Preview (11 of 35 pages)

Chapter 1 Defining Marketing for the 21st Century 1) Which of the following statements about marketing is true? A) It is of little importance when products are standardized. B) It can help create jobs in the economy by building demand for goods and services. C) It helps to build a loyal customer base but has no impact on a firm's intangible assets. D) It is more important for bigger organizations than smaller ones. E) It is seldom used by nonprofit organizations. Answer: B 2) ________ is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. A) Marketing management B) Knowledge management C) Operations management D) Strategic management E) Distribution management Answer: A 3) Identify the correct statement about marketing management. A) It is primarily concerned with the systematic gathering, recording, and analysis of data about issues related to marketing products and services. B) It focuses mostly on monitoring the profitability of a company's products and services. C) It focuses solely on attaining an organization's sales goals in an efficient manner. D) It is defined as the field that deals with planning and managing a business at the highest level of corporate hierarchy. E) It occurs when at least one party to a potential exchange thinks about the means of achieving desired responses from other parties. Answer: E 4) A social definition of marketing says ________. A) effective marketing requires companies to remove intermediaries to achieve a closer connection with direct consumers B) a company should focus exclusively on achieving high production efficiency, low costs, and mass distribution to facilitate the broadest possible access to the company's products C) marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others D) marketing is the process of extracting the maximum value from consumers to facilitate corporate growth E) marketing is the process of aggressive selling and promotion to encourage the purchase of products that might otherwise be unsought by the consumer Answer: C 5) ________ goods constitute the bulk of most countries' production and marketing efforts. A) Durable B) Impulse C) Physical D) Luxury E) Intangible Answer: C 6) As economies advance, a growing proportion of their activities focuses on the production of ________. A) products B) events C) experiences D) luxury goods E) services Answer: E 7) Car rental firms, hair dressers, and management consultants provide ________. A) goods B) experiences C) events D) services E) information Answer: D 8) The World Cup is promoted aggressively to both companies and fans. This is an example of marketing a(n) ________. A) idea B) place C) luxury item D) event E) service Answer: D 9) The "Malaysia, Truly Asia" ad campaign that showcased Malaysia's beautiful landscape and its multicultural society in order to attract tourists is an example of ________ marketing. A) event B) property C) service D) place E) idea Answer: D 10) In Tokyo Disneyland, customers can visit a fairy kingdom, a pirate ship, or even a haunted house. Disney is marketing a(n) ________. A) experience B) service C) event D) organization E) good Answer: A 11) Janet is very upset that she can't get tickets to a K-Pop concert because they are sold out. Which of the following demand states applies to Janet's situation? A) non-existent demand B) latent demand C) full demand D) unwholesome demand E) overfull demand Answer: E 12) Sales of pineapple tarts usually increase during the Chinese New Year season and decline thereafter. This is an example of ________ demand. A) irregular B) declining C) impulse D) latent E) negative Answer: A 13) Julia is worried about the rising pollution levels in her city. She doesn't mind paying extra for goods and services that use sustainable processes to help control pollution. This is an example of ________ for pollution. A) declining demand B) non-existent demand C) latent demand D) negative demand E) unwholesome demand Answer: D 14) People in emerging countries today are becoming increasingly health conscious and are seeking healthy food choices. As a result, demand for health foods is rising steadily, creating an opportunity for marketers to exploit this ________ market. A) demographic B) business C) need D) geographic E) service Answer: C 15) When consumers share a strong need that cannot be satisfied by an existing product, it is called ________. A) negative demand B) latent demand C) declining demand D) irregular demand E) non-existent demand Answer: B 16) When demand is ________, it implies that more customers would like to buy the product than can be satisfied. A) latent B) irregular C) overfull D) full E) negative Answer: C 17) In the case of ________, consumers dislike the product and may even pay a price to avoid it. A) non-existent demand B) overfull demand C) irregular demand D) negative demand E) declining demand Answer: D 18) Organizations catering to the ________ need to price their offerings carefully because these markets usually have limited purchasing power. A) business market B) global market C) non-profit market D) consumer market E) exclusive market Answer: C 19) Which of the following is true of business markets? A) Buyers are usually not skilled at comparing competitive product offerings. B) Buyers have limited purchasing power. C) Property rights, language, culture, and local laws are the most important concerns. D) Products sold in such markets are usually highly standardized. E) Business buyers buy goods to make or resell a product to others at a profit. Answer: E 20) A ________ is a cluster of complementary products and services that are closely related in the minds of consumers but are spread across a diverse set of industries. A) meta-market B) vertically integrated market C) horizontally integrated market D) marketspace E) synchronized market Answer: A 21) Consider the real estate industry. The ________ for this industry includes construction companies, financing institutions, paint manufacturers, interior decorators, furniture manufacturers, and plumbing industries. A) marketspace B) latent market C) need market D) meta-market E) geographic market Answer: D 22) Automobile manufacturers, new car and used car dealers, financing companies, and insurance companies are all part of the automobile ________. A) marketplace B) marketspace C) meta-mediary D) market-portal E) meta-market Answer: E 23) ________ are basic human requirements, while ________ are wants for specific products backed by an ability to pay. A) Wants; needs B) Demands; wants C) Needs; wants D) Needs; demands E) Demands; needs Answer: C 24) When Frank buys his own house, he would like to have a home theater system and a jacuzzi. He plans to save enough money in the next three years so that he can fulfill his wish. Frank's desire for the home theater and the jacuzzi is an example of a(n) ________. A) need B) want C) demand D) unstated need E) latent demand Answer: B 25) When companies measure the number of people who are willing and able to buy their products, they are measuring ________. A) demand B) price elasticity C) real needs D) standard of living E) disposable income Answer: A 26) A(n) ________ need is one that the consumer is reluctant or unwilling to explicitly verbalize. A) secondary B) unstated C) delight D) secret E) stated Answer: D 27) A(n) ________ need is a need that the consumer explicitly verbalizes. A) stated B) affirmative C) unsought D) delight E) secret Answer: A 28) The identification and profiling of distinct groups of buyers who might prefer or require varying product and service mixes is known as ________. A) segmentation B) integration C) disintermediation D) cross-selling E) customization Answer: A 29) Companies address needs by putting forth a ________, a set of benefits that they offer to customers to satisfy their needs. A) brand B) value proposition C) deal D) marketing plan E) demand Answer: B 30) During market segmentation analysis, the marketer identifies which segments present the greatest opportunity. These segments are called ________. A) target markets B) capital markets C) tertiary markets D) demographic markets E) developing markets Answer: A 31) ________ reflects a customer's comparative judgment of a product's performance in relation to his or her expectations. A) Brand equity B) Satisfaction C) Value D) Perception E) Brand image Answer: B 32) The value of an offering is described as ________. A) the price consumers are charged for a product B) the cost of manufacturing a product C) the degree to which consumer demand for a product is positive D) the sum of the tangible and intangible benefits and costs to customers E) the intangible benefits gained from a product Answer: D 33) When Volvo runs ads suggesting that its cars are the safest that money can buy, it is trying to ________. A) segment the market B) provide a service C) enter new a new market D) develop brand loyalty E) position its product Answer: E 34) If a marketer uses warehouses, transportation companies, banks, and insurance companies to facilitate transactions with potential buyers, the marketer is using a ________. A) service channel B) distribution channel C) communication channel D) relationship channel E) standardized channel Answer: A 35) The ________ is the channel stretching from raw materials to components to final products that are carried to final buyers. A) communication channel B) distribution channel C) supply chain D) service chain E) marketing chain Answer: C 36) The actual and potential rival offerings and substitutes that a buyer might consider are referred to as the ________. A) supply chain B) global market C) value proposition D) competition E) marketing environment Answer: D 37) The ________ includes the actors involved in producing, distributing, and promoting an offering. The main actors are the company, suppliers, distributors, dealers, and the target customers. A) economic environment B) management environment C) strategic environment D) task environment E) tactical environment Answer: D 38) In an attempt to create greater competition and growth opportunities, countries often ________. A) increase trade barriers B) protect industries C) deregulate industries D) encourage intermediation E) reduce privatization Answer: C 39) Rising promotion costs and shrinking profit margins are the result of ________. A) new and improved technology B) disintermediation C) industry convergence D) privatization E) heightened competition Answer: E 40) Industry boundaries are blurring rapidly as companies identify new opportunities at the intersection of two or more industries. This is called ________. A) globalization B) customization C) industry convergence D) disintermediation E) privatization Answer: C 41) The success of online purchasing resulted in ________ in the delivery of products and services by intervening in the traditional flow of goods through distribution channels. A) disintermediation B) diversification C) reduced competition D) deregulation E) privatization Answer: A 42) In response to threats from such companies as AOL, Amazon.com, Yahoo!, eBay, E*TRADE, and dozens of others, established manufacturers and retailers became "brick-and-click" oriented by adding online services to their existing offerings. This process is known as ________. A) reintermediation B) disintermediation C) retail transformation D) e-collaboration E) new-market synchronization Answer: A 43) When eBay and Amazon.com cut out the majority of middlemen that normally would participate in the exchange process, it is an example of ________. A) deregulation B) reverse auctioning C) reintermediation D) disintermediation E) diversification Answer: D 44) Disintermediation via the Internet has resulted in ________. A) higher prices B) stronger brand loyalty C) greater emphasis on personal selling D) well-established brand names E) greater consumer buying power Answer: E 45) Each of the following is true about the Internet's impact on the way business is conducted today, EXCEPT one. Identify the exception. A) It has facilitated high-speed communication among employees. B) It has empowered consumers with easy access to information. C) It can be used as a powerful sales channel. D) It has facilitated mass marketing but not the sale of customized products. E) It enables marketers to use social media to advertise their products. Answer: D 46) The ________ process consists of analyzing marketing opportunities, selecting target markets, designing marketing strategies, developing marketing programs, and managing the marketing effort. A) marketing planning B) strategic planning C) market research D) opportunity analysis E) operational management Answer: A 47) Marketers must try to balance increased spending on search advertising, social media, direct email, and text/SMS marketing efforts with appropriate spending on _________________. A) integrated marketing communications B) traditional marketing communications C) traditional selling D) traditional mass communications E) corporate communications Answer: B 48) What are customer touch points? A) all aspects of the offering that directly affect consumer preferences B) all needs and wants of customers C) all direct or indirect interactions between the customer and the company D) all interactions between customers and competitors E) all factors that affect buying behavior Answer: C 49) Which of the following holds that consumers prefer products that are widely available and inexpensive? A) the product concept B) the production concept C) the selling concept D) the performance concept E) the marketing concept Answer: B 50) Managers of ________ businesses concentrate on achieving high manufacturing efficiency, low costs, and mass distribution. A) selling-oriented B) product-oriented C) production-oriented D) marketing-oriented E) consumer-oriented Answer: C 51) The ________ concept holds that consumers will favor offerings with the best quality, performance, or innovative features. A) product B) marketing C) production D) selling E) holistic marketing Answer: A 52) Which of the following categories of goods and services is most likely to require an aggressive use of the selling concept? A) shopping goods B) unsought goods C) necessary goods D) luxury goods E) complementary goods Answer: B 53) ________ makes sense in developing countries such as China where the largest PC manufacturer, Lenovo, and domestic appliances giant, Haier, take advantage of the country’s huge inexpensive labor pool to dominate the market. A) selling orientation B) production orientation C) product orientation D) marketing orientation E) social orientation Answer: B 54) Asia Webnex Pte Ltd produced and marketed cameras. After considerable research and development, they developed a new digital camera that had an array of new features. Asia Webnex was so sure about the new offering that they even reduced their marketing budget. What sort of orientation does Asia Webnex have toward the marketplace? A) production orientation B) product orientation C) selling orientation D) marketing orientation E) holistic marketing orientation Answer: B 55) Rick Lee trains his company's sales force to go after the consumer. He repeatedly asks his team to bear in mind the essential fact that it is the sales team's responsibility to rouse the consumer's interest and make him feel that he needs the product. A true salesman is one who can convert an indifferent consumer walking into the store into a new customer. Lee believes in the ________ concept. A) product B) production C) selling D) marketing E) social responsibility Answer: C 56) Marketers at Oh Le Pte Ltd believe in putting their customers ahead of everything else. Their products are carefully designed to meet customer requirements and the entire focus is on achieving customer satisfaction. Oh Le follows the ________ concept in doing business. A) production B) product C) selling D) marketing E) social responsibility Answer: D 57) The ________ concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization's products. A) production B) selling C) marketing D) product E) holistic marketing Answer: B 58) The ____________ is a customer-centered, “sense-and-respond” philosophy. A) the product concept B) the production concept C) the selling concept D) the marketing concept E) the holistic marketing concept Answer: D 59) The marketing concept holds that ________. A) a firm should find the right products for its customers, and not the right customers for its products B) customers who are coaxed into buying a product will most likely buy it again C) a new product will not be successful unless it is priced, distributed, and sold properly D) consumers and businesses, if left alone, won't buy enough of the organization's products E) a better product will by itself lead people to buy it without much effort from the sellers Answer: A 60) ________ is based on the development, design, and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies. A) Niche marketing B) Holistic marketing C) Relationship marketing D) Supply chain marketing E) Demand-centered marketing Answer: B 61) __________ recognizes and reconciles the scope and complexities of marketing activities. A) Niche marketing B) Holistic marketing C) Relationship marketing D) Supply chain marketing E) Demand-centered marketing Answer: B 62) What are the four broad themes of holistic marketing? A) relationship, internal, position, and performance marketing B) integrated, internal, position, and performance marketing C) relationship, integrated, internal, and performance marketing D) integrated, relationship, social responsibility, and position marketing E) relationship, social responsibility, internal, and performance marketing Answer: C 63) ________ marketing aims to build mutually satisfying long-term collaboration with key constituents, such as customers, employees, suppliers, distributors, and other marketing partners, in order to earn and retain their business. A) Integrated B) Demand-based C) Direct D) Relationship E) Internal Answer: D 64) Tracy's is a chain of hair dressing salons for women. They use the television, magazines, radio, and newspapers to advertise their services. The owners ensure that all communication channels deliver a common message to prospective customers. Tracy's believes in ________. A) internal marketing B) integrated marketing C) socially responsible marketing D) global marketing E) relationship marketing Answer: B 65) The ultimate outcome of relationship marketing is a unique company asset called the ________, consisting of the company and its supporting stakeholders. A) brand B) supply chain C) marketing network D) value proposition E) service channel Answer: C 66) Which of the following is most consistent with the integrated marketing approach? A) A good product will sell itself. B) If left alone, consumers are inclined to purchase only inexpensive products. C) All communication to consumers must deliver a consistent brand message irrespective of the medium. D) In order to succeed, the main focus should be on having an efficient production process in place. E) Online marketing is less important than traditional marketing efforts. Answer: C 67) Which aspect of holistic marketing motivates employees and ensures that everyone in the organization embraces appropriate marketing principles, especially senior management? A) relationship marketing B) integrated marketing C) internal marketing D) network marketing E) performance marketing Answer: C 68) Financial accountability and social responsibility marketing are elements of ________. A) performance marketing B) relationship marketing C) internal marketing D) social marketing E) mass marketing Answer: A 69) Companies are recognizing that much of their market value comes from ________, particularly their brands, customer base, employees, distributor and supplier relations, and intellectual capital. A) variable assets B) value propositions C) intangible assets D) market offerings E) industry convergence Answer: C 70) Holistic marketing incorporates ________ where marketers must carefully consider their role in broader terms, and the ethical, environmental, legal, and social context of their activities. A) internal marketing B) cultural marketing C) social responsibility marketing D) relationship marketing E) integrated marketing Answer: C 71) The ________ holds that the organization's task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer's and the society's well-being. A) selling concept B) integrated marketing concept C) societal marketing concept D) production concept E) relationship marketing concept Answer: C 72) Joanna owns a chain of fast-food joints. As the chain became more and more successful, she decided to contribute a share of her profits each year to support cancer research. This is an example of ________. A) corporate community involvement B) environmental marketing C) cause-related marketing D) benefit marketing E) responsible marketing Answer: C 73) E. Jerome McCarthy classified marketing activities into the four Ps of the marketing mix. These four Ps stand for ________. A) product, positioning, place, and price B) product, production, price, and place C) promotion, place, positioning, and price D) place, promotion, production, and positioning E) product, price, promotion, and place Answer: E 74) Incorporating the holistic view of marketing, the four Ps of the marketing mix can be updated to ________. A) product, positioning, people, and price B) people, processes, place, and promotion C) product, processes, price, and people D) people, processes, programs, and performance E) product, price, promotion, and people Answer: D 75) Which of the following reflects the "people" component of the marketing mix? A) the creativity, discipline, and structure brought to marketing management B) the development of new products by the marketers C) the firm's consumer-directed activities D) the right set of processes to guide activities and programs within the firm E) the internal marketing of the firm Answer: E 76) Which of the four new Ps encompasses the old four Ps as well as a range of other marketing activities that might not fit well into the old view of marketing? A) programs B) processes C) promotion D) people E) performance Answer: A 77) At the heart of any marketing program is the firm's ________, its tangible offering to the market. A) strategy B) product C) brand D) value E) people Answer: B 78) ________ activities include those the company undertakes to make the product accessible and available to target customers. A) Line extension B) Segmentation C) Marketing research D) Channel E) New-product development Answer: D 79) A marketer's only concern is how best to create demand for a new product produced by his company. Improving product design is not his responsibility. Answer: False 80) A short definition of marketing is "meeting needs profitably." Answer: True 81) Services constitute the bulk of most countries' production and marketing efforts. Answer: False 82) Properties are intangible rights of ownership of either real property (real estate) or financial property (stocks and bonds). Answer: True 83) Place marketers include economic development specialists, real estate agents, commercial banks, local business associations, and advertising and public relations agencies. Answer: True 84) Properties are bought and sold, and this requires marketing. Answer: True 85) Organizations seldom work to build a strong, favorable, and unique image in the minds of their target public. Answer: False 86) Unwholesome demand occurs when consumers' purchases vary on a seasonal, monthly, weekly, daily, or even hourly basis. Answer: False 87) When consumers share a strong need that cannot be satisfied by an existing product, they are exhibiting latent demand. Answer: True 88) Advertising is the most important element in business marketing. Answer: False 89) Companies selling their goods to non-profit organizations often charge a premium over their normal prices because these organizations are largely indifferent to price. Answer: False 90) Shops and stores have a physical existence and as such are examples of marketspace. Answer: False 91) Wants are basic human requirements, such as food and shelter. Answer: False 92) Demands are wants for specific products backed by an ability to pay. Answer: True 93) Contrary to popular belief, marketers do not create needs. Answer: True 94) The customer value triad consists of a combination of quality, durability, and price. Answer: False 95) A distribution channel includes distributors, wholesalers, retailers, and agents that display, sell, or deliver the physical product or service(s) to the buyer or user. Answer: True 96) The task environment of a firm consists of demographic, economic, natural, and technological environments, as well as the political-legal system and the social-cultural arena. Answer: False 97) Regulation of industries has created greater competition and growth opportunities because the playing field has been leveled. Answer: False 98) Industry boundaries are blurring at an incredible rate as companies are recognizing that new opportunities lie at the intersection of two or more industries. Answer: True 99) The overabundance of information available on the Internet has made it more difficult for consumers to compare product features and prices. Answer: False 100) Companies can facilitate and speed external communication among customers by creating online and off-line "buzz" through brand advocates and user communities. Answer: True 101) Micro-target marketing and two-way communications have become easier thanks to the proliferation of special-interest magazines, TV channels, and Internet newsgroups. Answer: True 102) The production concept is one of the newest concepts in business. Answer: False 103) The selling concept holds that consumers will favor those products that offer the most quality, performance, or innovative features. Answer: False 104) The selling concept holds that consumers will prefer products that are ethical, environmentally responsible, legal, and social in the context of marketing activities and programs. Answer: False 105) The marketing concept stresses on finding the right customers for the company's products. Answer: False 106) The selling concept is based on the development, design, and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies. Answer: False 107) Relationship marketing aims to build mutually satisfying long-term relationships with key parties. Answer: True 108) Attracting a new customer costs far more than retaining an existing one. Answer: True 109) One of the key themes of integrated marketing is that there are very few marketing activities that can effectively communicate and deliver value. Answer: False 110) Proponents of holistic marketing consider internal marketing to be as important as marketing to consumers. Answer: True 111) Integrated marketing is the task of hiring, training, and motivating able employees who want to serve customers well. Answer: False 112) Performance marketing requires understanding the financial and non-financial returns to business and society from marketing activities and programs. Answer: True 113) Performance marketing involves reviewing and assessing market share, customer loss rate, customer satisfaction, and product quality in the evaluation of the effectiveness of marketing activities. Answer: True 114) The societal marketing concept holds that the organization's task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer's and the society's well-being. Answer: True 115) Adapting and conducting business practices that protect the environment and human and animal rights is specifically a part of corporate social marketing. Answer: False 116) Cause-related marketing involves donating a percentage of revenues to a specific cause based on the revenue occurring during the announced period of support. Answer: True 117) Making gifts of money, goods, or time to help nonprofit organizations, groups, or individuals is known as corporate philanthropy. Answer: True 118) The marketing-mix component called "people" reflects all the creativity, discipline, and structure brought to marketing management. Answer: False 119) A firm's tangible offering to the market includes product quality, design, features, and packaging. Answer: True 120) Marketing has been described as being both an "art" and a "science." Discuss the differences and similarities between these two marketing thrusts. Provide your theoretical response and a “real-life” example where you have seen both processes work effectively at creating customer value and loyalty. Answer: The student should demonstrate his or her understanding that the marketer must use data to understand customer needs and translate this understanding into properly designed products and services. This requires application of state-of-the art tools and techniques. It is also an art as marketers try to find creative solutions to consumer needs. Marketing as an "art" involves creativity, emotional connection, and brand storytelling, while marketing as a "science" relies on data analysis, research, and metrics to drive decisions. Both approaches aim to create customer value and loyalty by combining imaginative campaigns with data-driven strategies. A real-life example is Nike's "Just Do It" campaign, which blends emotional appeal (art) with targeted marketing analytics (science) to engage and retain customers effectively. 121) Marketers are involved in marketing 10 types of entities. List and briefly characterize these entities. Answer: The types of entities that are marketed are (1) goods—physical goods, (2) services—hotels and car rental services, (3) events—time-based events such as trade shows, (4) experiences—Walt Disney's Magic Kingdom, (5) persons—celebrity marketing, (6) places—cities, states, regions, and even whole nations, (7) properties—intangible rights of ownership of either real property or financial property, (8) organizations—corporate identity, (9) information—information produced and marketed as a product, and (10) ideas—marketing the basic idea of a market offering. 122) Marketers should be skilled in stimulating demand for a company's products. Just as production and logistics professionals are responsible for supply management, marketers are responsible for demand management. Marketing managers seek to influence the level, timing, and composition of demand to meet the organization's objectives. List and briefly characterize the eight different demand states. Answer: The eight different demand states are (1) negative demand—consumers dislike the product and may even pay a price to avoid it, (2) non-existent demand—consumers may be unaware or uninterested in the product, (3) latent demand—consumers may share a strong need that cannot be satisfied by an existing product, (4) declining demand—consumers begin to buy the product less frequently or not at all, (5) irregular demand—consumer purchases vary on a seasonal, monthly, weekly, daily, or even hourly basis, (6) full demand—consumers are adequately buying all products in the market, (7) overfull demand—more consumers would like to buy the product than can be satisfied, and (8) unwholesome demand—consumers may be attracted to products that have undesirable social consequences. 123) Consumers often have many needs that are not readily obvious. Just observing their behavior inside a retail store is not enough to get a true understanding of their "needs." List and briefly describe the five types of needs that most consumers have. Answer: Suppose a customer wants to buy a car. The five types of customer needs with respect to this example are (1) stated needs—the customer wants an inexpensive car, (2) real needs—the customer wants a car whose operating cost, not its initial price, is low, (3) unstated needs—the customer expects good service from the dealer, (4) delight needs—the customer would like the dealer to include an onboard navigation system, and (5) secret needs—the customer wants to be seen by friends as a savvy consumer. 124) Distinguish between the concepts of value and satisfaction. Answer: The offering will be successful if it delivers value and satisfaction to the target buyer. The buyer chooses between different offerings on the basis of his or her perception about which product will deliver the most value. Value reflects the perceived tangible and intangible benefits and costs to customers. Value can be seen as primarily a combination of quality, service, and price (called the customer-value triad). Satisfaction reflects a person's comparative judgments resulting from a product's perceived performance (or outcome) in relation to his or her expectations. 125) Assume that you have been given the task of assisting a company in designing its marketing planning process. What components should be in such a process? Answer: The marketing planning process consists of analyzing marketing opportunities, selecting target markets, designing strategies, developing marketing programs, and managing the marketing effort. 126) The competing concepts under which organizations have conducted marketing activities include: the production concept, product concept, selling concept, marketing concept, and holistic marketing concept. Evaluate the advantages and disadvantages of each concept. Which concept do you believe is the most effective? Why? Answer: Although students will be expected to research each concept, they should conclude the most effective concept is the holistic marketing concept, where companies need to have a more complete, cohesive approach that goes beyond traditional applications of the marketing concept. 127) Define internal marketing and its role in the company. Outline how various departments within the company can demonstrate a customer focus. Answer: Internal marketing is the task of hiring, training, and motivating able employees who want to serve customers well. Internal marketing must take place on two levels. At one level, the various marketing functions must work together. At the second level, other departments must embrace marketing and a “think customer” attitude. 128) According to Starbucks Chairman Howard Schultz, “We see a fundamental change in the way consumers buy their products and services … Consumers now commonly engage in a cultural audit of providers. People want to know your value and ethics demonstrated by how you treat employees, the community in which you operate. The implication for marketers is to strike the balance between profitability and social consciousness and sensitivity … It is not a program or a quarterly promotion, but rather a way of life. You have to integrate this level of social responsibility into your operation.” Discuss the concept of social responsibility marketing and how it impacts both companies and consumers. Answer: The social responsibility marketing concept holds that the organization's task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfaction more effectively and efficiently than competitors in a way that preserves or enhances the consumer's and society's long-term well-being. Many companies actively engaged in corporate social responsibility campaigns to both motivate employees and attract consumers. As goods become more commoditized, and as consumers grow more socially conscious, some companies are adding social responsibility as a way to differentiate themselves from competitors, build consumer preference, and achieve notable sales and profit gains. They believe customers will increasingly look for signs of good corporate citizenship. 129) Identify and define the traditional four Ps. Also identify the new four Ps and the reason for developing the new interpretation. Answer: The traditional four Ps are: Product (product variety, quality, design, features, brand name, packaging, sizes, services, warranties, returns), Price (list price, discounts, allowances, payment period, credit terms), Promotion (sales promotion, advertising, sales force, public relations, direct marketing), and Place (channels, coverage, assortments, locations, inventory, transportation). However, given the breadth, complexity, and richness of marketing, as exemplified by holistic marketing, these 4 Ps are not the whole story anymore. Updating them to reflect the holistic marketing concept, researchers in this field arrived at a more representative set that encompasses modern marketing realities: people, processes, programs, and performance. 130) Discuss the eight demand states with respect to bifocal lenses (eyeglasses with two distinct optical powers; having one section that corrects for distant vision and another that corrects for near vision) for glasses. Answer: Student answers may vary, but a possible answer includes the following: (1) negative demand—many people don't want to admit they need bifocals, (2) non-existent demand—when bifocal lenses were first introduced, people didn't know they existed, (3) latent demand—before they were introduced, many people thought such a product would be nice, but didn't think it would ever exist, (4) declining demand—this will occur when something better and more convenient is invented, (5) irregular demand—the consumer perceives a need for eye care devices only periodically, possibly when they begin to have trouble with their vision, (6) full demand—the manufacturers of the lenses are making all they possibly can, (7) overfull demand—the manufacturers of the lenses can't make enough and inventories are low, and (8) unwholesome demand—seeking alternatives that can lead to undesirable consequences. The eight demand states for bifocal lenses are: 1. Negative Demand: People avoid bifocals despite needing them. 2. No Demand: Lack of awareness or interest in bifocals. 3. Latent Demand: Desire for improved vision correction, but unaware of bifocals. 4. Declining Demand: Decreasing interest in bifocals due to alternatives. 5. Irregular Demand: Seasonal or sporadic interest in bifocals. 6. Full Demand: Current supply matches consumer interest in bifocals. 7. Overfull Demand: Demand exceeds the supply of bifocals. 8. Unwholesome Demand: Demand for bifocals when harmful or not needed. Each state influences marketing strategies to address the varying levels of consumer awareness and interest in bifocal lenses. 131) New terms are now being used to describe where marketing is done. Using the automobile market, describe automotive buying behavior for a: (1) marketplace, (2) marketspace, and (3) meta-market. Answer: Responses to this question should include a reference to the following: (1) marketplace—shopping for an automobile at a dealer, (2) marketspace—shopping for an automobile via the Internet, eBay, or even designing your own car via a manufacturer's Web site, and (3) meta-market—(a cluster of complementary products and services that are closely related in the customer's mind but are spread across a diverse set of industries) that might include insurance companies, the racing industry, the travel industry, the customization industry, etc. In the automobile market: 1. Marketplace: Traditional physical dealerships where customers interact with salespeople and test drive cars before purchase. 2. Marketspace: Online platforms like Carvana and Tesla's website, where customers browse, compare, and purchase vehicles digitally. 3. Meta-market: Ecosystem encompassing car sales, financing, insurance, maintenance, and aftermarket services, all interacting to serve automotive needs. 132) Carmaker, Kia, knows that to reach its target markets three kinds of marketing channels may be used. What are these three marketing channels and how might Kia use each of them? Answer: The three marketing channels are communication, distribution, and service channels. Kia uses advertising to position its products and convey a certain message to consumers (communication channel). The delivery of cars to end consumers would require a distribution channel, such as a car dealership, and the company can have tie-ups with insurance companies to provide car insurance (service channel). 133) The marketplace isn't what it used to be. List and briefly discuss the new behaviors, opportunities, and challenges that await the marketer in the 21st century. Answer: Responses to this question should include: (1) changing technology, (2) globalization, (3) deregulation, (4) privatization, (5) customer resistance, (6) heightened competition, (7) industry convergence, (8) retail transformation, (9) disintermediation, (10) network information technology, (11) consumer buying power, (12) consumer information, (13) consumer participation, and (14) consumer resistance. 134) Discuss the concept of disintermediation and provide an example. Answer: Disintermediation grew out of the rush to embrace the dot-coms and e-commerce. Essentially, the dot-coms removed many of the traditional intermediaries by encouraging consumers to deal directly with the company via the Internet. "Brick-and-click" businesses eventually brought some of the intermediaries back through a process called reintermediation. 135) The digital revolution has placed a whole new set of capabilities in the hands of consumers and businesses. Describe the advantages that you as a consumer have today that your parents or grandparents didn't have. Answer: Responses to this question should include: (1) a substantial increase in buying power, (2) a greater variety of available goods and services, (3) a great amount of information about practically anything, (4) greater ease in interacting and placing and receiving orders, and (5) an increased ability to compare products and services. 136) The Internet has given today's companies a new set of capabilities. Among those capabilities is the ability to operate a new information channel. Describe how information can be used by the marketer in this new channel. Answer: Companies can operate a powerful new information and sales channel, the Internet, with augmented geographical reach to inform and promote their businesses and products worldwide. By establishing one or more Web sites, a company can list its products and services, its history, its business philosophy, its job opportunities, and other information of interest to visitors. This provides consumers with a direct access to the company. Almost all Web sites include a "contact us" section that enables consumers to put forth their queries and interact with the company directly. This in turn allows marketers to be aware of people's opinions and preferences. 137) Discuss how companies can use the Internet to build their brands. Give an example of a company that has done so. Answer: Online marketing activities can be used to build brands by increasing consumer exposure to the brand and creating an interactive experience between the customer and the brand, giving consumers access not only to company-created information but also consumer-generated content. For example, Carnival Connections, an online cruise-booking site, made it easy for cruise fans to compare notes on cruise destinations and onboard entertainment. 138) Arthur Tan has decided to start a business. He wants to manufacture vacuum cleaners and believes in the production concept. If this approach is taken, what will be Mr. Tan's primary areas of concentration as he builds his business? Answer: This orientation holds that consumers will prefer products that are widely available and inexpensive. Managers of production-oriented businesses concentrate on high production efficiency, low costs, and mass distribution. Mr Tan will also want an efficient production process in place. This approach is also used when a company wants to expand the market. Students may use these facts as they design their answer. 139) Increasingly, a key goal of marketing is to develop deep, enduring relationships with all entities that directly or indirectly affect the success of the firm. Discuss the merits of relationship marketing. From your experience as a consumer, describe the relationship marketing efforts undertaken by a company of your choice. Answer: Students should understand that the relationship between any supplier and customer is not just in the mechanics of the transaction, but more importantly how the customer is treated during the transaction. The better the relationship, the more the likelihood of the customer remaining loyal. They should pick a company that has served them well and made them feel special each and every time. 140) What would be the marketing network elements for a motorcycle company such as Harley-Davidson? Answer: A marketing network consists of the company and its supporting stakeholders. These stakeholders for Harley-Davidson are its customers, employees, suppliers, distributors, retailers, repair services, ad agencies, lobby groups, and motorcycle support clubs. The operating principle is simple: Build an effective network of relationships with key stakeholders, and profits will follow. 141) Your firm is in the process of moving from focusing on a financial scorecard as the basis for running and evaluating the organization to a marketing scorecard approach. What is a marketing scorecard approach and what might be some of its components? Answer: Top management is going beyond sales revenue alone to examine the marketing scorecard. Today, the shift to the marketing scorecard attempts to interpret what is happening to market share, customer loss rate, customer satisfaction, product quality, and other measures. Managers know changes in marketing indicators predict changes in financial results. 142) William Boon owns an extremely profitable sea-side resort. In order to increase his resort's brand value, Burns is considering cause-marketing. Give a few examples of how he may achieve this goal. Answer: Cause marketing is promoting social issues through efforts such as sponsorships, licensing agreements, and advertising. The hotel can sponsor events addressing social issues. As it is a sea-side resort, it can support and sponger efforts to protect marine life, preserve the natural environment, and prevent water pollution. (Answers can vary.) William Boon could achieve cause-marketing by partnering with environmental organizations to support ocean conservation efforts or by organizing beach clean-up events, promoting these initiatives through his resort's marketing channels to enhance brand value and attract eco-conscious guests. 143) You have been given the assignment of justifying cause-related marketing to your board of directors. What would be your primary argument in favor of such a proposal? Answer: Companies see cause-related marketing as an opportunity to enhance their corporate reputation, raise brand awareness, increase customer loyalty, build sales, and increase press coverage. They believe customers will increasingly look for signs of good corporate citizenship that go beyond supplying rational and emotional benefits. This should be the main line of argument in support of any cause-related marketing effort. 144) Linda Lim has been given the task of developing the product element of her company's marketing mix. List the components that will likely be included in this element of the marketing mix. Answer: Product variety, quality, design, features, brand name, packaging, sizes, services, warranties, and returns are the key elements of the product portion of the marketing mix. Chapter 2 Developing Marketing Strategies and Plans 1) The task of any business is to ________. A) create customer needs B) differentiate in terms of cost of production C) deliver customer value at a profit D) reduce competition E) communicate similar value as provided by competitors Answer: C 2) What is the traditional view of marketing? A) Firms should just focus on production because if the products are good then they will automatically sell. B) Firms should just focus on making something and then selling it. C) Firms should have a proper marketing team that can increase consumers' awareness of their products and rouse their interest in them. D) Firms should price their products as low as possible so that marketing them becomes easy. E) Firms should remember that promotion is the most important of the four Ps. Answer: B 3) Value delivery process can be divided into three phases, out of which "choosing the value" implies _______, which is the essence of strategic marketing. A) segmentation, developing, and delivering B) targeting, positioning, and communicating C) targeting, positioning, and delivering D) segmentation, targeting, and positioning E) researching, developing, and delivering Answer: D 4) AsiaCorp is one of the best in its industry in terms of costs and performance. Many companies in its industry will probably consider AsiaCorp as a ________. A) pioneer B) benchmark C) target for acquisition D) future supplier E) sounding board for ideas Answer: B 5) James Foo has been put in charge of gathering marketing intelligence, disseminating it within his organization, and eventually directing action on the information. Mr. Foo's task is best described as part of the ________. A) market-sensing process B) new-offering realization process C) customer acquisition process D) customer relationship management process E) fulfillment management process Answer: A 6) When a customer places an order at BookBox.com, the company processes the customer's payment information, sends the order to the nearest warehouse, and ships the order via FedEx. This is best described as the ________. A) market-sensing process B) customer acquisition process C) customer relationship management process D) fulfillment management process E) new-offering realization process Answer: D 7) Today, the "mass market" is actually splintering into numerous segments, each with its own wants, perceptions, preferences, and buying criteria. This implies that ________. A) the traditional marketing approach would be the best approach to follow B) the producers must consider themselves as a part of the value-chain process C) the producers should focus on niche markets D) all market segments are equally profitable E) target market strategies are no longer effective Answer: B 8) The first phase of the value creation and delivery sequence is ________ that represents the "homework" marketing must do before any product exists. A) choosing the value B) providing the value C) communicating the value D) considering the value E) acquiring the value Answer: A 9) The last step in the value creation and delivery sequence is ________ the value where the sales force, sales promotion, advertising, and other communication tools announce and promote the product. A) developing B) positioning C) communicating D) reversing E) researching Answer: C 10) In the cycle of complete strategic planning, taking corrective action is a part of ________. A) planning B) implementation C) controlling D) organizing E) analyzing Answer: C 11) The ________ in the value chain cover the sequence of bringing materials into the business (inbound logistics), converting them into final products (operations), shipping out final products (outbound logistics), marketing them (marketing and sales), and servicing them (service). A) operations processes B) manufacturing processes C) primary activities D) secondary activities E) tertiary activities Answer: C 12) Michael Porter's value chain would identify which of the following as a support activity? A) shipping out final products B) marketing products C) procurement D) servicing products E) operations Answer: C 13) Which of the following can be considered a primary activity in the value chain process? A) procurement B) human resource management C) technology development D) inbound logistics E) firm infrastructure Answer: D 14) The fulfillment management process includes all the activities in ________. A) gathering and acting upon information about the market B) researching, developing, and launching new high-quality offerings quickly and within budget standards C) defining target markets and prospecting for new customers D) building deeper understanding, relationships, and offerings to individual customers E) receiving and approving orders, shipping the goods on time, and collecting payment Answer: E 15) With respect to core business processes, the ________ includes all the activities involved in gathering market intelligence, disseminating it within the organization, and acting on the information. A) market-sensing process B) market research process C) target marketing process D) market pulse process E) deployment process Answer: A 16) With respect to the core business processes, the ________ includes all the activities involved in developing, and launching high-quality products quickly and within budget. A) market-sensing process B) new-offering realization process C) fulfillment management process D) customer acquisition process E) customer relationship management process Answer: B 17) Activities involved in building deeper understanding of existing consumers and what the product offerings mean to them would be a part of ________. A) customer acquisition process B) customer relationship management process C) customer prospecting process D) customer integrating management process E) customer equity process Answer: B 18) ________ allows the company to discover who its target markets are, how they behave, and what they need or want. It also enables the company to respond appropriately, coherently, and quickly to different customer opportunities. A) Network management B) Supply chain management C) Marketing management D) Customer relationship management E) Total quality management Answer: D 19) Another way to describe a supply chain, where companies partner with specific suppliers and distributors to ensure a smooth functioning of the system, is to call it a ________. A) teamwork group B) horizontal integration C) domestic power center D) value exploration E) value delivery network Answer: E 20) The key to utilizing organizational core competencies is to ________ that make up the essence of the business. A) force organizational departments to justify the budgetary components B) vertically integrate and own all intermediaries C) own and nurture the resources and competencies D) emphasize global promotions E) segment the workforces Answer: C 21) ________ has three characteristics: (1) it is a source of competitive advantage in that it makes a significant contribution to perceived customer benefits; (2) it has applications in a wide variety of markets; and (3) it is difficult for competitors to imitate. A) Core competency B) Market sensing process C) Corporate social responsibility D) Strategic business unit E) Philanthropy Answer: A 22) Core competencies tend to refer to areas of special technical and production expertise, whereas ________ tend to describe excellence in broader business processes. A) process benchmarks B) distinctive capabilities C) distributive capabilities D) facultative benchmarks E) concentric capabilities Answer: B 23) Holistic marketers achieve profitable growth by expanding customer share, ________, and capturing customer lifetime value. A) undermining competitive competencies B) building customer loyalty C) creating customer needs D) renewing a customer base E) cannibalizing products Answer: B 24) The holistic marketing framework is designed to address three key management questions. Which of the following is one of those questions? A) Value claims—how does the company deal with value clutter? B) Value proposition—how can value propositions be made profitable? C) Value erosion—are there weak links in the company's value chain? D) Value network—how can a company effectively network? E) Value exploration—how can a company identify new value opportunities? Answer: E 25) As Kodak addresses the digital revolution taking over the photographic industry, it wants customers to see it as a leader in digital photography. Thus, it is moving away from the production of film roll cameras. This would be an example of which of the following value creation steps? A) abandoning current product lines B) changing the corporate vision C) repositioning the company's brand identity D) redoing the corporate logo E) realigning core competencies Answer: C 26) Of the four organizational levels, the corporate level is likely to take which of the following decisions? A) entering a new market B) resource allocation for each product C) strategic plan for individual business units D) choosing specific suppliers for each business unit E) marketing plan for each product Answer: A 27) Most large companies consist of four organizational levels: the corporate level, the ________, the business unit level, and the product level. A) board of director level B) major stakeholder level C) management team level D) division level E) strategic level Answer: D 28) During Jill's market research study, many customers indicated that traditional oven gloves made it very difficult to hold baking dishes, resulting in frequent spills. Jill brought her findings to the research department, and her company leveraged its engineering and design competencies to develop a new hand-held hot-pad that allows for significantly greater dexterity in handling hot cooking implements, while protecting the cook from burns. This is an example of the ________ element of the holistic marketing framework. A) integrated marketing B) value creation C) negative demand D) value networking E) value focus Answer: B 29) The marketing plan, the central instrument for directing and coordinating the marketing effort, operates at ________ levels. A) functional and operational B) strategic and tactical C) corporate and operational D) customer and expenditure E) corporate and division Answer: B 30) The ________ lays out the target markets and the value proposition that will be offered, based on an analysis of the best market opportunities. A) organizational plan B) strategic marketing plan C) corporate tactical plan D) corporate mission E) customer-value statement Answer: B 31) Which of the following plans would most likely specify the marketing tactics, including product features, promotion, merchandising, pricing, sales channels, and service? A) the tactical marketing plan B) the target marketing plan C) the deployment plan D) the product-launch plan E) the product-development plan Answer: A 32) Which of the following is NOT one of the four planning activities undertaken by all corporate headquarters? A) defining the corporate mission B) establishing strategic business units C) assigning resources to each SBU D) assessing growth opportunities E) deciding sales channels Answer: E 33) Joe Gan plans the daily promotional releases about his company's products and services. He can be described as a(n) ________ planner. A) strategic B) selective C) tactical D) niche E) operational Answer: C 34) A clear, thoughtful mission statement provides employees with a shared sense of purpose, direction, and ________. A) profitability B) target market feasibility C) opportunity D) continuous improvement E) quality products Answer: C 35) Mission statements are at their best when they reflect a ________. A) market B) strength C) competency D) vision E) value Answer: D 36) Which of the following is one of the five major characteristics of good mission statements? A) They focus on a large number of goals. B) They expand the range of individual employee discretion. C) They define the major competitive spheres within which the company will operate. D) They take a short-term view. E) They are long and comprehensive to ensure that all critical concepts are included. Answer: C 37) The ________ is the number of channel levels, from raw materials to final product and distribution, in which a company will participate. A) industry sphere B) vertical sphere C) product/application sphere D) competence sphere E) market segment sphere Answer: B 38) Gerber primarily serves the baby food market. In choosing to focus on this market, Gerber is defining its competitive sphere on the basis of ________. A) vertical segmentation B) backward integration C) market segmentation D) diversification E) differentiation Answer: C 39) While viewing businesses in terms of customer needs can suggest additional growth opportunities, a ________ tends to focus on selling a product or service to a current market. A) strategic market definition B) target market definition C) cognitive definition D) product definition E) tactical definition Answer: B 40) What are hollow corporations? A) companies that market their products through franchisees B) companies that have liabilities exceeding their assets C) companies that outsource all production to suppliers D) companies that do not have any physical presence and only operate online E) companies that are horizontally integrated Answer: C 41) A ________ tends to focus on selling a product or service. A) target market definition B) strategic market definition C) mass-market definition D) differentiated market definition E) integrated market definition Answer: A 42) A business can be defined in terms of three dimensions: customer groups, customer needs and ___________. A) size B) technology C) competitors D) services E) products Answer: B 43) A characteristic of a ________ is that it can be a single business or collection of related businesses that can be planned separately from the rest of the company. A) strategic business unit B) subsidiary unit C) merged unit D) niche market unit E) specialized business unit Answer: A 44) A strategic-planning gap can be corrected by ________. A) changing the company's mission B) adjusting its core values C) choosing integrative growth strategies D) redefining organizational culture E) increasing resource use Answer: C 45) Market-penetration, product-development, and market-development strategies would all be examples of ________ strategies. A) concentric growth B) conglomerate C) horizontal D) intensive growth E) integrative growth Answer: D 46) Which of the following is an example of growth by diversification? A) a company introducing its existing products in a new market B) a company introducing new product category in a new market C) a company increases its product line in an existing market D) a company introducing a new product category in an existing market E) a company integrates backward to cut costs Answer: B 47) A company that seeks to increase its sales and profits through backward, forward, or horizontal integration within the industry is said to be employing a(n) ________ strategy. A) diversification growth B) intensive growth C) target growth D) integrative growth E) conglomerate growth Answer: D 48) Which of the following is an example of integrative growth? A) a company improves its market share with its current products in the current markets B) a company enters a new market with current products C) a company develops new products for its existing markets D) a company improving sales by integrating backward E) a company developing new products for new markets Answer: D 49) If you were the CEO of a company that was looking to implement strategies to fill a perceived strategic-planning gap, you would most likely explore ________ strategy first because it is easier to improve an existing business than to build a new one. A) market-penetration B) market-development C) diversification D) product-development E) exclusive Answer: A 50) Once Starbucks had established its presence in thousands of cities internationally, the company sought to increase the number of purchases by existing customers with a ________ strategy that led to new in-store merchandise, including compilation CDs and high-speed wireless access. A) product-development B) market-penetration C) diversification D) market-development E) conglomerate Answer: A 51) Qantas, the Australian national carrier, introduces flights to the Middle East. This is an example of ________. A) product development B) diversification C) market development D) market penetration E) differentiation Answer: C 52) A(n) ________ is when a company might seek new businesses that have no relationship to its current technology, products, or markets. A) concentric strategy B) conglomerate strategy C) horizontal strategy D) intensive growth strategy E) integrative strategy Answer: B 53) Which of the following terms can be defined as “the shared experiences, stories, beliefs, and norms that characterize an organization”? A) organizational dynamics B) a business mission C) an ethical/value statement D) customer relationships E) corporate culture Answer: E 54) A company’s organization consists of its structures, policies, and corporate culture, all of which can become dysfunctional in a _______________ business environment. A) competitive B) global C) rapidly changing D) stagnant E) local Answer: C 55) The first step in the business unit strategic-planning process deals with which of the following? A) formulate goals B) define business mission C) implement strategies D) execute programs E) conduct SWOT analysis Answer: B 56) Through its inventory management technology and highly efficient shipping practices, IKEA is able to keep its inventory expenditure extremely low and to pass these savings on to consumers in the form of low prices. IKEA's strategy is best described as ________. A) a focused approach B) integrative growth C) differentiation D) market development E) overall cost leadership Answer: E 57) When a firm aims to underprice competitors and win market share, it is using a(n) ________ strategy that requires relatively less marketing skills as compared to other strategies. A) product differentiation B) overall cost leadership C) focus D) domestic customer relationship E) price skimming Answer: B 58) After analyzing their company's strengths and weaknesses, top managers at Asia Loans decided to meet the needs of the DINK (dual income, no kids) market segment, Asia Loans simplified its sales contract, restructured its advertising efforts to focus on Google ads, and created a separate customer-service department. Asia Loans’ strategy is best described as a(n) ________ strategy. A) overall cost leadership B) focus C) differentiation D) diversification E) promotional Answer: B 59) Unlike its competitors in the online air travel industry, Travel.com provides its customers with a greater variety of services such as cruise reservations, package tours, hotel bookings, and car rentals. This is an example of a(n) ________ strategy. A) overall cost leadership B) focus C) differentiation D) diversification E) promotional Answer: C 60) Microsoft features Pepsi in its XBox 360 games. The best description of this form of alliance would be a(n) ________. A) product alliance B) logistics alliance C) pricing collaboration D) network alliance E) promotional alliance Answer: E 61) Hong Kong’s Li & Fung manages Avon’s supply chain. The best description of this form of alliance would be a(n) ________. A) product alliance B) logistics alliance C) pricing collaboration D) indirect collaboration E) promotional alliance Answer: B 62) In India, Pepsi built strategic alliances with Adidas and Microsoft to tap Indian cricket fans during the World Cup. The best description of this form of alliance would be a ________. A) product alliance B) logistics alliance C) pricing collaboration D) network alliance E) promotional alliance Answer: E 63) When a business gets to know market segments intimately and pursues either cost leadership or differentiation within the target segment, it is employing a ________. A) defined strategy B) focused strategy C) value-added strategy D) competitive advantage strategy E) customer-focused strategy Answer: B 64) When one company licenses another to produce its offerings, or two companies jointly market their complementary offerings, it is called a ________. A) pricing collaboration B) product or service alliance C) promotional alliance D) logistics collaboration E) total quality management Answer: B 65) To keep their strategic alliances thriving, corporations have begun to develop organizational structures to support them and have come to view the ability to form and manage strategic alliances as core skills. This is called ________. A) value managed partnership B) decentralized partnership C) centralized partnership D) partner relationship management E) intensive growth management Answer: D 66) Which of the following statements is true of marketing plans? A) They can be independently developed without worrying about other functional areas. B) They provide direction and focus for a brand, product, or company. C) They are usually profit-oriented. D) They are of limited use to non-profit organizations. E) They are typically five-year plans and they lay out the strategies required to achieve targets in those five years. Answer: B 67) Which of the following elements of a marketing plan permits senior management to grasp the organization’s main goals and recommendations? A) the situation analysis B) the marketing strategy C) the executive summary D) the financial projections E) the short-term targets Answer: C 68) The most frequently cited shortcomings of current marketing plans, according to marketing executives, are lack of realism, insufficient competitive analysis, and a ________ focus. A) long-term B) profit C) short-run D) product E) price Answer: C 69) The ________ is the last section of the marketing plan and spells out the goals and budget for each month or quarter, so management can review each period's results and take action as needed. A) executive summary B) situation analysis C) marketing strategy D) financial projections E) implementation and controls Answer: E 70) The traditional view of marketing is that the firm makes something and then sells it. Answer: True 71) Marketing goods that are currently in short supply would require significant marketing talent. Answer: False 72) The traditional view of marketing works best in economies with many different types of people, each with individual wants, perceptions, preferences, and buying criteria. Answer: False 73) In the communication stage of the value creation and delivery sequence, marketing must determine specific product features, prices, and distribution channels. Answer: False 74) The customer relationship management process involves all the activities related to receiving and approving orders, shipping the goods on time, and collecting payment. Answer: False 75) The new-offering realization process involves all activities in defining target markets and prospecting for new customers. Answer: False 76) A principle of the value chain is that every firm is a synthesis of activities performed to design, produce, market, deliver, and support its product. Answer: True 77) Another name for a company's value delivery network is "distribution chain." Answer: False 78) Competitors in a given industry can be identified by the similarities in their core competencies. Answer: False 79) A firm's core competency has applications only in the specific market in which the firm operates. Answer: False 80) Holistic marketing focuses on the integration of value exploration, value creation, and value delivery as a means to build long-term relationships with consumers. Answer: True 81) When a manager is trying to identify how the company can efficiently create promising new offerings, he is addressing the question of value delivery. Answer: False 82) The marketing plan is the central instrument for directing and coordinating the marketing effort. Answer: True 83) A strategy is a game plan for achieving long-run objectives. Answer: True 84) Mission statements that express unrealistic visions are usually unable to inspire employees to achieve their targets. Answer: False 85) Good mission statements should be long and clear, should emphasize on a wide range of goals, and stress on the company's major policies and values. Answer: False 86) If Sony defined its scope of business as “making copying equipment”, it can be classified as a marketing definition. Answer: False 87) An intensive growth strategy involving marketing current products to new markets is a market-development strategy. Answer: True 88) A company seeking to expand the number of existing products sold to its current markets, would be using a “market-penetration strategy”. Answer: False 89) If a company sought to grow by starting new businesses that have no relation to its current technology, products, or markets, the company would be using a market penetration strategy. Answer: False 90) “What will we do if it happens?” is a question that managers typically ask while conducting a scenario analysis. Answer: True 91) An environmental threat is a challenge posed by an unfavorable trend or development that, in the absence of defensive marketing action, would lead to lower sales or profit. Answer: True 92) Situation analysis in SWOT involves analyzing the possible opportunities and threats that can come from the market. Answer: True 93) Once a SWOT analysis has been completed, the strategic planner is ready to proceed to the goal formulation stage of the strategic-planning process model. Answer: True 94) In applying MBO (management by objectives) all objectives are treated as being equally important. Answer: False 95) For an MBO (management by objectives) system to work, one of the four criteria that the unit's objectives must meet is that objectives must be stated quantitatively whenever possible. Answer: True 96) Contrary to popular belief, it is not possible to maximize sales and profits simultaneously. Answer: True 97) A business that concentrates on achieving superior performance in an important customer benefit area valued by a large part of the market is following a differentiation strategy. Answer: True 98) A firm employing a focus strategy concentrates on achieving superior performance in an important customer benefit area valued by a large part of the market. Answer: False 99) Partner relationship management is now considered as a core skill fundamental to the development and maintenance of strategic alliances. Answer: True 100) Firms directing the same strategy to the same target market constitute a strategic group. Answer: True 101) A written document that summarizes what the marketer has learned about the marketplace and indicates how the firm plans to reach its marketing objectives is called a vision statement. Answer: False 102) Marketing plans are becoming more production oriented because of the high costs of doing business in today's economy. Answer: False 103) A marketing plan should open with a situation analysis. Answer: False 104) Definitions of a firm's mission as well as its marketing and financial objectives are included in the marketing strategy section of the marketing plan. Answer: True 105) Sales forecasts, expense forecasts, and break-even analysis are usually found in the section on financial projections in the marketing plan. Answer: True 106) A marketing plan is evaluated on the basis of how simple, specific, realistic and complete it is. Answer: True 107) Good marketing plans are usually short and to the point. Answer: False 108) Most marketing plans conclude with a section that indicates how the plan will be implemented. Answer: True 109) The marketing strategy section of the marketing plan spells out goals and budgets for each month or quarter so the management can review each period's results and take corrective action as needed. Answer: False 110) Briefly summarize the two views of the value delivery process that may be followed by organizations. Answer: The traditional view of marketing is that the firm makes something and then sells it. Companies that subscribe to this view have the best chance of succeeding in economies marked by goods shortages where consumers are not fussy about the quality, features, or style. If abundant choices are present, this view does not work well. Another view emphasizes the organization's role in the value delivery process. Strategic and tactical marketing are used to choose the value, provide the value, and communicate the value to consumers and channel partners. The value delivery process begins before there is a product and continues through development and after launch. 111) The firm's success depends not only on how well each department performs its work, but also on how well the various departmental activities are coordinated to conduct core business processes. List and briefly describe the five core business processes. Answer: The core business processes include (1) the market-sensing process—all the activities involved in gathering market intelligence, disseminating it within the organization, and acting on the information; (2) the new-offering realization process—all the activities involved in researching, developing, and launching new high-quality offerings quickly and within budget; (3) the customer acquisition process—all the activities involved in defining target markets and prospecting for new customers; (4) the customer relationship management process—all the activities involved in building deeper understanding, relationships, and offerings to individual customers; and (5) the fulfillment management process—all the activities involved in receiving and approving orders, shipping the goods on time, and collecting payment. 112) Describe the characteristics a core competency should possess. Answer: Core competency has three characteristics. They are: (1) it is a source of competitive advantage; (2) it has applications in a wide variety of markets; and (3) it is difficult for competitors to imitate. 113) A holistic marketing orientation can provide insight into the process of capturing customer value and is designed to address three key management questions. Describe each of these key management questions in brief. Answer: The three management questions are: (1) value exploration—how can a company identify new customer-value opportunities? (2) value creation—how can a company efficiently create more promising new customer-value offerings? and (3) value delivery—how can a company use its capabilities and infrastructure to deliver the new customer-value offerings more efficiently? 114) Indicate the differences and similarities between the following terms: marketing plan, strategic marketing plan, and tactical marketing plan. Answer: The marketing plan is the central instrument for directing and coordinating the marketing effort. It operates at two levels: strategic and tactical. The strategic marketing plan lays out the target markets and the value proposition that will be offered, based on an analysis of the best market opportunities. The tactical marketing plan specifies the marketing tactics, including product features, promotion, merchandising, pricing, sales channels, and service. 115) Good mission statements are essential to being a success in business. Describe the three major characteristics that good mission statements should have. Answer: Major characteristics of mission statements include the following: (1) focus on a limited number of goals; (2) stress on the company's major policies and values; (3) definition of the major competitive spheres within which the company will operate (e.g., industry, products and applications, competence, market segment, vertical, and geographical); (4) a long-term view; and (5) should be as short, memorable, and meaningful as possible. 116) During the planning process, if there is a gap between future desired sales and projected sales, corporate management will need to develop or acquire new businesses to fill it. Identify and describe the three strategies that can be used to fill the strategic gap. Answer: The first option is to identify opportunities to achieve further growth with current businesses (intensive growth opportunities). The second option is to identify opportunities to build or acquire businesses that are related to current businesses (integrative growth opportunities). The third is to identify opportunities to add attractive businesses that are unrelated to the existing businesses (diversification growth opportunities). 117) Outline the steps involved in business unit strategic-planning process. Answer: Students should describe (in order) the business mission, SWOT analysis, goal formulation, strategy formulation, program formulation and implementation, and feedback and control. 118) Identify and give examples of the four major categories of strategic alliances. Answer: The four major categories of strategic alliances include (1) product or service alliances, where one company licenses its product, or two companies jointly market their complementary products or a new product; (2) promotional alliances, where one company agrees to carry a promotion for another company's product or service; (3) logistics alliances, where one company offers logistical services for another company's product; and (4) pricing collaboration, where one or more companies join in an agreement on coordinated pricing. Student examples may vary. The four major categories of strategic alliances are: 1. Joint Ventures: Two companies create a new entity, like Sony Ericsson. 2. Equity Alliances: One company invests in another, such as Toyota's investment in Uber. 3. Non-Equity Alliances: Companies collaborate through contracts, like Starbucks and Barnes & Noble. 4. Franchising: A company allows another to operate using its brand, such as McDonald's franchises. 119) Characterize a marketing plan. Answer: A marketing plan is a written document that summarizes what the marketer has learned about the marketplace and indicates how the firm plans to reach its marketing objectives. It contains tactical guidelines for the marketing programs and financial allocations over the planning period. 120) Briefly summarize the contents of a marketing plan. Answer: The contents of a marketing plan include (1) an executive summary and table of contents; (2) a situation analysis; (3) marketing strategy; (4) financial projections; and (5) implementation controls. 121) Hot Topic, a chain that sells rock-band-inspired clothes for teens, recently launched Torrid to give plus-size teens the same fashion options. Identify the three parts of the value delivery process and their function for Hot Topic. Answer: The first phase, choosing the value, represents the "homework" marketing must do before any product exists. The second phase, providing the value, is where product features, prices, and distribution are selected. The third phase, communicating the value, utilizes the sales force, sales promotion, advertising, and other communication tools to announce and promote the product. 122) Critics of Nike often complain that its shoes cost almost nothing to make, yet they are priced so high. Identify the elements of providing and communicating value that add to Nike's cost structure and result in the high price of Nike shoes. Answer: Although the raw materials and manufacturing costs of a sneaker are relatively low, marketing the product to the consumer is quite expensive. Providing value includes R&D costs and the costs associated with shipping to retail locations as well as the retailers' overhead. Communicating value includes obtaining celebrity endorsement and extensive advertising. Nike must also pay for a sales force that communicates the product's value to retailers and helps ensure that products are available in retail locations convenient to end consumers. 123) Over the past 10 years, Cisco Systems has drastically reduced its number of suppliers and aligned itself more closely with its remaining suppliers for each of its product-based teams. How might this have helped Cisco improve its new-offering realization process? Answer: By reducing the number of suppliers it uses, Cisco is able to work more closely with its few remaining suppliers, involving them in new-product development and tapping their expertise in improving overall product quality and supplier relationship. 124) In the central role of strategic planning, only a handful of companies stand out as master marketers—Procter & Gamble, Samsung, Nike, Disney, Toyota, Sony, and McDonald's to name a few. From a consumer's perspective why do you think they stand out? Explain. Answer: Students should explain that these companies focus on the customer and are organized to respond effectively to changing customer needs. They all have well-staffed marketing departments, and all their other departments—manufacturing, finance, research and development, personnel, purchasing—also accept the concept that the customer is king. 125) Identify the elements of a tactical marketing plan for a new kind of cola. Answer: The tactical marketing plan specifies the marketing tactics, including product features, promotion, merchandising, pricing, sales channels, and service. For a new kind of cola, the tactical marketing plan might include the packaging size and shape, the flavor, the kinds of advertising used (print, television, buzz marketing), how to price the new cola relative to other colas currently on the market, and where to sell the new cola (grocery stores, gas stations, vending machines, sandwich shops). 126) Lee’s Butchery has decided to purchase a meat-processing plant to gain more control of its beef supply and improve its profits. Which form of integrative growth strategy has Lee's employed? Answer: Lee's has selected a backward integration strategy. 127) From its origins as an animated film producer, Walt Disney Company has moved into licensing characters for merchandised goods and developed theme parks and vacation and resort properties. What strategy best describes Disney's growth? Answer: Disney has employed a diversification growth strategy, taking advantage of opportunities outside its original animated film business, leveraging the strength of its characters in new businesses. 128) When Yahoo! began to flounder in 2001, CEO Terry Semel imposed a more conservative, buttoned-down atmosphere on the freewheeling Internet start-up. At the new Yahoo!, spontaneity is out and order is in. Identify this organizational phenomenon. Answer: This could be described as a change in corporate or organizational culture. Corporate culture has been defined as “the shared experiences, stories, beliefs, and norms that characterize an organization”. 129) Describe what happens in scenario analysis and explain why firms such as Royal Dutch/Shell Group use the technique. Answer: Scenario analysis consists of developing plausible representations of a firm's possible future that make different assumptions about forces driving the market and include different uncertainties. Answers may vary on why to use the concept but answers should be mindful of the definition given. Students should try to anticipate the problems that are likely to aggravate in the energy industry and how scenario analysis may help the companies to anticipate the future and be prepared to adjust their processes accordingly. In scenario analysis, companies create and explore multiple potential future scenarios to assess the impact of various risks and opportunities. Firms like Royal Dutch/Shell use this technique to better prepare for uncertainties and make more resilient strategic decisions. 130) Explain what happens in a SWOT analysis during the strategic planning process. Answer: SWOT (strengths, weaknesses, opportunities, and threats) monitors the external and internal environment by examining key macroeconomic and microeconomic forces and actors that have an impact on the organization's business and industry. 131) Good marketing is the art of finding, developing, and profiting from marketing opportunities. What are the three primary methods for uncovering possible product or service improvements? Answer: Methods for uncovering possible product or service improvements include (1) the problem detection method, which asks consumers for their suggestions; (2) the ideal method, which asks consumers to imagine an ideal version of the product or service; and (3) the consumption chain method, which asks consumers to chart their steps in acquiring, using, and disposing of a product. 132) What questions would typically be asked during a market opportunity analysis (MOA)? Answer: Questions would typically be: (1) Can the benefits involved in the opportunity be articulated convincingly to a defined target market(s)? (2) Can the target market(s) be located and reached with cost-effective media and trade channels? (3) Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits? (4) Can the company deliver the benefits better than any actual or potential competitors? and (5) Will the financial rate of return meet or exceed the company's required threshold for investment? 133) For an MBO system (manage by objectives) to work, the business unit attempting to implement the process must meet four criteria. What are those criteria? Answer: The criteria are: (1) they must be arranged hierarchically, from the most to the least important; (2) objectives should be stated quantitatively whenever possible; (3) goals must be realistic; and (4) objectives must be consistent. 134) Michael Porter draws a firm distinction between operational effectiveness and a strategy. Briefly describe this distinction and identify when a company can claim that it has a strategy. Answer: Competitors can quickly copy the operationally effective company using benchmarking and other tools, thus diminishing the advantage of operational effectiveness. Porter defines strategy as “the creation of a unique and valuable position involving a different set of activities”. A company can claim that it has a strategy when its activities differ from those of its rivals or performs similar activities in different ways. 135) Warner Brothers has an alliance to release its movies in high-definition DVD in Sony’s Blu-ray format. This would classify as which type of strategic alliance? Explain your answer. Answer: This alliance is called a product or service alliance where one company licenses another to produce its product, or two companies jointly market their complementary products or a new product. Chapter 3 Gathering Information and Scanning the Environment 1) As the manager of an organization that is attempting to build a Marketing Information System (MIS), you have been informed that a MIS is built upon three fundamental information sources. The sources are ________, marketing intelligence activities, and marketing research. A) external records and documents B) databases found on the Internet C) consultant reports D) internal company records E) secondary data from government sources such as the Better Business Bureau Answer: D 2) The company's marketing information system should be a mix of what managers think they need, what managers really need, and ________. A) what the marketing research department is able to do B) what consumers are willing to consume C) what the government policies allow D) what is acceptable at the industry level E) what is economically feasible Answer: E 3) The heart of the internal records system is the ________. A) pay-roll system B) purchase order cycle C) order-to-payment cycle D) expense cycle E) human resources system Answer: C 4) The ________ begins with sales representatives and dealers sending orders to the firms and is followed by the sales department preparing invoices, and finally generating shipping and billing documents which are then sent to various departments. A) payroll system B) market research process C) human resources system D) expense cycle E) order-to-payment cycle Answer: E 5) By equipping its sales force with handheld devices with bar-code readers and Internet connections to speed inventory assessment, AsiaMade allows sales executives to have significantly more time to interact with their consumers. This is an example of the use of technology in improving ________. A) sales information systems B) payroll systems C) cookies D) cohort segmentation E) competitive intelligence gathering Answer: A 6) Companies can practice targeted marketing by using ________ records of Web site usage stored on personal browsers. A) plug-ins B) black swans C) cookies D) trolls E) honey-pots Answer: C 7) The internal records system supplies results data, but the marketing intelligence system supplies ________ data. A) internal B) revenue C) thematic D) happenings E) process Answer: D 8) A ________ is a set of procedures and sources managers use to obtain everyday information about developments in the marketing environment. A) data warehousing system B) viral marketing campaign C) product management system D) marketing intelligence system E) sales information system Answer: D 9) A company can take several steps to improve the quality of its marketing intelligence. Which of the following best describes the practice used by McDonald's when it sent mystery shoppers to assess stores' internal speed standards? A) training and motivating the sales force to spot and report new developments B) motivating intermediaries to pass along important intelligence C) networking externally D) purchasing information from outside research firms and vendors E) using the sales information system to get accurate sales reports Answer: B 10) A company can take several steps to improve the quality of its marketing intelligence. If the company purchases competitive products for study, attends open houses and trade shows, and reads competitors' published reports and stockholder information, the company is using ________ to improve the quality of its marketing intelligence. A) sales-force surrogates B) intermediaries C) external networks D) advisory panels E) customer feedback systems Answer: C 11) When gathering marketing intelligence, companies often use the population census, which provides an in-depth look at the population swings, demographic groups, regional migrations, and changing family structure. Which of the following steps to improve the quality of a company marketing intelligence system would be most closely associated with this illustration? A) A company can purchase information from outside suppliers. B) A company can take advantage of government data sources. C) A company can use online customer feedback systems to collect data. D) A company can network externally. E) A company can use its sales force to collect and report data. Answer: B 12) When a company acquires consumer-panel data from firms like A.C. Nielsen Company and Taylor Nelson Sofrés, which of the following steps to improve the quality of a company marketing intelligence system is the company resorting to? A) training and motivating the sales force to spot and report new developments B) motivating distributors, retailers, and other intermediaries to pass along important intelligence C) hiring external experts to collect intelligence D) using external network E) purchasing information from outside research firms and vendors Answer: E 13) Amazon.com offers an interactive feedback opportunity through which buyers, readers, editors, and others may review all products listed in the site, especially books. This is an example of a(n) ________. A) independent customer goods and service review forum B) public blog C) customer complaint site D) combo site offering customer reviews and expert opinions E) distributor or sales agent feedback site Answer: E 14) The sites which offer positive or negative product or service reviews and are built by the retailers of a particular product or service are called ________. A) combo sites B) distributor or sales agent feedback sites C) public blogs D) independent service review forums E) customer complaint sites Answer: B 15) A ________ is “unpredictable, short-lived, and without social, economic, and political significance.” A) fad B) fashion C) trend D) megatrend E) style Answer: A 16) A ________ is a direction or sequence of events that has some momentum and durability; it reveals the shape of the future and can provide strategic direction. A) fad B) fashion C) trend D) megatrend E) style Answer: C 17) A ________ is a “large social, economic, political, and technological change that is slow to form, and once in place, influences us for some time—between seven and ten years, or longer.” A) fad B) fashion C) trend D) megatrend E) style Answer: D 18) Which of the following is true about trends in worldwide population growth? A) Birthrates are on the rise in developed countries. B) Overall, the world population growth is declining. C) Birthrates are on the rise in developing countries. D) Death rates are rising in developing countries. E) Population growth is highest in developing countries. Answer: E 19) A growing population does not mean growing markets unless ________. A) the people are under a democratic system of government B) there is common ownership of all resources C) people have sufficient purchasing power D) there is adequate governmental intervention in the market E) the government has a budget surplus Answer: C 20) In China, as many as six adults — parents, grandparents, great-grandparents, and aunts and uncles — may be indulging the whims of each child. This is known as the _____________. A) pocket syndrome B) six pocket syndrome C) six syndrome D) one pocket syndrome E) baby pocket syndrome Answer: B 21) Firms find “reverse innovation” advantage by ________. A) introducing a commodity in a developed country and then distributing it globally B) introducing a commodity in a developing country and then distributing it in other developing countries C) introducing a commodity in a developing country and then distributing it globally D) introducing a commodity in a developed country and then distributing it in developing countries E) introducing a commodity in a developed country and then distributing it in other developed countries Answer: C 22) ________ refer to groups of individuals who are born during the same time period and travel through life together. A) Cohorts B) Populations C) Clans D) Societies E) Ethnic groups Answer: A 23) For marketers, the most ________ age groups shape the marketing environment. A) populous B) wealthy C) affluent D) poor E) innovative Answer: A 24) There is a global trend toward an aging population. It is the start of what the Japanese are calling the ______ Century. A) Lost B) Last C) Silver D) Gold E) Aging Answer: C 25) Future Asian retirees are envisaged to be more affluent, active, cosmopolitan, and youthful than their parents. This implies good prospects for marketers of _____________________ and beauty care offerings. A) travel, child care, wealth management B) pet care, entertainment, health care, wealth management. C) entertainment, health care D) travel, wealth management E) travel, entertainment, health care, wealth management Answer: E 26) The traditional household consists of ________. A) a husband, wife, and children (and sometimes grandparents) B) a group of related persons living together C) two or more families living together D) a man and a woman living together (whether married or not) E) related or unrelated persons who share living arrangements Answer: A 27) By 2010, projections indicate that the largest category of households will be composed of ________. A) childless married couples and empty nesters B) single-parent families C) single live-alones D) singles living with nonrelatives E) married couples with children Answer: A 28) Which of the following is likely to occur during economic downturns? A) People tend to spend more on luxury goods B) Consumption of necessary goods decline C) Long term credit is available at concessional rates of interest D) The purchasing power of the people declines E) The level of investment in the economy rises Answer: D 29) Which of the following economies provide limited opportunities to international marketers to develop product sales? A) capitalist economies B) subsistence economies C) raw-materials-exporting economies D) industrializing economies E) industrialized economies Answer: B 30) In a global economy, marketers need to pay attention to the ________________ in countries, particularly countries where affluence levels are rising. A) shifting distribution B) shifting income C) income distribution D) shifting population E) shifting income distribution Answer: E 31) Aside from cross-national income differences, companies must also consider intra-country variations in __________. A) religion B) occupations C) income D) culture E) size Answer: C 32) Which of the following elements of sociocultural environment can be associated with the growing demand for “social surrogates” like social networking sites, television etc.? A) views of ourselves B) views of organizations C) views of others D) views of nature E) views of the universe Answer: C 33) Today, corporations need to make sure that they are good corporate citizens and that their consumer messages are honest in order to positively align themselves with consumers' ________. A) views of others B) views of organizations C) views of themselves D) views of the universe E) views of society Answer: B 34) People vary in their views of society and their consumption patterns often reflect their social attitudes. ________ usually live more frugally, drive smaller cars, and wear simpler clothing. A) Makers B) Escapers C) Seekers D) Changers E) Developers Answer: D 35) People vary in their views of society and their consumption patterns often reflect their social attitudes. ________ usually eat, dress, and live well. A) Makers B) Escapers C) Seekers D) Changers E) Developers Answer: A 36) People vary in their views of society and their consumption patterns often reflect their social attitudes. ________ are a major market for movies, music, surfing, and camping. A) Makers B) Preservers C) Escapers D) Changers E) Developers Answer: C 37) ________ beliefs and values are passed from parents to children and reinforced by social institutions—schools, churches, businesses, and governments; they are very difficult to change. A) Transient B) Secondary C) Protected D) Core E) Variable Answer: D 38) Which of the following would be the best illustration of a secondary belief or value? A) belief in work B) belief in giving to charity C) belief in getting married D) belief in getting married early E) belief in being honest Answer: D 39) Each society contains ________, groups with shared values emerging from their special life experiences or circumstances. A) stakeholders B) cliques C) consumer bundles D) subcultures E) behavioral niches Answer: D 40) Consumers are generally more concerned with environmental issues that are closer to home, such as water pollution in rivers and lakes, than broader issues such as ______________. A) transportation B) industrial production C) global warming D) ozone depletion E) forest fires Answer: C 41) ________________ recognizes the need to integrate environmental issues into the firm’s strategic plans. A) Corporate environmentalism B) Environmentalism C) Social environmentalism D) Recycling E) Corporate culture Answer: A 42) Opportunities await companies and marketers who can create new solutions that promise to reconcile prosperity with _________________. A) corporate environmentalism B) environmentalism C) social environmentalism D) environmental protection E) corporate culture Answer: D 43) The marketer should monitor the following _____________: the pace of change, the opportunities for innovation, varying R&D budgets, and increased regulation. A) trends in fashion B) economic trends C) social trends D) trends in consumerism E) trends in technology Answer: E 44) When a company is said to have engaged in “greenwashing,” it means that ________. A) the company has significantly changed its business processes to incorporate a greener, more environmentally friendly philosophy B) the company has moved its production facilities to countries where environmental laws and regulations are less rigorous C) the company has changed its "green" image in order to appeal to a different, usually older, demographic D) the company's products are not nearly as green and environmentally beneficial as its marketing might suggest E) the company has undertaken a campaign to lobby for tougher environmental regulations for the industry Answer: D 45) Which of the following consumer environmental segments cares a great deal about the environment, but doesn't seem to have the knowledge or resources to take action? A) not me greens B) business first greens C) mean greens D) go-with-the-flow greens E) dream greens Answer: E 46) The consumer environmental segment termed ________ holds the view that the environment is not a huge concern and that business and industry is doing its part to help. This may explain why they don't feel the need to take action themselves—even as they cite lots of barriers to doing so. They are also the largest consumer environmental segment. A) not me greens B) business first greens C) mean greens D) go-with-the-flow greens E) dream greens Answer: B 47) The consumer environmental segment termed ________ claims to be knowledgeable about environmental issues, but does not express pro-green attitudes or behaviors. Indeed, it is practically hostile toward pro-environmental ideas. This segment has chosen to reject prevailing notions about environmental protection and may even be viewed as a potential threat to green initiatives. A) not me greens B) business first greens C) mean greens D) go-with-the-flow greens E) dream greens Answer: C 48) Which of the following is true about the technology trends that marketers should monitor? A) A growing portion of R&D expenditures are going toward the research side as opposed to the development side. B) Today, the time between idea and implementation is expanding. C) More single companies rather than consortiums are directing research efforts toward major breakthroughs. D) The pace of change is accelerating today. E) The government has decreased regulation of technological change. Answer: D 49) The ______________________ consists of laws, government agencies, and pressure groups that influence and limit various organizations and individuals. A) legal environment B) political environment C) social environment D) political and legal environment E) economic environment Answer: D 50) An intended effect of business legislation is to _____________________. A) restrict fair competition in the market B) encourage unbridled business behavior C) reduce the social cost of producing a particular commodity D) expose consumers to unfair trade practices E) protect companies from unfair competition Answer: E 51) An important force affecting business is the ________ movement, a movement of citizens and government organized to strengthen the rights and powers of buyers in relation to sellers. A) human rights B) consumerist C) environmental D) self-determination E) materialistic Answer: B 52) Companies can prepare as many as ________ different types of demand estimates. A) 6 B) 30 C) 60 D) 90 E) 150 Answer: D 53) The demand estimates of an organization comprise of five space levels. They are world, country, region, territory, and ________. A) zone B) organization C) customer D) product E) input Answer: C 54) The ________ market is the set of consumers with an adequate interest, income, and access to a particular offer. A) potential B) available C) target D) penetrated E) reserve Answer: B 55) The ________ market is the part of the qualified available market the company decides to pursue. A) potential B) available C) target D) penetrated E) reserve Answer: C 56) The ________ market is the set of consumers who are buying the company's product. A) potential B) available C) target D) penetrated E) reserve Answer: D 57) When the government of any country restricts the sale of a particular commodity to certain groups—for example, restricting sales of alcohol to individuals above the age of 21—the eligible consumers who have income, interest, access and qualification constitute the ________. A) accessible market B) target market C) potential market D) qualified potential market E) qualified available market Answer: E 58) Jeanine would like to own a Mercedes but is unable to afford one at this time. Jeanine is part of the ________ for this product. A) potential market B) available market C) target market D) projected market E) penetrated market Answer: A 59) ________ for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program. A) Company demand B) Area market potential C) Market demand D) Company sales potential E) Total market potential Answer: C 60) With an increase in marketing expenditure, market demand ________. A) continues to increase at an increasing rate B) initially increases and then declines C) increases first at an increasing rate, then at a decreasing rate D) decreases first and then spikes E) continues to increase at a decreasing rate. Answer: C 61) The base sales of an organization that takes place even without any demand-stimulating expenditures is called ________. A) primary demand B) market potential C) market minimum D) optimum demand E) market demand Answer: C 62) The distance between the market minimum and the market potential shows the overall ________. A) marketing sensitivity of demand B) market share of the firm C) market forecast of the firm D) product-penetration percentage E) sales quota Answer: A 63) A low market-penetration index indicates ________. A) it will be expensive for the firms to attract the few remaining prospects B) substantial growth potential for all firms C) the rival firms try to capture greater market share by lowering their product price D) the profit margins of the firms decline E) the firms cannot raise demand substantially by raising its market expenditure Answer: B 64) Only one level of industry marketing expenditure will actually occur. The market demand corresponding to this level is called the ________. A) market minimum B) market share C) market forecast D) market potential E) company demand Answer: C 65) A company can expect to expand its market share to a large extent when ________. A) it has a high market-penetration index B) its share-penetration index is low C) its share-penetration index is high D) its product-penetration percentage is high E) it has a low market potential Answer: B 66) During recession, the market demand curve which is a function of marketing expenditure ________. A) shifts upward B) becomes vertical C) remains unaffected D) shifts downward E) slopes downward Answer: D 67) The sales goal set for a product line, company division, or sales representative of an organization is called ________. A) sales budget B) company sales forecast C) sales quota D) company sales potential E) market potential Answer: C 68) A ________ is a conservative estimate of the expected volume of sales, primarily for making current purchasing, production, and cash flow decisions. A) sales budget B) company sales forecast C) sales quota D) company sales potential E) market potential Answer: A 69) ________ is the limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment. A) Sales budget B) Company sales forecast C) Sales quota D) Company sales potential E) Market potential Answer: E 70) ________ is the company's estimated share of market demand at alternative levels of company marketing effort in a given time period. A) Sales budget B) Market demand C) Company demand D) Company sales potential E) Market potential Answer: C 71) ________ is the sales limit approached by company demand as company marketing effort increases relative to that of competitors. A) Sales budget B) Market demand C) Company demand D) Company sales potential E) Market potential Answer: D 72) A company's sales potential would be equal to market potential if ________. A) the marketing expenditure of the company is reduced to zero B) industry marketing expenditures approach infinity for a given marketing environment C) the market is non-expandable D) market minimum is equal to market potential E) the company gets 100 percent share of the market Answer: E 73) ________ is the maximum sales available to all firms in an industry during a given period, under a given level of industry marketing effort and environmental conditions. A) Company demand B) Market demand C) Company sales potential D) Sales quota E) Total market potential Answer: E 74) Suppose an individual buyer purchases three pairs of shoes each year at $50 each pair and that there are 50 million such consumers in the economy. Compute the total market potential for shoes. A) $6,500 million B) $5,000 million C) $75 billion D) $7,500 million E) $10,000 million Answer: D 75) The ________ method of determining area market potential calls for identifying all the potential buyers in each market and estimating their potential purchases. A) group-discussion B) market-test C) market-buildup D) brand development index E) multiple-factor index Answer: C 76) An efficient method of estimating area market potentials makes use of the ________, developed by the U.S. Bureau of the Census in conjunction with the Canadian and Mexican governments. It classifies all manufacturing into 20 major industry sectors and further breaks each sector into a six-digit, hierarchical structure. A) Thomson Reuters Business Classification B) Global Industrial Classification Standard C) North American Product Classification System D) Industry Classification Benchmark E) North American Industry Classification System Answer: E 77) Which of the following organizations is likely to use the multiple-factor index method to estimate the market potential? A) a firm that manufactures auto parts B) a firm that provides facility management services to large offices C) a company that provides Web site development services for small businesses D) a company that manufactures diagnostic machines for hospitals E) a firm that manufactures fashionable clothes for teenagers Answer: E 78) Which of the following is true of the various elements of the multi-factor index method of estimating area market potentials? A) Zip+4 code centers generally have stable boundaries and a population of about 4000. B) The weights in the buying-power index are somewhat arbitrary. C) Normally, the lower the BDI, the less room there is to grow the brand. D) Census tracts are a little larger than neighborhoods. E) This method is primarily used by business marketers. Answer: B 79) Suppose Concrete Express, a cement manufacturing firm, finds that its sales have increased by 3 percent this year, while industry sales have increased by 5 percent. This implies that ________. A) Concrete Express has acquired additional market share in relation to the cement industry B) Concrete Express is losing its relative standing in the cement industry C) other players in the industry are losing market share D) the absolute market share of Concrete Express has declined E) Concrete Express's position in relation to the industry has remain unchanged Answer: B 80) For which of the following categories of products will demand forecasting be easiest? A) commodities which are in the initial stage of their product life cycles B) products which have many close substitutes in the market C) goods which are produced in an oligopoly market D) products whose sales fluctuate widely E) products whose consumers are highly sensitive to change in price Answer: C 81) Novamalt Asia, a manufacturer of health drinks, plans to introduce its new range of woman health drinks into the market. It involves a specialized marketing research firm to forecast the sales of this product. The research firm analyzes past buying behavior of customers and uses time-series analysis for making the sales forecasts. Which of the following information bases is being used by the research firm in this scenario? A) what people say B) what people do C) what people have done D) what people will do E) what people speculate Answer: C 82) Timeseries analysis method of forecasting sales breaks past time series into four components- trend, cycle, seasonal, and ________. A) regular B) annual C) erratic D) recurring E) periodic Answer: C 83) ________ projects the next period's sales by combining an average of past sales and the most recent sales, giving more weight to the latter. A) Timeseries analysis B) Statistical demand analysis C) Econometric analysis D) Cost effectiveness analysis E) Exponential smoothing Answer: E 84) ________ measures the impact of a set of causal factors (such as income, marketing expenditures, and price) on the sales level. A) Timeseries analysis B) Statistical demand analysis C) Econometric analysis D) Cost effectiveness analysis E) Exponential smoothing Answer: B 85) The sales forecasting method of ________ builds sets of equations that describe a system and statistically derives the different parameters that make up the equations statistically. A) timeseries analysis B) statistical demand analysis C) econometric analysis D) cost effectiveness analysis E) exponential smoothing Answer: C 86) Marketers have little information about how consumption patterns vary across and within countries. Answer: False 87) The major responsibility for identifying significant marketplace changes falls to the company’s marketers. Answer: True 88) Many firms use the Internet and extranets to improve the speed, accuracy, and efficiency of the order-to-payment cycle. Answer: True 89) Few consumers actually delete cookies frequently. When customers do not delete cookies, they expect customized marketing appeals and deals. Answer: True 90) Mailing of a new offer to a handful of selected customers instead of all customers reduces the response rate to the offer. Answer: False 91) The competitive intelligence function works best when it is loosely coordinated with the decision-making process. Answer: False 92) If a company were pursuing a policy of networking externally to gather marketing intelligence, it might collect competitors' ads or look up news stories about competitors. Answer: True 93) One of the ways to find relevant online information on competitors' strengths and weaknesses might be to frequent distributor or sales agent feedback sites. Answer: True 94) The competitive advantage function works best when it is closely coordinated with the decision-making process. Answer: False 95) A fad is more predictable and durable than a trend. Answer: False 96) A new market opportunity generally guarantees success, if the new product is technically feasible. Answer: False 97) Demographic developments are often unpredictable. Answer: False 98) Population growth is highest in countries and communities that can least afford it. Answer: True 99) There is a global trend toward an aging population. Answer: True 100) The graying of the population is affected by another trend, the widespread fall in fertility rates. Answer: True 101) Marketing strategies of firms should not consider the ethnic and racial diversity existing in their markets. Answer: False 102) Within each ethnic group are consumers who are quite different from each other. Answer: True 103) The desire for Asians to upgrade their knowledge and skills spell a high demand for quality books, magazines, and educational programs in the region. Answer: True 104) Households comprising of single, separated, widowed, and divorced individuals generally demand larger apartments, and expensive appliances, furniture, and furnishings. Answer: False 105) The available purchasing power in an economy depends on current income, prices, savings, debt, and credit availability. Answer: True 106) Industrial economies provide limited marketing opportunities for luxurious goods. Answer: False 107) Consumer expenditures are affected by income levels, savings, debt, and credit availability. Answer: True 108) Business has responded to increased awareness of nature's fragility and finiteness by producing wider varieties of camping, hiking, boating, and fishing gear such as boots, tents, backpacks, and accessories. Answer: True 109) Secondary beliefs and values are passed on from parents to children and reinforced by major social institutions, making them very difficult to change by marketers. Answer: False 110) Environmental regulations enforced by the government adversely affect automobile and steel manufacturing companies. Answer: True 111) Corporate environmentalism recognizes the need to integrate environmental issues into the firm's strategic plans. Answer: True 112) Trends in the natural environment for marketers to be aware of include the shortage of raw materials, especially water; increased pollution levels; and the changing role of governments. Answer: True 113) The time between introduction of products and peak production is shrinking. Answer: True 114) The U.S. leads the world in annual R&D expenditures while Japan is fast increasing its R&D expenditures in physics, biophysics, and computer science. Answer: True 115) Governments have reduced their agencies’ powers to investigate and ban potentially unsafe products. Answer: False 116) Environmental laws imposed by the government may at times create new business opportunities. Answer: True 117) Demand estimates prepared by companies are based on four different time periods. Answer: False 118) The penetrated market is the set of consumers who have an interest in a market offer but do not have the accessibility. Answer: False 119) Market demand for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program. Answer: True 120) An expansible market is unlikely to be affected by the level of industry marketing expenditures. Answer: False 121) The market forecast shows expected market demand, not maximum market demand. Answer: True 122) Companies assume that the lower the product-penetration percentage, the lower will be the market potential. Answer: False 123) In order to estimate future demand, companies commonly prepare a company sales forecast first, followed by an industry forecast, and finally a macroeconomic forecast. Answer: False 124) Forecasting is the art of anticipating what buyers are likely to do under a given set of conditions. Answer: True 125) Sales reps might have better insight into developing trends than any other group, and forecasting might give them greater confidence in their sales quotas and more incentive to achieve them. Answer: True 126) What is a marketing information system (MIS)? From what sources is the MIS developed? Answer: A marketing information system (MIS) consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. A marketing information system is developed from internal company records, marketing intelligence activities, and marketing research. 127) What is a marketing intelligence system? How can marketing intelligence data be collected? Answer: A marketing intelligence system is a set of procedures and sources that managers use to obtain everyday information about developments in the marketing environment. The marketing intelligence system supplies happenings data. Marketing managers collect marketing intelligence in a variety of different ways, such as by reading books, newspapers, and trade publications; talking to customers, suppliers, and distributors; monitoring social media on the Internet; and meeting with other company managers. 128) What are the various steps a company can take to improve the quality of its marketing intelligence function? Answer: The steps are: (1) a company can train and motivate the sales force to spot and report new developments; (2) a company can motivate distributors, retailers, and other intermediaries to pass along important intelligence; (3) a company can network externally; (4) a company can set up a customer advisory panel; (5) a company can take advantage of government data resources; (6) a company can purchase information from outside suppliers; and (7) a company can use online customer feedback systems to collect competitive intelligence. 129) List and briefly describe the five main ways in which marketers can find relevant online information on competitors' strengths and weaknesses. Answer: The five ways are: (1) independent customer goods and service review forums; (2) distributor or sales agent feedback sites which are built by the distributors themselves to describe their experience and level of satisfaction on products or services; (3) combo sites offering customer reviews and expert opinions mainly on financial services and high-tech products that require professional knowledge; (4) customer complaint sites designed mainly for dissatisfied customers, which allows customers to express their dissatisfaction in certain firms or products; and (5) public blogs offering personal opinions, reviews, ratings and recommendations on virtually any topic. 130) Explain “non-traditional” households. Answer: In some countries, there may be “non-traditional” households which include single live-alones, adult live-togethers of one or both sexes, single-parent families, childless married couples, and empty-nesters. More people are divorcing or separating, choosing not to marry, marrying later, or marrying without the intention to have children. Each group has a distinctive set of needs and buying habits. The single, separated, widowed, and divorced need smaller apartments; inexpensive and smaller appliances, furniture, and furnishings; and smaller-size food packages. Marketers must increasingly consider the special needs of non-traditional households, because they are growing rapidly. 131) What are the different income-distribution patterns? Answer: Marketers often distinguish countries using five income-distribution patterns: (1) very low incomes; (2) mostly low incomes; (3) very low, very high incomes; (4) low, medium, high incomes; and (5) mostly medium incomes. 132) Discuss the impact of tougher environmental regulations on businesses, citing examples whenever possible. Also, point out opportunities, if any, presented by these regulations. Answer: Imposing new regulations may hit certain industries very hard. Steel companies and public utilities in some countries like the U.S. have had to invest heavily in pollution-control equipment and more environmentally friendly fuels, making hybrid cars, low-flow toilets and showers, organic foods, and green office buildings. Opportunities await companies and marketers who can create new solutions that promise to reconcile prosperity with environmental protection. 133) What does total market potential mean? How can it be estimated? Answer: Total market potential is the maximum sales available to all firms in an industry during a given period, under a given level of industry marketing effort and environmental conditions. A common way to estimate total market potential is to multiply the potential number of buyers by the average quantity each purchases, times the price. A variation on this method is the chain-ratio method, which multiplies a base number by several adjusting percentages. 134) Suppose a cotton-textile company wants to estimate the area market potential for its high quality fabrics in Thailand. List the possible steps that the marketers will follow to compute the area market potential. Answer: The marketers may follow the following steps: Identify all the potential buyers of textile in the area, primarily the firms manufacturing readymade garments in that area. In order to do that, the company may compile a list from a directory of all manufacturing establishments in the area. Then it can estimate the quantity of fabrics each firm might purchase to produce garments worth $1 million. Compiling the quantity required by each of the firms, the marketers can estimate the area market potential of the fabric produced by the textile company. 135) Briefly describe the methods of forecasting future demand on the basis of past sales. Answer: The methods are: 1) Timeseries analysis, that breaks past time series into four components (trend, cycle, seasonal, and erratic) and projects them into the future. 2) Exponential smoothing, that projects the next period's sales by combining an average of past sales and the most recent sales, giving more weight to the latter. 3) Statistical demand analysis, which measures the impact of a set of causal factors (such as income, marketing expenditures, and price) on the sales level. 4) Econometric analysis, builds sets of equations that describe a system and statistically derives the different parameters that make up the equations statistically. 136) What are the two basic advantages that a company's marketers have in identifying significant changes in the market? Answer: The two advantages are: (1) They have disciplined methods for collecting information; and (2) they spend more time interacting with customers and observing competition. 137) Why is it necessary for firms to execute the steps of the order-to-payment cycle quickly and accurately? Answer: It is necessary for the firms to execute the steps of the order-to-payment cycle quickly and accurately because customers favor firms that can promise timely delivery. 138) Skyline Motors, an automobile manufacturing firm, is planning to introduce its new range of sports cars. It decides to offer a zero percent financing to the buyers. Skyline can save its mailing expenses by sending the offer only to its high-scoring customers instead of sending it to every customer in its database. Mention the factors according to which it may rank the customers in its database. Answer: A company may rank its customers according to factors such as purchase recency, frequency, and monetary value (RFM). 139) List some of the ways in which data mining assists the decision makers of the company. Answer: Data mining enables the analysts to garner fresh insights into neglected customer segments, recent customer trends, and other useful information. Managers can cross-tabulate customer information with product and salesperson information to yield still-deeper insights. 140) How do the distributors, retailers and other intermediaries help a company to improve the quantity and quality of its marketing intelligence? Answer: Since marketing intermediaries are often closer to the customer, they can offer helpful insights to the company to improve its marketing intelligence system. 141) Give an example of how a company can hire external experts to collect intelligence. Answer: Many companies hire specialists to gather marketing intelligence. Service providers often send mystery shoppers to their stores to assess how employees treat customers. Mystery shoppers for McDonald’s discovered that only 46 percent of its U.S. restaurants met internal speed-of-service standards, forcing the company to rethink processes and training. 142) How do retailers use mystery shoppers? Answer: Retailers find that stores that consistently score high on service have the best sales. Typical questions their mystery shoppers report on are (1) How long before a sales associate greeted you? (2) Did the sales associate act as if he or she wanted your business? and (3) Was the sales associate knowledgeable about products in stock? 143) When old industries fight or ignore new technologies, their businesses decline. Explain. Answer: Tower Records had ample warning that its music retail business would be hurt by Internet downloads of music. Its failure to respond led to liquidation. Similarly, Borders went into financial difficulties with the rise of Amazon.com and e-books such as Kindle and iPad. The marketer should monitor the following trends in technology: the pace of change, the opportunities for innovation, varying R&D budgets, and increased regulation. 144) How can marketers avoid “green marketing myopia”? Answer: Marketers should focus on consumer value positioning, calibrating consumer knowledge, and credibility of product claims. Persuade consumers that they are acting in their own and society’s long-run interest at the same time. 145) Philips Lighting's first shot at marketing a standalone compact fluorescent light (CFL) bulb was Earth Light, at $15 each versus 75 cents for incandescent bulbs. The product had difficulty climbing out of its deep green niche, as such marketing efforts of Philips suffered from the “green marketing myopia”. Identify the three ways of avoiding this. Answer: The three keys to avoiding green marketing myopia is the tendency to overly focus on a product's greenness. It can be avoided by (1) appropriately positioning the consumer value; (2) calibrating consumer knowledge; and (3) reinforcing the credibility of product claims. 146) Nestle is planning to introduce its new range of breakfast cereals. List the different product levels that it considers while formulating the demand estimates for the new product. Answer: The six different product levels that Nestle needs to consider to formulate the demand estimates for its new range of cereals are all sales, industry sales, company sales, product line sales, product from sales, and product item sales. 147) Suppose, the Indian government prohibits the sale of cigarettes to people below 20 years of age. Who are likely to comprise the qualified available market for Dunhill, a manufacturer of herbal cigarettes in India? Answer: Eligible adults (i.e. people above 20 years of age), who have interest and affordability constitute the qualified available market for the cigarettes in India. 148) What can you infer if the market-penetration index is low? Answer: A low index indicates substantial growth potential for all the firms. 149) How does the marketing environment determine the position of the market demand function? Answer: During economic prosperity the market demand function shifts up as every dollar spent in stimulating demand leads to a greater market demand. Whereas during recession the market demand function shifts downward as an equal increase in marketing expenditure leads to a smaller increase in market demand. 150) Suppose 100 million people consume black tea every year, and an average consumer consumes 8 kgs of tea at an average price of $3 per kg. Compute the total market potential for tea. Answer: $2,400 million 151) Sim Soon, a manufacturer of air conditioners, finds that its sales potential is less than its market potential even when it spends a sufficient amount on advertisements and after sale services. What is the basic reason behind such an observation by the marketers of Sim Soon? Answer: Company sales potential is less than the market potential, even when a company's marketing expenditures increase considerably because each firm has a set of loyal consumers unresponsive to other companies' efforts to woo them. 152) Two major methods of computing area market potential are market build-up method and multiple factor-index method. Which of these methods will Nexus Enterprises, a manufacturer of auto parts implement to estimate its market potential? Answer: Nexus Enterprise will implement market-build up method to estimate its area market potential as this method is primarily used by business marketers such as Nexus. 153) Suppose the brand development index of a detergent manufactured by P&G is 90 in Singapore and that in India is 48. Compare the marketing opportunity of the detergent in the two countries. Answer: P&G has a greater marketing opportunity for its detergent in India than it has in Singapore. 154) Suppose Redbus, a player in the small car market is planning to launch its new range of hybrid cars. It decides to estimate the future demand for its new car before launching it in the market. If interviewing consumers is not practical, what alternative technique might it resort to? Answer: When buyer interviewing is impractical, Redbus may ask its sales representatives to estimate the future sales or use expert opinions. 155) Assume that you are a marketing manager for a youth clothing manufacturer that has just read about the megatrend of the “rising Korean pop fashion influence” in Asia. Explain “megatrend” and indicate why it might be important to your company. Answer: Megatrends have been described as large social, economic, political, and technological changes that are slow to form, and once in place, they influence us for some time—between 7 and 10 years, or longer. Thus, the company must divert its production to the form of clothing demanded by fans of Korean pop fashion. Chapter 4 Conducting Marketing Research and Forecasting Demand 1) ________ provide diagnostic information about how and why we observe certain effects in the marketplace, and what that means to marketers. A) Marketing insights B) Marketing metrics C) Marketing channels D) Marketing information systems E) Marketing-mix models Answer: A 2) ________ is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company. A) Marketing communications B) Internal marketing C) Marketing research D) Market segmentation E) Marketing planning Answer: C 3) Anne, a beautician by profession, owns a salon in Bangkok, Thailand. Every weekend, she makes it a point to visit the other salons in Bangkok to find out about the beauty services they offer to customers. Anne is attempting to conduct market research by _______. A) studying customer behavior B) forming alliances with competing firms C) using experimental research techniques D) checking out rivals E) tapping into marketing partner expertise Answer: D 4) Which of the following types of marketing research firms gathers consumer and trade information and then sells it for a fee (e.g., Nielsen Media Research)? A) custom marketing research firms B) syndicated-service research firms C) specialty-line marketing research firms D) generic marketing research firms E) focused marketing research firms Answer: B 5) Quick Research, is a firm which collects and processes household data and sells it to other firms which produce consumer durables. Quick is an example of a ________. A) custom marketing research firm B) specialty-line marketing research firm C) syndicated-service research firm D) generic marketing research firm E) focused marketing research firm Answer: C 6) A field-service firm is a ________. A) custom marketing research firm B) syndicated-service research firm C) specialty-line marketing research firm D) consumer marketing research firm E) social marketing research firm Answer: C 7) You are the marketing research director of a medium-sized manufacturing firm and you would like to engage an outside marketing research firm to conduct field interviews. Which of the following options categories of marketing research firms should you use? A) syndicated-service research firms B) custom marketing research firms C) global research management firms D) specialty-line marketing research firms E) brand management specialty research firms Answer: D 8) The marketing research process begins by ________. A) developing a research plan B) defining the problem, the decision alternatives, and research objectives C) analyzing the internal environment D) reading marketing research journals E) contacting a professional research consultant Answer: B 9) Which of the following is considered to be the last step in the marketing research process? A) presenting findings B) analyzing information C) controlling the environment D) arriving at a decision E) drafting the report Answer: D 10) If the goal of marketing research is to shed light on the real nature of a problem and to suggest possible solutions or new ideas, the research is said to be ________. A) descriptive B) quantitative C) primary D) secondary E) exploratory Answer: E 11) Unistar Inc., is an FMCG company that produces a wide range of offerings such as grocery items and personal care products. If Unistar wants to estimate the demand for its new line of body moisturizers, which are all priced at $18, it should opt for ________ research. A) descriptive B) exploratory C) prescriptive D) causal E) qualitative Answer: A 12) A company would like to study the impact of advertising expenditure on sales and sales revenue. This is an example of ________ research. A) prescriptive B) causal C) secondary D) exploratory E) qualitative Answer: B 13) The marketing manager needs to know the cost of the research project before approving it. During which stage of the marketing research process would such a consideration most likely take place? A) Step 1: defining the problem B) Step 4: analyzing the information C) Step 5: drafting the report D) Step 2: developing the research plan E) Step 3: collecting information Answer: D 14) Designing a research plan calls for decisions on all of the following EXCEPT ________. A) research objectives B) data sources C) research approaches D) research instruments E) sampling plans Answer: A 15) ________ are data that were collected for another purpose and already exist. A) Primary data B) Secondary data C) Primitive data D) Cross-sectional data E) Ordinate data Answer: B 16) Before Sandra opened her florist shop she read all she could about the floral industry. She also consulted several published research reports to understand growth patterns in the local area with particular interest in the location of florists throughout the city. This ________ helped her to decide on the location of her store. A) primary data B) secondary data C) primitive data D) tertiary information E) licensed information Answer: B 17) Primary data can be collected in several ways. Installing CCTV cameras in a retail store whereby consumers' actions can be recorded is an example of ________. A) focus group research B) survey research C) observational research D) behavioral research E) experimental research Answer: C 18) ________ approach uses concepts and tools from anthropology and other social science disciplines to provide deep cultural understanding of how people live and work. A) Cognitive research B) Inductive research C) Archaeological research D) Ethnographic research E) Deductive research Answer: D 19) The goal of ethnographic research is to ________. A) capture cause-and-effect relationships by eliminating competing explanations of the observed findings B) understand consumers' behavior by observing a sample groups discussing various topics of interest at length C) study demographic variables such as age, gender, income, education, and so on, in relation to consumer buying patterns D) analyze customers' purchasing behavior through catalog purchases and customer databases E) immerse the researcher into consumers' lives to uncover unarticulated desires that might not surface in any other form of research Answer: E 20) A(n) ________ is a gathering of 6 to 10 people carefully selected by researchers based on certain demographic, psychographic, or other considerations and brought together to discuss various topics of interest at length. A) target group B) pilot group C) focus group D) customer base E) ethnographic group Answer: C 21) As the marketing manager of Cominform Pte Ltd., a manufacturer of health drinks, you have selected 10 individuals who match the profile of your target customer, to participate in a discussion on changing lifestyle trends related to health. You have also hired a skilled moderator to facilitate the discussion and ensure that everyone participates and stays focused on the topic. The moderator provides questions and probes based on the “script” prepared by you. The discussions are also recorded for further analysis. Which of the following methods of acquiring primary data is being used in this case? A) observational research B) surveys C) behavioral data D) experiments E) focus groups Answer: E 22) Why must the researchers avoid generalizing from focus-group participants to the whole market? A) Participants' responses are not reliable. B) Most of the participants are likely to be ignorant about the topic of discussion. C) The size of the group is too small and the sample is not drawn randomly. D) Most of the participants are likely to exhibit similar tastes and preferences. E) The participants usually come from diverse backgrounds. Answer: C 23) Which of the following is used to assess people's knowledge, beliefs, preferences, and satisfaction and to measure these magnitudes in the general population? A) observational research B) descriptive research C) quantitative research D) survey research E) experimental research Answer: D 24) The most scientifically valid research is ________ research. A) observation B) focus-group C) survey D) behavioral E) experimental Answer: E 25) ________ is designed to capture cause-and-effect relationships by eliminating competing explanations of the observed findings. A) Experimental research B) Behavioral research C) Observational research D) Focus group research E) Descriptive research Answer: A 26) Which of the following rules must be kept in mind while framing a questionnaire? A) Use broad and loosely defined words in the questions. B) Avoid using response bands. C) Ensure that fixed responses overlap. D) Frame hypothetical questions. E) Allow for the answer “other” in fixed-response questions. Answer: E 27) Because of its flexibility, ________ are the most common technique of collecting primary data. A) questionnaires B) telephonic interviews C) behavioral research studies D) experimental designs E) focus groups Answer: A 28) ________ allow respondents to answer in their own words and often reveal more about how people think. A) Open-end questions B) Dichotomous questions C) Likert scale questions D) Multiple choice questions E) Semantic differential questions Answer: A 29) Which of the following is true of qualitative research? A) It is a structured measurement approach that permits a range of possible responses. B) It is means of ascertaining consumer perceptions that may otherwise be difficult to uncover. C) It requires large sample sizes. D) Its results can be easily generalized to broader populations. E) It generally results in similar results and conclusions across researchers. Answer: B 30) A scale that connects two bipolar words is called a ________. A) dichotomous question B) multiple-choice question C) Likert scale D) semantic differential E) word association Answer: D 31) A question that respondents can answer in an almost unlimited number of ways is called a ________. A) structured question B) closed-end question C) completely unstructured question D) dichotomous question E) multiple choice question Answer: C 32) “Truancy should be checked in schools: 1) Strongly disagree, 2) Disagree, 3) Neither agree nor disagree, 4) Agree, 5) Strongly agree.” This is an example of a ________. A) Likert scale B) semantic differential C) multiple choice question D) Thematic Appreciation Test (TAT) E) dichotomous question Answer: A 33) An item in a questionnaire states that “most politicians cannot be trusted.” Respondents are required to provide their answers by choosing any one of the following options: 1) Strongly disagree, 2) Disagree, 3) Neither agree nor disagree, 4) Agree, 5) Strongly agree. This is an example of a ________. A) semantic differential B) word association question C) Thematic Appreciation Test (TAT) D) Likert scale E) dichotomous question Answer: D 34) If a marketing researcher chooses to use word associations, the researcher is using ________. A) closed-end questions B) Likert scale questions C) open-end questions D) rating scale questions E) semantic differential questions Answer: C 35) In which of the following types of tests is a picture presented and respondents are asked to make up a story about what they think is happening or may happen in the picture? A) visual perception test B) Rorschach Ink-blot Test C) story completion test D) Thematic Apperception Test E) Renfrew Action Picture Test Answer: D 36) The question “What is your opinion of the measures taken by the government to control inflation?” is an example of a ________ question. A) semantic differential B) word association C) completely unstructured D) story completion E) dichotomous Answer: C 37) In which of the following qualitative method are subjects asked to complete an incomplete stimulus? A) word association B) projective techniques C) visualization D) brand personification E) laddering Answer: B 38) ________ requires people to create a collage from magazine photos or drawings to depict their perceptions. A) Brand personification B) Projective technique C) Visualization D) Laddering E) Metaphor Elicitation Technique Answer: C 39) The primary purpose of ________ is to identify the range of possible brand associations in consumers' minds. A) experimental research B) deshboarding C) laddering D) semantic differentials E) word associations Answer: E 40) With respect to the sampling plan, three decisions must be made: (1) the sampling unit—who is to be surveyed; (2) sample size—how many people should be surveyed; and (3) ________. A) sample cost—how much does sampling cost B) surveyor skill—who should conduct the survey C) sample security—how should the sample data be protected D) sampling procedure—how should respondents be chosen E) sample supervisor—who leads the sampling effort Answer: D 41) Thailand’s Boon Rawd Brewery conducted a brand personification study and found that Leo, a local beer, was perceived to have a mature personality that values Thai heritage. Singha, another local beer, was perceived as having an international Thai personality — someone who is modern and proud to be a Thai, and yet a citizen of the world with international ambitions. Heineken was viewed as the Master European Brewer, while Chang, a low-cost beer targeted at the rural market, had no clear brand personality. Which of the following qualitative research approaches relates to the approach described above? A) projective techniques B) visualization C) brand personification D) laddering E) brand architecture Answer: C 42) According to the concept of ________, a series of increasingly more specific “why” questions can reveal consumer motivation and consumers' deeper, more abstract goals. A) word association B) projection C) visualizing D) brand personification E) laddering Answer: E 43) ________ measure the interest or emotions aroused by exposure to a specific ad or picture. A) Tachistoscopes B) Polygraphs C) Galvanometers D) Audiometers E) GPS systems Answer: C 44) ________ flash an ad to a subject with an exposure interval that may range from less than one hundredth of a second to several seconds. A) Tachistoscopes B) Audiometers C) Polygraphs D) GPS systems E) Galvanometers Answer: A 45) ________ attached to television sets in participating homes now record when the set is on and to which channel it is tuned. A) Tachistoscopes B) Polygraphs C) GPS systems D) Audiometers E) Galvanometers Answer: D 46) Which of the following statements about audiometers is true? A) It usually takes a long time to gather information through audiometers. B) The audiometers is able to clarify questions if respondents do not understand them. C) The response rate for audiometers has been typically lower than for mailed questionnaires. D) Governments generally encourage audiometer setups by firms. E) Audiometers attached to television sets in participating homes now record when the set is on and to which channel it is tuned. Answer: E 47) If a marketing researcher wishes to reach those people who would not give personal interviews or whose responses might be biased or distorted by interviewers, he or she should use ________. A) mail questionnaires B) telephonic interviews C) online interviews D) focus groups E) observational research Answer: A 48) Which of the following is considered to be the most versatile of all the contact methods? A) mail questionnaires B) telephone interviews C) personal interviews D) online interviews E) field trials Answer: C 49) In ________ interviews, researchers stop people at a shopping mall or busy street corner and request an interview on the spot. A) intercept B) arranged C) group D) structured E) behavioral Answer: A 50) Which of the following is an advantage of personal interviews? A) It is a relatively inexpensive method of gathering information. B) The possibility of interviewer bias is minimized. C) Participants can choose to respond at their own convenience. D) It facilitates anonymous responses. E) Interviewers can record additional observation about the respondent such as body language. Answer: E 51) Which of the following is one of the key disadvantages of online market research? A) Online research is expensive. B) Online research is time consuming. C) People tend to be dishonest online. D) Online research lacks versatility. E) Samples can be small and skewed. Answer: E 52) Which of the following is an advantage of online research? A) Samples are generally representative of the target population. B) Members of online panels and communities tend to have low turnover. C) Online research is relatively free of technological problems and inconsistencies. D) People tend to be honest and thoughtful online. E) Online research is slow but gather detailed information. Answer: D 53) The ________ phase of marketing research is generally the most expensive and the most prone to error. A) contact B) research planning C) questionnaire design D) interview design E) data collection Answer: E 54) After collecting the relevant information, the next step in the marketing research process is to ________. A) develop the research plan B) define the problem and research objectives C) present the project report D) make the final decision E) analyze the acquired data Answer: E 55) After computing averages and measures of dispersion for the major variables and applying advanced statistical techniques and decision models in the hope of discovering additional findings from the gathered information, the researchers ________. A) define the problem, the decision alternatives, and the research objectives B) present findings relevant to the major marketing decisions facing management C) evaluate the costs associated with data collected D) analyze the appropriateness of the data sources used E) develop the research plan Answer: B 56) Why do firms employ two or three research methods? A) To exhibit similar tastes and preferences. B) To show findings are equal across different customer segments. C) To show a unique approach to what they do. D) To increase confidence in the results. E) The firms want to provide consumers with a greater number of research choices. Answer: D 57) A ________ has been defined as a coordinated collection of data, systems, tools, and techniques with supporting software and hardware by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action. A) marketing metric B) marketing channel system C) marketing decision support system D) marketing research system E) database management system Answer: C 58) All of the following are considered to be among the seven characteristics of good marketing research EXCEPT ________. A) the scientific method B) research creativity C) multiple methods D) ethical marketing E) independence of models and data Answer: E 59) ________ are a structured way to disseminate the insights gleaned from the two complementary approaches to measuring marketing productivity within the organization. A) Marketing metrics B) Marketing decision support systems C) Marketing dashboards D) Marketing segments E) Marketing mix models Answer: C 60) Two complimentary approaches to measure marketing productivity are ________ and marketing-mix modeling. A) quality ratios B) salesperson satisfaction rates C) marketing metrics D) retailer satisfaction indices E) customer feedback surveys Answer: C 61) Which of the following refers to the set of measures that help firms to quantify, compare, and interpret their marketing performance? A) marketing diagnostics B) marketing information systems C) marketing simulation D) marketing intelligence E) marketing metrics Answer: E 62) London Business School's Tim Ambler believes the evaluation of marketing performance can be split into two parts: ________. A) long-term results and changes in brand equity B) short-term results and changes in brand equity C) long-term results and changes in consumer perceptions D) short-term results and changes in profitability E) changes in market share and changes in profitability Answer: B 63) Which of the following is an external marketing metric that companies need to monitor? A) resource adequacy B) staffing or skill levels C) active innovation support D) market share E) relative employee satisfaction Answer: D 64) Which of the following is an internal marketing metric that companies need to monitor? A) market share B) consumer satisfaction C) relative perceived quality D) total number of customers E) relative employee satisfaction Answer: E 65) ________ analyze(s) data from a variety of sources, such as retailer scanner data, company shipment data, pricing, media, and promotion spending data, to understand more precisely the effects of specific marketing activities. A) Marketing metrics B) Marketing-mix models C) Marketing forecasting D) Marketing intelligence databases E) Marketing decision systems Answer: B 66) When the marketers of a mobile phone manufacturing company want to determine the impact of individual media such as television and online display ads on sales as well as that of trade activities like every day low price, off-shelf display and so on, they usually use ________. A) marketing metrics B) market segmentation strategies C) market capitalization techniques D) market basket analysis E) marketing-mix models Answer: E 67) A ________ records how well the company is doing year after year based on measures such as the average perception of the company's product quality relative to its chief competitor. A) customer-performance scorecard B) stakeholder-performance scorecard C) marketing balanced scorecard D) vendor scorecard E) generic scorecard Answer: A 68) If a company actively tracks the satisfaction of its suppliers, banks, and distributors, it is using what is called a ________. A) customer-performance scorecard B) stakeholder-performance scorecard C) marketing balanced scorecard D) vendor scorecard E) generic scorecard Answer: B 69) According to marketing consultant Pat LaPointe, the ________ measurement pathway of the marketing dashboard reflects how prospects become customers. A) customer metrics B) unit metrics C) cash-flow metrics D) brand metrics E) productivity metrics Answer: A 70) According to marketing consultant Pat LaPointe, the ________ measurement pathway of the marketing dashboard focuses on how well marketing expenditures are achieving short-term returns. A) customer metrics B) unit metrics C) cash-flow metrics D) brand metrics E) productivity metrics Answer: C 71) Marketing insights often explain certain effects in the marketplace. Answer: True 72) Most large companies prefer to use external marketing research consultants rather than employ their own marketing research department. Answer: False 73) When the companies engage students to design and carry out projects, the payoff to the students is experience and visibility; the payoff to the companies is a fresh set of eyes to solve problems at a fraction of what consultants would charge. Answer: True 74) A good example of a syndicated-service research firm is Millward Brown. Answer: True 75) Custom marketing research firms sell field interviewing services to other firms. Answer: False 76) After developing the research plan, the marketing researcher should define the problem and research objectives. Answer: False 77) The goal of exploratory research is to shed light on the real nature of the problem and to suggest possible solutions or new ideas. Answer: True 78) The purpose of causal research is to test a cause-and-effect relationship. Answer: True 79) James collected primary data when he distributed a survey to dorm residents to discover their attitudes and opinions on campus life. Answer: True 80) Secondary data are data freshly gathered for a specific purpose or for a specific research project. Answer: False 81) The goal of ethnographic research is to immerse the researcher into consumers' lives to uncover unarticulated desires that might not surface in any other form of research. Answer: True 82) Researchers should generalize findings from focus-group participants to the whole market. Answer: False 83) Companies undertake surveys to learn about people’s knowledge, beliefs, preferences, and satisfaction, and to measure these magnitudes in the general population. Answer: True 84) A good example of collecting behavioral data would be when a store uses scanners to read bar codes on products selected by consumers. Answer: True 85) Behavioral research is the most scientifically valid research. Answer: False 86) Experiments call for selecting matched groups of subjects, subjecting them to different treatments, controlling extraneous variables, and checking whether observed response differences are statistically significant. Answer: True 87) Owing to its greater flexibility, a questionnaire is by far the most common instrument used to collect primary data. Answer: True 88) Qualitative research techniques are relatively structured measurement approaches that permit limited possible responses. Answer: False 89) Questionnaires need to be carefully developed, tested, and debugged before they are administered on a large scale. Answer: True 90) If a marketing researcher decides to use a Likert scale, the researcher has chosen a technique wherein the respondent reviews a statement that shows the amount of agreement/disagreement with some product, service, or concept. Answer: True 91) A dichotomous question is a question with three or more answers. Answer: False 92) A scale that describes the respondent's intention to buy a particular product is called a rating scale. Answer: False 93) Visualization requires people to create a collage from magazine photos or drawings to depict their perceptions. Answer: True 94) Once they have determined the sampling unit, marketers must develop a sampling frame so that a small section in the target population has a greater chance of being sampled. Answer: False 95) Samples of less than 1% of a population can often provide good reliability, with a credible sampling procedure. Answer: True 96) Probability sampling allows confidence limits to be calculated for sampling error and makes the sampling more representative. Answer: True 97) The response rate is usually very high for mail questionnaires. Answer: False 98) If a marketing researcher is looking for a contact method that can gather information quickly and allow the interviewer to clarify questions if necessary, he or she will choose the telephone interview method. Answer: True 99) A good illustration of what is called the arranged interview occurs when interviewers stop people in a shopping mall or on a busy street and solicit information necessary to their research effort. Answer: False 100) Online surveys are fast because the survey can automatically direct respondents to applicable questions and transmit results immediately. Answer: True 101) One of the characteristics of good marketing research is that it uses multiple methods to increase confidence in the results. Answer: True 102) Marketing researchers should have a healthy skepticism toward glib assumptions made by managers about how a market works. Answer: True 103) Some organizations are using marketing decision support systems to help their marketing managers make faster decisions. Answer: False 104) Marketing-mix modeling is used to estimate causal relationships and measure how marketing activity affects outcomes. Answer: True 105) Marketing accountability means that marketers must more precisely estimate the effects of different marketing investments. Answer: True 106) Especially popular with such companies as Procter & Gamble, marketing-mix modeling is used to allocate or reallocate expenditures. Answer: True 107) Marketing-mix modeling focuses on baseline sales or long term effects instead of incremental growth. Answer: False 108) Management can assemble a summary set of relevant internal and external measures in a marketing dashboard for synthesis and interpretation. Answer: True 109) A stakeholder-performance scorecard tracks the satisfaction with the company and its products and services among such entities as suppliers, banks, and stockholders. Answer: True 110) Discuss the different ways which can be adopted by small manufacturing firms to conduct market research. Answer: The small firms can adopt the following ways to conduct market research: 1) They can engage students or professors to design and carry out projects. 2) They can collect considerable information at very little cost by examining competitors’ Web sites, monitoring chat rooms, and accessing published data. 3) The owners of small business firms can routinely visit competitors to learn about changes they have made. 4) By tapping into marketing partner expertise. 111) What are the six steps involved in the marketing research process? Answer: The six steps are: (1) define the problem and research objectives, (2) develop the research plan, (3) collect the information, (4) analyze the information, (5) present the findings, and (6) make the decision. 112) List the challenges faced to conduct a good focus group discussion. Answer: There are many challenges to conducting a good focus group. Some researchers believe consumers have been so bombarded with ads, they unconsciously parrot back what they've already heard instead of what they really think. There's always a concern that participants are just trying to maintain their self-image and public persona or have a need to identify with the other members of the group. Participants also may not be willing to acknowledge in public—or may not even recognize—their behavior patterns and motivations. And the "loudmouth or know-it-all" problem often crops up when one highly opinionated person drowns out the rest of the group. 113) Distinguish between closed-end and open-end questions. Answer: Closed-end questions specify all the possible answers and provide answers that are easier to interpret and tabulate. Open-end questions allow respondents to answer in their own words and often reveal more about how people think. They are especially useful in exploratory research, where the researcher is looking for insight into how people think rather than measuring how many people think a certain way. 114) Give an account of experimental research. Answer: Experimental research is designed to capture cause-and-effect relationships by eliminating competing explanations of the observed findings. If the experiment is well designed and executed, research and marketing managers can have confidence in the conclusions. Experiments call for selecting matched groups of subjects, subjecting them to different treatments, controlling extraneous variables, and checking whether observed response differences are statistically significant. 115) Explain what qualitative research is and why it might be useful to marketers. What are its major drawbacks? Answer: Qualitative research techniques are relatively unstructured measurement approaches to permit a range of possible responses, and they are a creative means of ascertaining consumer perceptions that may otherwise be difficult to uncover. Because of the freedom it affords both researchers in their probes and consumers in their responses, qualitative research can often be an especially useful first step in exploring consumers' brand and product perceptions. It is indirect in nature, so consumers may be less guarded and reveal more about themselves in the process. Qualitative research does have its drawbacks. Marketers must temper the in-depth insights that emerge with the fact that the samples are often very small and may not necessarily generalize to broader populations. And different researchers examining the same qualitative results may draw very different conclusions. 116) Give an account of the different technological devices that have been developed to provide insight into the consumers' behavior to the researchers. Answer: There has been much interest in recent years in various technological devices. Galvanometers can measure the interest or emotions aroused by exposure to a specific ad or picture. Audiometers attached to television sets in participating homes now record when the set is on and to which channel it is tuned. Eye cameras study respondents' eye movements to see where their eyes land first, how long they linger on a given item, and so on. 117) What is the chief advantage of using each of the following contact methods: mail questionnaire, telephone interview, and personal interview? Answer: The chief advantage of each contact method mentioned is (1) mail questionnaire—the best way to reach people who would not give personal interviews or whose responses might be biased or distorted by the interviews, (2) telephone interviews—the best method for gathering information quickly and the interviewer is also able to clarify questions if respondents do not understand them, and (3) personal interview—the most versatile method because they can ask more questions and record additional observations about the respondent. 118) Give reasons to justify that online research is versatile. Answer: Increased broadband penetration offers online research even more flexibility and capabilities. For instance, virtual reality software lets visitors inspect 3-D models of products such as cameras, cars, and medical equipment and manipulate product characteristics. Even at the basic tactile level, online surveys can make answering a questionnaire easier and more fun than paper-and-pencil versions. Online community blogs allow customer participants to interact with each other. 119) What are the major shortcomings of marketing-mix modeling? Answer: The major shortcomings of marketing-mix modeling are- 1) Although marketing-mix modeling helps to isolate effects, it is less effective at assessing how different marketing elements work in combination. 2) Marketing-mix modeling focuses on incremental growth instead of baseline sales or long term effects. 3) The integration of important metrics such as customer satisfaction, awareness, and brand equity into marketing-mix modeling is limited. 4) Marketing-mix modeling generally fails to incorporate metrics related to competitors, the trade, or the sales force. 120) Mars Group is a market research firm which sells field interviewing services to a software development firm. Can Mars Group be categorized as a custom market research firm? Give reasons to support your answer. Answer: No, Mars group is a specialty-line marketing research firm as it sells field interviewing services, whereas a custom marketing research is hired to carry out specific projects. 121) As a marketing researcher of Matrix Private Limited you have been asked to forecast the demand for your new range of body wash if a discount of 10 percent is offered on each unit sold. Identify the research category into which this market research falls. Answer: Here the researcher needs to study the effect of the discount on the demand for body wash. The objective of this research is to establish the cause and effect relationship between the discount and the demand for body wash. Therefore, this can be categorized as causal research. 122) Highspeed Motors is planning to introduce its new sports bike into the market. It collects data on prices, designs, features, and performance of sports bikes manufactured by other companies from their respective Web sites. What type of data is being used by Highspeed motors in this case? Answer: Highspeed Motors is using secondary data for its research. 123) Ryan has been appointed by Target Internationals, a hardware manufacturing firm, as a marketing researcher and has been asked to conduct a marketing research to produce new insights of consumer attitude on its vacuum tubes. Ryan begins with the research process by defining the problem, the decision alternatives, and research objectives. Mention the next step that Ryan will follow to continue with the research. Answer: After defining the problem, the decision alternatives, and research objectives, the researcher develops the most efficient plan for gathering the needed information, and will estimate the cost of conducting the research. 124) Axis Centre a departmental store has installed CCTV cameras to record consumer actions. Which research approach has been adopted by Axis and why? Answer: Axis has adopted observational research approach to gather fresh data by observing the consumers' actions in the store. 125) As a marketing manager of Kids Care, a manufacturer of baby soaps, Tim plans to analyze customer attitudes by using the focus group research approach. How will he conduct the research in this case? Answer: Student answers will vary. Tim selects 8 first time mothers who can adequately represent the users you want to target. He also appoints a skilled moderator to facilitate the discussion among these women to ensure everyone participates and stays on track. The moderator provides questions based on the “script” prepared by Tim. The discussions are recorded for further analysis. Tim will gather a diverse group of parents and caregivers to discuss their perceptions, preferences, and experiences with baby soaps. He will facilitate the discussion to gain qualitative insights into customer attitudes and behaviors. 126) Copra, a manufacturer of cigarettes, conducts a survey before launching its new range of herbal cigarettes. What is the basic purpose of undertaking such a survey by Copra? Answer: Copra undertakes the survey to assess people's knowledge, beliefs, preferences, and satisfaction and to measure these magnitudes in the general population. 127) What are some drawbacks to qualitative research? Answer: The in-depth insights that emerge have to be tempered by the fact that the samples involved are often very small and may not necessarily generalize to broader populations. Moreover, given the qualitative nature of the data, there may also be questions of interpretation. Different researchers examining the same results from a qualitative research study may draw very different conclusions. 128) As a marketing researcher of a firm, you have planned to conduct behavioral research to develop marketing insight. What procedure would you follow in this case? Answer: In order to conduct behavioral research, the marketing researchers need to develop consumer insight by analyzing store scanning data, catalog purchases, and customer databases. 129) A questionnaire used in a survey contains a question such as: “Retail-R-Us offers the best everyday prices” and the responses that the respondents can opt for are: “Strongly Disagree”, “Disagree”, “No opinion”, “Agree”, “Strongly Agree”. Identify and define the type of closed-end question that has been exemplified in this case. Answer: The question mentioned above is a Likert Scale question. A Likert Scale is a statement with which the respondent shows the amount of agreement or disagreement. 130) Suppose, as a marketing manager of a firm, you have planned to conduct a market research using qualitative measures. For the purpose of developing consumer insight you have distributed among the respondents a picture of a man and woman in a coffee shop, and have asked the respondents to make up a story about what is happening in the picture. Identify and define the type of question used in this case. Answer: The marketing manager has used Thematic Apperception Test in this case. In Thematic Apperception Test, a picture is presented and respondents are asked to make up a story about what they think is happening or may happen in the picture. 131) The Bledsoe Marketing Research group has been hired to administer a series of questions to shoppers in a local mall. If questions on the survey questionnaire have only two possible responses (such as “yes/no”), what type of questions are these? Answer: Questions of this type are closed-end questions that are dichotomous in nature. 132) As a marketing researcher, if you plan to conduct your research using qualitative measures like brand personification, what are you likely to ask the respondents in order to elicit their impression on your brand? Answer: Student answers may vary. When the marketing researcher uses the brand personification approach to get inside consumers' minds and find out what they think or feel about brands and products, he is likely to ask the respondents what kind of person they think of when the brand is mentioned. As a marketing researcher using brand personification, you might ask respondents: 1. "If our brand were a person, what kind of personality would it have?" 2. "How would you describe this person's lifestyle and interests?" 3. "What kinds of activities would this person enjoy?" 4. "How would this person interact with their friends and family?" 133) Jane is a marketing researcher of a cellular service providing firm. She is conducting a market research before the firm decides to launch its 4G services. After deciding on the research approach and instruments, what is the next step that Jane should follow? What are the three things that she is required to consider in this step? Answer: After deciding on the research approach and instruments, Jane must design a sampling plan. In order to design the plan, Jane has to decide upon the sampling unit (whom she should survey?), the sample size (how many people should she survey?), sampling procedure (how should she choose the respondents?). 134) A marketing research firm has instructed its research associates to collect primary data by stopping people at a shopping mall or busy street corner and request an interview on the spot. Which contact method is being used by the researchers in this case? What probable risk may the researchers face while using this method? Answer: The researchers are using intercept interviewing method for collecting primary data in this case. The researchers run the risk of including non-probability samples while using this method. 135) Aromas is a popular brand of cosmetic products. During the last quarter, the company suffered a drop in sales of some of its more popular offerings. In an attempt to find out the problem, Aromas designed an online questionnaire for its existing customers, who can fill out the questionnaire and also leave their comments and suggestions for improvement. What are the problems that Aromas is likely to face by using this method of contacting its customers? Answer: Student answers will vary. Aromas is using online contact method to gather customer feedback. The major problems of using this method are- 1) samples may be small and skewed, 2) online panels and communities can suffer from excessive turnover, 3) such online market research can suffer from technological problems and inconsistencies. Aromas might face the following problems with an online questionnaire: 1. Low response rates, as customers may ignore or overlook the survey. 2. Biased feedback, primarily from highly satisfied or dissatisfied customers. 3. Limited depth of insights, as questionnaires may not capture nuanced opinions. 4. Potential technical issues, such as difficulties in accessing or submitting the survey. 136) As a marketing controller of a company, you have been asked to create a stakeholder-performance scorecard that tracks the satisfaction of various constituencies who have a critical interest and impact your company's performance. List four constituencies that might be included. Answer: The stakeholder-performance scorecard could track the satisfaction of employees, suppliers, banks, distributors, retailers, and stockholders. 137) As a marketing controller of a company you have been asked to develop a customer-performance scorecard for your company's toy division. List three measures you might include. Answer: The three measures that might be included are: (1) percentage of new customers to average number of customers; (2) percentage of lost customers to average number of customers; (3) percentage of win-back customers to average number of customers. Answers may vary. As a marketing controller, three measures to include in a customer-performance scorecard for the toy division might be: 1. Customer Satisfaction Index: To gauge overall customer happiness with the products. 2. Repeat Purchase Rate: To measure customer loyalty and the likelihood of repeat business. 3. Net Promoter Score (NPS): To assess the likelihood of customers recommending the brand to others. Chapter 5 Creating Customer Value, Satisfaction, and Loyalty 1) Which of the following is true for the modern company organization chart? A) Frontline employees are less important than top management. B) Customers are at the top of the pyramid. C) Top management is at the top of the pyramid. D) Customers are less important than middle management. E) Frontline employees are at the top of the pyramid. Answer: B 2) In the modern customer-oriented organizational chart, which of the following is considered to be at the top of the organizational pyramid? A) sales B) top management C) front-line people D) customers E) middle management Answer: D 3) In a modern customer-oriented organization chart, the ________ of an organization immediately follow the customer segment. A) top management B) marketing department C) middle management D) frontline people E) lower management Answer: D 4) ________ is the difference between the prospective customer's evaluation of all the benefits and all the costs of an offering and the perceived alternatives. A) Perceived usefulness B) Failure avoidance rate C) Total customer benefit D) Customer-perceived value E) Competitors' market share rate Answer: D 5) When a consumer considers a product or service, he or she will choose whichever product or service delivers the highest ________. A) customer-perceived value B) customer-perceived cost C) customer profitability analysis D) customer equity E) customer lifetime value Answer: A 6) ________ is the perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a given market offering. A) Total customer cost B) Total customer benefit C) Total benefits of ownership D) Value proposition E) Value delivery system Answer: B 7) The bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering is called the ________. A) activity-based cost B) customer profitability analysis C) total customer cost D) product life-cycle cost E) direct product profitability Answer: C 8) Which of the following is true for customer-perceived value? A) It is the perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a product. B) It is the difference between the prospective customer's evaluation of all the benefits and all the costs of an offering and the perceived alternatives. C) It is the perceived bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering. D) It is the net present value of the stream of future profits expected over the customer's lifetime purchases. E) It is the process of investigating the hierarchy of attributes consumers examine in choosing a brand if they use phased decision strategies. Answer: B 9) Which of the following is the first step in customer value analysis? A) Examine how customers in a specific segment rate the company's performance. B) Assess the company's and competitors' performances on the different customer values against their rated importance. C) Identify the major attributes and benefits that customers value. D) Monitor customer values over time. E) Assess the quantitative importance of the different attributes and benefits. Answer: C 10) The final step of customer value analysis is to ________. A) identify the major attributes and benefits that customers value B) assess the company's and competitors' performances on the different customer values against their rated importance C) examine how customers in a specific segment rate the company's performance D) monitor customer values over time E) assess the quantitative importance of the different attributes and benefits Answer: D 11) Cell phone manufacturer LZT has to choose between two options for sourcing parts: Japan-based Keiko Inc. and U.S.-based Global Tech. How can Keiko reduce the total customer cost for LZT? A) absorbing some risk by offering a warranty B) improving the functional aspects of the products C) augmenting the psychological benefits of the products D) training service personnel to improve their skills E) investing in brand building for the products Answer: A 12) ________ can be defined as a deeply held commitment to rebuy or repatronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior. A) Value proposition B) Loyalty C) Satisfaction D) Respect E) Customer value Answer: B 13) TBS Bikes has recently introduced a series of bikes called Surami. The core positioning of TBS Bikes is “speed”. Surami is a five-gear bike and apart from speed, the company promises to include other features such as safety, good performance, and pollution control features. This describes the ________ of the bike. A) total customer cost B) customer-perceived value C) value-delivery system D) value proposition E) total customer benefit Answer: D 14) A company's ________ includes all the experiences the customer will have on the way to obtaining and using the offering. A) value proposition B) value delivery system C) customer-value analysis D) total customer benefit E) total customer cost Answer: B 15) Sammy's is a fast food chain that offers burgers, sandwiches, and shakes. It focuses its marketing efforts on all the experiences the customers will have on the way to obtaining their food order and eating it. Hence, Sammy's is focusing its marketing efforts on its ________. A) horizontal marketing system B) cost versus benefit system C) consumption system D) marketing channel system E) value delivery system Answer: E 16) Total customer satisfaction is measured based on the relationship of ________. A) expected value and total customer benefit B) perceived performance and expectation C) advertised outcomes and real outcomes D) past experience and present experience E) customer attitude and salesperson's attitude Answer: B 17) Which of the following is true for customer satisfaction? A) Satisfaction is a deeply held commitment to rebuy or repatronize a preferred product despite situational influences. B) Consumers often form more favorable perceptions of a product with a brand that is new. C) The ultimate goal of a customer-centered firm is to create high customer satisfaction. D) Only increased customer satisfaction can help a company increase its profits. E) A company would be wise to measure customer satisfaction regularly because one key to customer retention is customer satisfaction. Answer: E 18) ________ can track customer satisfaction directly, measure repurchase intention and also gauge a consumer's willingness to recommend the company and brand to others. A) Periodic surveys B) Mystery shoppers C) Customer loss rates D) Customer focus statements E) Sales summary reports Answer: A 19) Econ Minimart wants to learn the strengths and weaknesses in customer service at all the Econ Minimart stores. Which of the following methods can it use for this? A) group buyers B) buyer brokers C) mystery shoppers D) personal shoppers E) buying agents Answer: C 20) Of customers who register a complaint, ________. A) all will do business with the company again because they are unwilling to dedicate the effort required to find another vendor B) none will do business with the company again C) customers whose complaints are satisfactorily resolved are more likely to provide publicity than those who are dissatisfied D) the speed of resolution has no impact on the likelihood of repeat business E) some will do business with the company again if their complaint is resolved Answer: E 21) Which of the following is the best method of recovering customer goodwill? A) sending service people to conduct door-to-door surveys B) contacting the complaining customer as quickly as possible C) identifying prospective customers from the customer database D) customizing products according to individual customer need E) defining and measuring the customer retention rate Answer: B 22) ________ is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. A) Performance B) Value C) Quality D) Customer retention E) Customer loyalty Answer: C 23) When two brands of the same basic product deliver their respective promised quality, they are delivering ________. A) performance quality B) conformance quality C) unique quality D) accuracy quality E) customer support Answer: B 24) Rade and Talion are competitors in the business of manufacturing wrist watches. While Rade promises to deliver design and quality to its customers, Talion promises to deliver durability and cost effectiveness. When both these companies deliver their respective promised qualities, they are delivering ________. A) performance quality B) customer support C) unique quality D) accuracy quality E) conformance quality Answer: E 25) The 20–80 rule reflects the idea that ________. A) 20% of the company's profits are generated by the top 80% of customers B) the top 20% of customers are highly satisfied and 80% of customers will recommend the company to a friend C) 20% of customers are unprofitable, and 80% make up a company's profits D) the top 20% of customers often generate 80% of the company's profits E) any new product will be accepted by 20% of the customers immediately, but 80% of the customers will be up for grabs throughout the product's life cycle Answer: D 26) A profitable customer ________. A) yields a cost stream that exceeds by an acceptable amount his revenue stream B) yields a revenue stream that exceeds the company's cost stream C) yields a cost stream that exceeds the company's revenue stream D) yields a revenue stream that exceeds by an acceptable amount his cost stream E) yields a revenue stream that equals the company's cost stream Answer: B 27) A ________ is a person, household, or company that over time yields a revenue stream that exceeds by an acceptable amount the company's cost stream of attracting, selling, and servicing that customer. A) prospector B) profitable customer C) market challenger D) market nicher E) pioneer customer Answer: B 28) Customer profitability analysis (CPA) is best conducted with the tools of an accounting technique called ________. A) input-output analysis B) factor analysis C) revenue-based costing D) activity-based costing E) future date costing Answer: D 29) Which of the following is true for activity-based costing (ABC)? A) ABC considers the real costs associated with each product. B) With ABC, the company can estimate all costs coming from the customer, less revenue. C) The tools of ABC can be used to conduct customer profitability analysis. D) It identifies the costs of products and services based on the revenue they generate. E) ABC allocates indirect costs in proportion to direct costs. Answer: C 30) ________ describes the net present value of the stream of future profits expected over the customer's lifetime purchases. A) Activity-based costing B) Customer lifetime value C) Customer value analysis D) Customer-perceived value E) Customer profitability analysis Answer: B 31) The aim of customer relationship management is to maximize customer ________. A) integrity B) loyalty C) innovation D) liability E) equity Answer: B 32) ________ is the process of carefully managing detailed information about individual customers and all customer "touch points" to maximize loyalty. A) Customer relationship management B) Customer lifetime value C) Customer profitability analysis D) Customer satisfaction analysis E) Customer-value delivery Answer: A 33) A customer ________ is any occasion on which a customer encounters the brand and product—from actual experience to personal or mass communications to casual observation. A) touch point B) point of order C) point of difference D) pivot point E) point of parity Answer: A 34) A customer touch point for Asiana Airlines would be an item such as ________. A) ease of access to the airport B) a mechanic's ability to service the airplanes C) the reservations desk D) the value of air travel versus surface transportation E) competency of a travel agent Answer: C 35) Rachel and John are on vacation in Hawaii. When they arrived at the hotel, they were offered chilled juice. Their check-in formalities were handled by the staff. When they entered their room, they saw that chocolates had been placed on the pillows and a flower arrangement on the table. The hotel's actions are an example of ________. A) customer lifetime value B) customer perceived value C) customer value analysis D) customer profitability analysis E) a customer touch point Answer: E 36) Customer relationship management enables companies to provide excellent real-time customer service through the effective use of ________. A) reports from mystery shoppers B) survey data from customers who have defected C) market research D) individual account information E) demographic trend data Answer: D 37) ________ is based on the premise that marketers can no longer use "interruption marketing" via mass media campaigns. A) Relationship marketing B) Permission marketing C) Database marketing D) Internet marketing E) Horizontal marketing Answer: B 38) ________ is the practice of sending messages only when consumers express a willingness to become more involved with the brand. A) Relationship marketing B) Permission marketing C) Cause marketing D) Defensive marketing E) Horizontal marketing Answer: B 39) Which of the following is a step in one-to-one marketing that can be adapted for CRM marketing? A) Identify the lifetime value of lost customers. B) Define and measure the retention rate of customers. C) Offer the lowest price for a particular product. D) Distinguish the causes of customer attrition. E) Customize products, services, and messages to each customer. Answer: E 40) Another term for high customer ________ is customer churn. A) retention B) defection C) value D) perception E) belief Answer: B 41) Which of the following can a company do to reduce defection? A) Attract new customers to try out the company's products. B) Increase customer lifetime value by increasing the non-monetary costs of products. C) Enhance the growth potential of existing customers through cross-selling and upselling. D) Distinguish the causes of customer attrition and identify those that can be managed better. E) Make low-profit customers more profitable or terminate the relationship. Answer: D The Marketing Funnel (Scenario) Amy and Jill were loyal customers of Jon’s Market, a local grocery store. However, after a couple of incidents where they had to return products that were stale and out of date, the couple decided to try out VeggiesNmore, a chain store that recently opened in town. Both Amy and Jill must move through each stage in the marketing funnel before becoming loyal customers. 42) Jill has shopped at VeggiesNmore. She was happy with the experience and thought that it could be an alternative to Jon’s Market. However, she is also keen to try out other stores in the neighborhood. She is in the ________ stage of the marketing funnel as far as shopping at VeggiesNmore is concerned. A) aware B) open to trial C) most often used D) trier E) regular user Answer: D 43) Amy is in the “aware” stage of the marketing funnel when she says ________. A) she can try shopping at VeggiesNmore while simultaneously exploring other stores in the neighborhood B) she was informed about VeggiesNmore by her colleague at work C) she regularly shops from VeggiesNmore D) she shops from VeggiesNmore as far as the store is easily accessible E) she was happy with the experience of shopping at VeggiesNmore Answer: B 44) Satisfied customers constitute the company's ________. A) customer relationship capital B) customer churn C) target audience D) high-value customers E) customer touch points Answer: A 45) Sapphire Toys actually sells more than toys. It also sells branded clothing, music CDs, and books for children. This expansion of dealership sales offerings is an attempt to increase the value of the customer base by ________. A) reducing the rate of customer defection B) increasing the longevity of the customer relationship C) enhancing the growth potential of each customer through cross-selling D) making low-profit customers more profitable E) terminating low-profit customers Answer: C 46) LifeTime Insurance screens its customers and tries to get unprofitable customers to buy services from competitors. This is an example of ________. A) trying to increase the retention rate for low-profit customers B) terminating the relationship with low-profit customers C) enhancing the growth potential of each customer through up-selling D) increasing the longevity of the customer relationship E) reducing the rate of customer defection Answer: B 47) Many banks and phone companies now charge fees for once-free services to ensure minimum customer revenue levels. This helps the banks to ________. A) reduce the rate of customer defection B) make low-profit customers more profitable C) enhance the growth potential for each customer through cross-selling D) increase the longevity of the customer relationship E) focus disproportionate effort on high-value customers Answer: B 48) Which of the following is an example of focusing disproportionate effort on high-profit customers? A) In addition to bicycles, 2Wheels sells biking gear such as helmets, bottles, jackets and other accessories. B) 2Wheels has a club for its regular customers, organizing cycling events and parties for them. C) Though 2Wheels previously offered free delivery, it now charges for deliveries made outside the city. D) 2Wheels allows existing customers to upgrade to a newer model at less than the sticker price by trading in their older model. E) 2Wheels encourages customers to send in their suggestions for product improvement. Answer: B 49) Which of the following is an example of enhancing the growth potential of each customer through cross-selling? A) In addition to bicycles, 2Wheels stocks biking gear such as helmets, bottles, jackets and other accessories. B) 2Wheels has a club for its regular customers, organizing cycling events and parties for them. C) Though 2Wheels previously offered free delivery, it now charges for deliveries made outside the city. D) 2Wheels allows existing customers to upgrade to a newer model at less than the sticker price by trading in their older model. E) 2Wheels encourages customers to send in their suggestions for product improvement. Answer: A 50) Which of the following is a policy a store can adopt to make low-profit customers more profitable? A) 2Wheels sends birthday greetings to its best customers and gives them discounts on merchandise. B) 2Wheels has a club for its regular customers, organizing cycling events and parties for them. C) Though 2Wheels previously offered free delivery, it now charges for deliveries made outside the city. D) 2Wheels allows existing customers to upgrade to a newer model at less than the sticker price by trading in their older model. E) 2Wheels encourages customers to send in their suggestions for product improvement. Answer: C 51) Companies provide rewards to customers who buy often and in substantial amounts. These reward schemes are referred to as ________. A) benefit programs B) frequency programs C) satisfaction programs D) profitability programs E) quality programs Answer: B 52) Which of the following gains the most benefit from introducing a frequency program? A) the first company to introduce a frequency program in an industry B) the fast follower, the second to introduce a program in an industry C) the industry sales leader D) the niche player in the industry E) the low-cost leader in the industry Answer: A 53) Club membership programs that are open to everyone who purchases a product or service ________. A) are more powerful long-term loyalty builders than limited-membership clubs. B) will not help a company attract customers from competitors C) prevent those with only a fleeting interest in a company's products from joining D) are useful for building a database of customers but are not very good as long-term loyalty builders E) are useless unless there are fees and membership conditions Answer: D 54) Singapore Airlines offers the Krisflyer Rewards program that allows customers to count flights they have taken toward free future flights. This is an example of a(n) ________. A) cross-selling program B) value delivery system C) club membership program D) activity-based costing program E) up-selling program Answer: C 55) Some customers inevitably become inactive or drop out. The challenge for marketers is to reactivate them through ________ strategies. A) win-back B) retention C) defection D) sell-out E) recuperation Answer: A 56) A ________ is an organized collection of comprehensive information about individual customers or prospects that is current, accessible, and actionable for lead generation, lead qualification, sale of a product or service, or maintenance of customer relationships. A) customer database B) customer mailing list C) customer-performance scorecard D) customer profitability analysis E) customer-value hierarchy Answer: A 57) The process of building, maintaining, and using customer databases and other databases for the purpose of contacting, transacting, and building customer relationships is called ________. A) data warehousing B) data mining C) database marketing D) participatory marketing E) permission marketing Answer: C 58) A ________ is simply a set of names, addresses, and telephone numbers. A) customer database B) customer mailing list C) customer-performance scorecard D) customer profitability analysis E) customer-value hierarchy Answer: B 59) Using the information in his company's ________ lets a telemarketer respond to customer inquiries more effectively because he or she can see a total picture of the customer relationship. A) data warehouse B) call back list C) call rejection list D) bibliographic database E) customer-value hierarchy Answer: A 60) Through ________, marketing statisticians can extract useful information about individuals, trends, and segments from the mass of data. A) data governance B) data modeling C) data mining D) data maintenance E) data marketing Answer: C 61) 2Wheels conducts exhaustive customer surveys to discover customer preferences and attitudes towards the brand. Sally uses cluster analysis to classify the data and help the company determine the trends in the information. Sally is using the technique of ________. A) data management B) data marketing C) data governance D) data accumulation E) data mining Answer: E 62) Susan Lee’s company advertises widely. Ms. Lee uses business reply cards attached to her company's magazine ads to build her company's database. In which of the following ways would Ms. Lee most likely use the database? A) to deepen customer loyalty B) to reactivate customer purchases C) to avoid serious customer mistakes D) to determine if up-selling is appropriate E) to identify prospects Answer: E 63) Phil Leong has just ordered a number of expensive executive gifts that he will be sending as an appreciation token to a select few customers from his client database. In which of the following ways is Mr. Leong most likely using his database? A) to identify prospects B) to decide which customers should receive a new sales offer C) to deepen customer loyalty D) to avoid serious customer mistakes E) to beat the competition to a sale Answer: C 64) The skillful use of ________ has made Avon one of the world's largest direct-mail marketers. A) everyday low prices B) expanded home delivery options C) database marketing D) under-the-line promotions E) retailer alliances Answer: C 65) Which of the following is true for customer relationship marketing? A) Competitors can often hack into CRM systems. B) Building and maintaining a customer database requires a large investment. C) It is very difficult to find and train database employees. D) Long-term results of such systems are still unproven. E) Focusing too much on databases separates a company from its customers. Answer: B 66) It is difficult to collect the right data, especially to capture all the occasions of company interaction with ______________. A) individual suppliers B) individual demands C) individual complaints D) individual customers E) individual regulators Answer: D 67) In which of the following cases is building a database worthwhile for the company? A) Clare's creates personalized sculptures for special occasions. B) Sales of Clarity soap have fallen over the past few months in all regions. C) 2Wheels sends appropriate gifts and discount coupons to deepen customer loyalty. D) Uncle Jim's sells its range of snacks in stores throughout the country. E) Ready-to-wear clothes brand Zeep targets the teen and tween market throughout the U.S. Answer: C 68) In which of the following cases is building a database worthwhile for the company? A) where the product is a once-in-a-lifetime purchase B) where customers show little loyalty to a brand C) where the company wishes to reactivate customer purchases D) where the unit sale is very small E) where the cost of gathering the information is high Answer: C 69) Which of the following is most likely to use database marketing? A) a mobile service provider B) a candy bar manufacturer C) a fast-food chain D) a toothpaste manufacturer E) a hair stylist Answer: A 70) Which of the following statements demonstrates behavioral loyalty towards a brand? A) 2Wheels has very customer-friendly return policies for its products. B) I always buy 2Wheels products when I'm looking for bike accessories. C) Most of my friends agree that 2Wheels is the best place for durable biking gear. D) 2Wheels has the friendliest customer service people I've ever met. E) I think that 2Wheels products are the highest-quality products in their price range. Answer: B 71) Managers who believe the customer is the company's only true "profit center" consider the traditional organization chart to be obsolete. Answer: True 72) The modern customer-oriented organization chart places top management at the top of the pyramid. Answer: False 73) Customer-perceived value is based on the difference between benefits the customer gets and the costs he or she assumes for different choices. Answer: True 74) Total customer cost consists of only the non-monetary costs in evaluating, obtaining, using, and disposing of the given market offering. Answer: False 75) Customer-perceived value is the perceived monetary value of all the purchases a customer makes on an annual basis. Answer: False 76) A seller who is at a disadvantage has two alternatives: decrease total customer benefit or increase total customer cost. Answer: False 77) The value proposition is stated in the price of a product and readily recognized by the average consumer. Answer: False 78) The value delivery system includes all the experiences the customer will have on the way to obtaining and using the offering. Answer: True 79) The value proposition is also known as the core positioning of the offering. Answer: False 80) Loyalty is a person's feelings of pleasure or disappointment that result from comparing a product's perceived performance to expectations. Answer: False 81) Customer satisfaction is the only way by which a firm can increase its profitability. Answer: False 82) Consumers' expectations result exclusively from past buying experiences. Answer: False 83) The best thing a company can do in the face of company mistakes is to discourage the customer from complaining. Answer: False 84) Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. Answer: True 85) Conformance quality and performance quality are identical in the marketing sense. Answer: False 86) Two products with very different performance qualities can have the same conformance quality if both products deliver their respective promised quality. Answer: True 87) A profitable customer is a person, household, or company that over time yields a revenue stream that exceeds by an acceptable amount the company's cost stream of attracting, selling, and servicing the customer. Answer: True 88) A customer's profitability is judged on the basis of the lifetime stream of revenue and cost, not the profit from a particular transaction. Answer: True 89) Unprofitable customers who defect to a competitor should be encouraged to do so. Answer: True 90) Customer profitability analysis is best conducted with the tools of an accounting technique called activity-based costing. Answer: True 91) Activity-based costing tries to identify the real costs associated with serving each customer. Answer: True 92) Activity-based costing does not consider indirect, variable and overhead costs. Answer: False 93) Customer lifetime value describes the net present value of the stream of future profits expected over the customer's lifetime purchases. Answer: True 94) The aim of customer relationship management is to keep the costs of meeting and tracking consumers as low as possible. Answer: False 95) A customer touch point is the time when the customer makes a purchase. Answer: False 96) Permission marketing presumes that consumers know what they want. Answer: True 97) All companies should practice one-to-one marketing. Answer: False 98) Customer churn is how rapidly a store can move customers through its checkout facility or process. Answer: False 99) For a magazine, subscription renewal rate is a good measure of retention. Answer: True 100) A company should try to retain the customer only as long as the cost to discourage defection is lower than the lost profit. Answer: True 101) Profit rate tends to decrease over the life of the retained customer due to increased purchases, referrals, price premiums, and increased operating costs to service. Answer: False 102) The marketing funnel identifies the profitability of consumers at each stage in the decision process. Answer: False 103) Focusing disproportionate effort on high-profit customers will lead to lower customer profitability for those customers. Answer: False 104) Frequency programs are designed to reward customers who buy frequently and in substantial amounts. Answer: True 105) Clubs that are open to everyone who purchases a product or service are good for building a customer database. Answer: True 106) It's often easier to re-attract ex-customers than to find new ones because the company knows their names and histories. Answer: True 107) A customer database is simply a listing of a customer's name, address, and phone number for credit reference. Answer: False 108) Cluster analysis is a statistical technique that can be employed in data mining. Answer: True 109) Building a customer database is not recommended when the product is a once-in-a-lifetime purchase. Answer: True 110) Loyal customers are the best ambassadors for a brand. Answer: False 111) Compare and contrast the typical traditional organization chart for an organization against the modern customer-oriented organization chart. Answer: The traditional organization chart is a pyramid with the president at the top, management in the middle, and frontline people and customers at the bottom. In this case, the top management is the most important part of an organization. Managers who believe the customer is the company's only true "profit center" consider the traditional organization chart obsolete. In the modern customer-oriented organization chart, customers are at the top, followed by frontline people, then middle management, and, lastly, top management. 112) Explain customer-perceived value. Answer: Customer-perceived value (CPV) is the difference between the prospective customer's evaluation of all the benefits and all the costs of an offering and the perceived alternatives. Total customer benefit is the perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a given market offering because of the product, service, people, and image. Total customer cost is the perceived bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering, including monetary, time, energy, and psychological costs. Customer-perceived value is thus based on the difference between benefits the customer gets and the costs he or she assumes for different choices. The marketer can increase the value of the customer offering by raising economic, functional, or emotional benefits and/or reducing one or more costs. 113) What are the steps in a customer value analysis? Answer: Managers conduct a customer value analysis to reveal the company's strengths and weaknesses relative to those of various competitors. The steps in this analysis are: 1. Identify the major attributes and benefits customers value. 2. Assess the quantitative importance of the different attributes and benefits. 3. Assess the company's and competitors' performances on the different customer values against their rated importance. 4. Examine how customers in a specific segment rate the company's performance against a specific major competitor on an individual attribute or benefit basis. 5. Monitor customer values over time. 114) Explain total customer satisfaction. Answer: In general, satisfaction is a person's feelings of pleasure or disappointment that result from comparing a product's perceived performance (or outcome) to expectations. If the performance falls short of expectations, the customer is dissatisfied. If it matches expectations, the customer is satisfied. If it exceeds expectations, the customer is highly satisfied or delighted. Customer assessments of product performance depends on many factors, especially the type of loyalty relationship the customer has with the brand. Consumers often form more favorable perceptions of a product with a brand they already feel positive about. 115) What are the measurement techniques for monitoring satisfaction? Answer: Many companies are systematically measuring how well they treat customers, identifying the factors shaping satisfaction, and changing operations and marketing as a result. Periodic surveys: These can track customer satisfaction directly and ask additional questions to measure repurchase intention and the respondent's likelihood or willingness to recommend the company and brand to others. Customer loss rate: Companies need to monitor their competitors' performance too. They can monitor their customer loss rate and contact those who have stopped buying or who have switched to another supplier to find out why. Mystery shoppers: Companies can hire mystery shoppers to pose as potential buyers and report on strong and weak points experienced in buying the company's and competitors' products. Managers themselves can enter company and competitor sales situations where they are unknown and experience firsthand the treatment they receive, or they can phone their own company with questions and complaints to see how employees handle the calls. 116) Identify ways in which companies facing customer complaints can recover customer goodwill. Answer: Given the potential downside of having an unhappy customer, it is critical that marketers deal with negative experiences properly. Beyond that, the following procedures can help to recover customer goodwill. 1. Set up a 24/7 toll-free "hotline" to receive and act on customer complaints. 2. Contact the complaining customer as quickly as possible. 3. Accept responsibility for the customer's disappointment 4. Use customer-service people who are empathic. 5. Resolve the complaint swiftly and to the customer's satisfaction. 117) What technique is used for customer profitability analysis? Answer: Customer profitability analysis (CPA) is best conducted with the tools of an accounting technique called activity-based costing (ABC). ABC accounting tries to identify the real costs associated with serving each customer—the costs of products and services based on the resources they consume. The company estimates all revenue coming from the customer, less all costs. With ABC, the costs should include the cost not only of making and distributing the products and services, but also of taking phone calls from the customer, traveling to visit the customer, paying for entertainment and gifts - all the company's resources that go into serving that customer. ABC also allocates indirect costs like clerical costs, office expenses, supplies, and so on, to the activities that use them, rather than in some proportion to direct costs. Both variable and overhead costs are tagged back to each customer. 118) Explain permission marketing. Answer: Permission marketing is the practice of marketing to consumers only after gaining their expressed permission and is based on the premise that marketers can no longer use "interruption marketing" via mass media campaigns. Marketers can develop stronger consumer relationships by respecting consumers' wishes and sending messages only when they express a willingness to become more involved with the brand. However, permission marketing, like other personalization approaches, presumes consumers know what they want. 119) Today, companies are increasingly concerned about customer defection. There are three main steps a company can take to reduce the defection rate. Characterize those three steps. Answer: The three steps that a company can take to reduce defection are: 1. The company must define and measure its retention rate. 2. The company must distinguish the causes of customer attrition and identify those that can be managed better. 3. The company must compare the lost profit equal to the customer lifetime value from a lost customer to the costs to reduce the defection rate. 120) A key driver of shareholder value is the aggregate value of the customer base. Identify the five strategies employed by winning companies to improve the value of their customer base. Answer: Winning companies improve the value of their customer base by excelling at the following five strategies: 1. Reducing the rate of customer defection 2. Increasing the longevity of the customer relationship 3. Enhancing the growth potential of each customer through "share-of-wallet," cross-selling, and up-selling 4. Making low-profit customers more profitable or terminating them 5. Focusing disproportionate effort on high-value customers 121) Explain “Win-Backs” in detail. Answer: Regardless of the nature of the category or how hard companies may try, some customers inevitably become inactive or drop out. The challenge is to reactivate dissatisfied customers through win-back strategies. It is often easier to re-attract ex-customers (because the company knows their names and histories) than to find new ones. The key is to analyze the causes of customer defection through exit interviews and lost-customer surveys, and win back only those who have strong profit potential. 122) LZT is a cell phone manufacturer that designs its phones based on customer input. Once a new model is launched, the company monitors customer feedback and uses negative reviews to improve the next model. LZT also handles customer queries at length, and customer service is considered to be the most important function in the company. Is LZT more likely to use a traditional or modern company organization? Answer: LZT is more likely to have a modern, customer-oriented company organization, as it gives great importance to customers. 123) Cell phone manufacturer LZT has to choose between two options for sourcing parts: Japan-based Keiko Inc. and U.S.-based Global Tech. Though Keiko's products are priced lower than Global's, the non-monetary costs of doing business with Keiko may lead LZT to choose Global Tech. What can Keiko do to obtain LZT's order? Answer: Student answers may vary. Keiko can increase total customer benefit by improving economic, functional, and psychological benefits of its product, services, people, and image. It can reduce LZT's nonmonetary costs by reducing the time, energy, and psychological investment. It can also further reduce its product's monetary cost. To obtain LZT's order, Keiko Inc. can: 1. Improve Communication and Customer Support: Enhance responsiveness and provide dedicated support to address any concerns promptly. 2. Ensure Quality and Reliability: Highlight stringent quality control measures and offer guarantees or warranties. 3. Simplify Logistics and Supply Chain: Offer efficient and reliable shipping options to reduce lead times and potential delays. 4. Build Strong Relationships: Engage in relationship-building activities, such as regular check-ins and personalized service, to build trust and loyalty. 124) Cell phone manufacturer LZT has to choose between two options for sourcing parts: Japan-based Keiko Inc. and U.S.-based Global Tech. How can Keiko reduce the total customer cost for LZT? Answer: Keiko can reduce the price or cost of ownership and maintenance, simplify the ordering and delivery process, or absorb some buyer risk by offering a warranty. 125) Create a value proposition for cell phone manufacturer LZT. Answer: Student answers may vary. LZT's value proposition could include good quality, reliable battery life, excellent design and style. LZT offers cutting-edge cell phone technology designed for seamless connectivity and superior user experience. Our devices feature innovative designs, long-lasting battery life, and exceptional camera quality at competitive prices. With robust customer support and a commitment to sustainability, LZT ensures you stay connected in style and confidence. Choose LZT for the perfect blend of performance, affordability, and reliability. 126) Shoe retail chain Berry's has noticed an increase in complaints about customer service at its stores and is beginning to lose customers to competitors. The company needs to identify the problems and rectify them. Give two methods Berry's can use to discover the problem. Answer: Periodic surveys can track customer satisfaction directly and ask additional questions about the quality of customer service. Berry's can hire mystery shoppers to pose as potential buyers and report on strong and weak points experienced in buying the company's and competitors' products. 127) Give an example of two products that have different performance quality but are of equal conformance quality. Answer: Student answers may vary. Performance quality is the quality of the product's attributes. Conformance quality is the extent to which the product delivers the performance quality promised to consumers. A Sony Ericsson mobile cell phone provides higher performance quality than a Nokia. The Sony Ericsson mobile has more features and lasts longer than a Nokia mobile cell phone. Yet both would deliver the same conformance quality if both delivered their respective promised quality. An example of two products with different performance quality but equal conformance quality could be: 1. A high-end DSLR camera with superior image resolution, advanced features, and high-speed performance. 2. A basic point-and-shoot camera that meets all specified quality standards but offers lower image resolution and fewer features. Both cameras conform to their respective manufacturing standards (conformance quality) but differ significantly in their performance quality. 128) Berry's is a chain of shoe stores. The company recently reviewed its customer relations strategy and suggested that the brand communication be consistent across all customer touch points. What are the various touch points for Berry's? Answer: Student answers may vary. Berry's touch points can include the stores' sales staff, point-of-purchase advertising, the company Web site, the packaging of the products, the company's advertising and promotional messages. The various touch points for Berry's include: 1. In-store experiences: Interactions with sales staff and the physical shopping environment. 2. Online presence: Website, social media, and email communications. 3. Customer service: Phone support, live chat, and after-sales service. 4. Marketing materials: Advertisements, promotional materials, and packaging. 129) Give an example of how a hotel can generate customer loyalty at a “customer touch point”. Answer: Student answers may vary. An example of customer touch point would be when a hotel offers its guests something to drink upon arrival before they check in, or when the staff places chocolates on pillows and face towels twisted into the shape of animals on beds. A hotel can generate customer loyalty at the check-in touch point by offering a personalized welcome experience. For example, greeting guests by name, providing a complimentary room upgrade, and offering a welcome drink or gift. This thoughtful and personalized approach can make guests feel valued and encourage them to return for future stays. 130) Berry's is a chain of shoe stores. The marketing team suggested that the company use permission marketing instead of interruption marketing. How can this benefit the company? Answer: Student answers may vary. Using permission marketing, the practice of marketing to consumers only after gaining their expressed permission, Berry's can develop stronger consumer relationships by respecting consumers' wishes and sending messages only when they express a willingness to become more involved with the brand. Permission marketing can benefit Berry's by fostering stronger customer relationships through targeted and relevant communication. It can lead to higher engagement rates, as customers who opt-in are genuinely interested. This approach also builds trust and loyalty, as customers feel respected and valued. Ultimately, it can increase conversion rates and long-term customer retention. 131) Uncle Jim's is a brand of ready-to-eat snacks that is widely distributed in supermarkets and stores across the country. Should Uncle Jim's opt for one-to-one marketing? Give reasons for your answer. Answer: Student answers may vary. One-to-one marketing is unlikely to profit Uncle Jim's. One-to-one marketing works best for companies that normally collect a great deal of individual customer information, carry a lot of products that can be cross-sold, carry products that need periodic replacement or upgrading, and sell products of high value. Uncle Jim's should not opt for one-to-one marketing due to its broad distribution and mass-market appeal. One-to-one marketing is resource-intensive and better suited for niche or high-value products. Instead, focusing on segmented marketing strategies can efficiently target key demographics. This approach can maximize reach and impact while managing costs effectively. 132) Bicycle store 2Wheels wants to maximize sales from each customer. The marketing team suggests that 2Wheels uses cross-selling techniques. How can the company implement this technique? Answer: 2Wheels can use cross-selling techniques by stocking products related to bicycles, such as cycling gear, bottles, lamps and other accessories. 133) Bicycle store 2Wheels notices that it has a high proportion of low-profit customers, but doesn't want to terminate the customer relationship. What can 2Wheels do to make these customers more profitable? Answer: 2Wheels can encourage unprofitable customers to buy more or in larger quantities, forgo certain features or services, or pay higher amounts or fees. It can also use cross-selling or up-selling techniques. 134) To increase customer loyalty, 2Wheels wants to start a club for its dedicated customers, but wants to make sure that only members who are ready to participate in activities join the club. What can it do to ensure this? Answer: Student answers may vary. 2Wheels can institute membership fees and membership conditions to ensure that only members with a lasting interest join the club. 2Wheels can ensure active participation in its customer club by implementing a membership fee or purchase requirement tied to club activities. They can also create an application process where potential members express their commitment to participating. Hosting exclusive events or offering rewards linked to engagement can further incentivize active involvement, ensuring the club is populated by dedicated and engaged customers. 135) The management of Keiko has learned that the company risks losing a long-time customer, LZT, to a competitor. How can Keiko make it more difficult for LZT to switch to another customer? Answer: Student answers may vary. Keiko can supply LZT with special equipment or computer links that help them manage orders, payroll, and inventory. Customers are less inclined to switch to another supplier when it means high capital costs, high search costs, or the loss of loyal-customer discounts. Keiko can make it more difficult for LZT to switch to another supplier by deepening their integration with LZT's operations. This could involve offering customized solutions that align closely with LZT's specific needs and processes, implementing long-term contracts or partnerships that provide stability and mutual benefits, ensuring exceptional customer service and support, and continuously innovating to stay ahead of competitors in terms of technology, quality, and cost-effectiveness. These efforts can strengthen the relationship and make it less attractive for LZT to switch suppliers. 136) Sara is the marketing manager of a small HR consultancy firm. She is in the process of implementing the use of a database to assist her company in its marketing efforts. List five ways in which she might be able to use the database for marketing efforts. Answer: Sara can use a database for marketing efforts in five ways. These include: (1) identifying prospects; (2) deciding which customers should receive a particular offer; (3) strengthening customer loyalty; (4) reactivating customer purchases; and (5) avoiding serious customer mistakes. 137) CJ's is a clothes retailer that grew from a single store into a chain over a few years. The key service characteristic during CJ's early years was a personalized customer relationship, and the company continues to collect information about its customers and maintain a database. Recently, however, CJ's has been losing customers to competitors as the expansion has made it difficult to personalize services. How can CJ's use its customer database to reactivate customer purchases? Answer: CJ's can install automatic mailing programs that send out birthday or anniversary cards, Christmas shopping reminders, or off-season promotions. The company can use the database to make attractive or timely offers to its customers based on their preferences. 138) Uncle Jim's is a brand of ready-to-eat snacks that is widely distributed in supermarkets and stores across the country. The marketing team has recently suggested that the company adopt database marketing so that it can better target its customers. Should Uncle Jim's create a database? Give reasons for your answer. Answer: Student answers may vary. Uncle Jim's may not profit from creating a database because the unit sale of the products it sells is very small; the cost of gathering information will be high because the product is widely distributed; and there is no direct contact between the seller and ultimate buyer. Yes, Uncle Jim's should create a database for better targeting its customers. A database allows for personalized marketing efforts based on customer demographics, purchase history, and preferences, enhancing relevance and engagement. It also enables effective segmentation, improving efficiency in promotions and loyalty programs tailored to different customer segments, ultimately driving sales and customer satisfaction. 139) Sara is the marketing manager of a small HR consultancy firm. She is in the process of building a database to assist her company in its marketing efforts. Give five problems that can make the database less effective. Answer: 1. Some situations are just not conducive to database management. 2. Building and maintaining a customer database requires a large, well-placed investment in computer hardware, database software, analytical programs, communication links, and skilled staff. 3. It may be difficult to get everyone in the company to be customer oriented and use the available information. 4. Not all customers want a relationship with the company. 5. The assumptions behind CRM may not always hold true. 140) Using an example, contrast behavioral loyalty and attitudinal loyalty to a product. Answer: Student answers will vary. James shows high behavioral loyalty to 2Wheels because he buys a lot of 2Wheels products. Sara shows high attitudinal loyalty to 2Wheels because she is very committed to the 2Wheels brand. Behavioral loyalty refers to repeat purchases or consistent usage of a product due to habit or convenience, such as regularly buying a particular brand of detergent out of familiarity. Attitudinal loyalty, on the other hand, reflects emotional attachment and preference based on positive perceptions and satisfaction, like choosing a specific brand of smartphone because of its features and customer service reputation. Behavioral loyalty focuses on actions, while attitudinal loyalty centers on feelings and beliefs about the product. Chapter 6 Analyzing Consumer Markets 1) ________ is the study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. A) Target marketing B) Mind mapping C) Consumer activism D) Consumer behavior E) Product differentiation Answer: D 2) Which of the following would be the best illustration of a subculture? A) a religion B) a group of close friends C) your university D) a fraternity or sorority E) your occupation Answer: A 3) The relatively homogeneous and enduring divisions in a society, which are hierarchically ordered and whose members share similar values, interests, and behavior constitute ________. A) a culture B) a subculture C) a social class D) a family E) a group Answer: C 4) A person's ________ consist(s) of all the groups that have a direct (face-to-face) or indirect influence on his/her attitudes or behavior. A) subculture B) family C) social class D) reference groups E) social networks Answer: D 5) A(n) ________ group is one whose values or behavior an individual rejects. A) aspirational B) disassociative C) membership D) primary E) procreational Answer: B 6) Joe is a computer service technician. People in his neighborhood usually depend on his suggestions for purchasing any computer accessory or hardware, as they believe that he has access to far more information on computer technology than the average consumer. The neighbors are also aware that Joe has the required knowledge and background for understanding the technical properties of the products. Within this context, Joe can be called a(n) ________. A) transactional leader B) opinion leader C) role model D) gate-keeper E) international marketer Answer: B 7) For a high-school student, Tim is highly concerned about environmental issues. He is a strong supporter of the garbage recycling and afforestation campaigns taken up by the environmental activists in his neighborhood. He wants to become a full time volunteer for their upcoming wildlife protection program and has even saved money to contribute to the cause. This group of environmental activists can be categorized under which of the following reference groups? A) primary group B) secondary group C) aspirational group D) dissociative group E) cognitive group Answer: C 8) Jason writes a weekly column in his school's newspaper about movies he has seen, books he has read, and concerts he has attended. His column provides information and opinions. Feedback from his fellow students is positive, and they are appreciative of the advice that is given. Which of the following would be the most apt description of the role played by Jason? A) silent majority B) protestor C) protector D) adapter E) opinion leader Answer: E 9) Social classes differ in media preferences, with upper-class consumers often preferring ________ and lower-class consumers often preferring television. A) movies B) radio C) video or computer games D) magazines and books E) music downloads Answer: D 10) If a direct-mail marketer wished to direct promotional efforts toward the family of ________, efforts need to be directed toward parents and siblings of the family members. A) orientation B) procreation C) immediacy D) intimacy E) reference Answer: A 11) The family in a buyers life consisting of parents and siblings is the ________. A) family of procreation B) family of influence C) family of efficiency D) family of orientation E) purchasing family Answer: D 12) When Gary was a high school student, he enjoyed rock music and regularly purchased hip clothing sported by his favorite rock band. However, five years later, when Gary became an accountant, his preference shifted toward formal clothing. Which of the following personal characteristics is likely to have had the most influence on Gary's preferences during his high school days? A) education B) age C) income D) gender E) physiological needs Answer: B 13) Marriage, childbirth, and divorce constitute the ________ that shape the consumption pattern of individuals. A) psychological life cycle B) product life cycle C) social status D) postpuberty cycles E) critical life events Answer: E 14) Identify an economic circumstance that can greatly affect any product or brand choice. A) retirement B) values C) lifestyle D) borrowing power E) relocation Answer: D 15) ________ refers to a set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli. A) Image B) Personality C) Psychological transformation D) Lifestyle E) Acculturation Answer: B 16) Brand personality analysts identified the popular music channel MTV as daring, spirited, and highly imaginative. As per Jennifer Aaker's research, which of the following brand personality traits best suits MTV? A) excitement B) sincerity C) competence D) ruggedness E) sophistication Answer: A 17) Timberland shoe advertisements often depict people in rugged environments like mountains and deserts. This is done to establish what is called ________. A) trademarking B) a brand name C) a brand personality D) co-branding E) a brand reference Answer: C 18) Consumers often choose and use brands that have a brand personality consistent with how they see themselves, also known as the ________. A) actual self-concept B) ideal self-concept C) others' self-concept D) prohibitive self-concept E) suggestive self-concept Answer: A 19) Consumers often choose and use brands that have a brand personality consistent with how they think others view them, also known as the ________. A) actual self-concept B) others' self-concept C) ideal self-concept D) dual self-concept E) perceptual self-concept Answer: B 20) Consumers who are highly sensitive to how others see them and who choose brands whose personalities fit the consumption situation are called ________. A) change agents B) self motivators C) self monitors D) self adapters E) opinion leaders Answer: C 21) Within the context of Jennifer Aaker's analysis, identify the brand personality that can be associated with a new product whose promotional messages consistently portray it as being reliable, intelligent, and successful. A) sincerity B) excitement C) competence D) sophistication E) ruggedness Answer: C 22) Standard Chartered bank’s “Here for good” ad campaign is meant to market the bank as having the brand personality of ____________. A) sincerity B) intelligence C) imagination D) sophistication E) ruggedness Answer: A 23) ________ portrays the "whole person" interacting with his or her environment. A) Attitude B) Personality C) Lifestyle D) Self-concept E) Subculture Answer: C 24) Luxury-goods distributors for Hermés and Kenzo find their markets growing dramatically because of the change in ________. A) Attitude B) Personality C) Lifestyle D) Self-concept E) Subculture Answer: C 25) IKEA has achieved global recognition by offering consumers leading-edge Scandinavian furniture at affordable prices. IKEA is delivering value to consumers who are ________. A) money constrained B) time constrained C) brand constrained D) value constrained E) self-concept constrained Answer: A 26) Marketers who target consumers on the basis of their ________ believe that they can influence purchase behavior by appealing to people's inner selves. A) time famine B) sophistication C) money constrain D) social class E) core values Answer: E 27) The starting point for understanding consumer behavior is the ________ model in which marketing and environmental stimuli enter the consumer's consciousness, and a set of psychological processes combine with certain consumer characteristics to result in decision processes and purchase decisions. A) self-reliance B) self-perception C) psychogenic D) stimulus-response E) projective Answer: D 28) ________ assumed that the psychological forces shaping people's behavior are largely unconscious, and that a person cannot fully understand his or her own motivations. A) Abraham Maslow B) Frederick Herzberg C) Sigmund Freud D) John Cacioppo E) Karl Marx Answer: C 29) Which of the following techniques was suggested by Freud to trace a person's motivations from the stated instrumental ones to the more terminal ones? A) laddering B) word association C) role playing D) casting E) selective attention Answer: A 30) Which of the following theories developed by Frederick Herzberg distinguishes dissatisfiers from satisfiers? A) trait-role theory B) psychological constraint theory C) probability theory D) leadership model E) two-factor theory Answer: E 31) At the top of Maslow's hierarchy of needs (shown as a pyramid in the text) are ________ needs. A) esteem B) self-actualization C) social D) safety E) physiological Answer: B 32) ________ is the process by which we select, organize, and interpret information inputs to create a meaningful picture of the world. A) Consumption B) Perception C) Acculturation D) Assimilation E) Cognitive dissonance Answer: B 33) ________ can work to the advantage of marketers with strong brands when consumers make neutral or ambiguous brand information more positive. A) Selective attention B) Selective distortion C) Selective retention D) Selective choice E) Selective embellishment Answer: B 34) ________ is the tendency to interpret information in a way that will fit our preconceptions. A) Selective retention B) Cognitive dissonance C) Selective distortion D) Subliminal perception E) Selective embellishment Answer: C 35) Marketers embed covert messages in ads or packaging of which the consumers are not consciously aware, yet it affects their behavior. This technique employed by the marketers targets the ________ of a consumer. A) selective attention B) selective distortion C) subliminal perception D) voluntary attention E) selective retention Answer: C 36) ________ teaches marketers that they can build demand for a product by associating it with strong drives, using motivating cues, and providing positive reinforcement. A) Demand theory B) Learning theory C) Economic theory D) Psychological theory E) Demographic theory Answer: B 37) Anne is a frequent purchaser of Yoplait strawberry yogurt. For once, she decides to try a different flavored yogurt. Instead of trying out the flavors offered by competing brands, Anne selects a different flavor offered by Yoplait. Here, her past experience with the brand prompts her to make the choice. Anne's behavior can be best described as ________. A) fallacy of proposition B) associative networking C) generalization D) heuristic thinking E) self-actualization Answer: C 38) The ________ says people have a general tendency to attribute success to themselves and failure to external causes. A) availability heuristic B) trait-role theory C) awareness set D) generalization theory E) hedonic bias Answer: E 39) As Rita scans the yellow pages section of her phone book looking for a florist, she sees several other products and services advertised. Though interesting on first glance, she quickly returns to her primary task of finding a florist. The items that distracted her from her initial search were most likely stored in which of the following types of memory? A) Short-term memory B) Long-term memory C) Middle memory D) Subconscious memory E) Subliminal memory Answer: A 40) Betsy, a teenager, uses most of her post school hours in either playing tennis or watching movies. She barely manages to concentrate in her lessons for a couple of hours before term exams. Being questioned about her substandard performance in the school, she points out the teacher's inability to complete the entire course during the school hours as the possible reason. Betsy's behavior is most likely to be associated with ________. A) generalization B) hedonic bias C) discrimination D) selective attention E) psychological repositioning Answer: B 41) The associative network memory model views long-term memory as ________. A) a subliminal perception B) the interplay of drives C) a strong internal stimulus impelling action D) a temporary and limited repository of information E) a set of nodes and links Answer: E 42) ________ refers to the process in which information gets out of memory. A) Memory encoding B) Memory decoding C) Memory classification D) Memory retrieval E) Memorization Answer: A 43) Amtex electronics, a consumer products brand, advertises its products inside supermarkets and retail stores frequently to promote the process of ________ and stimulate purchase. A) memory verification B) memory retrieval C) memory decoding D) memory formation E) memory augmentation Answer: B 44) Cognitive psychologists believe that memory is ________, so that once information becomes stored in memory, its strength of association decays very slowly. A) highly perceptual B) somewhat collective C) highly communicative D) often reflective E) extremely durable Answer: E 45) The milder information search state where a person simply becomes more receptive to information about a product is called ________. A) active information search B) information search C) heightened attention D) purchase decision E) dynamic information search Answer: C 46) The buying process starts when the buyer recognizes a(n) ________. A) product B) advertisement for the product C) salesperson from a previous visit D) problem or need E) internal cue Answer: D 47) Which of the following is considered to be a more advanced form of information search wherein the person might phone friends or go online to secure information about a product or service? A) heightened attention B) short-term memory processing C) subliminal processing of information D) long-term memory processing E) active information search Answer: E 48) Of key interest to marketers are the major informational sources to which the consumer will turn and the relative importance of each. Which of the following can be considered an experiential information source? A) consumer-rating organizations B) mass media C) acquaintances D) Web sites E) personal handing and examination Answer: E 49) Brands that meet consumers' initial buying criteria are called the ________. A) total set B) awareness set C) consideration set D) choice set E) decision set Answer: C 50) Maria considers buying a car for herself, after she notices the advantages derived by her best friend from his new car. Which of the following forms of stimulus has activated Maria's problem recognition process? A) external stimuli B) internal stimuli C) peer stimuli D) secondary stimuli E) marketing induced stimuli Answer: A 51) A consumer who uses Google to find comparative reports on new cars, is most likely using which of the following information sources for assistance? A) personal B) public C) experiential D) commercial E) under-the-radar Answer: D 52) With respect to consumer decision making, the ________ is the set of strong contenders from which one will be chosen as a supplier of a good or service. A) total set B) awareness set C) consideration set D) choice set E) decision set Answer: D 53) A(n) ________ is a descriptive thought that a person holds about something. A) attitude B) belief C) desire D) feeling E) emotion Answer: B 54) A(n) ________ puts people into a frame of mind, such as, liking or disliking an object, moving toward or away from it. A) attitude B) belief C) feeling D) position E) stance Answer: A 55) Marketers need to identify the hierarchy of attributes that guide consumer decision making in order to understand different competitive forces and how these various sets get formed. This process of identifying the hierarchy is called ________. A) market partitioning B) brand association C) market valuation D) market estimation E) market identification Answer: A 56) ________ are a person's enduring favorable or unfavorable evaluations, emotional feelings, and action tendencies toward some object or idea. A) Discriminations B) Values C) Beliefs D) Feelings E) Attitudes Answer: E 57) The expectancy-value model of attitude formation posits that consumers evaluate products and services by combining their ________. A) needs B) wants C) desires D) brand beliefs E) consuming attitudes Answer: D 58) Gordon is considering purchasing a computer from Best Denki. He has created a scale for rating eight different computers on three different characteristics. He plans to short-list only those computers, that score at least a seven on his scale on all three characteristics. Which of the following choice heuristics has he chosen? A) elimination-by-aspects heuristic B) lexicographic heuristic C) conjunctive heuristic D) anchoring and adjustment heuristic E) representativeness heuristic Answer: C 59) With the ________ heuristic, the consumer sets a minimum acceptable cutoff level for each attribute and chooses the first alternative that meets the minimum standard for all attributes. A) conjunctive B) lexicographic C) elimination-by-aspects D) primary E) secondary Answer: A 60) ________ are rules of thumb or mental shortcuts in the decision process. A) Attitudes B) Beliefs C) Heuristics D) Discriminations E) Biases Answer: C 61) Even if consumers form brand evaluations, two general factors can intervene between the purchase intention and the purchase decision. One of these is unanticipated situational factors. What is the other factor? A) Amount of purchasing power B) Attitudes of others C) Short-term memory capabilities D) Ability to return merchandise E) The self-concept Answer: B 62) A mobile phone manufacturing company observes that the main reason for an abrupt fall in their sales volume is the unconventional design of their phones that consumers found inconvenient and unattractive. The findings prompt the company to adopt a new strategy. They redesigned the product models keeping the requirements of the end-user in mind. According to the expectancy value-model, the company's strategy can be termed as ________. A) psychological repositioning B) real repositioning C) competitive depositioning D) physiological depositioning E) prescriptive method Answer: B 63) Ford believes its cars to be of higher quality than General Motor's but thinks that consumers wrongly believe the opposite. Ford might employ a(n) ________ strategy to change buyers' perceptions of its competition. A) real repositioning B) competitive depositioning C) psychological repositioning D) biased repositioning E) attribute repositioning Answer: B 64) When a marketer tries to alter a consumer's beliefs about a company's brand to get the consumer to rethink a purchase decision, the marketer is using ________. A) psychological repositioning B) competitive depositioning C) positioning D) repositioning E) biased positioning Answer: A 65) With the ________, the consumer chooses the best brand on the basis of its perceived most important attribute. A) lexicographic heuristic B) conjunctive heuristic C) elimination-by-aspects heuristic D) availability heuristic E) representativeness heuristic Answer: A 66) ________ risk occurs if the product fails to perform up to expectations. A) Physical B) Financial C) Social D) Psychological E) Functional Answer: E 67) Steve has only 20 minutes to have lunch. Although he really likes McDonald's, the line is very long and he is concerned that he will not have a chance to get through the line and eat his lunch before he is due back at work. Steve perceives ________ in going to McDonald's today. A) time risk B) functional risk C) physical risk D) psychological risk E) social risk Answer: A 68) A key driver of sales frequency is the product ________ rate. A) consumption B) disposal C) refusal D) utility E) option Answer: A 69) The level of engagement and active processing undertaken by the consumer in responding to a marketing stimulus is called ________. A) elaboration likelihood B) consumer disengagement C) consumer involvement D) variety seeking E) low involvement Answer: C 70) A consumer is persuaded to buy a product by a message that requires little thought and is based on an association with a brand's positive consumption experiences from the past. In this situation, the consumer used a ________ to arrive at this purchase decision. A) central route B) peripheral route C) behavioral route D) subjective route E) objective route Answer: B 71) Richard Petty and John Cacioppo's ________, an influential model of attitude formation and change, describes how consumers make evaluations in both low- and high-involvement circumstances. A) introspective model B) elaboration likelihood model C) stimulus-response model D) associative network memory model E) expectancy-value model Answer: B 72) Which of the following products is most likely to be characterized by low involvement but significant brand difference? A) toothpastes B) digital cameras C) packet of salt D) a milk carton E) furniture Answer: A 73) With the ________, predictions of usage are based on quickness and ease of use. A) availability heuristic B) representative heuristic C) anchoring heuristic D) adjustment heuristic E) semantic heuristic Answer: A 74) A consumer tells another consumer, “Every time I eat at Jack's Steakhouse, I get poor service.” Whether this is true or not, it is the consumer's perception. This is an example of consumers basing future predictions on the quickness and ease with which a particular example of an outcome comes to mind. This scenario would be an illustration of the ________ heuristic. A) discrimination B) differentiation C) availability D) screening E) representativeness Answer: C 75) Ben always reaches for the bright blue and yellow box of Ritz crackers when he visits the snack food aisle in the grocery store. He rarely even reads the box or checks the price. Which of the following heuristics is most likely being used by Ben? A) Availability B) Representative C) Anchoring D) Adjustment E) Semantic Answer: B 76) ________ refers to the manner in which consumers code, categorize, and evaluate financial outcomes of choices. A) Cost accounting B) Financial accounting C) Behavioral accounting D) Mental accounting E) Factual accounting Answer: D 77) Social class is the fundamental determinant of a person's wants and behavior. Answer: False 78) An example of a subculture would be a person's geographic region. Answer: True 79) Groups that have an indirect influence on a person's attitude or behavior can be a part of his/her reference groups. Answer: True 80) Members within a social class tend to behave more alike compared to members from two different social classes. Answer: True 81) Secondary groups require continuous interaction to be effective and meaningful. Answer: False 82) When Mark went to college he had a burning desire to join a social fraternity; for Mark, the fraternity would be a dissociative group. Answer: False 83) A person's position in a group is defined in terms of role and status. Answer: True 84) Marketers need to be aware of the status-symbol potential of brands because people usually choose products which reflect their role and their actual or desired status in a society. Answer: True 85) The behavior people exhibit as they pass through certain life-cycle stages, such as becoming a parent, is largely fixed and does not change over time. Answer: False 86) For an employee at an organization, annual appraisal can be considered as a critical life event that impacts his/her consumption behavior. Answer: False 87) Whereas economic circumstances can have a profound effect on consumption, occupation does not impact how people spend their money and what they buy. Answer: False 88) According to the research conducted by Jennifer Aaker, one of the five traits of a product's brand personality is its physical structure. Answer: False 89) Brand personality is the specific mix of human traits that may be attributed to a particular brand. Answer: True 90) The five brand personality traits identified by Jennifer Aaker are consistently observed regardless of nationality or culture. Answer: False 91) A person's personality portrays the “whole person” interacting with his or her environment. Answer: False 92) Consumers who experience money constraints are prone to multitasking. Answer: False 93) Psychogenic needs arise from the physiological states of tension such as hunger or discomfort. Answer: False 94) Sigmund Freud assumed that the psychological forces shaping people's behavior are largely unconscious, and that people cannot fully understand their motivations. Answer: True 95) According to Maslow's hierarchy of needs model, recognition, self-esteem, and status would constitute a person's social needs. Answer: False 96) According to Herzberg's two-factor theory, satisfiers will make the major difference as to which brand the customer buys. Answer: True 97) Perception depends only on the physical stimuli experienced by the person. Answer: False 98) People are more likely to notice stimuli whose deviations are large in relation to the normal size of the stimuli. Answer: True 99) Selective attention is the tendency to interpret information in a way that will fit our preconceptions. Answer: False 100) Selective retention works to the advantage of strong brands. Answer: True 101) Because of selective retention, we are likely to forget about the good points of competing products. Answer: True 102) Consistent with the elaboration memory model, consumer brand knowledge in memory can be conceptualized as consisting of a brand node in memory with a variety of linked associations. Answer: False 103) Brand associations consist of all brand-related thoughts, feelings, perceptions, images, experiences, beliefs, attitudes, and so on that become linked to the brand node. Answer: True 104) Memory is a very constructive process. This means people do not remember information and events completely and accurately and often remember only bits and pieces that they fill in based on whatever else they know. Answer: True 105) Every consumer has to pass through all five stages of the buying process when in a buying situation. Answer: False 106) The buying process starts when the buyer decides to or actually enters a store or service provider's facility. Answer: False 107) A belief is a person's enduring favorable or unfavorable evaluation, emotional feeling, and action tendency toward some object or idea. Answer: False 108) The expectancy-value model of attitude formation posits that consumers evaluate products and services by combining their brand beliefs according to importance. Answer: True 109) Most buyers consider several attributes in their purchase decision. Answer: True 110) With non-compensatory models of consumer choice, positive and negative attribute considerations usually net out. Answer: False 111) Volvo has the reputation for being one of the most “safe” cars on the road. For those that value safety, Volvo would be the logical choice. This is an example of the lexicographic heuristic of consumer choice. Answer: True 112) The degree of perceived risk varies with the amount of money at stake, the amount of attribute uncertainty, and the amount of consumer self-confidence. Answer: True 113) Psychological risk refers to the threat posed by a product to the physical well-being of a consumer. Answer: False 114) With respect to a consumer buying situation that involves variety-seeking behavior, the market leader generally encourages variety seeking by offering lower prices or deals. Answer: False 115) Anchoring heuristic comes in to play when consumers base their predictions on the quickness and ease with which a particular example of an outcome comes to mind. Answer: False 116) The prospect theory maintains that consumers frame decision alternatives in terms of gains and losses according to a value function. Answer: True 117) Explain the differences between culture, subculture, and social class. Answer: Culture is the fundamental determinant of a person's wants and behavior. Subcultures provide more specific identification and socialization of their members. Subcultures include nationalities, religions, racial groups, and geographic regions. Social class is a relatively homogeneous and enduring division in a society, that are hierarchically ordered and whose members share similar values, interests, and behaviors. 118) What is a reference group? Describe three different types of reference groups that can have an impact on a consumer's purchasing behavior. Answer: Reference groups consist of all the groups that have a direct (face-to-face) or indirect influence on attitudes or behavior. Types of reference groups that can impact a consumer's purchasing behavior include membership groups, primary groups, secondary groups, aspirational groups, and disassociative groups. Membership groups are the groups which have a direct influence on the person. Primary groups are the groups with whom the person interacts fairly continuously and informally, such as family, friends, neighbors, and coworkers. Secondary groups tend to be more formal and require less continuous interaction. Aspirational groups are those a person hopes to join; and dissociative groups are those whose values or behavior an individual rejects. 119) The family is the most important consumer buying organization in society, and family members constitute the most influential primary reference group. We can distinguish between two family categorizations in the buyer's life. Name the two families and their impact on buying behavior. Answer: The family of orientation consists of parents and siblings. From parents a person acquires an orientation toward religion, politics, and economics and a sense of personal ambition, self-worth, and love. Even if the buyer no longer interacts very much with his or her parents, their influence on behavior can be significant. A more direct influence on everyday buying behavior is the family of procreation—namely, one's spouse and children. 120) Each person has personality characteristics that influence his or her buying behavior. What does personality mean in terms of buying traits? Answer: Personality is often described in terms of such buying traits as self-confidence, dominance, autonomy, deference, sociability, defensiveness, and adaptability. Personality can be a useful variable in analyzing consumer brand choices. The idea is that brands also have personalities, and consumers are likely to choose brands whose personalities match their own. 121) Give an example of how age affects a consumer’s taste in products. Answer: People’s taste in food, clothes, furniture, and recreation is often age-related. For instance, some Japanese teenagers dye their hair fire-engine red and wear the latest street fashion which includes tutus over pants. They quit school because the strict discipline in schools is not compatible with what they want at this stage of their life cycle. 122) Frederick Herzberg developed a two-factor theory that distinguishes dissatisfiers and satisfiers. How does Herzberg's theory affect sellers' marketing strategy? Answer: Herzberg's theory has two implications. First, sellers should do their best to avoid dissatisfiers (for example, a poor training manual or a poor service policy). Although these things will not sell a product, they might easily unsell it. Second, the seller should identify the major satisfiers or motivators of purchase in the market and then supply them. These satisfiers will make the major difference as to which brand the customer buys. 123) People can emerge with different perceptions of the same object because of three perceptual processes. List and briefly characterize these processes. Answer: The three processes are selective attention, selective distortion, and selective retention. Selective attention occurs because a person cannot possibly attend to all the stimuli that he or she is exposed to during an average day. Some will be screened out. Selective distortion is the tendency to interpret information in a way that will fit our perceptions. Selective retention occurs because people will fail to register much information to which they are exposed in memory, but will tend to retain information that supports their attitudes and beliefs. 124) Explain the concept of selective retention and its association with marketing. Answer: Selective retention says that consumers are likely to remember good points about a product we like and forget good points about competing products. Selective retention works to the advantage of strong brands. It also means that marketers need to use repetition in sending messages to their target markets to make sure their message is not overlooked. 125) Identify three types of risk consumers might perceive in the context of purchasing a car. Answer: Consumers might perceive physical risk (an unsafe car poses a safety risk to the physical well-being of the driver and passengers), a financial risk (the car might be overpriced or may decline in value so rapidly that it will have minimal resale value when the consumer tries to resell it), and a functional risk (the car may not perform to the expectations of the consumer). Students may identify other risks, including social, psychological, and time risks. 126) What is mental accounting? What, according to Thaler, are the core principles on which mental accounting is based? Explain with examples. Answer: Mental accounting refers to the way consumers code, categorize, and evaluate financial outcomes of choices. Formally, it is “the tendency to categorize funds or items of value even though there is no logical basis for the categorization, e.g., individuals often segregate their savings into separate accounts to meet different goals even though funds from any of the accounts can be applied to any of the goals.” According to Chicago's Thaler, mental accounting is based on a set of core principles: 1. Consumers tend to segregate gains. When a seller has a product with more than one positive dimension, it's desirable to have the consumer evaluate each dimension separately. Listing multiple benefits of a large industrial product, for example, can make the sum of the parts seem greater than the whole. 2. Consumers tend to integrate losses. Marketers have a distinct advantage in selling something if its cost can be added to another large purchase. House buyers are more inclined to view additional expenditures favorably given the high price of buying a house. 3. Consumers tend to integrate smaller losses with larger gains. The “cancellation” principle might explain why withholding taxes from monthly paychecks is less aversive than large, lump-sum tax payments—the smaller withholdings are more likely to be absorbed by the larger pay amount. 4. Consumers tend to segregate small gains from large losses. The “silver lining” principle might explain the popularity of rebates on big-ticket purchases such as cars. 127) Culture is the fundamental determinant of a person's wants and behavior. The growing child acquires a set of values, perceptions, preferences, and behaviors through his or her family and other key institutions. What values are typical Asian young children exposed to? Answer: A child growing up in many parts of Asia is exposed to such values as filial piety, hard work, obedience to authority, and collectivism. For instance, the value of krengjai, or deference to or consideration of others, is pervasive in Thai culture. 128) An opinion leader is the person in informal, product-related communications who offers advice or information about a specific product or product category, such as which of several brands is best or how a particular product may be used. According to the text, how do marketers try to reach opinion leaders? Answer: Marketers try to reach opinion leaders by identifying demographic and psychographic characteristics associated with opinion leadership, identifying the media read by opinion leaders, and directing messages at opinion leaders. 129) Explain the differences between a role and status. Answer: A role consists of the activities a person is expected to perform. Each role carries a status. For example, a senior vice-president has more status than a sales manager. 130) Mention the personal factors that can influence the decision of a buyer. Answer: Personal characteristics that influence a buyer's decision include age and stage in the life cycle, occupation and economic circumstances, personality and self-concept, and lifestyle and values. Because many of these have a direct impact on consumer behavior, it is important for marketers to follow them closely. 131) What is brand personality and what are the five traits that has been linked to it? Answer: Brand personality is the specific mix of human traits that may be attributed to a particular brand. Traits that have been associated with brand personality are sincerity, excitement, competence, sophistication, and ruggedness. 132) Briefly explain Freud's theory on human motivation and explain how this might be related to marketing. Answer: Sigmund Freud assumed that the psychological forces shaping people's behavior are largely unconscious, and that a person cannot fully understand his or her own stated capabilities. When a person examines specific brands, he or she will react not only to their stated capabilities, but also to other, less conscious cues. 133) Within the context of the Freudian theory, explain how the laddering technique can be used. Answer: Shape, size, weight, material, color, and brand name can all trigger certain associations and emotions. A technique called laddering can be used to trace a person's motivations from the stated instrumental ones to the more terminal ones. Then the marketer can decide at what level to develop the message and appeal. 134) Abraham Maslow sought to explain why people are driven by particular needs at particular times. Describe Maslow's hierarchy of needs. How does Maslow's theory help marketers? Answer: Maslow's hierarchy of needs in order of importance are, physiological needs, safety needs, social needs, esteem needs, and self-actualization needs. Maslow's theory helps marketers understand how various products fit into the plans, goals, and lives of consumers. 135) List and briefly characterize Maslow's Hierarchy of Needs. Answer: Beginning with the most basic needs to the most advanced, the need structure is as follows: (1) physiological needs—food, water, shelter; (2) safety needs—security, protection; (3) social needs—sense of belonging, love; (4) esteem needs—self-esteem, recognition, status; and (5) self-actualization needs—self-development and realization. 136) Perception is the process by which an individual selects, organizes, and interprets information inputs to create a meaningful picture of the world. For a marketer, what is the key point of perception? Answer: The key point is that perceptions can vary widely among individuals exposed to the same reality. In marketing, perceptions are more important than the reality, as it is perceptions that will affect consumers' actual behavior. For a marketer, the key point of perception is understanding how consumers perceive their brand or product. This involves influencing how consumers select, organize, and interpret information to create favorable perceptions. By shaping these perceptions through marketing strategies, such as branding, advertising, and customer experiences, marketers can influence consumer behavior and decision-making effectively. 137) What does the learning theory teach marketers about demand for products? Answer: The learning theory teaches marketers that they can build demand for a product by associating it with strong drives, using motivating cues, and providing positive reinforcement. 138) What are the five stages of the consumer buying process? Answer: The five stages are problem recognition, information search, evaluation of alternatives, purchase decision, and post purchase behavior. 139) Describe how the problem recognition process works in the five-stage model of the consumer buying process. Answer: The buying process starts when the buyer recognizes a problem or need. With an internal stimulus, one of the person's normal needs—hunger, thirst, sex—rises to a threshold level and becomes a drive; or a need can be aroused by an external stimuli such as an advertisement. 140) Through market research a consumer gathers information about the competing brands of a product and their features. The consumer then advances through four sets with respect to brands before a decision is reached. What are those four sets? Answer: The four sets are: (1) the total set, (2) the awareness set, (3) the consideration set, and (4) the choice set. 141) Explain the differences between a belief and an attitude. Answer: A belief is a descriptive thought that a person holds about something. An attitude is a person's enduring favorable or unfavorable evaluation, emotional feeling, and action tendencies toward some object or idea. 142) What do you understand by the term market partitioning? Answer: Marketers need to identify the hierarchy of attributes that guide consumer decision making in order to understand different competitive forces and how these various sets get formed. This process of identifying the hierarchy is called market partitioning. 143) How is the expectancy-value model used in the evaluation of alternatives as a consumer engages in a buying process? Answer: The expectancy-value model of attitude formation posits that consumers evaluate products and services by combining their brand beliefs—the positives and negatives—according to importance. The model assists consumers in making choices. 144) Describe the lexicographic heuristic used to make consumer choices. Answer: The lexicographic heuristic is in use when the consumer chooses the best brand on the basis of its perceived most important attribute. 145) What four strategies can marketers of low-involvement products employ in an effort to convert their products into ones of higher involvement? Answer: The four strategies are: (1) linking the product to some involving issue; (2) linking the product to some involving personal situation; (3) designing advertising to trigger strong emotions related to personal values or ego defense; and (4) adding important features to the product. 146) Heuristics can come into play when consumers forecast the likelihood of future outcomes or events. When would a consumer use an anchoring and adjustment heuristic? Answer: Consumers will use this heuristic when the consumer arrives at an initial judgment and then makes adjustments of that first impression based on additional information. Chapter 7 Analyzing Business Markets 1) ________ refers to the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. A) Marketing channels B) Organizational buying C) Corporate retailing D) Brand auditing E) Inventory control Answer: B 2) The ________ consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others. A) business market B) consumer market C) e-commerce market D) global market E) domestic market Answer: A 3) The ___________ normally deals with far fewer, much larger buyers than the consumer marketer does. A) savvy marketer B) retail marketer C) business marketer D) global marketer E) regional marketer Answer: C 4) Which of the following is true for business marketers? A) They deal with more and larger buyers than consumer marketers. B) They deal with more and smaller buyers than consumer marketers. C) They deal with fewer and larger buyers than consumer marketers. D) They deal with fewer and smaller buyers than consumer marketers. E) They deal with the same kind of buyers as consumer marketers. Answer: C 5) Which of the following is a challenge in which business marketers differ from the consumer marketers? A) understanding deep customer needs in new ways B) identifying new opportunities for organic business growth C) geographically concentrated buyers D) calculating better marketing performance and accountability metrics E) competing and growing in global markets, particularly China Answer: C 6) Ultimately, the amount of steel sold to General Motors depends on the consumers' demand for GM cars and trucks. From the standpoint of the steel manufacturer, which of the following demand forms is most pertinent? A) derived demand B) inelastic demand C) geographic demand D) relational demand E) static demand Answer: A 7) The demand for business goods is ultimately derived from the demand for ________. A) raw materials B) consumer goods C) services D) business solutions E) e-commerce Answer: B 8) A given percentage increase in consumer demand can lead to a much larger percentage increase in the demand for plant and equipment necessary to produce the additional output. Economists refer to this as ________. A) derived demand B) inelastic demand C) the acceleration effect D) a straight rebuy E) the sales cycle Answer: C 9) The total demand for many business goods and services is not much affected by price changes. Thus, this demand is ________. A) derived B) fluctuating C) accelerated D) multiple E) inelastic Answer: E 10) The purchasing department buys office supplies on a routine basis from a pre-approved list of suppliers. This type of purchase is classified as a ________. A) straight rebuy B) modified rebuy C) new task D) secondary purchase E) procure-to-pay Answer: A 11) Sometimes a rise of only 10% in consumer demand can cause as much as a 200% rise in business demand for products for the next period. This is an example of ________. A) inelastic demand B) direct purchasing C) fluctuating demand D) derived demand E) a straight rebuy Answer: C 12) Shoe manufacturers are not going to buy much more leather if the price of leather falls, nor will they buy much less leather if the price rises, unless they can find satisfactory substitutes. This is an example of ________. A) inelastic demand B) direct purchasing C) the acceleration effect D) a modified rebuy E) a straight rebuy Answer: A 13) Asiaworth Pte Ltd is shifting from its rented four-room office to a standalone office building owned by the company itself. This can be classified as a ________. A) modified rebuy B) regular buy C) straight rebuy D) new rebuy E) new task Answer: E 14) In a ________ purchasing situation, the buyer wants to make some change to existing product specifications, prices, delivery requirements, or other terms. A) new rebuy B) regular buy C) straight rebuy D) modified rebuy E) new task Answer: D 15) The business buyer has to make the fewest decisions when involved in a ________. A) modified rebuy B) regular buy C) straight rebuy D) new rebuy E) new task Answer: C 16) Jason Lim’s company is considered to be an in-supplier for a vacuum cleaner manufacturer. However, recently the vacuum cleaner company has put out a memo to in- and out-suppliers indicating that it would like to change product specifications and delivery schedules. Which of the following buying situations is most likely to be in operation given this data? A) straight rebuy B) single rebuy C) rakeback rebuy D) system buy E) modified rebuy Answer: E 17) Orica Pte Ltd competes in the market for commercial explosives. The company recently changed its business model from just selling explosives to managing an entire blast in a quarry. This customer-solution-based approach to the sale of explosives is an example of ________. A) systems selling B) straight rebuying C) customer referencing D) derived demand E) channel consolidation Answer: A 18) If you decided to go into the systems contracting business, which of the following categories would constitute your main area of expertise, the service you provide for customers? A) computer applications B) database management C) manufacturing D) promotion management E) MRO (maintenance, repair, operating) supplies Answer: E 19) Many business buyers prefer to buy a total solution to a problem from one seller. This process is also known as ________. A) channel consolidation B) systems buying C) vertical buying D) horizontal buying E) supply buying Answer: B 20) Xerox offers a ________ approach to prospective clients when it offers a complete turnkey solution, including the operation and management of the client's information and communication need. A) guided selling B) fair trading C) systems buying D) cross-selling E) local purchasing Answer: C 21) If Ampex Support Systems is the single supplier for a local manufacturing company's MRO (maintenance, repair, operating) supplies and needs, Ampex Support Systems is considered as providing ________ for the manufacturer. A) guided selling B) purchasing support C) turnkey logistics D) decision support E) systems contracting Answer: E 22) ________ is a key industrial marketing strategy in bidding to build large-scale industrial products such as dams, pipelines, etc. A) Systems contracting B) Systems buying C) Systems selling D) Solutions buying E) Turnkey logistics Answer: C 23) ________ is composed of all parties who participate in the purchasing decision-making process and share common goals and risks associated with their decisions. A) The buying center B) The marketing sales team C) Strategic management D) Engineering support E) The logistics center Answer: A 24) In the purchasing decision process, the ________ are those who request that something be purchased. They may be users or others in the organization. A) users B) initiators C) influencers D) deciders E) approvers Answer: B 25) In the purchasing decision process, the ________ are those who have the power to prevent sellers or information from reaching members of the buying center. A) approvers B) buyers C) initiators D) gatekeepers E) deciders Answer: D 26) In the purchasing decision process, the major role of ________ is in selecting vendors and negotiating. A) gatekeepers B) buyers C) initiators D) approvers E) deciders Answer: B 27) If you performed the role of the ________ in a buying center, you would be the person that has the power to prevent sellers or information from reaching other members of the buying center. A) initiator B) influencer C) decider D) gatekeeper E) approver Answer: D 28) When purchasing disposable surgical gowns, Changi Hospital's vice president of purchasing analyzes whether the hospital should buy disposable gowns or reusable gowns. If the findings favor disposable gowns, then the operating-room administrator compares various competitors' products and prices and makes a choice. Surgeons influence the decision retroactively by reporting their satisfaction with the particular brand. In this situation, the operating-room administrator performs the role of the ________. A) gatekeeper B) initiator C) user D) decider E) influencer Answer: D 29) When purchasing disposable surgical gowns, Changi Hospital's vice president of purchasing analyzes whether the hospital should buy disposable gowns or reusable gowns. If the findings favor disposable gowns, then the operating-room administrator compares various competitors' products and prices and makes a choice. Surgeons influence the decision retroactively by reporting their satisfaction with the particular brand. In this situation, the surgeons perform the role of the ________. A) decider B) initiator C) user D) gatekeeper E) buyer Answer: C 30) In which of the following is a person performing the role of an influencer? A) Dan decides on the product requirements and makes the final choice of suppliers. B) Leo has the authority to pick out the supplier and negotiate the terms of purchase. C) Liam heads the Tech team at LKG and provides information for evaluating the possible alternatives. D) LKG gets many calls from potential suppliers, and it is Leah's job to weed out the good prospects and refer them to others in LKG. E) Dana authorizes the actions of the deciders and buyers in LKG. Answer: C 31) In which of the following is a person performing the role of an approver? A) Dan decides on the product requirements and makes the final choice of suppliers. B) Leo has the authority to pick out the supplier and negotiate the terms of purchase. C) Liam heads the Tech team at LKG and provides information for evaluating the possible alternatives. D) LKG gets many calls from potential suppliers, and it is Leah's job to weed out the good prospects and refer them to others in LKG. E) Dana authorizes the actions of the deciders and buyers in LKG. Answer: E 32) In which of the following is a person performing the role of a gatekeeper? A) Dan decides on the product requirements and makes the final choice of suppliers. B) Leo has the authority to pick out the supplier and negotiate the terms of purchase. C) Liam heads the Tech team at LKG and provides information for evaluating the possible alternatives. D) LKG gets many calls from potential suppliers, and it is Leah's job to weed out the good prospects and refer them to others in LKG. E) Dana authorizes the actions of the deciders and buyers in LKG. Answer: D 33) Which of the following is true about the buying center? A) In a buying center, one person cannot play more than one role. B) A typical buying center has a maximum of five or six members. C) A buying center consists of only mid-level managers and below. D) It is the decision-making unit of a buying organization. E) Gatekeepers in a buying center are people who authorize the proposed actions of deciders or buyers. Answer: D 34) Small sellers should first concentrate their marketing efforts on reaching ________. A) approvers B) initiators C) influencers D) users E) initiators Answer: C 35) If you were an upper-level marketing executive of a large seller of trucks, which of the following strategies would be most appropriate in reaching buying center targets? A) Concentrate on key buying influencers. B) Use multilevel in-depth selling. C) Use trade-based promotions. D) Concentrate sales efforts on the support staff. E) Move all operations to the Internet. Answer: B 36) ________ occurs when customers are given a perspective or point of view that allows the firm to “put its best foot forward.” A) Gatekeeping B) Commoditization C) Framing D) Rebuying E) Bartering Answer: C 37) The new, more strategically oriented purchasing departments have a mission. Which of the following most accurately describes that mission? A) Make the most profit possible and remain independent of entanglements. B) Approach every purchasing opportunity as means to create interdependency. C) Seek the best value from fewer and better suppliers. D) Outsource the supply function. E) Abandon all strategies except for systems selling and buying. Answer: C 38) Patrick Jung and his associates have identified eight stages in the business buying-decision process. This model is called the ________ framework. A) buygrid B) buying/selling C) seller-centered D) commercial E) buy-analysis Answer: A 39) According to Patrick Jung, the eight stages in the business buying-decision process are known as ________. A) buyphases B) buybacks C) buyouts D) buyables E) buyoffs Answer: A 40) Which of the following is a step in the straight rebuy buyclass? A) problem recognition B) general need description C) product specification D) supplier search E) proposal solicitation Answer: C 41) A new-task buyclass decision begins with which of the following steps? A) supplier search B) general need description C) product specification D) problem recognition E) proposal solicitation Answer: D 42) In reordering office supplies, the only stages that the buyer passes through are the product specification stage and the ________ stage. A) problem recognition B) general need description C) order-routine specification D) supplier search E) performance review Answer: E 43) The approach to cost reduction that studies whether components can be redesigned or standardized or made by cheaper methods of production without adversely impacting product performance is termed as ________. A) maintenance, repair, and operating (MRO) B) product value analysis (PVA) C) vendor managed inventories (VMI) D) supplier performance management (SPM) E) supplier added value effort (SAVE) Answer: B 44) Business buyers may get new ideas at a trade show, see an ad, or receive a call from a sales representative who offers a better product or a lower price compared to the current in-supplier. These situations spur the ________ stage. A) problem recognition B) general need description C) order-routine specification D) supplier search E) performance review Answer: A 45) Business marketers can stimulate problem recognition by ________. A) ensuring a presence in trade directories B) direct mail, telemarketing, and calling on prospects C) encouraging the Better Business Bureau to release statistics D) using consumer advertising E) conducting surveys of existing customers Answer: B 46) With respect to e-procurement, Coca-Cola, Sara Lee, Kraft, PepsiCo, P&G, and several other companies joined forces to form a ________ called Transora to use their combined leverage to obtain lower prices for raw materials. A) manufacturer's co-op B) supplier's co-op C) middleman group D) buying alliance E) buying cabal Answer: D 47) Plastics.com allows plastics buyers to search the best prices among thousands of plastics sellers. Plastics.com is an example of a(n) ________. A) buying alliance B) barter market C) systems seller D) vertical market E) auction site Answer: D 48) On an online ________, prices change by the minute. A) buying alliance B) barter market C) systems seller D) spot market E) catalog site Answer: D 49) With respect to e-procurement, which of the two types of e-hubs are Web sites organized around? A) vertical and horizontal hubs B) vertical and functional hubs C) functional hubs and organizational hubs D) supplier and user hubs E) manufacturer and supplier hubs Answer: B 50) Which of the following is an example of a vertical hub? A) Plastics.com allows plastics buyers to search the best prices among thousands of plastics sellers. B) ChemConnect.com is an online exchange for buyers and sellers of bulk chemicals. C) SteelMart.com concentrates on steel buyers from the United States. D) Garments & Textiles Online was launched to help international buyers trade more effectively with apparel manufacturers in China, India, and other supply markets. E) PaperTiger.com offers paper buyers a comprehensive look at the prices and quality in the paper market. Answer: D 51) The ________ approach to consumer research asks customers to attach a monetary value to alternative levels of a given attribute. The value of a given configuration is determined by adding the average values of each of the given attributes. A) benchmarking B) compositional C) importance rating D) focus-group E) conjoint analysis Answer: B 52) In the ________ method for assessing customer value, customers are asked how costs of using a new product compare to those of using an incumbent. A) direct survey B) importance ratings C) field value-in-use assessment D) benchmarking E) conjoint analysis Answer: C 53) In the ________ method for assessing customer value, customers are asked to rank their preference for alternative market offerings or concepts. Statistical analysis is used to estimate the implicit value placed on each attribute. A) internal engineering assessment B) importance ratings C) field value-in-use assessment D) benchmarking E) conjoint analysis Answer: E 54) In the ________ method for assessing customer value, company engineers use laboratory tests to estimate the product’s performance characteristics. However, this ignores the fact that in different applications, the product will have different economic value. A) internal engineering assessment B) importance ratings C) field value-in-use assessment D) benchmarking E) conjoint analysis Answer: A 55) In the ________ method for assessing customer value, customers are asked to place a direct dollar value on one or more changes in the market offering. A) internal engineering assessment B) direct survey C) importance ratings D) field value-in-use assessment E) benchmarking Answer: B 56) In the ________ method for assessing customer value, customers are asked to rate the importance of different attributes and their suppliers’ performance on these attributes. A) internal engineering assessment B) importance ratings C) field value-in-use assessment D) benchmarking E) conjoint analysis Answer: B 57) In the ________ method for assessing customer value, customers are shown a “benchmark” offering and then a new market offering. They are asked how much more they would pay for the new offering or how much less they would pay if certain features were removed from the benchmark offering. A) internal engineering assessment B) importance ratings C) field value-in-use assessment D) benchmarking E) conjoint analysis Answer: D 58) Which of the following methods is most likely to be used by buyers to review the performance of chosen suppliers? A) the buyer may contact different suppliers and ask for their evaluations B) the buyers may rate the end-users on several criteria using a weighted-score method C) the buyer might aggregate the cost of poor performance to come up with adjusted costs of purchase, including price D) the buyers may aggregate the opinions of various competitors and come up with the adjusted cost of supply E) the buyers might adopt the Supplier Added Value Effort technique to calculate supplier efficiency Answer: C 59) A ________ establishes a long-term relationship in which the supplier promises to resupply the buyer as needed, at agreed-upon prices, over a specified period of time. A) stockless purchase plan B) direct stock purchase plan C) defined contribution plan D) stock purchase plan E) share purchase plan Answer: A 60) In the ________ category of buyer-supplier relationships, competition rather than cooperation is the dominant form of governance. A) basic buying and selling B) bare bones C) contractual transaction D) customer supply E) collaborative Answer: D 61) Which of the following relationships is characterized by much trust and commitment leading to a true partnership? A) mutually adaptive B) collaborative C) basic buying and selling D) customer supply E) cooperative systems Answer: B 62) The partners in ________ systems are united in operational ways, but neither demonstrates structural commitment through legal means or adaptation. A) mutually adaptive B) cooperative C) basic buying and selling D) customer supply E) cooperative Answer: B 63) Value Central has a partnership of high trust and commitment with certain suppliers and gives them access to its sophisticated and detailed daily, individual store-based sales data. In exchange, those suppliers are responsible for managing Value Central's inventory of their products. This relationship is best described as ________. A) basic buying and selling B) contractual transaction C) collaborative D) customer supply E) customer is king Answer: C 64) The relationship between a company and its office supplies vendor where competition rather than cooperation is the dominant form of governance is probably best described as ________. A) basic buying and selling B) contractual transaction C) collaborative D) customer supply E) customer is king Answer: D 65) In the ________ category of buyer-supplier relationship, although bonded by a close, cooperative relationship, the seller adapts to meet the customer's needs without expecting much adaptation or change on the part of the customer in exchange. A) contractual transaction B) cooperative system C) collaborative D) mutually adaptive E) customer is king Answer: E 66) According to research studies, the closest relationships between customers and suppliers arise when ________. A) supply is important to the customer and there were procurement obstacles B) procurement is simple C) there are many undifferentiated vendors in the marketplace D) the customer is highly price sensitive E) the suppliers charge a premium for their products Answer: A 67) The type of buyer-supplier relationship in which buyers and sellers make many relationship-specific adaptations, but without necessarily achieving strong trust or cooperation is termed as ________. A) customer is king B) mutually adaptive C) collaborative D) contractual transaction E) customer supply Answer: B 68) ________ investments are those expenditures tailored to a particular company and value chain partner. A) Diversified B) Pooled C) Specific D) Umbrella E) General Answer: C 69) Which of the following is a form of cheating or undersupply relative to an implicit or explicit contract which usually takes place when buyers cannot easily monitor supplier performance? A) Institutional sale B) Business buying C) Opportunism D) Vertical integration E) Contractual transactionism Answer: C 70) The ________ market consists of schools, hospitals, nursing homes, prisons, and other institutions that must provide goods and services to people in their care. A) vertical B) nonprofit C) spot D) secondary business E) institutional Answer: E 71) In most countries, ________ are the major buyers of goods and services. They typically require suppliers to submit bids and often award the contract to the lowest bidder. A) consumer packaged-goods companies B) government organizations C) health services vendors D) educational institutions E) households Answer: B 72) Organizational buying is the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. Answer: True 73) The business market consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others. Answer: True 74) Business markets have several characteristics that contrast sharply with those of consumer markets. Answer: True 75) The business market is essentially the same market as the consumer market. Answer: False 76) Business buyers often select suppliers who also buy from them. Answer: True 77) The business marketer normally deals with far fewer, much larger buyers than the consumer marketer does. Answer: True 78) An increase in the demand for plant and equipment can lead to a much larger increase in consumer demand. This is known as the acceleration effect. Answer: False 79) The demand for business goods is ultimately derived from the demand for raw materials. Answer: False 80) The total demand for many business goods and services is inelastic, that is, not much affected by price changes. Answer: True 81) In the straight rebuy, “out-suppliers” try to get a small order and then enlarge their purchase share over time. Answer: True 82) The buyer in a straight rebuy usually changes product specifications, prices, delivery requirements, or other terms. Answer: False 83) The business buyer makes the fewest decisions in the straight rebuy situation and the most in the new-task situation. Answer: True 84) Most business buyers reject what is called systems buying from one seller. Answer: False 85) Systems selling is a key industrial marketing strategy in bidding to build large-scale industrial projects such as dams or pipelines. Answer: True 86) Sellers benefit from systems contracting through lower operating costs as a result of steady demand and reduced paperwork. Answer: True 87) The buying center is where consumers go to purchase their goods and services. Answer: False 88) With respect to the buying center, approvers are people who have the power to prevent sellers or information from reaching members of the buying center. Answer: False 89) Initiators are those who authorize the proposed action of deciders or buyers. Answer: False 90) Influencers influence the buying decision by helping define specifications and providing information for evaluating alternatives. Answer: True 91) In the buying center, several people can occupy a given role such as user or influencer, and one person may play multiple roles. Answer: True 92) Small sellers concentrate on multilevel in-depth selling instead of reaching the key buying influencers. Answer: False 93) In the business market, small sellers concentrate on reaching as many participants as possible because their chances of success are slim. Answer: False 94) Framing occurs when customers are given a perspective or point of view that allows the firm to “put its best foot forward.” Answer: True 95) A performance review is the first step in the buygrid framework. Answer: False 96) The buying process begins when someone places an order with a sales representative. Answer: False 97) Product value analysis is an approach to efficiency that studies whether components can be redesigned or made by more efficient methods of production without adversely impacting product performance. Answer: False 98) On spot electronic markets, prices of products or commodities change by the minute. Answer: True 99) In buying alliances, participants offer to trade goods or services. Answer: False 100) With respect to assessing customer value, in conjoint analysis customers are asked to rank their preference for alternative market offerings or concepts. Answer: True 101) The buying center may attempt to negotiate with preferred suppliers for better prices and terms before making the final selection. Answer: True 102) Vertical coordination can facilitate stronger customer-seller ties but at the same time may increase the risk to the customer’s and supplier’s specific investments. Answer: True 103) Companies are increasingly reducing the number of suppliers they utilize, and there is a trend toward single sourcing. Answer: True 104) Companies that use multiple sources often cite the threat of a labor strike as the biggest deterrent to single sourcing. Answer: True 105) Companies that fear a shortage of key materials are willing to buy and hold large inventories. Answer: True 106) Corporate credibility depends on corporate expertise, corporate trustworthiness, and corporate likability. Answer: True 107) One of the problems facing B2B on the Web is that many firms often impose more stringent requirements on their online business partners than they do on non-online partners. Answer: True 108) The “customer is king” category of buyer-seller relationship is relatively simple, and one in which routine exchanges with moderately high levels of cooperation and information exchange occur. Answer: False 109) Contracts are always sufficient to govern supplier transactions and prevent supplier opportunism. Answer: False 110) A good illustration of a member of the institutional market would be Boeing because it is a member of the aviation institution structure. Answer: False 111) Government organizations typically require suppliers to submit bids, and normally they award the contract to the highest bidder. Answer: False 112) Business markets have several characteristics that contrast sharply with those of consumer markets. Name and briefly characterize five of those characteristics. Answer: The characteristics of business markets as compared to consumer markets are: (1) fewer, larger buyers, (2) close supplier-customer relationship, (3) professional purchasing, (4) multiple buying influences, (5) multiple sales calls, (6) derived demand, (7) inelastic demand, (8) fluctuating demand, (9) geographically concentrated buyers, and (10) direct purchasing. See chapter section for brief characterizations. 113) Explain how fluctuating demand impacts business markets differently from consumer markets. Answer: The demand for business goods and services tends to be more volatile than the demand for consumer goods and services. A given percentage increase in consumer demand can lead to a much larger percentage increase in the demand for plant and equipment necessary to produce additional output. Economists refer to this as the acceleration effect. 114) Illustrate the differences between a straight rebuy, modified rebuy, and a new-task purchase. Answer: In a straight rebuy, the purchasing department reorders on a routine basis and choose from suppliers on an approved list. In a modified rebuy, the buyer wants to modify product specifications, prices, delivery requirements, or other terms. Lastly, in the new-task purchase, a purchaser buys a product or service for the first time. 115) What are the three different types of buying situations faced by a typical business buyer? Answer: The business buyer faces many decisions in making a purchase. Three types of buying situations are the straight rebuy, modified rebuy, and new task. Straight rebuy—In a straight rebuy, the purchasing department reorders supplies such as office supplies and bulk chemicals on a routine basis and chooses from suppliers on an approved list. The suppliers make an effort to maintain product and service quality and often propose automatic reordering systems to save time. “Out-suppliers” attempt to offer something new or exploit dissatisfaction with a current supplier. Their goal is to get a small order and then enlarge their purchase share over time. Modified rebuy—The buyer in a modified rebuy wants to change product specifications, prices, delivery requirements, or other terms. This usually requires additional participants on both sides. The in-suppliers become nervous and want to protect the account. The out-suppliers see an opportunity to propose a better offer to gain some business. New task—A new-task purchaser buys a product or service for the first time (an office building, a new security system). The greater the cost or risk, the larger the number of participants, and the greater their information gathering, the longer the time to a decision. 116) Describe the practices of systems buying and systems contracting. Answer: Systems buying involves buying a total solution to a problem from one seller. Systems contracting is a variant of systems selling in which a single supplier provides the buyer with his entire requirement for maintenance, repair, and operating supplies. During the contract period, the supplier manages the customer's inventory. 117) What is the composition of the buying center? Answer: A buying center is composed of “all those individuals and groups who participate in the purchasing decision-making process, who share some common goals and the risks arising from the decisions.” The buying center includes all members of the organization who play any of seven roles in the purchase decision process: initiators, users, influencers, deciders, approvers, buyers, gatekeepers. Buying centers usually include several participants with differing interests, authority, status, and persuasiveness. Each member of the buying center is likely to give priority to very different decision criteria. 118) List the seven roles of people in a buying center. Answer: 1. Initiators—Users or others in the organization who request that something be purchased. 2. Users—Those who will use the product or service. In many cases, the users initiate the buying proposal and help define the product requirements. 3. Influencers—People who influence the buying decision, often by helping define specifications and providing information for evaluating alternatives. Technical personnel are particularly important influencers. 4. Deciders—People who decide on product requirements or on suppliers. 5. Approvers—People who authorize the proposed actions of deciders or buyers. 6. Buyers—People who have formal authority to select the supplier and arrange the purchase terms. Buyers may help shape product specifications, but they play their major role in selecting vendors and negotiating. In more complex purchases, buyers might include high-level managers. 7. Gatekeepers—People who have the power to prevent sellers or information from reaching members of the buying center. For example, purchasing agents, receptionists, and telephone operators may prevent salespersons from contacting users or deciders. 119) Explain the concept of systems contracting. Answer: Systems contracting is where a single supplier provides the buyer with his or her entire requirement of MRO (maintenance, repair, operating) supplies. During the contract period, the supplier manages the customer’s inventory. For example, Shell Oil manages the oil inventory of many of its business customers and knows when it requires replenishment. The customer benefits from reduced procurement and management costs, and from price protection over the term of the contract. The seller benefits from lower operating costs because of a steady demand and reduced paperwork. 120) How do business marketers target firms? Answer: Business marketers may divide the marketplace in many different ways to decide on the types of firms to which they will sell. Finding those business sectors with the greatest growth prospects, most profitable customers, and most promising opportunities for the firm is crucial. 121) What are the benefits of vertical coordination? Answer: Much research has advocated greater vertical coordination between buying partners and sellers so that they transcend mere transactions to engage in activities that create more value for both parties. These benefits include gaining a more than proportionate increase in market share through mass production and advertising, overcoming barriers to entry when relationships are formed with another company that is already in the industry, and lowering the cost of reproducing products when the same offering is given to multiple clients. 122) The business market consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others. List the major industries that make up the business market. Answer: The major industries making up the business market are agriculture, forestry, and fisheries; mining; manufacturing; construction; transportation; communication; public utilities; banking, finance, and insurance; distribution; and services. 123) Define organizational buying. Answer: Organizational buying is the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. 124) Explain the concept of derived demand. Answer: The demand for business goods is ultimately derived from the demand for consumer goods. Consumer demand for business' end products drives their production. Production of those end products drives business demand for the inputs to those production processes. 125) If you were a purchasing agent facing a modified rebuy situation, how would you describe that situation? Answer: The buyer wants to modify product specifications, prices, delivery requirements, or other items. The modified rebuy usually involves additional participants on both sides. 126) Which type of buying situation would be preferred if the management wants to minimize decision-making time and effort? Answer: The business buyer makes the fewest decisions in the straight rebuy situation and the most in the new-task situation. Hence, a straight rebuy situation would be preferable. 127) In systems buying, governments often solicits bids from prime contractors. What do prime contractors do? Answer: Governments solicit bids from prime contractors who assemble the package or system. The contractor who was awarded the contract would be responsible for bidding out and assembling the system's subcomponents from second-tier contractors. Thus, the prime contractor provides a turnkey solution. 128) Systems selling is a key industrial marketing strategy in bidding to build large-scale industrial projects. Competition for these projects is fierce. What are the main areas of competition for these project engineering firms? Answer: Primary competitive areas include: price, quality, reliability, and other attributes to win contracts. 129) List the seven roles played by members of a buying center. Answer: The roles are: (1) initiators, (2) users, (3) influencers, (4) deciders, (5) approvers, (6) buyers, and (7) gatekeepers. 130) Buying centers usually include several participants with differing interests, authority, status, and persuasiveness. Explain. Answer: Each member of the buying center is likely to give priority to very different decision criteria. For example, engineering personnel may be concerned primarily with maximizing the actual performance of the product; production personnel may be concerned mainly with ease of use and reliability of supply; financial personnel may focus on the economics of the purchase; purchasing personnel may be concerned with operating and replacement costs; union officials may emphasize safety issues, and so on. 131) BEL is a small seller of specialized auto parts, while MES is a large seller of auto parts. Both firms want to approach the same car company with a view to supplying parts to it. How will their approaches differ? Answer: Small sellers like BEL concentrate on reaching the key buying influencers in order to make the most effective use of their small sales force. Large sellers like MES go for multilevel in-depth selling to reach as many participants as possible to increase sales volumes and strengthen relationships. 132) With reference to online buying, what are vertical markets? Give an example of a vertical market. Answer: Student answers may vary. Companies buying industrial products such as plastics, steel, or chemicals or services such as logistics or media can go to specialized Web sites (called e-hubs). Plastics.com allows plastics buyers to search the best prices among thousands of plastics sellers. Vertical markets in online buying refer to niche markets that focus on specific industries or sectors, catering to specialized needs and requirements. An example of a vertical market is the healthcare industry, where online platforms specialize in selling medical equipment, pharmaceuticals, or software tailored for healthcare providers. These markets often require industry-specific knowledge and solutions, distinguishing them from broader horizontal markets. 133) E-procurement Web sites are organized around two types of e-hubs. If you were in the advertising business and were seeking to take advantage of e-procurement, what type of e-hub should be constructed by your company? Answer: The two types of hubs are vertical hubs (centered on industries such as plastics) and functional hubs (centered on functions such as advertising). Therefore, you would construct a functional hub. 134) What are the benefits of e-procurement? Answer: Aggregating purchases across multiple departments gains larger, centrally negotiated volume discounts. There is less buying of substandard goods from outside the approved list of suppliers, and a smaller purchasing staff is required. 135) Why are companies increasingly reducing the number of suppliers? Answer: These companies want their chosen suppliers to be responsible for a larger component system; they want them to achieve continuous quality and performance improvement while at the same time lowering the supply price each year by a given percentage. These companies expect their suppliers to work closely with them during product development, and they value their suggestions. 136) What do you understand by “blanket contract”? Answer: A blanket contract establishes a long-term relationship in which the supplier promises to resupply the buyer as needed, at agreed-upon prices, over a specified period of time. 137) As part of the buyer selection process, buying centers must decide how many suppliers to use. What might motivate a buyer to use multiple sources? Answer: Companies that use multiple sources often cite the threat of a labor strike as the biggest deterrent to single sourcing. Another reason companies may be reluctant to use a single source is that they fear they'll become too comfortable with the relationship and lose their competitive edge. 138) In the buygrid framework model, where the major stages of the industrial buying process are listed and characterized, supplier selection is an important process. What follows supplier selection and what occurs in this phase? Answer: The step that follows supplier selection is order-routine specification. After selecting suppliers, the buyer negotiates the final order, listing the technical specifications, the quantity needed, the expected time of delivery, return policies, warranties, and so on. 139) Researchers have found that buyer-supplier relationships differed according to four factors: availability of alternatives; importance of supply; complexity of supply; and supply market dynamism. Based on these four factors, they classified buyer-supplier relationships into eight different categories. What are those categories? Answer: The categories are: (1) basic buying and selling, (2) bare bones, (3) contractual transaction, (4) customer supply, (5) cooperative systems, (6) collaborative, (7) mutually adaptive, and (8) customer is king. For additional information, see the specific chapter section. 140) As a seller in the business market, you have promised your customers that you have corporate credibility as one of your corporate goals. What three factors will have some bearing on whether you will be able to meet your goal and promise? Answer: The three factors are: (1) corporate expertise, (2) corporate trustworthiness, and (3) corporate likability. In other words, a credible firm is seen as being good at what it does, it keeps its customers’ best interests in mind, and it is enjoyable to work with. 141) Researchers have found that buyer-supplier relationships could be classified into eight different categories. What category would be appropriate for a relationship where, although bonded by a close, cooperative relationship, the seller adapts to meet the customer's needs without expecting much adaptation or change on the part of the customer in exchange? Answer: The appropriate category would be the “customer is king” category. 142) Explain the term opportunism with respect to business relationships. Answer: When buyers cannot easily monitor supplier performance, the supplier might shirk or cheat and not deliver the expected value. Opportunism is “some form of cheating or undersupply relative to an implicit or explicit contract.” It may entail blatant self-serving and deliberate misrepresentation that violates contractual agreements. 143) Your organization is considering selling its products to the institutional market. What type of customers will you be making your appeals to? Answer: The institutional market consists of schools, hospitals, nursing homes, prisons, and other institutions that must provide goods and services to people in their care. Chapter 8 Identifying Market Segments and Targets 1) Which of the following statements about market segmentation is true? A) It involves changing the identity of a product, relative to the identity of competing products, in the collective minds of the target market. B) It is a process of evaluating each segment's attractiveness and selecting one or more to enter. C) It is a process of creating an image or identity of the product in the minds of the target market. D) It is a process of identifying and profiling distinct groups of buyers who differ in their needs and wants. E) It is the quality of how marketers go to market with the goal of optimizing their spending to achieve good results. Answer: D 2) Establishing and communicating the distinctive benefit(s) of the company's market offering, for each target segment is called ________. A) market research B) market positioning C) marketing effectiveness D) market segmentation E) market dominance Answer: B 3) The process of selecting one or more market segments to enter is called ________. A) market targeting B) market dominance C) market positioning D) market segmentation E) market research Answer: A 4) A ________ consists of a group of customers who share a similar set of needs and wants. A) vertical marketing system B) market basket C) market share D) market segment E) market level Answer: D 5) Hilton Hotels customizes rooms and lobbies according to location. This is an example of ________ segmentation. A) demographic B) behavioral C) psychographic D) geographic E) cultural Answer: D 6) When Nike attempts to get close to its customers at the local level by sponsoring local school teams and providing shoes, equipment, and clothing to many of them, Nike is using which of the following marketing formats? A) differentiated marketing B) affiliate marketing C) guerrilla marketing D) affinity marketing E) grassroots marketing Answer: E 7) Regardless of the type of segmentation scheme used, the key is adjusting the marketing program to recognize ________. A) the level of disposable income earned by the target group B) customer differences C) the cost-benefit relationship of narrowing the target market D) customer complaints E) saturated markets Answer: B 8) If a marketer decides to segment a market based on neighborhoods, the marketer will have chosen the ________ method of segmentation. A) demographic B) psychographic C) geographic D) cultural E) behavioral Answer: C 9) If a marketing manager segments the market into culture-oriented, sports-oriented, or outdoor-oriented groups, he or she is segmenting on the basis of ________. A) loyalty status B) behavioral occasions C) user status D) psychographic lifestyle E) readiness stage Answer: D 10) Robert is the owner of an car manufacturing company. He calls for a board meeting and tells his directors that he wants to build a car that lets the users experience power and exhilaration. He tells them that the car must allow his users to soar from 0–60 mph in about 4 seconds. He also adds in that the price of the car must be affordable enough for anybody making a good salary. In accordance with the given scenario, Robert is trying to segment the market on the basis of ________. A) occupation B) family size C) benefits D) nationality E) user status Answer: C 11) In a growing trend called __________ marketing, such activities concentrate on getting as close and personally relevant to individual customers as possible. A) grassroots B) behavioral C) retail D) business E) VALS Answer: A 12) Pampers divides its market demographically on the basis of ________ into prenatal, new baby, baby, toddler, and preschooler. A) life stage B) gender C) age D) income E) social class Answer: C 13) Behavioral segmentation variables include: A) benefits, user status and income B) benefits, user status and usage rate C) benefits, user status and age D) benefits, user status and occupation E) benefits, user status and culture Answer: B 14) __________ defines a person’s major concern, such as going through a divorce, going into a second marriage, taking care of an older parent, deciding to cohabit with another person, deciding to buy a new home, and so on. A) Product stage B) Age stage C) Life stage D) Income stage E) Occupation stage Answer: C 15) By mapping the densest areas, the retailer can resort to ____________, assuming that the best prospects live where most of his customers come from. A) product cloning B) service cloning C) customer cloning D) cluster cloning E) human cloning Answer: C 16) Even when the target market is described in __________ terms (say, a personality type), the link back to demographic characteristics is needed to estimate the size of the market and the media that should be used to reach it efficiently. A) non-demographic B) non-geographic C) non-behavioral D) non-psychographic E) demographic Answer: A 17) Men and women tend to have different ________________________, based partly on genetic make-up and partly on socialization. A) needs and wants B) needs, wants and demands C) logistical requirements D) attitudinal and behavioral orientations E) communication needs Answer: D 18) Newlyweds are an example of a(n) ________ segment. A) life stage B) age C) behavior D) user status E) income Answer: A 19) Joe and Emily have just divorced. Which of the following demographic segmentation sub-segment formats might be used by marketers to reach Joe and Emily? A) life stage B) benefits C) age segment D) personality type E) social class Answer: A 20) ________ are products such as Kiehl's skin care and Kendall-Jackson wines that are priced between average middle-market and superpremium old luxury brands and are also based on emotions. A) Old Luxury brand extensions B) Accessible superpremium products C) Luxury items D) Hourglass products E) Masstige goods Answer: E 21) ________ are products such as the Mercedes Benz C-class and the American Express Blue card, that extend historically high-priced brands down-market while retaining their cachet. A) Hourglass products B) Mass market products C) Old luxury brand extensions D) Masstige goods E) Accessible superpremium products Answer: C 22) Which of the following statements about Gen Yers is true? A) They are often turned off by overt branding practices and “hard sell”. B) They are more likely to associate retirement with “the beginning of the end”. C) They are more pragmatic and individualistic. D) They were born between 1964 and 1978. E) They were the first generation to find surpassing their parents' standard of living a serious challenge. Answer: A 23) Rock band Foo Fighters created a digital street team that sends targeted email messages to members who receive exclusive news, previews, and opportunities to win prizes. The Foo Fighters are using ________ to reach Generation Y. A) student ambassadors B) unconventional sports C) cool events D) computer games E) online buzz Answer: E 24) If a marketing manager employs such marketing techniques as online buzz, student ambassadors, cool events, and street teams to reach target markets, the manager is most likely appealing to the ________ market. A) Generation Z B) Generation X C) Generation Y D) Silent generation E) Baby boomers Answer: C 25) China’s Gen Y are significantly more entrepreneurial and _______ than their parents, and with market reform, can more easily become entrepreneurs. A) computer game savvy B) capitalistic C) conventional D) simplistic E) pessimistic Answer: B 26) Which of the following statements about Gen Xers is true? A) Gen Xers are more optimistic and team-oriented. B) Gen Xers are selective, confident, and impatient. C) Gen Xers are highly socially conscious and concerned about environmental issues. D) Gen Xers share many of the same values toward work, family, and society as baby boomers. E) Technology is a barrier for Gen Xers. Answer: D 27) Each ________ or cohort is profoundly influenced by the times in which it grew up—the music, movies, politics, and defining events of that period. A) consumer B) baby boomer C) Generation Yer D) generation E) person Answer: D 28) ________ is the science of using psychology and demographics to better understand consumers. A) Psychographics B) Interactionism C) Clustering D) Demographic transition E) Customerization Answer: A 29) According to the VALS segmentation system, ________ are successful, sophisticated, active, “take-charge” people with high self-esteem. Their purchases often reflect cultivated tastes for relatively upscale, niche-oriented products and services. A) innovators B) thinkers C) achievers D) experiencers E) believers Answer: A 30) According to the VALS segmentation system, ________ are successful, goal-oriented people who focus on career and family. They favor premium products that demonstrate success to their peers. A) thinkers B) innovators C) achievers D) believers E) experiencers Answer: C 31) According to the VALS segmentation framework, consumers primarily motivated by ideals are guided by ________. A) knowledge B) social activity C) products that demonstrate success to their peers D) variety E) risk Answer: A 32) Kim is a young professional who enjoys wakeboarding and going to rock concerts with her friends. According to the VALS eight-part typology segmentation system, Kim is best described as a(n) ________. A) thinker B) achiever C) experiencer D) striver E) survivor Answer: C 33) Mature and reflective people who seek durability, functionality, and value in products are most likely to be categorized as ________ in the VALS system. A) innovators B) thinkers C) achievers D) experiencers E) strivers Answer: B 34) A hardware store is interested in reaching people who are characterized by the VALS system as being practical, down-to-earth, and self-sufficient, who like to work with their hands, or the ________ category. A) believers B) strivers C) survivors D) experiencers E) makers Answer: E 35) According to the VALS segmentation system, ________ are considered to be elderly, passive people who are concerned about change and are loyal to their favorite brands. A) believers B) strivers C) makers D) strugglers E) experiencers Answer: D 36) According to the VALS segmentation system, ________ are considered to be trendy and fun-loving people who are resource-constrained. They favor stylish products that emulate the purchases of those with greater material wealth. A) strivers B) survivors C) experiencers D) makers E) believers Answer: A 37) According to the VALS segmentation system, ________ are conservative, conventional, and traditional people with concrete beliefs. A) survivors B) strivers C) believers D) makers E) innovators Answer: C 38) Dennis requests his father to buy him a PlayStation® for his birthday. With respect to consumer decision roles, which role is Dennis currently playing? A) initiator B) influencer C) decider D) buyer E) gatekeeper Answer: A 39) The key to attracting potential users, or even possibly nonusers, is ________. A) understanding the reasons they are not using B) offering financial incentives for first-time use C) increasing the usage rate of existing users D) developing a new product that better meets their needs E) increasing advertising expenditures Answer: A 40) The sale of turkeys in Singapore is highest in December, as people buy turkeys to serve at Christmas. Supermarkets who specifically advertise turkeys at this time of year are segmenting on the basis of ________. A) benefits B) user status C) buyer-readiness stage D) demographics E) occasion Answer: E 41) Linda was buying all her groceries from Home Needs supermarket for the past 5 years. She recently came across The Convenience Store, another supermarket just a few miles away from her place and started buying her groceries from them. Linda can be best described as ________. A) a split loyal B) an antiloyal C) a shifting loyal D) a hard-core loyal E) a switcher Answer: C 42) When Amy goes shopping for clothes, she goes into every store in the mall looking for the best deal. She is very price-conscious. On the basis of loyalty status, Amy can be described as ________. A) a switcher B) a split loyal C) a shifting loyal D) a hard-core loyal E) an antiloyal Answer: A 43) Mothers-to-be are potential users who will turn into heavy users of infant products and services. By targeting mothers-to-be as future heavy users, producers of these products and services are segmenting consumers on the basis of ________. A) attitude B) buyer-readiness stage C) loyalty status D) user status E) benefits Answer: D 44) If a buyer is loyal to two or three different brands of soap, this buyer's loyalty status can be described as being among the ________. A) switchers B) shifting loyals C) split loyals D) hard-core loyals E) antiloyals Answer: C 45) Pete always buys Purina dog food for his dog because he believes that it is the best value for the nutritional content. Pete's loyalty status is best described as ________. A) split loyal B) shifting loyal C) consistent loyal D) hard-core loyal E) switcher Answer: D 46) A company can learn a great deal by analyzing the degrees of brand loyalty. For example, ________ can show the firm which brands are most competitive with its own. A) hard-core loyals B) split loyals C) shifting loyals D) switchers E) antiloyals Answer: B 47) A company can learn a great deal by analyzing the degrees of brand loyalty. For example, ________ can help identify the products' strengths. A) switchers B) split loyals C) antiloyals D) shifting loyals E) hard-core loyals Answer: E 48) If a marketer is seeking to segment a business market, which of the following variables is generally felt to be the most important? A) personal characteristics B) demographic variables C) situational factors D) operating variables E) purchasing approaches Answer: B 49) In segmenting its markets, an aluminum company first looked at which end-use market to serve: automobile, residential, or beverage containers. This is an example of ________. A) macrosegmentation B) microsegmentation C) geographic segmentation D) global segmentation E) short-term segmentation Answer: A 50) A marketer is interested in segmenting a business market on ________ if the marketer intends to segment the market based on industries and geographical areas to serve. A) demographic variables B) situational factors C) operating variables D) purchasing approaches E) personal characteristics Answer: A 51) A marketer is interested in segmenting a business market based on urgency of delivery and the size of the order. Which of the following major segmentation variables would the marketer most likely use to assist with the task? A) purchasing approaches B) situational factors C) operating variables D) personal characteristics E) demographic variables Answer: B 52) A marketer is interested in segmenting a business market based on technology and customer capabilities. Which of the following major segmentation variables would the marketer most likely use to assist with the task? A) demographic variables B) purchasing approaches C) situational factors D) personal characteristics E) operating variables Answer: E 53) A marketer is interested in segmenting a business market on ________ if the marketer intends to eventually segment the market based on loyalty and attitudes toward risk. A) situational factors B) purchasing approaches C) personal characteristics D) operating variables E) demographic variables Answer: C 54) A marketer interested in segmenting a business market based on ________ intends to eventually segment the market based on power structure and nature of existing relationship. A) situational factors B) purchasing approaches C) personal characteristics D) operating variables E) demographic variables Answer: B 55) A company can be said to have used ________ if the company distinguished among customers buying on the basis of price, service, and quality. A) global segmentation B) microsegmentation C) short-term segmentation D) macrosegmentation E) geographic segmentation Answer: B 56) During which step of the segmentation process would the marketer group customers into segments based on similar needs and benefits sought by the customer in solving a particular consumption problem? A) Step 2—segment identification B) Step 3—segment attractiveness C) Step 6—segment “acid test” D) Step 1—needs-based segmentation E) Step 7—marketing-mix strategy Answer: D 57) If an organization's marketing department wished to create “segment storyboards” to test the attractiveness of each segment's positioning strategy, this action would most likely occur in the ________ step of the segmentation process. A) needs-based segmentation B) segment identification C) segment profitability D) segment "acid test" E) marketing-mix strategy Answer: D 58) In the ________ step of the market segmentation process, the marketer evaluates the segment using criteria such as market growth and market access. A) need-based segmentation B) segment identification C) segment attractiveness D) segment profitability E) segment “acid test” Answer: C 59) In the ________ step of the market segmentation process, the marketer determines which demographics, lifestyles, and usage behaviors make each needs-based segment distinct and identifiable. A) segment “acid test” B) segment attractiveness C) segment profitability D) need-based segmentation E) segment identification Answer: E 60) A ________ consists of two parts: a naked solution and discretionary options. A) differentiated market offering B) flexible market offering C) rigid market offering D) vertical market offering E) horizontal market offering Answer: B 61) According to the ________ criterion for useful market segments, a segment should be the largest possible homogenous group worth going after with a tailored marketing program. A) measurable B) substantial C) accessible D) differentiable E) actionable Answer: B 62) Anderson and Narus have urged marketers to present flexible market offerings to all members of a segment. A flexible market offering consists of two parts. Which part contains the product and service elements that all segment members value? A) naked solution B) discretionary solution C) maximum solution D) pseudo solution E) virtual solution Answer: A 63) If your assignment was to create a value proposition and product-price positioning strategy for each segment, based on the segment's unique customer needs and characteristics, you would be in which of the following steps of the segmentation process? A) needs-based segmentation B) segment identification C) segment attractiveness D) segment positioning E) segment "acid-test" Answer: D 64) In evaluating different market segments, the firm must look at two factors: the segment's overall attractiveness and ________. A) the company's objectives and resources B) the effectiveness of the suppliers C) the flexibility of legal rules governing the business D) the socio-economic infrastructure E) the global nature of the product Answer: A 65) To meet the ________ criterion of useful market segments, it must be possible to formulate effective programs for attracting and serving the segments. A) measurable B) substantial C) accessible D) differentiable E) actionable Answer: E 66) If married and unmarried women respond similarly to a sale on perfume, these hypothetical segments fail the ________ criterion for useful market segments. A) measurable B) substantial C) accessible D) differentiable E) actionable Answer: D 67) Which of the following statements is true about the five forces identified by Michael Porter that determine the intrinsic long-run attractiveness of a market or market segment? A) A segment is unattractive if the company's suppliers are unable to raise prices or reduce quantity supplied. B) A segment is unattractive if buyers possess strong or growing bargaining power. C) A segment is attractive when there are actual or potential substitutes for the product. D) A segment is attractive if it already contains numerous, strong, or aggressive competitors. E) The most attractive segment is one in which entry barriers are low and exit barriers are high. Answer: B 68) In ________ marketing, the firm ignores segment differences and goes after the whole market with one offer. A) niche B) mass C) guerrilla D) segmented E) differentiated Answer: B 69) A segment should be the largest possible ___________ group worth going after with a tailored marketing program. A) homogeneous B) heterogeneous C) diffused D) clustered E) scattered Answer: A 70) In ________ marketing, the firm operates in several market segments and designs different products for each segment. A) individual B) undifferentiated C) differentiated D) concentrated E) niche Answer: C 71) Cosmetics firm Estée Lauder markets brands that appeal to women (and men) of different tastes: The flagship brand, the original Estée Lauder, appeals to older consumers; Clinique caters to middle-aged women; M.A.C. to youthful hipsters; Aveda to aromatherapy enthusiasts; and Origins to eco-conscious consumers who want cosmetics made from natural ingredients. This is an example of ________ marketing. A) undifferentiated B) differentiated C) concentrated D) niche E) micro Answer: B 72) Coca Cola's original marketing strategy that offered a single drink Coca Cola Classic in a single sized bottle with the advertising theme “Coke is it,” is an example of ________ marketing. A) concentrated B) niche C) differentiated D) micro E) undifferentiated Answer: E 73) Marketers usually identify niches by ________. A) dividing a segment into subsegments B) conducting VALS tests C) allowing consumers to gravitate toward product brands D) examining the demographics section of the handbook of marketing E) producing products that can be used in a variety of ways Answer: A 74) ________ combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product service offering of their choice. A) Consumptionism B) Viral marketing C) Virtual marketing D) Regionalization E) Customerization Answer: E 75) Volkswagen concentrates on the small-car market and Porsche on the sports car market. These would be examples of what is called ________. A) single-segment concentration B) selective specialization C) product specialization D) market specialization E) full market coverage Answer: A 76) All of the following are benefits of following the ________ approach to target market selection: a strong knowledge of the segment’s needs, a strong market presence, operating economies through specializing in production, distribution, and promotion. A) single-segment concentration B) selective specialization C) product specialization D) market specialization E) full market coverage Answer: A 77) When a symphony orchestra targets people who have broad cultural interests, rather than only those who regularly attend concerts, the orchestra is targeting ________. A) market mavens B) strategic segments C) supersegments D) occasion segments E) psychodemographic segments Answer: C 78) Which of the following best represents the chief advantage of pursuing a selective specialization multisegment strategy? A) It makes the company almost bulletproof to competitors’ actions. B) It diversifies the firm's risk. C) It creates synergy between markets. D) It is a low-cost strategy. E) It treats all buyers the same and, therefore, lowers promotion costs. Answer: B 79) The chief disadvantage to a firm that decides to follow a product specialization strategy in selecting target markets is that ________. A) no synergy exists B) logistics can become a nightmare C) the product may be supplanted by an entirely new technology D) competitors can easily copy any new product introductions E) e-commerce becomes difficult for the company Answer: C 80) With ________ as a target market strategy, the firm concentrates on serving many needs of a particular customer group. A) single-segment concentration B) selective specialization C) product specialization D) market specialization E) full market coverage Answer: D 81) Effective target marketing requires that marketers use market segmentation, market targeting, and market positioning to achieve success in the marketplace. Answer: True 82) A market segment consists of a group of consumers who share a similar set of needs and wants. Answer: True 83) Customer cloning is the practice of identifying the key characteristics of a market segment and then identifying multiple geographic areas where the majority of the population possesses those characteristics. Answer: False 84) Illustrations of personality segmentation would include culture-oriented, sports-centered, or outdoor-oriented subsegments. Answer: False 85) In a growing trend called grassroots marketing, such activities concentrate on getting as close and personally relevant to individual customers as possible. Answer: True 86) A local service company has decided to segment its market based on occupation; therefore, it has chosen a form of demographic segmentation for its approach. Answer: True 87) Members of a cohort don’t share the same major cultural, political, and economic experiences. Answer: False 88) Demographic variables are popular because they are often associated with consumer needs and wants and they are easy to measure. Answer: True 89) Life stage defines a person’s age. Answer: False 90) Income segmentation is a long-standing practice in such product and service categories as cars, clothing, cosmetics, financial services, and travel. Answer: True 91) Members of the same generational cohort share the same major cultural, political, and economic experiences and have similar outlooks and values. Answer: True 92) Because Gen X members are often turned off by overt branding practices and “hard sell,” marketers use different approaches to reach and persuade them. Answer: False 93) Members of Generation Y are generally open to overt branding practices and a “hard sell,” making product placements in computer and video games a popular way to reach this cohort. Answer: False 94) Marketers often advertise to a cohort group by using the icons and images prominent in their experiences. Answer: True 95) One of the most popular commercially available classification systems based on psychographic measurements is Strategic Business Insights’ VALS framework. Answer: True 96) People within the same demographic group can exhibit very different psychographic profiles. Answer: True 97) Psychographics is the science of using psychology and demographics to better understand consumers. Answer: True 98) People motivated by achievement look for products and services that demonstrate success to their peers. Answer: True 99) The main dimensions of the VALS segmentation framework are consumer motivation and consumer resources. Answer: True 100) In the VALS segmentation system, thinkers are characterized as being successful, sophisticated, active, “take-charge” people with high self-esteem. Answer: False 101) Everyone who buys a given product wants the same benefits from it. Answer: False 102) Believers favor stylish products that emulate the purchases of those with greater material wealth. Answer: False 103) Heavy users of a particular product are often a small percentage of the market but account for a high percentage of total consumption. Answer: True 104) With respect to loyalty status, if a consumer is loyal to two or three brands, he or she is called shifting loyal. Answer: False 105) Hard-core loyals can show the firm which brands are most competitive with its own. Answer: False 106) Door-to-door workers in a political campaign use attitude to determine how much time to spend with each voter. Answer: True 107) Purchasing approaches segmentation variables in the business marketplace include technology, user and nonuser status, and general purchasing policies. Answer: False 108) Situational factor segmentation variables in the business marketplace include urgency, specific application, and size of order. Answer: True 109) The last step in the seven-step marketing segmentation process would be to develop a marketing-mix strategy reflective of segment positioning strategies. Answer: True 110) To be useful, market segments must be measurable. Answer: True 111) With respect to market offerings, if a marketer emphasizes a naked solution, he or she is emphasizing the product and service elements that all segment members value. Answer: True 112) The most attractive segment is one in which entry barriers are low and exit barriers are high. Answer: False 113) A segment is attractive when there are actual or potential substitutes for the product. Answer: False 114) A segment is unattractive if the company's suppliers are able to raise prices or reduce quantity supplied. Answer: True 115) An undifferentiated marketing approach to full market coverage designs a marketing program for a product with a superior image that can be sold to the broadest number of buyers. Answer: True 116) An attractive niche consists of customers having a distinct set of needs. Answer: True 117) The ultimate level of segmentation leads to “segments of one,” “customized marketing,” or “one-to-one marketing.” Answer: True 118) Companies following a market specialization strategy offer one product to as many markets as possible. Answer: False 119) A company is customerized when it is able to respond to individual customers by customizing its products, services, and messages on a one-to-one basis. Answer: True 120) Customization is not for every company. It may be very difficult to implement for complex products such as cars. Answer: True 121) There are several major segmentation variables that might be used by a marketer to address a consumer market. If the marketer were to use social class, psychographic lifestyle, and readiness stage to segment its market, identify possible segmentation subcategories under each of the three. Answer: First, social class would yield the subcategories of lower lowers, upper lowers, working class, middle class, upper middles, lower uppers, and upper uppers. Second, psychographic lifestyles would yield culture-oriented, sports-oriented, and outdoor-oriented. Lastly, readiness stage would yield unaware, aware, informed, interested, desirous, and intending to buy. Other sub-categories might be possible. 122) Explain geographic segmentation. Answer: Geographic segmentation calls for dividing the market into different geographical units such as nations, states, regions, counties, cities, or neighborhoods. The company can operate in one or a few areas, or operate in all but pay attention to local variations. In that way, it can tailor marketing programs to the needs and wants of local customer groups in trading areas, neighborhoods, and even individual stores. 123) Identify and describe the three main types of New Luxury products. Answer: The three main types of New Luxury products are: 1) Accessible superpremium products—They carry a significant premium over middle-market brands, yet consumers can readily trade up to them because they are relatively low-ticket items in affordable categories. (2) Old Luxury brand extensions—They extend historically high-priced brands down-market while retaining their cachet. (3) Masstige goods—They are priced between average middle-market brands and superpremium Old Luxury brands. They are “always based on emotions, and consumers have a much stronger emotional engagement with them than with other goods.” 124) What are the three primary motivations of consumers? Answer: Consumers are inspired by one of three primary motivations: ideals, achievement, and self-expression. Those primarily motivated by ideals are guided by knowledge and principles. Those motivated by achievement look for products and services that demonstrate success to their peers. Consumers whose motivation is self-expression desire social or physical activity, variety, and risk. 125) Generation Y members are often turned off by overt branding practices and “hard sell.” List the different approaches tried by the marketers to reach and persuade them. Answer: The different approaches tried by the markets to reach and persuade Generation Y members include: 1) Online buzz 2) Student ambassadors 3) Product placements in computer games 4) Sponsoring cool events. 126) Identify the four market segment groups based on brand loyalty status and list what a company can learn from analyzing the degrees of brand loyalty. Answer: Marketers usually envision four groups based on brand loyalty status: (1) hard-core loyals, (2) split loyals, (3) shifting loyals, and (4) switchers. Hard-core loyals can help identify the products' strengths. Split loyals can show the firm which brands are most competitive with its own. By looking at customers who are shifting away from its brand, the company can learn about its marketing weaknesses and attempt to correct them. 127) Briefly describe the steps in the segmentation process. Answer: The seven steps in the segmentation process include: 1) Needs-Based Segmentation—Group customers into segments based on similar needs and benefits sought by customers in solving a particular consumption problem. 2) Segment Identification—For each needs-based segment, determine which demographics, lifestyles, and usage behaviors make the segment distinct and identifiable (actionable). 3) Segment Attractiveness—Using predetermined segment attractiveness criteria (such as market growth, competitive intensity, and market access), determine the overall attractiveness of each segment. 4) Segment Profitability—Determine segment profitability. 5) Segment Positioning—For each segment, create a “value proposition” and product-price positioning strategy based on that segment's unique customer needs and characteristics. 6) Segment “Acid Test”—Create “segment storyboard” to test the attractiveness of each segment's positioning strategy. 7) Marketing-Mix Strategy—Expand segment positioning strategy to include all aspects of the marketing mix: product, price, promotion, and place. 128) Briefly describe single-segment concentration with an example. Answer: With single-segment concentration, the firm markets to only one particular segment. Volkswagen concentrates on the small-car market and Porsche on the sports car market. Through concentrated marketing, the firm gains a strong knowledge of the segment’s needs and achieves a strong market presence. Further, the firm enjoys operating economies through specializing its production, distribution, and promotion. If it captures segment leadership, the firm can earn a high return on its investment. 129) Briefly describe product specialization and market specialization. Answer: With product specialization, the firm sells a certain product to several different market segments. A microscope manufacturer, for instance, sells to university, government, and commercial laboratories, making different instruments for each and building a strong reputation in the specific product area. The downside risk is that the product may be supplanted by an entirely new technology. With market specialization, the firm concentrates on serving many needs of a particular customer group, such as by selling an assortment of products only to university laboratories. The firm gains a strong reputation among this customer group and becomes a channel for additional products its members can use. The downside risk is that the customer group may suffer budget cuts or shrink in size. 130) List the three premises on which Anderson's long tail theory is based and the two aspects of internet shopping that supports these premises. Answer: Anderson's long tail theory is based on three premises: (1) Lower costs of distribution make it economically easier to sell products without precise predictions of demand; (2) The more products available for sale, the greater the likelihood of tapping into latent demand for niche tastes unreachable through traditional retail channels; and (3) If enough niche tastes are aggregated, a big new market can result. Anderson identifies two aspects of Internet shopping that support these premises. First, the increased inventory and variety afforded online permit greater choice. Second, the search costs for relevant new products are lowered due to the wealth of information online, the filtering of product recommendations based on user preferences that vendors can provide, and the word-of-mouth network of Internet users. 131) Local marketing reflects a growing trend called grassroots marketing. What are the characteristics of grassroots marketing? Answer: In grassroots marketing, marketing activities concentrate on getting as close and personally relevant to individual customers as possible. 132) What is customer cloning and how is it used? Answer: Customer cloning is a way of identifying new prospects by assuming that the best prospects live where most of a company's existing customers come from. 133) What is geoclustering? Answer: Geoclustering captures the increasing diversity of the population. It combines geographic data with demographic data to yield even richer descriptions of consumers and neighborhoods. 134) Identify ways in which shopping behaviors differ between men and women. Answer: Women tend to be more communal minded and men tend to be more self-expressive and goal directed. Women tend to take in more of the data in their immediate environment, whereas men focus on the part of the environment that helps them achieve a goal. When shopping, men often need to be invited to touch a product, whereas women are likely to pick it up without prompting. Men like to read product information, whereas women may relate to a product on a more personal level. 135) Increasingly, companies are finding that their markets are “hourglass shaped.” What does this mean for consumers and for marketers? Answer: Middle-market consumers migrate toward both discount and premium products. Companies that miss out on this new market risk being “trapped in the middle” and seeing their market share steadily decline. 136) Explain the five roles in a buying decision: initiator, influencer, decider, buyer, and user. Answer: Assume a wife initiates a purchase by requesting a new treadmill for her birthday. The husband may then seek information from many sources, including his best friend who has a treadmill and is a key influencer in what models to consider. After presenting the alternative choices to his wife, he then purchases her preferred model which, as it turns out, ends up being used by the entire family. 137) Characterize psychographic segmentation. Answer: In psychographic segmentation, buyers are divided into different groups on the basis of psychological/personality traits, lifestyle, or values. 138) The VALS segmentation system has evolved into an eight-part typology. List the categories of the eight-part typology. Answer: The eight parts of the VALS segmentation system include the following: (1) innovators, (2) thinkers, (3) achievers, (4) experiencers, (5) believers, (6) strivers, (7) makers, and (8) strugglers. 139) Professor Albert advises his students to purchase the book “Microbiology by Pelczar,” to acquaint themselves with the fundamentals of microbiology. What role does he play in the buying decision of his students? Answer: Professor Albert plays the role of an influencer in the buying decision of his students. An influencer is a person who explicitly or implicitly has some influence on the final buying decision of others. 140) List the four groups of consumers based on loyalty status. Answer: The four groups of consumers based on loyalty status are: 1) hard-core loyals, 2) split loyals, 3) shifting loyals, and 4) switchers. 141) Consumer attitudes are an interesting way to segment a market. What are the five different consumer attitudes about a product that can be found in the market? Answer: The five attitude groups are: (1) enthusiastic, (2) positive, (3) indifferent, (4) negative, and (5) hostile. 142) A flexible market offering consists of two parts. Identify and describe these two parts. Answer: A flexible market offering consists of two parts: a naked solution containing the product and service elements that all segment members value, and discretionary options that some segment members value. 143) To be useful, market segments must rate favorably on five key criteria. What are those criteria? Answer: To be useful, market segments must be: (1) measurable, (2) substantial, (3) accessible, (4) differentiable, and (5) actionable. 144) List the five forces identified by Michael Porter that determine the intrinsic long-run attractiveness of a market or market segment. Answer: The five forces identified by Michael Porter that determine the intrinsic long-run attractiveness of a market or market segment are industry competitors, potential entrants, substitutes, buyers, and suppliers. 145) List the threats posed by the five forces identified by Michael Porter that determine the intrinsic long-run attractiveness of a market or market segment. Answer: The threats posed by the five forces are: 1) Threat of intense segment rivalry 2) Threat of new entrants 3) Threat of substitute products 4) Threat of buyers' growing bargaining power 5) Threat of suppliers' growing bargaining power 146) Give an example of how a company might target products to children in an ethical way. Answer: The public is concerned when marketers take unfair advantage of vulnerable groups, such as children. However, not all attempts to target children draw criticism. Socially responsible marketing calls for targeting that serves not only the company's interests, but also the interests of those targeted. For example, Colgate Junior toothpaste has special features designed to get children to brush longer and more often. 147) Explain the concept of mass marketing. Answer: In mass marketing, the firm ignores segment differences and goes after the whole market with one offer. It designs a marketing program for a product with a superior image that can be sold to the broadest number of buyers via mass distribution and mass communications. 148) Explain the concept of differentiated marketing. Answer: In differentiated marketing, the firm sells different products to all the different segments of the market. 149) Assume that you have decided to use a niche strategy to advance your marketing goals. Characterize an attractive niche. Answer: An attractive niche is distinguished as follows: (1) The customers in the niche have a distinct set of needs; (2) they will pay a premium to the firm that best satisfies their needs; (3) the niche is not likely to attract other competitors; (4) the niche gains certain economies through specialization; and (5) the niche is fairly small but has size, profit, and growth potential. 150) A new trend in marketing is toward customerization. Describe what customerization is and how marketers are using it. Answer: Customerization combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product or service offering of their choice. A company is customerized when it is able to respond to individual customers by customizing its products, services, and messages on a one-to-one basis. Chapter 9 Creating Brand Equity 1) The first step in the strategic brand management process is ________. A) measuring consumer brand loyalty B) identifying and establishing brand positioning C) planning and implementing brand marketing D) measuring and interpreting brand performance E) growing and sustaining brand value Answer: B 2) The American Marketing Association defines a ________ as “a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.” A) copyright B) trademark C) slogan D) brand E) logo Answer: D 3) Branding is ________. A) all about creating unanimity between products B) the process of performing market research and selling products or services to customers C) endowing products and services with the power of a brand D) the process of comparing competing brands available in the market E) use of online interactive media to promote products and brands Answer: C 4) Brand ________ is the added value endowed to products and services. A) loyalty B) equity C) preference D) identity E) licensing Answer: B 5) ________ is the differential effect that brand knowledge has on consumer response to the marketing of that brand. A) Mission-driven brand equity B) Customer-based brand equity C) Product-driven brand equity D) Service-driven brand equity E) Function-based brand equity Answer: B 6) Adam wants to buy a washing machine and is looking for something that is not too expensive. When he goes to make the purchase, he finds there are two options that meet his requirements. One is a Samsung product, while the other is a newly imported South Korean brand. Adam is not very familiar with the latter and does not hesitate in choosing Samsung. This example implies that ________. A) the imported brand will not survive the competition from Samsung B) Samsung has a positive customer brand equity C) the South Korean company has a low advertising budget D) the imported brand is unreliable E) the Samsung washing machine has better features than the imported brand Answer: B 7) When a consumer expresses thoughts, feelings, images, experiences, and beliefs associated with the brand, the consumer is expressing ________. A) brand knowledge B) ethnocentric bias C) self-serving bias D) cognitive dissonance E) brand identity Answer: A 8) The challenge for marketers in building a strong brand is ________. A) ensuring that customers have the right type of experiences with their products and marketing programs to create the desired brand knowledge B) pricing the product at a point that maximizes sales volume C) minimizing the number of people to whom the product is targeted in order to provide consumers with a personalized experience D) minimizing the impact of customer brand equity E) avoiding the usage of an established brand to introduce a new product in the market Answer: A 9) Which of the following is a marketing advantage of strong brands? A) no vulnerability to marketing crises B) more elastic consumer response to price increases C) guaranteed profits D) additional brand extension opportunities E) more inelastic consumer response to price decreases Answer: D 10) When a marketer expresses his or her vision of what the brand must be and do for consumers, they are expressing what is called ________. A) a brand promise B) a brand personality C) a brand identity D) a brand position E) a brand revitalization Answer: A 11) Identify the four pillars of brand equity, according to brand asset valuator model. A) relevance, performance, bonding, and advantage B) presence, performance, advantage, and bonding C) energized differentiation, relevance, esteem, and knowledge D) brand salience, brand feelings, brand imagery, and brand performance E) energized differentiation, esteem, brand feelings, and brand salience Answer: C 12) Christian Louboutin is a footwear designer who launched his line of high-end women's shoes in France in 1991. Since 1992, his designs have incorporated the shiny, red-lacquered soles that have become his signature. These red-lacquered soles and high stilettos of Louboutin distinguish him from other designer shoe brands. In accordance with the brand asset valuator model, which of the following components of brand equity has Louboutin fulfilled in the given scenario? A) energized differentiation B) relevance C) esteem D) knowledge E) advantage Answer: A 13) Christian Louboutin is a footwear designer who launched his line of high-end women's shoes in France in 1991. The brand caters to an elite clientele whose satisfaction with the brand has always been evident. Apart from being high-end, Louboutin footwear signifies power in elite social circles. Celebrities are often seen sporting “Loubs” at special occasions, such as movie premieres. This has resulted in people associating Louboutin footwear with class and power. In accordance with the brand asset valuator model, which of the following components of brand equity has Louboutin fulfilled in the given scenario? A) knowledge B) energized differentiation C) esteem D) advantage E) presence Answer: C 14) According to the brand asset valuator model, which of the components of brand equity measures how aware and familiar consumers are with the brand? A) esteem B) energized differentiation C) relevance D) knowledge E) presence Answer: D 15) According to the brand asset valuator model, which of the components of brand equity measures the breadth of a brand's appeal? A) differentiation B) relevance C) esteem D) knowledge E) value Answer: B 16) According to brand asset valuator model, energized differentiation and relevance, the two pillars of brand equity combine to determine what is called brand ________. A) position B) image C) depth D) knowledge E) strength Answer: E 17) According to brand asset valuator model, esteem and knowledge, the two pillars of brand equity together create ________, a “report card” on past performance and a current indicator of current value. A) brand stature B) brand parity C) brand strength D) brand personality E) brand architecture Answer: A 18) According to the brand asset valuator model, strong new brands show ________. A) higher levels of esteem and knowledge than relevance, whereas both differentiation and energy are lower still B) higher levels of differentiation and energy than relevance, whereas both esteem and knowledge are lower still C) high knowledge—evidence of past performance—a lower level of esteem, and even lower relevance, energy, and differentiation D) high levels on energy, differentiation, relevance, knowledge, and esteem E) low levels on energy, differentiation, relevance, knowledge, and esteem Answer: B 19) According to brand asset valuator model, leadership brands show ________. A) high levels of energy, differentiation, relevance, knowledge, and esteem B) higher levels of esteem and knowledge than relevance, whereas both differentiation and energy are lower still C) higher levels of differentiation and energy than relevance, whereas both esteem and knowledge are lower still D) low levels on energy, differentiation, relevance, knowledge, and esteem E) high knowledge—evidence of past performance—a lower level of esteem, and even lower relevance, energy, and differentiation Answer: A 20) According to brand asset valuator model, declining brands show ________. A) higher levels of esteem and knowledge than relevance, whereas both differentiation and energy are lower still B) high relevance—appropriateness of brand's appeal—a lower level of energy and differentiation, and even lower knowledge C) high levels on energy, differentiation, relevance, knowledge, and esteem D) higher levels of differentiation and energy than relevance, whereas both esteem and knowledge are lower still E) high knowledge—evidence of past performance—a lower level of esteem, and even lower relevance, energy, and differentiation Answer: E 21) According to Young and Rubicam's brand asset valuator, a brand's ________ measures how well the brand is regarded and respected. A) differentiation B) energy C) relevance D) esteem E) knowledge Answer: D 22) Aromas Pte Ltd introduced a new line of shower gels. To analyze consumer reaction, the company interviewed people who bought them. When Sarah was asked why she had chosen the new shower gel, she said she bought it because a friend recommended it. Sarah is at which level of the brand dynamics pyramid? A) presence B) bonding C) relevance D) performance E) advantage Answer: A 23) If a consumer, trying to decide between alternatives, believes that a particular brand delivers acceptable product performance and can be short listed, she is in the ________ level of the brand dynamics pyramid. A) presence B) relevance C) performance D) advantage E) bonding Answer: C 24) Which of the following levels of the brand dynamics pyramid pertains to consumer's needs? A) advantage B) relevance C) bonding D) performance E) presence Answer: B 25) A consumer who expresses rational and emotional attachments to the brand to the exclusion of most other brands has reached the ________ level in the brand dynamics pyramid. A) advantage B) relevance C) presence D) performance E) bonding Answer: E 26) According to the BRANDZ model of brand strength, brand building involves people progressing through a sequential series of steps. Which of these steps would address the question “Do I know about this brand?” A) relevance B) presence C) performance D) advantage E) bonding Answer: B 27) According to the BRANDZ model of brand strength, brand building involves people progressing through a sequential series of steps. Which of these steps would address or answer the question “Does this brand offer something better than the others?” A) performance B) presence C) advantage D) bonding E) relevance Answer: C 28) According to the BRANDZ model of brand strength, brand building involves people progressing through a sequential series of steps. Which of these steps would address or answer the question “Can this brand deliver?” A) performance B) bonding C) advantage D) relevance E) presence Answer: A 29) According to the BRANDZ model of brand strength, brand building involves people progressing through a sequential series of steps. Which of these steps would address or answer the question “Does this brand offer me something?” A) advantage B) presence C) relevance D) bonding E) performance Answer: C 30) According to the BRANDZ model of brand strength, brand building involves people progressing through a sequential series of steps. Which of these steps convey the message “Nothing else beats this brand?” A) bonding B) relevance C) advantage D) performance E) presence Answer: A 31) Brand salience ________. A) is customers' emotional responses and reactions with respect to the brand B) is how often and how easily customers think of the brand under various purchase or consumption situations C) is how well the product or service meets customers' functional needs D) describes the extrinsic properties of the product or service, including the ways in which the brand attempts to meet customers' psychological or social needs E) describes the relationship customers have with the brand and the extent to which they feel they're “in sync” with it Answer: B 32) With respect to the “six brand building blocks,” ________ signifies how well the product or service meets customers' functional needs. A) brand judgment B) brand imagery C) brand salience D) brand performance E) brand resonance Answer: D 33) With respect to the “six brand building blocks,” ________ describes the extrinsic properties of the product or service, including the ways in which the brand attempts to meet customers’ psychological or social needs. A) brand imagery B) brand judgment C) brand resonance D) brand salience E) brand performance Answer: A 34) With respect to the “six brand building blocks,” ________ focuses on customers’ own personal opinions and evaluations. A) brand salience B) brand performance C) brand imagery D) brand judgment E) brand resonance Answer: D 35) With respect to the brand building pyramid, at which of the following “building block levels” would we expect the consumer to develop an intense, active loyalty? A) salience B) imagery C) feelings D) judgments E) resonance Answer: E 36) With respect to the brand building pyramid, at which of the following “building block levels” would we expect the consumer to develop positive and accessible reactions? A) resonance B) salience C) imagery D) performance E) feelings Answer: E 37) With respect to the “six brand building blocks,” ________ describes the relationship customers have with the brand and the extent to which they feel they're “in sync” with it. A) brand imagery B) brand judgment C) brand resonance D) brand salience E) brand performance Answer: C 38) With respect to the “six brand building blocks,” ________ are customers’ emotional responses and reactions with respect to the brand. A) brand imagery statements B) brand judgments C) brand performances D) brand feelings E) brand resonances Answer: D 39) Which of the following “building block levels” corresponds to the branding objectives of points-of-parity and difference? A) performance and imagery B) judgment and feelings C) resonance and salience D) imagery and judgment E) salience and feelings Answer: A 40) With respect to the brand building pyramid, the branding objective of developing deep, broad brand awareness corresponds to which of the following “building block levels”? A) resonance B) imagery C) performance D) salience E) judgment Answer: D 41) From a marketing management perspective, there are three main sets of brand equity drivers. Which of these drivers was most applicable when McDonald's decided to use the “golden arches” and Ronald McDonald as symbols of their brand? A) the product and all accompanying marketing activities and supporting marketing programs B) the service and all accompanying marketing activities and programs C) the initial choices for the brand elements or identities making up the brand D) associations indirectly transferred to the brand by linking it to some other entity E) the profitability associated with brand development Answer: C 42) Red Bull enlisted polytechnic students as “Red Bull student brand managers” to distribute samples, research drinking trends, design on-campus product promotion activities, and write stories for student newspapers. From a marketing management perspective, which of the following brand equity drivers is most applicable in the given scenario? A) the profitability associated with brand development B) associations indirectly transferred to the brand by linking it to a person C) the product and all accompanying marketing activities and supporting marketing programs D) the initial choices for the brand elements or identities making up the brand E) associations indirectly transferred to the brand by linking it to a place Answer: C 43) Li Ning Sports Goods associates itself with the Olympics. It sponsored the Chinese table tennis, diving, gymnastics, and shooting teams. From a marketing management perspective, which of the brand equity drivers is most applicable in the given scenario? A) the associations indirectly transferred to the brand by linking it to a place or thing B) the product and all accompanying marketing activities and supporting marketing programs C) the initial choices for the brand elements or identities making up the brand D) the profitability associated with brand development E) the service and all accompanying marketing activities and programs Answer: A 44) ________ are devices that can be trademarked and serve to identify and differentiate the brand. A) Brand elements B) Brand value propositions C) Brand perceptions D) Brand images E) Brand extensions Answer: A 45) If a brand element can be used to introduce new products in the same or different categories, the brand element is said to be ________. A) memorable B) meaningful C) likeable D) transferable E) adaptable Answer: D 46) If consumers can easily recall and recognize a brand element, the brand element is said to be ________. A) meaningful B) protectable C) adaptable D) transferable E) memorable Answer: E 47) Which of the following is a defensive criterion for choosing brand elements? A) adaptable B) memorable C) meaningful D) likeable E) significance Answer: A 48) With respect to powerful brand elements, ________ is an extremely efficient means to build brand equity. This element functions as a useful “hook” or “handle” to help consumers grasp what the brand is and what makes it special. A) the tangibility of a product B) a product's shape C) a slogan D) a patent E) a copyright Answer: C 49) A ________ can be defined as any information-bearing experience a customer or prospect has with the brand, the product category, or the market that relates to the marketer's product or service. A) brand value B) brand personality C) brand trait D) brand character E) brand contact Answer: E 50) The traditional “marketing-mix” concept and the notion of the “four Ps” may not adequately describe modern marketing programs. ________ is about mixing and matching marketing activities to maximize their individual and collective effects. A) Personalized marketing B) Mass customization C) Globalized marketing D) Relationship marketing E) Integrated marketing Answer: E 51) Brand equity can be built by ________, which create(s) equity by linking the brand to other information in memory that conveys meaning to customers. A) internal marketing B) brand transferability C) secondary associations D) customer alignment E) brand auditing Answer: C 52) Mark feels that Shell delivers on its promises to supply the best petrol possible to the public. His experiences with Shell have always been good resulting in positive brand contact. Mark is most likely experiencing ________. A) brand alliance B) brand essence C) brand harmonization D) brand parity E) brand bonding Answer: E 53) ________ consists of activities and processes that help inform and inspire employees about brands. A) Internal branding B) Personal branding C) Individual branding D) External branding E) Co-branding Answer: A 54) IBM’s e-business campaign not only helped to change public perceptions of the company in the marketplace, it also sent a signal to employees that IBM was determined to be a leader in the use of Internet technology. Which principle of internal branding does this example portray? A) choosing the right moment to capture employees' attention and imagination B) furnishing energizing and informative internal communication C) bringing the brand alive for employees D) linking internal and external marketing E) understanding how brand communities work Answer: D 55) A ________ is a specialized group of consumers and employees whose identification and activities focus around the brand. A) brand community B) brand channel C) brand association D) brand personality E) brand cluster Answer: A 56) Which of the following value creation processes means sharing the brand “good news” and inspiring others to use the brand? A) staking B) badging C) evangelizing D) justifying E) milestoning Answer: C 57) Which of the following value creation processes means detailing the brand relationship journey in a narrative way, often anchored by and peppered with milestones? A) documenting B) milestoning C) badging D) evangelizing E) staking Answer: A 58) Which of the following value creation processes means translating milestones into symbols and artifacts? A) staking B) evangelizing C) milestoning D) badging E) documenting Answer: D 59) A structured approach to assessing the sources and outcomes of brand equity and the manner in which marketing activities create the financial worth of the brand is called ________. A) the brand value chain B) the brand portfolio C) the brand life cycle D) brand partitioning E) brand positioning Answer: A 60) Competitive superiority and channel support are factors that influence the ________ of the brand value chain. A) program multiplier B) customer multiplier C) brand multiplier D) profit multiplier E) market multiplier Answer: B 61) Clarity, relevance, distinctiveness, and consistency are factors that influence the ________ of the brand value chain. A) program multiplier B) brand multiplier C) market multiplier D) customer multiplier E) profit multiplier Answer: A 62) ________ are a means of understanding where, how much, and in what ways brand value is being created to facilitate day-to-day decision making. A) Internal marketing campaigns B) Brand portfolio audits C) Brand value chains D) Sales cycles E) Brand-tracking studies Answer: E 63) ________ is the job of estimating the total financial worth of the brand. A) Brand tracking B) Brand auditing C) Brand equity D) Brand valuation E) Brand harmonization Answer: D 64) Apple's iPod Shuffle is an example of ________. A) a subbrand B) a parent brand C) family brand D) a brand mix E) an umbrella brand Answer: A 65) When a firm uses an established brand to introduce a new product, it is called a ________. A) brand harmonization B) brand valuation C) brand extension D) brand positioning E) brand parity Answer: C 66) A parent brand that is associated with multiple products through brand extensions is also called a(n)________. A) category brand B) subbrand C) extension brand D) family brand E) line brand Answer: D 67) The introduction of diet coke by the Coca Cola Company is an example of ________. A) line extension B) brand harmonization C) category extension D) brand dilution E) co-branding Answer: A 68) A ________ consists of all products original as well as line and category extensions sold under a particular brand. A) brand line B) cobrand C) generic brand D) licensed product E) subbrand Answer: A 69) A major advantage of a ________ strategy is that the company does not tie its reputation to the product. A) blanket family name B) licensing C) separate family brand name D) category extension E) brand revitalization Answer: C 70) Starbucks introduced ice creams in the same flavors as the Frappucinos it sold in its coffee shops. This is an example of ________. A) brand dilution B) cobranding C) brand variants D) category extension E) brand harmonization Answer: D 71) A ________ is a set of all brand lines that a particular seller makes. A) brand platform B) brand image C) cobrand D) brand extension E) brand mix Answer: E 72) A ________ is the set of all brands and brand lines a particular firm offers for sale to buyers in a particular category. A) brand architecture B) brand position C) brand portfolio D) brand extension E) brand image Answer: C 73) The hallmark of an optimal brand portfolio is ________. A) the ability of each brand to maximize equity in combination with all the other brands in it B) the ability of each brand to maximize its individual equity in isolation C) maximum brand overlap D) the eventual reduction of brand differentiation to create a unified brand appearance E) maximum internal competition within the firm Answer: A 74) ________ brands are positioned with respect to competitors' brands so that more important (and more profitable) flagship brands can retain their desired positioning. A) Flanker B) Attacker C) Defender D) Cash cow E) Simulation Answer: A 75) Two advantages of ________ are that they can facilitate new-product acceptance and provide positive feedback to the parent brand and company. A) product licensing B) brand extensions C) brand architecture D) brand audits E) brand dilutions Answer: B 76) According to Ries and Trout, Cadbury suffered from ________ when the company allowed its brand to become diluted by putting their name on such variants as mashed potatoes, powdered milk, and soups, apart from chocolates and candies. A) liquidity trap B) cognitive dissonance C) branding fallout D) cannibalization E) line-extension trap Answer: E 77) Even if sales of a brand extension are high and meet targets, the revenue may be coming from consumers switching to the extension from existing parent-brand offerings in effect ________ the parent brand. A) diluting B) cannibalizing C) reinforcing D) eroding E) revamping Answer: B 78) In its focus on bottom-line financial value, the ________ approach often overlooks the “option value” of brands and their potential to affect future revenues and costs. A) brand equity B) brand value chain C) customer tracking D) customer equity E) brand extension Answer: D 79) Consumers may evaluate identical products differently depending on how they are branded. Answer: True 80) Brands today play a number of important roles that improve consumers’ lives and enhance the financial value of firms. Answer: True 81) One of the advantages of having a strong brand is the ability to have a more elastic consumer response to price decreases of the brand. Answer: True 82) Brand equity arises from unanimity in consumer response. Answer: False 83) The quantity, rather than quality, of a marketer's investment in brand building is the critical factor in building brand equity. Answer: False 84) According to brand asset valuator (BAV) model, knowledge is one of the key components of brand equity. Answer: True 85) According to the BRANDZ model, “Bonded” consumers at the lower levels of the pyramid build stronger relationships with and spend more on the brand than those at the top. Answer: False 86) Under the BRANDZ model of brand strength, customers who are bonded to the brand believe “nothing else beats it.” Answer: True 87) Brand salience describes the extrinsic properties of the product or service, including the ways in which the brand attempts to meet customers’ psychological or social needs. Answer: False 88) Brand imagery is a consumer's emotional response and reaction with respect to the brand. Answer: False 89) One of the selection criteria for creating a successful brand element is that it should be protectable. Answer: True 90) If a brand element has the characteristic of being memorable, the brand is credible and suggestive of the type of person who might use the brand. Answer: False 91) Brands are built only by advertising. Answer: False 92) To achieve integrated marketing, marketers need a variety of different marketing activities that consistently reinforce the brand promise. Answer: True 93) Brand equity can be built by linking the brand to sources, such as channels of distribution as well as to other brands. Answer: True 94) The brand promise will not be delivered unless everyone in the company lives the brand. Answer: True 95) Modifying a brand to suit group-level or individual needs is called staking. Answer: False 96) A brand community can be a constant source of inspiration and feedback for product improvements or innovations. Answer: True 97) The indirect approach to assessing brand equity assesses the actual impact of brand knowledge on consumer response to different aspects of marketing. Answer: False 98) As the company’s major enduring asset, a brand needs to be carefully managed so that its value does not depreciate. Answer: True 99) The brand audit can be used to set strategic direction for the brand. Answer: True 100) Brand equity is essentially the same as brand valuation. Answer: False 101) When change is necessary, marketers should vigorously preserve and defend sources of brand equity. Answer: True 102) An important part of reinforcing brands is providing uniform and unchanging marketing support. Answer: False 103) When a parent brand covers a new product within a product category it currently serves, it is called a line extension. Answer: True 104) A firm's branding strategy is also called the brand architecture. Answer: True 105) When Honda expanded its brand into such areas as cars, snowblowers, and marine engines, it was pursuing a strategy called line extension. Answer: False 106) Increasing shelf presence and retailer dependence in the store is one of the reasons for introducing multiple brands in a category. Answer: True 107) Flankers are brands that may be kept around despite dwindling sales because they manage to maintain their profitability with virtually no marketing support. Answer: False 108) The role of a relatively high-priced brand in the portfolio is often to attract customers to the brand franchise or to “build traffic”. Answer: False 109) Brand extensions can reduce the costs of introductory launch campaigns and make it easier to convince retailers to stock and promote a new product. Answer: True 110) Brand differentiation occurs when consumers no longer associate a brand with a specific product or highly similar products and start thinking less of the brand. Answer: False 111) Intrabrand shifts in a company’s sales are always undesirable. Answer: False 112) Marketers must judge each potential brand extension by how effectively it leverages existing brand equity from the parent brand, as well as how effectively, in turn, it contributes to the parent brand’s equity. Answer: True 113) Research indicates that high-quality brands stretch farther than average-quality brands, although both types of brands have boundaries. Answer: True 114) A brand that is seen as prototypical of a product category is easy to extend outside the category. Answer: False 115) A successful extension cannot only contribute to the parent brand image but also enable a brand to be extended even farther. Answer: True 116) Concrete attribute associations tend to be easier to extend than abstract benefit associations. Answer: False 117) Customer lifetime value is affected by revenue and by the costs of customer acquisition, retention, and cross-selling. Answer: True 118) Both brand equity and customer equity emphasize the importance of customer loyalty and the notion that we create value by having as many customers as possible pay as high a price as possible. Answer: True 119) What valuable functions can brands perform for a firm? Answer: Brands perform a number of valuable functions for firms. First, they simplify product handling or tracing. Brands help to organize inventory and accounting records. A brand also offers the firm legal protection for unique features or aspects of the product. The brand name can be protected through registered trademarks; manufacturing processes can be protected through patents; and packaging can be protected through copyrights and proprietary designs. These intellectual property rights ensure that the firm can safely invest in the brand and reap the benefits of a valuable asset. A credible brand signals a certain level of quality so that satisfied buyers can easily choose the product again. Brand loyalty provides predictability and security of demand for the firm, and it creates barriers to entry that make it difficult for other firms to enter the market. Loyalty also can translate into customer willingness to pay a higher price. 120) Describe the three ingredients of customer-based brand equity. Answer: The three key ingredients of customer-based brand equity are as follows: 1) Brand equity arises from differences in consumer response. If no differences occur, the brand-name product is essentially a commodity, and competition will probably be based on price. 2) Differences in response are a result of consumers' brand knowledge, all the thoughts, feelings, images, experiences, and beliefs associated with the brand. Brands must create strong, favorable, and unique brand associations with customers, as have Toyota (reliability), Hallmark (caring), and Amazon.com (convenience). 3) Brand equity is reflected in perceptions, preferences, and behavior related to all aspects of the marketing of a brand. Stronger brands lead to greater revenue. 121) Advertising agency Young and Rubicam (Y&R) developed a model of brand equity called Brand Asset Valuator (BAV). What is the intent of the BAV model? List and briefly characterize the four key components (pillars) of brand equity. Answer: The BAV model is based on research of almost 800,000 consumers in 51 countries. BAV provides comparative measures of the brand equity of thousands of brands across hundreds of different categories. There are four key components—or pillars—of brand equity. These pillars are: (1) energized differentiation—measures the degree to which a brand is seen as different from others, and its perceived momentum and leadership; (2) relevance—measures the appropriateness and breadth of a brand's appeal; (3) esteem—measures perceptions of quality and loyalty, or how well the brand is regarded and respected; and (4) knowledge—measures how aware and familiar consumers are with the brand. 122) The creation of significant brand equity involves reaching the top or pinnacle of the brand pyramid. What are the six components of the brand resonance pyramid? Answer: The six components of the brand resonance pyramid include: (1) brand salience—relates to how often and easily the brand is evoked under various purchase or consumption situations; (2) brand performance—relates to how the product or service meets customers' functional needs; (3) brand imagery—deals with the extrinsic properties of the product or service, including the ways in which the brand attempts to meet the customers' psychological or social needs; (4) brand judgments—focus on consumers' own personal opinions and evaluations; (5) brand feelings—customers' emotional responses and reactions with respect to the brand; and (6) brand resonance—refers to the nature of the relationship that customers have with the brand and the extent to which customers feel that they are “in sync” with the brand. 123) Identify and describe the four value stages of the brand value chain. Answer: The brand value creation process begins when the firm invests in a marketing program targeting actual or potential customers. Next, customers' mindsets are assumed to change as a result of the marketing program. This change affects the way the brand performs in the marketplace through the collective impact of individual customers deciding how much to purchase and when, how much they'll pay, and so on. Finally, the investment community considers market performance and other factors such as replacement cost and purchase price in acquisitions to arrive at an assessment of shareholder value in general and the value of a brand in particular. 124) Describe the function of brand tracking studies. Answer: To understand how the sources and outcomes of brand equity change, if at all, over time, marketers conduct brand tracking studies. These studies collect quantitative data from consumers over time to provide consistent, baseline information about how brands and marketing programs are performing. Tracking studies help us understand where, how much, and in what ways brand value is being created, to facilitate day-to-day decision making. 125) Describe the meaning and function of a brand audit. Answer: To better understand the sources of brand equity and how they affect outcomes of interest, marketers often need to conduct brand audits. A brand audit is a consumer-focused exercise that involves a series of procedures to assess the health of the brand, uncover its sources of brand equity, and suggest ways to improve and leverage its equity. The brand audit can be used to set strategic direction for the brand. As the result of this strategic analysis, the marketer can develop a marketing program to maximize long-term brand equity. Marketers should conduct a brand audit whenever they consider important shifts in strategic direction. 126) As a branding manager, you have recommended to your board of directors a corporate policy of umbrella branding. What are the advantages that your company might gain from this? Answer: Many firms, such as Hitachi and Kao, use their corporate brand as an umbrella brand across their entire range of products. A corporate umbrella brand name has a number of advantages. Development cost is less because there is no need for “name” research or heavy advertising expenditures to create brand-name recognition. Furthermore, sales of the new product are likely to be strong if the manufacturer's name is good. Corporate-image associations of innovativeness, expertise, and trustworthiness have been shown to directly influence consumer evaluations. Finally, a corporate branding strategy can lead to greater intangible value for the firm. 127) There are a number of specific roles brands can play as part of a brand portfolio. List and briefly describe the four roles. Answer: The four roles are: (1) flankers—or fighting brands. These are positioned with respect to competitors' brands so that more important (and more profitable) flagship brands can retain their desired positioning; (2) cash cows—some brands may be kept around despite dwindling sales because they still manage to hold on to a sufficient number of customers and maintain their profitability with virtually no marketing support. These “cash cow” brands can be effectively “milked” by capitalizing on their reservoir of existing brand equity; (3) low-end entry-level—the role of the relatively low-priced brand in the portfolio often may be to attract customers to the brand franchise. Retailers like to feature these "traffic builders" because they are able to "trade up" customers to a higher-priced brand; and (4) high-end prestige—the role of a high-priced brand in the brand family often is to add prestige and credibility to the entire portfolio. 128) In what ways can brand extensions improve the odds of new-product success? Answer: Consumers make inferences and form expectations about the composition and performance of a new product based on what they already know about the parent brand and the extent to which they feel this information is relevant to the new product. By setting up positive expectations, extensions reduce risk and may make it easier to convince retailers to stock and promote a brand extension because of increased customer demand. From a marketing communications perspective, an introductory campaign for an extension doesn't need to create awareness of both the brand and the new product, but instead can concentrate on the new product itself. 129) Assume you are a marketing manager and want to adopt strategic brand management. List the four main steps that you would most likely go through to accomplish this task. Answer: The steps would be: (1) identifying and establishing brand positioning; (2) planning and implementing brand marketing; (3) measuring and interpreting brand performance; and (4) growing and sustaining brand value. 130) How does the American Marketing Association (AMA) define the term brand? Answer: A brand, according to the AMA, is “a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.” 131) Define brand equity. Answer: Brand equity is the added value endowed to products and services. This value may be reflected in how consumers think, feel, and act with respect to the brand, as well as the prices, market share, and profitability that the brand commands for the firm. 132) What is positive customer-based brand equity? Answer: A brand is said to have positive customer-based brand equity when consumers react more favorably to a product and the way it is marketed when the brand is identified, than when it is not identified. 133) Explain the concept of brand knowledge. Answer: Brand knowledge consists of all the thoughts, feelings, images, experiences, beliefs, and so on that become associated with the brand. In particular, brands must create strong, favorable, unique brand associations with customers. 134) How does consumer knowledge play a role in the success of new products associated with existing brands? Answer: Brand knowledge created by marketing investments dictates appropriate future directions for the brand. Consumers will decide, based on what they think and feel about the brand, where they believe the brand should go and grant permission to any marketing action or program. Many new products can fail because consumers find them inappropriate extensions for the brand. 135) Brand equity has four components—energized differentiation, relevance, esteem, and knowledge. How are these components combined to produce brand strength and brand stature? Answer: Energized differentiation and relevance combine to produce brand strength. Esteem and knowledge together create brand stature. 136) According to the BRANDZ model of brand strength, brand building involves a series of five sequential steps. What are those five sequential steps? Answer: The steps are in ascending order: (1) presence, (2) relevance, (3) performance, (4) advantage, and (5) bonding. 137) List the six criteria used in creating brand elements. Answer: The six criteria are: (1) memorable, (2) meaningful, (3) likable, (4) transferable, (5) adaptable, and (6) protectable. 138) As a brand manager you would like to have your brand (brand name) be protectable. Explain what you mean by “protectable” and give an illustration. Answer: As a brand manager you would need to consider the questions like, “How legally protectable is the brand element?”, “How competitively protectable is the brand element?”, and “Can it be easily copied?” It is important that names that become synonymous with product categories—such as Kleenex, Scotch Tape and Xerox—retain their trademark rights and not become generic. 139) Identify the three important principles for internal branding. Answer: Three important principles for internal branding are: (1) choosing the right moment; (2) linking internal and external marketing; and (3) bringing the brand alive for employees. 140) Given that the power of a brand resides in the minds of consumers and how it changes their response to marketing, there are two basic approaches to measuring brand equity. Briefly, describe each of these approaches. Answer: The two approaches are: (1) an indirect approach that assesses potential sources of brand equity by identifying and tracking consumer brand knowledge structures; and (2) a direct approach that assesses the actual impact of brand knowledge on consumer response to different aspects of the marketing. 141) Distinguish between brand equity and brand valuation. Answer: Brand equity is the added value endowed to products and services. Brand valuation is the job of estimating the total financial value of the brand. 142) How can marketers reinforce brand equity? Answer: Marketers can reinforce brand equity by consistently conveying the brand’s meaning in terms of 1) what products it represents, what core benefits it supplies, and what needs it satisfies; and 2) how the brand makes products superior, and which strong, favorable, and unique brand associations should exist in consumers' minds. 143) The decision as to how to brand new products is especially critical. When a firm introduces a new product, it has three main choices. What are those choices? Answer: The firm can: (1) develop new brand elements for the new product, (2) apply some of its existing brand elements, or (3) use a combination of new and existing brand elements. 144) Explain category extension with an example. Answer: In a category extension, the parent brand is used to enter a different product category from that currently served by the parent brand. Honda has used its company name to cover such different products as automobiles, motorcycles, snowblowers, lawnmowers, marine engines, and snowmobiles. This allows Honda to advertise that it can fit “six Hondas in a two-car garage.” 145) Define brand variants. Answer: Brand variants are specific brand lines supplied to specific retailers or distribution channels. They result from the pressure retailers put on manufacturers to provide distinctive offerings. 146) Kellogg's uses its corporate brand name with its individual product brands as with Kellogg's rice krispies, Kellogg's raisin bran, and Kellogg's corn flakes. Which branding strategy is being used by the company? Answer: Kellogg's employs a sub-brand or hybrid branding strategy by combining the corporate brand with individual product brands as with Kellogg's rice krispies, Kellogg's raisin bran, and Kellogg's corn flakes. 147) What is a licensed product? Why have corporations seized on licensing? Answer: A licensed product is one whose brand name has been licensed to other manufacturers that actually make the product. Corporations have seized on licensing to push their company names and images across a wide range of products-from bedding to shoes-making licensing a multibillion dollar business. 148) Tide laundry detergent maintains the same market share it had 50 years ago because of the sales contributions from its various line extensions. It can be said that Tide employs a preemptive cannibalization strategy in generating line extensions. What does this mean? Answer: When there is a threat of losing consumers to a competing brand, companies sometimes opt for preemptive cannibalization. This causes consumers to switch between the same brand's products, preventing loss of customers. Even though Tide's various line extensions may cannibalize sales of its other products, if the extensions had not been introduced, then customers would have defected to another brand offering the same type of extension. In this way, Tide has maintained its market share through preemptive cannibalization. Chapter 10 Crafting the Brand Positioning 1) All marketing strategy is built on STP, segmentation, targeting, and ________. A) positioning B) product C) planning D) promotion E) performance Answer: A 2) ________ is the act of designing the company's offering and image to occupy a distinctive place in the minds of the target market. A) Positioning B) Valuation C) Pricing D) Commercialization E) Launching Answer: A 3) The goal of positioning is ________. A) to locate the brand in the minds of consumers to maximize the potential benefit to the firm B) to discover the different needs and groups existing in the marketplace C) to target those customers marketers can satisfy in a superior way D) to collect information about competitors that will directly influence the firms’ strategy E) to help the firm anticipate what the actions of its competitors will be Answer: A 4) The result of positioning is the successful creation of ________, which provides a cogent reason why the target market should buy the product. A) an award-winning promotional campaign B) a customer-focused value proposition C) a demand channel D) everyday low pricing E) employee value proposition Answer: B 5) Which of the following best describes a car company's value proposition? A) We charge a 20% premium on our cars. B) We target safety-conscious upscale families. C) We sell the safest, most durable wagon. D) We are the market leader in the small car category. E) We focus on expanding in faster-growing markets. Answer: C 6) Which of the following best describes BR Chicken's value proposition? A) We sell chicken at most major malls. B) We undertake home delivery services. C) We target quality-conscious consumers of chicken. D) We sell tender golden chicken at a moderate price. E) We charge a 10% premium on our chicken. Answer: D 7) The ________ defines which other brands a brand competes with and therefore which brands should be the focus of competitive analysis. A) consumer profitability analysis B) competitor indexing C) service blueprint D) competitive frame of reference E) cluster analysis Answer: D 8) ________ refers to the products or sets of products with which a brand competes and which function as close substitutes. A) Consumer profitability analysis B) Competitive frame of reference C) Category membership D) Value membership E) Demand field Answer: C 9) ________ are defined as companies that satisfy the same customer need. A) Communities B) Competitors C) Trendsetters D) Industries E) Task groups Answer: B 10) A(n) ________ is a group of firms offering a product or class of products that are close substitutes for one another. A) community B) task force C) industry D) focus group E) umbrella brand Answer: C 11) Which of the following statements about blue ocean thinking is true? A) It involves designing creative business ventures to positively affect both a company's cost structure and its value proposition to consumers. B) In blue ocean thinking, industry boundaries are defined and accepted, and the competitive rules of the game are known. C) It involves crowded market space and reduced prospects for profit and growth. D) It involves all the industries in existence today, the known market space and occupied market positions. E) In blue ocean thinking, value to consumers comes from reintroducing factors the industry has previously offered. Answer: A 12) Which of the following terms is most closely associated with the statement: “attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe that they could not find to the same extent with a competitive brand”? A) points-of-inflection B) points-of-difference C) points-of-parity D) points-of-value E) points-of-presence Answer: B 13) ________ are product associations that are not necessarily unique to the brand but may in fact be shared with other brands. A) Points-of-parity B) Points-of-difference C) Points-of-inflection D) Points-of-presence E) Points-of-divergence Answer: A 14) The three criteria that determine whether a brand association can truly function as a point-of-difference are ________. A) comparability, authenticity, deliverability B) desirability, peculiarity, deliverability C) deviance, peculiarity, deformity D) desirability, deliverability, differentiability E) differentiability, authenticity, desirability Answer: D 15) Which of the following criteria relates to consumers seeing the brand association as personally relevant to them? A) deliverability B) authenticity C) desirability D) differentiability E) feasibility Answer: C 16) Which of the following criteria relates to the company having the internal resources and commitment to feasibly and profitably create and maintain the brand association in the minds of consumers? A) differentiability B) peculiarity C) desirability D) believability E) deliverability Answer: E 17) Which of the following criteria relates to consumers seeing the brand association as distinctive and superior to relevant competitors? A) desirability B) differentiability C) believability D) deliverability E) deviance Answer: B 18) The brand must demonstrate ________, for it to function as a true point-of-difference. A) clear superiority on an attribute or benefit B) clear profitability to the company C) clear similarity to the attributes of other brands D) technological advances for an attribute or benefit E) exploitation of competitors' weakness Answer: A 19) The two basic forms of points-of-parity are ________ and ________. A) conceptual points-of-parity; competitive points-of-parity B) strategic points-of-parity; conceptual points-of-parity C) category points-of-parity; deliverable points-of-parity D) competitive points-of-parity; peculiar points-of-parity E) category points-of parity; competitive points-of-parity Answer: E 20) ________ are attributes or benefits that consumers view as essential to a legitimate and credible offering within a certain product or service class. A) Category points-of-difference B) Conceptual points-of-parity C) Competitive points-of-parity D) Category points-of-parity E) Competitive points-of-difference Answer: D 21) Coca Cola introduced zero-calorie, Coke Zero, and assured health conscious consumers that it tastes as good as the original. What does the company assure by doing this? A) points-of-difference B) points-of-presence C) points-of-parity D) points-of-conflict E) points-of-inflection Answer: C 22) Coca Cola introduced zero-calorie, Coke Zero, and assured health conscious consumers that it tastes as good as the original. What did the company try to build when they conveyed the fact that Coke Zero contained almost zero calories per liter and hence is a healthier alternative? A) points-of-difference B) points-of-conflict C) points-of-parity D) points-of-presence E) points-of-inflection Answer: A 23) Consumers might not consider a hand sanitizer truly a hand sanitizer unless they are gels designed to apply topically, contain alcohol that kills the germs present on the skin, and developed for use after washing hands or for those times when soap and water are not available. These service elements are considered ________. A) competitive points-of-difference B) competitive points-of-parity C) category points-of-difference D) category points-of-parity E) conceptual points-of-parity Answer: D 24) Nivea became the leader in the skin cream class on the “gentle”, “protective” and “caring” platform. The company further moved into classes such as deodorants, shampoos and cosmetics. Attributes like gentle and caring were of no value unless consumers believed that its deodorant was strong enough, its shampoo would cleanse and its cosmetics would be colorful enough. This is an example of ________. A) competitive points-of-parity B) competitive points-of-difference C) category points-of-parity D) category points-of-difference E) competitive points-of-presence Answer: C 25) ________ are associations designed to overcome perceived weaknesses of the brand. A) Conceptual points-of-parity B) Category points-of-difference C) Competitive points-of-parity D) Competitive points-of-difference E) Category points-of-parity Answer: C 26) As a marketing manager, which of the following would be the best purpose for your organization's competitive points-of-parity? A) to point out competitors' points-of-difference B) to emphasize competitors' points-of-difference C) to rationalize competitors' perceived points-of-difference D) to globalize competitors' perceived points-of-difference E) to negate competitors' perceived points-of-difference Answer: E 27) A marketer that wants to anchor a point-of-difference for Dove soap on brand benefits might emphasize which of the following? A) the soap is one-quarter cleansing cream B) Dove products include bar soaps and shampoos C) Dove soap helps users have softer skin D) the soap brand has global presence E) the brand has recently launched soap for men Answer: C 28) Subway restaurants are positioned as offering healthy, great-tasting sandwiches. ________ allows the brand to create a point-of-parity (POP) on taste and a point-of-difference (POD) on health with respect to quick-serve restaurants such as McDonald's and Burger King and, at the same time, a POP on health and a POD on taste with respect to health food restaurants and cafés. A) Category-based positioning B) Need-based positioning C) Noncomparitive positioning D) Straddle positioning E) Price-quality positioning Answer: D 29) BMW positioned itself as the only car that offered both luxury and performance. It was able to achieve a point-of-difference on performance and a point-of-parity on luxury with respect to other car brands. This is an example of ________. A) straddle positioning B) category-based positioning C) need-based positioning D) noncomparitive positioning E) price-quality positioning Answer: A 30) Marketers typically focus on ________ in choosing the points-of-parity and points-of-difference that make up their brand positioning. A) brand equity B) brand awareness C) brand benefits D) brand architecture E) brand extensions Answer: C 31) ________ are visual representations of consumer perceptions and preferences. A) Procedural maps B) Brain maps C) Perceptual maps D) Procedural models E) Cognitive maps Answer: C 32) Straddle positions ________. A) help firms to analyze who their competitors are B) allow brands to expand their market coverage and potential customer base C) are a necessity while creating a firm's vision and mission statement D) assist firms in collecting information on competitors that will directly influence their strategy E) are ambiguous moral principles behind the operation and regulation of marketing Answer: B 33) Which of the following statements about brand mantras is true? A) They guide only major decisions, they have no influence on mundane decisions. B) Their influence does not extend beyond tactical concerns. C) They must economically communicate what the brand is and avoid communicating what it is not. D) They can provide guidance about what ad campaigns to run and where and how to sell the brand. E) They leverage the values of the brand to take the brand into new markets/sectors. Answer: D 34) McDonald’s brand philosophy of “Food, Folks, and Fun” is an example of ________. A) brand mantras B) brand parity C) brand identity D) brand architecture E) brand extension Answer: A 35) ________ are short, three- to five-word phrases that capture the irrefutable essence or spirit of the brand positioning and ensure that the company's own employees understand what the brand represents. A) Brand mantras B) Brand symbols C) Brand logos D) Brand alliances E) Brand extensions Answer: A 36) A ________ is an external translation that attempts to creatively engage consumers. A) brand vision B) brand extension C) brand architecture D) brand slogan E) brand alliance Answer: D 37) BMW's “The ultimate driving machine,” and American Express’ “Don't leave home without it,” are all examples of ________. A) brand slogan B) brand personality C) brand mission D) brand architecture E) brand vision Answer: A 38) A brand mantra should be ________. A) original, ambiguous, and straightforward B) unique, complex, and inspirational C) communicative, memorable and inspiring D) competitive, sensitive, and simple E) unique, sensitive, and explanatory Answer: C 39) Brand mantras typically are designed to capture the brand’s ________, that is, what is unique about the brand. A) points-of-conflict B) points-of-parity C) points-of-inflection D) points-of-difference E) points-of-presence Answer: D 40) Points-of-parity are important while designing brand mantras for brands facing ________. A) rapid growth B) market saturation C) slow and steady growth D) rapid decline E) stability in sales volume Answer: A 41) For brands in more stable categories where extensions into more distinct categories are less likely to occur, the brand mantra may focus more exclusively on ________. A) points-of-difference B) points-of-presence C) points-of-inflection D) points-of-parity E) points-of-conflict Answer: A 42) A chicken stock cube might attain membership in the seasoning category by claiming the benefit of great taste and support this benefit claim by possessing high-quality ingredients (performance) or by showing users delighting in its consumption (imagery). In what way is the brand's category membership being conveyed? A) comparing to exemplars B) relying on the product descriptor C) announcing category benefits D) focusing on reliability E) persuasion based on believability Answer: C 43) The typical approach to positioning is to inform consumers of a brand's category membership before stating its ________, A) point-of-parity B) point-of-difference C) point-of-conflict D) point-of-weakness E) point-of-presence Answer: B 44) The ____________ that follows the brand name is often a concise means of conveying category origin. A) exemplars B) product descriptor C) category benefits D) deliverability variables E) counter examples Answer: B 45) Industrial tools claiming to have durability, and antacids announcing their efficacy convey a brand's category membership by ________. A) relying on the product descriptor B) comparing to exemplars C) announcing category benefits D) communicating deliverability variables E) identifying counter examples Answer: C 46) A well-known car manufacturing company introduces a new hatchback model by describing its distinctive features and then stressing the speed and safety qualities of the car. Which of the following is the company using to convey its membership in the hatchback segment? A) announcing category benefits B) comparing to exemplars C) relying on the product descriptor D) using channel differentiation E) maximizing negatively correlated attributes Answer: A 47) Which of the following ways to conveying a brand's category membership relates to well-known, noteworthy brands in a category helping a brand specify its category membership? A) comparing to exemplars B) communicating deliverability variables C) identifying counter examples D) announcing category benefits E) relying on the product descriptor Answer: A 48) SJC is a new retailer that targets the youth market. SJC needs to make an impression using advertising, and decides to use funny or irreverent ads to get its point across. Each ad features one of SJC's competitors and conveys an advantage SJC has over that competitor. Which of the following is the company using to convey its membership in the retail segment? A) announcing category benefits B) comparing to exemplars C) relying on the product descriptor D) using channel differentiation E) maximizing negatively correlated attributes Answer: B 49) When Tommy Hilfiger was an unknown brand, advertising announced his membership as a great U.S. designer by associating him with Calvin Klein, and Perry Ellis, who were recognized members of that category. Tommy Hilfiger conveyed the brand's category membership by ________. A) relying on the product descriptor B) focusing on reliability C) comparing to exemplars D) announcing category benefits E) identifying counter examples Answer: C 50) To capitalize on the advantage that an MNC brings to the perception of quality, local brand Videocon positioned itself as an “Indian MNC” in its tagline. The company conveyed its brand's category membership by ________. A) announcing category benefits B) identifying counter examples C) relying on the product descriptor D) focusing on reliability E) comparing to exemplars Answer: C 51) One common difficulty in creating a strong, competitive brand positioning is that many of the attributes or benefits that make up the points-of-parity and points-of-difference are ________. A) negatively correlated B) always correlated C) directly proportional D) never correlated E) positively correlated Answer: A 52) ________ is a company's ability to perform in one or more ways that competitors cannot or will not match. A) Brand positioning B) Market research C) Competitive advantage D) Competitor analysis E) Competitive intelligence Answer: C 53) A ________ is one that a company can use as a springboard to new advantages. A) sustainable advantage B) leverageable advantage C) realistic advantage D) rational advantage E) distinct advantage Answer: B 54) Which of the following types of differentiation relates to companies having better-trained personnel who provide superior customer service? A) channel differentiation B) services differentiation C) personnel differentiation D) image differentiation E) product differentiation Answer: C 55) Singapore Airlines is well regarded in large part because of the excellence of its flight attendants. This is an example of ________ differentiation. A) image B) services C) product D) personnel E) channel Answer: D 56) Which of the following types of differentiation refers to companies effectively designing their distribution medium's coverage, expertise, and performance to make buying the product easier and more enjoyable and rewarding? A) service differentiation B) channel differentiation C) image differentiation D) product differentiation E) employee differentiation Answer: B 57) In China, Dell targets chief information officers of Chinese state-owned enterprises, emphasizing speed, convenience, and service in its customer relationship. This is an example of ________ differentiation. A) service B) employee C) image D) product E) channel Answer: E 58) Which of the following is an example of channel differentiation? A) Ritz-Carlton has an intensive training program for its customer-facing employees, to ensure a consistent service standard. B) Shangri-La hotels use a distinctive signature fragrance in all outlets so that customers can associate the fragrance with the hotel. C) JEK's sophisticated customer database allows the company to handle queries and product returns much faster than competitors. D) RTZ shifted its products from supermarket aisles to exclusive stores as it realized that customers were willing to pay more in stores. E) Hayley's found success by allowing buyers to customize the color and some features of its appliances before buying them. Answer: D 59) Which of the following is an example of image differentiation? A) Ritz-Carlton has an intensive training program for its customer-facing employees, to ensure a consistent service standard. B) Shangri-La hotels use a distinctive signature fragrance in all outlets so that customers can associate the fragrance with the hotel. C) JEK's sophisticated customer database allows the company to handle queries and product returns much faster than competitors. D) RTZ shifted its products from supermarket aisles to exclusive stores as it realized that customers were willing to pay more in stores. E) Hayley's found success by allowing buyers to customize the color and some features of its appliances before buying them. Answer: B 60) Which of the following is an example of services differentiation? A) Ritz-Carlton has an intensive training program for its customer-facing employees, to ensure a consistent service standard. B) Shangri-La hotels use a distinctive signature fragrance in all outlets so that customers can associate the fragrance with the hotel. C) JEK's sophisticated customer database allows the company to handle queries and product returns much faster than competitors. D) RTZ shifted its products from supermarket aisles to exclusive stores as it realized that customers were willing to pay more in stores. E) Hayley's found success by allowing buyers to customize the color and some features of its appliances before buying them. Answer: C 61) Marlboro’s “macho cowboy” image has struck a responsive chord with much of the cigarette-smoking public. This is an example of ________. A) personnel differentiation B) channel differentiation C) service differentiation D) product differentiation E) image differentiation Answer: E 62) A company which can differentiate itself by designing a better and faster delivery system that provides more effective and efficient solutions to consumers is most likely using ________ differentiation. A) services B) channel C) image D) product E) employee Answer: A 63) Suppliers who are dependable in their on-time delivery, order completeness, and order-cycle time are most likely to be differentiated based on ________. A) resilience B) innovativeness C) insensitivity D) reliability E) expertise Answer: D 64) Suppliers who are better at handling emergencies, product recalls, and inquiries are most likely to be differentiated based on their ________. A) innovativeness B) thoroughness C) resilience D) insensitivity E) reliability Answer: C 65) A supplier creates better information systems, and introduces bar coding, mixed pallets, and other methods of helping the consumer. The supplier is most likely to be differentiated on its ________. A) innovativeness B) reliability C) insensitivity D) resilience E) accuracy Answer: A 66) Which of the following traits of a brand's ability to become a lovemark relates to drawing together stories, metaphors, dreams, and symbols? A) intimacy B) mystery C) insensitivity D) sensuality E) practicality Answer: B 67) Which of the following traits of a brand's ability to become a lovemark keeps the five senses of sight, hearing, smell, touch, and taste on constant alert for new textures, intriguing scents and tastes, music, and other such stimuli? A) sensuality B) intimacy C) mystery D) practicality E) sensitivity Answer: A 68) Which of the following traits of a brand's ability to become a lovemark implies empathy, commitment, and passion? A) practicality B) sensuality C) morality D) mystery E) intimacy Answer: E 69) Randall Ringer and Michael Thibodeau see ________ as based on deep metaphors that connect to people's memories, associations, and stories. A) cultural branding B) narrative branding C) brand journalism D) emotional branding E) personal branding Answer: B 70) Which element of a brand story framework do Randall Ringer and Michael Thibodeau relate to the time, place, and context of the brand story? A) cast B) pitch C) narrative arc D) setting E) language Answer: D 71) Which element of a brand story framework do Randall Ringer and Michael Thibodeau relate to the way the narrative logic unfolds over time, including actions, desired experiences, defining events, and the moment of epiphany? A) language B) pitch C) cast D) setting E) narrative arc Answer: E 72) Which element of a brand story framework do Randall Ringer and Michael Thibodeau relate to the authenticating voice, metaphors, symbols, themes, and leitmotifs? A) narrative arc B) context C) language D) setting E) cast Answer: C 73) Which of the following statements about the branding guidelines for a small business is true? A) A small business must creatively conduct low-cost marketing research. B) A small business must avoid leveraging secondary brand associations. C) A small business must separate the well-integrated brand elements to enhance both brand awareness and brand image. D) A small business must disintegrate the brand elements to maximize the contribution of each of the three main sets of brand equity drivers. E) A small business must focus on building more than two strong brands based on a number of associations. Answer: A 74) All marketing strategy is built on segmentation, targeting, and positioning. Answer: True 75) Positioning is the act of designing the company's offering and image to occupy a distinctive place in the minds of the target market. Answer: True 76) The result of positioning is the successful creation of an employee-focused value proposition. Answer: False 77) Positioning requires that marketers define and communicate only the differences between their brand and its competitors. Answer: False 78) The competitive frame of reference defines which other brands a brand competes with. Answer: True 79) Category membership is seen as the products which function as close substitutes of a brand. Answer: True 80) A company is more likely to be hurt by current competitors than by emerging competitors or new technologies. Answer: False 81) The industry concept of competition reveals a broader set of actual and potential competitors than competition defined in just the market concept. Answer: False 82) Using the industry approach, competitors are defined as companies that satisfy the same customer need. Answer: False 83) To analyze its competitors, a company needs to gather information about both the real and the perceived strengths and weaknesses of each competitor. Answer: True 84) Associations that make up points-of-difference are based exclusively on product features. Answer: False 85) Points-of-parity are attributes or benefits consumers strongly associate with a brand and believe that they could not find to the same extent with a competitive brand. Answer: False 86) Points-of-parity may be shared among two or more brands. Answer: True 87) Category points-of-parity are unique to a brand. Answer: False 88) Category points-of-parity may change over time due to technological advances, legal developments, or consumer trends. Answer: True 89) Category points-of-parity are associations designed to overcome perceived weaknesses of the brand. Answer: False 90) A competitive point-of-parity negates competitors' perceived points-of-difference. Answer: True 91) Trying to be all things to all people leads to highest-common-denominator positioning, which is typically effective. Answer: False 92) Straddle positioning refers to a brand using different positioning with different categories of competitors. Answer: False 93) Occasionally, a company will be able to straddle two frames of reference with one set of points-of-difference and points-of-parity. Answer: True 94) Perceptual maps provide quantitative portrayals of market situations and the way consumers view different products, services, and brands along various dimensions. Answer: True 95) The purpose of brand mantras is to ensure that employees and external marketing partners understand what the brand is to represent to the customers. Answer: True 96) Brand mantras must communicate both what a brand is and what it is not. Answer: True 97) Brand mantras are typically designed to capture the brand’s points-of-parity, that is, what is unique about the brand. Answer: False 98) Brands are never affiliated with categories in which they do not hold membership. Answer: False 99) Consumers should understand what the brand stands for, and not just what it is not. Answer: True 100) There are situations in which consumers know a brand’s category membership but may not be convinced the brand is a valid member of the category. Answer: True 101) The product descriptor that follows the brand name is often a concise means of conveying category origin. Answer: True 102) If Barry compares his organization's products to those of leaders in the field, then he is conveying category membership by “comparing to exemplars”. Answer: True 103) A good illustration of negatively correlated attributes or benefits is good taste versus bad taste. Answer: False 104) A leverageable advantage is one that a company can use as a springboard to new advantages. Answer: True 105) Competitive advantage is a company's ability to perform in one or more ways that competitors cannot or will not match. Answer: True 106) The means of differentiation that are often most compelling to consumers relate to aspects of the product and service. Answer: True 107) Companies cannot achieve differentiation by differentiating their channels, as this is not the purpose of a distribution channel. Answer: False 108) A good positioning should contain points-of-difference and points-of-parity that have rational but not emotional components. Answer: False 109) Rather than outlining specific attributes or benefits, some marketing experts describe positioning a brand as telling a narrative or story Answer: True 110) Narrative branding is based on deep metaphors that connect to people's memories, associations, and stories. Answer: True 111) Cultural branding is essential for small firms, but ineffective for large companies. Answer: False 112) Small businesses must focus on building one or two strong brands based on one or two key associations. Answer: True 113) While creating a loyal brand community is useful for large companies, it is not cost-effective for small firms. Answer: False 114) What are the requirements for deciding on a positioning strategy? Answer: Positioning requires that marketers define and communicate similarities and differences between their brand and its competitors. Specifically, deciding on a positioning requires: (1) determining a frame of reference by identifying the target market and relevant competition, (2) identifying the optimal points-of-parity and points-of-difference brand associations given that frame of reference, and (3) creating a brand mantra to summarize the positioning and essence of the brand. 115) With respect to positioning, explain points-of-parity and points-of-difference. Answer: Points-of-difference (PODs) are attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe that they could not find to the same extent with a competitive brand. Points-of-parity (POPs), on the other hand, are associations that are not necessarily unique to the brand but may in fact be shared with other brands. 116) With the help of an example, explain straddle positioning. Answer: Occasionally, a company will be able to straddle two frames of reference with one set of points-of-difference and points-of-parity. In these cases, the points-of-difference for one category become points-of-parity for the other and vice versa. Subway restaurants are positioned as offering healthy, good-tasting sandwiches. This positioning allows the brand to create a POP on taste and a POD on health with respect to quick-serve restaurants such as McDonald's and Burger King and, at the same time, a POP on health and a POD on taste with respect to health food restaurants and cafés. Straddle positions allow brands to expand their market coverage and potential customer base. 117) Describe three methods by which a brand can communicate category membership. Answer: There are three main ways to convey a brand's category membership: 1. Announcing category benefits. To reassure consumers that a brand will deliver on the fundamental reason for using a category, marketers frequently use benefits to announce category membership. 2. Comparing to exemplars. Well-known, noteworthy brands in a category can also help a brand specify its category membership. 3. Relying on the product descriptor. The product descriptor that follows the brand name is often a concise means of conveying category origin. 118) Briefly describe four brand differentiation strategies. Answer: In addition to product and service differentiation, the four differentiation strategies are: (1) personnel differentiation-companies can gain a strong competitive advantage through having better-trained people; (2) channel differentiation-companies can achieve competitive advantage through the way they design their distribution channels' coverage, expertise, and performance; (3) image differentiation-companies can craft powerful, compelling images that appeal to consumers' social and psychological needs; and (4) services differentiation-a service company can differentiate itself by designing a better and faster delivery system that provides more effective and efficient solutions to consumers. 119) Explain three variables a firm should consider when analyzing potential threats posed by competitors. Answer: In general, the firm should monitor three variables when analyzing potential threats posed by competitors: 1. Share of market—The competitors' share of the target market. 2. Share of mind—The percentage of customers who named the competitor in responding to the statement, “Name the first company that comes to mind in this industry.” 3. Share of heart—The percentage of customers who named the competitor in responding to the statement, “Name the company from which you would prefer to buy the product.” 120) Name and briefly explain three less-structured alternatives to competitive brand positioning. Answer: Three alternatives to competitive branding are as follows: Brand narratives and storytelling: Rather than outlining specific attributes or benefits, some marketing experts describe positioning a brand as telling a narrative or story. Brand journalism: Just as editors and writers for newspapers and magazines tell many facets of a story to capture the interests of diverse groups of people, marketers should communicate different messages to different market segments, as long as they at least broadly fit within the basic broad image of the brand. Cultural branding: For companies to build iconic, leadership brands, they must assemble cultural knowledge, strategize according to cultural branding principles, and hire and train cultural experts. 121) What are the five elements of narrative branding as described by Randall Ringer and Michael Thibodeau? Answer: Randall Ringer and Michael Thibodeau see narrative branding as based on deep metaphors that connect to people's memories, associations, and stories. They identify five elements of narrative branding: (1) the brand story in terms of words and metaphors, (2) the consumer journey in terms of how consumers engage with the brand over time and touch points where they come into contact with it, (3) the visual language or expression for the brand, (4) the manner in which the narrative is expressed experientially in terms of how the brand engages the senses, and (5) the role/relationship the brand plays in the lives of consumers. 122) Randall Ringer and Michael Thibodeau see narrative branding as based on deep metaphors that connect to people's memories, associations, and stories. Briefly describe their framework for a brand story. Answer: Based on literary convention and brand experience, Randall Ringer and Michael Thibodeau offer the following framework for a brand story: • Setting. The time, place, and context • Cast. The brand as a character, including its role in the life of the audience, its relationships and responsibilities, and its history or creation myth • Narrative arc. The way the narrative logic unfolds over time, including actions, desired experiences, defining events, and the moment of epiphany • Language. The authenticating voice, metaphors, symbols, themes, and leitmotifs 123) How does a loyal brand community support the positioning and branding of a small business? Provide an example to support your explanation. Answer: Student answers may vary. Creating a vibrant brand community among current and prospective customers can be a cost-effective way to reinforce loyalty and help spread the word to new prospects. Web browser Mozilla Firefox is able to compete with Microsoft's Internet Explorer in part because of its dedicated volunteer group of 10,000 programmers who work on its open source coding. Twelve fans of the brand felt so strongly about it they used two-by-fours and rope to hollow out a 30,000-square-foot impression of the brand's logo in an oat field outside Salem, Oregon! A loyal brand community supports the positioning and branding of a small business by advocating for the brand, providing valuable feedback, and extending its reach through word-of-mouth and social sharing. For example, a small artisanal coffee shop with a dedicated community of coffee enthusiasts can use their support to reinforce its image as a quality-focused, local establishment. This community helps attract new customers who value authenticity and recommendations from peers, thereby strengthening the brand's market position. 124) With the help of an example, explain why a company's competition may not be from companies in the same category. Answer: Student answers may vary. Category membership includes the products or sets of products with which a brand competes and which function as close substitutes. After having spent billions of dollars building their networks, cell phone carriers face the threat of new competition emerging as a result of a number of changes in the marketplace: Skype and the growth of Wi-Fi hotspots, municipal Wi-Fi networks built by cities, and dual mode phones that can easily switch networks. A company's competition may not be limited to companies in the same category because consumer choices are often influenced by broader factors like lifestyle, preferences, and evolving market trends. For example, a high-end gym might not only compete with other gyms but also with wellness retreats, personal trainers, or even fitness apps that offer convenience and variety. Understanding these diverse competitive influences helps companies strategize effectively beyond direct category competitors. 125) Belling is a chain of coffee shops. List possible competitors first from an industry point of view and then from the market point of view. Answer: Student answers may vary. From an industry point of view, Belling's competitors will be other coffee shops, coffee machines and outlets that sell coffee in addition to other foods. From a market point of view, Belling's competitors could be anything from restaurants to supermarkets selling ready-to-drink coffee. From an industry point of view, possible competitors for Belling, a chain of coffee shops, could include: 1. Starbucks and other national/international coffee chains. 2. Costa Coffee and other regional coffee chains. 3. Independent coffee shops in the same locality. From a market point of view, competitors could extend to: 1. Cafés in adjacent industries, such as bakeries or juice bars. 2. Fast food chains offering coffee as part of their menu. 3. Convenience stores with coffee offerings for grab-and-go customers. 126) There are three key consumer criteria that determine whether a brand association can truly function as a point-of-difference. When the Westin Stamford hotel in Singapore advertised that it was the world's tallest hotel, it attempted to create a point-of-difference (POD). Explain why the hotel may not have been successful in its attempt to create its POD. Answer: Student answers may vary. Consumers must see the brand association as personally relevant to them. Staying in the tallest hotel might not be a necessary need for most tourists, there might be other factors that are more important. The hotel was not successful in its attempt to create its POD because of the desirability criteria associated with PODs. The Westin Stamford hotel in Singapore may not have been successful in creating a point-of-difference (POD) because: 1. Relevance: Being the tallest hotel may not be relevant or meaningful to all potential guests compared to factors like service quality or location. 2. Distinctiveness: Other hotels may have similar claims or unique selling propositions (USPs), diminishing the perceived distinctiveness of being the tallest. 3. Believability: Without clear evidence or tangible benefits associated with its height, consumers may not perceive it as a credible or compelling reason to choose the hotel over competitors. 127) Belling is a chain of coffee shops. Give an example of a category point-of-parity and a competitive point-of-parity for the company. Answer: Student answers may vary. A category point-of-parity for Belling could be its freshly-brewed coffee and friendly atmosphere. A competitive point-of-parity could be its fast customer service times. For Belling, a chain of coffee shops, a category point-of-parity could be offering a variety of coffee beverages, as this is expected in the coffee shop industry. A competitive point-of-parity could be providing free Wi-Fi, matching the standard set by many other coffee shops to attract customers who seek a comfortable place to work or relax while enjoying their coffee. These points help Belling meet basic customer expectations and compete effectively in the coffee shop market. 128) Belling is a chain of coffee shops. Give an example of a point-of-parity and a point-of-difference for the company. Answer: Student answers may vary. Points-of-parity for Belling could be its freshly-brewed coffee or friendly atmosphere. Points-of-difference could be its unusual interior design or laid-back attitude. For Belling, a chain of coffee shops, a point-of-parity could be offering quality coffee beverages similar to other coffee chains in terms of taste and preparation standards. A point-of-difference could be their unique focus on sustainability, using ethically sourced coffee beans and eco-friendly packaging, distinguishing them from competitors who may not prioritize sustainability as prominently. This differentiation enhances Belling's brand identity and appeals to environmentally conscious consumers. 129) Give an example of the use of straddle positioning. Answer: Student answers may vary. Subway restaurants are positioned as offering healthy, good-tasting sandwiches. This positioning allows the brand to create a POP on taste and a POD on health with respect to quick-serve restaurants such as McDonald's and Burger King and, at the same time, a POP on health and a POD on taste with respect to health food restaurants and cafés. Straddle positioning involves targeting two or more distinct market segments simultaneously. An example is Toyota's Prius hybrid car, which straddles the market by appealing to environmentally conscious consumers seeking fuel efficiency and cost savings, while also appealing to tech-savvy consumers interested in cutting-edge hybrid technology and innovation. This dual appeal allows Toyota to capture market share from both traditional gasoline-powered cars and niche electric vehicle markets. 130) Define a brand mantra and provide an example of a brand mantra. Answer: Student answers may vary. A brand mantra is an articulation of the heart and soul of the brand and is closely related to other branding concepts like “brand essence” and “core brand promise.” Brand mantras are short, three- to five-word phrases that capture the irrefutable essence or spirit of the brand positioning. American Express's “World Class Service, Personal Recognition,” is an example of a brand mantra. A brand mantra is a succinct articulation of a brand's core essence, capturing its purpose and promise in just a few words. It typically emphasizes what the brand stands for and what it promises to deliver consistently. Example: Nike: "Authentic athletic performance" 131) Give an example of how a brand can be affiliated with a category in which it does not hold membership. Answer: Student answers may vary. Spizza's frozen pizza has adopted a positioning strategy that identifies with a different category from its own—instead of putting it in the frozen pizza category, the marketers have positioned it in the delivered pizza category with ads that claim, “It's Not Delivery, It's Spizza’s!” A brand can be affiliated with a category it does not officially belong to through strategic partnerships or endorsements. For instance, a luxury fashion brand might collaborate with a renowned artist to release limited-edition artwork, thus associating itself with the art world despite not being an art-focused brand. This affiliation leverages the artist's credibility to expand the brand's appeal into new consumer segments and enhance its perceived cultural relevance. 132) Belling begins most advertising messages by announcing category benefits and then moving on to its specific positioning. Offer one reason why Belling may adopt this strategy. Answer: Student answers may vary. To reassure consumers that a brand will deliver on the fundamental reason for using a category, marketers such as Belling frequently use benefits to announce category membership. Belling may adopt this strategy of beginning advertising messages with category benefits to establish a common ground with consumers and set a baseline expectation. By emphasizing well-known category benefits like quality coffee and a comfortable atmosphere first, Belling ensures potential customers recognize its offerings as meeting industry standards before highlighting its unique positioning or additional features. This approach helps to build initial interest and credibility before delving into specific brand differentiators. 133) How can coffee shop chain Belling convey its category membership? List the methods it can use to achieve this. Answer: The three main ways to convey a brand's category membership are: announcing category benefits; comparing to exemplars; and relying on the product descriptor. 134) As a company seeks to establish a category membership designation, how does the company approach points-of-difference? What is done first? Answer: The typical approach to positioning is to inform consumers of a brand's membership before stating its point-of-difference. Presumably, consumers need to know what a product is and what function it serves before deciding whether it dominates the brands against which it competes. 135) Provide three examples of negatively correlated attributes and benefits. Answer: Student answers may vary. Some examples of negatively correlated attributes and benefits are: low price versus high quality, taste versus low calories, strong versus refined, powerful versus safe, and ubiquitous versus exclusive. Three examples of negatively correlated attributes and benefits are: 1. Cost vs. Quality: As cost decreases, perceived quality often decreases. 2. Speed vs. Customization: Faster service may be perceived as less customized or personalized. 3. Environmental Impact vs. Convenience: Products that are more environmentally friendly may be less convenient or require more effort to use or dispose of properly. 136) Define leverageable advantage with an example. Answer: A leverageable advantage is one that a company can use as a springboard to new advantages, much as Microsoft has leveraged its operating system to Microsoft Office and then to networking applications. In general, a company that hopes to endure must be in the business of continuously inventing new advantages. 137) How does a company differentiate its market offerings using personnel differentiation? Provide an example of a company using personnel differentiation. Answer: Student answers may vary. A company differentiating its market offerings using personnel differentiation, does so by having better-trained personnel who provide superior customer service. Singapore Airlines is well regarded in large part because of its flight attendants. A company can differentiate its market offerings using personnel differentiation by focusing on the unique skills, expertise, and customer service capabilities of its employees. This can include hiring knowledgeable and friendly staff who provide personalized experiences and expert advice. An example is Apple's retail stores, where employees (called "Geniuses") are trained extensively to offer technical support and advice, enhancing customer satisfaction and loyalty through superior service and expertise. 138) Companies can achieve competitive advantage through the way they design their distribution channel. What three areas are considered in this design process? Answer: Considerations to achieve competitive advantage in the distribution channel are in the areas of coverage, expertise, and performance. 139) Belling wants to analyze the threats posed by its competitors. Which three variables must it monitor to achieve this? Answer: To analyze the threats posed by its competitors, Belling must monitor the competitors' share of the market, share of mind and share of heart. 140) Sally's is a boutique bakery that specializes in cupcakes. How can Sally's create channel differentiation to stand apart from its competitors? Answer: Student answers may vary. Sally's can more effectively and efficiently design its distribution channels' coverage, expertise, and performance to make buying the product easier and more enjoyable and rewarding. It can set up an online store or undertake home deliveries. Sally's can create channel differentiation by focusing on unique distribution channels and customer access points. For example, offering exclusive delivery services for customized cupcake orders within a specific radius, setting up pop-up shops in high-traffic areas, or partnering with local coffee shops to sell their cupcakes can differentiate Sally's from competitors. Emphasizing convenience, personalization, and accessibility through innovative channels can attract new customers and enhance brand loyalty. 141) Sally's is a boutique bakery that specializes in cupcakes. How can Sally's create image differentiation to stand apart from its competitors? Answer: Student answers may vary. Sally's can use innovative and distinctive packaging for its products, or use interior design to give the store a distinctive look. Sally's can create image differentiation by focusing on distinctive branding elements and marketing strategies. For example, emphasizing handmade and locally sourced ingredients, showcasing unique and creative cupcake designs through vibrant packaging and social media, and promoting a cozy and welcoming ambiance in their bakery can set Sally's apart. Highlighting a commitment to quality, creativity, and a personalized customer experience can help build a strong and memorable brand image that resonates with customers looking for something special and unique in their cupcake choices. 142) Sally's is a boutique bakery that specializes in cupcakes. Give one method by which Sally's can conduct low-cost market research. Answer: Student answers may vary. There are a variety of low-cost marketing research methods that help small businesses connect with customers and study competitors. One way is to set up course projects at local universities to access the expertise of both students and professors. Sally's can conduct low-cost market research by leveraging social media platforms. They can create polls or surveys on platforms like Instagram or Facebook to gather customer feedback on flavors, pricing preferences, and satisfaction levels. Monitoring comments and messages from followers can also provide valuable insights into customer preferences and trends, helping Sally's refine their offerings and marketing strategies effectively without significant financial investment. 143) Sally's is a boutique bakery that specializes in cupcakes. Give some methods by which Sally's can position itself without spending a lot on promotions. Answer: Student answers may vary. Because small businesses often must rely on word of mouth to establish their positioning, public relations, social networking, and low-cost promotions and sponsorship can be inexpensive alternatives for Sally's. Creating a vibrant brand community among current and prospective customers can also be a cost-effective way to reinforce loyalty and help spread the word to new prospects. Sally's can position itself effectively without extensive promotional spending by: 1. Word-of-Mouth: Encouraging satisfied customers to share their experiences and recommend Sally's to friends and family. 2. Local Partnerships: Collaborating with nearby businesses or cafes to cross-promote each other's offerings. 3. Community Engagement: Participating in local events, sponsoring neighborhood activities, or donating cupcakes to charity events to enhance visibility and goodwill. 4. Online Presence: Maintaining an active and engaging social media presence to showcase their products, interact with customers, and build a loyal following organically. Chapter 11 Competitive Dynamics 1) The ________ has the largest market share and usually shows the way to other firms in price changes, new-product introductions, distribution coverage, and promotional intensity. A) market challenger B) market entrant C) market follower D) market nicher E) market leader Answer: E 2) When the total market expands, the ________ usually gains the most. A) market challenger B) market leader C) market follower D) market nicher E) market entrant Answer: B 3) When a firm looks for new users in groups that might use the product but do not, the firm is using the ________ strategy. A) new-market segment B) market-penetration C) geographical-expansion D) product development E) diversification Answer: B 4) As the marketing manager of a company that manufactures floor tiles, Evan See is given a target to achieve 500 new customers by the end of summer. He decides to search the market for probable customers who might use the product but do not at present. Which of the following strategies is Evan pursuing to increase the market demand for his product? A) market-penetration strategy B) new-market segment strategy C) geographical-expansion strategy D) needs-assessment strategy E) consolidation strategy Answer: A 5) When firms look for new users in groups that have never used the product before, the firm is using the ________ strategy. A) new-market segment B) market-penetration C) geographical-expansion D) product development E) diversification Answer: A 6) When Starbucks introduced its Tazo Tea line to bring in new customers who had never gone to Starbucks because they don't drink coffee, Starbucks was employing a ________ strategy. A) market-penetration B) new-market segment C) geographical-expansion D) niche identification E) blue-ocean Answer: B 7) Trendz Inc. is a leading brand of fashion clothing and accessories based in Hong Kong. After gaining a strong foothold in Hong Kong, the company wants to foray into foreign markets. The management at Trends knows that people residing in other countries are likely to have different tastes and preferences, so they may have to redesign some of their offerings. Which of the following strategies is Trendz using? A) market-penetration strategy B) outsourcing strategy C) geographic-expansion strategy D) product differentiation strategy E) ethnocentric strategy Answer: C 8) A market leader on the lookout for more usage from existing customers should focus on increasing the frequency of consumption and ________. A) decreasing the product price B) the product line C) the amount of consumption D) decreasing production turnover time E) diversifying into unrelated markets Answer: C 9) Which of the following marketing strategies requires either identifying additional opportunities to use the brand in the same basic way or identifying completely new and different ways to use the brand? A) increasing the amount of consumption B) decreasing the level of consumption C) increasing dedication to consumption D) increasing product innovation E) increasing frequency of consumption Answer: E 10) When food product companies advertise recipes that use their branded products in entirely different ways, they are increasing the ________ of the brand. A) amount of consumption B) level of consumption C) dedication to consumption D) frequency of consumption E) awareness consumption Answer: D 11) Oliver, a company that produces different types of olive oil, launched a promotional campaign focusing on the alternative uses of olive oil. What strategy is the company implementing to expand its total market demand? A) using the new-market segment strategy to attract new customers B) improving the current level of product performance C) advertising new and different applications of the brand D) protecting its market share E) using the market-penetration strategy to attract new customers Answer: C 12) Clorox runs ads stressing the many benefits of its bleach, such as how it eliminates kitchen odors, in order to generate additional opportunities to use the brand in the same basic way. This is an attempt to ________. A) increase the amount of consumption B) increase the level of consumption C) increase the perception of consumption D) increase the frequency of consumption E) increase the emotional implications of consumption Answer: D 13) Which of the following is the most constructive response a market leader can make when defending its market share? A) maintain basic cost control B) innovate continuously C) provide desired benefits D) meet challengers with a swift response E) provide expected benefits Answer: B 14) To satisfy customers, a(n) ________ marketer finds a stated need and fills it. A) creative B) responsive C) anticipative D) laidback E) inexperienced Answer: B 15) A(n) ________ marketer looks ahead to needs customers may have in the near future. A) laidback B) creative C) inexperienced D) responsive E) anticipative Answer: E 16) A(n) ________ marketer discovers solutions customers did not ask for but to which they enthusiastically respond. A) laidback B) responsive C) inexperienced D) creative E) anticipative Answer: D 17) ________ marketers are not just market-driven, they are proactive market-driving firms. A) Creative B) Responsive C) Inexperienced D) Laidback E) Anticipative Answer: A 18) Sony is an unusual market leader. It gives its customers new products that they have never asked for (e.g., Walkmans, VCRs, video cameras, CDs). This makes Sony a(n) ________ firm. A) market-driven B) market-driving C) operations-driven D) vision-driven E) virtually-driven Answer: B 19) Which of the following is true about proactive marketing? A) A company needs creative anticipation to see the writing on the wall. B) Proactive companies create new offers to serve unmet and unknown consumer needs. C) Proactive companies refrain from practicing uncertainty management. D) A company needs responsive anticipation to devise innovative solutions. E) Companies are winners when they are extremely risk-averse. Answer: B 20) ________ defense involves occupying the most desirable market space in the minds of the consumers and making the brand almost impregnable. A) Position B) Flank C) Preemptive D) Mobile E) Contraction Answer: A 21) A marketing manager has planned a strategy that will require the organization to erect outposts to protect its weak front-running brands. In this ________ defense, the outposts will be central to the organization's new competitive strategy. A) position B) flank C) preemptive D) counteroffensive E) mobile Answer: B 22) ________ is an aggressive maneuver where the firm attacks first, perhaps with guerrilla action across the market and keeping everyone off balance. A) Position defense B) Flank defense C) Contraction defense D) Preemptive defense E) Lateral defense Answer: D 23) The defensive marketing strategy wherein a stream of new products are introduced by a firm and are announced in advance are referred to as ________ defense. A) mobile B) counteroffensive C) preemptive D) contraction E) flank Answer: C 24) If Microsoft announces plans for a new-product development, smaller firms may choose to concentrate their development efforts in other directions to avoid head-to-head competition. In this example, Microsoft is employing a ________ strategy. A) preemptive defense B) counteroffensive defense C) mobile defense D) flank defense E) contraction defense Answer: A 25) In a ________ defense strategy, the market leader can meet the attacker frontally and hit its flank, or launch a pincer movement so that it's forced to pull back to defend itself. A) position B) counteroffensive C) preemptive D) contraction E) flank Answer: B 26) After Olay entered and took over the Indian market with its anti-aging lotion, Ponds decided to defend its home turf by investing heavily in a similar product, but that which used only natural ingredients. This is an example of a ________. A) position defense B) flank defense C) counteroffensive defense D) contraction defense E) mobile defense Answer: C 27) In ________, the market leader stretches its domain over new territories that can serve as future centers for defense and offense. A) counteroffensive defense B) flank defense C) contraction defense D) mobile defense E) position defense Answer: D 28) Market broadening and market diversification are likely tactics employed in ________ strategies. A) position defense B) flank defense C) preemptive defense D) counteroffensive defense E) mobile defense Answer: E 29) When “petroleum” companies such as BP sought to recast themselves as “energy” companies, increasing their research into the oil, coal, nuclear, hydroelectric, and chemical industries, these companies were employing a ________ strategy. A) preemptive defense B) counteroffensive defense C) mobile defense D) flank defense E) contraction defense Answer: C 30) When large companies can no longer defend all their territory, they launch a ________ defense where they give up weaker markets and reassign resources to stronger ones. A) contraction B) preemptive C) flank D) mobile E) position Answer: A 31) Diageo acquired most of Seagram’s brands in 2001 and spun off Pillsbury and Burger King so it could concentrate on powerhouse alcoholic beverage brands such as Smirnoff vodka, J&B scotch, and Tanqueray gin. In this example, Diageo is employing a ________ strategy. A) preemptive defense B) counteroffensive defense C) mobile defense D) flank defense E) contraction defense Answer: E 32) A firm that is willing to maintain its market share, and not attack the leader and other competitors in an aggressive bid for further market share, is known as a ________. A) market challenger B) market leader C) market follower D) market nicher E) market entrant Answer: C 33) For a market challenger, attacking ________ is a high risk but potentially high payoff strategy, which also allows it to distance itself from other challengers. A) a firm of its own size B) the market leader C) a regional firm D) an underfinanced firm E) a poorly performing firm Answer: B 34) In a pure ________ attack, the attacker matches its opponent's product, advertising, price, and distribution. A) guerilla B) bypass C) encirclement D) frontal E) flank Answer: D 35) Epic Inc., a firm that produces chairs for offices, uses comparative advertising to inform the consumers that its products offer the same features and quality as the competitor's. This is an example of a(n) ________ attack. A) guerilla B) frontal C) encirclement D) bypass E) flank Answer: B 36) The ________ can be used when the challenger spots areas where the opponent is underperforming. A) encirclement attack B) frontal attack C) flank-geographic attack D) backwards-flank attack E) guerilla attack Answer: C 37) Apple attacked RIM, the maker of Blackberry, through flanking. The next powerful innovation was not technological but the amazing ease of use and range of applications offered. This is an example of a(n) ________ attack. A) frontal B) flank C) guerrilla D) encirclement E) bypass Answer: B 38) A(n) ________ is another name for identifying shifts in market segments that are causing gaps to develop, then rushing in to fill the gaps and developing them into strong segments. A) frontal attack strategy B) flanking strategy C) encircling strategy D) counteroffensive strategy E) bypass strategy Answer: B 39) The ________ attack attempts to capture a significant share of the consumer market by launching a grand offensive on several fronts. A) frontal B) bypass C) flank D) encirclement E) guerrilla Answer: D 40) Sally Sim is an up-and-coming marketing manager for a large department store chain. Ms. Sim has distinguished herself with bold strategies such as launching attacks on her primary competitor from several fronts, including advertising, new store openings, and new distributor alliances. Which of the following market challenger attack strategies is Ms. Sim using to attack her competition? A) frontal attack B) bypass attack C) guerrilla attack D) flank attack E) encirclement attack Answer: E 41) The ________ attack offers the firm an opportunity to diversify into unrelated products, into new geographical markets, and leapfrogging into new technologies. A) bypass B) flank C) frontal D) guerrilla E) encirclement Answer: A 42) Appy Juices, a company that manufactures bottled water, diversified into soft drinks before any of its opponents could launch a diversified product. This would be an example of a(n) ________ attack. A) flank B) bypass C) guerrilla D) encirclement E) frontal Answer: B 43) A marketing manager has decided to “leapfrog” competition by moving into cutting-edge technologies. This indirect approach to attacking competition can be characterized as a ________. A) flank attack B) encirclement attack C) bypass attack D) guerrilla attack E) frontal attack Answer: C 44) Selective price cuts, intense promotional blitzes, and occasional legal action are commonplace in the strategic design of a(n) ________. A) frontal attack B) flank attack C) bypass attack D) encirclement attack E) guerilla attack Answer: E 45) Theodore Levitt argues that ________. A) imitation is wrong and should be punished B) product imitation might be as profitable as product innovation C) innovation is not possible without substantial imitation D) innovation cannot begin unless dissatisfaction with imitation occurs E) imitation should be against the law because of the intellectual property decision involved Answer: B 46) As a market follower strategy, the ________ duplicates the leader's product and packages and sells it on the black market or through disreputable dealers. A) innovator B) cloner C) imitator D) adapter E) counterfeiter Answer: E 47) Aron, a company manufacturing snack food and soft drinks, replicates its product taste and packaging from Lay's, a market leader in snack food industry. Later, it sells these imitated products on the black market. This is an example of ________. A) cloning B) imitating C) counterfeiting D) adapting E) innovating Answer: C 48) As a market follower strategy, the ________ emulates the leader's products, name, and packaging, with slight variations. A) counterfeiter B) cloner C) imitator D) adapter E) innovator Answer: B 49) Amani, a company that manufactures cloth for suits, strives to be equal to Armani in product design, brand name, and product packaging. This is an example of ________. A) innovating B) adapting C) imitating D) cloning E) counterfeiting Answer: D 50) Glico Pocky chocolate stick snacks has a look-alike in Giant Chocky. Which market follower strategy is being employed by Giant Chocky? A) counterfeiter B) cloner C) imitator D) adapter E) reverse innovator Answer: B 51) The ________ copies some things from the leader but differentiates on packaging, advertising, pricing, or location. A) innovate B) adapt C) cloner D) imitator E) counterfeiter Answer: D 52) As a(n) ________, BurgerJacks, a fast food chain selling low-price burgers, has differentiated on location by setting up base in the Middle East, a market which the current leader of the industry McDonalds has yet not exploited. A) cloner B) imitator C) counterfeiter D) adapter E) innovator Answer: B 53) The Sarpino’s pizza chain, which operates in Asia, has copied Domino's service model but maintains differentiation in terms of location. This is an example of a(n) ________. A) counterfeiter B) adopter C) cloner D) imitator E) adapter Answer: D 54) As a market follower, the ________ may choose to sell to different markets, but often it grows into a future challenger. A) imitator B) adapter C) cloner D) counterfeiter E) innovator Answer: B 55) Redo is a market follower in the wristwatch industry. After noticing a shortfall in the market leader's product, Redo improves its product to suit consumer needs and becomes a challenger for the market leader. This is an example of ________. A) counterfeiter B) cloner C) imitator D) adapter E) innovator Answer: D 56) An alternative to being a market follower in a large market is to be a leader in a small market. This type of competitor is called a ________. A) marketing king B) market nicher C) segment king D) guerilla marketer E) strategic clone Answer: B 57) A firm that serves small market segments that are not being served by bigger firms is known as a ________. A) market challenger B) market leader C) market follower D) market nicher E) market entrant Answer: D 58) The market leader strategy ensures high sales volume, whereas the market nicher strategy allows firms to achieve ________. A) high margin B) low margin C) high promotability D) medium pricing E) lower demand Answer: A 59) Which of the following is true about market-nichers? A) They are market followers in small markets. B) They tend to have high manufacturing costs. C) Their return on investment exceeds that in larger markets. D) A nicher achieves high volume as against a mass marketer that achieves high margin. E) They usually experience long-term losses. Answer: C 60) The key idea in successful nichemanship is specialization. Which of the following specialists would most closely be identified with the characterization of being an organization that limits its selling to one customer? A) end-user specialist B) vertical-level specialist C) customer-size specialist D) specific-customer specialist E) quality-price specialist Answer: D 61) Hanjaya Mandala Sampoerna produces kretek, a clove-scented cigarette favored by most Indonesian smokers. Within this context the firm is exhibiting the role of a ________ specialist. A) vertical-level B) customer-size C) product-line D) job-shop E) service Answer: C 62) A market nicher is considered to be a(n) ________ specialist if the firm specializes in producing a certain type of product or product feature such as, Rent-a-Wreck, that rents only “beat-up” cars. A) end-user B) vertical-level C) customer-size D) channel E) product-feature Answer: E 63) A job-shop specialist ________. A) sells only in a certain locality, region, or area of the world B) customizes its products for individual customers C) operates at the low- or high-quality ends of the market D) offers one or more services not available from other firms E) specializes in serving only one channel of distribution Answer: B 64) A firm that is based in Myanmar designs jewelry and takes custom orders from around the world. They do not design more than 15 pieces of jewelry in a year and ensure that each design uses unique stones and is different from the other. Such nichemanship is an example of ________ specialist role. A) customer-size B) product C) product-feature D) job-shop E) quality-price Answer: D 65) When a bank takes loan requests over the phone and hand-delivers the money to the customer, it becomes a ________ specialist. A) geographic B) job-shop C) quality-price D) channel E) service Answer: E 66) ________ is the period of slow sales growth and non-existent profits. A) Growth B) Decline C) Maturity D) Introduction E) Stagnancy Answer: D 67) Campy Soups is a newly established company that specializes in preparing healthy but tasty food for children under the age of 5. It is incurring huge productions costs, non-existent profits, and slow sales growth. The company is in the ________ phase of its life cycle. A) stagnancy B) introduction C) maturity D) decline E) growth Answer: B 68) ________ is a period of rapid market acceptance and substantial profit improvement. A) Stagnancy B) Introduction C) Maturity D) Decline E) Growth Answer: E 69) A dance school in Singapore teaches professional hip-hop and salsa. It is experiencing an increase in student admissions, which is leading to substantial improvement in profits. The school is going through the ________ phase of its life cycle. A) decline B) stagnancy C) growth D) introduction E) maturity Answer: C 70) ________ is a slowdown in sales growth because the product has achieved acceptance by most potential buyers. A) Obsolescence B) Introduction C) Growth D) Decline E) Maturity Answer: E 71) A music school in India, specializes in teaching the guitar and the violin. After a spurt in growth and a few successful years, the school is experiencing a slowdown in sales and stability in its profits due to an increase in competition. The school is in the ________ stage of its life cycle. A) introduction B) growth C) decline D) maturity E) obsolescence Answer: D 72) During the ________ stage of a product's life cycle, sales show a downward drift and profits erode. A) introduction B) growth C) decline D) obsolescence E) maturity Answer: C 73) After a couple of years of successful business, an experimental theatre company based in Japan is unable to sell tickets for its theatre shows. They have been using profits from previous shows to run the business. The company is in the ________ phase of its life cycle. A) maturity B) obsolescence C) introduction D) growth E) decline Answer: E 74) According to Peter Golder and Gerald Tellis, a(n) ________ is the first to develop a working model of the product. A) developer B) creative pioneer C) market pioneer D) product pioneer E) inventor Answer: D 75) One of the ways to change the course of a brand is to modify the product. Under product modification, ________ adds size, weight, materials, supplements, and accessories that expand the product's performance, versatility, safety, or convenience. A) feature improvement B) quality improvement C) style improvement D) size improvement E) technological improvement Answer: A 76) An alternate way to increase sales volume is to expand the number of users. This can be done by ________. A) having consumers use the product on more occasions B) having consumers use more of the product on each occasion C) having consumers use the product in new ways D) remaining in the current market segment E) attracting competitors' customers Answer: E 77) An alternate way to increase sales volume is to increase the usage rate among users. This can be done by ________. A) converting nonusers B) having consumers use less of the product on each occasion C) having consumers use the product on more occasions D) attracting competitors' customers E) entering new market segments Answer: C 78) ________ is a distribution strategy that can be effectively used during the growth stage of the product life cycle. A) Building product awareness B) Phasing out unprofitable outlets C) Building selective distribution D) Building intensive distribution E) Stressing on brand differences Answer: D 79) Which of the following strategies should be adopted by marketers during a recession? A) increase investment on marketing existing products B) focus on expanding the customer base and not on the retention of existing customers C) focus primarily on price reductions and discounts D) concentrate on communicating the brand value and product quality to consumers E) stick to the budget allocations adopted during the preceding years Answer: D 80) Sanjiv and Sons Corp., a manufacturer of high end consumer durables, experienced a sluggish sales growth in most of its product categories during three consecutive quarters of 2009. However, market analysis revealed that its competitors' sales had also slackened during this period. Analysts pointed out that when all firms are losing sales, it is extremely important to adopt strategies that are aimed at retaining customers. This led the firm to reduce operation costs while maintaining product quality. They also revamped their marketing strategy to focus on the values created by their products. Which of the following can be inferred from the strategies adopted by the firm? A) The company was trying to protect its market share and continue to operate as a market leader. B) The company was focusing on geographical expansion. C) The company was aiming to capture a new market segment. D) The company was marketing its products amidst an economic downturn. E) The company was focusing on market penetration. Answer: D 81) When the total market expands, the dominant firm usually gains the most. Answer: True 82) The market leader should look for new customers or more usage from existing customers. Answer: True 83) A market-penetration strategy is one where a company searches for new customers in a group that has never used a product before. Answer: False 84) One way to increase the frequency of consumption of a product by consumers is by introducing it in larger package sizes. Answer: False 85) Increasing amount of consumption requires identifying additional opportunities to use the brand in the same basic way. Answer: False 86) A marketing program can communicate the appropriateness and advantages of using the brand. Answer: True 87) The most constructive response to protecting market share is continuous innovation. Answer: True 88) A responsive marketer looks ahead to needs customers may have in the near future. Answer: False 89) An anticipative marketer finds a stated need and fills it. Answer: False 90) A creative marketer discovers solutions customers did not ask for but to which they enthusiastically respond. Answer: True 91) Position defense means occupying the most desirable market space in consumers' minds, making the brand almost impregnable. Answer: True 92) In counteroffensive marketing, the market leader can meet the attacker frontally and hit its flank, or launch a pincer movement so that it is forced to pull back to defend itself. Answer: True 93) In contraction defense, the leader stretches its domain over new territories through market broadening and market diversification. Answer: False 94) Market diversification shifts the company's focus to unrelated industries. Answer: True 95) Market challengers are companies that attack the leader and other competitors in an aggressive bid for further market share. Answer: True 96) Attacking the market leader proves successful and beneficial only when the leader is not serving the market well. Answer: True 97) A frontal attacking strategy is another name for identifying shifts that are causing gaps to develop, then rushing to fill the gaps. Answer: False 98) Encirclement attempts to capture a wide slice of territory by launching a grand offensive on several fronts. Answer: True 99) Guerrilla attacks consist of small, intermittent attacks, conventional and unconventional, including selective price cuts, intense promotional blitzes, and occasional legal action. Answer: True 100) As a market-follower strategy, a counterfeiter emulates the leader's products, name, and packaging, with slight variations. Answer: False 101) As a market-follower strategy, an imitator duplicates the leader's product and packages and sells it on the black market or through disreputable dealers. Answer: False 102) As a market-follower strategy, an adapter takes the leader's products and adapts or improves them. Answer: True 103) Firms with low shares of the total market can become highly profitable through smart niching. Answer: True 104) An alternative to being a follower in a large market is to be a leader in a small market. Answer: True 105) The nicher achieves high sales volume, whereas the mass marketer achieves high margin. Answer: False 106) The growth stage of a product's life cycle is a period of rapid market acceptance and substantial profit improvement. Answer: True 107) During the maturity stage of a product life cycle, profits stabilize or decline because of increased competition. Answer: True 108) A fashion is a basic and distinctive mode of expression appearing in a field of human endeavor. Answer: False 109) Fads are fashions that come quickly into public view, are adopted with great zeal, peak early, and decline very fast. Answer: True 110) An inventor is the first to develop a working model while a product pioneer is the first to develop patents in a new-product category. Answer: False 111) Price, distribution, and communication are the nonproduct elements that marketers modify to increase product sales. Answer: True 112) An alternate way to increase sales volume is to expand the number of users by having them consume more of the product on each occasion. Answer: False 113) An alternate way to increase sales volume is to expand the number of users by converting nonusers. Answer: True 114) An alternate way to increase sales volume is to increase the usage rates among users by having consumers use the product in new ways. Answer: True 115) An alternate way to increase sales volume is to increase the usage rates among users by entering new market segments. Answer: False 116) The prime objective, during the introduction stage of a product life cycle, is to maximize market share. Answer: False 117) The product strategy during the maturity stage of the product life cycle should be to build more intensive distribution. Answer: False 118) In tough times, consumers may change what they want and can afford, where and how they shop, even what they want to see and hear from a firm. Answer: True 119) Heavy focus on price reductions and discounts during recession allow firms to improve long-term brand equity and price integrity. Answer: False 120) Which three groups of customers can help expand a firm's market demand? Answer: Every product class has the potential to attract buyers who are unaware of the product or are resisting it because of price or lack of certain features. A company can search for new users among three groups: those who might use it but do not (market-penetration strategy), those who have never used it (new-market segment strategy), or those who live elsewhere (geographical-expansion strategy). 121) Which three groups of marketers help satisfy a customer's needs? Answer: In satisfying customer needs, one can draw a distinction between responsive marketing, anticipative marketing, and creative marketing. A responsive marketer finds a stated need and fills it. An anticipative marketer looks ahead to needs customers may have in the near future. A creative marketer discovers solutions customers did not ask for but to which they enthusiastically respond. Creative marketers are proactive market-driving firms, not just market-driven ones. 122) What is counteroffensive defense? Explain with an example. Answer: In a counteroffensive, the market leader can meet the attacker frontally and hit its flank, or launch a pincer movement so it will have to pull back to defend itself. After FedEx watched UPS successfully invade its airborne delivery system, it invested heavily in ground delivery through a series of acquisitions to challenge UPS on its home turf. Another common form of counteroffensive is the exercise of economic or political clout. The leader may try to crush a competitor by subsidizing lower prices for the vulnerable product with revenue from its more profitable products, or it may prematurely announce a product upgrade to prevent customers from buying the competitor's product. Or the leader may lobby legislators to take political action to inhibit the competition. 123) Characterize the four broad strategies often employed by market followers to meet their competitors. Answer: These broad strategies include: (1) counterfeiter—the counterfeiter duplicates the leader's product and package and sells it on the black market or through disreputable dealers; (2) cloner—the cloner emulates the leader's products, name, and packaging, with slight variations; (3) imitator—the imitator copies some things from the leader but maintains differentiation in terms of packaging, advertising, pricing, or location; and (4) adapter—the adapter takes the leader's products and adapts or improves them. 124) What are end-user and vertical-level specialists? Answer: The key idea in successful nichemanship is specialization. A firm that specializes in one type of end-use customer is an end-user specialist. For example, a value-added reseller (VAR) customizes computer hardware and software for specific customer segments and earns a price premium in the process. A firm that specializes at some vertical level of the production-distribution value chain is a vertical-level specialist. A copper firm may concentrate on producing raw copper, copper components, or finished copper products. 125) What is fashion? Answer: Fashion is one of the three special categories of product life cycles. A fashion is a currently accepted or popular style in a given field. Fashions pass through four stages: distinctiveness, emulation, mass fashion, and decline. The length of a fashion cycle is hard to predict. One view is that fashions end because they represent a purchase compromise, and consumers soon start looking for the missing attributes. Another explanation is that too many consumers adopt the fashion, thus turning others away. Still another is that the length of a particular fashion cycle depends on the extent to which the fashion meets a genuine need, is consistent with other trends in the society, satisfies societal norms and values, and keeps within technological limits as it develops. 126) What must the firm do to sustain rapid market share growth? Answer: To sustain rapid market share growth now, the firm must: • improve product quality and add new features and improved styling. • add new models and flanker products (of different sizes, flavors, and so forth) to protect the main product. • enter new market segments. • increase its distribution coverage and enter new distribution channels. • shift from awareness and trial communications to preference and loyalty communications. • lower prices to attract the next layer of price-sensitive buyers. By spending money on product improvement, promotion, and distribution, the firm can capture a dominant position. It can trade off maximum current profit for high market share and the hope of even greater profits in the maturity stage. 127) Which are the three ways to change the course for a brand? Answer: Three ways to change the course for a brand are market, product, and marketing program modifications. Market modification: A company might try to expand the market for its mature brand by working with the two factors that make up sales volume: Volume = number of brand users * usage rate per user. This may also be matched by competitors. Product modification: Managers also try to stimulate sales by improving quality, features, or style. Quality improvement increases functional performance by launching a “new and improved” product. Feature improvement adds size, weight, materials, supplements, and accessories that expand the product's performance, versatility, safety, or convenience. Style improvement increases the product's esthetic appeal. Any of these can attract consumer attention. Marketing program modification: Finally, brand managers might also try to stimulate sales by modifying nonproduct elements—price, distribution, and communications in particular. They should assess the likely success of any changes in terms of effects on new and existing customers. 128) Explain how luxury brands can benefit during an economic recession from having lower-priced brands or sub-brands in their portfolio. Answer: They can review product portfolios and brand architecture to confirm that brands and sub-brands are clearly differentiated, targeted, and supported based on their prospects. Luxury brands can benefit from lower-priced brands or sub-brands in their portfolios. Because different brands or sub-brands appeal to different economic segments, those that target the lower end of the socioeconomic spectrum may be particularly important during a recession. Value-driven companies such as McDonald's, Dell and IKEA are likely to benefit most. Spam, the oft-maligned gelatinous 12-ounce rectangle of spiced ham and pork, found its sales soaring during the recession. Affordably priced and requiring no refrigeration, Spam is, its maker Hormel claims, “like meat with a pause button.” 129) Describe the three strategies that are necessary for a market leader to accomplish to stay on top. Answer: The three primary strategies that may be used by the market leader are: (1) expanding the total market demand by attracting new customers and by stimulating more usage of product; (2) protecting market share; and (3) increasing market share. 130) Your marketing manager has asked you to develop a new customer strategy for your company. Additionally, you have been asked to develop, specifically, a market-penetration strategy to assist in gaining new customers. Describe a market-penetration strategy in this context. Answer: The market-penetration strategy in this context would seek to get new customers from a group that might use the product but as yet do not. 131) Assume that your firm is a market leader in manufacturing detergent. How would the firm use position defense as a defensive marketing strategy to maintain its share? Answer: Position defense means occupying the most desirable market space in consumers' minds, making the brand almost impregnable. Tide, as a popular laundry detergent, has become synonymous with washing machine detergent. Student answers may vary. As a market leader in detergent manufacturing, the firm would use position defense by emphasizing its strong brand reputation, product quality, and customer loyalty programs. It could launch aggressive marketing campaigns highlighting superior cleaning power, eco-friendly formulations, and competitive pricing to reinforce its market position. Additionally, continuous product innovation and improvements in distribution channels would further solidify its leadership by making it challenging for competitors to displace its market share. 132) If you were asked to develop a mobile defense for your products that are likely to come under attack from a market challenger, what would you suggest? Answer: In mobile defense, the leader stretches its domain over new territories through market broadening and market diversification. Market broadening shifts the company's focus from the current product to the underlying generic need. 133) As a brand manager of a firm that manufactures denim jeans, how will you implement a preemptive defense marketing strategy to meet an anticipated competitive challenge? Answer: A preemptive defense is a more aggressive maneuver that has as its purpose to attack before the enemy starts its offense. You can launch a preemptive defense by waging a guerrilla action across the market and keep everyone off balance. Another way to launch a preemptive defense is by introducing a stream of new products like denim jackets and skirts in various colors. Student answers may vary. As a brand manager of a denim jeans manufacturer, I would implement preemptive defense marketing by: 1. Market Intelligence: Conducting thorough market research to anticipate competitor actions and industry trends. 2. Product Innovation: Introducing new denim styles, fits, or eco-friendly materials ahead of competitors. 3. Marketing Campaigns: Launching proactive advertising and promotional campaigns to reinforce brand loyalty and highlight unique features. 4. Customer Engagement: Strengthening relationships with existing customers through personalized offers and excellent customer service to preemptively mitigate competitor strategies. 134) The cost of buying higher market share through acquisition may far exceed its revenue value. Which are the four factors a company should consider before doing so? Answer: The four factors to be considered before buying higher market share are: the possibility of provoking antitrust action, economic cost, the danger of pursuing the wrong marketing activities, and the effect of increased market share on actual and perceived quality. 135) Who are the ideal opponents of a market challenger? Answer: The opponents of a market challenger are: (1) the industry leader; (2) firms its own size that are not doing the job and are underfinanced; or (3) small local and regional firms. 136) Describe frontal attack as a general market-challenger attack strategy. Answer: In a pure frontal attack, the attacker matches its opponent's product, advertising, price, and distribution. The principle of force says the side with the greater resources will win. A modified frontal attack, such as cutting price, can work if the market leader doesn't retaliate, and if the competitor convinces the market its product is equal to the leader's. 137) Assume that you are the marketing manager of a firm that manufactures athletic shoes. How will you launch an encirclement attack on your competitor? Answer: Encirclement attempts to capture a wide slice of territory by launching a grand offensive on several fronts. It makes sense when the challenger commands superior resources. In an attack on your archrival, you can launch your product in all the major cites of the globe together and surprise your rival. Student answers may vary. As the marketing manager of an athletic shoe manufacturer, I would launch an encirclement attack on my competitor by: 1. Expanding Product Lines: Introducing a broader range of athletic shoes catering to various sports and lifestyles. 2. Targeting Different Market Segments: Marketing aggressively to niche segments such as runners, basketball players, and casual walkers. 3. Pricing Strategy: Offering competitive pricing across different product tiers to appeal to budget-conscious and premium customers alike. 4. Distribution Channels: Increasing availability through online platforms, retail partnerships, and exclusive stores to enhance accessibility and market reach. 138) The marketing manager of a firm that manufactures cotton cloth has chosen the bypass attack as a means of responding to an industry leader. How will the manager go about launching this type of attack? Answer: The bypass attack is an indirect assault. The marketing manager can diversify into unrelated products like ready-made garments. The manager can also diversify into new geographical markets or adopt new technologies to manufacture its product. Student answers may vary. The marketing manager launching a bypass attack for a cotton cloth manufacturing firm would focus on: 1. Targeting Niche Markets: Identifying underserved or emerging market segments that the industry leader may overlook. 2. Innovative Products or Technology: Introducing new types of cotton cloth with unique features or sustainable materials. 3. Alternative Distribution Channels: Exploring direct-to-consumer models or online platforms to bypass traditional distribution channels. 4. Aggressive Marketing: Promoting the new products aggressively through targeted advertising and leveraging social media to create buzz and attract attention away from the industry leader. 139) What is a guerilla attack? Answer: Guerrilla attacks consist of small, intermittent attacks, conventional and unconventional, including selective price cuts, intense promotional blitzes, and occasional legal action, to harass the opponent and eventually secure permanent footholds. A guerrilla campaign can be expensive, although less so than a frontal, encirclement, or flank attack, but it typically must be backed by a stronger attack to beat the opponent. 140) How can a firm choose a specific attack? Answer: Any aspect of the marketing program can serve as the basis for attack, such as lower-priced or discounted products, new or improved products and services, a wider variety of offerings, and innovative distribution strategies. A challenger's success depends on combining several, more specific, strategies to improve its position over time. 141) Describe a counterfeiter as a market-follower. Answer: A counterfeiter duplicates the leader's product and package and sells it on the black market or through disreputable dealers. Music firms, Apple, and Rolex have been plagued by the counterfeiter problem, especially in Asia. 142) If your company, which is a market follower, was labeled as an imitator, what would its primary strategies for meeting competition be? Answer: The imitator copies some things from the leader but maintains differentiation in terms of packaging, advertising, pricing, or location. The leader does not mind the imitator as long as the imitator does not attack the leader aggressively. 143) Who is a market-nicher? Answer: An alternative to being a follower in a large market is to be a leader in a small market or niche. Smaller firms normally avoid competing with larger firms by targeting small markets of little or no interest to the larger firms. But even large, profitable firms may choose to use niching strategies for some of their business units or companies. 144) The market nicher is a specialist. Characterize the end-user specialist role that can be assumed by the market nicher. Answer: When the firm assumes the end-user specialist role, it specializes in one type of end-use customer. For example, a value-added reseller (VAR) customizes computer hardware and software for specific customer segments and earns a price premium in the process. 145) What is a product-feature specialist? Answer: As a product-feature specialist specializes in producing a certain type of product or product feature. Zipcar's car-sharing services target people who live and work in seven major U.S. cities, frequently use public transportation, but still need a car a few times a month. 146) What are fads? Answer: Fads are fashions that come quickly into public view, are adopted with great zeal, peak early, and decline very fast. Their acceptance cycle is short, and they tend to attract only a limited following who are searching for excitement or want to distinguish themselves from others. Fads fail to survive because they don't normally satisfy a strong need. The marketing winners are those who recognize fads early and leverage them into products with staying power. 147) What is the criticism of the product life-cycle concept? Answer: The product life-cycle theory has its share of critics, who claim life-cycle patterns are too variable in shape and duration to be generalized, and that marketers can seldom tell what stage their product is in. A product may appear mature when it has actually reached a plateau prior to another upsurge. Critics also charge that, rather than an inevitable course, the product life-cycle pattern is the self-fulfilling result of marketing strategies, and that skillful marketing can in fact lead to continued growth. Chapter 12 Setting Product Strategy 1) A ________ is anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas. A) function B) product C) benefit D) process E) structure Answer: B 2) A customer judges a product offering by three basic elements: product features and quality, services mix and quality, and ________. A) performance B) utility C) tangibility D) price E) availability Answer: D 3) The five product levels constitute a ________. At each level more customer value is added. A) product line B) business model C) customer value-hierarchy D) value grid E) demand chain Answer: C 4) When companies search for new ways to satisfy customers and distinguish their offering from others, they look at the ________ product, which encompasses all the possible augmentations and transformations of the product. A) consumption B) expected C) potential D) augmented E) basic Answer: C 5) The way the user performs the tasks of getting and using products and related services is the user's total ________. A) consumption system B) consumable system C) consistent use system D) augmented system E) potential system Answer: A 6) Marketers must see themselves as benefit providers. For example, when a shopper purchases new shoes, he/she expects the shoes to cover his/her feet and allow him/her to walk unobstructed. This is an example of what level in the consumer-value hierarchy? A) pure tangible good B) basic product C) augmented product D) potential product E) generic product Answer: B 7) How a consumer shops for organic foods and how he or she uses and disposes of the product is part of the consumers’ ________ that is important for marketers to consider. A) value proposition B) consumption system C) value system D) quality perception E) value chain Answer: B 8) The sellers of ________ goods carry a wide assortment to satisfy individual tastes and must have well-trained salespeople to inform and advise customers. A) unsought B) specialty C) convenience D) heterogeneous shopping E) generic Answer: D 9) Marketers have traditionally classified products on the basis of three characteristics: ________, tangibility, and use. A) availability B) affordability C) aesthetics D) durability E) necessity Answer: D 10) Which of the following are tangible goods that normally survive many uses? A) generic goods B) durable goods C) core benefits D) convenience goods E) unsought goods Answer: B 11) Because ________ are purchased frequently, marketers should make them available in many locations, charge only a small markup, and advertise heavily to induce trial and build preference. A) nondurable goods B) durable goods C) services D) unsought goods E) specialty goods Answer: A 12) What types of goods are purchased frequently, immediately, and with minimum effort by the consumers? A) specialty goods B) shopping goods C) unsought goods D) durable goods E) convenience goods Answer: E 13) It was sunny when Jenny went to class, but by the time class was over it was raining heavily, so Jenny stopped by the student store to buy an umbrella before she walked back to her dorm. In this case, the umbrella is an example of a(n) ________. A) impulse good B) specialty good C) homogeneous shopping good D) emergency good E) heterogeneous shopping good Answer: D 14) What goods are similar in quality but different enough in price to justify shopping comparisons? A) emergency goods B) homogeneous shopping goods C) heterogeneous shopping goods D) specialty goods E) convenience goods Answer: B 15) Products such as insurance, cemetery plots, and smoke detectors are examples of ________ that are products that the consumer does not know about or does not normally think of buying. A) specialty goods B) unsought goods C) heterogeneous shopping goods D) homogeneous shopping goods E) convenience goods Answer: B 16) Industrial goods can be classified as ________, capital items, or suppliers and business services based on their relative cost and how they enter the production process. A) service components B) sub-assemblies C) accessories D) specialty goods E) materials and parts Answer: E 17) ________ are the major factors influencing the selection of suppliers for natural products. A) Price and delivery reliability B) Product features and customization C) Price and customization D) Delivery reliability and product features E) Customization and delivery reliability Answer: A 18) Capital items are long-lasting goods that facilitate developing or managing the finished product. They include two groups: installations and ________. A) natural products B) component materials C) operating supplies D) equipment E) processed materials Answer: D 19) The two kinds of supplies with respect to industrial goods classification are maintenance and repair items, and ________. A) installations B) operating supplies C) processed materials D) component materials E) equipment Answer: B 20) ________ are major purchases and are usually bought directly from the producer with the typical sale preceded by long negotiation periods. A) Raw materials B) Materials and parts C) Processed materials D) Capital goods E) Installations Answer: E 21) Most products are established at one of four performance levels: low, average, high, or superior. For example, mountain bikes come in a variety of sizes and physical attributes. When a consumer purchases a mountain bike costing $1,000, she/he expects the bike to perform to specifications and to have a high ________ meeting the promised specifications. A) features B) conformance quality C) durability D) performance quality E) reliability Answer: D 22) Many products can be differentiated in terms of their ________, which is its size, shape, or physical structure. A) form B) prototype C) architecture D) model E) blueprint Answer: A 23) ________ is the ability of a company to prepare on a large-scale basis individually designed products, services, programs, and communications. A) Mass customization B) Reverse engineering C) Interoperability D) Backward compatibility E) Benchmarking Answer: A 24) ________ is the level at which the product's primary characteristics operate. A) Design B) Conformance quality C) Reparability D) Performance quality E) Durability Answer: D 25) Buyers expect products to have high ________, which is the degree to which all the produced units are identical and meet the promised specifications. A) durability B) compatibility C) conformance quality D) form E) performance quality Answer: C 26) Most products can be offered with varying ________ that can supplement its basic function. A) degrees of reliability B) conformance qualities C) features D) forms E) designs Answer: C 27) If the Subaru Impreza is designed to accelerate to 50 miles per hour within 10 seconds, and every Subaru Impreza coming off the assembly line does this, the model is said to have high ________. A) reliability B) conformance quality C) durability D) compatibility E) interoperability Answer: B 28) ________ describes the product's look and feel to the buyer; it has an advantage of creating distinctiveness that is difficult to copy. A) Design B) Style C) Durability D) Conformance E) Reliability Answer: B 29) Maintenance and ______ programs help customers keep purchased products in good working order. A) durability B) reliability C) style D) design E) repair Answer: E 30) ________ is a measure of the probability that a product will not malfunction or fail within a specified time period. A) Reparability B) Durability C) Reliability D) Specialty E) Compatibility Answer: C 31) When the physical product cannot be easily differentiated, the key to competitive success may lie in adding valued services and improving their quality. The main service differentiators are ordering ease, delivery, installation, ________, customer consulting, maintenance, and repair. A) technology intensity B) responsivity C) ease of use D) customer training E) adaptability Answer: D 32) Delivery refers to how well the product or service is brought to the customer. It includes speed, ________, and care throughout the delivery process. A) expedience B) intensity C) tangibility D) performance E) accuracy Answer: E 33) ________ refers to educating the customer's employees to use the vendor's equipment properly and efficiently. A) Customer training B) Open innovation C) Crowdsourcing D) Co-development E) Collaborative research Answer: A 34) ________ refers to data, information systems, and advice services that the seller offers to their buyers. A) Sales force relationships B) Customer relationships C) Open source technology D) Customer training E) Customer consulting Answer: E 35) Differentiating on ________ is important for companies with complex products and becomes an especially good selling point when targeting technology novices. A) delivery B) ordering ease C) ease of installation D) customer consulting E) reparability Answer: C 36) _____________ is a measure of the ease of fixing a product when it malfunctions or fails. A) Reparability B) Durability C) Reliability D) Specialty E) Compatibility Answer: A 37) Which of the following actions would result in the elimination of uncontrollable returns of products in the short run? A) improved handling B) better packaging C) improved transportation D) proper storage E) cannot be eliminated Answer: E 38) Swee & Kee Poultry has recently upgraded its transactional model such that its customers (restaurants and hotels) can communicate with its central supply system to indicate purchase volumes, dates, and receive confirmation, through their computer terminals. This is an example of a company differentiating itself versus competition in terms of ________. A) customer relationships B) customer training C) installation D) delivery ease E) ordering ease Answer: E 39) Realizing that although household products is a huge category, taking up an entire supermarket aisle or more, it is an incredibly boring one, the founders of Method Products designed a sleek, uncluttered dish soap container that also carried functional advantages, such as ease of dispensing soap and cleaning. Method is competing in the crowded market for household products on the basis of superior ________. A) design B) durability C) conformance D) reliability E) performance quality Answer: A 40) In increasingly fast-paced markets, price and technology are not enough. ________ is the factor that will often give a company its competitive edge and is defined as the totality of features that affect how a product looks, feels, and functions in terms of customer requirements. A) Conformance B) Design C) Performance D) Reliability E) Style Answer: B 41) A group of products within a product class that are closely related because they perform a similar function, are sold to the same customer groups, are marketed through the same outlets or channels, or fall within given price ranges is known as a ________. A) product type B) product class C) need family D) product variant E) product line Answer: E 42) A(n) ________ is defined as a distinct unit within a brand or product line distinguishable by size, price, appearance, or some other attribute. A) stockkeeping unit B) inventory turn C) individual brand D) product type E) brand line Answer: A 43) A ________ is the set of all products and items a particular seller offers for sale. A) product line B) product mix C) product extension D) product system E) product class Answer: B 44) Happy Home Products produces detergents, toothpaste, bar soap, disposable diapers, and paper products. This company has a product ________ of five lines. A) type B) length C) class D) mix E) width Answer: E 45) Using the ________ level of the product hierarchy to market its soups, Campbell Soups feature the company name first, then the soup variety on their packaging. A) product class B) product-type C) need-family D) product-family E) product-line Answer: E 46) A consumer products firm manufactures and sells over 200 different sizes and varieties of jams and jellies. We can say that this manufacturer's product mix has high ________. A) consistency B) depth C) intensity D) range E) width Answer: B 47) The ________ of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. A) consistency B) depth C) width D) length E) composition Answer: A 48) The ________ of the product mix refers to the total number of items in the mix. A) width B) length C) depth D) breadth E) range Answer: B 49) In offering a product line, companies normally develop a ________ and modules that can be added to meet different customer requirements. A) convenience item B) flagship product C) staple item D) potential product E) basic platform Answer: E 50) The ________ of a product mix refers to how many variants are offered of each product in the line. A) width B) length C) depth D) consistency E) height Answer: C 51) Which of the following is a benefit of product mapping? A) studying market matrices B) integrating target markets C) identifying market segments D) educating consumers E) integrating target matrices Answer: C 52) Product-line analysis provides information for two key decision areas, product-line length and ________. A) product-class composition B) product-mix pricing C) product pricing D) popular pricing E) product need family Answer: B 53) What occurs when any company lengthens its product line beyond its current range? A) market overreach B) brand dilution C) product adaptations D) cannibalization E) line stretching Answer: E 54) A company positioned in the “middle” market introduces a lower-priced product line. What type of line-stretching is this? A) home stretch B) up-market stretch C) down-market stretch D) maintenance stretch E) two-way stretch Answer: C 55) Moving ________ carries risks. The new brand can cannibalize core brand sales and lower the core brand's quality image. A) up-market B) two ways C) one way D) down-market E) out-market Answer: D 56) Companies may wish to implement a(n) ________ to achieve more growth, to realize higher margins, or simply to position themselves as full-line manufacturers. A) up-market stretch B) rebranding plan C) outsourcing strategy D) disintermediation policy E) vertical integration strategy Answer: A 57) A manufacturer of hiking boots looks at data that indicate that their subsegment of the market called “serious hiker” is declining and is predicted to decline into the future. The firm decides to enter the “low-price” segment with its new items. This is an example of a firm's ________ to reach a new market. A) down-market stretch B) up-market stretch C) two-way stretch D) marketing research E) disintermediation Answer: A 58) Alongside its midrange Corolla model, Toyota added the Camry to serve the upper end of the car market, and the Vios to serve the compact car market. It also introduced the Lexus as a premium offering for the luxury car segment. This is an example of a firm that successfully performed a ________ to reach more consumers and ventures that are more profitable. A) upstream integration B) two-way stretch C) up-market stretch D) down-market stretch E) downstream integration Answer: B 59) A product line can also be lengthened by adding more items within the present range. There are several motives for line filling. Which of the following is one of them? A) responding to senior management wishes B) responding to consumer wishes C) reaching for incremental profits D) reaching for incremental capacity E) responding to sales-force demands Answer: C 60) If line filling is overdone, it could result in ________ and customer confusion. A) sales paralysis B) manufacturing inefficiencies C) self-cannibalization D) disintermediation E) ineffective management Answer: C 61) Price-setting logic must be modified when the product is part of a product mix. In that case, the firm searches for a set of prices that ________ profits on the total mix. A) are ineffective on total B) have no effect on total C) maximizes D) minimizes E) capitalize upon Answer: C 62) Companies normally develop ________ rather than single products and require sellers to establish perceived quality differences between price steps within it. A) product mix B) captive products C) product lines D) optional products E) average products Answer: C 63) When shopping for tires for your car, you notice that the manufacturer you have selected has tires for your car priced low, average, and high, based upon performance and features. This is an example of what type of product-mix pricing? A) two-part pricing B) product-line pricing C) captive product pricing D) market pricing skimming E) price discrimination Answer: B 64) Some service firms often engage in ________, consisting of a fixed fee plus a variable usage fee. A) pure bundling B) pure pricing C) mixed pricing D) captive pricing E) two-part pricing Answer: E 65) In ________, the seller offers goods both individually and in bundles and often charges less for the “bundle” than for the individual products. A) pirating pricing B) captive pricing C) two-part pricing D) pure bundling E) mixed bundling Answer: E 66) Purchasers of theatre tickets receive a 20% discount if they purchase and pay for the full season at one time. This is an example of what type of product-mix pricing? A) mixed bundling B) pure bundling C) cross-promotion D) captive pricing E) two-part pricing Answer: A 67) Kasikornbank in Thailand has Starbucks located in its branches to optimize the space as well as build on each other’s image. This is an example of __________________. A) cooperative marketing B) cross-promotion C) retail co-branding D) ingredient branding E) feature promotion Answer: C 68) Betty Crocker cake mixes using Hershey syrup in its cake mixes and “Lunchables” lunch combinations with Taco Bell tacos are examples of what special type of branding? A) family branding B) ingredient co-branding C) co-branding D) generic-branding E) individual branding Answer: B 69) The main advantage of co-branding is that a product may be convincingly positioned by virtue of the ________ involved. A) branding synergy B) increased advertising dollars C) multiple brands D) bundled package E) pure bundling Answer: C 70) The potential disadvantages of ________ are the risks and lack of control from becoming aligned with another brand in the consumers mind. Consumer expectations about the level of involvement and commitment are likely to be high, so unsatisfactory performance could be very negative for the brands involved. A) co-branding B) cannibalization C) vertical integration D) disintermediation E) brand stretching Answer: A 71) ________ is a special case of co-branding involving creating brand equity for materials, components, or parts that are necessarily contained within other branded products. A) Cross-branding B) Ingredient branding C) Equity branding D) Family branding E) Generic branding Answer: B 72) We define packaging as all the activities of designing and producing the container for a product. This includes up to three levels of material: primary package, secondary package, and ________. A) retailer package B) design package C) shipping package D) consumer package E) supplier package Answer: C 73) Sales of luxury goods such as perfumes, colognes, and aftershaves depend heavily upon their initial response by the consumer. A well-designed package can create convenience and promotional value. It has been called the “silent salesman.” Which of the three levels of packaging is this “silent salesman”? A) retailer B) consumer C) shipping D) secondary E) primary Answer: E 74) Which of the following factors is one of the contributors to the growing use of packaging as a marketing tool? A) consumption aid B) consumer affluence C) consumer influence D) conformance qualities E) brand identification Answer: B 75) ________ are formal statements of expected product performance by the manufacturer. A) Insurance B) Warranties C) Bonds D) Invoices E) Balance sheets Answer: B 76) Many sellers offer either general or specific guarantees. Guarantees reduce the buyer's ________ risk. A) actual B) perceived C) real D) implied E) stated Answer: B 77) Guarantees are most effective in two situations. The first is when the company or products are not well known and the second is when the product's quality is ________ to competition. A) not known B) different C) inferior D) equivalent E) superior Answer: E 78) A new product is advertised as being “the best cleaner money can buy” and “if not completely satisfied, return the product for a full refund, including shipping.” The strategy of using a strong guarantee in this instance is sound because ________. A) it is an example of a misleading or false advertising and is illegal B) the product is so superior to competition that there will be no claims for refunds C) it is just “advertising fluff” and the manufacturer has no intentions of refunding money D) for a product that is not too well known, it is “good advertising” because the claims will be a small percentage of sales E) for a product that is not too well known it reduces the buyer's risk in purchasing Answer: E 79) Marketing planning begins with formulating an offering to meet target customers’ needs or wants. Answer: True 80) A product is anything that can be offered to a market to satisfy a want or need. Answer: True 81) In planning its market offering, the marketer needs to address five product levels, each of which reduces customer value. Answer: False 82) The customer-value hierarchy consists of the basic product, core benefit, expected product, augmented product, and the consumption system. Answer: False 83) Marketers have traditionally classified products on the basis of characteristics such as durability, tangibility, and use. Answer: True 84) Durable products normally require less personal selling and service and less seller guarantees than nondurable goods. Answer: False 85) Because they are intangible, durable goods normally require more quality control, supplier credibility, and adaptability than either services or nondurable goods. Answer: False 86) Carl always buys bread and milk when he goes grocery shopping. In this case, bread and milk are examples of impulse goods. Answer: False 87) A Maserati sports car is considered a convenience good because interested buyers will travel far to buy one. Answer: False 88) The homogeneity of natural materials limits the amount of demand-creation activity that producers undertake. Answer: True 89) Capital items are long-lasting goods that facilitate developing or managing the finished products. Answer: True 90) Supplies are the equivalent of convenience goods; they are usually purchased with minimum effort on a straight rebuy basis. Answer: True 91) To be branded, physical products need not be differentiated. Answer: False 92) To avoid “feature fatigue,” companies must be careful to prioritize those features that are included and find unobtrusive ways to provide information about how consumers can use and benefit from the feature. Answer: True 93) Firms should design the highest performance level possible for their products. Answer: False 94) As a selling point, durability commands a particularly high pricing premium, especially for products that are subject to rapid technological obsolescence, as are personal computers and video cameras. Answer: False 95) If the physical product cannot be easily differentiated, the key to competitive advantage lies in the pricing of the related “services” provided by the manufacturer. Answer: False 96) Customer training and customer consulting are two areas for service differentiation that manufacturers can use with their products. Answer: True 97) The cost of processing a return can be significantly greater than that of an outbound shipment. Answer: True 98) Design can shift consumer perceptions to make brand experiences more rewarding. Answer: True 99) The product hierarchy stretches from basic needs to particular items that satisfy those needs. Answer: True 100) A product system is a group of diverse and unrelated items that does not function in a compatible manner and includes the product mix and product assortment. Answer: False 101) The four product-mix dimensions (length, width, depth, consistency) permit the company to expand its business. Answer: True 102) The product-line length can be obtained by averaging the number of variants within the brand groups. Answer: False 103) Every company's product line covers a certain part of the total possible range of products and consumer levels. Answer: True 104) Companies in the “middle market” should never attempt to stretch their line in both directions. Answer: False 105) Line filling, if overdone, may result in self-cannibalization and increased customer loyalty. Answer: False 106) In the rapidly changing market of today's world, product lines must be continuously updated or modernized. Answer: True 107) Price-setting logic must be modified when the product is part of a product mix. Answer: True 108) Companies normally develop product lines rather than a single product and introduce price steps such as a “low-,” “average-,” and “high-”priced computer system. Answer: True 109) Manufacturers of systems such as razors and ink jet printers use a system of pricing called “two-part pricing”, one price for the disposable products and another for the “hardware.” Answer: False 110) A pricing system in which there is a “fixed” fee and then a variable “usage” fee is called bundling. Answer: False 111) Pure bundling occurs when a firm offers goods both individually and in bundles. Answer: False 112) Co-branding is when two or more well-known existing brands are combined into a joint product and/or marketed together in some fashion. Answer: True 113) Ingredient branding can take on a form called “self-branding” in which the company advertises its own branded ingredients. Answer: True 114) Packaging is all the activities of designing and producing the container for a product. Answer: True 115) Even if the seller prefers a simple label, the law may require additional information. Answer: True 116) Warranties are formal statements of expected product performance by the manufacturer. Answer: True 117) A guarantee's greatest contribution to a product's success is that it decreases the buyer's perceived risk in the purchase of the product. Answer: True 118) Guarantees are most effective when the product is well known and/or similar in performance to other brands in the market. Answer: False 119) In planning its market offering, the marketer must address the five product levels of the customer-value hierarchy. Describe the "customer-value hierarchy" and identify the five levels of product contained within. Answer: Each layer adds more customer value, and the five levels are: (1) the core benefit—the service or benefit the customer is really buying; (2) the basic product—the actual product that provides the core benefit; (3) expected product—a set of attributes and conditions buyers normally expect when they purchase the product; (4) the augmented product—the marketer exceeds customer expectations; and (5) the potential product—which encompasses all the possible augmentations and transformations the product or offering might undergo in the future. These five elements constitute the buyers' consumption system. 120) The vast array of products that consumers buy can be classified on the basis of shopping habits and are broken down into four main areas. List these four main classifications of consumer goods and explain what elements are included within. Answer: The four main areas are: (1) Convenience goods are bought frequently, immediately, and with a minimum of effort; (2) shopping goods are goods that the consumer characteristically compares on such bases as suitability, quality, price, and style; (3) specialty goods have unique characteristics or brand identification for which a sufficient number of buyers are willing to make a special purchasing effort; and (4) unsought goods are those goods that the consumer does not know about or does not normally think of buying. 121) You know that marketers have traditionally classified products based on characteristics of durability, tangibility, and use. You also know that each product type has an appropriate marketing-mix strategy attached. In analyzing your company's products, you decide to list each of these products and the appropriate marketing-mix strategy to understand where your products “fit.” List these products and their appropriate marketing-mix strategies. Answer: (1) Nondurable goods—the appropriate strategy is to make them available in many locations, charge only a small markup, and advertise heavily to induce trial and build preference. (2) Durable goods—tangible goods that normally survive many uses. Durable products normally require more personal selling and service, command a higher margin, and require more seller guarantees. (3) Services—intangible, inseparable, variable, and perishable products. They require more quality control, supplier credibility, and adaptability. 122) Industrial goods can be classified in terms of how they enter the production process and their relative costliness. Identify the three groups of industrial goods. Answer: The three groups of industrial goods include: (1) Materials and parts are goods that enter the manufacturer's product completely. Raw materials (farm and natural products) and manufactured materials and parts (component materials and component parts) compose this group; (2) Capital items are long-lasting goods that facilitate developing or managing the finished product, such as machinery (installations and equipment); and (3) Supplies and business services are short-term goods and services that facilitate developing or managing the finished product; maintenance and repair and operating supplies are included here. Business supplies include advisory services and other “services” necessary for the ongoing operation of the business. 123) Describe the six main service differentiators. Answer: The main service differentiators are ordering ease, delivery, installation, customer training, customer consulting, and maintenance and repair. Ordering ease refers to how easy it is for the customer to place an order with the company. Delivery refers to how well the product or service is brought to the customer. It includes speed, accuracy, and care throughout the process. Installation refers to the work done to make a product operational in its planned location. Ease of installation is a true selling point for buyers of complex products like heavy equipment and for technology novices. Customer training helps the customer's employees use the vendor's equipment properly and efficiently. Customer consulting includes data, information systems, and advice services the seller offers to buyers. Maintenance and repair programs help customers keep purchased products in good working order. 124) Distinguish between controllable returns and uncontrollable returns. Answer: Controllable returns result from problems or errors by the seller or customer and can mostly be eliminated with improved handling or storage, better packaging, and improved transportation and forward logistics by the seller or its supply chain partners. Uncontrollable returns result from the need for customers to actually see, try, or experience products in person to determine suitability and can't be eliminated by the company in the short run through any of these means. 125) What is the significance of design for a company's products and services? What are the advantages of a good design? Answer: Design offers a potent way to differentiate and position a company's products and services. Design is the totality of features that affect how a product looks, feels, and functions to a consumer. Design offers functional and aesthetic benefits and appeals to both our rational and emotional sides. The designer must figure out how much to invest in form, feature development, performance, conformance, durability, reliability, reparability, and style. To the company, a well-designed product is easy to manufacture and distribute. To the customer, a well-designed product is pleasant to look at and easy to open, install, use, repair, and dispose of. The designer must take all these factors into account. Design can shift consumer perceptions to make brand experiences more rewarding. Design should penetrate all aspects of the marketing program so that all design aspects work together. 126) Explain the concepts of product-mix width, length, depth, and consistency. Answer: The width of a product mix refers to how many different product lines the company carries. The length of a product mix refers to the total number of items in the mix. The depth of a product mix refers to how many variants are offered of each product in the line and is determined by dividing the total number of items by the number of lines. The consistency of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. 127) Product-mix pricing can involve a number of pricing strategies for the brand manager. List each of these strategies and briefly define each. Answer: There are six situations involving product-mix pricing: (1) product-line pricing—low-, medium-, and high-priced products within the same line, such as different priced ties; (2) optional-feature pricing—charging for “extra” features, such as leather seats in a car; (3) captive-product pricing—when the “user” has no choice but to use the high-priced “disposable” products that make the entire product work (for example, ink cartridges for printers); (4) two-part pricing—consisting of a fixed fee and a variable usage fee (cell phone usage); (5) by-product pricing—the price of the by-products of goods being used for other purposes (oil refining for example); and (6) product-bundling pricing—pure bundling when the firm offers its products only as a bundle, or mixed bundling when the firm offers its products as a “bundle” and/or individually. 128) Various factors have contributed to the increased importance of packaging as a marketing tool. List and briefly describe these events. Answer: Self-service—an increasing number of products are being sold without any personal interaction, on a self-service basis. Consumer affluence—rising consumer affluence means consumers are willing to pay a little more for convenience, appearance, dependability, and prestige of better packages. Company and brand image—packages contribute to instant recognition of the company or brand. Innovation opportunity—innovative packaging can bring large benefits to consumers and profits to producers. 129) A manufacturer is contemplating introducing a product that is inferior to its competition in its performance, design, and functionality. However, the manufacturer believes that “good brand marketing” can overcome these shortfalls. Why is this thinking incorrect? Answer: At the heart of a great brand is a great product, the product is a key element in the market offering. Customers will judge the product (offering) on three basic elements: product features and quality; services mix and quality, and price. Not having a competitive product cannot be overcome by marketing. 130) Studying how consumers shop, how they use a particular product or service, and how they dispose of the product when consumed is important for marketers. This information forms the basis of product strategy. Define the consumption system and identify the two upcoming product strategies that are affected by this knowledge. Answer: This is called the user's total consumption system, defined as the way the user performs the tasks of getting and using products and related services. This is important because it will contain information useful in the product-augmentation strategy and the potential product strategy. 131) Industrial-goods classifications based on terms of how the products enter the production process and their relative costs include such segments as materials and parts and capital items. Window cleaning services, consumable office supplies, personal computers, desks, paint, nails, and buckets are included in the classifications of industrial goods. List the other "classifications" including subclassifications for industrial goods. Answer: Industrial-goods classifications include material and parts, farm products, natural products, manufactured materials and parts, and component parts. Capital goods include installations and equipment. Supplies and business services include maintenance and repair items, operating supplies, and business advisory services. 132) To be branded, products must be differentiated. List the possible ways that physical products can be differentiated. Answer: Products can be differentiated according to form, features, customization, performance quality, conformance quality, durability, reliability, reparability, and style. 133) In your position as a marketing manager for a small industrial company, you have been asked by the president to help differentiate the company's product from its competitors. In reviewing your marketing management notes, you note that the text stated that physical products could be differentiated in nine ways. These nine areas comprise the “meat” of the memo you are writing to the president of your firm. What are the nine ways that physical products can be differentiated? Answer: The nine ways that physical products can be differentiated are form, features, customization, performance quality, conformance quality, durability, reliability, reparability, and style. 134) When a physical product cannot easily be differentiated, the key to competitive success may lie in adding valued services and improving quality. Identify the six main service differentiators. Answer: The six main service differentiators are (1) ordering ease, (2) delivery, (3) installation, (4) customer training, (5) customer consulting, and (6) maintenance and repair. 135) You have been asked to create a product system for your company's personal digital assistant. Before starting, you must define the term “product system” to the engineers to enable them to start design and production of the aligned items. Define the concept of a “product system.” Answer: A product system is a group of diverse but related items that function in a compatible manner. 136) You have been asked to prepare a product-line analysis for your company's stable of products. Why is it important for product-line mangers to do a product-line analysis? Answer: Product-line managers need to know the sales and profits of each item in their line in order to determine which items to build, maintain, harvest, or divest. They also need to understand each product line's market profile. 137) Explain the concept of line stretching and the three uses for it. Answer: Line stretching occurs when a company lengthens its product line beyond its current range. It includes down-market stretch (introduce a lower-priced line), up-market stretch (introduce an upscale line), or two-way stretch (introduce both an upscale line and a down-scale line). 138) As the newest member of the marketing department, your immediate boss asks you to comment on the company's proposal to add two new shoes to the company's middle-of-the-road pricing and product-line strategies. The first pair will retail for $40.00 and has as its target market the “bargain” shopper. The second pair will retail for $200.00 and is targeted at the “sophisticated shopper.” In relation to product-line strategy, what is the company trying to accomplish with these two new items? Answer: This is an example of the company trying a “two-way stretch”—introducing products at both ends of the consumer market simultaneously. 139) During a meeting, you were asked by the vice-president of marketing, to comment on the company's pricing strategy for its products. Recalling your marketing management course in college, your comments define the six situations involving product-mix pricing. List these six product-mix pricing strategies. Answer: Product-mix pricing includes product-line pricing, optional-feature pricing, captive-product pricing, two-part pricing, by-product pricing, and product-bundling pricing. 140) Outline three guidelines for correctly implementing a bundling strategy. Answer: Do not promote individual products in a package as frequently and cheaply as the bundle. Second, limit promotions to a single item in the mix if you still want to promote individual products. Third, if you decide to offer large rebates on individual products, it must be the absolute exception and done with discretion. 141) As the marketing manager for your firm, you have been approached by your key component manufacturer suggesting that your two firms “ingredient brand” a new item. What are some of the requirements for succeeding in ingredient branding? Answer: First, the consumer must perceive that the ingredient matters to the performance and success of the product. Secondly, consumers must be convinced that not all ingredient brands are the same and that the ingredient is superior. Third, a distinctive symbol or logo must clearly signal to consumers that the host product contains the ingredient. Fourth, a coordinated “pull” and “push” program must help consumers understand the importance and advantages of the branded ingredient. 142) Your research shows that over 53% of all purchases are made on impulse. As you sit down with your packaging design team, you tell them that the package must communicate many of the sales tasks. List the sales tasks that packaging must now incorporate due to the increase in self-service sales. Answer: These tasks are: attract attention, describe the product's features, create consumer confidence, and make a favorable overall impression. 143) In discussions with the packaging design team, you note that they do not have a firm design objective for the final package. In an internal memo to your boss, outline the objectives (both company and consumer orientated) that you wish to see implemented by the design team. Answer: The objectives of packaging are to identify the brand; convey descriptive and persuasive information; facilitate product transportation and protection; assist at-home storage; and aid product consumption. 144) Sellers must label their products. Labels serve many purposes beyond just “naming” the product. List the additional services provided by a product's label. Answer: A label identifies the product; a label might also grade the product; a label might describe the product; and the label might promote the product. A label may contain information required by law. 145) What is the importance of guarantees? Answer: Guarantees reduce the buyer's perceived risk. They suggest that the service/product is of high quality and that the company and its service performance are dependable. 146) What are the situations in which guarantees are most effective? Answer: Guarantees are most effective when either the company or the product is not well known, so a “money-back” guarantee in that case would reduce the buyer's perceived risk and provide them with confidence in purchasing the product. The second area is when the product/service is superior to competition in quality and performance. Chapter 13 Designing and Managing Services 1) Which of the following is a characteristic of a service? A) It is essentially tangible. B) It does not result in the ownership of anything. C) Its production is majorly tied to a physical product. D) Services are typically produced and consumed at different times. E) A client's presence is not required for rendering a service. Answer: B 2) Which of the following is an example of a pure tangible good? A) massage B) shampoo C) email D) restaurant meal E) air travel Answer: B 3) To which of the following categories of services does a mobile phone belong? A) major service with accompanying minor services B) major service with accompanying minor goods C) pure service D) pure tangible good E) tangible good with accompanying services Answer: E 4) A computer falls into the ________ category of service mix. A) pure tangible good B) tangible good with accompanying services C) hybrid D) major service with accompanying minor goods E) pure service Answer: B 5) Which of the following is an example of a hybrid service? A) teaching B) car C) restaurant meal D) soap E) air travel Answer: C 6) A flight with complementary drinks is an example of a ________. A) major service with accompanying minor goods and services B) pure service C) pure tangible good D) tangible good with accompanying services E) hybrid Answer: A 7) Which of the following is an example of a pure service? A) air travel B) psychotherapy C) baby oil D) a laptop E) a restaurant meal Answer: B 8) Which of the following is true for services? A) All services are people-based, while goods are equipment-based. B) Service providers can be both for-profit or nonprofit. C) All service companies follow the same process to deliver their services. D) The client's presence is a hindrance during the service delivery process. E) Service providers develop similar marketing programs for personal services and business services. Answer: B 9) Some services require that the client be present to conduct the service. Which of the following is an example of such a service? A) pest control B) furniture polishing C) surgery D) car repairing E) tax services Answer: C 10) Services high in ________ have characteristics that the buyers can evaluate before purchase. A) search qualities B) experience qualities C) credence qualities D) privacy qualities E) storing qualities Answer: A 11) Services high in ________ qualities have characteristics that the buyer can evaluate after purchase. A) privacy B) experience C) credence D) search E) stock Answer: B 12) Services high in ________ are those services that have characteristics the buyer normally finds hard to evaluate even after consumption. A) trial qualities B) search qualities C) experience qualities D) privacy qualities E) credence qualities Answer: E 13) Which one of the following would be considered high in credence qualities? A) an interior of a house B) a restaurant C) a haircut D) psychotherapy E) a computer Answer: D 14) Which one of the following is highest in search qualities? A) a play at a theater B) a meal at a restaurant C) a haircut D) psychotherapy E) a computer Answer: E 15) Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled before they are bought. This is known as the ________ aspect of services. A) inseparability B) intangibility C) variability D) perishability E) heterogeneity Answer: B 16) Which of the following will most help service providers overcome the limitation of intangibility of services when positioning itself? A) using brand symbols B) sharing services C) working with larger groups D) cultivating non-peak demand E) creating a service blueprint Answer: A 17) A brand that is action-oriented and causes consumers to engage in physical actions appeals to the ________ dimension of brand experience. A) sensory B) affective C) behavioral D) intellectual E) social Answer: C 18) BRZ Shoes targets the youth market with vibrant, visually appealing ads in modern styles. BRZ ads appeal to the ________ dimension of brand experience. A) sensory B) affective C) behavioral D) intellectual E) social Answer: A 19) BRZ Shoes positions itself as a young, adventurous brand. Its logo and brand communication try to give consumers a feeling of excitement and bravery. These ads appeal to the ________ dimension of brand experience. A) sensory B) affective C) behavioral D) intellectual E) social Answer: B 20) ________ refer(s) to logos, symbols, characters, and slogans that service providers use in order to make the service and its key benefits more tangible. A) Brand engagement B) Brand orientation C) Brand elements D) Brand loyalty E) Brand equity Answer: C 21) Which of the following is true regarding services? A) Services are typically produced, stored, and then consumed. B) Services are generally low in experience and credence qualities. C) Service providers develop similar marketing programs for personal services and business services. D) There is less risk associated with the purchase of services than with the purchase of goods. E) Provider-client interaction is a special feature of services marketing. Answer: E 22) The fact that services are typically produced and consumed simultaneously is known as the ________ aspect of services. A) perishability B) intangibility C) heterogeneity D) inseparability E) variability Answer: D 23) Service quality depends on who provides them, when and where, and to whom. Thus, services are highly ________. A) inseparable B) tangible C) variable D) perishable E) intangible Answer: C 24) Which of the following will help a service provider overcome the limits imposed by the inseparability of services? A) using differential pricing B) working with larger customer groups C) providing complementary services D) concentrating on physical evidence and presentation E) standardizing the service process Answer: B 25) Which of the following steps will help service firms to increase their quality control? A) standardizing the service-performance process B) providing complementary services to customers C) giving personnel authority in handling situations D) adopting differential pricing E) cultivating nonpeak demand Answer: A 26) In order to map out the service process, the points of customer contact, and the evidence of service from the customer's point of view, service firms should develop a ________. A) marketing plan B) service floor plan C) Gantt chart D) business plan E) service blueprint Answer: E 27) Jake had an appointment at the doctor's, but couldn't make it on time because he was caught in traffic. By the time he reached the doctor's office, the doctor had already begun with the next patient. This illustrates the ________ of services. A) variability B) heterogeneity C) perishability D) intangibility E) homogeneity Answer: C 28) When a theater sells matinee movie tickets at low prices, it aims to shift some demand from the peak to the off-peak period. What is the strategy that the theater is said to be adopting? A) It is providing complementary services. B) It is increasing peak-time efficiency. C) It is using linear pricing. D) It is using differential pricing. E) It is sharing services. Answer: D 29) A travel agency offers weekend discounts for car rentals. What can be deduced from this? A) It is increasing peak-time efficiency. B) It is using differential pricing. C) It is using linear pricing. D) It is cultivating peak demand. E) It is providing complementary services. Answer: B 30) In which of the following cases is a service provider trying to increase non-peak demand? A) A fine dining restaurant is promoting a breakfast service in addition to its popular lunch and dinner options. B) An upscale restaurant has a cocktail lounge where customers can wait until a table is ready. C) AXA Bank set up automated teller machines so that its customers could avoid standing in line. D) Chesterton College hired part-time teachers as enrollment increased significantly. E) Big department stores usually hire extra staff to handle the rush during the holiday season. Answer: A 31) The Caesar Park Hotel generally caters to business customers during the week, but has now decided to promote mini vacation weekends for non-business customers as well. What is the Caesar Park Hotel trying to do? A) It is implementing premium pricing. B) It is trying to cultivate nonpeak demand. C) It is promoting complementary services. D) It is putting reservation systems in place. E) It is implementing differential pricing. Answer: B 32) Cocktail lounges in restaurants are examples of ________. A) differential pricing B) cultivating nonpeak demand C) complementary services D) reservation systems E) shared services Answer: C 33) Which of the following is an example of a complementary service? A) Big department stores usually hire extra staff to handle the rush during the holiday season. B) The Caesar Park Hotel generally caters to business customers during the week, but has now decided to promote mini vacation weekends for non-business customers as well. C) More paramedics are on hand to assist physicians during times when emergency admissions are highest. D) AXA Bank set up automated teller machines so that its customers could avoid standing in line. E) Chesterton College hires part-time teachers when enrollment goes up. Answer: D 34) Giant has decided to hire extra staff during the holiday season. It is said to be ________. A) matching its supply with the existing demand B) generating non-peak demand C) increasing its customer participation D) sharing its services E) facilitating for its future expansion Answer: A 35) Kaya, a chain of skin clinics, requests each new visitor to fill up their own details on a printed form. This is a step in ________. A) increasing its peak-time efficiency B) creating nonpeak demand C) increasing consumer participation D) sharing its services E) facilitating its future expansions Answer: C 36) Customers today want separate prices for each service element and they also want the right to select the elements they want. The customers are said to be pressing for ________. A) complementary services B) perishable services C) variable services D) unbundled services E) shared services Answer: D 37) Often, a service problem arises from a customer's lack of understanding or ineptitude. Which of the following can help to minimize customer failures? A) giving customers exclusive primary service packages B) redesigning processes to simplify service encounters C) using differential pricing and shared services D) minimizing service intangibility E) working with more customers at the same time Answer: B 38) ________ refers to the normal work of preparing, pricing, distributing, and promoting the service to customers. A) Interactive marketing B) Internal marketing C) External marketing D) Promotional marketing E) Direct marketing Answer: C 39) ________ refers to training and motivating employees to serve customers well. A) External marketing B) Promotional marketing C) Direct marketing D) Internal marketing E) Interactive marketing Answer: D 40) ________ describes the employees' skill in serving the client. A) External marketing B) Internal marketing C) Promotional marketing D) Direct marketing E) Interactive marketing Answer: E 41) Susan wanted to check out a new salon in her locality, so she decided to go for a hair styling session. She was very happy with the way her stylist connected and related with her concerns. She is judging the service based on its ________. A) promotional marketing B) functional quality C) technical quality D) search qualities E) external marketing Answer: B 42) In which of the following does a customer respond to the technical quality of a service? A) Sara's preferred hair stylist is some miles away, but Sara goes to him because his styles suit her looks. B) Kathy tries out a new restaurant every week, because she likes to experience the variety. C) Bill has gone to the same chiropractor for the past fifteen years, because he is friendly and takes the time to listen to Bill. D) Ray avoids going to the bank as far as possible because the manager is rude and unhelpful. E) Alex has no interest in theater, but goes often because her best friend loves plays. Answer: A 43) In which of the following does a customer respond to the functional quality of a service? A) Sara's preferred hair stylist is some miles away, but Sara goes to him because his styles suit her looks. B) Kathy tries out a new restaurant every week, because she likes to experience the variety. C) Bill has gone to the same chiropractor for the past fifteen years, because he is friendly and takes the time to listen to Bill. D) Ray's mechanic charges high prices for service, but his work is good and worth the price. E) Alex has no interest in theater, but goes often because her best friend loves plays. Answer: C 44) Firms have decided to raise fees and lower service for those customers who barely pay their way and to coddle big spenders to retain their patronage as long as possible. This is an example of organizing customers by ________. A) retailer convenience B) profit tiers C) psychographic characteristics D) social influence E) customer preference Answer: B 45) Charles's best customers are instantly directed to customer service representatives, while other customers have to wait longer. Charles is trying to ________. A) monitor its service systems B) empower the customers C) retain the patronage of profitable customers D) increase consumer participation E) standardize the service-performance process Answer: C 46) The ________ rates the various elements of the service bundle and identifies required actions. A) company performance analysis B) voice of customer measurement C) customer factor measurement D) importance-performance analysis E) customer importance analysis Answer: D 47) Customers who view a service as homogeneous ________. A) only patronize a preferred service provider B) judge services on the basis of the providers C) care less about the provider than about the price D) pick a service provider based on functional attributes E) opt for the service with the highest price, irrespective of quality Answer: C 48) Hyatt Hotels provides complimentary breakfast buffets to all its guests. This is an example of a ________. A) primary service package B) service interface C) service support D) service frequency E) secondary service feature Answer: E 49) Although Brenda previously used UPS because it offered better prices on package shipping, she now uses only FedEx, because it gives her the facility of shipping from any FedEx location 24 hours a day. Which of the following factors led to Brenda's customer switching behavior? A) inconvenience B) pricing C) response to service failure D) ethical problems E) involuntary switching Answer: A 50) Angela switched to a new hair stylist after getting a bad haircut from her previous stylist. This is an example of which of the following factors leading to customer switching behavior? A) service encounter failure B) core service failure C) response to service failure D) involuntary switching E) competition Answer: B 51) Dean recently had a BRZ broadband connection installed. However, the connection was bad and he didn't get the quality he required. He contacted BRZ about the problem, but the company did not solve his problem. Dean switched to Blue Broadband. Which of the following was the cause of Dean's switching behavior? A) involuntary switching B) competition C) response to service failure D) service encounter failures E) inconvenience Answer: C 52) MGC Inc. organizes a company-wide picnic once a year. The organizers arranged for the best possible menu thinking that food would be a priority, but the staff were disappointed because the activities were very poorly planned. What kind of a gap is apparent here? A) gap between perceived service and expected service B) gap between service delivery and external communications C) gap between service-quality specifications and service delivery D) gap between management perception and service-quality specification E) gap between consumer expectation and management perception Answer: E 53) Which of the following is an example of a gap between management perception and the service-quality specifications? A) The college brochure showed state-of-the-art classrooms, but when the visitors walked in, they saw peeling walls and dull lighting. B) A nurse visits a patient to show care, but the patient interprets this as an indication that something is very wrong. C) The hotel administrators think that guests want better food, but guests are more concerned with the courtesy of the waiters. D) A service center manager has asked his subordinates to provide fast service, but has not specified a time for the service to be performed. E) Customer service representatives are asked to give ample time to each customer, but must serve a minimum of 50 customers a day. Answer: D 54) The customer service representatives at a call center have been asked to handle each call in not more than five minutes. A recent customer survey by the company revealed that customers appreciate it when employees take the time to answer their questions fully and listen to their grievances. What kind of service gap is apparent here? A) gap between perceived service and expected service B) gap between service delivery and external communications C) gap between service-quality specifications and service delivery D) gap between management perception and service-quality specification E) gap between consumer expectation and management perception Answer: D 55) The customer service representatives at a call center have been asked to handle each call in not more than five minutes. At the same time, they have been asked to answer all customer queries in detail and provide appropriate solutions. What kind of service gap is apparent here? A) gap between perceived service and expected service B) gap between service delivery and external communications C) gap between service-quality specifications and service delivery D) gap between management perception and service-quality specification E) gap between consumer expectation and management perception Answer: C 56) Which of the following is an example of a gap between service delivery and external communications? A) The employees at GBL have been asked to take time to listen to customers, but they must serve them fast as well. B) Amanda chose to shop at Alison's Fashions because the store's website offered on-the-spot alterations. However, when she did buy a dress, she had to wait a week to get it altered. C) Customers at LUX appreciate the personalized services the salespeople offer, but do not like the store design. D) Clearwater Spa attendants are well-trained in massage therapy and the services they offer, but customers rarely return because they don't like the attendants' impersonal service. E) When sales dropped, Styx modernized its stores in order to retain customers, but didn't realize that the product quality was the main problem. Answer: B 57) Ellen came across an ad for a new restaurant which promised authentic French cuisine. When she ate there, however, she was disappointed to find that the food was mediocre and not very authentic. Which of the following gaps of service performance does this demonstrate? A) gap between service-quality specifications and service delivery B) gap between perceived service and expected service C) gap between service delivery and external communications D) gap between consumer expectation and management perception E) gap between management perception and service-quality specification Answer: C 58) When Aaron went to his doctor for his annual checkup, he was asked to undergo a number of tests. Although the doctor assured Aaron that the tests were routine, Aaron thinks that the doctor is hiding a grave problem from him. What kind of a gap is apparent here? A) gap between perceived service and expected service B) gap between service delivery and external communications C) gap between service-quality specifications and service delivery D) gap between management perception and service-quality specification E) gap between consumer expectation and management perception Answer: A 59) The most important determinant of service quality is ________ which refers to the ability to perform the promised service dependably and accurately. A) empathy B) assurance C) responsiveness D) reliability E) tangibles Answer: D 60) The customer service representatives at G.K.'s customer service center must know as much about the products as possible, so that they can help the customers solve their difficulties without sounding hesitant or unsure of themselves. Which of the following determinants of service quality are they being asked to demonstrate? A) responsiveness B) assurance C) empathy D) reliability E) tangibility Answer: B 61) Josh gets his bike serviced at Dean's Garage even though there's another garage much closer to home. He prefers Dean's because the work is usually done quickly and the staff try to solve the issues with the bike as soon as possible. Dean's Garage excels at which of the following five determinants of service quality? A) reliability B) responsiveness C) assurance D) empathy E) tangibles Answer: B 62) The ________ determinant of service quality refers to the knowledge and courtesy of employees and their ability to convey trust and confidence in the service they provide. A) conscientious B) assurance C) empathy D) reliability E) responsiveness Answer: B 63) Leo's manager has asked him and his teammates to demonstrate caring towards customers. They are instructed to learn the customers’ names, and use the customers' names while interacting with them. Repeat customers should get special attention, and the team members should remember their preferences and habits. The manager is asking the team to be ________. A) assuring B) candid C) empathetic D) reliable E) responsive Answer: C 64) Gloria goes to the same bagel shop every morning because the workers there remember her name and know her order. They always make her feel welcome. The employees of this bagel shop excel at which of the following determinants of service quality? A) reliability B) responsiveness C) assurance D) empathy E) tangibles Answer: D 65) The zone of ________ is a range where a service dimension is deemed satisfactory, anchored by the minimum level consumers are willing to accept and the level they believe can and should be delivered. A) immunity B) tolerance C) reliability D) assurance E) flexibility Answer: B 66) According to the dynamic process model, two different types of expectations have opposite effects on perceptions of service quality. One of these is that ________. A) increasing customer expectations of what the firm will deliver improve the perceptions of overall service quality B) increasing customer expectations of what the firm will deliver decrease the perceptions of overall service quality C) decreasing customer expectations of what the firm should deliver decrease the perceptions of overall service quality D) decreasing customer expectations of what the firm will deliver improve the perceptions of overall service quality E) increasing customer expectations of what the firm should deliver improve the perceptions of overall service quality Answer: A 67) When customers calculate the perceived economic benefits of a continuously provided service in relationship to the economic costs, they are gauging the ________. A) private equity B) brand equity C) payment equity D) customer-service equity E) product-service equity Answer: C 68) A ________ refers to any place at which a company seeks to manage a relationship with a customer, whether through people, technology, or some combination of the two. A) customer service interface B) product-customer interface C) tangible user interface D) attentive user interface E) crossing-based interface Answer: A 69) Regular maintenance and repair costs are known as ________. A) service contract costs B) out-of-pocket costs C) fixed costs D) facilitating services costs E) value-augmentation costs Answer: B 70) The product's purchase cost plus the discounted cost of maintenance and repair less the discounted salvage value gives the ________. A) service warranty cost B) out-of-pocket cost C) life-cycle cost D) facilitating services cost E) value-augmentation cost Answer: C 71) Expensive equipment manufacturers not only install the equipment but also train the staff and undertake the maintenance and repair activities of the equipment. By doing so, they are providing ________. A) payment equity B) value-augmenting services C) differential pricing D) facilitating services E) a primary service package Answer: D 72) When Johnson Controls reached beyond its climate control equipment and components business to manage integrated facilities by offering products and services that optimize energy use, it was said to be providing ________. A) facilitating services B) a primary service package C) value-augmenting services D) service contracts E) service warranties Answer: C 73) When sellers agree to provide free maintenance and repair services for a specified period of time at a specified contract price, they are offering ________. A) a complementary service B) payment equity C) a service blueprint D) differential pricing E) an extended warranty Answer: E 74) The private non-profit sector is a provider of services. Answer: True 75) A service is essentially intangible. Answer: True 76) A service results in ownership on the part of the client. Answer: False 77) The production of a service is never tied to a physical product. Answer: False 78) Soap is an example of a pure tangible good. Answer: True 79) Salt is an example of a hybrid. Answer: False 80) A hybrid consists of unequal parts of goods and services, with services being in the majority. Answer: False 81) A pure service requires a capital-intensive good, but the primary item is a service. Answer: False 82) All services require the client to be present. Answer: False 83) The search qualities of a service are the characteristics the buyer can evaluate before purchase. Answer: True 84) Credence qualities of a service are difficult to evaluate before purchase, but easy to evaluate after consumption. Answer: False 85) The experience qualities of a good or service can be evaluated after purchase. Answer: True 86) Furniture is high in credence qualities. Answer: False 87) While goods meet personal needs, services meet business needs. Answer: False 88) Services have five distinctive characteristics, one of these being “pure service.” Answer: False 89) Intangibility with regards to a service means that the service cannot be duplicated across providers. Answer: False 90) Service companies try to demonstrate their service qualities through physical evidence and presentation. Answer: True 91) Inseparability in the context of a service means that there is a provider-client interaction involved as the provider is part of the service. Answer: True 92) A service provider can work with larger groups to get around the limitations of inseparability. Answer: True 93) Service buyers are aware of this variability and often talk to others before selecting a service provider. Answer: True 94) Customers want unbundled services, with separate prices for each service element and the right to select the elements they want. Answer: True 95) External marketing describes the training and motivation required by employees in order to properly serve the customers. Answer: False 96) Interactive marketing describes the employees’ skill in serving the client. Answer: True 97) Clients judge service not only by its technical quality but also by its functional quality. Answer: True 98) Importance-performance analysis rates the various elements of the service bundle and identifies required actions. Answer: True 99) Customers who view a service as fairly homogeneous care less about the provider than about the price. Answer: True 100) What the customer expects from a service is called the primary service package. Answer: True 101) Secondary service features are the features that the customer himself adds to the service. Answer: False 102) Pricing has no negative effect on customer loyalty. Answer: False 103) If the expected service falls below the perceived service, customers are disappointed. Answer: False 104) Responsiveness is a company's willingness to help customers and provide prompt service. Answer: True 105) Reliability refers to the company's willingness to help customers and provide them with prompt service. Answer: False 106) The appearance of physical facilities, equipment, personnel, and communication materials are the tangibles that convey service quality to consumers. Answer: True 107) The zone of tolerance for a service is the perceived economic benefits in relationship to the economic costs. Answer: False 108) The payment equity for a service is a range from the minimum level of service consumers are willing to accept to the level they believe can and should be delivered. Answer: False 109) A customer-service interface is defined as any place at which a company seeks to manage a relationship with a customer. Answer: True 110) If the length of the downtime increases, the cost incurred decreases. Answer: False 111) A product's purchase cost plus the discounted cost of maintenance and repair less the discounted salvage value is known as the product's activity cost. Answer: False 112) Out-of-pocket costs are what the customer spends on regular maintenance and repair costs. Answer: True 113) Value-augmenting services include installation, staff training, maintenance and repair services, and financing. Answer: False 114) List and briefly explain with examples the five categories of service offerings. Answer: The five categories of service offerings are: a. Pure tangible goods: These are tangible goods with no accompanying services. For example, soap or toothpaste. b. Tangible good with accompanying services: The tangible good is accompanied by one or more services. Typically, the more technologically advanced the product, the greater the need for high-quality supporting services. For instance, car or computer. c. Hybrid: It is an offering of equal parts goods and services. For example, a meal in a restaurant. d. Major service with accompanying minor goods and services: This offering requires a capital-intensive good, but the primary item is a service. For instance, an air travel that is accompanied by snacks and drinks. e. Pure service: This refers primarily to an intangible service. For example, psychotherapy or massage. 115) List and briefly explain the four distinctive characteristics of services. Answer: The four distinctive service characteristics that greatly affect the design of marketing programs are: a. Intangibility: Services cannot be seen, tasted, felt, heard, or smelled before they are bought. To reduce uncertainty, buyers will look for evidence of quality by drawing inferences from the place, people, equipment, communication material, symbols, and price. b. Inseparability: Services are typically produced and consumed simultaneously. Both the provider and the client are a part of the service. c. Variability: Because services depend on who provides them and when and where, and to whom, services are highly variable. Service buyers are aware of this variability and often talk to others before selecting a service provider. d. Perishability: Services cannot be stored, so their perishability can be a problem when demand fluctuates. That is why public transportation companies must own much more equipment because of rush-hour demand than if demand were even throughout the day. 116) List three steps that service firms can take to increase quality control over services and reduce variability. Answer: Three steps that service firms can take to increase quality control and reduce variability in services are: a. Invest in good hiring and training procedures: Recruiting the right employees and providing them with excellent training is crucial, regardless of whether employees are highly skilled professionals or low-skilled workers. Better-trained personnel exhibit six characteristics: competence, courtesy, credibility, reliability, responsiveness, and communication. b. Standardize the service-performance process throughout the organization: A service blueprint maps out the service process, the points of customer contact, and the evidence of service from the customer's point of view. c. Monitor customer satisfaction: Service firms can employ suggestion and complaint systems, customer surveys, and comparison shopping. Customer needs vary in different areas. This allows firms to develop region-specific customer satisfaction programs. Firms can also develop customer information databases and systems for more personalized service, especially online. 117) Several strategies exist for managing the supply and demand of services. List the strategies for managing each and give an example of each strategy. Answer: Several strategies can produce a better match between service demand and supply. On the demand side, these strategies include the following: a. Differential pricing: This will shift some demand from peak to off-peak periods. For example, low matinee movie prices and weekend discounts for car rentals. b. Nonpeak demand: This can be cultivated. For instance, McDonald's pushes its breakfast service, and hotels promote mini-vacation weekends. c. Complementary services: These can provide alternatives to waiting customers. For example, cocktail lounges in restaurants and automated teller machines in banks. d. Reservation systems: These are one of the many ways to manage the demand level. For instance, airlines, hotels, and physicians employ them extensively. On the supply side, these strategies include the following: a. Part-time employees: They can serve peak demand. For example, colleges add part-time teachers when enrollment goes up and stores hire extra clerks during holiday periods. b. Peak-time efficiency: These routines can allow employees to perform only essential tasks during peak periods. For instance, paramedics assist physicians during busy periods. c. Increased consumer participation: This frees service providers' time. For example consumers can fill out their own medical records or bag their own groceries. d. Shared services: These can improve offerings. For instance, several hospitals can share medical-equipment purchases. e. Facilities for future expansion: This can be a good investment. For example, an amusement park can buy surrounding land for later development. 118) Define customer failures and list four methods to tackle them. Answer: Customer failures refer to situations where service problems arise from a customer's lack of understanding or ineptitude. Some of the methods to solve such situations include the following: a. Redesigning processes and redefining customer roles to simplify service encounters b. Incorporating the right technology to aid employees and customers c. Creating high-performance customers by enhancing their role clarity, motivation, and ability d. Encouraging “customer citizenship” so that customers help customers 119) Marketing excellence with services requires excellence in three broad areas. List and explain the three areas. Answer: The three areas in which services require excellence are: a. External marketing: This describes the normal work of preparing, pricing, distributing, and promoting the service to customers. b. Internal marketing: This describes training and motivating employees to serve customers well. c. Interactive marketing: This describes the employees’ skill in serving the client. Clients judge service not only by its technical quality but also by its functional quality. 120) List the eight different variables that influence service outcome and customer loyalty. Answer: The eight major variables that influence service outcome and customer loyalty are: a. Pricing: High price, price increases, unfair pricing, or deceptive pricing prompt customers to change their loyalty. b. Inconvenience: If a customer is made to wait for his appointment or service, there is a chance that he will think of shifting his loyalty. c. Core service failure: Service failures, billing errors, or service catastrophe influence service outcome and customer loyalty. d. Service encounter failures: If the customer service representative is uncaring, impolite, unresponsive, or unknowledgeable, the service outcome and customer loyalty is influenced. e. Response to service failure: If the customer service representative exhibits negative response or reluctant response or no response at all, the customer's loyalty is likely to shift. f. Competition: A customer's loyalty changes if he finds a better service. g. Ethical problems: If a customer thinks that the service provider is a cheat or his services are unsafe, then he starts looking for another service provider. h. Involuntary switching: If the customer has to shift his base or the service provider has to close down, the customer's loyalty undergo an involuntary shifting. 121) The service-quality model highlights the main requirements for delivering high service quality. Which are the five gaps that cause unsuccessful delivery? Answer: The five gaps that cause unsuccessful customer service delivery are as follows: a. The gap between consumer expectation and management perception: The management does not always correctly perceive what customers want. b. The gap between management perception and service-quality specification: The management might correctly perceive customers' wants but not set a performance standard. c. The gap between service-quality specifications and service delivery: The employees might be poorly trained, or incapable of or unwilling to meet the standard, or they may be held to conflicting standards, such as taking time to listen to customers and serving them fast. d. The gap between service delivery and external communications: The consumers' expectations are affected by statements made by company representatives and ads. e. The gap between perceived service and expected service: This gap occurs when the consumer misperceives the service quality. 122) Based on the service-quality model, researchers have identified five determinants of service quality. List and briefly explain each. Answer: The five determinants of service quality are: a. Reliability: It is the ability to perform the promised service dependably and accurately. b. Responsiveness: It refers to the willingness to help customers and to provide prompt service. c. Assurance: It is the knowledge and courtesy of employees and their ability to convey trust and confidence. d. Empathy: It refers to the provision of caring, individualized attention to customers. e. Tangibles: It is the appearance of physical facilities, equipment, personnel, and communication materials. 123) Traditionally, customers have had three specific worries about product service. What are they? Answer: Manufacturers of equipment—small appliances, office machines, tractors, mainframes, airplanes—must provide product-support services. The three specific worries about product services that customers face are: a. They worry about reliability and failure frequency. For example, a farmer may tolerate a combine that will break down once a year, but not two or three times a year. b. They worry about downtime. The longer the downtime, the higher the cost. The customer counts on the seller's service dependability which refers to the seller's ability to fix the machine quickly or at least provide a loaner. c. They worry about out-of-pocket costs, which refers to the amount they have to spend on regular maintenance and repair costs. 124) There are five categories of service offerings depending upon whether or not the service component is minor or major. In which of the five categories would you place a haircut? Answer: A hair salon would be considered a pure service because the service provided by a hair salon is primarily intangible in nature. 125) Give an example of a pure service provided by a company. Answer: Student answers may vary. Examples of a pure service include babysitting, psychotherapy, career counseling, or a massage. An example of a pure service provided by a company is **consulting services** offered by management consulting firms. These services involve advising clients on strategic decisions, problem-solving, and improving organizational performance without the transfer of physical goods. Clients benefit from expertise, analysis, and recommendations tailored to their specific business challenges, highlighting the intangible nature of pure services in the consulting industry. 126) Best Western is a mid-sized hotel chain that is entering a competitive market. The chain needs to differentiate its service from that of competitors, positioning itself as a hotel with excellent service at an affordable price. However, the intangible nature of services makes this difficult to demonstrate. How can Best Western convey its message effectively to prospective guests using marketing tool of place? Answer: Student answers may vary. Best Western should try to demonstrate its service quality through physical evidence and presentation. Best Western can use ‘place’, i.e., the hotels themselves, by designing the hotels to reflect its desired attributes. The hotel design should not be too ornate or fancy, but not too basic either. Best Western can effectively convey its message of excellent service at an affordable price through the marketing tool of place by: 1. Physical Environment: Ensuring hotel properties are well-maintained, clean, and welcoming to create a positive first impression. 2. Location Strategy: Choosing strategic locations that emphasize accessibility and convenience for travelers. 3. Ambiance and Atmosphere: Creating a comfortable and inviting atmosphere through decor, amenities, and personalized guest interactions. 4. Customer Testimonials and Reviews: Showcasing positive guest experiences and feedback on platforms like their website