CH-1 An Overview of Marketing – MKTG : Exam Guide

Chapter 1—An Overview of Marketing TRUE/FALSE 1. Marketing is defined as producing, promoting, and selling products. Answer: False Rationale: Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. 2. According to the American Marketing Association, marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. Answer: True Rationale: According to the American Marketing Association's definition, marketing involves creating, communicating, delivering, and exchanging offerings that provide value to customers, clients, partners, and society. 3. An exchange cannot take place unless each party in the exchange has something that the other party values. Answer: True Rationale: An exchange in marketing occurs when each party involved has something of value to the other party, facilitating the transaction and mutual benefit. 4. Sara Lee Industries spent considerable money and time developing a crustless bread. Prior to the introduction, the company had not conducted market research among its customers, but it was confident that its science and technology department had produced a successful new product. Based on this example, Sara Lee is a good example of a production-oriented company. Answer: True Rationale: Sara Lee Industries' approach of developing a crustless bread without prior market research, relying instead on internal confidence in its technology department, illustrates a production-oriented company. Such companies prioritize internal capabilities and product innovation over understanding customer needs and preferences through market research. 5. Unlike a production-orientated firm, a firm embracing a sales orientation focuses on customer wants and needs so it can develop the best product at the lowest cost that will require very little selling effort. Answer: False Rationale: A sales orientation is based on the ideas that people will buy more goods and services if aggressive sales techniques are used and that high sales result in high profits. 6. The focus of a production-oriented firm is on what it can make or do best. Answer: True Rationale: A production-oriented firm focuses primarily on its internal capabilities and what it can produce or do most efficiently and effectively. This orientation often emphasizes maximizing production output, cost efficiency, and product quality based on the firm's technical expertise and resources. This approach contrasts with a market-oriented firm, which prioritizes understanding and meeting customer needs and preferences through market research and customer feedback. 7. The marketing concept states that the social and economic justification for an organization’s existence is the satisfaction of customers’ wants and needs while meeting organizational objectives. Answer: True Rationale: The marketing concept indeed asserts that an organization's reason for existence, both socially and economically, revolves around satisfying customers' wants and needs while achieving its own objectives, whether financial or otherwise. 8. The ultimate goal of most market-oriented firms is profitability that results from satisfying the wants and needs of its consumers. Answer: True Rationale: For market-oriented firms, profitability typically stems from effectively meeting and exceeding the wants and needs of consumers. By understanding and fulfilling customer demands through market research, innovation, and customer-centric strategies, these firms can achieve sustainable profitability and competitive advantage in the marketplace. 9. The societal marketing concept considers society’s long-term best interests along with the satisfaction of customers’ wants and needs. Answer: True Rationale: The societal marketing concept integrates considerations of society's long-term welfare and interests alongside satisfying customers' wants and needs. This approach emphasizes ethical and responsible marketing practices that benefit not only customers and the organization but also the broader community and environment. 10. Increasingly well informed customers have shifted the power from manufacturers and retailers to consumers. Answer: True Rationale: The rise of well-informed consumers, empowered by access to information and digital platforms, has shifted power dynamics in the marketplace. Consumers now have greater ability to compare products, prices, and reviews, influencing their purchasing decisions and shaping market trends. This trend compels manufacturers and retailers to prioritize transparency, quality, and customer satisfaction to remain competitive and maintain consumer trust and loyalty. 11. Personnel in sales-oriented firms tend to be “outward looking,” focusing on selling what the market wants. Answer: False Rationale: Personnel in sales-oriented firms tend to be “inward looking,” focusing on selling what the organization makes rather than making what the market wants. 12. Customer value is the relationship between company profits and company costs. Answer: False Rationale: Customer value is the relationship between benefits and the sacrifice necessary to obtain those benefits. 13. The way to achieve customer satisfaction and value is to offer the lowest price. Answer: False Rationale: Marketers interested in customer value offer realistic prices and try to achieve customer satisfaction and value by ensuring customer expectations are met or exceeded. 14. 3D Systems is a company that uses computers to generate new product prototypes. It has generated loyal business clients by providing the best customer support in the industry. The company also provides direct sales consultations that give its salespeople intimate knowledge about what exactly its customers want. This partnership between 3D Systems and its customers is relationship marketing. Answer: True Rationale: The scenario described aligns with relationship marketing principles, where 3D Systems focuses on building strong, long-term relationships with its business clients. By providing excellent customer support and personalized sales consultations, the company demonstrates a commitment to understanding and meeting the specific needs and preferences of its customers. This approach not only fosters loyalty but also enhances customer satisfaction and retention, key elements of relationship marketing aimed at creating mutually beneficial partnerships and sustainable competitive advantage. 15. Only a firm’s salespeople need to be customer oriented. Answer: False Rationale: All employees need to be customer oriented because in the customer’s eyes, the employee (regardless of the position held in the organization) is the firm and may be the only firm representative the customer ever sees. 16. Retailers who give their sales clerks the authority to handle customer complaints without having to get approval from a supervisor are using empowerment. Answer: True Rationale: Empowerment in retail refers to granting sales clerks the authority to resolve customer complaints independently, enhancing customer service efficiency and satisfaction by eliminating the need for supervisor approval in handling such issues. 17. In the early 1920s, Ford promised its customers any color vehicle they wanted as long as it was black. Ford’s management assumed anyone buying a car would accept the color black, so it made products affordable by offering only one variety in large quantities. Ford is an example of a market-oriented firm. Answer: False Rationale: A market-oriented organization recognizes that different customers groups want different features or benefits. 18. While most marketing organizations rely on various forms of promotion to succeed, sales-oriented organizations make the most effective use of their entire marketing mix. Answer: False Rationale: Sales-oriented firms usually rely more heavily on promotion alone than do market-oriented firms. 19. A local grocer recently began grouping its customers into specific groups based on what they bought and when they shopped. The grocer then began to schedule shipments of specific items based on these customer segments and to offer different promotions to different shopper groups. This is an example of CRM. Answer: True Rationale: This scenario describes Customer Relationship Management (CRM), where the grocer segments customers based on their purchasing behaviors and preferences. By using this data to tailor shipments and promotions to different customer groups, the grocer aims to enhance customer satisfaction and loyalty, ultimately improving business performance through targeted marketing efforts. 20. Salespeople who work for market-oriented organizations are generally perceived by their customers as problem solvers and important links to supply sources and new products. Answer: True Rationale: Salespeople in market-oriented organizations are often perceived as problem solvers and valuable conduits between customers and the organization. They play a crucial role in understanding customer needs, communicating these needs to the organization, and facilitating the introduction of new products or solutions that meet those needs. This perception underscores their importance as key links in maintaining strong customer relationships and driving business growth. 21. Marketing is important to business, so marketing should be part of the job of everyone in the organization, not just those in marketing. Answer: True Rationale: Marketing is essential for business success because it involves understanding customer needs, creating value through products or services, and effectively communicating that value to target audiences. When everyone in the organization recognizes the importance of marketing and aligns their activities with customer-centric principles, it fosters a culture of customer focus and collaboration across departments. This integrated approach enhances overall organizational effectiveness and contributes to achieving business goals more effectively. MULTIPLE CHOICE 1. One facet of marketing is that it is: A. an approach that focuses on maximizing sales B. a short-term oriented approach to profit maximization C. an approach that requires diversity D. a philosophy that stresses customer satisfaction E. independent of value creation Answer: D Rationale: Marketing has two facets. First, it is a philosophy, an attitude, a perspective, or a management orientation that stresses customer satisfaction. Second, marketing is an organization function and a set of processes used to implement this philosophy. 2. A business is concerned with many day-to-day activities. Some of the most important of these activities are the planning and development of a product, its ability to communicate value, its pricing policy, and the distribution strategy. These activities are all a part of: A. a control system B. marketing C. accounting D. production E. human resources Answer: B Rationale: Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. 3. _____ is a set of activities used to implement a management orientation that stresses customer satisfaction. A. Planning strategy B. Customer management C. Marketing D. A control system E. Reciprocity Answer: C Rationale: This is the focus of marketing. 4. The American Marketing Association’s definition of marketing: A. is limited to promotional activities B. focuses on the value of empowerment, teamwork, and customer value C. shows how marketing benefits the marketer D. relies on the synergy created by exchange E. includes creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. Answer: E Rationale: According to the American Marketing Association, marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. 5. Which of the following occurs when people give up something in order to receive something they would rather have? A. Exchange B. Synergy C. Transformation D. Leveraging E. Reciprocity Answer: A Rationale: Exchange is people giving up something to receive something they would rather have. 6. All of the following are necessary for exchange to occur EXCEPT: A. each party is capable of communication and delivery B. each party signs a contract before exchange occurs C. each party believes it is appropriate or desirable to deal with the others D. each party is free to accept or reject the exchange offer E. each party must have something the other party considers to be valuable Answer: B Rationale: Exchange can occur without a legal contract. 7. A problem facing the timber industry is the absence of any effective way to prove that rain forest timber has been legally harvested. In places like Indonesia, as much as 80 percent of timber available for sale is illegally cut. Companies like The Home Depot do not want to sell timber from illegally logged forests even though the demand is great for timber from rain forests. Which of the following conditions required for an exchange to occur is missing when a company tries to sell illegally acquired logs to The Home Depot? A. There are more than two parties involved. B. Each party has something of value to bring to the exchange. C. One party is free to accept the exchange offer. D. Each party believes it is appropriate to deal with the other party. E. Nobody sees the exchange as producing value. Answer: D Rationale: For an exchange to occur, two or more parties must be involved. Both parties are free to accept or reject the exchange. If The Home Depot believes the timber has been illegally harvested, then it will not want to deal with the loggers. 8. Kellogg’s is offering free DVDs to consumers who collect five official Collection certificates from the back panels of specially marked packages of Kellogg’s cereals and then mail them with the official order form. Within 90 days, these consumers will receive the movie of their choice. A(n) _____ will occur when a movie fan mails in his or her certificates for a movie. A. synergy B. sublimation C. exchange D. entropy E. reciprocity Answer: C Rationale: For an exchange to occur, two or more parties must be involved. Both parties are free to accept or reject the exchange. Furthermore, each party must have something that is of value to the other party. Each party is capable of communication and delivery and believes it is desirable to do so. In this case, the value for Kellogg’s is customer loyalty. The value for the customer is the cereal and free movie. 9. For an exchange to take place: A. there must be at least two parties involved B. money must be used in the transaction C. each party must feel obligated to accept the offer D. at least one party must have something of value that the other party desires E. neither party must communicate with the other Answer: A Rationale: For exchange to occur, there must be at least two parties, each party has something that might be of value to the other party, each party is capable of communication and delivery, each party is free to accept or reject the exchange offer, and each party believes it is appropriate or desirable to deal with the other party. 10. The concept of exchange is important to marketing because: A. if all the conditions for an exchange are in place, then the exchange will be completed B. exchange provides money to marketers C. marketing activities help to create exchange D. marketing activities are a requirement for exchange to take place E. money is the only medium of exchange for business marketers Answer: C Rationale: Marketing activities help the exchange to take place, but marketing can occur without an exchange. 11. Barry collects antique watches and has decided to sell a few of them on eBay. Some of the watches he wants to sell are rare and very valuable. What condition is necessary for an exchange to occur between Barry and a buyer? A. His watch should have a certificate of authenticity. B. The opening bid must be lower than other watches being sold on the site. C. Buyers must provide payment before the item is shipped. D. Delivery must take place within 2 days of the purchase. E. Potential buyers must be able to see the watch and understand its qualities. Answer: E Rationale: For an exchange to take place, there must be at least two parties, each party must have something the other values, the parties must be able to communicate, each party must believe that it is appropriate to deal with the other, and each party must be free to accept or reject the exchange offer. 12. All of the following are marketing management philosophies EXCEPT: A. sales orientation B. societal marketing orientation C. market orientation D. profitability orientation E. production orientation Answer: D Rationale: The four marketing philosophies are commonly referred to as production, sales, market, and societal marketing orientations. 13. Indonesian logging companies harvest the rain forests for timber and assume that a market exists for their products. The typical Indonesian logging company has a(n) _____ orientation. A. exchange B. product C. production D. sales E. environmental Answer: C Rationale: A production orientation is a philosophy that focuses on the internal capabilities of the firm rather than on the desires and needs of the marketplace. 14. Firms with a _____ orientation focus on the internal capabilities of the firm rather than on the desires and needs of the marketplace. A. sales B. production C. market D. customer E. customer-benefit Answer: B Rationale: A production orientation is a philosophy that focuses on the internal capabilities of the firm rather than on the desires and needs of the marketplace. 15. A company that sets its goals and strategies based on what its current equipment can produce, what products engineering can design, and what the company itself can do best, has a(n) _____ orientation. A. marketplace B. sales C. market D. exchange E. production Answer: E Rationale: A production orientation focuses on the internal capabilities of the firm. 16. Researchers at PPG Industries spent considerable time, effort, and money developing a bluish windshield that would let in filtered sunlight but block out the heat. Little market research was done, but the scientists were convinced this new product would be significantly better than existing windshields even though it was more expensive and of a different color than the current models on the market. This scenario suggests PPG most likely has a(n) _____ orientation. A. exchange B. production C. sales D. promotion E. customer Answer: B Rationale: A production orientation is a philosophy that focuses on the internal capabilities of the firm rather than on the desires and needs of the marketplace. 17. A newspaper ad for a hospital that states, “We have the most modern delivery rooms and state-of-the art medical equipment,” is an indication of which marketing management philosophy? A. Sales B. Customer C. Market D. Societal E. Production Answer: E Rationale: A production orientation focuses on the internal capabilities of the firm. 18. A firm with a production orientation is most likely to survive if: A. there are many small competitors in the marketplace B. demand for the product it produces exceeds supply C. the needs of the marketplace are constantly shifting D. supply for the product it produces exceeds demand E. any of these conditions exist Answer: B Rationale: The production orientation can survive in the short term under a variety of conditions; however, if market needs change, long-term survival is difficult. 19. A firm that adopts a(n) _____ orientation to marketing will fail to consider whether what the firm produces most efficiently also meets the needs of the marketplace. A. customer B. exchange C. product D. market E. production Answer: E Rationale: The production orientation forces a company to build whatever it builds best––that is, whatever it has the experience and expertise in doing. 20. Toyota found that consumers wanted cars to last longer and be more environmentally friendly. GM, however, enjoyed being the top U.S. car producer and focused more on how many cars and trucks it could manufacture, not on what customers wanted from a vehicle. GM had more of a _____ orientation. A. sales B. production C. market D. product E. customer Answer: B Rationale: The production orientation forces a company to build whatever it builds best––that is, whatever it has the experience and expertise in doing. 21. The _____ orientation assumes people will buy more if aggressive selling techniques are used. A. market B. sales C. customer D. production E. exchange Answer: B Rationale: The sales orientation assumes aggressive selling is what is needed to increase demand. 22. Which marketing management philosophy is often adopted by organizations that sell unsought products such as life insurance, retirement plans, and preplanned funeral services? A. Sales orientation B. Production orientation C. Marketing orientation D. Product orientation E. Customer orientation Answer: A Rationale: Aggressive selling is sometimes used by companies that sell products their customers do not want to buy. 23. Which marketing orientation assumes people will buy more goods and services if aggressive marketing techniques are used? A. Sales B. Production C. Market D. Customer E. Marketplace Answer: A Rationale: A sales orientation is based on the ideas that people will buy more goods and services if aggressive sales techniques are used and that high sales result in high profits. 24. Colorado Silversmith creates and markets silver and turquoise jewelry, which it sells to retailers in the western United States. The company’s management believes its retail customers will stock more jewelry if its salespeople use aggressive marketing techniques, so the company provides strong incentives for salespeople and promotional allowances to resellers to get distribution for its jewelry. In other words, the company has a _____ orientation. A. promotion B. production C. sales D. market E. customer Answer: C Rationale: The sales orientation assumes aggressive sales techniques will sell more product, regardless of customer desires and needs. 25. If a company uses a sales orientation, consumer complaints would most likely result in: A. a modification of the sales presentation B. product reinvention C. continuous market research D. philanthropy E. attempts to cut production costs Answer: A Rationale: The sales orientation relies on aggressive sales techniques to fuel business. 26. Fujifilm Computer Products has improved the efficiency and productivity of its plant, which manufactures printing technology. For the new fiscal year, the company projects a production increase of 25 percent. It has instructed its sales force to aggressively distribute and promote its printers. The CEO is sure the market will absorb more product if the sales force is determined and assertive. Fujifilm appears to have a _____ orientation. A. market B. production C. sales D. customer E. marketplace Answer: C Rationale: A sales orientation is based on the belief that people will buy more goods and services if aggressive sales techniques are used. 27. Which marketing management philosophy focuses on the question, “What can we make or do best?” A. Production B. Marketing C. Sales D. Societal E. Internal Answer: A Rationale: A production orientation focuses on the internal capabilities of the firm rather than on the desires and needs of the marketplace. 28. Which marketing management philosophy focuses on the question, “How can we sell more aggressively?” A. Production B. Marketing C. Sales D. External E. Internal Answer: C Rationale: A sales orientation is based on the ideas that people will buy more goods and services if aggressive sales techniques are used and that high sales result in high profits. 29. Which marketing management philosophy focuses on the question, “What do customers want and need?” A. Sales B. Production C. Product D. Market E. Internal Answer: D Rationale: A market orientation is based on the marketing concept, which is the idea that the social and economic justification for an organization’s existence is the satisfaction of customer wants and needs while meeting organizational objectives. 30. Which marketing management philosophy assumes that a sale does not depend on an aggressive sales force but rather on a customer’s decision to purchase a product? A. Sales B. Production C. Product D. Market E. Exchange Answer: D Rationale: A market orientation states that the social and economic justification for an organization’s existence is the satisfaction of customer wants and needs while meeting organizational objectives. 31. Companies that rely on the marketing concept and that have implemented a market orientation strategy recognize that: A. price is the most important variable for customers B. sales depend predominantly on an aggressive sales force C. what the customer thinks he or she is buying is what is important D. a company has to apply scientific management techniques to survive E. selling and marketing are essentially the same thing Answer: C Rationale: The perceived product and perceived value are what the customer is buying, and the marketing concept and market orientation have endeavored to understand those perceptions. 32. A company that has a market orientation and adheres to the marketing concept does NOT: A. integrate all the activities of the firm to satisfy customer wants B. focus on consumer needs and wants C. differentiate the firm’s products from its competitor’s products D. fuel sales growth through the application of aggressive sales techniques E. concentrate on long-term goal achievement (such as profits and growth) for the firm Answer: D Rationale: Aggressive sales techniques are part of the sales orientation and are not needed if a company is meeting the needs and wants of its customers. 33. Minor League Baseball (MiLB) suffers from sluggish attendance. To attract more fans to MiLB games, owners often resort to gimmicks––free hot dog nights, events designed to get into the Guinness World Records, and celebrity visits. Since baseball fans are seldom asked what would make them want to attend more games, this suggests most MiLB teams do not have a(n) _____ orientation. A. sales B. empowerment C. community D. societal E. market Answer: E Rationale: The marketing concept and a market-oriented philosophy is based on the consumers’ wants and needs, and the organization will focus its activities on satisfying these customers by listening to them and revising strategies as necessary. 34. A company adhering to the marketing concept will likely take which of the following steps if it learned that its customers were dissatisfied with its product? A. Hire more salespeople B. Decrease its organizational overhead C. Increase its advertising to underserved markets D. Increase the number of outlets in which the product is sold E. Conduct research to determine if its customers’ needs have changed Answer: E Rationale: A marketing concept and market-oriented philosophy are based on the consumers’ wants and needs, and the organization will focus its activities on satisfying these customers by listening to them and revising strategies as necessary. 35. The marketing concept involves: A. focusing on customers’ wants and needs so that the organization can distinguish its product (or products) from competitors’ products B. satisfying management’s needs and wants with the idea of maximizing profits in the short run C. selling as much product as possible under the assumption people will buy more goods and services if aggressive selling techniques are used D. selling as much as possible under the assumption consumers will buy more at lower prices E. focusing on production in order to increase product quality and lower prices Answer: A Rationale: This is the definition of the marketing concept. 36. The marketing concept stresses that the social and economic justification for an organization’s existence is the satisfaction of customer needs and wants while: A. producing a good or service at the lowest possible cost B. improving the general standard of living C. constantly increasing sales volumes D. applying scientific management techniques to improve efficiency E. simultaneously meeting organization objectives Answer: E Rationale: The marketing concept holds that the needs and wants of both the customer and the firm be served. 37. SAP, the world’s largest business software company, has pledged to put the “customer at the center” of their universe. SAP has captured the idea of: A. the 80/20 rule B. Maslow’s hierarchy of needs C. the marketing concept D. the sales orientation philosophy E. the societal concept Answer: C Rationale: The marketing concept justifies a company’s existence by its ability to satisfy customers. 38. When a homeowner visited The Home Depot to buy what he thought he needed to fix a leaking toilet, he gathered up materials totaling almost $70. One his way to check out, an employee asked him what was he trying to fix. After some discussion, the employee convinced the homeowner that a $5.99 replacement part would fix the problem better than the materials he thought he needed and with less trouble. This sort of discussion between employees and customers is commonplace at The Home Depot and indicates the retail store has a(n) _____ orientation. A. sales B. market C. product D. exchange E. production Answer: B Rationale: The marketing concept, the foundation of a market orientation, holds that the needs and wants of both the customer and the firm be served. 39. At The Container Store, every employee is trained to serve customers. Full-time salespeople receive 240 hours of training. The Container Store works to hire people who are self-motivated and have a passion for customer service. The Container Store has a _____ orientation. A. sales B. market C. product D. societal E. production Answer: B Rationale: The marketing concept, the foundation of a market orientation, holds that the needs and wants of both the customer and the firm be served. 40. A company that wants to implement a market orientation would need to: A. do research on its customers, competitors, and markets B. determine how to deliver superior customer value C. establish and maintain mutually satisfying relationships with customers D. implement actions that provide value to customers E. do all of the activities listed Answer: E Rationale: These are all options that make up a successful marketing orientation. 41. Mimi Couturier is a design company that specializes in formalwear for women. The company is known for challenging fashion mores. The company’s fashion designers use computer-assisted design software to create what it thinks women should wear. The company regularly hires industry experts to examine its factories to find waste and inefficiencies that can be eliminated. The company has expanded the number of products it offers for sale many times. However, for the last two years Mimi Couturier has lost money, and it has had to lay off some of its workforce. To avoid this occurrence in the future, Mimi Couturier should: A. hire more retail efficiency experts to trace down any production problems B. increase its sales force to find more potential customers for the firm C. have someone study its target market to see what needs and wants should be met by Mimi Couturier D. cut prices so that its prices will be at least 10 percent below those of its competitors E. design more sophisticated products that use the latest computer-aided techniques Answer: C Rationale: Mimi Couturier has been production-oriented. It should develop a market orientation, which means the firm will produce only those items needed by its target market. 42. Best Buy has become the nation’s largest specialty retailer by focusing on the customer’s needs and wants. This philosophy is at the heart of a(n) _____ orientation. A. sales B. market C. retail D. production E. exchange Answer: B Rationale: A market-oriented philosophy is based on the consumers’ wants and needs, and the organization will focus its activities on satisfying these customers by listening to them and revising strategies as necessary. 43. At www.mystarbucksidea.com, customers are encouraged to share their ideas and thoughts about how Starbucks can better serve its customers. Starbucks customers told management that they wanted to be recognized for choosing Starbucks coffee. So Starbucks instituted the My Starbucks Reward program with money-saving benefits to their Starbuck cardholders. Starbucks is an example of a company with a _____-oriented philosophy. A. transaction B. sales C. product D. society E. market Answer: E Rationale: A market-oriented philosophy is based on consumers’ wants and needs, and the organization will focus its activities on satisfying these customers by listening to them and revising strategies as necessary. 44. At the Lands’ End Web site, a customer can chat online with customer service representatives while shopping. This live help allows the customer to have questions answered before placing an order. This focus on meeting customer needs illustrates a(n) _____ orientation. A. societal B. market C. sales D. production E. one-to-one Answer: B Rationale: A market-oriented philosophy is based on the consumers’ wants and needs, and the dealer satisfies these needs by providing excellent customer service. Building a relationship with these customers is an important key. 45. After hearing his company criticized for its failure to respond to consumer needs, the CEO of a bank realized that his company needs to adhere to the marketing concept and implement a market-oriented strategy. Which of the following actions would be the best approach to achieving this goal? A. Reorganizing the company and making marketing its most important department B. Hiring new salespeople to find new customers C. Expanding the advertising budget to make potential customers more aware of its product offerings D. Creating cross-functional teams and instructing them to focus on creating greater customer value E. Hiring a new product development manager Answer: D Rationale: Market-oriented companies are successful in getting all business functions working together to deliver customer value. 46. Jacques Torres Chocolate is a factory and retail store in Brooklyn. Its owner is willing to try to produce new products when his customers suggest them––such as chili-pepper-laced chocolate candy. His only condition is that when he adds new products, his customers have the final say on whether the product is of any value. According to Torres, “If something doesn’t move, that’s the last time you see it.” By focusing on customer’ wants, the chocolate company exhibits a(n)_____ orientation. A. exchange B. product C. production D. sales E. market Answer: E Rationale: Torres understands that a sale occurs because a customer makes a decision to buy. 47. An organization with a(n) _____ believes that it exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve or enhance individuals’ and society’s long-term best interests. A. sales orientation B. market orientation C. ethical business mission D. focused target market strategy E. societal marketing orientation Answer: E Rationale: The societal marketing orientation extends the marketing concept by acknowledging that some products that customers want may not really be in their best interests or the best interests of society as a whole. 48. Most companies become sensitized to community issues after they’ve done enough damage to draw the locals’ anger. Dofasco, Inc., a highly successful steel company in Ontario, tries to get ahead of business and community issues by annually bringing together representatives from the local area and deciding which projects to improve the local environment will be implemented. This annual community-wide meeting indicates Dofasco has a _____ orientation. A. societal marketing B. sales C. reciprocal exchange D. production E. product Answer: A Rationale: Societal marketing orientation is the idea that an organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve individuals’ and society’s long-term best interests. 49. Life is good® no longer encloses its apparel in individual poly bags when shipping to customers because the management feels it harms the environment. This is an example of a _____ orientation. A. societal marketing B. sales C. reciprocal exchange D. production E. product Answer: A Rationale: Societal marketing orientation is the idea that an organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve individuals’ and society’s long-term best interests. 50. Procter & Gamble (P&G) decided to address the fact that Hispanic women are more likely to die from breast cancer because they’re reluctant to get mammograms or discuss screening. So P&G brought screening to the supermarket, parking mobile mammography vehicles in grocery store parking lots in Texas and inviting shoppers in for free x-rays. Tie-ins with local hospitals assured that women with suspicious films got follow-up care. P&G adopted a _____ orientation to achieve this goal. A. promotional B. societal marketing C. customer D. marketing E. product Answer: B Rationale: Societal marketing orientation is the idea that an organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve individuals’ and society’s long-term best interests. 51. Which of the following statements about the societal orientation is FALSE? A. Companies that protect the environment by using all-natural materials in their products are showing a societal marketing orientation. B. Marketers cannot deliver all benefits sought by customers, as these benefits may not be in the long-term best interests of the customers. C. The societal marketing concept is an important refinement of the market concept. D. Organizations have both a social and economic justification for their existence. E. The majority of consumers support environmentally friendly companies and willingly paying more for these products. Answer: E Rationale: While a majority of consumers report that environmental issues are important, they are not willing to make trade-offs for higher costs or lower performance. 52. Life is good® developed the “Good Karma” line of environmentally friendly 100% organic cotton apparel. The production of the Good Karma line is consistent with a _____ orientation. A. societal marketing B. supplier C. sales D. production E. philanthropic Answer: A Rationale: Societal marketing orientation is the idea that an organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve individuals’ and society’s long-term best interests. 53. Target shoppers can enroll in the Take Charge of Education® program so that Target will donate 1 percent of purchases made with a consumer’s REDcard, a Target credit card. The more money customers spend, the larger the donation to the consumer’s school of choice. By instituting the Take Charge of Education® program to help local schools, Target has shown a _____ orientation. A. societal marketing B. supplier C. sales D. production E. philanthropic Answer: A Rationale: Societal marketing orientation is the idea that an organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve individuals’ and society’s long-term best interests. 54. Jewelry stores want to provide their customers with the highest quality of diamonds available at the lowest possible prices. Unfortunately, the lowest priced diamonds these days are sold by African rebels who use the profits to engage in genocide. Human rights organization have asked jewelers to buy diamonds that are “conflict free”––that is, from South Africa, Australia, or Canada. LeeBrant is one retail jewelry store that sells only diamonds that are certified to be from these countries. LeeBrant is exhibiting which marketing management orientation? A. Production B. Sales C. Societal marketing D. Direct E. Omnipotent Answer: C Rationale: LeeBrant has a societal marketing orientation because it is not only trying to satisfy customers’ wants but also is trying to enhance society’s long-term best interests. The other jewelers that continue to sell diamonds purchased from the rebels are more interested in satisfying their customers’ desire for lower prices than in serving society. 55. Which marketing management philosophy focuses on the question, “What do customers want and need, and how can we benefit society?” A. Internal B. External C. Sales D. Societal marketing E. Production Answer: D Rationale: The societal marketing concept extends the marketing concept by acknowledging that some products that customers want may not really be in their best interests or in the best interests of society as a whole. 56. The sales and market orientations differ on all of the following characteristics EXCEPT: A. those to whom the product is directed B. the firm’s performance C. the firm’s business D. the firm’s primary goal E. the tools to achieve goals Answer: B Rationale: These two orientations differ with respect to the organization’s focus, the firm’s business, those to whom the product is directed, the firm’s primary goal, and the tools used to achieve those goals. 57. Market-oriented firms primarily focus their efforts upon: A. improving the technological skills and competitive advantages of the firm B. satisfying the organization’s needs for low overhead C. achieving the company’s societal responsibilities inexpensively D. distributing goods and services E. satisfying the wants and needs of their customers Answer: E Rationale: Market-oriented firms are focused outward toward their customers. 58. Which of the following statements about a typical sales-oriented business is TRUE? A. The company develops its products to meet the needs of specific groups of people. B. The primary goal of the company is profit through customer satisfaction. C. The company invests the majority of its resources in promoting its products and services. D. The company is in business to satisfy customer wants and needs and deliver superior value. E. All of these statements about a typical sales-oriented business are true. Answer: C Rationale: Sales-oriented firms focus on selling what the organization makes rather than making what the market wants. 59. _____ is defined as the relationship between benefits and the sacrifice necessary to obtain those benefits. A. Opportunity cost B. Marketing utility C. Market quality D. Satisfaction percentage E. Customer value Answer: E Rationale: This is the definition of customer value. 60. The U.S. Postal Service (USPS) argues that its express service is comparable to what is offered by FedEx and that its prices are much lower. Yet, FedEx dominates with more than a 45 percent share of the express-delivery market. Which of the following statements describes this situation? A. The USPS is perceived as offering greater customer value. B. FedEx is perceived as offering greater customer value. C. FedEx and the USPS offer the same customer value. D. Customer value is not an issue in deciding which express-delivery service to use. E. The USPS should lower its prices even further to increase market share. Answer: B Rationale: Customer value is defined as the relationship between benefits and the sacrifice necessary to obtain those benefits. 61. Marketers interested in offering customer value can: A. offer products that perform B. give the consumer facts C. offer organization-wide commitment to service and after-the-sale support D. avoid unrealistic pricing E. do all of these Answer: E Rationale: Marketers interested in offering customer value can achieve this by offering products that perform well (option A), providing consumers with factual information (option B), demonstrating organization-wide commitment to service and after-the-sale support (option C), and avoiding unrealistic pricing (option D). By integrating these strategies, marketers can effectively deliver superior customer value, enhancing customer satisfaction and loyalty. This comprehensive approach ensures that all aspects of the customer experience align with their expectations and needs, fostering long-term relationships and competitive advantage. 62. Chaz loves to play a Disney online pirate game in which he gets to create a pirate by choosing hair color, skin color, clothing, and physical features. Then he gets to choose from a variety of quests and can sail a ship, dig for treasure, fight skeleton pirates, or fight the British Navy. This game provides what element of value? A. Offering products that perform B. Earning of trust C. Avoiding unrealistic pricing D. Giving facts E. Co-creation Answer: E Rationale: Co-creation allows customers to help create their own experience. 63. Which of the following is the customers’ evaluation of a good or service in terms of whether that good or service has met their needs and expectations? A. Value B. Perception C. Attitude D. Dissonance E. Satisfaction Answer: E Rationale: This is the definition of customer satisfaction. 64. When customer expectations regarding product quality, service quality, and value-based price are met or exceeded, _____ is created. A. a value line B. a quality rift C. planning excellence D. customer satisfaction E. expectation satisfaction Answer: D Rationale: Customer satisfaction is the customers’ evaluation of a good or service in terms of whether that good or service has met their needs and expectations. 65. Ninety-six percent of USAA home insurance policy holders report that USAA representatives meet their commitment in calling back customers quickly about claims. The most likely result of USAA’s efforts is: A. management empowerment B. retailer-customer synergy C. customer satisfaction D. transactional marketing E. disintermediation Answer: C Rationale: When customer expectations regarding product quality, service quality, and value-based price are met or exceeded, customer satisfaction is created. 66. Xerox emphasizes _____ by replacing at its own expense any dissatisfied customer’s equipment within a period of three years after purchase. A. management empowerment B. management-customer synergy C. customer satisfaction D. transactional marketing E. direct selling Answer: C Rationale: When customer expectations regarding product quality, service quality, and value-based price are met or exceeded, customer satisfaction is created. 67. _____ is a strategy that focuses on keeping and improving relationships with current customers. A. Commitment selling B. Relationship marketing C. Transactional marketing D. Market engineering E. Organization-customer synergy Answer: B Rationale: This is the definition of relationship marketing. 68. Networkcar.com sells a plug-in device that connects to computer diagnostic ports that are standard on cars. The device beams signals to dealers who can remotely diagnose or spot trouble, allowing car dealerships to maintain a closer bond with their customers by offering maintenance before a problem leaves customers with an inoperable or possibly dangerous car. With the device, dealers can better engage in: A. management empowerment B. management-customer synergy C. relationship marketing D. transactional marketing E. direct selling Answer: C Rationale: Relationship marketing is a strategy that entails forging long-term partnerships with customers. 69. Kellogg’s gives consumers the chance to receive a free DVD. Consumers who buy five boxes of specially marked cereal can cut out the coupons and mail in their completed official form to get a free DVD. Kellogg’s is engaging in: A. transactional marketing B. sports distribution C. relationship marketing D. one-to-one marketing E. customer transformation Answer: C Rationale: Relationship marketing is a strategy that entails forging long-term partnerships with customers. 70. Frequent-flyer programs are an example of financial incentives to customers in exchange for their continuing patronage. After flying a certain number of miles or flying a specified number of times, the frequent-flyer program participant earns a free flight or some other award such as free lodging. Airlines that use frequent-flyer programs are practicing: A. commitment selling B. transaction marketing C. transformational marketing D. marketing engineering E. relationship marketing Answer: E Rationale: The strategy that entails forging long-term partnerships with customers is called relationship marketing. 71. Greenberg Smoked Turkey, Inc. is a nationwide mail-order business that operates without any advertising. It does not accept credit cards, has no toll-free number for customers to call, and does not have a Web site. This hopelessly old-fashioned company is also very profitable with thousands of devoutly loyal customers––some of whom have ordered Greenberg smoked turkeys every year for the last 50 years. Greenberg more than likely uses _____ to maintain these long-term ties to its customers. A. reactive marketing B. synergistic management C. relationship marketing D. a sales orientation E. management empowerment Answer: C Rationale: Relationship marketing is a strategy that entails forging long-term partnerships with customers. 72. The Geek Squad is a tech support station located inside every Best Buy electronics retail store. Best Buy gives intensive training to the Geeks. The purpose of this training is to: A. improve customer service B. give higher education benefits to employees C. promote the company image by increasing public awareness D. reduce the need of empowerment E. increase employment levels Answer: A Rationale: Leading marketers recognize the role of employee training in customer service. 73. Some market-oriented firms give employees expanded authority to solve customer problems on the spot. This is known as: A. training B. deregulation C. empowerment D. commissioning E. mediating Answer: C Rationale: Empowerment is the delegation of authority to solve customer problems quickly, usually by the first person the customer notifies regarding a problem. 74. _____ gives customers the feeling their concerns are being addressed and at the same time gives employees the feeling their expertise matters to management. A. Management-employee synergy B. Organizational entropy C. Managerial reciprocity D. Empowerment E. Delegation Answer: D Rationale: Empowerment is the delegation of authority to solve customers’ problems quickly, usually by the first person the customer notifies regarding a problem. 75. The Ritz-Carlton has Service Values that guide employees in providing its Gold Standard service. One of the service values states, “I own and immediately resolve guest problems.” The Ritz-Carlton management uses _____ to provide customer service. A. training B. deregulation C. empowerment D. commissioning E. mediating Answer: C Rationale: Empowerment is the delegation of authority to solve customers’ problems quickly. 76. As part of instituting an empowerment program, a marketing director should: A. hire college graduates who have the latest training in marketing management techniques B. create a customer service department and place a key staff person in charge of the department C. train the company’s staff to judge the quality of the products the firm produces D. allow non-management employees to resolve problems on their own without prior approval from their immediate supervisors E. conduct a survey of the company’s marketing staff to learn about employee morale Answer: D Rationale: Empowerment occurs when firms give employees expanded authority to solve customer problems on the spot without having to get management’s permission first. 77. _____ is the collaborative efforts of people to achieve common objectives. A. Effort training B. Teamwork C. Empowerment D. OJT training E. Mediation Answer: B Rationale: This is the definition of teamwork. 78. TUFF SHED, Inc. is one of the leading suppliers of installed storage buildings and garages in the United States. TUFF SHED mandates that sales, management, and construction teams work together to anticipate and eliminate potential problems. They make sure customers get the right buildings for their needs, and they all are built well and in a timely manner. By using teamwork, TUFF SHED: A. operates successfully using a production orientation B. provides its customer with a high level of satisfaction C. has a high employee turnover rate D. does not deliver superior customer service E. has a sales orientation Answer: B Rationale: Teamwork is one way a company with a market orientation creates customer satisfaction. 79. A sales-oriented firm defines its business (or mission) in terms of: A. employees B. goods and services C. customers D. competitors E. benefits Answer: B Rationale: A sales-oriented firm focuses inward on its products and services. 80. A firm that wants to develop a deeper understanding of its customers may optimize profitiablity, revenue, and customer satisfaction by focusing on highly defined and precise customer groups. This is: A. Customer optimization B. Customer Relationship Management C. Sales Orientation D. Sales Maximization E. All of these Answer: B Rationale: This is the definition of Customer Relationship Management 81. A market-oriented firm defines its business in terms of: A. goods and services B. the benefits its customers seek C. employee empowerment D. competitive position E. customer satisfaction Answer: B Rationale: A market-oriented firm is defined in terms of the benefits its customers seek. 82. Redefining the business mission of a mattress manufacturer as “a good night’s sleep” rather than stating the mission as “the manufacture of high-quality mattresses” will: A. not stimulate an awareness of changes in consumer desires B. be too broad a statement to be of any real use in serving customers C. stifle creativity in discovering opportunities to serve customers D. help ensure the firm retains its focus on consumers E. ensure the core products will be retained Answer: D Rationale: The broader business mission of “a good night sleep” will stimulate innovation and creativity because not all sleep aids are mattresses. It will lead the company to further growth. 83. One of the reasons given for the decline of the passenger rail industry in the United States is that the industry defined its mission as trains and not as transportation sources. The railroad industry failed to: A. define its mission in terms of the benefits its customers seek B. ignore the marketing concept of serving customer needs and wants C. realize “customers only want what they know” D. have a sales orientation E. empower the consumer Answer: A Rationale: A market-oriented firm defines its business in terms of the benefits its customers seek. Because of the limited way the railroad industry defined its business, it missed an opportunity to define itself in terms of the benefits customers were seeking. 84. Walker Farms heard from many of its customers that they would like organic produce. As a result, Walker Farms became a certified organic farm. Walker realized that while not all consumers were willing to pay the higher prices for organic produce, his customers wanted the organic produce. Walker realized: A. he missed sales by not concentrating on the average customer B. different customer groups have different needs and wants C. he is a sales-oriented farm D. his business is about selling the cheapest vegetables E. his aim is a goal of profit through maximum sales volume Answer: B Rationale: One way to implement the marketing concept is to concentrate on the needs of specific groups of customers. 85. One way to identify the orientation of a firm is to examine its primary goal. If a firm seeks to achieve profitability through sales volume, it would probably be: A. promotion-oriented B. price-oriented C. sales-oriented D. production-oriented E. retail-oriented Answer: C Rationale: A sales-oriented organization seeks to achieve profitability through sales volume and tries to convince potential customers to buy. 86. All of the following are basic marketing mix decisions EXCEPT: A. sales B. price C. product design D. place (distribution) E. promotion Answer: A Rationale: The four marketing mix decisions include product decisions, place (or distribution) decisions, promotion decisions, and pricing decisions. 87. The owner of Maine Kitchen Art bowls, spoons, and cutting boards knows marketing can make his company a success. He wants to rely solely on promotion as the technique for attracting customers. He advertises extensively in cooking magazines and provides retailers who carry his product with attractive displays. From this information, you know that Maine Kitchen Art has a _____ orientation. A. market B. societal C. production D. sales E. product Answer: D Rationale: A sales-oriented organization views promotions as the primary tool used to achieve its goals. 88. Fujifilm Computer Products has improved the efficiency and productivity of its plant, which manufactures printing technology. For the new fiscal year, the company projects a production increase of 25 percent and has instructed its sales force to aggressively distribute and promote the product. The CEO is sure the market will absorb more product if the sales force is determined and assertive. Apparently Fujifilm: A. has an outward organizational focus on its customers wants and preferences B. seeks its goals primarily through the use of intensive promotion C. directs its products to specific groups of people D. is in the business of satisfying customers E. profits through customer satisfaction Answer: B Rationale: Fujifilm definitely has a sales orientation. 89. _____ is the primary tool used by a sales-oriented organization to achieve its corporate goals. A. Price B. Promotion C. Product design D. Place (distribution) E. Production Answer: B Rationale: A sales-oriented organization seeks to generate sales volume based upon intensive promotional activities. 90. All of the following are good reasons to study marketing EXCEPT: A. Marketing creates consumer needs. B. Marketing plays an important role in society, coordinating the huge numbers of transactions needed to provide goods and services. C. Marketing is a key function in business. D. Marketing offers outstanding career opportunities. E. Marketing affects your day-to-day life as a consumer. Answer: A Rationale: Marketing may create consumer wants, but it does not create consumer needs. 91. What is the fundamental objective of most businesses? A. employee empowerment, teamwork, and relationship marketing B. satisfied stakeholders C. low costs and high quality D. customer loyalty and retention E. survival, profits, and growth Answer: E Rationale: The use of marketing allows businesses to achieve this objective. Ritz-Carlton Hotels Cesar Ritz, the founder of the original Ritz-Carlton, Boston, was known as the “king of hoteliers and the hotelier to kings.” Today, there are more than 70 Ritz-Carlton hotels spanning 24 countries with 38,000 employees. These are not typical employees, though. They are described as “Ladies and Gentlemen serving Ladies and Gentlemen.” Employees participate in an intensive orientation program and recertification programs throughout their careers with the company, and many are allowed $2,000 to fix a guest’s problem on the spot without managerial approval. So renowned is the Ritz way of doing business that the company offers a Leadership Center for executives and managers of other companies to learn and implement the Ritz way of customer service. But it doesn’t stop with employees. Ritz-Carlton hotels recently launched “Give Back Getaways” in 2008 that allow guests to volunteer in locales where they are vacationing. The hotel also offers “Vow to Help Others,” which is a program that donates a portion of a wedding couple’s reception costs to those in need. The chief operating officer’s words sum up Ritz-Carlton’s philosophy best: “If we really do our job, we really don’t need sales anymore. Satisfied guests are your advertising.” 92. Refer to Ritz-Carlton Hotels. The chief operating officer’s statement regarding sales and advertising illustrates which marketing management philosophy embraced by this company? A. Sales B. Market C. Production D. Societal E. Promotional Answer: B Rationale: A market orientation is a philosophy that assumes that a sale does not depend on an aggressive sales force but rather on a customer’s decision to purchase a product. 93. Refer to Ritz-Carlton Hotels. The “Give Back Getaways” and “Vow to Help Others” programs offered by Ritz-Carlton hotels are applications of which marketing management philosophy? A. Societal B. Sales C. Production D. Market E. Retail Answer: A Rationale: The societal marketing orientation is the idea that an organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve or enhance individuals’ and society’s long-term interests. 94. Refer to Ritz-Carlton Hotels. Ritz-Carlton embodies an organization-wide commitment to service and support so that customers attain benefits relative to the price they pay for this service. Which element of an organization’s focus is this commitment satisfying? A. Empowerment B. Customer value C. Customer acquisition D. Creativity E. Primary goal making Answer: B Rationale: Customer value is the relationship between benefits and the sacrifice necessary to obtain those benefits. 95. Refer to Ritz-Carlton Hotels. Customer-oriented personnel, effective training programs, employees with authority to make decisions and solve problems, and teamwork all work together at Ritz-Carlton to implement which type of strategy? A. relationship marketing B. social marketing C. internal marketing D. external marketing E. empowered marketing Answer: A Rationale: Most successful relationship marketing strategies depend on customer-oriented personnel, effective training programs, employees with authority to make decisions and solve problems, and teamwork. 96. Refer to Ritz-Carlton Hotels. A guest’s suitcase was lost while in the care of hotel employees, and that guest needed his suit for an important business meeting. The desk clerk took the guest to a local mall to purchase clothing and shoes totaling $850. The fact that Ritz-Carlton employees have the authority to solve customers’ problems quickly illustrates that these employees are given: A. authority training B. customer value giving C. cross-utilization D. teamwork E. empowerment Answer: E Rationale: Empowerment is the delegation of authority to employees to solve customers’ problems quickly, usually by the first person the customer notifies regarding a problem. Circuses As recently as 20 years ago, circuses came to town with tents, animals, clowns, and other performers. An advance man arrived about two weeks before the circus actually arrived, covered the community with posters, and gave out free tickets to schoolchildren. If the advance man had done a good job, when the circus arrived and opened its tent doors, 300 to 600 people would fill its seats. When the largest circus organizations merged, the newly formed Ringling Bros. and Barnum & Bailey’s Greatest Show on Earth began performing in 4,000-seat arenas. Attendance, however, has stagnated in recent years. People have stopped going to the circus because they miss the circus tent and the intimate atmosphere it created. The newest thing in circuses is a return to the tent atmosphere with an emphasis on the types of entertainment that were popular years ago. Antique circus wagons, calliope music, and cotton candy are replacing the exotic animals and the prima donna performers. To satisfy the needs of this new audience, the tent circus now sells lattes and wine. 97. Refer to Circuses. Now circuses are trying to satisfy customers’ needs and wants and to profit through customer satisfaction. They have adopted a _____ orientation. A. societal B. selling C. production D. market E. retail Answer: D Rationale: A market-oriented philosophy is based on consumers’ wants and needs 98. Refer to Circuses. To exhibit a societal marketing orientation, circuses could: A. rely on publicity and avoid any promotions B. empower their employees to satisfy customer wants C. donate a percentage of their profits to local educational institutions D. use relationship marketing E. emphasize customer value Answer: C Rationale: The philosophy called the societal marketing orientation states that an organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve or enhance individuals’ and society’s long-term best interests. 99. Refer to Circuses. One of the tent venues is called Barnum’s Kaleidoscope, and it is in a permanent location with the hopes that people who see the show will want to return and see it again as well as bring their friends and relatives to the production. Which of the following techniques would most likely advance this strategy of referrals and repeat business? A. Relationship marketing B. Empowerment C. Sales orientation D. Authority to delegate E. Transactional marketing Answer: A Rationale: Relationship marketing is a strategy that entails forging long-term partnerships with customers. 100. Refer to Circuses. The aggressive promotions used by advance men indicate that decades ago the circuses probably had a _____ orientation. A. sales B. market C. production D. societal E. product Answer: A Rationale: Sales-oriented organizations achieve their sales goals primarily through intensive promotion. 101. Refer to Circuses. The circus’s goal of redesigning the circus experience is being completed through the coordination of many marketing activities, such as value pricing, a product that includes exciting performances, tent venue locations, and promotion. These activities make up the _____ for the circuses. A. opportunity analysis B. value of marketing C. marketing environment D. target market E. marketing mix Answer: E Rationale: Marketing mix elements include product, place, promotion, and price. Starbucks Loyalty Rewards The first Starbucks opened in 1970 in Seattle, Washington. The demand for its coffee grew, and Starbucks added more than 6,000 stores located in over 30 countries. In its more than 30-year history, Starbucks has never given out coupons for its coffee. Starbucks needed only to make its coffee and customers came. Recently, consumer quality perception of the Starbucks brand has started to fall. Starbucks started a consumer response blog to learn more about what consumers expect from Starbucks. One of the most common requests was for a customer rewards program. In response, Starbucks started My Starbucks Rewards, which offers free refills on brewed coffee, free beverage with whole bean purchase, beverage customization, and free Wi-Fi. Starbucks also put coupons in a national newspaper for those consumers who love coupons and created a new brew of coffee for those who prefer a milder coffee taste. Starbucks is hoping that these improvements will restore customers’ loyalty and confidence. 102. Refer to Starbucks. Which of the four conditions did NOT exist in the minds of the Starbucks consumer, resulting in declining sales? A. Each party having something of value to give to the other party B. Each party being capable of communication and delivery C. Each party being free to accept or reject the exchange offer D. Each party believing it to be appropriate or desirable to deal with the other party E. There being at least two parties for exchange to occur Answer: A Rationale: Starbucks customers were not seeing the value of exchanging their money for Starbucks products. 103. Refer to Starbucks. For more than 30 years, Starbucks held the orientation of “If we build it, they will come.” This philosophy is most in line with a _____ orientation. A. sales B. market C. production D. societal E. product Answer: C Rationale: A production orientation means that management asks, “What do we do best?” In the Starbucks case, the company made great coffee and created an atmosphere where people wanted to spend time and money. 104. Refer to Starbucks. Starbucks customers wanted more value from their coffee. Starbucks management responded to customers through the Starbucks card rewards program. Which element of value was Starbucks management working to increase? A. Offering products that perform B. Earning trust C. Avoiding unrealistic pricing D. Giving the buyer facts E. Co-creation Answer: B Rationale: In order for Starbucks to continue to grow and prosper, it needed to keep its stable base of loyal customers happy. 105. Refer to Starbucks. The creation of a consumer response blog is an example of _____. A. how to increase sales B. technology at its best C. relationship marketing D. good training E. product improvements Answer: C Rationale: Relationship marketing is a strategy that focuses in keeping and improving relationships with current customers. 106. Refer to Starbucks. The fact that management realized that coffee drinkers had different needs, whether it be using coupons, wanting a milder brew of coffee, or using free Wi-Fi, shows that Starbucks is now using a _____-oriented approach. A. sales B. market C. production D. societal E. product Answer: B Rationale: A market-oriented organization recognizes that different consumer groups want different features or benefits. ESSAY 1. Explain how marketing is both a philosophy and a set of activities. Answer: The first facet of marketing is its philosophy. This philosophy is an attitude, perspective, or management orientation that stresses the importance of customer satisfaction. The second facet of marketing is the organization function and the set of activities used to implement this philosophy. These activities include (but are not limited to) planning, pricing, promotion, distribution, selling, advertising, and inventory management. 2. What is the American Marketing Association’s (AMA) definition of marketing and what does marketing entail? Answer: According to the AMA, marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. Marketing entails the processes that focus on delivering value and benefits to customers, not just selling goods, services, and/or ideas. 3. Describe the concept of exchange, and list the five conditions that must be satisfied for exchange to occur. If all conditions are met, does that guarantee exchange will occur? Explain why or why not. Answer: The concept of exchange simply means that people give up something in order to receive something they would rather have. Money, goods, or services may be the medium of exchange. The five conditions of exchange are: 1. There must be at least two parties. 2. Each party has something that might be of value to the other party. 3. Each party is capable of communication and delivery. 4. Each party is free to accept or reject the exchange offer. 5. Each party believes it is appropriate or desirable to deal with the other party. Exchange will not necessarily take place even if all these conditions exist. They are necessary for exchange to be possible, but unless the buyer and seller reach an agreement, an exchange will not take place. 4. Name and describe the four marketing management philosophies. Answer: PRODUCTION ORIENTATION. This orientation focuses firms on their internal production capabilities rather than the desires and needs of the marketplace. SALES ORIENTATION. This orientation assumes that buyers will purchase more of any item if aggressive selling techniques are used. Again, this orientation does not address the needs and wants of the marketplace. MARKET ORIENTATION. This orientation recognizes that a sale is dependent on the customer’s decision to purchase a product and provides increased responsiveness to customer needs and wants. To market-oriented firms, marketing means building relationships with customers. SOCIETAL MARKETING ORIENTATION. This orientation refines the marketing orientation by stating that the social and economic justification for an organization’s existence is the satisfaction of customer wants and needs while meeting the organization’s objectives and preserving or enhancing both individuals’ and society’s long-term best interests. 5. If a firm has a production orientation, what types of questions does management ask after assessing its resources? Answer: With a production orientation, management focuses on the internal capabilities of the firm. Management might ask: “What can we do best?” “What can engineering design?” and/or “What is economical and easy to produce with our equipment?” 6. An entrepreneur has set up a company to manufacture and market GPS systems for hunters. He has decided a sales orientation would best suit his new company. What are important considerations for this firm when it adopts this orientation? What are potential pitfalls of this orientation the owner needs to understand? Answer: The most important component for a sales orientation is an aggressive sales force. The sales force can push intermediaries to carry products or push consumers to purchase. For the entrepreneur in question, this is important, as hunters rarely buy GPS equipment directly from the manufacturer. Instead, GPS equipment is offered through specialty resellers. An aggressive sales force could help the entrepreneur sell his product in more outlets. However, despite a high-quality sales force, even aggressive salespeople cannot convince people to buy goods and services that are neither wanted nor needed. 7. Consider the following statement: “Relationship marketing is not possible in a firm embracing a production orientation.” Do you agree or disagree with this statement? Explain your answer. Answer: A company with a production orientation concentrates on what it can do best––its internal capabilities. Sometimes what the company produces is exactly what the customer wants, so it could be possible for a company to engage in relationship marketing (a strategy that entails forging long-term partnerships with customers) and still have a production orientation. However, the most successful relationship marketing strategies depend on customer-oriented personnel, effective training programs, employees with authority to make decisions and solve problems, and teamwork. 8. What is the marketing concept? According to the marketing concept, what determines if a sale will actually occur? Answer: The marketing concept is a simple and intuitively appealing philosophy that articulates a marketing orientation. It states that the social and economic justification for an organization’s existence is the satisfaction of customer wants and needs while meeting organizational objectives. It is based on an understanding that a sale does not depend on an aggressive sales force but rather on a customer’s decision to purchase a product. 9. Explain the marketing concept and market orientation. What three requirements are included in the marketing concept? Answer: The philosophy of the marketing concept states that the social and economic justification for an organization’s existence is the satisfaction of customer wants and needs while meeting organizational objectives. Market orientation involves obtaining information about customers, competitors, and markets; examining the information from a total business perspective; determining how to deliver superior customer value; and implementing actions to provide value to customers. The marketing concept includes: • focusing on consumer wants so the organization can distinguish its product(s) from competitors’ offerings • integrating all the organization’s activities, including production, to satisfy these wants • achieving long-term goals of the organization by satisfying customer wants and needs legally and responsibly 10. Explain the societal marketing orientation, and give an example of a company implementing this orientation. Answer: The societal marketing orientation is the idea that an organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve or enhance individuals’ and society’s long-term best interests. Students’ examples will vary depending upon what commercials, advertisements, and publicity they have been exposed to. All should select a company that exists not only to satisfy customers’ wants and needs and to meet organizational objectives but also to preserve or enhance individuals’ or society’s long-term best interests. 11. Explain how technology has changed the role of the consumer for today’s marketers. Answer: Technology has allowed consumers to become very well informed. They are able to find the lowest prices, the best quality, and the exact products or services to meet their needs. The internet is the main resource, but mobile technology has changed how bricks and mortar stores market to customers. By becoming educated, consumers are better equipped to spend their money where they receive the most customer value and or satisfaction. This mean manufacturers and retailers must understand their customers and offer them the prices and value they want. 12. What is customer value? What are the six ways marketers can make sure customers perceive their companies/products as sources of value? Answer: Customer value is the relationship between benefits and the sacrifice necessary to obtain those benefits. Marketers who want to be perceived by their customers as offering value can (1) offer products that perform, (2) earn trust, (3) avoid unrealistic pricing, (4) give the buyer facts, (5) offer organization-wide commitment in service and after-sales support, and (6) co-creation. 13. Compare and contrast the sales and market orientations using the following five characteristics as guidelines: (1) the organization’s focus, (2) in the firm’s business, (3) people to whom the product is directed, (4) the organization’s primary goal, and (5) tools used to achieve that goal. Answer: ORGANIZATION’S FOCUS. With a sales orientation, the firm’s focus is inward upon the firm’s own needs. With a market orientation, the focus is outward on the wants and preferences of customers. In particular, market-oriented firms create customer value, maintain customer satisfaction, and build long-term relationships. BUSINESS. A firm with a sales orientation is in the business of selling goods and services. A firm with a market orientation is in the business of satisfying consumer wants and needs. CUSTOMERS. A sales orientation directs the firm’s output at everybody, while a market orientation directs goods toward specific groups of people. PRIMARY GOAL. The primary goal of a firm with a sales orientation is to make profit through maximizing sales volume. The primary goal of a firm with a market orientation is to seek profit through customer satisfaction. TOOLS FOR GOAL ACHIEVEMENT. A sales orientation seeks to achieve goals primarily through intensive promotion. A market orientation achieves goals through coordinated use of a set of marketing activities. See Review Learning Outcome 3. 14. Discuss the elements needed to implement successful relationship marketing strategies. Answer: Most successful relationship marketing strategies depend on: CUSTOMER-ORIENTED PERSONNEL. An employee may be the only contact a customer has with the firm, so in that customer’s eyes, the employee is the firm. Any person, department, or division that is not customer oriented weakens the positive image of the entire organization. TRAINING. Training is important to quality customer service and relationship building. EMPOWERMENT. In empowerment, delegation of authority is used to solve customer problems quickly, usually by the first person the customer notifies regarding a problem. TEAMWORK. Teamwork is the collaborative efforts of people to accomplish a common objective. Job performance, company performance, product value, and customer satisfaction all improve when people in the same department or work group begin supporting and assisting each other and emphasize cooperation instead of competition. 15. List the three advantages of defining the company’s business in terms of the benefits customers seek instead of in terms of goods and services. Answer: (1) It ensures that the firm keeps focusing on customers and avoids becoming preoccupied with goods, services, or the organization’s internal needs. (2) It encourages innovation and creativity by reminding people there are many different ways to satisfy customer wants. (3) It stimulates an awareness of changes in customer desires and preferences so product offerings are more likely to remain relevant. 16. There are several important reasons to study marketing. Name three of these reasons. Answer: 1. Marketing plays an important role in society. 2. Marketing is important to businesses. 3. Marketing offers outstanding career opportunities. 4. Marketing affects your life every day. 17. Explain how marketing is important to business and society. Answer: Marketing contributes directly to the achievement of business objectives, including survival, profits, and growth. Marketing is concerned with assessing the wants and satisfactions of customers, designing and managing product offerings, determining prices, developing distribution strategies, and communicating with customers. Marketing is important to society because it efficiently distributes the output of farms and factories to the millions of consumers worldwide. Marketing makes products and services safely and conveniently available when buyers want them, in desired quantities, at accessible locations. 18. Explain how marketing affects consumers’ everyday life. How will the study of marketing enable you to be a better consumer? Answer: Every person participates in the marketing process as a consumer of goods and services. About half of every dollar spent pays for marketing costs. By developing an understanding of marketing, one can better understand the buying process, negotiate more effectively with sellers, and demand corrective action when products do not meet performance standards. Test Bank for MKTG Charles W. Lamb, Jr. Hair, Joseph F., Carl McDaniel 9781285091860