BUAD471 Chapter 3 Bambach
A company often uses a decentralized organizational system when: A. it has multiple divisions and many different products. B. it does not facilitate a manufacturing or industrial operation. C. it wants one advertising manager to handle the promotional activities of all the products. D. it has a top management which is actively involved in day-today decision making. E. it lacks the ability to handle multiple brands.
A
A(n) _____ is a type of compensation arrangement where an agency charges a client a basic monthly amount for all of its services and credits to the client any media commissions earned. A. fixed fee method B. negotiated commission method C. cost-plus agreement method D. incentive-based compensation system E. objective-and-task compensation system
A
A(n) _____ is responsible for understanding the advertiser's marketing and promotional needs and interpreting them to agency personnel. A. account executive B. database manager C. media specialist D. copywriter E. art director
A
Defenders of the commission system argue that: A. it is generally easier to administer and keeps the emphasis in agency compensation on nonprice factors. B. it encourages agencies to recommend direct mail, sales promotion, and public relations to their clients. C. it does not tie agency compensation to media costs. D. it helps in reducing skyrocketing media costs. E. it is similar to the fixed-fee method.
A
In a decentralized system, a(n) _____ is responsible for the total management of the brand, including planning, budgeting, sales, and profit performance. A. brand manager B. media manager C. collateral services provider D. account executive E. sales manager
A
In a decentralized system, individuals who oversee management of the entire product category and focus on the strategic role of the various brands in order to build profits and market share are known as: A. category managers. B. art directors. C. account executives. D. account supervisors. E. media planners.
A
In the ad agency industry, clients refer to: A. an advertiser or organization that has the product, service, or cause that needs to be marketed. B. any media, which plays a crucial role in the process of marketing communication. C. a purchaser of the consumer product advertised. D. a market for business or consumer products. E. an advertising agency that specializes in the creation of the communications message.
A
Jim, an employee of CL Inc., is responsible for planning, marketing, budgeting, sales, and profit performance of a specific brand. He has two assistants who help in planning, implementing, and controlling the marketing program. In this scenario, Jim is an example of a(n) _____. A. product manager B. art director C. account executive D. copywriter E. account director
A
Negotiated commission rates for advertising agencies: A. average between 8 to 10 percent. B. are usually set between 15 to 25 percent. C. are typically not based on a sliding scale. D. are rarely used by consumer-products advertisers. E. are designed primarily to benefit agencies.
A
Pluto Inc. is a small agency that employs writers, artists, other innovative personnel. Mars is a specialized agency and does not deal with research, account planning, or television and radio space buying. In this scenario, Mars is an illustration of a(n) _____. A. creative boutique B. media specialist company C. account services organization D. media procurement specialist E. content management specialist
A
Under which type of compensation system might an agency be more inclined to recommend expensive media such as network television and national magazines to its clients? A. Commission system B. Fee arrangement system C. Cost-plus system D. Incentive-based compensation system E. Objective-and-task compensation system
A
Which of the following is a disadvantage of using a centralized organizational system? A.Longer response time B. Allows for very little top-management involvement C. Involvement of a huge number of people in making program decisions D. Prohibits communications E. Discontinuity in staff
A
Which of the following is a potential benefit of an in-house advertising agency? A. Greater control B. Access to more highly skilled specialists C. Potential to obtain varied perspective on advertising problems D. Greater flexibility E. Greater objectivity
A
Which of the following is true of a creative boutique? A. They lack media, research, and account planning capabilities. B. They lack creative personnel such as copywriters and artists. C. They are headed by a media buying director. D. They have an inherent disadvantage of being cumbersome and time-consuming. E. They have lesser access to creative talent.
A
Which of the following is true of the role of an advertising manager, under a centralized management system? A. It includes budgeting and planning media schedule. B. It primarily involves checking the accuracy of financial reports and records. C. It includes employee compensation management. D. It involves administering the firm's sales and sales promotion programs. E. It ensures that day-to-day sales targets are met.
A
Which of the following refers to the amount of client money that agencies spend on media purchases and other equivalent activities? A. Billings B. Media commissions C. Retainers D. Activity fees E. Ad traffic compensation
A
Which of the following statements is true about agency commissions? A. The negotiated commission system is increasingly replacing the traditional commission system. B. Agencies are increasingly relying on mass media for their income. C. Agencies rely on incentive-based commission as companies are expanding their IMC programs. D. Typically, agencies are unwilling to negotiate their commission rates. E. Generally, agencies receive their highest commissions from direct mail and sales promotions.
A
With respect to the creative services department of a full-service agency, the layout for TV commercials is known as a(n): A. storyboard. B. logo. C. art infusion. D. packshot. E. creative brief.
A
_____ are the individuals in the creative services department of an ad agency who conceive the ideas for the ads and compose the advertising message. A. Copywriters B. Art directors C. Account planners D. Account executives E. Media planners
A
_____ is a system whereby the commissions average from 8 to 10 percent or are based on a sliding scale that becomes lower as the clients' media expenditures increase. A. Negotiated commission system B. Fixed-fee commission system C. Cost-plus commission system D. Incentive commission system E. Pro-rata commission system
A
A major reason why some companies choose to use an in-house agency is to: A. maintain creative freshness. B. reduce advertising and promotions costs. C. reduce the threat of potential lawsuits. D. make use of top creative talent. E. dissimilate brand management and advertising from under one roof.
B
Greg is hired into the marketing services department of a full-service advertising agency. His job profile includes gathering information relating to the client's product and service that can be used in the development of the creative strategy. He has to collect information from various other departments in the firm to gain a better understanding of the client's target audience. In this scenario, Greg has been hired as a(n): A. art director. B. account planner. C. illustrator. D. media specialist. E. account executive.
B
J&J is an advertising agency that handles each of its clients by assigning individuals from various departments to work together as a team on their accounts. With respect to the organizational structures employed by a full-function advertising agency, J&J is using a _____ organizational system. A. departmental B. group C. matrix D. creative boutique E. media boutique
B
Lack of long-term objectivity, flexibility, and creativity are a few of the reasons why a company might move away from: A. a decentralized marketing system. B. an in-house agency. C. the use of full-service advertising agencies. D. a centralized marketing system. E. the use of creative boutiques.
B
Mars Inc., a San Diego based advertising agency, offers various services, such as sales promotion, marketing research, package design, direct marketing, publicity as well as planning, creation, and advertising production. In this scenario, Mars is an example of a(n): A. creative boutique. B. full-service agency. C. media buying organization. D. account service organization. E. media specialist company.
B
The majority of an advertising agency's expenses are in the area of: A. media costs. B. salaries and benefits for employees. C. sales promotions. D. production overheads. E. market research.
B
Under a centralized organizational system, the responsibility for planning and controlling the advertising and promotional functions lies with the: A. brand manager. B. marketing communications manager. C. product manager. D. art director. E. account planning supervisor.
B
Under which of the following compensation systems is the agency compensation tied to performance? A. Fixed-fee system B. Incentive-based system C. Cost-plus system D. Negotiated commission system E. Straight-fee system
B
Which of the following departments of a full-service agency, analyzes, selects, and contracts for space or time to publish or broadcast the client's advertising message? A. Research department B. Media department C. Account management department D. Creative services department E. Art department
B
Which of the following is a disadvantage of a decentralized organizational system? A. Inability to handle multiple product lines B. Ineffective decision making C. Longer response time D. Lack of flexibility E. Lack of managerial attention
B
Which of the following is a disadvantage of using an in-house advertising agency? A. Focus is external rather than internal B. Lesser access to top level talent C. Reduced cost savings D. Lesser stability E. Decreased coordination
B
Which of the following is an advantage of a decentralized organizational system? A. Effective decision making B. Rapid response to problems and opportunities C. Lack of internal conflicts D. Enhanced authority E. External rather than internal focus
B
Which of the following statements is true about outside advertising agencies? A. Typically, external ad agencies do not use media analysts and researchers. B. External agencies are often preferred for their greater skill and expertise levels. C. Generally, most external ad agencies do not offer creative services. D. External ad agencies are generally cheaper than in-house agencies. E. Unlike in-house agencies, outside agencies can be used to portray a singular global image.
B
Which of the following statements is true about superagencies? A. They were formed when large advertisement agencies were broken down into smaller, more specialized agencies. B. Advertisers who became disenchanted with the superagencies, moved to smaller agencies that were flexible and more responsive. C. They were formed so that agencies could provide clients with effective supply chain management. D. Advertisers who generally worked with superagencies converted them into in-house agencies to gain greater flexibility and objectivity. E. They were formed so that agencies could provide clients with just-in-time inventory management systems.
B
Which type of ad agency is most likely to offer its clients an extensive range of marketing, communications, and promotions services, including planning, creating, and producing the advertising; performing research; and selecting media? A. A creative boutique B. A full-service agency C. A media buying service D. A collateral agency E. A switch marketing agency
B
With respect to the types of organizational structures, many advertising agencies prefer the group system because: A. it completely avoids the usage of the incentive-based compensation system. B. it leads to continuity in client servicing. C. it avoids the involvement of the top management in the decision making processes. D. it converts a full-service agency into a media specialist agency. E. it keeps the departments within an organization independent of each other.
B
With respect to the types of organizational structures, some advertising agencies prefer the departmental system because: A. it completely avoids the usage of a commission system to compensate ad agencies. B. it gives employees opportunity to develop expertise in servicing a variety of accounts. C. it converts a full-function advertising agency into a creative boutique. D. it avoids the involvement of the top management in the decision making processes. E. it allows the creative team and the media team to work together as a group.
B
_____ are the major participants in the integrated marketing communications process who pay for advertising campaigns and promotions. A. Collateral service providers B. Clients C. Advertising agencies D. Media organizations E. Special service organizations
B
A company often uses a centralized organizational system when: A. it has many different divisions within the company. B. it does not want to involve the top management in the decision making process. C. it does not have many product lines or brands to advertise. D. it wants to involve a large number of people in making program decisions. E. it wants to have a category management system in place.
C
A company that uses an in-house agency might turn its advertising and promotion tasks over to an outside agency in order to: A. obtain greater control over the advertising process. B. reduce costs. C. obtain greater objectivity. D. make coordination of the advertising and promotional process easier. E. save media commissions.
C
A sequence of frames or panels that depict a TV commercial in still form is called a(n) _____. A. screenplay B. creative brief C. storyboard D. placard E. art infusion
C
Creative Networks is a major participant in the advertising and promotion process. It attracts various companies to buy space and time with them by providing the same at discounted rates. Creative Networks helps these companies reach their target market effectively by communicating their message. In this scenario, Creative Networks is a(n): A. advertiser. B. collateral service provider. C. media organization. D. creative boutique. E. sales promotion agency.
C
Diva Boutique, located in Manhattan, relies on external advertising agencies for its advertising needs, but due to its growing global presence, it is now worried that using external agencies may lead to inconsistency in delivery of its brand image. It also wants to maintain tighter control over its advertising and promotional activities. Which of the following advertising agencies should it adopt? A. Collateral service agency B. Buzz marketing agency C. In-house agency D. Centralized agency E. Creative boutique
C
Dynamic Inc., an advertising agency in Manhattan, receives compensation from its clients based on Dynamic's sales and market share performance. This is an example of a(n) _____ compensation system. A. fixed-fee B. straight-fee C. value-based D. cost-plus E. objective-and-task
C
From the perspective of a promotional planner, the primary purpose of media is to: A. represent the company's senior management in negotiations with an ad agency. B. provide the company with strategic recommendations and analysis. C. provide an environment for the firm's marketing communications message. D. help conduct a SWOT analysis. E. provide appropriate funding for all marketing activities.
C
In companies which follow a centralized organizational system, who among the following is likely to be given the title "marketing communications manager"? A. Art director B. Brand manager C. Advertising manager D. Product manager E. Copywriter
C
The _____ is a document that the agency's creative department uses to guide the development of advertising ideas and concepts. A. tagline brief B. product data sheet C. creative brief D. copywriter collateral E. marketing plan
C
The primary function of most media is to: A. assist the market research organization by conducting market surveys. B. coordinate their activities with direct-marketing agencies. C. provide information and entertainment to their audience. D. prepare the budget for the advertising and promotion process. E. compensate ad agencies through a commission system.
C
Which of the following differentiates a centralized organization from a decentralized organization? A. In a centralized organization, the advertising manager is responsible for all promotions activities including sales, whereas in a decentralized organization, the advertising manager is responsible for all promotions activities except sales. B. A centralized organizational structure is used in large companies with more than 1000 employees, whereas a decentralized organization system is used only in smaller companies which have not more than 500 employees. C. In a centralized organization, an advertising manager controls the entire promotions operation for all the products of a company, whereas in a decentralized organization, each product is assigned to a different brand manager. D. A centralized organizational structure includes a category management system, whereas a decentralized organizational structure does not include one. E. In a centralized organization, the efforts of all the brand managers are coordinated by the category managers, whereas in a decentralized organization, the efforts of all the brand managers are coordinated by the advertising managers.
C
Which of the following is true of an in-house advertising agency? A. It avoids top management involvement with the marketing communications function. B. It increases advertising and promotion costs. C. It provides greater stability. D. It provides more objectivity and range of services in comparison to outside agencies. E. It offers more access to top creative talent.
C
Which of the following is true of the problems associated with the centralized organizational structure? A. It does not enable a transfer of functions and responsibilities associated with advertising and promotions to the brand manager. B. It does not facilitate coordination with external advertising agencies. C. It makes it difficult for the advertising department to understand the overall marketing strategy of the brand. D. It makes it difficult for the brand manager to coordinate with the various departments within the organization. E. It facilitates disassociation of advertising managers from the category management system.
C
Which of the following statements is true about the role of top management in the advertising and promotion decision making process? A. The top management's day-to-day responsibilities usually include decision making and operations of advertising and promotion. B. The top management does not provide input in the advertising and promotion process. C. The top management is usually interested in how the advertising program represents the organization. D. The top management is only interested in the amount of money that must be allocated to advertising and promotion. E. The top management is more interested in tactical planning rather than strategic planning.
C
Which of the following statements is true of media departments? A. Their brief is primarily creative. B. They lack the ability or the authority to negotiate prices. C. They review information on demographics and radio listenership. D. They are in charge of creating the clients' advertising message. E. They are generally headed by an account planner.
C
Within the creative services department of a full-service agency, once the copy, layout, illustrations, and mechanical specifications of the ad have been completed and approved, the ad is turned over to the _____ department. A. traffic B. account planning C. production D. research E. art
C
_____ are drawings that show what the print ad will look like and from which the final artwork will be produced. A. Creative briefs B. Packshots C. Layouts D. Art infusions E. Product sheets
C
A(n) _____ is an outside firm that specializes in the creation, production and/or placement of the communications message and that may provide other marketing and promotions related services. A. media organization B. sales promotion firm C. research organization D. advertising agency E. creative boutique
D
Account planning has become a very important and demanding function in many agencies because: A. it facilitates organizations in reducing the number of effective communication channels. B. it enables organizations with a centralized management to reduce costs. C. it provides greater value to the final consumer. D. it provides the creative team with more insight into consumers. E. it has replaced brand management as the primary marketing function.
D
An ad agency that offers its clients a complete range of marketing, communication, and promotion services is known as a(n): A. creative boutique. B. media buying service. C. account service agency. D. full-service agency. E. buzz marketing agency.
D
CL Ads, an ad agency, provides media services for its clients. It prepares and places ads in local and national magazines at a specified cost. However, the agency bills its clients a flat 15 percent of the ad cost as revenue. In this scenario, the agency is using a(n) _____ system. A. incentive-based B. flexible revenue C. cost-plus D. commission E. fixed-fee
D
In a centralized organizational structure, the _____ department is responsible for developing promotional plans that will be approved by management and recommending a promotions program based on the overall marketing plan, objectives, and budget. A. production B. finance C. auditing D. advertising E. product planning
D
Independent companies that exclusively help in purchase of radio and television time are known as: A. creative boutiques. B. SMM organizations. C. macro-marketing agencies. D. media specialist companies. E. storyboard specialists.
D
Superagencies were formed: A.because advertisers were disenchanted with large agencies. B. because advertisers wanted agencies to be more flexible and responsive than traditional agencies. C. to save money for clients. D. so that agencies could provide their clients with integrated marketing communications services worldwide. E. to lessen the need for competitive pricing.
D
The _____ department coordinates all phases of production to see that the ads are completed on time and that all deadlines for submitting the ads to the media are met. A. research B. production C. art D. traffic E. personnel
D
Under a decentralized system, the advertising department is generally a part of _____. A. finance B. sales C. product development D. marketing services E. research and development
D
Which of the following departments in a full-service agency is responsible for the development and execution of advertisements? A. Traffic department B. Account services department C. Media planning department D. Creative services department E. Production department
D
Which of the following describes a limitation associated with the decentralized organizational structure for advertising? A. Brand managers are often overqualified and tend to feel superior to product managers. B. Brand managers are typically from non-management backgrounds. C. Brand managers do not devote enough attention to short-term planning and administrative tasks. D. Brand managers often end up competing for management attention, marketing budgets, and other resources. E. Brand managers typically rely on intuition and often jeopardize the creative activities of the advertising agency.
D
Which of the following is the reason why companies are increasingly choosing to opt for an incentive-based system? A. To encourage its agencies to use more mass media advertising B. To encourage its agencies to stop using network TV advertising C. To avoid the involvement of its top management in the decision making process D. To demand more accountability and pay the agencies based on their performance E. To encourage its agencies to keep detailed records of the costs it incurs while working with the client
D
Which of the following is true about the functions of the advertising manager in a centralized system? A. The advertising manager is responsible for all sales and sales management activities. B. The advertising manager has the final say in determining the sales forecasts. C. The role of an advertising manager is similar to the role of an art director in a decentralized organization. D. The advertising manager controls the entire promotions operation. E. The advertising manager does not deal with planning and budgeting.
D
Which of the following is true of the traffic department in a full-service agency? A. It is headed either by an art director or a graphic designer who produce the final artwork for the ad. B. It can be located only within the research department and is used to gather information through primary or secondary sources. C. It gathers, analyzes, and interprets information that will be useful in developing advertising for the agency's clients. D. It may be located in the creative services area of the agency or be a part of media or account management. E. It is headed either by a copywriter or a media planner who selects and contracts for space and time in media.
D
Which of the following statements is true about creative boutiques? A. They generally have media, research, and account planning capabilities. B. They are large ad agencies that provide all types of advertising and promotion services. C. They often subcontract work to full service agencies. D. They tend to provide quicker innovative services due to less bureaucracy. E. They are generally characterized by extensive internal politics.
D
With respect to the major participants in the advertising and promotions process, which of the following participants include sales promotion agencies, digital/interactive agencies, and public relations firms? A. Advertising agencies B. Media organizations C. Collateral service agencies D. Specialized marketing communications service agencies E. Bait-and-switch marketing service agencies
D
Fixed-fee method of compensation is also called: A. objective-and-task method. B. value-based compensation. C. incentive-based compensation. D. cost-plus fee method. E. straight-fee method.
E
In a full-service agency, the function of gathering, analyzing, and interpreting information that is useful in developing advertising is the responsibility of the _____ department. A. audit B. personnel C. media D. account management E. research
E
In the creative services department of an ad agency, the _____ department is responsible for creating the visual portion of an ad, such as layouts and commercial storyboards. A. account services B. service C. product management D. research E. art
E
Under the _____ system of compensation, the client agrees to pay the agency a fee based on the price of its work along with some agreed-on profit margin. A. fixed fee B. negotiated commission C. straight fee D. incentive-based E. cost-plus
E
Which department within an advertising agency supervises the casting of people to appear in the ad and the setting for the scenes? A. Account services department B. Art department C. Traffic department D. Media department E. Production department
E
Which of the following is true of the role of an account executive? A. It is primarily considered as a research function. B. It is used only by centralized organizations. C. It is generally considered as a subsidiary function. D. It includes an extensive creative aspect. E. It is the focal point of agency-client relationships.
E
Which of the following statements explain why an organization would want to use an external advertising agency? A. It reduces advertising and promotional costs for the client. B. It enables the client to gain more control of the promotional activities. C. It allows more access to the top management of the client firm. D. It helps provide a consistent and integrated global brand image. E. It provides the client with the services of highly skilled individuals.
E
Which of the following statements is true about account services? A. It is an in-house service for the advertisement agency which is independent of its clients' obligations. B. It is an advertisement agency which solely provides media space and time. C. It provides the creative team with in-depth storyboards. D. It is a research department in the advertisement agency which assists in creating the advertising message for the client. E. It is the link between the advertisement agency and its clients.
E
Momentum Automobiles, an automobile manufacturer, hires Dreams Inc. to cater to its advertising needs. Momentum is only required to provide the necessary finances and does not take part in any decision making. In the given scenario, Momentum Automobiles would be classified as a(n): A. client. B. illustrator. C. full service agency. D. advertising agency. E. media organization.
a
A decentralized organizational system is often used when companies do not have many different divisions, product or service lines, or brands to advertise.
false
A disadvantage of the decentralized system is that each brand does not receive concentrated managerial attention, resulting in slower response to both problems and opportunities.
false
A typical direct-response agency does not include a creative department.
false
From the perspective of the promotional planner, the purpose of media is to provide information or entertainment to their subscribers.
false
Loyalty to a single agency is becoming more common as marketers seek new ways of connecting with consumers.
false
Superagencies were formed when large advertising organizations disintegrated to form separate, more specialized individual agencies.
false
The layout of a print ad is known as a storyboard.
false
The role of account representatives is likely to disappear as agencies and their clients are beginning to liaise directly with each other.
false
While the advertising department develops the promotional budget, the final decision on allocating funds is usually made by the overall marketing department.
false
A cost-plus system requires that the agency keep detailed records of the costs it incurs in working on a client's account.
true
According to marketing executives, the biggest obstacle to implementing integrated marketing communications (IMC) is the lack of people with the broad perspective and skills to make it work.
true
Account planners work with the client as well as other agency personnel including the account executives and media specialists.
true
An agency with integrated marketing capabilities can create a single image for the product or service and address everyone, from wholesalers to consumers, with one voice.
true
Digital/interactive agencies and public relations firms are examples of organizations that provide specialized marketing communication services.
true
In-house agencies are preferred by some companies because they keep the marketing communications function more closely tied to top management.
true
Media buying services have been experiencing strong growth in recent years as clients seek alternatives to full-service agency relationships.
true
One of the more widely used collateral service organizations is the marketing research firm.
true
Proponents of the commission system argue that the system is more flexible than it appears as agencies often perform other services for large clients at no extra charge.
true
The agency evaluation is often done on a subjective, informal basis, particularly in smaller companies where ad budgets are low.
true
While many people both inside and outside the organization have some input into the advertising and promotion process, direct responsibility for administering the program must be assumed by someone within the firm.
true
