Online Questions Test 1
What are the two types of perceptual screens consumers use?
Physiological and psychological;
A small Wisconsin agency wants to buy a quarter-page ad in Golf Digest magazine for a travel agency that specializes in preparing all-inclusive, hassle-free golf travel packages. The ad would cost $300. How much money would the agency send the publication to pay for the ad?
$225; The magazine would receive only $255 even though the travel company paid the agency $300. The $45 is the agency's media commission. Cash discounts were ignored in the question as they are in the text discussion. The typical media commission is 15 percent.
What is the typical agency markup for services provided to a client?
17.65 percent; The agency pays the supplier's charge and then adds a markup to the client's bill, typically 17.65 percent of the invoice (which becomes 15 percent of the new total).
What economic principle best demonstrates the importance of advertising?
Abundance Principle; The abundance principle states that in an economy that produces more goods and services than can be consumed, advertising serves two important purposes. It keeps consumers informed of their alternatives, and it allows companies to compete more effectively for consumer dollars.
Business-to-business advertising agencies frequently charge their clients service fees because:
Ad rates in trade magazines are lower and the standard agency commission does not generate enough revenue to cover agency costs; Because commissions usually don't cover the cost of the agency's services, business agencies typically charge their clients service fees.
Which of the following statements is most likely true about advertising media?
An advertising medium is any paid means used to present an ad to a target market; Most advertising is paid for by sponsors. Word-of-mouth is a type of communication medium. It is not an advertising medium. Interactive media are exemplified by the Internet. Addressable media are exemplified by direct mail. The Internet is classified as an interactive advertising medium. One of the characteristics of word-of-mouth is the fact that it is unstructured.
The use of narrowcasting allows advertisers to:
Appeal to a limited TV audience with specialized interests; The explosion of new technologies in the last decade has affected advertising considerably. This shift transformed television from the most widespread of mass media to a more specialized, narrowcasting medium. Now small companies and product marketers that appeal to a limited clientele can use TV to reach audiences with select interests. Narrowcasting is used by such cable networks as the Food Channel, the History Channel, and ESPN.
Paula always drinks Diet Coke with her meals. She refuses to eat at a restaurant that does not serve Coke products and goes to another restaurant that serves Diet Coke. Paula has a strong degree of:
Brand Loyalty; Brand loyalty is the consumer's conscious or unconscious decision, expressed through interest or behavior, to repurchase a brand continually. It occurs because the consumer perceives that the brand offers the right product features, image, quality, or relationship at the right price.
The many factors that affect the client-agency relationship can best be grouped into the following categories:
Chemistry, conduct, communication, and changes; Many forces influence the client/agency relationship. Generally they can be grouped into the four Cs: chemistry, communication, conduct, and changes. The most critical factor is the personal chemistry.
What are the two broad categories of learning theories?
Cognitive theory and conditioning theory; There are numerous theories of learning, but advertisers classify most into two broad categories—cognitive theory and conditioning theory—depending on the level of consumer involvement (high or low) required to make a purchase.
Which of the following is a step in the market segmentation process?
Combining groups of people into larger market segments; The process of market segmentation involves two steps: identifying groups of people (or organizations) with certain shared needs and characteristics and aggregating (combining) these groups into larger market segments according to their interest in the product's utility.
The ad for the Transderm Scop patch, a remedy for motion sickness, states that it "has clinically proven more effective than Dramamine," a motion sickness medication in pill form. The manufacturer of the Transderm Scop patch most likely used _____ advertising.
Comparative; Advertisers use comparative advertising to claim superiority over named competitors. In the U.S., such ads are encouraged as long as the comparison is truthful. In addition to being truthful, the ad must compare some objectively measurable characteristic.
Most advertising seen every day on television and in newspapers is targeted to the _____ market.
Consumer; The two primary types of target markets are business and consumer markets. Mass media ads are primarily aimed at the consumer market.
Some years ago, an ad for Montgomery Ward (which has since gone out of business) said the retailer was selling a pair of diamond earrings that had been reduced from their regular price of $1,199 to $399. Upon investigation, it was discovered that there was no evidence that Montgomery Ward had ever sold the earrings at the "regular" price. This ad was most likely an example of _____ advertising.
Deceptive; The ad was deceptive because the ad contained a misrepresentation that could and did mislead a significant number of reasonable consumers.
If you are a retailer in South Africa, Beget Holdings is the only source in the entire nation for Intellect Aero, a wireless, all-in-one, point-of-sale, mini-ATM and voucher device, which is able to carry out debit and credit card transactions faster than landlines or any other current communications methods. The maker of Intellect Aero is most likely using _____ distribution.
Exclusive; Some manufacturers grant exclusive distribution rights to a wholesaler or retailer in one geographic region. What is lost in market coverage is gained in the ability to maintain a prestige image and premium pricing.
A target audience is a segment of the market that displays a varying degree of loyalty to certain brands and products.
False; A target audience is a specific group of individuals to whom the advertising message is directed.
Advertising is generally personal and directed toward individuals to try and induce higher individual consumption.
False; Advertising is typically directed to groups of people rather than to individuals. It is therefore a nonpersonal method of mass communication.
Due to the principle of perception, most adults are exposed to thousands of ads each day and are able to remember at least half of them.
False; The average adult may be exposed to thousands of ads each day but notices only a handful and remembers even fewer. This is due to the principle of perception.
The fundamental differentiating device between any two products is the product life cycle.
False; The fundamental differentiating device for all products is the brand—that combination of name, words, symbols, or design that identifies the product and its source and distinguishes it from competing products.
Advertisements conveying factually false messages are generally categorized under puffery.
False; Under current advertising law, the only product claims— explicit or implied—that are considered deceptive are those that are factually false or convey a false impression and therefore have the potential to deceive or mislead reasonable people. But puffery is excluded from this requirement because regulators maintain that reasonable people won't believe it anyway.
A strategy of product differentiation allows manufacturers to separate a particular brand from its competitors by associating that brand with a particular set of needs that rank high on the consumer's priority list.
False; With product differentiation, manufacturers portray their brands as different from and better than the competition by offering consumers quality, variety, and convenience. Positioning involves separating a particular brand from its competitors by associating that brand with a particular set of needs that rank high on the consumer's priority list.
What are the two categories of media available to the international advertiser?
Foreign media and international media; Generally, the media available to the international advertiser can be categorized as either international or foreign media, depending on the audience they serve.
Which of the following statements about the industrial age is most likely TRUE?
Fresh markets led to the development of consumer packaged goods; The industrial age started around the turn of the twentieth century and lasted well into the 1970s. Fresh mass markets then developed for new brands of consumer luxury and convenience goods we refer to as consumer packaged goods.
What kind of segmentation would an advertiser have used if it were to define its target market as people under the age of 18 and living in the metropolitan area of Houston, Texas?
Geodemographic; Demographics are often combined with geographic segmentation to select target markets for advertising. This is called geodemographic segmentation.
The population around Las Vegas grew more than 85 percent during the last census period. With this population growth expected to continue, St. Rose Dominican Hospital has announced plans to add a third acute-care hospital to its system in the Las Vegas area, "designed to meet the future needs of our valley's rapidly expanding population." St. Rose Dominican Hospital is relying on _____ segmentation.
Geographic; One simple way to define markets is by using geographic segmentation. People in one region of the country (or the world) have needs, wants, and purchasing habits that differ from those in other regions. City size is one of the variables of geographic segmentation.
Goldwin Golf Corp. has developed a golf club that has a wider shaft and is 40 grams lighter than other clubs currently on the market. It has hired Lowell Agency Co. to develop an advertising campaign for this new club. Goldwin has offered to pay the agency 3 percent of its profits if it sells more than 30,000 clubs during its first full year of production. This bonus is an example of a(n):
Incentive System; Accountability is a major issue in client/agency relationships. With the incentive system, the agency earns more if the campaign attains specific, agreed-upon goals.
What step in the consumer decision process follows problem recognition?
Information Search; The moment we receive an advertising message, our mental computer runs a rapid evaluation called the consumer decision process. The full process involves a rather lengthy sequence of activities: problem recognition (which may occur as a result of seeing an ad), information search, evaluation and selection of alternative brands, store choice and purchase, and finally postpurchase behavior.
One of the disadvantages of using a decentralized advertising department is the:
Lack of ad uniformity across divisions; A drawback of decentralized advertisement department is that decentralized departments often concentrate on their own budgets, problems, and promotions rather than the good of the whole company. Across divisions, ads may lack uniformity, diminishing the power of repetitive corporate advertising. Rivalry among brand managers may even escalate into unhealthy competition.
The _____ protects all copyrighted material, including advertising, in the United States.
Library of Congress
_____ refers to all the planned messages that companies and organizations create and disseminate to support their marketing objectives and strategies.
Marcom; Marketing communications (often called marcom) refers to all the planned messages that companies and organizations create and disseminate to support their marketing objectives and strategies. In addition to advertising, major marketing communication tools include personal selling, sales promotion, direct marketing, and public relations activities.
Owing to the Great Depression of 1929, the expenditures in advertising plummeted. This led advertising agencies to shift their focus to _____.
Market Research; On October 29, 1929, the stock market crashed, the Great Depression began, and advertising expenditures plummeted. In the face of consumer sales resistance and corporate budget cutting, the advertising industry needed to improve its effectiveness. It turned to research. By providing information on public opinion, the performance of ad messages, and sales of advertised products, these companies started a whole new business: the marketing research industry.
_____ is being used when a publishing company prints three monthly magazines—one for horse breeders, one for cat lovers, and one for thrifty senior citizens.
Market Segmentation; Market segmentation is the process by which marketers identify unique groups of people whose needs they can address.
There is a wide array of cosmetics currently available in the market. Exhibitor Labs makes a line of cosmetics including eye accents and shampoos for horses. It claims to manufacturer "the world's finest equine cosmetics." What kind of strategy is Exhibitor Labs most likely using?
Positioning; The company has made effective use of product differentiation and market segmentation strategies. The brand has associated itself with a particular set of customer needs that rank high on its customers' priority lists.
The Eggo brand has been around since the 1930s. The Eggo brand has always featured yellow as a key color behind a product shot and a big, red script logo on its packages. The problem was that these elements were not engaging consumers. The colors looked flat, and the food didn't appear as appetizing as its competition. Eggo has recently developed new boxes to appeal to both its adult and children markets. Which component has been the primary focus of Eggo?
Product Packaging; The packaging is the manufacturer's last chance to communicate with buyers and has been the focus of Eggo marketing. As an element of the product, it can determine the outcome of retail shelf competition.
Current subscribers to Sports Illustrated receive special renewal rates. The magazine is most likely trying to build brand loyalty by _____ consumer habits.
Reinforcing; In the quest for brand loyalty, advertisers have three aims related to habits: breaking habits, acquiring habits, and reinforcing habits. Reinforcing habits involves reminding current customers of the value of their original purchase and encourage them to continue purchasing, such as through lower renewal rates.
An advertisement presented as a scholarly article about the benefits of drinking tea shows the Lipton Tea logo embedded in ice cubes. This is most likely an example of:
Subliminal Advertising; According to Wilson Bryan Key, subliminal advertising works through embedded messages that seduce consumers into buying the good or service.
What is the job title used for the individual in the ad agency who serves as the liaison between the agency and the client?
The account executive; Account executives are the liaison between the agency and the client. The account executive is responsible both for managing all the agency's services for the benefit of the client and for representing the agency's point of view to the client.
Which of the following statements about the cognitive learning theory is true?
The cognitive theory helps explain how we learn from the experiences of others; Cognitive theory views learning as a mental process of memory, thinking, and the rational application of knowledge to a practical problem. The conditioning theory is also called the stimulus-response theory. According to the conditioning theory, learning is a trial-and-error process.
What is the major objective of all brand marketing?
To produce brand loyalty; The major objective of all brand marketers is to produce brand loyalty, a direct result of the habit of repurchasing and the reinforcement of continuous advertising.
One of the worst sins in an ad agency is a missed deadline. Which department within the agency is responsible for preventing this from happening?
Traffic Department; The agency traffic department coordinates all phases of production and makes sure everything is completed and approved before client and/or media deadlines.
Advertising supporters argue that advertising allows manufacturers to engage in mass production, which then lowers the cost of the products.
True; Advertising often enables manufacturers to engage in mass production, which in turn lowers the unit cost of products.
The United States has the strictest regulatory control over advertising in the world. Now that advertising has become global, many campaigns use similar themes and even the same ads across frontiers. But foreign governments often regulate advertising considerably more than the United States.
True; Now that advertising has become global, many campaigns use similar themes and even the same ads across frontiers. But foreign governments often regulate advertising considerably more than the United States.
The traditional actions taken by people in a society or community and the philosophical rules that society establishes to justify such past actions and decree future actions are the two interrelated components of ethics.
True; On one level, ethics comprise two interrelated components: the traditional actions taken by people in a society or community and the philosophical rules that society establishes to justify such past actions and decree future actions.
Public service announcements (PSAs) are generally carried out without any charge because they constitute general public awareness and social welfare messages.
True; Some sponsors don't have to pay for their ads. The American Red Cross, United Way, and American Cancer Society are among the many national organizations whose public service announcements (PSAs) are carried at no charge because of their nonprofit status.
Higher levels of consumer involvement with the product and the message would most likely involve the central route to persuasion.
True; The central route to persuasion is one of two ways communication can persuade consumers. When a consumer's level of involvement is high, the central route to persuasion is more likely.
An advertisement containing elements that have the potential of causing unjustifiable injury to the consumers of the product is best categorized as:
Unfair Advertising; According to FTC policy, some ads that are not deceptive may still be considered unfair to consumers. Unfair advertising occurs when a consumer is "unjustifiably injured" or there is a "violation of public policy" (such as other government statutes).