Marketing Chapter 3

Dine&View Movie Theaters has decided to close its east side location. It had been consistently understaffed, resulting in poor dining and viewing experiences for many customers. Recognizing that its resources were too limited to operate three locations, it will move employees from the east side location to the two remaining locations. Dine&View was likely asking:

"In what markets should we compete?"

Which of the following is an example of indirect competition?

A Sony home entertainment system competing with a Jacuzzi hot tub

Businesses compete indirectly when they produce goods and services that are _____________ for those of another business

Substitutable

Which of the following agencies supports consumer rights through its initiative of informing consumers of their right to modify or discontinue receiving solicitations?

The Direct Marketing Association

Marketing ethics and social responsibility are important to the success of marketing strategies. Marketing ethics defines the principles and standards that define acceptable conduct in marketing. Which of the following decisions is not related to marketing ethics?

The Director of Marketing wants to withdraw a product because it is no longer profitable or competitive.

Marketing ______ refers to a marketer's standards of conduct and .

ethics

When the economy slows, marketers are more likely to succeed with products that are ________ rather than _______

value-priced; premium-priced

Marketers must pay attention to changes in sociocultural forces in order to send effective marketing messages to their target market. Sociocultural forces occur incrementally, making it easy to miss the shift until it is fully integrated. These can include a change in population characteristics such as age, gender, ethnicity, income, education, and marital and parental status. The degree to which these changes take place determines the amount of diversity present in a particular market, which, in turn results in different consumer buying behaviors. Cultural values affect the way people think about and make purchases, and largely result from one's family. Consumerism is a movement to protect consumers' rights, whose values can be heard from individuals, organizations, or groups. Which of the following statements provides a correct example of consumerism?

A snack and beverage company is reacting to consumer complaints about high sugar content in their products.

You are the head of the corporate acquisitions team at a major biotech company in Atlanta, Georgia. Your team has identified a couple of attractive acquisition targets that you would like to recommend to the Board of Directors for consideration. However, before you make a recommendation, you want to make sure that none of the acquisitions will raise any regulatory issues. In order to evaluate all potential regulatory issues, which one of the following analytical actions should you have your team complete prior to making any recommendations?

A thorough analysis of the provisions of the Celler-Kefauver Act, the Clayton Act, and the Sherman Antitrust Act

Marketers must continually acquire information about trends, events, and societal dynamics occurring in the marketing environment outside of the firm in order to identify and interpret potential positive and negative forces that may impact the firm's marketing strategies. The following statements provide examples of trends related to environmental forces. Which of these examples is correct?

Advances in biotechnology, cosmetic surgery, and cancer drugs are related to technological forces.

When determining a competitive strategy, marketers consider "In what markets should we compete?" During this time, they are likely:

Allocating resources to the areas of greatest opportunity

A major marketer of rice offers a range of varieties to satisfy the distinctive tastes of Chinese, Japanese, and Vietnamese consumers. By catering to its different Asian buyers, the marketer is demonstrating sensitivity to ________ diversity.

Cultural

You just got hired by the Federal Trade Commission, and you're the envy of all your friends. You feel good when you overhear your roommate describe your new job to another student. However, in his enthusiasm, he made a couple of mistakes. Which of the following points about the FTC did your roommate get wrong?

Because of its enormous power, the FTC is known informally as the Federal Power Commission. AND The FTC operates at the state level as well as the federal level. AND The FTC sets safety standards for consumer products.

The Council of Better Business Bureaus is a national organization devoted to consumer service and _____.

Business self-regulation

Discount retailer, Target, has technology that can track where customers are in the store and send them appropriate notifications through text message that alerts the customer to specials such as sale prices or limited edition products. Target likely does not use this technology because:

Customers have concerns about the privacy implications that are impacted by this technology.

You work for an automobile manufacturing company whose sales have been low as a result of the economic downturn. Company executives are strategizing as to how to stimulate sales. Which of the following steps should they take to improve business?

Decrease prices and offer more promotions

During a recession, consumers' buying power normally _______.

Decreases

_____ can lead to a damaging downward spiral, causing a freefall in business profits, lower returns on most investments, and widespread job layoffs.

Deflation

People might think that _____ is good for consumers because prices fall. However, this condition ultimately hurts the economy by causing ______.

Deflation; Layoffs

Changes in a population's _________ characteristics, like age and ethnicity, help define individual behavior.

Demographic

The social-cultural trend of consumers becoming more time-starved has resulted in changes to the competitive environment. Many grocery stores now offer online ordering and grocery pickup or even grocery delivery. This illustrates that:

Dimensions of the marketing environment influence each other.

Dick's Donut Sohp faced ______ competition when a Dunkin Donuts franchise opened across the street.

Direct

Vendors who sell essentially identical products or services are known as a firm's ________________.

Direct Competition

Brock recently graduated from college and began his job as a media analyst earning $50,000 per year. He wants to start saving for retirement and use a weekly budget to keep him from spending too much money. He determines that his _______ income is $120 per week for entertainment, dining out, clothes, and other non-essential items.

Discretionary

Which of the following is not one of the five dimensions of the marketing environment?

Distributive

You own an expensive restaurant and have a thriving business until the economic recession hits. Sales immediately plummet as your diners disappear. Some friends argue that a big advertising campaign focused on the quality of your food would bring the customers back, but you don't agree. Choose the statement(s) you'd use to accurately explain your point of view.

During a recession, consumers are more likely to respond to discount deals than to ads touting the quality of a purchase that isn't a necessity. AND During a recession, consumers limit expenditures on items that aren't necessary, like restaurant meals.

Companies often reorganize their operations which might include lay-offs, divestiture of business units, or other decisions linked to their ability to maximize profitability. Which dimension of social responsibility is related to a firm's desire to maximize profits?

Economic

Your company just attended a symposium on sustainability; and as company president, you are interested in raising the level of social responsibility in all that the company does, whether manufacturing goods, marketing, or offering services that improve the lives of individuals in the communities you serve. Which of the following steps can your company take to ensure that its practices are socially responsible?

Eliminate the use of paper-based circulars and rely solely on Web-based and social marketing strategies to promote products.

The question of channel control may pose a serious _____ issue

Ethical

The regulatory agency that can require advertisers to provide additional information about products in their advertisements is the _____.

Federal Trade Comission (FTC)

The _____ has the broadest powers of an agency to influence marketing activities.

Federal Trade Commission (FTC)

Marketers are keenly aware that good marketing alone is not enough to win the hearts and minds of consumers anymore. Now, marketers must market in a socially responsible manner or risk alienating consumers in ways that can be irreparable. Which one of the following statements is true regarding social responsibility?

Government legislation can mandate socially responsible actions.

The overall health of the economy has a significant impact on consumers' ability and willingness to purchase goods and services. The most reliable measure of the economy's health is the sum of all final goods and services produced in the country in a given period. This measure is called ____________.

Gross domestic product

It has been seen that periods of major innovations often lead to:

Higher standards of living

Jan was planning to take her kids to Disney World, but decided instead to book a family-oriented cruise on Carnival Cruise Lines. The Competition between Disney World and Carnival Cruise Lines is ______.

Indirect

You own a high-end restaurant competing for the business of well-heeled diners. Now you're worried, because a gourmet takeout store just opened across the street. The new store will mean increased _____ competition.

Indirect

The pyramid of corporate social responsibility states that there are four dimensions of social responsibility: economic, legal, ethical, and philanthropic. The socially responsible marketer accepts different responsibilities for each of these dimensions in terms of how she carries out her marketing activities. You have been asked to make a presentation to management that will highlight your company's ethical responsibilities. Which of the following topics do you plan to discuss?

It is important to recognize that corporate integrity and behavior go beyond mere compliance with laws and regulations.

When marketers offer new products, increase their promotional efforts, and expand their distributional limits, it is a sign of:

Low inflation and low unemployment

A market structure in which a single seller dominates trade in a good or service for which buyers can find no close substitutes is called a(n) _____.

Monopoly

Consumerism exerts legal, _______, and economic pressures on business.

Moral

As the baby boom generation reaches retirement age, their driving habits are likely to change. Once retired, they will no longer be driving to work every day and the number of miles they drive will probably decrease when compared to younger drivers. In addition, most retirees find themselves on a fixed income and actively seek discounts to help them spend less. Progressive executives are looking at offering a product targeted specifically toward retired drivers. Option #1: Pay-As-You-Drive (PAYD) pricing model. Much like pay-as-you-go or prepaid cell phones, you only pay for the miles you drive. Progressive would offer motorists a per-mile rate and a device to plug into their on-board diagnostic port in the car. The device would monitor the number of miles driven and drivers then receive a monthly bill based on that amount. Option #2: Safe Driver Discount model. Because retirees are no longer working, they are less likely to drive during peak times when most accidents occur. As a way to monitor their driving and provide discounts based on safe driving habits, Progressive could offer a smartphone app that allows the phone to track the driving behavior. Customers would be billed monthly based on three criteria: average speed, number of hard brakes, and how fast the driver takes turns. Which product option would be best?

Option #1

Over the last six months, Progressive has noticed a decline in applications for new policies. The latest industry reports indicate similar declines among other home and auto insurers. The Bureau of Labor Statistics reports that the unemployment rate has steadily increased over the last three quarters due to an economic recession. In response to changing economic conditions, Progressive has come up with two different insurance plans to better meet customers' needs. Option #1: Progressive Value. This is full coverage auto insurance, but excludes items like rental car reimbursement and roadside assistance. This basic level insurance includes comprehensive, collision, and liability coverage, but at lower limits than most insurance plans. This plan appeals to cost-conscious buyers looking for a basic auto insurance policy. Option #2: Progressive Enhanced. This is full coverage auto insurance, and includes rental car reimbursement, roadside assistance, travel expense coverage, and concierge services. Roadside assistance is available 24 hours per day, seven days a week. If your car isn't drivable because of damage done more than 60 miles from home, travel expense coverage will pay for meals and lodging. With the concierge service available with the enhanced plan, Progressive will deliver the policy holder's vehicle to their home or place of work after collision repairs have been completed. Consumers will pay a premium for this plan, but many consumers feel the added benefits and services are worth it. Which option will work best in the current environment?

Option #1

Progressive has seen a recent increase in claims in a high crime area of St. Louis, Missouri. A majority of the claims were car break-ins that occurred while policy holders were at work. What is troubling about many of the claims is that none of the policy holders had indicated working in the high crime area when they applied for auto coverage through Progressive. As a result, the policy holders received lower rates than they would have if they had indicated working in this area. In a move to offset the cost of claims, Progressive would like to increase insurance premiums not only for the policy holders who have made recent claims in the high crime area, but also for customers who may work in the area but have failed to indicate this on their insurance application. Progressive executives would like to determine an accurate and efficient way to determine which policy holders' premiums to raise. Option #1: Survey policy holders, asking for updated policy information including home address, work address, and contact phone numbers. Depending on customers' responses, Progressive could then raise the insurance premiums of customers working in the high crime area. Option #2: Mail Progressive Snapshot® devices to policy holders in the St. Louis area. These devices are plugged into the on-board diagnostic port of customers' cars and can record metrics such as speed, acceleration rates, hard brakes, and more. While customers might not be aware, Snapshot® devices are also equipped with an RFID chip which Progressive could use to track the GPS location of its policy holders. Data from the Snapshot® devices could be analyzed to speculate where the policy holder worked. Progressive could then raise the insurance premiums of customers working in a high crime area.

Option #1

Progressive has long been involved with socially responsible efforts, such as donating to charities and implementing energy conservation measures within their offices. However, Progressive has recently received criticism. While their recent profits were about $1.3 billion, some believe its social responsibility efforts are weak compared to those of competitors. As a result, Progressive's CEO is debating between two social responsibility campaigns. Option #1: Recent flooding in California has resulted in an estimated $1 billion price tag to repair roads, dams, and other critical infrastructure. Further, California's governor says this is on top of a $6 billion annual backlog of repairs for roads, highways, and bridges. California has historically been a strong market for Progressive, where they maintain 64% market share of all auto insurance policies. In addition to paying damage and total loss claims from their California customers (an estimated $3 million), Progressive is willing to commit $2 billion to the rebuilding efforts. Progressive's CEO sees this donation as an act of goodwill for community stewardship. Option #2: The U.S. Department of transportation reports that nearly four in 10 veterans live in rural areas where transportation options are limited. In addition, these veterans have to travel great distances to receive medical care and reach employment service offices. Progressive would like to donate cars to 500 deserving veterans each year. This $10 million annual contribution would allow veterans and their families reliable transportation to meet their basic needs. Which option should she choose?

Option #2

_________ is probably the most regulated aspect of marketing strategy.

Pricing

Kia Motors has gained consumer confidence and increased sales through its warranty program that includes a 10-year and 100,000 mile limited warranty. Kia Motors notes that all warranties are "limited" and consumers are encouraged to read the fine print to fully understand what the warranty covers. To which element of the marketing mix is the warranty linked when considering a company's ethical behavior?

Product

It is believed that marketers need to reevaluate their strategies and concentrate on their most promising products during the _____ stage of the business cycle.

Recession

Marketers must continually assess changes in the competition and make changes in their own competitive strategy because the competitive environment often determines success or failure of a product. Which of the steps below can a marketer for a large retail discount store (e.g., Target, Walmart, Sears) implement as part of the store's competitive strategy as children are headed back to school? Choose the step that you think will be most profitable.

Run Early Bird Special discounts on end-of-summer weekends for local school supply lists, toiletries, and clothing.

To qualify as a recession, a period of economic contraction must last at least _______ months

Six.

In marketing, _____ involves accepting an obligation to give equal weight to profits, consumer satisfaction, and social well-being in evaluating a firm's performance.

Social Responsibility

Consumers who are part of the Millennial generation rely on social media and the influence of peers when making decisions about purchasing products and brands compared to Baby Boom generation consumers who might prefer to read reviews by sources such as Consumer Reports. This distinction is important to marketers and part of the ______ environment.

Social-Cultural

Air travel today is not very glamorous and takes a lot of patience but many changes have occurred to enhance convenience for travelers. First, consumers can book their own travel via the Web rather than use a travel agent. Before their flight, they can check-in remotely via their smartphone or other mobile device and print their boarding pass. Alternately, they can use their smartphone to display their boarding pass to the gate agent who scans the digital image. Once on-board and safely cruising, some airlines offer in-flight Wi-Fi to enable travelers to check their e-mail, send documents, surf the Web or catch up on a Netflix series or movie. These conveniences are most related to the ________ environmental factor.

Technological

Venmo is a mobile application that enables people to send and receive money for free as long as they have a bank account, supported debit card, or a Venmo balance to fund payments. Venmo also allows the use of credit cards for a fee. To ensure security, the company uses bank-grade security systems and data encryption to prevent unauthorized transactions or access to personal information. Venmo operates as a mobile wallet, and though it provides services comparable to Western Union and PayPal, it can be managed through smartphones, thus appealing to a wide audience of retailers and others who depend on efficient money exchange. In an analysis of Venmo for your marketing class, you argue that it exemplifies how technological change creates marketing opportunities. What is the core of your argument?

Technological change often enables companies to greatly improve customer service.

The legal and regulatory forces in the marketing environment consist primarily of laws that are enforced by a variety of agencies operating at the federal, state, and local levels of government. Which of the following laws and agencies is (are) incorrectly linked to an area of regulatory responsibility?

The FDA prohibits adulteration of food, drugs, and additives. AND The CPSA sets standards for Business-to-Business products.

Advantages of technology include all of the following except:

increased costs