Chapter 01 Marketing In Today's Global Business Milieu True/False Questions 1. The American Marketing Association defines marketing as "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: In late 2007, the American Marketing Association announced a new "official" definition of marketing as follows: 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. Marketing is relevant only to people in the organization that work directly in the marketing department. Answer: False Rationale: One of the common misconceptions regarding marketing is that marketing departments "own" an organization's marketing initiative. In reality, everybody does marketing. 3. Of all the business fields, marketing is most visible to people outside the organization. Answer: True Rationale: Marketing as a field is highly public and readily visible outside the confines of the internal business operation. Of all the business fields, marketing is almost certainly the most visible to people outside the organization. 4. Substantiality refers to practices of socially responsible firms that incorporate doing well by doing good. Answer: False Rationale: Sustainability (and not substantiality) practices have helped socially responsible organizations incorporate doing well by doing good into their overarching business models so that both the success of the firm and the success of society at large are sustained over the long term. 5. A firm with a selling orientation assumes that "if you build it, they will come". Answer: False Rationale: A production orientation assumes that customers will beat a path to your door just because you have a great product that functions nicely. 6. Don Peppers and Martha Rogers popularized the term one-to-one marketing. Answer: True Rationale: Don Peppers and Martha Rogers have popularized the term one-to-one marketing, which advocates that firms should direct energy and resources into establishing a learning relationship with each customer and then connect that knowledge with the firm's production and service capabilities to fulfill that customer's needs in as custom a manner as possible. 7. Fred Wiersema's book The New Market Leaders states that marketers will continue to have more power than customers in both B2B and B2C markets. Answer: False Rationale: Fred Wiersema builds a powerful case that the balance of power is shifting between marketers and their customers, both in business-to-consumer markets and business-to-business markets. Wiersema's central point is that not only is a customer orientation desirable, but in today's market it is also a necessity for survival. 8. A patient's ability to come self-diagnosed and ready to self-prescribe to a doctor's clinic is an example of shift in information power. Answer: True Rationale: Between open direct-to-consumer advertising by pharmaceutical companies and innumerable Web sites devoted to every medical malady, more and more patients arrive at the doctor's office self-diagnosed and ready to self-prescribe. This shows that information power is shifting from marketer to customer. 9. Gen Yers tends to value relationships with marketers like State Farm Insurance in exactly the same way their parents do. Answer: False Rationale: GenY consumers tend to be much more receptive to electronic commerce as a primary mode of receiving marketing communication and ultimately purchasing than are prior generations. 10. Little m marketing refers to tactics and programs the firm uses to reach its stakeholders. Answer: True Rationale: Little m marketing serves the firm and its stakeholders at the functional or operational level. Hence, marketing (little m) is often thought of as tactical marketing. 11. Big M marketing refers to the strategic, long-term, firm-level commitment to investing in marketing for the purpose of enhancing organization performance. Answer: True Rationale: Big M marketing is often referred to as strategic marketing, which means a long-term, firm-level commitment to investing in marketing—supported at the highest organization level—for the purpose of enhancing organizational performance. 12. The concept of customer orientation needs to be understood by marketing and sales and service managers. Employees who work in accounting, finance, and manufacturing need to do their jobs well but rarely have an impact on customer service. Answer: False Rationale: Everyone in an organization, regardless of their position or title, must understand the concept of customer orientation, which places the customer at the core of all aspects of the enterprise. 13. Firms today are beginning to understand the importance of marketing metrics to assess marketing performance. Answer: True Rationale: Firms want to understand the pay-off in marketing investment and measurement of marketing's performance and contribution is a focal point in many firms. 14. "If it can't be measured, it can't be managed" refers to top management's need to quantify objectives and results. Answer: True Rationale: One of the important reasons for the intense focus on metrics is the quantification of objectives and results. 15. The international experience learning curve refers to the length of time it takes a company to export the first shipment of products into a foreign market. Answer: False Rationale: The understanding of marketing beyond home markets develops over time as a firm develops international business experience. This is called the global experience learning curve. The global experience learning curve moves a company through four distinct stages. The process is not always linear. Additionally, the amount of time spent in any stage can vary. 16. A company can do business with an international company and still not engage in direct foreign marketing. Answer: True Rationale: Many companies with indirect foreign marketing do business with international customers through intermediaries or limited direct contact. This is called indirect foreign marketing. 17. Companies often begin direct foreign marketing when they follow existing customers into foreign markets. Answer: True Rationale: Domestic customers with global operations may demand more service or place additional orders that require the company to work with their foreign subsidiaries. Companies often begin direct foreign marketing in this manner. 18. Walmart opened its first international store in Canada over 30 years ago. Answer: False Rationale: Walmart opened its first international store in Mexico City in 1991. 19. The scope of activities in direct foreign marketing is the same as in international marketing or global marketing and occurs with no modification. Answer: False Rationale: The scope of activities in the various stages of the global learning experience curve is different and requires substantial modification. 20. Absolute dependency on domestic markets is essential for a company's long-term growth. Answer: False Rationale: Companies cannot rely solely on their domestic markets for long-term growth. Technology and sophisticated distribution systems make it easy for a company anywhere in the world to become an international marketer. Multiple Choice Questions 21. The _______________ aspect of a firm is generally the most visible to people outside the organization. A. Financial management B. Accounting C. Marketing D. Information technology E. Operations management Answer: C. Marketing Rationale: A good portion of marketing is very public. Of all the business fields, marketing is almost certainly the most visible to people outside the organization. 22. Last year, a professional golfer made $100,000,000 from celebrity endorsements. This example is more relevant to which of the following marketing misconception? A. The sizzle B. Overstating claims C. Advertising D. Pushy salespeople E. Celebrities sponsor the worst products Answer: A. The sizzle Rationale: A common misconception about marketing is that it is all about sizzle. Some aspects of marketing are inherently fun and glitzy. But marketing is much more than that. 23. Marketing misunderstandings occur because many people think of marketing as _______________. A. Pushy salespeople B. Advertising and celebrity spokespersons C. The firm's department of advertising D. Overstated product claims E. All of the above Answer: E. All of the above Rationale: Many people think of marketing as pushy sales people or the firm's department of advertising. But marketing also has aspects that involve sophisticated research, detailed analysis, and thoughtful development of strategies and plans. 24. When you tell someone you are a marketing major in college, he or she may think you want a career in _______________. A. Management B. Information technology C. Sales D. Customer service E. Financial planning Answer: C. Sales Rationale: A common misconception about marketing is that it is all about selling. Selling, or more correctly "personal selling," is simply another method of marketing communication. 25. _______________ is NOT a marketing function. A. Research B. Advertising C. Brand development D. Public relations E. Research and development Answer: E. Research and development Rationale: Although marketers conduct consumer research, they do not conduct R&D. 26. Peter Drucker, the father of modern management, stated that the only definition of a business purpose is _______________. A. To create products B. To make products affordable and accessible to the majority of the public C. To improve the quality of life for all people D. To create a customer E. To respect the environment Answer: D. To create a customer Rationale: According to Peter Drucker, "it is the customer who determines what a business is. For it is the customer, and he alone, who through being willing to pay for a good or service, converts economic resources into wealth, things into goods." 27. Peter Drucker, the father of modern management, believed that marketing _______________. A. Should be a separate function within the business B. Is the business as seen from an internal point of view C. Is the business as seen from the customer's point of view D. Should be considered solely as a department contributing to the firm's success E. Should improve the quality of life for society Answer: C. Is the business as seen from the customer's point of view Rationale: Peter Drucker says, "Marketing is so basic that it cannot be considered a separate function (i.e., a separate skill or work) within the business . . . it is, first, a central dimension of the entire business. It is the whole business . . . seen from the customer's point of view." 28. The makers of Milk Bone dog biscuits recently launched a media campaign to promote Canine Assistants, a nonprofit group that provides service dogs to people with disabilities. This type of marketing may be called _______________. A. National marketing B. Global marketing C. Animal marketing D. Societal marketing E. Brand marketing Answer: D. Societal marketing Rationale: At the broadest conceptual level, members of society at large can be viewed as a stakeholder for marketing, a concept called societal marketing. The makers of Milk Bone dog biscuits are trying to do well by doing good. So this type of marketing is called as societal marketing. 29. AMA's current official definition of marketing reflects the view towards marketing activities as _______________. A. Focused on strategy B. Focused on tactics like using electronic commerce and new media like You Tube C. Focused on activities throughout the organization, not just a department D. Focused on value, through creating, communicating, delivering and exchanging offering that create value E. A, C and D Answer: E. A, C and D Rationale: The American Marketing Association defines marketing as follows: 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. 30. After a recent 141-day strike, union members at area grocery stores in California went back to work. The union negotiated raises, better healthcare benefits, and a one-tier pay scale. The role of the union may best be described as a(n) _______________. A. Governmental body B. Stakeholder C. Vendor D. Internal customer E. Management group Answer: B. Stakeholder Rationale: Stakeholders are anyone within or outside the firm with whom marketing interacts and is impacted by or impacts. 31. Companies that promote sustainability practices like Starbucks, that has a stringent recycling program, or General Electric, that makes compact fluorescent light bulbs (CFLs), are practicing _______________. A. Green marketing B. Public relations C. Publicity D. Shotgun marketing E. One-to-one marketing Answer: A. Green marketing Rationale: Green marketing refers to the concept of environmentally friendly marketing. 32. _______________ refers to business practices that meet humanity's needs without harming future generations. A. Sustainability B. Public relations C. Publicity D. Value E. Relationship orientation Answer: A. Sustainability Rationale: Sustainability refers to business practices that meet humanity's needs without harming future generations. Sustainability ensures that both the success of the firm and the success of society at large are sustained over the long term. 33. Which of the following is less likely to be considered as a condition to be fulfilled for an exchange to take place? A. Communication and delivery capabilities B. Minimum requirement of two parties C. Free will to accept or reject the exchange offer D. Desirability to deal with parties E. Assurance of exchange Answer: E. Assurance of exchange Rationale: For any exchange to take place, five conditions must be present. However, the existence of these conditions does not guarantee that an exchange will take place. 34. Bryan gets reduced fees for his daughter's piano lessons by maintaining her teacher's Web site. Bryan is practicing the central tenet of marketing called _______________. A. Value B. Exchange C. Growth D. Sustainability E. Customization Answer: B. Exchange Rationale: A central tenet of marketing is the concept of exchange, in which people give up something of value to them for something else they desire to have. Usually an exchange is facilitated by money, but not always. 35. Value may be defined as the ratio of bundled benefits received to the cost incurred by the customer to receive those benefits. _______________ is NOT thought of as one of the costs. A. Monetary cost B. Time to shop C. Skill or expertise D. Poor service quality E. Customer satisfaction Answer: E. Customer satisfaction Rationale: Customer satisfaction is considered a benefit of the value bundle (and not a cost). 36. Henry Ford is well known to business students for creating the assembly line that enabled mass production of the Model T. This is an example of _______________. A. Production orientation B. Selling orientation C. Marketing orientation D. Buzz marketing orientation E. Business orientation Answer: A. Production orientation Rationale: Production orientation focuses on improving products and production efficiency without much regard for what is going on in the marketplace. 37. The stereotypical automobile dealership uses tactics like high pressure and bargaining to get customers to buy. This is an example of _______________. A. Production orientation B. Selling orientation C. Marketing orientation D. Buzz marketing orientation E. Business orientation Answer: B. Selling orientation Rationale: Selling orientation assumes that salespeople need to push the product into the hands of customers, both businesses and end users. 38. High pressure selling _______________. A. Is practiced today by most companies B. Has a marketing orientation C. Sparked laws to protect consumers D. Is totally a thing of the past E. Is endorsed by the American Marketing Association Answer: C. Sparked laws to protect consumers Rationale: During the sales orientation era, salespersons pushed product on customers. Gradually, customers grew wary of high-pressure selling, sparking laws at all levels to protect consumers from unscrupulous salespeople. 39. Companies that conduct research using focus groups, consumer surveys, and in-person interviews most likely have a _______________. A. Production orientation B. Selling orientation C. Marketing orientation D. Buzz marketing orientation E. Business orientation Answer: C. Marketing orientation Rationale: The notion of market orientation takes the guiding business philosophy of the marketing concept and works to more usefully define just how to implement it within a firm. 40. The marketing concept was introduced _______________. A. Immediately after the Civil War B. Immediately after World War I C. Immediately after the Great Depression D. In the 1950s E. In the 1960s Answer: D. In the 1950s Rationale: In the 1950s, growing frustration with high pressure selling sparked a shift in the focus of American business from sales orientation to marketing concept, which is an organization-wide customer orientation with the objective of achieving long run profits. 41. Which of the following company's annual report has often been cited as the first to articulate the marketing concept in writing in the Annual Report? A. Ford Motor Company B. AT&T C. RCA D. General Motors E. General Electric Answer: E. General Electric Rationale: General Electric's 1952 Annual Report is often cited as the first time the marketing concept was articulated in writing by a major corporation. 42. Making a change in any of the marketing mix elements will _______________. A. Leave the other elements unchanged B. Possibly have an impact on another element C. Have a domino effect on the other elements D. Require the firm to introduce new products E. Require an increase in promotion Answer: C. Have a domino effect on the other elements Rationale: Marketing mix refers to a combination of 4Ps of marketing: product, price, place, and promotion. Making a change in any one of these elements tends to result in a domino effect on the others. 43. Creating, communicating, delivering, and exchanging offerings that have value may be thought of as _______________. A. The marketing mix or 4 Ps B. The firm's strategic plan C. Sales orientation D. Production orientation E. Exchange Answer: A. The marketing mix or 4 Ps Rationale: Marketers have traditionally defined product, price, place, and promotion as the 4 Ps. 44. The characterization of an offering as a solution refers to _______________. A. Product B. Branding C. Service D. Pricing E. Distribution Answer: A. Product Rationale: This statement implies that the company understands the customers' needs and wants and has developed solutions for them. 45. Delivering value focuses on _______________. A. Product B. Branding C. Service D. Pricing E. Distribution Answer: E. Distribution Rationale: This statement indicates that the company goes beyond physical distribution and implies effective supply chain management and retailing. 46. _______________ today is widely regarded in terms of value. A. Product B. Branding C. Service D. Pricing E. Distribution Answer: D. Pricing Rationale: From a customer's perspective, value is defined as a ratio of the bundle of benefits received to the costs incurred by the customer in acquiring that bundle of benefits. 47. The Clean-O Company makes an all-purpose cleaner for the hospital and nursing home market that is guaranteed to kill 99% of staphylococcus germs, a major concern for medical facilities. The company is not interested in pursuing the consumer market. Clean-O has adopted a _______________. A. Market orientation B. Mass customization orientation C. Differentiation orientation D. Selling orientation E. Production orientation Answer: C. Differentiation orientation Rationale: Differentiation enables the firm to serve very specific customer groups through segmentation and targeting. 48. Fernandez Brothers, Inc. provides accounting services to small businesses. Before and after tax season, the partners meet with each client company. It sends a monthly newsletter to update clients with tax changes. The firm's business practices revolve around putting the customer at the center when developing services and practices. Fernandez Brothers has adopted a _______________ approach. A. Market orientation B. Mass customization orientation C. Differentiation orientation D. Relationship orientation E. Product orientation Answer: D. Relationship orientation Rationale: Keeping and cultivating current customers is far more profitable than constantly having to invest in gaining new customers that come with unknown return on investment. Since Fernandez Brothers, Inc. is interested in building and maintaining long-term relationships with its customers, the approach adopted is relationship orientation. 49. Customers may visit the Land's End clothing Web site and order a pair of jeans that will be made especially for them. Land's End has adopted a _______________ approach. A. Market orientation B. Mass customization orientation C. Differentiation orientation D. Product orientation E. Relationship orientation Answer: B. Mass customization orientation Rationale: Some firms come close to one-to-one marketing by employing mass customization, in which they combine flexible manufacturing with flexible marketing to greatly enhance customer choices. 50. Don Peppers and Martha Rogers promote the idea of _______________. A. Market orientation B. Mass customization orientation C. Differentiation orientation D. One-to-one marketing orientation E. Relationship orientation Answer: D. One-to-one marketing orientation Rationale: Don Peppers and Martha Rogers have popularized the term one-to-one marketing, which advocates that firms should direct energy and resources into establishing a learning relationship with each customer and then connect that knowledge with the firm's production and service capabilities to fulfill that customer's needs in as custom a manner as possible. 51. The concept of engaging in a learning relationship with customers and directing the firm's resources to making each product or service to feel tailored is known as _______________. A. Market orientation B. Product orientation C. Differentiation orientation D. One-to-one marketing orientation E. Relationship orientation Answer: D. One-to-one marketing orientation Rationale: One-to-one marketing orientation uses firm's production and service capabilities to fulfill customer's needs in as custom a manner as possible. 52. _______________ is NOT part of the marketing mix. A. Product B. Distribution C. Promotion D. Price E. Manufacturing Answer: E. Manufacturing Rationale: Manufacturing is an operational function. 53. High tech media options like cell phones and the Internet have had a huge impact on the _______________ aspect of marketing. A. Product B. Promotion C. Price D. Distribution E. Research Answer: B. Promotion Rationale: Changes in the approach to promotions today lie in consumer technology. 54. XYZ department store advertises the "biggest sale of the year" every weekend and offers extra bargains to early bird customers. ABC department store advertises seasonal sales and employees send handwritten notes to customers who spend more than a certain amount of money. This implies that _______________. A. XYZ is long-term oriented and ABC is short-term oriented B. XYZ is focused on selling and ABC is focused on relationship building C. Both firms are trying to achieve the same goal of profitability so tactics do not matter D. XYZ must be more successful since it advertises every week E. They should both be worried about LMN Answer: B. XYZ is focused on selling and ABC is focused on relationship building Rationale: The move toward a relationship orientation by firms has been driven by the realization that it is far more efficient and effective to invest in keeping and cultivating profitable current customers instead of constantly having to invest in gaining new customers that come with unknown return on investment. ABC is focused on relationship building and retaining more customers, while XYZ is following the usual sales tactics. 55. Relationship-oriented firms are _______________. A. Driven by meeting this quarter's financial projections B. Seeking the most profitable customers who are highly satisfied with the firm's offering C. Constantly investing in new customers and hope they become long-term D. Often scrambling to replace lost customers E. Trying to retain all customers Answer: B. Seeking the most profitable customers who are highly satisfied with the firm's offering Rationale: Keeping and cultivating profitable current customers is more efficient and effective than constantly having to invest in gaining new customers. 56. Jack wants to get his new computer from the most famous mass customization marketer. He should purchase from _______________. A. Compaq B. Hewlett-Packard C. Apple D. Dell E. Gateway Answer: D. Dell Rationale: Dell's Web site allows the customer to build a seemingly endless variety of combinations of features into a laptop or desktop to create a computer that gives the buyer the strong impression of creating his or her very own machine. 57. Customer Relationship Management is designed to _______________. A. Assign a sales representative to a particular customer B. Allow software to manage marketing C. Facilitate higher levels of customer satisfaction and identify the most profitable customers D. Fire customers who do little business with the firm E. Aid the accounting department in sending invoices Answer: C. Facilitate higher levels of customer satisfaction and identify the most profitable customers Rationale: Much of CRM is designed to facilitate higher levels of customer satisfaction and loyalty, as well as to provide a means for identifying the most profitable customers—those worthy of the most marketing investment. 58. _______________ is NOT one of the new market realities identified by Fred Wiersema. A. Increase in demand B. Customers have less time than ever C. Information overwhelms and depreciates D. All secrets are open secrets E. Competitors proliferate Answer: A. Increase in demand Rationale: Fred identifies "six new market realities" in support of this trend: Competitors proliferate, all secrets are open secrets, innovation is universal, information overwhelms and depreciates, easy growth makes hard times, and customers have less time than ever. 59. The wristwatch industry was surprised when consumers began telling time by looking at their cell phones. This trend is identified by Wiersema's new market reality of _______________. A. Increase in demand B. Customers have less time than ever C. Information overwhelms and depreciates D. All secrets are open secrets E. Competitors proliferate Answer: E. Competitors proliferate Rationale: Most companies are facing ever accelerating competition because of the speed at which competitors and their products enter and leave markets. And this competition often comes from unexpected sources. 60. Walk into almost any grocery store today and the first thing you may see is ready-to-eat meals. This trend is identified by Wiersema's new market reality of _______________. A. Increase in demand B. Customers have less time than ever C. Information overwhelms and depreciates D. All secrets are open secrets E. Competitors proliferate Answer: B. Customers have less time than ever Rationale: Grocery stores and other retailers understand that consumers (for cultural and workplace-related reasons) have very little time left to shop for products and would try to accommodate their needs through convenience. 61. Jim got over 21 million results when he visited a search engine to find out how to build his own web site. This trend is identified by Wiersema's new market reality of _______________. A. Easy growth makes hard times B. Customers have less time than ever C. Information overwhelms and depreciates D. All secrets are open secrets E. Competitors proliferate Answer: C. Information overwhelms and depreciates Rationale: Jim got over 21 million results when he visited a search engine to find out how to build his own web site. This shows that there is a lot of information available on the Internet and hence it represents Wiersema's new market reality of information overwhelms and depreciates. 62. Customers being inundated with thousands of new products in a year and suppliers being in the pursuit of the next best thing is highly relevant to which of the following market realities identified by Wiersema? A. Easy growth makes hard times B. Innovation is universal C. All secrets are open secrets D. Customers have less time than ever E. Information overwhelms and depreciates Answer: B. Innovation is universal Rationale: Product life cycles are shorter and continuous innovation is expected. Today, innovation is not optional; firms either innovate or perish. 63. Coming to grips with the impact of Wiersema's six market realities should drive firms to realize _______________. A. That marketing is central to the organization B. Customer orientation is not really necessary in most manufacturing firms C. Non-profit and government agencies have long understood the importance of the customer D. Make just-in-time manufacturing the central focus E. They need to invest in excellent accounting systems to save money Answer: A. That marketing is central to the organization Rationale: Coming to grips with the impact of Wiersema's six market realities greatly heightens the role of marketing in the firm as the nexus of an organization's customer-focused strategies. 64. Which of the following is NOT a change driver impacting the future of marketing? A. Shift to product glut and customer shortage B. Focus on sales orientation C. Shift in generational values and preferences D. Shift to demanding return on marketing investment E. Shift to distinguishing Marketing ("Big M") from marketing ("little m") Answer: B. Focus on sales orientation Rationale: The change drivers impacting the future of marketing are: Shift to product glut and customer shortage, shift in information power from customer to marketer, shift in generational values and preferences, shift to demanding return on marketing investment, Shift to distinguishing Marketing ("Big M") from marketing ("little m"). 65. When TGI Friday's, Outback Steakhouse, and other fast-casual restaurants began offering curbside delivery for call-in customers, the trend seemed unnoticed by the ‘fast-food' chains like McDonalds. This illustrates Fred Wiersema's new market reality of _______________. A. Competitors proliferate B. All secrets are open secrets C. Customers have more time than ever D. Information overwhelms and depreciates E. Easy growth makes hard times Answer: A. Competitors proliferate Rationale: Competition often comes from unexpected sources. McDonald's famously missed for several years the trend of full-service restaurants such as Outback Steakhouse and TGI Friday's offering call-ahead drive-up food pickup, which in essence made this genre of restaurant faster and more convenient than the supposedly "fast-food" outlets like McDonald's. 66. Kraft Foods planned to introduce more than 80 new products in 2008. This illustrates Fred Wiersema's new market reality of _______________. A. Competitors proliferate B. All secrets are open secrets C. Innovation is universal D. Information overwhelms and depreciates E. Easy growth makes hard times Answer: C. Innovation is universal Rationale: Product life cycles keep getting shorter and continuous innovation is now expected and even common. 67. Brands and their messages have to catch people's attention because they are not paying attention; they are scanning. This illustrates Fred Wiersema's new market reality of _______________. A. Competitors proliferate B. All secrets are open secrets C. Innovation is universal D. Information depreciates E. Customers have less time than ever Answer: E. Customers have less time than ever Rationale: Brands and their messages have to catch people's attention in a nanosecond because that's all the time they will give. They are not paying attention; they are scanning. 68. The Internet has made it easy for customers to access information, disinformation, post their opinions and read other people's opinions. From a marketer's point of view, this has caused _______________. A. A shift to product glut and customer shortage B. A shift in generational values and preferences C. A shift in power from marketers to consumers D. A shift to demanding return on marketing investment E. A shift to Marketing (Big M) and marketing (little m) Answer: C. A shift in power from marketers to consumers Rationale: For competitive reasons, firms must be more open about their businesses and products. Consumers access this information through the Internet. Thus, they have greater knowledge and advantage. 69. Generational shifts impact marketing in terms of human resources. Older and younger generations may have different _______________. A. Attitudes towards work life versus family life B. Expectations about job satisfaction and rewards C. Preferred modes of learning and working D. All of the above E. None of the above Answer: D. All of the above Rationale: Generational shifts may lead to differences in attitudes towards work life versus family life, expectations about job satisfaction and rewards, preferred modes of learning and working. Understanding the generational differences and how to work to appeal to different generations' values and preferences is a critical part of marketing management. 70. State Farm Insurance offers products through a network of 16,000 independent agents. Assume that the company wants to launch a marketing campaign directed at college students. Which marketing tactic would you recommend? A. TV advertising during the evening news B. Sponsoring National Public Radio during morning drive time C. Setting up a MySpace contest to win gas money D. Sponsorship of a Rolling Stones concert tour E. Direct mail Answer: C. Setting up a MySpace contest to win gas money Rationale: GenY consumers tend to be much more receptive to electronic commerce as a primary mode of receiving marketing communication and ultimately purchasing. 71. _______________ advocates that firms should fulfill the customer's needs in as custom a manner as possible. A. Differentiation orientation B. Mass marketing C. One-to-one marketing D. Sales orientation E. Low cost orientation Answer: C. One-to-one marketing Rationale: One-to-one marketing advocates that firms should direct energy and resources into establishing a learning relationship with each customer and then connect that knowledge with the firm's production and service capabilities to fulfill customer's needs in as custom a manner as possible. 72. Companies like GEICO and Progressive that use online marketing and phone calls have affected established car insurance companies like State Farm and Allstate that traditionally write their policies through agents. This demonstrates that _______________. A. Everyone likes to use the Internet B. Younger customers may value quick in-and-out transactions more than their parents C. Different business models will always work because there will always be people who are insecure and need to see an agent D. When older people stop buying insurance, all insurance will be offered online only E. Car insurance is mandatory in all states Answer: B. Younger customers may value quick in-and-out transactions more than their parents Rationale: Gen Y are much more receptive to electronic commerce than previous generations. 73. Starbucks does not use advertise to promote its stores. This decision most likely reflects the company's _______________. A. Advertising budget B. Marketing (Big M) C. Marketing (little m) D. Relationship orientation E. Sales orientation Answer: B. Marketing (Big M) Rationale: Big M reflects the company's strategic thinking. Starbuck's successful early growth was fueled by an understanding of the markets and competitors and other external factors and internal capabilities. Management believed that word of mouth would be the most successful promotion strategy. 74. Strategic marketing refers to _______________. A. An understanding of the organizations internal opportunities and threats and external strengths and weaknesses B. Working with competitors, when appropriate, and with suppliers C. A long-term, firm-level commitment to investing in marketing for the purpose of enhancing organizational performance D. Making a non-wavering commitment on which customers to serve E. The study of promotion, distribution, delivery, and production Answer: C. A long-term, firm-level commitment to investing in marketing for the purpose of enhancing organizational performance Rationale: Strategic marketing means a long-term, firm-level commitment to investing in marketing—supported at the highest organization level—for the purpose of enhancing organizational performance. 75. The long-term objective of strategic marketing is _______________. A. Customer satisfaction at all costs B. Profitability through building a customer-oriented organization C. Understanding where the company with be in 10, 20, 30 years D. Getting ahead while doing well in society E. Studying the competition Answer: B. Profitability through building a customer-oriented organization Rationale: Strategic marketing is customer-centric, and recognizes that serving the most profitable customers efficiently and effectively will lead to longevity. 76. Southwest Air was the only airline in the U.S. that did not lose money in the year following the 9/11 terrorist attacks on the United States in 2001. This fact most likely reflects the company's _______________. A. Advertising budget B. Marketing (Big M) C. Marketing (little m) D. Relationship orientation E. Sales orientation Answer: B. Marketing (Big M) Rationale: Southwest's overarching customer focus (big M), not marketing programs (little m), lead to customer loyalty during hard times. 77. Customer orientation must be understood by _______________. A. The sales force B. Top management C. Top management and middle management D. Frontline personnel E. Everyone in the organization Answer: E. Everyone in the organization Rationale: Everyone in an organization, regardless of their position or title, must understand the concept of customer orientation, which places the customer at the core of all aspects of the enterprise. 78. All internal organizational practices should be aligned around _______________. A. The billing system B. Management C. Manufacturing D. The customer E. Information technology Answer: D. The customer Rationale: If employees understand the purpose of customer focus, but internal systems don't support it, Big M will not be successful. 79. In order for Marketing (Big M) to succeed, it must be championed by _______________. A. The sales force B. Top management C. Top management and middle management D. Frontline personnel E. Everyone in the organization Answer: B. Top management Rationale: Big M takes time, commitment, and resources. Without top management support, big M will not be successful. 80. Sheila and Barbara are billing department managers in a call center. Senior management has given employees only a limited amount of time to spend with each customer who phones. Sheila and Barbara want to make strategic marketing changes. They must have the support of _______________ in order to succeed. A. The sales force B. Top management C. Vendors D. Frontline personnel E. Everyone in the organization Answer: B. Top management Rationale: Big M takes time, commitment, and resources. Without top management support, big M will not be successful. 81. (Little m) marketing includes _______________. A. Marketing strategy B. Product designing C. Advertising D. Production E. Philosophy Answer: C. Advertising Rationale: Little m is tactical in nature, and managing advertising is a day-to-day activity. 82. Alignment of all internal organizational processes and systems around the customer is associated with which of the following? A. Marketing (little m) B. Tactical marketing C. Functional marketing D. Metric marketing E. Marketing (Big M) Answer: E. Marketing (Big M) Rationale: For successful Marketing (Big M), all internal organizational processes and systems must be aligned around the customer. 83. Many companies today pay their advertising agencies based on sales or market share increase after a particular advertising campaign is executed. _______________ is NOT a reason for this. A. Marketing is viewed internally as an investment B. There has been an increased demand for marketing accountability by CEOs and shareholders C. Firms today are beginning to understand the importance of marketing metrics to assess marketing performance D. If it can't be measured, it can't be managed E. Historically measurement of marketing activities has not been important and still is not today Answer: E. Historically measurement of marketing activities has not been important and still is not today Rationale: Appropriate and effective marketing metrics must be designed to identify, track, evaluate, and provide key benchmarks for improvement just as various financial metrics guide the financial management of the firm. 84. Today many CEOs and shareholders expect to measure results of marketing efforts because _______________. A. Marketing metrics today are designed to assign specific results to specific marketing programs B. They are unrealistic in believing that all marketing is measurable C. It is easy to do D. Every other firm does it E. Marketing has been easy to measure for decades Answer: A. Marketing metrics today are designed to assign specific results to specific marketing programs Rationale: As with all aspects of business, effective management of the various aspects of marketing requires quantification of objectives and results. The marketing plan is one of the most important elements of a business plan. Effective planning requires metrics. 85. The purpose of marketing metrics is to _______________ key benchmarks for improvement just as financial metrics guide the financial management of the firm. A. Identify B. Track C. Evaluate D. Provide E. All of the above Answer: E. All of the above Rationale: Appropriate and effective marketing metrics help identify, track, evaluate, and provide key benchmarks for improvement just as various financial metrics guide the financial management of the firm. 86. An understanding of marketing beyond home markets develops over time as a company gets more international business experience. This process is referred to as the _______________. A. Global experience curve B. Global learning continuum C. Regional experience learning curve D. Global experience learning curve E. International experience continuum Answer: D. Global experience learning curve Rationale: Marketers refer to the experience beyond the home market as the global experience learning curve and it involves four distinct stages. 87. Toyota sells and manufactures automobiles worldwide with operational bases in 27 countries and regions. Toyota is engaged in _______________. A. Global marketing B. Indirect foreign marketing C. Global partnerships D. Foreign marketing E. Direct foreign marketing Answer: A. Global marketing Rationale: A global marketing company realizes that all world markets (including the company's own domestic market) are, in reality, a single market with many different segments. 88. ABC Inc. received an email from a company in Jamaica asking to buy some of its products. ABC has shipped outside of the U.S. only three times in the past. ABC is engaged in _______________. A. Foreign marketing B. International marketing C. Global marketing D. Indirect foreign marketing E. Global partnerships Answer: D. Indirect foreign marketing Rationale: Companies that engage in indirect foreign marketing do business with international customers through intermediaries or limited direct contact. 89. Companies that develop markets outside their home markets with extensive selling and distribution networks, but still take a "domestic first" approach to the business are engaged in _______________. A. Foreign marketing B. International marketing C. Global marketing D. No direct foreign marketing E. Global partnerships Answer: B. International marketing Rationale: In international marketing, management gives priority to domestic markets and the corporate structure divides international and domestic markets. 90. Companies that view the world as a single market with different segments are engaged in _______________. A. Foreign marketing B. International marketing C. Global marketing D. No direct foreign marketing E. Global partnerships Answer: C. Global marketing Rationale: Global marketing treats world as a single, unified market with different segments and generates more than half its revenue in international markets. Short Answer Questions 91. How does the American Marketing Association define marketing? Answer: Marketing 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. 92. Identify marketing stakeholders. Answer: Any person inside or outside the firm with whom marketing interacts, impacts, and is impacted by. This includes all internal stakeholders—like finance, accounting, production, etc. and external stakeholders—customers, shareholders, vendors, governmental bodies, and labor unions. 93. Define societal marketing and give an example of a firm that practices it. Answer: Societal marketing refers to marketing that views society at large as a stakeholder. One example in the forefront today is many firms' emphasis on green marketing. These firms are committed to communicating sustainability practices to the public. One example is GE's ‘Imagineering' advertising. 94. Give an example of an industry or firm that has transformed environmentally harmful products to environmentally friendly products. Answer: The air conditioning industry stopped using the hazardous product Freon and began to use Puron, a refrigerant that reduces chlorine emissions and the depletion of the ozone layer. 95. How has the Internet empowered customers? Give an example. Answer: The Internet has provided people all over the world with information at their fingertips. Pricing has become more transparent, the availability of products has increased, and anyone can share an opinion of a product, service, person, government, or idea. For example, Amazon.com allows customers to rate products. 96. How can a firm create marketing-driving strategies? Give an example. Answer: Apple uncovered needs that consumers did not know they had. When Apple launched the iPhone, many non-Apple computer users lined up to get the phone and paid a premium price for a device that made it easy to use a phone, camera, the Internet, and created a new market. 97. Discuss the difference in being market-driven and market-driving. Give examples of each. Answer: A firm that is market-driven seeks to understand current customer needs and wants and finds ways to fulfill them. Southwest Airline is a good example of a firm that understands passengers want to spend little time in the gate area, get on and off a plane as quickly as possible, and obtain luggage without delays. A market-driving firm seeks to fulfill needs that the consumer does not realize exist or are possible. Apple changed the way consumers look at telecommunication when it introduced the iPhone. It created a new market. 98. What does "everyone in the firm owns marketing" mean? Answer: It means that anyone in the company may interact with customers, suppliers, and other stakeholders. All employees represent the brand and need to be trained to think about their interactions this way. 99. Why is marketing no longer confined to a company's local market? Answer: Worldwide distribution systems, sophisticated communication tools, great product standardization, and the Internet have opened world markets. 100. Describe the difference in international and global marketing. Answer: Companies that develop markets outside their home markets with extensive selling and distribution networks, but still take a "domestic first" approach to the business are engaged in "home first" are engaged in international marketing. Companies that view the world as a single market with different segments are engaged in global marketing. Essay Questions 101. George inherited his family business 30 years ago. The company makes shelving for grocery and drug store chains. Three customers account for 85% of revenue. Recently, one of the grocers went out of business and George is struggling to find a customer to replace the lost revenue. His attitude towards marketing has always been that it is an unnecessary expense. George has asked you to give him advice. How can you dissuade him from the outdated ideas he has about this and other marketing misunderstandings? Answer: George's attitude reflects marketing misconception no. 6: Marketing is just another cost center. Marketing should be viewed as an investment. Cost center mentality means that marketing budgets are among the first to be cut during difficult times. Firms suboptimize their success in the long run by avoiding investment in brand and product development. George's attitude is short-sighted. 102. Emily, a tenacious entrepreneur, has grown her closet organizer company to $20 million in sales and has 65 employees. She has directed the firm's marketing since its inception and believes she instinctively knows which marketing efforts will bring success. Her new assistant Heather, who just completed a Marketing Management course, wants to find a way to measure results. What should Heather say to Emily to convince her that this is necessary? Answer: She should tell her that many CEOs and CMOs today are developing marketing metrics to identify, track, evaluate, and provide key benchmarks for improvement just as various financial metrics guide the financial management of the firm. 103. Paul and Pierre are writing a business plan to submit to a bank to ask for a loan to start a French restaurant. Paul has worked in finance for five years and Pierre is a chef. Unfortunately, neither has much experience in marketing and they think that marketing equals advertising. They have asked you to explain the marketing concept as it is viewed today. What do you say? Answer: • Focus on value and exchange • Customer-centricity • Differentiation orientation • Relationship orientation 104. State Farm Insurance offers products through a network of 16,000 independent agents. Assume that the company wants to launch a marketing campaign towards college students. What does State Farm need to know about the way Gen X communicates? What marketing tactics would you recommend and why? Answer: SF should recognize that a generational shift in values and preferences has occurred. Gen X is much less likely to value the personal relationships their parents and grandparents have with their insurance agents. Gen X is much more receptive to electronic commerce. SF should make it easy to apply for coverage and pay bills online. The company may try to reach college students through MySpace or Facebook or hiring a text messaging marketing firm. 105. What conditions existed after World War II that caused the marketing concept to emerge? What marked the transition from the selling concept to the marketing concept? Answer: • Pent-up demand for consumer goods and services • Euphoric focus on family and a desperate need to regain a normalcy of day-to-day life after years of war • Opening up of production capacity dominated for years by war production • Advent of readily available mainframe computing capability and associated statistical analytic techniques that allowed for more sophisticated market research. 106. Firms such as General Electric and Starbucks try to practice the concept of "doing well by doing good". What does this mean? What are some of the challenges faced by a firm that wants to create products that fit this concept? Answer: Some industries have more trouble than others in creating environmentally responsible products (Freon vs. Air Nike shoes) minimize environmental waste. "Doing well by doing good" means achieving financial success while positively impacting society and the environment. Firms like General Electric and Starbucks face challenges such as higher production costs, supply chain complexities, and maintaining profitability while adhering to sustainable and ethical practices. Balancing stakeholder expectations and effectively communicating their efforts to consumers are additional hurdles. 107. Long-term oriented firms need to be aware of change drivers that most likely will have a significant impact on the future of marketing and business in general. What areas of shift do you recommend these firms study? Answer: • Product glut and customer shortage • Information power from marketer to customer • Generational values and preferences • Return on marketing investment • Big M versus little m 108. Bedtime Mattress Company is sales-driven. The company has high levels of employee turnover, frequent sales, and is short-term oriented. What do you believe management should know about Big M Marketing and little m marketing? Answer: Big M is strategic marketing. The core concepts of value, exchange, customer relationships, and benefit to the organization and its stakeholders are all very strategic in nature and help form the core business philosophy of a firm. Customer orientation and long-run profits are also very strategic. All firm functions should be aligned around the customer. Everyone is in "marketing". Big M needs a senior level champion. Little m marketing is about tactics—the classic 4 Ps. It is the day-to-day marketing operations of the firm. 109. Which two brands do you think do a good job of connecting emotionally to the consumer? Support your answer with examples of what the firm has done to make that emotional appeal to the consumer. Can you defend your claims with tactics in addition to advertising? Answer: Answers will vary depending on the student. iPod had great advertising from Day 1 with the dancing silhouettes. I want to be cool and have as much fun as the people listening in the ads! iPhones led the way in user-friendly technology convergence. Apple has an image of being a rebel, cooler, and anti-establishment. Look at the ads for Apple computer and Microsoft. MS is painted as a stodgy conservative company and the products don't work as well as Apple's do. Apple goes to great length to keep products top-secret until they are released. In fact, the press gives the company so much free publicity that people line up hours before retailers open to say they got and iPod or iPhone on the first day. Apple and Nike excel at emotionally connecting with consumers. Apple does this through sleek, user-friendly product design and a brand ethos centered on creativity and innovation, exemplified by campaigns like "Think Different." Nike taps into emotions by championing personal achievement and social issues, as seen in their "Just Do It" campaign and endorsements of athletes like Colin Kaepernick, which resonate with themes of empowerment and social justice. Beyond advertising, both brands engage in community building and social initiatives that reinforce their emotional appeal. 110. Discuss the global experience learning curve. What are the four stages that a company may move through in going global? Answer: An understanding of marketing beyond home markets develops over time as a company gets more international business experience. This process is referred to as the global experience learning curve. Companies with No Foreign Marketing: Many companies with no direct foreign marketing still do business with international customers through intermediaries or limited direct contact. In these cases, however, there is no formal international channel relationship or global marketing strategy targeted at international customers. Of course, any company with a Web site is now a global company as someone can visit the site from anywhere in the world, but companies with no foreign marketing consider any sales to an international customer as incidental. Companies with Foreign Marketing: Companies often develop a more formal international strategy by following their existing customers into foreign markets. One method is to identify local intermediaries in appropriate international markets and create a formal relationship. The second approach is for the company to establish its own direct sales force in major markets, thereby expanding the company's direct market reach. In either scenario, key activities (product planning and development, manufacturing) are still done in the company's home market, but products are modified to fit international requirements. International Marketing: When a firm makes the commitment to manufacture products outside its domestic market it is engaged in international marketing. While companies can be heavily involved in international markets with extensive selling organizations and distribution networks, the decision to manufacture outside its home market marks a significant shift toward an integrated international market strategy. Global Marketing: A global marketing company realizes that all world markets (including the company's own domestic market) are, in reality, a single market with many different segments. This frequently happens when a company generates more than half its revenue in international markets. Test Bank for Essentials of Marketing Management Greg W. Marshall, Mark W. Johnston 9780078028786, 9780071082020, 9780077400187
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