Chapter 3 Gathering Information and Scanning the Environment 1) As the manager of an organization that is attempting to build a Marketing Information System (MIS), you have been informed that a MIS is built upon three fundamental information sources. The sources are ________, marketing intelligence activities, and marketing research. A) external records and documents B) databases found on the Internet C) consultant reports D) internal company records E) secondary data from government sources such as the Better Business Bureau Answer: D 2) The company's marketing information system should be a mix of what managers think they need, what managers really need, and ________. A) what the marketing research department is able to do B) what consumers are willing to consume C) what the government policies allow D) what is acceptable at the industry level E) what is economically feasible Answer: E 3) The heart of the internal records system is the ________. A) pay-roll system B) purchase order cycle C) order-to-payment cycle D) expense cycle E) human resources system Answer: C 4) The ________ begins with sales representatives and dealers sending orders to the firms and is followed by the sales department preparing invoices, and finally generating shipping and billing documents which are then sent to various departments. A) payroll system B) market research process C) human resources system D) expense cycle E) order-to-payment cycle Answer: E 5) By equipping its sales force with handheld devices with bar-code readers and Internet connections to speed inventory assessment, AsiaMade allows sales executives to have significantly more time to interact with their consumers. This is an example of the use of technology in improving ________. A) sales information systems B) payroll systems C) cookies D) cohort segmentation E) competitive intelligence gathering Answer: A 6) Companies can practice targeted marketing by using ________ records of Web site usage stored on personal browsers. A) plug-ins B) black swans C) cookies D) trolls E) honey-pots Answer: C 7) The internal records system supplies results data, but the marketing intelligence system supplies ________ data. A) internal B) revenue C) thematic D) happenings E) process Answer: D 8) A ________ is a set of procedures and sources managers use to obtain everyday information about developments in the marketing environment. A) data warehousing system B) viral marketing campaign C) product management system D) marketing intelligence system E) sales information system Answer: D 9) A company can take several steps to improve the quality of its marketing intelligence. Which of the following best describes the practice used by McDonald's when it sent mystery shoppers to assess stores' internal speed standards? A) training and motivating the sales force to spot and report new developments B) motivating intermediaries to pass along important intelligence C) networking externally D) purchasing information from outside research firms and vendors E) using the sales information system to get accurate sales reports Answer: B 10) A company can take several steps to improve the quality of its marketing intelligence. If the company purchases competitive products for study, attends open houses and trade shows, and reads competitors' published reports and stockholder information, the company is using ________ to improve the quality of its marketing intelligence. A) sales-force surrogates B) intermediaries C) external networks D) advisory panels E) customer feedback systems Answer: C 11) When gathering marketing intelligence, companies often use the population census, which provides an in-depth look at the population swings, demographic groups, regional migrations, and changing family structure. Which of the following steps to improve the quality of a company marketing intelligence system would be most closely associated with this illustration? A) A company can purchase information from outside suppliers. B) A company can take advantage of government data sources. C) A company can use online customer feedback systems to collect data. D) A company can network externally. E) A company can use its sales force to collect and report data. Answer: B 12) When a company acquires consumer-panel data from firms like A.C. Nielsen Company and Taylor Nelson Sofrés, which of the following steps to improve the quality of a company marketing intelligence system is the company resorting to? A) training and motivating the sales force to spot and report new developments B) motivating distributors, retailers, and other intermediaries to pass along important intelligence C) hiring external experts to collect intelligence D) using external network E) purchasing information from outside research firms and vendors Answer: E 13) Amazon.com offers an interactive feedback opportunity through which buyers, readers, editors, and others may review all products listed in the site, especially books. This is an example of a(n) ________. A) independent customer goods and service review forum B) public blog C) customer complaint site D) combo site offering customer reviews and expert opinions E) distributor or sales agent feedback site Answer: E 14) The sites which offer positive or negative product or service reviews and are built by the retailers of a particular product or service are called ________. A) combo sites B) distributor or sales agent feedback sites C) public blogs D) independent service review forums E) customer complaint sites Answer: B 15) A ________ is “unpredictable, short-lived, and without social, economic, and political significance.” A) fad B) fashion C) trend D) megatrend E) style Answer: A 16) A ________ is a direction or sequence of events that has some momentum and durability; it reveals the shape of the future and can provide strategic direction. A) fad B) fashion C) trend D) megatrend E) style Answer: C 17) A ________ is a “large social, economic, political, and technological change that is slow to form, and once in place, influences us for some time—between seven and ten years, or longer.” A) fad B) fashion C) trend D) megatrend E) style Answer: D 18) Which of the following is true about trends in worldwide population growth? A) Birthrates are on the rise in developed countries. B) Overall, the world population growth is declining. C) Birthrates are on the rise in developing countries. D) Death rates are rising in developing countries. E) Population growth is highest in developing countries. Answer: E 19) A growing population does not mean growing markets unless ________. A) the people are under a democratic system of government B) there is common ownership of all resources C) people have sufficient purchasing power D) there is adequate governmental intervention in the market E) the government has a budget surplus Answer: C 20) In China, as many as six adults — parents, grandparents, great-grandparents, and aunts and uncles — may be indulging the whims of each child. This is known as the _____________. A) pocket syndrome B) six pocket syndrome C) six syndrome D) one pocket syndrome E) baby pocket syndrome Answer: B 21) Firms find “reverse innovation” advantage by ________. A) introducing a commodity in a developed country and then distributing it globally B) introducing a commodity in a developing country and then distributing it in other developing countries C) introducing a commodity in a developing country and then distributing it globally D) introducing a commodity in a developed country and then distributing it in developing countries E) introducing a commodity in a developed country and then distributing it in other developed countries Answer: C 22) ________ refer to groups of individuals who are born during the same time period and travel through life together. A) Cohorts B) Populations C) Clans D) Societies E) Ethnic groups Answer: A 23) For marketers, the most ________ age groups shape the marketing environment. A) populous B) wealthy C) affluent D) poor E) innovative Answer: A 24) There is a global trend toward an aging population. It is the start of what the Japanese are calling the ______ Century. A) Lost B) Last C) Silver D) Gold E) Aging Answer: C 25) Future Asian retirees are envisaged to be more affluent, active, cosmopolitan, and youthful than their parents. This implies good prospects for marketers of _____________________ and beauty care offerings. A) travel, child care, wealth management B) pet care, entertainment, health care, wealth management. C) entertainment, health care D) travel, wealth management E) travel, entertainment, health care, wealth management Answer: E 26) The traditional household consists of ________. A) a husband, wife, and children (and sometimes grandparents) B) a group of related persons living together C) two or more families living together D) a man and a woman living together (whether married or not) E) related or unrelated persons who share living arrangements Answer: A 27) By 2010, projections indicate that the largest category of households will be composed of ________. A) childless married couples and empty nesters B) single-parent families C) single live-alones D) singles living with nonrelatives E) married couples with children Answer: A 28) Which of the following is likely to occur during economic downturns? A) People tend to spend more on luxury goods B) Consumption of necessary goods decline C) Long term credit is available at concessional rates of interest D) The purchasing power of the people declines E) The level of investment in the economy rises Answer: D 29) Which of the following economies provide limited opportunities to international marketers to develop product sales? A) capitalist economies B) subsistence economies C) raw-materials-exporting economies D) industrializing economies E) industrialized economies Answer: B 30) In a global economy, marketers need to pay attention to the ________________ in countries, particularly countries where affluence levels are rising. A) shifting distribution B) shifting income C) income distribution D) shifting population E) shifting income distribution Answer: E 31) Aside from cross-national income differences, companies must also consider intra-country variations in __________. A) religion B) occupations C) income D) culture E) size Answer: C 32) Which of the following elements of sociocultural environment can be associated with the growing demand for “social surrogates” like social networking sites, television etc.? A) views of ourselves B) views of organizations C) views of others D) views of nature E) views of the universe Answer: C 33) Today, corporations need to make sure that they are good corporate citizens and that their consumer messages are honest in order to positively align themselves with consumers' ________. A) views of others B) views of organizations C) views of themselves D) views of the universe E) views of society Answer: B 34) People vary in their views of society and their consumption patterns often reflect their social attitudes. ________ usually live more frugally, drive smaller cars, and wear simpler clothing. A) Makers B) Escapers C) Seekers D) Changers E) Developers Answer: D 35) People vary in their views of society and their consumption patterns often reflect their social attitudes. ________ usually eat, dress, and live well. A) Makers B) Escapers C) Seekers D) Changers E) Developers Answer: A 36) People vary in their views of society and their consumption patterns often reflect their social attitudes. ________ are a major market for movies, music, surfing, and camping. A) Makers B) Preservers C) Escapers D) Changers E) Developers Answer: C 37) ________ beliefs and values are passed from parents to children and reinforced by social institutions—schools, churches, businesses, and governments; they are very difficult to change. A) Transient B) Secondary C) Protected D) Core E) Variable Answer: D 38) Which of the following would be the best illustration of a secondary belief or value? A) belief in work B) belief in giving to charity C) belief in getting married D) belief in getting married early E) belief in being honest Answer: D 39) Each society contains ________, groups with shared values emerging from their special life experiences or circumstances. A) stakeholders B) cliques C) consumer bundles D) subcultures E) behavioral niches Answer: D 40) Consumers are generally more concerned with environmental issues that are closer to home, such as water pollution in rivers and lakes, than broader issues such as ______________. A) transportation B) industrial production C) global warming D) ozone depletion E) forest fires Answer: C 41) ________________ recognizes the need to integrate environmental issues into the firm’s strategic plans. A) Corporate environmentalism B) Environmentalism C) Social environmentalism D) Recycling E) Corporate culture Answer: A 42) Opportunities await companies and marketers who can create new solutions that promise to reconcile prosperity with _________________. A) corporate environmentalism B) environmentalism C) social environmentalism D) environmental protection E) corporate culture Answer: D 43) The marketer should monitor the following _____________: the pace of change, the opportunities for innovation, varying R&D budgets, and increased regulation. A) trends in fashion B) economic trends C) social trends D) trends in consumerism E) trends in technology Answer: E 44) When a company is said to have engaged in “greenwashing,” it means that ________. A) the company has significantly changed its business processes to incorporate a greener, more environmentally friendly philosophy B) the company has moved its production facilities to countries where environmental laws and regulations are less rigorous C) the company has changed its "green" image in order to appeal to a different, usually older, demographic D) the company's products are not nearly as green and environmentally beneficial as its marketing might suggest E) the company has undertaken a campaign to lobby for tougher environmental regulations for the industry Answer: D 45) Which of the following consumer environmental segments cares a great deal about the environment, but doesn't seem to have the knowledge or resources to take action? A) not me greens B) business first greens C) mean greens D) go-with-the-flow greens E) dream greens Answer: E 46) The consumer environmental segment termed ________ holds the view that the environment is not a huge concern and that business and industry is doing its part to help. This may explain why they don't feel the need to take action themselves—even as they cite lots of barriers to doing so. They are also the largest consumer environmental segment. A) not me greens B) business first greens C) mean greens D) go-with-the-flow greens E) dream greens Answer: B 47) The consumer environmental segment termed ________ claims to be knowledgeable about environmental issues, but does not express pro-green attitudes or behaviors. Indeed, it is practically hostile toward pro-environmental ideas. This segment has chosen to reject prevailing notions about environmental protection and may even be viewed as a potential threat to green initiatives. A) not me greens B) business first greens C) mean greens D) go-with-the-flow greens E) dream greens Answer: C 48) Which of the following is true about the technology trends that marketers should monitor? A) A growing portion of R&D expenditures are going toward the research side as opposed to the development side. B) Today, the time between idea and implementation is expanding. C) More single companies rather than consortiums are directing research efforts toward major breakthroughs. D) The pace of change is accelerating today. E) The government has decreased regulation of technological change. Answer: D 49) The ______________________ consists of laws, government agencies, and pressure groups that influence and limit various organizations and individuals. A) legal environment B) political environment C) social environment D) political and legal environment E) economic environment Answer: D 50) An intended effect of business legislation is to _____________________. A) restrict fair competition in the market B) encourage unbridled business behavior C) reduce the social cost of producing a particular commodity D) expose consumers to unfair trade practices E) protect companies from unfair competition Answer: E 51) An important force affecting business is the ________ movement, a movement of citizens and government organized to strengthen the rights and powers of buyers in relation to sellers. A) human rights B) consumerist C) environmental D) self-determination E) materialistic Answer: B 52) Companies can prepare as many as ________ different types of demand estimates. A) 6 B) 30 C) 60 D) 90 E) 150 Answer: D 53) The demand estimates of an organization comprise of five space levels. They are world, country, region, territory, and ________. A) zone B) organization C) customer D) product E) input Answer: C 54) The ________ market is the set of consumers with an adequate interest, income, and access to a particular offer. A) potential B) available C) target D) penetrated E) reserve Answer: B 55) The ________ market is the part of the qualified available market the company decides to pursue. A) potential B) available C) target D) penetrated E) reserve Answer: C 56) The ________ market is the set of consumers who are buying the company's product. A) potential B) available C) target D) penetrated E) reserve Answer: D 57) When the government of any country restricts the sale of a particular commodity to certain groups—for example, restricting sales of alcohol to individuals above the age of 21—the eligible consumers who have income, interest, access and qualification constitute the ________. A) accessible market B) target market C) potential market D) qualified potential market E) qualified available market Answer: E 58) Jeanine would like to own a Mercedes but is unable to afford one at this time. Jeanine is part of the ________ for this product. A) potential market B) available market C) target market D) projected market E) penetrated market Answer: A 59) ________ for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program. A) Company demand B) Area market potential C) Market demand D) Company sales potential E) Total market potential Answer: C 60) With an increase in marketing expenditure, market demand ________. A) continues to increase at an increasing rate B) initially increases and then declines C) increases first at an increasing rate, then at a decreasing rate D) decreases first and then spikes E) continues to increase at a decreasing rate. Answer: C 61) The base sales of an organization that takes place even without any demand-stimulating expenditures is called ________. A) primary demand B) market potential C) market minimum D) optimum demand E) market demand Answer: C 62) The distance between the market minimum and the market potential shows the overall ________. A) marketing sensitivity of demand B) market share of the firm C) market forecast of the firm D) product-penetration percentage E) sales quota Answer: A 63) A low market-penetration index indicates ________. A) it will be expensive for the firms to attract the few remaining prospects B) substantial growth potential for all firms C) the rival firms try to capture greater market share by lowering their product price D) the profit margins of the firms decline E) the firms cannot raise demand substantially by raising its market expenditure Answer: B 64) Only one level of industry marketing expenditure will actually occur. The market demand corresponding to this level is called the ________. A) market minimum B) market share C) market forecast D) market potential E) company demand Answer: C 65) A company can expect to expand its market share to a large extent when ________. A) it has a high market-penetration index B) its share-penetration index is low C) its share-penetration index is high D) its product-penetration percentage is high E) it has a low market potential Answer: B 66) During recession, the market demand curve which is a function of marketing expenditure ________. A) shifts upward B) becomes vertical C) remains unaffected D) shifts downward E) slopes downward Answer: D 67) The sales goal set for a product line, company division, or sales representative of an organization is called ________. A) sales budget B) company sales forecast C) sales quota D) company sales potential E) market potential Answer: C 68) A ________ is a conservative estimate of the expected volume of sales, primarily for making current purchasing, production, and cash flow decisions. A) sales budget B) company sales forecast C) sales quota D) company sales potential E) market potential Answer: A 69) ________ is the limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment. A) Sales budget B) Company sales forecast C) Sales quota D) Company sales potential E) Market potential Answer: E 70) ________ is the company's estimated share of market demand at alternative levels of company marketing effort in a given time period. A) Sales budget B) Market demand C) Company demand D) Company sales potential E) Market potential Answer: C 71) ________ is the sales limit approached by company demand as company marketing effort increases relative to that of competitors. A) Sales budget B) Market demand C) Company demand D) Company sales potential E) Market potential Answer: D 72) A company's sales potential would be equal to market potential if ________. A) the marketing expenditure of the company is reduced to zero B) industry marketing expenditures approach infinity for a given marketing environment C) the market is non-expandable D) market minimum is equal to market potential E) the company gets 100 percent share of the market Answer: E 73) ________ is the maximum sales available to all firms in an industry during a given period, under a given level of industry marketing effort and environmental conditions. A) Company demand B) Market demand C) Company sales potential D) Sales quota E) Total market potential Answer: E 74) Suppose an individual buyer purchases three pairs of shoes each year at $50 each pair and that there are 50 million such consumers in the economy. Compute the total market potential for shoes. A) $6,500 million B) $5,000 million C) $75 billion D) $7,500 million E) $10,000 million Answer: D 75) The ________ method of determining area market potential calls for identifying all the potential buyers in each market and estimating their potential purchases. A) group-discussion B) market-test C) market-buildup D) brand development index E) multiple-factor index Answer: C 76) An efficient method of estimating area market potentials makes use of the ________, developed by the U.S. Bureau of the Census in conjunction with the Canadian and Mexican governments. It classifies all manufacturing into 20 major industry sectors and further breaks each sector into a six-digit, hierarchical structure. A) Thomson Reuters Business Classification B) Global Industrial Classification Standard C) North American Product Classification System D) Industry Classification Benchmark E) North American Industry Classification System Answer: E 77) Which of the following organizations is likely to use the multiple-factor index method to estimate the market potential? A) a firm that manufactures auto parts B) a firm that provides facility management services to large offices C) a company that provides Web site development services for small businesses D) a company that manufactures diagnostic machines for hospitals E) a firm that manufactures fashionable clothes for teenagers Answer: E 78) Which of the following is true of the various elements of the multi-factor index method of estimating area market potentials? A) Zip+4 code centers generally have stable boundaries and a population of about 4000. B) The weights in the buying-power index are somewhat arbitrary. C) Normally, the lower the BDI, the less room there is to grow the brand. D) Census tracts are a little larger than neighborhoods. E) This method is primarily used by business marketers. Answer: B 79) Suppose Concrete Express, a cement manufacturing firm, finds that its sales have increased by 3 percent this year, while industry sales have increased by 5 percent. This implies that ________. A) Concrete Express has acquired additional market share in relation to the cement industry B) Concrete Express is losing its relative standing in the cement industry C) other players in the industry are losing market share D) the absolute market share of Concrete Express has declined E) Concrete Express's position in relation to the industry has remain unchanged Answer: B 80) For which of the following categories of products will demand forecasting be easiest? A) commodities which are in the initial stage of their product life cycles B) products which have many close substitutes in the market C) goods which are produced in an oligopoly market D) products whose sales fluctuate widely E) products whose consumers are highly sensitive to change in price Answer: C 81) Novamalt Asia, a manufacturer of health drinks, plans to introduce its new range of woman health drinks into the market. It involves a specialized marketing research firm to forecast the sales of this product. The research firm analyzes past buying behavior of customers and uses time-series analysis for making the sales forecasts. Which of the following information bases is being used by the research firm in this scenario? A) what people say B) what people do C) what people have done D) what people will do E) what people speculate Answer: C 82) Timeseries analysis method of forecasting sales breaks past time series into four components- trend, cycle, seasonal, and ________. A) regular B) annual C) erratic D) recurring E) periodic Answer: C 83) ________ projects the next period's sales by combining an average of past sales and the most recent sales, giving more weight to the latter. A) Timeseries analysis B) Statistical demand analysis C) Econometric analysis D) Cost effectiveness analysis E) Exponential smoothing Answer: E 84) ________ measures the impact of a set of causal factors (such as income, marketing expenditures, and price) on the sales level. A) Timeseries analysis B) Statistical demand analysis C) Econometric analysis D) Cost effectiveness analysis E) Exponential smoothing Answer: B 85) The sales forecasting method of ________ builds sets of equations that describe a system and statistically derives the different parameters that make up the equations statistically. A) timeseries analysis B) statistical demand analysis C) econometric analysis D) cost effectiveness analysis E) exponential smoothing Answer: C 86) Marketers have little information about how consumption patterns vary across and within countries. Answer: False 87) The major responsibility for identifying significant marketplace changes falls to the company’s marketers. Answer: True 88) Many firms use the Internet and extranets to improve the speed, accuracy, and efficiency of the order-to-payment cycle. Answer: True 89) Few consumers actually delete cookies frequently. When customers do not delete cookies, they expect customized marketing appeals and deals. Answer: True 90) Mailing of a new offer to a handful of selected customers instead of all customers reduces the response rate to the offer. Answer: False 91) The competitive intelligence function works best when it is loosely coordinated with the decision-making process. Answer: False 92) If a company were pursuing a policy of networking externally to gather marketing intelligence, it might collect competitors' ads or look up news stories about competitors. Answer: True 93) One of the ways to find relevant online information on competitors' strengths and weaknesses might be to frequent distributor or sales agent feedback sites. Answer: True 94) The competitive advantage function works best when it is closely coordinated with the decision-making process. Answer: False 95) A fad is more predictable and durable than a trend. Answer: False 96) A new market opportunity generally guarantees success, if the new product is technically feasible. Answer: False 97) Demographic developments are often unpredictable. Answer: False 98) Population growth is highest in countries and communities that can least afford it. Answer: True 99) There is a global trend toward an aging population. Answer: True 100) The graying of the population is affected by another trend, the widespread fall in fertility rates. Answer: True 101) Marketing strategies of firms should not consider the ethnic and racial diversity existing in their markets. Answer: False 102) Within each ethnic group are consumers who are quite different from each other. Answer: True 103) The desire for Asians to upgrade their knowledge and skills spell a high demand for quality books, magazines, and educational programs in the region. Answer: True 104) Households comprising of single, separated, widowed, and divorced individuals generally demand larger apartments, and expensive appliances, furniture, and furnishings. Answer: False 105) The available purchasing power in an economy depends on current income, prices, savings, debt, and credit availability. Answer: True 106) Industrial economies provide limited marketing opportunities for luxurious goods. Answer: False 107) Consumer expenditures are affected by income levels, savings, debt, and credit availability. Answer: True 108) Business has responded to increased awareness of nature's fragility and finiteness by producing wider varieties of camping, hiking, boating, and fishing gear such as boots, tents, backpacks, and accessories. Answer: True 109) Secondary beliefs and values are passed on from parents to children and reinforced by major social institutions, making them very difficult to change by marketers. Answer: False 110) Environmental regulations enforced by the government adversely affect automobile and steel manufacturing companies. Answer: True 111) Corporate environmentalism recognizes the need to integrate environmental issues into the firm's strategic plans. Answer: True 112) Trends in the natural environment for marketers to be aware of include the shortage of raw materials, especially water; increased pollution levels; and the changing role of governments. Answer: True 113) The time between introduction of products and peak production is shrinking. Answer: True 114) The U.S. leads the world in annual R&D expenditures while Japan is fast increasing its R&D expenditures in physics, biophysics, and computer science. Answer: True 115) Governments have reduced their agencies’ powers to investigate and ban potentially unsafe products. Answer: False 116) Environmental laws imposed by the government may at times create new business opportunities. Answer: True 117) Demand estimates prepared by companies are based on four different time periods. Answer: False 118) The penetrated market is the set of consumers who have an interest in a market offer but do not have the accessibility. Answer: False 119) Market demand for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program. Answer: True 120) An expansible market is unlikely to be affected by the level of industry marketing expenditures. Answer: False 121) The market forecast shows expected market demand, not maximum market demand. Answer: True 122) Companies assume that the lower the product-penetration percentage, the lower will be the market potential. Answer: False 123) In order to estimate future demand, companies commonly prepare a company sales forecast first, followed by an industry forecast, and finally a macroeconomic forecast. Answer: False 124) Forecasting is the art of anticipating what buyers are likely to do under a given set of conditions. Answer: True 125) Sales reps might have better insight into developing trends than any other group, and forecasting might give them greater confidence in their sales quotas and more incentive to achieve them. Answer: True 126) What is a marketing information system (MIS)? From what sources is the MIS developed? Answer: A marketing information system (MIS) consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. A marketing information system is developed from internal company records, marketing intelligence activities, and marketing research. 127) What is a marketing intelligence system? How can marketing intelligence data be collected? Answer: A marketing intelligence system is a set of procedures and sources that managers use to obtain everyday information about developments in the marketing environment. The marketing intelligence system supplies happenings data. Marketing managers collect marketing intelligence in a variety of different ways, such as by reading books, newspapers, and trade publications; talking to customers, suppliers, and distributors; monitoring social media on the Internet; and meeting with other company managers. 128) What are the various steps a company can take to improve the quality of its marketing intelligence function? Answer: The steps are: (1) a company can train and motivate the sales force to spot and report new developments; (2) a company can motivate distributors, retailers, and other intermediaries to pass along important intelligence; (3) a company can network externally; (4) a company can set up a customer advisory panel; (5) a company can take advantage of government data resources; (6) a company can purchase information from outside suppliers; and (7) a company can use online customer feedback systems to collect competitive intelligence. 129) List and briefly describe the five main ways in which marketers can find relevant online information on competitors' strengths and weaknesses. Answer: The five ways are: (1) independent customer goods and service review forums; (2) distributor or sales agent feedback sites which are built by the distributors themselves to describe their experience and level of satisfaction on products or services; (3) combo sites offering customer reviews and expert opinions mainly on financial services and high-tech products that require professional knowledge; (4) customer complaint sites designed mainly for dissatisfied customers, which allows customers to express their dissatisfaction in certain firms or products; and (5) public blogs offering personal opinions, reviews, ratings and recommendations on virtually any topic. 130) Explain “non-traditional” households. Answer: In some countries, there may be “non-traditional” households which include single live-alones, adult live-togethers of one or both sexes, single-parent families, childless married couples, and empty-nesters. More people are divorcing or separating, choosing not to marry, marrying later, or marrying without the intention to have children. Each group has a distinctive set of needs and buying habits. The single, separated, widowed, and divorced need smaller apartments; inexpensive and smaller appliances, furniture, and furnishings; and smaller-size food packages. Marketers must increasingly consider the special needs of non-traditional households, because they are growing rapidly. 131) What are the different income-distribution patterns? Answer: Marketers often distinguish countries using five income-distribution patterns: (1) very low incomes; (2) mostly low incomes; (3) very low, very high incomes; (4) low, medium, high incomes; and (5) mostly medium incomes. 132) Discuss the impact of tougher environmental regulations on businesses, citing examples whenever possible. Also, point out opportunities, if any, presented by these regulations. Answer: Imposing new regulations may hit certain industries very hard. Steel companies and public utilities in some countries like the U.S. have had to invest heavily in pollution-control equipment and more environmentally friendly fuels, making hybrid cars, low-flow toilets and showers, organic foods, and green office buildings. Opportunities await companies and marketers who can create new solutions that promise to reconcile prosperity with environmental protection. 133) What does total market potential mean? How can it be estimated? Answer: Total market potential is the maximum sales available to all firms in an industry during a given period, under a given level of industry marketing effort and environmental conditions. A common way to estimate total market potential is to multiply the potential number of buyers by the average quantity each purchases, times the price. A variation on this method is the chain-ratio method, which multiplies a base number by several adjusting percentages. 134) Suppose a cotton-textile company wants to estimate the area market potential for its high quality fabrics in Thailand. List the possible steps that the marketers will follow to compute the area market potential. Answer: The marketers may follow the following steps: Identify all the potential buyers of textile in the area, primarily the firms manufacturing readymade garments in that area. In order to do that, the company may compile a list from a directory of all manufacturing establishments in the area. Then it can estimate the quantity of fabrics each firm might purchase to produce garments worth $1 million. Compiling the quantity required by each of the firms, the marketers can estimate the area market potential of the fabric produced by the textile company. 135) Briefly describe the methods of forecasting future demand on the basis of past sales. Answer: The methods are: 1) Timeseries analysis, that breaks past time series into four components (trend, cycle, seasonal, and erratic) and projects them into the future. 2) Exponential smoothing, that projects the next period's sales by combining an average of past sales and the most recent sales, giving more weight to the latter. 3) Statistical demand analysis, which measures the impact of a set of causal factors (such as income, marketing expenditures, and price) on the sales level. 4) Econometric analysis, builds sets of equations that describe a system and statistically derives the different parameters that make up the equations statistically. 136) What are the two basic advantages that a company's marketers have in identifying significant changes in the market? Answer: The two advantages are: (1) They have disciplined methods for collecting information; and (2) they spend more time interacting with customers and observing competition. 137) Why is it necessary for firms to execute the steps of the order-to-payment cycle quickly and accurately? Answer: It is necessary for the firms to execute the steps of the order-to-payment cycle quickly and accurately because customers favor firms that can promise timely delivery. 138) Skyline Motors, an automobile manufacturing firm, is planning to introduce its new range of sports cars. It decides to offer a zero percent financing to the buyers. Skyline can save its mailing expenses by sending the offer only to its high-scoring customers instead of sending it to every customer in its database. Mention the factors according to which it may rank the customers in its database. Answer: A company may rank its customers according to factors such as purchase recency, frequency, and monetary value (RFM). 139) List some of the ways in which data mining assists the decision makers of the company. Answer: Data mining enables the analysts to garner fresh insights into neglected customer segments, recent customer trends, and other useful information. Managers can cross-tabulate customer information with product and salesperson information to yield still-deeper insights. 140) How do the distributors, retailers and other intermediaries help a company to improve the quantity and quality of its marketing intelligence? Answer: Since marketing intermediaries are often closer to the customer, they can offer helpful insights to the company to improve its marketing intelligence system. 141) Give an example of how a company can hire external experts to collect intelligence. Answer: Many companies hire specialists to gather marketing intelligence. Service providers often send mystery shoppers to their stores to assess how employees treat customers. Mystery shoppers for McDonald’s discovered that only 46 percent of its U.S. restaurants met internal speed-of-service standards, forcing the company to rethink processes and training. 142) How do retailers use mystery shoppers? Answer: Retailers find that stores that consistently score high on service have the best sales. Typical questions their mystery shoppers report on are (1) How long before a sales associate greeted you? (2) Did the sales associate act as if he or she wanted your business? and (3) Was the sales associate knowledgeable about products in stock? 143) When old industries fight or ignore new technologies, their businesses decline. Explain. Answer: Tower Records had ample warning that its music retail business would be hurt by Internet downloads of music. Its failure to respond led to liquidation. Similarly, Borders went into financial difficulties with the rise of Amazon.com and e-books such as Kindle and iPad. The marketer should monitor the following trends in technology: the pace of change, the opportunities for innovation, varying R&D budgets, and increased regulation. 144) How can marketers avoid “green marketing myopia”? Answer: Marketers should focus on consumer value positioning, calibrating consumer knowledge, and credibility of product claims. Persuade consumers that they are acting in their own and society’s long-run interest at the same time. 145) Philips Lighting's first shot at marketing a standalone compact fluorescent light (CFL) bulb was Earth Light, at $15 each versus 75 cents for incandescent bulbs. The product had difficulty climbing out of its deep green niche, as such marketing efforts of Philips suffered from the “green marketing myopia”. Identify the three ways of avoiding this. Answer: The three keys to avoiding green marketing myopia is the tendency to overly focus on a product's greenness. It can be avoided by (1) appropriately positioning the consumer value; (2) calibrating consumer knowledge; and (3) reinforcing the credibility of product claims. 146) Nestle is planning to introduce its new range of breakfast cereals. List the different product levels that it considers while formulating the demand estimates for the new product. Answer: The six different product levels that Nestle needs to consider to formulate the demand estimates for its new range of cereals are all sales, industry sales, company sales, product line sales, product from sales, and product item sales. 147) Suppose, the Indian government prohibits the sale of cigarettes to people below 20 years of age. Who are likely to comprise the qualified available market for Dunhill, a manufacturer of herbal cigarettes in India? Answer: Eligible adults (i.e. people above 20 years of age), who have interest and affordability constitute the qualified available market for the cigarettes in India. 148) What can you infer if the market-penetration index is low? Answer: A low index indicates substantial growth potential for all the firms. 149) How does the marketing environment determine the position of the market demand function? Answer: During economic prosperity the market demand function shifts up as every dollar spent in stimulating demand leads to a greater market demand. Whereas during recession the market demand function shifts downward as an equal increase in marketing expenditure leads to a smaller increase in market demand. 150) Suppose 100 million people consume black tea every year, and an average consumer consumes 8 kgs of tea at an average price of $3 per kg. Compute the total market potential for tea. Answer: $2,400 million 151) Sim Soon, a manufacturer of air conditioners, finds that its sales potential is less than its market potential even when it spends a sufficient amount on advertisements and after sale services. What is the basic reason behind such an observation by the marketers of Sim Soon? Answer: Company sales potential is less than the market potential, even when a company's marketing expenditures increase considerably because each firm has a set of loyal consumers unresponsive to other companies' efforts to woo them. 152) Two major methods of computing area market potential are market build-up method and multiple factor-index method. Which of these methods will Nexus Enterprises, a manufacturer of auto parts implement to estimate its market potential? Answer: Nexus Enterprise will implement market-build up method to estimate its area market potential as this method is primarily used by business marketers such as Nexus. 153) Suppose the brand development index of a detergent manufactured by P&G is 90 in Singapore and that in India is 48. Compare the marketing opportunity of the detergent in the two countries. Answer: P&G has a greater marketing opportunity for its detergent in India than it has in Singapore. 154) Suppose Redbus, a player in the small car market is planning to launch its new range of hybrid cars. It decides to estimate the future demand for its new car before launching it in the market. If interviewing consumers is not practical, what alternative technique might it resort to? Answer: When buyer interviewing is impractical, Redbus may ask its sales representatives to estimate the future sales or use expert opinions. 155) Assume that you are a marketing manager for a youth clothing manufacturer that has just read about the megatrend of the “rising Korean pop fashion influence” in Asia. Explain “megatrend” and indicate why it might be important to your company. Answer: Megatrends have been described as large social, economic, political, and technological changes that are slow to form, and once in place, they influence us for some time—between 7 and 10 years, or longer. Thus, the company must divert its production to the form of clothing demanded by fans of Korean pop fashion. Test Bank for Marketing Management: A South Asian Perspective Philip Kotler, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha 9789810687977, 9780132102926
Download
Close
Close
