Principles of Marketing Final

Cognitive dissonance is most likely to occur during which part of the decision making process? ​

Postpurchase evaluation

What is the estimated sales potential?

Potential x competitive factor/downside x Advantage/upside =

Which one of the 4 P's of the marketing mix is usually seen as a "short term" method of driving sales because it can be easily copied and lowers profits?

Price

Greenwashing

When products are promoted as being more environmentally friendly than they really are.

Jason is going to buy a new car. He has narrowed his choices down to Nissan, Ford, Chevy and Honda. These brands would represent

Consideration set

3 main dimensions of determining pricing

Cost, competition, demand

Which of the following should a marketer consider when evaluating the relevancy of a particular market segment to pursue? a. Estimated costs b. Sales estimate c. Competition d. All of these

d. All of these

Which of the following would NOT be an example of misleading or unethical marketing? a. Deceptive sales promotion b. Promoting products that might be harmful to an individual c. False advertising d. Feature a discontinued model at a discounted price

d. Feature a discontinued model at a discounted price.

Which of the following is NOT a stakeholder group that marketers must take into consideration when considering ethics? a. Government regulators b. The public c. Consumers d. International agencies

d. International agencies

Which of the following statements about implementing an ethics and legal compliance program is false? a. It requires open communication. b. It helps create a buffer zone on issues that could trigger serious legal complications for the company. c. It requires taking reasonable steps in response to violations of standards. d. It rarely needs to be revised. e. It requires consistent enforcement of standards from the code of conduct.

d. It rarely needs to be revised.

four stages of product life cycle

introduction, growth, maturity, decline

5 steps of consumer buying decision process

1. Problem recognition 2. Information search 3. Evaluation of alternatives 4. Purchase 5. Post-purchase evaluation

The new product process

1. new product strategy development 2. idea generation 3. screening and evaluation 4. business analysis 5. development 6. market testing 7. commercialization

The state of Utah has approximately 3.2 million people. Of that total, 17% like to downhill ski. What would the market density for downhill skiers be for the state of Utah?

544,000

Effectiveness

the degree to which long-term customer relationships help achieve an organization's objectives

Efficiency

minimizing the resources an organization uses to achieve a specific level of desired customer relationships

Claire is beginning to wonder if she has made the right decision about purchasing a new HP laptop after she sees a friend with a new Dell. Claire's doubt whether she made the right decision occurs during the ___________ of the buying decision process.

postpurchase evaluation phase

Marketers must insure that pricing objectives they set are consistent with

the financial objectives for the company and the marketing department

Max recently purchased a Ford F150 truck and has owned it for about a week. Earlier in the day, he received a call from Dane, the sales representative who sold him the truck. Dane called to check to see whether Max had any questions or problems with the truck and if he had learned how to navigate all the bells and whistles. Dane also reminded Max about how Ford is highly regarded as one of the best automobile brands and that the Ford truck is the #1 truck brand in the United States. What phenomenon is Dane trying to prevent by contacting her customer?

Cognitive dissonance

What is the best data a marketer can have?

Combination of quantitative and qualitative

When shopping for detergent, Josh looks at Tide, Fresh Start, Surf, and All and chooses the one that is on sale. These four brands make up his ____ set.

Consideration

Honda has financial objectives of generating a 25% gross margin on every car that it sells. If the cost to make the 2018 Honda Civic is $12,500, what should Honda price it at to achieve their goal of a 25% margin?

Selling price to achieve desired margin percentage = Cost (cost of goods) / 1 - desired margin percentage $12,500 / 1 - .25 = $16,700 or $16,666 (no penalty for not rounding up) The correct answer is: $16,700

Roy enjoys cycling. He sets out on a hundred mile ride on a warm summer day. He gathers all of his gear before setting out - helmet, gloves, sunglasses, water bottle filled with water. Believing he is all set for a great ride, he starts out early in the morning. After about 30 miles, he all of a sudden hears "pfffffffffff" as his front tire starts to go flat. As he pulls to the side of the road, many miles from home or the nearest bike store, he suddenly realizes he forgot to bring a spare tube. Roy is in the post purchase evaluation stage of the consumer decision making process

False

Stars are profitable products that usually generate more cash than is required to maintain share.

False

The following is an example of deceptive advertising: "Our toothbrushes are guaranteed to make you smile!"

False

The more elastic the demand, the more beneficial it is for the seller to raise the price

False

The opening new restaurants in Japan, the marketing team conducted research that indicated that the preferred size of soda serving sizes in Japan were 25% smaller than in the U.S. This would be an example of an "ethical" global environment factor that McDonald's had to take into consideration when determining what size beverages to introduce in Japan.

False

Product development is a strategy of increasing sales by improving present products or developing new products for current markets.

True

Promotion can help sustain interest in established products that have long been available.

True

Small firms can compete in industries dominated by larger players by using a concentrated targeting strategy.

True

Quantitative Data

Yields empirical information that can be communicated through numbers

Which of the following is NOT part of the 5 step Market Research Process a. Collecting data b. Determining market volume potential c. Locating and defining issues and problems d. Interpreting research findings

b. Determining market volume potential

Which of the following statements about price elasticity is false? a. A product like electricity has an inelastic demand. b. When price is raised on a product that has an inelastic demand, then total revenue will decrease. c. If marketers can determine price elasticity, then setting prices at optimum levels is much easier. d. Steak is an example of a product that has an elastic demand for most people, because when price goes up quantity demanded goes down proportionally. e. Elasticity of demand is the relative responsiveness of a change in quantity demanded to changes in price

b. when price is raised on a product that has an inelastic demand, then total revenue will decrease

​The consumer buying decision process involves _______ stages. The first stage is ____________, and the last stage is _____________.

​five; problem recognition; postpurchase evaluation

Marketing efforts do not involve the design and development of products.​

False

What would the global market potential for a product be based upon the following information? - Total population: 1,250,000 - % of population that uses product/service: 35% - Avg. retail price of product/servcie: $25 - Customers who purchase use product/service purchase it 8 times per year. - Competitive factor: -15% - Brand advantage: +25% - Global environmental factor: +15%

$1,069,140,625

Doritos has already calculated that the total market potential for their new line of jalapeno and cheddar curly chips is $23,890,000 for Uruguay - a new market for them. The competitor impact is estimated to be -40% while the unique flavor and extensive advertising support of Doritos is calculated to provide a brand advantage of +30%. What is the new market potential when competitor and brand factors are calculated in?

$18,634,200

Nike is thinking of introducing a broomball shoe in Minnesota just in time for the upcoming broomball season! The total population of MN is 5.5 million people, roughly 15% of Minnesotans play broomball. Nike estimates that over the course of their lifetime, MN who play broomball would purchase 3 sets of broomball shoes. Nike plans to price the shoe at $78. What would the total market potential be?

$193,050,000

Jenny's Carmel Popcorn Company would like to introduce their line of sweet popcorn into grocery stores in Minnesota. What would be the sales potential given the following information? - MN population: 5.5 million - % of population that consumes sweet or flavored popcorn = 23% - Avg. price of a bag of popcorn: $4.25 - Avg customer buys sweet popcorn 6 times per year - Competitor impact of -30% (based upon the fact that Angie's Popcorn is the hometown favorite for popcorn in MN, is lower in price and has bigger bags.)

$22,580,250

What would the best sales estimates - from the answers listed below - for the following scenario? Tide laundry detergent is developing a "Pumpkin Spice" fragrance that it will potentially introduce in the Fall to entice users to wash more frequently. Senior management requested that marketing develop a sales estimate of what this product could generate in terms of sales. Here are the variables they considered when developing their estimate: 1. Total population of detergent users: 34,000,000 2. Percent of total detergent users that like fragrances: 43% 3. Competitors already offer similar products with various "fall fragrances" - but no one offers a "pumpkin spice" fragrance. Therefore, the marketing team believes that the "competitive factor" will negatively impact Tide's potential of success by 40%. Another way of stating this, would that Tide's success potential would be 60%. 4. Tide also believes that it has an advantage over competitor products due to its larger advertising budget, better pricing and the fact that ONLY Tide offers a "pumpkin spice" scent - which secondary research has shown is the most popular scent in the Fall. As a result, the Tide team estimates that its "advantage factor" will be 110%. 5. The price of the new product will be $10.49 6. Purchase frequency for the target segment is estimated to be 4.5 times per year.

$455,490,486

Pepsi has calculated that it has fixed costs that consist of its lease, depreciation of its assets, executive salaries, and property taxes add up to $750,000. Their product is diet Pepsi. Their variable costs associated with producing Diet Pepsi are raw ingredients, factory labor, and sales commissions. Variable costs have been calculated to be $0.10 per unit. A can of Diet Pepsi is priced at $.75 each. What is the break-even for Diet Pepsi?

$750,000 ÷ ($.75 - $0.10) = 1,153,846 units

A product that demonstrates value usually provides which of the following enhancements/benefits?

A meaningful point of differentiation relative to the competition

undifferentiated targeting strategy

A strategy in which an organization designs a single marketing mix and directs it at the entire market for a particular product

Corporate strategies

A strategy that determines the means for utilizing resources in the various functional areas to reach the organization's goals

Qualitative data

Data that is not numerical and is descriptive

Key steps in the target market selection process

Determining which segmentation variables to use

Which of the following would be an example of a global environmental factor that a marketer would have to take into consideration when determining sales potential of a given international market?

Economic conditions

_____________ refers to minimizing the resources an organization uses to achieve a specific level of desired customer relationships.

Efficiency

Shelly wants to hire her cousin's consulting company to help her organization, but she wonders if this might violate the company's conflict of interest policy. Which dimension of social responsibility applies to this example?

Ethical

Joe is considering buying a new car. He has developed a list of most important considerations including cost of the car, color, horsepower and cars ability to handle snowy roads. Joe has developed his own opinions about various car brands and is now spending considerable amount of time reviewing reports on various manufacturers through such websites as Car & Driver and Consumer Reports. Which of the following would the review of Car & Driver and Consumer Reports be considered?

External research

Example of unethical marketing

Failure to inform customers about existing conditions or changes in product quality

Bi-Pro - the Eden Prairie based company that manufactures and distributes a protein supplement, is thinking about launching their product in Germany. The total population of Germany is 82.6 million people. An estimated 12% of the German population currently uses/purchases protein supplements of some sort. Bio-Pro calculates that the market density for their product for the country of Germany would be 68.5 million potential customers.

False

If the demand for haircuts does not vary based upon whether a salon charges $15 per cut or $10 per cut, the demand for haircuts would be categorized as elastic.

False

In general, when marketers focus on customers chosen for their lifetime value, they earn lower profits in future periods than when they focus on customers selected for other reasons.​

False

Liz is thinking of buying a new smartphone. There are seemingly hundreds of options to choose from - she is overwhelmed by all the choices and options. Her professor in Principles of Marketing suggests that she develops a prioritized list of objective and subjective product charateristics that are most important to her related to her next smartphone. These variables would be an example of Liz "consideration set."

False

What is the break even point (business analysis)

Fixed costs / (price-variable costs)= Breakeven point in units

A pair of Nike Air Jordan basketball shoes are priced at $190. The cost of the shoes is approximately $28.50. What is the gross margin for the shoes?

Gross margin = Gross Profit / sales price $190 - $28.50 - $161.50 is gross profit $161.50/$190 = 85% The correct answer is: 85%

A regular size cup of coffee at Starbucks is $2.75. The cost of the coffee (cost of goods sold/COGS) is 33%. What would the gross profit be for a cup of regular coffee?

Gross profit = Price - cost (COGS) = $2.75 - ($2.75 x .33) = $1.84 The correct answer is: $1.84

The average price for a Dell laptop computer is $750. The gross margin is 70%. What is the cost (cost of goods sold) for the laptop?

Gross profit = Price x Gross Margin > Cost = Price-gross profit Gross profit = $750 x .70% = $525 Cost of goods sold = $750 - $525 = $225 The correct answer is: $225

Price Elasticity

How much the demand for a product or service changes based upon how much the price of that product/service changes. The less the demand changes, the less elastic the pricing is. The more the demand changes, the more elastic the price is.

Benefits of new product introductions

Increased market share, increased profit, and success in failure

Of the 4 growth strategies we studies in Chapter 2 - which defines the Market Penetration Strategy?

Increasing sales in current markets with current products

Apple continues to grow its business by developing new products (Apple Watch) and optimizing the performance of existing ones (iPhone.) Which of the following best defines Apple's growth strategy?

Product development

Tiffany is a purchasing manager of computer and software equipment for her company, which employs about 350 individuals. She subscribes to PC Magazine and several other trade publications that review computer hardware and software. In addition, Tiffany is an active user of online forums and often reads reviews that other purchasing managers post about different computer models. Tiffany spends about 1-2 hours each week reviewing information through these sources before making purchasing decisions. What stage of the consumer decision process is Tiffany most likely in?

Information search

Risks of new product introductions

Innovation is costly, lac of incremental sales, and wasted time and resources

5 best practices of data collection

Insuring that you have the selected the appropriate target audience for your research

Key consideration for selecting a target market

Is there an unmet customer need? How big is the market opportunity? How much competition is there? (# and strength?) Are there cost efficient ways of reaching the target market?

Determining sales potential of an international market

It can be positive (if country has strong economy and strong consumer preference for spicy foods) or it can be negative (poor economy and high tariffs on foreign products.)

Why is market density important for marketers to know?

It determines the total potential customers for a product in a given market

Credit Susie paid $2.6 million in fines and pleaded guilty to helping American customers evade their taxes. Which dimension of social responsibility applies to this example?

Legal

Nike's marketing team develops products and marketing support campaigns by dividing up customers into groups based upon the sports they play. This would be an example of

Market Segmentation

Competitive Growth Strategies

Market penetration is a strategy of increasing sales in current markets with current products Market development is a strategy of increasing sales of current products in new markets Product development is a strategy of increasing sales by improving present products or developing new products for current markets Diversification allows firms to make better and wider use of their managerial, technological, and financial resources

Cheerios comes in two different "formulas" - regular Cheerios and Gluten-Free Cheerios. As a result, it has two distinct versions of packaging and two distinct advertising campaigns to support the specific formulas and benefits of each product. This would be an example of what kind of targeting strategy?

Market segmentation

In order to determine total sales potential for a market - the maximum sales that could occur if all potential customers in that market were to buy a product - can be calculated by:

Total population x % of population that use the product or service x (price of product x # of times they use the product)

An organization's business goals should be derived from its

Mission statement

Which of the following is most likely to have an inelastic demand curve?

Nonelective surgery

Pharmaceutical companies have at times been accused of acting unethically by taking advantage of customers in the area of

Pricing

In an effort to further boost sales and capture younger users, Apple is considering introducing the iPhone Mini - a smaller size version of their traditional iPhone - that is more portable, more durable and less expensive than their traditional phones. It does not have all the "bells and whistles" of the iPhone X but offers the same quality of workmanship/performance that Apple is famous for. It will be promoted at HALF the price of what the iPhone X retails for. What is one potential downside of this pricing strategy could have on the Apple brand?

Pricing that is significantly below what is normal may be perceived as lower quality and potentially damage a brand reputation.

Marketing ethics

Principles and standards that define acceptable marketing conduct as determined by various stakeholders.

The 4 P's

Product, Price, Place, Promotion

During which stage of the consumer buying decision process does a consumer decide from which seller he or she will buy the product?

Purchase

Pepsi is trying to identify new beverage categories that would attract Gen Z customers. As a first step, their marketing team looks at research and data that was already conducted about Gen Z. beverage preferences by various outside companies. This would be an example of what kind of data that the marketing team reviewed?

Secondary

Segmentation Variables

Segmentation variables are characteristics of individuals, groups or organizations used to divide a market into segments.

The Red Cow (Professor Donaldson's favorite new burger place) will be introducing a new burger next month - known as the POM Burger - Principles of Marketing Burger - which features 1 lb patty of grass fed beef, pepper jack cheese, 3 bacon strips, sautéed mushrooms, banana peppers, lettuce, tomato and crispy onion fries. The cost of all the ingredients is $2.27. If the Red Cow wants to achieve a gross margin of 65% - what should they price the POM Burger at?

Selling price to achieve desired margin percentage = Cost (cost of goods) / 1 - desired margin percentage $2.27 / 1 - .65 = $6.48 The correct answer is: $6.48

Bottled water remains one of the fastest growing segments of the beverage industry. While Coke and Diet Coke generate larger overall sales than DASANI (Coke's bottled water brand) - DASANI has had higher growth over the last 10 years than either of these legacy products. Based upon the BCG Matrix, how would you classify DASANI?

Star

Growth Share Matrix

Stars are products with a dominant share of the market and good prospects for growth but use more cash than they generate to finance growth, add capacity, and increase market share Cash cows have a dominant share of the market but low prospects for growth, and they typically generate more cash than is required to maintain market share Dogs have a subordinate share of the market and low prospects for growth Question marks have a small share of a growing market and generally require a large amount of cash to build market share

Which of the following is a requirement for setting pricing objectives?

The objectives/goals of what the company is trying to achieve through pricing should be clearly stated.

market density

The potential number of customers within a unit of land area

Brand Advantage

The potential upside or downside a product or service when compared to the competitor options that are already available in a market.

Marketing

The process of creating, distributing, promoting, and pricing goods, services, and ideas that satisfy customer needs and to develop processes that maintain favorable relationships with customers and promote repeat purchases

Strategic marketing management

The process of planning, implementing, and evaluating the performance of marketing activities and strategies, both effectively and efficiently

Marketing Research

The systematic design, collection, interpretation and reporting of information designed to help marketers solve specific marketing problems or take advantage of marketing opportunities.

market potential

The total amount of product that customers will purchase within in a specified time period with a specified level of marketing support.

Customer relationship management (CRM)

The use of information about customers to create marketing strategies that develop and sustain desirable customer relationships.​

American Airlines' frequent-flyer program awards AAdvantage Miles to passengers when they fly with its airline. When passengers accumulate a certain amount of miles, they can redeem them to get discounts on flights. Why has American Airlines adopted this frequent-flyer initiative? ​

To increase customer loyalty and build a positive relationship

Total industry sales for athletic footwear was $104 billion dollars in 2017. Nike's sales for 2017 were $48 billion. What was Nike's market share of the athletic footwear industry in 2017?

Total company sales/total company sales = Market share $50/$104 = 48% market share The correct answer is: 48%

5 Guys Hamburger is thinking about opening restaurants in California. It has calculated the total market potential of hamburger customers in this state. In N Out Burger, however, is based in California and is extremely popular due to its special sauce, hand cut fries and long standing relationships with many communities throughout the state. These factors related to In N Out would be examples of "competitor impact" - that can negatively impact the sales potential of a new product or service in a given market.

True

A consumer may try to reduce cognitive dissonance by trying to return the product they purchased

True

A core competency is something a firm does extremely well, sometimes so well that it gives the company an advantage over its competition.

True

At the most basic level, profits can be obtained through relationships by acquiring new customers, enhancing the profitability of existing customers, and extending the duration of customer relationships.​

True

Cognitive dissonance is most likely to occur with products that are expensive and complex and require significant consumer research and evaluation.

True

Customers often prioritize the size of the data plan (amount of G's) (objective criteria) and their belief in the quality of the provider (subjective criteria) as the two most important criteria when selecting a data plan provider for their family. Size and perceived quality would be examples of evaluative criteria.

True

High Gliding Air Academy is developing its marketing mix for the coming year. Its managers know that they must first select ____ which may be the most important decision they make in the planning process.

a target market

Social Responsibility

a. Ethical b. Economic c. legal d. Philanthropic

When developing questions for an upcoming research study, which of the following IS NOT considered a best practice for insuring the optimal capture of usable data from customers? a. Questions that will generate a numeric answer b. The development of clear and easy to understand questions c. Questions that are designed to elicit information that meets the study's data requirements d. Questions that are impartial

a. Questions that will generate a numeric answer

Which of the following is NOT a key criteria for determining whether a group of individuals should be considered a target market?

a. The competitors that offer they same product or service are not based in the United State. b. There are cost efficient methods of marketing to the customers. c. The unmet need of the individuals represents a significant dollar volume. d. There is a common unmet need among a group of customers

All of the following conditions must be in place if accurate market segmentation is to happen EXCEPT a. Competitors must be few and small in size b. Segments must be identifiable and divisible c. One segment must have enough profit potential to justify developing and maintaining a special marketing mix d. Customer needs for the product must be heterogeneous

a. competitors must be few and small in size.

Which of the following criteria is frequently used to determine a target market? a. Geographic location b. Age c. All of these choices d. Lifestyle

c. All of these choices

Which of the following would NOT be considered a benefit of having a global brand? a. Uniformity of marketing practices b. Ability to leverage good ideas quickly and efficiently c. Cost involved in translating an ad campaign into multiple languages. d. Economies of scale

c. cost involved in translating an ad campaign into multiple languages.

Purchase frequency

how frequently the product is purchased

From the Boston Consulting Group (BCG) growth matrix - a ____________ has a small share of a growing market and generally require a large amount of cash to build market share.

question mark