing pet foods and accessories, created a membership
club for its regular customers called "I Love My Pet." This group consists of animal lovers
selected by the company to complete product-related polls, chat with product developers, and
provide feedback about specific products. Which of the following best describes "I Love My
Pet"?
A) primary group
B) immersion group
C) mob
D) dyad
E) triad
83) In a simple random sample,
.
A) every member of the population has a known and equal chance of selection
B) the population is divided into mutually exclusive groups (such as blocks), and the researcher
draws a sample of the groups to interview
C) the researcher selects the easiest population members from which to obtain information
D) the population is divided into mutually exclusive groups and random samples are drawn from
each group
E) the researcher finds and interviews a prescribed number of people in each of several
categories
84) Which of the following is most likely a disadvantage of focus group interviewing?
A) Focus group interviewing does not connect secondary data with primary data.
B) Focus group interviewing is less flexible compared to mail questionnaires.
C) Consumers in focus groups are always open and honest about their real feelings, behaviors,
and intentions in front of other people.
D) Focus group interviewing involves small samples to keep time and costs down, which
makes it hard to generalize from the results.
E) The moderator in a focus group interview has poor control over the group of respondents.
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85) To overcome problems in focus group interviewing, some companies employ small groups
of consumers who interact directly and informally with product designers without a focus group
moderator present. Such groups are known as
.
A) classes
B) consumer guilds
C) virtual communities
D) immersion groups
E) primary groups
86) Jaime Gonzalez owns a small publishing company in Utah and has a very restrictive budget
for the market research he currently needs to conduct. He requires a large sample size for his
research in order to arrive at insightful conclusions. Additionally, he wants to have excellent
control over his sample. Keeping in mind his restrictive budget and other specifications, which
of the following methods of contact would you advise Jaime to use?
A) telephone interviews
B) individual interviews
C) online surveys
D) mail questionnaires
E) focus group interviews
87) Melissa Thomas leads the marketing research division at Tronics Inc., a manufacturing
company based in Alabama. To improve future sales of the company's products, she has
decided to collect customer opinions and feedback on the current products offered by her
company. For this purpose, Melissa is looking for a highly flexible contact method that can be
used to gather large amounts of data within the least possible time. In this instance, which of
the following contact methods is most likely to hold the highest appeal for Melissa?
A) online surveys
B) in-depth interviews
C) telephone interviews
D) individual interviews
E) mail questionnaires
88) Which of the following is true about Internet-based survey research?
A) The effectiveness of Internet-based survey research is invariably affected by the
interviewer's bias.
B) Internet-based survey research is less flexible compared to mail questionnaires.
C) Internet-based survey research is characterized by high speed and low costs.
D) Typically, the quantity of data gathered in Internet-based survey research is low.
E) The response rate of Internet-based survey research is lower than that of mail questionnaires.
89) Which of the following is a disadvantage of online focus groups?
A) Responses are not instantaneous.
B) Controlling the online sample is difficult.
C) Results take a long time to tabulate and analyze.
D) Facility, technology, and travel costs are very high.
E) Researchers are unable to view the sessions in real-time.
90) A(n)
is a segment of the population selected for marketing research to represent
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the population as a whole.
A) focus group
B) immersion group
C) primary group
D) sample
E) secondary group
91) For her current research project, Margaret Rogers wants to select a sample in which every
member has a known and equal chance of selection. In other words, Margaret is looking for a
.
A) simple random sample
B) convenience sample
C) stratified random sample
D) judgment sample
E) quota sample
92) Which of the following refers to a probability sample in which the population is divided
into mutually exclusive groups (such as blocks), and the researcher draws a sample of the
groups to interview?
A) quota sample
B) judgment sample
C) cluster sample
D) stratified random sample
E) simple random sample
93) Which of the following refers to a nonprobability sample in which the researcher selects the
easiest population members from which to obtain information?
A) quota sample
B) judgment sample
C) convenience sample
D) stratified random sample
E) simple random sample
94) Which of the following refers to a nonprobability sample in which the researcher uses his or
her evaluation techniques to select population members who are good prospects for accurate
information?
A) quota sample
B) judgment sample
C) convenience sample
D) stratified random sample
E) simple random sample
95) Which of the following refers to a nonprobability sample in which the researcher finds and
interviews a prescribed number of people in each of several categories?
A) quota sample
B) judgment sample
C) convenience sample
D) stratified random sample
E) simple random sample
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96) In collecting primary data, marketing researchers have a choice of two main research
instruments,
.
A) reference books and journals
B) questionnaires and mechanical devices
C) social networks and internal databases
D) commercial online databases and search engines
E) open-source directories and blogs
97) Which of the following is an example of an open-ended question?
A) How is voting going to help the nation?
B) Do you like driving on the highway?
C) How many children do you have?
D) Would you like to try a sample?
E) Are your friends in town?
98) Which of the following questions is an example of a closed-end question?
A) Why do you think some people are more comfortable taking risks than others?
B) How can I improve my presentation skills?
C) Why do you think a single vote makes a difference?
D) Would you like to try our new ice cream flavor?
E) What is the best way to prevent weeds in a garden?
99) While creating research questionnaires, researchers must particularly AVOID the use of
.
A) biased phrasing
B) simple language
C) closed-end questions
D) logical question arrangement
E) open-ended questions
100)
refers to the measurement of brain activity to learn how consumers feel and
respond.
A) Biometrics
B) Demographics
C) Sampling
D) Neuromarketing
E) Psychographics
101) After a research instrument is selected, the next step in the marketing research process is
to .
A) select a sampling method
B) interpret the research findings
C) implement the research plan
D) evaluate alternatives
E) select a research approach
Refer to the scenario below to answer the following question(s).
Jason West, owner of A1 Cleaning, started his enterprise in 2001. Jason's primary focus had
been on office cleaning for large corporations. But in recent months, Jason has seen a decline in
demand for his office cleaning services. Surprisingly, the competitive environment appeared
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relatively stable with no new competitors. However, Jason knew that office cleaning was a
high-frequency service that is usually performed daily; therefore, competitors must have been
doing something to attract his customers. Building a competitive advantage seemed to be the
only option to offset competition. But as Jason pondered over his dilemma, he realized that
prior to building his competitive advantage he needed to better understand how customers
assessed service quality and what they look for in a superior cleaning service.
Jason developed a research plan. First, he gathered information about his competitors, primarily
through pamphlets and Web sites, as well as through a few phone calls in order to find out
exactly what the competitors offered in their cleaning packages. In addition, Jason obtained
from the Chamber of Commerce an updated list of local corporations. He planned on sending
written questionnaires to them.
Though the list of corporations contained 141 local company names, Jason chose to survey 75
of them. To better understand customer service expectations between both small and large
corporations, Jason divided his surveys into two categories. The survey questions were
designed to extract specific data from respondents with regard to service quality expectations in
correlation to service frequency and price.
Jason awaited the results. Though his primary focus had been on large corporations, he was
flexible and would aim his efforts differently if needed.
102) In this scenario, which of the following is an example of primary data?
A) list of corporations obtained from the Chamber of Commerce
B) information obtained from competitors' pamphlets
C) data obtained from the surveys conducted in the 75 companies
D) information obtained from the Internet about current market trends
E) data obtained from competitors' Web sites
103) Of the 141 companies on the list, Jason chose to survey only 75 of them. He sent surveys
to both small as well as large companies. If Jason selected survey recipients randomly from two
mutually exclusive groups comprised of small and large companies respectively, he most likely
used a
.
A) simple random sample
B) judgment sample
C) convenience sample
D) stratified random sample
E) quota sample
104) If Jason used mostly open-ended questions in the survey to encourage people to answer in
their own words, he is performing
research.
A) focus group
B) qualitative
C) experiential
D) causal
E) exploratory
105) Marketing researchers can conduct their own searches of secondary data sources by using
mail questionnaires and interviewing individuals.
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106) Since secondary data provide a good starting point for research and often help define
problems and research objectives, companies do not need to collect primary data.
107) A weakness of market research is that it cannot help marketers measure the effectiveness
of pricing changes or promotion activities.
108) Causal research involves sending observers to watch and interact with consumers in their
natural environments.
109) Experimental research is best suited for gathering descriptive information.
110) Personal interviews can be used to collect large amounts of information at a low cost per
respondent.
111) The most obvious advantages that Internet-based survey research offers over mail and
personal interviewing approaches are high speed and low costs.
112) A sample is a segment of the population selected for marketing research to represent the
population as a whole.
113) Open-ended questions are especially useful in exploratory research.
114) The first question in a questionnaire should be intentionally difficult and complicated in
order to weed out uninterested respondents.
115) Neuromarketing involves measuring brain activity to learn how consumers feel and
respond.
116) What are the steps of the marketing research process? How do companies conduct
research?
117) Briefly compare the different types of research approaches for gathering primary data.
118) Identify three ways that companies can collect secondary data.
119) Describe the major contact methods used to collect information from respondents in
market research.
120) Describe the three decisions involved in designing a sample.
121) Compare and contrast closed-ended questions and open-ended questions for gathering
data.
122) Briefly explain why marketers need marketing research in addition to competitive
marketing intelligence.
123) What type of research would be the most useful to determine if a 20-percent decrease in
price for a high-end sedan would result in an increase in purchases sufficient to offset the
reduced price? Why?
124) Why is it important for managers to define the problem and establish research objectives?
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125) How do primary data differ from secondary data?
126) List two benefits of using secondary data.
127) What is observational research and when is it used?
128) What are some of the limitations of observational research?
129) What is experimental research and when is it used?
130) How can researchers and managers arrive at the best interpretation of research findings?
131) The fourth step in gathering insights into the marketplace and customers is
.
A) assessing marketing information needs
B) developing marketing information
C) performing marketing research
D) analyzing and using marketing information
E) preparing reports for marketing management
132) Customer relationship management (CRM) helps
.
A) firms monitor and minimize employee turnover
B) customers manage information about different sellers in the market
C) firms manage customer touch points to maximize customer loyalty
D) customers locate the best deals in the market
E) firms create artificial demand in the market
133) Customer information is often buried deep in separate databases and records of different
company departments. To overcome such problems, many companies are now turning to
to manage detailed information about individual customers.
A) neuromarketing
B) customer needs marketing
C) customer relationship management
D) ethnographic research
E) netnography research
134) Customer relationship management integrates everything that a company's sales, service,
and
teams know about individual customers.
A) management
B) marketing
C) manufacturing
D) engineering
E) accounting
135) Which of the following is true about customer relationship management (CRM)?
A) Data mining has limited applicability in CRM activities.
B) Sophisticated analytical tools are sparingly used in CRM activities.
C) CRM reduces the number of customer touch points.
D) CRM aims to maximize customer loyalty.
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E) CRM enables firms to compare various product and service categories.
136) What is the purpose of marketing analytics?
A) to obtain secondary data and integrate it with primary data
B) to gather and integrate data in a central, accessible location
C) to interpret the data obtained
D) to prevent the theft of customer data
E) to identify and discard outdated data
137) In CRM,
techniques are used to sort through data and locate useful findings
about customers.
A) data warehousing
B) marketing analytics
C) niche marketing
D) data conservancy
E) mass marketing
138) A successful CRM program is expected to help a company achieve all of the following
EXCEPT
.
A) provide higher levels of customer service
B) develop deeper customer relationships
C) create offers tailored to meet specific customer requirements
D) understand the competition better
E) pinpoint high-value customers and cross-sell products
139) Ralph Goldsmith works for Zenith Inc., a leading cosmetic company based in Illinois. At
Zenith, Ralph's primary responsibility revolves around digging deeply into customer data to
gain valuable insights about customer needs, motives, and attitudes. This data is, in turn, used
by Zenith to personalize its customers' shopping experiences. Ralph's position at Zenith
requires him to focus primarily on
.
A) customer sales
B) human resource management
C) risk assessment
D) financial analysis
E) customer relationship management
140) For marketing information to have value, it must be available to decision makers. This
may include non-routine information for special situations. Companies frequently use
in these instances.
A) e-mail messages
B) computer extranets
C) company intranet and internal CRM systems
D) scanned documents and faxes
E) video conferences
141) Customer touch points include customer purchases, satisfaction surveys, credit and
payment interactions, sales force contacts, and service and support calls.
142) Customer relationship management helps manage detailed information about individual
customers and maximize customer loyalty.
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143) An obvious disadvantage of using customer relationship management is its ineffectiveness
in pinpointing high-value customers.
144) How can a company manage information on specific customers more effectively?
145) What is the most common CRM mistake?
146) Joe Kerry, owner of a small bakery, wants to obtain marketing insights to improve his
business. Joe has a limited budget and would like to gather free secondary data. What is the
best option for Joe?
A) mail questionnaires
B) focus group interviews
C) Internet search engines
D) personal interviews
E) commercial online databases
147) Which of the following is least likely to be a tool used by small businesses?
A) observation of customers and potential customers
B) online product and service review sites
C) purchasing data from Nielsen or U.S. Yankelovich MONITOR
D) informal surveys using small convenience samples
E) competitor and customer web, mobile, and social media sites
148) Often, international researchers must collect their own primary data because
A) reliable secondary data is both scarce and difficult to find
B) information from commercial online databases is unreliable
C) it is cheaper to obtain primary data than secondary data
D) it is easier to obtain primary data than secondary data
E) it is illegal in some countries to track customer data
.
149) For international researchers,
is the most obvious obstacle.
A) language
B) technology
C) infrastructure
D) motivation
E) political risk
150) Which of the following is true with regard to problems faced by international researchers?
A) Translation of questionnaires increases research costs and risks of error.
B) Erratic purchasing patterns limit data reliability and validity.
C) More often than not, cultural differences enrich research findings.
D) Diverse markets always yield conflicting data.
E) The primary data obtained by international researchers are almost always error prone.
151) Which of the following is most likely true about international research?
A) The availability of good secondary data makes international research rewarding.
B) The costs of conducting international research are much higher than the benefits offered.
C) Technology enables customer responses to be translated quickly and accurately.
D) Costly international research is necessary if firms want to succeed in foreign markets.
E) Interpretations of data are fairly consistent among different countries.
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152) Consumers who mistrust marketing research are more likely to
.
A) consider marketing research initiatives as genuine endeavors aimed at heightening customer
satisfaction
B) believe that marketers rarely use personal data to manipulate consumer behavior
C) believe that the misuse of research findings is highly unlikely
D) consider marketing research efforts, such as interviewing, intrusions on consumer privacy
E) feel positive about being personally interviewed by marketers
153) While collecting sensitive customer data, market researchers should adhere to all of the
following guidelines EXCEPT
.
A) asking only for the information needed
B) using information responsibly to provide value
C) providing respondents with the research firm's contact information
D) sharing information without the customer's authorization
E) explaining to respondents how the information will be used
154) In a company, the job of a chief privacy officer is to
A) ensure timely product deliveries
B) detect patent infringements and copyright violations
C) safeguard the privacy of a firm's customers
D) engage in niche marketing
E) safeguard the privacy of senior executives
.
155) Small businesses and not-for-profit organizations can collect a significant amount of
information at very little cost by researching online. They can also use observation and
informal surveys effectively.
156) For international researchers, language is a primary obstacle.
157) Most major companies have now appointed a chief privacy officer (CPO), whose job is to
safeguard the privacy of the companies in the international business environment.
158) Discuss how small businesses and not-for-profit organizations can obtain market insights
economically.
159) Explain the common problems that international marketing researchers encounter.
160) Why do some consumers resent marketing research?
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Principles of Marketing, 17e (Kotler/Armstrong)
Chapter 5 Consumer Markets and Buyer Behavior
1) Individuals and households that buy or acquire goods and services for personal consumption
make up the
.
A) consumer market
B) market offering
C) market mix
D) subculture
E) social class
2) Marketing stimuli include which of the following?
A) economic stimuli
B) price stimuli
C) technological stimuli
D) social stimuli
E) cultural stimuli
3) Which of the following is one of the other stimuli present in a buyer's environment apart
from marketing stimuli?
A) product stimuli
B) cultural stimuli
C) price stimuli
D) place stimuli
E) promotion stimuli
4) Companies can research many aspects of buying decisions. However, the one that is the most
difficult to identify is
.
A) what consumers buy
B) how and how much they buy
C) why they buy
D) when they buy
E) where they buy
5) According to the model of buyer behavior, which of the following is one of the two primary
parts of a "buyer's black box"?
A) technological stimuli
B) buyer's decision process
C) buyer's spending habits
D) social stimuli
E) promotion stimuli
6) Marketing stimuli consist of the four Ps. Which of the following is NOT one of these?
A) product
B) packaging
C) price
D) promotion
E) place
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7) In the model of buyer behavior, which of the following is NOT a major type of force or
event in the buyer's environment?
A) economic
B) technological
C) social
D) political
E) cultural
8) Buyer responses are influenced by marketing stimuli. The responses to the stimuli include all
of the following EXCEPT
.
A) brand engagement
B) buying attitudes
C) purchasing behavior
D) buying preferences
E) the "why" regarding the responses
9) The starting point of understanding how consumers respond to various marketing efforts is
called the stimulus-response model of buyer behavior.
10) Consumers can easily explain what influences their purchases.
11) What role do the four Ps play in consumer behavior?
12)
is the most basic determinant of a person's wants and behavior.
A) Culture
B) Brand personality
C) Cognitive dissonance
D) Motive
E) Attitude
13) Each culture contains smaller
, or groups of people with shared value systems
based on common life experiences and situations.
A) cultural universals
B) reference groups
C) subcultures
D) monocultures
E) social networks
14) Subcultures include nationalities, religions, geographic regions, and
.
A) genders
B) ages
C) professions
D) racial groups
E) income levels
15) Which consumer group tends to show more brand loyalty and makes shopping a family
event, with children having a big say in the purchase decision?
A) Hispanic Americans
B) African Americans
C) Arab Americans
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2
D) working class consumers
E) middle class consumers
16)
consumers are one of the fastest-growing U.S. population subsegments and are
expected to surge to nearly one third of the total U.S. population by 2030.
A) African American
B) Hispanic American
C) Asian American
D) Baby boomer
E) Millennial
17) Hispanic Americans tend to be deeply family oriented and make shopping a family affair.
Older consumers are brand loyal, while younger Hispanics have shown increasing price
sensitivity and willingness to choose store brands. Hispanic Americans make up a
.
A) subculture
B) social class
C) social network
D) life-cycle stage
E) lifestyle
18) Although more price-conscious than other population segments,
consumers tend
to be strongly motivated by quality and selection, and give importance to brands.
A) lower upper
B) African American
C) Asian American
D) Filipino
E) working class
19)
consumers are the most affluent U.S. demographic segment and are expected to
have an annual buying power approaching $1 trillion by 2017.
A) Hispanic American
B) African American
C) Asian American
D) Baby boomers
E) Generation X
20)
consumers are the most brand conscious of all the ethnic groups, are extremely
brand loyal, and shop frequently.
A) African American
B) Native American
C) Hispanic American
D) Italian American
E) Asian American
21) Many companies use ethnically specific themes in their mainstream marketing strategy
because marketers have realized that insights gleaned from ethnic consumers can influence
their broader markets. This type of marketing is known as
.
A) total market strategy
B) buzz marketing
C) social networking
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D) word-of-mouth marketing
E) life-style marketing
22)
are society's relatively permanent and ordered divisions whose members share
similar values, interests, and behaviors.
A) Social classes
B) Societal norms
C) Reference groups
D) Universal cultures
E) Social networks
23) Consumer purchases are influenced strongly by characteristics that marketers cannot
control but must take into account, including cultural, social, psychological, and
characteristics.
A) economic
B) professional
C) medical
D) personal
E) genetic
24) Which of the following statements is true of cultural factors that influence consumer
behavior?
A) Cultural influences on buying behavior are identical across countries.
B) Social classes show distinct product and brand preferences in areas such as clothing and
travel.
C) Subcultures include nationalities and racial groups, but exclude religions.
D) Subcultures are groups within which each individual has a unique and distinct value system.
E) Hispanic Americans and African Americans are examples of racially segregated groups and
not subcultures.
25) Which of the following statements is true of social classes?
A) Social classes are society's temporary divisions.
B) Members of a social class have unique and distinct values, interests, and behaviors.
C) People within a social class tend to exhibit similar buying behavior.
D) Income is the single factor that determines social class.
E) Social classes universally exhibit identical product and brand preferences.
26) Which of the following statements is true regarding social classes in the United States?
A) Social class is determined by income alone.
B) Lines between social classes in the United States are fixed and rigid.
C) Social classes show distinct product preferences in clothing and automobiles.
D) Wealth is more critical than education level in measuring social class.
E) People are relegated to a permanent social class in the United States.
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27) Family is one of the
A) regional
B) social
C) personal
D) psychological
E) business
factors that influence consumer behavior.
28)
are groups to which an individual wishes to belong, as when a young basketball
player hopes to play someday in the NBA or WNBA.
A) Membership groups
B) Aspirational groups
C) Leading adopters
D) Subcultures
E) Reference groups
29) A shoe manufacturing company uses ads featuring the members of a country music band
with the hope that the band's fans will see them wearing the company's shoes and hence
purchase the same brand of shoes. The shoe company believes that the band portrays the image
of a
to the band's fans.
A) membership group
B) reference group
C) status symbol
D) subculture
E) lifestyle
30) Word-of-mouth influence comes to consumers from family, colleagues, and
.
A) investors
B) athletes
C) neighbors
D) entertainment celebrities
E) friends
31) Rachel loves fashion and is always seen wearing the trendiest fashion outfits. She actively
shares her knowledge with a wide group of friends and colleagues about where to shop for the
latest fashion at great deals. Most of her friends and colleagues follow her fashion tips. Rachel
portrays the image of a(n)
.
A) surrogate consumer
B) lagging adopter
C) opinion leader
D) brand personality
E) social networker
32)
are people within a reference group who, because of special skills, knowledge,
personality, or other characteristics, exert influence on others.
A) Opinion leaders
B) Innovators
C) Surrogate consumers
D) Stealth marketers
E) Lagging adopters
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33) Opinion leaders are also referred to as
A) leading adopters
B) lower uppers
C) innovators
D) lagging adopters
E) surrogate consumers
.
34)
are ambassadors who enthusiastically share their passion for a company's
products with large circles of friends and acquaintances.
A) Leading adopters
B) Brand evangelists
C) Surrogate consumers
D) Market mavens
E) Innovators
35) Companies that use brand ambassadors are most likely involved in
A) ambush
B) spam
C) buzz
D) viral
E) database
36) Facebook, Snapchat and LinkedIn are all examples of
A) brand alliances
B) opinion leaders
C) social networks
D) early adopters
E) market mavens
marketing.
.
37) Which of the following is characteristic of online social networks?
A) use of one-way communication techniques
B) negligible adoption rates
C) guaranteed positive results
D) easy methods to measure results
E) interactive media content
38) Independent bloggers are self-made influencers. Traits that make them relevant to
marketers include
.
A) creative writing skills
B) professional Web site
C) good fit with the brand
D) a few vocal followers
E) technological skills
39) What is the most important consumer buying organization in society?
A) family
B) social class
C) membership group
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D) subculture
E) reference group
40)
traditionally has been considered the main purchasing agent for the family in the
areas of food, household products, and clothing, although this is changing as more work outside
the home.
A) A teenager
B) The husband
C) The wife
D) The couple together
E) The parent
41) A
consists of the activities an individual is expected to perform, according to the
people around him/her.
A) motive
B) role
C) lifestyle
D) life cycle
E) perception
42) A buyer's decisions are influenced by
such as the buyer's age and life-cycle stage,
occupation, economic situation, lifestyle, personality, and self-concept.
A) personal characteristics
B) stereotypes
C) perceptions
D) attitudes
E) psychographics
43) Consumer information provider Nielsen uses a life-stage segmentation system that places
U.S. households into one of 66 different life-stage groups. According to Nielsen's groups,
which of the following refers to the group consisting of hip, single twenty-somethings who are
politically liberal, listen to alternative music, and enjoy lively nightlife?
A) Striving Singles
B) Young Achievers
C) Bohemian Mix
D) Young Influentials
E) Young Digerati
44) Life-stage changes usually result from
A) birthdays
B) mentors
C) friends
D) life-changing events
E) siblings
.
45) Life-stage segmentation allows marketers to create targeted, actionable, and
campaigns based on how people consume and interact with brands.
A) inexpensive
B) professional
C) multimedia
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D) social media
E) personalized
46) Since a person's economic situation will affect her store and product choices, marketers
watch trends in spending, personal income, interest rates, and
.
A) employment
B) savings
C) home purchases
D) rents
E) fuel prices
47)
is a person's pattern of living as expressed in his/her psychographics, and it
includes the individual's activities, interests, and opinions.
A) Personality
B) Culture
C) Lifestyle
D) Motive
E) Social class
48) In the context of the AIO dimensions for measuring consumers' lifestyles, "A" stands for
.
A) activities
B) achievements
C) admirations
D) attitudes
E) associations
49) A current trend in the United States involves rediscovering the benefits of home-cooked
food and the use of organic ingredients. People are choosing to spend hours in the kitchen using
only the freshest ingredients to cook healthy and nutritious meals. This change in
is
one of the reasons for the increasing demand for organic ingredients.
A) self-concept
B) subculture
C) lifestyle
D) personality
E) life-cycle
50)
refers to the unique psychological characteristics that distinguish an individual or
group.
A) Attitude
B) Belief
C) Perception
D) Personality
E) Self-awareness
51) Which of the following terms refers to a specific mix of human traits that may be attributed
to a particular brand?
A) brand perception
B) brand identity
C) brand personality
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D) brand concept
E) brand equity
52) Shoez Inc., a manufacturer of shoes, has recently launched a brand of sturdy shoes ideal for
hiking and other outdoor activities. Which of the following brand personalities could be best
associated with the new brand?
A) sincerity
B) excitement
C) sophistication
D) competence
E) ruggedness
53) Many marketers use the self-concept premise that people's possessions contribute to and
reflect their identities—that is, "we are what we consume." According to this premise,
consumers
.
A) buy products to support their self-image
B) rarely identify with brand personalities
C) are affected by opinion leaders
D) compare product brands
E) conduct primary research
54) Harley-Davidson promotes its motorcycles with images of independence, freedom, and
power. Harley-Davidson has created a
.
A) motive
B) life-cycle stage
C) self-concept
D) brand personality
E) self-actualization need
55) A marketer of women's hair care products targeting Chinese customers created an
advertising message that told women their hair could be worn any way they wanted as opposed
to wearing it straight. The message suggested the women did not need to conform to the
mainstream media definition of beauty. It is most accurate to say that this ad was based on an
understanding of customers'
.
A) social class
B) life-cycle stage
C) self-concept
D) status
E) role
56) A person's buying choices are influenced by four major psychological factors. Which of the
following is NOT one of these factors?
A) motivation
B) perception
C) association
D) learning
E) beliefs
57) A
A) stimulus
is a need that is sufficiently pressing to direct a person to seek satisfaction.
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B) perception
C) culture
D) motive
E) tradition
58) According to Freud, a person's buying decisions are primarily affected by
A) family influences
B) societal expectations
C) brand images
D) cultural norms
E) subconscious motives
59) Many marketers now use
develop better marketing strategies.
A) analytical
B) interpretive
C) causal
D) descriptive
E) experiential
.
research to dig deeply into consumer psyches and
60)
refers to qualitative research designed to probe consumers' hidden, subconscious
motivations.
A) Perception analysis
B) Subliminal analysis
C) Motivation research
D) Need recognition
E) Market segmentation
61) A marketing research company asked members of a focus group to describe several brands
as animals. The purpose of the request is to measure the prestige of the various brands. This is
an example of
.
A) brand strength analysis
B) interpretive consumer research
C) quantitative research
D) buzz marketing
E) brand extension
62) Maslow's theory is that
A) marketing stimuli
B) personal beliefs
C) perceptions
D) human needs
E) decisions
can be arranged in a hierarchy.
63) Which of the following is NOT part of Maslow's hierarchy of needs?
A) physiological needs
B) safety needs
C) spiritual needs
D) esteem needs
E) social needs
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64) According to Maslow's hierarchy of needs, which of the following is the LEAST pressing
need?
A) physiological needs
B) social needs
C) esteem needs
D) self-actualization needs
E) safety needs
65)
is the process by which people select, organize, and interpret information to form
a meaningful picture of the world.
A) Motivation
B) Perception
C) Dissonance
D) Learning
E) Self-actualization
66) People cannot focus on all of the stimuli that surround them each day. A person's tendency
to screen out most of the information is called
.
A) subliminal retention
B) selective distortion
C) cognitive dissonance
D) selective attention
E) cognitive inertia
67) People tend to interpret new information in a way that will support what they already
believe. This is called
.
A) selective retention
B) selective distortion
C) cognitive dissonance
D) selective attention
E) cognitive bias
68)
means that consumers are likely to remember good points made about a brand
they favor and forget good points made about competing brands.
A) Selective attention
B) Selective retention
C) Cognitive dissonance
D) Selective distortion
E) Cognitive bias
69) Mark has long supported a particular brand of footwear and has always bought that brand.
Recently, the footwear manufacturer was embroiled in a controversy for using child labor at its
manufacturing plants. Mark doubts the news reports and continues to purchase the same brand
of footwear. It is most accurate to say that Mark displays
.
A) selective distortion
B) cognitive dissonance
C) selective retention
D) selective attention
E) consumer ethnocentrism
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70) Juana looked at the September issue of her favorite fashion magazine and did not find
anything particularly interesting despite the fact that the magazine had several advertisements
that were targeted at Juana's demographic. The only thing that interested her was an article
about an upcoming fashion show. Which consumer behavior is being illustrated in this
instance?
A) subliminal advertising
B) groupthink
C) selective attention
D) social loafing
E) consumer ethnocentrism
71) Stephanie and John wanted to purchase a high-end sports car. They viewed a commercial
for a particular sports car that highlighted the cost, design, and power of the car. After viewing
the ad, Stephanie felt that the car's price was acceptable, considering the superior and unique
design. John thought that the car was expensive owing to the high power engine installed in it.
They used the information in different ways, focusing on issues that each considered important.
Which of the following concepts does this scenario demonstrate?
A) selective distortion
B) consumer ethnocentrism
C) selective retention
D) selective attention
E) cognitive dissonance
72) Some consumers worry that they will be affected by marketing messages without even
knowing it. They are concerned about
.
A) alternative evaluation
B) subliminal advertising
C) selective retention
D) cognitive dissonance
E) selective communication
73)
describes changes in an individual's behavior arising from experience.
A) Lifestyle
B) Learning
C) Perception
D) Cognitive dissonance
E) Selective attention
74)
are minor stimuli that determine where, when, and how a person responds to an
idea.
A) Cues
B) Drives
C) Reinforcers
D) Cognitions
E) Impulses
75) A(n)
A) lifestyle
B) motive
is a descriptive thought that a person has about something.
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C) belief
D) attitude
E) cognition
76) A(n)
is a person's relatively consistent evaluations, feelings, and tendencies
toward an object or idea.
A) lifestyle
B) motive
C) belief
D) attitude
E) perception
Refer to the scenario below to answer the following question(s).
The Attic Trunk opened in 1999 as an upscale dress shop in Forest Ridge's fashionable
shopping district, catering to a wealthy, mature clientele consisting mostly of older, firstgeneration Hispanics. Many other specialty shops lined the main avenue over the next few
years. But as Forest Ridge began to attract a more price-conscious, younger, and more
demographically diverse population, the once-popular shopping district was increasingly
perceived as stodgy and snobby by the new segment of customers.
By the mid-2000s, many of these specialty shops suffered financially. Most shops attracted only
tourists who enjoyed browsing through the displays of alligator belts and shoes, piles of scented
soaps, and so on, often laughing at the ridiculously high prices.
Owners of The Attic Trunk had noticed the shifts in buying behavior of customers by the mid2000s. In fact, the owners had observed that the once-fashionable shopping district in Forest
Ridge no longer attracted the wealthy, mature clientele. This clientele had been replaced with
price-conscious families with children, a mix of Asian and African Americans as well as
Caucasians.
Specialty items at The Attic Trunk gradually disappeared, replaced by brand-name apparel,
fashion accessories, and jewelry. Other owners followed suit in the late 2000s, bringing
restaurants, an outdoor cafe, and a day spa to the main avenue in Forest Ridge.
77) Which of the following best supports the idea that The Attic Trunk's mature, wealthy
clientele can remain a viable target market?
A) Older, first generation Hispanic consumers are not especially family-oriented.
B) Older, first-generation Hispanic consumers favor sellers who show special interest in them.
C) Older, first generation Hispanic consumers tend to be very price conscious.
D) Older, first generation Hispanic consumers tend to display little brand loyalty.
E) Older, first generation Hispanic consumers are motivated by mainstream marketing.
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78) Many families with children are now attracted to the shopping district in Forest Ridge.
What characteristics about families as consumer groups might the owners of The Attic Trunk
want to keep in mind?
A) Though more women hold jobs outside the home today than when The Attic Trunk first
opened, husband-wife involvement in the buying process has remained relatively unchanged.
B) Children have considerable amounts of disposable income and have a strong influence on
family buying decisions.
C) Women seldom account for any technology-related purchases.
D) Women typically account for most habitual purchases.
E) Men make all the major purchasing decisions in most families.
79) Which of the following would each consumer segment attracted to The Attic Trunk have in
common with the other consumer segments?
A) habitual buying behaviors
B) self-concepts
C) AIO dimensions
D) life-cycle stages
E) aspirational groups
80) Subcultures consist only of religious groups.
81) Asian-American consumers are the least brand conscious of all ethnic groups.
82) Social class is based on shared value systems and common life experiences and situations.
83) In the United States, the lines between social classes are not fixed and rigid, but people can
only drop to a lower social class and not move up into a higher one.
84) Online social networks represent an important avenue to create buzz for marketers.
85) Children exert little influence on family buying decisions.
86) A person's occupation has no effect on the goods and services that she buys.
87) People's tastes in food, clothes, recreation, and even furniture remain unchanged as they
age.
88) Personality is a person's pattern of living as expressed in his or her psychographics.
89) A brand personality is the specific mix of human traits that may be attributed to a particular
brand.
90) According to Maslow's hierarchy of needs theory, when the most important need is
satisfied, it will cease to be a motivator, and the person will then try to satisfy the next most
important need.
91) Alternative evaluation is the process by which people select, organize, and interpret
information to form a meaningful picture of the world.
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92) While an individual's beliefs are difficult to change, an individual's attitudes are easy to
change.
93) Give an example of a cultural shift that may impact the marketing of products or services.
94) Why might the Hispanic American market be a viable targeted group for a new marketer of
products?
95) In what way might a marketer rely on opinion leaders?
96) How does marketing through online social networks differ from more traditional
marketing?
97) Explain why typical husband-dominant or wife-dominant products of the 1970s may no
longer be regarded as typical.
98) Define brand personality.
99) Explain why selective attention is not controllable by a marketer.
100) Explain how selective distortion is somewhat controllable by a marketer.
101) Explain how selective retention affects what consumers remember about marketing
messages.
102) Cultural factors exert a broad and deep influence on consumer behavior. The marketer
needs to understand the role played by the buyer's culture, subculture, and social class.
Distinguish between culture, subculture, and social class.
103) Many subcultures make up important market segments. Examples of three such important
subculture groups include Hispanic Americans, African Americans, and Asian Americans.
Describe the general shopping-related characteristics of each of these groups.
104) A consumer's behavior is influenced by social factors, such as the consumer's small
groups, family, and social roles and status. Explain the differences among these social factors.
105) Explain the change in buying roles of husbands and wives due to an evolving consumer
lifestyle in the United States. Additionally, describe the effect of this change on marketers.
106) People's distinct individual personalities influence their buying behavior. Personality is
usually described in terms of traits. What are these traits, and how do they affect the way
people purchase items? Give at least one example.
107) Explain Maslow's hierarchy of needs.
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108) When consumers are highly involved with the purchase of an expensive product and they
perceive significant differences among brands, they most likely will exhibit
.
A) consumer capitalism
B) complex buying behavior
C) consumer ethnocentrism
D) dissonance-reducing buying behavior
E) variety-seeking buying behavior
109) George is buying his first house. He has spent a month looking at houses and comparing
attributes such as price and location. He has contacted several real estate agents to look at
different types of houses. George is most likely exhibiting
.
A) variety-seeking buying behavior
B) complex buying behavior
C) consumer capitalism
D) dissonance-reducing buying behavior
E) marketing myopia
110) When consumers are highly involved with an expensive, infrequent, or risky purchase but
see little difference among brands, they most likely will exhibit
.
A) habitual buying behavior
B) complex buying behavior
C) impulse buying behavior
D) dissonance-reducing buying behavior
E) consumer capitalism
111) For the past ten years, Bill and Margaret have saved money to go to the Super Bowl
should their team, the Chicago Bears, reach the finals of the NFC championship. This is the
year, and several tour companies offer attractive, but very similar, packages to the game. Since
all packages are pretty much the same, they have chosen one that fits their budget. Bill and
Margaret are most likely exhibiting
.
A) complex buying behavior
B) dissonance-reducing buying behavior
C) habitual buying behavior
D) consumer capitalism
E) consumer ethnocentrism
112) Which of the following consumer buying behaviors is related to conditions of lowconsumer involvement and little significant brand difference?
A) complex buying behavior
B) dissonance-reducing buying behavior
C) habitual buying behavior
D) variety-seeking buying behavior
E) consumer capitalism
113) Pat thought he had received the best deal on his new car. Shortly after buying the car, Pat
started to notice certain disadvantages of his new car as he learned more about other cars
available in the market. Pat is experiencing
.
A) dissonance-reducing buying behavior
B) need recognition
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C) postpurchase dissonance
D) marketing myopia
E) complex buying behavior
114) Which of the following would a marketer LEAST likely do to encourage habitual buying
behavior?
A) dominate shelf space
B) run frequent reminder ads
C) keep shelves fully stocked
D) stress unique features in ads
E) offer lower prices and coupons
115) Eduardo usually purchases the same breakfast cereal, the kind he grew up eating. Eduardo
exhibits
.
A) dissonance-reducing buying behavior
B) complex buying behavior
C) habitual buying behavior
D) variety-seeking buying behavior
E) conspicuous consumption behavior
116) Carrie tends to purchase various brands of bath soap. She has never been loyal to a
specific brand; instead she does a lot of brand switching. Carrie exhibits
.
A) dissonance-reducing buying behavior
B) complex buying behavior
C) habitual buying behavior
D) variety-seeking buying behavior
E) conspicuous consumption behavior
117) When customers have low involvement in a purchase but perceive significant brand
differences, they will most likely engage in
.
A) complex buying behavior
B) dissonance-reducing buying behavior
C) habitual buying behavior
D) variety-seeking buying behavior
E) consumer ethnocentrism
118) The buyer decision process consists of five stages. Which of the following is NOT one of
these stages?
A) need recognition
B) information search
C) conspicuous consumption
D) purchase decision
E) postpurchase behavior
119) The buying decision process starts with
A) need recognition
B) information search
C) impulse purchases
D) buyer's remorse
E) alternative evaluation
, in which the buyer spots a problem.
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120) An invitation to go skiing over the weekend forced Donna to look at her current wardrobe.
She realized that she required a warmer coat. Which of the following stages of the buyer
decision process does Donna exemplify?
A) product evaluation
B) situational analysis
C) need recognition
D) problem screening
E) information search
121) Donna wants to buy a new coat. During the
stage of the buyer decision process
she will ask her friends to recommend stores that sell good quality winterwear clothing. She
will also go through newspapers and magazines to look out for offers and sales on coats.
A) product evaluation
B) alternative evaluation
C) need recognition
D) information search
E) purchase decision
122) If a consumer's drive is strong and a satisfying product is near at hand, the consumer is
likely to purchase the product at that time. If not, the consumer may store the need in memory
or undertake
.
A) consumer ethnocentrism
B) buyer's remorse
C) a need recognition
D) an information search
E) cognitive dissonance
123) James has decided to buy a new vehicle. His brother John has recently purchased a new
truck and recommends the same model to James. James finally decides to buy the same truck.
Which of the following sources of information has most likely influenced James' purchase
decision?
A) experiential sources
B) public sources
C) personal sources
D) commercial sources
E) market mavens
124) John has decided to buy a particular smartphone that he saw reviewed online. Which of
the following sources of information has most likely influenced John's purchase decision?
A) laggards
B) commercial sources
C) public sources
D) personal sources
E) market mavens
125) Marketers realize that their commercial sources
A) legitimize products
B) attract
C) evaluate products
D) personalize products to
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the buyer.
E) inform
126) The information sources that are the most effective at influencing a consumer's purchase
decision are
. These sources legitimize or evaluate products for the buyer.
A) commercial
B) public
C) experimental
D) personal
E) attitudinal
127) Marketers describe the way a consumer processes information to arrive at brand choices
as .
A) alternative evaluation
B) information search
C) impulse buying
D) consumer capitalism
E) cognitive dissonance
128) Robert has taken up cycling as a hobby and as a way to maintain his physical fitness. He
wants to buy a hydration system since he will need a lot of water as he cycles. Having gathered
a great deal of information, he has finally narrowed down his choices to three systems:
Waterbags for Roadies, Supertanker Hydropacks, and Fast Water. Robert is in the
stage of the buyer decision process.
A) need recognition
B) evaluation of alternatives
C) product trial
D) postpurchase evaluation
E) information search
129) Sara is about to purchase a new television. She is using several attributes to evaluate her
choices. Which of the following is least likely to be a criterion Sara is using?
A) price
B) size of screen
C) color of body
D) network connectivity
E) availability
130) Generally, the consumer's purchase decision will be to buy the most preferred brand, but
two factors can come between the purchase intention and the purchase decision. Which of the
following is one of these factors?
A) economic risks
B) attitudes of others
C) cognitive dissonance
D) alternative evaluation
E) buyer's remorse
131) After the purchase of a product, consumers will be either satisfied or dissatisfied and
engage in
.
A) consumer capitalism
B) alternative evaluation
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C) postpurchase behavior
D) consumer ethnocentrism
E) information searches
132) The relationship between the consumer's expectations and the product's
determines whether the buyer is satisfied or dissatisfied with a purchase.
A) perceived performance
B) brand personality
C) market reach
D) consumer market
E) market share
133) A particular automobile company works to keep its customers happy after each sale,
aiming to delight each one of them in order to increase their customer lifetime value. Which of
the following steps of the buyer decision process does the company exemplify?
A) need recognition
B) information search
C) evaluation of alternatives
D) purchase decision
E) postpurchase behavior
134) Leona bought two different brands of wine from vineyards in Australia. When asked for
her opinion about the wines, she said that one brand of wine tasted like alcoholic grape juice,
but the other had a crisp taste that she really enjoyed. These statements were most likely made
during the
stage of the buyer decision process.
A) information search
B) need recognition
C) alternative evaluation
D) purchase decision
E) postpurchase behavior
135) Almost all major purchases result in
, or discomfort caused by postpurchase
conflict.
A) need recognition
B) cognitive dissonance
C) consumer ethnocentrism
D) conspicuous consumption
E) consumer capitalism
136) When a customer feels uneasy about losing out on the benefits of a brand not purchased,
she is likely to experience
.
A) selective retention
B) selective attention
C) selective distortion
D) cognitive dissonance
E) consumer ethnocentrism
137) Store salespeople and a consumer's friends rarely impact someone's final purchase
decision.
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138) Dissonance-reducing buying behavior typically occurs when a buyer sees little difference
among brands but is highly involved with the purchase.
139) Jim is planning on buying an expensive HDTV and he realizes that there are few
differences between brands. Jim is displaying complex buying behavior.
140) Habitual buying behavior involves consumers searching extensively for information about
brands and evaluating brand characteristics.
141) Commercial sources of information typically legitimize and evaluate products for buyers.
142) Postpurchase behavior is the stage of the buyer decision process in which consumers take
further action after purchase, based on their satisfaction or dissatisfaction.
143) Explain the role of marketers in the information search step of the buyer decision process.
Give an example of how the marketer might execute this role.
144) Why should marketers set up systems that encourage customers to complain about
products?
145) Compare and contrast the four types of buying decision behavior exhibited by consumers.
146) Describe some important strategies for a marketer of a high-involvement product.
147) Listing them in the proper order, what are the stages in the buyer decision process?
Describe each.
148) Consumers learn about new products for the first time and make the decision to buy those
products during the
.
A) need recognition stage
B) adoption process
C) evaluation process
D) trial process
E) quality assessment stage
149) Which of the following is the first stage in the new product adoption process?
A) awareness
B) adoption
C) evaluation
D) interest
E) trial
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150) Which of the following is the adoption process stage at which the consumer considers
whether trying the new product makes sense?
A) awareness
B) interest
C) evaluation
D) adoption
E) trial
151) Cameron loves to own and be up-to-date on the latest technological gadgets available in
the market. Among his friends, he is always the first to own the latest electronic gadgets. He
loves trying out new products before others. Cameron most likely belongs to the
adopter group.
A) innovator
B) surrogate consumer
C) late mainstream
D) early mainstream
E) lagging
152) Five characteristics are important in influencing an innovation's rate of adoption. Which of
the following is NOT one of those characteristics?
A) relative advantage
B) compatibility
C) consumability
D) complexity
E) communicability
153) In the context of product characteristics that influence the rate of adoption,
refers to the degree to which the innovation fits the values and experiences of potential
consumers.
A) communicability
B) relative advantage
C) compatibility
D) complexity
E) divisibility
154) Which of the following product characteristics refers to the degree to which the innovation
appears superior to existing products?
A) compatibility
B) divisibility
C) communicability
D) relative advantage
E) complexity
155) Which of the following best describes divisibility of an innovation that influences the rate
of adoption?
A) It is the degree to which the innovation is difficult to understand.
B) It is the degree to which the results of using the innovation can be observed or described to
others.
C) It is the degree to which the innovation appears superior to existing products.
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D) It is the degree to which the innovation may be tried on a limited basis.
E) It is the degree to which the innovation fits the values and experiences of potential
consumers.
156) Relative advantage, compatibility, complexity, divisibility, and communicability are all
characteristics of
.
A) alternative evaluations
B) the degree of buyer involvement
C) a product's rate of adoption
D) unexpected situational factors
E) postpurchase behaviors
157) Abel is considering whether or not to get an e-reader. He has read online reviews of three
different kinds of readers and has talked with two friends who own e-readers. Abel is at the
awareness stage of the new product adoption process.
158) The adoption process for new products refers to the mental process through which an
individual passes from first learning about an innovation to final adoption.
159) Being able to try a new product is an unimportant stage in the adoption process as the
consumer already has a good idea of the product's value.
160) People differ greatly in their readiness to try new products. In each product area, there are
"consumption pioneers," also referred to as lagging adopters.
161) Early adopters are opinion leaders in their communities. They adopt new ideas early but
carefully.
162) Early mainstream adopters accept new ideas after the average person.
163) Ed purchased electronic devices such as a smartphone, and tablet after many people he
knew already owned the devices. Ed belongs to the adopter group called lagging adopters.
164) Viviana wants to be the first to own the new fashion style of shoes. Viviana is an early
mainstream adopter.
165) Two of the characteristics that are especially important in influencing an innovation's rate
of adoption are relative advantage and compatibility.
166) What strategy should a marketer use upon learning that consumers are not buying a
product because they do not perceive a need for it?
167) What are the differences between innovators, early adopters, and early mainstream
adopters?
168) Identify and describe the stages in the adoption process.
169) Identify product characteristics that influence the rate of adoption. Explain how each
characteristic affects the rate of adoption.
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Principles of Marketing, 17e (Kotler/Armstrong)
Chapter 6 Business Markets and Business Buyer Behavior
1) The decision process by which business buyers determine which products and services their
organizations need to purchase and then find, evaluate, and choose among alternative suppliers
and brands is known as
.
A) situational analysis
B) business buying process
C) business diversification
D) business process automation
E) lateral expansion
2) Business buyer behavior refers to the
.
A) buying behavior of consumers who buy goods and services for personal consumption
B) buying behavior of the organizations that buy goods and services for use in the production of
other products and services that are sold, rented, or supplied to others
C) buying behavior of consumers who rely on small retailers for the regular supply of
provisions
D) decision process by which business buyers determine which products and services their
organizations need to purchase
E) strong affinity of businesses for value-for-money deals
3) Which of the following is NOT part of the business market?
A) Kruger Group sells interior security systems to resorts.
B) A country club buys safety equipment for its swimming pool.
C) Maria Theresa shops for her family's groceries at the local Whole Foods store.
D) A firm buys laptops from Dell for company salespeople to use when traveling.
E) Airmark sells a vinyl printing press to a manufacturer of plastic storage containers.
4) Business markets are similar to consumer markets in that
.
A) the nature of the buying unit is the same for both
B) the decision processes involved in both the markets are same
C) both involve people who assume buying roles and make purchase decisions to satisfy needs
D) both share the same market structure
E) the types of decisions are fairly consistent in both the markets
5) Differences between business markets and consumer markets include all of the following
EXCEPT
.
A) nature of the buying unit
B) market structure and demand
C) number of buyers
D) people who make purchase decisions to satisfy needs
E) types of decisions and the decision process
6) The business marketer normally deals with
A) far fewer but far larger buyers
B) far more but far smaller buyers
C) negligible customer complaints
D) far less fluctuations in demands
than the consumer marketer does.
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E) far more elastic demand
7) The Pure Drug Company produces insulin, a product with a very stable demand. Even
though the price changed several times in the past two years, the demand for Pure Drug's
insulin remained relatively unaffected. In this instance, the demand for insulin is representative
of
demand.
A) latent
B) negative
C) inelastic
D) derived
E) composite
8) In business markets with inelastic demand
.
A) the total demand for products is not much affected by short-term price changes
B) buyers are highly sensitive to price changes
C) derived demand is absent
D) a business purchase usually involves fewer decision participants
E) a business purchase usually does not involve a professional purchasing effort
9) A university enrolled 200 graduate students in the Fall of 2015. However, the enrollment rate
was only slightly affected following a 12-percent hike in tuition the following fall. This
illustrates
demand.
A) derived
B) negative
C) highly elastic
D) composite
E) inelastic
10) Business demand that ultimately comes from the demand for consumer goods is known as
demand.
A) derived
B) negative
C) primary
D) consumer
E) elastic
11) Green Bees, a popular American heavy-metal band, will perform in Berlin during
Christmas. There is a high demand for concert tickets among fans worldwide who are looking
forward to the much-awaited performance. In this instance, the high demand for tickets for the
Green Bees concert is representative of
demand.
A) primary
B) negative
C) derived
D) elastic
E) business
12) Demand for outboard motors depends on consumers purchasing fishing boats. This is an
example of
demand.
A) primary
B) composite
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C) derived
D) elastic
E) negative
13) Jeremy's, a handbag manufacturer in Lower Manhattan, procures a large stock of leather in
anticipation of brisk sales of handbags during December. This is an example of a(n)
demand.
A) composite
B) derived
C) primary
D) latent
E) inelastic
14) Which of the following is true about business purchases?
A) Business purchases involve more professional purchasing effort than consumer purchases.
B) Business purchases involve fewer participants in decision making compared to consumer
purchases.
C) Purchasing agents are absent in business purchases.
D) Business purchases involve less technical and economic considerations compared to
consumer purchases.
E) Business purchases are usually quicker and more informal than are consumer purchases.
15) A business purchase usually involves all of the following EXCEPT
.
A) more decision participants
B) manufacturing representatives
C) more professional purchasing effort
D) trained purchasing agents
E) high-level trained supply managers
16) Since business marketers have fewer buyers than consumer marketers, business buyers
often face
than do consumer buyers.
A) less complex buying decisions
B) shorter buying processes
C) informal buying processes
D) more complex buying decisions
E) fewer product details
17)
involves systematically developing networks of supplier-partners to ensure a
dependable supply of products and materials for use in making products or reselling them to
others.
A) Supplier development
B) Business buying
C) Supplier quality assurance
D) Relationship management
E) Executive development
18) The owners of a manufacturing firm in Ohio have developed a core network of suppliers to
ensure an uninterrupted supply of products. This is an example of
.
A) capability management
B) a supply bottleneck
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C) asset management
D) backsourcing
E) supplier development
Refer to the scenario below to answer the following question(s).
Alpha Stampings Inc. produces 14 metal stampings for the automotive industry. Due to industry
design changes and consumer demands, for the next financial year, six of those stampings will
require a slight change: two will have an extra hole punched through the side, two will require
an extra plating process, and two will require an additional weld operation.
In the meantime, purchasing agent Richard Koehl has been asked to reduce the number of
Alpha's steel suppliers in an effort to cut costs. After obtaining updated price quotations and
steel samples from his current suppliers, Richard faced a dilemma. Until now, he had selected
his suppliers based on quality and price, but the major consideration had been the type of steel
required and the specialized production processes of his respective suppliers. Not all of Alpha's
suppliers could produce the exact grades of steel needed; some suppliers were better at
producing certain types of steel than others.
Richard contacted several employees at Alpha who had worked with the various types of steel
in the past. The quality control manager and line inspector, for example, could help to
determine which suppliers had the capabilities of producing specific types of steel. The
production control manager could provide input regarding which types of steel worked best in
which presses. The warehouse foreman gave inputs regarding how long various types of steel
could be held in inventory before rust spots began to form on their surfaces. Each person
contributed the necessary information to help Richard in making his decision.
19) The demand for Alpha Stampings' products is ultimately based on the demand for new
automobiles in the consumer market. This is an example of
demand.
A) negative
B) latent
C) primary
D) derived
E) composite
20) In the business buying process, business buyers determine which products and services
their organizations need to purchase.
21) The main differences between business and consumer markets are in market structure and
demand, the nature of the buying unit, and the types of decisions and the decision process
involved.
22) Most businesses that manufacture products for the consumer market also sell directly to
consumers.
23) The business marketer normally deals with far fewer but far larger buyers than the
consumer marketer does.
24) The demand for many business goods tends to change more slowly than the demand for
consumer goods.
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7
25) Derived demand refers to the business demand that ultimately comes from the demand for
consumer goods.
26) Business demand ultimately derives from the demand for consumer goods.
27) In the business buying process, the buyer and seller are relatively less dependent on each
other.
28) Why is demand in the business market mostly inelastic?
29) Explain the concept of derived demand.
30) Why is the business buying process more formalized than the consumer buying process?
31) What is supplier development?
32) Distinguish between business markets and consumer markets.
33) In which of the following would the buyer reorder a product without any modifications?
A) reverse auction
B) solution selling
C) new task
D) straight rebuy
E) modified rebuy
34) Sigma Inc., a software firm based in California, reordered 50 printers from the designated
provider without any modifications. This is an example of
.
A) derived demand
B) inelastic demand
C) a straight rebuy
D) a new task
E) a modified rebuy
35) A marketer wanting to determine business buyer behavior is most likely to ask which of the
following questions?
A) Are buyers sensitive toward price changes in consumer markets?
B) What are the major influences on buyers?
C) Are niche markets more profitable than mass markets?
D) How do interpersonal factors affect organizational performance?
E) Is the role of gatekeepers relevant in the international business environment?
36) In a
situation, the "in" suppliers may become nervous and feel pressured to put
their best foot forward to protect an account and the "out" suppliers may see the present
situation as an opportunity to make a better offer and gain new business.
A) straight rebuy
B) new task
C) reverse auction
D) modified rebuy
E) solutions selling
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8
37) In a(n)
situation, the buyer wants to revise product specifications, prices, terms,
or suppliers.
A) reverse auction
B) straight rebuy
C) new task
D) modified rebuy
E) absolute auction
38) In a straight rebuy,
.
A) the "in" suppliers try to maintain product and service quality to keep the business
B) the "in" suppliers feel pressured to protect an account
C) the "out" suppliers view the situation as an opportunity to gain new business
D) a company buys a product or a service for the first time
E) buyers are keen on revising product specifications
39) Gina Parker owns an ad agency in Baton Rouge. She regularly purchases cleaning supplies
for her custodial staff, using the same vendor and ordering relatively consistent amounts of the
same products on each purchase. This is an example of
.
A) a modified rebuy situation
B) a new task
C) a straight rebuy situation
D) reverse auction
E) product differentiation
40) Which of the following is most likely true about a straight rebuy?
A) Suppliers are not required to focus on quality of products or services delivered.
B) A straight rebuy is far more complex than a new-task situation.
C) A straight rebuy is handled on a routine basis by the purchase department.
D) A straight rebuy occurs only when a buyer wants to pinpoint and procure the best deal in the
market.
E) A straight rebuy involves more opportunities for "out" buyers than do other types of
purchasing situations.
41) Ralph works for a manufacturing company in Ohio. Recently, he called in a department
manager to assist in the purchase of some heavy machinery. After consulting the department
manager, Ralph is considering a change in product specifications and characteristics and
expects suppliers to meet his requirements. Which of the following is evident here?
A) modified rebuy
B) new task
C) straight rebuy
D) product differentiation
E) reverse auction
42) Sheffield Cargo serves both consumer and business markets, but most of its revenue comes
from its business customers. Of late, the business customers of Sheffield Cargo have demanded
a change in the packaging of heavy cargo along with a more sophisticated and user-friendly
extranet framework. Sheffield Cargo is under pressure to offer better products and services or
risk losing a huge portion of its customers. This is an example of
.
A) a new task
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9
B) a modified rebuy situation
C) a straight rebuy situation
D) trade exchange
E) reverse auction
43) Peter Adams, an entrepreneur, decided to start a new technology venture. As he needed
servers and computers for his company, he decided to order these from a local vendor who was
offering attractive discounts. In this instance, Peter
.
A) faces a new task situation
B) faces a modified rebuy situation
C) is most likely to benefit the most from reverse auction
D) faces the need for product differentiation
E) plans to attract customers by offering products at below-market prices
44)
refers to a business buying situation in which the buyer purchases a product or
service for the first time.
A) Modified rebuy
B) Straight rebuy
C) New task
D) Reverse auction
E) Derived demand
45) A new task situation presents
.
A) low risk for the buyer
B) the fewest decisions for the buyer
C) the least information required
D) the greatest opportunity and the greatest challenge to the marketer
E) the smallest number of decision participants
46)
refers to buying a packaged solution to a problem from a single seller, thus
avoiding all the separate decisions involved in a complex buying situation.
A) Systems selling
B) Performance review
C) Problem recognition
D) Proposal solicitation
E) General need specification
47) Solutions selling
.
A) is often a key business marketing strategy for winning and holding accounts
B) refers to a business buying situation in which the buyer purchases a product or service for
the first time
C) refers to a business buying situation in which the buyer wants to modify product
specifications, prices, terms, or suppliers
D) is equivalent to cold calling
E) refers to a business buying situation in which the buyer routinely reorders something without
any modifications
48) Rudolf Technologies Inc. decided to enter the automobile service market. Consequently, the
company decided to procure the tools and machines needed from a reputable supplier. Rudolf
Technologies is facing
.
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A) a new task situation
B) a modified rebuy situation
C) negative competition
D) the need to outsource its primary service offering
E) the pressure to diversify its market
49) The decision-making unit of a purchasing organization is called its
.
A) value chain
B) buying center
C) customer support system
D) quality center
E) innovation center
50) In routine buying situations, which of the following members of the buying center has formal
or informal power to select or approve the final suppliers?
A) users
B) influencers
C) gatekeepers
D) deciders
E) buyers
51) The
refer(s) to all the individuals and units that play a role in the purchase
decision-making process.
A) users
B) influencers
C) buying center
D) gatekeepers
E) systems sellers
52) A(n)
A) user
B) influencer
C) buyer
D) decider
E) gatekeeper
controls the flow of information to others in the buying center.
53)
refer to members of the buying organization who help define specifications and
provide information for evaluating alternatives.
A) Gatekeepers
B) Influencers
C) Users
D) Deciders
E) Buyers
54)
have formal authority to select the supplier and arrange the terms of purchase.
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1
A) Users
B) Influencers
C) Buyers
D) Gatekeepers
E) Deciders
55)
refer to people in an organization's buying center who affect the buying decision;
they often help define specifications and provide information for evaluating alternatives.
A) Users
B) Influencers
C) Buyers
D) Gatekeepers
E) Deciders
56)
may help shape product specifications, but their major role is to select vendors
and to negotiate.
A) Gatekeepers
B) Deciders
C) Buyers
D) Influencers
E) Users
57) Eric Mason, an employee of Huntington Steelworks, is responsible for defining product
specifications and providing relevant information for evaluating alternatives in his
organization's buying center. Eric, whose opinions affect the buying decisions of his
organization to a great extent, is most likely a(n)
.
A) user
B) influencer
C) decider
D) gatekeeper
E) buyer
58) Dora has formal authority to select the suppliers and arrange terms of purchase for many of
the items her firm uses. Her role in the buying center is that of a(n)
.
A) user
B) influencer
C) buyer
D) decider
E) gatekeeper
59) Paul, a purchasing agent for Kiel Inc., has the authority to prevent salespersons from seeing
the decision makers in his organization. Which of the following best describes Paul's position?
A) influencer
B) decider
C) gatekeeper
D) buyer
E) user
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2
60) Who among the following does NOT participate in the purchase decision process of a
buying organization?
A) individuals who use the product or service
B) individuals who influence the buying decision
C) individuals who make the buying decision
D) individuals who supply raw materials
E) individuals who control the flow of information to others
61) Jason Perkins has the informal power to approve the final suppliers in his organization. In
other words, Jason plays the role of a(n)
in his organization's buying center.
A) gatekeeper
B) decider
C) buyer
D) influencer
E) user
62) A technician in a hospital told the chief dentist, Dr. Albrecht, that the hospital should
purchase equipment that would sterilize the dentists' tools without using any water because
water tends to affect the durability of the tools over time. Dr. Albrecht located some articles on
chemical sterilizers and gathered more information on how they worked. After talking to
salespeople, Dr. Albrecht finally placed his order for the machine. In this instance, Dr. Albrecht
played the role of a(n)
.
A) monitor
B) decider
C) agent
D) influencer
E) gatekeeper
63) Marissa Hopkins, a hospital nurse, notices that the gurneys used in the hospital are not
durable enough. She informed the hospital authorities about Grace Care Inc., a new company
selling lightweight and durable gurneys. In this instance, Marissa played the role of a(n)
.
A) strategist
B) buyer
C) gatekeeper
D) influencer
E) decider
64) In new product buying, the users are often the
A) monitors
B) influencers
C) gatekeepers
D) deciders
E) primary advertisers
.
65) Phoi Nguyen, a manufacturing mechanic, determines that the molds for manufacturing
plastic jar lids are wearing out sooner than expected. Phoi contacts her manager to request that
the parts be reordered. In this instance, Phoi played the role of a(n)
.
A) user
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3
B) buyer
C) gatekeeper
D) influencer
E) decider
66) In routine buying, buyers are often the
A) monitors
B) influencers
C) gatekeepers
D) deciders
E) primary advertisers
, or at least the approvers.
67) Which of the following is an environmental factor that influences business buyers?
A) organizational procedures
B) individual motives
C) organizational objectives
D) supply of key materials
E) group dynamics
68) Business buyers are heavily influenced by factors in the current and expected economic
environment, such as
.
A) level of primary demand
B) organizational objectives
C) group dynamics
D) individual motives
E) culture and customs
69) The major influences on the buying process at General Aeronautics Limited include supply
conditions and technological changes, which would both be categorized as
factors.
A) organizational
B) individual
C) systemic
D) interpersonal
E) environmental
70)
can strongly influence business buyer reactions to the marketer's behavior and
strategies, especially in the international marketing environment.
A) Political developments
B) Culture and customs
C) Technological changes
D) Competitive developments
E) The cost of money
71) Which of the following is an organizational factor that influences business buyers?
A) technology
B) company procedures
C) employee attitudes
D) employee motives
E) group dynamics
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72) Which of the following factors influencing the business buying process do marketers
typically find most difficult to assess?
A) economic
B) technological
C) interpersonal
D) organizational
E) environmental
73) Factors such as a firm's objectives, procedures, and systems are examples of
influences on the business buyer behavior.
A) political
B) interpersonal
C) technological
D) organizational
E) cultural
74) If a buying center is most influenced by authority in the business buying process, it can be
safely concluded that
factors have a major influence on its buying behavior.
A) technological
B) systemic
C) interpersonal
D) strategic
E) economic
75) After searching extensively for vendors, Shalina D'Souza, the owner of a manufacturing
firm, selected Texcom Technologies Inc. as her firm's primary supplier of bearings and shafts of
a specific dimension. Shalina is currently preparing an order form that specifies the number of
shafts needed and the expected time of delivery. In other words, she is preparing the
.
A) order routine specification
B) general needs description
C) product specification
D) marketing mix
E) product mix
Refer to the scenario below to answer the following question(s).
Alpha Stampings Inc. produces 14 metal stampings for the automotive industry. Due to industry
design changes and consumer demands, for the next financial year, six of those stampings will
require a slight change: two will have an extra hole punched through the side, two will require
an extra plating process, and two will require an additional weld operation.
In the meantime, purchasing agent Richard Koehl has been asked to reduce the number of
Alpha's steel suppliers in an effort to cut costs. After obtaining updated price quotations and
steel samples from his current suppliers, Richard faced a dilemma. Until now, he had selected
his suppliers based on quality and price, but the major consideration had been the type of steel
required and the specialized production processes of his respective suppliers. Not all of Alpha's
suppliers could produce the exact grades of steel needed; some suppliers were better at
producing certain types of steel than others.
Richard contacted several employees at Alpha who had worked with the various types of steel
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5
in the past. The quality control manager and line inspector, for example, could help to
determine which suppliers had the capabilities of producing specific types of steel. The
production control manager could provide input regarding which types of steel worked best in
which presses. The warehouse foreman gave inputs regarding how long various types of steel
could be held in inventory before rust spots began to form on their surfaces. Each person
contributed the necessary information to help Richard in making his decision.
76) In this scenario, which of the following had the greatest influence on the business buying
behavior at Alpha Stampings?
A) individual preferences
B) organizational structure
C) interpersonal influences
D) technological changes
E) cultures and customs
77) The management's directive to reduce the number of steel suppliers refers to the influence
of factors affecting the business buying behavior of Alpha.
A) political
B) organizational
C) interpersonal
D) individual
E) cultural
78) In a straight rebuy, the buyer wants to alter product specifications, prices, terms, or
suppliers.
79) A company buying a product or service for the first time faces a new task situation.
80) The buying center is a fixed and formally identified unit within the buying organization.
81) Within the organization, buying activity consists of two major parts: the buying center and
the buying decision process.
82) Influencers often help define specifications and also provide information for evaluating
alternatives.
83) Gatekeepers have formal or informal power to select or approve the final suppliers.
84) Rachel Stein works for the LeBray Beverage Company. She helps define product
specifications and also provides information for evaluating alternatives. Rachel plays the role of
gatekeeper.
85) Business buyers are subject primarily to economic influences when they make their buying
decisions. Emotional or personal factors rarely are involved.
86) What happens in a modified rebuy?
87) How do influencers contribute to the purchase decision process?
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88) What is the primary function of gatekeepers in an organization?
89) How do interpersonal factors influence the business buying process?
90) What functions do buyers serve in a buying center?
91) Why is it difficult to assess interpersonal factors that influence the business buying process?
92) Describe the major types of buying situations.
93) Explain the advantages of systems selling.
94) Define a buying center and the major roles played by members of an organization in the
purchase decision process.
the major factors that influence business buyer behavior.Difficulty: Moderate
95) "The buying center concept presents a major marketing challenge." What does a business
marketer need to learn in order to deal with the challenge effectively?
96) Discuss the major influences on business buyers.
97) Buyers who face a
usually go through all stages of the buying process.
A) straight rebuy
B) modified rebuy
C) new task buying situation
D) routine buying situation
E) need for limited problem solving
98) In the beginning of the buying process, Timothy Perry, a product development manager,
noticed that the raw materials that were being procured from his company's regular supplier
were of poor quality. Consequently, he decided to change the existing supplier as a remedial
measure. The stage of the buying process in which Timothy identified the quality breach
represents the
stage.
A) problem recognition
B) general needs description
C) product specification
D) supplier search
E) performance review
99)
occurs when someone in the company identifies a need that can be met by
acquiring a specific product or service.
A) Solutions selling
B) Proposal solicitation
C) Problem recognition
D) Performance review
E) Real-time marketing
100) Which of the following is an example of an internal stimulus that would most likely lead
to problem recognition?
A) A buyer gets a new idea from an advertisement.
B) A buyer gets a new idea at a trade show.
C) A buyer is unhappy with a current supplier's product quality.
D) A buyer receives a call from a salesperson offering better service.
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7
E) A buyer learns about a new product at an industry convention.
101) The first step of the business buying process is
.
A) general needs description
B) product specification
C) order-routine specification
D) problem recognition
E) performance review
102) Ross Stuart is a purchasing manager in a Texas-based manufacturing company. He sources
most of the raw materials needed by his company from Kramer Corp. However, Ross is
unhappy with Kramer's prices. Additionally, he thinks that the quality of the raw materials
supplied by Kramer is substandard. Which of the following stages in the business buying
process is Ross' company currently in?
A) general needs description
B) problem recognition
C) product specification
D) order-routine specification
E) performance review
103) Sam Doharty, a purchasing manager in Willard Groups of Companies, is currently
working with engineers and consultants to define the items to be purchased. Additionally, Sam
and his team are ranking the importance of reliability, durability, and price desired in the items.
In other words, they are preparing a(n)
.
A) decision tree
B) supplier list
C) product proposal
D) order-routine specification
E) general need description
104) In the
stage of the buying process, the alert business marketer can help the
buyers define their needs and provide information about the value of different product
characteristics.
A) problem recognition
B) general needs description
C) supplier search
D) supplier selection
E) order-routine specification
105)
refers to the stage of the business buying process in which the buying
organization decides on and specifies the best technical product characteristics for a needed
item.
A) Performance review
B) General needs description
C) Product development
D) Proposal solicitation
E) Product specification
106) During which of the following stages of the business buying process is a buyer most likely
to conduct a value analysis by carefully studying components to determine if they can be
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8
redesigned, standardized, or made less expensively?
A) proposal solicitation
B) general need description
C) order-routine specification
D) performance review
E) product specification
107) A manager in a garment manufacturing company decided to replace the plastic shopping
bags currently used in his company with bags made of recyclable material. Consequently, he
asked the operations officer to gather relevant information and send a list of alternatives to him.
In the business buying process, the manager is preparing a(n)
.
A) problem statement
B) general needs description
C) supplier list
D) proposal solicitation
E) order-routine specification
108)
is an approach to cost reduction in which components are studied carefully to
determine if they can be redesigned, standardized, or made by less costly methods of
production.
A) Proposal solicitation
B) General needs description
C) Order-routine specification
D) Cost-benefit analysis
E) Product value analysis
109) By showing buyers a better way to make an object, outside sellers can
A) turn straight rebuy situations into modified rebuy situations
B) reduce delivery times and save money
C) provide incentives for larger orders
D) turn straight rebuy situations into new task situations
E) discourage straight rebuys
.
110) Johann Herr's company has standardized the size of its paper bags so that each bag can be
used in five to seven different store departments. In the business buying process, this approach
to cost reduction most likely took place in the
stage.
A) problem recognition
B) general needs description
C) product specification
D) supplier search
E) proposal solicitation
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9
111) Sail Metalworks Inc. is currently looking for the best vendors of metal sheets. In other
words, Sail Metalworks is
.
A) preparing a general needs description
B) deciding on product specification
C) conducting a supplier search
D) preparing an order-routing specification
E) reviewing suppliers' performance
112) Members of the buying center at Kid's World, a store for children's clothing, are drawing
up a list of desired supplier attributes and their relative importance. Next, they intend to
compare several suppliers' proposals to these attributes. In which step of the business buying
process is the buying center at Kid's World involved?
A) general needs description
B) proposal solicitation
C) supplier selection
D) order-routine specification
E) performance review
113) Which of the following most likely occurs in the supplier selection stage of the business
buying decision process?
A) The buyer calls for detailed written proposals or formal presentations from each potential
supplier.
B) The buyer compiles a small list of qualified suppliers by reviewing trade directories, doing
computer searches, or contacting other companies for recommendations.
C) The buying team decides on the best product characteristics and specifies them accordingly.
D) The buyer prepares a general need description and identifies the quantity of the needed item.
E) The buying center draws up a list of the desired supplier attributes and their relative
importance.
114) If a task is new, complex and costly, on which stage of the buying process will the buyer
spend a greater amount of time?
A) preparing a general needs description
B) deciding on product specification
C) conducting a supplier search
D) preparing an order-routing specification
E) reviewing suppliers' performance
115) A company will likely identify qualified suppliers by doing all of the following EXCEPT
.
A) online searches
B) reviewing trade directories
C) phoning other companies for recommendations
D) placing classified advertisements
E) being contacted by salespeople of qualified firms
116) In which stage of the business buying process does the buyer contact suppliers for bids?
A) general needs description
B) product specification
C) supplier search
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D) proposal solicitation
E) order-routing specification
117) Attributes that a buying center may look for in a supplier include all of the following
EXCEPT
.
A) product quality
B) off-shore manufacturing
C) service quality
D) on-time delivery
E) competitive prices
118) Many buyers prefer multiple sources of supplies
.
A) to avoid being totally dependent on one supplier
B) to keep companies interested in doing business with them
C) to ensure that suppliers do not become complacent
D) to encourage their salespeople to develop broader networks of contacts
E) to prepare in case of a work stoppage
119) The stage of the business buying process in which the chosen supplier(s) is given the final
order is the
stage.
A) performance review
B) proposal solicitation
C) order-routine specification
D) vendor-managed inventory
E) product specification
120) A
creates a long-term relationship in which the supplier promises to resupply
the buyer as needed at agreed prices for a set time period.
A) blanket contract
B) request for proposal
C) supplier proposal
D) change order
E) noncompete clause
121) In which stage of the business buying process does a buyer ask users to rate their
satisfaction with the supplied materials?
A) problem recognition
B) performance review
C) supplier search
D) supplier selection
E) order-routine specification
122) Luke Price, a manager in an automobile factory, wanted his subordinates to rate their
satisfaction about the new pistons that arrived last month. He asked them to rate the product
based on strength and ease of handling. Which of the following is evident here?
A) order-routine specifications
B) supplier selection
C) performance review
D) general needs description
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E) proposal solicitation
123) Under
, buyers share sales and inventory information directly with key suppliers
who monitor and replenish the buyer's stock automatically as needed.
A) supplier selection
B) proposal solicitation
C) general need specification
D) vendor-managed inventory
E) procurement
Refer to the scenario below to answer the following question(s).
Alpha Stampings Inc. produces 14 metal stampings for the automotive industry. Due to industry
design changes and consumer demands, for the next financial year, six of those stampings will
require a slight change: two will have an extra hole punched through the side, two will require
an extra plating process, and two will require an additional weld operation.
In the meantime, purchasing agent Richard Koehl has been asked to reduce the number of
Alpha's steel suppliers in an effort to cut costs. After obtaining updated price quotations and
steel samples from his current suppliers, Richard faced a dilemma. Until now, he had selected
his suppliers based on quality and price, but the major consideration had been the type of steel
required and the specialized production processes of his respective suppliers. Not all of Alpha's
suppliers could produce the exact grades of steel needed; some suppliers were better at
producing certain types of steel than others.
Richard contacted several employees at Alpha who had worked with the various types of steel
in the past. The quality control manager and line inspector, for example, could help to
determine which suppliers had the capabilities of producing specific types of steel. The
production control manager could provide input regarding which types of steel worked best in
which presses. The warehouse foreman gave inputs regarding how long various types of steel
could be held in inventory before rust spots began to form on their surfaces. Each person
contributed the necessary information to help Richard in making his decision.
124) In this instance, Richard plays the role of a(n)
A) decider
B) gatekeeper
C) influencer
D) proposal solicitor
E) product designer
.
125) Product value analysis is an approach to enhancing productivity.
126) In the general needs description of the buying process, the buyer describes the
characteristics and quantity of the needed item.
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127) In the proposal solicitation stage of the business buying process, the buyer invites
qualified suppliers to submit proposals.
128) The newer the buying task, and the more complex and costly the item, the lesser the
amount of time the buyer will spend searching for suppliers.
129) In the supplier selection stage, the buyer reviews supplier performance.
130) During proposal solicitation, the buying center often will draw up a list of desired supplier
attributes and their relative importance.
131) The order-routine specification includes the final order with the chosen supplier or
suppliers and lists items such as technical specifications, quantity needed, expected delivery
time, return policies, and warranties.
132) In the performance review stage, the seller or the buyer may modify, continue, or cancel
the business arrangement.
133) All business buying decisions follow all steps of the business buying process.
134) How does the buying process typically begin?
135) What is product value analysis?
136) What does the proposal solicitation stage of the business buying process involve?
137) Describe the advantage of selecting multiple sources of supplies.
138) Briefly describe the eight steps in the business buying process.
139)
refers to purchasing through electronic connections between buyers and sellers
—usually online.
A) E-procurement
B) General need specification
C) Strategic sourcing
D) Proposal solicitation
E) Value chain management
140) SkyWalk Aeronautics Limited received orders for 25 cargo air carriers from Zephyr Cargo
Limited through its Web site in 2016. This is an example of
.
A) order-routine specification
B) supplier selection
C) e-procurement
D) proposal solicitation
E) customer relations management
141) Pace Hardware uses Learningnow.com to improve sales force effectiveness and facilitate
sharing of expertise. It allows Pace retailers to connect with each other for seeking managerial
and marketing advice. It also allows Pace retailers to ask their suppliers about product usage,
deliveries, and warranties, and send new-product information directly to the retailers. In this
instance, Pace Hardware is facilitating communication through
.
A) extranet links
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B) podcasts
C) search engines
D) trading exchanges
E) reverse auctions
142) Which of the following is true with regard to e-procurement?
A) E-procurement has significantly declined in recent years.
B) Typically, business marketers do not favor e-procurement as it offers them little benefit.
C) E-procurement has been widely practiced since the 1950s.
D) E-procurement adds to existing inefficiencies in the supply chain.
E) E-procurement hastens order processing and delivery.
143) In
, companies put their purchasing requests online and invite suppliers to bid
for the business.
A) product specification
B) supplier search
C) reverse auctions
D) procurement
E) problem recognition
144) In
, companies work together to facilitate the trading process.
A) reverse auctions
B) trading exchanges
C) procurement
D) supplier selection
E) order-routine specification
145) Which of the following is LEAST likely a characteristic of business-to-business eprocurement?
A) greater access to new suppliers
B) lower purchasing costs
C) quick order processing and delivery
D) an increase in the derived demand
E) less paperwork
146) Which of the following can help a company create direct procurement accounts with
suppliers, through which company buyers can purchase equipment, materials, and supplies
directly?
A) backsourcing
B) extranet
C) company blog
D) reverse auction
E) trade exchange
147) Which of the following is true about business-to-business e-procurement?
A) E-procurement increases transaction costs for suppliers.
B) Because of an overwhelming demand, e-procurements usually have a huge time gap
between order and response.
C) Many buyers now use the power of the Internet to pit suppliers against one another and
search out better deals, products, and turnaround times on a purchase-by-purchase basis.
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4
D) E-procurement doesn't enhance customer-supplier relationships.
E) Due to extensive paperwork, the relatively important strategic issues, such as finding better
supply sources and working with suppliers to reduce costs and develop new products, are
sidelined.
148) Digital and social media's role in business-to-business marketing enhances all of the
following EXCEPT
.
A) targeting individuals that affect buying decisions within the target businesses
B) facilitating anytime and anywhere connections between people at the selling and buying
organizations
C) giving sellers more control of and access to important information
D) meeting in person with customers at trade shows or conferences
E) giving buyers more control of and access to important information
149) The benefits of e-procurement include access to new suppliers, lower purchasing costs,
and more time-efficient order processing and delivery.
150) E-procurement has caused the time between order and delivery to increase significantly.
151) Companies can allow their suppliers access to online sites on which the company posts its
buying needs, requests bids, negotiates terms, and places orders, thus minimizing research steps
and costs.
152) Digital and social media are useful primarily for consumer products and services
companies.
153) What is e-procurement? Briefly describe its major advantages.
154) The
market consists of schools, hospitals, nursing homes, prisons, and the like
that provide goods and services to people in their care.
A) government
B) consumer
C) wholesale
D) for-profit
E) institutional
155) Sage Hospitals, a nonprofit organization, provides healthcare to the people in the Midwest.
Management at Sage is involved in the
market.
A) government
B) consumer
C) wholesale
D) institutional
E) resell
156) All of the following organizations are likely part of the institutional market EXCEPT
.
A) LaGrange Community Hospital
B) Worthampshire Prison
C) Lancaster Real Estate Company
D) Water Street Nursing Home
E) Millersville Community College
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5
157) In several major cities in the United States, the
operates business service centers
with staffs to provide a complete education on the way government agencies buy, the steps that
suppliers should follow, and the procurement opportunities available.
A) Defense Logistics Agency
B) Federal Business Agency
C) Small Business Administration
D) General Services Administration
E) U.S. Commerce Department
158) All of the following are difficulties associated with selling to government buyers EXCEPT
.
A) excessive paperwork
B) bureaucracy
C) strict regulations
D) high advertising costs
E) decision-making delays
159) Government buyers are affected by all of the following factors EXCEPT
factors.
A) environmental
B) cultural
C) organizational
D) interpersonal
E) individual
160) Which of the following plays the most important role in government buying?
A) price
B) product differentiation
C) advertising
D) personal selling
E) customer relationship management
161) Total government spending is determined by
.
A) legal treatises
B) marketing efforts
C) elected officials
D) court rulings
E) technology needs
162) Some companies sell primarily to government buyers as prime contractors or
subcontractors. This allows these companies to
, participate in the product
specification phase, gather competitive intelligence, prepare bids carefully, and produce
stronger communication to describe and enhance their companies' reputations.
A) lobby elected officials to fund projects
B) anticipate government needs and projects
C) develop relationships with government procurers
D) identify cost-cutting measures
E) invest in new technologies
163) The
Web site provides a single point of entry through which commercial
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6
vendors and government buyers can post, search, monitor, and retrieve opportunities solicited
by the entire federal contracting community.
A) U.S. Small Business Administration
B) Center for Regulatory Effectiveness
C) Federal Business Opportunities
D) Federal Civil Defense Authority
E) U.S. Commerce Department
164) The institutional market is characterized by high budgets, while its buying objective is
profit.
165) The government market consists of schools, hospitals, nursing homes, prisons, and other
institutions that provide goods and services to people in their care.
166) Government organizations typically require suppliers to submit bids, and normally they
award the contract to the lowest bidder.
167) What are the noneconomic criteria that influence government buying?
168) What are the major characteristics of institutional markets?
169) What are the major characteristics of government markets?
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Principles of Marketing, 17e (Kotler/Armstrong)
Chapter 7 Customer Value-Driven Marketing Strategy: Creating Value for Target
Customers
1) Companies know they cannot appeal to all buyers in the marketplace, or at least not in the
same way. Reasons for this include all of the following EXCEPT
.
A) buyers are too numerous
B) companies vary widely in their abilities to serve different market segments
C) buyers are varied in their needs and buying practices
D) companies need more information to offer the right products to the right customers
E) buyers are widely scattered
2)
consists of evaluating each market segment's attractiveness and selecting one or
more segments to enter.
A) Positioning
B) Mass customization
C) Market targeting
D) Market segmentation
E) Differentiation
3)
involves dividing a market into smaller segments of buyers with distinct needs,
characteristics, or behaviors that might require separate marketing strategies or mixes.
A) Mass customization
B) Market targeting
C) Market segmentation
D) Differentiation
E) Positioning
4)
involves actually distinguishing the firm's market offering to create superior
customer value.
A) Mass customization
B) Differentiation
C) Market segmentation
D) Diversifying
E) Targeting
5) When marketers at Fair & Leigh Inc. selected the Millennials, a demographic group that
includes many college students, as an untapped group of potential customers for their new line
of products, they were engaging in
.
A) occasion segmenting
B) local marketing
C) market diversification
D) market targeting
E) product positioning
6)
consists of arranging for a market offering to occupy a clear, distinctive, and
desirable place relative to competing products in the minds of target consumers.
A) Mass customization
B) Targeting
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8
C) Segmentation
D) Differentiation
E) Positioning
7) Mass marketing involves identifying market segments, selecting one or more of them, and
developing products and marketing programs tailored to each. FALSE
8) The customer-driven marketing strategy involves four steps: market segmentation, market
targeting, positioning, and differentiation. TRUE
9) With technology advances making it simple to contact many customers at once, companies
have moved toward mass marketing over target marketing.FALSE
10) What is differentiation?
11) Explain the four major steps in designing a customer-driven marketing strategy.
12) Which of the following is NOT one of the major variables used in segmenting consumer
markets?
A) demographic
B) behavioral
C) ethical
D) geographic
E) psychographic
13)
calls for dividing the market into regions, states, counties, cities, or even
neighborhoods.
A) Benefit segmentation
B) Geographic segmentation
C) Demographic segmentation
D) Psychographic segmentation
E) Occasion segmentation
14) Many companies today are localizing their products, advertising, promotion, and sales
efforts to fit the needs of individual regions, cities, and neighborhoods. This is an example of
.
A) geographic segmentation
B) product diversification
C) branding
D) psychographic segmentation
E) demographic segmentation
15)
segmentation divides the market into segments based on variables such as age,
life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation.
A) Geographic
B) Benefit
C) Occasion
D) Psychographic
E) Demographic
16) Delta Motorworks markets its cars based on the age, gender, and income of its customers.
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9
Which of the following types of market segmentation is evident here?
A) geographic segmentation
B) benefit segmentation
C) occasion segmentation
D) demographic segmentation
E) psychographic segmentation
17)
segmentation divides buyers into different segments based on social class,
lifestyle, or personality characteristics.
A) Benefit
B) Occasion
C) Geographic
D) Demographic
E) Psychographic
18) A company selling child-care products ran a television ad depicting women as being
primarily responsible for childcare. Many women viewers considered this regressive, alleging
that the ad failed to recognize the much more diversified role of women in today's world. This
is an example of
.
A) cause marketing
B) stereotyping
C) niche marketing
D) scapegoating
E) positioning
19) Which of the following variables are the most popular for marketers to use in segmenting
customer groups?
A) ethical
B) psychographic
C) demographic
D) behavioral
E) geographic
20)
can be a poor predictor of a person's health, work or family status, needs, or
buying power.
A) Occupation
B) Education
C) Ethnicity
D) Religion
E) Age
21)
segmentation has long been used in clothing, cosmetics, toiletries, and
magazines.
A) Behavioral
B) Gender
C) Benefit
D) Occasion
E) Geographic
22) Gilron Holidays runs a premium membership club that caters to customers whose annual
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0
salary exceeds $100,000. Members of this club are offered seasonal discounts at select luxury
hotels in select cities worldwide. Gilron Holidays most likely follows a(n)
segmentation approach.
A) gender
B) benefit
C) occasion
D) income
E) geographic
23)
segmentation divides buyers into different segments based on lifestyle or
personality characteristics.
A) Benefit
B) Occasion
C) Geographic
D) Demographic
E) Psychographic
24) Marketers who use
often segment their markets by consumer lifestyles and base
their marketing strategies on lifestyle appeals.
A) demographic segmentation
B) geographic segmentation
C) benefit segmentation
D) psychographic segmentation
E) occasion segmentation
25)
segmentation divides buyers into segments based on their knowledge, attitudes,
uses, or responses concerning a product.
A) Behavioral
B) Psychographic
C) Age and life cycle
D) Gender
E) Geographic
26)
segmentation refers to dividing the market into segments according to occasions
when buyers get the idea to buy, actually make their purchase, or use the purchased item.
A) Gender
B) Psychographic
C) Occasion
D) Geographic
E) Income
27) Malcolm Sanders, a graduate student from Boston, makes customized snowboards for local
snowboarding enthusiasts. The demand for snowboards peaks during the winter months, a busy
time for Malcolm. He advertises more aggressively and sells most of his snowboards around
this time. Which market segmentation approach does Malcolm most likely use?
A) gender segmentation
B) psychographic segmentation
C) occasion segmentation
D) geographic segmentation
E) age and life-cycle segmentation
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1
28) Tropicana promotes drinking orange juice at any time of day as a cool, refreshing drink.
The market segmentation approach Tropicana is using is
.
A) occasion segmentation
B) benefit segmentation
C) age and life-cycle segmentation
D) gender segmentation
E) behavioral segmentation
29)
requires finding the major advantages people look for in a product class, the
kinds of people who look for each positive aspect of a product, and the major brands that
deliver it.
A) Gender segmentation
B) Psychographic segmentation
C) Benefit segmentation
D) Geographic segmentation
E) Age and life-cycle segmentation
30) Calypso Motors recently rolled out its Proteus hatchback. Proteus combines the
attractiveness of a luxury car with the excellent agility of a sports car. Calypso Motors is
confident that Proteus will appeal to both sports car enthusiasts as well as the luxury segment.
Which of the following types of market segmentation is evident here?
A) gender segmentation
B) income segmentation
C) benefit segmentation
D) geographic segmentation
E) age and life-cycle segmentation
31) Which of the following refers to a behavioral segmentation variable that involves
segmenting markets into nonusers, ex-users, potential users, first-time users, and regular users
of a product?
A) user status
B) usage rates
C) gender status
D) income status
E) loyalty status
32) In the context of behavioral segmentation, who among the following is a potential user?
A) Anita, who recently had a baby
B) Peter, who recently changed his job
C) Mary, who enrolled as a graduate student in a university last year
D) Gina, who opened a dental clinic in Orange County
E) Raj, who is planning a trip to Hawaii with friends
33) In the context of behavioral segmentation, markets segmented by
categorized into light, medium, and heavy product users.
A) benefits sought
B) loyalty status
C) usage rate
D) user status
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2
can be
E) occasion
34) A recent study conducted by Estelle Cosmetics Company showed that heavy users of
Estelle's products comprise a small percentage of the market. The study indicated that less than
7 percent of all shoppers buy nearly 71 percent of Estelle's products in the United States. This is
an example of
.
A) benefit segmentation
B) segmentation by loyalty status
C) segmentation by usage rate
D) psychographic segmentation
E) occasion segmentation
35) Consumers who show their allegiance to brands, stores, or companies help marketers to
segment consumers by their
.
A) user status
B) degree of loyalty
C) income
D) geographic location
E) benefit-seeking attitudes
36) Which of the following is true about behavioral segmentation on the basis of the loyalty
variable?
A) Consumers tend to pay more for products that are targeted at their respective age group or
generation.
B) By looking at customers who are shifting away from its brand, a company can learn about
its marketing weaknesses and take actions to correct them.
C) Highly loyal customers of a brand are less likely to engage in word-of-mouth publicity than
those who are not.
D) Completely loyal customers of a brand are typically loyal to two or three brands of a given
product.
E) Only consumers who seek premium or luxury services are subjected to behavioral
segmentation based on the loyalty variable.
37) Which of the following is true about multivariable segmentation systems?
A) Marketers using multiple segmentation bases tend to ignore smaller markets.
B) Marketers often use multiple segmentation bases to control inflation.
C) Multiple segmentation rarely involves the use of demographic data.
D) Multiple segmentation is ineffective in large markets.
E) Multiple segmentation bases help identify smaller, better-defined target groups.
38) Which of the following is NOT a benefit of using multivariable segmentation systems?
A) help companies identify key customer segments
B) help companies reach key customer segments more efficiently
C) help companies more accurately price their products to appeal to key customer segments
D) help companies better understand key customer segments
E) help companies tailor market offering to the needs of the key customer segments
39) Which of the following is NOT a common variable used by both consumer and business
marketers while segmenting markets?
A) operating characteristics
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3
B) loyalty status
C) usage rate
D) geographic location
E) benefits sought
40) Business marketers use geographic, demographic, benefit, user status, usage rate, and
loyalty status to segment their markets. They also use
, customer operating
characteristics, purchasing approaches, and situational factors.
A) weather patterns
B) psychographics
C) ethical traits
D) budgets and financial status
E) personal characteristics
41)
segmentation assumes that nations close to one another will have many common
traits and behaviors.
A) Geographic
B) Occasion
C) Psychographic
D) Benefit
E) Demographic
42) Double Drill Inc. segments its foreign markets by per capita income. This firm segments
the international markets based on
.
A) political factors
B) legal factors
C) geographic location
D) economic factors
E) cultural factors
43) Pacific Fisheries divides its customers into different regional units, such as Asia, Australia,
and the Americas. This is an example of
segmentation.
A) demographic
B) psychographic
C) geographic
D) occasion
E) benefit
44) Marketers often segment international markets according to the type and stability of
government. In such instances, they segment markets based on
.
A) geographic location
B) economic factors
C) cultural factors
D) political factors
E) sociocultural factors
45) Anchor Tractors focuses on selling its farm equipment in North America and Europe. It has
not yet considered expanding into the Middle East. Which factor is likely most important in this
decision regarding expansion?
A) geographic
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4
B) political
C) demographic
D) personality
E) cultural
46) Which of the following refers to a cultural factor in the context of segmenting international
markets?
A) receptivity of foreign firms
B) economic development of the country
C) population income levels
D) stability of the government
E) values and attitudes
47) Using
segmentation, marketers form segments of consumers who have similar
needs and buying behaviors even though they are located in different countries.
A) psychographic
B) demographic
C) occasion
D) benefit
E) intermarket
48) Orion Inc. markets luxury watches. It targets the wealthy global elite segment, regardless of
their geographic location. Orion most likely uses
segmentation.
A) income
B) age-group
C) occasion
D) benefit
E) cross-market
49) Teen Mania Inc., a company marketing adventure sports merchandise for teenagers, targets
the world's teenagers, who have similar needs and buying behavior even though they are
located in different countries. Which market segmentation is evident here?
A) income segmentation
B) psychographic segmentation
C) gender segmentation
D) intermarket segmentation
E) occasion segmentation
50) An American cola-manufacturing company that primarily targets rebellious and
adventurous people most likely uses
segmentation.
A) occasion
B) geographic
C) income
D) benefit
E) psychographic
51) An Irish company that manufactures umbrellas and ponchos primarily targeting consumers
during the winter months is using
segmentation.
A) psychographic
B) income
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C) geographic
D) occasion
E) benefit
52) Venus Inc., a company designing and marketing branded diamond jewelry, targets wealthy
consumers with similar needs and buying behaviors, even though the consumers are located in
different countries. This is an example of
segmentation.
A) intermarket
B) loyalty
C) life-cycle
D) income
E) psychographic
53) Papillon, a popular retailer of chic women's clothing, segments its market according to
consumer lifestyles. Papillon most likely uses
segmentation for segmenting its
market.
A) geographic
B) psychographic
C) benefit
D) age and life-cycle
E) occasion
54) Bailey's Burgers promotes the Bailey's Jumbo Burger as a fun snack for teens and young
adults. In this instance, Bailey's Burgers is practicing
segmentation.
A) benefit
B) age and life-cycle
C) psychographic
D) geographic
E) gender
55) Business information services such as Experian Marketing Services and Nielsen help
marketers to
.
A) save significant amounts of money on shipping products
B) spend more time identifying potential customers
C) learn more specific details from consumers about their products
D) segment people and locations into marketable groups of like-minded consumers
E) expand their product offerings to interested clients and provide high-quality service to them
56) When the size, purchasing power, and profile of a market segment can be calculated, the
market is
.
A) measurable
B) profitable
C) substantial
D) actionable
E) competitive
57) A market segment that is large enough or profitable enough to serve is
A) measurable
B) accessible
C) substantial
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.
D) profitable
E) differentiable
58) When an effective program can be designed for attracting and serving a particular segment,
the segment is best described as
.
A) accessible
B) measurable
C) competitive
D) actionable
E) differentiable
59)
segments are conceptually distinguishable and respond differently to different
marketing mix elements and programs.
A) Complex
B) Measurable
C) Competitive
D) Differentiable
E) Homogeneous
60) Market segments that can be effectively reached and served are
A) measurable
B) accessible
C) substantial
D) actionable
E) profitable
.
61) Different soft drinks target different personalities. This is an example of
segmentation.
A) psychographic
B) demographic
C) occasion
D) life-cycle
E) benefits
Refer to the scenario below to answer the following question(s).
Ruben Delgado was making wooden pens and pencils, which had unique engravings, as a
hobby until Simon Yoder recognized Ruben's talent. Simon immediately ordered 250 pens and
pencils of various styles to be displayed in his shop's showcase. Within three months, the
wooden pencils were a hit with all students! Ruben Delgado had never thought of marketing his
talent, but Simon's enthusiasm and the recent sales were enough to change his mind.
With limited resources, Ruben contacted three additional specialty shops within 100 miles that
were situated near schools. He explained his manufacturing processes and engraving options to
each. All three shop owners placed a trial order. Within two months, just prior to the holiday
season, each shop owner placed an additional order. Ruben was ecstatic! "I figured business
would slow down after that," Ruben stated, "but in February I was contacted by Elmore
Distributors. At that point, I had to make a huge decision about how far I wanted to go with this
business."
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7
Elmore Distributors provides products for school fundraisers in a seven-state area. Ruben was
offered a two-year contract and immediate inclusion in Elmore's promotional flyer. Ruben
Delgado accepted the offer and, along with it, the responsibility to produce thousands of
wooden pens and pencils. "I had to get a grip on the magnitude of this project," Ruben added.
He decided to place his major focus on the large contract with Elmore. However, to avoid
placing his total emphasis with one customer, Ruben continued nurturing his four previously
established accounts without targeting any additional customers.
"At this point, I had set up an assembly line in a rented building," Ruben explained. "I had to
hire three full-time employees to work the line while I managed the customer orders and
purchased materials." Ruben paused. "But I can't take the Elmore project for granted. It might
not always be there. I'll have to have a good alternate plan if that day comes."
62) In the scenario, Ruben has segmented his market based on
.
A) geography
B) benefits sought
C) occasion
D) degree of loyalty
E) demographics
63) Through market targeting, companies divide large, diverse markets into smaller segments
that can be reached more efficiently and effectively with products and services that match their
unique needs. FALSE
64) Geographic segmentation divides the market into segments based on variables such as age,
life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation.
FALSE
65) Gender segmentation has long been used in clothing, cosmetics, toiletries, and magazines.
TRUE
66) Psychographic segmentation divides buyers into different segments based on lifestyle or
personality characteristics. TRUE
67) Demographic segmentation divides buyers into segments based on their knowledge,
attitudes, uses, or responses concerning a product.FALSE
68) Benefit segmentation requires finding the major benefits people look for in a product class,
the kinds of people who look for each benefit, and the major brands that deliver each benefit.
69) When segmenting by user status, markets are segmented into light, medium, and heavy
product users. FALSE
70) When segmenting by usage rate, markets can be segmented into nonusers, ex-users,
potential users, first-time users, and regular users of a product. FALSE
71) Marketers usually limit their segmentation analysis to only one major variable.
FALSE
72) Intermarket segmentation refers to forming segments of consumers who have different
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needs and buying behaviors in a given geographical region. FALSE
73) Briefly describe geographic segmentation.
74) Why are demographic factors the most popular bases for segmenting customer groups?
75) Why must marketers guard against stereotypes when using age and life-cycle
segmentation?
76) Define psychographic segmentation.
77) Briefly describe occasion segmentation.
78) How does loyalty status enhance a company's understanding of its consumers?
79) List three variables that are used in segmenting business markets.
80) Explain the different segmentation variables used in segmenting consumer markets.
81) Describe how marketers use multiple segmentation bases to their advantage.
82) Why do companies opt for market segmentation?
83) Why do international markets need to be segmented?
84) What are the primary requirements for effective market segmentation?
85) Market targeting is
.
A) arranging for a market offering to occupy a clear, distinctive, and desirable place relative to
competing products in the minds of target consumers
B) dividing a market into distinct groups of buyers who have different needs and characteristics
C) evaluating segment attractiveness and deciding how many and which segment(s) to serve
D) marketing to buyers with separate marketing strategies or mixes
E) differentiating the firm's market offering to create customer value
86) Which of the following is LEAST relevant when a firm evaluates different market
segments?
A) segment size and growth
B) company resources
C) segment structural attractiveness
D) core competencies of competitors
E) company objectives
87) Which of the following is the reason a company may choose not to focus on the largest,
fastest-growing segments?
A) The smaller segments may be more profitable to the firm.
B) It may lack the skills to serve larger segments.
C) The right size and growth characteristics don't match its goals.
D) The segments may be too competitive.
E) It may lack the physical and financial resources to serve larger segments.
88) A segment is less attractive if it
A) is difficult for new entrants to enter
B) is substantial
C) is actionable
.
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D) already contains many strong and aggressive competitors
E) contains weak suppliers
89) Several structural factors affect long-run segment attractiveness. These include all of the
following EXCEPT
.
A) easy entry by new competitors
B) the segment does not match the company's long-run objectives
C) strong and aggressive competitors
D) many substitute products
E) power of buyers
90) A
consists of a set of buyers who share common needs or characteristics that the
company decides to serve.
A) marketing channel
B) citizen-action group
C) distribution channel
D) customer franchise
E) target market
91)
refers to a market-coverage strategy in which a firm decides to ignore market
segment differences and go after the whole market with one offer.
A) Individual marketing
B) Local marketing
C) Niche marketing
D) Undifferentiated marketing
E) Segmented marketing
92) Sanguine Services is a small company that uses a marketing strategy in which its limited
resources are employed to target a large share of two small market segments. Sanguine most
likely uses which of the following marketing strategies?
A) individual marketing
B) one-to-one marketing
C) mass marketing
D) concentrated marketing
E) trigger-based marketing
93) A market-coverage strategy in which a firm decides to target several market segments and
designs separate offers for each is known as
.
A) mass marketing
B) differentiated marketing
C) concentrated marketing
D) individual marketing
E) cross-marketing
94) Which of the following is a disadvantage of using a differentiated marketing strategy?
A) It generates far lower sales compared to an undifferentiated marketing strategy.
B) Customer loyalty is negatively impacted and difficult to obtain.
C) The costs of doing business increase.
D) Quality control problems increase.
E) Product safety decreases.
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95) With a(n)
smaller niches.
A) individual
B) mass
C) concentrated
D) differentiated
E) local
marketing strategy, a firm goes after a large share of one or a few
96) Which of the following is true about the concentrated marketing strategy?
A) Companies that rely on a few segments for all of their business will suffer if a segment turns
sour.
B) Concentrated marketing is not profitable for most firms.
C) Niche marketing involves few risks for most firms.
D) Concentrated marketing involves going after a small share of a large market.
E) The Internet has limited the use and benefits of niche marketing.
97)
is the practice of tailoring products and marketing programs to suit the tastes of
specific individuals and locations.
A) Mass marketing
B) Trigger-based marketing
C) Differentiated marketing
D) Concentrated marketing
E) Micromarketing
98)
marketing tailors brands and promotions to the needs and wants of regional
customer groups, such as cities, neighborhoods, and even specific stores.
A) Undifferentiated
B) Differentiated
C) Niche
D) Local
E) Individual
99) Which of the following is a drawback of local marketing?
A) Local marketing increases manufacturing costs by reducing the economies of scale.
B) Local marketing requires specialization that is difficult to identify.
C) Local marketing is not profitable for most small firms.
D) Local marketing cannot accommodate the needs of modern buyers who are technology
savvy.
E) Local marketing almost always results in brand dilution.
100) Andrew Levitt runs a retail store in Norristown. Andrew's store stocks cold weather
products as Norristown mostly has sub-zero temperatures. Which of the following is evident
here?
A) local marketing
B) concentrated marketing
C) segmented marketing
D) mass marketing
E) direct marketing
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101) A public relations firm tailors its advertising and promotional services according to the
needs and preferences of specific customers. This exemplifies
.
A) trigger-based marketing
B) mass marketing
C) segmented marketing
D) individual marketing
E) concentrated marketing
102) When a company customizes its merchandise store by store to meet shopper needs, it is
practicing
marketing.
A) niche
B) mass
C) local
D) segmented
E) trigger-based
103)
is the process by which firms interact one-to-one with masses of customers to
design products and services tailor-made to individual needs.
A) Product diversification
B) Micromarketing
C) Mass customization
D) Differentiated marketing
E) Local marketing
104) When order requests come in, the designers of Titus Furniture often go to a client's
location to note their requirements, budget, and expected date of delivery. In this way, Titus
Furniture is successful in tailor-making products for its customers. This is an example of
.
A) market diversification
B) undifferentiated marketing
C) mass customization
D) differentiated marketing
E) trigger-based marketing
105) Which of the following marketing strategies is most suitable for smaller firms with limited
resources?
A) mass marketing
B) undifferentiated marketing
C) niche marketing
D) differentiated marketing
E) one-to-one marketing
106) Rex Steelworks makes steel sheets which the firm markets and sells to companies all over
the world. Which of the following marketing strategies is most suitable for Rex Steelworks?
A) one-to-one marketing
B) undifferentiated marketing
C) individual marketing
D) local marketing
E) trigger-based marketing
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107) GamaPix makes point-and-shoot cameras and handycams for amateur photographers and
hobbyists. It also has a separate line of cameras dedicated to professional photographers.
Additionally, it designs separate offers for each segment. Which of the following marketing
strategies does GamaPix most likely use in this instance?
A) mass marketing
B) differentiated marketing
C) individual marketing
D) local marketing
E) direct marketing
108) Jean Malone, a market researcher, recently found that most people in Bradburg County
purchase automobiles with predominantly functional designs and prefer darker colors. Which of
the following marketing strategies should Jean most likely recommend to an automobile dealer
interested in opening a dealership in Bradburg County?
A) one-to-one marketing
B) undifferentiated marketing
C) segmented marketing
D) individual marketing
E) direct marketing
109) Shine Enterprises mass produces an all-purpose floor cleaner that is aimed at the whole
market. This firm uses a(n)
marketing strategy.
A) segmented
B) undifferentiated
C) individual
D) niche
E) one-to-one
110)
marketing is more suited for uniform products, such as grapefruit or steel.
A) Niche
B) Undifferentiated
C) One-to-one
D) Trigger-based
E) Local
111)
marketing is more suited for products that vary in design.
A) Mass
B) Local
C) Direct
D) Differentiated
E) Individual
112) A catalog retailer in the United States has identified African American professionals
between the ages of 35 and 45 as a group of potential customers for its products. The retailer
plans to direct its marketing efforts toward this group of consumers. Which of the following
market segmentation variables did the catalog retailer most likely use?
A) demographic
B) psychographic
C) user status
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D) loyalty status
E) usage rate
113) Market targeting can bring up concerns about privacy and abuse in all of the following
ways EXCEPT
.
A) when marketing toward children
B) when entertainment and commercial content blend
C) when customers opt in to receive focused content
D) when deceptive messaging is used
E) when e-mails are personalized based on Internet searches by the customer
Refer to the scenario below to answer the following question(s).
Ruben Delgado was making wooden pens and pencils, which had unique engravings, as a
hobby until Simon Yoder recognized Ruben's talent. Simon immediately ordered 250 pens and
pencils of various styles to be displayed in his shop's showcase. Within three months, the
wooden pencils were a hit with all students! Ruben Delgado had never thought of marketing his
talent, but Simon's enthusiasm and the recent sales were enough to change his mind.
With limited resources, Ruben contacted three additional specialty shops within 100 miles that
were situated near schools. He explained his manufacturing processes and engraving options to
each. All three shop owners placed a trial order. Within two months, just prior to the holiday
season, each shop owner placed an additional order. Ruben was ecstatic! "I figured business
would slow down after that," Ruben stated, "but in February I was contacted by Elmore
Distributors. At that point, I had to make a huge decision about how far I wanted to go with this
business."
Elmore Distributors provides products for school fundraisers in a seven-state area. Ruben was
offered a two-year contract and immediate inclusion in Elmore's promotional flyer. Ruben
Delgado accepted the offer and, along with it, the responsibility to produce thousands of
wooden pens and pencils. "I had to get a grip on the magnitude of this project," Ruben added.
He decided to place his major focus on the large contract with Elmore. However, to avoid
placing his total emphasis with one customer, Ruben continued nurturing his four previously
established accounts without targeting any additional customers.
"At this point, I had set up an assembly line in a rented building," Ruben explained. "I had to
hire three full-time employees to work the line while I managed the customer orders and
purchased materials." Ruben paused. "But I can't take the Elmore project for granted. It might
not always be there. I'll have to have a good alternate plan if that day comes."
114) In marketing his wooden pens and pencils to specialty-shop customers, Ruben was most
likely using
marketing.
A) mass
B) trigger-based
C) concentrated
D) segmented
E) individual
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115) If Ruben interacted one-to-one with his customers to design his products and services
according to individual needs, he would be practicing
.
A) concentrated marketing
B) trigger-based marketing
C) undifferentiated marketing
D) mass customization
E) segmented marketing
116) In evaluating different market segments, a firm should look at three factors: segment size
and growth, segment structural attractiveness, and company objectives and resources. TRUE
117) A company will always choose the largest and fastest-growing segments as the most
attractive for it to enter. FALSE
118) The relative power of buyers affects segment attractiveness.
TRUE
119) A target market consists of a set of buyers who share common needs or characteristics that
the company decides to serve. TRUE
120) Using an undifferentiated marketing strategy, a firm might decide to target several market
segments and designs separate offers for each. FALSE
121) Using a segmented marketing strategy, a firm might decide to ignore market segment
differences and target the whole market with one offer. FALSE
122) When using a niche marketing strategy, a firm goes after a large share of one or a few
smaller segments. TRUE
123) Niche marketing involves tailoring brands and promotions to the needs and wants of local
customer groups—cities, neighborhoods, and even specific stores. FALSE
124) Individual marketing is also known as one-to-one marketing, mass customization, and
markets-of-one marketing. TRUE
125) When competitors use differentiated marketing to focus on the customer's needs, a firm
should use undifferentiated marketing to compete with them. FALSE
126) What are the major structural factors affecting long-run segment attractiveness?
127) What does a company focus on when using an undifferentiated marketing strategy?
128) What does a company focus on when using a concentrated marketing strategy?
129) Briefly explain mass customization.
130) List some important factors that companies need to consider when choosing a markettargeting strategy.
131) How do companies identify attractive market segments? How do they choose a target
marketing strategy?
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132) Distinguish between undifferentiated and differentiated marketing strategies.
133) Briefly explain local and individual marketing.
134)
refers to how a company will create differentiated value for targeted segments
and what positions it wants to occupy in those segments.
A) Targeted marketing
B) Market segmentation
C) Product positioning
D) Value proposition
E) Niche marketing
135) A
refers to the way a product is defined by consumers on important attributes—
the place the product occupies in consumers' minds relative to competing products.
A) core competency
B) value stream
C) value proposition
D) product position
E) product specification
136)
show(s) consumer perceptions of a company's brands versus competing
products on important buying dimensions.
A) Differentiation
B) Positioning
C) Market targeting
D) Perceptual positioning maps
E) Market segmentation
137) To the extent that a company can differentiate and position itself as providing superior
customer value, it gains
.
A) competitive advantage
B) complementary assets
C) service life
D) core competencies
E) contingent liability
138) Through
differentiation, brands can be differentiated on features, performance,
or style and design.
A) services
B) channel
C) people
D) product
E) price
139) Even when competing offers look the same, buyers may perceive a difference based on
differentiation.
A) image
B) people
C) price
D) channel
E) services
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140) Harvey's Bookstore is a popular online bookstore that has differentiated itself through
smooth-functioning delivery networks. This is an example of
differentiation.
A) product
B) image
C) price
D) channel
E) people
141) All of the following are ways a company can differentiate itself or its product EXCEPT
.
A) services
B) channels
C) price
D) people
E) image
142) The full mix of benefits on which a brand is differentiated and positioned is known as the
brand's
.
A) value proposition
B) service life
C) value stream
D) supply chain
E) demand chain
143)
positioning involves providing the most upscale product or service and
charging a higher price to cover the higher costs.
A) More for the same
B) More for less
C) Same for less
D) Less for much less
E) More for more
144) Stores such as Walmart, Best Buy, PetSmart, David's Bridal, and DSW Shoes use
positioning.
A) more for the same
B) more for less
C) same for less
D) less for much less
E) more for more
145)
positioning involves meeting consumers' lower performance or quality
requirements at a much lower price.
A) More for less
B) Less for much less
C) Same for less
D) More for more
E) More for the same
146) While there may be many differences between brands, not all are meaningful or relevant
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7
to consumers. Which of the following is NOT a criterion for establishing the value of a
difference to promote?
A) superior; the difference is superior to other ways that customers might obtain the same
benefit
B) affordable; buyers can afford to pay the difference
C) profitable; the company can introduce the difference profitably
D) important; the difference delivers a highly valued benefit to target buyers
E) visually appealing; customers will be able to see and appreciate the difference
147) Pierre's Mart, a grocery store in New Orleans, Louisiana, offers less merchandise selection
and fairly low levels of service. Despite the lackluster service and limited selection of
merchandise, customers still flock to Pierre's because it charges rock-bottom prices. Pierre's
Mart most likely uses the
positioning.
A) more for the same
B) more for less
C) same for less
D) less for much less
E) more for more
148) When it first opened stores across the United States, Bateman's, an office supply chain
store, had the best product selection, the best service, and the lowest prices compared to other
office supply chain stores. As a result, Bateman's captured a significant chunk of the market in
the short run. Which of the following positioning strategies did Bateman's most likely use?
A) more for the same
B) more for less
C) same for less
D) less for much less
E) more for more
149) The winning value proposition would be to offer
.
A) more for the same
B) more for less
C) more for more
D) same for less
E) same for more
150) Which of the following states the product's membership in a category and then shows its
point of difference from other members of the category?
A) a mission statement
B) a vision statement
C) a general need description
D) a positioning statement
E) an order-routine specification
151) "To busy multitaskers who need help remembering things, Evernote is a digital content
management application that makes it easy to capture and remember moments and ideas from
your everyday life using your computer, phone, tablet, and the Web." This is an example of a(n)
.
A) positioning statement
B) statement of purpose
C) order-routine specification
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D) vision statement
E) product specification
152) Chronos Inc. designs and markets different brands of cycling watches. Each brand has a
single unique feature: the Chronos Cosmos has a heart rate monitor, the Chronos Acumen is
designed for older cyclists who prefer a large display, and the Chronos Aegis has a GPS
function. Which of the following is evident here?
A) channel differentiation
B) service differentiation
C) product differentiation
D) people differentiation
E) image differentiation
153) Apex describes its clothing line as, "Elegance and attitude, now as one. For the daily
office-goer, who takes pride in what he or she wears everyday, Apex makes sure you get
noticed." This exemplifies a
.
A) statement of purpose
B) vision statement
C) positioning statement
D) general need description
E) product specification
154) The Jay Group hires better employees than its competition by conducting effective
searches and multi-tiered interviews. The company also provides high quality training to its
employees, an aspect often neglected by competitors. The Jay Group is most likely to gain a
strong competitive advantage through which type of differentiation?
A) image differentiation
B) people differentiation
C) services differentiation
D) product differentiation
E) channel differentiation
155) Symbols such as the McDonald's golden arches, the colorful Google logo, the Nike
swoosh, or Apple's "bite mark" logo provide strong company or brand recognition and are
indicative of
differentiation.
A) people
B) image
C) channel
D) services
E) product
156) Kinger Auto specializes in selling low-quality used vehicles that are priced a good deal
lower than other used cars. Which of the following value propositions is evident here?
A) more for the same
B) more for less
C) same for less
D) less for much less
E) more for more
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157) Ferrari sports cars claim superior quality, performance, and style. Ferrari provides
"perfection" at a premium price to keep its brand image intact. Which type of value proposition
does Ferrari most likely position its products with?
A) more for the same
B) more for more
C) less for much less
D) the same for less
E) more for less
158) Which of the following is true with regard to the same for less value proposition?
A) Discount stores and "category killers" rarely use the same-for-less value proposition.
B) The same-for-less value proposition is mostly offered by marketers who sell higher quality
upscale products or services.
C) The same-for-less value proposition cannot generate profits.
D) Offering the same for less can be a powerful value proposition because everyone likes a
good deal.
E) The same-for-less positioning involves meeting consumers' lower performance or quality
requirements at a much lower price.
159) While Jenkins Stationeries was selling branded stationery at premium prices, Pembroke
Stationeries, a store across the street, was selling the same branded stationery at discount prices.
Which of the following value propositions best describes Pembroke's product positioning?
A) more for less
B) more for the same
C) same for less
D) less for much less
E) more for more
160) Product differentiation refers to the way a product is defined by consumers on important
attributes—the place the product occupies in consumers' minds relative to competing products.
FALSE
161) A product position is the way a product is defined by consumers on important attributes.
TRUE
162) To the extent that a company can differentiate and position itself as providing superior
customer value, it gains competitive advantage. TRUE
163) Firms that practice product differentiation gain competitive advantage through the way
they design their channel's coverage, expertise, and performance. FALSE
164) Less-for-much-less positioning involves meeting consumers' lower performance or quality
requirements at a much lower price. TRUE
165) Companies find it as easy to come up with a good positioning strategy as to execute it.
FALSE
166) Kia Motors offers a new car model with the same features as other cars in the same
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segment. However, Kia's model is priced higher than its two main competitors. Kia is following
a more-for-less positioning strategy. FALSE
167) Briefly describe competitive advantage.
168) How do firms practicing channel differentiation gain competitive advantage?
169) What is product position? What functions do perceptual positioning maps serve?
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Principles of Marketing, 17e (Kotler/Armstrong)
Chapter 8 Products, Services, and Brands: Building Customer Value
1) Which of the following is true with regard to products?
A) The quality of products is far more difficult to measure than that of services.
B) Products do not include experiences, organizations, persons, places, and ideas.
C) Products are not meant for sale in the market.
D) Products include services, events, persons, places, organizations, ideas, or a mixture of
these.
E) Products refer to only those activities that are essentially intangible.
2)
are a form of product that consists of activities, benefits, or satisfactions offered
for sale that are essentially intangible and do not result in the ownership of anything.
A) Liabilities
B) Services
C) Brands
D) Consumer products
E) Specialty products
3) Which of the following exemplifies a service?
A) candy
B) laptop
C) hair salon
D) car
E) laundry detergent
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
4) Marketing mix planning begins with
.
A) building an offering that brings value to target customers
B) finding a suitable promotion strategy for the product
C) setting a reasonable price for the product
D) selecting the right channel for distribution of the product
E) calculating the total costs involved in manufacturing the product
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
5) Market offering includes everything from pure tangible goods to pure services, as well as
combinations of goods and services. Which of the following is NOT a product or service?
A) breakfast cereal
B) rental car
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C) free concert
D) shoes
E) haircut
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
6) Which of the following is true with regard to services?
A) Services refer to purely tangible products.
B) Services are a form of product that consists of activities, benefits, or satisfactions offered for
sale.
C) Services can be stored for later use.
D) Services can be easily separated from their providers.
E) Services are tangible product offerings whose quality can be easily measured.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
7) Which of the following is an example of a pure tangible good?
A) a laptop with a comprehensive warranty for three years
B) an online shoe retailer that provides free home delivery
C) an agency that offers free legal advice
D) a credit card
E) a bag of potato chips
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
8) Which of the following product offerings is intangible?
A) a package of laundry detergent
B) an ink cartridge for a printer
C) a wool jacket
D) a gold ring
E) a taxi ride
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
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3
9) Which of the following is a goods-and-services combination?
A) a bicycle
B) a milk shake at an ice cream store
C) chocolate chips
D) a train ride
E) a music lesson
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
10) Product planners need to consider products and services on three levels. Each level adds
more customer value. The most basic level is
, which addresses the question, "What is
the buyer really buying?"
A) an actual product
B) an augmented product
C) core customer value
D) co-branding
E) exchange value
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
11) Product planners need to consider products and services on three levels. At the second
level, product planners must
.
A) offer additional product support and after-sale services
B) identify the core customer value that consumers seek from the product
C) turn the core benefit into an actual product
D) find out how they can create the most satisfying brand experience
E) define the problem-solving benefits or services that consumers seek
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
12) If a consumer purchases a new flat-screen "smart" television which can connect to services
like Netflix and Pandora, what is the core customer value involved?
A) connection to entertainment and information
B) state-of the art technology
C) slick and attractive packaging
D) brand name
E) tech support and warranty
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F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
13) If a consumer purchases a new flat-screen "smart" television, what is the augmented
product involved?
A) connection to the world of entertainment
B) state-of the art technology
C) slick and attractive packaging
D) brand name
E) tech support and warranty
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
14) Product planners need to consider products and services on three levels. At the third level,
product planners must build
.
A) an actual product
B) an augmented product
C) core customer value
D) a brand personality
E) a basic product
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
15) What is the core customer value a customer might purchase when buying Urban Decay
cosmetics?
A) variety of collections
B) unique packaging
C) unusual colors
D) sense of adventure
E) long-lasting makeup
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
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5
16)
are industrial products.
A) Major appliances
B) Laundry detergents
C) Life insurance policies
D) Office supplies
E) Legal services
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
17) Consumer products refer to
.
A) products purchased by consumers for further processing or for use in conducting a business
B) products and services bought by final consumers for personal consumption
C) primarily intangible offerings from marketers
D) raw materials as well as manufactured materials and parts
E) products that aid in the consumer's production or operations, including installations and
accessory equipment
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
18)
are consumer products and services that customers usually buy frequently,
immediately, and with minimal comparison and buying effort.
A) Unsought products
B) Capital items
C) Shopping products
D) Convenience products
E) Supplies and repair services
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
19) Which of the following is an example of a convenience product?
A) fast food
B) diamond ring
C) furniture
D) life insurance
E) refrigerator
F)
AACSB: Analytical thinking
Skill: Concept
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6
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
20)
are less frequently purchased consumer products and services that customers
compare carefully on suitability, quality, price, and style.
A) Shopping products
B) Convenience products
C) Unsought products
D) Capital items
E) Supplies and repair services
F)
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
21) Which of the following is NOT a category of consumer products?
A) unsought
B) specialty
C) convenience
D) luxury
E) shopping
F) Skill:
Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
22) Erica wants to replace her old washing machine with a new one. In order to get the
maximum value for her money, she plans to spend substantial time and effort in gathering
information and making product comparisons before making the actual purchase. In this
instance, Erica is planning to buy a(n)
product.
A) convenience
B) unsought
C) specialty
D) shopping
E) exclusive
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
23)
are consumer products and services with unique characteristics or brand
identification for which a significant group of buyers is willing to make a special purchase
effort.
A) Shopping products
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7
B) Unsought products
C) Specialty products
D) Capital items
E) Convenience products
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
24) A hickory rocking chair, handmade by an Amish woodcarver in Lancaster, Pennsylvania,
from locally grown wood, is an example of a
.
A) convenience product
B) capital item
C) service
D) specialty product
E) product attribute
25)
are consumer products that the consumer either does not know about or knows
about but does not normally think about buying.
A) Specialty products
B) Convenience products
C) Unsought products
D) Shopping products
E) Capital items
26)
products are those products purchased for further processing or for use in
conducting a business.
A) Unsought
B) Specialty
C) Shopping
D) Industrial
E) Convenience
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
27)
are the major marketing factors in the sale of most manufactured materials and
parts.
A) Branding and advertising
B) Price and service
C) Sales promotion and advertising
D) Branding and packaging
E) Public relations and brand management
F)
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8
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
28)
are industrial products that aid in the buyer's production or operations, including
installations and accessory equipment.
A) Unsought products
B) Convenience products
C) Capital items
D) Specialty items
E) Repair items
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
29) Installations consist of
.
A) highly priced luxury goods such as Rolex watches
B) portable office equipment such as computers
C) major purchases such as elevators
D) portable factory equipment such as hand tools
E) products such as insurance
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
30) Lubricants, coal, paper, and pencils are examples of
.
A) operating supplies
B) capital items
C) raw materials
D) specialty products
E) installations
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
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9
31) Industrial products and services include raw materials, buildings, fixed equipment, supplies,
services, and
.
A) computers and desks
B) electricity
C) groceries
D) insurance
E) employees
F) Skill:
Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
32)
marketing consists of activities undertaken to create, maintain, or change the
attitudes and behaviors of target consumers toward an organization.
A) Social network
B) Organization
C) Niche
D) Location
E) Concentrated
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
33) The advertising slogan, "We bring good things to life," used by General Electric to market
itself, is an example of
marketing.
A) person
B) corporate image
C) internal
D) place
E) niche
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
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0
34)
marketing consists of activities undertaken to create, maintain, or change
attitudes toward particular people. People ranging from presidents, entertainers, and sports
figures to professionals such as doctors, lawyers, and architects use it to build their reputations.
A) Corporate image
B) Person
C) Social
D) Organization
E) Place
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
35) A company that uses well-known celebrities to help sell its products is using
marketing.
A) interactive
B) internal
C) social
D) person
E) organization
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
36)
marketing involves activities undertaken to create, maintain, or change attitudes
toward particular cities, states, or regions.
A) Idea
B) Place
C) Organization
D) Social
E) Interactive
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
18
1
37) Tourism Australia's global marketing campaign, "There's nothing like Australia" is an
example of
marketing.
A) corporate image
B) person
C) organization
D) internal
E) place
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
38) Advertising campaigns involving issues ranging from health care, education, and
environmental sustainability to human rights and personal safety can be classified under
marketing.
A) corporate image
B) internal
C) social
D) place
E) person
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
39) Elmo Inc., a Michigan-based manufacturer of athletic shoes, uses professional athletes in its
ad campaigns to help sell its products. This is an example of
marketing.
A) person
B) place
C) social
D) organization
E) internal
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
18
2
40) Public health campaigns designed to reduce alcoholism, drug abuse, smoking, and obesity
are all examples of
marketing.
A) internal
B) social
C) organization
D) person
E) place
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
41) Rhodia invites tourists from all over the world to experience its pristine nature, clear skies,
and beautiful summertime climate. This exemplifies
.
A) corporate image marketing
B) social marketing
C) place marketing
D) social engineering
E) negative brand equity
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
18
3
Refer to the scenario below to answer the following question(s).
Ruben Delgado built his enterprise on the faithful patronage of four specialty shops and a large
contract from Elmore Distributors. But after two years, the maker of novelty pens and pencils
had to rethink his strategy when his contract with Elmore ended.
Ruben built a company reputation on the manufacturing and distribution of a variety of wooden
writing utensils with customized engravings. Specialty shops loved to display the products in
their fancy, lighted showcases, but such specialty shops alone were not profitable. Ruben
Delgado established a brand name, known merely as Delgado, and decided to expand on it.
Ruben extended his writing utensil lines to include quills, felt-tip pens, and multiple-cartridge
pens that write in different colors. He even added a line of various grades of personalized
stationery and business cards. Perhaps Ruben's biggest added touch, however, was the addition
of two salespeople who would work to explain the diverse array of products offered by
Delgado, as well as nurture existing accounts.
"We make an excellent product," Ruben Delgado stated, "and we honor a good guarantee on
everything we sell. But let's face it—we face hundreds of competitors! We need Delgado
representatives out there to help prospects understand what they should demand in something
as simple as a writing tool." The Delgado brand was fast-becoming synonymous with top-notch
customer service. Part of the purchase package brought personal visits from the Delgado
representative, before the purchase and long after.
42) An easier, more comfortable, more stylish transfer of thought onto paper refers to the
of Ruben's offerings.
A) tangible element
B) core customer value
C) actual product
D) augmented product
E) service variability
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Challenging
18
4
43) Which type of product does Delgado manufacture?
A) industrial
B) convenience
C) specialty
D) shopping
E) unsought
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Challenging
44) A service refers to an activity, benefit, or satisfaction offered for sale that is essentially
intangible and does not result in the ownership of anything. TRUE
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
45) Unsought products are products that the customer usually buys frequently, immediately, and
with a minimum of comparison and buying effort. FALSE
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
46) Convenience products are less frequently purchased consumer products and services that
customers compare carefully on suitability, quality, price, and style. FALSE
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
18
5
47) The augmented product is the actual product plus the various services and benefits offered
with it, such as a warranty, free delivery, installation, and maintenance. TRUE
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
48) Specialty products are consumer products and services that customers evaluate on
suitability, quality, price, and style, by gathering information and making comparisons.
FALSE
49)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
50) Give examples of pure tangible goods.
xamples will vary. A company's market offering often includes both tangible goodsand
services. Examples of pure tangible goods include soap, toothpaste, or salt; no services
accompany these products.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
51) What is a product?
nything that can be offered to a market for attention, acquisition, use, orconsumption that
might satisfy a want or need is known as a product.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
52) How do consumers perceive products?
onsumers see products as complex bundles of benefits that satisfy their needs.AACSB:
Written and oral communication
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
18
6
Difficulty: Easy
18
7
53) Name some common convenience products.
Answer: Student examples may vary. Convenience products include laundry detergent, candy,
magazines, and fast food.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
54) Give three examples of shopping products.
Answer: Student examples may vary. Shopping products include clothing, used cars, and
furniture.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Easy
55) How are specialty products distributed?
Answer: Specialty products are distributed through only one or a few exclusive outlets per
market area. Special effort is required to purchase these products.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
56) Explain the difference between a consumer product and an industrial product. Include an
example.
Answer: The distinction between a consumer product and an industrial product is based on the
purpose for which the product is purchased. If a consumer buys a lawn mower for use around
home, the lawn mower is a consumer product. If the same consumer buys the same lawn
mower for use in a landscaping business, the lawn mower is an industrial product.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
18
8
57) Products and services fall into two broad classes based on the types of consumers that use
them. Name these two broad classes and describe how they are different from each other.
Answer: The two broad classes are consumer products and industrial products. Consumer
products and services—those bought by final consumers—are usually classified according to
consumer shopping habits. Consumer products include convenience products, shopping
products, specialty products, and unsought products.
Industrial products, on the other hand, are those that are purchased for further processing or for
use in conducting a business. These products include the three broad categories of materials and
parts, capital items, and supplies and services.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.1: Define product and describe the major classifications of products and
services.
Difficulty: Moderate
58) Developing a product or service involves defining the benefits that it will offer. These
benefits are communicated and delivered by
.
A) product labels
B) product attributes
C) support services
D) product packaging
E) branding
F) Skill:
Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
59) Product attributes include all of the following EXCEPT
.
A) style
B) design
C) price
D) features
E) quality
F) Skill:
Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
18
9
60)
refers to the characteristics of a product or service that bear on its ability to
satisfy stated or implied customer needs.
A) Brand equity
B) Product quality
C) Product labeling
D) Brand image
E) Brand personality
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
61)
is an approach in which all the company's people are involved in constantly
improving the quality of products, services, and business processes.
A) Business intelligence
B) Quality function deployment
C) Total quality management
D) Brand equity management
E) Product positioning
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
62) What are the two dimensions of product quality?
A) consistency and level
B) performance and conformance
C) design and innovation
D) conformance and style
E) feature and design
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
19
0
63)
refers to freedom from defects and consistency in delivering a targeted level of
performance.
A) Performance quality
B) Product style
C) Branding
D) Conformance quality
E) Product design
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
64) Features are a competitive tool for differentiating a company's product from competitors'
products. Which question are companies LEAST likely to ask in a survey of buyers regarding
product features?
A) Which features could we add to improve the product?
B) Which specific features of the product do you like most?
C) How much would (a certain new feature) be worth to you?
D) Which features of the product do you like the least?
E) How do you like the product?
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
65) Style simply describes the
of a product.
A) quality
B) appearance
C) utility
D) durability
E) long-term benefits
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
19
1
66)
contributes to a product's usefulness as well as to its looks.
A) Sensational style
B) Good design
C) Quality
D) Consistency
E) Packaging
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
67) A good design begins with
.
A) brainstorming new product ideas
B) making prototypes of the planned product
C) identifying the most suitable and aesthetic packaging
D) brainstorming technical product specifications
E) observing and understanding customers and shaping their product-use experience
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Moderate
68) Which of the following questions is most important for product designers to consider while
developing a product?
A) Which specific features of the product do customers like most?
B) How does the product appear to buyers?
C) What are the product's technical specifications?
D) How would customers use and benefit from the product?
E) How can the product be packaged to stimulate instant purchase?
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Moderate
19
2
69) A
is a name, term, sign, symbol, design, or a combination of these, that identifies
the maker or seller of a product or service.
A) feature
B) brand
C) line extension
D) package
E) value chain
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
70)
involves designing and producing the container or wrapper for a product.
A) Packaging
B) Patenting
C) Servicing
D) Co-branding
E) Labeling
F) Skill:
Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
71) A product's
identifies the product or brand, describes several things about the
product, and promotes the brand.
A) line extension
B) portfolio
C) label
D) design
E) feature
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Moderate
19
3
72) Which of the following has become a major packaging concern in recent years?
A) underpackaging
B) legibility of print
C) colors used
D) product safety
E) durability
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
73) A label can identify, promote, and
the product.
A) sell
B) assemble
C) package
D) brand
E) describe
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
74) The
requires sellers to provide detailed nutritional information on food products.
A) Fair Packaging and Labeling Act of 1966
B) Nutritional Labeling and Educational Act of 1990
C) Glass-Steagall Act
D) Commodity Futures Modernization Act of 2000
E) Federal Trade Commission Act of 1914
F)
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
19
4
75) The first step in designing support services is to
.
A) add new services that will both delight customers and yield profits to the company
B) closely observe the product and pricing strategies of consumers
C) survey customers to assess the value of current services and obtain ideas for new ones
D) prevent brand dilution
E) encourage customers to try new products
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
76) A
is a group of products that are closely related because they function in a similar
manner, are sold to the same customer groups, are marketed through the same type of outlets,
or fall within given price ranges.
A) product line
B) line extension
C) private brand
D) multibrand
E) new brand
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
77) The major product line decision involves product
, the number of items in the
product line.
A) features
B) line depth
C) line conformance
D) line length
E) packaging
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
19
5
78)
involves adding more items within the present range of the product line.
A) Market diversification
B) Brand extension
C) Product line filling
D) Upward product line stretching
E) Downward product line stretching
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
79) Titan Inc., an automobile manufacturer based in Utah, recently added two new models to its
existing line of sedans in order to increase profits and satisfy dealers. This is an example of
.
A) line filling
B) social marketing
C) market diversification
D) negative brand equity
E) person marketing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Moderate
80)
occurs when a company lengthens its product line beyond its current range.
A) Product line filling
B) Product line stretching
C) Co-branding
D) Niche marketing
E) Market diversification
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
19
6
81) Proton Corp. is an automobile manufacturer known for producing efficient, durable, and
low-priced cars. Recently, the company launched a new range of luxury cars to broaden its
market appeal and to add prestige to its existing line of cars. This is an example of
.
A) social marketing
B) product line filling
C) product line stretching
D) internal marketing
E) cannibalization
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Challenging
82) A
consists of all the product lines and items that a particular seller offers for sale.
A) product mix
B) store brand
C) supply chain
D) value chain
E) line extension
F) Skill:
Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
83) Product mix
refers to the number of different product lines the company carries.
A) length
B) height
C) width
D) consistency
E) depth
F) Skill:
Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
19
7
84) Product mix
refers to the total number of items a company carries within its
product lines.
A) length
B) depth
C) height
D) width
E) consistency
F) Skill:
Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
85) Product mix
refers to the number of versions offered for each product in the line.
A) length
B) depth
C) height
D) width
E) consistency
F) Skill:
Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
86) 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) length
B) depth
C) consistency
D) width
E) height
F) Skill:
Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
19
8
87) A well-known cosmetic company in New York City added new product lines in order to
increase its business. In other words, it
.
A) lengthened its existing product line
B) decreased its product line consistency
C) widened its product mix
D) engaged in market diversification
E) engaged in social marketing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Moderate
19
9
Refer to the scenario below to answer the following question(s).
Ruben Delgado built his enterprise on the faithful patronage of four specialty shops and a large
contract from Elmore Distributors. But after two years, the maker of novelty pens and pencils
had to rethink his strategy when his contract with Elmore ended.
Ruben built a company reputation on the manufacturing and distribution of a variety of wooden
writing utensils with customized engravings. Specialty shops loved to display the products in
their fancy, lighted showcases, but such specialty shops alone were not profitable. Ruben
Delgado established a brand name, known merely as Delgado, and decided to expand on it.
Ruben extended his writing utensil lines to include quills, felt-tip pens, and multiple-cartridge
pens that write in different colors. He even added a line of various grades of personalized
stationery and business cards. Perhaps Ruben's biggest added touch, however, was the addition
of two salespeople who would work to explain the diverse array of products offered by
Delgado, as well as nurture existing accounts.
"We make an excellent product," Ruben Delgado stated, "and we honor a good guarantee on
everything we sell. But let's face it—we face hundreds of competitors! We need Delgado
representatives out there to help prospects understand what they should demand in something
as simple as a writing tool." The Delgado brand was fast-becoming synonymous with top-notch
customer service. Part of the purchase package brought personal visits from the Delgado
representative, before the purchase and long after.
88) The new felt-tip pens, multiple-cartridge pens, and quills offered by Ruben Delgado are
examples of
.
A) product line filling
B) multibranding
C) megabranding
D) product line inconsistencies
E) co-branding
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Challenging
89) Companies frequently try to offer the highest possible performance quality level.
90)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Moderate
20
0
91) Style is a larger concept than design. Design simply describes the appearance of a product.
92)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Moderate
93) Branding decisions include determining a product price.
94)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
95) For few companies, the package itself has become an important promotional medium.
96)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Moderate
97) Labels range from simple tags attached to products to complex graphics that are part of the
packaging.
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Moderate
98) A product line consists of unrelated products that are sold to diverse customer groups.
99)
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
100) Product line filling is overdone if it results in cannibalization and customer
confusion.
101)
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
20
1
102) A company cannot stretch its product line
downward.
103)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
104) Product mix width refers to the total number of items a company carries within its
productlines.
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
105) Companies stretch downward to add prestige to their current
products.
106)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
107) A company's product mix has four important dimensions: width, length, depth,
andconsistency.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Easy
108) How does branding help buyers?
randing helps buyers in many ways. Brand names help consumers identify productsthat might
benefit them. Brands also say something about product quality and consistency— buyers who
always buy the same brand know that they will get the same features, benefits, andquality each
time they buy.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Moderate
20
2
109) When does product line stretching occur?
Answer: Product line stretching occurs when a company lengthens its product line beyond its
current range.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Moderate
110) Define consistency of the product mix.
Answer: 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.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Moderate
111) Name and describe the principal decisions companies make regarding their individual
products and services.
Answer: Individual product decisions involve: 1) product attributes, 2) branding, 3) packaging,
4) labeling, and 5) product support services.
Product attribute decisions involve product quality, features, and style and design. Branding
decisions include selecting a brand name and developing a brand strategy. Package decisions
often include designing labels, which identify, describe, and possibly promote the product.
Labeling identifies the product and may describe and promote the product and brand.
Companies also develop product support services that enhance customer service and
satisfaction and safeguard against competitors.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Moderate
103) Describe the principal functions of packaging.
Answer: Packaging involves designing and producing the container or wrapper for a product.
Traditionally, the primary function of the package was to hold and protect the product. In recent
times, however, packaging has become an important marketing tool as well. Increased
competition and clutter on retail store shelves means that packages must now perform many
sales tasks—from attracting buyers, to communicating brand positioning, to closing the sale.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Moderate
20
3
104) Briefly describe the history of legal concerns about packaging and labels.
Answer: The Federal Trade Commission Act of 1914 held that false, misleading, or deceptive
labels or packages constitute unfair competition. Labels can mislead consumers, fail to describe
important ingredients, or fail to include needed safety warnings. As a result, several federal and
state laws regulate labeling. The most prominent is the Fair Packaging and Labeling Act of
1966, which set mandatory labeling requirements, encouraged voluntary industry packaging
standards, and allowed federal agencies to set packaging regulations in specific industries. The
Nutritional Labeling and Educational Act of 1990 requires sellers to provide detailed nutritional
information on food products, and recent sweeping actions by the Food and Drug
Administration (FDA) regulate the use of health-related terms such as low fat, light, high fiber,
and organic.
AACSB: Ethical understanding and reasoning
Skill: Application
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Moderate
105) What are the different dimensions of a company's product mix? Briefly describe each
dimension.
company's product mix has four important dimensions: width, length, depth, and
consistency.
Product mix width refers to the number of different product lines the company carries.
Product mix length refers to the total number of items a company carries within its product
lines.
Product mix depth refers to the number of versions offered for each product in the line.
Finally, 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.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 8.2: Describe the decisions companies make regarding their individual products
and services, product lines, and product mixes.
Difficulty: Moderate
106) Service
means that services cannot be seen, tasted, felt, heard, or smelled before
they are bought.
A) inseparability
B) variability
C) intangibility
D) perishability
E) heterogeneity
F) Skill:
Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Easy
20
4
107) Which of the following actions is a restaurant owner most likely to take in order to reduce
problems associated with service intangibility?
A) increase entree prices after 6:00 p.m.
B) provide clean tablecloths and fresh napkins for each new customer
C) empower employees to handle customer complaints
D) offer discounted prices for appetizers ordered during happy hour
E) hold regular employee workshops focusing on customer service
F)
AACSB: Reflective thinking
Skill: Critical Thinking
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Challenging
108) Tristan and Juliet, a newly married couple who intend to go to Egypt for their honeymoon,
bought a Europe travel package on Jizo Inc., an online travel site. As they have never seen
Europe or used the services of Jizo before, they were largely dependent on other customers'
feedback and signals for service quality. Which of the following characteristics of service is
highlighted in this instance?
A) service intangibility
B) service inseparability
C) service variability
D) service perishability
E) service distinction
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Challenging
109) If a service employee provides the service, then the employee becomes a part of the
service. This is an example of service
.
A) intangibility
B) inseparability
C) variability
D) perishability
E) heterogeneity
F) Skill:
Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Easy
20
5
110) Service
means that the quality of services depends on who provides them as
well as when, where, and how they are provided.
A) intangibility
B) inseparability
C) variability
D) perishability
E) heterogeneity
F) Skill:
Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Easy
111) The customers of Parry's Hair Salon have noticed that the quality of a haircut depends on
who provides it as well as when, where, and how the service is provided. Which of the
following characteristics of service is evident in this instance?
A) service intangibility
B) service inseparability
C) service perishability
D) service variability
E) service distinction
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Challenging
112) Service
means that services cannot be stored for later sale or use.
A) consistency
B) perishability
C) variability
D) intangibility
E) inseparability
F) Skill:
Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Easy
20
6
113) Alex Smith rents storage space to college students who go home for the summer but do
not want to haul all of their property home and back. The business is profitable during the
summer months, but when the storage space is unoccupied in the off-season, Alex loses money.
Which of the following characteristics of service is most likely the source of Alex's problem?
A) intangibility
B) perishability
C) inconsistency
D) variability
E) inseparability
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Challenging
114) According to the service profit chain, superior internal service quality results in
.
A) lesser service value
B) increased word-of-mouth sales
C) reduced after-sale services
D) more satisfied, loyal, and hardworking employees
E) negative brand equity of newly launched products
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Moderate
115) The service profit chain includes internal service quality, satisfied and productive service
employees, greater service value, healthy service profits and growth, and
.
A) higher market share
B) better paid employees
C) satisfied and loyal customers
D) increased manufacturing efficiency
E) higher morale
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Moderate
20
7
116) Through
, a service firm orients and motivates its customer-contact employees
and supporting service people to work as a team to provide customer satisfaction.
A) service inseparability
B) social marketing
C) service variability
D) internal marketing
E) corporate image marketing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Moderate
117)
means that service quality depends on the quality of buyer-seller interaction
during the service encounter.
A) Interactive marketing
B) Service differentiation
C) Service productivity
D) Corporate image marketing
E) Traditional external marketing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Moderate
118) Service companies can differentiate their offering by
.
A) having a lower price than their competitors
B) designing a superior delivery process
C) offering a stellar physical environment in which the product is delivered
D) developing innovative features
E) adopting a recognizable image
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Moderate
20
8
119) Service companies can differentiate their service delivery by
.
A) using symbols and logos
B) instituting a hierarchical organizational structure
C) offering innovative product features
D) de-emphasizing branding
E) having more able and reliable customer-contact people
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Moderate
120) Apollo Couriers, a company providing international express mail services, has a proactive
customer communications team. The primary job of this team is to identify situations that led to
customer dissatisfaction, and then provide quick remedies to fix the problems. To a great
extent, this has helped Apollo in winning customer loyalty. In this instance, Apollo has
benefitted from
.
A) product differentiation
B) good service recovery
C) multibranding
D) place marketing
E) co-branding
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Challenging
121) Service productivity can be increased by hiring new employees who will work harder, by
giving up some quality, or by
.
A) using technology more effectively
B) outsourcing portions of the process to other firms
C) creating more self-serve opportunities for customers
D) reducing the number of products offered
E) increasing the price on some of the product line
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Moderate
20
9
122) Services are growing more slowly in the world economy as a percentage of gross world
product than in the U.S. economy, as a percentage of gross domestic product.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Moderate
123) Service inseparability means that the quality of services depends on who provides them, as
well as when, where, and how they are provided.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Moderate
124) In a service business, the customer and the front-line service employee interact to cocreate the service.
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Easy
125) At a hotel renowned for its superior service, one registration-desk employee may be
cheerful and efficient, whereas another may be irritable and slow. This exemplifies service
consistency.
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Moderate
126) Service companies can differentiate their service delivery by having more able and
reliable customer-contact people.
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Easy
21
0
127) Product quality is harder to define and judge than service quality.
128)
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Easy
129) Good service recovery can turn angry customers into loyal ones.
130)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Easy
131) As competition and costs increase, and as productivity and quality decrease, what are the
three major marketing tasks facing service companies in contemporary times?
Answer: Today, as competition and costs increase, and as productivity and quality decrease,
more service marketing sophistication is needed. Service companies face three major marketing
tasks: They want to increase their service differentiation, service quality, and service
productivity.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Moderate
132) Define interactive marketing. Why is it considered an important skill for service
marketers?
Answer: Interactive marketing means that service quality depends heavily on the quality of the
buyer-seller interaction during the service encounter. In product marketing, product quality
often depends little on how the product is obtained. But in services marketing, service quality
depends on both the service deliverer and the quality of delivery. Service marketers, therefore,
have to master interactive marketing skills.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Moderate
21
1
133) What are the key service characteristics a company must consider when designing
marketing programs? Briefly describe each characteristic.
company must consider four special service characteristics when designingmarketing
programs: intangibility, inseparability, variability, and perishability.
Service intangibility means that services cannot be seen, tasted, felt, heard, or smelled before
they are bought.
Service inseparability means that services cannot be separated from their providers, whether the
providers are people or machines.
Service variability means that the quality of services depends on who provides them as well as
when, where, and how they are provided.
Service perishability means that services cannot be stored for later sale or use.
AACSB: Analytical thinking; Written and oral communications
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Moderate
134) Distinguish between the service profit chain and internal marketing.
Answer: The service profit chain links service firm profits with employee and customer
satisfaction. This chain consists of five links: internal service quality, satisfied and productive
service employees, greater service value, satisfied and loyal customers, and healthy service
profits and growth.
On the other hand, internal marketing means that the service firm must orient and motivate its
customer-contact employees and supporting service people to work as a team to provide
customer satisfaction. Marketers must get everyone in the organization to be customer centered.
In fact, internal marketing must precede external marketing.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Challenging
135) How can service providers use a differentiated offer, delivery, and image to avoid
competing solely on price?
service offer can include innovative features that set a company's offers apart from competitors'
offers. Service companies can differentiate their service delivery by having more able and
reliable customer-contact people, developing a superior physical environment in whichthe
service product is delivered, or designing a superior delivery process. Services can also be
differentiated through symbols and branding, by creating an image that sets a company's
services apart from that of its competitors.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.3: Identify the four characteristics that affect the marketing of services and the
additional marketing considerations that services require.
Difficulty: Moderate
21
2
136)
represent(s) consumers' perceptions and feelings about a product and its
performance.
A) Product lines
B) Labeling
C) Brands
D) Design
E) Product attributes
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
137) Brand
is the differential effect that knowing the brand name has on customer
response to the product and its marketing.
A) differentiation
B) knowledge
C) equity
D) personality
E) relevance
F) Skill:
Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
138) BlueFin canned tuna has higher sales than its unbranded rival, even though the unbranded
tuna costs $0.45 less per can than BlueFin tuna. BlueFin most likely has
.
A) an aggressive brand personality
B) high brand equity
C) no brand commitment
D) negative brand equity
E) low brand relevance
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Moderate
21
3
139) Which of the following is one of the four consumer perception dimensions used by ad
agency Young & Rubicam to measure brand strength?
A) brand conformance
B) brand consistency
C) brand convenience
D) brand extension
E) brand relevance
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
140) Brand
refers to how consumers feel if a brand meets their needs.
A) differentiation
B) equity
C) dilution
D) esteem
E) relevance
F) Skill:
Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
141) Brand
refers to how highly consumers regard and respect the brand.
A) esteem
B) conformance
C) differentiation
D) relevance
E) knowledge
F) Skill:
Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
21
4
142) After a brief stay at a luxury hotel in Paris, Benjamin Sanders noted that the hotel had kept
every promise it made when he booked the room, meeting all his needs. He added that it was a
"thoroughly comfortable and opulent experience." According to Young & Rubicam's Brand
Asset Valuator, this reflects brand
.
A) valuation
B) esteem
C) relevance
D) differentiation
E) knowledge
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Challenging
143) Which of the following is true with regard to brand equity?
A) Brand equity refers to how much consumers know about the brand.
B) High brand equity provides a company with many competitive advantages.
C) A brand has positive brand equity if consumers react less favorably to it than to an
unbranded version.
D) Positive brand equity derives from low brand esteem.
E) The total financial value of a brand can be easily measured.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
144) The fundamental asset underlying brand equity is
, the value of customer
relationships that the brand creates.
A) the customer mix
B) customer equity
C) the product experience
D) service variability
E) the service encounter
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
21
5
145) Which of the following is the lowest level on which marketers can position their brands in
target customers' minds?
A) beliefs and values
B) product benefits
C) product attributes
D) after-sale services
E) brand equity
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
146) The strongest brands are positioned on
.
A) desirable benefit
B) good packaging
C) service inseparability
D) strong beliefs and values
E) product attributes
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
147) Gainville Inc. manufactures Android phones. Each new Gainville phone launch advances
the cause of democratizing technology. Gainville, an expert in fostering customer community,
engages customers at a deep, emotional level, and has been ranked one of the Breakaway
Brands by the brand consultancy, Kendell Associates. Gainville is most likely positioned on
.
A) basic product attributes
B) short-term benefits
C) service variability
D) self-image enhancement
E) strong beliefs and values
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Moderate
21
6
148) A good brand name should most likely be
.
A) trendy
B) complex
C) long
D) conventional
E) distinctive
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
149) An increasing number of retailers and wholesalers have created their own
, also
called store brands.
A) national brand
B) support brand
C) private brand
D) generic brand
E) manufacturer's brand
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Moderate
150) Costco's Kirkland Signature products are an example of a
.
A) national brand
B) support brand
C) private brand
D) generic brand
E) manufacturer's brand
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Moderate
21
7
151) Which of the following is true with regard to store brands?
A) Store brands have been declining in popularity and strength for more than two decades.
B) Store brands are also known as national brands.
C) Store brands are created and owned by resellers of a product or service.
D) Increasing consumer distrust toward store brands has led to a store-brand slump.
E) Store brands are growing far slower than manufacturer's brands.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Moderate
152) Some companies obtain the rights to use the names or symbols previously created by other
manufacturers for a fee. This process is known as
.
A) multibranding
B) positioning
C) segmenting
D) co-branding
E) licensing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
153)
occurs when two established brand names of different companies are used on
the same product.
A) Market diversification
B) Niche marketing
C) Co-branding
D) Licensing
E) Cannibalization
F)
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
21
8
154) Which of the following is an advantage offered by co-branding?
A) Manufacturers do not have to invest in creating their own brand names with co-branding.
B) Co-branding allows retailers to sell exclusive products that cannot be purchased from
competitors.
C) Co-branding allows a company to expand its existing brand into a category it might
otherwise have difficulty entering alone.
D) Co-branding dilutes brand equity and increases the appeal of store brands.
E) Co-branding does not involve complex legal contracts and licenses.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Moderate
155)
occurs when a company introduces additional items in a given product category
under the same brand name, such as new flavors, forms, colors, ingredients, or package sizes.
A) Line extension
B) Megabranding
C) Interactive marketing
D) Internal marketing
E) Co-branding
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
156)
involves the use of a successful brand name for new or modified products in a
new category.
A) A line extension
B) A product line
C) A brand extension
D) Co-branding
E) Cannibalization
F)
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
21
9
157) Symmonds Inc., a company manufacturing breakfast cereals, has extended its special
Crispo cereal brand into a full line of breakfast cereals plus protein shakes, fruit and sandwich
spreads, butter, and doughnuts. This is an example of
.
A) line extension
B) brand extension
C) licensing
D) co-branding
E) cannibalization
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Challenging
158) Which of the following is a potential drawback of multibranding?
A) Multibranding tends to decrease brand loyalty.
B) Company resources are likely to be concentrated on a single brand.
C) Multibranding curbs the growth opportunities of established brands.
D) Each brand might obtain only a small market share, and none may be very profitable.
E) Multibranding causes companies to refrain from product diversification.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Moderate
159) Which of the following strategies involves weeding out weaker brands and focusing
marketing dollars only on brands that can achieve the number one or number two market share
positions with good growth prospects in their categories?
A) megabrand strategies
B) niche marketing strategies
C) social marketing strategies
D) co-branding
E) licensing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
22
0
160) While advertising campaigns can help create name recognition, brand knowledge, and
perhaps even some brand preference, brands are not maintained by advertising but by
.
A) brand differentiation
B) line extensions
C) brand experiences
D) brand sponsorships
E) brand awareness
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
161) The total financial value of a brand is brand value.
162)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
163) Attributes are the most desirable level for brand positioning because competitors can
easily copy attributes.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
164) The strongest brands do not engage customers on a deep, emotional level.
165)
AACSB: Reflective thinking
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
22
1
166) A company should strive to build a brand name that becomes identified with the product
category, as Scotch Tape did.
AACSB: Reflective thinking
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
167) Co-branding occurs when retailers and wholesalers create their own store brands.
168)
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
169) Line extension refers to extending an existing brand name to new product categories.
170)
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
171) Multibranding offers a way to establish different features that appeal to different customer
segments, lock up more reseller shelf space, and capture a larger market share.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
172) Briefly explain the concept of brand equity.
rand equity is the differential effect that knowing the brand name has on customer response to
the product and its marketing. It's a measure of the brand's ability to capture consumer
preference and loyalty. A brand has positive brand equity when consumers react morefavorably
to it than to a generic or unbranded version of the same product. It has negative brandequity if
consumers react less favorably than to an unbranded version.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Moderate
22
2
173) What are the desirable qualities for a brand name?
esirable qualities for a brand name include the following:
1. It should suggest something about the product's benefits and qualities.
2. It should be easy to pronounce, recognize, and remember.
3. It should be distinctive.
4. It should be extendable.
5. The name should translate easily into foreign languages.
6. It should be capable of registration and legal protection.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Moderate
174) What is a private brand?
brand created and owned by a reseller of a product or service is known as a privatebrand or store
brand.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Easy
175) What are the different brand sponsorship options available to manufacturers?
manufacturer has four sponsorship options. The product may be launched as a national brand
(or manufacturer's brand), as when Samsung and Kellogg sell their output undertheir own
brand names (the Samsung Galaxy tablet or Kellogg's Frosted Flakes). Or the manufacturer
may sell to resellers who give the product a private brand (also called a store brand or
distributor brand). Although most manufacturers create their own brand names, othersmarket
licensed brands. Finally, two companies can join forces and co-brand a product.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Moderate
22
3
176) A company has four choices when it comes to developing brands. Describe them.
Answer: The company can introduce line extensions, brand extensions, multibrands, or entirely
new brands. A line extension involves extending a current brand name to new forms, colors,
sizes, flavors, etc. in one of the company's existing product categories. In contrast, a brand
extension extends a current brand name to a new or modified product in a new product
category. Multibranding involves introducing several brands within the same category. Finally a
company may decide that a new brand name is needed, particularly if the power of an existing
brand name is declining or the company is entering a new product category.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 8.4: Discuss branding strategy - the decisions companies make in building and
managing their brands.
Difficulty: Moderate
22
4
Principles of Marketing, 17e (Kotler/Armstrong)
Chapter 9 Developing New Products and Managing the Product Life Cycle
1) Which of the following is a significant challenge presented by the product life cycle?
A) increased expenses
B) increased competition
C) new product development
D) evaluation of results
E) recognizing the stages as a product goes through them
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.1: Explain how companies find and develop new product ideas.
Difficulty: Easy
2) Acquisition refers to
.
A) the buying of a whole company, a patent, or a license to produce someone else's product
B) an agreement between two or more commercial companies to produce a common product
C) a partnership between two companies to produce a product in different countries by sharing
risks
D) investments made in a country's businesses by foreign citizens, often in the form of stocks
E) the development of original products, product improvements, product modifications, and
new brands through the firm's own product development strategies
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.1: Explain how companies find and develop new product ideas.
Difficulty: Easy
3) Electron Corp. purchased Proton Corp. by buying all of its assets and ownership equity. This
is an example of a(n)
.
A) new product development
B) acquisition
C) joint venture
D) licensing contract
E) divestment
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 9.1: Explain how companies find and develop new product ideas.
Difficulty: Moderate
1
4) Product improvements, product modifications, and original products can all be classified as
.
A) blueprints
B) new products
C) prototypes
D) product extensions
E) test products
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.1: Explain how companies find and develop new product ideas.
Difficulty: Easy
5) Which of the following is a common reason for new product failure?
A) incorrect estimation of the market size
B) low product development costs
C) ineffective social marketing campaigns
D) low selling prices of products
E) patent ownership exclusively held by the company
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 9.1: Explain how companies find and develop new product ideas.
Difficulty: Moderate
6) A particular firm added three new products earlier this year to increase variety for customers.
Two of the products failed to reach the minimal sales quota. Which of the following is LEAST
likely to have been the cause of their failure?
A) The products were priced too high.
B) The products were advertised incorrectly.
C) Competitors fought back harder than expected.
D) Product research was too extensive.
E) The product development costs were high.
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.1: Explain how companies find and develop new product ideas.
Difficulty: Challenging
2
7) The product life cycle presents challenges. Which of the following is LEAST likely to
require a company to adapt its marketing strategies?
A) developments in technology
B) decreased manufacturing costs
C) competition
D) changing tastes of consumers
E) aging of products
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.1: Explain how companies find and develop new product ideas.
Difficulty: Challenging
8) A firm can obtain new products through acquisition or new product development efforts.
9)
Skill: Concept
Objective: LO 9.1: Explain how companies find and develop new product ideas.
Difficulty: Easy
10) Acquisition involves the purchase of a whole company, a patent, or a license to
producesomeone else's product.
Skill: Concept
Objective: LO 9.1: Explain how companies find and develop new product ideas.
Difficulty: Easy
11) Adapting marketing strategies is not a challenge faced in the product life cycle.
12)
Skill: Concept
Objective: LO 9.1: Explain how companies find and develop new product ideas.
Difficulty: Easy
13) Explain common reasons for the failure of new products. What must be the goals for a
company to create successful new products?
lthough an idea may be good, the market size may have been overestimated. Other possible
reasons for failure include the following: the actual product was not designed as well as it
should have been; the product may have been incorrectly positioned in the market, priced too
high, or advertised poorly; a high-level executive might have pushed a favorite idea despite
poor marketing research findings; the costs of product development were higher than expected;
or competitors fought back harder than expected. To create successful new products, a company
must understand its customers, markets, and competitors and deliver superior value to
customers.
AACSB: Analytical thinking; Written and oral communications
Skill: Concept
Objective: LO 9.1: Explain how companies find and develop new product ideas.
Difficulty: Moderate
3
14) New product development starts with
.
A) concept development
B) idea screening
C) idea generation
D) concept testing
E) test marketing
Answer: C
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
15) John's fascination for his grandmother's sherbet recipes inspired him to come up with a
recipe for SherBetter, a gourmet sherbet for the American market. Which of the following
stages of the new product development process does this exemplify?
A) idea screening
B) idea generation
C) concept testing
D) product development
E) product manufacturing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Challenging
16) Which of the following is an internal source for new product ideas?
A) competitors
B) company employees
C) marketing research firms
D) trade magazines
E) government agencies
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
4
17) Many companies have developed
programs that encourage employees to develop
new product ideas.
A) management
B) incentive
C) entrepreneurial
D) intrapreneurial
E) crowdsourcing
F)
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
18) Why are customers often considered the most important sources of new product ideas?
A) Customers are close to the market and can pass along information about problems and new
product possibilities.
B) The company can analyze customer questions and complaints to find new products that
better solve consumer problems.
C) Customers buy competing new products, take them apart to see how they work, analyze
sales, and then decide to purchase.
D) Customers review the sales, costs, and profit projections for a new product to find out
whether the product satisfies the company's objectives.
E) Customers estimate the minimum and maximum sales to assess the range of risk.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
19) Which of the following is an external source for ideas?
A) project managers
B) engineers
C) salespeople
D) manufacturing staff
E) suppliers
F) Skill:
Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
5
20) Who can pass along information about new concepts or techniques to use in new products?
A) competitors
B) salespeople
C) customers
D) suppliers
E) distribution channels
F)
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
21) Which of the following is the practice of inviting broad communities of customers,
employees, independent researchers, and members of the public into the new product
innovation process?
A) brainstorming
B) idea screening
C) crowdsourcing
D) outsourcing
E) concept testing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
22) Which of the following statements is true of the idea generation stage in the new product
development process?
A) The purpose of idea generation is to reduce the number of ideas to the least possible number.
B) Truly innovative companies rely exclusively on a single source for new product ideas.
C) Customers are the least important sources of new product ideas.
D) Truly innovative companies develop extensive innovation networks that capture ideas and
inspiration from every possible source.
E) Truly innovative companies seldom rely on customers and the general public for ideas.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
6
23) In the new product development process, the first idea-reducing stage is
.
A) business analysis
B) idea generation
C) concept development
D) crowdsourcing
E) idea screening
F)
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
24) Executives at an automobile manufacturing company conducted a brainstorming session for
selected employees. This session resulted in a large number of ideas for developing new cars
after extensive R&D. The executives then planned to filter out the best ideas during the
stage.
A) business analysis
B) idea generation
C) concept testing
D) idea screening
E) concept development
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
25) Which of the following would most likely be included in an executive's write up of a new
product idea to be presented to a new product committee?
A) the proposed customer value proposition
B) the product image
C) the marketing strategy
D) the business analysis
E) the pricing strategy
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
7
26) Which of the following is NOT likely to be a question asked in the new product screening
process?
A) Is there a real need and desire for the product?
B) Is there a clear product concept?
C) Does the product offer a sustainable advantage?
D) How many items will the company sell in the first two years?
E) Does the product fit the company's overall growth strategy?
F)
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
27) Which of the following statements best explains why idea screening may be the most
important step of new product development?
A) It increases the number of ideas generated.
B) It provides an opportunity for the marketer to test the prototype in a simulated market.
C) It helps forecast the products' sales and profits accurately for a specific period.
D) It gives research and development team members an opportunity to gather consumer
feedback.
E) It saves the company money in product development costs by going ahead with only the
product ideas that are likely to be profitable.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
28) A product idea is
.
A) the way consumers perceive an actual or potential product
B) the knowledge and awareness of a product among consumers
C) a possible product that the company can see itself offering to the market
D) a detailed version of the new product idea stated in meaningful consumer terms
E) the testing of new product concepts with groups of target consumers
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
8
29) A detailed version of a new idea stated in meaningful customer terms is called a product
.
A) solution
B) concept
C) image
D) proposal
E) lining
F) Skill:
Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
30) An attractive product idea must be developed into a
.
A) concept alternative
B) product concept
C) brand personality
D) brand placement
E) product strategy
F)
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
31) A
is the way consumers perceive an actual or potential product.
A) product idea
B) product concept
C) product image
D) brand personality
E) concept test
F) Skill:
Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
9
32) JoAnn Fabrics Inc. has created a new combination of colors and fabric types. The firm
wants to know how consumers will perceive the new product. The firm is concerned with the
product
.
A) idea
B) displacement
C) image
D) activation
E) placement
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Challenging
33) Which of the following groups do marketers involve for the process of concept testing new
products?
A) suppliers
B) employees
C) target consumers
D) manufacturers
E) competitors
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
34) For concept test, companies will frequently present customers with
of the
concept for a reliable concept test.
A) a verbal description
B) a PowerPoint slide
C) a picture
D) a physical presentation
E) a printed paragraph
F)
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
10
35) Which of the following stages in the new product development would a firm engage in
immediately after the completion of concept testing?
A) idea screening
B) marketing strategy development
C) business analysis
D) product development
E) idea generation
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
36) What is included in the first part of a marketing strategy statement?
A) distribution strategy
B) product longevity
C) long-run sales goals
D) promotional mixes
E) target market description
F)
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
37) Which of the following is included in the second part of the marketing strategy statement?
A) advertising tagline
B) promotional mix
C) planned price
D) customer segmentation
E) operational excellence
F)
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
11
38) Which of the following is included in the third part of the marketing strategy statement?
A) the planned value proposition
B) distribution strategy
C) the product's planned price
D) marketing budget
E) the planned long-run sales
F)
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
39) A review of the sales, costs, and profit projections for a new product to find out whether
they satisfy the company's objectives is called a
.
A) business feasibility plan
B) marketing strategy development
C) business analysis
D) product acceptance
E) business proposal
F)
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
40) Which stage of new product development requires management to estimate minimum and
maximum sales to assess the range of risk in launching a new product?
A) concept testing
B) marketing strategy development
C) business analysis
D) product development
E) test marketing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
12
41) Once managers of The Grecian Urn have decided on their product concept and marketing
strategy, they can evaluate the business attractiveness of the proposal in the
stage of
the new product development process.
A) business transformation
B) test marketing
C) business analysis
D) business process reengineering
E) concept testing
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
42) Which of the following statements is true of the new product development process?
A) The purpose of the idea screening stage is to create a large number of ideas.
B) Under the business analysis stage, if the new product satisfies the company's objectives, the
product then moves to the product development stage.
C) A product concept is the way consumers perceive an actual or potential product.
D) The concept testing stage is the stage at which the product and its proposed marketing
program are introduced into realistic market settings.
E) Commercialization is the process of inviting broad communities of people such as
customers, employees, and scientists into the new product innovation process.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
43) Neutron Inc. is conducting a business analysis to determine which of the many newly
developed apps should be released. To estimate sales, the company must
.
A) conduct surveys of competitors
B) exclusively consider the government's opinions
C) consider the sales history of similar products
D) apply the PLC concept to industry sales
E) opt for business process reengineering
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
13
44) Which figures does the company use to analyze the new product's financial attractiveness?
A) size of population
B) expected market share
C) number of competitors
D) anticipated number of options
E) sales and costs
F)
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
45) Which of the following stages of the new product development process occurs immediately
after the completion of the business analysis for the product or service?
A) idea screening
B) product development
C) product activation
D) marketing strategy development
E) product design
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
46) The product development stage requires
.
A) a huge jump in investment
B) salespeople to contact potential customers
C) financial analysis
D) a few hours
E) management approval
F)
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
14
47) In the
stage of the new product development process, products undergo rigorous
tests to make sure that they perform safely and effectively, or that consumers will find value in
them.
A) product design
B) idea generation
C) concept development and testing
D) product development
E) product activation
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
48) A group of business entrepreneurs who worried about their teenage children drinking and
driving decided there must be some way to approach this problem proactively. They came up
with an idea for a pair of blurry goggles. They believed looking through the goggles would
simulate what the world looks like when someone is seriously intoxicated. They developed a
crude pair of blurry goggles to show prospective customers. This crude pair of goggles is
known as a
.
A) prototype
B) concept test
C) product concept
D) product image
E) product idea
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Challenging
49) Once the prototype of Wainwright Industries' new riding lawnmower, made especially for
women, passes product tests, the next step is
.
A) test marketing
B) focus group surveys
C) commercialization
D) concept testing
E) business analysis
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
50) In a
, new products and marketing tactics are tested online in a virtual shopping
15
environment.
A) controlled test market
B) simulated test market
C) standard test market
D) focus group
E) survey
F)
AACSB: Information technology
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
51) Starbucks introduced a less-than-perfect mobile payments app, then worked out the flaws
after the launch. The company chose speed to market over a perfect app at introduction. This
illustrates
.
A) why many companies engage in crowdsourcing
B) the influence of fast-changing market developments
C) why prototypes are so important
D) how idea screening can make a product a commercial success
E) the importance of different sources for idea generation
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Challenging
52) Yummy Peanut Butter created a new coconut-flavored peanut butter that it tested in a small
number of representative cities. The company plans to use the results to forecast national sales
and profits. Which of the following did the firm use?
A) controlled test markets
B) simulated test markets
C) standard test markets
D) ambush marketing
E) affinity marketing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Challenging
16
53) In a(n)
, consumers interact with new products and marketing tactics in laboratory
stores or virtual online shopping environments.
A) standard test market
B) focus group
C) controlled test market
D) simulated test market
E) individual survey
F)
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
54) In a(n)
, new products and marketing tactics are tested among specifically
identified groups of customers and stores.
A) controlled test market
B) simulated test market
C) standard test market
D) systematic sample
E) accidental sample
F)
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
55) All of the following are disadvantages of test marketing EXCEPT that test marketing
.
A) is typically expensive
B) can be time consuming
C) enables competitors to gain advantages
D) encourages dishonesty among participants
E) fails to guarantee product success in the market
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
17
56) Which of the following is the most likely circumstance for a company to decide to do little
or no test marketing?
A) when the new product requires a major investment
B) when management lacks confidence in the new product
C) when management lacks confidence in the marketing strategy
D) when the product has no substitutes and is new in its category
E) when the costs of developing and introducing the product are low
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
57) Which of the following statements is true of test marketing?
A) The amount of test marketing needed remains constant for each new product.
B) When the costs of developing and introducing the product are low, the company will have to
do significant test marketing.
C) Test marketing is seldom done on products that are risky.
D) Test marketing is seldom done when management is not sure of the product or its marketing
program.
E) Test marketing costs can be high, and it takes time that may allow competitors to gain
advantages.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
58) The major purpose of test marketing is to provide management with the information needed
to make a final decision about
.
A) the entire marketing program
B) which market to compete in
C) whether to launch the new product
D) how to compete in the market
E) how long to compete in the market
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
18
59) Introducing a new product into the market is called
.
A) test marketing
B) simulation
C) co-marketing
D) commercialization
E) segmentation
F) Skill:
Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
60) P&G introduced its Duncan Hines ready-to-spread frosting in a small geographic area.
When General Mills became aware of the product, it rushed to market its own Betty Crocker
ready-to-spread frosting, which eclipsed the Duncan Hines product introduction. General Foods
was able to enter the
stage of the new product development process before P&G
could.
A) commercialization
B) co-marketing
C) idea generation
D) idea screening
E) simulation
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Challenging
61) Which of the following involves costs that most likely occur during the commercialization
stage of new product development?
A) building or renting a manufacturing facility
B) paying target customers for product feedback
C) determining the product's planned distribution
D) developing a prototype of the product
E) identifying target markets
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
19
62) A company getting ready to launch a new product must make several decisions. The
company must first decide on
.
A) whether to launch the product in a single location
B) whether to launch the product in a region
C) whether to launch the product into full national distribution
D) when to introduce the product
E) when to develop a planned market rollout
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
63) According to the commercialization stage of the new product development process,
following the decision to introduce the new product at a particular time, a company must next
decide
.
A) where to launch the new product
B) how to launch the new product
C) why to launch the new product
D) what pricing strategies to implement
E) what marketing mix elements to use
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
64) Steelz Inc. has designed a process that manufactures an improved version of steel more
efficiently, which will save the firm both money and resources. In considering the launch of this
new steel in the market, the firm must first decide on
.
A) timing
B) location
C) organizational structure
D) test marketing
E) product mix
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Challenging
20
65) Which of the following focuses on finding new ways to solve customer problems and create
more customer-satisfying experiences?
A) concept testing process
B) customer value proposition
C) customer-centered new product development
D) customer lifetime value
E) team-based new product development
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
66) Skyrim Corp. lacks the capital and capacity to launch its new helicopter for full national
and international distribution. If the test market results look promising, what should be
management's next step?
A) retest the product in additional markets
B) develop a planned market rollout over time
C) liquidate its assets to gain capital and capacity
D) seek the help of a nationally known consultant
E) develop a prototype
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Challenging
67)
is a new product development approach in which one company department
works to complete its stage of the process before passing the new product along to the next
department and stage.
A) Team-based product development
B) Simultaneous product development
C) Sequential product development
D) Horizontal integration
E) Vertical integration
F)
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
21
68) Under a team-based new product development approach,
.
A) a single departmental team works to complete different stages of the process before passing
the new product along to the next department and stage
B) the organizational tension and confusion is less than under the sequential approach
C) company departments work closely together in cross-functional teams
D) a bottleneck at one phase can seriously delay an entire project
E) the new product passes from one department to another before finalizing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
69) At Fantastic Flavors, a large regional chain of candy stores, employees from marketing,
design, production, and finance work in cross-functional groups to save time and money in the
new product development process. Fantastic Flavors uses a
approach.
A) customer-centered new product development
B) sequential product development
C) team-based new product development
D) heuristic
E) functional
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Challenging
70) Which of the following is the goal of the team-based new product development approach
when it uses cross-functional teams that overlap the steps in the process?
A) gain a big competitive edge by getting the right new products to market
B) save time and increase effectiveness
C) increase production efficiency and customer satisfaction
D) speed product distribution to market and reduce costs
E) reduce organizational tension and confusion
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
22
71) Which of the following is a disadvantage of a team-based approach to new product
development?
A) It takes longer for the development of a new product.
B) The development effort is not as effective because of employee inexperience.
C) It decreases the efficiency of the new product development process.
D) It can result in organizational confusion and tension.
E) The process does not work with the shorter life cycles of many of today's products.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
72) According to the text, the search for new product ideas should most likely be
.
A) intermittent
B) holistic
C) segmented
D) compartmentalized
E) flexible
F) Skill:
Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
73) A company can install a(n)
management system to collect, review, evaluate, and
manage new product ideas.
A) quality
B) innovation
C) content
D) supply chain
E) customer relationship
F)
AACSB: Information technology
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
23
74) The innovation management system approach yields two favorable outcomes: it helps
create an innovation-oriented company culture, and it
.
A) clearly assigns responsibility for the process to a single department
B) yields a larger number of new product ideas
C) guarantees successful products
D) frees up senior management time
E) requires less budget support
F)
AACSB: Information technology
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
75) New product success requires all of the following EXCEPT
.
A) a whole-company commitment
B) a holistic approach for finding new ways to create valued customer experiences
C) thinking up a few good ideas
D) introducing products that will satisfy a want or need for customers
E) efficient engineering and manufacturing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
24
Refer to the scenario below to answer the following question(s).
Most people laughed when Evelyn Ringler explained her product idea: a solar-powered vacuum
cleaner. But the concept was practical and the technology used in the vacuum was the same as
that used in many electronic toys. After setting up a demonstration booth in a mall in a Chicago
suburb, Evelyn felt more assured than ever that her idea would be a hit. Consumers seemed
receptive and offered helpful pieces of advice, such as how much they would pay for the
vacuum, what colors they would prefer, and why they would not buy the vacuum.
The vacuum itself was shaped like a small saucer, with a filter bag on top and sensory nodes
along the edges. After being charged in the sunlight, the vacuum could run for 7 hours,
covering a floor area of 600 square feet. As the apparatus lightly bumped into table legs, chairs,
and so on, the sensory nodes allowed the vacuum to move around the objects in various
directions. This is the same type of technology used in the manufacture of children's racecars
and walking dolls.
Evelyn knew that the solar-powered vacuum would be especially helpful to both elderly
consumers, who may have a more difficult time with vacuuming, and on-the-go consumers who
lead busy lives. The price would be above average but would likely be reduced after Evelyn
recouped some of her costs.
After a 500-unit production run and a substantial financial investment, Evelyn set up a
multiple-city test market, in a Chicago mall and in an appliance store in New Jersey and several
other retail stores in Florida. "It's such a novel idea," Evelyn added. "People will notice it, even
if they don't buy it right away."
76) Evelyn's
is the practical use of solar power in a vacuum cleaner that is designed
to effortlessly vacuum clean the floors of on-the-go and elderly consumers.
A) product placement
B) product concept
C) product image
D) product idea
E) virtual product
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Challenging
25
77) Which of the following stages of new product development was Evelyn involved in when
she set up a demonstration booth to learn about consumers' feelings toward her vacuum
cleaner?
A) concept testing
B) marketing strategy development
C) idea screening
D) commercializing
E) crowdsourcing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Challenging
78) New product development begins with a systematic search for new product ideas through
idea generation.
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
79) Companies seldom solicit ideas from customers during the idea generation stage of product
development.
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
80) A product idea is an idea for a possible product that a company can offer the market.
81)
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
82) Blair Housewares wants to add new products to its existing line of products. Managers are
correct in believing that the purpose of idea generation is to create a few ideas, and the purpose
of succeeding stages is to increase that number.
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
26
83) In the concept development stage, a firm will create a single product concept to test.
84)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
85) Concept testing works best with people who are familiar with the new idea and the new
product's purpose. This generally includes top management, the sales force, and research and
development.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
86) GreenTree Lawn and Garden Products is engaged in marketing strategy development. The
first part of the marketing strategy statement created by management should outline the
product's planned price, distribution, and marketing budget for the first year.
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
87) The business analysis stage represents the first large jump in financial investment in the
new product development process.
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
88) GreenTree Lawn and Garden Products is engaged in a review of the sales, costs, and profit
projections for some new products to find out whether they satisfy the company's objectives.
This activity is called business product development.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
27
89) Marketers often involve actual customers in product testing.
90)
28
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
91) A company introducing a product that is similar to its competitors' product will do a
complete test market to gain maximum information before product introduction.
92)
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
93) A company launching a new product into the market must first decide where to launch the
product.
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
94) JumBo Games is in the commercialization stage. The first decision that the firm should
make while introducing the product in the market is introduction timing.
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
95) Sequential product development has the advantage of not only being a team-oriented
approach, but also of being faster in bringing products to market.
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
29
96) To avoid too few new product ideas and the failure of many good ideas, management
should implement an innovation management system that collects, reviews, evaluates, and
manages new product ideas.
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
97) What elements may help to create a product image?
product image is the way consumers perceive an actual or potential product. Any number of
product attributes, as well as packaging and intended use, create product image; the
promotional campaign also affects product image.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
98) How might a firm benefit from implementing an "intrapreneurial" program?
Answer: Many companies have developed successful internal social networks and
intrapreneurial programs that encourage employees to develop new product ideas. For example,
Twitter hosts periodic "hackathons," which actively promotes internal innovation through
experimentation around the company.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
99) Why are competitors considered a good external idea source?
Answer: Marketers can pay particular attention to competitors' ads to get clues about their new
products. They buy competing new products, take them apart to see how they work, analyze
their sales, and decide whether they should bring out a new product of their own.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
30
100) The potential sales, costs, and profit projections are being determined for a new
product idea at Art for Kids. Which of the following stages of the new product development
processdoes this illustrate?
Answer: The projections for potential sales, costs, and profits occur in the business analysis
stage of the new product development process.
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
101) What factors are assessed in test marketing?
Answer: Test marketing lets a company assess customer response to its product and the
effectiveness of its positioning strategy, advertising, distribution, pricing, branding, and
packaging.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
102) A marketer has selected a single city in which to conduct a test market. What can
beconcluded from this choice of a single-city test market?
Answer: The marketer may be confident that consumers in that city are representative of the
overall market.
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Challenging
103) A marketer has chosen a multiple-city test market. What can be concluded from this
choiceof a multiple-city test market?
Answer: The marketer likely understands that the product being tested will be perceived
differently in different geographic regions.
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Challenging
31
104) Differentiate between controlled test markets and simulated test markets.
Answer: In controlled test markets, new products and tactics are tested among controlled
panels of shoppers and stores. Using simulated test markets, researchers measure consumer
responses to new products and marketing tactics in laboratory stores or virtual online shopping
environments. Both controlled test markets and simulated test markets reduce the costs of test
marketing and speed up the process.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
105) Why might individual departments prefer sequential product development?
Answer: This process allows each individual department to work with a new idea, completing
its stage of development before passing the product on to the next department and stage; other
departments are less likely to interfere.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
106) Briefly describe the steps in the new product development process.
Answer: New product development starts with idea generation from internal and/or external
sources. Next, the ideas must be reduced through idea screening. Once the new ideas are
decided upon, the product concept must be developed and tested. A marketing strategy must be
developed to introduce the product to the market. Once the product concept and marketing
strategy are chosen, a business analysis is conducted to review the sales, costs, and profit
projections to see if they will satisfy the company's objectives. Next, a prototype will be created
in the product development stage. Test marketing will follow, introducing the new product and
its marketing program into more realistic market settings. The last step is to launch or not
launch the new product. If the company decides to launch the product, it will go ahead with the
commercialization stage and later test its sales and profit results.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
32
107) Identify the major sources of external new product ideas and explain why these sources
offer advantages over internal sources.
Answer: The major external sources of new product ideas include customers, suppliers and
distributors, competitors, and research firms. These sources are close to the market and tend to
reflect current tastes and preferences. Firms can better match their product offerings to
customer needs and wants.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
108) Differentiate between a product idea, a product concept, and a product image.
product idea is an idea for a product that a company can imagine itself offering to the market.
A product concept takes the idea several steps further, with a detailed version of theidea stated
in meaningful consumer terms. Finally, a product image is the way consumers perceive an
actual or potential product.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
109) Explain concept testing.
oncept testing calls for testing new product concepts with groups of target consumers. The
concepts may be presented to consumers physically or symbolically. A moreconcrete and
physical presentation, however, will increase the reliability of the concept test. After being
exposed to the concept, consumers are asked questions about it; their answers reveal to the
marketer whether the concept needs to be altered in any way.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Easy
110) Define commercialization. Explain two important decisions the company must make
during this stage.
Answer: Introducing a new product into the market is called commercialization. The company
launching a new product must first decide on introduction timing. Next, the company must
decide where to launch the new product—in a single location, a region, the national market, or
the international market. Confidence, capital, and capacity are required to launch new products
on a large-scale basis. Hence, many firms plan a market rollout over time.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
33
Difficulty: Moderate
34
111) What are the two advantages of an innovation management system for developing new
products? Provide four strategies for a company to use to establish a successful system.
Answer: The first advantage of an innovation management system is that it helps create an
innovation-oriented company culture. It shows that top management supports, encourages, and
rewards innovation. The second advantage is that it will yield a larger number of new product
ideas, among which will be found some especially good ones. As the system matures, ideas will
flow more freely.
To establish a successful system a company can do the following:
1. Appoint a respected senior person to be the company's innovation manager.
2. Create a cross-functional innovation management committee with people from each
department.
3. Set up a Web site for anyone who wants to become involved in finding and developing new
products.
4. Encourage all company stakeholders to send their ideas to the idea manager.
5. Set up formal recognition programs to reward those who contribute the best new ideas.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.2: List and define the steps in the new product development process and the
major considerations in managing this process.
Difficulty: Moderate
112) Which of the following refers to the course that a product's sales and profits take over its
lifetime?
A) total product process
B) service life
C) product mix
D) product life cycle
E) marketing mix
F)
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
113) Which of the following best characterizes the decline stage of product development?
A) rapid market acceptance
B) slow sales growth
C) sales and profits decline
D) high investment costs
E) increasing profits
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
114) Which of the following statements characterizes the introduction stage of the PLC?
35
A) There are increased marketing outlays.
B) Profits are nonexistent.
C) The company incurs minimal expenses.
D) The product achieves acceptance by most potential buyers.
E) Promotional expenditures are zero.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
115) Which stage in the product life cycle is characterized by rapid market acceptance and
increasing profits?
A) introduction
B) maturity
C) growth
D) decline
E) product development
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
116)
is the product life cycle period when sales fall off and profits drop.
A) Introduction
B) Growth
C) Maturity
D) Decline
E) Product development
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
36
117)
is the product life cycle period when sales growth slows because the product
has achieved acceptance. Profits level off because marketing costs increase in the face of
competition.
A) Decline
B) Maturity
C) Product development
D) Introduction
E) Growth
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
118) Some products that have entered the decline stage have been cycled back to the growth
stage through
.
A) repositioning
B) harvesting
C) maintaining
D) pruning
E) expanding
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
119) What causes a specific brand's life cycle to change quickly?
A) costs of raw materials
B) changing demographics
C) shift in company strategy
D) competitive attacks and responses
E) new technology
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
37
120) A style is best defined as a
.
A) currently popular trend in retail goods
B) popular consumer taste at a given time
C) temporary period of unusually high sales
D) short-term component of the marketing mix
E) basic and distinctive mode of expression
F)
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
121) The more formal "business attire" look of corporate dress of the 1980s and 1990s gave
way to the "business casual" look of the 2000s and 2010s. This is an example of a
.
A) style
B) fashion
C) fad
D) subculture
E) norm
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
122) Apple's iPod has been called "one of the greatest consumer electronics hits of all
time." iPods have been sold in huge numbers, and Apple captures a large share of the music
playermarket. This success has attracted many large, resourceful competitors. The iPod is in
the
stage of the product life cycle.
A) introduction
B) growth
C) maturity
D) decline
E) adoption
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Challenging
38
123) Flurrbies, a brand of unique winter accessories that quickly fell in and out of favor with
customers, is an example of a
.
A) style
B) fashion
C) fad
D) norm
E) subculture
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
124) The PLC concept can be applied by marketers as a useful framework for describing how
.
A) competitors' moves are predicted
B) marketing strategies are developed
C) products and markets work
D) concept testing is conducted
E) product ideas are developed
F)
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
125) According to the PLC, the
stage is reached when sales plunge to zero, or when
they drop to a low level where they continue for many years.
A) laggard
B) decline
C) maturity
D) growth
E) incubation
F) Skill:
Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
39
126) Which of the following stages of the PLC is characterized with high promotional
expenditures that result from an effort to create consumer awareness?
A) growth
B) product development
C) maturity
D) introduction
E) decline
F) Skill:
Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
127) A(n)
chooses a strategy consistent with the intended product positioning. To
gain market leadership requires correct decisions from the beginning.
A) brand evangelist
B) market pioneer
C) early adopter
D) laggard
E) harvester
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
128) Which of the following stages of the PLC is characterized with the same level or slightly
higher level of promotional expenditures in an attempt to respond to increasing competition?
A) growth
B) decline
C) maturity
D) product development
E) adoption
F) Skill:
Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
40
129) Kellogg's begins to sell its cereals in new markets after conducting extensive marketing
research. After the cereal begins to appear in these new markets, the company increases its
promotion expenditure to counteract competitive responses. Kellogg's is in the
stage
of the product life cycle.
A) introduction
B) growth
C) maturity
D) decline
E) adoption
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Challenging
130) Big Moose Toys is a market pioneer introducing a modern version of Bubble the Moose, a
character from an animated television series originally broadcast in the '50s and '60s. The
company's version of Sandy the Flying Squirrel, a character from the show targeted to baby
boomers, was a strong success. Since the firm is a market pioneer, it needs to make the new
launch strategy for Bubble the Moose consistent with the intended
.
A) pricing
B) product positioning
C) brand extension
D) prototype
E) fad
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Challenging
131) Which stage in the PLC normally lasts longest and poses strong challenges to marketing
managers?
A) growth
B) decline
C) maturity
D) introduction
E) adoption
F) Skill:
Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
41
132) At which stage in the PLC do profits increase as promotion costs are spread over a large
volume, and as the firm enters new market segments?
A) maturity
B) introduction
C) decline
D) growth
E) harvest
F) Skill:
Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
133) Which of the following would lead to greater competition in the maturity stage of the
PLC?
A) overcapacity
B) market pioneers
C) poor management
D) inadequate promotion
E) diminishing budgets
F)
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
134) Most products in the marketplace are in the
stage of the product life cycle.
A) growth
B) decline
C) maturity
D) introduction
E) development
F) Skill:
Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
42
135) Over the past few years, Binney and Smith's Crayola crayons has expanded to more than
80 countries around the world. Crayola crayons are in the
stage of the PLC.
A) introduction
B) laggard
C) maturity
D) decline
E) incubation
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Challenging
136) When a product is in the maturity stage, the company should most likely consider
.
A) harvesting the product or market
B) modifying the product, market, or marketing mix
C) divesting the product line
D) liquidating the firm's assets
E) dropping the product from its market offerings
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
137) When Heinz introduced EZ Squirt packaging and new colors such as Blastin' Green and
Awesome Orange to revitalize consumer buying, the company was modifying the
.
A) market
B) pricing strategy
C) distribution
D) product
E) competition
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Challenging
43
138) P&G has sold off a number of lesser or declining brands such as Folgers coffee and Cover
Girl cosmetics. In these examples, management decided to
the products.
A) modify
B) maintain
C) drop
D) harvest
E) franchise
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
139) Due to dropping sales, a company that manufactures soaps begins to sell them to
restaurants and hotels to extend their product's life. The soap manufacturer is in the
stage of PLC.
A) introduction
B) growth
C) maturity
D) decline
E) development
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
140) When Kraft focused on cost cutting with its older, established brands, leaving them to
wither without much investment or modification, Kraft decided to
the older products.
A) extend
B) modify
C) drop
D) harvest
E) analyze
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
44
Refer to the scenario below to answer the following question(s).
Most people laughed when Evelyn Ringler explained her product idea: a solar-powered vacuum
cleaner. But the concept was practical and the technology used in the vacuum was the same as
that used in many electronic toys. After setting up a demonstration booth in a mall in a Chicago
suburb, Evelyn felt more assured than ever that her idea would be a hit. Consumers seemed
receptive and offered helpful pieces of advice, such as how much they would pay for the
vacuum, what colors they would prefer, and why they would not buy the vacuum.
The vacuum itself was shaped like a small saucer, with a filter bag on top and sensory nodes
along the edges. After being charged in the sunlight, the vacuum could run for 7 hours,
covering a floor area of 600 square feet. As the apparatus lightly bumped into table legs, chairs,
and so on, the sensory nodes allowed the vacuum to move around the objects in various
directions. This is the same type of technology used in the manufacture of children's racecars
and walking dolls.
Evelyn knew that the solar-powered vacuum would be especially helpful to both elderly
consumers, who may have a more difficult time with vacuuming, and on-the-go consumers who
lead busy lives. The price would be above average but would likely be reduced after Evelyn
recouped some of her costs.
After a 500-unit production run and a substantial financial investment, Evelyn set up a
multiple-city test market, in a Chicago mall and in an appliance store in New Jersey and several
other retail stores in Florida. "It's such a novel idea," Evelyn added. "People will notice it, even
if they don't buy it right away."
141) Evelyn's vacuum is at the
stage of the product life cycle.
A) product development
B) introduction
C) growth
D) decline
E) maturity
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Challenging
142) Using the PLC concept to develop marketing strategy can be problematic because strategy
is both a cause and a result of the product's life cycle.
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
143) Most successful products are immediately accepted, and quickly move to the growth stage
45
of the PLC.
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
144) Profits drop during the growth stage of the PLC because per customer promotion costs are
high.
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
145) Although products that remain in the maturity stage of the PLC seem unchanged, the most
successful ones actually evolve to meet changing consumer needs.
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
146) When sales of a product drop during the decline stage of the PLC, a company typically
modifies the marketing mix, the product, or the market.
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
147) Sales of products decline because of technological advances, shifts in consumer tastes, and
increased competition.
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
148) Harvesting the product involves reducing various costs such as maintenance, R&D, and
advertising to increase profits.
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
149) The distribution strategy during the decline stage of PLC involves building more intensive
46
distribution networks.
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
150) Explain how the PLC applies differently to a product class than to a product form.
Answer: Product classes have longer life cycles, while product forms tend to have the standard
PLC shape.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
151) Why are ad expenditures high for products in the introduction stage of the PLC?
onsumers have very little awareness about such products; promotional spending canenhance
customer awareness.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
152) Why do ad expenditures remain high in the growth stage of the PLC?
Answer: Though sales are increasing for such products, competition becomes fierce as
competitors attempt to enter the market; therefore, ad expenses remain high in an effort to
offset competitive threats.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Easy
47
153) Marketers can prolong the lives of many products in the maturity or decline stages of the
PLC, sometimes even moving these products back into the growth stage. How is this
undertaken?
Answer: Marketers can change any element of the marketing mix, find new users and new
market segments for its brands, change characteristics such as quality, features, style,
packaging, or technology platforms, and so on.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
154) Each product will have a life cycle, although its exact shape and length is not known in
advance. Briefly explain each phase of the product life cycle.
Answer:
-Product development begins when the company finds and develops a new product idea. Sales
are zero and the company's investment costs mount.
-Introduction is a period of slow sales growth as the product is introduced in the market. Profits
are nonexistent in this stage because of the heavy expenses of product introduction.
-Growth is a period of rapid market acceptance and increasing profits.
-Maturity is a period of slowdown in sales growth because the product has achieved acceptance
by most potential buyers. Profits level off or decline because of increased marketing outlays to
defend the product against competition.
-Decline is the period when sales fall off and profits drop. A company may seek to reinvigorate
a product in decline or maintain it hoping competition will diminish or harvest it or drop it.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
155) Explain why the PLC can be applied to more than just brands.
Answer: The PLC can be applied to new products and services. It can also be applied to
product class, a product form, or a brand. The PLC concept lends itself to styles, fashions, and
fads. The concept can be used as a useful framework for describing how products and markets
work, as well as developing marketing strategy for each stage of the product life cycle.
Managers may have difficulties using the PLC concept to forecast product performance or
develop general marketing strategies.
AACSB: Analytical thinking
Skill: Application
Objective: LO 9.3: Describe the stages of the product life cycle and how marketing strategies
change during a product's life cycle.
Difficulty: Moderate
48
156) Manufacturers must comply with specific laws regarding
.
A) profit margins
B) product quality and safety
C) product harvesting
D) distribution channel length
E) product life cycles
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions
and international product and services marketing.
Difficulty: Easy
157) Because of
, a company cannot make its product illegally similar to a
competitor's already established product.
A) anti-monopoly laws
B) patent laws
C) the Consumer Product Safety Act
D) product warranties
E) product liability
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions
and international product and services marketing.
Difficulty: Easy
158) CellTones, a new company selling several types of cellular phones, has closely modeled
its products after successful products that are already in the marketplace. As it prepares to enter
the market with its new products and services, which of the following should concern
CellTones the most?
A) legal obligations to suppliers and dealers
B) patent laws
C) distribution requirements
D) product liability suits
E) limited warranties
F)
AACSB: Ethical understanding and reasoning
Skill: Application
Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions
and international product and services marketing.
Difficulty: Challenging
49
159) Which of the following best describes the role of a product steward?
A) to protect employees and laborers from harm
B) to evaluate new product ideas against a set of general criteria
C) to develop a new product concept into a physical product
D) to protect consumers from harm and the company from liability
E) to decide whether to maintain, harvest, or drop the product in the decline stage of the PLC
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions
and international product and services marketing.
Difficulty: Moderate
160) Which of the following is a consequence of standardizing an international product?
A) image consistency
B) regional design flexibility
C) decreased product demand
D) increased manufacturing costs
E) higher marketing costs
F)
AACSB: Diverse and multicultural work environments
Skill: Concept
Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions
and international product and services marketing.
Difficulty: Moderate
161) The federal government may prevent a company from adding products through
acquisitions if acquisition threatens to lessen competition.
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions
and international product and services marketing.
Difficulty: Moderate
162) As long as a product is not identical to a competitor's product offering, a company can
introduce, market and sell it without penalty.
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions
and international product and services marketing.
Difficulty: Easy
50
163) The international growth of many professional and business services such as accounting,
consulting, and advertising led to the globalization of the client companies they served.
164)
AACSB: Diverse and multicultural work environments
Skill: Concept
Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions
and international product and services marketing.
Difficulty: Moderate
165) Why has the cost of product liability insurance risen so dramatically?
onsumers who have been injured by a product with a defective design can sue manufacturers
or dealers of the product; though manufacturers are only found to be at fault in asmall
percentage of cases, awards can run into the tens or even hundreds of millions of dollars.This
litigation phenomenon has resulted in huge increases in product liability insurance premiums,
causing big problems in some industries.
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions
and international product and services marketing.
Difficulty: Moderate
166) Describe three public policy issues or regulations that marketers should carefully consider
as they make decisions about adding or dropping products.
Answer: The government may prevent companies from adding products through acquisitions if
the effect threatens to lessen competition. On the other hand, companies dropping products
must be aware that they have legal obligations to their suppliers, dealers, and customers who
have a stake in the dropped product. Companies must also obey U.S. patent laws when
developing new products, meaning that a company cannot make its product illegally similar to
another company's established product. Manufacturers must also comply with specific laws
regarding product quality and safety. The Federal Food, Drug, and Cosmetic Act and the
Consumer Product Safety Act are just two of many laws that protect consumers from
potentially harmful products. If consumers have been injured by a product that has a defective
design, they can sue manufacturers or dealers.
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 9.4: Discuss two additional product issues: socially responsible product decisions
and international product and services marketing.
Difficulty: Moderate
51
Principles of Marketing, 17e (Kotler/Armstrong)
Chapter 10 Pricing: Understanding and Capturing Customer Value
1)
refers to the amount of money charged for a product or service.
A) Value
B) Cost
C) Price
D) Wage
E) Salary
F) Skill:
Concept
Objective: LO 10.1: Answer the question "What is a price?" and discuss the importance of
pricing in today's fast-changing environment.
Difficulty: Easy
2)
is the only element in the marketing mix that produces revenue.
A) Price
B) Product
C) Place
D) Fixed costs
E) Variable costs
F) Skill:
Concept
Objective: LO 10.1: Answer the question "What is a price?" and discuss the importance of
pricing in today's fast-changing environment.
Difficulty: Easy
3) Which of the following is true with regard to price?
A) Historically, price has had the least perceptible impact on buyer choice.
B) Price is the least flexible element in the marketing mix.
C) Unlike product features and channel commitments, prices cannot be changed quickly.
D) Price is the sum of all the values that customers give up to gain the benefits of having a
product.
E) Prices only have an indirect impact on a firm's bottom line.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.1: Answer the question "What is a price?" and discuss the importance of
pricing in today's fast-changing environment.
Difficulty: Moderate
1
4) Price is important to managers
.
A) because prices cannot be changed quickly, so must be correctly determined
B) because a small percentage improvement in price can generate a large percentage increase in
profitability
C) but other marketing mix elements create customer value and build relationships
D) but product features can be changed more quickly
E) but has little impact on a firm's market share
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.1: Answer the question "What is a price?" and discuss the importance of
pricing in today's fast-changing environment.
Difficulty: Challenging
5) Prices have a direct impact on a firm's bottom line.
6)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 10.1: Answer the question "What is a price?" and discuss the importance of
pricing in today's fast-changing environment.
Difficulty: Easy
7) Price is the most inflexible of the marketing mix elements.
8)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 10.1: Answer the question "What is a price?" and discuss the importance of
pricing in today's fast-changing environment.
Difficulty: Easy
9) List some important characteristics of price.
Answer: Price is the only element in the marketing mix that produces revenue; all other
elements represent costs. Price is also one of the most flexible marketing mix elements. Unlike
product features and channel commitments, prices can be changed quickly.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 10.1: Answer the question "What is a price?" and discuss the importance of
pricing in today's fast-changing environment.
Difficulty: Moderate
10) Why is price considered one of the most flexible elements of the marketing mix?
Answer: Unlike product features and channel commitments, prices can be changed quickly.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 10.1: Answer the question "What is a price?" and discuss the importance of
pricing in today's fast-changing environment.
Difficulty: Easy
2
11) Define price. Discuss its importance.
Answer: In the narrowest sense, price is the amount of money charged for a product or a
service. More broadly, price is the sum of all the values that customers give up to gain the
benefits of having or using a product or service. Historically, price has been the major factor
affecting buyer choice. In recent decades, however, nonprice factors have gained increasing
importance. Even so, price remains one of the most important elements that determines a firm's
market share and profitability.
Price is the only element in the marketing mix that produces revenue; all other elements
represent costs. Price is also one of the most flexible marketing mix elements. Unlike product
features and channel commitments, prices can be changed quickly. At the same time, pricing is
the number one problem facing many marketing executives, and many companies do not
handle pricing well. Some managers view pricing as a big headache, preferring instead to focus
on other marketing mix elements. However, smart managers treat pricing as a key strategic tool
for creating and capturing customer value. Prices have a direct impact on a firm's bottom line. A
small percentage improvement in price can generate a large percentage increase in profitability.
More important, as part of a company's overall value proposition, price plays a key role in
creating customer value and building customer relationships.
AACSB: Analytical thinking; Written and oral communications
Skill: Concept
Objective: LO 10.1: Answer the question "What is a price?" and discuss the importance of
pricing in today's fast-changing environment.
Difficulty: Moderate
12) What sets the ceiling for product prices?
A) product manufacturing costs
B) sellers' perceptions of the product's value
C) customer perceptions of the product's value
D) variable costs
E) break-even volume
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
3
13) What sets the floor for product prices?
A) consumer perceptions of the product's value
B) product costs
C) competitors' strategies
D) advertising budgets
E) market competition
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
14) Effective
pricing involves understanding how much value consumers place on
the benefits they receive from the product and setting a price that captures that value.
A) competition-oriented
B) cost-based
C) time-based
D) customer-oriented
E) marketer-oriented
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
15)
pricing uses buyers' perceptions of value as the key to pricing.
A) Customer value-based
B) Cost-based
C) Time-based
D) Markup
E) Target return
F) Skill:
Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
4
16) Factors a company considers in setting its price include all of the following EXCEPT
.
A) competitors' strategies and prices
B) product costs
C) overall marketing strategy and mix
D) value of the product on the pre-owned market
E) nature of the market and demand
F)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
17) Which of the following is true of value-based pricing?
A) The targeted value and price drive decisions about what costs can be incurred and the
resulting product design.
B) Value-based pricing is mostly product driven.
C) Value-based pricing involves setting prices based on the costs of producing, distributing, and
selling the product plus a fair rate of return for its effort and risk.
D) The marketer usually designs a product and marketing program and then sets the price.
E) A company using value-based pricing designs what it considers to be a good product, adds
up the costs of making the product, and sets a price that covers costs plus a target profit.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
18) What is usually the first step in cost-based pricing?
A) testing the product concept with potential customers
B) determining the marketing mix strategy
C) setting a price that covers costs plus a target profit
D) designing a good product
E) adding up the costs of making the product
F)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
5
19) Which of the following processes does value-based pricing reverse?
A) high-low pricing
B) everyday low pricing
C) cost-based pricing
D) good-value pricing
E) value-added pricing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
20) A pharmaceutical company in Utah recently released a new and expensive anti-ulcer drug
in the market. The company justifies the high price of the drug by claiming that it is highly
effective for treating all kinds of ulcers. The company also claims that the new drug will help
bring down the need for invasive surgeries, an additional benefit for patients. Which of the
following pricing strategies is the pharmaceutical company most likely using in this instance?
A) target pricing
B) markup pricing
C) cost-based pricing
D) value-based pricing
E) break-even pricing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Challenging
21) A restaurant wants to use value-based pricing. It knows the costs of the ingredients in the
food. It must also factor in
in determining customer satisfaction and value.
A) wages of employees
B) costs of utilities of the restaurant
C) atmosphere and décor of the restaurant
D) travel distance for customers
E) percentage of bar patrons versus dining patrons
F)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
6
22) The perceived value of different product offers can be reasonably assessed by
.
A) conducting a SWOT analysis
B) preparing demand curves
C) conducting surveys and experiments
D) collecting data about competitors' offers
E) setting a benchmark for product quality
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
23) Underpriced products
.
A) produce less revenue than they would if they were priced at the level of perceived value
B) sell poorly in the global marketplace
C) produce more revenue than they would if they were priced at the level of perceived value
D) mostly offer higher value than those with a high markup price
E) are characterized by rapidly declining demand
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
24) The Great Recession of 2008 to 2009 triggered a shift in consumer attitudes toward
.
A) variety and price
B) perceptions of value
C) locations of stores
D) price and quality
E) economic data
Answer: D
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
7
25) Which of the following involves introducing less-expensive versions of established, brand
name products?
A) markup pricing
B) good-value pricing
C) time-based pricing
D) cost-based pricing
E) target profit pricing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
26)
pricing refers to offering just the right combination of quality and gratifying
service at a fair price.
A) Markup
B) Good-value
C) Cost-plus
D) Target profit
E) Break-even
F) Skill:
Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
27) When McDonald's and other fast food restaurants offer "value menu" items at surprisingly
low prices, they are most likely using
pricing.
A) break-even
B) target profit
C) good-value
D) cost-plus
E) target return
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
8
28) Azure Air, an airline company, offers attractive prices to customers with tighter budgets. A
no-frills airline, it charges for all other additional services, such as baggage handling and inflight refreshments. Which of the following best describes Azure Air's pricing method?
A) target profit pricing
B) good-value pricing
C) cost-based pricing
D) break-even pricing
E) penetration pricing
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
29) Retailers such as Costco and Walmart charge a constant, daily low price with few or no
temporary price discounts. This is an example of
pricing.
A) competition-based
B) everyday low
C) cost-plus
D) break-even
E) penetration
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
30) Bon Vivant offers an assortment of exclusive French wines at incredibly low prices. These
prices are neither limited-time offers nor special discounts, but represent the daily prices of
products sold by Bon Vivant. This reflects Bon Vivant's
pricing strategy.
A) everyday low
B) markup
C) penetration
D) break-even
E) cost-based
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
31)
pricing involves charging higher prices on an everyday basis but running
9
frequent promotions to lower prices temporarily on selected items.
A) High-low
B) Everyday low
C) Cost-plus
D) Break-even
E) Penetration
F) Skill:
Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
32) Department stores such as Kohl's and JCPenney's practice high-low pricing by
.
A) charging a constant, everyday low price
B) providing few or no temporary price discounts
C) increasing prices temporarily on select products
D) having frequent sale days for store credit-card holders
E) underpricing most consumer items
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
33) Companies that adopt value-added pricing
.
A) consider value-added features as a fitting substitute for aggressive cost cutting
B) set incredibly low prices to meet competition
C) attach value-added features and services to differentiate their offers and support their higher
prices
D) overprice their products without any apparent justification
E) underprice their products and lower quality to boost demand in the short-run
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
10
34) Which of the following is true with regard to value-added pricing?
A) Companies that practice value-added pricing typically match the competition by cutting
prices.
B) Companies practicing value-added pricing differentiate their offers by attaching value-added
features to offerings that, in turn, justify higher prices.
C) The intrinsic value of products sold by companies practicing value-added pricing is far less
than their actual selling price.
D) Companies practicing value-added pricing primarily rely on cost differentiation.
E) Value-added pricing is the most suitable pricing strategy in pure monopolies.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
35) In an effort to differentiate its offerings from its competitors, Pegasus Computers decided to
add an extra USB port in all its laptops besides providing a free pair of Delphi power bass
headphones with every Pegasus laptop. Although the additional features increased the price of
the laptops by $500, Pegasus was confident that the strategy would help boost demand for its
laptops substantially. This is an example of
.
A) good-value pricing
B) markup pricing
C) break-even pricing
D) value-added pricing
E) cost-based pricing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Challenging
11
36)
involves setting prices based on the costs for producing, distributing, and selling
the product plus a fair rate of return for effort and risk.
A) Value-based pricing
B) Competition-based pricing
C) Cost-based pricing
D) Penetration pricing
E) Break-even pricing
F)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
37) Companies with lower costs
.
A) specialize in selling products with value-added features
B) usually market products with inferior quality, thereby justifying the low selling price
C) can set lower prices that result in smaller margins but greater sales and profits
D) tend to overprice products owing to their monopolistic advantage
E) usually set higher prices that result in higher margins
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
38) Companies with higher costs
.
A) can drive out competitors through their pricing strategy
B) intentionally pay higher costs so that they can add value through higher quality and claim
higher prices and margins
C) can set lower prices that result in increased sales though with lower margins
D) specialize in selling products without value-added features
E) are more financially successful
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
12
39) A company must pay each month's bills for rent, heat, interest, and executive salaries
regardless of the company's level of output. This exemplifies its
costs.
A) overhead
B) variable
C) target
D) total
E) unit
F) Skill:
Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
40) Overhead costs
as the number of units produced increases.
A) decrease
B) increase steadily
C) fluctuate
D) remain the same
E) increase rapidly
F)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
41) Which of the following is most likely a fixed cost?
A) sales representative commissions
B) product distribution costs
C) manufacturing input costs
D) temporary worker salaries
E) facility rental payments
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
13
42) Fixed costs
.
A) are costs that do not vary with production or sales level
B) vary directly with the level of production
C) decrease with accumulated production experience
D) are the sum of the overhead and variable costs for any given level of production
E) represent the annual costs of inputs incurred by a company
F)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
43) Costs that change with the level of production are referred to as
.
A) fixed costs
B) variable costs
C) target costs
D) total costs
E) overhead costs
F)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
44) In 2011, the fixed costs of a company were $500,000, and its variable costs equaled
$150,000. In 2010, the company made an annual profit of $200,000. It has been predicted that,
despite a steady growth, the company's variable costs will likely equal $300,000 by 2013. The
total costs of the company in 2011 were
.
A) $350,000
B) $450,000
C) $650,000
D) $800,000
E) $950,000
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
14
45) The total production costs at Kellner Machine Works are $87,000 out of which $45,000
represent fixed costs. Which of the following is representative of the variable costs incurred by
the company?
A) $35,000
B) $42,000
C) $45,000
D) $87,000
E) $132,000
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
46) The fixed cost in manufacturing a single LED monitor is $40 and the variable cost is $12. If
the company expects to manufacture 5,000 monitors, the total costs would be
.
A) $60,000
B) $200,000
C) $260,000
D) $420,000
E) $500,000
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
47) As production moves up, the average cost per unit decreases because
.
A) variable costs decrease
B) of increasing diseconomies of scale
C) fixed costs are spread over more units
D) overhead costs decrease
E) revenue increases
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
15
48) A cell phone manufacturing firm produced 1,000 cell phones a day but believed that it
could reasonably step up production to 2,000 cell phones a day. Consequently, it built a larger
plant and installed efficient machinery and work arrangements to realize the projected output.
Which of the following can most likely be inferred from this information?
A) The unit cost of producing 2,000 cell phones per day would be twice that of the unit cost of
producing 1,000 units per day.
B) A production plant with the capacity of producing 5,000 cell phones a day would be most
efficient.
C) The unit cost of producing 2,000 cell phones per day would be lower than the unit cost of
producing 1,000 units per day.
D) A 2,000-capacity production plant would be less efficient because of increasing
diseconomies of scale.
E) The fixed costs of the firm are more likely to increase with the increase in output.
F)
AACSB: Reflective thinking
Skill: Critical Thinking
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Challenging
49) The long-run average cost (LRAC) curve indicates the
.
A) per unit cost of output in the long run
B) projected total production costs of competitors
C) variable costs incurred by a firm over time
D) fixed costs incurred by a firm over the long term
E) number of units the market will buy in a given time period, at different prices that might be
charged
Skill:
Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
16
50) A manufacturing plant is designed to produce 2000 flat-screen TVs per day. But demand is
higher than that. If the company tries to increase its production to 2500 TVs per day, the
average costs will
because
.
A) decrease; the plant becomes more efficient
B) stay the same; the plant becomes more efficient
C) decrease; the plant becomes inefficient
D) increase; the plant becomes more efficient
E) increase; the plant becomes inefficient
F)
AACSB: Reflective thinking
Skill: Critical Thinking
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Challenging
51) The learning curve is representative of the
.
A) per unit cost of output in the long run
B) drop in the average per-unit production cost that comes with accumulated production
experience
C) number of units the market will buy in a given time period, at different prices that might be
charged
D) total market demand resulting from different prices
E) per unit cost of output in the short run
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
52) As production workers become better organized and more familiar with equipment, the
average cost per unit tends to decrease with the
.
A) increase in the diseconomies of scale
B) accumulated production experience
C) decrease in the economies of scale
D) increase in derived demand
E) increase in primary demand
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
53) With accumulated production experience and a higher volume of production, companies not
17
only become more efficient but also
.
A) gain economies of scale
B) incur higher overhead costs
C) create derived demand in the market
D) spend more per unit of produced output
E) tend to routinely spend less on inputs
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
54) The experience curve reveals that
.
A) repetition in production has no visible impact on production costs
B) repetition in production enhances efficiency
C) the average cost of production remains the same with accumulated production experience
D) repetition in production adds to the costs and thereby increases the prices of outputs
E) the average cost of production increases with accumulated production experience
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
55) A downward-sloping experience curve is indicative of
.
A) the negative customer perception about a company's products
B) the falling demand for a company's products
C) the falling unit production cost of a company
D) the low quality of a company's products
E) slow and inadequate organizational learning
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
18
56) To take advantage of a downward-sloping experience curve, a company must do all of the
following EXCEPT
.
A) increase the product's price
B) be able to sell the higher volume of product
C) price its product lower
D) increase its production output
E) decrease its costs through experience gained
F)
AACSB: Reflective thinking
Skill: Critical Thinking
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Challenging
57) Which of the following is most likely a risk associated with experience-curve pricing?
A) High-volume production facilities are unable to meet demand.
B) New technology often leads to productivity problems.
C) Demand for the product fluctuates unpredictably.
D) Consumers tend to prefer new brands over established ones.
E) Aggressive pricing often gives a product a cheap image.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
58) Experience-curve pricing assumes that
.
A) competitors are weak and not willing to match price cuts
B) competitors are strong and invincible
C) aggressive pricing adversely affects product image
D) volume-based production slows down organizational learning
E) lower-cost technologies are almost always inferior
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
19
59) The simplest pricing method is
pricing.
A) value-based
B) fixed cost
C) cost-plus
D) target return
E) competition-based
F)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
60) Cost-plus pricing
.
A) is a complex pricing method
B) involves pricing that accurately reflects production costs
C) involves adding a standard markup for profit
D) aims at breaking even on the costs of making and marketing a product
E) is a value-based pricing method
F)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
61) Lawyers, accountants, and other professionals typically price by adding a standard markup
for profit. This exemplifies
.
A) target pricing
B) cost-plus pricing
C) value-based pricing
D) break-even pricing
E) penetration pricing
F)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
20
62) Herbie Inc., a firm manufacturing sandwich makers, has fixed costs of $250,000, variable
costs of $20 per unit of output, and expected unit sales of 50,000 units. What is the unit cost of
a sandwich maker manufactured by Herbie?
A) $15
B) $25
C) $30
D) $50
E) $75
AACSB: Reflective thinking
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Challenging
63) Samsung Mobile plans to launch a new phone with a unit cost of $270 and wants to earn a
10 percent markup on its sales. Samsung's markup price is
.
A) $275
B) $280
C) $295
D) $300
E) $335
AACSB: Reflective thinking
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Challenging
64) Why is markup pricing most likely impractical?
A) Calculating costs is complicated due to fluctuations.
B) By tying the price to cost, sellers oversimplify pricing.
C) When all firms in the industry use this pricing method, prices tend to be similar.
D) The method ignores demand and competitor prices.
E) With a standard markup, consumers know when they are being overcharged.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
21
65) Why is markup pricing most likely popular?
A) Sellers are more certain about demand than about costs.
B) Markup pricing tends to maximize market competition.
C) Markup pricing affords buyers greater bargaining power.
D) Sellers do not need to make frequent adjustments as demand changes.
E) Markup pricing is designed to set prices to break even on the costs of making and marketing
a product.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
66) Which of the following is a cost-based approach to pricing?
A) value-based pricing
B) high-low pricing
C) target return pricing
D) good value pricing
E) EDLP
F) Skill:
Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
67) Target return pricing is a variation of which of the following cost-oriented pricing
approaches?
A) cost-plus pricing
B) break-even pricing
C) markup pricing
D) value-based pricing
E) fixed cost pricing
F)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
22
68) Target return pricing uses the concept of a(n)
, which shows the total cost and
total revenue expected at different sales volume levels.
A) BCG matrix
B) break-even chart
C) SWOT analysis
D) demand curve
E) experience curve
F)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
69) John assured his venture capitalists an earning of 25-percent return on equity when he
began his IT startup. In order to achieve this result, he will most likely use which of the
following pricing approaches?
A) value-based pricing
B) markup pricing
C) EDLP
D) customer-based pricing
E) target return pricing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
70) The break-even volume is the point at which
.
A) the total revenue and total cost curves intersect
B) demand equals supply
C) the production of one more unit will not lead to increase in demand
D) the company can pay off all its long-term debt
E) a firm exceeds the sales forecast
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
23
71) Which of the following statements about break-even analysis is true?
A) It is used to determine how much production experience a company must have in order to
achieve desired efficiencies.
B) It is a technique used to calculate fixed costs.
C) It determines the amount of retained earnings a company will have during a given
accounting period.
D) It is a technique marketers use to determine the relationship between supply and demand.
E) It is calculated by using variable costs, the unit price, and fixed costs.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
72) A company faces fixed costs of $100,000 and variable costs of $8 per unit. It plans to
directly sell its product in the market for $12. How many units must it produce and sell to break
even?
A) 20,000
B) 25,000
C) 30,000
D) 35,000
E) 40,000
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Challenging
73) As a manufacturer increases the price,
.
A) efficiency drops
B) the break-even volume drops
C) competition is minimized
D) the total costs increase
E) the profit margin shrinks
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
24
74) Mansfield Pharmaceuticals markets Zipro, an antibiotic. The firm has fixed costs of
$1,000,000 and variable costs of $2 per bottle of 50 tablets priced at $10 per bottle. What is the
break-even volume?
A) 25,000
B) 55,000
C) 100,000
D) 115,000
E) 125,000
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Challenging
75) A manufacturer has fixed costs of $100,000, a variable cost of $10 per unit of output, and
break-even volume of 50,000 units. What should the manufacturer's unit cost be in order to
break even?
A) $10
B) $12
C) $14
D) $16
E) $20
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Challenging
76) When performing a break-even analysis, the manufacturer should consider all of the
following EXCEPT
.
A) probable demand
B) likely profits
C) competitors' pricing
D) estimated break-even volumes
E) different prices
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Challenging
25
77) Which of the following involves setting prices based on a rival firm's strategies, costs,
prices, and market offerings?
A) target return pricing
B) good-value pricing
C) competitor value-added pricing
D) market-based pricing
E) competition-based pricing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
78) Companies can legitimately charge a higher price if
.
A) consumers perceive that the company's product offers greater value
B) the demand for products manufactured by a firm is highly elastic
C) the cost of advertising is minimal
D) derived demand remains constant
E) consumers de-emphasize quality
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
26
Refer to the scenario below to answer the following question(s).
Alden Manufacturing produces small kitchen appliances—blenders, hand mixers, and electric
skillets—under the brand name First Generation. Alden attempts to target newlyweds and firsttime home buyers with this brand.
Considering that most young households have limited financial resources, Alden attempts to
engage in target costing. "In doing this," says Milt Alden, the co-founder of Alden Electronics,
"we have better control over keeping price right in line with customers."
Alden manufactures a three-speed blender, its top seller, along with a five-speed blender. The
hand mixers are manufactured in two variants—a small handheld mixer with two rotating
beaters and another that comes with an optional stand and an attached mixing bowl. Alden's
temperature-controlled skillets are manufactured in a single style with three color options.
"Our product offerings are narrower," Milt Alden added, "but our line workers know each
product like the back of their hands. This allows us to produce superior products while holding
our prices low.
79) Milt Alden says that his line workers "know each product like the back of their hands," and
that this knowledge helps the company keep its prices low. This indicates that Alden
Manufacturing most likely benefits from the
.
A) cost-plus pricing
B) value-added pricing
C) experience curve
D) inelastic demand in the market
E) derived demand in the market
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Challenging
27
80) Which of these is NOT a way in which pricing can accomplish company objectives?
A) set prices to attract new customers and retain existing customers
B) raise prices to create excitement for a brand
C) set prices low to hinder competition from entering the market
D) price one product to help sales of other products in the company's line
E) set price to keep the loyalty of resellers
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
81) Customer perceptions of the product's value set the floor for prices.
82)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
83) Product costs set the ceiling for prices.
84)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
85) In customer value-based pricing, price is considered along with all other marketing mix
variables before the marketing program is set.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
28
86) Value-based pricing uses the sellers' perception of value as the key to pricing.
87)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
88) Using value-based pricing, a marketer would not design a product and marketing program
before setting the price.
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
89) Good-value pricing usually is used by premium brands, and rarely by less-expensive
brands.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
90) Cost-based pricing is often product driven.
91)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
92) Department stores that practice everyday low pricing typically provide frequent sale days,
early-bird savings, and bonus earnings for store credit-card holders.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
29
93) Overhead costs are costs that do not vary with production or sales level.
94)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
95) Variable costs change directly with the level of production.
96)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
97) Cost-based pricing involves setting prices based on consumer perception of value.
98)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
99) A company will be at an advantage even if it costs more than its competitors to make and
sell a similar product.
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
100) Average cost tends to increase with accumulated production
experience.
101)
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
30
102) A downward-sloping experience curve is indicative of a company's rapidly
increasingproduction costs.
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
103) The simplest pricing method is cost-plus pricing, which involves adding a standard
markupto the cost of the product.
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
104) Markup pricing is popular because when all firms in the industry use this pricing
method,prices tend to be similar, so price competition is minimized.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
105) Markup pricing is used when a firm tries to determine the price at which it will break
evenor make the target return it is seeking.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
106) A break-even chart shows the total cost and total revenue expected at various sales
volumelevels.
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
31
107) Break-even volume is the number of unit sales required for total revenue to cover total cost.
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
108) Explain the concept of the price floor.
Answer: Price floor represents the price below which there is no profit.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
109) Explain the concept of the price ceiling.
Answer: Price ceiling represents the price above which there is no demand.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
110) Briefly describe the process of value-based pricing.
Answer: The company first assesses customer needs and value perceptions. It then sets its
target price based on customer perceptions of value. The targeted value and price drive
decisions about what costs can be incurred and the resulting product design. As a result, pricing
begins with analyzing consumer needs and value perceptions, and the price is set to match
perceived value.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
32
111) What is good-value pricing?
Answer: Good-value pricing refers to offering just the right combination of quality and good
service at a fair price.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
112) What is high-low pricing?
Answer: High-low pricing involves charging higher prices on an everyday basis but running
frequent promotions to lower prices temporarily on selected items.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
113) Define total costs.
Answer: Total costs are the sum of the fixed and variable costs for any given level of
production.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
114) Explain the significance of a downward-sloping experience curve.
Answer: If a downward-sloping experience curve exists, this is highly significant for the
company. Not only will the company's unit production cost fall, but it will fall faster if the
company makes and sells more during a given time period.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
33
115) A marketer's fixed costs are $400,000. The variable cost is $16 per unit, and the price of
the product is $24 per unit. If the company wants to make a profit, how many units must it sell
and at what price?
Answer: If the company wants to make a profit, it must sell more than 50,000 units at $24
each.
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Challenging
116) A marketer's fixed costs are $400,000, the variable cost is $16 per unit, and the price of the
product is $24 per unit. What is the company's break-even point in dollar sales?
Answer: The break-even point in dollar sales is $1,200,000.
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Challenging
117) What is competition-based pricing?
ompetition-based pricing refers to setting prices based on competitors' strategies,prices, costs,
and market offerings.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Easy
118) Distinguish between value-based pricing and cost-based pricing.
ustomer value-based pricing uses buyers' perceptions of value as the key to pricing.Valuebased pricing means that the marketer cannot design a product and marketing program and
then set the price. Price is considered along with all other marketing mix variables before the
marketing program is set.
Although costs are an important consideration in setting prices, cost-based pricing is often
product driven. The company designs what it considers to be a good product, adds up the costs
of making the product, and sets a price that covers costs plus a target profit. Marketing must
then convince buyers that the product's value at that price justifies its purchase.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
34
Difficulty: Moderate
35
119) Explain break-even pricing.
reak-even pricing (target return pricing) refers to setting price to break even on thecosts of
making and marketing a product, or setting price to make a target return. Target returnpricing
uses the concept of a break-even chart, which shows the total cost and total revenue expected
at different sales volume levels.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 10.2: Identify the three major pricing strategies and discuss the importance of
understanding customer-value perceptions, company costs, and competitor strategies when
setting prices.
Difficulty: Moderate
120) Which of the following is an external factor that affects pricing decisions in a company?
A) the company's overall marketing strategy
B) the nature of the market
C) the organizational objectives of the company
D) elements of the company's marketing mix
E) the annual advertising budget of rival firms
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
121) Which of the following is an internal factor that affects pricing decisions in a company?
A) the nature of the market
B) the degree of inflation in the economy
C) the overall marketing strategy of the company
D) the forces of demand and supply in the market
E) consumers' perception of value
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
36
122) Companies using target costing
.
A) first design a new product and then determine its cost
B) tailor their products to be in line with the marketing mix
C) routinely neglect customer value considerations
D) avoid determining an ideal selling price until analyzing test market results
E) start with an ideal selling price and then target costs that will ensure that the price is met
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
123) Developing an effective integrated marketing mix program involves coordinating price
decisions with product design, promotion, and
decisions.
A) distribution
B) production
C) assembly
D) warranty
E) competition
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
124) Elmo Inc., a global conglomerate, designed the ElBrush, an electric toothbrush. Sensing
market demand for the electric toothbrush, Elmo started with an ideal selling price of $13 based
on customer value considerations and then targeted costs to ensure that the price was met. This
exemplifies
.
A) competition-based pricing
B) cost-plus pricing
C) target costing
D) everyday low pricing
E) high-low pricing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Challenging
37
125) PoolPak produces climate-control systems for large swimming pools. The company's
customers are more concerned about service support for maintaining their systems than the
initial price of the product. PoolPak specializes in and differentiates itself through both cuttingedge technologies used to build its high-value climate control systems as well as seamless
quality service. PoolPak's prices are very high, but demand for its climate-control systems
seems to be forever on the rise. This exemplifies
.
A) target costing
B) a pure monopoly
C) cost-plus pricing
D) a nonprice position
E) break-even pricing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Challenging
126) DivetheBlue, a company marketing deep-sea diving equipment, charges very high prices
for its products. Despite the availability of many low-priced products in the market, customers
seem to prefer DivetheBlue, which has earned a reputation for selling high-quality products.
This exemplifies
.
A) a pure monopoly
B) an oligopoly
C) a nonprice position
D) break-even pricing
E) target costing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
127) A decision to position the product on high-performance quality will mean that the
.
A) seller must charge a higher price to cover higher costs
B) seller must charge a lower price to attract more customers
C) producer must step down production
D) marketer must boost derived demand in the market
E) break-even volume will be fairly low
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
38
128) Price setting is usually determined by
in small companies.
A) the top managers
B) the marketing department
C) the sales department
D) divisional managers
E) product managers
F)
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
129) Price setting is usually determined by
in large companies.
A) top managers
B) external stakeholders
C) product managers
D) non-executive employees
E) the sales department
F)
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
130) In industrial markets,
typically has the final say in setting the pricing objectives
and policies of a company.
A) the sales manager
B) top management
C) the production manager
D) the HR department
E) the sales staff
F) Skill:
Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
39
131) In industries in which pricing is a key factor,
often set the best prices or help
others in setting them.
A) sales departments
B) salespeople
C) production managers
D) line managers
E) pricing departments
F)
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
132) Departments or managers that have an influence on pricing include sales managers,
finance managers, accountants, and
.
A) engineering managers
B) human resources managers
C) production managers
D) customers
E) resellers
F) Skill:
Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
133) Under
, the market consists of many buyers and sellers trading in a uniform
commodity.
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) a pure monopoly
E) the dominant firm model
F)
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
40
134) Which of the following exemplifies a pure competitive market?
A) a market where many buyers and sellers trade over a range of prices rather than a single
market price
B) a market where a single firm controls the larger fraction of the market share
C) a market where a few powerful firms control the larger fraction of the market share
D) a market characterized by only a few large sellers
E) a market where many buyers and sellers trade in a uniform commodity
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
135) Which of the following is true of a pure competitive market?
A) A single seller has a major effect on the current and future market price.
B) Companies spend significantly on marketing research and product development.
C) The advertising budget of companies is usually huge.
D) Sellers try to develop differentiated offers for different customer segments.
E) Sellers spend little time on marketing strategy.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
136) In Viña del Mar, Chile, a large number of shops specialize in selling the same quality of
seafood products along the beach frequented by tourists. No individual shop dares charge more
than the going price without fearing loss of business to other shops. This exemplifies
.
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) pure monopoly
E) the dominant firm model
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Challenging
41
137) Under
, the market consists of many buyers and sellers who trade over a range
of prices rather than a single market price.
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) a pure monopoly
E) the dominant firm model
F)
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
138) Which of the following is true with regard to pure competition?
A) Under pure competition, no single buyer or seller has much effect on the going market price.
B) In a purely competitive market, marketing research is of utmost importance.
C) In a purely competitive market, product development is the focus of most firms.
D) Under pure competition, the market consists of many buyers and sellers who trade over a
range of prices rather than a single market price.
E) Under pure competition, the market consists of only a few large sellers.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
139) Which of the following is true with regard to monopolistic competition?
A) Under monopolistic competition, the market consists of many buyers and sellers who trade
at a single market price.
B) Under monopolistic competition, the market consists of only a few large sellers.
C) In a monopolistic market, little time is spent on marketing strategy.
D) Sellers can differentiate their products to buyers.
E) In a monopolistic market, price becomes a major competitive tool.
F)
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
42
140) The movie industry in a country is controlled by six large studios that receive 90 percent
of the annual revenues from movies. This is an example of a(n)
.
A) pure competition
B) monopolistic competition
C) oligopolistic competition
D) pure monopoly
E) government monopoly
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Challenging
141) In which situation is the market dominated by one seller?
A) pure monopoly
B) monopolistic competition
C) oligopolistic competition
D) pure competition
E) free market
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
142) Under oligopolistic competition
.
A) the market consists of a single dominant seller
B) the market consists of numerous small sellers
C) the market consists of many buyers and sellers who trade over a range of prices rather than a
single market price
D) sellers are typically unresponsive to competitors' pricing strategies and marketing moves
E) the market consists of only a few large sellers
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
43
143) Which of the following shows the number of units the market will buy in a given time
period, at different prices that might be charged?
A) demand curve
B) supply curve
C) learning curve
D) break-even pricing
E) target costing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
144) Which of the following is true about the demand curve?
A) A demand curve indicates the drop in the average per-unit production cost that comes with
accumulated production experience.
B) A demand curve indicates the cost per unit of output in the long run.
C) A demand curve indicates the cost per unit of output in the short run.
D) In a monopoly, the demand curve does not indicate the total market demand resulting from
different prices.
E) A demand curve shows the number of units the market will buy in a given time period at
different prices that might be charged.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
145) Bruno Servers has decided to decrease its prices on its popular higher-range servers. The
company can reasonably expect
to increase.
A) fixed costs
B) variable costs
C) demand
D) additional value
E) overhead costs
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
44
146)
refers to a measure of the sensitivity of demand to changes in price.
A) Price elasticity
B) A demand curve
C) Price-value equation
D) Marginal utility
E) Income elasticity of demand
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
147) If demand hardly changes with a small change in price, the demand is
.
A) variable
B) inelastic
C) highly elastic
D) derived
E) negative
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
148) If demand changes greatly with a small change in price, the demand is
.
A) variable
B) inelastic
C) derived
D) elastic
E) negative
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
45
149) Dips in the economy and the instant price comparisons made possible by the Internet have
contributed to
.
A) decreased consumer price sensitivity
B) increased consumer price sensitivity
C) a less direct relationship between supply and demand
D) low brand equity for luxury goods
E) decreased brand loyalty
F)
AACSB: Information technology
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
150) In the aftermath of the Great Recession of 2008 to 2009, consumers
.
A) have become more value conscious
B) have become less value conscious
C) exhibit great interest in prestige pricing
D) show no interest in price cutting
E) rarely endorse value-for-money deals
F)
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
151) Ways companies have avoided relying on price cuts in the new value-conscious era
include all of the following EXCEPT
.
A) by adding more affordable product lines for the cost-conscious consumer
B) by redefining the "value" in their value propositions
C) by adding premium product lines for the higher end consumer
D) by offering deep discounts
E) by creating price tiers
F)
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
46
152) When companies set prices, the government and social concerns are
factors
affecting pricing decisions.
A) external
B) internal
C) economic
D) cultural
E) organizational
Answer: A
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
Refer to the scenario below to answer the following question(s).
Alden Manufacturing produces small kitchen appliances—blenders, hand mixers, and electric
skillets—under the brand name First Generation. Alden attempts to target newlyweds and firsttime home buyers with this brand.
Considering that most young households have limited financial resources, Alden attempts to
engage in target costing. "In doing this," says Milt Alden, the co-founder of Alden Electronics,
"we have better control over keeping price right in line with customers."
Alden manufactures a three-speed blender, its top seller, along with a five-speed blender. The
hand mixers are manufactured in two variants—a small handheld mixer with two rotating
beaters and another that comes with an optional stand and an attached mixing bowl. Alden's
temperature-controlled skillets are manufactured in a single style with three color options.
"Our product offerings are narrower," Milt Alden added, "but our line workers know each
product like the back of their hands. This allows us to produce superior products while holding
our prices low.
153) Milt Alden uses which of the following strategies for pricing his products?
A) basing company price on competitors' prices
B) using everyday low pricing
C) initiating an aggressive promotional campaign
D) starting with customer-value considerations
E) focusing on overall fixed costs of manufacturing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Challenging
47
154) If Milt Alden focuses on overall costs of manufacturing plus profit in setting product
prices, which strategy would he employ?
A) break-even pricing
B) competition-based pricing
C) value-added pricing
D) cost-plus pricing
E) good-value pricing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
155) Internal factors affecting pricing include the company's overall marketing strategy,
objectives, and marketing mix.
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
156) Price decisions must be coordinated with product design, distribution, and promotion
decisions to form a consistent and effective integrated marketing mix program.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
157) In a pure monopoly, the market consists of many buyers and sellers who trade over a
range of prices rather than a single market price.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
48
158) A demand curve shows the number of units the market will buy in a given time period at
different prices that could be charged.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
159) If a company faces competition, its demand at different prices will depend on whether
competitors' prices stay constant or change with the company's own prices.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
160) If demand changes greatly with price, the demand is inelastic.
161)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
162) The more elastic the demand, the more it pays for the seller to raise the price.
163)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
164) If demand is elastic rather than inelastic, sellers will consider lowering their prices.
165)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
49
166) While lower prices may attract additional customers, it is possible for pricing strategies to
result in the product becoming a commodity in the customers' eyes.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
167) Who typically sets prices in large and small companies?
Answer: In small companies, prices are often set by top management rather than by the
marketing or sales departments. In large companies, pricing is typically handled by divisional
or product managers.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
168) What is a pure monopoly?
Answer: In a pure monopoly, the market is dominated by one seller. The seller may be a
government monopoly, a private regulated monopoly, or a private unregulated monopoly.
Pricing is handled differently in each case.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Easy
169) What are the different internal factors that affect a firm's pricing decisions?
eyond customer value perceptions, costs, and competitor strategies, the company must consider
several additional internal and external factors. Internal factors affecting pricing include the
company's overall marketing strategy, objectives, and marketing mix, as well as other
organizational considerations. Price is only one element of the company's broader marketing
strategy. If the company has selected its target market and positioning carefully, thenits
marketing mix strategy, including price, will be fairly straightforward. Some companies
position their products on price and then tailor other marketing mix decisions to the prices they
want to charge. Other companies deemphasize price and use other marketing mix tools to create
nonprice positions.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
50
170) Compare and contrast pure competition and oligopolistic competition.
Answer: Under pure competition, the market consists of many buyers and sellers trading in a
uniform commodity, such as wheat, copper, or financial securities. No single buyer or seller has
much effect on the going market price. In a purely competitive market, marketing research,
product development, pricing, advertising, and sales promotion play little or no role. Thus,
sellers in these markets do not spend much time on marketing strategy.
On the other hand, under oligopolistic competition, the market consists of only a few large
sellers. Because there are few sellers, each seller is alert and responsive to competitors' pricing
strategies and marketing moves.
AACSB: Application of knowledge; Written and oral communication
Skill: Synthesis
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Challenging
171) Briefly discuss monopolistic competition.
Answer: Under monopolistic competition, the market consists of many buyers and sellers who
trade over a range of prices rather than a single market price. A range of prices occurs because
sellers can differentiate their offers to buyers. Because there are many competitors, each firm is
less affected by competitors' pricing strategies than in oligopolistic markets. Sellers try to
develop differentiated offers for different customer segments and, in addition to price, freely
use branding, advertising, and personal selling to set their offers apart.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
172) What is a demand curve? Explain its importance in the context of pricing decisions.
173) demand curve shows the number of units the market will buy in a given time period, at
different prices that might be charged. Each price the company might charge will leadto a
different level of demand. The relationship between the price charged and the resulting demand
level is shown in the demand curve. In the normal case, demand and price are inversely
related—that is, the higher the price, the lower the demand. Thus, the company would sell less
if it raised its price from P1 to P2. In short, consumers with limited budgets probably will buy
less of something if its price is too high. Understanding a brand's price-demand curve is crucial
to good pricing decisions. Most companies try to measure their demand curves by estimating
demand at different prices. The type of market makes a difference. In a monopoly, the demand
curve shows the total market demand resulting from different prices. If the company faces
competition, its demand at different prices will depend on whether competitors' prices stay
constant or change with the company's own prices.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
174) Explain price elasticity. What determines the elasticity of demand?
51
Answer: Price elasticity refers to a measure of the sensitivity of demand to changes in price. If
demand hardly changes with a small change in price, the demand is inelastic. If demand
changes greatly, it is elastic.
If demand is elastic rather than inelastic, sellers will consider lowering their prices. A lower
price will produce more total revenue. This practice makes sense as long as the extra costs of
producing and selling more do not exceed the extra revenue. At the same time, most firms want
to avoid pricing that turns their products into commodities. In recent years, forces such as
deregulation and the instant price comparisons afforded by the Internet and other technologies
have increased consumer price sensitivity, turning products ranging from telephones and
computers to new automobiles into commodities in some consumers' eyes.
AACSB: Analytical thinking; Written and oral communications
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
175) Briefly describe how economic conditions impact a firm's pricing strategies.
176) conomic conditions can have a strong impact on a firm's pricing strategies.
Economic factors such as a boom or recession, inflation, and interest rates affect pricing
decisions because they affect consumer spending, consumer perceptions of the product's price
and value, and the company's costs of producing and selling a product.
In the aftermath of the recent Great Recession of 2008 to 2009, many consumers have
rethought the price-value equation. They have tightened their belts and become more value
conscious. Consumers will likely continue their thriftier ways well beyond any economic
recovery. As a result, many marketers have increased their emphasis on value-for-the-money
pricing strategies.
The most obvious response to the new economic realities is to cut prices and offer discounts.
Thousands of companies have done just that. Lower prices make products more affordable and
help spur short-term sales. However, such price cuts can have undesirable long-term
consequences. Lower prices mean lower margins. Deep discounts may cheapen a brand in
consumers' eyes. And once a company cuts prices, it is difficult to raise them again when the
economy recovers.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
52
177) "Beyond the market and the economy, the company must consider several other factors in
its external environment when setting prices." Explain this statement.
eyond the market and the economy, the company must consider several other factorsin its
external environment when setting prices. It must know what impact its prices will have on
other parties in its environment. How will resellers react to various prices? The company
should set prices that give resellers a fair profit, encourage their support, and help them to sell
the product effectively. The government is another important external influence on pricing
decisions. Finally, social concerns may need to be taken into account. In setting prices, a
company's short-term sales, market share, and profit goals may need to be tempered by broader
societal considerations.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 10.3: Identify and define the other important external and internal factors
affecting a firm's pricing decisions.
Difficulty: Moderate
53
Principles of Marketing, 17e (Kotler/Armstrong)
Chapter 11 Pricing Strategies: Additional Considerations
1) Companies set not a single price, but a pricing
that covers different items in its
line and changes over time as products move through their life cycles.
A) by-product
B) structure
C) loop
D) cycle
E) bundle
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Easy
2) Companies facing the challenge of setting prices for the first time can choose between two
broad strategies: market-penetration pricing and
pricing.
A) comparative
B) competitive
C) market-skimming
D) market-segmentation
E) cost-plus
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Easy
3) A market-skimming pricing strategy should NOT be used for a new product when
A) the product's quality and image support its higher price
B) enough buyers want the products at that price
C) competitors are unable to enter the market
D) competitors can undercut prices easily
E) producing a smaller number of goods is feasible
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Easy
1
.
4) When a company sets a high price for a new product with the intention of reducing the price
in the future, it is using the
pricing strategy.
A) market-skimming
B) cost-plus
C) market-segmentation
D) market-penetration
E) competitive
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Easy
5) Midnight Magic, a perfume manufacturing company, plans to release a new fragrance during
the holiday season at $99 per bottle. The company intends to bring the price down to $49 within
six months of its release to attract buyers who couldn't afford the initial price. Which of the
following pricing strategies is Midnight Magic using?
A) market-penetration pricing
B) market-skimming pricing
C) competitive pricing
D) cost-plus pricing
E) product-line pricing
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Moderate
6) Which of the following is true of price skimming?
A) It is effective in situations in which competitors are able to undercut prices easily.
B) It can be profitably used when the product's quality and image support its price.
C) It involves underpricing products so that companies make larger sales.
D) It is ineffective in situations in which competitors are unable to enter the market easily.
E) It leads to a situation in which the company completes more, though less profitable, sales.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Moderate
2
7) Companies that set a low price for a new product in order to attract a large number of buyers
and a large market share are using the
strategy.
A) market-skimming pricing
B) market-penetration pricing
C) cost-plus pricing
D) inclusive pricing
E) exclusive pricing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Easy
8) A market-penetration pricing policy should LEAST likely be used for a new product when
.
A) the market is highly price sensitive
B) production and distribution costs fall as sales volume increases
C) the product's quality and image support a high price
D) a high price helps keep out the competition
E) there are few or no competitors in the market
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Moderate
9) Which of the following is true of market-penetration pricing?
A) It should be used when the product's quality and image support a high price.
B) It involves setting a high price for a new product to appeal to the elite in society.
C) It results in drawing in large numbers of buyers quickly, winning a large market share.
D) It is best used in conjunction with a market-skimming pricing strategy.
E) It results in the company making fewer and less profitable sales.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Moderate
3
10) In a bid to attract more customers in a market that has several competitors, Barrymore's
Bakery slashed the prices of all its products by 50 percent. Managers at the firm reasoned that
lower prices would draw in even more customers, making up for the reduction in price several
times over. Which of the following pricing strategies are they using?
A) market-skimming pricing
B) market-penetration pricing
C) captive-product pricing
D) cash discount pricing
E) by-product pricing
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Challenging
11) Whizz Corp. wishes to introduce a new hybrid car into mature markets in developed
countries with the goal of gaining mass-market share quickly. Which of the following pricing
strategies would help the firm meet its goal?
A) market-skimming pricing
B) market-penetration pricing
C) market-segmentation pricing
D) cost-plus pricing
E) captive-product pricing
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Challenging
12) Electrowhip, a company that manufacturers blenders and electric whisks, has decided to use
a market penetration pricing strategy. Which of the following, if true, proves their decision to
be a wise one?
A) Electrowhip's competitors utilize social media for marketing their products.
B) Electrowhip sells products whose image and quality support high prices.
C) Electrowhip operates in a market with many competitors.
D) Electrowhip does not operate in a price sensitive market.
E) Electrowhip's products are intended to appeal to the elite in society.
F)
AACSB: Reflective thinking
Skill: Application
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Challenging
4
13) For a market penetration-price strategy to succeed, which of the following is LEAST likely
to be true?
A) Production costs decrease as sales volume increases.
B) A low price triggers market growth.
C) Distribution costs decrease as sales volume increases.
D) Low prices must inhibit competition from entering the market.
E) The strategy can be changed quickly, to a higher-priced position, with no negative impact.
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Moderate
Refer to the scenario below to answer the following question(s).
Champion, Inc. is a manufacturer of lunch boxes, school bags, and school stationery. Charles
Payton, the CEO of Champion, hopes to sell the products at a low price to penetrate the market
quickly.
14) Which of the following best supports a market-penetration strategy for Champion?
A) Production costs increase as sales volume increases.
B) It is very difficult for competitors to enter the market.
C) The cost of producing a smaller volume is negligible.
D) The quality of the products supports high initial prices.
E) The market for the products is highly price sensitive.
F)
AACSB: Reflective thinking
Skill: Critical Thinking
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Challenging
15) Pricing strategies tend to change and evolve as the average product passes through its life
cycle.
Skill: Concept
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Easy
16) For market skimming to be successful, the costs of producing a smaller volume cannot be
so high that they cancel the advantage of charging more.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Easy
5
17) When The Candy Store sets a low initial price in order to get its "foot in the door" and to
quickly attract a large number of buyers, the company is using market-skimming pricing.
18)
AACSB: Analytical thinking
Skill: Application
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Moderate
19) After entering a market by using market-penetration pricing, a company can easily raise its
price and maintain its market share.
AACSB: Analytical thinking
Skill: Application
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Moderate
20) Differentiate between market-skimming and market-penetration pricing strategies. Explain
the conditions within which they are effective.
Answer: Market-skimming is used to skim revenues layer by layer from the market by entering
the market with high initial prices. The product's quality and image must support its higher
price, and enough buyers must want the product at that price. The costs of producing a smaller
volume cannot be so high that they cancel the advantage of charging more. Competitors should
not be able to enter the market easily and undercut the high price. Market penetration is used to
penetrate the market quickly and deeply to attract a large number of buyers quickly and win a
large market share by setting a low price initially when it enters the market. The market must be
highly price sensitive so that a low price produces more market growth. Production and
distribution costs must fall as sales volume increases. Also, the low price must help keep out
competition and be maintained over time.
AACSB: Application of knowledge; Written and oral communication
Skill: Synthesis
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Challenging
21) For what types of products might marketers use market-skimming pricing?
Answer: Market-skimming pricing works when the product's quality and image support the
higher price. For example, companies selling high-tech electronics may use market-skimming
pricing successfully.
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Moderate
6
22) Why might marketers use market-penetration pricing?
Answer: Marketers use such pricing when attempting to attract a large number of buyers
quickly and win a large market share; such pricing may be common when competition for
products is high.
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.1: Describe the major strategies for pricing new products.
Difficulty: Moderate
23) Which of the following product mix pricing strategies involves setting prices across an
entire product range based on cost differences between the products, customer evaluations of
different features, and competitors' prices?
A) by-product pricing
B) product bundle pricing
C) optional product pricing
D) captive product pricing
E) product line pricing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Easy
24) Go Zone plans to introduce four tablet models over the next year. These models range from
basic readers at $99 per unit, to more sophisticated tablets at $399 per unit. The more features a
model has, the more expensive it is. What pricing strategy is Tone Zone using for its range of
tablets?
A) product line pricing
B) product bundle pricing
C) captive product pricing
D) by-product pricing
E) optional product pricing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Moderate
7
25) Which of the following is true of product line pricing?
A) The price steps take cost differences between products in the line into account.
B) The pricing strategy cannot be used by companies in developed countries.
C) The price steps do not account for the prices of similar products from competitors.
D) The pricing strategy involves overpricing products so that they appeal to the elite.
E) The customer's perception of the value of different features is considered irrelevant.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Moderate
26) Which of the following companies uses product line pricing?
A) Photo Genie, which sells inexpensive cameras that run only on their own expensive batteries
B) Mobile Point, which launched a range of cell phone models, each priced according to its
features
C) Penguin's Parlor, which offers customers a 20-percent discount on their birthdays and certain
holidays
D) Green Thumb, which gives away free watering cans with the purchase of certain potted
plants
E) Panizza, whose combo meals are priced lower than the individual components sold together
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Challenging
27) Which of the following product mix pricing strategies involves pricing additional or
accessory products sold along with the main product?
A) inclusive product pricing
B) exclusive product pricing
C) by-product pricing
D) product bundle pricing
E) optional-product pricing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Easy
8
28) Which of the following is true of optional-product pricing?
A) It involves capitalizing on low value by-products.
B) It involves pricing products that can be added to the base product.
C) It is used to price a company's main product.
D) It involves setting geographically specific prices.
E) It is used to price products that must be used with the company's main product.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Moderate
29) Which of the following product mix pricing strategies involves pricing products that can
only be used with the main product?
A) by-product pricing
B) product bundle pricing
C) captive product pricing
D) product line pricing
E) optional product pricing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Easy
30) Multiprint, a printer manufacturing firm, sells ink cartridges for each of its specific models.
Only Multiprint cartridges are compatible with Multiprint printers, and no two models share the
same specifications. What type of pricing does Multiprint use?
A) product line pricing
B) captive product pricing
C) optional product pricing
D) by-product pricing
E) product bundle pricing
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Challenging
9
31) Which of the following product mix pricing strategies did Polaroid use when it set the
general price range of its cameras low and the markup on its film high?
A) product-segmented pricing
B) by-product pricing
C) customer-segmented pricing
D) captive product pricing
E) product bundling pricing
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Challenging
32) In the case of services, captive product pricing is called
pricing.
A) by-product
B) optional product
C) two-part
D) bundle
E) segmented
F) Skill:
Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Easy
33) Which of the following companies uses captive product pricing?
A) Photo Genie, which sells inexpensive cameras that run only on their own expensive batteries
B) Go Zone, which launched a range of tablet models, each priced according to its features
C) Penguin's Parlor, which offers customers a 20-percent discount on their birthdays
D) Sportsprint, which prices sports equipment according to customer evaluations
E) Burger Den, whose combo meals are priced lower than its individual components sold
together
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Challenging
10
34) When amusement parks charge customers for admission and later for food and beverages,
they are following a
pricing strategy.
A) by-product
B) product line
C) penetration
D) skimming
E) two-part
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Moderate
35) Beach Heaven uses two-part pricing for its holiday resort charges. Because this is a service,
the price is broken into a fixed fee for the room plus a(n)
usage rate for activities,
including kite-sailing and child care.
A) fixed
B) variable
C) standard
D) market
E) optional
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Moderate
36) Using
pricing, companies are able to turn their trash into cash, allowing them to
make the price of their main product more competitive.
A) product bundle
B) optional product
C) captive product
D) by-product
E) product line
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Easy
11
37) A lumber mill takes in logs, turns them into 2 x 4's and other sizes needed for building
construction. Wood chips created in the milling process are a(n)
that can be sold.
A) bundled product
B) captive product
C) by-product
D) optional product
E) primary product
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Moderate
38) Which of the following product mix pricing strategies involves pricing multiple products to
be sold together?
A) product line pricing
B) product bundle pricing
C) optional product pricing
D) by-product pricing
E) captive product pricing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Easy
39) Which of the following is true of product bundle pricing?
A) It promotes the sale of products that consumers might not otherwise buy.
B) It is used to set prices across an entire product range based on customer evaluations.
C) It forces customers to buy product parts that are only compatible with the main product.
D) It results in companies making fewer—though more profitable—sales.
E) It involves pricing the main product low and setting high markups on the supplies.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Moderate
12
40) Which of the following companies uses product bundle pricing?
A) Photo Genie, which sells inexpensive cameras that run only on their own, expensive,
batteries
B) Go Zone, which launched a range of tablet models, each priced according to its features
C) Penguin's Parlor, which offers customers a 20 percent discount on their birthdays
D) Green Thumb, which gives away free watering cans with the purchase of certain potted
plants
E) Panizza, whose combo meals are priced lower than its individual components sold together
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Challenging
Refer to the scenario below to answer the following question(s).
Champion, Inc. is a manufacturer of lunch boxes, school bags, and school stationery. Charles
Payton, the CEO of Champion, hopes to sell the products at a low price to penetrate the market
quickly.
41) Noticing that themed envelopes aren't selling well, Charles Payton decides to offer
customers a special "letter writing" kit. He prices the kit—which comprises letter paper,
matching envelopes, and pens—at $5, even though the combined prices of the individual items
is $8. Which of the following pricing strategies is he using?
A) optional product pricing
B) product bundle pricing
C) by-product pricing
D) dynamic pricing
E) captive product pricing
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Challenging
42) Pricing across a product mix is difficult because various products have related demand and
costs, and products face different degrees of competition.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Easy
13
43) In product line pricing, price steps should account for differences in customer perceptions
of the value of different features.
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Easy
44) Thinking Cap Corp. prices its various cap designs at different price levels, ranging from
$2.05 to $5.95. This is an example of optional product pricing.
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Moderate
45) Print-Fast Printers prices its printer cartridges at a premium, since customers must buy
Print-Fast cartridges to work with their Print-Fast printer. Print-Fast uses optional-product
pricing.
AACSB: Application of knowledge; Analytical thinking
Skill: Application
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Moderate
46) In addition to its customary services, On the Spot, a moving company, also sells the boxes
and padding that are used when moving household furniture. This is an example of customersegmented pricing.
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Moderate
47) When a manufacturer seeks a market for by-products and accepts a price that covers more
than the cost of storing and delivering those by-products, the manufacturer is able to reduce the
main product's price to make it more competitive.
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
14
Difficulty: Challenging
48) Some industries commonly use two-part pricing, breaking the price down into a fixed fee
15
and a fixed usage rate.
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Moderate
49) When using product bundle pricing, sellers combine several of their products and offer the
bundle at an increased price for increased profit.
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Moderate
50) Sensenig Propeller manufactures replica antique wooden airplane propellers. In the process
of production, the company generates a great deal of scrap hardwood. How can using byproduct pricing benefit the company?
Answer: Using by-product pricing, Sensenig can seek a market for the hardwood and should
accept any price that covers more than the cost of storing and delivering the by-products. This
practice allows Sensenig to reduce the main product's price to make it more competitive.
Sensenig might even find that the by-products themselves are profitable.
AACSB: Application of knowledge; Written and oral communication
Skill: Application
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Challenging
51) Explain product line pricing.
Answer: With product line pricing, management must decide on the price steps to set between
the various products in a line. The price steps should take into account cost differences between
the products in a line, customer evaluations of different product features, and competitors'
prices. The seller's task is to establish perceived quality differences that support the price
differences between various price points.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Moderate
16
52) What should the price steps of product line pricing take into account?
Answer: The price steps should take into account cost differences between products in the line.
More importantly, they should account for differences in customer perceptions of the value of
different features.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Moderate
53) Give two examples of products for which marketers might use optional-product pricing.
Answer: Student answers will vary. Such products may include refrigerators with icemakers
and cars with options such as stereos, GPS, and cruise control.
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Challenging
54) Give two examples of products for which captive product pricing might be used.
Answer: Student answers will vary. Examples of captive products are razor blade cartridges,
video games, printer cartridges, and e-books.
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Challenging
55) Give two examples of by-product pricing.
Answer: Student answers will vary. Examples include selling scrap metal after producing
metal clamps, selling wood chips after milling lumber, or selling donut holes after producing
donuts.
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Challenging
56) Give two examples of product bundle pricing.
Answer: Student answers will vary. Examples include vacation packages that include airfare,
hotel charges, and tourist charges, or value meals in the fast-food industry.
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.2: Explain how companies find a set of prices that maximizes the profits from
the total product mix.
Difficulty: Challenging
57) Which of the following is a price adjustment strategy?
17
A) product bundle pricing
B) by-product pricing
C) product line pricing
D) optional product pricing
E) discount and allowance pricing
F)
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
58) Which of the following price adjustment strategies involves reducing prices to reward
customer responses such as volume purchases, paying early, or participating in sales-support
programs?
A) product bundle pricing
B) captive product pricing
C) product line pricing
D) dynamic pricing
E) discount and allowance pricing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
59) A(n)
is a straight reduction in price on purchases during a stated period of time or
of larger quantities.
A) allowance
B) free sample
C) discount
D) tax credit
E) quota
F) Skill:
Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
18
60) Solar Tanning Salon prices tanning sessions at $25 per visit. It also offers seasonal passes
for $175 that allow the customer to visit the salon multiple times in a year. This is an example
of a
.
A) sample
B) promotional allowance
C) product bundle
D) discount
E) product line
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
61) Which of the following price adjustment strategies offers a price reduction to buyers who
pay their bills promptly?
A) cash discount
B) season discount
C) quantity discount
D) trade discount
E) functional discount
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
62) Leicestershire Renovations has a history of problems with customers who do not pay their
bills on time. Leicestershire Renovations wants to improve its cash situation, reduce bad debts,
and reduce credit-collection costs. Which of the following forms of pricing would most likely
help the firm achieve its goal?
A) by-product pricing
B) zone pricing
C) cash discounts
D) product bundling
E) quantity discounts
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Challenging
19
63) A quantity discount is a price reduction for buyers who
.
A) buy merchandise out of season
B) buy merchandise in bulk
C) pay their bills on time
D) buy discontinued products
E) return old items while buying new ones
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
64) A seller offers a
to trade-channel members who perform certain functions, such
as selling, storing, and record keeping.
A) functional discount
B) storage allowance
C) cash discount
D) promotional allowance
E) quantity discount
F)
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
65) The discount offered by Glamor Gifts to customers who bought Valentine-themed
merchandise the week following Valentine's Day is an example of a
.
A) functional discount
B) seasonal discount
C) trade discount
D) cash discount
E) time-based discount
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Challenging
20
66) A(n)
refers to promotional money paid by manufacturers to retailers in return for
an agreement to feature the manufacturer's products in some way.
A) allowance
B) sample
C) discount
D) tax credit
E) tax exemption
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
67)
allowances are price reductions given for turning in an old item when buying a
new one.
A) Promotional
B) Trade-in
C) Depreciation
D) Segmented
E) Functional
F) Skill:
Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
68) Trade-in allowances are most commonly used in the
industry.
A) real estate
B) automobile
C) dairy products
D) financial services
E) health care
F)
AACSB: Reflective thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
21
69) Shoe Trends, a company that manufactures formal shoes for men and women, offers to give
its customers $10 for an old pair of shoes when they buy a new pair. In essence, they're
reducing the price of the new shoes by $10. What is this type of price adjustment called?
A) functional discount
B) captive product pricing
C) seasonal discount
D) trade-in allowance
E) by-product pricing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
70)
allowances are payments or price reductions that reward dealers for participating
in advertising and sales support programs.
A) Promotional
B) Trade-in
C) Segmented
D) Functional
E) Dynamic
F) Skill:
Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
71) In return for participating in Honda advertising and sales support programs, Honda
dealerships are rewarded with payments or price reductions, which are known as
.
A) seasonal discounts
B) functional allowances
C) cash discounts
D) promotional allowances
E) trade-in allowances
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Moderate
22
72) By definition,
pricing is used when a firm sells a product or service at two or
more prices, even though the difference in price is not based on differences in cost.
A) segmented
B) variable
C) flexible
D) cost-plus
E) reference
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
73) The New Age Gallery has three admission prices for students, adults, and seniors, even
though all three groups are entitled to the same services. This form of pricing is called
pricing.
A) psychological
B) product form
C) customer-segment
D) captive product
E) by-product
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Moderate
74) Under
pricing, different versions of the product are priced differently but not
according to differences in their costs.
A) product form
B) optional product
C) captive product
D) by-product
E) seasonal
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
23
75) Sparkling Valley, a luxury resort, prices cottages facing the lake higher than cottages that do
not, even though the cottages and services offered are identical in every other aspect. This form
of pricing is called
pricing.
A) location-based
B) time-based
C) by-product
D) seasonal
E) captive product
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Challenging
76) When theaters vary seat prices due to audience preferences for seats in coveted rows, they
use
pricing.
A) customer-segment
B) location-based
C) time-based
D) product line
E) captive product
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Challenging
77) When a firm varies its price by the season, it is using
pricing.
A) product form
B) customer-segment
C) location-based
D) time-based
E) value-added
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
24
78) Segmented pricing is only effective when
.
A) the segments show similar degrees of demand
B) the cost of segmenting does not exceed the revenue obtained from the price difference
C) the segmented prices do not reflect real differences in customers' perceived value
D) the customers of different socio-economic classes are treated according to their rank
E) companies make their services and products accessible exclusively to wealthy patrons
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Moderate
79) A movie theater offers a reduced price for an afternoon showing of a film. This type of
pricing is
pricing.
A) location-based
B) customer-segmented
C) cost-based
D) product form
E) time-based
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
80) Which of the following is a price adjustment strategy that considers how a customer's
perception of a product is influenced by its price?
A) captive product pricing
B) psychological pricing
C) by-product pricing
D) promotional pricing
E) international pricing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Moderate
25
81) Consumers are less likely to use price to judge the quality of a product when they
.
A) have never tried the product before
B) have little knowledge of the brand
C) have experience with the product
D) are shopping for luxury items
E) cannot physically examine the product
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Moderate
82) Which term refers to prices that buyers carry in their minds and check with when they look
at a given product?
A) product line prices
B) reference prices
C) location-based prices
D) product form prices
E) time-based prices
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
83) Which of the following is NOT a cue to consumers about whether a price is high or low?
A) price-matching guarantees
B) prices of surrounding, similar products
C) signs such as "Clearance"
D) "Coming Soon!" signs
E) location in the store, especially at the entry
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Moderate
26
84)
are formed by noting current prices, remembering past prices, or assessing the
buying situation.
A) Product line prices
B) Seasonal prices
C) Reference prices
D) Time-based prices
E) Product bundle prices
F)
AACSB: Reflective thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
85) La Belle released a cut glass bottle of perfume at $299 per item, even though its major
competitor prices its signature scent at $99 per item. La Belle reasons that customers in search
of luxury goods will prefer its product because they are likelier to believe that high price
indicates superior quality. What price adjustment strategy is evident in its reasoning?
A) seasonal pricing
B) time-based pricing
C) captive product pricing
D) psychological pricing
E) location-based pricing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Challenging
86) A supermarket places its store brand of blackberry jam priced at $5 per jar in the fruit
preserves aisle, alongside the jam jars of a better known brand—whose products are priced at
$8 apiece. Store managers reason that customers are more likely to choose the store brand
instead of the better-known brand when they realize the price difference. What price adjustment
strategy is evident in the supermarket's reasoning?
A) by-product pricing
B) product bundle pricing
C) captive product pricing
D) psychological pricing
E) seasonal pricing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Challenging
87) What type of pricing is being used when a company temporarily prices its product below
27
the list price or even below cost to create buying excitement and urgency?
A) segmented pricing
B) international pricing
C) reference pricing
D) promotional pricing
E) basing-point pricing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
88) Hearth & Home, a store which sells household products, has announced a one-week sale on
its new carpet line. This is an example of
.
A) promotional pricing
B) seasonal pricing
C) by-product pricing
D) product bundle pricing
E) time-based pricing
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Challenging
89) Which of the following is true of promotional pricing?
A) It leads to 'deal-prone' customers who buy products only during sales.
B) It fortifies the brand's image in the eyes of customers if relied upon extensively.
C) It simplifies shopping for customers if used simultaneously by multiple stores.
D) It makes balancing short-term sales incentives against long-term brand building
unnecessary.
E) It is extremely beneficial for the brand's profitability if practiced repeatedly.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
28
90) Low-interest financing and longer warranties are both examples of
pricing.
A) segmented
B) promotional
C) product bundling
D) captive product
E) product form
F)
AACSB: Reflective thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
91) Which of the following is an adverse effect of using promotional pricing?
A) It makes shopping stressful if used by multiple stores simultaneously.
B) It erodes the value of competing brands in the eyes of customers.
C) It gives pricing secrets away to competitors.
D) It creates "deal-immune" customers if used often.
E) It delays the company's focus on short-term strategies.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Moderate
92) Which of the following involves adjusting prices to account for the physical location of
customers?
A) location-based pricing
B) geographical pricing
C) domestic pricing
D) interior pricing
E) captive pricing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
29
93) Which of the following is a geographical pricing strategy?
A) basing-point pricing
B) segmented pricing
C) dynamic pricing
D) Internet pricing
E) location-based pricing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
94) Under which type of geographic pricing strategy does each customer take responsibility for
the freight charges for the product from the factory to its destination?
A) zone pricing
B) basing-point pricing
C) uniform-delivered pricing
D) dynamic pricing
E) FOB-origin pricing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
95) Which of the following is true of FOB-origin pricing?
A) It is a strategy in which the company charges the same price plus freight to all customers.
B) It is a costly option for customers who are located near the company.
C) It charges all customers the freight cost from a base city to the customer location.
D) It is an expensive alternative for customers in distant locations.
E) It is a strategy in which the seller absorbs all or part of the freight charges.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
30
96) Which form of geographic pricing is a company using when it charges the same rate to ship
a product anywhere in the United States?
A) uniform-delivered pricing
B) psychological pricing
C) zone pricing
D) FOB-origin pricing
E) basing-point pricing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
97) If Detroit DLX charges the same price for the delivery of its product to customers located
in the states near the Great Lakes, but a different price to customers elsewhere, the company is
using
.
A) psychological pricing
B) promotional pricing
C) zone pricing
D) reference pricing
E) uniform-delivered pricing
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Challenging
98) Motorzone offers replacement parts for old Volkswagen Beetles. The company calculates
shipping charges based on shipping parts from Boston, even though some parts actually ship
from St. Louis. Motorzone most likely practices
pricing.
A) FOB-origin
B) basing-point
C) zone
D) uniform-delivered
E) freight-absorption
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Challenging
31
99)
is a pricing strategy in which the company sets up two or more clearly identified
geographic regions within which all customers pay the same total price.
A) Freight-absorption pricing
B) Zone pricing
C) Uniform-delivered pricing
D) FOB-origin pricing
E) Basing-point pricing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Moderate
100) In which of the following geographic pricing strategies would customers located close
tothe company pay the same amount as customers in distant locations?
A) uniform-delivered pricing
B) zone pricing
C) FOB-origin pricing
D) location-based pricing
E) reference pricing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Moderate
101) With which pricing strategy does the seller take responsibility for part or all of the actual
freight charges in order to acquire the desired business?
A) FOB origin pricing
B) freight-absorption pricing
C) basing-point pricing
D) location-based pricing
E) uniform-delivered pricing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
32
102) Freight-absorption pricing is used for
.
A) penetrating international markets
B) generating customer buzz about new products
C) holding on to increasingly competitive markets
D) generating quick profits to offset input costs
E) maintaining quality service records
F)
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Moderate
103) The Internet offers
, where the price can easily be adjusted to meet changes in
demand.
A) captive pricing
B) dynamic pricing
C) basing-point pricing
D) price bundling
E) cost-plus pricing
F)
AACSB: Information technology
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
104) Big Mike's Health Food Store sells nutritional energy foods. The price of the products sold
varies according to individual customer accounts and situations. For example, long-time
customers receive discounts. This strategy is an example of
.
A) time-based pricing
B) seasonal pricing
C) dynamic pricing
D) promotional pricing
E) penetration pricing
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Challenging
33
105) Stores can combat the current consumer practice of
, in which consumers visit
stores and then check online for price comparisons.
A) discounting
B) conferencing
C) using Instagram to share purchases
D) showrooming
E) auctioning
F) Skill:
Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
106) Which of the following likely does NOT play into products being offered for different
prices in different countries?
A) additional costs of operations
B) product commonality
C) physical distribution
D) shipping and insurance
E) exchange-rate fluctuations
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Moderate
107) Which of the following is true of the bottom of the pyramid?
A) It is a market segment that has been tapped into and depleted.
B) It consists of people who have easy access to luxury goods.
C) It comprises people who have easy access to the basic amenities of life.
D) It is considered a source of fresh growth opportunities.
E) It is a market segment that has insignificant purchasing power.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Moderate
34
108) Consumers who have no past experience with a product are more likely to judge it by its
price.
AACSB: Reflective thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
109) A seasonal discount is a price reduction to buyers who buy merchandise while the
products are in season.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
110) Online flash sales are used to create buying urgency and make buyers feel lucky to have
gotten in on the deal.
AACSB: Information technology
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
111) If used infrequently, price promotions create "deal-prone" customers who wait until brands
go on sale before buying them.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
112) Constantly reduced prices can erode a brand's value in the eyes of customers.
113)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
35
114) In segmented pricing, the difference in prices is based on differences in costs.
115)
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
116) For segmented pricing to be an effective strategy, prices should reflect real differences in
customers' perceived value.
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
117) Sellers cannot influence or use consumers' reference prices when setting their product
prices.
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Moderate
118) Customers located close to a firm are less likely to benefit from FOB-origin pricing than
customers located farther away.
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
119) The uniform-delivered pricing strategy means that goods sold are placed free on board a
carrier with the customer paying the freight from the factory to the destination.
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
120) Dynamic pricing is least prevalent online.
121)
AACSB: Information technology
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
122) Marketing a product internationally rarely requires a product to be priced differently
36
depending on the country.
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Easy
123) Why do businesses use cash discounts when they are in essence losing some money on the
sale?
Answer: Such discounts are customary in many industries in order to reward a customer who
pays bills promptly. The practice encourages customers to pay early, giving the firm quicker
and more reliable access to cash. A cash discount can also help to build customer loyalty to the
firm.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Challenging
124) Differentiate between dynamic and fixed pricing.
Answer: Throughout most of history, prices were set by negotiation between buyers and
sellers. The fixed price policy—setting one price for all buyers—is a relatively modern idea
that arose with the development of large-scale retailing at the end of the nineteenth century.
Today most prices are set this way. However, some companies are now reversing the fixed
pricing trend. They are using dynamic pricing, adjusting prices continually to meet the
characteristics and needs of individual customers and situations. Dynamic pricing makes sense
in many contexts. It adjusts prices according to market forces, and it often works to the benefit
of the customer.
AACSB: Application of knowledge; Written and oral communication
Skill: Synthesis
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Challenging
37
125) Explain the factors involved in setting international pricing.
Answer: In some cases, a company can set a uniform worldwide price. However, most
companies adjust their prices to reflect local market conditions and cost considerations. A firm
must consider economic conditions, competitive situations, laws and regulations, and
development of the wholesale and retail system. Consumer perceptions and preferences also
may vary from country to country, calling for different prices. The company may have different
marketing objectives in various world markets. Costs play an important role in setting
international prices. Management must prepare for price escalation that may result from the
differences in selling strategies or market conditions. The additional costs of operations,
product modifications, shipping and insurance, import tariffs and taxes, exchange-rate
fluctuations, and physical distribution must all be factored into the "price."
AACSB: Diverse and multicultural work environments; Application of knowledge; Written and
oral communication
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Challenging
126) List four types of discounts.
Answer: Four types of discounts are cash discount, quantity discount, functional or trade
discount, and seasonal discount.
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Moderate
127) List four types of segmented pricing.
Answer: Four types of segmented pricing are customer-segment pricing, product form pricing,
location-based pricing, and time-based pricing.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Moderate
128) Explain the psychology behind a price of $9.99 instead of $10.00.
onsumers typically see a product that is priced at $9.99 as in the $9 range instead ofas $10. The
price appears to be cheaper at a subconscious level.
AACSB: Application of knowledge; Analytical thinking
Skill: Concept
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Challenging
38
129) Casual Comfort sells its catalog items using FOB-origin pricing. Who pays the freight
charges?
Answer: The customer pays for the freight.
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.3: Discuss how companies adjust their prices to take into account different
types of customers and situations.
Difficulty: Challenging
130) The "bottom of the pyramid" refers to
.
A) the world's poorest consumers
B) the middle classes of Brazil, Russia, India, and China
C) a market with little or no purchasing power
D) people with easy access to luxury goods
E) the middle class of high-income countries
F)
Skill: Concept
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Easy
131) Which of the following factors would most likely lead to a company initiating a price cut?
A) over-demand
B) weakened economy
C) poor competition
D) cost inflation
E) weak price competition
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Easy
132) Which of the following is used in an attempt to dominate the market through a pricing
strategy?
A) price increase
B) match competitors' pricing
C) price cuts
D) quantity discounts
E) custom prices
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Easy
39
133) Which of the following would most likely lead to a company initiating a price increase?
A) weakened economy
B) possession of outdated merchandise
C) excess capacity
D) over-demand
E) possession of defective merchandise
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Easy
134) Reasons for a price increase include all of the following EXCEPT
.
A) a desire to improve profits
B) cost inflation
C) when the alternative is rationing of the product
D) decreasing gross margins
E) increasing supply of product
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Moderate
135) Ways to avoid accusations of price gouging include
.
A) bundling products together
B) matching competitors' pricing
C) communications to customers explaining why prices are being increased
D) passing along increased costs
E) increase quality of the product
F)
AACSB: Application of knowledge; Analytical thinking
Skill: Concept
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Moderate
136) Which of the following is true of price changes?
A) Over-demand leads to companies initiating price cuts.
B) Changes in price do not affect a brand's image.
C) Customer reaction to price changes is not as important as competitor reaction.
D) A drop in price can adversely affect how consumers view the brand.
E) Excess capacity is a factor that causes increases in price.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Moderate
40
137) Competitors are most likely to react to a price change when
.
A) a large number of competitors are involved
B) the product is uniform
C) the buyers are not well informed about product features
D) buyers are not well informed about price differences
E) the products are not uniform
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Moderate
138) Questions a company should consider if a competitor initiates a price change include all of
the following EXCEPT
.
A) "Are other competitors going to respond?"
B) "What will happen to the company's market share if it does not respond?"
C) "Is the price change temporary or permanent?"
D) "Why did the competitor change the price?"
E) "How can we improve our product?"
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Easy
139) When a competitor cuts its price, a company should
if it believes it will not lose
much market share or would lose too much profit by cutting its own prices.
A) reduce its production costs
B) reduce its marketing costs
C) maintain its current prices and profit margin
D) increase its marketing budget to raise the perceived value of the product
E) increase its production costs to improve the quality of the product
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Moderate
41
140) When faced with a competitor who has cut its product's price, which of the following is
the most cost-effective way for a company to maintain its own price but raise the perceived
value of its offer?
A) by improving the quality of the product
B) by introducing a higher-priced premium brand
C) by altering the company's marketing communications
D) by bundling the offer with add-ons
E) by distributing the product through less costly channels
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Moderate
141) In response to price cuts from competitors, a cereal company with several more expensive
and higher quality cereals introduced a lower-priced option to its product line. This is an
example of which of the following responses to a competitor's price cut?
A) raising the perceived value of a product
B) improving product quality
C) accepting a reduced market share
D) launching a "fighter brand"
E) using high-low pricing
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Challenging
142) Excess capacity leads to companies initiating an increase in price.
143)
Skill: Concept
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Easy
144) Companies need to respond to a competitor's price change if its own market share and
profits will decrease because of the change.
Skill: Concept
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Easy
145) Launching a fighter brand is an effective way to deal with a situation in which the market
segment being lost is price sensitive and will not respond to arguments of higher quality.
146)
Skill: Concept
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Moderate
42
147) Discuss the conditions under which a company might consider using price cuts or price
increases.
Answer: Price cuts may be necessary when there is excess capacity. Another time to cut prices
is when market share is falling in the face of strong price competition. A company may also cut
prices in a drive to dominate the market through lower costs. A major factor in price increases
is cost inflation. Rising costs squeeze profit margins and lead companies to pass cost increases
along to customers. Another factor leading to price increases is over-demand. When a company
cannot supply all its customers' needs, it can raise its prices, ration products to customers, or
both.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Challenging
148) When are competitors most likely to react to price changes? How can a firm anticipate the
likely reactions of its competitors?
ompetitors are most likely to react when the number of firms involved is small, when the
product is uniform, and when the buyers are well informed. If the firm faces one large
competitor, and if the competitor tends to react in a set way to price changes, that reaction can
be easily anticipated. But if the competitor treats each price change as a fresh challenge and
reacts according to its self-interest, the company will have to figure out just what makes up the
competitor's self-interest at the time.
AACSB: Application of knowledge; Written and oral communication
Skill: Application
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Challenging
149) How might a consumer view a price cut?
Answer: Price cuts have both advantages and disadvantages. A consumer might believe that he
or she is getting a good deal on a quality product, or a consumer might believe that the quality
of the product has been reduced.
AACSB: Application of knowledge
Skill: Application
Objective: LO 11.4: Discuss the key issues related to initiating and responding to price changes.
Difficulty: Challenging
43
150) Which of the following is true of public policies and pricing?
A) The government imposes no limits on intrastate pricing issues.
B) The Robinson-Patman Act governs interstate commerce.
C) Companies have free rein when it comes to setting prices.
D) The Sherman Act governs intrastate commerce.
E) The Clayton Act encourages the formation of monopolies.
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Moderate
151) Which of the following is NOT true of public policies and pricing?
A) Companies are free to charge whatever prices they wish.
B) Federal, state, and local laws govern the rules of fair play in pricing.
C) Deceptive pricing is not permitted.
D) Companies must consider broader societal pricing concerns.
E) Regulations exist to control predatory pricing.
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Moderate
152) The Sherman, Clayton, and Robinson-Patman Acts are all federal laws that were enacted
to curb the formation of
.
A) monopolies
B) global partnerships
C) competitive markets
D) internal markets
E) intrastate partnerships
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Easy
44
153) When sellers set prices after talking to competitors and engaging in collusion, they are
involved in
.
A) interstate commerce
B) comparative pricing
C) price fixing
D) skimming pricing
E) price bundling
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Easy
154) A number of top fashion-modeling agencies would most likely be charged with
for jointly determining what commissions they charge for models.
A) prestige pricing
B) competitive pricing
C) price bundling
D) dynamic pricing
E) price fixing
F)
AACSB: Ethical understanding and reasoning
Skill: Application
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Challenging
155) Federal legislation on price fixing requires that sellers set their prices
.
A) based on their fixed and variable costs
B) without communication from competitors
C) to achieve a specific profit margin
D) without the intention of cutting into competitors' profits
E) consistently throughout a region
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Moderate
45
156) If a large retailer sold numerous items below cost with the intention of punishing small
competitors and gaining higher long-run profits by putting those competitors out of business,
the retailer would be guilty of
.
A) price collusion
B) price fixing
C) predatory pricing
D) competitive pricing
E) penetration pricing
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Moderate
157) Savings for You, a discount retail chain, is highly competitive. When entering a new
market, Savings for You often cuts prices so deeply that it sells below costs, effectively pushing
smaller companies with less purchasing power out of the market. Savings for You is most likely
guilty of
.
A) market skimming
B) price fixing
C) deceptive pricing
D) price collusion
E) predatory pricing
F)
AACSB: Ethical understanding and reasoning
Skill: Application
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Challenging
158) Which of the following would be considered predatory pricing?
A) a company that prices its products below cost to get rid of a surplus
B) a company that prices below cost to drive out competitors
C) a company that offers a volume discount
D) a company that offers the suggested retail price on the manufacturer's package
E) a company that offers real-time pricing online
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Moderate
46
159) The
seeks to prevent unfair price discrimination by ensuring that sellers offer
the same price terms to customers at a given price level.
A) FTC's "Guides against Deceptive Pricing"
B) Robinson-Patman Act
C) Sherman Act
D) Clayton Act
E) Automobile Information Disclosure Act
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Moderate
160) Price discrimination is legal when a
.
A) manufacturer and reseller have agreed upon a specified retail price for a product
B) manufacturer sells to retailers in different markets
C) seller can prove its costs are different when selling to different retailers
D) seller advertises prices that are not actually available to consumers
E) seller has not communicated with competitors before announcing prices
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Moderate
161) Price discrimination may be used to match competition as long as the strategy is
temporary, localized, and
.
A) defensive
B) offensive
C) publicized
D) private
E) uniform across channels
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Easy
47
162) Mark's Markers, a manufacturer of white board markers, has required its dealers to charge
a specified retail price for its markers. Mark's is most likely guilty of
.
A) captive pricing
B) retail price maintenance
C) price discrimination
D) competitive pricing
E) unfair price skimming
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Moderate
163)
occurs when a seller states price savings that are not actually available to
consumers.
A) Comparative pricing
B) Scanner fraud
C) Deceptive pricing
D) Market skimming
E) Price collusion
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Easy
164) While comparison pricing claims are legal if they are truthful, the FTC warns sellers not to
advertise a) factory or wholesale prices unless such prices are what they claim to be, b)
comparable value prices on imperfect goods, or c)
.
A) a sale unless the products are available in sufficient quantity to meet expected demand
B) in a way which confuses potential buyers of the product
C) a description of a product unless all versions of the product are offered with the same pricing
terms
D) a price reduction unless it is a savings from the usual retail price
E) if only a limited quantity are available at the reduced price
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Moderate
48
165) Failure to enter the current price into a retailer's system may result in charges of
.
A) predatory pricing
B) scanner fraud
C) retail maintenance pricing
D) discriminatory pricing
E) price fixing
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Easy
166) Reasons sellers go beyond what is required by pricing regulations include all of the
following EXCEPT that
.
A) it is good business to treat customers fairly
B) customers that fully understand prices and pricing terms are happy customers
C) word-of-mouth from dissatisfied customers spreads rapidly
D) building strong and lasting relationships is key to business success
E) it improves profitability to earn additional revenue due to customer confusion
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Easy
167) Price discrimination is permissible if the seller manufactures different qualities of the
same product for different retailers and can prove that the price difference is proportional.
168)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Easy
169) The widespread use of scanner-based computer checkouts has eradicated complaints of
retailers overcharging their customers.
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Easy
49
170) While regulations exist to prohibit deceptive pricing practices, in reality, most reputable
sellers do the minimum required to meet the regulations.
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Easy
171) In what way does the government regulate pricing?
Answer: The most important pieces of federal legislation affecting prices are the Sherman,
Clayton, and Robinson-Patman acts, initially adopted to curb the formation of monopolies and
to regulate business practices that might unfairly restrain trade. Because these statutes can be
applied only to interstate commerce, many states have adopted similar provisions for
companies that operate locally. Examples include pricing within channel levels and pricing
across channel levels.
AACSB: Ethical understanding and reasoning
Skill: Application
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Challenging
172) Compare the practices of price fixing and predatory pricing. Explain why each is
prohibited by law.
Answer: Many federal, state, and local laws govern the rules of fair play in pricing. Two major
areas of concern are price fixing and predatory pricing. Companies that engage in price fixing
collude to set a common price for their comparable products; price fixing undermines the core
element of price competition in our free-market economy. On the other hand, predatory pricing
takes price competition too far. Predatory pricing occurs when a company sells a product below
cost with the intention of punishing a competitor or by putting a competitor out of business.
AACSB: Ethical understanding and reasoning
Skill: Synthesis
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Challenging
173) Why is predatory pricing considered illegal?
Answer: Predatory pricing works against the principles of a free-enterprise system; predatory
pricing allows marketers to sell below cost with the intention of punishing competitors.
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Moderate
50
174) Why is identifying predatory pricing difficult?
Answer: Selling below cost to unload excess inventory is not considered predatory; selling
below cost to drive out competitors is illegal. Thus, a given action may or may not be predatory
depending on intent, and intent can be very difficult to determine or prove.
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Challenging
175) What is deceptive pricing?
eceptive pricing occurs when a seller states prices or price savings that misleadconsumers or
are actually not available to consumers.
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 11.5: Overview the social and legal issues that affect pricing decisions.
Difficulty: Moderate
51
Principles of Marketing, 17e (Kotler/Armstrong)
Chapter 12 Marketing Channels: Delivering Customer Value
1) Producing a product or service and making it available to buyers requires building
relationships not only with customers but also with key suppliers and resellers in the company's
.
A) upstream partnerships
B) marketing channels
C) inventory providers
D) supply chain
E) downstream partnerships
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
2) The sets of firms that supply companies with the raw materials, components, parts,
information, finances, and expertise needed to create products or services are known as
.
A) retailers
B) upstream partners
C) distributors
D) downstream partners
E) distribution channels
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
3) Which of the following terms refers to the wholesalers and retailers that form a vital link
between the firm and its customers?
A) factory-supply networks
B) downstream partners
C) resource banks
D) upstream partners
E) supply channels
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
4) The term supply chain is considered limited because it
1
.
A) ignores the make-and-sell aspect of the market
B) suggests that planning begins with raw materials and factory capacity
C) takes a step-by-step, linear view of purchase-production-consumption activities
D) takes a sense-and-respond view of the market
E) suggests that planning starts with identifying the needs of target customers
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Moderate
5) The term demand chain is considered limited because it
.
A) advocates a make-and-sell view of the market that relies on a responsive supply network
B) suggests that planning starts with raw materials, productive inputs, and factory capacity
C) takes a step-by-step, linear view of purchase-production-consumption activities
D) ignores the evolution of the global marketplace
E) overlooks the needs of target customers
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Moderate
6) A view of the market that specifies that planning starts by identifying the needs of target
customers, to which the company responds by organizing a chain of resources and activities
with the goal of creating customer value is a(n)
view.
A) make-and-sell
B) identify-and-target
C) purchase-produce-and-consume
D) market-and-profit
E) sense-and-respond
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Moderate
2
7) A
is made up of the company, suppliers, distributors, and customers who partner
to improve the performance of the entire system.
A) value delivery network
B) horizontal channel
C) consumer base
D) product delivery network
E) product line
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
8)
play an important role in matching supply and demand by providing consumers
with a broad assortment of products in small quantities.
A) Virtual banks
B) Intermediaries
C) Price consultants
D) Uniform-delivery networks
E) Upstream partners
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Challenging
9) Which of the following questions is NOT of major concern regarding marketing channels?
A) What role do physical distribution and supply chain management plan in attracting and
satisfying customers?
B) What impact do marketing channels have on the profitability of the firm and its partners?
C) How do channel firms interact and organize to do the work of the channel?
D) What problems do companies face in designing and managing their channels?
E) What is the nature of marketing channels, and why are they important?
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Moderate
3
10) A
is a set of interdependent organizations that help make a product or service
available for use or consumption by the consumer or business user.
A) product line
B) product delivery network
C) marketing channel
D) consumer base
E) resource bank
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
11) Which of the following is most likely true of marketing channel decisions?
A) They often involve long-term commitments to other firms.
B) They have minimal influence on the prices of products offered to customers.
C) They increase the amount of time a company spends connecting with customers.
D) They increase the amount of effort a company puts in to distribute goods.
E) They are easily altered, replaced, or discarded.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
12) Distribution channel decisions frequently require long-term commitments between firms. A
primary reason is that
.
A) advertising is not easy to change
B) old products are difficult to discard and new products are difficult to introduce
C) when they set up distribution through franchisees, independent dealers, or large retailers,
they cannot readily replace these channels with company-owned stores or Internet sites if
conditions change
D) changing the manufacturing requirements is expensive and takes significant time
E) management does not want to be constantly changing the method of selling and distributing
its products
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Challenging
4
13)
play an important role in efficiently making products available to target markets
in the needed varieties and quantities.
A) Virtual banks
B) Intermediaries
C) Price consultants
D) Uniform-delivery networks
E) Upstream partners
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Challenging
14) From the economic system's point of view, the role of
is to transform the
assortments of products made by producers into the assortments wanted by consumers.
A) upstream partners
B) marketing intermediaries
C) third-party logistics
D) price consultants
E) factory supervisors
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
15) A
is a layer of intermediaries that performs some work in bringing the product
and its ownership closer to the final buyer.
A) product platform
B) channel level
C) resource bank
D) contact center
E) customer franchise
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
5
16) In a(n)
channel, the same member both produces and distributes a product or
service to consumers.
A) tiered
B) direct
C) platform
D) vertical
E) exclusive
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
17) Which of the following companies uses a direct marketing channel?
A) Fishhooks, a factory that manufactures fishing equipment that it ships to hobby stores
worldwide
B) Germfight, a factory that manufactures dental products that it distributes only to select
department stores
C) Apple Blossoms, a company that sells its cosmetics exclusively through Ray's Retail Store
D) Holly Wreaths, a store that sells Christmas ornaments to customers via its online click-toorder catalogs
E) Showdown, a clothing store that stocks merchandise from different international brands
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Moderate
18) At its most basic form, a marketing channel consists of the producer and the
.
A) retailer
B) sales agent
C) competitor
D) processor
E) consumer
F)
AACSB: Reflective thinking
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
6
19) A marketing channel that consists of one or more intermediaries is known as a(n)
marketing channel.
A) cyclic
B) upstream
C) looped
D) direct
E) indirect
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
20) Plasticine Palace supplies its products exclusively to Arts & Crafts, a chain of stationery
stores across the country. The chain then makes the plasticine available to end consumers. This
is an example of
.
A) a direct marketing channel
B) intensive distribution
C) an indirect marketing channel
D) disintermediation
E) extensive distribution
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Moderate
21) Which of the following is an example of an indirect marketing channel?
A) June Bride, which sells bridal gowns via its click-to-order online catalogs
B) Farmer Brown, who delivers fresh milk from his dairy to customers every morning
C) Wine & Dine, which sells its picnic baskets to select novelty stores across the country
D) Lifebelt Insurance, which sells life insurance through its door-to-door salespeople
E) Rhonda's Rental, which rents cars to people for the day
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Moderate
7
22) Which of the following is a type of flow that connects all institutions in a marketing channel?
A) payment flow
B) ownership flow
C) physical flow
D) promotion flow
E) information flow
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
23) The greater the number of channel levels in a marketing channel, the
.
A) less distance between producer and end-consumer
B) greater the channel complexity
C) less time it takes for products to reach end-consumers
D) greater the control producers have over the distribution of their products
E) greater the control producers have over the demand of their products
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
24) Which of the following is a conventional consumer marketing channel?
A) producer to business distributor to end consumer
B) producer to wholesaler to retailer to end consumer
C) producer to end consumer to business customer
D) producer to retailer
E) producer to business distributor to business customer
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
8
25) Which of the following is an indirect business marketing channel?
A) producer to retailer to business distributor
B) producer to wholesaler to retailer to end consumer
C) producer to end-consumer to business distributor
D) producer to retailer
E) producer to business distributor to business customer
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Moderate
Refer to the scenario below to answer the following question(s).
Giant Beanstalks is a company based in Maryland that processes and cans vegetables. It has
contracts with several large farms in Riverdale, 80 miles away from the factory, that agree to
sell their produce to Giant Beanstalks. The company's products are available to the public only
through Greenleaf, a grocery chain with 38 stores in the country.
26) Which of the following is Giant Beanstalks' upstream partner?
A) the management of Greenleaf
B) the farmers of Riverdale
C) the trucks that carry Giant Beanstalks' products to Greenleaf
D) the end-consumers who buy the canned vegetables from Greenleaf
E) the logistics division of Giant Beanstalk
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Moderate
27) Downstream marketing channel partners, such as wholesalers and retailers, form a vital link
between the firm and its customers.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
9
28) A company's channel decisions directly affect the prices of its products.
29)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
30) Producers use intermediaries because they create greater efficiency in making goods
available to target markets.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
31) The role of marketing intermediaries is to transform the assortments of products made by
retailers into the assortments wanted by producers.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
32) Each layer of marketing intermediaries that performs some work in bringing the product
and its ownership closer to the final buyer is a channel level.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
33) It is more efficient for a company to keep the marketing channel functions—such as
information gathering, promotion, contacting customers and matching their needs, negotiation,
and physical distribution—in-house as they are most skilled at those functions.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Moderate
10
34) The number of products supplied indicates the length of a channel.
35)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
36) In a direct marketing channel, the producer sells directly to the intermediaries, who in turn
sell directly to the customers.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Easy
37) Provide an example of a company that has used an imaginative distribution system to gain a
competitive advantage.
nterprise Rent-A-Car revolutionized the car-rental business by setting up off-airportrental
offices. Apple turned the retail music business on its head by selling music for the iPod via the
Internet on iTunes. And Amazon.com forever changed the face of retailing and becamethe
Walmart of the Internet by selling anything and everything without using physical stores.
Student answers will vary.
AACSB: Application of knowledge
Skill: Application
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Challenging
11
38) Why is the term value delivery network a more relevant expression to use than the terms
supply chain or demand chain?
Answer: The term supply chain may be too limited, because it takes a make-and-sell view of
the business. It suggests that raw materials, productive inputs, and factory capacity should serve
as the starting point for market planning. The term demand chain is better because it suggests a
sense-and-respond view of the market. Under this view, planning starts by identifying the needs
of target customers, to which the company responds by organizing a chain of resources and
activities with the goal of creating customer value. However, even a demand chain view of a
business may be too limited because it takes a step-by-step, linear view of purchase-productionconsumption activities. Most large companies today are engaged in building and managing a
complex, continuously evolving value delivery network. A value delivery network is made up
of the company, suppliers, distributors, and, ultimately, customers who partner with each other
to improve the performance of the entire system.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Moderate
39) How do intermediaries add value to a marketing system?
Answer: Intermediaries reduce the amount of work that must be done by both producers and
consumers. They transform the assortment of products made by producers into the assortment
wanted by consumers. They buy large quantities from many producers and break them down
into the smaller quantities and broader assortments wanted by consumers. Intermediaries help
to match supply and demand. Intermediaries add value by bridging the major time, place, and
possession gaps that separate goods and services from those who would use them.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Moderate
40) What are the key functions that members of the marketing channel perform?
Answer: Members of the marketing channel help to complete transactions by gathering and
distributing information, developing and spreading promotions, contacting prospective buyers,
matching and shaping the offer to the buyer's needs, and negotiating price and other terms.
Others help to fulfill the completed transactions through physical distribution, financing, and
risk taking.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.1: Explain why companies use marketing channels and discuss the functions
these channels perform.
Difficulty: Moderate
12
41)
are complex behavioral systems in which people and companies interact to
accomplish individual, company, and channel goals.
A) Customer relationship management systems
B) Distribution channels
C) Partner relationship systems
D) Consumer bases
E) Buying centers
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
42) Which of the following does NOT apply to channel systems?
A) Some channel systems consist of only informal interactions among loosely organized firms.
B) Channel systems do not stand still; they evolve.
C) Some channel systems are formal interactions guided by strong organizational structures.
D) Intermediaries play interchangeable roles in the system.
E) Different types of intermediaries develop and emerge.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Challenging
43) Which of the following is true of channel members?
A) They act independent of each other.
B) They play specialized roles in the channel.
C) They are not accountable to other channel members.
D) They play generalized and interchangeable roles in the distribution process.
E) Their competence and cooperation don't affect the company's image or profits.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
13
44) Conflict that occurs among firms at the same level of the marketing channel is known as
conflict.
A) multitiered
B) horizontal
C) vertical
D) prolonged
E) financial
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
45) Conflict that occurs between different levels of the same marketing channel is known as
conflict.
A) horizontal
B) vertical
C) multitiered
D) equilateral
E) communal
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
46) Managers at the Imperial Hotel-Chicago complained that the chain's overall image was hurt
because Imperial Hotel-Dallas was overcharging guests and providing poor service. The
Imperial Hotel was experiencing
conflict.
A) equilateral
B) vertical
C) multitiered
D) communal
E) horizontal
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
14
47) The management of two Panizza restaurants has an ongoing disagreement over the discount
rate given to students from the local high school. This is an example of
conflict.
A) intensive
B) selective
C) exclusive
D) horizontal
E) vertical
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
48) When KFC came into conflict with its franchisees over the brand's Unthink KFC
repositioning, which emphasized grilled chicken over its traditional Kentucky fried chicken,
KFC experienced
conflict.
A) equilateral
B) horizontal
C) multitiered
D) communal
E) vertical
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
49) Conflict in the channel can be healthy because
.
A) it can disrupt channel effectiveness
B) normal give-and-take simply is normal
C) the channel could become passive and non-innovative
D) it can cause harm to channel relationships
E) the respective rights of the channel partners take priority
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Challenging
15
50) A(n)
consists of one or more independent producers, wholesalers, and retailers,
each seeking to maximize its own profits, sometimes even at the expense of the system as a
whole.
A) multitiered supply chain
B) conventional distribution channel
C) intrinsic market matrix
D) resource bank
E) product platform
F)
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
51) Which of the following is true of conventional distribution channels?
A) Channel members have complete control over each other.
B) Channel members seek to maximize their own profits.
C) Channel conflict is governed by formal mechanisms.
D) Channel members are assigned roles according to a clearly defined framework.
E) Channel members work exclusively for the good of the organization.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
52) A(n)
marketing system consists of producers, wholesalers, and retailers acting as
a unified system.
A) horizontal
B) communal
C) multitiered
D) vertical
E) equilateral
F) Skill:
Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
16
53) Which of the following is true of vertical marketing systems?
A) Producers, wholesalers, and retailers act as a unified system.
B) Channel members have no control over each other.
C) Channel conflict is governed by informal mechanisms.
D) The system is dominated by the consumer.
E) Channel members work independently with no cooperation from other members.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
54) Which of the following is a major type of vertical marketing system?
A) corporate
B) conventional
C) multilevel
D) intrinsic
E) extrinsic
F) Skill:
Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
55) A
VMS integrates successive stages of production and distribution under single
ownership.
A) contractual
B) contingency
C) corporate
D) conventional
E) communal
F) Skill:
Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
17
56) A
VMS consists of independent firms at different levels of production and
distribution who join together through formal agreements to obtain more economies or sales
impact than each could achieve alone.
A) corporate
B) contingency
C) contractual
D) communal
E) conventional
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
57) The
organization is the most common type of contractual relationship.
A) franchise
B) horizontal
C) conventional
D) multi-national
E) entrepreneurial
F)
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
58) Ford and its network of independent franchised dealers is an example of a
.
A) manufacturer-sponsored retailer franchise system
B) manufacturer-sponsored wholesaler franchise system
C) service-firm-sponsored retailer franchise system
D) service-firm-sponsored equity strategic alliance
E) manufacturer-and-service-sponsored joint venture
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
18
59) Fire Up makes fireproof clothing material and it licenses select stores around the world to
use its material to make finished products with the Fire Up logo. Which of the following types
of franchising is evident here?
A) manufacturer-sponsored retailer franchise system
B) manufacturer-sponsored wholesaler franchise system
C) service-firm-sponsored retailer franchise system
D) service-firm-sponsored equity strategic alliance
E) manufacturer-and-service-sponsored joint venture
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Challenging
60) In a(n)
, leadership is assumed not through common ownership or contractual ties
but through the size and power of one or a few dominant channel members.
A) horizontal marketing system
B) administered VMS
C) corporate VMS
D) contractual VMS
E) conventional VMS
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
61)
VMS is a vertical marketing system that coordinates successive stages of
production and distribution through the size and power of one of the parties.
A) Contingent
B) Aligned
C) Corporate
D) Contractual
E) Administered
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
19
62) In a(n)
, two or more companies at one level join together to follow a new
marketing opportunity.
A) administered vertical marketing system
B) horizontal marketing system
C) corporate vertical marketing system
D) hybrid distribution system
E) conventional marketing system
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
63) Which of the following is most likely a manufacturer-sponsored retailer franchise system?
A) international fast food chains like McDonald's and Pizza Hut
B) Starbucks outlets operating within Target stores
C) Toyota and its network of independent franchised dealers
D) licensed bottlers that bottle and sell soft drinks to retailers
E) hotel chains like the Ritz Carlton and Shangri-La
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
64) When McDonald's offers its products inside of a Walmart store, it is using a(n)
.
A) conventional marketing system
B) corporate VMS
C) contractual VMS
D) administered VMS
E) horizontal marketing system
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
20
65) A(n)
system involves a single firm setting up two or more marketing channels to
reach one or more customer segments.
A) conventional distribution
B) corporate vertical marketing
C) horizontal marketing
D) administered vertical marketing
E) multichannel distribution
F)
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
66) Atlas Imports and Exports sells products directly to consumers via the Atlas Web site, and
through local retailers as well. Which of the following is evident here?
A) corporate vertical marketing system
B) horizontal marketing system
C) multichannel distribution system
D) administered vertical marketing system
E) conventional distribution channel
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
67) Movie Giants offers DVD rentals through its Web site. It also offers DVD rentals via Star
City stores. This is an example of a(n)
distribution system.
A) conventional
B) inclusive
C) intensive
D) extensive
E) multichannel
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
21
68) Which of the following is an advantage of adding new channels in a multichannel
distribution system?
A) limiting market complexity
B) reducing control over the system
C) expanding sales and market coverage
D) decreasing marketing needs and costs
E) minimizing mass customization of products
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
69) Which of the following is a disadvantage of adding new channels in a multichannel
distribution system?
A) decreasing complexity of markets
B) decreasing control over the system
C) reducing opportunities for franchising
D) lowering sales and market coverage
E) minimizing publicity needs
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
70)
occurs when product or service producers cut out intermediaries and go directly
to final buyers or when radically new types of channel intermediaries displace traditional ones.
A) Extensive distribution
B) Multichannelization
C) Disintermediation
D) Inclusive distribution
E) Cross merchandising
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
22
71) The Bookworm began delivering books directly to customers through mail instead of
selling through brick-and-mortar companies. This is an example of
.
A) indirect marketing
B) disintermediation
C) franchising
D) exclusive distribution
E) intensive distribution
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
72) Which of the following is true of changes in the organization of distribution channels?
A) Developing new channels seldom causes conflict with a company's established channels.
B) To remain competitive, product and service producers must use fewer marketing channels.
C) The growth of the Internet threatens many brick-and-mortar companies with
disintermediation.
D) Companies have fewer channel options today than they did in the past due to economic
problems.
E) Advances in technology have decreased the number of channels available to entrepreneurial
firms.
AACSB: Information technology
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
73) A marketing channel works most effectively when each channel member performs the tasks
it does best.
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
74) Horizontal conflicts are conflicts between different levels of the same channel.
75)
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
23
76) Vertical conflict occurs among firms at the same level of the channel.
77)
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
78) A conventional distribution channel consists of one or more independent producers,
wholesalers, and retailers; each seeking to maximize its own profits, perhaps even at the
expense of the system as a whole.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
79) A non-corporate VMS integrates successive stages of production and distribution under
single ownership.
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
80) In a vertical marketing system, two or more companies at one level join together to take
advantage of a new marketing opportunity.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
81) Disintermediation occurs when radically new types of channel intermediaries displace
traditional ones.
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
24
82) What is horizontal conflict? Illustrate your answer with an example.
Answer: Horizontal conflict is conflict that occurs among firms at the same level of the
channel. For example, Chevrolet would experience horizontal conflict if two of its dealers in
the same area complain that each is being undercut by the other. Student answers will vary.
AACSB: Application of knowledge
Skill: Application
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
83) What is vertical conflict? Illustrate your answer with an example.
Answer: Vertical conflict occurs between different levels of the same channel; an example
would be conflict created between a manufacturer and its dealers when it decides to open an
online e-commerce Web site for the same product. Student answers will vary.
AACSB: Application of knowledge
Skill: Application
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
84) What is a conventional distribution channel?
conventional distribution channel consists of one or more independent producers,
wholesalers, and retailers. Each is a separate business seeking to maximize its own profits,
perhaps even at the expense of the system as a whole.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
85) Explain power in a vertical marketing system.
vertical marketing system (VMS) consists of producers, wholesalers, and retailers acting as a
unified system. One channel member owns the others, has contracts with them, or wields so
much power that they must all cooperate.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
25
86) How can a firm benefit from involvement in a contractual VMS?
contractual VMS consists of independent firms at different levels of production anddistribution
that join together through contracts to obtain more economies or sales impact than each could
achieve alone.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
87) How can a firm benefit from participating in a horizontal marketing system?
Answer: Two or more companies at one level join together to follow a new marketing
opportunity; by working together, companies can combine their financial, production, or
marketing resources to accomplish more than any one company could alone.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Easy
88) Give an example of a multichannel distribution system.
Answer: John Deere sells its familiar green and yellow lawn and garden tractors, mowers, and
outdoor power products to consumers and commercial users through several channels,
including John Deere retailers, Lowe's home improvement stores, and online. Student answers
will vary.
AACSB: Application of knowledge
Skill: Application
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
89) Compare a conventional distribution channel with a vertical marketing system (VMS).
90) conventional distribution channel consists of one or more independent producers,
wholesalers, and retailers. Each is a separate business seeking to maximize its own profits, even
at the expense of the system as a whole. No channel member has much control over the other
members, and no formal means exists for assigning roles and resolving channel conflict. On the
other hand, a vertical marketing system is a unified system made up of producers, wholesalers,
and retailers. While members of a conventional distribution channel seek to maximize their
own profits, members of a vertical marketing system all cooperate because either one member
owns the others, one has contracts with the others, or one wields more power than the others.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
26
91) What are the advantages of multichannel distribution systems?
Answer: Multichannel distribution systems exist when a single firm sets up two or more
marketing channels to reach one or more customer segments. Such a system offers advantages
to firms facing large and complex markets. It allows the firms to expand sales and market
coverage. It allows firms to tailor their products and services to the specific needs of diverse
customer segments. Larger bottom-line profits may result.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
92) How have changes in technology and the growth of online marketing affected the design of
marketing channels?
hanges in technology and the growth of online marketing have increased disintermediation,
which is the cutting out of marketing channel intermediaries by product or service producers,
or the displacement of traditional intermediaries with radically new types. Inmany industries,
traditional intermediaries are dropping by the wayside. For example, many airlines now sell
directly to final buyers, cutting retailers and sales agents from their marketing channels. Online
marketers take business from traditional brick-and-mortar retailers.
AACSB: Information technology
Skill: Concept
Objective: LO 12.2: Discuss how channel members interact and how they organize to perform
the work of the channel.
Difficulty: Moderate
93) Which of the following should be a manufacturer's first step when designing an effective
marketing channel?
A) set channel objectives
B) analyze consumer needs
C) identify channel alternatives
D) evaluate channel alternatives
E) establish strategic alliances
F)
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Moderate
27
94) Which of the following is NOT a step in designing an effective marketing channel?
A) evaluating the channel alternatives
B) identifying major channel alternatives
C) analyzing consumer needs
D) determining pricing policy for channel members
E) setting channel objectives
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Moderate
95) In designing the marketing channel, a company must balance customer needs and wants
with
.
A) the need to make a profit
B) the requirement to find channel members to fill all the steps
C) the firm's position in the customers' minds
D) the desire to be "the best" in all service areas
E) the firm's resources and skills to provide all the desired services
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Challenging
96) The company's channel objectives are influenced by all of the following EXCEPT
.
A) the company's marketing intermediaries
B) the company's competitors
C) the age of the company
D) the nature of the company
E) the company's products
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Moderate
28
97) Which of the following is an environmental factor that affects channel objectives and
design?
A) economic conditions
B) factory staffing
C) organizational objectives
D) interpersonal influences
E) individual motives
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Challenging
98)
distribution is a strategy in which producers of convenience products and
common raw materials stock their products in as many outlets as possible.
A) Direct
B) Intensive
C) Inclusive
D) Exclusive
E) Selective
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Easy
99) For which of the following products would the intensive distribution strategy most likely be
used?
A) high-end cameras
B) luxury cars
C) lawn mowers
D) soft drinks
E) furniture
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Moderate
29
100)
Whitelight sells its toothpastes in many convenience stores across the
country. This is anexample of
distribution.
A) exclusive
B) selective
C) hybrid
D) intensive
E) normal
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Moderate
101) With which of the following strategies would a company give only a limited number
ofdealers the right to distribute its products in their territories?
A) exclusive distribution
B) extensive distribution
C) moderate distribution
D) primary distribution
E) intensive distribution
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Easy
102) For which product would a company use an exclusive distribution strategy?
A) luxury cars
B) newspapers
C) chewing gum
D) dairy products
E) soft drinks
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Moderate
30
103) Ocean Spray sells its air fresheners only through Ray's Drugs. This is an example of
distribution.
A) exclusive
B) selective
C) intensive
D) indirect
E) corporate
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Easy
104)
distribution involves the use of more than one but fewer than
all of theintermediaries who are willing to carry a company's products.
A) Exclusive
B) Selective
C) Intensive
D) Indirect
E) Corporate
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Easy
105) Craftsman Furniture Company offers its bedroom and living room furniture through
independent and smaller chain furniture stores, not through every store that sells furniture. It
uses
distribution.
A) intensive
B) direct
C) corporate
D) selective
E) exclusive
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Easy
31
106) Which of the following is true of the exclusive distribution strategy?
A) It makes products available to everybody, everywhere.
B) It is used primarily for convenience items.
C) It helps promote a brand's luxury image.
D) It gives producers no control over their products.
E) It enlists all of the intermediaries willing to carry a company's products.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Moderate
107) When the seller allows only certain outlets to carry its products, this strategy is called
.
A) exclusive distribution
B) subjective dealing
C) selective distribution
D) exclusive pricing
E) disintermediation
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Easy
Refer to the scenario below to answer the following question(s).
Giant Beanstalks is a company based in Maryland that processes and cans vegetables. It has
contracts with several large farms in Riverdale, 80 miles away from the factory, that agree to
sell their produce to Giant Beanstalks. The company's products are available to the public only
through Greenleaf, a grocery chain with 38 stores in the country.
108) What distribution strategy does Giant Beanstalks use?
A) inclusive distribution
B) exclusive distribution
C) selective distribution
D) intensive distribution
E) extensive distribution
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Moderate
32
109) Which of the following is NOT a criterion a company will use to evaluate the major
channel alternatives?
A) adaptability
B) control
C) commitment
D) sales and costs
E) likability
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Moderate
110) Why do firms have difficulty accessing potential market areas in developing countries,
such as China and India?
A) inadequate distribution systems
B) anti-globalization efforts
C) highly centralized rural markets
D) limited manpower
E) high operating costs
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Easy
111) Multichannel marketing occurs when a single firm sets up two or more marketing
channels to reach one or more customer segments.
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Easy
112) Marketing channel design calls for analyzing consumer needs, setting channel objectives,
identifying major channel alternatives, and evaluating those alternatives.
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Easy
113) Producers of convenience products and common raw materials typically seek exclusive
distribution, a strategy in which they stock their products in as many outlets as possible.
114)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Easy
33
115) Under the strategy of intensive distribution, the producer gives only a limited number of
dealers the exclusive right to distribute its products in their territories.
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Easy
116) The producer informs each channel member what its responsibilities are, and what the
terms of business are.
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Easy
117) Describe the types of products that are intensively distributed and provide examples.
118) onvenience products and common raw materials must be available where and when
consumers want them; examples include chewing gum, soft drinks, and toothpaste. Student
examples will vary.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Easy
119) Describe the types of products that are exclusively distributed and provide examples.
120) xclusive distribution is often used for luxury brands, such as expensive automobilesand
prestige clothing. Student answers will vary.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Easy
121) Describe the types of products that are selectively distributed and provide examples.
Answer: In selective distribution, more than one, but fewer than all, of the intermediaries who
are willing to carry a company's products are used. Products include appliances and some
branded clothing. Student answers will vary.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Easy
34
122) Compare the three distribution strategies that producers use, providing examples of
products for each type of distribution.
Answer: Student answers will vary. Producers of convenience products and common raw
materials typically seek intensive distribution as a strategy to stock their products in as many
outlets as possible. The goods are available where and when consumers want them. Toothpaste,
detergents, and soft drinks are examples of this kind of distribution.
Selective distribution is used when selling to more than one but fewer than all of the
intermediaries who are willing to carry a company's products in a given market. Examples are
name-brand blue jeans and computers.
Exclusive distribution is used when the producer wants to stock its products with only one or a
few dealers in an area. Examples are expensive cars.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 12.3: Identify the major channel alternatives open to a company.
Difficulty: Moderate
123)
management calls for selecting, managing, and motivating individual channel
members and evaluating their performance over time.
A) Inventory
B) Marketing channel
C) Brand image
D) Customer experience
E) Brand content
Answer: B
Skill: Concept
Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members.
Difficulty: Easy
124) To help recruit, train, organize, manage, motivate, and evaluate relationships with channel
partners, companies are now installing integrated high-tech
systems.
A) advertiser funded programming
B) customer segmentation network
C) brand content management
D) partnership relationship management
E) closed loop marketing
F)
Skill: Concept
Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members.
Difficulty: Easy
35
125) Producers motivate channel members using all of the following EXCEPT
.
A) using strict rules to force compliance with contract terms
B) partner relationship management
C) working to sell through the intermediaries
D) persuading the intermediaries that they are first-line customers
E) convincing channel members that each will enjoy greater success working together with a
common goal
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members.
Difficulty: Moderate
126) When a seller requires its dealers to abstain from handling competitors' products, it is
called
.
A) subjective distribution
B) exclusive dealing
C) selective distribution
D) exclusive pricing
E) disintermediation
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members.
Difficulty: Easy
127) A strategy of exclusive dealing is most likely considered legal if
.
A) the industry is newly developed
B) both parties have large territories
C) competition is not substantially lessened
D) the dealer agrees to promote the competitor's products
E) the dealer receives a steady source of supply and support
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members.
Difficulty: Moderate
36
128) Which of the following involves the producer agreeing not to sell to other dealers in a
given area, or the buyer agreeing to sell only in its own region?
A) closed loop marketing
B) uniform-delivery pricing
C) exclusive territorial agreement
D) cross merchandising
E) nationalized marketing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members.
Difficulty: Easy
129) Producers of strong brands sometimes sell to dealers only on the condition that dealers
take some or all of the rest of a product line. This practice is known as
.
A) product line franchising
B) selective dealing
C) cross merchandising
D) full-line forcing
E) disintermediation
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members.
Difficulty: Easy
130) Marketing channel management calls for selecting, managing, and motivating individual
channel members and evaluating their performance over time.
Skill: Concept
Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members.
Difficulty: Easy
131) As a part of intensive distribution, dealers are expected to refrain from selling the products
of the producers' competitors.
Skill: Concept
Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members.
Difficulty: Easy
132) When a producer uses exclusive dealing and the use of exclusive territorial agreements to
keep a dealer from selling outside its territory, it is completely legal.
Skill: Concept
Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members.
Difficulty: Easy
133) What factors should a firm consider when selecting intermediaries?
37
company may want to evaluate each intermediary's years in business, other linescarried,
growth and profit records, cooperativeness, and reputation.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members.
Difficulty: Easy
134) When would an exclusive dealing contract be legally problematic?
n exclusive dealing contract may become a legal issue if one party has not voluntarily
agreed to the contract or if the arrangement substantially lessens competition ortends to
create a monopoly.
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members.
Difficulty: Easy
135) Explain how companies select, motivate, and evaluate intermediaries or channel members.
Answer: When selecting intermediaries, the company should evaluate each channel member's
qualifications and select those who best fit its channel objectives. The company should use
economic criteria, control issues, and adaptive criteria to analyze each possible channel
member. Once selected, channel members must be continuously motivated to do their best. The
company must sell not only through the intermediaries but also to and with them. It should
work to forge long-term partnerships with channel partners to create a marketing system that
meets the needs of both the manufacturer and the partners. The company must also regularly
check channel member performance against established performance standards, rewarding
intermediaries who are performing well and assisting or replacing weaker ones.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members.
Difficulty: Moderate
136) Evaluate how public policy affects distribution decisions.
Answer: For the most part, companies are legally free to develop whatever channel
arrangement suits them, as long as they do not substantially lessen competition or tend to create
a monopoly, and as long as both parties enter into the agreement voluntarily. Exclusive
territorial agreements in which a producer attempts to keep a dealer from selling outside of a
designated territory have become a major legal issue. Producers are free to select their dealers,
but they must have legitimate cause to terminate a relationship with a dealer.
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 12.4: Explain how companies select, motivate, and evaluate channel members.
Difficulty: Moderate
38
137) Smart Shoppers, an online store that delivers its products to homes in and around
California, recently switched its entire fleet to biodiesel trucks that run on used cooking oil
rather than gas. Smart Shoppers has most likely developed a(n)
.
A) vertical marketing channel
B) green supply chain
C) multitiered marketing channel
D) intermodal transportation system
E) hybrid distribution system
F)
AACSB: Ethical understanding and reasoning
Skill: Application
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Moderate
138)
involves planning, implementing, and controlling the physical flow of goods,
services, and related information from points of origin to points of consumption to meet
customer requirements at a profit.
A) Advertising
B) Product positioning
C) Mass customization
D) Marketing logistics
E) Branding
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
139) Marketing logistics includes all of the following EXCEPT
.
A) reverse logistics
B) inbound logistics
C) outbound logistics
D) customer-centered logistics
E) producer-centered logistics
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
39
140)
logistics starts with the marketplace and works backward to the factory or even
to sources of supply.
A) Outbound
B) Customer-centered
C) Upstream
D) Reverse
E) Inbound
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
141)
logistics involves moving products from the factory to resellers and ultimately
to customers.
A) Customer-centered
B) Reverse
C) Upstream
D) Outbound
E) Inbound
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
142)
logistics refers to moving products and materials from the suppliers to the
factory.
A) Outbound
B) Diverse
C) Inbound
D) Reverse
E) Customer-centered
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
40
143) Reusing, recycling, refurbishing, or disposing of broken, unwanted, or excess products
returned by consumers or resellers is known as
.
A) cross merchandising
B) reverse logistics
C) disintermediation
D) diverse logistics
E) inbound logistics
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
144)
management refers to the management of upstream and downstream valueadded flows of materials, final goods, and related information among suppliers, the company,
resellers, and final consumers.
A) Cross
B) Price
C) Supply chain
D) Product cycle
E) Customer
F) Skill:
Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
145) Which of the following is NOT a major logistics function?
A) inventory management
B) product designing
C) warehousing
D) transportation
E) packaging
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
41
146) Logistics has grown in importance for all of the following reasons EXCEPT that
.
A) companies that become channel members want to continue to grow and expand.
B) companies can gain a powerful competitive advantage by using improved logistics to give
customers better service or lower prices.
C) improved logistics can yield tremendous cost savings to both a company and its customers.
D) more than almost any other marketing function, logistics affects the environment and a
firm's environmental sustainability efforts.
E) the explosion in product variety has created a need for improved logistics management.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Moderate
147) Major logistics functions are logistics information management, inventory management,
transportation, and
.
A) advertising
B) product design
C) financial projections
D) warehousing
E) customer sales
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
148)
are large and highly automated warehouses designed to receive goods from
various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as
quickly as possible.
A) Loading docks
B) Open warehouses
C) Distribution centers
D) Shipping platforms
E) Product platforms
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
42
149)
or smart tag technology helps companies locate a product's exact position
within its supply chain.
A) RFID
B) PRM
C) VMS
D) BCODE
E) 3PL
F)
AACSB: Information technology
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
150) Which of the following is true of using trucks as a transportation mode?
A) Transportation via trucks is costlier than by rail or air.
B) Trucks are a specialized means of shipping petroleum, natural gas, and chemicals from
sources to markets.
C) Trucks provide in-transit services such as the diversion of shipped goods to other
destinations en route.
D) Trucks are highly flexible in their routing and time schedules.
E) Trucks are the slowest mode of transportation and most affected by the weather.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Moderate
151) Which of the following is true of transporting goods via railroads?
A) Railroads are ideal for the transportation of digital technology.
B) Railroads are a specialized means of shipping petroleum, natural gas, and chemicals from
sources to markets.
C) Railroads are a cost-effective way to ship large amounts of bulk products over long
distances.
D) Railroads are the most flexible mode of transportation in their routing and time schedules.
E) Railroads are the slowest mode of transportation and are the most affected by the weather.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Moderate
43
152) Which of the following is true of shipping goods via water transportation?
A) Water transportation is an efficient way to ship perishable merchandise over long distances.
B) Water carriers are highly flexible in their routing and time schedules.
C) Water transportation provides in-transit services, such as the processing of goods en route.
D) Water transportation is ideal when time is short and speed is needed.
E) Water transportation is the slowest mode of transportation and the most affected by the
weather.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Moderate
153)
are a specialized means of shipping petroleum, natural gas, and chemicals from
sources to markets.
A) Air tunnels
B) Rail flatcars
C) Steam ships
D) Pipelines
E) Airlines
F) Skill:
Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
154) Which of the following is true about using air carriers as a transportation mode when
shipping products?
A) Air carriers are the most cost-effective way to ship non-perishable goods over short
distances.
B) Air carriers are the slowest and least reliable modes of transport.
C) Air carriers provide in-transit services such as the processing of goods en route.
D) Air carriers are ideal when time is short and speed is needed.
E) Air carriers are a specialized means of shipping chemicals from sources to markets.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Moderate
44
155) In intermodal transportation, which of the following describes the use of both rail and
trucks for transportation?
A) fishyback
B) drawbar
C) trainship
D) piggyback
E) airtruck
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
156) In intermodal transportation, which of the following describes the use of both water and
trucks for transportation?
A) fishyback
B) drawbar
C) trainship
D) piggyback
E) airtruck
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
157) Which of the following is the most effective way for a company to ship bulky, nonperishable products if its key requirement is low price?
A) pipelines
B) air transport
C) trucks
D) water carriers
E) piggyback
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
45
158) Heart of Midnight sells blue orchids to major florists around the world. Their key
requirement is speed. Which of the following modes of transport will help them?
A) rail transport
B) air carriers
C) trucks
D) piggybacks
E) water transport
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Moderate
159) Using
, retailers can share real-time data on sales and current inventory levels
with suppliers.
A) automated storage and retrieval systems (ASRS)
B) vendor-managed inventory (VMI) systems
C) transportation management systems (TMS)
D) warehouse management systems (WMS)
E) distribution center management systems (DCMS)
F)
AACSB: Information technology
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
160)
management is the logistics concept that emphasizes teamwork—both inside
the company and among all the marketing channel organizations—to maximize the
performance of the entire distribution system.
A) Logistics inventory
B) Integrated logistics
C) Logistics information
D) Independent logistics
E) Group logistics
F)
AACSB: Interpersonal relations and teamwork
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Moderate
46
Refer to the scenario below to answer the following question(s).
Giant Beanstalks is a company based in Maryland that processes and cans vegetables. It has
contracts with several large farms in Riverdale, 80 miles away from the factory, that agree to
sell their produce to Giant Beanstalks. The company's products are available to the public only
through Greenleaf, a grocery chain with 38 stores in the country.
161) Roland is the logistics manager of Giant Beanstalks. Which of the following is NOT an
area of responsibility for him?
A) the transportation of the canned vegetables to Greenleaf
B) the storage of the unprocessed vegetables
C) the advertising of the final product
D) product inventory management
E) the packaging of the final product
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
162) Which of the following modes of transport should Roland choose to transport the
unprocessed vegetables from Riverdale's farms to the Giant Beanstalks' factory quickly and
with minimum cost?
A) air carrier
B) pipeline
C) truck
D) oil tanks
E) air tunnels
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
47
Refer to the scenario below to answer the following question(s).
Kimberly's Crown sells and designs jewelry. Despite the jewelry's popularity, products are
available only through a few shopping stores across the country.
163) What distribution strategy does Kimberly's Crown use?
A) exclusive
B) intensive
C) selective
D) inclusive
E) extensive
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
164) When one of the stores complains that the jewelry they're being given is inferior to the
jewelry Kimberly sells to other stores, Kimberly experiences
conflict.
A) horizontal
B) multitiered
C) vertical
D) intensive
E) subjective
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Moderate
165) Kimberly decides to alter its distribution strategy so that its jewelry is accessible to
thepublic only through one distributor. The strategy they're considering is known as
distribution.
A) elusive
B) extensive
C) exclusive
D) selective
E) elective
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
166) What mode of transport should Kimberly use to ship its goods over long distances as
48
quickly as possible?
A) flatcars
B) water transport
C) air transport
D) trucks
E) railroads
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
167) Marketing logistics involves planning, implementing, and controlling the physical flow of
goods, services, and related information from points of origin to points of consumption to meet
customer requirements at a profit.
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
168) Reverse logistics refers to the moving of products and materials from suppliers to the
factory.
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
169) Environmental sustainability is an important factor in supplier selection and performance
evaluation, as designing sustainable supply chains has become the right thing to do.
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
170) In contrast to distribution centers, storage warehouses are designed to move goods rather
than just house them.
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
171) Air carriers transport digital products from producer to customer via satellite, cable, phone
wire, or wireless signal.
49
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
172) Intermodal transportation refers to the combination of two or more modes of
transportation.
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
173) Electronic data interchange is the digital exchange of data between organizations, which
primarily is transmitted via the Internet.
AACSB: Information technology
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
174) How can a company benefit through a just-in-time logistics system?
Answer: With just-in-time logistics systems, producers and retailers carry only small
inventories of parts or merchandise, often only enough for a few days of operations. This
creates substantial savings in inventory carrying and handling costs.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
175) What does the concept of integrated logistics management advocate?
Answer: This concept recognizes that providing better customer service and trimming
distribution costs require teamwork, both inside the company and among all the marketing
channel organizations. Inside, the company's various departments must work closely together to
maximize its own logistics performance. Outside, the company must integrate its logistics
system with those of its suppliers and customers to maximize the performance of the entire
distribution network.
AACSB: Interpersonal relations and teamwork
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Easy
176) Why are companies increasingly turning to third-party logistics providers (3PLs)?
50
177) third-party logistics provider is an independent company that performs any or all of
51
the functions required to get a producer's product to market, helping clients to tighten up
sluggish, overstuffed supply chains, slash inventories, and get products to customers more
quickly and reliably. Companies use third-party logistics providers because getting the product
to market is the main focus of 3PLs, so they can often do it more efficiently and at a lower cost.
Second, outsourcing logistics frees a company to focus more intensely on its core business.
Finally, integrated logistics companies understand increasingly complex logistics environments.
For example, third-party logistics partners can be especially helpful to companies attempting to
expand their global market coverage.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 12.5: Discuss the nature and importance of marketing logistics and integrated
supply chain management.
Difficulty: Moderate
52
Principles of Marketing, 17e (Kotler/Armstrong)
Chapter 13 Retailing and Wholesaling
1)
includes all the activities involved in selling products or services directly to final
consumers for their personal, nonbusiness use.
A) Franchising
B) Retailing
C) Brokering
D) Wholesaling
E) Disintermediation
F)
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
2) Many institutions, including retailers, wholesalers, and
do retailing.
A) schools
B) government agencies
C) factory farmers
D) manufacturers
E) defense contractors
F)
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
3) Retailers connect brands with consumers in the
phases of the buying process.
A) need identification
B) evaluation of alternatives
C) final
D) information gathering
E) post-purchase
F) Skill:
Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
1
4)
involves using in-store promotions and advertising to extend brand equity to "the
last mile" and encourage favorable point-of-purchase decisions.
A) Differentiation
B) Shopper marketing
C) Social media marketing
D) Retailer marketing
E) Segmentation
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
5)
creates a seamless cross-channel buying experience that integrates in-store, online,
and mobile shopping.
A) Shopper marketing
B) Point-of-purchase marketing
C) Social media marketing
D) Virtual marketing
E) Omni-channel retailing
F)
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
6) Retailers are classified on characteristics including the amount of service they offer, the
breadth and depth of their product lines, how they are organized, and
.
A) the relative prices they charge
B) the number of locations they have
C) the strength of their Internet presence
D) their sustainability and environmental policies
E) the stability of their financial situation
F)
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
2
7) At Neiman Marcus, a first-class department store, customers shop for high-end products and
they are assisted in every phase of the shopping process. Neiman Marcus is a
.
A) full-service retailer
B) limited-service retailer
C) self-service retailer
D) specialty store
E) superstore
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
8)
is a type of service offered by those retailers who serve customers that are willing
to perform their own "locate-compare-select" process in order to save money.
A) Limited-service
B) Self-service
C) Full-service
D) Specialty-service
E) Wholesaling
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
9)
are retailers that offer sales assistance because they carry more shopping goods
about which customers might need information.
A) Self-service retailers
B) Full-service retailers
C) Off-price retailers
D) Limited-service retailers
E) Specialty-service retailers
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
3
10) Which type of retailer usually carries more specialty goods at high prices and is more likely
to provide customers with assistance in every phase of the shopping process?
A) self-service retailer
B) limited-service retailer
C) full-service retailer
D) independent retailer
E) off-price retailer
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
11) At JCPenney, a mid-level department store, customers shop for moderately priced products
and they are assisted in some phases of the shopping process. JCPenney is a
.
A) full-service retailer
B) limited-service retailer
C) self-service retailer
D) specialty store
E) superstore
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
12) Which type of retailer is most likely to require its employees to focus most on assisting
customers as they shop?
A) self-service retailer
B) full-service retailer
C) off-price retailer
D) limited-service retailer
E) convenience retailer
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
4
13) Today,
are flourishing due to the increased use of market segmentation and
market targeting.
A) chain stores
B) specialty stores
C) superstores
D) discount stores
E) off-price stores
F)
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
14) Specialty stores carry
with
within them.
A) only convenience products; shallow assortments
B) narrow product lines; deep assortments
C) narrow product lines; shallow assortments
D) wide product lines; shallow assortments
E) wide product lines; deep assortments
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
15) Which type of store carries a wide variety of product lines and has been squeezed in recent
years between more focused and flexible specialty stores on the one hand and more efficient,
lower-priced discounters on the other?
A) warehouse clubs
B) department store
C) factory outlet
D) merchant wholesaler
E) category specialist
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
5
16)
are facing slow sales growth because of slower population growth, increased
competition, and the rapid growth of out-of-home eating.
A) Warehouse clubs
B) Off-price retailers
C) Discount stores
D) Supermarkets
E) Factory outlets
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
17) Which of the following is the most frequently visited type of retail store?
A) convenience store
B) department store
C) supermarket
D) superstore
E) off-price retailer
F)
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
18) A
is a small store, located near a residential area that is open long hours seven
days a week and carries a limited line of high-turnover goods.
A) convenience store
B) chain store
C) department store
D) supermarket
E) specialty store
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
6
19) Which type of store is much larger than regular supermarkets and offers a large assortment
of routinely purchased food products, nonfood items, and services?
A) off-price retailer
B) specialty store
C) factory outlet
D) superstore
E) convenience store
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
20) Which type of store carries a deep assortment of a particular product line, has
knowledgeable staff, and can be viewed as a giant specialty store?
A) category killer
B) convenience store
C) factory outlet
D) warehouse club
E) off-price retailer
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
21) Home Depot and PetSmart are examples of
.
A) factory outlets
B) warehouse clubs
C) superstores
D) off-price retailers
E) category killers
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
7
22) Which of the following would be considered a service retailer?
A) factory outlets
B) supermarkets
C) jewelry stores
D) restaurants
E) gas stations
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
23)
retailers in the United States are growing faster than product retailers.
A) Discount
B) Merchant
C) Service
D) Specialty
E) Off-price
F) Skill:
Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
24)
sell standard merchandise at lower prices by accepting lower margins and selling
higher volume.
A) Merchant wholesalers
B) Discount stores
C) Full-service retailers
D) Limited-service retailers
E) Factory outlets
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
8
25) The early
cut expenses by offering few services and operating in warehouse-like
facilities in low-rent, heavily traveled districts.
A) department stores
B) hypermarkets
C) discount stores
D) supermarkets
E) full-service retailers
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
26) As discount stores traded up,
have filled the ultra low-price, high-volume gap by
buying at less-than-regular wholesale prices and charging consumers less than retail.
A) off-price retailers
B) specialty stores
C) convenience stores
D) chain stores
E) supercenters
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
27) Which of the following is NOT a type of off-price retailer?
A) independent
B) factory outlet
C) warehouse club
D) category killer
E) wholesale club
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
9
28)
are manufacturer-owned and operated stores that offer prices as low as 50
percent below retail on a wide range of mostly surplus, discounted, or irregular items.
A) Category killers
B) Factory outlets
C) Specialty stores
D) Superstores
E) Power centers
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
29) Which of the following is an off-price retailer that operates in a huge, warehouse-like
facility and offers few frills?
A) warehouse club
B) service retailer
C) convenience store
D) hypermarket
E) superstore
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
30)
are two or more outlets that are commonly owned and controlled.
A) Corporate chains
B) Convenience stores
C) Off-price retailers
D) Independent off-price retailers
E) Power centers
F) Skill:
Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
10
31) As a result of the great success of corporate chains, many independent stores choose to
band together in either a voluntary chain or a
.
A) factory outlet
B) retailer cooperative
C) wholesale club
D) warehouse club
E) convenience cooperative
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
32) A
is a wholesaler-sponsored group of independent retailers that engages in group
buying and common merchandising.
A) voluntary chain
B) retailer cooperative
C) franchise
D) wholesale club
E) warehouse club
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
33) McDonald's, Subway, and Jiffy Lube are all examples of
.
A) voluntary chains
B) retailer cooperatives
C) franchises
D) category killers
E) power centers
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
11
34) Which of the following kind of organization best represents a contractual association based
on some unique product or service, a method of doing business, or a trade name or goodwill?
A) corporate chain
B) franchise
C) voluntary chain
D) retailer cooperative
E) warehouse club
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Challenging
35) Sears, Target, and Kroger are examples of
.
A) voluntary chains
B) retailer cooperatives
C) corporate chains
D) franchise organizations
E) warehouse clubs
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
36) Independent Grocers Alliance, Do-It Best, and Western Auto are examples of
.
A) franchise organizations
B) warehouse clubs
C) voluntary chains
D) category killers
E) wholesale clubs
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
12
37) GameStop sells only video games and systems, offering a narrow product line with a deep
assortment within that line. GameStop is a(n)
.
A) department store
B) convenience store
C) category killer
D) specialty store
E) off-price retailer
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
38) Stop-N-Go , 7-Eleven, and Circle K are examples of
.
A) department stores
B) convenience stores
C) category killers
D) specialty stores
E) supermarkets
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
39) Which of the following terms best describes a large, low-cost, low-margin, high-volume,
self-service store that carries a wide variety of grocery and household products?
A) convenience store
B) supermarket
C) specialty store
D) warehouse club
E) factory outlet
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
13
40) Overstock.com, a Web seller that buys furniture, clothing, electronics, and more from a
variety of producers at less-than-regular wholesale prices and then charges customers less than
retail, is a(n)
.
A) specialty store
B) off-price retailer
C) factory outlet
D) wholesale club
E) category killer
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
14
Refer to the scenario below to answer the following question(s).
In the 1970s, Shipshewana was only a small town with a hardware store, a grain mill, a shoe
store, a small restaurant, and a grocery store. Over the next two decades, the small town
transformed into an international tourist attraction, attracting thousands of tourists who were
intrigued by the lifestyle of Shipshewana's largest population—the Amish.
Ben and Mary Miller, having grown up within the Amish faith, decided to capitalize on their
town's popularity and their woodworking skills. Their shop, Indiana Wood, began with a small
display of handmade hickory rocking chairs, Ben Miller's specialty. But within a few months,
the display at Indiana Wood included picnic tables, flower boxes, and small handmade novelty
items. No other shop offers the same variety.
Mary Miller decorated the shop's display room with authentic Amish décor and eventually
hired three Amish friends to sew and embroider napkins and other textiles as customers had
requested such items. In addition, two women from the Amish community sought permission
from the Millers to display home-baked pastries and jellies on Tuesdays and Wednesdays, when
Shipshewana attracts swarms of visitors to its flea market on the south edge of town. The
Millers also hired four more people to help customers throughout the purchasing process and to
provide the required product-related information to the customers.
"Shipshewana is full of specialty shops," Mary Miller stated. "People don't come here to buy
things made in China or Taiwan. They want real, Amish-made goods."
41) Indiana Wood can be best classified as a(n)
.
A) full-service retailer
B) industrial distributor
C) self-service retailer
D) warehouse club
E) limited-service retailer
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
15
42) Retailers can also be classified by the length and breadth of their product assortments. In
terms of product line, what kind of retailer is Indiana Wood?
A) supermarket
B) specialty store
C) category killer
D) department store
E) convenience store
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
43) Wholesaling includes all the activities involved in selling products or services directly to
final consumers for their personal, nonbusiness use.
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
44) Shopper marketing involves focusing the entire marketing process—from product and
brand development to logistics, promotion, and merchandisings—toward turning shoppers into
buyers at the point of sale.
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
45) Department stores carry narrow product lines with deep assortments within those lines.
46)
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
47) Self-service retailers serve customers who are willing to perform their own locate-compareselect process to save time or money.
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
16
48) Full-service stores usually carry more specialty goods for which customers need or want
assistance or advice.
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
49) In recent years, convenience stores have redesigned their stores to closely focus on serving
their primary target market made up of young, blue-collar men.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
50) Superstores are much larger than regular supermarkets and offer a large assortment of
routinely purchased food products, nonfood items, and services.
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
51) Supermarkets sell a limited selection of goods at deep discounts to consumers who pay
membership fees.
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
52) Supermarkets are located near residential areas and are open long hours, seven days a week.
They carry a limited line of high-turnover goods.
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
17
53) Category killers are giant specialty stores that carry a very deep assortment of a particular
line.
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
54) Off-price retailers pay regular wholesale prices for their merchandise but maintain low
prices by accepting lower margins and selling higher volume.
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
55) A discount store buys at less-than-regular wholesale prices and charges consumers less than
retail.
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
56) Independent off-price retailers either are independently owned and run or are divisions of
larger retail corporations.
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
57) Corporate chains are two or more outlets that are commonly owned and controlled.
58)
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
59) A voluntary chain is a wholesaler-sponsored group of independent retailers that engages in
group buying and common merchandising.
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
60) In a retailer cooperative, independent retailers band together to set up a jointly owned,
18
central wholesale operation and conduct joint merchandising and promotion efforts.
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
61) Franchises constitute only a small portion of all retail sales in the United States.
62)
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
63) Retail stores can be classified in terms of several characteristics. Name four of them.
Answer: Retail stores can be classified based on the amount of service they offer, the breadth
and depth of their product lines, the relative prices they charge, and how they are organized.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
64) Compare and contrast specialty stores and convenience stores.
Answer: Specialty stores carry narrow product lines with deep assortments within those lines.
Convenience stores are small stores that carry a limited line of high-turnover convenience
goods. The majority of their revenues come from sales of gasoline, cigarettes, and beverages.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
65) Describe the differences between discount stores and off-price retailers.
discount store buys at regular wholesale prices but sells standard merchandise at lower
prices by accepting lower margins and selling higher volume. Off-price retailers buy atlessthan-regular wholesale prices and charge consumers less than retail.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
19
66) What types of products do specialty stores carry? Give an example of a specialty store.
Answer: Student answers will vary. Specialty stores carry narrow product lines with deep
assortments within those lines. Today, specialty stores are flourishing. The increasing use of
market segmentation, market targeting, and product specialization has resulted in a greater need
for stores that focus on specific products and segments. Some examples of specialty stores are
Tiffany and REI.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
67) How have department stores responded to increased competition by specialty stores and
lower-priced discounters?
Answer: Many department stores have added promotional pricing to meet the threat; in
addition, they have stepped up the use of store brands and single-brand "designer shops" to
compete with specialty stores. Department stores are also trying mail order, telephone, and Web
selling.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
68) What is a category killer? Provide an example and a description of a category killer.
Answer: Student answers will vary. A category killer is a giant specialty store that carries a
very deep assortment of a particular line. They feature stores the size of airplane hangars that
carry a very deep assortment of a particular line. Category killers are found in a wide range of
categories, including electronics, home-improvement products, books, baby gear, toys, linens
and towels, party goods, sporting goods, and even pet supplies.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
69) How can discount stores sell merchandise at lower prices?
iscount stores sell merchandise at lower prices by accepting lower margins andselling higher
volumes.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
20
70) What are the different types of off-price retailers?
Answer: The three main types of off-price retailers are independents, factory outlets, and
warehouse clubs. Independent off-price retailers either are independently owned and run or are
divisions of larger retail corporations. A factory outlet is an off-price retailing operation that is
owned and operated by a manufacturer and normally carries the manufacturer's surplus,
discontinued, or irregular goods. A warehouse club is an off-price retailer that sells a limited
selection of brand-name grocery items, appliances, clothing, and other goods at deep discounts
to members who pay annual membership fees.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
71) How does a retailer cooperative function?
retailer cooperative is a group of retailers that come together to set up a jointly owned, central
wholesale operation, and conduct joint merchandising and promotion efforts. Through a
retailer cooperative, independents can match the buying and promotion economiesof corporate
chains.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
72) Describe the levels of service that retailers can offer. Provide an example of each type of
retailer.
Answer: Student answers will vary. Amount of service can include self-service to serve
customers who are willing to perform their own locate-compare-select process to save time and
money. It is the basis of all discount operations and typically used by retailers selling
convenience goods. Examples include supermarkets, Target, and Kohl's. It can also include
limited-service retailers that provide more sales assistance because they carry more shopping
goods about which customers need information. Examples include Sears and JCPenney. The
third type is full-retailers that assist customers in every phase of the shopping process. These
stores usually carry more specialty goods for which customers need or want assistance or
advice. Examples include Nordstrom or Neiman Marcus.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Easy
21
73) Identify and describe the different types of retailers, based on their product lines. Provide
an example of each type of retailer.
Answer: Student answers will vary.
-Specialty stores are stores with narrow product lines and deep assortments within those lines.
Examples include REI, Sephora and Williams-Sonoma.
-Department stores carry a wide variety of product lines, each operated as a separate
department. Examples include Macy's and Neiman Marcus.
-Supermarkets are large, low-cost, self-service stores that carry a wide variety of grocery and
household products. Examples include Safeway and Kroger.
-Convenience stores are small stores, open long hours, that carry a limited line of high-turnover
convenience goods. Examples include 7-Eleven, Stop-N-Go, and Circle K.
-Superstores are much larger than supermarkets and offer a large assortment of routinely
purchased food products, nonfood items, and services. Examples include Walmart and Target.
-Category killers are giant specialty stores that carry a very deep assortment of a specific
product line. Examples include Best Buy, Home Depot, and PetSmart.
-Service retailers are retailers whose product line is actually a service; examples include hotels,
airlines, banks, colleges, and many others. Specific examples include Holiday Inn, Southwest
Airlines, and SuperCuts.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
74) Describe the different types of off-price retailers. Provide examples of each type.
Answer: Student answers will vary.
-A discount store is a retail operation that sells standard merchandise at lower prices by
accepting lower margins and selling at higher volume. Examples include Walmart, Costco,
Dollar General and Target.
-An off-price retailer is a retailer that buys at less-than-regular wholesale prices and sells at less
than retail. Off-price retailers can be found in all areas, from food, clothing, and electronics to
no-frills banking and discount brokerages.
-An independent off-price retailer is an off-price retailer that is independently owned and
operated or a division of a larger retail corporation. Examples include TJ Maxx and Marshalls.
-A factory outlet is an off-price retailing operation that is owned and operated by a
manufacturer and normally carries the manufacturer's surplus, discontinued, or irregular goods.
Examples include J. Crew, Gap, Coach and Mikasa.
-A warehouse club is an off-price retailer that sells a limited selection of brand name grocery
items, appliances, clothing, and other goods at deep discounts to members who pay annual
membership fees. Examples include Costco, Sam's Club, and BJ's.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
22
75) Although many retail stores are independently owned, others band together under some
form of corporate or contractual organization. Describe the four kinds of corporate or
contractual organizations.
Answer:
-Corporate chains are two or more outlets that are commonly owned and controlled. Their size
allows them to buy in large quantities at lower prices and gain promotional economies. They
can hire specialists to deal with areas such as pricing, promotion, merchandising, inventory
control, and sales forecasting. Examples include Macy's, Target, and CVS.
-The voluntary chain is a wholesaler-sponsored group of independent retailers that engages in
group buying and common merchandising. Examples include the Independent Grocers
Alliance, Western Auto, and Do-It Best hardware stores.
-The other type of contractual association is the retailer cooperative, a group of independent
retailers that band together to set up a jointly owned, central wholesale operation and conduct
joint merchandising and promotion efforts. Examples are Associated Grocers and Ace
Hardware. These organizations give independents the buying and promotion economies they
need to meet the prices of corporate chains.
-Another form of contractual retail organization is a franchise. The main difference between
franchise organizations and other contractual systems (voluntary chains and retail cooperatives)
is that franchise systems are normally based on some unique product or service; a method of
doing business; or the trade name, goodwill, or patent that the franchisor has developed.
Franchising has been prominent in fast-food restaurants, motels, health and fitness centers, auto
sales and service dealerships, and real estate agencies. Examples include McDonald's, Subway,
and Jiffy Lube.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
76) Describe the differences between chain stores and franchises.
hain stores consist of two or more outlets that are commonly owned and controlled. Chain
stores have the advantage of buying in larger quantities at lower prices and sharing resources to
hire specialists to help with decisions in pricing, promotion, merchandising, inventory, and
sales forecasting. Franchises are not commonly owned and controlled; instead, afranchise is a
contractual association between a manufacturer, wholesaler, or service organization and an
independent businessperson. The system is normally based on some uniqueproduct or service; a
method of doing business; or a trade name, goodwill, or patent that the franchisor has
developed.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.1: Explain the role of retailers in the distribution channel and describe the
major types of retailers.
Difficulty: Moderate
23
77) In recent years, service differentiation among retailers has
A) increased at a steady rate
B) decreased
C) stayed the same
D) increased exponentially
E) tripled
F) Skill:
Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Easy
.
78) Changes to service differentiation include all of the following EXCEPT
A) smarter customers
B) decreased services at department stores
C) more price-sensitive consumers
D) customers' willingness to pay more for identical brands
E) increased services from discounters
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
.
79) Daizy's is a shop that carries only plus-size clothing. According to this information, Daizy's
differentiates itself from its competitors based on
.
A) service mix
B) pricing
C) product assortment
D) store atmosphere
E) distribution strategy
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
80)
were the main form of retail clusters until the 1950s.
A) Strip malls
B) Discount stores
C) Independent off-price retailers
D) Central business districts
E) Regional shopping malls
F)
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Easy
81) A large retailer of home improvement and construction products offers "how-to" classes for
24
do-it-yourselfers, featuring instructions on how to complete home improvement projects using
products sold at its stores. This is an example of how the retailer has differentiated itself
through its
.
A) product assortment
B) services mix
C) segmentation
D) atmosphere
E) pricing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
82) Until retailers
their markets, they cannot make consistent decisions about product
assortment, services, pricing, or advertising.
A) create
B) communicate with
C) divide up
D) define and profile
E) design products for
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
83) A
contains from 50 to 100 stores, is like a covered mini-downtown, and attracts
customers from a wide area.
A) community shopping center
B) neighborhood shopping center
C) central business district
D) regional shopping center
E) strip mall
F) Skill:
Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Easy
25
84) Upon determining who will want the product, retailers must determine in more detail how
to in those markets.
A) differentiate and position themselves
B) market themselves
C) entice customers to them
D) offer the correct products
E) properly price the product offerings
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
85) A
contains between 15 and 50 retail stores, including a department or variety store,
a supermarket, specialty stores, professional offices, and sometimes a bank.
A) community shopping center
B) neighborhood shopping center
C) strip mall
D) regional shopping center
E) power center
F) Skill:
Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Easy
86) In addition to segmenting and targeting the correct market, which of the following is NOT
an area in which marketers must make decisions?
A) product assortment
B) services mix
C) store's atmosphere
D) using experiential retailing
E) manufacturing schedules
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
26
87) A
generally contains between 5 and 15 stores. It is close and convenient for
consumers, usually contains a supermarket, perhaps a discount store, and several service stores
such as a dry cleaner, a drugstore, and a hardware store.
A) regional shopping center
B) community shopping center
C) neighborhood shopping center
D) warehouse club
E) factory outlet
F) Skill:
Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Easy
88) An ideal price policy scenario for retailers would be to achieve
.
A) low volume; high markups
B) low volume; low markups
C) high volume; high markups
D) high volume; low markups
E) high volume; zero markups
F)
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
while earning
89) In-store demonstrations, displays, sales, and loyalty programs are examples of
A) direct marketing
B) sales promotion
C) public relations
D) personal selling
E) affinity marketing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Easy
90) Neighborhood shopping centers are also known as
.
A) power centers
B) lifestyle centers
C) warehouse clubs
D) strip malls
E) regional shopping centers
F)
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Easy
27
.
91) Press conferences, speeches, store openings, special events, newsletters, and store
magazines are examples of
activities used by retailers to promote themselves.
A) public relations
B) sales promotions
C) personal selling
D) affinity marketing
E) social marketing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
92) Digital promotions have grown in usage and include e-mail, social media, Web sites, and
.
A) demonstrations
B) displays
C) store flyers
D) newsletters
E) online ads and video
F)
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Easy
93) Which of the following is most likely gained by stores that cluster together?
A) decreased competition
B) increased customer pulling power
C) compliance with franchise agreements
D) creation of retailer cooperatives
E) standardization of the service mix
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Challenging
28
94) A
is a group of retail businesses built on a site that is planned, developed, owned,
and managed as a unit.
A) warehouse club
B) franchise
C) shopping center
D) supermarket
E) hypermarket
F) Skill:
Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Easy
95) Most shopping centers are
.
A) strip malls
B) regional shopping malls
C) community shopping centers
D) lifestyle centers
E) power centers
F) Skill:
Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
96)
are huge unenclosed shopping centers consisting of a long strip of retail stores,
including at least one large, freestanding anchor store like Walmart. Each store has its own
entrance with parking directly in front for shoppers who wish to visit only one store.
A) Shopping malls
B) Power centers
C) Superstores
D) Chain stores
E) Regional shopping centers
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Easy
29
97) A small, open-air mall with upscale stores, convenient locations, and nonretail activities,
such as a playground, skating rink, hotel, dining establishments, and a movie theater, is an
example of a
.
A) regional shopping center
B) lifestyle center
C) community shopping center
D) franchise
E) power center
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Easy
98) Springfield, a convenience store, has recently begun to redesign and restock its stores to
offer a more upscale environment with products such as house wines and fresh foods. This
information indicates that Springfield has most likely changed its
.
A) positioning
B) price strategy
C) service level
D) corporate identity
E) organizational structure
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
99) Cabela's stores are as much natural history museums for outdoor enthusiasts as they are
retail outlets. This information indicates that Cabela's is practicing
.
A) wholesaling
B) nonstore retailing
C) shopper marketing
D) experiential retailing
E) showrooming
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
30
100) Big and Tall Men's Shop carries men's clothing in larger sizes; this allows the store to
other stores.
A) align itself with
B) differentiate itself from
C) cluster with
D) affect the store atmosphere of
E) converge with
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
101)
The lighting in Jake's Steak Restaurant is dim. The chairs are
covered in leather and each table is covered with a white linen cloth. The colors are limited to
earth tones with an occasional splash of red. Patrons cannot hear any kitchen noises, only a
pleasant melody that seems familiar but unrecognizable. The smells are extraordinarily
varied. This is a descriptionof the restaurant's
.
A) promotions
B) target
C) atmosphere
D) services mix
E) product assortment
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Challenging
102) Which of the following best describes a similarity between Costco and Walmart?
A) Both are warehouse clubs.
B) Both target the same affluent market.
C) Both are specialty stores.
D) Both use everyday low pricing.
E) Both are examples of merchant wholesalers.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
31
103) Macy's department stores carry a wide range of product lines, including clothing, jewelry,
kitchenware, and home furnishings. Macy's typically charges a relatively high markup, but also
holds frequent sales and price promotions, in particular offering discounts to customers who use
a Macy's credit card. Macy's uses
.
A) self-service retailing
B) experiential retailing
C) high-low pricing
D) everyday low pricing
E) retail convergence
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
104) Which of the following is most likely true about shoppers who prefer to shop at "lifestyle
centers"?
A) They use coupons.
B) They prefer upscale stores.
C) They prefer indoor shopping locations.
D) They rarely dine out in expensive restaurants.
E) They are motivated by deals on last year's merchandise.
F)
AACSB: Reflective thinking
Skill: Critical Thinking
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
32
Refer to the scenario below to answer the following question(s).
In the 1970s, Shipshewana was only a small town with a hardware store, a grain mill, a shoe
store, a small restaurant, and a grocery store. Over the next two decades, the small town
transformed into an international tourist attraction, attracting thousands of tourists who were
intrigued by the lifestyle of Shipshewana's largest population—the Amish.
Ben and Mary Miller, having grown up within the Amish faith, decided to capitalize on their
town's popularity and their woodworking skills. Their shop, Indiana Wood, began with a small
display of handmade hickory rocking chairs, Ben Miller's specialty. But within a few months,
the display at Indiana Wood included picnic tables, flower boxes, and small handmade novelty
items. No other shop offers the same variety.
Mary Miller decorated the shop's display room with authentic Amish décor and eventually
hired three Amish friends to sew and embroider napkins and other textiles as customers had
requested such items. In addition, two women from the Amish community sought permission
from the Millers to display home-baked pastries and jellies on Tuesdays and Wednesdays, when
Shipshewana attracts swarms of visitors to its flea market on the south edge of town. The
Millers also hired four more people to help customers throughout the purchasing process and to
provide the required product-related information to the customers.
"Shipshewana is full of specialty shops," Mary Miller stated. "People don't come here to buy
things made in China or Taiwan. They want real, Amish-made goods."
105) The authentic Amish décor of Indiana Wood's contributes to the store's
A) product assortment
B) services mix
C) atmosphere
D) segmentation
E) retail convergence
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Easy
.
106) Retailers first must position themselves in a market and then decide how they will define
the target customers in these markets.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
33
107) Retailers must work to ensure customers identify with their products. Differentiation and
positioning are vital to communicating this message.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
108) The colors, layout, and music in a store or a product package are only minor aspects of the
shopping experience and marketers spend little time making decisions about them.
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
109) A neighborhood shopping center has from 50 to more than 100 stores.
110)
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
111) A strip mall contains between 5 and 15 retail stores.
112)
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Easy
113) Explain how Whole Foods is able to compete against Walmart.
Answer: Walmart owns the low-price position, so other grocery chains such as Whole Foods
must position themselves differently. Rather than try to compete directly with Walmart, Whole
Foods is positioned away from Walmart. It targets a smaller group of upscale customers and
offers them organic, gourmet foods in a cheerful, aesthetically pleasing environment.
AACSB: Application of knowledge
Skill: Application
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Challenging
114) What attracts shoppers to a power center?
Answer: Power centers are unenclosed shopping centers that consist of a long strip of retail
stores, each store with its own entrance with parking directly in front for shoppers who wish to
visit only one store. A power center offers convenience and variety for shoppers.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Easy
34
115) Explain how Whole Foods is able to compete against Walmart.
Answer: Walmart owns the low-price position, so other grocery chains such as Whole Foods
must position themselves differently. Rather than try to compete directly with Walmart, Whole
Foods is positioned away from Walmart. It targets a smaller group of upscale customers and
offers them organic, gourmet foods in a cheerful, aesthetically pleasing environment.
AACSB: Application of knowledge
Skill: Application
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Challenging
116) What elements comprise a store's atmosphere?
store's atmosphere includes the sights, sounds, and smells that customers typicallyassociate with
the store.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Easy
117) How do the practices of high-low pricing and everyday low pricing differ?
Answer: With high-low pricing, a retailer charges higher prices on an everyday basis but also
has frequent sales and other price promotions; with everyday low pricing, a retailer for the most
part avoids sales and instead delivers constant, everyday low prices.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
118) How have shopping centers changed in the past few decades?
entral business districts were the main form of retail cluster until the 1950s. Every large city
and town had a central business district with department stores, specialty stores, banks, and
movie theaters. When people began moving to the suburbs, however, these central business
districts, with their traffic, parking, and crime problems, began to lose business. In recent
years, many cities have joined with merchants to revive downtown shopping areas, generally
with only mixed success. Currently, shopping centers are described as a group of retail
businesses built on a site that is planned, developed, owned, and managed as a unit. Theyare
not generally located in the central business districts.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
35
119) The three types of shopping centers are regional shopping centers, community shopping
centers, and neighborhood shopping centers/strip malls. Describe how they are different from
each other.
Answer: Regional shopping centers are the largest shopping centers and they contain anywhere
from 40 to more than 200 stores. They attract customers from a wide area. Smaller than
regional shopping centers, community shopping centers contain between 15 and 40 stores. They
normally contain a branch of a department store or variety store, a supermarket, specialty
stores, professional offices, and sometimes a bank. Smaller still are neighborhood shopping
centers/strip malls, which generally contain five to 15 stores. They are close and convenient for
consumers, usually containing a supermarket, a discount store, and several service stores.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 13.2: Describe the major retailer marketing decisions.
Difficulty: Moderate
120) Many retailers are now experimenting with limited-time shops that allow them to promote
their brands to seasonal shoppers and create buzz in busy areas. Which of the following terms
best represents such shops?
A) power centers
B) strip malls
C) pop-up stores
D) category killers
E) lifestyle centers
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Easy
121) Target recently opened temporary shops to celebrate limited-run collections by Jason Wu
in Toronto and Missoni in New York. These temporary shops are examples of
.
A) lifestyle centers
B) pop-up stores
C) warehouse clubs
D) strip malls
E) category killers
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Easy
36
122) The online and mobile equivalent of a pop-up store is
.
A) door buster deals
B) Black Friday specials
C) high-low pricing
D) flash sales sites
E) everyday low pricing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Easy
123) When different types of retailers sell the same products at the same prices to the same
customers, thanks in part to the price transparency of the Internet, the retail forms appear to be
.
A) converging
B) differentiating
C) repositioning
D) adapting
E) declining
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Moderate
124) With their size and buying power,
can offer better merchandise selections, good
service, and strong price savings to consumers.
A) convenience stores
B) franchises
C) megaretailers
D) power centers
E) lifestyle centers
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Moderate
37
125)
is known as the merging of consumers, products, prices, and retailers.
A) Retail conglomeration
B) Consumer convergence
C) Price merging
D) Retail convergence
E) Retail clustering
F)
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Easy
126) Which term refers to looking at merchandise at a traditional store and then purchasing the
merchandise online?
A) pop-up shopping
B) wheel-of-retailing
C) off-price retailing
D) showrooming
E) wholesaling
F)
AACSB: Information technology
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Easy
127) Retail online sites, mobile apps, and social media influence
.
A) overall retail sales
B) in-store buying
C) the number of likes and subscribers companies earn
D) customers and their followers
E) the number of products a company manufactures
F)
AACSB: Information technology
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Easy
38
128) Touchscreen kiosks, handheld shopping assistants, interactive dressing-room mirrors and
virtual sales associates are all examples of how retailers use technology to
.
A) maintain inventory costs
B) send information between stores
C) meet consumers' expectations
D) produce more accurate forecasts
E) interact with suppliers
F)
AACSB: Information technology
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Moderate
129) Store retailers must master
, integrating store and online channels into a single
shopper experience.
A) showrooming
B) single-channel retailing
C) omni-channel retailing
D) webrooming
E) dual-channel retailing
F)
AACSB: Information technology
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Moderate
130) Today's retailers increasingly adopt environmentally sustainable practices. Which of the
following is NOT one of these practices?
A) working with channel partners to reduce their environmental impact
B) cutting back on recycling programs
C) greening up their stores and operations
D) launching programs to help customers be more responsible
E) promoting more environmentally responsible products
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Moderate
39
Refer to the scenario below to answer the following question(s).
In the 1970s, Shipshewana was only a small town with a hardware store, a grain mill, a shoe
store, a small restaurant, and a grocery store. Over the next two decades, the small town
transformed into an international tourist attraction, attracting thousands of tourists who were
intrigued by the lifestyle of Shipshewana's largest population—the Amish.
Ben and Mary Miller, having grown up within the Amish faith, decided to capitalize on their
town's popularity and their woodworking skills. Their shop, Indiana Wood, began with a small
display of handmade hickory rocking chairs, Ben Miller's specialty. But within a few months,
the display at Indiana Wood included picnic tables, flower boxes, and small handmade novelty
items. No other shop offers the same variety.
Mary Miller decorated the shop's display room with authentic Amish décor and eventually
hired three Amish friends to sew and embroider napkins and other textiles as customers had
requested such items. In addition, two women from the Amish community sought permission
from the Millers to display home-baked pastries and jellies on Tuesdays and Wednesdays, when
Shipshewana attracts swarms of visitors to its flea market on the south edge of town. The
Millers also hired four more people to help customers throughout the purchasing process and to
provide the required product-related information to the customers.
"Shipshewana is full of specialty shops," Mary Miller stated. "People don't come here to buy
things made in China or Taiwan. They want real, Amish-made goods."
131) Which of the following would be the most logical way for Indiana Wood to expand?
A) establishing an online presence
B) pursuing retail convergence
C) implementing RFID inventory tracking
D) establishing a community-gathering environment in the store
E) joining a producers' cooperative
F)
AACSB: Information technology
Skill: Critical Thinking
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Moderate
132) Power centers tend to be smaller than lifestyle centers.
133)
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Moderate
134) The life cycle of new retail forms is getting longer.
135)
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Easy
40
136) Retail convergence means lower competition for retailers and lower difficulty in
differentiating the product assortments of different types of retailers.
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Moderate
137) Megaretailers have shifted the balance of power between retailers and producers, giving
retailers more power.
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Easy
138) Many shoppers now check out merchandise in-store and then buy it online. This process is
called webrooming.
AACSB: Information technology
Skill: Application
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Moderate
139) While the process of showrooming can hurt in-store sales of merchandise, retailers can
make it a positive by enhancing the in-store shopping experience.
AACSB: Information technology
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Moderate
140) Green retailing yields both top- and bottom-line benefits.
141)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Moderate
142) What are pop-up stores? Provide an example to illustrate your answer.
Answer: Many retailers are now experimenting with limited-time pop-up stores that let them
promote their brands to seasonal shoppers and create buzz in busy areas. During the last
holiday season, for instance, Toys"R"Us set up approximately 150 temporary pop-up toy
boutiques, many located in malls that formerly housed recently bankrupt KB Toys stores.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Moderate
41
143) What constitutes retail convergence?
42
Answer: Retail convergence is the coming together of shoppers, goods, and prices. Customers
of all income levels are shopping at the same stores, often for the same goods. Distinctions such
as discount store, specialty store, and department store are losing significance.
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Moderate
144) Describe how nonstore retailing has grown in the past decade.
Answer: Though most purchases are still made in stores, more and more consumers are now
shopping using a broad range of nonstore alternatives, including mail-order, television, phone,
and online shopping. Easy-to-use Web sites, improved online service, mobile apps and
sophisticated search engines have all helped online business grow at a faster rate than retail
buying. All types of retailers now use direct and online channels, with traditional brick-andmortar retailers selling online, along with online-only retailers such as Amazon.com and eBay.
Much of the growth in online sales will go to multichannel retailers who provide service both in
stores and online. While the total percentage of nonstore retail sales is still small, it is growing
at a much faster rate than retail buying as a whole.
AACSB: Information technology
Skill: Concept
Objective: LO 13.3: Discuss the major trends and developments in retailing.
Difficulty: Moderate
145)
includes all activities involved in selling goods and services to those buying for
resale or business use.
A) Wholesaling
B) Retailing
C) Franchising
D) Discounting
E) Showrooming
Answer: A
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Easy
146)
buy mostly from producers and sell to retailers and industrial consumers.
A) Warehouse clubs
B) Factory outlets
C) Wholesalers
D) Discount stores
E) Megaretailers
F) Skill:
Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Easy
147) Which of the following wholesaler's channel functions is demonstrated when a
wholesaler's sales force helps a manufacturer to reach many small customers at a low cost?
43
A) bulk-breaking
B) selling and promoting
C) buying and assortment building
D) risk bearing
E) rack jobbing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Moderate
148) Which of the following is NOT one of a wholesaler's channel functions?
A) financing
B) risk bearing
C) transportation
D) off-price retailing
E) bulk breaking
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Moderate
149) Which of the following wholesaler's channel functions is demonstrated when a wholesaler
holds inventories and thereby reduces inventory holding costs and risks of suppliers and
customers?
A) financing
B) transporting
C) buying and assortment building
D) warehousing
E) bulk breaking
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Moderate
44
150) Which of the following wholesaler's channel functions is demonstrated when a buyer
receives quicker delivery because wholesalers are located closer than producers?
A) financing
B) transportation
C) buying and assortment building
D) warehousing
E) risk bearing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Easy
151) Which of the following wholesaler's channel functions is exemplified by buying in carload
lots and then dividing these lots into small quantities?
A) warehousing
B) transportation
C) risk bearing
D) bulk breaking
E) selling and promoting
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Easy
152)
are the largest group of wholesalers. They include two broad types: full-service
wholesalers and limited-service wholesalers.
A) Brokers
B) Manufacturer sellers
C) Manufacturers' agents
D) Merchant wholesalers
E) Selling agents
F) Skill:
Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Easy
45
153) What is the most common type of agent wholesaler?
A) wholesale merchant
B) industrial distributor
C) limited-service wholesaler
D) manufacturers' representative
E) truck jobber
F) Skill:
Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Moderate
154)
and
do not take title to goods, and they perform only a few channel
functions.
A) Full-service wholesalers; limited-service wholesalers
B) Brokers; agents
C) Industrial distributors; cash-and-carry wholesalers
D) Cash-and-carry wholesalers; industrial distributors
E) Rack jobbers; off-price retailers
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Moderate
155) A(n)
brings buyers and sellers together and assists in negotiations.
A) agent
B) broker
C) retailer
D) wholesaler
E) industrial distributor
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Easy
46
156) A(n)
does not take title to goods and represents buyers or sellers on a more
permanent basis than a broker.
A) full-service wholesaler
B) industrial distributor
C) agent
D) retailer
E) cash-and-carry wholesaler
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Easy
157) Which type of wholesaler sells to manufacturers rather than to retailers?
A) industrial distributor
B) full-service wholesaler
C) cash-and-carry wholesaler
D) wholesale merchant
E) limited-service wholesaler
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Moderate
158)
are a type of limited-service wholesaler who carries a limited line of
semiperishable merchandise (such as milk, bread, and snack foods), which is sold for cash as
deliveries are made to supermarkets, small groceries, or hotels.
A) Industrial distributors
B) Wholesale merchants
C) Full-service wholesalers
D) Truck jobbers
E) Purchasing agents
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Easy
47
159)
are a type of limited-service wholesaler who does not carry inventory or handle
a product. They typically operate in bulk industries, such as coal, lumber, and heavy equipment.
A) Wholesale merchants
B) Industrial distributors
C) Cash-and-carry wholesalers
D) Rack jobbers
E) Drop shippers
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Easy
160)
are agents who take physical possession of products and negotiate sales. They
deal mostly with agricultural marketing.
A) Industrial distributors
B) Cash-and-carry wholesalers
C) Purchasing officers
D) Rack jobbers
E) Commission merchants
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Moderate
161)
are wholesalers who serve grocery and drug retailers, mostly in nonfood items.
They price the goods, keep them fresh, set up point-of-purchase displays, and keep inventory
records.
A) Purchasing agents
B) Rack jobbers
C) Drop shippers
D) Cash-and-carry wholesalers
E) Manufacturers' agents
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Easy
48
162) Today's large, progressive wholesalers have successfully reacted to rising costs by
.
A) relocating to low-rent, low-tax areas
B) investing in information technology systems
C) investing less money in expensive machinery
D) reducing their markup rates
E) reducing promotional activities
F)
AACSB: Information technology
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Easy
163) Carey David's wholesale company helps retailers train salesclerks, improve store layouts
and displays, and set up inventory control systems. According to this information, which of the
following wholesaler's channel functions does Carey David provide?
A) buying and assortment building
B) selling and promotion services
C) risk bearing services
D) marketing information
E) management services and advice
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Moderate
164) You own a small independent retail store in your neighborhood. You want to offer fresh
seafood, milk, and bread in your store. In this case, which of the following types of wholesalers
will serve you the best?
A) truck jobber
B) independent distributor
C) drop shipper
D) mail-order wholesaler
E) manufacturers' agent
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Challenging
49
165) You own a neighborhood grocery store and would like to have non-food items delivered,
priced, displayed and inventoried by a wholesaler. You do not want to purchase title to the
goods. Which type of wholesaler best fits your needs?
A) cash-and-carry wholesaler
B) rack jobber
C) drop shipper
D) mail-order wholesaler
E) agents and brokers
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Challenging
166) Tony Pool Chemical Co. purchased 144 buckets of chlorine tablets over the Internet from
Chemical Inc. Then Chemical Inc. placed the order with the manufacturer, and the
manufacturer then transported the tablets directly to the Tony Pool store. In this case, Chemical
Inc. is an example of a
.
A) drop shipper
B) truck jobber
C) rack jobber
D) full-service wholesaler
E) cash-and-carry wholesaler
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Challenging
167)
perform a role similar to that of brokers or agents but are part of the buyer's
organization.
A) Truck jobbers
B) Merchant wholesalers
C) Purchasing officers
D) Rack jobbers
E) Cash-and-carry wholesalers
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Moderate
50
168) Wholesalers must
to maintain their profits.
A) raise their prices to their retail customers
B) find efficient ways to deliver value to their customers
C) reduce the number of customers they work with
D) increase the number of services they offer
E) improve the relationships with the suppliers
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Moderate
169) Like retailers, wholesalers must decide on product and service assortments, prices,
promotion, and place.
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Moderate
170) Wholesalers realize that they increase value to their customers by watching for better ways
to meet the needs of their suppliers and target customers. This involves reducing the services
they provide to retailers.
AACSB: Information technology
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Easy
171) In an automated warehouse, orders are fed directly from the retailer's information system
to the wholesaler's, and the items are picked up by mechanical devices and taken to a shipping
platform where they are assembled.
AACSB: Information technology
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Easy
51
172) Why would a producer use wholesalers rather than sell directly to retailers or consumers?
Answer: Wholesalers add value by performing one or more of the following channel functions:
selling and promotion, buying and assortment building, bulk breaking, warehousing,
transportation, financing, risk bearing, providing market information, and giving management
services and advice. Wholesalers can perform many channel functions more efficiently and
effectively than a producer can, allowing the producer to focus its energies on creating its
product.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Moderate
173) How do merchant wholesalers and agents/brokers differ?
Answer: Merchant wholesalers "take title to" (or own) what they sell; agents/brokers merely
serve as liaisons, bringing buyers and sellers together.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Easy
174) How can wholesalers improve their use of promotions?
Answer: Many wholesalers do not view promotion as a team effort to sell, build, and service
major accounts; to address this issue, wholesalers should adopt some of the promotion
techniques used by retailers, such as developing an overall promotion strategy and making
greater use of supplier promotion materials and programs.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Moderate
52
175) Explain the marketing decisions faced by wholesalers.
Answer: Wholesalers are faced with the marketing decisions of segmentation and targeting,
differentiation and promotion, and the marketing mix. Progressive wholesalers are adapting
their services to the needs of target customers and are seeking cost-reducing methods of doing
business. Faced with slow growth in their domestic markets and developments such as the
North American Free Trade Association, many large wholesalers are also now going global.
Wholesalers must decide on product and service assortments, prices, promotion, and place.
Wholesalers add customer value though the products and services they offer. Price is also an
important wholesaler decision. Wholesalers usually mark up the cost of goods by a standard
percentage. As their retail and industrial customers face sales and margin declines, these
customers turn to wholesalers, looking for lower prices. Wholesalers may, in turn, cut their
margins on some lines to keep important customers. They may also ask suppliers for special
price breaks in cases when they can turn them into an increase in the supplier's sales. Although
promotion can be critical to wholesaler success, most wholesalers are not promotion minded.
They use largely scattered and unplanned trade advertising, sales promotion, personal selling,
and public relations. They need to develop an overall promotion strategy and make greater use
of supplier promotion materials and programs. Digital and social media are playing an
increasingly important role. Finally, distribution (location) is important. Wholesalers must
choose their locations, facilities, and Web locations carefully.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Moderate
176) Explain how wholesalers have been able to use technology to cut costs.
Answer: Many wholesalers have invested in automated warehouses and information
technology systems. Delivery time can be cut as orders are fed from the retailer's information
system directly into the wholesaler's. Automated warehouses increase efficiencies and drive
down costs, as mechanical devices can automatically pick up items and take them to a shipping
platform to be assembled. Wholesalers can also use technology for accounting, billing,
inventory control, and forecasting. These computerized, automated, and Web-based systems
help wholesalers contain the costs of ordering, shipping, and inventory holding.
AACSB: Information technology
Skill: Concept
Objective: LO 13.4: Explain the major types of wholesalers and their marketing decisions.
Difficulty: Moderate
53
Principles of Marketing, 17e (Kotler/Armstrong)
Chapter 14 Engaging Consumers and Communicating Customer Value: Integrated
Marketing Communications Strategy
1) A company's total marketing communications mix consists of a specific blend of advertising,
sales promotion, public relations, personal selling, and direct-marketing tools that the company
uses to communicate customer value and build customer relationships. Which of the following
terms best describes this set of communications tools?
A) the product mix
B) product line filling
C) the promotion mix
D) the price mix
E) horizontal diversification
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.1: Define the five promotion mix tools for communicating customer value.
Difficulty: Easy
2) Which of the following is one of the five major promotion tools?
A) market penetration
B) strategic positioning
C) product line filling
D) market diversification
E) direct and digital marketing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.1: Define the five promotion mix tools for communicating customer value.
Difficulty: Easy
3) Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an
identified sponsor is called
and includes broadcast, mobile, print, and online forms.
A) sales promotion
B) advertising
C) direct and digital marketing
D) personal selling
E) public relations
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.1: Define the five promotion mix tools for communicating customer value.
Difficulty: Easy
1
4) The use of short-term incentives to encourage the purchase or sale of a product or service is
called
.
A) direct and digital marketing
B) sales promotion
C) personal selling
D) public relations
E) publicity
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.1: Define the five promotion mix tools for communicating customer value.
Difficulty: Easy
5) Which of the following promotion tools involves building up a good corporate image and
handling unfavorable stories and events?
A) sales promotion
B) personal selling
C) direct and digital marketing
D) public relations
E) advertising
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.1: Define the five promotion mix tools for communicating customer value.
Difficulty: Easy
6) Which of the following promotion categories is most likely to include the use of displays,
discounts, coupons, and demonstrations?
A) sales promotion
B) direct and digital marketing
C) horizontal diversification
D) public relations
E) advertising
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.1: Define the five promotion mix tools for communicating customer value.
Difficulty: Easy
2
7)
includes sales presentations, trade shows, and incentive programs.
A) Direct and digital marketing
B) Sales promotion
C) Personal selling
D) Public relations
E) Advertising
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.1: Define the five promotion mix tools for communicating customer value.
Difficulty: Easy
8) Extel Inc., a home appliance manufacturer, uses sales representatives to sell its products to
wholesalers and individual customers. This is an example of
.
A) sales promotion
B) personal selling
C) public relations
D) direct and digital marketing
E) advertising
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 14.1: Define the five promotion mix tools for communicating customer value.
Difficulty: Moderate
9) Which major promotion category uses catalogs, direct mail, e-mail, mobile marketing and
social media?
A) sales promotion
B) direct and digital marketing
C) horizontal diversification
D) public relations
E) advertising
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.1: Define the five promotion mix tools for communicating customer value.
Difficulty: Easy
3
10) Which of the following promotion categories is most likely to use the promotion tools of
press releases, sponsorships, events, and Web pages?
A) sales promotion
B) direct and digital marketing
C) advertising
D) public relations
E) horizontal diversification
F)
Skill: Concept
Objective: LO 14.1: Define the five promotion mix tools for communicating customer value.
Difficulty: Easy
11) In addition to the specific promotion tools, marketing communication requires
for greatest impact.
A) the engineering and manufacturing departments work together
B) the sales force lead the communication process
C) the advertising be developed with the manufacturers' representatives
D) the pubic relations staff work closely with the sales force
E) the promotion, product, price, and place be coordinated
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 14.1: Define the five promotion mix tools for communicating customer value.
Difficulty: Challenging
12) Advertising involves a personal presentation by the firm's sales force for the purpose of
making sales and building customer relationships.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.1: Define the five promotion mix tools for communicating customer value.
Difficulty: Easy
13) Sales promotion involves building up a good corporate image, and handling or heading off
unfavorable rumors, stories, and events.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.1: Define the five promotion mix tools for communicating customer value.
Difficulty: Easy
4
14) Direct and digital marketing involves engaging directly with carefully targeted individual
consumers and customer communities to both obtain an immediate response and build lasting
customer relationships.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.1: Define the five promotion mix tools for communicating customer value.
Difficulty: Easy
15) Direct and digital marketing includes catalogs, e-mail, direct mail, social media, and mobile
marketing.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.1: Define the five promotion mix tools for communicating customer value.
Difficulty: Moderate
16) A company's marketing communications mix—also called its promotion mix—blends five
different components. List and define these components.
dvertising is any paid-for or nonpersonal presentation and promotion of ideas, goods, or
services by an identified sponsor. Sales promotion includes short-term incentives to
encourage the purchase or sale of a product or service. Public relations includes building good
relations with the company's various publics by obtaining favorable publicity, building up a
good corporate image, and handling or heading off unfavorable rumors, stories, or events.
Personal selling includes a personal presentation by the firm's sales force for the purpose of
making sales and building customer relationships. Direct marketing includes direct connections
with carefully targeted individual consumers to obtain an immediate response and cultivate
lasting customer relationships.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 14.1: Define the five promotion mix tools for communicating customer value.
Difficulty: Moderate
17) Changes to the marketing communications model include that consumers are changing and
are better informed, that marketing strategies are changing and are moving from mass
marketing, and that
.
A) manufacturing processes are becoming more efficient
B) distribution of products worldwide is more feasible and cost-effective
C) segmenting and targeting of consumers are more detailed than ever before
D) digital technologies are changing the ways companies and customers communicate
E) retailing is more competitive with more sources of products available for consumers
F)
AACSB: Information technology
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
5
integrated marketing communications.
Difficulty: Moderate
6
18) Today's consumers do not need to rely on marketer-supplied information about products
and services because they can use
to seek out a wealth of information.
A) push strategies
B) direct and digital marketing
C) the Internet
D) personal selling
E) public relations
F)
AACSB: Information technology
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Easy
19) Which of the following statements is true regarding today's marketing communications?
A) More marketers are shifting away from narrowly defined micromarkets and moving toward
mass marketing.
B) More customers have started relying on marketer-supplied information rather than finding
out information on their own.
C) Network television, magazines, newspapers, and other traditional mass media continue to
increase their dominance.
D) Focused marketing programs, which are designed to build closer relationships with
customers in more narrowly defined micromarkets, are no longer used by marketers.
E) Today's consumers are better informed about products and services.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Moderate
20) Shifting away from mass marketing, marketers are developing
which are
designed to build relationships with customers in more narrowly defined micromarkets.
A) focused marketing programs
B) horizontal diversification programs
C) backward integration strategies
D) new pull strategies
E) new push strategies
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Easy
7
21) Which of the following is a specialized and highly targeted media selection that an
advertiser might use to reach smaller customer segments with personalized content?
A) radio
B) magazines
C) newspapers
D) network television
E) online social networks
F)
AACSB: Information technology
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Moderate
22) Companies are doing less
and more
as a result of the explosive
developments in communication technologies to better target smaller customer segments.
A) personal selling; digital activities
B) public relations activities; digital activities
C) digital activities; mass marketing
D) mass marketing; digital marketing
E) viral marketing; word-of-mouth marketing
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Moderate
23) Which of the following statements is true regarding the old mass-media communications
model?
A) Mass-media costs are decreasing.
B) Mass-media audiences are increasing.
C) Many viewers are gaining control of message exposure through DVRs and video streaming.
D) Ad clutter is decreasing.
E) Internet ad spending has stagnated and more marketers are shifting toward TV advertising.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Moderate
8
24) Of the various digital marketing categories,
is the fastest-growing category.
A) blogs
B) e-mail
C) social media
D) mobile
E) brand Web sites
F)
AACSB: Information technology
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Easy
25) The key is to
traditional mass media with online, mobile and social media to best
engage customers, communicate the brand message, and enhance the customer's brand
experiences.
A) prioritize
B) integrate
C) utilize
D) design
E) spend on
F)
AACSB: Information technology
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Easy
26) Marketers now view themselves as
that create and share brand messages and
conversations with and among customers across a mix of paid, owned, earned, and shared
communication channels.
A) promotion managers
B) public relations managers
C) sales managers
D) content marketing managers
E) account managers
F)
AACSB: Information technology
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Easy
9
27) Companies often fail to integrate their various messages to consumers because
A) historically, consumers have been able to distinguish between message sources
B) advertising departments are reluctant to work with public relations professionals
C) communications often come from different parts of the company
D) personal selling and sales promotion are in direct conflict
E) firms have overemphasized the concept of brand contact
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Moderate
.
28) Consumers today receive commercial messages from a broad range of sources. However,
consumers
the way marketers do.
A) don't distinguish between message sources
B) never pay attention to sales promotions
C) don't care about buzz marketing
D) are not able to block out messages
E) block out all media messages
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Moderate
29) Today, most companies are adopting the concept of
, which carefully combines
and coordinates the company's many communication channels to deliver a clear, consistent, and
compelling message about the organization and its brands.
A) integrated marketing communications
B) pull strategy
C) vertical diversification
D) nonpersonal communication channels
E) buzz marketing
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Easy
10
30) Integrated marketing communications require a company's mass-market advertisements,
Web site, e-mail, and personal selling communications to all
.
A) have equal portions of the advertising budget
B) use independent communications directors
C) develop separate marketing objectives
D) engage the same target audience
E) deliver a clear, consistent, and compelling message
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Moderate
31) Delia's is a clothing retailer that targets teenage girls. The company runs coordinated
promotions for its catalogs, Web site, and retail outlets. It uses the same models in its catalog,
print ads, and Web site. Delia's works to make sure its public relations activities as well as its
sales promotions harmonize with its advertising in all aspects. From this information, we can
infer that Delia's is using
.
A) buzz marketing
B) experiential marketing
C) integrated marketing communication
D) word-of-mouth marketing
E) database marketing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Challenging
32) Excel Enterprises uses a Web site, online social networks, and print advertisements to
promote its products. Since Excel Enterprises practices integrated marketing communications,
all these different brand contacts maintain
in design and tone.
A) variety
B) simplicity
C) creativity
D) consistency
E) flexibility
F)
AACSB: Written and oral communication
Skill: Application
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Moderate
11
33) To carefully integrate and coordinate the company's many communications channels and
produce greater sales impact, some companies appoint a(n)
.
A) idea champion
B) marketing communications director
C) sales representative
D) business analyst
E) media planner
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Easy
34) Direct marketing includes catalogs, direct-response TV, kiosks, the Internet, and mobile
marketing.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Moderate
35) As mass markets have fragmented, marketers have shifted away from mass marketing.
36)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Easy
37) Communications technologies such as cell phones and the Internet give companies new
media for interacting with targeted consumers, but these technologies also give consumers
more control over the advertising messages they receive.
AACSB: Information technology
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Moderate
12
38) Mass marketers can expect consumers to distinguish between commercial message sources
to maintain a clear image of a company and its brands.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Moderate
39) The integrated marketing concept ties together all of the company's messages and images.
40)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Easy
41) Integrated marketing communications calls for recognizing all communications channels
where the customer may encounter the company and its brands.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Moderate
42) The shift toward digital communication allows companies to keep control of message
exposure.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Easy
43) A marketing communications director has overall responsibility for the company's
communications efforts.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Easy
13
44) Why should a company be concerned about integrating communications from different
sources within the company?
ustomers won't separate conflicting or varying messages from different sources within a
company, so failing to integrate communications could lead to blurred consumer brand
perceptions.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Moderate
45) How do integrated marketing communications build brand identity?
Answer: IMC builds brand identity and strong customer relationships by tying together all of
the company's messages and images.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Moderate
46) Why are profound changes in marketing communications creating both exciting and scary
times for marketing communicators?
Answer: In the past, marketers relied heavily on mass marketing. Today, however, mass
markets have fragmented, consumers are better informed, and sweeping changes in technology
have changed how companies and consumers communicate with each other. These three factors
have led to a new marketing communications model that is specialized to reach smaller
customer segments with messages that are more personalized. Mass marketing can no longer be
solely relied upon to deliver a marketer's message. Although these changes may frighten
marketing communicators, these changes afford tremendous opportunities to reach new
customers and strengthen relationships with existing customers.
AACSB: Analytical thinking
Skill: Application
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Challenging
14
47) Explain the concept of integrated marketing communications (IMC).
Answer: IMC calls for recognizing all touch points where the customer may encounter the
company and its brands. While implementing IMC, the company's goal should be to deliver a
consistent and positive message at each contact. Integrated marketing communications ties
together all of the company's messages and images. Its television and print ads have the same
brand message, look, and feel as its e-mail and personal selling communications. And its PR
materials project the same image as its Web site, online social networks, or mobile marketing
efforts.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 14.2: Discuss the changing communications landscape and the need for
integrated marketing communications.
Difficulty: Moderate
48) In order to avoid shortsightedness, today marketers are moving toward viewing
communications as managing the
.
A) organizational culture
B) nonpersonal communication channels
C) word-of-mouth influence
D) ongoing customer relationships with the company
E) product life cycle
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
49) Communications programs need to be developed for specific niches, individuals, and
.
A) genders
B) countries
C) departments
D) products
E) segments
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
15
50) While using integrated marketing communications, the communications process should
start with a(n)
.
A) advertising strategy
B) competitive-parity analysis
C) long-term public relations plan
D) audit of all potential customer touch points
E) strategy for implementing a social media presence
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
51) Which of the following is one of the four major communication functions?
A) coordination
B) distribution
C) noise
D) response
E) preference
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
52)
refers to the process of putting thought into symbolic form.
A) Sending
B) Encoding
C) Decoding
D) Receiving
E) Feedback
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
16
53) HP's advertising agency assembles words and illustrations into an advertisement that
conveys the company's intended brand message. In the context of the communication process,
HP is
.
A) messaging
B) decoding
C) sending
D) encoding
E) responding
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
54) The decision to use an NBA star player to communicate the desirability of Nike basketball
shoes represents the
process of the communication model.
A) sourcing
B) messaging
C) acknowledging
D) decoding
E) encoding
F)
AACSB: Application of knowledge; Written and oral communication
Skill: Application
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
55) A(n)
is a set of symbols that the sender transmits.
A) encoder
B) feedback loop
C) message
D) media
E) decoder
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
17
56) In the communication process, an actual HP printer/fax machine advertisement would be
considered
.
A) encoding
B) decoding
C) the product
D) the message
E) the medium
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
57) Which of the following terms best represents the communication channel that a company
uses to move its advertising messages from sender to receiver?
A) decoder
B) media
C) encoder
D) communicator
E) feedback loop
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
58) In a communication process, a receiver assigns meaning to the symbols encoded by a
company in its advertisements through a process known as
.
A) integrating
B) reciprocating
C) acknowledging
D) decoding
E) coordinating
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
18
59) In the communication process, the reaction of the receiver after being exposed to a message
is called the
.
A) response
B) disturbance
C) noise
D) code
E) distortion
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
60) When a customer lets a producer know something about its products or advertising, the
customer is providing
.
A) decoding
B) noise
C) feedback
D) encoding
E) reverse marketing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
61) A consumer is reading a magazine with an advertisement, but due to a loud sound he is
distracted from reading the advertisement and is not able to grasp its key points. In the context
of the communication process, this unplanned static or distortion is called
.
A) noise
B) encoding
C) feedback
D) response
E) decoding
F)
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
19
62) An ad for Maybelline age-minimizing makeup in Ladies' Home Journal magazine featured
actress Gigi Hadid and offered readers a $2-off coupon when they tried the new makeup. In
terms of the communication model, the sender of this message is
.
A) Gigi Hadid
B) Ladies' Home Journal
C) readers who redeem the $2-off coupon
D) Maybelline
E) the target market to which Gigi Hadid appeals
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Challenging
63) An ad for Maybelline age-minimizing makeup in Ladies' Home Journal magazine featured
actress Gigi Hadid and offered readers a $2-off coupon when they tried the new makeup. In
terms of the communication model, the medium of this ad is
.
A) Gigi Hadid
B) Ladies' Home Journal
C) readers who redeem the $2-off coupon
D) Maybelline
E) the target market to which Gigi Hadid appeals
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Challenging
64) An ad for Maybelline age-minimizing makeup in Ladies' Home Journal magazine featured
actress Gigi Hadid and offered readers a $2-off coupon when they tried the new makeup. In the
context of the communication model, measuring which of the following would be the best way
for the source to measure feedback?
A) the number of subscribers to Ladies' Home Journal
B) the number of people who make up the target market
C) the number of people who redeem the coupon
D) the number of people who have purchased Maybelline products in the past
E) the number of people to whom Gigi Hadid is an appealing spokesperson
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Challenging
20
65) In the communication process, the more the sender's field of experience
that of
the receiver, the more
the message is likely to be.
A) varies from; distinguishable
B) overlaps with; effective
C) connects with; ineffective
D) coincides with; creative
E) departs from; direct
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
66) The AIDA model identifies the characteristics of an effective
.
A) advertising budget
B) channel of communication
C) marketing message
D) marketing mix
E) marketing response
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
67) To communicate effectively, a marketing communicator should most likely
.
A) ensure that the encoding and decoding processes are different
B) encode and decode the message personally and frequently
C) understand the consumer's field of experience
D) foresee unplanned static or distortion
E) use familiar words and symbols
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
21
68) Marketing communicators must be good at
messages that take into account how
the target audience
them.
A) delivering; encodes
B) sending; encodes
C) encoding; decodes
D) retrieving; perceives
E) decoding; receives
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
69) Marketing communicators must know what
and what
.
A) products they wish to sell; audiences they want to target
B) distribution channel(s) they wish to use; timing they need
C) advertising media they will use; message they will send
D) audiences they wish to reach; responses they want
E) message they will send; feedback they expect
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Challenging
70) Which of the following is the first step in developing an effective integrated
communications and promotion program?
A) designing a message
B) identifying the target audience
C) determining the communication objectives
D) collecting feedback
E) choosing the media through which to send a message
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
22
71) While developing an effective integrated communication, once the target audience has been
defined, marketers must do all these steps EXCEPT
.
A) determine the desired response
B) collect feedback
C) choose the media through which to send a message
D) identify potential distractions
E) design a message
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Challenging
72) Based on the target audience, the communicator makes decisions regarding what will be
said, who will say it, when it will be said, where it will be said, and
.
A) whether it will be said
B) how it will be said
C) what noise to anticipate
D) how much it will cost to prepare the message
E) how frequently it will be said
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Challenging
73) In which step of the communication process does the marketing communicator need to
know the buyer-readiness stage of the target audience?
A) designing the message
B) choosing the media through which to send the message
C) determining communication objectives
D) collecting feedback
E) selecting the message source
F)
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Challenging
23
74) The six stages consumers normally pass through on their way to making a purchase are
known as the
stages.
A) personal-readiness
B) buyer-readiness
C) objective-readiness
D) market-readiness
E) supplier-readiness
F)
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
75) Among the buyer-readiness stages, the first stage is
.
A) preference
B) knowledge
C) liking
D) awareness
E) insistence
F) Skill:
Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
76) Boson Corp. is introducing consumers to its new car with the help of an advertisement
campaign. This introductory campaign most likely aims to affect the
stage of buyerreadiness.
A) liking
B) awareness
C) preference
D) insistence
E) conviction
F)
AACSB: Application of knowledge; Written and oral communication
Skill: Application
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Challenging
24
77) Which buyer-readiness stage are consumers in when they are feeling favorable about the
product?
A) preference
B) conviction
C) knowledge
D) purchasing
E) liking
F) Skill:
Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
78) Using the AIDA model, an effective marketing message should get attention, hold interest,
, and obtain action.
A) create differences
B) enhance doubts
C) double interest levels
D) arouse desire
E) minimize dismay
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
79) Which of the following statements is true about personal communication channels?
A) A magazine advertisement exemplifies the use of a personal communication channel.
B) All personal communication channels are directly controlled by a company.
C) Personal communication channels do not allow sending and receiving of feedback.
D) ord-of-mouth influence uses a personal communication channel.
E) A billboard message exemplifies the use of a personal communication channel.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
25
80) A message showing a product's quality, economy, value, or performance is an example of
a(n)
appeal.
A) structural
B) rational
C) emotional
D) moral
E) standard
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
81) An appeal that attempts to stir up either negative or positive sentiments that can motivate
purchase is called a(n)
appeal.
A) rational
B) structural
C) emotional
D) moral
E) standard
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
82)
involves cultivating opinion leaders and getting them to spread information about
a product or a service to others in their communities.
A) Sales promotion
B) Indirect marketing
C) Buzz marketing
D) Stealth marketing
E) Public relations
F)
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
26
83) Which of the following appeals is based on the idea that consumers often feel before they
think?
A) emotional appeal
B) rational appeal
C) structural appeal
D) standardized appeal
E) integrated appeal
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
84) Moral appeals
.
A) relate to the audience's self-interest by showing that the product will produce the desired
benefits
B) attempt to stir up either negative or positive emotions that can motivate purchase
C) range from love, joy, and humor to fear and guilt
D) are directed to an audience's sense of what is "right" and "proper"
E) are based on the idea that practical benefits are more important for consumers than emotions
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
85) A charitable trust's appeal which states, "While you are trying to figure out what to get the
man who has everything, don't forget the man who has nothing" is an example of a(n)
appeal.
A) structural
B) awareness
C) rational
D) moral
E) standard
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
27
86) Display media includes
.
A) newspapers
B) magazines
C) television
D) company Web sites
E) billboards
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
87) One of the message structure issues that a marketer must handle is whether to
.
A) present the strongest arguments first or last
B) make a moral appeal or not
C) use the pull strategy or push strategy
D) diversify vertically or horizontally
E) use mass marketing or niche marketing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
88) A(n)
argument is most likely to be effective when the audience is highly
educated or likely to hear opposing claims.
A) one-sided
B) two-sided
C) moral
D) emotional
E) structured
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
28
89) Which of the following advertising slogans most likely represents a two-sided argument?
A) Breakfast of champions
B) Good to the last drop
C) A diamond is forever
D) The ultimate driving machine
E) The next big thing is already here
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Challenging
90) A marketer making decisions about the headline, copy, illustration, and colors for a print ad
is determining the message
.
A) structure
B) content
C) medium
D) channel
E) format
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
91) Which of the following terms best describes the channels through which two or more
people communicate directly with each other, including face-to-face, mail, e-mail, texting, or an
Internet chat?
A) shared communication channel
B) earned communication channel
C) personal communication channel
D) nonverbal communication channel
E) owned communication channel
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
29
92) Communication through a telephone call is considered a part of a(n)
communication channel.
A) online
B) nonverbal
C) personal
D) nonpersonal
E) unidirectional
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
93) Personal communications about a product between target buyers and neighbors, friends,
family members, associates, and other consumers, are known as
.
A) personal selling
B) direct marketing
C) public relations
D) buzz marketing
E) word-of-mouth influence
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
94) A manufacturer of a variety of technological devices asked its marketing department to
develop inexpensive methods of building and maintaining brand awareness and excitement.
The marketing department then recruited consumers who were early adopters of technological
devices to spread the word about the company's new products. This is an example of
.
A) a reverse marketing activity
B) nonpersonal marketing
C) sales promotion
D) buzz marketing
E) direct marketing
F)
AACSB: Application of knowledge; Written and oral communication
Skill: Application
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Challenging
30
95) Nonpersonal communication channels include major media,
, and events.
A) sales calls
B) atmospheres
C) buzz marketing
D) word-of-mouth influence
E) phone calls
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
96) Many firms hire celebrities to appear in their advertisements. Which step of the
communication process is represented?
A) collecting feedback
B) designing a message
C) selecting the message source
D) determining the communication objectives
E) choosing the media
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
97) To
, a marketer would most likely ask target audience members whether they
remember the message, how many times they saw it, and what points they remember.
A) select a message source
B) collect feedback
C) select a message channel
D) plan a media purchase
E) design a marketing appeal
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
31
Refer to the scenario below to answer the following question(s).
John Mayes opened Sparkle Janitorial in 2005. John began his business by acquiring two
contracts for office cleaning services from two local manufacturing facilities. For two years,
John and his wife, Barb, performed the cleaning services alone. After acquiring three additional
cleaning contracts in 2007, John hired two employees. "Up to that point, we had room to grow
but we really had no advertising plan," John stated. "We were relying mostly on word-ofmouth."
By 2010, Barb hired another two full-time employees to begin Sparkle's new endeavor: carpet
cleaning in homes and offices. "Competition was getting tough for both of our services at that
point," Barb added. "We ran a local radio spot three times each week. Then we had an
advertiser print coupons on placemats. That gave us a little more exposure."
John and Barb Mayes admit that they did not realize the value of a sound promotional plan
earlier. "We wish we would have put together something catchy with a jingle long before now,"
they said.
98) In a recent radio spot, John and Barb gave a quick explanation of Sparkle's cleaning process
and a description of the value consumers receive for their money. This is an example of a(n)
appeal.
A) emotional
B) standard
C) rational
D) moral
E) social
F)
AACSB: Application of knowledge; Written and oral communication
Skill: Application
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
99) John and Barb could have drawn attention to their services in several ways by using
effective integrated marketing communications. Which of the following is NOT a part of an
IMC strategy?
A) public relations
B) personal selling
C) direct marketing
D) strategic planning
E) sales promotion
F)
AACSB: Application of knowledge; Written and oral communication
Skill: Application
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
32
100) The communications process should start with mass media advertising in order to
reach alarge number of consumers.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
101) The four major communication functions are encoding, decoding, response, and
noise.
102)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
103) Encoding is the process by which the receiver assigns meaning to symbols.
104)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
105) Decoding is the process by which a sender puts his or her thoughts into a symbolic form.
106)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
107) A good marketing message will try to move consumers through several steps of the buyerreadiness stages in a single message.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
33
108) Good marketing communications can speed the demise of a poor product.
109)
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
110) Rational appeals are often used to urge people to support social causes, such as a cleaner
environment or helping the disadvantaged.
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
111) The "Stop. Think. Tylenol." ad slogan is an example of a moral appeal.
112)
AACSB: Analytical thinking
Skill: Application
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
113) All personal communication channels are controlled directly by the company.
114)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
115) Advertisements for prescription drugs often feature potential benefits and negative side
effects that consumers may experience with use of the medication. These ads present two-sided
arguments.
AACSB: Application of knowledge
Skill: Application
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
34
116) Buzz marketing involves cultivating opinion leaders and getting them to spread
information about a product or service to others in their communities.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Easy
117) What are the four major communication functions?
Answer: The four major communication functions are encoding, decoding, response, and
feedback. Encoding is the process of putting thought into symbolic form. Decoding is the
process by which the receiver assigns meaning to the symbols encoded by the sender. In
addition, response refers to the reactions of the receiver after being exposed to the message.
Feedback is the part of the receiver's response communicated back to the sender.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
118) Why is the consumer's field of experience important to a marketer?
Answer: The marketing communicator must understand the consumer's field of experience in
order to create promotional messages that will be decoded as the sender intends them to be
understood.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
119) In the communication process, what is noise and what is its significance?
Answer: Noise is the unplanned static or distortion during the communication process, which
results in the receiver getting a different message than the one the sender sent. Due to the noise,
the consumer can get distracted and might miss the key point.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
35
120) Describe the three types of appeals that marketers use.
Answer: Rational appeals relate to the consumer's self-interest; emotional appeals attempt to
stir up either positive or negative emotions; moral appeals are directed to the consumer's sense
of what is "right" and "proper."
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
121) What role does message format play in print advertisements?
Answer: In a print ad, for example, the headline, copy, illustrations, and color are critical. To
attract attention, the advertiser may use novelty, contrasts, or eye-catching headlines.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
122) Why do marketers value opinion leaders?
Answer: Opinion leaders are people whose opinions are sought by others. Marketers rely on
opinion leaders to positively influence the spread of product or service acceptance through a
market.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
123) Explain how the message source affects consumers' perceptions of the message.
Answer: The message source will affect how the consumer perceives the message. For
example, highly credible sources—such as certain newspapers or professionals such as doctors
and dentists—will be more persuasive. In some cases, the use of celebrity testimonials works
well to persuade consumers to make the purchase.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
36
124) The background for the QuickRelief allergy medication ad appearing in the magazine
Better Homes and Gardens shows green grass and lovely flowers. The headline states
"QuickRelief is 54% more effective than the leading prescription." At the bottom of the ad, in
small print, is an explanation of how the effectiveness of QuickRelief was determined. The ad
also shows a package of QuickRelief so consumers can easily recognize it at the store. Identify
the different components of the communication model for this advertisement.
Answer: The marketers of QuickRelief are the sender. These marketers encoded their ideas
into the actual message, which includes the images and text of the advertisement. The medium
for this communication is the page in Better Homes and Gardens. The receiver is anyone
reading the magazine who sees this page of advertising; the receiver may or may not decode the
message in the way the marketers intended. Noise could pop up at any stage of the
communication process.
AACSB: Analytical thinking
Skill: Application
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Challenging
125) Outline the steps in developing effective marketing communications.
Answer: In preparing marketing communications, the marketer's first task is to identify the
target audience and its characteristics. Next, the marketer has to determine the communication
objectives and define the response sought, whether it is awareness, knowledge, liking,
preference, conviction, or purchase. Then a message should be constructed with an effective
content and structure. Media must be selected, both for personal and nonpersonal
communication. The marketer should find highly credible sources to deliver messages. Finally,
the communicator must collect feedback by watching how much of the market becomes aware,
tries the product, and is satisfied in the process.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
37
126) Describe the six buyer-readiness stages along with the marketing strategies used at each
stage.
Answer: The six buyer-readiness stages are awareness, knowledge, liking, preference,
conviction, and purchase. A marketer might use teaser ads to create interest, anticipation, and
curiosity at the awareness stage. Next, marketers want to inform potential buyers of the
product's high quality and its many features. Beyond knowledge, marketers want to move
consumers to have stronger feelings about the product, going from liking to preference to
conviction, or believing that a product is the best for them. A combination of promotion tools
can be used to create positive feelings and a customer connection with the brand. The final
stage is purchase, which marketers may influence through the use of premiums, upgrades, or
rebates.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.3: Outline the communication process and the steps in developing effective
marketing communications.
Difficulty: Moderate
127) While using the
method for setting an advertising budget, a company starts with
total revenues, deducts operating expenses and capital outlays, and then devotes some portion
of the remaining funds to advertising.
A) integrated
B) moving-average
C) competitive-parity
D) percentage-of-sales
E) affordable
F) Skill:
Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Easy
128) Which of the following statements is true regarding the affordable method for setting a
promotion budget?
A) It is mostly used by large businesses.
B) It completely ignores the effects of promotion on sales.
C) It tends to place promotion first among spending priorities.
D) It leads to a certain annual promotion budget.
E) It almost always results in overspending.
F)
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
38
129) Though the
method of setting an advertising budget is simple to use and helps
management think about the relationships among promotion spending, selling price, and profit
per unit, it wrongly views sales as the cause of promotion rather than the result.
A) percentage-of-sales
B) integrated
C) competitive-parity
D) objective-and-task
E) regression
F) Skill:
Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
130) Which of the following methods is used by companies to set their advertising budgets
based on the industry average?
A) percentage-of-sales method
B) affordable method
C) competitive-parity method
D) objective-and-task method
E) regression method
F)
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Easy
131) Sam, the owner of a small company, learned that a competitor was planning to spend
$150,000 on promotion in the next financial year. As soon as he learned this, Sam called his
finance manager and said, "I want to spend $150,000 on promotion next year." In this case,
which method of promotional budgeting does Sam use?
A) the objective-and-task method
B) the competitive-parity method
C) the percentage-of-sales method
D) the affordable method
E) the pull-push method
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Challenging
39
132) Which of the following statements is most likely true regarding the competitive-parity
method?
A) This method involves starting with total revenues, deducting operating expenses and capital
outlays, and then devoting some portion of the remaining funds to advertising.
B) It is based on the availability of funds rather than on opportunities.
C) It wrongly views sales as the cause of promotion rather than as the result.
D) In this method, promotion budgets are set to match competitors' outlays.
E) This method involves setting the promotion budget at a certain percentage of current or
forecasted sales.
Skill:
Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
133) Which of the following is the most logical budget-setting method?
A) percentage-of-sales method
B) affordable method
C) competitive-parity method
D) objective-and-task method
E) push method
F) Skill:
Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Easy
134) Which budgeting method entails defining specific promotion goals, determining the
necessary tasks, and estimating the costs to determine a promotion budget?
A) percentage-of-sales method
B) objective-and-task method
C) affordable method
D) exponential task method
E) competitive-parity method
F)
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Easy
40
135) Which of the following statements is most likely true regarding the objective-and-task
method of budget setting?
A) It forces management to spell out its assumptions about the relationship between the money
spent and promotion results.
B) It is the simplest and least time consuming method to use.
C) It is the least logical budget-setting method.
D) It involves setting the promotion budget to match competitors' outlays.
E) It wrongly views sales as the cause of promotion rather than as the result.
F)
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
136) Using a(n)
strategy, the producer directs its marketing activities toward final
consumers to induce them to buy the product.
A) pull
B) blitz
C) push
D) buzz
E) pulse
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Easy
137) Which of the following is most likely a shortcoming of advertising?
A) It is the most expensive promotion tool.
B) It cannot reach masses of geographically dispersed buyers.
C) It is impersonal and lacks the direct persuasiveness of company salespeople.
D) It cannot trigger quick sales.
E) It cannot be used to build up a long-term image for a product.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
41
138) Which of the following is a strength of advertising?
A) It is the most inexpensive promotion tool.
B) It reaches masses of geographically dispersed buyers at low cost per exposure
C) It is impersonal and lacks the direct persuasiveness of company salespeople.
D) It cannot trigger quick sales.
E) It cannot be used to build up a long-term image for a product.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
139) In most cases, what is the most expensive promotion tool?
A) advertising
B) personal selling
C) mass media
D) public relations
E) publicity
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Easy
140) Which of the following promotional tools is the most effective in building up buyers'
preferences, convictions, and actions?
A) mass-market advertising
B) sales promotion
C) segmented advertising
D) personal selling
E) public relations
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Easy
42
141)
consists of strong short-term incentives that invite and reward quick responses
from customers.
A) Public relations
B) Personal selling
C) Advertising
D) Sales promotion
E) Direct marketing
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Easy
142) Suppose Amazon.com has offered you free shipping on your next purchase of more than
$35. This offer is an example of
.
A) sales promotion
B) personal selling
C) a public relations strategy
D) horizontal diversification
E) a pull strategy
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
143)
is very believable because news stories, features, sponsorships, and events seem
more real and believable to readers than ads do.
A) Differentiated marketing
B) Public relations
C) Direct marketing
D) Sales promotion
E) Personal selling
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Easy
43
144) A newspaper article announced that Connect Wireless, the sixth-largest wireless carrier in
a country, was changing its name to M-Mobile and that to begin the makeover process it had
replaced spokesperson Robert Garmon with Catherine Naylor. Which of the following elements
of a promotion mix is represented in this example?
A) sales promotion
B) advertising
C) public relations
D) personal selling
E) direct marketing
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Challenging
145) Which promotional tool is the most immediate, customized, and interactive?
A) segmented advertising
B) sales promotion
C) direct marketing
D) horizontal diversification
E) public relations
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Easy
146) Under which promotional mix strategy does the producer direct its marketing activities
toward channel members to induce them to carry the product and promote it to final
consumers?
A) pull strategy
B) blitz strategy
C) push strategy
D) buzz strategy
E) pulse strategy
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Easy
44
147) The manufacturer of Crest toothpaste provides free samples of its toothpaste to dentists
and encourages them to distribute these samples to their patients and to inform the patients
about advantages of using Crest. The manufacturer of Crest toothpaste is using
.
A) sales promotion
B) direct marketing
C) a push strategy
D) a pull strategy
E) a vertical diversification strategy
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Challenging
148) Glasis is a type of paint made specifically for use on cars. An ad in Motor Trend magazine
advising consumers to request their auto body shops to use Glasis paint is an example of how a
company uses
.
A) word-of-mouth influence
B) public relations
C) buzz marketing
D) a push strategy
E) a pull strategy
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Challenging
149) Business-to-consumer companies are more likely to emphasize a
promotion
strategy, while business-to-business companies are more likely to emphasize a
promotion strategy.
A) pull; push
B) push; pull
C) pulse; pull
D) blitz; pull
E) push; blitz
F) Skill:
Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
45
150) John Deere does very little promoting of its lawn mowers and garden tractors to final
consumers. Instead, John Deere's sales force works with Lowe's, Home Depot, independent
dealers, and other channel members, who in turn sell John Deere products to final consumers.
According to this information, which of the following promotion mix strategies is being used
by John Deere?
A) public relations strategy
B) direct marketing strategy
C) push strategy
D) blitz strategy
E) pull strategy
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
151) Which of the following would be classified as bait-and-switch advertising?
A) advertising a cheaper brand but making only a more expensive one available to customers
B) advertising the advantages of a product by comparing it to its competitors
C) providing free samples of a product
D) providing discount coupons with a product
E) favoring certain customers over others through trade promotions
F)
AACSB: Ethical understanding and reasoning
Skill: Application
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Challenging
152) The FTC has adopted a three-day cooling-off rule to give special protection to
.
A) customers who purchased because of deceptive advertising
B) customers who purchased because of bait-and-switch tactics
C) customers who were not seeking a product
D) resellers who do not receive proportionately equal treatment from manufacturers
E) resellers who are not covered by the Robinson-Patnam Act
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
46
153) Of the following actions, which is permitted in personal selling activities?
A) obtain or use trade secrets
B) criticize competitors by using inaccurate information
C) bribes to those who can influence a sale
D) offer incentives such as discounts based on size of an order
E) stretching the truth when describing advantages of a product
F)
AACSB: Ethical understanding and reasoning
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
Refer to the scenario below to answer the following question(s).
John Mayes opened Sparkle Janitorial in 2005. John began his business by acquiring two
contracts for office cleaning services from two local manufacturing facilities. For two years,
John and his wife, Barb, performed the cleaning services alone. After acquiring three additional
cleaning contracts in 2007, John hired two employees. "Up to that point, we had room to grow
but we really had no advertising plan," John stated. "We were relying mostly on word-ofmouth."
By 2010, Barb hired another two full-time employees to begin Sparkle's new endeavor: carpet
cleaning in homes and offices. "Competition was getting tough for both of our services at that
point," Barb added. "We ran a local radio spot three times each week. Then we had an
advertiser print coupons on placemats. That gave us a little more exposure."
John and Barb Mayes admit that they did not realize the value of a sound promotional plan
earlier. "We wish we would have put together something catchy with a jingle long before now,"
they said.
154) When starting their business, John and Barb would most likely have benefitted from
understanding
.
A) social media
B) buzz marketing
C) public relations campaigns
D) network television advertising
E) integrated marketing communications
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
47
155) The affordable method of setting advertising budgets takes into consideration the effects
of promotion on sales.
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
156) The affordable method of setting advertising budgets more frequently results in
overspending, rather than in underspending.
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
157) The percentage-of-sales method wrongly views sales as the cause of promotion rather than
as the result.
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
158) The percentage-of-sales budget is based on the availability of funds rather than on
opportunities.
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Easy
159) The affordable method involves setting promotion budgets to match competitors' outlays.
160)
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
161) Large-scale advertising conveys a positive message about the seller's size, popularity, and
success.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Easy
48
162) If the pull strategy is effective, then consumers will demand the product from channel
members, who will in turn demand it from producers.
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Challenging
163) Using a push strategy, the producer directs its marketing activities (primarily advertising
and consumer promotion) toward final consumers to induce them to buy the product.
164)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Easy
165) Integrating the promotion mix starts with suppliers.
166)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Easy
167) Because personal selling involves developing relationships, it is acceptable for salespeople
to stretch claims they make about a product's advantages.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Easy
49
168) Discuss sales promotion.
Answer: Sales promotion includes a wide assortment of tools—coupons, contests, discounts,
premiums, and others—all of which have many unique qualities. They attract consumer
attention, offer strong incentives to purchase, and can be used to dramatize product offers and
boost sagging sales. Sales promotions invite and reward quick response. Whereas advertising
says, "Buy our product," sales promotion says, "Buy it now." Sales promotion effects are often
short-lived, however, and often are not as effective as advertising or personal selling in building
long-run brand preference and customer relationships.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
169) Describe the significance of public relations as a promotion tool.
Answer: Public relations is very believable—news stories, features, sponsorships, and events
seem more real and believable to readers than ads do. PR can also reach many prospects who
avoid salespeople and advertisements—the message gets to buyers as "news" rather than as a
sales-directed communication. And, as with advertising, public relations can dramatize a
company or product. Marketers tend to underuse public relations or use it as an afterthought.
Yet a well-thought-out public relations campaign used with other promotion mix elements can
be very effective and economical.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
170) Discuss direct marketing.
lthough there are many forms of direct marketing—direct mail and catalogs, online marketing,
mobile marketing, social media and others—they all share four distinctive characteristics.
Direct marketing is less public: The message is normally directed to a specific person. Direct
marketing is immediate and customized: Messages can be prepared very quicklyand can be
tailored to appeal to specific consumers. Finally, direct marketing is interactive: It allows a
dialogue between the marketing team and the consumer, and messages can be altered
depending on the consumer's response. Thus, direct marketing is well suited to highly targeted
marketing efforts and building one-to-one customer relationships.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
50
171) When is it advisable to predominantly use sales promotions in a promotion mix?
Answer: Sales promotions are used to invite and reward quick response. Sales promotions are
short-lived; therefore, sales promotions are used when the marketer intends to make a quick,
dramatic impact on an intended audience with the use of coupons, samples, contest, etc.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
172) Marketers can choose from two basic promotion mix strategies—push promotion or pull
promotion. Compare these two strategies.
Answer: Using the pull strategy, the producer directs its marketing activities toward final
consumers to induce them to buy the product; if the pull strategy is effective, consumers will
then demand the product from channel members, who will in turn demand it from producers.
Using a push strategy, the producer focuses instead on the channel members, persuading them
to carry the product and promote it to final consumers.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
173) What is the FTC three-day cooling off rule? What purpose does the rule serve?
Answer: The three-day cooling-off rule gives special protection to customers who are not
seeking products. Under this rule, customers who agree in their own homes to buy something
costing more than $25 have 72 hours in which to cancel a contract or return merchandise and
get their money back, no questions asked.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
51
174) Discuss the percentage-of-sales method used for setting the total budget for advertising.
Answer: The percentage-of-sales method involves setting the promotion budget at a certain
percentage of current or forecasted sales. The percentage-of-sales method is simple to use and
helps management think about the relationships between promotion spending, selling price, and
profit per unit. It wrongly views sales as the cause of promotion rather than as the result. Thus,
the percentage-of-sales budget is based on the availability of funds rather than on opportunities.
It may prevent the increased spending sometimes needed to turn around falling sales. Finally,
the method does not provide any basis for choosing a specific percentage, except what has been
done in the past or what competitors are doing.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
175) Discuss the affordable method of setting the total budget for advertising.
Answer: Some companies use the affordable method: They set the promotion budget at the
level they think the company can afford. Small businesses often use this method, reasoning that
the company cannot spend more on advertising than it has. They start with total revenues,
deduct operating expenses and capital outlays, and then devote some portion of the remaining
funds to advertising.
Unfortunately, this method of setting budgets completely ignores the effects of promotion on
sales. It tends to place promotion last among spending priorities, even in situations in which
advertising is critical to the firm's success. It leads to an uncertain annual promotion budget,
which makes long-range market planning difficult. Although the affordable method can result
in overspending on advertising, it more often results in underspending.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
52
176) What is personal selling? What are the advantages and disadvantages of a firm using
personal selling to promote a product or service?
Answer: Personal selling is the most effective tool at certain stages of the buying process,
particularly in building up buyers' preferences, convictions, and actions. It involves personal
interaction between two or more people, so each person can observe the other's needs and
characteristics and make quick adjustments. Personal selling also allows all kinds of customer
relationships to spring up, ranging from matter-of-fact selling relationships to personal
friendships. An effective salesperson keeps the customer's interests at heart to build a long-term
relationship by solving a customer's problems. Finally, with personal selling, the buyer usually
feels a greater need to listen and respond, even if the response is a polite "No thank-you."
These unique qualities come at a cost, however. A sales force requires a longer-term
commitment than does advertising—although advertising can be turned up or down, the size of
a sales force is harder to change. Personal selling is also the company's most expensive
promotion tool, costing companies on average $600 or more per sales call, depending on the
industry.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
177) Discuss the advantages and disadvantages of advertising.
dvertising can reach masses of geographically dispersed buyers at a low cost per exposure,
and it enables the seller to repeat a message many times. Beyond its reach, large- scale
advertising says something positive about the seller's size, popularity, and success.
Because of advertising's public nature, consumers tend to view advertised products as more
legitimate. Advertising is also very expressive; it allows the company to dramatize its products
through the artful use of visuals, print, sound, and color.
Advertising also has some shortcomings. Although it reaches many people quickly, advertising
is impersonal and lacks the direct persuasiveness of company salespeople. For the most part,
advertising can carry on only a one-way communication with an audience, and the audience
does not feel that it has to pay attention or respond. In addition, advertising can be very costly.
AACSB: Application of knowledge; Written and oral communication
Skill: Concept
Objective: LO 14.4: Explain the methods for setting the promotion budget and factors that affect
the design of the promotion mix.
Difficulty: Moderate
53
Principles of Marketing, 17e (Kotler/Armstrong)
Chapter 15 Advertising and Public Relations
1) Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an
identified sponsor is called
.
A) sales promotion
B) direct marketing
C) advertising
D) personal selling
E) public relations
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.1: Define the role of advertising in the promotion mix.
Difficulty: Easy
2) Advertising is used mostly by
.
A) governments
B) business firms
C) social agencies
D) independent professionals
E) not-for-profit organizations
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.1: Define the role of advertising in the promotion mix.
Difficulty: Easy
3) Marketing management must make important decisions when developing an advertising
program. Which of the following is NOT one of those decisions?
A) evaluating advertising effectiveness
B) developing advertising strategy
C) setting advertising objectives
D) designing products and distribution
E) setting the advertising budget
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.1: Define the role of advertising in the promotion mix.
Difficulty: Easy
1
4) Competitive parity and task methods are considered when making decisions about
A) sales objectives
B) budget
C) message structure
D) media selection
E) message effectiveness
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.1: Define the role of advertising in the promotion mix.
Difficulty: Easy
5) Advertising is the least used of the major promotion tools, although it has great potential for
building consumer awareness and reference.
.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.1: Define the role of advertising in the promotion mix.
Difficulty: Moderate
6) Advertising is a good way to engage, inform, and persuade, regardless of the objective of the
message.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.1: Define the role of advertising in the promotion mix.
Difficulty: Moderate
7) Marketing management must make four important decisions when developing an advertising
program. Briefly describe these four decisions.
Answer: Marketing management should first set advertising objectives, which can be classified
by primary purpose: to inform, persuade, or remind. Next, the advertising budget needs to be
determined, which will often depend on the product's stage in the product life cycle. The third
step is to develop an advertising strategy, which involves message decisions and media
decisions. The last step is to evaluate the effectiveness of the advertising campaign.
AACSB: Analytical thinking; Written and oral communications
Skill: Concept
Objective: LO 15.1: Define the role of advertising in the promotion mix.
Difficulty: Moderate
2
8) The decisions about impact and engagement of an advertisement fall into the category of
decisions.
A) sales objectives
B) budget
C) message
D) media
E) advertising evaluations
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
9) An advertising objective is classified by its primary purpose, which is to inform, persuade, or
.
A) reciprocate
B) compete
C) remind
D) explain
E) suggest
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
10) Advertising objectives should be based on the marketing mix, positioning, and
A) differentiation
B) past decisions about the target market
C) costs of different media choices
D) ability to create special events
E) novelty of the product advertised
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
3
.
11) Advertising is a good way to
, inform, and persuade.
A) educate
B) create
C) define
D) engage
E) harvest
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
12) Which of the following is most likely an objective of informative advertising?
A) build brand preference
B) change customer perceptions of brand value
C) encourage customers to switch brands
D) suggest new uses for a product
E) keep the brand in customer minds during off-seasons
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Challenging
13) When P&G developed the Mr. Clean Magic Eraser, the company needed to explain how the
product cleans grime from walls without removing paint. What type of campaign was most
likely used by P&G for the Mr. Clean Magic Eraser?
A) informative advertising
B) persuasive advertising
C) reminder advertising
D) developmental advertising
E) comparative advertising
F)
AACSB: Reflective thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Challenging
4
14) When the advertising objective is to build primary demand for a new product category,
advertising will most likely be used.
A) persuasive
B) informative
C) comparative
D) patronage
E) institutional
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
15) Which of the following is an objective of persuasive advertising?
A) communicate customer value
B) correct false impressions
C) describe available services and support
D) keep the brand in a customer's mind during off-seasons
E) engage customers and create brand community
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Challenging
16)
becomes more important as competition increases. With this type of advertising,
a company's objective is to build selective demand.
A) Institutional advertising
B) Informative advertising
C) Reminder advertising
D) Not-for-profit advertising
E) Persuasive advertising
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
5
17) Persuasive advertising becomes
advertising when a company directly or
indirectly compares its brand with one or more other brands.
A) informative
B) reminder
C) attack
D) covert
E) institutional
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
18) Comparative advertising is also known as
advertising.
A) attack
B) institutional
C) covert
D) reminder
E) informative
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
19) When Verizon Wireless began offering the iPhone, it used its "Can you hear me now?"
slogan to attack AT&T's rumored spotty service. This example best illustrates
.
A) informative advertising
B) reminder advertising
C) comparative advertising
D) covert advertising
E) institutional advertising
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
6
20) Encouraging customers to switch brands is most likely the objective of
advertising.
A) informative
B) reminder
C) covert
D) persuasive
E) institutional
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
21) Which of the following types of advertising will most likely result in an advertising war?
A) covert advertising
B) institutional advertising
C) informative advertising
D) comparative advertising
E) reminder advertising
F)
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
22) Describing available services and support is most likely a goal of
advertising.
A) reminder
B) competitive
C) covert
D) attack
E) informative
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
7
23) Keeping the brand in a customer's mind during off-seasons is most likely a goal of
advertising.
A) reminder
B) attack
C) informative
D) covert
E) competitive
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
24) Which of the following is one of the primary goals of reminder advertising?
A) maintain customer relationships
B) build brand preference
C) correct false impressions
D) inform the market of a price change
E) restore company image
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
25) A product in the maturity stage will most likely require
advertising.
A) informative
B) comparative
C) persuasive
D) reminder
E) covert
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
8
26) Advertising has numerous goals. Which of the following is NOT one of those goals?
A) to help move consumers through the buying process
B) to work with lobbyists and legislators in developing industry regulations
C) to move people to immediate action
D) to build or strengthen long-term customer relationships
E) to engage customers and change the way they think or feel about the brand
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
27) After determining its advertising objectives, a company's next step in developing an
advertising program is to
.
A) set an advertising budget
B) determine the media vehicle
C) use cash rebate offers
D) evaluate the advertising campaign
E) develop a message strategy
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
28) Which of the following most likely requires the smallest advertising budget?
A) products in competitive markets
B) undifferentiated brands
C) new products
D) low-share brands
E) mature brands
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
9
29) With the help of
systems, consumers can avoid watching ads.
A) USB
B) CCTV
C) HDMI
D) DVR
E) XBMC
F)
AACSB: Information technology
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
30) Which of the following brands most likely requires heavy advertising in order to be set
apart from similar products?
A) undifferentiated brands
B) specialty brands
C) international brands
D) mature brands
E) high-share brands
F)
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
31) Brands in a market with many competitors and high advertising clutter must
.
A) have very high prices compared to competitors
B) be advertised only through print and social media
C) be advertised more heavily to be noticed in the marketplace
D) never be advertised using informative advertising
E) be advertised only during the mature stage of the product life cycle
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
10
32) Which of the following would be the most likely result of slashing ad spending for a
product?
A) increased popularity
B) reduced long-term market share
C) improved brand image
D) increased short-term sales
E) increased long-term market share
F)
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
33) When the product differs greatly from those of competitors,
.
A) advertising can make customers aware of the product
B) firms should advertise similarly to competitors, to remind consumers of the product
C) advertising can point out the differences to consumers
D) firms should advertise little as the uniqueness will not require education of consumers
E) advertising can reaffirm a consumer's decision to purchase
F)
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
34) Which of the following is a major element of developing an advertising strategy?
A) selecting advertising media
B) using sophisticated statistical models
C) setting advertising objectives
D) evaluating advertising campaigns
E) setting the advertising budget
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
11
35) Which of the following statements is true regarding the vital importance of the mediaplanning function?
A) With changing technologies, media costs are declining.
B) Brand content is usually created in-house by the company.
C) Which media to use is sometimes more critical than the creative elements of the messaging.
D) Market targeting has declined in importance in the planning stages.
E) Because so many consumers use the same mobile and social media applications, messaging
can be less focused.
AACSB: Application of knowledge; Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
36) To break through the clutter, many marketers have subscribed to a new merging of
advertising and entertainment, dubbed
.
A) Madison & Vine
B) Wall St. & Fifth Ave
C) buzz marketing
D) podcasting
E) webisodes
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
37) The aim of
is to make an advertisement so useful or entertaining that people want
to watch it.
A) branded entertainment
B) advertainment
C) viral marketing
D) buzz marketing
E) word-of-mouth advertising
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
12
38) In addition to advertainment, advertisers are creating content that
.
A) provides much more information than ads did in the past
B) they expect to go viral
C) helps the advertiser save money
D) looks less like ads and more like short films or shows
E) confuses viewers about whether they are ads
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
39) Product placement in television programs and movies is an example of
.
A) branded entertainment
B) advertainment
C) direct marketing
D) buzz marketing
E) sales promotion
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
40) Pepsi being prominently featured on episodes of Empire is an example of
.
A) advertainment
B) buzz marketing
C) personal selling
D) sales promotion
E) product placement
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
13
41) Which term refers to the general idea that will be communicated to consumers through an
advertisement?
A) advertising appeal
B) message strategy
C) consumer-generated message
D) creative concept
E) message execution
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
42) The first step in creating effective advertising messages is
.
A) selecting specific media vehicles
B) planning a message strategy
C) determining return on advertising investment
D) choosing media timing
E) executing the message
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
43) Developing an effective message strategy begins with identifying
that can be
used as advertising appeals.
A) consumer trends
B) competitors' weaknesses
C) competitors' strengths
D) customer benefits
E) consumer emotions
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
14
44)
tend to be straightforward outlines of benefits and positioning points that the
advertiser wants to stress.
A) Promotion mix plans
B) Message strategy statements
C) Creative concept strategies
D) Advertainment statements
E) Branded entertainment plans
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
45) After creating a message strategy statement, the advertiser must develop a compelling
that will bring the message strategy to life in a distinctive and memorable way.
A) creative concept
B) customer strategy
C) customer benefit
D) execution style
E) media vehicle
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
46) Which of the following are the three characteristics that an advertising appeal should have?
A) engaging, informative, and stylish
B) trendy, compelling, and appealing
C) meaningful, believable, and distinctive
D) unique, emotional, and entertaining
E) humorous, memorable, and interesting
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
15
47) In its advertisements, Timex promotes its affordable and sturdy watches. Fossil emphasizes
style and fashion in its advertisements, and Rolex stresses luxury and status. These are all
examples of
appeals.
A) rational
B) reminder
C) believable
D) entertainment
E) distinctive
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
48) The advertiser must find the best approach, style, words, format, and
for
executing the message.
A) media
B) cost
C) visuals
D) tone
E) endorser
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
49) Which message execution style depicts average people using a product in an everyday
setting?
A) lifestyle
B) scientific evidence
C) slice of life
D) personality symbol
E) testimonial evidence
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
16
50) An ad for a new convection oven shows a busy professional woman using the convection
oven to cook dinner for her family. Which of the following message execution styles is
illustrated in this example?
A) testimonial evidence
B) slice of life
C) fantasy
D) scientific evidence
E) mood or image
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
51) An ad for Athleta active wear shows a woman in a complex yoga pose and states: "If your
body is your temple, build it one piece at a time." This ad uses the
execution style.
A) slice of life
B) lifestyle
C) fantasy
D) scientific evidence
E) personality symbol
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
52) Which of the following message execution styles focuses on the company's skill and
knowledge in making the product?
A) endorsement
B) scientific evidence
C) slice of life
D) technical expertise
E) testimonial evidence
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
17
53) A pharmaceutical ad features a world-renowned heart surgeon describing the benefits of a
medication. Which of the following message execution styles is illustrated in this example?
A) mood or image
B) fantasy
C) personality symbol
D) musical
E) testimonial evidence
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
54) An IKEA ad shows consumers creating fanciful room designs with IKEA furniture, such as
"a bedroom for a queen made by Bree and her sister, designed by IKEA." Which of the
following message execution styles is illustrated in this example?
A) mood or image
B) musical
C) fantasy
D) lifestyle
E) personality symbol
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
55) Apple used an album by the band U2 to promote the Apple Watch announcement. Which of
the following message execution styles is illustrated in this example?
A) personality symbol
B) musical
C) fantasy
D) lifestyle
E) slice of life
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
18
56) The advertisements that use the Aflac duck or the GEICO gecko are using the message
execution style of
.
A) lifestyle
B) technical expertise
C) testimonial evidence
D) slice of life
E) personality symbols
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
57) Progressive Insurance uses Flo to represent its product. Which of the following message
execution styles was used by Progressive Insurance?
A) mood or image
B) fantasy
C) personality symbol
D) technical expertise
E) musical
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
58) Which message execution style involves presenting survey data indicating that a brand is
better than other brands?
A) scientific evidence
B) testimonial evidence
C) endorsement
D) technical expertise
E) slice of life
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
19
59) Which of the following message execution styles features a highly believable or likable
source endorsing the product?
A) musical
B) mood or image
C) testimonial evidence
D) lifestyle
E) slice of life
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
60) Maybelline used Gigi Hadid, a model, to endorse a new range of cosmetics. This message
execution style is referred to as
.
A) lifestyle
B) testimonial evidence
C) image
D) technical expertise
E) personality symbol
F)
AACSB: Application of knowledge
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
61) The McDonald's fast-food restaurant chain uses Ronald McDonald, a clown, as its primary
character. Which message execution style is used by McDonald's?
A) technical expertise
B) lifestyle
C) personality symbol
D) image
E) slice of life
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
20
62) An illustration, a headline, and a copy are the three
elements of an advertisement.
A) tone
B) mood
C) format
D) reach
E) frequency
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
63) What is the first element that a reader most likely notices in a print ad?
A) copy
B) illustration
C) headline
D) slogan
E) tone
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
64) The main block of text in a print ad is referred to as the
.
A) copy
B) testimonial evidence
C) headline
D) slogan
E) message strategy statement
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
21
65) Which of the following is illustrated by an amateur 30-second video, developed by a
consumer, telling the story of the online crafts marketplace, Etsy.com?
A) personal selling
B) consumer-generated messages
C) consumer ethnocentrism
D) sales promotion
E) consumerism
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
66) Television, as a medium of advertisement, is characterized by
.
A) high audience selectivity
B) low absolute costs
C) poor mass-marketing coverage
D) fleeting exposure
E) high cost per exposure
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
67) What is an advantage of consumer-generated content?
A) It will be less expensive.
B) It cannot be controlled by the company.
C) It can provide new creative ideas.
D) It can entice customers to become brand evangelists.
E) It can use social media sites more effectively than the company can.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
22
68) Which of the following is a major step in selecting advertising media?
A) determining reach, frequency, and impact
B) selecting message execution style
C) developing a compelling creative concept
D) deciding on format elements
E) planning a message strategy
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
69)
is a measure of the percentage of people in a target market who are exposed to an
ad campaign during a given period of time.
A) Frequency
B) Qualitative value
C) Impact
D) Premium
E) Reach
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
70) Which of the following is an advantage of using newspapers as an advertising medium?
A) long life
B) good reproduction quality
C) large pass-along audience
D) broad acceptability
E) no ad competition within the same medium
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
23
71) You receive a report that 68 percent of your target market has been exposed to your ad
campaign during a given period of time. Which of the following aspects of media selection is
represented by this information?
A) frequency
B) reach
C) impact
D) engagement
E) qualitative value
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
72) Which of the following statements about magazines as an advertising medium is true?
A) Magazines have long ad purchase lead times.
B) Magazines cannot offer high geographic selectivity.
C) Magazines lack credibility.
D) Magazines provide better local coverage than newspapers.
E) Magazines have poor reproduction of images.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
73) The number of times an average person in the target market is exposed to a message is
known as the
of the message.
A) quantitative value
B) reach
C) frequency
D) exposure rate
E) turnover rate
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
24
74) Which of the following is a disadvantage of using direct mail as an advertising medium?
A) low audience selectivity
B) no flexibility
C) severe ad competition
D) relatively high cost per exposure
E) lack of personalization
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
75) Which term refers to the qualitative value of message exposure through a given medium?
A) reach
B) turnover rate
C) efficiency
D) media impact
E) frequency
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
76) Which of the following is a media measure?
A) consumer price index
B) GDP per capita
C) wholesale price index
D) click-through rate
E) human development index
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
25
77) Which of the following statements is most likely true about radio as an advertising medium?
A) Radio advertising is typically quite expensive.
B) Radio ensures good attention from the target audience.
C) Radio offers very low audience selectivity.
D) Radio prohibits the use of segmentation strategies.
E) Radio advertising is characterized by good local acceptance.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
78) Which of the following is a digital medium that is used by advertisers to reach consumers
directly?
A) smartphone
B) direct mail
C) newspapers
D) billboards
E) television
F)
AACSB: Information technology
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
79) Which of the following statements about outdoor media is true?
A) It has no creative limitations.
B) It is characterized by higher costs per exposure.
C) It has good positional selectivity.
D) It has very limited flexibility.
E) It has high audience selectivity.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
26
80) You want to advertise your new product. You want good mass marketing coverage and low
cost per exposure. You also want to combine sight, sound, and motion and make the
advertisement appealing to the senses. You should choose
as your advertising media.
A) newspaper
B) radio
C) magazines
D) television
E) direct mail
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
81) Snappy Cameras is launching a new advertising campaign to demonstrate the high quality
of its digital cameras. Which media option would give the audience the most control over
exposure to the ads and interactive capabilities?
A) the Internet
B) newspaper
C) TV
D) radio
E) billboard
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Challenging
82) Rather than measuring click-through rates, companies now want to track
as a
more accurate measure of the engagement of the consumers in the message.
A) ratings
B) consumer expressions
C) listenership
D) consumer impressions
E) readership
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
27
83) While traditional mass media still make up a majority of today's media mixes, companies
have added digital, mobile, and social media that cost less, target more effectively, and
.
A) are quicker to create
B) involve more departments in the company
C) must be chosen carefully, since there are so many options
D) engage consumers more fully
E) are challenging to schedule
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
84) Finding ads on shopping carts, ATMs, transit buses, and even municipal garbage cans is
known as
.
A) paid media
B) earned media
C) shared media
D) media multitasking
E) alternative media
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Challenging
85) A Spanish-language channel runs its ads only in Hispanic neighborhoods. This is an
example of
.
A) broadcasting
B) buzz marketing
C) narrow programming
D) media multitasking
E) personal selling
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
28
86) The term media multitaskers refers to
.
A) competing brands which use the same media vehicle
B) people who absorb more than one medium at a time
C) media planners who also head the creative department
D) media planners who use more than one advertising medium
E) ad agencies whose clients are competitors of each other
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
87) Modern Family and The Wall Street Journal are both examples of
—specific
media within each general media type.
A) alternative media
B) major media
C) media vehicles
D) media multitaskers
E) micromedia
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
88) When selecting a media vehicle, the media planner looks both at the total cost of using a
medium and at the
.
A) cost per thousand persons reached
B) cost of premium offers
C) cost of the magazine it is using
D) profit margin
E) continuity cost
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
29
89) When a media planner determines whether an advertisement for diapers should be placed in
Parents magazine or Sports Illustrated magazine, the planner is evaluating the media vehicle's
.
A) profit margin
B) flexibility
C) rate of depreciation
D) audience quality
E) cost per exposure
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
90) Audience quality, audience engagement, and editorial quality are most likely to be
considered when a media planner
.
A) decides on media timing
B) selects an execution style
C) selects a media vehicle
D) evaluates return on investment
E) measures the communication effects of an advertisement
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
91) In the context of media timing,
means making decisions on scheduling ads either
following the seasonal pattern, opposing the seasonal pattern, or being the same all year.
A) routing
B) continuity
C) sequencing
D) narrowcasting
E) seasonal advertising
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
30
92) To measure the
effects of an ad after it has aired, the advertiser can evaluate how
the ad affected consumer recall, product awareness, attitude changes, and preference.
A) sales
B) profit
C) communication
D) continuity
E) associativity
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
93) Which of the following characterizes standardized global advertising?
A) higher advertising costs
B) no global advertising coordination
C) higher appeal to varying demographics
D) a more consistent worldwide image
E) lower reach
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
31
Refer to the scenario below to answer the following question(s).
Most clients of Second Avenue have learned about the store through word-of-mouth
communication. This small retailer of quality secondhand children's clothing thrives on the sale
of a vast inventory of children's clothing placed on consignment. "Because small children grow
so quickly," Second Avenue's owner commented, "they often outgrow many of their clothes
before they've hardly been worn!"
Second Avenue provides a way for people to sell their children's clothing, earn a few dollars,
and buy the next larger size. "We're extremely picky about the condition of the clothing we
stock," the owner stated, "but we sell most items at a 60-percent discount."
94) Which of the following media options would be the LEAST costly for Second Avenue's
promotional efforts?
A) periodic advertising in a local newspaper that follows a regular monthly schedule
B) daily advertisements on a cable television station
C) daily commercials during the local evening news
D) a billboard placed on the nearest interstate highway
E) a billboard placed in a supercenter
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Challenging
95) Second Avenue has just developed a 30-second television ad that features three different
shoppers enthusiastically shopping in the store and appreciating its products. This ad uses the
execution style.
A) slice of life
B) technical expertise
C) personality symbol
D) fantasy
E) image
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Challenging
32
96) A specific communication task to be accomplished with a specific target audience during a
specific period of time is called an advertising objective.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
97) Informative ads are used primarily in the growth stage of the product life cycle.
98)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
99) The most important objective of reminder advertising is telling the market about a new
product.
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
100) Persuasive advertising aims to build broad
demand.
101)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
102) While cuts in advertising may appear to do little short-term harm to sales, reducing ad
spending may cause long-term damage to a brand's image and market share.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
33
103) The aim of advertainment is to make ads so entertaining or useful that people want to
watch them.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
104) The most common form of advertainment is product placement.
105)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
106) A brief glimpse of the latest LG phone on the television series Modern Family is an
example of an advertainment.
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
107) Branded entertainment involves making the brand an inseparable part of some other form
of entertainment.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
108) Professional athletes such as Peyton Manning and Maria Sharapova are featured in
advertisements for Gatorade. According to this information, Gatorade is utilizing branded
entertainment.
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
34
109) The purpose of advertising is to get consumers to think about or react to the product or
company in a certain way.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
110) The message execution style of personality symbol involves identifying and presenting
ordinary people saying how much they like a product.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
111) Although television advertising has high absolute costs, its cost per exposure is relatively
low.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
112) In an endorsement style of execution, the endorsers can be characters that represent the
product.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
113) The direct mail medium has very low cost per exposure.
114)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
35
115) Reach is a measure of how many times the average person in the target market is exposed
to the message.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
116) While advertisers can accurately measure the communications effects of their ads,
measuring sales and profit effects are more difficult.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
117) The communication effects of advertisements and ad campaigns are more difficult to
measure than the sales and profit effects.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
118) Agencies bring an outside point of view to solving a company's problems, along with lots
of experience from working with different clients and situations.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
119) Recently, the increased use of online social networks and video sharing has reduced the
need for advertising standardization with global brands.
AACSB: Information technology
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
36
Difficulty: Moderate
37
120) Standardization of advertising leads to lower advertising costs, greater global advertising
coordination, and a more consistent worldwide image.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
121) Advertising media costs and availability differ vastly from country to country.
122)
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
123) What is an advertising objective? What are the three primary types of advertising
objectives?
n advertising objective is a specific communication task to be accomplished with aspecific
target audience during a specific period of time. Advertising objectives can be classified by
primary purpose—whether the aim is to inform, persuade, or remind.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
124) Describe the main objectives of informative advertising.
Answer: The main objectives of informative advertising are:
-Communicating customer value
-Building a brand and company image
-Telling the market about a new product
-Explaining how a product works
-Suggesting new uses for a product
-Informing the market of a price change
-Describing available services and support
-Correcting false impressions
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
38
125) Describe the three characteristics that advertising appeals should have?
dvertising appeals should be meaningful, believable, and distinctive. Meaningfulappeals
point out benefits that make the product more desirable or interesting to consumers.
Believable appeals lead consumers to believe that the product or service will deliver the
promised benefits. Finally, distinctive appeals should tell how the product is better than the
competing brands.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
126) When would a marketer most likely use a comparative ad?
omparative ads are a type of persuasive ad in which a company directly or indirectlycompares
its brand with one or more other brands. This type of ad is used as competition increases within
a category.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
127) Describe the main objectives of reminder advertising.
Answer: The main objectives of reminder advertising are:
-Maintaining customer relationships
-Reminding consumers that the product may be needed in the near future
-Reminding consumers where to buy the product
-Keeping the brand in a customer's mind during off-seasons
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
128) How has clutter in television and other advertising media created an increasingly hostile
advertising environment?
Answer: The majority of Americans believe there are too many television commercials, and
they are faced with almost 20 minutes of commercials for each hour of prime-time television;
viewers are increasingly using technologies to skip past commercials.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
39
129) Discuss the concepts of advertainment and branded entertainment.
Answer: This merging of advertising and entertainment takes one of two forms: advertainment
or branded entertainment. The aim of advertainment is to make ads themselves so entertaining,
or so useful, that people want to watch them.
Branded entertainment (or brand integrations) involves making the brand an inseparable part of
some other form of entertainment. The most common form of branded entertainment is product
placements—embedding brands as props within other programming.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
130) Give an example of a slice-of-life message execution style.
Answer: Student answers will vary. Slice-of-life examples show one or more typical people
using a product in a normal setting. A McDonald's ad featuring a family eating burgers and fries
on a family outing is a slice-of-life message execution.
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
131) How does a personality symbol impact a brand?
personality symbol is a character that represents the product and with whom theconsumer
can relate; the personality symbol helps a consumer connect with the product.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
132) Give an example of testimonial evidence and explain the importance of the source.
Answer: Students answers will vary. Testimonial evidence features a highly believable or
likable source endorsing the product. Nike uses Maria Sharapova to endorse its sports
equipment and apparel.
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
40
133) Why is reach an important measure for a marketer?
Answer: Reach is a measurement of the percentage of people in the target market who are
exposed to the ad campaign during a given period of time.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
134) Explain why an ad might need to be modified from one country to the next.
ifferences in culture, demographics, and economic conditions will impact how effective or
acceptable an advertisement will be in other countries. In addition, changes in theuse of
language and imagery may be required to be appropriate to the foreign culture. Also, countries
have varying laws regulating advertising.
AACSB: Application of knowledge; Diverse and multicultural work environments
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
135) Describe any three message execution styles.
Answer: Students' answers may include any three of the following.
There are nine message execution styles. They are:
-Slice of life: shows one or more typical people using the product in a normal setting.
-Lifestyle: shows how a product fits in with a particular lifestyle.
-Fantasy: creates a fantasy around the product or its use.
-Mood or image: builds a mood or image around the product or service.
-Musical: shows people or cartoon characters singing about the product.
-Personality symbol: creates a character to represent the product.
-Technical expertise: depicts the company's expertise in making the product or delivering the
service.
-Scientific evidence: presents survey or scientific evidence that the brand is better than other
brands.
-Testimonial evidence/endorsement: features a highly believable or likable source endorsing the
product.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
41
136) How are companies taking advantage of interactive technologies to tap consumers for
message ideas and actual ads? What are the benefits and disadvantages of consumer-generated
advertising?
ompanies can now search existing video sites such as YouTube, set up their own Web sites,
create accounts on social networks such as Facebook, and sponsor ad-creation contests.
Several companies, such as Coca-Cola, MasterCard, and Frito-Lay, have used consumergenerated ads in national promotions. Consumer-generated advertising offers companies a
way to gather new perspectives on their products and develop insights into how their products
are used and seen by actual consumers. Also, consumer-generated advertising isvery
inexpensive. On the other hand, companies do not control consumer-generated material,
which can lead to conflicting, or even negative, messages about a brand.
AACSB: Application of knowledge; Information technology
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
137) Describe the four major steps in media selection.
Answer: First, the advertiser needs to decide on reach, frequency, and impact. Reach is a
measure of the percentage of people who are exposed to the advertisement; frequency is the
measure of how many times the average person is exposed to the message; impact is how
people feel about the advertisement. Next, media planners need to choose among major media
types: television, newspapers, magazines, direct mail, radio, outdoor, and Internet. They may
also select newer digital media such as cell phones. After the media type is selected, the
specific media vehicles must be identified. The last decision is media timing, which involves
determining how to schedule the advertising over the course of a year.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
42
138) List any four major media types and identify some of the strengths and weaknesses of each
of them.
Answer: Students' answers may include any four of the following.
-Television: Advantages are good mass marketing coverage, low cost per exposure, and appeals
to the senses; weaknesses are high total costs and high clutter.
-Newspapers: Strengths are timeliness, good local market coverage, and high believability;
weaknesses are short life and poor reproduction quality.
-Direct mail: Strengths are flexibility and capacity for personalization; weaknesses are relatively
high cost per exposure and "junk mail" image.
-Magazines: Strengths are high audience selectivity, credibility, and good pass-along readership;
weaknesses are high costs and long lead times.
-Radio: Strengths are good local acceptance and low cost; weaknesses are low attention and
fleeting exposure to messages.
-Outdoor: Strengths are flexibility, low cost, and low message competition; weaknesses are low
audience selectivity and creative limitations.
-Internet: Strengths include high selectivity, low cost, and interactive capabilities; weaknesses
are audience control of exposure and potentially low impact.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
139) Advertisers should regularly evaluate two types of advertising results: the communication
effects and the sales and profit effects. How are these two results measured?
Answer: Measuring the communication effects of an ad or ad campaign tells whether the ads
and media are communicating the ad message well. Individual ads can be tested before or after
they are run. Before an ad is placed, the advertiser can show it to consumers, ask how they like
it, and measure message recall or attitude changes resulting from it. After an ad is run, the
advertiser can measure how the ad affected consumer recall or product awareness, knowledge,
and preference. Pre- and post-evaluations of communication effects can be made for entire
advertising campaigns as well. Sales and profit effects of advertising are often much harder to
measure. Sales and profits are affected by many factors other than advertising—such as product
features, price, and availability. One way to measure the sales and profit effects of advertising is
to compare past sales and profits with past advertising expenditures. Another way is through
experiments. For example, to test the effects of different advertising spending levels, a
company could vary the amount it spends on advertising in different market areas and measure
the differences in the resulting sales and profit levels. More complex experiments could be
designed to include other variables, such as differences in the ads or media used.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Moderate
43
140) Explain how seasonality impacts media timing.
n advertiser must decide how to schedule the advertising over the course of a year. Suppose
sales of a product peak in December and drop in March (for winter outdoor gear, for instance).
The firm can vary its advertising to follow the seasonal pattern, oppose the seasonal pattern, or
be the same all year. Most firms do some seasonal advertising. For example, Mars currently
runs M&M's special ads for almost every holiday and "season," from Easter, Fourth of July,
and Halloween to the Super Bowl season and the Oscar season. The Picture People, thenational
chain of portrait studios, advertises more heavily before major holidays, such as Christmas,
Easter, Valentine's Day, and Halloween. Some marketers do only seasonal advertising: for
instance, P&G advertises its Vicks NyQuil only during the cold and flu season.AACSB:
Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Challenging
141) Discuss the advantages of using the services of an advertising agency.
Answer: Today's agencies employ specialists who can often perform advertising tasks better
than the company's own staff can. Agencies also bring an outside point of view to solving the
company's problems, along with lots of experience from working with different clients and
situations. So, today, even companies with strong advertising departments of their own use
advertising agencies. Most large advertising agencies have the staff and resources to handle all
phases of an advertising campaign for their clients, from creating a marketing plan to
developing ad campaigns and preparing, placing, and evaluating ads and other brand content.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.2: Describe the major decisions involved in developing an advertising
program.
Difficulty: Easy
142) Which of the following promotion tools involves building up a positive corporate image
and handling unfavorable stories and events?
A) sales promotion
B) personal selling
C) direct marketing
D) public relations
E) advertising
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Easy
44
143) Kathy Champe, a public relations specialist for a regional chain of pharmacies, regularly
contacts members of the local and statewide media with information about community events
and charity fundraisers sponsored by her company. This is an example of the
function of public relations.
A) press relations
B) product publicity
C) investor relations
D) lobbying
E) development
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Moderate
144) One of the functions performed by a PR department is
, which involves building
and maintaining relations with legislators and government officials to influence legislation and
regulation.
A) direct marketing
B) press relations management
C) investor relations management
D) lobbying
E) public affairs management
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Easy
145) One of the functions performed by a PR department is
, which involves working
with donors or members of nonprofit organizations to gain financial or volunteer support.
A) direct marketing
B) press relations management
C) investor relations management
D) development
E) lobbying
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Easy
45
146) The National Pork Board developed "Pork. The Other White Meat" campaign. The
campaign provided nutritional information and pork recipes in an attempt to encourage people
to view pork as a tasty alternative to poultry and fish. Which of the following functions was the
goal of this public relations campaign?
A) influencing government regulations on pork
B) gaining financial support for pork producers
C) creating newsworthy information about pork
D) maintaining relationships with pork producers
E) rebuilding consumer interest in pork
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Challenging
147) Which of the following public relations functions involves maintaining relationships with
shareholders and those in the financial community?
A) direct marketing
B) press relations management
C) investor relations management
D) development
E) lobbying
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Easy
148) Which of the following statements is most likely true of public relations?
A) It requires participating companies to pay for media space or time.
B) It can have the same impact on public awareness as advertising at much lower costs.
C) It is always handled by a third-party agency hired by the firm.
D) It forms a huge portion of the overall marketing budget of most large firms.
E) It plays an insignificant role in brand building with the increasing popularity of advertising.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Moderate
46
149) How can public relations have a strong impact at a much lower cost than advertising?
A) The firm can pay for content to be spread.
B) Interested consumers can create the content on their own and spread it.
C) Interesting brand stories, events, videos, or other content can be shared by sources out of the
company's control, but to its benefit.
D) Advertising agencies can minimize the impact of competitors' news.
E) Advertising costs have changed dramatically due to changing technologies.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Moderate
150) Which of the following is NOT one of the publics to which a public relations department
must answer?
A) stockholders
B) legislators
C) the press
D) employees
E) suppliers
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Moderate
151) Which of the following best explains why public relations is often overlooked as a tool for
supporting product marketing objectives?
A) Public relations departments are typically large divisions within corporations.
B) The time and costs associated with public relations prohibit its extensive use.
C) Public relations specialists lack the skills necessary to work with marketing experts.
D) Many public relations professionals see their jobs as communicating, not brand building.
E) The public relations department handles stockholders and legislators but not employees.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Moderate
47
Refer to the scenario below to answer the following question(s).
Most clients of Second Avenue have learned about the store through word-of-mouth
communication. This small retailer of quality secondhand children's clothing thrives on the sale
of a vast inventory of children's clothing placed on consignment. "Because small children grow
so quickly," Second Avenue's owner commented, "they often outgrow many of their clothes
before they've hardly been worn!"
Second Avenue provides a way for people to sell their children's clothing, earn a few dollars,
and buy the next larger size. "We're extremely picky about the condition of the clothing we
stock," the owner stated, "but we sell most items at a 60-percent discount."
152) The owner of Second Avenue wants to establish a community clothing drive to collect
clothes for a local children's shelter. The owner is planning to set up collection barrels outside
Second Avenue. In this case, which of the following public relations tools is being used by the
owner?
A) press relations
B) product publicity
C) lobbying
D) development
E) public affairs
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Challenging
153) Companies use PR to build good relations with consumers, investors, the media, and their
communities.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Easy
154) PR can have a strong impact on public awareness at a much higher cost than advertising
can.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Easy
48
155) When using public relations, the company pays for space and time in the media.
156)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Easy
157) Changing technologies, especially with digital content, is significantly increasing the role
of public relations in a firm's integrated marketing communications program.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Easy
158) Describe the significance of public relations as a mass-promotion tool.
Answer: Public relations is used to promote products, people, places, ideas, activities,
organizations, and even nations. Companies use PR to build good relations with consumers,
investors, the media, and their communities. Trade associations have used PR to rebuild interest
in commodities, such as eggs, apples, potatoes, milk, and even onions.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Moderate
159) Explain why a public relations campaign can be a more cost-effective option for
corporations than an advertising campaign.
Answer: Public relations can have a strong impact on public awareness at a much lower cost
than advertising can. The company does not pay for the space or time in the media. Rather, it
pays for a staff to develop and circulate information and to manage events. If the company
develops an interesting story or event, it could be picked up by several different media, having
the same effect as advertising that would cost millions of dollars. And it would have more
credibility than advertising.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Moderate
49
160) Describe public relations and any three of its main functions.
Answer: Student answers may include this description and any three function descriptions.
Public relations departments build good relations with the company's various publics by
obtaining favorable publicity, building up a good corporate image, and handling or heading off
unfavorable rumors, stories, and events. Some of its functions are:
-Product publicity: publicizing specific products
-Public affairs: building and maintaining national or local community relations
-Lobbying: building and maintaining relations with legislators and government officials to
influence legislation and regulation
-Press relations: creating and placing newsworthy information in the new media to attract
attention to a person, product, or service associated with the company
-Investor relations: maintaining relationships with shareholders
-Development: working with donors or members of nonprofit organizations to gain financial or
volunteer support
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.3: Define the role of public relations in the promotion mix.
Difficulty: Moderate
161) Which of the following is NOT a major public relations tool?
A) trade shows and conferences
B) stationery, logos, and uniforms
C) public service activities
D) videos
E) annual reports and brochures
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.4: Explain how companies use PR to communicate with their publics.
Difficulty: Easy
162) Which of the following is a major tool used by PR professionals?
A) standardized global advertising
B) market penetration
C) news
D) bait-and-switch strategy
E) product packaging
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.4: Explain how companies use PR to communicate with their publics.
Difficulty: Easy
50
163) News conferences, press tours, and grand openings are examples of
, a type of
tool commonly used by public relations professionals.
A) public service activities
B) special events
C) social networking
D) development
E) investor relations
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.4: Explain how companies use PR to communicate with their publics.
Difficulty: Easy
164) Which of the following would most likely be included in the written materials prepared by
PR professionals to reach and influence target markets?
A) employee code of conduct
B) annual reports
C) memorandum of association
D) advertisement jingles
E) white papers
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.4: Explain how companies use PR to communicate with their publics.
Difficulty: Easy
165) Which of the following is an example of audiovisual material used by PR professionals?
A) blogs
B) logos
C) vision statements
D) brochures
E) online videos
F)
AACSB: Information technology
Skill: Concept
Objective: LO 15.4: Explain how companies use PR to communicate with their publics.
Difficulty: Moderate
51
166) Logos, uniforms, brochures, and company trucks are all examples of
materials
that can be used to help a company create a visual image which the public can immediately
recognize.
A) direct marketing
B) social marketing
C) public service
D) corporate identity
E) buzz marketing
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.4: Explain how companies use PR to communicate with their publics.
Difficulty: Easy
167) In an attempt to set the company apart from its competitors, Central Parcel Service (CPS)
has its employees wear brown uniforms and drive brown trucks. What type of public relations
tool is being used by CPS?
A) buzz marketing
B) corporate logos
C) corporate identity materials
D) product publicity
E) public service materials
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 15.4: Explain how companies use PR to communicate with their publics.
Difficulty: Moderate
168) Steps involved in determining when and how to use product public relations include
, choosing the PR message and media, implementing the PR plan, and evaluating the
results, plus integrating with the full marketing communications effort.
A) defining the budget
B) hiring the media creators
C) collecting feedback
D) setting PR objectives
E) determining the messenger
F)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.4: Explain how companies use PR to communicate with their publics.
Difficulty: Easy
52
169) Corporate identity materials help create a corporate identity that the public immediately
recognizes.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.4: Explain how companies use PR to communicate with their publics.
Difficulty: Moderate
170) A company's Web site can be an important public relations vehicle.
171)
AACSB: Information technology
Skill: Concept
Objective: LO 15.4: Explain how companies use PR to communicate with their publics.
Difficulty: Easy
172) While a company can choose to participate in public service activities, doing so has no
impact on public goodwill toward the company.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 15.4: Explain how companies use PR to communicate with their publics.
Difficulty: Easy
53
173) Public relations specialists use several tools. Identify three of these tools and describe how
they can help a company communicate with the public.
Answer: Students' answers may include any three of the following.
PR professionals find or create favorable news about the company and its products or people.
Sometimes news stories occur naturally, and sometimes the PR person can suggest events or
activities that would create news.
Speeches can also create product and company publicity. Increasingly, company executives
must field questions from the media or give talks at trade associations or sales meetings, and
these events can either build or hurt the company's image.
Another common PR tool is special events, ranging from news conferences, press tours, grand
openings, and fireworks displays to laser shows, hot air balloon releases, multimedia
presentations, or educational programs designed to reach and interest target publics.
Public relations people also prepare written materials to reach and influence their target
markets. These materials include annual reports, brochures, articles, and company newsletters
and magazines.
Audiovisual materials, such as slide-and-sound programs, DVDs, and online videos are being
used increasingly as communication tools.
Corporate identity materials can also help create a corporate identity that the public
immediately recognizes. Logos, stationery, brochures, signs, business forms, business cards,
buildings, uniforms, and company cars and trucks—all become marketing tools when they are
attractive, distinctive, and memorable.
Companies can improve public goodwill by contributing money and time to public service
activities.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 15.4: Explain how companies use PR to communicate with their publics.
Difficulty: Moderate
54
Principles of Marketing, 17e (Kotler/Armstrong)
Chapter 16 Personal Selling and Sales Promotion
1) Which of the following is true with regard to personal selling?
A) Personal selling entails personal presentations by a firm's sales force for the purpose of
making sales and building customer relationships.
B) Personal selling involves making personal requests to potential buyers to enter into shortterm business relationships with firms.
C) Personal selling distances the buyer from the seller and does not focus on building enduring
relationships.
D) An outside sales force is not involved in personal selling.
E) Personal selling is a relatively new profession.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.1: Discuss the role of a company's salespeople in creating value for customers
and building customer relationships.
Difficulty: Easy
2) A(n)
is an individual who represents a company to customers by prospecting,
communicating, selling, servicing, information gathering, and/or relationship building.
A) auditor
B) trainer
C) salesperson
D) manager
E) human resource personnel
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.1: Discuss the role of a company's salespeople in creating value for customers
and building customer relationships.
Difficulty: Easy
3) Which of the following is true about the sales force of a company?
A) Salespeople represent customers to the company and manage the buyer-seller relationship.
B) Salespeople represent workers' interests to upper management.
C) The primary responsibility of a sales force is to formulate operational strategies.
D) The sales force is responsible for product development and product strategy.
E) The sales force oversees the auditing process and recovers money from defaulting
customers.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.1: Discuss the role of a company's salespeople in creating value for customers
and building customer relationships.
Difficulty: Moderate
1
4) Which of the following is NOT a position that a salesperson covers?
2
A) order taker
B) creative seller
C) order getter
D) relationship builder
E) shipping arranger
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.1: Discuss the role of a company's salespeople in creating value for customers
and building customer relationships.
Difficulty: Moderate
5) Which of the following is true about the sales force of a company?
A) Salespeople rely on engineers and manufacturers to learn about customer needs.
B) The sales force plays a minor role in customer-company relationships.
C) Salespeople rarely visit in person with customers.
D) Salespeople represent customers to the company, championing customers' interests.
E) Salespeople do not have the authority to act on customers' objections.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.1: Discuss the role of a company's salespeople in creating value for customers
and building customer relationships.
Difficulty: Moderate
6) Which of the following would most likely improve coordination between marketing and
sales?
A) Salespeople should directly participate in the development of new products.
B) Salespeople should participate in marketing planning sessions by sharing firsthand customer
knowledge.
C) The sales force should strategize promotional strategies and be the primary decision makers
about marketing.
D) Marketing managers should field test new promotion strategies before the sales team.
E) The marketing and sales departments should conduct annual job rotations.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.1: Discuss the role of a company's salespeople in creating value for customers
and building customer relationships.
Difficulty: Moderate
3
7) Which of the following is NOT likely to improve coordination between marketing and sales?
A) appointing a high-level marketing executive to oversee both marketing and sales
B) arranging joint meetings and spelling out communications channels
C) creating rewards systems that put marketing and sales in competition with each other
D) including brand managers in sales calls
E) adding marketing-sales liaisons to coordinate programs and efforts
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.1: Discuss the role of a company's salespeople in creating value for customers
and building customer relationships.
Difficulty: Moderate
8) At Price & Wallace Inc., a pharmaceuticals company, members of the sales force and
marketing department tend to have disagreements when things go wrong with a customer. The
marketers blame the salespeople for poorly executing their strategies, while the salespeople
blame the marketers for being out of touch with customers. Which of the following steps should
upper management at Price & Wallace take to help bring the sales and marketing functions
closer together?
A) establish a customer sales force structure and make sure that sales quotas are easily
achievable
B) establish a complex sales force structure
C) emphasize traditional methods of selling
D) adopt a sales force automation system and implement team selling
E) appoint a high-level marketing executive to oversee both marketing and sales
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.1: Discuss the role of a company's salespeople in creating value for customers
and building customer relationships.
Difficulty: Moderate
9) All companies must have salespeople.
10)
Skill: Concept
Objective: LO 16.1: Discuss the role of a company's salespeople in creating value for customers
and building customer relationships.
Difficulty: Easy
11) Personal selling involves interpersonal interactions between salespeople and individual
customers.
Skill: Concept
Objective: LO 16.1: Discuss the role of a company's salespeople in creating value for customers
and building customer relationships.
Difficulty: Easy
12) Salespeople do not represent customers to the company.
4
Skill: Concept
Objective: LO 16.1: Discuss the role of a company's salespeople in creating value for customers
and building customer relationships.
Difficulty: Easy
13) What is personal selling?
Answer: Personal presentations by the firm's sales force for the purpose of making sales and
building customer relationships is known as personal selling.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 16.1: Discuss the role of a company's salespeople in creating value for customers
and building customer relationships.
Difficulty: Easy
14) Describe the nature of personal selling and the role of the sales force.
Answer: Today, most salespeople are well-educated and well-trained professionals who work
to build and maintain long-term customer relationships by listening to their customers,
assessing customer needs, and organizing the company's efforts to solve customer problems.
The best salespeople are the ones who work closely with customers for mutual gain. Personal
selling is the interpersonal arm of the promotion mix. The sales force acts as a critical link
between a company and its customers. Salespeople represent the company to the customer and
the customer to the company to produce customer satisfaction and company profit.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 16.1: Discuss the role of a company's salespeople in creating value for customers
and building customer relationships.
Difficulty: Moderate
15)
is defined as analyzing, planning, implementing, and controlling sales force
activities.
A) Benchmarking
B) Sales force management
C) Business intelligence
D) Sales force automation
E) Sampling
F) Skill:
Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
5
16) Sales force management includes all of the following EXCEPT
salespeople.
A) recruiting
B) evaluating
C) paying
D) supervising
E) training
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
17) Which of the following questions is NOT asked when designing a sales force strategy and
structure?
A) Should salespeople sell in the field, by phone, or using online and social media?
B) Should salespeople work alone or in teams with other company employees?
C) How big should the sales force be?
D) Should salespeople follow strict steps in the sales process?
E) How should salespeople and their tasks be structured?
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
18) In the
, each salesperson is assigned to an exclusive geographic area and sells the
company's full line of products or services to all customers in that region.
A) territorial sales force structure
B) digital marketing system
C) product sales force structure
D) geographical operations system
E) customer sales force structure
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
6
19) Which of the following is true about the territorial sales force structure?
A) The territorial sales force structure does not define each salesperson's job clearly.
B) Salespeople specialize in selling only a small portion of the company's products.
C) In a territorial sales force structure, separate sales forces are set up for different industries.
D) Travel expenses are relatively small as each salesperson travels within a limited geographic
area.
E) In a territorial sales force structure, separate sales forces are often established to handle a
single, large account in every territory.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
20) Ultra Tech Inc., a company manufacturing gardening tools, has decided to switch to a
territorial sales force structure. Which of the following benefits is the company most likely to
gain as a result of this decision?
A) The cost of training new recruits would be eliminated.
B) An increased focus on short-term customer relationships would boost local sales of
specialized products.
C) Each salesperson would be assigned to sell a single product in which he/she specializes.
D) The capacity for mass production of a wide range of products would significantly increase.
E) As each salesperson travels within a limited geographic area, travel expenses would decline.
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Challenging
21) If a company
, it should adopt a product sales force structure, in which the sales
force specializes along product lines.
A) specializes in a single product
B) manufactures a small number of simple products
C) maintains that product specialization is counterproductive
D) has numerous and complex products
E) lacks salespeople with superior technical know-how
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
7
22) Which of the following is true about the product sales force structure?
A) A product sales force structure is most appropriate for a company that manufactures a small
number of simple products.
B) In a product sales force structure, each salesperson is assigned to an exclusive geographic
area and sells the company's full line of products or services to all customers in that territory.
C) In a product sales force structure, salespersons specialize in only a particular product line as
the company produces numerous and complex products.
D) In a product sales force structure, a single salesperson can become an expert in all product
categories.
E) In a product sales force structure, specialization is highly discouraged.
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Challenging
23) In the
, separate sales forces are set up for different industries.
A) territorial sales force structure
B) digital marketing system
C) customer sales force structure
D) geographical operations system
E) product sales force structure
F)
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
24) Which of the following is true about the customer sales force structure?
A) The customer sales force structure is a combination of territorial sales force structure and
product sales force structure.
B) Each salesperson is assigned to an exclusive geographic area and sells the company's full
line of products or services to all customers in that territory.
C) Salespersons specialize in only a particular product line as the company produces numerous
and complex products.
D) Companies using customer sales force structure tend to ignore the importance of long-term
relationship building with customers.
E) Separate sales forces are set up for different industries, serving current customers versus
finding new ones.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
8
25) Johnson Business Solutions maintains one sales force for its copy machines and a separate
sales force for its computer systems. Johnson Business Solutions utilizes a
.
A) product sales force structure
B) customer sales force structure
C) territorial sales force structure
D) digital marketing system
E) geographical operations system
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
26) In what situation is a complex sales force structure used?
A) when a company sells a narrow variety of products to few types of customers over a broad
geographic area
B) when a company sells a wide variety of products to many types of customers over a broad
geographic area
C) when a company sells a wide variety of products to many types of customers over a small
geographic area
D) when a company sells a wide variety of products to few types of customers over a small
geographic area
E) when a company sells a narrow variety of products to many types of customers over a small
geographic area
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
27) Morrill Motors splits the United States of America into 10 sales regions. Within each of
those regions, the company has separate sales personnel selling the company's full line of
products. Morrill Motors uses a
sales force structure.
A) territorial
B) complex
C) customer
D) product
E) market
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
9
28) Which of the following helps companies in setting sales force size?
A) workload approach
B) pull strategy
C) push strategy
D) top-down approach
E) bottom-up approach
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
29) The workload approach takes into account all of the following EXCEPT
.
A) customer account status
B) amount of effort required to maintain the account
C) customer account size
D) number of times each class of account is to be contacted
E) success rate at closing orders with account
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
30) Sigma Inc. has 2,000 Type-A accounts, each requiring 35 calls per year, and 1,000 Type-B
accounts, each requiring 15 calls per year. What is the sales force's workload?
A) 15,000 calls
B) 35,000 calls
C) 70,000 calls
D) 85,000 calls
E) 95,000 calls
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Challenging
10
31) Stahl Inc. has 1,000 A-level accounts, each requiring 30 calls per year, and 3,000 B-level
accounts, each requiring 10 calls per year. If each salesperson at Stahl Inc. can make 1,500
sales calls per year, how many salespeople would be needed to meet the total workload?
A) 25
B) 35
C) 40
D) 45
E) 60
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Challenging
32) Kevin is a salesperson working for a company that manufactures gardening tools. He is
involved in door-to-door sales and travels every day to call on customers. In his company,
Kevin is most likely a part of the
.
A) top management
B) inside sales force
C) product designing team
D) customer support team
E) outside sales force
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
33) Robin works in a manufacturing company in Ohio. She sells products and handles customer
requests via the company's online live chat feature. In her company, Robin is most likely a part
of the
.
A) outside sales force
B) inside sales force
C) product designing team
D) operations management team
E) executive management
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
11
34) Which of the following is true with regard to the inside sales force of a company?
A) The inside sales force is invariably more attentive to customer needs than the outside sales
force.
B) Unlike the outside sales force, the inside sales force does not require training.
C) Inside sales representatives engage in face-to-face interaction with customers.
D) The inside sales force is far more knowledgeable about customer habits than are outside
salespeople.
E) Inside salespeople provide support for the outside sales force, freeing them to spend more
time selling to major accounts and finding new prospects.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
35) Kelly works as a sales representative at Ginner Machine Works. She uses the phone and the
Internet to identify prospects and make sales. Kelly calls customers and explains the products
offered by Ginner and the advantages of using them. If requested, she also mails the customer
product information brochures. Which of the following is most likely Kelly involved in?
A) outside selling
B) technical sales support
C) telemarketing and online selling
D) research and administrative backup
E) field sales
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
36) Which of the following best explains the growth of telephone and online selling?
A) the use of the Do Not Call Registry
B) the ability to make up to 8 times as many more customer contacts per day than an outside
salesperson
C) the similarity in cost between the inside and outside sales forces
D) the difficulty and expense of reaching some customers
E) the preference of customers for face-to-face contact
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
12
37) Travis Computing Systems earns most of its revenue from sales and in-person computer
services. The sales force at Travis recently began telemarketing and online selling. How would
telemarketing and online selling most likely benefit Travis?
A) The need for an outside sales force would be completely eliminated through telemarketing.
B) Travis sales reps would be able to engage in more frequent face-to-face interaction with
large, high-value customers.
C) Travis sales reps would be able to service hard-to-reach customers more effectively.
D) The overhead costs of Travis would significantly decrease.
E) The current liabilities of Travis would decrease.
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
38) Amanda Perkins is a senior sales manager in Arlington Steelworks. As the customer base of
her company has grown larger and more demanding over the last few years, Amanda insists on
, or using groups of people from various departments such as sales, technical support,
engineering, and even upper management to service complex accounts.
A) cross selling
B) e-procurement
C) team selling
D) observational research
E) vendor screening
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
39) Which of the following best explains why companies are adopting the team selling
approach to service large, complex accounts?
A) Products have become too complicated for one salesperson to handle a large company's
needs.
B) Customers prefer dealing with many salespeople rather than one sales representative.
C) Job rotation, an integral part of team selling, keeps workers motivated and boosts their
morale.
D) Team selling facilitates the evaluation of individual contributions.
E) With team selling, companies are not required to train the outside sales force any longer.
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
13
40) A(n)
is a written representation of a salesperson's completed activities.
A) bill of sale
B) call report
C) tender
D) sales quotation
E) contract of sale
F)
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
41) All of the following are disadvantages of team selling EXCEPT
.
A) selling teams can be confusing and overwhelming for customers
B) salespeople who are used to having customers all to themselves may have trouble learning to
work with and trust others on a team
C) team selling reduces the overall efficiency of the selling process
D) individual contributions and compensations can be difficult to assess in team selling
E) team selling discourages individual contributors because the team receives credit for good
performance
Skill:
Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
42) Hannah Adams is a senior sales manager in Elmo Corp., a rapidly growing company
manufacturing personal computers and printers. In order to handle sales effectively, Hannah
insists on using the services of different groups of people from different departments within the
company such as the sales, marketing, technical support, and finance departments. In this
instance, Hannah makes use of
.
A) team selling
B) competitive marketing intelligence
C) hybrid selling
D) occasion segmentation
E) sales force automation systems
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
14
43) All of the following are problems associated with the poor selection of salespeople
EXCEPT
.
A) lower sales
B) costly turnover
C) less productivity
D) fewer training expenses
E) disruptive customer relationships
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Challenging
44) Eric Brown is a human resource manager in a company selling and manufacturing personal
computers. Who among the following is Eric most likely to hire as a salesperson if his objective
is to minimize training costs post recruitment?
A) Samantha, a fresh college graduate
B) Richard, a product developer from a competing firm
C) Nancy, an experienced engineer with no prior experience in personal selling
D) Melissa, a proven salesperson from a competing firm
E) Henry, a young salesperson with a few months' experience in a large MNC
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Challenging
45) Which of the following abilities would LEAST likely be measured when recruiting and
testing applicants for a sales position?
A) sales aptitude
B) work style
C) accounting skills
D) motivation
E) relationship skills
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
15
46) The purpose of a training program for salespeople is to teach them about all of the
following EXCEPT
.
A) customers' buying habits
B) customers' buying motives
C) competitor strategies
D) industry history
E) company goals
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
47) Which of the following is a primary reason that companies use e-learning to conduct sales
training programs?
A) Customer needs and habits can be unambiguously conveyed through online training
programs.
B) Sales training programs that do not use e-learning are mostly ineffective.
C) E-learning eliminates employee attrition.
D) E-learning is the best way to simulate real-life sales calls.
E) E-learning cuts travel and training costs.
F)
AACSB: Information technology
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
48) A hybrid sales rep
.
A) works exclusively from remote locations
B) is a modern cross between a field sales rep and an inside rep
C) rarely engages in face-to-face interactions with customers
D) performs sales audits
E) sets the sales objectives of companies
F)
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
16
49) All of the following are basic types of compensation plans for salespeople EXCEPT
.
A) straight commission
B) straight salary
C) salary plus commission
D) salary plus company shares
E) salary plus bonus
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
50) More and more companies are moving away from high-commission plans because
.
A) outside salespeople tend to undermine the efforts of the inside sales team
B) high-commission plans require salespeople to work overtime
C) salespeople tend to become pushy which affects customer relationships
D) salespeople are prone to taking multiple sales jobs to maximize their income
E) salespeople end up spending too much time traveling to meet customers
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
51) Which of the following is most likely a true statement about sales compensation in
economically tough circumstances?
A) Cutting sales force compensation is usually a last resort for firms that want to maintain
positive customer relationships.
B) Morale is boosted by distributing commissions equally among low and high sales
performers.
C) Online selling is discontinued to improve customer relations.
D) Compensation for the inside sales force is reduced to increase commissions for the outside
sales force.
E) Low performers are retained and top performers are dismissed to reduce commission
payments.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
17
52) A(n)
shows how much time is spent selling, traveling, waiting, taking breaks,
and doing administrative chores by the salesperson.
A) customer relationship management tool
B) corporate social networking site
C) time-and-duty analysis tool
D) outsourcing relationship management tool
E) product lifecycle management analysis
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
53) Which of the following is the best way for a company to increase selling time?
A) implementing high-commission plans
B) reducing the number of customers
C) sharing less information with customers
D) simplifying administrative duties
E) implementing mass customization
F)
AACSB: Application of knowledge
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
54) Which of the following involves computerized, digitized sales force operations that let
salespeople work more effectively anytime, anywhere?
A) SWOT analysis
B) BCG matrix
C) digital marketing system
D) sales force automation system
E) field service management system
F)
AACSB: Analytical thinking; Information technology
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
18
55) Which of the following is an advantage of using a sales force automation system?
A) lowers sales team training costs
B) records major competitor's sales
C) eliminates the need for an inside sales force
D) eliminates employee attrition
E) improves customer service
F)
AACSB: Information technology
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
56)
refers to the standard that establishes the amount each salesperson should sell
and how sales should be divided among the company's products.
A) Conditional sale
B) A bill of sale
C) A sales quota
D) Prospecting
E) Satisficing
F) Skill:
Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
57) Which of the following refers to a positive incentive intended to increase the sales force
effort?
A) sales contests
B) prospecting
C) telecommuting
D) sales collateral
E) annual sales plan
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
19
58) Mary Conti, a sales manager at National Computer Training, wants to evaluate the
performance of her sales force in the New England territory. Which of the following would
Mary most likely use?
A) SWOT analysis
B) breakeven analysis
C) sales forecast
D) expense reports
E) call plan
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
59) At the beginning of each year, the management of Dee Decor states the exact amount a
salesperson should sell. This specific sales target is also known as a
.
A) sales lead
B) prospect
C) bill of sale
D) channel length
E) sales quota
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
20
Refer to the scenario below to answer the following question(s).
Reliable Tools Company is a manufacturer of hubs and axles for the trailer and heavy truck
industry. Although Reliable Tools only has 15 customers, the company is the sole supplier of
hub and axle components to those customers. Monthly sales at Reliable Tools are
approximately $1 million. "You might say we have all our eggs in one basket," says owner
Arthur Deetz.
It is critical that a competent sales force be maintained in order to nurture those few but large
accounts. Ninety-five percent of Reliable Tools' customers are located in Michigan, Ohio, and
Indiana, which means that travel time to all customers is relatively short. However, given the
nature of the industry, time spent with each customer is crucial.
60) How would a customer sales force structure benefit Reliable Tools?
A) It would eliminate the need for the company's salespeople to travel to meet customers.
B) It would enable the company's salespeople to build close relationships with customers.
C) It would help the company's salespeople become experts in the products they sell.
D) It would enable the company's management to cut training costs substantially.
E) It would make telemarketing irrelevant.
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Challenging
61) For sales managers to understand how the members of the Reliable Tools sales force spend
their time, the salespeople must submit a(n)
.
A) expense report
B) time-and-duty analysis
C) mobile conferencing schedule
D) sales forecast
E) incentive plan
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Challenging
21
62) Several compensation plans are available to reward and motivate Reliable Tool's
salespeople. Since generating new leads and new business can be a goal for the sales force,
which compensation plan approach is MOST likely to motivate and direct the salespeople in
that direction?
A) straight commission
B) salary plus bonus
C) straight salary
D) salary plus commission
E) salary, commission, and bonus
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Challenging
63) Purposes of social selling, the use of online, mobile, and social media, are to do all of the
following EXCEPT
.
A) augment sales performance
B) eliminate person-to-person selling
C) build stronger customer relationships
D) engage customers
E) provide customers more control over the selling process
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
64) Disadvantages of social selling include
.
A) its impact on efficiency
B) its ability to provide information
C) its expense and the difficulty of presenting some things via the Internet
D) the ability to spot opportunities
E) its impact on productivity
F)
AACSB: Analytical thinking
Skill: Application
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Challenging
65) Sales force management refers to hiring and training the sales force.
66)
AACSB: Written and oral communication
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
67) In the territorial sales force structure, each salesperson is responsible for selling a single,
22
exclusive product across different geographical regions.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
68) In a territorial sales force structure, as each salesperson travels within a limited geographic
area, travel expenses are relatively small.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
69) If a company has numerous and complex products, it can adopt a product sales force
structure in which the sales force specializes along product lines.
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
70) In a product sales force structure, no single salesperson can become an expert in all of the
product categories, so product specialization is required.
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
71) In the customer sales force structure, each salesperson is assigned to an exclusive
geographic area and sells the company's full line of products or services to all customers in that
territory.
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
72) In a complex sales force structure, salespeople can be specialized by customer and territory;
product and territory; product and customer; or territory, product, and customer.
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
23
73) The workload approach is used to determine the type of sales force structure required by a
company.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
74) The inside sales force consists of salespeople who conduct business from their offices via
telephone, the Internet, or visits from buyers.
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
75) Sales assistants confirm appointments, follow up on deliveries, and answer customers'
questions when outside salespeople cannot be reached.
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
76) Telemarketing has ceased to be an important tool for most B-to-B marketers owing to the
federal government's Do Not Call Registry.
AACSB: Information technology
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
77) Using teams of people from sales, marketing, engineering, finance, technical support, and
even upper management to service large, complex accounts is known as complex selling.
78)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
79) Training online instead of on-site can cut travel and other training costs, and it takes up less
of a salesperson's selling time.
AACSB: Information technology
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
24
80) Companies are increasingly adopting high-commission plans to make sure that salespersons
are motivated to build long-term relationships with customers.
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
81) The goal of supervision is to encourage salespeople to "work hard" and energetically
toward sales force goals.
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
82) Salespeople are only evaluated on the number of sales they close within a certain time
frame.
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
83) Social selling emphasizes personal contact between the company and its customers.
84)
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
85) What is the role of a salesperson in a territorial sales force structure?
Answer: In the territorial sales force structure, each salesperson is assigned to an exclusive
geographic area and sells the company's full line of products or services to all customers in that
territory.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
86) Under what conditions is a company most likely to use a product sales force structure?
Answer: If a company has numerous and complex products, it can adopt a product sales force
structure, in which the sales force specializes along product lines.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
25
87) Why and how do companies use workload approach?
Answer: Many companies use some form of workload approach to set sales force size. Using
this approach, a company first groups accounts into different classes according to size, account
status, or other factors related to the amount of effort required to maintain the account. It then
determines the number of salespeople needed to call on each class of accounts the desired
number of times.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
88) Distinguish between an outside sales force and an inside sales force.
Answer: Outside sales force (or field sales force) consists of salespeople who travel to call on
customers in the field. On the other hand, inside sales force consists of salespeople who
conduct business from their offices via telephone, the Internet, or visits from prospective
buyers.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
89) What is the goal of training salespeople?
Answer: Training programs have several goals. First, salespeople need to know about
customers and how to build relationships with them. Therefore, the training program must teach
them about different types of customers and their needs, buying motives, and buying habits. It
must also teach them how to sell effectively and train them in the basics of the selling process.
Salespeople also need to know and identify with the company, its products, and its competitors.
Therefore, an effective training program teaches them about the company's objectives,
organization, products, and the strategies of major competitors.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
90) What does a call plan show?
Answer: The weekly, monthly, or annual call plan shows which customers and prospects to call
on and which activities to carry out.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
26
91) Why have firms adopted sales force automation systems?
Answer: Many firms have adopted sales force automation systems to help their salespeople
better manage their time, improve customer service, lower sales costs, and increase sales
performance.
AACSB: Information technology
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Easy
92) Why is a firm's organizational climate an important part of building a successful sales staff?
Answer: Organizational climate describes the feeling that salespeople have about their
opportunities, value, and rewards for a good performance. Some companies treat salespeople as
if they are not very important, so performance suffers accordingly. Other companies treat their
salespeople as valued contributors and allow virtually unlimited opportunity for income and
promotion. Not surprisingly, these companies enjoy higher sales force performance and less
turnover.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
93) Discuss the differences between the three major sales force structures. What are the
potential benefits of each structure?
Answer: In the territorial sales force structure, each salesperson is assigned to an exclusive
geographic area and sells the company's full line of products or services to all customers in that
territory. This organization clearly defines each person's job, fixes accountability, and increases
the person's desire to build local business relationships that improve selling effectiveness.
The product sales force structure allows the sales force to sell along product lines; the seller
becomes very knowledgeable about products.
The customer sales force structure organizes its sales force along customer or industry lines.
This can help a company build closer relationships with important customers.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
27
94) Why are more companies using team selling? What are its pros and cons?
Answer: Team selling is useful for servicing large, complex accounts. Sales teams can uncover
problems, solutions, and sales opportunities that no individual salesperson could. In many
cases, the move to team selling mirrors similar changes in customers' buying organizations.
Many large customer companies have implemented team-based purchasing, requiring marketers
to employ equivalent team-based selling. When dealing with large, complex accounts, one
salesperson can't be an expert in everything the customer needs. Instead, selling is done by
strategic account teams, quarterbacked by senior account managers or customer business
managers.
Team selling does have some pitfalls, however. For example, salespeople are by nature
competitive and have often been trained and rewarded for outstanding individual performance.
Salespeople who are used to having customers all to themselves may have trouble learning to
work with and trust others on a team. In addition, selling teams can confuse or overwhelm
customers who are used to working with only one salesperson. Finally, difficulties in evaluating
individual contributions to the team selling effort can create some sticky compensation issues.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
95) How do successful companies recruit and train their salespeople? What does an effective
training program teach salespeople?
Answer: When recruiting, a company should analyze the sales job itself and the characteristics
of its most successful salespeople to identify the traits needed by a successful salesperson in
their industry. Then it must recruit the right salespeople. The human resources department looks
for applicants by getting names from current salespeople, using employment agencies,
searching the Internet, placing classified ads, and working through college placement services.
Another source is to attract top salespeople from other companies. Proven salespeople need less
training and can be productive immediately.
New salespeople may spend anywhere from a few weeks or months to a year or more in
training. After the initial training ends, most companies provide continuing sales training via
seminars, sales meetings, and Internet e-learning throughout the salesperson's career. Many
companies are now using imaginative and sophisticated e-learning techniques to make sales
training more efficient.
Salespeople also need to know and identify with the company, its products, and its competitors.
Therefore, an effective training program teaches them about the company's objectives,
organization, products, and the strategies of major competitors.
AACSB: Application of knowledge
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
28
96) Describe some of the methods used to supervise salespeople and help them work more
efficiently.
Answer: Through supervision, or helping salespeople "work smart," companies can help
salespeople do the right things in the right way. This includes helping salespeople identify
target customers and manage their time. A weekly, monthly, or annual call plan is used in many
companies to show salespeople which customers and potential customers to call on within a
given time period and which activities to carry out. Companies often use time-and-dutyanalysis. In addition to time spent selling, the salesperson spends time traveling, waiting, taking
breaks, and doing administrative chores. Companies are always looking for ways to save time
—simplifying administrative duties, developing better sales call and routing plans, supplying
more and better customer information, and using phone, e-mail, or Internet conferencing
instead of traveling.
Many firms have adopted sales force automation systems: computerized, digitized sales force
operations that let salespeople work more effectively anytime, anywhere. Companies now
routinely equip their salespeople with technologies such as laptops or tablets, smartphones,
wireless connections, videoconferencing technologies, and customer-contact and relationship
management software. Armed with these technologies, salespeople can more effectively and
efficiently profile customers and prospects, analyze and forecast sales, schedule sales calls,
make presentations, prepare sales and expense reports, and manage account relationships. The
result is better time management, improved customer service, lower sales costs, and higher
sales performance. In all, technology has reshaped the ways in which salespeople carry out
their duties and engage customers.
AACSB: Written and oral communication
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
29
97) Explain the methods of evaluating the performance of a sales force. Why is the evaluation
of a company's sales force considered necessary?
Answer: Management gets information about its salespeople in several ways. The most
important source is sales reports, including weekly or monthly work plans and longer-term
territory marketing plans. Salespeople also write up their completed activities on call reports
and turn in expense reports for which they are partly or wholly reimbursed. The company can
also monitor the sales and profit performance data in the salesperson's territory. Additional
information comes from personal observation, customer surveys, and talks with other
salespeople. Using various sales force reports and other information, sales management
evaluates the members of the sales force. It evaluates salespeople on their ability to "plan their
work and work their plan." Formal evaluation forces management to develop and communicate
clear standards for judging performance. It also provides salespeople with constructive
feedback and motivates them to perform well.
On a broader level, management should evaluate the performance of the sales force as a whole.
Is the sales force accomplishing its customer relationship, sales, and profit objectives? Is it
working well with other areas of the marketing and company organization? Are sales force
costs in line with outcomes? As with other marketing activities, the company wants to measure
its return on sales investment.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
30
98) Describe social selling and what changes it is bringing to the selling process.
Answer: The fastest-growing sales trend is the explosion in social selling—the use of online,
mobile, and social media to engage customers, build stronger customer relationships, and
augment sales performance. New digital sales force technologies are creating exciting new
avenues for connecting with and engaging customers in the digital and social media age. Used
properly, online and social media technologies will make salespeople more productive and
effective. The new digital technologies are providing salespeople with powerful tools for
identifying and learning about prospects, engaging customers, creating customer value, closing
sales, and nurturing customer relationships. Social selling technologies can produce big
organizational benefits for sales forces. They help conserve salespeople's valuable time, save
travel dollars, and give salespeople new vehicles for selling and servicing accounts.
Social selling hasn't really changed the fundamentals of selling. Sales forces have always taken
the primary responsibility for reaching out to and engaging customers and managing customer
relationships. Now, more of that is being done digitally. However, online and social media are
dramatically changing the customer buying process. As a result, they are also changing the
selling process. In today's digital world, many customers no longer rely as much as they once
did on information and assistance provided by salespeople. Instead, they carry out more of the
buying process on their own—especially the early stages.
In response to this new digital buying environment, sellers are reorienting their selling
processes around the new customer buying process. They are "going where customers are"—
social media, forums, online communities, blogs—in order to engage customers earlier. They
are engaging customers not just where and when they are buying, but also where and when they
are learning about and evaluating what they will buy.
Salespeople now routinely use digital tools that monitor customer social media exchanges to
spot trends, identify prospects, and learn what customers would like to buy, how they feel about
a vendor, and what it would take to make a sale. Today's sales forces are also ramping up their
own use of social media to engage customers throughout the buying process.
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.2: Identify and explain the six major sales force management steps.
Difficulty: Moderate
99) Which of the following is the last step in the selling process?
A) qualifying
B) handling objections
C) demonstration
D) follow-up
E) approach
F) Skill:
Concept
Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing.
Difficulty: Easy
31
100) Which of the following is the first step in the personal selling process?
A) handling objections
B) follow-up
C) presentation and demonstration
D) preapproach
E) prospecting and qualifying
F)
Skill: Concept
Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing.
Difficulty: Easy
101)
In the stage of the selling process, a company first identifies qualified
potentialcustomers.
A) preapproach
B) follow-up
C) prospecting
D) presentation
E) approach
F) Skill:
Concept
Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing.
Difficulty: Easy
102) Prospects can be qualified by looking at all of the following characteristics EXCEPT
.
A) occupational mobility
B) financial ability
C) volume of business
D) location
E) possibilities for growth
F)
Skill: Concept
Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing.
Difficulty: Easy
32
103)
During the prospecting stage, a
salesperson needs to identify the good leads and screen outthe poor ones through a process
known as
.
A) closing
B) satisficing
C) presenting
D) qualifying
E) approaching
F) Skill:
Concept
Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing.
Difficulty: Easy
104) Salespeople can draw prospective leads by referrals from all of the following EXCEPT
.
A) current customers
B) suppliers
C) dealers
D) directories
E) competitive salespeople
F)
Skill: Concept
Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing.
Difficulty: Easy
105) Before calling on a prospect, the salesperson should learn as much as possible about the
organization and its buyers. This step is known as
.
A) preapproach
B) closing
C) approach
D) presentation
E) prospecting
F) Skill:
Concept
Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing.
Difficulty: Easy
33
106)
refers to a practice in which salespeople drop in unannounced on various offices.
A) Hybrid selling
B) Niche marketing
C) Cold calling
D) Value selling
E) Direct marketing
F)
Skill: Concept
Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing.
Difficulty: Easy
107) Which of the following will NOT be a call objective in a preapproach plan?
A) qualify the prospect
B) find the initial lead
C) gather information
D) determine the best approach and timing
E) make an immediate sale
F)
Skill: Concept
Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing.
Difficulty: Easy
108) In which of the following steps of the selling process is a salesperson most likely to meet
the customer for the first time?
A) prospecting
B) preapproach
C) follow-up
D) approach
E) closing
F) Skill:
Concept
Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing.
Difficulty: Easy
34
109) Which of the following is especially crucial in the approach stage of the selling process?
A) ensuring the customer understands the company's history
B) telling the customer about the company's products
C) listening to the customer
D) presenting the solution that the customer needs
E) overcoming the customer's objections
F)
Skill: Concept
Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing.
Difficulty: Easy
110) During the
step of the selling process, the salesperson tells the value story to the
buyer, showing how the company's product or service solves the customer's problems.
A) prospecting
B) preapproach
C) presentation
D) closing
E) follow-up
F) Skill:
Concept
Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing.
Difficulty: Easy
111)
refers to the sales step in which a salesperson asks the customer for an order.
A) Prospecting
B) Demonstration
C) Approach
D) Closing
E) Handling objections
F)
Skill: Concept
Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing.
Difficulty: Easy
35
112) All of the following are traits that buyers dislike in salespeople EXCEPT
.
A) disorganization
B) tardiness
C) empathy
D) being overly talkative
E) deceit
F) Skill:
Concept
Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing.
Difficulty: Easy
113) Which of the following refers to a closing technique used by salespeople?
A) asking customers for referrals
B) developing solutions to customers' problems
C) seeking out hidden objections
D) reviewing points of agreement
E) taking objections as opportunities to provide more information
F)
AACSB: Analytical thinking
Skill: Concept
Objective: LO 16.3: Discuss the personal selling process, distinguishing between transactionoriented marketing and relationship marketing.
Difficulty: Moderate
114) Which of the following steps in the selling process is most focused on ensuring customer
satisfaction and repeat business?
A) preapproach
B) demonstration
C) handling objections
D) qualifying prospects
E) follow-up
F)
AACSB: Analyt