marketing Final
28. Caruso's Office Supplies has decided to branch out from its existing stores. It plans to start sending out a catalog and to sell its products online. Caruso's is adopting a. an omnichannel strategy. b. exclusive distribution. c. selective distribution. d. an extreme value strategy. e. a service retailing philosophy.
Answer = a: An omnichannel strategy is when a company uses multiple sales channels, such as stores, catalogs, and the Internet.
18. A university using benefit segmentation and targeting students who want to get a degree quickly while still working full-time would most likely focus on a. providing classes at convenient times and offering online courses. b. discount pricing for students taking more than 12 credit hours. c. the higher average salaries earned by college graduates. d. the great variety of classes offered. e. the number of Nobel Prize winners on the faculty.
Answer = a: Benefit segmentation groups consumers on the basis of the benefits they derive from products or services. The benefit sought by the target market is speed and convenience of getting a degree; thus, convenient class times and the ability to take classes online would be important criteria.
3. Which of the following statements regarding conscious marketing is correct? a. It recognizes that business is a subset of society, and that society is a subset of the planet. b. It sees limited overlap between the business and society, and between business and the planet. c. It is often grafted on to traditional business model, usually as a separate department or part of PR. d. It reflects a mechanistic view of business. e. It is independent of corporate purpose or culture.
Answer = a: Conscious marketing recognizes that business is a subset of society, and that society is a subset of the planet. The other statements reflect corporate social responsibility.
16. Giant Food Stores in suburban Washington, DC, adjusts its ethnic food aisle offerings based on the ethnic groups living near each store. Giant Foods is using geodemographic segmentation. a. True b. false
Answer = a: Geodemographic segmentation uses a combination of geographic, demographic, and lifestyle characteristics to classify consumers
8. Which of the following refers to variability in a service's quality? a. heterogeneity b. perishability c. service gap d. delivery gap e. communications gap
Answer = a: Heterogeneity refers to variability in the service's quality.
24. In a direct marketing channel, there are no intermediaries between the buyer and the seller. a. True b. False
Answer = a: In a direct marketing channel, there are no intermediaries between the buyer and seller. Typically, the seller is a manufacturer, such as when a carpentry business sells bookcases through its own store and online to individual consumers. The seller also can be an individual, such as when a knitter sells blankets and scarves at craft fairs, on Etsy, and through eBay.
44. Which of the following is an example of an institutional buyer? a. Mayo Clinic Hospital b. Procter & Gamble c. U.S. Marine Corps d. Nucor Steel Corporation e. Walmart
Answer = a: Institutional buyers include organizations such as hospitals, educational organizations, and religious organizations.
30. When Creative Pen Company designed a new pen that was particularly comfortable to use, it wanted to literally get the pen in the hands of as many consumers as possible. Creative Pen will probably choose ________ distribution for its new product. a. intensive b. exclusive c. selective d. collective e. variable
Answer = a: Intensive distribution refers to getting a product into as many outlets as possible
36. The Salvation Army runs a campaign over the Christmas holidays called the Mobile Bell Ringer. Volunteers send text messages to their friends' cell phones asking them to donate. Which type of marketing communication does this represent? a. mobile marketing b. public relations c. personal selling d. sales promotions e. advertising
Answer = a: Mobile marketing sends messages through wireless handheld devices, such as cellular telephones.
45. The buying center for Comstock Corporation is in the process of discussing price, quality, and delivery schedules with potential suppliers. They are in the ________ stage of the businessto-business buying process. a. vendor negotiation b. product specification c. need recognition d. vendor performance assessment e. RFP
Answer = a: Once the list of potential suppliers has been limited to a few finalists who are able to meet Comstock's needs, the firm will probably negotiate with each of the finalists regarding price, quality, delivery, and financing, in order to get the best deal possible.
47. Which of the following statements best describes secondary data? a. Secondary data are pieces of information that have been collected prior to the start of the focal research project. b. Secondary data are those data collected to address specific research needs. c. secondary data. d. Secondary data collection is always extremely time-consuming and expensive. e. Secondary data include only qualitative research.
Answer = a: Secondary data are pieces of information that have been collected prior to the start of the focal research project. Secondary data include external as well as internal data sources and might come from free or very inexpensive external sources.
22. Joy is looking to expand her hair salon business and wants to evaluate the profitability of a potential new market. The area she is looking at has 2,000 homes and Joy estimates that 20 percent of them would be likely to use her service. She charges $45 per haircut and on average customers cut their hair six times a year. Joy estimates her variable costs to expand her business will be $10 per haircut and her fixed costs are $10,000. How much profit would Joy make on this new segment? a. $72,240 b. $98,000 c. $108,000 d. $128,000 e. $410,000
Answer = a: Segment profitability = (Segment size × Segment adoption percentage × Purchase behavior × Profit margin percentage) − Fixed costs. Segment size = Number of people in the segment Segment adoption percentage = Percentage of customers in the segment who are likely to adopt the product/service Purchase behavior = Purchase price × Number of times the customer would buy the product/service in a year Profit margin percentage = (Selling price − Variable costs) ÷ Selling price Fixed costs = Advertising expenditure, rent, utilities, insurance, and administrative salaries for managers Calculations based on our example are as follows: Segment profitability = (2,000 × 20% × (45 × 6) × (45 − 10) ÷ 45) − $10,000 Segment profitability = (400 × (270) × (35) ÷ 45)) − $10,000 Segment profitability = (108,000 × $0.78) − $10,000 Segment profitability = $82,240 − $10,000 Segment profitability = $72,240
9. The key to successful pricing is to match the product with the consumer's perception of value. a. True b. False
Answer = a: Successful pricing considers consumers' perceived value, since to ignore this might result in a price that is too high or too low. Marketers should view pricing decisions as a strategic opportunity to create value rather than as an afterthought to the rest of the marketing mix.
4. Marriott Hotels trains its front desk employees to dress neatly and conservatively to project a professional image. This relates to the service dimension of tangibles. a. True b. false
Answer = a: The category of tangibles would include the appearance of facilities, equipment, personnel, and communication materials.
23. Whenever the president of the local public university promotes the institution, he emphasizes the university's price (much lower than neighboring private colleges) and high quality. He is positioning the institution based primarily on a. the value proposition. b. product attributes. c. symbols. d. competitive comparisons. e. profitability.
Answer = a: Value is a popular positioning method because the relationship of price to quality is among the most important considerations for consumers when they make a purchase decision. By emphasizing the low price and high quality, the university president is focusing on value.
21. Which of the following would be used in calculating the profitability of a segment? a. segment perceptions b. segment size c. geographic segmentation d. demographics e. product positioning
Answer = b: A calculation of segment profitability uses segment size, estimated segment adoption percentage, purchase behavior (frequency and price), profit margin percentage, and fixed costs.
12. According to a typical demand curve, the higher the price, a. the greater the income effect. b. the lower the quantity consumers will buy. c. the lower the output of producers. d. the greater the production costs. e. the lower the cross-price elasticity.
Answer = b: A typical demand curve shows that as price increases, quantity demanded for a product or service will decrease.
14. If a 1 percent decrease in price results in less than a 1 percent increase in the quantity demanded, demand is a. cross-price elastic. b. price inelastic. c. price elastic. d. status-quo elastic. e. derived demand inelastic.
Answer = b: Demand is said to be price inelastic if a percentage increase in price results in a smaller percentage increase in demand. The market for a product is generally viewed as price insensitive, or inelastic, when its price elasticity is greater than −1.
33. Marketers often use focus groups to learn how consumers interpret their IMC messages. Experience has shown that a. effective branding requires marketers to encode messages identically for each market. b. each receiver decodes IMC messages in his or her own way. c. action is taken before desire and interest are determined. d. marketers can almost always use the same message for all audiences. e. messages are decoded in the manner intended by the encoder.
Answer = b: Each receiver decodes IMC messages differently, depending on personal experiences and preferences
38. In both new buy and straight rebuy situations, several members of a buying center will be intensely involved in the purchasing decision. a. True b. False
Answer = b: In a new buy, many members of the buying center will be involved in the purchasing decision; however, in a straight rebuy, it is likely that the buyer will handle the transaction alone.
1. Ethos Water donates 2 percent of its profits to children in need of clean water. This action demonstrates that Ethos Water is a firm with a strong ethical climate. a. True b.false
Answer = b: This is an example of corporate social responsibility, as it is a nonmandated action designed to help the community at large.
5. Cookie Cutter, a firm that manufactures high-end mixers, donates $10 per mixer sold to a local food bank. This is a form of a. public relations. b. corporate social responsibility. c. business ethics. d. pandering to the public. e. tax relief.
Answer = b: When companies embrace CSR, they appeal not only to their shareholders, but also to their primary stakeholders—including their own employees, consumers, the marketplace, and society at large. In this case, the company would be supporting a charity that helps society at large.
6. Along the service-product continuum, which of the following would be considered the most service dominant? a. grocery store b. apparel specialty store c. doctor's office d. bookstore e. restaurant
Answer = c: All the businesses on the list except the doctor's office involve some tangible component —groceries, clothing, books, and food. In the doctor's office, the only tangible elements delivered are things such as samples of drugs, X-rays, and prescription slips (and even those are often submitted electronically).
2. The principle that decisions be ethically based is part of the concept of a. marketing analytics. b. individual consumer issues. c. conscious marketing. d. the triple bottom line. e. corporate social responsibility.
Answer = c: Conscious marketing entails a sense of purpose for the firm that is higher than simply making a profit by selling products and services. It encompasses four overriding principles, one of which is the understanding that decisions be ethically based.
11. Many years ago Honda's Accord and Ford's Taurus were the two top-selling cars in the United States. As the year was coming to an end, Ford cut the price of the Taurus, hoping to outsell the Accord and allow Ford to claim that "Taurus is the best-selling car in America." Ford was using a ________ pricing strategy. a. maximizing profits b. target profit c. sales orientation d. status-quo e. target return
Answer = c: Ford wanted to sell more of the Taurus, even if it meant lower profits. Firms using a sales orientation to set prices believe that increasing sales will help the firm more than will increasing profits.
37. Hope wants to increase the number of visits to her marketing consulting website, which specializes in marketing strategy for small businesses. Hope decides to target Internet users who search for the terms "marketing," "small business," and "advertisement." Which of the following will be most helpful to Hope? a. Twitter b. corporate blog c. Google AdWords d. Google Chrome e. Google Analytical Thinking
Answer = c: Google AdWords is a search engine marketing tool offered by Google that allows advertisers to show up in the Sponsored Links section of the search results page based on the keywords potential customers use.
39. Indea works as a sales rep for a company that produces and sells steel used in building construction. Indea is in ________ sales. a. G2B b. B2C c. B2B d. C2C e. G2G
Answer = c: Indea sells materials used by other businesses; thus, she is in B2B sales.
25. At the BMW plant in Spartanburg, South Carolina, rather than use a typical order-to-delivery process, it has suppliers deliver parts every four hours when the plant is in operation. BMW uses a ________ inventory control system. a. cross-docking b. lead time c. just-in-time (JIT) d. pick ticket e. UPC
Answer = c: Just-in-time (JIT) and quick response (QR) both refer to inventory management systems designed to ship smaller quantities more frequently.
29. Knowing what customers expect is essential. Retailers need to know which manufacturers their customers prefer, while manufacturers need to know a. if customers are using credit cards or cash to make purchases. b. how many employees the retailers have. c. where their target customers expect to find their products. d. whether the products will fill a customer's self-actualization needs. e. whether customers will find the store atmospherics appropriate to the location.
Answer = c: Manufacturers must know where their target customers expect to find their products, or they will not know which retailers to consider as partners.
20. Baby Boomers represent a huge demographic segment for travel marketers. Baby Boomers are also heavily motivated by self-fulfillment, which creates the possibility of ________ segmentation. a. geographic b. self-concept c. psychographic d. benefit e. behavioral
Answer = c: Segmentation based on self-values is a form of psychographic segmentation.
31. A(n) ________ distribution intensity helps a seller maintain a particular image and control the flow of merchandise into an area. a. intensive b. widespread c. selective d. collective e. variable
Answer = c: Selective distribution intensity, in which a few sellers in a given area are permitted to sell a product, is a good strategy for maintaining an image and controlling the flow of merchandise without resorting to the more extreme solution, exclusive distribution.
46. Talia subscribes to an Internet service that alerts her whenever other firms in her industry are quoted in the media. Talia is using this type of marketing research primarily to a. provide a link between her and her production center. b. help her understand the needs of her customers. c. monitor her competitors. d. increase profits through the sale of syndicated data. e. decide how to price her new products.
Answer = c: Since Talia's service is informing her of quotes from managers of others in her industry, she is monitoring her competition, which allows her to anticipate and respond quickly to competitive moves.
26. When Costco sells to consumers directly, it acts as a ________; when it sells to other businesses, such as a restaurant owner, it acts as a ________. a. wholesaler; retailer b. retailer; manufacturer c. retailer; wholesaler d. manufacturer; wholesaler e. marketing channel; supply channel
Answer = c: Some retail chains, such as Home Depot or Costco, function as both retailers and wholesalers. They act as retailers when they sell to consumers directly and as wholesalers when they sell to other businesses.
34. Once the marketing communication has captured the interest of its target market, the goal of subsequent IMC messages should be to move the consumer from a. "I want it" to "I like it." b. action to desire. c. "I like it" to "I want it." d. interest to awareness. e. feeling to thinking.
Answer = c: The interest stage of the AIDA model is represented by "I like it"; the next stage, desire, is represented by "I want it."
32. The right communication channel to use in IMC is a. the traditional channel used in that particular retail sector. b. network advertising, local newspapers, and regional radio stations. c. the one that will connect to the desired recipients. d. the one with the best encoding capabilities. e. the one that maximizes decoding difficulty.
Answer = c: There is no one right communication channel. The media chosen must be appropriate to connect the sender with the desired recipients.
15. Evan is a yacht broker in the southeastern United States. For years he has had difficulty selling large yachts locally because there were few places to dock these boats. Yachts and spaces to dock them are an example of a. substitute products. b. purely competitive products. c. status-quo pricing products. d. complementary products. e. competitive parity products.
Answer = d: Complementary products are things that are used together; yachts and docking space in marinas are an example.
17. Although marketers have found that psychographics are often more useful for predicting consumer behavior than demographics, psychographic segmentation a. is available only in limited geographic areas. b. is rarely used and unproven. c. offers only one-to-one marketing potential. d. involves knowing and understanding self-values, self-concept, and lifestyles. e. is still an unproven area.
Answer = d: Psychographic segmentation is by no means unproven and can be used for many applications unrelated to one-to-one marketing. Determining psychographics involves knowing and understanding three components: self-values, self-concept, and lifestyles.
10. When Ursula decides how to price new products in her gift store, she measures the value of her product offerings against those of the other stores in her area. Ursula uses a ________ pricing strategy. a. maximizing profits b. target profit c. target return d. competitor-oriented e. sales-oriented
Answer = d: Ursula is concerned mostly with pricing relative to the competition, so this is a competitor-oriented strategy. When firms take a competitor orientation, they strategize according to the premise that they should measure themselves primarily against their competition.
13. For which of the following is demand likely to be most sensitive to price increases? a. prescription drugs b. college tuition for last-semester seniors c. electricity d. hospital care e. a specific brand of soft drink
Answer = e: A specific brand of soft drink has many substitutes, and so demand is likely to be sensitive to price increases. The greater the availability of substitute products, the higher the price elasticity of demand for any given product will be. One exception would be extremely brand-loyal consumers.
19. When airlines created frequent-flyer programs, they were among the first retailers to embrace a. geographic segmentation. b. education segmentation. c. lifestyle segmentation. d. convenience segmentation. e. loyalty segmentation.
Answer = e: Airline frequent-flyer programs offer an example of using loyalty segmentation and investing in retention and loyalty initiatives to retain their most profitable customers since only those who fly on the airline frequently are eligible.
35. Shannon is assessing the effectiveness of her firm's marketing communications. She knows the ultimate goal is to a. maximize rating points. b. minimize marketing communication expenditures. c. shift encoding into decoding. d. use personal selling to augment public relations. e. drive the receiver to action.
Answer = e: Although many measures of marketing communications look at things like number of exposures, the eventual goal is to move a consumer to take action.
7. Many product-dominant firms use quality service a. as a way to minimize the cost of production. b. to support a standards gap. c. as a way to increase the perishability of their products. d. to install a voice of the customer program. e. to maintain a sustainable competitive advantage.
Answer = e: Customer service can add value to almost any product or service offered to consumers. Even those firms that are engaged primarily in selling a good, such as a fast-food restaurant, typically view service as a method to maintain a sustainable competitive advantage.
43. Sales of electric components manufactured by Sean's company depend on sales of new cars. Sean's company faces ________ demand. a. synthetic b. situational c. monopolistic d. contrived e. derived
Answer = e: Derived demand refers to the link between consumers' demand for a company's output and the company's purchase of necessary inputs to manufacture or assemble that particular output. The car manufacturer's demand for electric components is derived from the demand for its cars.
27. Which of the following is required to build a successful strategic relationship? a. autonomous respect b. closed communications c. creation of a joint venture d. individual goals e. credible commitments
Answer = e: For a strategic relationship to succeed, it requires mutual respect, open communication, common goals, and credible commitments.