Preview Extract
Chapter 11 Unique Marketing Issues
1) True You Cosmetics, the company profiled in the opening feature in Chapter 11, sells
cosmetics products. The company's marketing efforts to date have focused heavily on:
A) Google AdWords and AdSense
B) print advertising
C) radio
D) social media
E) television advertising
Answer: D
Rationale:
Social media is a common platform for cosmetics companies to engage with their audience,
showcase products, and leverage influencer partnerships, making it a likely focus for True You
Cosmetics' marketing efforts.
2) Andy Sanders owns a sporting goods store that appeals to hunters and fishermen. The market
that Andy is trying to appeal to is called his:
A) focal market
B) objective market
C) target market
D) critical market
E) intention market
Answer: C
Rationale:
The target market is the specific group of consumers toward which a business aims its products
or services, in this case, hunters and fishermen who are interested in sporting goods.
3) The first step in selecting a target market is to study the industry in which the firm intends to
compete and determine the different potential target markets in that industry. This process is
called:
A) market positioning
B) market splitting
C) market targeting
D) market subdividing
E) market segmentation
Answer: E
Rationale:
Market segmentation involves dividing a market into distinct groups of buyers who have
different needs, characteristics, or behaviors, which is the initial step before selecting a target
market.
4) Which of the following is the correct sequence of events in regard to the process of selecting a
target market and position strategy?
A) creating a unique positioning strategy, selecting a target market, segmenting the market
B) segmenting the market, creating a unique positioning strategy, selecting a target market
C) segmenting the market, selecting a target market, creating a unique positioning strategy
D) selecting a target market, creating a unique positioning strategy, segmenting the market
E) creating a unique positioning strategy, segmenting the market, selecting a target market
Answer: C
Rationale:
The correct sequence is to first segment the market, then select a target market from those
segments, and finally create a unique positioning strategy to appeal to that target market.
5) Brenda Berry is thinking about starting a computer company. After doing some research, she
has decided that the computer industry can be divided into the following product categories:
handheld computers, laptops, tablet computers, PCs, minicomputers, and mainframes. She is
now trying to decide which product category she is the most interested in competing in. The
process that Brenda is going through is called:
A) market splitting
B) market subdividing
C) market segmentation
D) market dividing
E) market separating
Answer: C
Rationale:
Market segmentation involves dividing the market into distinct groups based on various factors,
such as product type or customer needs, which Brenda is doing by considering different product
categories within the computer industry.
6) Once a firm has segmented the market, the next step is to:
A) decide on a position within the segment
B) select a critical market
C) select a target market
D) select a focal market
E) immediately decide on the "4Ps" of the marketing strategy
Answer: C
Rationale:
After segmenting the market, the next step is to select a target market from the identified
segments, determining which group of customers the firm will focus its marketing efforts on.
7) A ________ is a place within a market segment that represents a narrower group of customers
with similar interests.
A) position market
B) niche market
C) slot market
D) spot market
E) gap market
Answer: B
Rationale:
A niche market refers to a more specialized segment within a broader market, consisting of
customers with specific needs or interests that may not be adequately addressed by mainstream
products or services.
8) Research in Motion (RIM) is a handheld computer company that focuses specifically on
business users that need dependable access to e-mail and the Internet while away from their
office. For RIM, this specific type of user within the large business market segment is referred to
as its:
A) gap market
B) task market
C) position market
D) hole market
E) niche market
Answer: E
Rationale:
RIM's focus on business users with specific needs represents a niche market within the larger
business market segment, catering to a specialized group of customers.
9) A(n) ________ is the set of attributes—positive or negative—that people associate with a
company.
A) emblem
B) logo
C) symbol
D) brand
E) trade name
Answer: D
Rationale:
A brand encompasses the perceptions and associations that consumers have with a company,
including its products, services, and reputation, influencing their purchasing decisions and
loyalty.
10) Which of the following selections is incorrect regarding a firm's "positioning" strategy?
A) Position is concerned with how the firm is situated relative to its competitors.
B) A firm's decision about how to position itself relative to its competitors starts with a product
or service idea that is tested and refined through feasibility analysis and marketing research.
C) Position is concerned with how a firm is situated relative to competitors.
D) Once a firm positions itself in a certain way, it must be able to follow through with a product
or service offering that lives up to the image it has created.
E) After selecting a positioning strategy, the firm's next step is to select a target market.
Answer: E
Rationale:
The correct sequence is to first select a target market, then create a positioning strategy to appeal
to that target market. Selecting a positioning strategy before identifying the target market would
not align with effective marketing practices.
11) A ________ illustrates a firm's positioning strategy relative to its major rivals.
A) product attribute map
B) positioning analysis grid
C) positioning plot
D) competitive analysis grid
E) positioning diagram
Answer: A
Rationale:
A product attribute map visually represents how a firm's products or services are positioned
relative to those of its competitors based on key attributes or features, helping to identify
competitive advantages or gaps in the market.
12) A product attribute map is used to help a firm determine:
A) if it is emphasizing benefits rather than features
B) if its branding strategy is appropriate
C) if its market segmentation is correct
D) if its positioning strategy is appropriate
E) if its target market is appropriate
Answer: D
Rationale:
A product attribute map is used to assess whether a firm's positioning strategy is appropriate by
comparing how its products or services are perceived relative to competitors in terms of key
attributes or features.
13) Nike's familiar phrase "Just do it" is an example of a(n):
A) attention-line
B) tagline
C) notice-line
D) catchline
E) grabline
Answer: B
Rationale:
A tagline is a memorable phrase used in advertising that captures the essence of a brand or
product, such as Nike's "Just do it," which conveys a sense of motivation and empowerment.
14) InstyMed's phrase "We make patients better quicker" is an example of a(n):
A) tagline
B) grabline
C) notice-line
D) catchline
E) attention-line
Answer: A
Rationale:
Similar to Nike's tagline, InstyMed's phrase serves as a succinct statement of the company's
value proposition, emphasizing the benefit it provides to customers.
15) Which of the following statements is correct regarding the concept of branding?
A) Brands cannot be built through advertising, public relations, sponsorships, social media, or
similar techniques.
B) A company doesn't normally want its customers to identify with its brand.
C) Startups usually start with an established brand.
D) A brand can be one of a company's most valuable assets.
E) A brand can denote a negative impression of a company.
Answer: D
Rationale:
A brand can be one of a company's most valuable assets because it represents the reputation,
perceptions, and associations that consumers have with the company and its products or services,
influencing their purchasing decisions and loyalty.
16) Some companies monitor the integrity of their brands through a program of:
A) brand administration
B) brand persistence
C) brand determination
D) brand resolution
E) brand management
Answer: E
Rationale:
Brand management involves monitoring and maintaining the integrity of a brand, ensuring that it
remains consistent and aligns with the company's values and objectives.
17) The What Went Wrong feature in Chapter 11 focuses on Ugobe, the company that made
Pleo, a small robotic baby dinosaur. Ugobe failed primarily because it didn't establish a clear:
A) positioning strategy
B) branding strategy
C) social media strategy
D) financial strategy
E) advertising strategy
Answer: A
Rationale:
Ugobe's failure to establish a clear positioning strategy meant that it was unable to effectively
differentiate its product in the market, leading to challenges in attracting customers and
generating sales.
18) According to the textbook, a brand is all of the following except:
A) reputation
B) collection of memories
C) a pledge
D) a promise
E) a written warranty
Answer: E
Rationale:
A brand is often described as a reputation, a collection of memories and associations, a pledge or
promise to customers, but it is not specifically a written warranty, which is a legal document
outlining the terms and conditions of a product's warranty.
19) Creating ________ means creating awareness and a sense of anticipation about a company
and its offerings.
A) ruckus
B) noise
C) clatter
D) clamor
E) buzz
Answer: E
Rationale:
Buzz refers to generating excitement and interest around a company and its offerings, creating
awareness and anticipation among consumers.
20) Which of the following statements is incorrect regarding the process of building a company's
brand?
A) A firm's name, logo, Web site design, and even its letterhead are part of its brand.
B) One of the keys to effective branding is to create a strong personality for a firm.
C) Some companies monitor the integrity of their brands through brand management.
D) Startups must build a brand from scratch, which starts with selecting the company's name.
E) Most experts recommend a heavy reliance on advertising in building a firm's brand.
Answer: E
Rationale:
While advertising can play a role in building a brand, most experts emphasize the importance of
a comprehensive branding strategy that goes beyond advertising, including aspects such as brand
identity, positioning, and customer experience.
21) ________ is a term that denotes the set of assets and liabilities that are linked to a brand and
enable it to raise a firm's valuation.
A) Trademark equity
B) Brand equity
C) Logo equity
D) Trademark value-added
E) Trade name strength
Answer: B
Rationale:
Brand equity refers to the value that a brand adds to a product or service. It includes factors such
as brand recognition, customer loyalty, perceived quality, and brand associations. Brand equity
can significantly impact a firm's valuation as it represents the value of the brand's reputation and
customer relationships.
22) According to the textbook, a successful brand can increase the market value of a company
by:
A) 5 to 10 percent
B) 20 to 30 percent
C) 40 to 50 percent
D) 50 to 75 percent
E) 75 to 100 percent
Answer: D
Rationale:
A successful brand can increase the market value of a company by 50 to 75 percent. This
increase is due to the brand's ability to attract customers, create loyalty, and differentiate the
company's products or services from competitors.
23) The Savvy Entrepreneurial Firm feature in Chapter 11 focuses on Airbnb, the company that
created a marketplace for people to list, discover, and book unique spaces in people's homes or
apartments while traveling. According to the feature, Airbnb was able to generate substantial
buzz about its service via the use of:
A) Facebook
B) Google AdSense
C) blogs
D) newspaper ads
E) Twitter
Answer: C
Rationale:
Airbnb generated substantial buzz about its service through the use of blogs. By leveraging
bloggers and social media influencers, Airbnb was able to reach a large audience and generate
interest in its unique offering.
24) A firm's ________ is the set of controllable, tactical marketing tools that it uses to produce
the response it wants in the target market.
A) tactical mix
B) promotional blend
C) organizational mix
D) marketing mix
E) selling mix
Answer: D
Rationale:
A firm's marketing mix refers to the set of controllable, tactical marketing tools that it uses to
produce the desired response from its target market. These tools include product, price,
promotion, and place (distribution).
25) Which of the following is not one of the four elements that constitute a firm's marketing
mix?
A) price
B) promotion
C) passion
D) place (or distribution)
E) product
Answer: C
Rationale:
Passion is not one of the four elements of a firm's marketing mix. The marketing mix consists of
product, price, promotion, and place (distribution), which are the key components that a firm can
control to influence customer behavior.
26) A firm's marketing mix consists of the following four elements:
A) product, price, promotion, and place
B) passion, pride, promotion, and place
C) passion, pleasure, product, and price
D) enthusiasm, passion, product, and price
E) place, promotion, passion, and product
Answer: A
Rationale:
The marketing mix consists of product, price, promotion, and place (distribution). These are the
controllable elements that a firm can use to influence customer behavior and achieve its
marketing objectives.
27) A firm's ________, in the context of its marketing mix, is the good or service it offers to its
target market.
A) conception
B) idea
C) formation
D) product
E) invention
Answer: D
Rationale:
In the context of a firm's marketing mix, the product is the good or service that the firm offers to
its target market. It is the tangible or intangible offering that satisfies a customer's need or want.
28) A ________ is something that takes on a physical form, such as an MP3 player or a laptop
computer. A ________ is an activity or benefit that is intangible, such as an airplane trip or
advice from an attorney.
A) product, service
B) service, component
C) component, service
D) formation, service
E) service, product
Answer: A
Rationale:
A product is something that takes on a physical form, such as an MP3 player or a laptop
computer. A service, on the other hand, is an intangible activity or benefit, such as an airplane
trip or advice from an attorney.
29) A(n) ________ is an early user of a firm's product who is willing to give a testimonial
regarding his or her experience with the product.
A) tribute account
B) reference account
C) approval report
D) appreciation account
E) acknowledgment report
Answer: B
Rationale:
A reference account is an early user of a firm's product who is willing to give a testimonial
regarding his or her experience with the product. Reference accounts can be valuable in building
credibility and trust with potential customers.
30) Before Kim Green opened her jiffy print store, she processed several large print jobs for
local merchants for free, to demonstrate the quality of her service and to solicit feedback. Two of
the merchants wrote favorable reviews of Kim's service, and agreed to let Kim post the reviews
on her company's Web site. The companies that wrote the favorable reviews are referred to as:
A) appreciation reports
B) acknowledgement accounts
C) referent accounts
D) tribute reports
E) approval reports
Answer: C
Rationale:
The companies that wrote the favorable reviews are referred to as referent accounts. These are
customers or clients who are satisfied with a firm's product or service and are willing to provide
testimonials or referrals to others.
31) The amount of money consumers pay to buy a product is its:
A) price
B) fee
C) value
D) cost
E) charge
Answer: A
Rationale:
The price of a product is the amount of money consumers pay to buy it. Price is a key element of
the marketing mix and plays a significant role in determining consumer behavior and perceptions
of value.
32) Which element of the marketing mix is the only one that produces revenue?
A) product
B) place (or distribution)
C) advertising
D) price
E) promotion
Answer: D
Rationale:
Price is the only element of the marketing mix that directly produces revenue. The price that a
firm sets for its products or services determines the revenue it generates from sales.
33) In ________, the list price of an item is determined by adding a markup percentage to a
product's cost.
A) cost-based pricing
B) compliance-based pricing
C) value-based pricing
D) competitive-based pricing
E) economic-based pricing
Answer: A
Rationale:
Cost-based pricing is a pricing strategy where the list price of an item is determined by adding a
markup percentage to the product's cost. This method ensures that the firm covers its costs and
generates a profit.
34) Pat Walker owns an environmental services company. The way Pat prices her services is to
figure her cost and then add a 22 percent markup. The method that Pat uses to determine her
prices is called:
A) economic-based pricing
B) value-based pricing
C) competitive-based pricing
D) cost-based pricing
E) conformity-based pricing
Answer: D
Rationale:
Pat Walker uses cost-based pricing, which involves determining the cost of providing a service
and then adding a markup percentage to cover costs and generate a profit.
35) In ________, the list price is determined by estimating what consumers are willing to pay for
a product and then backing off a bit to provide a cushion.
A) value-based pricing
B) tactical pricing
C) strategic pricing
D) cost-based pricing
E) economic-based pricing
Answer: A
Rationale:
Value-based pricing is a pricing strategy where the list price of a product is determined by
estimating what consumers are willing to pay and then backing off slightly to provide a cushion.
This strategy focuses on the perceived value of the product to the customer.
36) Michael Jones owns a Web design firm. The way Michael prices his products is to determine
what consumers are willing to pay, and then he backs off a bit to provide a cushion. The method
that Michael used to determine his prices is called:
A) predatory pricing
B) technical pricing
C) cost-based pricing
D) competitive-based pricing
E) value-based pricing
Answer: E
Rationale:
Michael Jones uses value-based pricing, which involves determining what consumers are willing
to pay for a product or service and then setting the price slightly lower to provide a perceived
value to the customer.
37) According to the textbook, most experts recommend ________ pricing because it hinges on
the perceived value of a product or service.
A) value-based
B) cost-based
C) competitive-based
D) tactical
E) strategic
Answer: A
Rationale:
Most experts recommend value-based pricing because it focuses on the perceived value of a
product or service to the customer. This approach allows firms to capture the maximum value
from customers willing to pay for the benefits offered.
38) Karen Simon recently purchased a digital camera. She considered three cameras, a Kodak
that was priced at $139.00, a Panasonic priced at $189.00, and a Nikon priced at $229.00. Karen
couldn't tell much difference between the cameras, so she bought the Nikon, figuring that
because it was the most expensive of the three, it must be the best. According to the textbook,
Karen was making a:
A) price-quality attribution
B) price-merit attribution
C) cost-value acknowledgement
D) cost-worth attribution
E) price-worth acknowledgement
Answer: A
Rationale:
Karen was making a price-quality attribution, which is the tendency for consumers to associate
higher prices with higher quality. In this case, Karen assumed that the Nikon camera, being the
most expensive, must be the best in terms of quality.
39) ________ refers to the activities the firm takes to communicate the merits of its product to its
target market.
A) Sponsorship
B) Advertising
C) Endorsement
D) Promotion
E) Price
Answer: D
Rationale:
Promotion refers to the activities that a firm takes to communicate the merits of its product or
service to its target market. This includes advertising, sales promotions, public relations, and
personal selling.
40) The Google program called ________ allows advertisers to buy keywords on the Google
Home Page.
A) AdSense
B) Adcenter
C) AdWords
D) Search Marketing
E) AdGoogle
Answer: C
Rationale:
The Google program called AdWords allows advertisers to buy keywords on the Google Home
Page. AdWords is a popular advertising platform that allows businesses to reach potential
customers through targeted keyword searches.
41) Efforts to establish and maintain a company's image with the public are referred to as:
A) open relations
B) public relations
C) civic relations
D) community relations
E) advertising
Answer: B
Rationale:
Public relations (PR) refers to the efforts made by a company to establish and maintain a positive
image with the public. This includes managing communication with the media, customers,
employees, and other stakeholders.
42) Every year thousands of electronic products manufacturers gather in Las Vegas to display
their products and to see what their competitors are up to. This type of event is called a:
A) trade show
B) promotions show
C) deal show
D) goods show
E) skill show
Answer: A
Rationale:
The gathering of electronic products manufacturers in Las Vegas to display their products and
see what competitors are up to is called a trade show. Trade shows provide an opportunity for
companies to showcase their products, network with industry professionals, and stay informed
about the latest trends.
43) Twitter, Facebook, and company blogs are examples of:
A) public media
B) group media
C) shared media
D) social media
E) community media
Answer: D
Rationale:
Twitter, Facebook, and company blogs are examples of social media platforms. Social media
allows companies to engage with customers, promote their products or services, and build
relationships with their audience.
44) The idea behind blogs is that they:
A) familiarize people with a business and help build an emotional bond between a business and
its customers
B) are an effective recruiting tool and they help businesses network with government officials
C) help build an emotional bond between a business and its customers and are an effective
platform for product development
D) are an effective tool for product development and familiarize people with a business
E) are an effective tool for recruiting and they familiarize people with a business
Answer: A
Rationale:
The idea behind blogs is to familiarize people with a business and help build an emotional bond
between the business and its customers. Blogs can provide valuable information, insights, and
updates about the business, which can help build trust and loyalty among customers.
45) The Partnering for Success feature in Chapter 11 focuses on Moxsie, an online retailer that
sells fashion items made by independent designers. Moxsie has accelerated its growth by:
A) partnering with an influential website and soliciting feedback from customers
B) running Google AdSense ads and soliciting feedback from customers
C) utilizing viral marketing and putting in place a formal sales process
D) utilizing guerrilla marketing techniques and entering into a strategic alliance with Google
E) co-branding its site with another online retailer and putting a formal sales process in place
Answer: A
Rationale:
Moxsie has accelerated its growth by partnering with an influential website and soliciting
feedback from customers. This strategy has helped Moxsie expand its reach and attract new
customers.
46) ________ marketing is a low-budget approach to marketing that relies on ingenuity,
cleverness, and surprise rather than traditional techniques.
A) Rebel
B) Bug
C) Catching
D) Guerrilla
E) Revolutionary
Answer: D
Rationale:
Guerrilla marketing is a low-budget approach to marketing that relies on ingenuity, cleverness,
and surprise to attract attention and create buzz. It often involves unconventional tactics and
creative strategies to engage consumers.
47) A(n) ________ is a route a product takes from the place it is made to the customer who is the
end user.
A) trade channel
B) product channel
C) allotment channel
D) promotion channel
E) distribution channel
Answer: E
Rationale:
A distribution channel is the route a product takes from the place it is made to the customer who
is the end user. It includes intermediaries such as wholesalers, retailers, and distributors who help
move the product from the manufacturer to the consumer.
48) A firm's sales process:
A) is typically not put in place until a year or more after a startup launches
B) describes a firm's branding strategy
C) depicts the steps it goes through to identify prospects and close sales
D) describes its social media strategy
E) depicts the steps it goes through to identify its target market and positioning strategy
Answer: C
Rationale:
A firm's sales process depicts the steps it goes through to identify prospects and close sales. It
outlines the key stages of the sales cycle, from prospecting to closing, and helps the firm
streamline its sales efforts.
49) The first step in the formal sales process described in the book is:
A) qualify the lead
B) make the sales presentation
C) prospect for sales leads
D) meet objections and concerns
E) make the initial contact
Answer: C
Rationale:
The first step in the formal sales process is to prospect for sales leads. This involves identifying
potential customers who have a need for the product or service and are likely to make a purchase.
50) Which of the following statements is untrue regarding a firm's sales process?
A) A formal sales process helps a firm fine-tune its approach to sales and build uniformity into
the process.
B) Following a formal or structured process to generate and close sales benefits a firm.
C) A "sales process" is equally valuable whether a firm is selling directly to customers or
through intermediaries.
D) A firm's sales process depicts the steps it goes through to identify its target market.
E) A formal sales process involves a number of identifiable steps.
Answer: D
Rationale:
The statement that a firm's sales process depicts the steps it goes through to identify its target
market is untrue. A firm's sales process typically focuses on the steps involved in identifying and
closing sales, rather than identifying the target market, which is usually determined before the
sales process begins.
51) A firm's target market is the limited group of individuals or businesses that it goes after or
tries to appeal to.
Answer: True
Rationale:
A target market is a specific group of consumers or businesses that a firm aims its marketing
efforts and products towards. It represents the segment of the market that the firm believes it can
most effectively serve.
52) The proper sequence in selecting a target market and positioning strategy is (1) craft a unique
positioning strategy, (2) select a target market, and (3) segment the market.
Answer: False
Rationale:
The proper sequence is to first segment the market (dividing it into distinct groups with similar
characteristics), then select a target market (choose which segments to pursue), and finally craft a
unique positioning strategy (develop a marketing mix to influence how the target market
perceives the brand).
53) Markets can be segmented in a number of ways, including by product type, price point,
distribution channel used, and customers served.
Answer: True
Rationale:
Market segmentation involves dividing a market into distinct groups of buyers who have
different needs, characteristics, or behaviors. This segmentation can be based on various factors
such as product type, price sensitivity, distribution channel preferences, and demographics.
54) A niche market is a place within a market segment that represents a narrow group of
customers with similar interests.
Answer: True
Rationale:
A niche market is a specialized segment of the market that caters to a specific group of
customers with unique needs or preferences. It is a small, distinct segment within a larger
market.
55) A firm's "position" is concerned with how it is situated relative to its rivals.
Answer: True
Rationale:
Positioning refers to how a company's product or brand is perceived in the minds of consumers
relative to competitors. It is about creating a unique identity and image for the product or brand
in the market.
56) A product attribute map illustrated the strength of a firm's niche (or target) market relative to
competing markets.
Answer: False
Rationale:
A product attribute map is a visual representation that shows the positioning of competing
products or brands based on their attributes or features. It does not specifically illustrate the
strength of a firm's niche market relative to competing markets.
57) A tagline is a catchy phrase that's used consistently in a company's literature, advertisements,
and even invoices and thus becomes associated with a company—to reinforce their position in
the market.
Answer: True
Rationale:
A tagline is a memorable phrase or slogan that is used in marketing and advertising to convey the
essence of a brand or product. It is often used to reinforce the company's positioning and create
brand recognition.
58) A brand is the set of attributes—positive or negative—that people associate with a company.
Answer: True
Rationale:
A brand is the perception or image that consumers have about a particular company, product, or
service. It is the sum of all the characteristics, both tangible and intangible, that make a company
unique and differentiates it from competitors.
59) Creating buzz means creating awareness and a sense of anticipation about a company and its
offerings.
Answer: True
Rationale:
Creating buzz involves generating excitement, interest, and anticipation about a company,
product, or event. It is a marketing strategy aimed at building awareness and generating positive
word-of-mouth.
60) "Brand premium" is the term that denotes the set of assets and liabilities that are linked to a
brand and enable it to raise a firm's valuation.
Answer: False
Rationale:
The term "brand equity" denotes the set of assets and liabilities that are linked to a brand and
enable it to raise a firm's valuation. Brand equity reflects the value of a brand's reputation,
customer loyalty, and brand associations.
61) A firm's marketing mix is the assortment of products and services that it sells.
Answer: False
Rationale:
A firm's marketing mix refers to the set of controllable, tactical marketing tools that it uses to
produce the desired response from its target market. It includes product, price, place
(distribution), and promotion.
62) An important distinction should be made between a firm's core product and its actual
product. While the core product may be a CD that contains an antivirus software program, the
actual product may have a number of characteristics, include a quality level, features, design, a
brand name, and packaging.
Answer: True
Rationale:
The core product is the basic benefit that customers receive from using the product, while the
actual product includes additional features and characteristics that enhance its appeal and value
to customers.
63) A referent account is an early user of a firm's product who is willing to give a testimonial
regarding his or her experience with the product.
Answer: True
Rationale:
A referent account is a satisfied customer who is willing to provide a testimonial or referral to
others about their positive experience with a firm's product or service.
64) Price is the only element in the marketing mix that produces revenue; all other elements
represent costs.
Answer: True
Rationale:
Price is the element of the marketing mix that directly generates revenue for the firm. Product,
place (distribution), and promotion represent costs associated with producing, distributing, and
promoting the product.
65) In value-based pricing, the list price is determined by estimating what customers are willing
to pay for a product and then backing off a bit to provide a cushion.
Answer: True
Rationale:
Value-based pricing is a pricing strategy where the list price of a product is based on the
perceived value to the customer. The price is set slightly below what customers are willing to
pay to provide a perceived value and encourage purchase.
66) Because of the weaknesses associated with advertising, most startups do not advertise their
products broadly.
Answer: True
Rationale:
Advertising can be expensive and may not always be the most effective way for startups to reach
their target market. Many startups focus on other marketing strategies, such as social media and
content marketing, to build awareness and attract customers.
67) The Google AdWords program allows advertisers to buy ads that will be shown on other
Web sites instead of Google's Home Page.
Answer: False
Rationale:
The Google AdWords program allows advertisers to buy keywords and create ads that will be
displayed on Google's search results pages and other Google properties, such as Google Maps
and YouTube.
68) Many startups emphasize advertising over public relations primarily because it's cheaper and
helps build the firm's credibility.
Answer: False
Rationale:
Many startups emphasize public relations over advertising because it can be more cost-effective
and can help build credibility and trust with customers. Public relations efforts, such as press
releases and media relations, can help startups gain exposure and establish their reputation.
69) Social plugins are tools that Web sites can use to provide users with personalized social
experiences.
Answer: True
Rationale:
Social plugins are tools that allow websites to integrate social media features and functionality,
such as sharing buttons and social login options, to provide users with a more personalized and
social experience.
70) A firm's sales process depicts the steps it goes through to identify prospects and close sales.
Answer: True
Rationale:
A firm's sales process outlines the steps that the sales team follows to identify potential
customers, qualify leads, make sales presentations, address objections, and ultimately close sales.
It helps to ensure consistency and efficiency in the sales process.
71) What is the purpose of market segmentation? How are markets typically segmented? Can a
company segment its market on more than one dimension?
Answer: The first step in selecting a target market is to study the industry in which the firm
intends to compete and determine the different potential niche or target markets in that industry.
This process is called market segmentation and is important because a new firm typically only
has enough resources to target one market segment, at least initially. Markets can be segmented
in many ways, such as by geography (city, state, country), demographic variables (age, gender,
family size, income), behavioral variables (benefits sought, product usage rate, brand loyalty)
and product type. Sometimes a firm segments its market on more than one dimension to drill
down to a specific market that the firm thinks it is uniquely capable of serving. For example, in
its market segmentation, GreatCall, the cell phone service provider for older people, probably
segmented the cell phone market by age and by benefits sought. Helio (a cell phone designed for
young people) likely used this same segmentation strategy by targeting younger users and
featuring a more sophisticated set of options.
72) What is a tagline? Provide an example of a popular tagline, and discuss why you think it has
been effective?
Answer: Firms often develop a tagline to reinforce the position they have staked out in their
market, or a phrase that is used consistently in a company's literature, advertisements,
promotions, stationery, and even invoices and thus becomes associated with that company. An
example is Nike's familiar tagline, "Just do it." The Nike tagline implies that people don't need to
be told they should exercise—they already know that. The challenge is to "Just do it." The
beauty of this simple three-word expression is that it applies equally to a 21-year-old triathlete
and a 65-year-old mall walker. This clever tagline, along with Nike's positioning strategy, helped
it expand its product line beyond running shoes to athletic products for all age groups.
73) What is a brand? How does a new firm develop a brand?
Answer: A brand is the set of attributes—positive or negative—that people associate with a
company. These attributes can be positive, such as trustworthy and dependable, or they can be
negative, such as cheap and unreliable. The customer loyalty a company creates through its
brand is one of its most valuable assets. To develop a brand, a new firm must have meaning in its
customers' lives—something for which customers are willing to pay. On a more pragmatic level,
brands are built through a number of techniques, including advertising, public relations,
sponsorships, and good performance.
74) Describe the concept of guerrilla marketing. Why is guerrilla marketing particularly suitable
for entrepreneurial firms?
Answer: Guerrilla marketing is a low-budget approach to marketing that relies on ingenuity,
cleverness, and surprise rather than traditional techniques. The point is to create awareness of a
firm and its products, often in unconventional and memorable ways. Guerrilla marketing is
particularly suitable for entrepreneurial firms, which are often on a tight budget but have
creativity, enthusiasm, and passion to draw from. Firms often use very entertaining and engaging
guerilla marketing techniques to build awareness for their products and services.
75) What is an exclusive distribution agreement? Why do firms enter into exclusive distribution
agreements with other firms?
Answer: Exclusive distribution agreements give a retailer or other intermediary the exclusive
rights to sell a company's products. The advantage to giving out an exclusive distribution
agreement is to motivate a retailer or other intermediary to make a concerted effort to sell a
firm's products without having to worry about direct competition. For example, if Nokia granted
AT&T the exclusive rights to sell a new type of cell phone, AT&T would be more motivated to
advertise and push the phone than if many or all cell phone companies had access to the same
phone.
Test Bank for Entrepreneurship: Successfully Launching New Ventures
Bruce R. Barringer, R. Duane Ireland
9780132555524, 9780131393905, 9780134729534, 9780133797190
