This Document Contains Chapters 1 to 6 Part 1 Critical Thinking Case—Telekom Austria Group: Sustainability to Increase Value TRUE/FALSE 1. ICT stands for information and customer technologies, which states Telekom’s market orientation. Answer: False Rationale: ICT stands for information and communications technologies. 2. As part of its customer service, Telekom is a full-service green company so that customers can effortlessly participate without changing their own personal behaviors. Answer: False Rationale: The company’s resource conservation efforts flow directly to customers who are encouraged to use online billing that requires no printing and the like. 3. A sustainable behavior that Telekom encourages in its customers might mean paying more for an environmentally friendly phone that has its recycle fee built into its cost. Answer: True Rationale: Encouraging customers to pay more for environmentally friendly phones with built-in recycling fees promotes sustainable behavior by incentivizing the purchase of eco-friendly products and supporting responsible disposal practices. This approach aligns with Telekom's commitment to sustainability, influencing consumer behavior towards making environmentally conscious choices and reducing environmental impact across the product lifecycle. 4. Telekom’s commitment to sustainability can be translated into bottom line performance. Answer: True Rationale: Telekom's commitment to sustainability can positively impact bottom line performance by reducing operational costs through energy efficiency measures, enhancing brand reputation and customer loyalty, attracting socially responsible investors, and mitigating risks associated with environmental regulations and consumer preferences for sustainable products and services. These factors contribute to overall financial sustainability and long-term profitability. MULTIPLE CHOICE 1. Which of the following would you expect to read in Telekom’s mission statement? A. Telekom is above all a green company. B. Telekom means sustainability. C. Telekom seeks to integrate all its resources into the welfare of his customers. D. Telekom desires to be the most innovative and efficient telecommunications provider in its market. E. Telekom is an environmentally friendly company that serves its investors. Answer: D Rationale: The overarching goal of the company is to be the most innovative and efficient telecommunications provider in the central and eastern European marketplace. 2. Telekom, in finding ways to benefit its stakeholders, exercises __________ as a guiding principle. A. resource conservation B. ethical decision making C. corporate social responsibility D. ethical culture E. all of the above Answer: C Rationale: The company prides itself on its groupwide corporate social responsibility (CSR) efforts that seek to provide benefit to all stakeholders. 3. Telekom’s Kundiologie (literally, “customerology”) program is intended to improve __________ as well as customer service. A. its cellular phones B. its employees’ ability to interact with clients C. its automated answering system D. 611 online support E. none of the above Answer: E Rationale: Telekom attempts to engage its employees in real-time interactions with customers and then channels these insights into the areas of product management. 4. What does Telekom mean by achieving “data traffic instead of road traffic”? A. using wireless technologies to help customers leave less of a “carbon footprint” B. using fuel efficient service vehicles C. facilitating smartphone purchases D. achieving a complete reliance on m-commerce for all its transactions E. none of the above Answer: A Rationale: Telekom seeks to expand environmentally friendly information communication technologies to facilitate online purchases that use less energy that driving to a store. 5. In setting a corporate goal for itself in order to satisfy its broad constituency of stakeholders, which of the following is not explicitly stated? A. sustainability B. innovation C. quality D. responsibility E. diversity Answer: A Rationale: Driving the attainment of this goal are four corporate values: innovation, diversity, responsibility, and quality. 6. Why does Telekom follow guidelines issued by the Global Reporting Initiative (the GRI is an NGO based in Amsterdam) in auditing its sustainability performance? A. The GRI is a European Union agency and it is the law. B. Telekom desires to cooperate with a nonprofit organization for their mutual benefit. C. Such audits also reveal Telekom’s financial performance, which is really its primary goal. D. Telekom seeks to compare its initiatives to generally accepted indicators of sustainability. E. Telekom has international subsidiaries that must legally have uniform sustainability goals. Answer: D Rationale: Telekom’s seeks to meet what are generally accepted indicators of sustainability being reported by other organizations to the GRI. Part 2 Critical Thinking Case—Mary Kay Inc. Taps into a Changing Demographic TRUE/FALSE 1. Mary Kay relies on consultants and direct-selling, which is essentially one-to-one marketing. Answer: True Rationale: Mary Kay's business model relies on independent beauty consultants who engage in direct-selling, which involves personalized interactions with customers on an individual basis. This approach aligns with one-to-one marketing principles by fostering direct relationships, personalized customer service, and customized product recommendations tailored to individual needs and preferences. 2. The marketing that exists between Mary Kay and its consultants is not B2B. Answer: False Rationale: Mary Kay, vis-à-vis its independent beauty consultants, who are small business, is the producer and distributor in this B2B role. 3. Mary Kay’s seeking consultants who fit the segmentation of the target market is a form of product user positioning. Answer: True Rationale: Mary Kay's practice of seeking consultants who fit the segmentation of the target market is more aligned with market segmentation and targeting rather than product user positioning. Market segmentation involves dividing the market into distinct groups with similar characteristics or needs, whereas product user positioning focuses on aligning the product's benefits and features with the specific needs and preferences of target customers to create a unique market position. 4. Mary Kay is not only vulnerable to losing a younger generation of consultants to direct-sellers like itself. Answer: True Rationale: Mary Kay faces the challenge of potentially losing younger generations of consultants to other direct-selling companies that offer similar opportunities and products. This vulnerability stems from changing preferences, evolving career aspirations, and competitive pressures within the direct-selling industry, which may influence younger consultants to explore alternative opportunities or brands that better resonate with their values and lifestyle choices. MULTIPLE CHOICE 1. Which of the following segmentations are probably least important to Mary Kay? A. ethnic B. gender C. age D. family life cycle E. none of the above Answer: E Rationale: All of these demographic segmentation basses are important to Mary Kay, which is an ethnically oriented global company that sells to females and males clients, seeks to broaden its target market in a younger clientele that tends to marry later and delay having children. 2. By designing its products to vary, to seem “new” in shade, scent, forms, even packaging, Mary Kay is counteracting which aspect of a younger generation of users? A. skepticism B. disloyalty to brands C. less income D. the desire for an “experience” E. all of the above Answer: B Rationale: Those generations after the baby boomers, such as Generation X tend to be disloyal to brands. Mary Kay now markets its products to foil that tendency. 3. Mary Kay recognizes geographic and ethnic segmentation. It also sees most women as having similar preferences. These would probably lead to what strategy? A. Continue to create product lines specifically for each target market. B. Produce makeup and the like in the most uniform way possible because women tend not to recognize cultural differences when it comes to beauty care projects. C. Treating customers in different countries as reference groups. D. Pursue a geodemographic segments to target women in even smaller, more diverse markets. E. Produce products with the same formulations yet intensify marketing to individual cultures and the like. Answer: E Rationale: Even though the trend in global business is toward less variation, firms have little chance of selling products in a culture that they do not understand. 4. Unlike other companies, Mary Kay must compete with other direct-selling firms for ____________ from a business-to-business perspective. A. beauty care product customers B. the same demographic segments C. a largely female demographic D. its beauty consultants E. none of the above Answer: D Rationale: Mary Kay recognizes that other direct selling companies want to harness the power and dynamic of consultants in the younger age group. 5. When a Mary Kay identifies and focuses on the younger age of its largely female clientele, their unlimited earning power, their preferences for certain product lines, and the like, it is looking at __________. A. segmentation descriptors B. target market variables C. evoked sets D. consideration sets E. optimizers Answer: A Rationale: Segmentation descriptors identify the specific segmentation variables. 6. From reading the Mary Kay case, which of the following would be the least important in its approach to one-to-one marketing? A. loyalty B. technology C. personalization D. time-savings E. none of the above Answer: B Rationale: For direct selling, technology (in the form of m-commerce mass marketing apps, mobile sites, Web sites, and the like) is typically the least important marketing tool when it comes to a individualized face-to-face sale. Part 3 Critical Thinking Case—Prestige Brands, Inc.: Transforming the Business TRUE/FALSE 1. Looking at its list of OTC healthcare products, Prestige Brands, did not improve its positioning in eye care products. Answer: True Rationale: Prestige Brands, focusing on OTC healthcare products, likely did not enhance its positioning in eye care products because eye care is a specialized category requiring specific expertise and market positioning distinct from general OTC healthcare products. Without targeted efforts and investments in eye care products specifically, Prestige Brands may not have improved its market share or competitive standing in this particular segment of the healthcare market. 2. The acquisition of Blacksmith left Prestige’s depth in household brands unchanged. Answer: True Rationale: Prestige's acquisition of Blacksmith did not significantly alter the company's depth in household brands because the acquisition did not add new types or categories of products to Prestige’s portfolio. If Blacksmith's products were similar or redundant to Prestige's existing offerings, the overall depth (variety and number of distinct household brands) would remain the same. 3. Given some redundancy in its product mix, Prestige is not immune from cannibalization. Answer: True Rationale: Cannibalization occurs when a company's new product eats into the sales of one of its existing products. Given that Prestige has some redundancy in its product mix, meaning it offers multiple similar products, it is likely that these products will compete against each other in the market. This internal competition can lead to cannibalization, where the sales of one product decrease because consumers are choosing a different product from the same company. 4. One benefit that Prestige probably does not enjoy is an extreme economy of scale in its advertising. Answer: True Rationale: An extreme economy of scale in advertising means that a company can advertise its products at a significantly lower cost per unit because it is advertising on a very large scale. Prestige probably does not enjoy this benefit because its product portfolio may be too diversified or niche, preventing it from achieving the massive advertising reach necessary to significantly reduce costs. Additionally, if Prestige's market presence is not as large as some of its bigger competitors, it would not benefit from the same level of cost savings in advertising. MULTIPLE CHOICE 1. Efferdent, PediaCare, and the other products Prestige picked up from its Blacksmith acquisition should be more correctly seen as __________ rather than __________. A. product mixes/brands B. product lines/product items C. product item/product lines D. product items/brands E. product mixes/product lines Answer: B Rationale: Each of these brands will include the various product items that are categorized under a product line. 2. One aspect of expanding a portfolio through acquisition is a new product mix. Compoz and Momentum brands have a product depth of 1. What term best describes them? A. unsought products B. noncore brands C. convenience products D. product lines E. all of the above Answer: D Rationale: Each item is a product line. Since both are HTC brands, they are considered core brands unless Prestige decides to sell these brands in the future. 3. The acquisition of Blacksmith is called a “transformational acquisition” for what reason? A. It made Prestige an even larger niche marketer of minor brands. B. It addressed stockholder concerns about a lack of focus. C. It eliminated a competitor. D. It provided more product line depth to a core business. E. It evened out a sales pattern that had been dependent on the cough, cold, and flu season. Answer: D Rationale: For the company, it was a meaningful step in its long-term strategy of an increasing presence in the OTC healthcare arena. 4. The third prong of Prestige’s corporate strategy involves periodically reassessing which brands are the best for the company in the long term from a portfolio standpoint and then adjusting the portfolio accordingly. Peter Drucker gave this a name. What is it? A. product demixing B. product line attrition C. organized abandonment D. periodic audit E. organized delisting Answer: C Rationale: Prestige practices what management sage Peter Drucker calls “organized abandonment,” which is based upon a periodic audit of all goods and services that a firm markets and eliminating the poorer performers from the product mix. 5. Which of the following expenses does Prestige most likely not eliminate by its reliance on acquisition over new product development? A. R&D B. testmarketing C. commercialization D. business analysis E. none of the above Answer: D Rationale: Given that Prestige calculates what brands it buys before and after acquisition, it would engage in a process analogous to a business analysis, that is, an assessment of the demand, cost, sales, and profitability of an acquired product. 6. Venerable brands such as Luden’s (cough drops originally formulated over a century ago) and Efferdent (virtually synonymous with denture adhesive since the days of early television) give Prestige what important attribute? A. brand equity B. a major position in both segments C. two brand marks D. household words E. manufacturing brands to go with its private brands Answer: A Rationale: These brand names are familiar to consumers and indicate quality, hence brand equity, which refers to the value of a brand name. Part 4 Critical Thinking Case—CUTCO Cutlery Corporation: Direct to Consumer for Over 60 Years! TRUE/FALSE 1. CUTCO’s college student sales force performs the role of channel members. Answer: True Rationale: CUTCO's college student sales force acts as channel members by directly selling CUTCO products to consumers, thereby serving as a crucial part of CUTCO's distribution channel. These students typically operate on a direct selling model, promoting and selling CUTCO products through personal demonstrations and sales pitches. 2. In a strict sense, only CUTCO enjoys an economy of scale, not its direct sellers. Answer: False Rationale: As a marketing channel, CUTCO’s direct sellers also attain economies of scale by selling only CUTCO-branded products to end users. 3. Students who work for Vector Marketing are a form of selective distribution. Answer: True Rationale: Vector Marketing, which operates with CUTCO, uses a selective distribution strategy by recruiting college students as sales representatives. These students are selected and trained to market CUTCO products directly to consumers, which aligns with a strategy of limiting the number of outlets (in this case, sales representatives) in order to maintain better control over distribution and enhance brand image through personalized selling efforts. 4. CUTCO is the channel member with channel control and power over the student sales force. Answer: False Rationale: Vector Marketing Channel controls and influences the behavior of the channel members below it, i.e., the student sales force. MULTIPLE CHOICE 1. Vector Marketing is a(n) __________. A. independent direct marketer for CUTCO B. merchant wholesaler C. CUTCO broker D. corporate subsidiary of CUTCO E. CUTCO agent Answer: D Rationale: Vector Marketing is not an independent direct marketer but rather part of CUTCO’s corporate family. 2. CUTCO is an example of a company that concentrates on __________ to achieve its economy of scale in cutlery and related implements. A. distribution B. direct sales C. franchising with college students D. manufacturing E. all of the above Answer: D Rationale: Specialty manufacturers such as CUTCO achieve their economies of scale by focusing on producing large quantities of a single product line or item. 3. “Products that are more complex, customized, and expensive” benefit from direct marketing channels. Knives and scissors are fairly low-tech. Why does CUTCO use direct sales? A. Because it is located in New York State. B. Because its products are difficult to find C. CUTCO sells to an exclusive market—newlyweds, professional chefs, cooking schools, and the like. D. Direct sales forces can demonstrate CUTCO’s product factors over cheaper retail and imported cutlery to justify its price. E. Actually, the technology used to make high-quality CUTCO products at the factory is customized and complex. Answer: D Rationale: A producer’s desire to control pricing, positioning, and brand image also tends to influence channel selection, especially for firms that sell products vulnerable to discount retailers and alternative product item equivalents. 4. Which of the following businesses does not use direct retailing? A. Vector Marketing B. Tupperware C. Pampered Chef D. Amway E. CUTCO independent sales representatives Answer: A Rationale: In the marketing channel, the sales reps are hired and managed by Vector. 5. Why are CUTCO sales people not small-scale franchisees? A. They do not establish retail outlets. B. They only deal with Vector Marketing for the only product they sell. C. They do not pay a royalty. D. They do not pay Vector Marketing for the right to sell CUTCO products. E. all of the above Answer: E Rationale: Although a direct retailer may resemble a franchise, it is different for all the reasons listed. 6. In the retailing mix, which of the following only applies to CUTCO’s success? A. price B. place C. product D. personnel E. promotion Answer: C Rationale: As a direct sales operation, CUTCO really has no retailing mix. This is the only P that applies: product. Part 5 Critical Thinking Case—Lap Dance at Boston Blazers Lacrosse Game: Promotional Mistake or Creative Genius? TRUE/FALSE 1. More people attended subsequent Boston Blazer games because the team had turned a sophomoric stunt into a competitive advantage. Answer: True Rationale: By transforming a sophomoric stunt into a competitive advantage, the Boston Blazer team likely generated increased attention and curiosity from the public. This novelty and unique positioning could attract more attendees who were interested in experiencing the team's innovative approach firsthand, thereby boosting game attendance. 2. The viral YouTube videos of the lap-dancing incident were cleverly exploited by the Boston Blazers. Answer: False Rationale: Actually, the team’s response to the incident suggests it was a standalone promotion and there was no real plan, if any, to exploit the “black eye” the team had given itself the way Dominoes Pizza did with its Turnaround campaign in Chapter 16. 3. YouTube uploads of the halftime show provided a source of feedback for the marketing people of the Boston Blazers. Answer: True Rationale: YouTube uploads of the halftime show would serve as a valuable source of feedback for the marketing team of the Boston Blazers. They could monitor viewer comments, likes, dislikes, and view counts to gauge audience reactions, identify trends, and assess the overall impact of their halftime show on the audience, helping them refine future marketing strategies and promotional efforts accordingly. 4. The YouTube uploads provided both product placement and reason for crisis management. Answer: True Rationale: Whether intentional or not, the Boston Blazer’s product, entertaining, competitive lacrosse and fun halftime shows—not seen at other sports venues—was Internet product placement. The “scandal” was also a test of damage control and rebuilding the team’s other image, that of a provider of entertainment for the whole family. MULTIPLE CHOICE 1. When a company develops its product, it must communicate (i.e., promote) the benefit to consumers. Does Doug Reffue’s Facebook posting (and free ticket offer) meet that criterion? A. No, it is simply an apology. B. Yes, sex sells and there is no such thing as bad publicity. C. No, only the team benefits and there are always free tickets set aside for promotions. D. Yes, because Reffue, even if insincere, is still promoting the team as family entertainment. E. No, because only the team’s gate receipts benefitted and the public was essentially teased. Answer: D Rationale: Virtually any communication, even one that is remedial of a botched promotional strategy, is promotion. What Reffue did here was return to the message of wholesome family entertainment after that value was violated. 2. Let’s say, for the sake of argument, that the halftime lap dance was intended because it looked little different from what cheerleaders choreograph anyway. What role did the cheerleaders play and mascot play in the communication process? A. senders B. encoders C. message channel D. decoders E. receivers Answer: B Rationale: Since being a cheerleader and a mascot is essentially performance art, they could serve both of these roles encoding the message that lacrosse is like a lap dance and as the message channels since they are communicating, albeit with questionable antics and gestures, for their respective teams. 3. If the lap dance had only been intended to titillate rather than market the Boston Blazers, what was social media’s role? A. YouTube made it possible for an isolated event to go viral. B. Facebook allowed the CEP to initiate a crisis communication strategy. C. It provided visibility that would cost the team very little in free advertising. D. Social media provided a two-way, real-time channel of communication between the team, its fans, and potential fans. E. all of the above Answer: E Rationale: Although not intended as a social media campaign, the Boston Blazers could exploit the positives and negatives of social media in each of these responses. 4. Although not intended for a wider target audience, the lap dance controversy did accomplish the major tasks of promotion in the highly competitive Boston metro market. Which of the following would be an exception? A. The lap dance informed sporting event-goers that the Blazers were not a fringe league but part of a national sport league. B. The lap dance turned out to be a positive form of public relations that could be repeated in the future despite the front office apology. C. For those who may have seen one game, they were no reminded that they had “missed something” by not being repeat customers. D. The male demographic was persuaded to buy tickets (i.e., sex sells). E. Any perception that lacrosse was not a hot game had been changed in the public mind. Answer: B Rationale: Promotion performs three tasks: inform the target audience, persuade the target audience, or remind the target audience. 5. For most organizations, publicity is intended to win good will and manage crises. So why did the Boston Blazers public relations people on the field allow for such risky behavior? A. The cultural context of a halftime show has changed from marching bands to entertainment that pushes the same boundaries other entertainment businesses do. B. The role of cheerleaders has evolved beyond dance numbers and pom-poms—they can be bad girls along with the bad boys on the field. C. The Duke lacrosse scandal added the cachet of sex to the sport and invites satire. D. American sports reflects American society. E. all of the above Answer: E Rationale: Major league teams sell entertainment and have to compete with not only other sports but other forms of entertainment. Just like television and film, sex has been added to the mix and so the teams can indulge in having both ways, being saint and sinner. 6. The lap dance had a national audience and it can still be found on the Internet. For the NLL, what its affiliate team did was achieve the lowest cost per contact of any kind of advertising. What is the most likely reason for not trying to do these kinds of shock-value stunts more often? A. The public would eventually be insulted. B. It could open up the league to criminal investigation. C. It would eventually harm the league’s value as family entertainment. D. The CEO of the Blazers promised not to risk his organization’s reputation again. E. It is offensive and demeaning. Answer: C Rationale: The brand value and corporate image of a national lacrosse league would be damaged and tilt away from the fine balance between wholesome entertainment and a high-energy and sometimes violent sport not unlike ice hockey. Part 6 Critical Thinking Case—Will a New Reservation System Translate to Higher Prices for Travelers? TRUE/FALSE 1. Given American Airlines demands that Orbitz and other middlemen use its Direct Connect, the carrier sees a satisfactory profit. Answer: False Rationale: American Airlines penetration pricing and behavior are more indicative of profit maximization. 2. GDS evolved from YMS. Answer: True Rationale: GDS (Global Distribution System) did evolve from YMS (yield management system). Yield management systems initially focused on maximizing revenue through dynamic pricing strategies for airlines, hotels, and other travel industries. Over time, these systems expanded into comprehensive global distribution systems that integrate booking, pricing, inventory management, and distribution across various travel-related services, making them indispensable tools for the travel industry. 3. The GDS systems that Orbitz and other middlemen use is an extranet. Answer: False Rationale: The GDS (Global Distribution System) systems that Orbitz and other travel intermediaries use are not typically considered extranets. Instead, GDS systems are comprehensive networks that connect various travel service providers (such as airlines, hotels, car rental companies) with travel agents and online booking platforms. These systems facilitate real-time availability, pricing, booking, and transaction processing, operating more as centralized databases and communication platforms rather than extranets, which are typically limited-access networks for specific parties to share information securely. 4. Critics say that Direct Connect will allow American Airlines to raise its prices whenever it wants. Answer: False Rationale: Supply and demand and other variables (e.g., fuel prices) still determine what American Airlines charges and it will price it tickets to ensure the fewest empty seats accordingly. MULTIPLE CHOICE 1. American Airlines risks disappointing consumers who perceive Expedia and other middlemen as the go-to source for “great deals.” This is because consumers expect __________ when they buy tickets. A. reasonable competition B. a reasonable price C. little sacrifice D. satisfaction maximization E. all of the above Answer: A Rationale: Value is based upon perceived satisfaction, that is, when consumers feel they have paid a “reasonable price.” 2. American Airline tickets are a commodity. If other agents can sell its tickets, then they have __________ that American Airlines does not have. A. status quo pricing B. competition C. a distribution D. supply and demand E. unit market share Answer: E Rationale: American Airlines is clearly increasing its market share at the expense of middlemen, repeating a strategy it had used previously to squeeze out travel agencies. 3. The in-house reservation Direct Connect is the latest example of __________, long used by airlines. A. eliminating competition B. penetration pricing C. a yield management system D. a ticket shopping bot E. selling for the brand Answer: C Rationale: First developed in the airline industry, yield management systems (YMS) use complex mathematical software to profitably fill unused capacity. 4. Expedia, Orbitz, Priceline, and travel agencies make their money off __________. A. commissions paid by the airlines to sell their tickets B. the profits they make by bulk ticket purchases from the airlines C. sophisticated scalping software D. fees the airlines pay to list tickets on GDS E. fees the airlines pay after a ticket is sold on the middlemen’s GDS Answer: E Rationale: The GDS ticket-sale model enables travel agents to sell tickets and collect fees from the sale of tickets via the GDS. 5. By removing itself from GDS-type retailers, American Airlines will maximize its ability for all of the following except __________. A. to increase ticket revenue B. to decrease marginal cost C. two-part pricing D. comparison shopping E. bundling with hotels, rental car agencies, and the like Answer: D Rationale: Ticket shoppers using Direct Connect will not be able to compare flights to other carriers. 6. By eliminating the number of online ticket shopping venues that sold its tickets, American Airlines improves __________. A. its status quo pricing B. its buyer dependence—those traveling in and out of its hubs C. its ability to absorb fuel costs D. its economies of scale E. all of the above Answer: E Rationale: All of the above are improved by penetration pricing strategies that result in market share, more ways to compete, and more options to pass (or not pass) on costs to consumers. Test Bank for MKTG Charles W. Lamb, Jr. Hair, Joseph F., Carl McDaniel 9781285091860
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