MKTG 182 Exam 3
19) Which of the following would be considered a competitiveness metric for a company? A) marketing return on investment B) relative service quality C) marketing return on sales D) capacity utilization E) gross profit
Answer: B
36) RVP Inc. realizes a net profit of $230 million and the owner's equity amounts to $750 million. Calculate the return on equity for the company. A) 16.5% B) 30.7% C) 7.5% D) 75% E) 23.2%
Answer: B
38) Calculate the total value of owner's equity of a business if it realizes a net profit of $240 million at a return of 30%. A) $8 billion B) $800 million C) $720 million D) $7.2 billion E) $2.4 billion
Answer: B
43) If a business produces 400,000 units and the market demand for the product is 2 million units, what is its percentage of market share? A) 8% B) 20% C) 16% D) 40% E) 80%
Answer: B
44) If a business produces 800,000 units and the market demand for the product is 4 million units, what is its percentage of market share? A) 8% B) 20% C) 16% D) 40% E) 80%
Answer: B
26) Which of the following metrics would a company most likely evaluate at the end of an operating period? A) inventory turnover B) product defects C) market share D) customer satisfaction E) late deliveries
Answer: C
52) The net marketing contribution for TRX Inc. is $20 million. The marketing and sales expenses come up to $4 million. Calculate the marketing return on investment for the company. A) 66.6% B) 300% C) 500% D) 100% E) 50%
Answer: C
55) Calculate the PE ratio of a company whose stock price is $86 and earnings per share is $2.4. A) 8.3 B) 20.7 C) 35.8 D) 28.3 E) 13.5
Answer: C
2) The higher the marketing ROI, the less productive the company's marketing and sales strategies.
Answer: FALSE
6) The customer retention metric acts as a forward-looking metric when it measures the number of customers retained from one year to the next.
Answer: FALSE
10) Return measures of performance are valid indicators of financial health.
Answer: TRUE
15) Shareholder measures of performance are directly influenced by product-market performance and profitability.
Answer: TRUE
5) Compared to a direct marketing channel, an indirect marketing channel has lower margins and also, lower costs of marketing and channel management.
Answer: TRUE
5) Creating awareness among a large number of people is not the objective of most marketing communications.
Answer: TRUE
8) Successful implementation of a marketing plan is directly related to the structure of a business's marketing effort.
Answer: TRUE
9) Ad copy can best attract customers when it is based on customer needs and situations that are familiar to customers.
Answer: TRUE
9) One of the most common reasons a marketing plan fails is because of a lack of ownership.
Answer: TRUE
54) Each unit of a product is sold at $5. The cost per unit is $2. What is the percent margin for the product? A) 60% B) 40% C) 66.6% D) 16.3% E) 33.3%
Answer:A
51) The net and economic profits generated by Hoddle Inc. are $320 million and $16 million, respectively, at 8% cost of capital. Calculate the total capital invested. A) $3.8 billion B) $5.6 billion C) $1.25 billion D) $8.8 billion E) $840 million
Answer: A
53) Which type of marketing channel typically yields the highest margins for a manufacturer? A) direct channel B) indirect channel C) mixed channel D) intermediate channel E) distributor channel
Answer: A
54) A company's price-earnings ratio (PE) is ________. A) stock price divided by earnings per share B) (stock price multiplied by earnings per share) divided by number of shares C) stock price divided by (earnings per share multiplied by number of shares) D) stock price divided by total earnings E) stock price divided by (total earnings multiplied by number of shares)
Answer: A
29) Which of the following terms is used to describe the success of many Japanese marketing plans because of the Japanese management's ability to adapt when a marketing plan is not working and to stick with the plan? A) vertical integration B) adaptive persistence C) horizontal integration D) decentralization E) standardization
Answer: B
30) When considering marketing metrics for a company, market share is most likely to be ________. A) an internal forward-looking metric B) an external backward-looking metric C) an internal metric that is used after the reporting period D) an external metric that is used during the reporting period E) an internal metric that can be used either during or after the reporting period
Answer: B
31) Calculate the target market reach of a business if it produces an impact of 400 GRPs at a frequency of 8. A) 40 percent B) 50 percent C) 60 percent D) 70 percent E) 80 percent
Answer: B
31) Which of the following terms refers to an incremental implementation of a marketing plan that allows for feedback and corrective adjustments early in the implementation process? A) adaptive persistence B) adaptive rollout C) channel strategy D) marketing mix E) benchmarking
Answer: B
32) Adapting the marketing plan, a force that contributes to the successful implementation of a marketing plan, involves ________. A) conducting a variance analysis B) using an adaptive rollout C) creating ownership teams D) promoting the business-as-usual routine E) developing and using detailed action plans
Answer: B
49) Marketing return on investment equals ________. A) profits/marketing & sales expenses x 100% B) net marketing contribution/marketing & sales expenses x 100% C) gross margin/total expenses x 100% D) net marketing contribution/operating expenses x 100% E) sales revenues/marketing & sales expenses x 100%
Answer: B
50) 15 million transactions are made per year at a total cost of $750 million. Calculate the cost per transaction. A) $5 B) $50 C) $500 D) $5,000 E) $50,000
Answer: B
51) Office Services Inc. uses a direct sales force to sell office equipment to its 1,000 target customers. The required rate of customer contact for sales effectiveness and customer satisfaction is two customer visits per month, translating into 24,000 customer contacts per year. Assuming that a salesperson can make three customer visits per day, has 4 days per week to make customer calls, and works 50 weeks per year, how many salespeople does Office Services Inc. need to meet its requirements? A) 4 B) 40 C) 480 D) 2,000 E) 2,400
Answer: B
51) What is the marketing return on sales (marketing ROS) for a product line that generates $40 million in sales revenues with a net marketing contribution of $32 million ? A) 75% B) 80% C) 100% D) 125% E) 150%
Answer: B
52) Calculate the sales effect in period 15 if the advertising expense for that period is $30 million. A) $45 million B) $450 million C) $2 million D) $30 million E) $540 million
Answer: B
52) The actual price per unit and price per unit estimated in the plan are $15 and $20, respectively. The actual volume of units produced is 25,000 units. Calculate the price variance. A) $125,000 B) -$125,000 C) $500,000 D) -$375,000 E) $375,000
Answer: B
54) Variance in volume reflects any difference in actual versus planned market demand plus any difference in actual versus planned ________. A) customer satisfaction B) market share C) selling price D) profit margin E) marketing expense
Answer: B
16) Which of the following is a performance metric used to measure brand-image communications? A) high recall of key content B) high rate of purchase C) high ad and brand recall D) response to requested action E) low ownership costs
Answer: C
17) Which of the following is an operational component of marketing channel performance? A) product assortment B) sales revenue C) service quality D) customer value E) profitability
Answer: C
17) ________ provides a measure of marketing profits that demonstrates how much the company's investment in marketing and sales contributes to company profits. A) Return on equity B) Marketing ROS C) Net marketing contribution D) Marketing ROI E) Sales-to-assets ratio
Answer: C
18) Which of the following is the first level of the customer response hierarchy? A) aware of the ad B) comprehend the ad C) exposed to the ad D) intend to buy E) buy the produc
Answer: C
20) SetPro Inc., a software firm, collects information about its marketing communication. The firm finds that 60% of the firm's target market is exposed the marketing communication, and 50% of that group is aware of the offering. Amongst the people who are aware of the offering, 70% understand the message. And 60% of that group intends to purchase, and 90% of that group actually does purchase. What is the customer response index for the buying group? A) -1.13% B) 1.13% C) 11.3% D) 90% E) 60%
Answer: C
21) The customer retention metric acts as a(n) ________ metric when it measures the number of customers retained from one year to the next. A) net contribution B) forward-looking C) backward-looking D) marketing ROI E) marketing ROS
Answer: C
21) Which of the following statements regarding customer satisfaction is true? A) Very satisfied customers usually switch back and forth with competitors' products. B) Over 90 percent of dissatisfied customers lodge complaints. C) Very satisfied customers often buy higher margin products and extra services. D) Dissatisfied customers who complain cannot usually be retained. E) Satisfied customers are very loyal and buy in relatively large amounts.
Answer: C
22) Backward-looking marketing performance metrics ________. A) are leading indicators of a business's future performance B) include in-process measures of customer thinking and attitudes C) include the metrics that measure market share, customer retention, and revenue per customer D) involve using uniform benchmarks across all industries E) are more advanced product-market metrics for companies that are dealing with pricing issues
Answer: C
24) Which of the following metrics does a company apply during an operating period rather than at the end of the operating period? A) sales revenues B) market share C) inventory turnover D) customer retention E) return on assets
Answer: C
24) ________ market metrics include customer retention and revenue per customer. A) Competitiveness B) Forward-looking C) Backward-looking D) Digital-media E) Ongoing
Answer: C
47) Calculate the number of shares held by a business if it earns $8.8 per share and generates a net profit of $136.4 million. A) 45 million B) 24.6 million C) 15.5 million D) 36.2 million E) 8.8 million
Answer: C
47) Marketing return on sales equals ________. A) profits/sales revenues x 100% B) gross margin/sales revenues x 100% C) net marketing contribution/sales x 100% D) net marketing contribution/marketing sales & expenses x 100% E) sales revenues x % gross margin
Answer: C
47) Which of the following measures is used to assess the responsiveness of consumers to advertising expenditures, calculated by dividing the percent change in sales by the percent change in advertising expenses? A) net sales expenditure B) gross advertising index C) advertising elasticity D) advertising return on investment E) push rating
Answer: C
48) An advertising elasticity of 0.35 means that for every one percent change in advertising expenditures there will be an estimated ________ percent change in volume sold. A) 0.0035 B) 0.035 C) 0.35 D) 3.5 E) 35
Answer: C
49) Calculate the economic profit generated by a business with a capital cost of 5% for $680 million of capital invested and a net profit of $40 million. A) $18.5 million B) $10 million C) $6 million D) $35 million E) $22.5 million
Answer: C
49) Calculate the net marketing contribution variance, if the actual net marketing contribution and net marketing contribution estimated in the plan are $450,000 and $900,000, respectively. The actual percentage of market share is 25%. A) $450,000 B) $11,250 C) -$450,000 D) -$11,250 E) $225,000
Answer: C
51) The idea that the advertising effort made in a given period will produce some additional sales response in subsequent sales periods is known as the ________. A) advertising elasticity effect B) pulsing effect C) advertising carryover effect D) pull effect E) push effect
Answer: C
53) Calculate the economic profit generated by a business with a capital cost of 10% for $2 billion of capital invested. Its net marketing contribution is $450 million and its other expenses, including interests and taxes, amount to $200 million. A) $250 million B) $200 million C) $50 million D) $100 million E) $150 million
Answer: C
53) The product of market demand, market share, average selling price, and channel discounts is the ________. A) marketing and sales expenses B) net marketing contribution C) net sales D) operating income E) marketing return on investment
Answer: C
54) If the sales effect for period 5 is $125 million and the carryover effect is 0.25, calculate the total sales impact for period 5. A) $500 million B) $31.25 million C) $166.67 million D) $93.75 million E) $156.25 million
Answer: C
34) A television advertisement achieves 200 GRPs over a 4-week exposure period. The advertisement is run in alternating 4-week periods in which during the intervening 4-week period no messages are run. This is an example of which of the following approaches to message reinforcement? A) benchmarking B) bundling C) cobranding D) pulsing E) brand encoding
Answer: D
35) A company's return on equity is equal to ________. A) net profit divided by retention equity B) net profit divided by value equity C) net profit divided by customer's equity D) net profit divided by owner's equity E) net profit divided by company's liability
Answer: D
35) Margin per unit equals ________ A) demand x sales B) total sales contribution - marketing and sales expenses C) price - fixed unit cost D) price - variable unit cost E) price - total unit cost
Answer: D
34) Calculate the return on capital of a business whose net marketing contribution is $300 million and total invested capital is $900 million. The other expenses, including interest and taxes, amount to $120 million. A) 40% B) 15% C) 5% D) 30% E) 20%
Answer: E
36) Calculate the net marketing contribution, if a business produces 25,000 units at $10 margin per unit, with total marketing and sales expenses of $100,000. A) $50,000 B) $350,000 C) $100,000 D) $250,000 E) $150,000
Answer: E
36) Which of the following approaches to message reinforcement is most effective for products that are purchased more frequently at some times of the year than at others? A) an average frequency strategy B) a gross frequency strategy C) a pulsing strategy D) a benchmarking strategy E) a heavy-up exposure pattern
Answer: E
37) An ad campaign buys a constant amount of GRPs throughout the year, and increases the GRP total during the weeks leading up to the most extensive purchasing period of the year is using a ________ message reinforcement strategy. A) distributed B) random C) deep line-up D) pulsing E) heavy-up
Answer: E
37) Calculate the net profit generated by Cabaye Inc. if it obtains a return of 12% from the owner's equity amounting to $675 million. A) $118 million B) $8.1 million C) $562 million D) $5.6 billion E) $81 million
Answer: E
37) The cost of goods sold and the SGA expenses of an organization are $60 million and $25 million, respectively. Its other operating expenses amount to $15 million. Determine the total operating income of the organization if it generates sales revenues of $150 million. A) $100 million B) $90 million C) $75 million D) $60 million E) $50 million
Answer: E
40) Which of the following is a mode of push marketing communication? A) sales promotions B) direct marketing C) media advertising D) social media E) channel marketing
Answer: E
41) Milton-Normand Inc. obtains a return of 13.5% from total invested capital of $790.6 million. Calculate the net profit it generates. A) $325.3 million B) $159 million C) $84.7 million D) $233.5 million E) $106.7 million
Answer: E
43) If there are 10 manufacturers and 200 retailers, and each manufacturer has 12 interactions per year with each retailer at a cost of $100 per transaction, the total transaction cost of doing business through this channel method is ________. A) $2,000 B) $24,000 C) $200,000 D) $1,200,000 E) $2,400,000
Answer: E
45) A business has a market demand of 300,000 units at a market share of 20%. The price per unit and variable cost per customer are $25 and $10, respectively. If the net marketing contribution of the business is $450,000, calculate the total marketing and sales expenses incurred by the business. A) $250,000 B) $160,000 C) $520,000 D) $300,000 E) $450,000
Answer: E
45) Kindest Inc. generates a net profit of $345.1 million from 17 million shares. Calculate the earnings per share of the company. A) $20,300 per share B) $2,030 per share C) $203 per share D) $2.3 per share E) $20.3 per share
Answer: E
45) Palmer Enterprises has a net marketing contribution of $60 million. Its general and administrative expenses and other operating expenses are $20 million and $15 million, respectively. Calculate its operating income. A) $95 million B) $75 million C) $45 million D) $40 million E) $25 million
Answer: E
46) If the price per unit is $34 and the variable cost per customer is $17, calculate the margin per unit. A) $2 B) $51 C) $25.5 D) $8.5 E) $17
Answer: E
50) The net marketing contribution for TRX Inc. is $25 million, and sales revenues equal $150 million. Calculate the marketing ROS for TRX. A) 15% B) 26.3% C) 25% D) 306% E) 16.6%
Answer: E
52) Calculate the cost of capital of Grantz Inc. when the net and economic profits generated by the company are $180 million and $24 million, respectively, and the total invested capital is $940 million. A) 24.3% B) 20.5% C) 12.2% D) 8.5% E) 16.6%
Answer: E
52) Once the market share has exceeded the outlet share, the rate of market share growth ________ with further increase in outlet share. A) becomes zero B) becomes infinity C) remains constant D) increases E) decreases
Answer: E
53) Calculate the advertising expense for period 16 if the sales effect for that period is $240 million. A) $256 million B) $224 million C) $160 million D) $24 million E) $15 million
Answer: E
53) The actual variable cost per customer and variable cost per customer estimated in the plan are $3 and $8, respectively. The actual volume and the volume estimated in the plan are 30,000 units and 20,000 units, respectively. Calculate the cost variance. A) $250,000 B) $100,000 C) -$100,000 D) -$150,000 E) $150,000
Answer: E
55) In order to increase the net profit of a business, the NMC of any proposed strategy must ________. A) be equal to the current NMC B) be equal to the difference of the current NMC and the marketing and sales expenses C) be equal to the total operating income D) be lower than the current NMC E) exceed the current NMC
Answer: E
10) Heavy-up message frequency involves the use of alternating exposure periods by spending heavily during some periods and not at all during other periods.
Answer: FALSE
11) A share-penetration strategy in an existing market generally takes more time to succeed than a strategy to enter a new, undeveloped market.
Answer: FALSE
11) Economic profit is calculated from the ratio of net profit to the number of shares.
Answer: FALSE
11) VARs and OEMs operate in the consumer market but not in the business-to-business market.
Answer: FALSE
12) Marketing plans should not be aggressively communicated either internally or externally to protect competitive position.
Answer: FALSE
12) The NMC of any proposed strategy must be lower than the current NMC in order to increase a business's net profit.
Answer: FALSE
13) Consumer response to advertising costs is measured as total revenue.
Answer: FALSE
13) One way to grow net profit is to increase the variable cost per unit.
Answer: FALSE
14) A market-based business lays more emphasis on assets and technology than understanding their customers.
Answer: FALSE
14) A market-based business with a strong competitor orientation across job functions has a lower level of market sensitivity.
Answer: FALSE
15) The net price a business can derive from the use of indirect marketing channels is much higher than that with other channel types.
Answer: FALSE
2) Traditional media advertising is considered more personal than social media engagement and is "viral" in nature.
Answer: FALSE
3) A combination of market growth and market share growth decreases the number of customers but increases the amount of revenue per customer.
Answer: FALSE
3) A decline in relative product and service quality means that actual product or service quality has declined.
Answer: FALSE
3) Customer use of social media gives marketers complete control over their brands.
Answer: FALSE
3) Forward-looking marketing metrics are particularly important because they correspond more closely to internal financial-performance metrics.
Answer: FALSE
4) Every marketing channel is basically the same in its cost structure and its customer reach.
Answer: FALSE
5) Companies cannot enjoy high levels of customer retention without having high levels of customer satisfaction.
Answer: FALSE
5) The whole purpose of backward-looking marketing metrics is to track customer perceptions and attitudes that precede changes in customer behavior and financial performance.
Answer: FALSE
6) Marketing performance metrics include competitiveness metrics and customer metrics, while financial metrics include service quality, customer value, and product performance.
Answer: FALSE
6) Target market reach is the total number of customers who purchase a product as a result of a marketing message.
Answer: FALSE
7) In indirect channel systems, the business interfaces with customers at all contact points and retains ownership of the product until delivery.
Answer: FALSE
7) Marketing strategies rarely affect accounts receivable and inventory assets of a company.
Answer: FALSE
7) Poor customer retention has a powerful impact on financial performance only if a business is losing market share.
Answer: FALSE
8) Gross rating points (GRPs) is a measure of advertising efficiency which is equal to reach divided by frequency.
Answer: FALSE
8) Pre-tax net profit and market share are examples of forward-looking metrics that are applied during a company reporting period.
Answer: FALSE
9) Customers who make small purchases are usually profitably served with a direct channel system.
Answer: FALSE
Chapter 15 1) To get started, a company should adopt marketing metrics that are intuitive and complex.
Answer: FALSE
Chapter 16 1) The net marketing contribution as a percentage of sales is called the marketing ROI.
Answer: FALSE
Chapter 2 1) Sales revenues, net profits, return on sales, assets as a percentage of sales, and return on assets are measures of internal financial performance that provide a market-based view of performance.
Answer: FALSE
10) Dividing the NMC by the investment in marketing and sales produces the marketing return on investment.
Answer: TRUE
10) Mixed channel systems are unsuitable for marketing specialized and technological products.
Answer: TRUE
10) Using an ownership team keeps the implementation process on track even when some members of the team are away for extended periods because of business trips, training programs, illness, or vacations.
Answer: TRUE
11) A business's operating expenses is its revenues minus its cost of goods sold and its expenses.
Answer: TRUE
11) The objectives of a pull marketing communication are to build awareness, attraction, and loyalty and to reduce search costs.
Answer: TRUE
12) A channel system should enhance customer value by increasing customer benefits, lowering customer cost of purchase, or both.
Answer: TRUE
12) Push communications are directed at channel intermediaries.
Answer: TRUE
12) The higher the price-earnings ratio, the greater the risk to investment.
Answer: TRUE
13) The cost of using direct marketing channels is typically higher than that of indirect marketing channels for manufacturers.
Answer: TRUE
13) The forward-looking marketing metrics signal aspects of the marketing plan that may be failing.
Answer: TRUE
13) The only source of positive cash flow is the customer.
Answer: TRUE
14) Advertising effort made in a given period will produce some additional sales response in subsequent sales periods, and the advertising carryover coefficients range from zero to less than one.
Answer: TRUE
14) Indirect channels are able to achieve the lowest out-of-pocket marketing and sales expenses.
Answer: TRUE
14) The net marketing contribution metric enables a company to measure the profit impact of a marketing strategy
Answer: TRUE
15) Communications that are targeted at industry gurus and consultants lead to secondary marketing communications.
Answer: TRUE
15) Marketing return on sales (ROS) and marketing return on investment (ROI) are marketing profitability ratios that allow a business to evaluate its marketing efficiency.
Answer: TRUE
15) Variance analysis allows the company to isolate the components of marketing performance to understand better how each component contributes to the actual net marketing contribution.
Answer: TRUE
2) For the consumer market, marketing channels include direct channels as well as indirect channels.
Answer: TRUE
2) Marketing metrics are too important to be simply an add-on to the marketing or product manager's responsibilities.
Answer: TRUE
2) To complement a business internal financial performance metrics, a business needs a parallel set of external marketing metrics to track its market-based performance.
Answer: TRUE
3) Marketing channel performance is based on customer reach, operating efficiency, and service quality.
Answer: TRUE
4) A marketing return on investment of 150 percent means that for every dollar invested in marketing and sales expenses, the company is realizing $1.50 in marketing profits.
Answer: TRUE
4) Customer awareness, interest, product trial, and customer satisfaction and dissatisfaction, along with perceptions of relative product quality, service quality, and customer value, all serve as forward-looking marketing metrics.
Answer: TRUE
4) Customer satisfaction is considered a forward-looking marketing metric.
Answer: TRUE
4) Insufficient message frequency and poor ad copy both contribute to target customers' lack of awareness and comprehension.
Answer: TRUE
5) A share development index of 40 means that the business or product has only obtained 40 percent of its share potential.
Answer: TRUE
6) A direct marketing channel produces higher margins than an indirect channel, but the business must bear the cost of channel management and all marketing and sales expenses.
Answer: TRUE
6) Without backward-looking metrics, the business has only an internal measure of performance.
Answer: TRUE
7) A "concentrated frequency" strategy would be appropriate for building awareness and comprehension for seasonal products, political candidates, and special events.
Answer: TRUE
7) Customer performance metrics include measures of customer satisfaction, customer retention, and customer lifetime value.
Answer: TRUE
8) Businesses exercise greater control over service quality when they use direct marketing channels to market their goods.
Answer: TRUE
8) Service quality affects customer retention and profit in the numerator and accounts receivable in the denominator of the return on assets equation.
Answer: TRUE
9) Changes in marketing metrics such as product awareness, customer satisfaction, and customer perceptions of relative product quality and customer value generally precede actual changes in customer purchasing behavior.
Answer: TRUE
9) The financial metric of return on equity has owner's equity as its basis.
Answer: TRUE
Chapter 10 1) The objective of brand-image communications is to trigger an emotional response that builds a strong connection between the brand and the image the company wants to create among its target customers.
Answer: TRUE
Chapter 9 1) Marketing channels make it possible for target customers to buy the product at their desired points of purchase.
Answer: TRUE
55) Which of the following statements is true about trade promotions? A) They involve offering price reductions to end-users. B) They aim to build awareness, attraction, and loyalty in end-user. C) They are a part of pull communications strategy. D) They are customer-directed sales promotions. E) They stimulate intermediaries to engage in aggressive customer promotion efforts.
Answer:E
16) Marketing channel performance is evaluated based on the operational components of ________. A) customer reach, operating efficiency, and service quality B) customer value, sales revenues, and profitability C) return on sales, brand image, and sales margin D) product quality, product assortment, and product form E) product costs, branding strategy, and customer loyalty
Answer: A
17) Which of the following communications are primarily intended to stimulate potential customers to contact the company, visit the company web site, obtain a free sample, and buy the company's product? A) brand-action communications B) brand-image communications C) brand-information communications D) brand-development communications E) brand-awareness communications
Answer: A
17) Which of the following is true of the financial metrics used to gauge a product's performance in the market? A) They report important ratios for profits, costs, and assets. B) They provide insight into how the business or product is performing in the market. C) They include measures of marketing performance, such as customer satisfaction, retention, and loyalty. D) They allow a company to estimate its market share and customer value. E) They are mainly external metrics of a product's performance in a particular market.
Answer: A
19) An ad program's marketing ROI refers to ________. A) the net marketing contribution divided by the cost of the ad program B) the total sales divided by the net marketing cost C) the customer response index divided by the net marketing cost D) the total sales multiplied by the net marketing cost E) the net marketing contribution plus the cost of the ad program
Answer: A
19) As an operational component of channel performance, operating efficiency refers to ________. A) cost to serve B) volume C) customer reach D) return on sales E) retention
Answer: A
20) ________ index a business or product against another similar business or product with respect to product performance, service quality, and brand image. A) Competitiveness metrics B) Finance-based performance metrics C) Market share metrics D) Internal performance metrics E) Customer metrics
Answer: A
22) Calculate the return on sales for Matt-Brine Inc., which has a net marketing contribution of $450 million and total sales of $800 million. The other expenses, including interest and taxes, amount to $250 million. A) 25% B) 20% C) 30% D) 10% E) 45%
Answer: A
22) The ________ index is calculated using the formula based on hierarchical set of customer response effects: Exposed to Ad X Aware of Ad X Comprehend the Ad X Intend to Buy X Buy the Product. A) customer response B) marketing benefit C) market penetration D) brand awareness E) market share
Answer: A
23) ________ is the percentage of target customers who are exposed to the business's message through a certain combination of media. A) Target market reach B) Target market frequency C) Target market effectiveness D) Target market rate E) Target market pulse
Answer: A
24) Which of the following message frequency strategies would be appropriate for seasonal products, political candidates, and special events where the goal is to steadily increase message awareness over a relatively short period of time with no concern about message awareness decay after the messages stop? A) a concentrated frequency strategy B) a distributed frequency strategy C) a gross frequency strategy D) an umbrella strategy E) a constant frequency strategy
Answer: A
25) Calculate the net profit generated by Toby Inc. for a return of 8.6% from sales of $240 million. A) $20.6 million B) $78.4 million C) $120 million D) $206 million E) $12.6 million
Answer: A
25) Which of the following is true of backward-looking market metrics? A) They are applied simultaneously with financial performance metrics, normally at the end of a reporting period. B) They include relative product and service quality. C) Their purpose is to track customer perceptions and attitudes that precede actual changes in customer behavior. D) They are the indicators of future financial performance. E) The absence of these metrics can result in customer-dissatisfaction problems being undetected.
Answer: A
26) In a direct channel marketing system, ________. A) the manufacturer retains title of all products until they are delivered to the customer B) wholesalers and retailers take ownership of the products for sale C) the cost of customer sales contact is lower than that in indirect marketing systems D) the opportunities for sales communication and customer interaction are nonexistent E) customers who make infrequent, small purchases can be profitably served
Answer: A
26) Owning the marketing plan, a force that contributes to the successful implementation of a marketing plan, involves ________. A) developing and using detailed action plans B) using an adaptive rollout C) using feedback measurements D) promoting the business-as-usual routine E) adapting to changing market conditions
Answer: A
28) A gross rating point equals ________. A) reach multiplied by frequency B) frequency multiplied by response C) frequency multiplied by impact D) impact multiplied by response E) reach multiplied by response
Answer: A
28) The overall goal of compensation tied to market metrics is to immediately create ________. A) motivation and responsibility B) satisfaction C) accountability D) persistence E) harmony
Answer: A
29) Which of the following is true of backward-looking metrics? A) They tell a company where it stands with respect to current performance. B) They provide insights on future performance. C) They are applied at regular intervals during an operating period. D) They include company metrics such as late deliveries and late payments. E) They include marketing metrics such as customer awareness and customer satisfaction.
Answer: A
32) Calculate the frequency if a business with a 45% target market reach produces a GRP of 270. A) 6 B) 7 C) 8 D) 9 E) 10
Answer: A
33) Expenses that change on a per-unit basis when production volume increases or decreases are known as ________. A) variable costs B) manufacturing overhead costs C) marketing and sales expenses D) indirect costs E) operating costs
Answer: A
33) ________ serves as the basis for the financial metric known as return on equity. A) Owner's equity B) Customer's equity C) Brand equity D) Value equity E) Retention equity
Answer: A
37) Pell buys disk drives from Leagate and computer chips from Lentel to incorporate into the computer systems it manufactures. Which company or companies would be considered an original equipment manufacturer (OEM)? A) Pell B) Leagate C) Lentel D) Leagate and Lentel E) Pell, Leagate and Lentel
Answer: A
38) The net marketing contribution and marketing and sales expenses of a business are $2 million and $725,000, respectively. Calculate the margin per unit if the business produces 100,000 units. A) 27.2% B) 13% C) 31.6% D) 8.9% E) 22%
Answer: A
38) We-Move-It Inc. is a moving company located in Athens, Ohio. The firm has its heaviest business during the summer months. Thus, the firm maintains a GRP of 40 throughout the year and a GRP of 100 during April and May, which is the prime buying period for its services. In this example, We-Move-It Inc. uses which of the following approaches to message reinforcement? A) a heavy-up exposure pattern B) an average frequency strategy C) a gross frequency strategy D) a pulsing strategy E) a benchmarking strategy
Answer: A
40) A channel system that accommodates the customers' credit needs, terms of payment, warranty needs, desire for delivery at no charge, and easy return of faulty products is satisfying the quality of ________. A) transaction services B) after-sale services C) availability/delivery D) product form E) product assortment
Answer: A
40) Which of the following is true of the net marketing contribution of a firm? A) It sets a benchmark to gauge improving or deteriorating marketing profitability. B) General and administrative expenses are included to assess the net marketing contribution. C) It is an internal in-process financial metric. D) It is equal to the revenues of the firm. E) It includes all operating expenses.
Answer: A
42) A business generates a net profit of $124 million and its return on capital is 12.5%. Calculate the total capital invested into the business. A) $992 million B) $860 million C) $740 million D) $668 million E) $532 million
Answer: A
44) If there are 20 manufacturers and 500 retailers, and 15 transactions are made per year at a cost of $200 per transaction, calculate the total number of transactions. A) 150,000 transactions per year B) 200,000 transactions per year C) 250,000 transactions per year D) 300,000 transactions per year E) 350,000 transactions per year
Answer: A
44) ________ communication strategies are directed at channel intermediaries. A) Push B) Pull C) Heavy-up D) Centralized E) Pulsing
Answer: A
45) The objective of a ________ communication strategy is to motivate channel intermediaries to carry a particular product or brand and, in this way, make it more available to consumers. A) push B) pull C) pulsing D) lateral E) heavy-up
Answer: A
47) The actual volume and volume estimated in a business plan are 60,000 units and 55,000 units, respectively. If the volume variance of the business works out to $30,000, calculate the margin per unit estimated in the plan. A) $6 B) $10 C) $15 D) $18.5 E) $24.5
Answer: A
48) Calculate the price per unit if the variable cost per customer is $6 and the margin per unit is $24. A) $30 B) $4 C) $18 D) $15 E) $9
Answer: A
48) If 30 million transactions are made per year at $15 per transaction, what is the total transaction cost? A) $450 million B) $200 million C) $2 billion D) $4.5 billion E) $900 million
Answer: A
50) Calculate the advertising elasticity if a company has a 1.3% change in sales and a 5.2% change in ad expenses. A) 0.25 B) 0.52 C) 0.4 D) 4.0 E) 6.5
Answer: A
51) The actual margin per unit and margin per unit estimated in the plan are $6 and $8, respectively. The actual volume and the volume estimated in the plan are 5,000 units and 10,000 units, respectively. What is the margin variance of the business? A) -$10,000 B) $10,000 C) -$20,000 D) $20,000 E) $5,000
Answer: A
54) Which of the following is true of direct marketing channels? A) Direct marketing channels offer the greatest opportunity for sales communication and customer interaction. B) Direct marketing channels yield very low margins for the manufacturer. C) Direct marketing channels do not allow the manufacturer control over the sales messages and service quality. D) Direct marketing channels are most suited for inexpensive products that are bought in low quantities. E) Direct marketing channels result in the lowest out-of-pocket marketing expenses for the manufacturer.
Answer: A
16) The degree to which a marketing strategy is successful will be detected first by ________. A) gains or losses in revenue B) market metrics that track customer satisfaction, retention and perceptions of value C) the financial performance measure of cash flow D) shareholder value E) net profit
Answer: B
16) ________ is the amount that is left over after deducting all other business expenses but before deducting interest and taxes. A) Sales revenue B) Operating income C) Net marketing contribution D) Marketing expenses E) Gross profit
Answer: B
18) As an operational component of channel performance, customer reach refers to ________. A) cost to serve B) volume C) operating efficiency D) service quality E) retention
Answer: B
18) What are the two broad categories of market metrics? A) process metrics and product metrics B) forward-looking metrics and backward-looking metrics C) marketing profitability metrics and customer metrics D) customer metrics and competitiveness metrics E) revenue metrics and cost metrics
Answer: B
18) Which of the following is considered to be a marketing performance metric rather than a financial performance metric for a company? A) gross profit B) customer retention C) sales-to-assets ratio D) accounts receivable E) earnings per share
Answer: B
18) ________ represents the net marketing contribution as a percentage of sales. A) Return on equity B) Marketing ROS C) Gross profit D) Marketing ROI E) Market demand
Answer: B
19) Forward-looking marketing metrics are particularly important because ________. A) they focus on the past performance of a company B) they are leading indicators of a business's future performance C) they include both customer metrics and competitiveness metrics D) they allow a business to measure the revenue per customer E) they are more advanced product-market metrics for companies that are dealing with pricing issues
Answer: B
20) ________ is the ratio of net marketing contribution to a company's investment in marketing and sales expenses. A) Gross profit B) Marketing ROI C) Return on equity D) Marketing ROS E) Market demand
Answer: B
21) A firm finds that 50% of the target market is exposed to a marketing communication, 40% of that group is aware of the offering, 80% understand the message. WIthin that group, 60% intends to purchase, and 70% of that group actually does purchase. The customer response index is 6.7%. What is the difference in the value of the customer response index if 80% of the group intends to purchase and 60% of that group actually does purchase? A) 0% B) 1% C) 2% D) 3% E) 4%
Answer: B
22) Which of the following statements is true of marketing channels? A) A direct marketing channel removes a business from the end-user customer. B) A direct marketing channel offers higher margins than an indirect channel, but the company must bear the cost of marketing expenses. C) Customers who make small purchases are usually profitably served with a direct channel system. D) An indirect marketing channel is often expensive, so it limits the number of customers a business can profitably reach. E) Original equipment manufacturers (OEMs) are part of a direct marketing channel system.
Answer: B
23) Which of the following is a backward-looking market metric? A) customer awareness B) market share C) product trial D) customer satisfaction E) perceptions of relative product quality
Answer: B
23) Which type of marketing channel allows a manufacturer to have the highest degree of control over service quality? A) indirect B) direct C) intermediate D) mixed E) value-added
Answer: B
24) Calculate a business's return on sales when it makes a net profit of $500,000 from sales of $3 million. A) 60% B) 16.7% C) 30.5% D) 50.5% E) 24.8%
Answer: B
25) Karl-Mart, a chain of American department stores, spreads its promotional budget evenly over the year. The firm ensures that its target customers receive advertising messages throughout the year with the aims of building and maintaining its target customer awareness and comprehension. Karl-Mart uses which of the following strategies? A) a concentrated frequency strategy B) a distributed frequency strategy C) a gross frequency strategy D) an umbrella strategy E) a heavy-up scheduling strategy
Answer: B
27) A business's return on assets is ________. A) net profit multiplied by assets B) net profit divided by assets multiplied by 100% C) assets divided by net profit D) net marketing contribution divided by assets E) net marketing contribution multiplied by assets
Answer: B
27) Which of the following is an internal forward-looking metric for a company? A) sales revenues B) late payments C) percent gross profit D) return on assets E) net profit before tax
Answer: B
27) Which of the following refers to a person who is highly devoted to the action plan and can lead its successful implementation? A) an entrepreneur B) a champion C) an intrapreneur D) a scapegoat E) an in-process manager
Answer: B
27) Which of the following types of marketing intermediaries assumes the selling responsibility for a business and receives a commission when a sale occurs, as part of a direct channel system? A) retailers B) brokers C) wholesalers D) commercial distributors E) dealers
Answer: B
28) The net marketing contribution for Doldrum Inc. is $600 million and its total assets are worth $2 billion. The other expenses, including interest and taxes, amount to $400 million. Calculate the company's return on assets. A) 5% B) 10% C) 15% D) 20% E) 25%
Answer: B
29) Which of the following is the best measure of how well the ad reached a target market and how often it was seen? A) total revenue B) gross rating points C) total advertising cost D) cost advantage index E) brand advantage index
Answer: B
32) Which of the following is the best example of a mixed marketing channel? A) Wellspring Cosmetics sells its products exclusively through its monthly catalogs, mailed to a subscriber list. B) GTB Computers uses its own sales force to initiate sales contacts, but uses external local dealers to provide products and after-sales services. C) Radix Inc., a manufacturer of automotive parts, sells its products to a number of automobile companies. D) More4Less.com buys products from manufacturers and sells them to consumers through its Web site. E) Apparel retailer UrbanScene elected to close all its brick-and-mortar stores and sell products only through its online storefront.
Answer: B
34) Which of the following types of costs is an allocated cost based on the use of the plant, equipment, and other fixed expenses needed to run the production operation? A) variable costs B) manufacturing overhead costs C) corporate overhead costs D) research and development expenses E) marketing sales and expenses
Answer: B
34) ________ purchase a variety of equipment from several manufacturers and package them as a system. A) Wholesalers B) Value-added resellers C) Brokers D) Sales agents E) Distributors
Answer: B
35) Paterson Inc. is a business that purchases computers, printers, modems, fax machines, software, and telecommunications equipment from several manufacturers and markets them as complete (bundled) customized systems to small businesses to meet their specific needs. What type of channel intermediary is Paterson Inc.? A) wholesaler B) value-added reseller C) original equipment manufacturer D) sales agent E) distributor
Answer: B
35) Which of the following expenses would be included under the manufacturing overhead of a firm? A) advertising expenses B) fixed expenses for a building's facilities C) cost of office supplies D) income taxes E) cost of materials for production
Answer: B
36) The formula used to calculate the operating income is ________. A) operating income = sales revenues + cost of goods B) operating income = sales revenues - cost of goods - SGA expenses - other operating expenses C) operating income = cost of goods + SGA expenses + other operating expenses D) operating income = sales revenues - SGA expanses E) operating income = sales revenues + cost of goods + SGA expenses + other operating expenses
Answer: B
38) A channel system that provides a wide range of products required in order to achieve the desired level of customer appeal is satisfying the product performance factor of ________. A) quality B) assortment C) form D) delivery E) after-sale service
Answer: B
40) Mikon Inc. generates a net profit of $64 million from $160 million of invested capital. Calculate its return on capital. A) 4% B) 40% C) 16% D) 61% E) 24%
Answer: B
41) Which of the following communication strategies refers to customer-directed marketing communications? A) push communication B) pull communication C) channel communication D) centralized communication E) lateral communication
Answer: B
42) A push marketing strategy differs from a pull marketing strategy in that a push marketing strategy ________. A) is directed at end-users B) is directed at channel intermediaries C) is a form of direct marketing D) uses social media and media advertising E) aims to build awareness, attraction, and loyalty and to reduce search costs
Answer: B
42) Calculate the percent gross profit for a company if the sales revenue generated is $200 million, and the firm sells 60 products that cost $2 million each to produce. A) 20% B) 40% C) 50% D) 60% E) 80%
Answer: B
42) If there are 20 manufacturers and 500 retailers, and each manufacturer has 15 interactions per year with each retailer at a cost of $200 per transaction, calculate the total number of transactions. A) 100,000 transactions per year B) 150,000 transactions per year C) 200,000 transactions per year D) 250,000 transactions per year E) 300,000 transactions per year
Answer: B
43) Mason Enterprises' net marketing contribution of $50 million is derived from sales of $200 million. If its marketing and sales expenses amount to $20 million, what is its percentage of gross profit margin? A) 40% B) 35% C) 20% D) 25% E) 30%
Answer: B
43) Which of the following is true about a pull communication strategy? A) It uses uses channel marketing instead of direct marketing. B) It is directed at end-users. C) It uses tools such as sales incentives and co-op advertising. D) It motivates retailers to carry a particular product or brand. E) It aims to build the interest, purchase, inventory, and marketing efforts of its intermediaries.
Answer: B
46) Erb Manufacturing Group is an American manufacturer of electrical wire and cable based in Pennsylvania. The firm offers price reductions to its distributors and retailers, as well as offers them financial incentives to promote and provide greater shelf space to Erb products. In this example, Erb Manufacturing Group uses which of the following communication strategies? A) a push communication strategy B) a pull communication strategy C) a cobranding communication strategy D) a centralized communication strategy E) a lateral communication strategy
Answer: B
46) Rondon Inc. has 48 million shares outstanding with an earnings per share of $5.6. Calculate the net profit it generates. A) $480 million B) $268.8 million C) $634.8 million D) $345.4 million E) $196 million
Answer: B
47) Calculate the number of transactions made per year if a total of 20 million transactions are made in a year by 40 manufacturers and 4,000 retailers. A) 250 B) 125 C) 75 D) 50 E) 175
Answer: B
48) What is the marketing return on sales (marketing ROS) for a product line that generates $20 million in sales revenues with a net marketing contribution of $5 million? A) 20% B) 25% C) 34% D) 35% E) 40%
Answer: B
49) Advertising elasticity is calculated as the ________. A) absolute change in sales divided by the percent change in advertising expenses B) percent change in sales divided by the percent change in advertising expenses C) absolute change in advertising expenditures divided by the percent change in revenue D) percent change in advertising expenses divided by the percent change in revenue E) percent change in sales minus the percent change in advertising expenditures
Answer: B
28) Which of the following is true of marketing using a direct marketing channel system? A) Direct mail and catalog sales are more labor-intensive than telemarketing, but are more efficient at customer interaction. B) Using direct salespeople is generally cheaper than using brokers, sales agents, or manufacturer's representatives. C) Telemarketing provides a better opportunity for a sales communication but is more labor intensive and usually more expensive than direct marketing. D) Compared to indirect marketing channel systems, direct marketing channel systems maximize the number of customers that a business can profitably reach. E) Digital marketing channels have a greater customer reach than other channels, but are also more expensive.
Answer: C
30) MVB Inc.obtains a return of 9.8% from assets worth $248.5 million. Calculate its net profit. A) $105.9 million B) $36.8 million C) $24.3 million D) $76.2 million E) $60.4 million
Answer: C
30) Which of the following factors determines that a marketing channel is an indirect channel rather than a direct channel? A) The products are complex and require extensive after-sales service. B) The products are intended for business-to-business markets rather than consumer markets. C) At least one marketing intermediary takes ownership of the products and controls distribution. D) Telemarketing and digital marketing are an integral part of the distribution system. E) The marketing channel uses one or more intermediaries who are a part of the company.
Answer: C
30) Which of the following statements is true? A) American managers are more likely than Japanese managers to drop a marketing plan when it meets resistance. B) The concept of continuous improvement is implicit in American marketing plan implementation, unlike Japanese marketing plan implementation. C) The term adaptive persistence has been used to describe the success of many Japanese marketing plans. D) One of Japanese management's greatest assets is the ability to abandon a marketing plan quickly when it is not working. E) Japanese managers are not as determined as American managers to make their marketing plans work.
Answer: C
31) Which of the following is true of cash-and-carry wholesalers? A) They undertake delivery of the product from manufacturer to consumer. B) They offer a greater variety of services than retailers and dealers. C) They do not offer credit facilities to customers. D) They do not take title to the manufacturer's products. E) They are full-function wholesalers.
Answer: C
32) The primary purpose of company metrics is ________. A) to achieve maximum customer satisfaction B) to make optimal use of the organization's resources C) to maintain an ongoing measure of marketing performance D) to maximize the organization's return on assets E) to minimize the defects in the organization's products
Answer: C
33) Which of the following is an approach to message reinforcement that maintains awareness, reduces copy wear-out, and is cost-efficient? A) benchmarking B) bundling C) pulsing D) cobranding E) brand encoding
Answer: C
34) Net marketing contribution equals ________. A) (volume/margin per unit) - marketing and sales expenses B) volume x margin per unit x marketing and sales expenses C) (volume x margin per unit) - marketing and sales expenses D) (volume x marketing and sales expenses) - margin per unit E) (margin per unit/volume) - marketing and sales expenses
Answer: C
36) ________ buy components from manufacturers and assemble them to make their own products. A) Wholesalers B) Value-added resellers C) Original equipment manufacturers D) Sales agents E) Distributors
Answer: C
37) Calculate the number of units produced by a business if the net marketing contribution and marketing and sales expenses are $625,000 and $175,000, respectively. The margin per unit is estimated to be $25. A) 50,000 B) 25,000 C) 32,000 D) 76,000 E) 43,000
Answer: C
39) A company's return on capital is ________. A) invested capital divided by net marketing contribution B) net profit multiplied by invested capital C) net profit divided by invested capital D) net marketing contribution divided by invested capital E) invested capital divided by net profit
Answer: C
39) The net marketing contribution for a firm is the firm's ________. A) profits B) profits - (other operating expenses) C) gross profit - (marketing and sales expenses) D) (all revenues) - (all expenses) E) (sales revenues) - (cost of goods sold)
Answer: C
39) Which of the following benefits with respect to a customer's service needs and expectations must a business consider to determine if a channel system is viable? A) product quality B) product assortment C) availability/delivery D) product form E) image benefits
Answer: C
40) Calculate the total volume of units sold by a business if there is a market demand of 550,000 units and the business has a market share of 25%. A) 292,560 B) 440,650 C) 137,500 D) 325,000 E) 110,190
Answer: C
41) Calculate the total volume of units produced if there is a market demand of 50,000 units at a market share of 10%. A) 292,560 B) 440,650 C) 500,000 D) 325,000 E) 100,000
Answer: C
41) If TRX Inc's sales total $150 million, and the cost of goods sold is $50 million, calculate the percent gross profit for TRX. A) 33.3% B) 25% C) 66.6% D) 15% E) 75%
Answer: C
44) What is the total sales revenue generated by an organization that has a net marketing contribution of $25 million at a gross profit margin of 5%, and its marketing and sales expenses amount to $10 million? A) $500 million B) $600 million C) $700 million D) $800 million E) $900 million
Answer: C
45) Calculate the total number of manufacturers, if 15 transactions are made per year with 10,000 retailers. The total number of transactions is 3 million transactions per year. A) 25 B) 10 C) 20 D) 35 E) 50
Answer: C
46) Calculate the total number of retailers interacting with 120 manufacturers if 10 transactions are made per year. The total number of transactions is 15 million transactions per year. A) 7,900 B) 4,800 C) 12,500 D) 16,500 E) 22,000
Answer: C
46) The operating income of a company is $10 million, the net marketing contribution is $30 million and general and administrative expenses are $5 million. Calculate the other operating expenses. A) $10 million B) $5 million C) $15 million D) $20 million E) $25 million
Answer: C
55) Which of the following is true of marketing channels? A) In a direct marketing channel, intermediaries take a portion of the purchase price for their services. B) The net price derived from the use of indirect marketing channels is much higher than from direct channels. C) Direct channels are able to capture most, if not all, of the end-user price. D) The cost of direct marketing channels is generally lower for a manufacturer than that of other channels. E) Indirect channels incur the highest out-of-pocket marketing and sales expenses for manufacturers.
Answer: C
16) Which of the following is considered an external performance benchmark for a product's performance in the market? A) sales revenues B) net profits C) return on sales D) relative product quality E) assets as a percentage of sales
Answer: D
17) Which of the following statements is true about market metrics? A) They involve using uniform benchmarks across all industries. B) They provide qualitative data, and not quantitative data. C) They always express the measurements as pie charts. D) They measure market conditions and a business's performance in that market. E) They are more advanced product-market metrics for companies that are dealing with pricing issues.
Answer: D
19) A company's operating income as a percentage of sales is equal to the ________ minus other expenses as a percentage of sales. A) gross profit B) marketing ROI C) sales-to-assets ratio D) marketing ROS E) net marketing contribution
Answer: D
20) TDZ Manufacturing wants to change its distribution system from an indirect channel to a direct channel system. Which of the following should the company use to achieve this? A) cash-and-carry wholesalers B) retailers C) full-function wholesalers D) traveling sales representatives E) dealers
Answer: D
20) The whole purpose of ________ market metrics is to track customer perceptions and attitudes that precede changes in customer behavior and a business's financial performance. A) financial B) static C) competitiveness D) forward-looking E) backward-looking
Answer: D
21) Chloe is examining her company's marketing performance metrics. Which of the following would be on the list? A) capacity utilization B) operating expenses C) earnings per share D) customer value E) return on assets
Answer: D
23) Which of the following is an external metric for a company? A) inventory turnover B) net profit before tax C) accounts receivable D) revenue per customer E) return on assets
Answer: D
24) In which of the following situations is a business most likely to opt for a direct rather than an indirect marketing channel system for product distribution? A) The business manufactures products for the consumer market rather than the business market. B) The business's products are sold in wide markets, and require localized availability of parts and services. C) The business is new to the market and does not have a network of contacts in place for distribution. D) The business wants to maintain complete control over its marketing messages and collection of payments for products. E) The business manufactures a product that people buy on impulse and is generally sold in small quantities.
Answer: D
25) Which of the following is an internal financial metric? A) customer awareness B) market share C) revenue per customer D) product defects E) customer satisfaction
Answer: D
25) Why might a business use a combination of direct, indirect, and mixed marketing channel systems? A) to have total control over the quality of customer service B) to lower the risk of distributing products to end-users C) to attain maximum profits at minimum cost D) to reach different target markets cost effectively and to deliver the service level expected by target customers E) to comply with legal requirements that limit a business from having too much control over the distribution of products to consumers
Answer: D
26) Kristy's Decorations Inc. is a firm that manufactures and sells Halloween decorations in Oakland. The firm starts heavily advertising its products during September and October, and sets up temporary shops in various neighborhoods during this period. After Halloween is over, the firm does not direct any messages to its target customers till the next year. In this example, Kristy's Decorations Inc. uses which of the following marketing communications strategies? A) a distributed frequency strategy B) a gross frequency strategy C) an umbrella strategy D) a concentrated frequency strategy E) a heavy-up message strategy
Answer: D
26) What is the total sales a business should generate if it must obtain a net profit of $125 million at a sales return of 20%? A) $1.25 billion B) $250 million C) $2.5 billion D) $625 million E) $750 million
Answer: D
27) In television advertising, the combined impact of message frequency and reach produces an index called ________. A) customer response index B) marketing penetration index C) advertising elasticity index D) gross rating points E) market share index
Answer: D
31) A business realizes a net profit of $3 million and a return on assets of 6%. The total assets of the business will be ________. A) $5 million B) $20 million C) $18 million D) $50 million E) $36 million
Answer: D
31) Which of the following marketing metrics is an internal forward-looking metric for a firm? A) market share B) customer retention C) revenue per customer D) inventory turnover E) customer satisfaction
Answer: D
32) Service quality affects customer retention and profit in the numerator and ________ in the denominator of the return on assets equation. A) total income generated B) return on sales C) customer satisfaction D) accounts receivable E) accounts payable
Answer: D
33) Which of the following is an example of an indirect B2C marketing channel? A) Wellspring Cosmetics sells its products exclusively through its monthly catalogs, mailed to a subscriber list. B) GTB Computers uses its own sales force to initiate sales contacts, but uses external local dealers to provide products and after-sales services. C) Radix Inc., a manufacturer of automotive parts, sells its products to a number of automobile companies. D) More4Less.com buys products from manufacturers and sells them to consumers through its Web site. E) Apparel retailer UrbanScene elected to close all its brick-and-mortar stores and sell products only through its online storefront.
Answer: D
35) Which of the following is true about a pulsing message reinforcement strategy? A) It is more expensive than maintaining a high level of awareness with traditional media. B) It can be used for products that are purchased more frequently at some times of the year than at others. C) It involves maintaining a certain level of base advertising at all times. D) It reduces copy wear-out due to overexposure to the same messaging. E) It involves increasing the message frequency just before and during the prime buying period of a product.
Answer: D
38) The operating income for TRX Inc. is $100 million. If the cost of goods is $30 million, SGA expenses are $15 million, and other operating expenses are $5 million, find the sales revenues for TRX. A) $200 million B) $100 million C) $50 million D) $150 million E) $25 million
Answer: D
39) Calculate the total marketing and sales expenses incurred by a business if it produces 30,000 units at $15 per unit and its net marketing contribution is $225,000. A) $300,000 B) $150,000 C) $625,000 D) $225,000 E) $450,000
Answer: D
39) Which of the following is a mode of pull marketing communication? A) channel marketing B) sales incentives C) channel financing D) direct marketing E) co-op advertising
Answer: D
41) Which of the following is true of improving cost efficiency of the marketing process? A) If a business does not make products available at customers' preferred points of purchase, it lowers the cost of the transaction. B) For undifferentiated products, customers' transaction costs are high even when availability is unrestricted. C) The more undifferentiated a product is, the greater its perceived value. D) Customer value can be increased by lowering the cost of reaching customers. E) The general assumption is that the more intermediaries a channel system has, the lower the total cost of purchase.
Answer: D
42) Calculate the total market demand if a business sells 48,000 units, which represents a market share of 32%. A) 224,500 B) 265,000 C) 196,000 D) 150,000 E) 125,300
Answer: D
43) A business has 75 million shares and its net marketing contribution is $550 million. The other expenses, including interest and taxes, amount to $280 million. Calculate the earnings per share for the business. A) $2.4 per share B) $6 per share C) $1.2 per share D) $3.6 per share E) $4.8 per share
Answer: D
44) Earnings per share is ________. A) invested capital divided by number of shares B) net marketing contribution multiplied by number of shares C) net marketing contribution divided by number of shares D) net profit divided by number of shares E) net profit multiplied by number of shares
Answer: D
48) The economic profit generated by a company is its ________. A) (capital x cost of capital) / net profit B) net profit / (capital x cost of capital) C) net profit + (capital x cost of capital) D) net profit - (capital x cost of capital) E) (capital x cost of capital) - net profit
Answer: D
49) Calculate the total number of transactions made per year if the total transaction cost is $2 billion at $50 per transaction. A) 25 million transactions per year B) 10 million transactions per year C) 100 million transactions per year D) 40 million transactions per year E) 250 million transactions per year
Answer: D
50) Calculate the marketing expense variance, if the actual marketing expense and marketing expenses estimated in the plan are $98,000 and $80,000, respectively. The actual percentage of sales is 15%. A) $27,000 B) $1,800 C) $2,700 D) $18,000 E) $270,000
Answer: D
50) Calculate the net profit generated by Key Inc.,which has a capital cost of 10% for $450 million of capital invested and generates an economic profit of $20 million. A) $48.5 million B) $110 million C) $78.5 million D) $65 million E) $135 million
Answer: D
55) The fundamental marketing profitability metric for planning purposes is the ________ equation. A) gross profit B) market share C) market demand D) net marketing contribution E) variable unit cost
Answer: D
21) Which of the following marketing channels has the most potential for expanding customer reach at the lowest cost? A) telemarketing B) personal selling C) trade shows D) catalog marketing E) digital marketing
Answer: E
22) Jack is examining his company's financial performance measures. Which of the following would be on the list? A) net marketing contribution B) market ROI C) relative service quality D) customer satisfaction E) return on sales
Answer: E
23) A business's return on sales is ________. A) sales divided by net marketing contribution B) net marketing contribution multiplied by sales C) net marketing contribution divided by sales D) net profit multiplied by sales E) net profit divided by sales multiplied by 100%
Answer: E
28) Which of the following is an external backward-looking metric for a company? A) intent to repurchase B) customer awareness C) perceived performance D) customer satisfaction E) customer retention
Answer: E
29) Calculate the return on assets for Nestor Inc., which generates a net profit of $45 million from its assets worth $780 million. A) 57.1% B) 45% C) 28.5% D) 17.5% E) 5.7%
Answer: E
29) Which of the following is true of an indirect channel system? A) The business retains ownership of the products until delivered to customers. B) The cost of indirect customer sales contact is high and increasing. C) An indirect marketing channel system includes telemarketing and digital marketing. D) An indirect marketing channel system is particularly important for specialized and technological products. E) An indirect marketing channel system involves an intermediary that takes over ownership and sales.
Answer: E
30) Calculate the gross rating points of an ad if it has a target market reach of 70 percent and a frequency of 5. A) 14 B) 70 C) 75 D) 250 E) 350
Answer: E
33) Which of the following allows a company to isolate the components of marketing performance to understand better how each component contributes to the actual net marketing contribution? A) a SWOT analysis B) a situation analysis C) a performance analysis D) a post-hoc analysis E) a variance analysis
Answer: E
