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Chapter 3 - The Marketing Environment, Social Responsibility, and Ethics 1. Given a new brand of barbecue sauce for which to develop a marketing strategy, describe the process of conducting environmental scanning and analysis for this brand. Answer: Environmental scanning can be done by collecting information about the existing brands of barbecue sauce, surveying people about their attitude toward barbecue sauces. Scanning involves observation; secondary sources such as business, trade, government, and Internet sources; and marketing research. Environmental analysis is the process of assessing and interpreting the information gathered through environmental scanning to identify the potential threats and opportunities linked to environmental changes. Thus, once the information regarding barbecue sauces is obtained, it will be assessed and interpreted for any potential threats and opportunities through this process. 2. Distinguish between the competitive structures of a monopoly and an oligopoly with examples. Answer: A monopoly exists when an organization offers a product that has no close substitutes, making that organization the sole source of supply. In reality, most monopolies surviving today are local utilities, which are heavily regulated by local, state, or federal agencies. An oligopoly exists when a few sellers control the supply of a large proportion of a product. Products facing oligopolistic competition may be homogeneous, such as aluminium, or differentiated, such as package delivery services. 3. Describe a consumer's buying power. How might this affect a marketing strategy? Answer: The strength of a person’s buying power depends on economic conditions and the size of the resources, money, goods, and services that can be traded in an exchange, that enable the individual to make purchases. Hence, it affects the marketing strategy. The major financial sources of buying power are income, credit, and wealth. 4. Distinguish between a recession and a depression. Answer: During a recession unemployment rises, while total buying power declines. Pessimism accompanying a recession often stifles both consumer and business spending. A prolonged recession may become a depression, a period in which unemployment is extremely high, wages are very low, total disposable income is at a minimum, and consumers lack confidence in the economy. 5. Explain how a period of recession might affect the marketing of a product. Answer: In times of recession or depression, when buying power decreases, many customers may become more price conscious and seek more basic, functional products. Some firms make the mistake of drastically reducing their marketing efforts during a recession, harming their ability to compete. During these times, a company should focus its efforts on determining precisely what functions buyers want and ensure that these functions are available in its product offerings. Promotional efforts should emphasize value and utility. 6. Describe the several ways in which federal agencies influence marketing activities. Answer: Federal regulatory agencies usually have the power to enforce specific laws, as well as some discretion in establishing operating rules and regulations to guide certain types of industry practices. Some of the federal laws that regulate and influence marketing activities are Federal Trade Commission Act, Sherman Antitrust Act, Consumer Goods Pricing Act, Fair Packaging and Labeling Act, Consumer Product Safety Act, and so on. 7. What roles do the Better Business Bureau and the National Advertising Review Board play in self-regulation of business? Answer: The Better Business Bureau is a local regulatory agency supported by local businesses. When a firm continues to violate what the Better Business Bureau believes to be good business practices, the bureau warns consumers through local newspapers or broadcast media. If the offending organization is a Better Business Bureau member, it may be expelled from the local bureau. The National Advertising Review Board (NARB) is another self-regulatory entity that considers cases in which an advertiser challenges issues raised by the National Advertising Division (NAD) about an advertisement. Cases are reviewed by panels drawn from NARB members representing advertisers, agencies, and the public. 8. Why must marketers be aware of new developments in technology? Answer: Technology is the application of knowledge and tools to solve problems and perform tasks more efficiently. Marketers must be aware of new developments in technology, because it helps them to operate more efficiently and to provide an exciting array of products for consumers. 9. Define social responsibility. Describe the importance of social responsibility in marketing. Answer: In marketing, social responsibility is defined as an organization’s obligation to maximize its positive impact and minimize its negative impact on society. Social responsibility thus deals with the total effect of all marketing decisions on society. In marketing, social responsibility includes the managerial processes needed to monitor, satisfy, and even exceed stakeholder expectations and needs. 10. Define marketing citizenship. Describe the impact of its dimensions on organizations. Answer: The adoption of a strategic focus for fulfilling the economic, legal, ethical, and philanthropic social responsibilities expected by stakeholders is defined as marketing citizenship. The dimensions of marketing citizenship are as follows: Economic Dimension: At the most basic level, all companies have an economic responsibility to be profitable so that they can provide a return on investment to their owners and investors, create jobs for the community, and contribute goods and services to the economy. How organizations relate to stockholders, employees, competitors, customers, the community, and the natural environment affects the economy. Legal Dimension: Marketers are also expected to obey laws and regulations. The efforts of elected representatives and special-interest groups to promote responsible corporate behavior have resulted in laws and regulations designed to keep U.S. companies’ actions within the range of acceptable conduct. Ethical dimension: Ethical marketing decisions foster trust, which helps to build long term marketing relationships. Marketers should be aware of ethical standards for acceptable conduct from several viewpoints—company, industry, government, customers, special-interest groups, and society at large. Philanthropic Dimension: Philanthropic responsibilities, which go beyond marketing ethics, are not required of a company, but they promote human welfare or goodwill. More companies than ever are adopting a strategic approach to corporate philanthropy. 11. Provide an overview of important social responsibility issues in marketing. Answer: Two major categories of social responsibility issues are sustainability and consumerism. Sustainability: One of the more common ways marketers demonstrate social responsibility is through programs designed to protect and preserve the natural environment. This approach to the environment is to reduce, reuse, and recycle. Consumerism: Consumerism consists of organized efforts by individuals, groups, and organizations seeking to protect consumers’ rights. The movement’s major forces are individual consumer advocates, consumer organizations and other interest groups, consumer education, and consumer laws. 12. Define green marketing. Bloom's: Knowledge Answer: Green marketing is a strategic process involving stakeholder assessment to create meaningful long-term relationships with customers while maintaining, supporting, and enhancing the natural environment. 13. Discuss the difference between social responsibility and ethics in marketing. Answer: Although the concepts of marketing ethics and social responsibility are often used interchangeably, it is important to distinguish between them. Ethics relates to individual and group decisions—judgments about what is right or wrong in a particular decision-making situation—whereas social responsibility deals with the total effect of marketing decisions on society. 14. Discuss some of the important ethical issues in marketing. Answer: Some of the important ethical issues in marketing are related to product, price, distribution, and promotion. Product-related ethical issues include failure to disclose risks associated with a product, information about a product’s function, value, or use, and information about changes in the nature, quality, or size of a product. Distribution-related ethical issues include failure to live up to the rights and responsibilities associated with channel member roles, manipulation of product availability, and use of coercion to force other intermediaries to behave in a certain way. Promotion-related ethical issues include false or misleading advertising, use of manipulative or deceptive sales promotions, tactics, and publicity, and offering or accepting bribes in personal selling situations. Promotion-related ethical issues include price fixing, predatory pricing, and failing to disclose the full price of a purchase. 15. How can a code of conduct encourage ethical behavior in an organization? Answer: To improve ethics, many organizations have developed codes of conduct (also called codes of ethics) consisting of formalized rules and standards that describe what the company expects of its employees. The New York Stock Exchange now requires every member corporation to have a formal code of conduct. Codes of conduct promote ethical behavior by reducing opportunities for unethical behavior; employees know both what is expected of them and what kind of punishment they face if they violate the rules. Such codes are important in preventing misconduct within the organization. It is also important that companies consistently enforce standards and impose penalties or punishment on those who violate codes of conduct. 16. To monitor changes in the marketing environment effectively, marketers must engage in: A. environmental scanning and analysis. B. economic scanning. C. self-regulatory analysis. D. marketing research analysis. E. information collecting. Answer: A 17. Collecting information from secondary sources such as business, government, trade, and general-interest publications plays an important role in: A. environmental analysis. B. competitive forces. C. environmental scanning. D. procompetitive legislation. E. self-regulatory forces. Answer: C 18. Three primary methods of collecting information for environmental scanning are: A. marketing research, company records, and advance orders. B. secondary sources, company records, and observation. C. executive knowledge, media, and marketing research. D. observation, secondary sources, and marketing research. E. company database, executive knowledge, and research. Answer: D 19. The Lazy-Boy Furniture Company collects information about a wide variety of competitive, economic, political, legal and regulatory, technological, and sociocultural forces that affect its marketing activities. This process is called: A. environmental scanning. B. survey of environment. C. marketing. D. environmental analysis. E. marketing information processing. Answer: A 20. In order to develop a new drink dispenser, a soft drink company collected information on the soda-drinking habits of individuals in several different age groups, new technologies for dispensing liquids from vending machines, and the sales of its “fountain” syrup for national restaurant chains to use in their soda machines. The soft drink company’s collection of this information is an example of ________, while the examination of its impact on the potential for the new dispenser is an example of ________. A. environmental scanning; environmental analysis B. an environmental force; environmental scanning C. environmental analysis; environmental strategy D. strategizing; environmental scanning E. strategic management; environmental scanning Answer: A 21. A satellite radio broadcasting company is concerned about how the increasing use of smart phones will affect the future sales of its satellite radio service. The company gathers information about the changing trends in music access and delivery to prepare for this trend. This process is called: A. environmental scanning. B. target marketing. C. surveying. D. environmental analysis. E. dynamic responsiveness. Answer: A 22. A manager's duties in an environmental analysis include: A. checking information for accuracy and resolving inconsistencies. B. observation and assessment. C. conducting research, assessment, and reporting. D. observation, market research, and fact finding. E. checking the company database, conducting research, and reporting. Answer: A 23. When a soft drink manufacturing company takes the information collected through research and attempts to assess and interpret what it means for its soft-drink marketing efforts, it is engaged in environmental: A. scanning. B. marketing. C. management. D. manipulation. E. analysis. Answer: E 24. Nabisco, a biscuit manufacturing company, learned that health-conscious consumers preferred lower fat snack and lower-carbohydrate foods. At the same time, the company saw sales of such products slumping and was careful not to launch any new varieties of these products for a while. Which of the following best describes this biscuit company’s action? A. Environmental scanning B. Environmental marketing C. Push marketing D. Market segmentation E. Environmental analysis Answer: E 25. After Home Depot gathers information related to its marketing environment, it attempts to define the current environmental changes and predict future changes. This determines possible opportunities and threats facing the company. Which of the following processes is being implemented by Home Depot? A. Environmental marketing B. Survey of environment C. Marketing D. Environmental analysis E. Marketing information processing Answer: D 26. Marketers who attempt to influence and change the various environmental forces have a (n) ________ response to these forces. A. reactive B. inactive C. variable D. positive E. proactive Answer: E 27. Toyota, a car manufacturing company, has developed aluminium car bodies that are 100 percent recyclable and light enough to help conserve fuel. What kind of response is this toward environmental forces? A. Proactive B. Competitive C. Reactive D. Inactive E. Controllable Answer: A 28. If Silk Soyamilk Corp. engaged in environmental scanning and analysis, it is likely to change its products and marketing strategies to adapt to environmental forces rather than trying to influence these forces. Thus, it can be concluded that this company has a (n) ________ approach to marketing environmental forces. A. inactive B. reactive C. proactive D. negative E. variable Answer: B 29. Marketers who view political forces as being beyond their control are taking a (n) ________ response toward these forces. A. reactive B. aggressive C. proactive D. competitive E. liberal Answer: A 30. When marketers define their target market, they simultaneously establish a set of: A. technologies. B. monopolies. C. competitors. D. government regulations. E. sociocultural forces. Answer: C 31. Companies that market products with similar features, benefits, and prices to the same customer group are known as ________ competitors. A. generic B. product C. brand D. total budget E. monopolistic Answer: C 32. Which of the following would represent a brand competitor for Volkswagen’s Touareg Hybrid sport utility vehicle? A. Honda Pilot B. Toyota Highlander Hybrid C. Honda Civic Hybrid D. Taxi ride E. Chevrolet Tahoe rented from Avis Answer: B 33.________ competitors provide very different products that satisfy the same basic customer need. A. Brand B. Generic C. Total budget D. Product E. Marketing Answer: B 34. ________ competitors are those that compete in the same product class, but their products have different features, benefits, and prices. A. Product class B. Generic C. Brand D. Product E. Price Answer: D 35. Which of the following is not a generic competitor for Ford's Expedition sport utility vehicle? A. Ford’s Escape SUV B. Enterprise car rental C. Harley-Davidson motorcycle D. Schwinn mountain bike E. Taxi cab ride Answer: A 36. Marketers primarily focus their environmental analysis on ________ competitors. A. brand B. product C. total budget D. generic E. monopolistic Answer: A 37. In today's marketing environment, competitors can take on many forms. For example, Diet Coke can be seen as a competitor to Wrigley's Double Mint chewing gum. In this circumstance, these two products are described as ________ competitors. A. generic B. product C. total budget D. monopolistic E. pure Answer: C 38. Due to limited resources, a consumer decided to serve Hawaiian Punch to a New Year's Eve party crowd instead of Korbel champagne. As a result of this action, Korbel and Hawaiian Punch can be viewed as ________ competitors. A. generic B. product C. total budget D. oligopolistic E. pure Answer: C 39. Companies that compete for the same limited financial resources of the same customers are known as ________ competitors. A. oligopolic B. total budget C. generic D. product E. brand Answer: B 40. ________ competitors are the most significant to marketers because buyers see the different products of these firms as direct substitutes for each other. A. Oligopolic B. Total budget C. Generic D. Product E. Brand Answer: E 41. Companies delivering mixed concrete know that it cannot be shipped farther than twenty-five miles because the concrete might harden in the truck. Citrus County Concrete Company is the only supplier of mixed concrete to customers within a thirty-mile radius. Citrus County Concrete is an example of a(n): A. monopoly. B. oligopoly. C. monopolistic competition. D. pure competition. E. monopsony. Answer: A 42. The four major competitive structures are: A. monopolies, oligopolies, oligopolistic monopolies, and pure competition. B. pure competition, heavy competition, moderate competition, and light competition. C. brand, product, total budget, and generic. D. oligopolies, monopolies, monopolistic competition, and pure competition. E. monopolies, limited competition, oligopolistic competition, and pure competition. Answer: D 43. Which of the following types of a competitive structure exists when a firm produces a product that has no close substitutes? A. Monopoly B. Oligopoly C. Monopolistic competition D. Pure competition E. Mixed competition Answer: A 44. The type of competitive structure that exists in the case where there are almost no substitutes for a product is: A. monopolistic competition. B. an oligopoly. C. pure competition. D. a monopoly. E. noncompetition. Answer: D 45. The American automobile industry was historically dominated by "The Big Three," referring to General Motors, Ford, and Chrysler. However, as many more foreign competitors began influencing this market, the American companies had to modify and differentiate their products. The automobile industry moved from a(n) ________ structure to a(n) ________ structure. A. monopolistic; oligopolistic B. oligopolistic; pure competition C. oligopolistic; monopolistic competition D. monopolistic competition; pure competition E. monopolistic; monopolistic competition Answer: C 46. The Decca Electric Corporation produces light bulbs that are used in refrigerator manufacturing. Currently, only three other companies produce bulbs used in the production of refrigerators, with Decca having the greatest market share. In this case, Decca Electric Corporation would be considered: A. an oligopoly. B. a monopoly. C. involved in monopolistic competition. D. involved in perfect competition. E. involved in a perfect oligopoly. Answer: A 47. Which of the following firms would be most likely to have a monopoly for its competitive environment? A. TimeWarner Cable TV B. Mitchell Trucking C. American Airlines D. Rogers Plumbing E. Chemlawn Lawn Care Answer: A 48. When a firm has many potential competitors and tries to develop a marketing strategy to differentiate its products from the competitors' products,________ is said to exist in the competitive environment. A. oligopoly B. monopoly C. pure competition D. oligopolistic competition E. monopolistic competition Answer: E 49. Which of the following types of a competitive structure exists when just a few sellers control a large portion of the supply of a product? A. Monopoly B. Oligopoly C. Monopolistic competition D. Mixed competition E. Pure competition Answer: B 50. Changes Salon is part of the hair and personal care service industry. Which of the following types of competitive structures represents this salon? A. Pure competition B. Monopoly C. Monopolistic competition D. Oligopolistic competition E. Oligopoly Answer: A 51. The tobacco industry in the United States is dominated by three large companies. When any one of these companies changes its price on tobacco products, the other two companies quickly adjust their prices to match it. From these characteristics, the tobacco industry could best be described as: A. price sensitive. B. opportunistic. C. monopolistic competition. D. an oligopoly. E. a monopoly. Answer: D 52. J. Pitner Clothing is a medium-size specialty men's and women's clothing store in a market with many other specialty stores, department stores, and discounters. It has established a reputation for offering high-quality, fashionable merchandise with quality service. J. Pitner's competitive environment would best be characterized as: A. a monopoly. B. an oligopoly. C. monopolistic competition. D. pure competition. E. faceted competition. Answer: C 53. Which of the following competitive structures is rarely followed by organizations? A. Monopoly B. Monopolistic competition C. Oligopoly D. Elastic competition E. Pure competition Answer: E 54. The best approach for a company to take when monitoring its competitors is: A. watching for increases and decreases in competitors' prices and match them. B. analyzing all information that is readily available about competitors. C. sending employees to competitors' offices and factories to observe their actions. D. developing a system for gathering ongoing information about competitors. E. reading important business publications such as The Wall Street Journal. Answer: D 55. Assuming that inflation is low, high buying power characterizes the ________ stage of the business cycle. A. prosperity B. depression C. recovery D. succession E. recession Answer: A 56.________ is the stage of the business cycle where the unemployment rate is low and total income is relatively high. A. Repression B. Prosperity C. Recovery D. Recession E. Depression Answer: B 57. Total buying power declines during periods of economic: A. recovery. B. prosperity. C. recession. D. uncertainty. E. expansion. Answer: C 58. Publix Supermarket is revising its marketing plan for the upcoming quarter. It typically focuses on its wide variety of products and its high quality customer service, having very few weekly “sales.” However, during the upcoming quarter, Publix plans to focus on price and value, and promote weekly “values” instead. Hence, this supermarket is most likely in: A. inflation. B. prosperity. C. recession. D. depression. E. recovery. Answer: C 59. Consumer confidence is low during periods of: A. recession. B. prosperity. C. recovery. D. slowdown. E. depression. Answer: E 60. Consumer confidence and willingness to spend begin to increase during periods of ________. A. depression B. prosperity C. recovery D. growth E. recession Answer: C 61. The strength of a person's "buying power" depends on economic conditions and: A. his or her level of income. B. the size of resources that are used for purchases. C. how much the person will buy. D. his or her spending pattern. E. his or her levels of median wealth. Answer: B 62. Why are marketers interested in consumers' levels of disposable income? A. It accurately predicts future buying power. B. It increases current buying power. C. It is the amount remaining after paying taxes and making savings which is used to buy luxuries. D. It is a ready source of buying power. E. It is essential for forecasting future business trends. Answer: D 63. The amount of money received through wages, rents, investments, pensions, and subsidies is called: A. income. B. wealth. C. discretionary income. D. prosperity. E. credit. Answer: A 64. Marketers are most interested in ________ of consumers. A. wealth B. disposable income C. discretionary income D. total income E. extra income Answer: B 65. What is the most important factor in distinguishing disposable income from income? A. Taxes B. Housing C. Employment levels D. Consumer spending E. Saving Answer: D 66. Which of the following are the major financial sources of buying power? A. Disposable incomes B. Past income, natural resources, and financial resources C. Wages, rents, and investments D. Income, wealth, and credit E. Discretionary incomes Answer: D 67. Discretionary income is associated with all of the following except: A. automobiles. B. education. C. pets. D. furniture. E. food. Answer: E 68. Lindsay was reviewing her bank statement for last month. She had paid her rent, her car payment, electric and phone bills, and made three trips to the grocery. Lindsay had also bought tickets to a Katy Perry concert and new clothes to wear to the concert. The money spent on Lindsay’s rent, car, electric and phone bills was likely from her ________ , while the money spent on the concert tickets and new clothes was from her ________ A. disposable income; savings B. gross income; disposable income C. disposable income; net income D. disposable income; discretionary income E. gross income; savings income Answer: D 69. The accumulation of past income, natural resources, and financial resources is known as: A. income. B. collected income. C. credit. D. wealth. E. savings. Answer: D 70. Which of the following companies would probably be most interested in tracking discretionary income levels? A. Safeway food stores B. BMW automobiles C. Gulf States Utilities D. General Mills E. Florida Orange Growers Answer: B 71. By offering both credit and financing through its GMAC division, General Motors Inc. is trying to help consumers: A. expand future buying power at the expense of current buying power. B. expand disposable income at the expense of discretionary income. C. expand current buying power at the expense of future buying power. D. expand both disposable income and wealth. E. decrease both disposable and discretionary income. Answer: C 72. When using credit to make purchases, consumers are: A. decreasing current buying power and increasing future buying power. B. increasing their present discretionary income to extend purchasing power. C. putting themselves at significant risk of financial disaster. D. forgoing the accumulation of wealth to increase current income. E. increasing current buying power at the expense of future buying power. Answer: E 73. Texas rice farmers wish to get their product into the Japanese market, but are hindered by a complex maze of regulations imposed by the Japanese government. The farmers are most likely to attempt to influence the ________ aspect of the marketing environment. A. sociocultural B. technological C. competitive D. economic E. political Answer: E 74. Textile companies historically face issues concerning the use of child labor in foreign countries and the various regulations created concerning this labor. Thus, executives in these companies are most likely to influence the ________ forces of the marketing environment. A. economic B. competitive C. political D. environmental E. sociocultural Answer: C 75. Which of the following acts was enacted to prevent businesses from restraining trade and monopolizing markets? A. Sherman Antitrust Act B. Clayton Act C. Federal Trade Commission Act D. Robinson-Patman Act E. Wheeler-Lea Act Answer: A 76. If all the gas stations in a city collaborated to determine what gas prices should be charged, they would be violating the: A. Wheeler-Lea Act. B. Clayton Act. C. Robinson-Patman Act. D. Sherman Antitrust Act. E. Celler-Kefauver Act. Answer: D 77. Which of the following provides protection for and regulates brand names, brand marks, trade names, and trademarks? A. Lanham Act B. Clayton Act C. Robinson-Patman Act D. Sherman Antitrust Act E. Celler-Kefauver Act Answer: A 78. International Office Supplies wholesaler charges different prices to its various customers without any legal justification. This company is in violation of the: A. Sherman Antitrust Act. B. Wheeler-Lea Act. C. Lanham Act. D. Federal Trade Commission Act. E. Robinson-Patman Act. Answer: E 79. Price discrimination is prohibited by the ________ Act. A. Sherman B. Wheeler-Lee C. Robinson-Patman D. Celler-Kefauver E. Consumer Goods Pricing Answer: C 80. The 1990 Nutritional Labeling and Education Act directly prohibits: A. exaggerated claims made by all products. B. putting the words "cholesterol-free" on any food package. C. putting nutritional information on most food products. D. exaggerated health claims on food packages. E. the use of any health claim on food packaging. Answer: D 81. Consumer protection legislation deals with all of the following legal concerns except: A. consumer safety. B. sale of hazardous products. C. monopolistic practices. D. information disclosure. E. health claims on food packages. Answer: C 82. The Children's Online Privacy Protection Act prohibits websites and Internet providers from: A. selling products to children under the age of 18. B. seeking personal information from children under the age of 13. C. selling products to children under the age of 12. D. doing research about the buying habits of children under 15. E. selling products to children under the age of 15. Answer: B 83. Of all the federal regulatory units, the ________ most heavily influences marketing activities. A. Food and Drug Administration (FDA) B. Federal Communications Commission (FCC) C. Environmental Protection Agency (EPA) D. Federal Trade Commission (FTC) E. Federal Power Commission (FPC) Answer: D 84. After several children fell ill while playing with toys imported from outside the U.S., medical researchers found several illegal chemicals, including lead in the paint. These toys were sold primarily through websites on the Internet. Which of the following agencies would most likely have jurisdiction over the problem with lead in the paint of children's toys? A. Consumer Product Safety Commission B. Children's Online Protection Act C. Food and Drug Administration D. Environmental Protection Agency E. National Advertising Review Board Answer: A 85. The FTC can issue a cease-and-desist order, which is an injunction to: A. report to the FTC immediately. B. stop doing whatever caused the complaint. C. appear before the courts. D. pay for damages caused by negligence of the firm. E. close down the firm until further notice. Answer: B 86. In its advertisements for a light beer, Anheuser-Busch brewing company has decided to include a statement saying "Know when to say when," indicating that customers should know when to stop drinking. This is an example of a: A. federal regulation. B. state regulation. C. city regulation D. self-regulation E. social regulation Answer: D 87. Which of the following regulatory groups is a system of nongovernmental, independent, local regulatory agencies supported by local businesses? A. The Chamber of Commerce B. The National Advertising Review Board C. The National Advertising Division D. The Better Business Bureau E. American Marketing Association Answer: D 88. The Pharmaceutical Research and Manufacturers of America sets guidelines for its member firms to follow regarding the use of unethical practices. Thus, it is engaging in: A. legislation. B. lobbying. C. self-regulation. D. environmental scanning. E. trade restraint. Answer: C 89. Jared Bledsoe hired Green Gardens Corp., a local landscape firm, to plant trees and shrubs in his front yard. The landscape looked beautiful after the work was completed. However, in just a few days many of the plants began to die. When Jared complained to the manager of Green Gardens, the manager said that Jared must have done something to them that caused the plants to die, such as over watering them. Green Gardens doesn’t have any money­back guarantees. Jared is angry that he can’t get a refund or replacement. At this time, Jared's best course of action would be to contact the: A. local Chamber of Commerce. B. Federal Trade Commission. C. Sherman Commission. D. Better Business Bureau. E. local Small Claims Court. Answer: D 90. The Better Business Bureau is probably the best-known: A. nongovernmental regulatory group. B. state-operated enforcement agency. C. national evaluator of advertisements. D. federal regulatory group. E. self-regulatory unit operating at the national level. Answer: A 91. In its advertisements, Regent Hair Care Products claims that its KLTR-14 gel will restore the hair of bald men. Even though Regent shows supporting evidence in its ads, members of the National Advertising Review Board (NARB) believe the claim is unsupportable. Which of the following actions can be taken by the National Advertising Review Board? A. Force Regent Hair Care Products to stop running the advertisement. B. File a complaint with the Federal Trade Commission. C. Fine Regent Hair Care Products for each time the ad appears. D. Sue Regent Hair Care Products in federal court. E. Sue Regent Hair Care Products in state court. Answer: B 92. Which of the following statements about self-regulatory programs is false? A. Self-regulatory programs are usually less expensive than governmental regulatory programs. B. Self-regulatory programs' guidelines generally are more realistic and operational. C. Nongovernmental self-regulatory programs have neither the tools nor the authority to enforce guidelines. D. Self-regulatory guidelines generally are stricter than governmental regulatory programs. E. When a trade association sets up industry guidelines, some firms that are in the industry but not in the trade association do not follow the guidelines. Answer: D 93. Which of the following is an advantage that self-regulatory agencies such as the BBB and the NARB have over governmental laws and regulatory agencies? A. Firms must strictly abide by the rulings of self-regulatory agencies. B. Establishment and implementation are usually less expensive. C. They have better tools to enforce their rulings. D. Guidelines are often stricter and create greater compliance from firms. E. Money is very rarely an issue in enforcing decisions of self-regulatory agencies. Answer: B 94. When a firm continues to violate what the Better Business Bureau believes to be good business practices, the bureau ________. A. leads a consumer boycott of the business B. sues the chief executive of the business C. imposes fines on the owners/managers of the business D. supports legal ordinances against the business E. warns consumers of the unfair practices Answer: E 95. Which of the following national self-regulatory organizations screens advertisements? A. Federal Advertising Review Division B. National Advertising Review Board C. Federal Communications Commission D. Consumer Federation of America E. Better Business Bureau Answer: B 96. Technology is: A. the formulation of scientific concepts. B. the application of knowledge and tools to solve problems and perform tasks more efficiently. C. a theoretical science. D. one of the weakest marketing environment forces. E. the result of research performed primarily by universities. Answer: B 97. More than half of the research of technology created is paid for by: A. corporations. B. state and local governments. C. the federal government. D. large universities. E. private investors. Answer: C 98. While playing soccer Bryan suddenly fell and broke his arm. On his way to the hospital, he sees a billboard for The Cleveland Clinic promoting its time-text service where he can call the number GET-TXT-TIME, and they will text him the approximate waiting time at the closest three hospital locations. Thus, the Cleveland Clinic is providing enhanced service to its patients by capitalizing on the ________ environmental force. A. economic B. competitive C. political D. legal and regulatory E. technological Answer: E 99. The broad nature of technology as it moves through society is referred to as ________. A. reach B. dynamics C. environment D. self-sustenance E. impact Answer: A 100. Which of the following is the best example of utilizing technology to improve consumer relationships? A. Waiters recording orders on handheld computers B. Surveying customers to determine their needs C. Responding to changes in competitors' prices D. Introducing stringent package standards E. Requiring dolphin-safe tuna Answer: A 101. Technology assessment is: A. measuring how much technology has been incorporated into an organization. B. trying to foresee the effects of new products and processes on the firm's operation and on society in general. C. assessing the technologies that a company is currently using. D. judging how a firm's products affect society. E. weighing the cost of new technology to determine whether a firm can afford to use it. Answer: B 102. UPS Inc. is considering its distribution strategy for the next five years. As part of the strategy development, UPS Inc. is investigating the use of radio frequency identification, consumer payments through smart phones, Facebook, and Twitter and how they might use these to interface with their customers. UPS is most likely engaging in: A. product differentiation. B. monopolistic competition. C. technology assessment. D. distinctive promotional methods. E. innovative marketing. Answer: C 103. Many health care companies are making adaptations to meet the needs of an aging population as the demand for medical services and products such as diabetes supplies increases. This change in marketing strategy is best explained by a change in: A. demographics. B. cultural values. C. income levels. D. consumerism. E. subcultures. Answer: A 104. People for the Ethical Treatment of Animals (PETA) have held protests against the sale of coats made of animal furs. PETA's efforts to change shoppers' attitudes represent a ________ force for fur retailers. A. technological B. political C. sociocultural D. self-regulatory E. controllable Answer: C 105. By the turn of the twentieth century, the population of the United States had shifted to three large racial and ethnic groups. These groups are: A. Whites, Blacks, and Hispanics. B. Asians, African-Americans, and Caucasians. C. Asians, African-Americans, and Hispanics. D. African-Americans, Native American Indians, and Caucasians. E. Hispanics, Native-American Indians, and Caucasians. Answer: A 106. In the near future, ________ will become the second largest group in the United States. A. Whites B. African-Americans C. Asians D. Hispanics E. Native American Indians Answer: D 107. The Coca Cola Company has recognized the significant increase in population diversity within the U.S. soft-drink market. Which one of the following best illustrates the company's integration of this knowledge into its marketing strategy? A. Ads featuring nostalgic Americana B. Bonus coupons in Cola twelve-packs C. Ads featuring Hispanic actors and Tejano music D. Ads in The New Yorker and Reader's Digest E. Ads aimed at children Answer: C 108. The Classic Hotel Group has begun to offer entire floors of rooms in its hotels that are smoke-free, adults-only, and pet-friendly. The Classic Hotel Group is responding to changes in: A. technology. B. the legal environment. C. demographics. D. its cultural values. E. its cultural diversity. Answer: D 109. Many well-known restaurants and corporations are changing to a completely smoke-free environment, and fewer restaurants offer smoking and nonsmoking sections. These firms are responding to changes in: A. federal law. B. cultural values. C. demographics. D. consumerism. E. technological forces. Answer: B 110. Consumerism is a(n): A. diverse group of individuals and organizations opposed to foreign producers that sell products in the United States that are much cheaper than those produced by U.S. manufacturers. B. social movement that is trying to encourage consumer satisfaction. C. social movement that is reorganizing the Council of Better Business Bureaus. D. attempt made by various individuals and organizations to protect the rights of consumers. E. social movement that provides consumers with means for expressing satisfaction and expressing their gratitude to producers. Answer: D 111. A group of protesters carries signs encouraging people to boycott The Farmer’s Market, a small grocery store in an urban area. The protesters claim that Farmer’s takes unfair advantage of elderly and minority consumers by charging them as much as 20% higher prices than other locations in the suburbs. This protest is considered a part of: A. cultural diversity movement. B. civil rights movement. C. urban unrest cycle. D. procompetitive movement. E. consumerism movement. Answer: E Scenario 3.1 Meyers' Sporting Goods, a national chain, has been doing business with Soljur Sports, a manufacturer of skateboards, for several years. Recently, it came to the attention of Meyers' financial director that the average cost per Soljur Sports skateboard had substantially increased over that of the previous year. The financial director asked the marketing department if they knew what the Soljur skateboards cost at competing sporting goods stores, to see if they too were likely hit with a higher cost. The marketing department found that the Soljur skateboards were priced at $15 less in the competing store than at Meyers. The financial director found that Soljur Sports was selling a similar number of skateboards to one of Meyers’ competitors for $10 less per skateboard. The attorney for Meyers' Sporting Goods immediately filed a complaint with the Federal Trade Commission. 112. Refer to Scenario 3.1. Suppose that the Soljur Sports company was actually discriminating against Meyer Sporting Goods with its price increase. Which of the following acts prohibits this type of business behavior? A. Sherman Antitrust Act B. Wheeler-Lee Act C. Robinson-Patman Act D. Celler-Kefauver Act E. Consumer Goods Pricing Act Answer: C 113. Refer to Scenario 3.1. If the Federal Trade Commission believes that Soljur Sporting Goods is acting in violation of the law, the first move for the FTC is to: A. issue a cease-and-desist order. B. issue a complaint stating that the business is in violation of the law. C. seek a monetary penalty. D. issue negative publicity about the company. E. contact the sporting goods manufacturers association. Answer: B 114. Refer to Scenario 3.1. A regular customer of Meyers Sporting Goods feels that some of its advertisements are deceptive. He responded to an ad for sale of skateboards one hour after the store opened and found that none were left. Where should he file a complaint? A. Federal Advertising Commission B. National Advertising Review Board C. Consumer Product Safety Commission D. National Advertising Division E. Office of Consumer Affairs Answer: D 115. Refer to Scenario 3.1. Suppose that a customer has a complaint against Meyers Sporting Goods Stores. He files a complaint with the Better Business Bureau (BBB). What action could the BBB take against Meyers if the complaint was substantiated and Meyers did not change the offending practice? A. Issue a cease-and-desist order. B. Seek a $10,000 monetary penalty. C. Issue a warning to consumers through the local newspaper. D. Order Meyers to make restitution. E. Seek a $5,000 monetary penalty. Answer: C Scenario 3.2 Clayton Homes, a mobile home manufacturer since 1934, introduced its new iHome in 2009. The iHome is one of the first of its kind, designed as an updated, modern version of the modular home, offered as a base home plus addons known as “pods.” The base home is a one­bedroom, one­bath 734­square foot version at a price of around $80,000. There is also a 1,000 square-foot version for around $100,000. All versions may add on the additional one-room pods as desired which are shipped to your location and constructed on-site. The homes offer galvanized metal roofing, corrugated steel siding, VOC­free paints, and a “butterfly” roof that collects rainwater. The iHome uses 30% less energy than a similar square­foot home and offers “green” characteristics of solar panels, tankless water heaters, and low-flow faucets. In addition, it comes with bamboo flooring, a renewable resource. The modular, pre­fabricated design offers endless options for creating the customer’s home and its engineered building system cuts down on construction waste. Due to the “green effects” of the iHome, the state governments have given it a tax abatement for any sales taxes. 116. Refer to Scenario 3.2. The new Clayton Homes iHome product is a reflection of the company’s attention to ________ in developing its strategy. A. marketing research analysis B. self-regulatory analysis C. consumer behavior analysis D. marketing information processing E. environmental scanning and analysis Answer: E 117. Refer to Scenario 3.2.Which of the following types of competitive structures is being followed by Clayton Homes? A. Monopoly B. Oligopoly C. Monopolistic competition D. Perfect competition E. Monopsony Answer: C 118. Refer to Scenario 3.2. The iHome’s reduction of energy use, renewable resources as materials, “pod” customization, reduction of construction waste, and tax abatement status is/are examples of reaction to ________ environmental forces. A. political and sociocultural B. political, sociocultural, and economic C. sociocultural and economic D. political and economic E. political, economic, sociocultural, and technological Answer: E 119. Refer to Scenario 3.2. Clayton Homes is revising its marketing strategy for the iHome due to the current recession. Which of the following is the best action for promoting the iHome in the near future? A. Emphasize the value of the iHome products. B. Focus on the “green” qualities of the home and target environmentally conscious individuals. C. Significantly reduce advertising expenditures to create an exclusive image. D. Decrease production until the economy improves. E. Significantly reduce the prices on the company's product offerings. Answer: B 120. Refer to Scenario 3.2. The income a consumer would use to purchase an iHome is considered as ________. A. discretionary income B. buying power C. disposable income D. consumer spending E. comprehensive spending Answer: C 121. Which of the following statements about social responsibility is true? A. Social responsibility dimensions do not include philanthropic concerns. B. Social responsibility does not deal with the total effect of all marketing decisions on society. C. Social responsibility refers to a company's obligation to maximize its positive impact and minimize its negative impact on society. D. Social responsibility dimensions do not include economic concerns. E. Social responsibility refers to principles and standards that define acceptable conduct in marketing as determined by various stakeholders. Answer: C 122. If Hefty Bags expresses concern that its products are having too great an impact on the pollution of ground water under landfills, this concern is directly related to the firm's: A. social responsibility. B. marketing concept. C. legal responsibility. D. ethical responsibility. E. corporate benevolence. Answer: A 123. Honeybees are disappearing at an alarming rate and since they pollinate about a third of all foods we eat, it is an important concern. Haagen-Dazs launched a microsite to increase the awareness of the issue. In addition, it launched a “Twit cause” campaign on Twitter, raising $7,000 in 2 days. This example illustrates the positive consequences of: A. social responsibility. B. corporate benevolence. C. green marketing. D. ethical responsibility. E. economic responsibility. Answer: A 124. After a newspaper reported that a pharmaceutical giant was aware that its arthritis-fighting drug could cause heart problems and still continued to sell the drug, the firm's stock plummeted and hundreds of lawsuits were filed against the company. This demonstrates what can occur if firms ignore: A. marketing citizenship. B. sociocultural forces. C. environmental causes. D. social responsibility. E. laws regulating car design. Answer: D 125. Socially responsible business practices have provided all of the following benefits except: A. creating goodwill toward the organization. B. attracting employees. C. reducing marketing costs. D. generating publicity for the firm. E. positively impacting local communities. Answer: C 126. The adoption of a strategic focus for fulfilling the economic, legal, ethical, and philanthropic social responsibilities expected by stakeholders is called: A. marketing citizenship. B. social responsibility. C. social entrepreneurship. D. cause-related marketing. E. strategic philanthropy. Answer: A 127. Any constituent who has a claim in some aspect of a company's products, operations, markets, industry, or outcomes is known as a(n): A. director. B. customer. C. employee. D. manager. E. stakeholder. Answer: E 128. Companies that are considered to be good corporate citizens and consider the diverse perspectives of different groups affected by their operations are said to have an ________ orientation. A. marketing B. sales C. production D. stakeholder E. citizen Answer: D 129. The Kofton Corporation produces all types of jeans that are sold to retailers throughout the world. Hank, the purchasing director at Kofton, has found a supplier who will provide new fabrics that are easier to launder and more comfortable to wear. Additionally, they are available at a lower price than the current jeans Kofton buys. Since Kofton wants to satisfy its customers and its bottom line, Hank thinks he has a winner. However, when presenting the news to his management team, one of them asks “Will there be any child labor involved with this new supplier?” Hank has forgotten ________, which is important to the Kofton Corporation. A. the philanthropic position. B. marketing citizenship. C. a stakeholder orientation. D. community relations. E. social responsibility. Answer: C 130. Which of the following is not a dimension of social responsibility and marketing citizenship? A. Economic B. Ethical C. Legal D. Technological E. Philanthropic Answer: D 131. Katelyn understands that even small businesses like her local catering business have certain responsibilities to society. She knows that she must abide by the laws that apply to her business and try to make a profit. What are the other obligations that Katelyn should be aware of? A. Ethical and moral B. Economic and ethical C. Philanthropic and legal D. Environmental and ethical E. Ethical and philanthropic Answer: E 132. The RedCap Corporation is committed to social responsibility. It is looking for a new shipping partner and has found LogiSpec, one that seems to be perfect since it employs individuals with disabilities, contributes a portion of profit to the local school system, and allows its employees to work on flex-time. RedCap is very interested in LogiSpec’s attention to social responsibility. However, its pricing is almost 12% higher than other shippers RedCap is considering. The fact that RedCap’s decision has to balance the company’s desire for social responsibility and investors' desires for profits is an example of a(n) ________ responsibility. A. ethical B. legal C. cost D. philanthropic E. economic Answer: E 133. DoneRight Inc. is a very profitable automobile repair shop. The company is well known for its great service and involvement in the community, but it fails to properly dispose of its used oil as outlined in environmental regulations. DoneRight is failing in its ________ responsibilities. A. legal B. ethical C. economic D. philanthropic E. strategic Answer: A 134. Marketing ethics refers to principles and standards that define: A. improper behavior in marketing. B. acceptable conduct in society. C. improper behavior in business. D. acceptable conduct in marketing. E. acceptable conduct in general. Answer: D 135. Marketing ethics: A. refers to laws and regulations that govern marketing. B. refers to principles and standards that define acceptable conduct in marketing. C. maximizes an organization's positive impact and minimizes its negative impact on society. D. is most important for advertising agencies. E. refers to morals governing the management of a company. Answer: B 136. The most basic principles of marketing ethics are: A. philanthropic responsibilities. B. economic responsibilities. C. not determined by stakeholders. D. written as laws and regulations. E. determined only by stakeholders. Answer: D 137. A business that contributes resources to the community to improve the quality of life is taking on a(n)________ responsibility. A. ethical B. legal C. cost D. philanthropic E. economic Answer: D 138. McDonald's supports and funds Ronald McDonald houses for the families of terminally-ill children to stay in and to be near their loved ones. McDonald's action demonstrates the fulfillment of ________ responsibility. A. legal B. stakeholder C. philanthropic D. economic E. ethical Answer: C 139. The Transportation Division of the GE Corporation is located in a small city which has limited economic growth at this time. Due to the condition of the local school system, GE contributed $2 million to repair and revive it, stating that GE believed in education for the community. This action would imply that GE is in the ________ level of the pyramid of social responsibility. A. ethical B. legal C. cost D. philanthropic E. economic Answer: D 140. Actions that promote human health and welfare address the ________ dimension of the pyramid of social responsibility. A. philanthropic B. legal C. ethical D. economic E. social Answer: A 141. The practice of linking a firm's product marketing to a particular social cause on an ongoing or short-term basis is known as: A. economic responsibility. B. social responsibility. C. ethical marketing. D. cause-related marketing. E. corporate benevolence. Answer: D 142. If a popular coffee shop was to donate 5 percent of every coffee purchase to shelters for victims of domestic abuse for one month, this would be an example of: A. strategic philanthropy. B. ethical responsibility. C. economic responsibility. D. green marketing. E. cause-related marketing. Answer: E 143. Which of the following is the best definition of cause-related marketing? A. Linking a firm's products to a particular social cause either short-term or long-term B. Using organizational core competencies and resources to address stakeholders' interests and achieve organizational and social benefits C. Donating money to a social cause based on sales of a particular product over a defined period of time D. Developing, promoting, and distributing products that are environmentally safe E. Contributing resources to the community in order to improve the overall quality of life Answer: A 144. The close relationship of Home Depot's philanthropic initiatives and its business goals is an example of: A. strategic philanthropy. B. strategic ethics. C. cause-related marketing. D. strategic marketing. E. environmental philanthropy. Answer: A 145. Which of the following is a primary difference between cause-related marketing and strategic philanthropy? A. Cause-related marketing is short term only while strategic philanthropy is an ongoing approach that lasts for years or even decades. B. Strategic philanthropy fulfills a firm's primary social responsibilities while cause-related marketing does not. C. Cause-related marketing is unlikely to have a positive effect on society while strategic philanthropy always benefits society. D. Strategic philanthropy can take on both a financial and nonfinancial format while cause-related marketing only involves financial contributions. E. Customers are likely to feel good about themselves when supporting a cause-related marketing campaign but are unlikely to notice strategic philanthropy. Answer: D 146. Which of the following is the best example of strategic philanthropy for Staples, the large office supply chain? A. Donating money to help fight illiteracy of both adults and children B. Collecting money from employees for a charity C. Giving a portion of its profits in August to support charter schools D. Offering discounts to large corporations on their office supplies E. Providing low-income families with school supplies and computer training Answer: E 147. Which of the following refers to a firm's specific development, pricing, promotion, and distribution of products that do not harm the environment? A. Marketing ethics B. Social responsibility C. Environmental marketing D. Green marketing E. Conservation marketing Answer: D 148. Products that may do harm to the natural environment are inconsistent with: A. green marketing. B. the marketing concept. C. consumerism. D. strategic philanthropy. E. the marketing mix. Answer: A 149. Which of the following is the best definition of green marketing? A. Using technology and human resources for marketing efforts designed to reduce waste B. Developing, pricing, promoting, and distributing products that do not harm the natural environment C. Protecting the natural environment through the implementation of programs for environmental cleanup D. Using only recycled materials in the production, distribution, and disposal of a company's products E. Meeting the criteria necessary to receive the European Eco-label through efforts designed to protect the natural environment Answer: B 150. Venus Inc., a manufacturer of personal care and beauty products, has a focus on sustainability. It has developed eco-packaging, eliminated many potentially harmful chemicals from its products, and has improved its production systems to reduce waste. Which major issue of social responsibility has been addressed by Venus Inc.? A. Protection of the natural environment B. Consumerism C. Marketing ethics D. Legal obligations E. Community relations Answer: A 151. StarKist Tuna has frequently extolled its dolphin-safe methods of catching tuna. This is an example of: A. community relations. B. cause-related marketing. C. sustainability marketing. D. strategic philanthropy. E. consumerism. Answer: C 152. Consumerism is: A. the efforts of independent individuals, groups, and organizations to protect the rights of consumers. B. President John F. Kennedy's consumer bill of rights. C. marketers' efforts to contribute to the satisfaction and growth of the communities in which they operate. D. the right to be informed. E. the specific development, pricing, promotion, and distribution of products that do not harm the environment. Answer: A 153. Angela organized a boycott of a local restaurant because of the owner's obvious prejudicial treatment of Hispanics. Thus, Angela's action is an example of ________. A. lobbying B. a public service announcement C. the right to be informed D. a social demonstration E. consumerism Answer: E 154. Several mothers in Atlanta wanted to get the message to their city government that they were not happy with the nutritional quality of the food the city’s school system served their children, especially at the current cost for a lunch. They organized a protest at City Hall to get the lawmakers’ attention. Hence, these mothers are engaging in: A. a publicity stunt. B. soapboxing. C. consumerism. D. lobbying. E. political action. Answer: C 155. Who drafted the Consumer Bill of Rights? A. Bill Clinton B. John F. Kennedy C. Ralph Nader D. Ronald Reagan E. George W. Bush Answer: B 156. The four basic rights outlined in the Consumer Bill of Rights include the right to safety, the right to be heard, the right to: A. to be informed, and the right to be chosen. B. consumer education, and the right to honesty. C. choose, and the right to be informed. D. redress, and the right to choose. E. honesty, and the right to redress. Answer: C 157. Product testing for reliability and quality helps to ensure a consumer's right to: A. be heard. B. be informed. C. choose. D. performance. E. safety. Answer: E 158. Warnings on television commercials for prescription drugs include a list of harmful side effects that are possible when taking that particular drug. The consumer right to ________ is most applicable to these commercials. A. know B. safety C. be heard D. choose E. be informed Answer: E 159. According to President Kennedy's consumer bill of rights, the right to choose means that: A. consumers' interests will receive full and sympathetic consideration in the formulation of government policy. B. consumers should have access to a variety of products and services at competitive prices. C. consumers should have access to and the opportunity to review all relevant information about a product before buying it. D. marketers have an obligation not to knowingly market a product that could harm consumers. E. consumers should be able to buy products at prices they are willing to pay. Answer: B 160. Sharese wants to buy a new couch, but there is only one place in her town that sells them, and she lives in an isolated area. Sharese most likely feels her consumer right to ________ has been violated. A. choose B. be heard C. safety D. recourse E. be informed Answer: A 161. According to the consumer bill of rights, the idea that consumers' interests should receive full and sympathetic consideration in the formulation of government policy is known as the right to: A. be heard. B. choose. C. be informed. D. safety. E. listen. Answer: A 162. How would marketers most likely benefit from the consumer's right to be heard? A. Consumers will also tell others about their bad experience with the company. B. The company can use the information to make its products better. C. They gain valuable information about their competitors. D. Consumers are more loyal to companies who have wronged them. E. More information about the products can be posted online. Answer: B 163. According to the consumer bill of rights, the right to be informed means that: A. consumers' interests will receive full and sympathetic consideration in the formulation of government policy. B. consumers should have access to a variety of goods and services at competitive prices. C. consumers should have access to and the opportunity to review all relevant information about a product before buying it. D. marketers have an obligation not to knowingly market a product that could harm consumers. E. consumers should be informed when the quality of a product has changed. Answer: C 164. Ethical standards for acceptable conduct for a company should: A. be clearly dictated by top management and enforced by all management staff. B. consider only the point of view of the customers and the employees. C. reflect the desires of the company's employees for a quality working environment. D. be based on company, industry, government, customer, and society viewpoints. E. be derived only from federal, state, and local laws and regulatory agencies. Answer: D 165. When is the best time to deal with marketing exchange problems concerning ethics? A. Right before the problem is made public B. After the problem has received extensive media attention C. Immediately after the problem is discovered D. When lawsuits are brought against the company E. During the strategic planning process Answer: E 166. A marketing ethics issue likely exists when: A. company members disagree about a marketing decision. B. an activity does not benefit the organization but benefits the environment. C. an activity results in increased prices for the consumer. D. a consumer is dissatisfied with a marketing decision. E. an individual or organization must choose from among several actions that must be evaluated as right or wrong. Answer: E 167. Reese has recently joined PharmaTec, a large pharmaceutical firm, as a sales representative. He was briefed on the recent lawsuit a physician has filed against PharmaTec alleging that he did not receive the necessary information about the negative side-effects of one of its cholesterol drugs. Reese’s sales manager has said that if Reese comes across any documentation in the former sales representative’s office about visits to the physician, he is not to say anything to anyone, and notify the manager immediately. Reese certainly doesn’t want to jeopardize his new, and potentially profitable job. He has identified four possible courses of action he could take. Which of the following criteria should Reese use to evaluate each possible action in order to choose the most ethical? A. Its level of positive or negative impact on PharmaTec’s reputation B. Its potential to increase (or decrease) PharmaTec’s profit C. Whether the action is inherently right or wrong D. Whether he will be appreciated or unappreciated by his coworkers afterward E. Whether it will be courageous or cowardly on his part Answer: C 168. An ethical issue is: A. likely to arise when an employee's moral philosophy is consistent with the organization's expectations of the employee's behavior. B. an identifiable problem, situation, or opportunity requiring an individual to choose from among several actions that must be evaluated as right or wrong. C. most often found in personal selling situations. D. easily resolved by consulting written laws and regulations. E. characterized by a blatant disregard for human rights and equality. Answer: B 169.________ ethical issues generally surface when companies fail to disclose risks associated with a product or information regarding its function, value, or use. A. Promotion-related B. Distribution C. Corporate D. Product-related E. Safety Answer: D 170. Product-related ethical issues arise when marketers: A. provide consumers with inadequate information about how a product is priced. B. force channel intermediaries to behave in a specific manner. C. bribe salespeople to push one product over another. D. fail to disclose information to consumers about the risks associated with using a product. E. manufacture a product that is very similar to a competing product. Answer: D 171. Bridgewater, Inc. produces its industrial components in several developing countries outside the United States. One of Bridgewater’s customers is Craft Care, who uses Bridgewater components in the production of child car seats. Recently, there was a recall of Craft Care’s car seats due to serious injuries, which the company has traced back to Bridgewater’s components. If Bridgewater knew about the faulty components, but failed to notify Craft Care, it would have been engaging in unethical behavior with regard to which of the following marketing issue areas? A. Planning and strategy B. Distribution-related C. Promotion-related D. Product-related E. Quality-related Answer: D 172. A chips manufacturer introduces a new, larger sized can of potato chips using the words “new size” on the label. However, the can is larger while the contents are slightly smaller than the original sizes. The correct weight is printed on the can. In this case, an ________ ethical issue exists. A. decision-making B. promotion-related C. product-related D. pricing-related E. distribution-related Answer: C 173. Beth is responsible for the product line of Avenger Transformer action figures. In testing her firm's new TV ads, Beth discovers some children think many of the toys can actually fly. Beth knows that there are only a few children in the groups aged 3 to 5 that believe this, so she decides to use children over age 5 as her target market. Since the ads will be shown on programs that have her target market as its viewers, Beth decides to include a statement “figures do not actually fly” on the bottom of the screen. However, she still faces an ethical decision regarding which element(s) of the marketing mix? A. Product-related B. The right to know C. Performance-related D. Promotion-related E. Strategy-related Answer: D 174. A cereal company advertises that its newly launched product can lower cholesterol although the company cannot provide evidence to substantiate this claim. This situation involves an ethical issue related to which element of the marketing mix? A. Product B. Pricing C. Promotion D. Distribution E. Production Answer: C 175. When a purchasing agent for a processor manufacturer is offered a bribe by a silicon manufacturer salesperson: A. a promotion-related ethical issue has been created. B. the purchasing agent is free to accept the bribe without consequences. C. an ethical issue primarily related to the pricing of products exists. D. there is an ethical dilemma for the purchasing agent that is product related. E. no ethical issue exists under these circumstances. Answer: A 176. After a hurricane strikes the U.S. Gulf Coast, a tremendous demand for gas-powered generators occurs. Many of the local hardware and home supply stores have limited supplies of these items. However, Ace Hardware has a large inventory of these items. Traditionally, Ace has lower prices than the other competitors. What major ethical decisions is Ace likely to face with regard to the current issue? A. Product-related and pricing-related B. Advertising-related and distribution-related C. Distribution-related and product-related D. Publicity-related and advertising-related E. Pricing-related and promotion-related Answer: E 177. Distribution-related ethical issues arise when marketers: A. do not provide intermediaries with enough information about how a product is priced. B. force channel intermediaries to behave in a specific manner. C. bribe salespeople to push one product over another. D. fail to disclose information to consumers about the risks associated with using a product. E. distribute a product that is very similar to a competing product. Answer: B 178. At times, large retailers may be accused of coercion in dealing with intermediaries because of the amount of power and control these large companies have over many of their suppliers. This is most potentially a ________ related ethical issue. A. promotion B. pricing C. culture D. product E. distribution Answer: E 179.________ are formalized rules and standards that describe what a company expects of its employees in terms of ethical behavior. A. Job descriptions B. Ethics clauses C. Behavior contracts D. Codes of conduct E. Ethics contracts Answer: D 180. Codes of conduct are also frequently known as: A. ethics mandates. B. codes of ethics. C. corporate culture. D. ethics compliance programs. E. moral codes. Answer: B 181. Which one of the following statements about codes of conduct (ethics) is false? A. They are formalized rules and standards that describe what a company expects of its employees. B. They must be detailed enough to take into account many possible situations. C. They encourage ethical behavior by eliminating opportunities for unethical behavior because employees know what is expected of them. D. They help marketers deal with marketing issues by prescribing and limiting certain activities. E. Top management must provide leadership in implementing codes of ethics. Answer: B 182. What is the major difference between social responsibility and marketing ethics? A. Marketing ethics varies by industry whereas social responsibility involves universal rules of conduct. B. There is legislation that deals with marketing ethics, but none for socially responsible practices. C. Marketing ethics is concerned with organizational practices, and social responsibility is concerned with individual behavior. D. There is no difference; they are synonymous terms. E. Social responsibility deals with the total effect of marketing decisions on society, whereas marketing ethics relates to individual and group evaluations in marketing situations. Answer: E 183. Companies that incorporate ethics and social responsibility into their strategic plans are likely to face: A. improved marketing performance. B. increased lawsuits. C. negative publicity. D. reduced costs. E. disappointed shareholders. Answer: A 184. Refer to Scenario 3.1. Milton Hershey contributed resources to the community to improve the overall quality of life for consumers, employees, and the community in general. This reflected his ________ responsibility. A. philanthropic B. ethical C. legal D. economic E. shareholder Answer: A Scenario 3.3 Use the following to answer the questions. Hershey Foods was founded in the nineteenth century by Milton Hershey, who had a strong ethical value system always show integrity, be honest, and respect others. Hershey felt it was important to provide high-quality goods and services of real value at competitive prices that provide an adequate return on investment. He also founded the Milton Hershey School, operating today as a cost-free, private home and school dedicated to helping children with social needs and limited resources. The company also focuses on environmental issues, such as reducing waste by 360,000 pounds annually by redesigning Hershey's Syrup caps. Hershey Foods has an ethics compliance program that includes a code of ethics and training, guidelines for handling legal and ethical issues, an 800 number for assistance with ethical issues, and support from supervisors and human resource managers in dealing with ethical issues. However, in the last few years, Hershey has been criticized by several advocacy groups concerning the sourcing of its chocolate from West Africa where many of the companies use child labor. While Hershey is the largest chocolate candy producer in America, it lags behind other major chocolate producers with regard to certifying its chocolate as child labor-free. 185. Refer to Scenario 3.3. The fact that the Hershey company has recently reduced its waste by 360,000 pounds through a packaging redesign is evidence of its focus on: A. a philanthropic culture. B. an ethical culture. C. social responsibility. D. the legal climate. E. the economic environment. Answer: C 186. Refer to Scenario 3.3. The criticism of Hershey’s sourcing for chocolate is an example of ________, while the potential use of child labor to produce Hershey products impacts its level of commitment to ________. A. consumerism; organizational culture B. ethics; social responsibility C. shareholder orientation; social responsibility D. ethical climate; ethics E. consumerism; sustainability practices Answer: E 187. Refer to Scenario 3.3. Hershey and its employees benefit in many ways from its strong ethics compliance program. Which of the following is not one of the benefits of such a program? A. Enforcement and discipline of ethical infractions B. Better employee understanding of ethical issues C. Free-flowing communication within the firm regarding ethical issues D. These programs are expensive to develop and maintain E. High level of organizational guidance for employees Answer: D Scenario 3.4 Use the following to answer the questions. WhiteWave Foods, producer of brands such as Silk Soymilk, specializes in manufacturing innovative and nutritious food products. Silk Soymilk was first launched in 1996, and is committed to the health of its customers, as well as the health of the planet. At Silk, they have offset all of their energy consumption with wind power, preventing over 16,000 tons of greenhouse gasses from entering the atmosphere each year. Silk Soymilk is made from a mixture of organic and natural, non-genetically modified soy beans, reducing the amount of pesticides in the air, soil, and water. Since 2002 they have been sponsoring the FarmAid concert, whose mission is to keep family farmers on their own land and ensure a safe, healthy food supply for all Americans. 188. Refer to Scenario 3.4. Silk Soymilk's sponsorship of the FarmAid concert is best thought of as an example of its: A. cause-related marketing effort. B. ethical responsibility. C. green marketing strategy. D. philanthropic activities. E. environmental strategy. Answer: D 189. Refer to Scenario 3.4. Silk Soymilk's use of organic, non-genetically modified soybeans in its product is an example of: A. green marketing. B. social consciousness. C. ethical responsibility. D. cause-related marketing. E. corporate benevolence. Answer: A 190. Refer to Scenario 3.4. The use of wind power to offset energy consumption by Silk Soymilk's parent company demonstrates its commitment to: A. consumerism. B. ethical marketing. C. social responsibility. D. philanthropic strategy. E. environmental marketing. Answer: C 191. Refer to Scenario 3.4. Silk Soymilk's parent company, WhiteWave Foods, is currently operating at the ________ level of the social responsibility pyramid. A. economic B. philanthropic C. ethical D. legal E. cause-related Answer: B 192. The marketing environment consists of external forces that directly or indirectly influence an organization's acquisition of inputs and generation of outputs. A. True B. False Answer: True 193. Environmental analysis is the process of collecting information about forces in the marketing environment. A. True B. False Answer: False 194. Environmental analysis helps managers identify potential threats and opportunities linked to environmental changes. A. True B. False Answer: True 195. Brand competitors market products with similar features, benefits, and prices to the same customers. A. True B. False Answer: True 196. Product competitors provide very different products that solve the same problem or satisfy the same basic customer need. A. True B. False Answer: False 197. The number of firms that control the supply of a product may affect the strength of competition. A. True B. False Answer: True 198. A monopoly exists when a firm with many potential competitors attempts to develop a marketing strategy to differentiate its products. A. True B. False Answer: False 199. An oligopoly exists when a firm offers a product that has no close substitutes, making the firm the sole source of supply. A. True B. False Answer: False 200. Pure competition is a common competitive environment. A. True B. False Answer: False 201. Monitoring the competitive environment guides marketers in developing competitive advantages. A. True B. False Answer: True 202. Economic forces determine the size and strength of demand for products. A. True B. False Answer: True 203. A prolonged period of recession is characterized by extremely high unemployment, very low wages, minimal total disposable income, and lack of consumer confidence in the economy. A. True B. False Answer: True 204. The strength of one's buying power depends partially on the state of the economy. A. True B. False Answer: True 205. An individual's after-tax income is called his or her discretionary income, which is used for spending and/or saving. A. True B. False Answer: False 206. Disposable income is used to pay taxes, spend, and save. A. True B. False Answer: False 207. The total amount of disposable income is affected by the amount of taxes consumers pay. A. True B. False Answer: True 208. Decreases in taxes lead to decreases in disposable income. A. True B. False Answer: False 209. Credit increases future buying power. A. True B. False Answer: False 210. An individual can have a high income and very little wealth. A. True B. False Answer: True 211. Wealth is an accumulation of past income, natural, and financial resources. A. True B. False Answer: True 212. If a person has buying power, he or she is influenced only by a product's absolute price. A. True B. False Answer: False 213. Wealth enables consumers to gain buying power. A. True B. False Answer: True 214. One of the factors that affect willingness to spend is general economic conditions. A. True B. False Answer: True 215. Political and legal forces in the marketing environment are closely interrelated. A. True B. False Answer: True 216. Proactive marketers think that political forces are beyond their control. A. True B. False Answer: False 217. If political officials have positive feelings toward particular firms or industries, they are less likely to create or enforce laws and regulations that are unfavorable for business organizations. A. True B. False Answer: True 218. A recent U.S. Supreme Court decision has authorized the government to ban corporate spending in candidate elections for political offices. A. True B. False Answer: False 219. Many laws that directly influence marketing activities were enacted either to preserve a competitive atmosphere or to protect consumers. A. True B. False Answer: True 220. The Sherman Antitrust Act is a procompetitive law. A. True B. False Answer: True 221. All marketers interpret laws and regulations conservatively and strictly to avoid violating a law. A. True B. False Answer: False 222. The Food and Drug Administration influences marketing activities the most. A. True B. False Answer: False 223. Numerous self-regulatory programs have been created to stop or stall the development of laws and government regulatory groups that would regulate marketing practices. A. True B. False Answer: True 224. Although numerous regulatory forces arise from governmental sources, nongovernmental regulatory forces may also affect marketing decisions. A. True B. False Answer: True 225. A good example of a government regulatory group at the local level is the Better Business Bureau. A. True B. False Answer: False 226. The Council of Better Business Bureaus and the FTC make up the National Advertising Review Board (NARB). A. True B. False Answer: False 227. All members of an industry are bound to follow trade association guidelines. A. True B. False Answer: False 228. Technology is the application of knowledge and tools to solve problems and perform tasks more efficiently. A. True B. False Answer: True 229. Technological developments have a direct impact on creating and maintaining a marketing mix. A. True B. False Answer: True 230. Technological changes do not directly affect what, how, when, and where products are marketed. A. True B. False Answer: False 231. Personal computers and cellular phones are technological revolutions. A. True B. False Answer: True 232. Technology affects the types of products offered to consumers. A. True B. False Answer: True 233. Technology can help marketers become more productive. A. True B. False Answer: True 234. Firms always adopt and use new technology. A. True B. False Answer: False 235. Through technology assessment, managers try to foresee the effects of new products and processes on the firm's operations and on society. A. True B. False Answer: True 236. An increasingly diverse cultural base in the United States means that marketers face increasingly diverse consumer markets. A. True B. False Answer: True 237. Changes in values have little effect on people's needs for products. A. True B. False Answer: False 238. Changes in social and cultural values have dramatically influenced people’s needs and desires for products. A. True B. False Answer: True 239. The major forces that make up the consumerism movement are consumer organizations and business organizations. A. True B. False Answer: False 240. To achieve their objectives, consumer advocates write letters to companies, lobby government agencies, broadcast public service announcements, and boycott companies whose actions they deem irresponsible. A. True B. False Answer: True 241. An organization's obligation to maximize its positive impact and minimize its negative impact on society is known as social accountability. A. True B. False Answer: False 242. Social responsibility is an organization's obligation to maximize its positive impact and minimize its negative impact on society. A. True B. False Answer: True 243. Marketing citizenship refers to an organization's obligation to maximize its positive impact and minimize its negative impact on society. A. True B. False Answer: False 244. Four dimensions of social responsibility are economic, legal, ethical, and philanthropic. A. True B. False Answer: True 245. At the most basic level of marketing citizenship, marketers have an obligation to contribute funds to philanthropic causes. A. True B. False Answer: True 246. Marketing ethics refers to principles and standards that define acceptable conduct in marketing. A. True B. False Answer: True 247. Cause-related marketing refers to the specific development, pricing, promotion, and distribution of products that do not harm the natural environment. A. True B. False Answer: False 248. Strategic philanthropy involves linking a firm's products to a particular social cause on a short-term basis. A. True B. False Answer: False 249. Green marketing refers to the practice of marking the prices of products in dollars across the world. A. True B. False Answer: False 250. Under President Kennedy's consumer bill of rights, consumers must have access and opportunity to review all relevant information about a product before buying it. A. True B. False Answer: True 251. The right to be informed means that consumers should be treated fairly when they complain to marketers about their products. A. True B. False Answer: True 252. Marketers' contributions of resources to community causes such as education, recreation, and others illustrate social responsibility on a community-relations level. A. True B. False Answer: True 253. When marketing activities deviate from accepted standards, the exchange process can break down, resulting in customer dissatisfaction, lack of trust, and lawsuits. A. True B. False Answer: True 254. According to research, only a small percentage of consumers have a more positive opinion of an organization when it supports causes they care about. A. True B. False Answer: False 255. It is easy to distinguish between legal and ethical issues. A. True B. False Answer: False 256. Marketing ethics goes beyond legal issues, although ethical disputes must sometimes be resolved in court. A. True B. False Answer: True 257. An ethical issue is an identifiable problem, situation, or opportunity requiring an individual to choose from among several actions that must be evaluated as right or wrong. A. True B. False Answer: True 258. Any time an activity causes managers or consumers to feel manipulated or cheated, a marketing ethics issue exists, regardless of the legality of that activity. A. True B. False Answer: True 259. A marketer's failure to inform customers about changes in the quality of its products does not constitute an ethical issue. A. True B. False Answer: False 260. Pressures to substitute inferior materials to reduce costs may result in product-related issues. A. True B. False Answer: True 261. A bribe offered to benefit an organization is generally considered acceptable. A. True B. False Answer: False 262. Bribery is a pricing-related ethical issue. A. True B. False Answer: False 263. Price fixing, predatory pricing, and failure to disclose the full price associated with a purchase are pricing activities that do not result in ethical issues. A. True B. False Answer: False 264. Manipulating a product's availability for purposes of exploitation and forcing intermediaries to behave in a specific manner are ethical issues in distribution. A. True B. False Answer: True 265. If a person is rewarded for developing a deceptive advertisement, he or she probably will not engage in such behavior in the future. A. True B. False Answer: False 266. Codes of conduct are formalized rules and standards that describe what the company expects of its employees in terms of ethical behavior. A. True B. False Answer: True 267. Codes of conduct must be detailed enough to take every situation into account. A. True B. False Answer: False 268. Employees can easily determine what behavior is acceptable even in organizations that do not have ethics compliance programs and policies on conduct. A. True B. False Answer: False 269. Companies should promote individuals prone to misconduct to management positions. A. True B. False Answer: False 270. It is not important to consistently enforce standards and impose penalties or punishment on those who violate codes of conduct A. True B. False Answer: False 271. Marketing ethics and social responsibility mean the same thing. A. True B. False Answer: False 272. Marketing ethics concerns the impact of an organization's decisions on society, whereas social responsibility relates to individual decisions. A. True B. False Answer: False 273. Marketing ethics relates to individual and group evaluations about what is right or wrong in a particular marketing decision-making situation; social responsibility deals with the total impact of marketing decisions on society. A. True B. False Answer: True 274. There is no evidence that being socially responsible and ethical is beneficial. A. True B. False Answer: False Test Bank for Foundations of Marketing William M. Pride, O. C. Ferrell 9781285429779, 9781439039441

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