SECTION 1:
True and False
<TOTAL20 marks>
For each of the following, place a “T” if the statement is “true”, “F” if the
statement is false. (20 marks, 2 marks/ Question)
___T__ 1. Competitive advantage is a unique strength relative to competitors, often
based on quality, time, cost or, innovation.
___F__2. Market share can be defined in both currency as well as in units sold.
Because both ratios calculate market share, market share will be the same for a firm
regardless which measurement is used.
___F_ 3. A “high-involvement purchase” usually involves a considerable amount of
time researching the product and the product is a routine purchase.
___T_ 4. A company engaged in environmental scanning is continually acquiring
information on events occurring outside the organization to identify and interpret
potential trends .
__ F__5.At the information search stage of the purchase decision process, a
consumer compares the product with his or her expectations and is either satisfied
or dissatisfied.
____F__6. A cohesive marketing mix consists of the product, promotion, price, and
personnel.
____F__7.Publicity is any paid form of nonpersonal communication about an
organization, good, service or idea by an identified sponsor.
____T__8. Direct mail and catalog retailing are examples of nonstore retailing.
___F___9. Market segment would have a collection of prospective buyers that are
ready to buy。
____F__10. “Marketing” is best described as “promotion”.
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SECTION 2: Multiple Choice：Choose Just One Answer
(Total 40, 2 Marks/Question)
1. __________ are what is considered normal and expected about the way people do
things in a specific country.
A. Morals
B.Ethics
C. Values
D.Customs
Ans: d
2. Questions such as:”What ads do you remember seeing yesterday?” are an
example of what type of post-test?
A. Aided recall
B. Unaided recall
C. Inquiry test
D. Attitude test.
Ans: b
3. The group of brands a consumer would consider acceptable from among all the
brands in the product class of which he or she is aware is the __________.
A. evaluative set
B. evolved set
C. consideration set
D. alternative selection group
E. aspiration group
Ans: c
4.All activities involved in selling renting, and providing goods and services to
ultimate consumers for personal, family or household use are known as:
A. Marketing
B. Retailing
C. Personal Selling
D. Sales promotion
Ans: B
5.A consumer's __________ refers to the personal, social and economic significance
of the purchase to the consumer.
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A. involvement
B. aspiration
C. acculturative response
D. motivation
E. selective perception
Ans: a
6.At what stage of the PLC (Product Life Cycle) can a higher price usually be
charged?
A. Introduction
B. Growth
C. Maturity
D. Decline
E. R&D Era
Ans: A.
7．A company that sets a low initial price on a new product to appeal immediately to the mass
market is using __________.
a) skimming pricing
b) penetration pricing
c) price lining
d) odd-even pricing
e) prestige pricing
Ans: b
8.Using Price as a measure of the quality of a product and setting price high is:
A. Prestige pricing
B. Pricing Lining
C. Pricing odd-even
D. Target pricing
Ans: a
9.The main reasons a firm segments its markets are:
A. To refine sales forecasts and allow for more product differentiation.
B. To create more word-of-mouth in a market.
C. To focus advertising and monitor sales
D. To respond to different needs and wants in market and increases sales and
profits
Ans:D
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10. A(n) __________ in the consumer purchase decision process occurs when
consumers scan their memory for previous experiences with products or brands.
A. problem recognition
B. internal search
C. external search
D. purchase task
E. antecedent state
Ans: b
11.Selecting target markets means using criteria such as cost of reach the segment
and __:
A. Size and expected growth
B. Marketing investment
C. Density of population
D. Values of customers.
Ans: a.
12. Using __________, many retailers deliberately sell products below their normal
prices (and sometimes below cost) to attract attention and induce additional store
traffic.
A. customary pricing
B. above-market pricing
C. loss-leader pricing
D. prestige pricing
E. skimming pricing
Ans: c
Feedback: Loss-leader pricing is deliberately pricing a product below its customary
price to attract consumer attention to it. It is hoped that customers will buy other,
higher-margin products while in the store.
13.Melissa has just told her supervisor, "I'm so glad I bought the Motorola RAZR2
rather than those other phones I was looking at. I can do my email, access my music
and even search the web with it. It's like having a mini-computer in my pocket".
Which stage of the consumer purchase decision process is demonstrated by
Melissa's conversation?
A. Problem recognition
B. Information search
C. Alternative evaluation
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D. Purchase decision
E. Post-purchase behavior
Ans: e
Feedback: After buying a product a consumer compares it with his or her
expectations and is either satisfied or dissatisfied. The consumer may attempt to
reduce cognitive dissonance by reinforcing the belief that he or she made the right
choice. This occurs at the post-purchase stage.
14. A country's economic infrastructure consists of all of the following EXCEPT
__________.
A. distribution systems
B. telephone lines
C. roads
D. banks
E. political system
Ans: e
Feedback: Communications, transportation systems, financial services as well as
distribution systems contribute to a nation's economic infrastructure. The political
system, while important is not included in the term economic infrastructure.
15.Customer satisfaction is an important focus for marketers because __________.
A. marketing research is an inexpensive process
B. the financial value of a retained customer can be significant
C. customer value is a non-quantifiable statistic
D. attracting new customers is easier than keeping old ones
E. a market development strategy is preferable to a market penetration strategy
Ans: b
Feedback: Research shows that a 5 percent improvement in customer retention can
increase a company's profits by 70 to 80 percent.
16.Between classes, many college students stop at conveniently located vending
machines for their favorite candy bar and soft drink. Their choices are generally
made quickly and with little or no effort to consider alternative product offerings.
The college students described here are most likely involved in __________.
A. limited problem solving situations
B. routine problem solving situations
C. extensive problem solving situations
D. intensive problem solving situations
E. unlimited problem solving situations
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Ans: b
Feedback: Routine purchase decisions involve low-priced, frequently purchased
products. Consumers typically spend very little effort or time seeking or evaluating
alternatives. Purchase decisions resemble habitual responses and are typical of
low-involvement decisions.
17.Learning refers to behaviors that result from
A. Repetition of experience
B. Thinking
C. Observation
D. Repetition of experience, thinking and observation.
Ans: D.
18．A recent innovation in marketing channels whereby one firm's marketing channel is used to
sell another firm's products is called __________.
a) dual distribution
b) a strategic channel alliance
c) cooperative distribution
d) an integrated channel alliance
e) a multi-channel venture
Ans: b
19. The four steps in the sequential building process of brand equity include
__________, establishing a brand's meaning in the minds of consumers, eliciting
the proper consumer responses to a brand's identity and meaning and to create a
consumer-brand connection.
A. positive brand awareness
B. products lower in price
C. easing consumers' decision making
D. products higher in value
E. needed market modification
Ans: a
Feedback: The four steps in the sequential building process of brand equity include
positive brand awareness, establishing a brand's meaning in the minds of consumers,
eliciting the proper consumer responses to a brand's identity and meaning and to
create a consumer-brand connection.
20. Which of the following is a competition-based pricing method?
A. Customary
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B. Prestige
C. Skimming
D. Price lining
E. Penetration pricing
Ans: a
Feedback: Customary is a competition-oriented approach.
Section 3: Essay Question (Total 40 Marks)
1. (Total 10 points) For several years, the Ferrari has been known as the
manufacturer of expensive, luxury automobiles. The company plans to
attract the major segment of the car buying market who purchases medium
priced automobiles. As Ferrari considers this trading down strategy, what
branding strategy would you recommend? (5 points) What are the
disadvantages or dangers to consider with your strategy? (5points)
Answer: Trading down for Ferrari is very risky. The company may
lose the profitable, upper market who has purchased their
expensive cars. Ferrari might develop a new car and choose
a different Italian sounding brand name. The company
might promote it's heritage as "designed by the makers of
Ferrari". This different name might minimize the affect on
their loyal buyers. Obviously, this approach means the
company must spend more money promoting the name of
this new car.
multibranding strategy, i.e. different brand for different market segment.
Reasons:
1. going to the low-end market, using different brand name will not impact the
Ferrari’s brand name negatively.
Danger:
Cost: because it has to build the brand name from the very beginning.
Answers
1． Use correct terminology: multibranding, or multiproduct branding strategy.
(2.5)
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2． Give reasons of why use multibranding or multiproduct branding. (2.5)
3． Dangers: 5
2. Total (31 points)
Bogner Inc., a high end sports wear company, is planning on introducing a new
product this coming fall: A solar denim jacket. This jacket is lined with solar
patches that have the capability to keep your iPod, cellphone, and laptop charged as
you make your way through the day. It comes in a variety of styles appealing to
both genders and is predominantly geared towards young adults (teens, and
individuals in their early to mid twenties).
2a) Bogner Inc. is in the process of developing the marketing communications for
the introduction of the solar denim jacket. The marketing director is interested in
designing an Integrated Marketing Communication (IMC) program. Explain how
your IMC program differs from an ordinary advertising/ promotional campaign, and
what benefit it provides for the company. (5 marks)
Answers
An IMC differs from an ordinary advertising/ promotional campaign in that the message is
consistent across all media and promotions. Areas are fully integrated. All elements of the
marketing communications program work together synergistically. (2.5 each point)
2b)What the stage of product life cycle is the Bogner solar denim jacket in? And
what are the typical characteristics of 4 Ps of marketing during that stage for this
product? (10 marks)
Answers
It is on the Introduction phase (2 mark)
(2 each)
Product: Usually a limited product line. For this product it comes in a variety of styles but none
the less the product is essentially the same – a solar denim jacket.
Price: skimming or penetration pricing. In this skimming b/c it is a high end retailer.
Distribution: limited distribution
Promotion: objective during the intro stage is to gain awareness. Primary focus of marketing
campaign will be to make consumers aware of product; educate them regarding the
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functionality of the product.
3c) As the product moves along the different stages of the product life cycle,
changes in their strategy is necessary. List 3 different strategies Bogner Inc. can
use to ensure their growth continues longer so they can reap more profit. Provide an
example for each strategy. (6 marks)
Answers
(2 marks each – 1 mark for the term, 1 mark explaining the term. )
1) market penetration (increase advertising, increase awareness…)
2) product development (also called ‘product modification/modify the product) (e.g.: add new
features)
3) Market development (also called “market modification’/modify the market) (e.g.: sell to
other segments)
OR
4) Repositioning (target a new market) (2 marks)
OR:
-lower price (0.5 marks)
-new distribution channels (0.5 marks)
3. Selling the Floating Bed (Total 9 points)
A few months ago, an award was
given by “CoolStuff.com” for the
“coolest new invention.” The winner
was the Floating Bed from the
Floating Bed Company. The product
is- as the name suggests- an oval
shaped “queen sized” bed that hangs
from the ceiling. It has a gentle swing
for the sleeper(s) in the bed.
The Floating Bed moves like a true one-point pendulum. It swings gently and evenly
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in all planes and directions. The overhead suspension and the inertial forces created by
pendulum motion helps to gently hold the occupant(s) in place. The body and brain
subconsciously know and enjoy the motion, which feels secure and nurturing. This
results in extraordinarily comfort and relaxation- the key benefit of this product.
The Floating Bed can support up to 2000 lbs and attaches to almost any bedroom
ceiling using its patented suspension system.
According to the company, if a consumer does not find that the Floating Bed provides
the best night sleep, the bed can be returned with a 30 day money back guarantee.
Referring to information provided above answer the following questions.
1. Please describe the potential target market of this floating bed. Please use the
terminologies you learned in marketing. (6 points)
Answers
Students should use the terminologies. Terminology 1 point, description 1 point.
Demographical
Psychological
Geographical
3c) What pricing strategy would you recommend, skimming pricing or penetration
pricing? Explain the reasons of your choice. (3 points)
Answers
There is no right answer. As long as students indicate 3 reasons, they get the points.
Penetration Pricing.
a. Setting a low initial price on a new product to appeal immediately to the
mass market is penetration pricing, the exact opposite of skimming
pricing.
b. The conditions favoring penetration pricing are:
Many segments of the market are price sensitive.
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A low initial price discourages competitors from entering the market.
Unit production and marketing costs fall dramatically as production
volumes increase.
c. A firm using penetration pricing may:
Maintain the initial price for a time to gain profit lost from its low
introductory level.
Lower the price further, counting on the new volume to generate the
necessary profit.
d. Penetration pricing may follow skimming pricing:
A firm might initially price a product high to attract price-insensitive
consumers as well as recoup initial R&D costs and introductory
promotional expenses.
Then, penetration pricing is used to appeal to a broader segment of the
population and increase market share.
Skimming Pricing.
a. A firm introducing a new or innovative product can use skimming pricing,
setting the highest initial price that customers really desiring the product
are willing to pay.
These customers are not very price sensitive. They weigh the new
product’s price, and quality against the same characteristics of
substitutes.
As consumer demand is satisfied, the firm lowers the price to attract
another, more price-sensitive segment.
Skimming pricing gets its name from skimming successive layers of
“cream,” or customer segments, as prices are lowered in a series of
steps.
b. Skimming pricing is an effective strategy when:
Enough customers are willing to buy the product at the high initial
price to make these sales profitable.
The high initial price will not attract competitors.
Lowering price has only a minor effect on increasing the sales volume
and reducing the unit costs.
Customers interpret the high price as high quality.
These four conditions are most likely to exist when patents or
copyrights protect the new product or its uniqueness is understood and
valued by consumers.
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