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Chapter 22 1. Appointing teams to manage customer-value-building processes and break down walls between departments is part of which of the following business practices? A) reengineering B) outsourcing C) benchmarking D) supplier partnering E) customer partnering Answer: A Rationale: Reengineering involves restructuring organizational processes to improve efficiency, effectiveness, and customer value. Appointing teams to manage customer-value-building processes and breaking down departmental walls aligns with the objectives of reengineering, which seeks to streamline and enhance processes to better serve customers. 2. ________ involves buying more goods and services from external domestic or foreign vendors. A) Merging B) Broadening C) Outsourcing D) Globalizing E) Accelerating Answer: C Rationale: Outsourcing entails contracting external vendors for goods or services that were traditionally produced internally. By purchasing more goods and services externally, a company engages in outsourcing to leverage the expertise and resources of external vendors, whether domestic or foreign. 3. ________ involves studying "best practice companies" to improve performance. A) Empowering B) Globalizing C) Flattening D) Benchmarking E) Focusing Answer: D Rationale: Benchmarking involves the process of studying and learning from leading companies or organizations in order to improve one's own performance. By identifying best practices and comparing them to internal processes, companies can identify areas for improvement and implement changes to enhance their performance. 4. Merging involves ________. A) reducing the number of organizational levels to get closer to the customer B) removing barriers that separate organizational departments C) partnering with fewer but better value-adding suppliers D) working more closely with customers to add value to their operations E) acquiring firms in the same or complementary industries Answer: E Rationale: Merging refers to the combination of two or more companies to form a new entity or to integrate them into an existing one. Acquiring firms in the same or complementary industries is a key aspect of merging, as it allows companies to expand their market presence, achieve economies of scale, or access new technologies or markets. 5. Which of the following business practices involves reducing the number of organizational levels to get closer to the customer? A) flattening B) globalizing C) decentralization D) merging E) justifying Answer: A Rationale: Flattening refers to the process of reducing hierarchical layers within an organization. By flattening the organizational structure, companies aim to improve communication, decisionmaking, and responsiveness, ultimately getting closer to the customer by eliminating unnecessary bureaucratic layers. 6. Which of the following business practices focuses specifically on designing the organization and setting up processes to respond quickly to changes in the environment? A) benchmarking B) outsourcing C) focusing D) accelerating E) globalizing Answer: D Rationale: Accelerating involves designing organizational structures and processes to respond rapidly to changes in the external environment. This may include streamlining decision-making processes, empowering employees to act quickly, and leveraging technology to adapt to market dynamics swiftly. 7. As a business practice, broadening involves _________. A) acquiring or merging with firms in the same or complementary industries to gain economies of scale and scope B) factoring the interests of customers, employees, shareholders, and other stakeholders into the activities of the enterprise C) buying more goods and services from outside domestic or foreign vendors D) appointing teams to manage customer-value-building processes and break down walls between departments E) becoming more accountable by measuring, analyzing, and documenting the effects of marketing actions Answer: B Rationale: Broadening as a business practice involves expanding the scope of consideration beyond purely financial metrics to include the interests of various stakeholders such as customers, employees, shareholders, and the community. This approach aims to ensure that business activities align with broader societal and ethical concerns. 8. As a marketing practice, monitoring involves ________. A) designing the organization and setting up processes to respond quickly to changes in the environment B) becoming more accountable by measuring, analyzing, and documenting the effects of marketing actions C) tracking what is said online and elsewhere and studying customers, competitors, and others to improve business practices D) determining the most profitable businesses and customers and expending greater organizational resources to capitalize on them E) factoring the interests of customers, employees, shareholders, and other stakeholders into the activities of the enterprise Answer: C Rationale: Monitoring in marketing involves systematically tracking and analyzing various sources of information, such as online conversations, customer feedback, and competitive activities, to gain insights that can inform marketing strategies and improve business practices. 9. The role of marketing in the organization is changing. Traditionally marketers have played the roles of ________, charged with understanding customers' needs and transmitting their voice to various functional areas. A) middlemen B) opinion leaders C) clients D) influencers E) end consumers Answer: A Rationale: Traditionally, marketers have acted as intermediaries or middlemen between customers and other functional areas within the organization. They were responsible for understanding customer needs and preferences and conveying this information to other departments to ensure products or services met customer expectations. 10. Which of the following observations is true? A) In today's business environment, marketers are mainly middlemen. B) Marketing has the sole ownership of customer interactions. C) Only when all employees realize their job is to create, serve, and satisfy customers does the company become an effective marketer. D) Marketers must clearly differentiate all customer-facing processes, such that every customer receives a personalized marketing message. E) Marketers must avoid collaborating with other organizational departments, as it blurs functional responsibilities. Answer: C Rationale: The statement that "Only when all employees realize their job is to create, serve, and satisfy customers does the company become an effective marketer" is true. In modern business environments, customer-centricity is essential for organizational success, and this mindset should permeate throughout the entire organization, not solely within the marketing department. When all employees understand and prioritize customer satisfaction, the organization becomes more effective in meeting customer needs and achieving its business objectives. 11. ________ requires that everyone in the organization accept the concepts and goals of marketing and engage in choosing, providing, and communicating customer value. A) Internal marketing B) Corporate communications C) Integrated marketing communications D) Supply chain management E) Employee engagement Answer: A Rationale: Internal marketing focuses on ensuring that all employees within an organization understand and embrace the principles and objectives of marketing. It involves promoting a customercentric mindset among employees and encouraging them to contribute to delivering customer value. 12. The most common form of marketing organization consists of ________ reporting to a marketing vice president who coordinates their activities. A) zonal managers B) functional specialists C) product managers D) area market specialists E) brand managers Answer: B Rationale: In the most common form of marketing organization, functional specialists such as advertising, sales, market research, and product development report to a marketing vice president. This structure facilitates coordination and integration of various marketing activities. 13. Which of the following is the main advantage of a functional marketing organization? A) easy coordination B) lower staff requirements C) administrative simplicity D) reduced competition between functional groups E) smooth working relationships Answer: C Rationale: The main advantage of a functional marketing organization is administrative simplicity. Each functional unit focuses on specific tasks or activities, leading to clear roles and responsibilities and facilitating efficient coordination within each functional area. 14. A company selling in a national market often organizes its sales force along ________. A) functional groups B) geographic lines C) product teams D) brand groups E) product categories Answer: B Rationale: In a national market, companies often organize their sales force along geographic lines to efficiently cover different regions or territories. This allows the sales force to focus on specific markets and tailor their approach to local needs and preferences. 15. A product-management organization makes sense if ________. A) the company's products are quite varied B) there are very few products in the company's portfolio C) the company is pursuing a low-cost strategy D) the company's products satisfy similar customer needs E) the company is vertically integrated Answer: A Rationale: A product-management organization is suitable when a company's product portfolio is diverse, with each product requiring dedicated management and marketing efforts. This structure allows for focused attention on each product's unique characteristics and customer needs. 16. A product- or brand-management organization is characterized as a(n) ________ system. A) hub-and-spoke B) waterfall C) internal marketing D) top-down E) lateral Answer: A Rationale: A product- or brand-management organization is characterized as a hub-and-spoke system, where the product manager serves as the central hub overseeing various functional areas involved in managing the product or brand. 17. A disadvantage of the product-management organization is that ________. A) it marginalizes a company's smaller brands B) it reduces organizational responsiveness to new products in the marketplace C) product managers generally exercise authority outside their areas of responsibility D) it prevents product managers from gaining sufficient expertise in their product areas E) it fails to build long-term strengths as brand managers normally manage brands for only short periods Answer: E Rationale: A disadvantage of the product-management organization is that it fails to build long-term strengths, as product managers often rotate through different brands or products within short periods. This lack of continuity may hinder the development of deep expertise and long-term brand strategies. 18. A product-management organization ________. A) often proves to be cost-effective B) simplifies the process of developing a national strategy C) focuses on building market share rather than customer relationships D) reduces an organization's staffing requirements E) allows product managers to achieve functional expertise Answer: C Rationale: A product-management organization often focuses on building market share rather than developing strong customer relationships. Product managers may prioritize short-term sales and market penetration over long-term customer satisfaction and loyalty. 19. There are three types of product-team structures. These are ________. A) vertical, triangular, and horizontal product teams B) vertical, horizontal, and circular product teams C) horizontal, vertical, and rectangular product teams D) horizontal, vertical, and flattened product teams E) vertical, rectangular, and circular product teams Answer: A Rationale: The three types of product-team structures are vertical, triangular, and horizontal product teams. Each structure varies in terms of how authority and responsibilities are distributed among team members and across organizational levels. 20. Which of the following is true about a brand-asset management team (BAMT)? A) A BAMT is part of the triangular and vertical product team structures. B) BAMTs often report directly to the organization's chief branding officer. C) BAMTs are a traditional, tried and tested means of managing brands. D) Companies with a product-management organization often have only one BAMT. E) The BAMT consists of key representatives from functions affecting the brand's performance. Answer: E Rationale: A brand-asset management team (BAMT) typically consists of key representatives from various functions within the organization that affect the brand's performance, such as marketing, sales, product development, and customer service. This interdisciplinary team collaborates to manage and enhance the brand's equity and value. 21. One of the options in a product-management organization is to eliminate product manager positions for minor products and assign two or more products to each remaining manager. Under what conditions is this alternative feasible? A) when the product mix is highly diverse B) when there are very few products in the company's portfolio C) when two or more products serve a similar set of needs D) when customers fall into different user groups E) when the company produces many products for many markets Answer: C Rationale: This alternative is feasible when two or more products serve a similar set of needs, allowing a product manager to effectively oversee and manage multiple products without significant overlap in responsibilities. 22. When customers fall into different user groups with distinct buying preferences and practices, a ________ is desirable. A) market-management organization B) product-management organization C) brand-management organization D) geographic organization E) functional organization Answer: A Rationale: A market-management organization is desirable when customers fall into different user groups with distinct preferences and practices. This structure allows for tailored marketing strategies and activities to effectively address the needs of each market segment. 23. Companies that produce many products for many markets may adopt a ________ marketing organization. A) flat B) brand C) product D) matrix E) top-down Answer: D Rationale: A matrix marketing organization is suitable for companies with diverse product portfolios serving multiple markets. This structure allows for cross-functional collaboration and coordination to address the complexity of managing numerous products across various market segments. 24. Which of the following is true regarding a matrix-management organization? A) It proves to be cost-effective in the long run. B) It often creates conflicts regarding authority and responsibility for marketing activities. C) It hampers the flow of information among marketing personnel. D) It fosters a strong sense of accountability for performance among product and market managers. E) It is best suited to companies that offer a small range of products to niche markets. Answer: B Rationale: Matrix management organizations often create conflicts regarding authority and responsibility due to the dual reporting structure, where employees report to both functional managers and project managers. This can lead to confusion and inefficiencies in decisionmaking and execution. 25. Transforming into a true market-driven company requires organizing around ________. A) sales B) customer segments C) products D) functions E) brands Answer: B Rationale: Organizing around customer segments is essential for a market-driven company as it allows the organization to focus its resources and efforts on understanding and meeting the specific needs and preferences of different customer groups. 26. Which of the following is true of building a creative marketing organization? A) It is enough if firms are customer-oriented. B) Companies must watch trends and be ready to capitalize on them. C) Firms should focus more on efficiency rather than innovation. D) Companies should attempt to minimize risks as much as possible. E) Firms should focus on protecting their existing markets and physical resources. Answer: B Rationale: Building a creative marketing organization involves watching trends and being ready to capitalize on emerging opportunities. Innovation and adaptability are crucial for staying ahead in dynamic markets, and companies must foster a culture that encourages experimentation and creativity. 27. Rising customer expectations, evolving employee goals and ambitions, and tighter government legislation and pressure are driving companies to ________. A) operate leaner manufacturing facilities B) manage shorter supply chains C) operate flatter organizations D) practice a higher level of corporate social responsibility E) vertically integrate Answer: D Rationale: Rising customer expectations, evolving employee goals, and tighter government legislation are driving companies to practice a higher level of corporate social responsibility. This includes considerations for environmental sustainability, ethical sourcing, and social impact. 28. In order to promote ethical cultures, companies should do all of the following EXCEPT ________. A) disseminate a written code of ethics B) build a company tradition of ethical behavior C) hold people responsible for observing ethical and legal guidelines D) ensure every employee knows and observes relevant laws E) encourage business practices that are not clearly ethical or unethical Answer: E Rationale: Encouraging business practices that are not clearly ethical or unethical goes against the promotion of ethical cultures. Companies should instead encourage behaviors aligned with ethical standards and hold employees accountable for observing ethical and legal guidelines. 29. ________ gives products the appearance of being more environmentally friendly without living up to that promise. A) Ambush marketing B) Greenwashing C) Astroturfing D) Viral marketing E) Green politics Answer: B Rationale: Greenwashing refers to the practice of misleading consumers into thinking that a product or company is more environmentally friendly than it actually is. This deceptive marketing tactic can involve exaggerating environmental claims or making false statements about a product's sustainability efforts. 30. ________ refers to the ability to meet humanity's needs without harming future generations. A) Greenwashing B) Sustainability C) Ecological footprinting D) Scalability E) Legal practice Answer: B Rationale: Sustainability refers to the ability to meet present needs without compromising the ability of future generations to meet their own needs. It encompasses environmental, social, and economic considerations to ensure responsible resource use and long-term viability. 31. Cause-related marketing is part of ________. A) sustainability B) corporate societal marketing C) social media D) global marketing E) community marketing Answer: B Rationale: Cause-related marketing involves partnerships between for-profit companies and nonprofit organizations to promote social or environmental causes while also benefiting the company's marketing objectives. It is a subset of corporate societal marketing, which focuses on addressing societal issues through business practices and initiatives. 32. Cause marketing has a particularly interested audience in civic-minded ________. A) Millennial consumers B) baby boomers C) Gen Xers D) Gen Yers E) shadow boomers Answer: A Rationale: Millennials, or Gen Yers, are often seen as a particularly interested audience for cause marketing due to their strong values and desire for social impact. They are more likely to support companies that align with their values and participate in cause-related initiatives. 33. Cadbury's "Sports for Schools" promotion offered sports and fitness equipment for schools in exchange for vouchers. The problem was that the public and media saw a perverse incentive for children to eat more chocolate, a product associated with obesity. Which of the following best summarizes Cadbury's problem? A) Customers felt that the cause was not in sync with the company's brand image. B) Consumers did not value the cause Cadbury was promoting. C) Customers questioned the link between the product and the cause and saw the firm as selfserving and exploitive. D) Consumers resented being sold an inferior product on the back of a cause-marketing program. E) Consumers felt that the campaign did not make a sufficient attempt to change the target audience's behavior. Answer: C Rationale: Cadbury's problem stems from customers questioning the link between the product (chocolate) and the cause (sports for schools), perceiving the promotion as self-serving and exploitative rather than genuinely altruistic. This perception led to backlash and negative publicity. 34. Which of the following is true regarding cause-related marketing? A) The positive impact of cause-related marketing can be increased through sporadic involvement with numerous causes. B) Many companies focus on multiple causes to simplify execution and maximize impact. C) Limiting support to a single cause increases the pool of stakeholders who can transfer positive feelings from the cause to the firm. D) Most firms choose causes that fit their corporate or brand image and matter to their employees and shareholders. E) In order to avoid public backlash, firms are advised to adopt a hard-sell approach to their cause efforts. Answer: D Rationale: Most firms choose causes that fit their corporate or brand image and matter to their employees and shareholders. Aligning cause-related marketing efforts with the company's values and stakeholders' interests enhances credibility and effectiveness. 35. ________ by nonprofit or government organizations furthers a cause. A) Corporate societal marketing B) Brand marketing C) Causal marketing D) Social marketing E) Place marketing Answer: D Rationale: Social marketing refers to efforts by nonprofit or government organizations to promote social causes or address societal issues. It aims to influence behavior change and improve public health, safety, or welfare. 36. Social marketing programs designed to discourage cigarette smoking or excessive consumption of alcohol are examples of ________. A) cognitive campaigns B) active campaigns C) behavioral campaigns D) value campaigns E) normative campaigns Answer: C Rationale: Social marketing campaigns aimed at discouraging unhealthy behaviors such as smoking or excessive alcohol consumption are examples of behavioral campaigns. They seek to change individuals' actions or behaviors to improve public health outcomes. 37. A social marketing program which aims to alter ideas about abortion is an example of a(n) ________. A) cognitive campaign B) active campaign C) behavioral campaign D) value campaign E) normative campaign Answer: D Rationale: A social marketing program aimed at altering ideas or beliefs about abortion represents a value campaign. It seeks to influence individuals' attitudes, perceptions, and values regarding a specific social issue or topic. 38. Which of the following represents the objective of a cognitive social marketing campaign? A) Motivate people with obesity to eat healthy and exercise more often. B) Change public attitudes and stereotypes associated with people who are obese. C) Explain the different causes of obesity and how it can be prevented. D) Encourage people to participate in a walkathon aimed at promoting awareness about obesity. E) Help people with obesity to implement lifestyle changes. Answer: C Rationale: The objective of a cognitive social marketing campaign is to educate and inform the target audience about the causes of a particular issue or behavior, such as obesity, and how it can be prevented. It aims to raise awareness and knowledge to facilitate informed decision-making. 39. Which of the following represents the objective of a social marketing campaign aimed at changing people's actions? A) Motivate people with obesity to eat healthy and exercise more often. B) Change public attitudes and stereotypes associated with people who are obese. C) Explain the different causes of obesity and how it can be prevented. D) Encourage people to participate in a walkathon aimed at promoting awareness about obesity. E) Help people with obesity to implement lifestyle changes. Answer: D Rationale: The objective of a social marketing campaign aimed at changing people's actions is to encourage specific behaviors or actions related to the target issue or problem. In this case, it involves encouraging participation in a walkathon to promote awareness about obesity. 40. Which of the following represents the objective of a social marketing campaign aimed at changing people's values? A) Motivate people with obesity to eat healthy and exercise more often. B) Change public attitudes and stereotypes associated with people who are obese. C) Explain the different causes of obesity and how it can be prevented. D) Encourage people to participate in a walkathon aimed at promoting awareness about obesity. E) Help people with obesity implement to lifestyle changes. Answer: B Rationale: The objective of a social marketing campaign aimed at changing people's values is to shift societal attitudes, perceptions, or beliefs related to the target issue. In this case, it involves changing public attitudes and stereotypes associated with obesity and overweight individuals. 41. Which of the following represents the objective of a social marketing campaign aimed at changing people's behavior? A) Motivate people with obesity to eat healthy and exercise more often. B) Change public attitudes and stereotypes associated with people who are obese. C) Explain the different causes of obesity and how it can be prevented. D) Encourage people to participate in a walkathon aimed at promoting awareness about obesity. E) Attract people with obesity to sign up for a one-time free medical check-up. Answer: A Rationale: The objective of a social marketing campaign aimed at changing people's behavior is to motivate individuals to adopt specific actions or behaviors that contribute to positive outcomes. In this case, the objective is to motivate people with obesity to eat healthy and exercise regularly to improve their health and well-being. 42. Which of the following should be done to increase the likelihood that social marketing programs will be successful? A) Choose target markets that are the least ready to respond. B) Promote multiple, doable behaviors in clear, simple terms. C) Make it easy to adopt the behavior. D) Adopt a soft-sell approach, as opposed to attention-grabbing messages. E) Explain the benefits in an exaggerated manner. Answer: C Rationale: Making it easy to adopt the behavior increases the likelihood of success in social marketing programs. By reducing barriers and obstacles to behavior change, individuals are more likely to engage in the desired actions promoted by the campaign. 43. The first step in the social marketing planning process is ________. A) determining the focus of the program B) selecting the target audience C) setting objectives and goals D) designing the market offering E) finding a source of funding Answer: A Rationale: The first step in the social marketing planning process is determining the focus of the program, which involves identifying the specific issue or behavior that the campaign aims to address. 44. ________ software provides a set of Web-based applications that automate and integrate project management, campaign management, budget management, asset management, brand management, customer relationship management, and knowledge management. A) Marketing dashboard B) Enterprise resource planning C) Supply chain management D) Marketing resource management E) Enterprise campaign management Answer: D Rationale: Marketing resource management (MRM) software provides a comprehensive set of tools and applications to streamline and automate various marketing processes and activities, including project management, campaign management, budgeting, asset management, brand management, customer relationship management, and knowledge management. 45. ________ is the process that turns marketing plans into action assignments and ensures that such assignments are executed in a manner that accomplishes the plan's stated objectives. A) Marketing implementation B) Marketing research C) Marketing analysis D) Brand management E) Product management Answer: A Rationale: Marketing implementation is the process of translating marketing plans into actionable tasks and activities to achieve the plan's objectives. It involves executing marketing strategies and tactics in a coordinated and effective manner. 46. ________ is the process by which firms assess the effects of their marketing activities and programs and make necessary changes and adjustments. A) Marketing control B) Marketing implementation C) Test marketing D) Market watch E) Market analysis Answer: A Rationale: Marketing control is the process of evaluating the results and effectiveness of marketing activities and programs, identifying deviations from the plan, and making adjustments as necessary to ensure that objectives are achieved. 47. Top and middle management are primarily responsible for ________. A) annual-plan control B) efficiency control C) profitability control D) technological control E) innovation control Answer: A Rationale: Top and middle management are primarily responsible for annual-plan control, which involves comparing actual performance against planned objectives and targets on an annual basis to assess progress and take corrective actions if needed. 48. Who is primarily responsible for efficiency control? A) BAMT B) marketing auditor C) middle management D) line and staff management E) top management Answer: D Rationale: Efficiency control primarily falls under the responsibility of line and staff management, who oversee the day-to-day operations and resource utilization within the organization to ensure efficiency and cost-effectiveness. 49. The purpose of profitability control is to ________. A) examine whether the planned results are being achieved B) examine where the company is making and losing money C) evaluate and improve the spending efficiency and impact of marketing expenditures D) examine whether the company is pursuing its best opportunities with respect to markets, products, and channels E) understand the efficiency of the sales force, advertising, sales promotion, and distribution Answer: B Rationale: The purpose of profitability control is to examine where the company is making and losing money, identifying areas of profitability and areas requiring improvement or cost reduction to enhance overall financial performance. 50. The ________ is primarily responsible for strategic control. A) line and staff management B) marketing auditor C) marketing controller D) middle management E) BAMT Answer: B Rationale: The marketing auditor is primarily responsible for strategic control, which involves evaluating the overall direction and effectiveness of the marketing strategy in achieving longterm objectives and alignment with the organization's mission and goals. 51. The purpose of strategic control is to ________. A) examine whether the planned results are being achieved B) examine where the company is making and losing money C) evaluate and improve the spending efficiency and impact of marketing expenditures D) examine whether the company is pursuing its best opportunities with respect to markets, products, and channels E) understand the efficiency of the sales force, advertising, sales promotion, and distribution Answer: D Rationale: Strategic control focuses on evaluating whether the company is pursuing its best opportunities with respect to markets, products, and channels. It involves assessing the alignment between the organization's strategies and its long-term objectives and making adjustments as necessary to ensure strategic success. 52. Marketing effectiveness rating instruments and marketing audits are approaches to ________. A) annual-plan control B) profitability control C) efficiency control D) strategic control E) statistical control Answer: D Rationale: Marketing effectiveness rating instruments and marketing audits are methods used to conduct strategic control. These approaches evaluate the overall effectiveness and performance of marketing strategies, activities, and initiatives in achieving long-term objectives and goals. 53. Which of the following is true regarding annual-plan control? A) This control process begins by identifying the causes of serious performance deviations. B) The tools used for this purpose are sales analysis, market share analysis, marketing expense-to-sales analysis, and financial analysis. C) The marketing controller has the primary responsibility for annual-plan control. D) Its purpose is to evaluate and improve the spending efficiency and impact of marketing expenditures. E) It measures profitability by product, territory, customer, segment, trade channel, and order size. Answer: B Rationale: Annual-plan control involves evaluating performance against the annual marketing plan. The tools used for this purpose typically include sales analysis, market share analysis, marketing expense-to-sales analysis, and financial analysis to assess performance and identify areas requiring corrective action. 54. Which of the following is an example of a distribution metric used for measuring the performance of marketing plans? A) effective reach B) customer acquisition costs C) market share D) stocks cover in days E) response rate Answer: D Rationale: Stocks cover in days is a distribution metric used to measure the efficiency and effectiveness of distribution channels. It indicates the number of days of inventory cover based on current stock levels and sales rates. 55. Your firm has experienced a decline in sales over the last three quarters. You have traced the problems to distribution inefficiencies. Which of the following should you track to ensure that the firm's distribution efficiency is maximized? A) average sales per point of sale B) sales from new products C) trial rate D) repurchase rate E) new customer gains Answer: A Rationale: Average sales per point of sale is a key metric for tracking distribution efficiency. It measures the average sales volume generated by each point of sale or distribution outlet, providing insights into the effectiveness of distribution channels. 56. A ________ is a comprehensive, systematic, independent, and periodic examination of a company's or business unit's marketing environment, objectives, strategies, and activities, with a view to determining problem areas and opportunities and recommending a plan of action to improve the company's marketing performance. A) marketing plan B) test market C) marketing audit D) market-based scorecard analysis E) marketing metric Answer: C Rationale: A marketing audit is a comprehensive evaluation of a company's marketing environment, objectives, strategies, and activities. It assesses performance, identifies strengths and weaknesses, and recommends actions to improve marketing effectiveness. 57. Which of the following is true regarding a marketing audit? A) It focuses primarily on a firm's macromarketing environment. B) It identifies the most-needed improvements and incorporates them into a corrective-action plan with short- and long-run steps. C) It is less effective at locating the real source of a problem than a functional audit. D) It analyzes only those marketing activities that have failed to produce adequate results. E) It relies solely on company managers for data and opinions. Answer: B Rationale: A marketing audit identifies areas for improvement and incorporates them into a correctiveaction plan with short- and long-term steps. It provides a systematic approach to evaluating marketing performance and addressing deficiencies. 58. To succeed in the future, marketing must ________. A) become more holistic B) build brands through promotion rather than performance C) be more departmental D) focus on free-spending E) rely more on mass marketing Answer: A Rationale: To succeed in the future, marketing must become more holistic, integrating various disciplines and approaches to address complex business challenges and meet evolving consumer needs and expectations. 59. Which of the following is likely to be an important trend in marketing in the future? A) marketing intuition B) free-spending marketing C) manual marketing D) marketing science E) mass marketing Answer: D Rationale: Marketing science, which involves using data, analytics, and technology to drive marketing decisions and strategies, is likely to be an important trend in the future. With advancements in technology and data analytics, marketers can gain deeper insights into consumer behavior and preferences, leading to more effective marketing strategies. 60. Which of the following is a best practice in business and marketing? A) end-product orientation B) reacting to competitors C) vertical integration D) stockholder driven E) teamwork Answer: E Rationale: Teamwork is considered a best practice in business and marketing as it fosters collaboration, creativity, and innovation. By working together effectively, teams can achieve shared goals and objectives, drive organizational success, and deliver value to customers. 61. ________ looks at specific products, territories, and so forth that failed to produce expected sales. A) Microsales analysis B) Sales variance analysis C) Expense-to-sales analysis D) Full costing analysis E) Financial analysis Answer: A Rationale: Microsales analysis, option A, involves examining detailed data related to specific products, regions, or other segments to understand why they didn't meet the expected sales targets. This analysis helps identify weaknesses in product performance, market penetration, or sales strategies at a granular level. 62. Served market share ________. A) expresses the company's sales as a percentage of total market sales B) is sales as a percentage of the total sales to the market C) is market share in relationship to the largest competitor D) is always smaller than overall market share E) measures the relative contribution of different factors to a gap in sales performance Answer: B Rationale: Correctly defines served market share as the company's sales expressed as a percentage of the total sales to the market. This metric provides insight into the company's performance relative to the entire market. 63. ________ is market share in comparison to the largest competitor. A) Relative market share B) Served market share C) Overall market share D) Market value E) Target market share Answer: A Rationale: Relative market share, compares a company's market share to that of its largest competitor. It provides insight into the company's competitive position within the market. Airfare (Scenario) The airfare for an economy class, one-way ticket from Los Angeles to New York is $500. Due to the recession, the airline manages to fill only 100 out of the 150 seats at $400 per seat. 64. How much of the sales performance gap is due to price decline? A) 28.5 percent B) 37 percent C) 2.5 percent D) 71.4 percent E) 0.4 percent Answer: A Rationale: Price decline contributes to the sales performance gap. To calculate the percentage of the gap due to price decline, we find the difference between the original price and the discounted price, which is $500 - $400 = $100. Then we divide this difference by the original price and multiply by 100 to get the percentage: ($100 / $500) * 100 = 20%. 65. The sales gap due to reduced volume is ________. A) 0.4 percent B) 28.5 percent C) 71.4 percent D) 2.5 percent E) 63 percent Answer: C Rationale: Reduced volume contributes to the sales performance gap. To calculate the percentage of the gap due to reduced volume, we find the difference between the original volume and the actual volume, which is 150 - 100 = 50 seats. Then we divide this difference by the original volume and multiply by 100 to get the percentage: (50 / 150) * 100 = 33.33%. 66. Which of the following is true about market share? A) Outside forces affect all companies in the same way. B) A company's performance should be judged against the average performance of all companies. C) A decline in market share does not necessarily mean the company is performing worse than other companies. D) A decline in market share cannot be deliberately engineered. E) All shifts in market share have marketing significance. Answer: C Rationale: A decline in market share does not necessarily mean the company is performing worse than other companies. It could be due to various factors such as changes in market conditions, new competitors, or deliberate strategic decisions. 67. A(n) ________ of exactly 100 percent means that a company is tied for the market lead. A rise in relative market share means the company is gaining on its leading competitor. A) overall market share B) served market share C) potential market share D) relative market share E) actual market share Answer: D Rationale: Relative market share of exactly 100 percent means that a company is tied for the market lead. An increase in relative market share indicates that the company is gaining on its leading competitor. 68. Annual-plan control requires making sure the company isn't overspending to achieve sales goals. The key ratio to watch is ________. A) stock turnover B) gross margin C) return on capital D) cash flow return on investment E) marketing expense-to-sales Answer: E Rationale: The key ratio to watch for annual-plan control is marketing expense-to-sales ratio. This ratio helps in ensuring that the company isn't overspending to achieve its sales goals. 69. ________ advocates argue that all costs must ultimately be imputed in order to determine true profitability. A) Direct-cost approach B) Full-cost approach C) Traceable-cost approach D) Activity based costing approach E) Fixed cost approach Answer: B Rationale: Advocates of the full-cost approach argue that all costs, both direct and indirect, must ultimately be imputed in order to determine true profitability. This approach allocates all costs, including indirect and overhead costs, to products or services. Cabot Cars (Scenario) Cabot, a large car manufacturer, has four popular car brands in different segments. It has a manufacturing facility near Detroit, MI, where parts common to all the four brands are manufactured. Other specific parts like the brake system, windshield, bonnet, locks, and so on are manufactured in separate plants. Each make has its own product manager and support staff. All product managers report to the CEO of the company. 70. The CEO's annual compensation is an example of a ________. A) direct cost B) variable cost C) traceable common cost D) non-traceable common cost E) manufacturing cost Answer: D Rationale: The CEO's annual compensation is an example of a non-traceable common cost, as it cannot be directly allocated to a specific product or brand. It is a shared cost incurred for the overall management and operation of the company. 71. The cost of the land where the plant which manufactures the common parts is set up falls under ________. A) traceable common costs B) non-traceable common costs C) variable costs D) manufacturing costs E) material costs Answer: B Rationale: The cost of the land where the plant is set up is a non-traceable common cost because it cannot be directly allocated to a specific product or brand. It is a shared cost incurred for the overall operation of the company. 72. Suppose the manufacturer pays a commission on every car sold. Then, the salesperson's commission is classified as a(n) ________. A) cost of labor B) traceable common cost C) non-traceable common cost D) advertising cost E) direct cost Answer: E Rationale: The salesperson's commission is a direct cost because it can be directly attributed to the sale of a specific product (car). 73. The cost of operating the common manufacturing facility is a(n) _____. A) opportunity cost B) traceable cost C) non-traceable cost D) sunk cost E) differential cost Answer: B Rationale: The cost of operating the common manufacturing facility is a traceable cost because it can be directly attributed to the production of specific parts for the cars. 74. The manufacturer launches a brand building advertising campaign. The campaign does not promote any one specific car but is aimed at promoting the company as a whole. Which type of cost does this fall under? A) direct costs B) material costs C) non-traceable costs D) traceable costs E) labor costs Answer: C Rationale: The brand-building advertising campaign falls under non-traceable costs because it cannot be directly attributed to any specific product or brand. Instead, it is incurred for the overall promotion of the company. 75. Internal marketing requires that everyone in the organization buy into the concepts and goals of marketing and engage in choosing, providing, and communicating customer value. Answer: True Rationale: Internal marketing emphasizes the importance of ensuring that all employees within an organization understand and support the marketing objectives and strategies. By aligning everyone with the organization's marketing goals, it becomes easier to deliver consistent customer value and maintain a customer-centric approach throughout the company. 76. Marketing has sole ownership of customer interaction. Answer: False Rationale: While marketing plays a significant role in shaping customer interactions, it does not have sole ownership. Customer interactions involve various departments and functions within an organization, including customer service, sales, product development, and more. Each department contributes to shaping the overall customer experience. 77. A functional organization allows for adequate planning as the number of products and markets of a firm increases. Answer: False Rationale: In a functional organization, departments are structured based on specialized functions such as marketing, finance, operations, etc. As the number of products and markets increases, a functional organization may become less effective in coordinating activities across different product lines and markets, leading to potential inefficiencies and difficulties in planning. 78. Companies producing a variety of products and brands often establish a product- (or brand-) management organization. Answer: True Rationale: To effectively manage a diverse portfolio of products and brands, many companies establish product or brand management organizations. These entities focus on managing individual products or brands, ensuring that each receives adequate attention and resources to maximize its potential in the market. 79. The product-management organization replaces the functional organization in the firm. Answer: False Rationale: A product-management organization typically operates within the framework of the larger functional organization. While it may have its own structure and responsibilities, it does not entirely replace the functional organization, which encompasses various departments and functions necessary for the overall operation of the firm. 80. An advantage of the product- and brand-management system is that product and brand managers focus the company on building market share rather than customer relationships. Answer: False Rationale: Product and brand managers play a crucial role in building customer relationships by understanding customer needs, preferences, and behaviors. While they may focus on building market share for their respective products or brands, this goal is typically achieved by delivering value to customers and nurturing strong relationships with them. 81. There are three types of product-teams structures: vertical, triangular, and horizontal. Answer: True Rationale: Different organizations may adopt various product team structures based on their specific needs and preferences. Common structures include vertical, triangular, and horizontal arrangements, each with its own advantages and disadvantages in terms of communication, coordination, and decision-making. 82. Because the retail trade tends to think of profitability in terms of product categories, some companies are switching to a category management organizational model. Answer: True Rationale: Category management is an approach where retailers manage product categories as individual business units, focusing on maximizing the performance of each category. This model aligns with the retail trade's tendency to evaluate profitability at the category level rather than the individual product level, leading some companies to adopt category management organizational structures. 83. When customers fall into different user groups with distinct buying preferences and practices, a product team structure is desirable. Answer: False Rationale: When customers have diverse preferences and behaviors, a market-oriented structure may be more suitable than a product-oriented one. Market-oriented structures organize teams around specific market segments or customer groups, allowing for tailored strategies and offerings to meet the needs of different customer segments effectively. 84. Market managers are staff people, with duties like those of a product manager. Answer: True Rationale: Market managers typically work in staff positions within an organization and are responsible for overseeing specific markets or market segments. They perform duties similar to product managers but focus more on the broader market environment rather than individual products or brands. 85. A customer-management organization deals with individual customers rather than the mass market or market segments. Answer: True Rationale: Customer management organizations focus on building and maintaining relationships with individual customers rather than targeting mass markets or market segments. They employ strategies such as personalized communication, tailored offerings, and customer service to meet the specific needs and preferences of individual customers. 86. Many companies now focus on departments as opposed to processes because processes can be a barrier to smooth performance. Answer: False Rationale: In reality, many companies recognize the importance of focusing on processes rather than departments. Processes ensure efficiency, consistency, and quality in operations. By optimizing processes, organizations can streamline workflows, reduce redundancies, and enhance overall performance. 87. Transforming into a true market-driven company involves organizing around products. Answer: False Rationale: Transforming into a true market-driven company involves organizing around customer needs, preferences, and market segments rather than products. This customer-centric approach allows companies to align their strategies closely with market demands and enhance their ability to deliver superior value to customers. 88. Firms that are viewed as being socially responsible have the added benefit of being able to attract employees. Answer: True Rationale: Socially responsible companies often appeal to employees who are seeking meaningful work and want to contribute to positive societal impact. By demonstrating a commitment to social responsibility, companies can enhance their employer brand and attract top talent who share similar values. 89. Companies must adopt and disseminate a written code of ethics, build a company tradition of ethical behavior, and hold their people fully responsible for observing ethics and legal guidelines if they wish to demonstrate ethical behavior. Answer: True Rationale: Establishing and enforcing a code of ethics is essential for fostering a culture of ethical behavior within an organization. Clear guidelines, coupled with a commitment to upholding ethical standards at all levels, are crucial for maintaining trust with stakeholders and avoiding unethical practices. 90. Although salespeople are legally prohibited from saying things about their products that are not true, they may legally suggest things about competitors' products that are not true. Answer: False Rationale: Salespeople are generally prohibited from making false or misleading statements about competitors' products as well as their own. Engaging in deceptive practices, including spreading false information about competitors, can lead to legal repercussions and damage to the company's reputation. 91. Some business practices, such as deceptive advertising, exclusive dealing, and predatory competition, sharply divide critics regarding whether they are clearly unethical or illegal. Answer: False Rationale: Practices like deceptive advertising, exclusive dealing, and predatory competition are often considered both unethical and, in many cases, illegal. While there may be some debate among critics about specific instances or nuances, these practices generally violate ethical principles and legal regulations. 92. Often, the more committed a company is to sustainability and environmental protection, the more dilemmas that can arise. Answer: True Rationale: Commitment to sustainability and environmental protection can lead to dilemmas as companies navigate complex issues such as resource usage, supply chain sustainability, waste management, and balancing environmental concerns with business objectives. Strong commitment may require difficult trade-offs and decisions. 93. Sustainability ratings exist, but there is no consistent agreement about what metrics are appropriate. Answer: True Rationale: While sustainability ratings and certifications are available, there is often a lack of consensus on which metrics are most relevant or meaningful for evaluating sustainability performance. Different stakeholders may prioritize different aspects of sustainability, leading to varying rating systems and methodologies. 94. Because of insincere firms jumping on the "green" bandwagon, consumers bring a healthy skepticism to environmental claims, but they are also unwilling to sacrifice product performance and quality. Answer: True Rationale: Consumers are increasingly skeptical of environmental claims due to instances of greenwashing by insincere companies. While they value sustainability, they also prioritize product performance and quality. Thus, companies must demonstrate genuine commitment to sustainability while delivering products that meet consumers' expectations for performance and quality. 95. Corporate philanthropy as a whole is on the rise. Answer: True Rationale: Corporate philanthropy, including donations, community engagement, and social initiatives, has been increasing among companies as they recognize the importance of giving back to society and engaging with their communities. This trend reflects a growing emphasis on corporate social responsibility and ethical business practices. 96. Cause-related marketing efforts are unlikely to backfire as customers generally view the company's motives as genuine. Answer: False Rationale: Cause-related marketing efforts can backfire if customers perceive the company's motives as insincere or if the alignment between the cause and the company's brand is not authentic. Customers are increasingly skeptical and may react negatively if they perceive the marketing campaign as opportunistic or lacking genuine commitment to the cause. 97. Cash donations are the most productive contribution that businesses can make to a nonprofit or community group. Answer: False Rationale: While cash donations are valuable, they are not always the most productive contribution. Businesses can contribute in various ways, including volunteering employee time, providing in-kind donations, offering expertise or resources, or supporting fundraising events. The most productive contribution depends on the specific needs of the nonprofit or community group and how well it aligns with the company's capabilities and values. 98. Many companies focus on multiple cause-related marketing programs to simplify execution and maximize impact. Answer: False Rationale: To maximize impact and ensure authenticity, companies often focus on a select few causerelated marketing programs that align closely with their brand values and resonate with their target audience. Diluting efforts across multiple programs may diminish impact and spread resources too thin, making it challenging to achieve meaningful results. 99. Social marketing is a new trend in marketing. Answer: False Rationale: Social marketing, which aims to influence behaviors for the greater social good, is not a new trend but has been practiced for decades. It involves applying marketing principles and techniques to address societal issues such as public health, environmental conservation, and social justice. 100. Social marketing programs designed to motivate people to donate blood or attract people for mass immunization are examples of cognitive campaigns. Answer: False Rationale: Social marketing campaigns designed to motivate behaviors such as donating blood or participating in mass immunization are examples of behavioral campaigns. Cognitive campaigns, on the other hand, aim to change knowledge, attitudes, or beliefs rather than behaviors directly. 101. Social marketing programs take little time to develop and are generally easy to implement. Answer: False Rationale: Developing and implementing effective social marketing programs can be complex and timeconsuming. They require thorough research, careful planning, targeted messaging, collaboration with stakeholders, and ongoing evaluation to ensure effectiveness and sustainability. 102. The actual success of a social marketing program should be evaluated in terms of the program objectives. Answer: True Rationale: The success of a social marketing program should be evaluated based on whether it achieves its intended objectives, which may include behavior change, awareness building, or social impact. By assessing the program's effectiveness against its objectives, organizations can determine whether it has made a meaningful difference and identify areas for improvement. 103. Desktop marketing gives marketers information and decision structures on computer dashboards. Answer: True Rationale: Desktop marketing involves providing marketers with access to information, analytics, and decision support tools through computer dashboards or similar interfaces. This allows marketers to access real-time data, analyze trends, and make informed decisions to optimize marketing strategies and tactics. 104. Profitability control is the prime responsibility of line and staff management. Answer: False Rationale: Profitability control is primarily the responsibility of line management, which is directly involved in revenue generation and cost management activities. Staff management may support profitability control through providing analysis, recommendations, and support functions, but the primary responsibility lies with line management. 105. Annual-plan control involves the use of financial analysis to evaluate the performance of marketing plans. Answer: True Rationale: Annual-plan control involves comparing actual results against the targets outlined in the annual marketing plan and using financial analysis to assess the effectiveness and efficiency of marketing activities. This helps identify deviations, analyze causes, and make adjustments to improve future planning and performance. 106. The annual plan control process begins with measuring performance. Answer: False Rationale: The annual plan control process typically begins with setting objectives and targets as part of the annual marketing planning process. Measuring performance comes after implementation, allowing for comparison between actual results and planned targets. 107. Repurchase rate is a sales metric that is used to evaluate the performance of marketing plans. Answer: False Rationale: Repurchase rate is not a sales metric but rather a customer retention metric. It measures the percentage of customers who make repeat purchases over a specified period. While it is valuable for assessing customer loyalty and satisfaction, it is not specifically a sales metric. 108. The ratio of promoters to detractors is a customer metric that is used to evaluate the performance of marketing plans. Answer: True Rationale: The ratio of promoters to detractors, commonly measured through methods such as Net Promoter Score (NPS), is a customer metric used to evaluate customer satisfaction and loyalty. It provides insights into customers' likelihood to recommend the company or its products/services to others, which is indicative of overall customer sentiment and brand advocacy. 109. A marketing audit is an orderly examination of the organization's macro- and micromarketing environments, marketing objectives and strategies, marketing systems, and specific activities. Answer: True Rationale: A marketing audit involves a comprehensive evaluation of various aspects of the organization's marketing efforts, including internal and external environments, marketing objectives and strategies, marketing systems and processes, and specific marketing activities. It aims to identify strengths, weaknesses, opportunities, and threats to inform strategic decision-making. 110. Self-audits tend to provide more objective information than audits conducted by external consultants. Answer: False Rationale: Self-audits may be susceptible to bias or limited perspectives due to the organization's internal stakeholders conducting the evaluation. External consultants often bring objectivity, expertise, and a fresh perspective, allowing for more thorough and unbiased assessments of the organization's marketing efforts. 111. A marketing audit only benefits a company that is in trouble; companies in good health do not need to conduct them. Answer: False Rationale: Marketing audits are beneficial for all companies, regardless of their current health. Conducting regular audits helps organizations identify areas of improvement, capitalize on strengths, and stay responsive to changing market conditions. It allows for proactive strategic planning rather than reactive measures when problems arise. 112. To succeed in the future, marketing must be more holistic and less departmental. Answer: True Rationale: In an increasingly interconnected and dynamic business environment, successful marketing requires a holistic approach that integrates various departments and functions within the organization. Siloed departmental approaches are often ineffective in addressing complex market challenges and delivering seamless customer experiences. 113. In the future, there will be greater emphasis on precision marketing as opposed to mass marketing. Answer: True Rationale: With advancements in technology and data analytics, there is a growing trend toward precision marketing, which involves targeting specific audience segments with personalized messages and offers based on their unique preferences, behaviors, and demographics. This approach is more effective than mass marketing in reaching and engaging with increasingly diverse and fragmented consumer populations. 114. In the context of overall market share, customer loyalty refers to the percentage of all customers who buy from the company. Answer: False Rationale: In the context of overall market share, customer loyalty refers to the percentage of a company's existing customers who continue to purchase from the company over time. It measures the retention of existing customers rather than the entire market share. 115. The first step in conducting a marketing profitability analysis involves assigning functional expenses to marketing entities. Answer: False Rationale: The first step in conducting a marketing profitability analysis typically involves identifying and categorizing all relevant revenues and costs associated with marketing activities. This may include direct costs such as advertising expenses and indirect costs such as overhead allocations. Only after this step can expenses be assigned to marketing entities for further analysis. 116. Operating management is most effective in controlling direct costs and traceable common costs. Answer: True Rationale: Operating management, which is responsible for day-to-day operations within a company, is typically more closely involved with direct costs and traceable common costs. These costs are directly attributable to specific products, departments, or activities and are therefore more manageable and controllable at the operational level. By focusing on controlling these costs effectively, operating management can contribute to overall cost efficiency and profitability. 117. List and define some of the important shifts that have taken place in business and marketing practices. Answer: 1. Reengineering is the appointment of teams to manage customer-value-building processes and break down walls between departments. 2. Outsourcing involves buying more goods and services from outside domestic or foreign vendors. 3. Benchmarking is the study of "best practice companies" to improve performance. 4. Supplier partnering focuses on partnering with fewer but better value-adding suppliers. 5. Customer partnering entails working more closely with customers to add value to their operations. 6. Merging involves acquiring or merging with firms in the same or complementary industries to gain economies of scale and scope. 7. Globalizing focuses on increasing the effort to "think global" and "act local." 8. Flattening refers to reducing the number of organizational levels to get closer to the customer. 9. Focusing involves determining the most profitable businesses and customers and focusing on them. 10. Accelerating involves designing the organization and setting up processes to respond more quickly to changes in the environment. 11. Empowering means encouraging and empowering personnel to produce more ideas and take more initiative. 12. Justifying means becoming more accountable by measuring, analyzing, and documenting the effects of marketing actions. 13. Broadening involves factoring the interests of customers, employees, shareholders, and other stakeholders into the activities of the enterprise. 14. Monitoring involves tracking what is said online and elsewhere and studying customers, competitors, and others to improve business practices. 118. Describe the functional organization of a marketing department in terms of its structure, advantages, and disadvantages. Answer: The most common form of marketing organization consists of functional specialists reporting to a marketing vice president. The main advantage of a functional marketing organization is its administrative simplicity. It can be quite a challenge for the department to develop smooth working relationships, however. This form also can result in inadequate planning as the number of products and markets increases and each functional group vies for budget and status. The marketing vice president constantly weighs competing claims and faces a difficult coordination problem. 119. Explain the product- or brand-management organization and list its advantages and disadvantages. Answer: Companies producing a variety of products and brands often establish a product- (or brand-) management organization. The product- or brand-management organization does not replace the functional organization, but serves as another layer of management. A product-management organization makes sense if the company's products are quite different, or if the sheer number of products is beyond the ability of a functional organization to handle. Product and brand management is sometimes characterized as a hub-and-spoke system. The product-management organization has several advantages. The product manager can concentrate on developing a cost-effective marketing mix for the product and can react more quickly to new products in the marketplace; the company's smaller brands have a product advocate. The disadvantages are that product managers are not given enough authority, they become experts in their product area but rarely achieve functional expertise. The product-management system is costly and brand managers normally manage a brand only for a short time. The fragmentation of markets makes it harder to develop a national strategy. In addition to this, product and brand managers focus on market share and not in building customer relationships. 120. What is a market-management organization? Answer: Many companies sell their products to differing markets. When customers fall into different user groups with distinct buying preferences and practices, a market-management organization is desirable. Market managers supervise several market-development managers, market specialists, or industry specialists and draw on functional services as needed. Market managers of important markets might even have functional specialists reporting to them. Market managers are staff (not line) people, with duties like those of product managers. They develop long-range and annual plans for their markets and are judged by their market's growth and profitability. Because this system organizes marketing activity to meet the needs of distinct customer groups, it shares many advantages and disadvantages of productmanagement systems. 121. Many companies are beginning to realize that they are not really market and customer driven, they are product and sales driven. In the attempt to transform themselves into true market-driven companies, firms are required to change. Describe and explain what changes are necessary. Answer: To be truly market-driven, companies need to develop a company-wide passion for customers, organize around customer segments instead of around products, and develop a deep understanding of customers through qualitative and quantitative research. Additionally, the organization must be creative; the firm must build capability in strategic innovation and imagination. This capability comes from assembling tools, processes, skills, and measures that let the firm generate more and better new ideas than its competitors. 122. What is sustainability? How is it related to the concept of greenwashing? Answer: Sustainability is the ability to meet humanity's needs without harming future generations. It now tops many corporate agendas. Major corporations outline in great detail how they are trying to improve the long-term impact of their actions on communities and the environment. Heightened interest in sustainability has also unfortunately resulted in greenwashing, which gives products the appearance of being environmentally friendly without living up to that promise. Because of insincere firms jumping on the green bandwagon, consumers bring a healthy skepticism to environmental claims, but they are also unwilling to sacrifice product performance and quality. Many firms are rising to the challenge and are using the need for sustainability to fuel innovation. 123. Identify some of the brand benefits that can accrue to a company that engages in cause marketing. Answer: A successful cause-marketing program can improve social welfare, create differentiated brand positioning, build strong consumer bonds, enhance the company's public image, create a reservoir of goodwill, boost internal morale and galvanize employees, drive sales, and increase the firm's market value. Consumers may develop a strong, unique bond with the firm running the cause-marketing that transcends normal marketplace transactions. Specifically, cause marketing can (1) build brand awareness, (2) enhance brand image, (3) establish brand credibility, (4) evoke brand feelings, (5) create a sense of brand community, and (6) elicit brand engagement. 124. Identify three key success factors in developing and implementing a social marketing program. Answer: Students may choose three of the following key success factors presented in the text: (1) choose target markets that are most ready to respond; (2) promote a single, doable behavior in clear, simple terms; (3) explain the benefits in compelling terms; (4) make it easy to adopt the behavior; (5) develop attention-grabbing messages and media; and (6) consider an education-entertainment approach. 125. Briefly explain the concept of annual-plan control. Answer: Annual-plan control ensures the company achieves the sales, profits, and other goals established in its annual plan. At its heart is management by objectives. First, management sets monthly or quarterly goals. Second, it monitors performance in the marketplace. Third, management determines the causes of serious performance deviations. Fourth, it takes corrective action to close gaps between goals and performance. This control model applies to all levels of the organization. Top management sets annual sales and profit goals; each product manager, regional district manager, sales manager, and sales rep is committed to attaining specified levels of sales and costs. Each period, top management reviews and interprets the results. Marketers today have better marketing metrics for measuring the performance of marketing plans. Four tools for the purpose are sales analysis, market share analysis, marketing expense-to-sales analysis, and financial analysis. 126. What is a marketing audit? Explain the four characteristics of a marketing audit. Answer: A marketing audit is a comprehensive, systematic, independent, and periodic examination of a company's or business unit's marketing environment, objectives, strategies, and activities, with a view to determining problem areas and opportunities and recommending a plan of action to improve the company's marketing performance. A marketing audit should be: (1) comprehensive it covers all the major marketing activities of a business; (2) systematic it is an orderly examination of the organization's macro- and micromarketing environments, marketing objectives and strategies, marketing systems, and specific activities; (3) independent outside consultants bring the necessary objectivity, broad experience in a number of industries, familiarity with the industry being audited, and undivided time and attention; and (4) periodic firms typically initiate marketing audits only after failing to review their marketing operations during good times, with resulting problems. A periodic marketing audit can benefit companies in good health as well as those in trouble. 127. What is a brand-asset management team (BAMT)? Answer: Triangular and horizontal product-team approaches let each major brand be run by a brand-asset management team (BAMT) consisting of key representatives from functions that affect the brand's performance. The company consists of several BAMTs that periodically report to a BAMT directors committee, which itself reports to a chief branding officer. 128. Define a category-management organization. Answer: A category-management organization is where a company focuses on product categories to manage its brands. 129. What is a customer-management organization? When should it be adopted? Answer: A customer-management organization deals with individual customers rather than the mass market or even market segments. It is suitable when a close customer relationship is advantageous, such as when customers have diverse and complex requirements and buy an integrated bundle of products and services. 130. What are some of the forces that are driving companies to practice corporate social responsibility? Answer: A number of forces are driving companies to practice a higher level of corporate social responsibility, such as rising customer expectations, evolving employee goals and ambitions, tighter government legislation and pressure, investor interest in social criteria, media scrutiny, and changing business procurement practices. 131. How can firms promote ethical behavior among their employees? Answer: Companies must adopt and disseminate a written code of ethics, build a company tradition of ethical behavior, and hold their people fully responsible for observing ethical and legal guidelines. Organizations must also ensure that every employee knows and observes relevant laws. 132. Corporate philanthropy can pose problems even when done with the best intentions. Explain. Answer: Philanthropic efforts by companies can be overlooked—even resented—if the company is seen as exploitive or fails to live up to a "good guys" image. 133. Explain the concept of greenwashing along with an example. Answer: Greenwashing gives products the appearance of being environmentally friendly without living up to that promise. An automobile manufacturer who promotes its cars as being environmentally friendly when the company is in fact a major polluter, would be an example of greenwashing. 134. Define cause-related marketing. What is the difference between cause-related marketing and social marketing? Answer: Cause-related marketing links the firm's contributions to a designated cause to customers' engaging directly or indirectly in revenue-producing transactions with the firm. Cause-related marketing supports a cause whereas social marketing by nonprofit or government organizations furthers a cause. 135. Give an example of a cognitive social marketing campaign. Answer: Cognitive campaigns try to educate and inform people. A cognitive campaign might explain the nutritional value of different foods or demonstrate the importance of conservation. 136. Suicide is one of the leading causes of death worldwide. Develop the possible objectives of a social marketing campaign which aims to change people's cognitions, values, behaviors, and actions related to suicide. Answer: Cognitive—To promote awareness about the risk factors associated with suicide and how it can be prevented. Action—To motivate people to volunteer for a crisis hotline service aimed at providing support to people with suicidal tendencies. Behavioral—To reduce the incidence of suicide by discouraging substance abuse. Value - To eliminate the stigma associated with suicidal people. 137. Define marketing implementation. Answer: Marketing implementation is the process that turns marketing plans into action assignments and ensures that such assignments are executed in a manner that accomplishes the plan's stated objectives. 138. What is marketing control? List the four types of marketing control. Answer: Marketing control is the process by which firms assess the effects of their marketing activities and programs and make necessary changes and adjustments. The four types of needed marketing control are: annual-plan control, profitability control, efficiency control, and strategic control. 139. What is the purpose of profitability control? Answer: The purpose of profitability control is to examine where the company is making and losing money. Companies should measure the profitability of their products, territories, customer groups, segments, trade channels, and order sizes to help determine whether to expand, reduce, or eliminate any products or marketing activities. 140. How can a firm periodically reassess its strategic approach to the marketplace? Answer: Each company should periodically reassess its strategic approach to the marketplace with a good marketing audit. Companies can also perform marketing excellence reviews and ethical/social responsibility reviews. 141. List some of the marketing trends that are likely to emerge in the near future. Answer: The coming years will see: • The demise of the marketing department and the rise of holistic marketing • The demise of free-spending marketing and the rise of ROI marketing • The demise of marketing intuition and the rise of marketing science • The demise of manual marketing and the rise of both automated and creative marketing • The demise of mass marketing and the rise of precision marketing 142. Define sale-variance analysis and microsales analysis. Answer: Sales-variance analysis measures the relative contribution of different factors to a gap in sales performance. Microsales analysis looks at specific products, territories, and so forth that failed to produce expected sales. 143. What are the steps involved in marketing profitability analysis? Answer: The steps involved in marketing profitability analysis are as follows: Step 1: Identifying functional expenses Step 2: Assigning functional expenses to marketing entities Step 3: Preparing a profit-and-loss statement for each marketing entity 144. What are direct, traceable common, and nontraceable common costs? Give an example of each. Answer: Direct costs are costs that we can assign directly to the proper marketing entities, such as materials costs and sales-force salaries. Traceable common costs are incurred indirectly but can be attributed on a plausible basis to various marketing entities, such as rent expenses. Nontraceable common costs are costs whose assignments are highly arbitrary, such as "corporate image" expenditures. 145. What is the full-cost approach of evaluating a marketing entity's performance? Answer: When evaluating a marketing entity's performance, the major controversy is about whether to allocate the nontraceable common costs to the marketing entity. Such allocation is called the full-cost approach, and its advocates argue that all costs must ultimately be imputed in order to determine true profitability. However, this argument confuses the use of accounting for financial reporting with its use for managerial decision making. 146. Full costing allocates nontraceable common costs to marketing entities and has three major weaknesses. What are they? Answer: Full costing has three major weaknesses: (1) The relative profitability of different marketing entities can shift radically when we replace one arbitrary way to allocate nontraceable common costs by another; (2) the arbitrariness demoralizes managers, who feel their performance is judged adversely; and (3) the inclusion of nontraceable common costs could weaken efforts at real cost control. Test Bank for Marketing Management Philip T Kotler, Kevin Lane Keller 9780132102926, 9780273753360, 9781292092621, 9780133856460, 9789332587403, 9780136009986

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